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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6404
---------------------------------------------
American Strategic Income Portfolio Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
800 Nicollet Mall, Minneapolis, MN 55402
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert H. Nelson 800 Nicollet Mall, Minneapolis, MN 55402
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 800-677-3863
----------------------------
Date of fiscal year end: November 30, 2003
--------------------------
Date of reporting period: May 31, 2003
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
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Item 1. Report to Shareholders
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[GRAPHIC]
[FIRST AMERICAN(TM) LOGO]
AMERICAN STRATEGIC INCOME PORTFOLIO INC.
ASP
MAY 31, 2003
SEMIANNUAL REPORT
<Page>
[FIRST AMERICAN(TM) LOGO]
AMERICAN STRATEGIC INCOME PORTFOLIO INC.
As you are probably aware, the board of directors for American Strategic
Income Portfolio Inc. (the "Fund"), as well as American Strategic Income
Portfolio Inc. II, American Strategic Income Portfolio Inc. III, and American
Select Portfolio Inc. (collectively, the "Existing Funds"), has approved a
proposal to reorganize these four funds into the First American Strategic
Real Estate Portfolio, Inc., a specialty finance company that would elect to
be taxed as a real estate investment trust ("REIT"). Shareholders of the
Existing Funds who do not wish to receive shares of the REIT will have the
option, subject to certain limitations, of electing to exchange their shares
for shares of First American Strategic Income Portfolio Inc., a newly formed
closed-end management investment company with investment policies,
restrictions, and strategies substantially similar to those of the Existing
Funds. This transaction is subject to review by the Securities and Exchange
Commission, approval by the Fund's shareholders, and certain other
conditions. There is no assurance that the transaction will be completed.
OUR IMAGE-GEORGE WASHINGTON
HIS RICH LEGACY AS PATRIOT AND LEADER IS WIDELY RECOGNIZED AS EMBODYING THE
SOUND JUDGMENT, RELIABILITY, AND STRATEGIC VISION THAT ARE CENTRAL TO OUR BRAND.
FASHIONED IN A STYLE REMINISCENT OF AN 18TH CENTURY ENGRAVING, THE ILLUSTRATION
CONVEYS THE SYMBOLIC STRENGTH AND VITALITY OF WASHINGTON, WHICH ARE ATTRIBUTES
THAT WE VALUE AT FIRST AMERICAN.
TABLE OF CONTENTS
1 Financial Statements
5 Notes to Financial
Statements
17 Investments in
Securities
25 Shareholder Update
NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
<Page>
FINANCIAL STATEMENTS (Unaudited)
STATEMENT OF ASSETS AND LIABILITIES May 31, 2003
.................................................................................
<Table>
ASSETS:
Investments in securities at value* (note 2)...... $66,168,433
Cash in bank on demand deposit.................... 32,344
Receivable for investment securities sold......... 823,325
Accrued interest receivable....................... 346,477
Other assets...................................... 9,184
-----------
Total assets.................................... 67,379,763
-----------
LIABILITIES:
Reverse repurchase agreements payable (note 2).... 13,875,717
Accrued investment management fee................. 9,856
Accrued administrative fee........................ 11,326
Accrued interest expense.......................... 8,715
Accrued reorganization expenses (notes 3 and 6)... 43,390
Other accrued expenses............................ 19,590
-----------
Total liabilities............................... 13,968,594
-----------
Net assets applicable to outstanding capital
stock......................................... $53,411,169
===========
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital...... $60,517,426
Undistributed net investment income............... 84,544
Accumulated net realized loss on investments...... (9,115,347)
Unrealized appreciation of investments............ 1,924,546
-----------
Total-representing net assets applicable to
capital stock................................. $53,411,169
===========
*Investments in securities at identified cost..... $64,243,887
===========
NET ASSET VALUE AND MARKET PRICE OF CAPITAL STOCK:
Net assets outstanding............................ $53,411,169
Shares outstanding (authorized 1 billion shares of
$0.01 par value)................................ 4,230,294
Net asset value per share......................... $ 12.63
Market price per share............................ $ 12.72
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 1 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
FINANCIAL STATEMENTS (Unaudited) continued
STATEMENT OF OPERATIONS For the Six Months Ended May 31, 2003
.................................................................................
<Table>
INCOME:
Interest (net of interest expense of $220,748).... $2,002,567
Dividends......................................... 272,772
Dividends from affiliated money market fund....... 15,667
----------
Total investment income......................... 2,291,006
----------
EXPENSES (NOTE 3):
Investment management fee......................... 155,913
Administrative fee................................ 66,495
Custodian fees.................................... 5,320
Transfer agent fees............................... 13,215
Exchange listing and registration fees............ 21,168
Reports to shareholders........................... 15,045
Mortgage servicing fees........................... 29,023
Directors' fees................................... 5,950
Audit and legal fees.............................. 38,827
Financial advisory and accounting fees............ 19,460
Other expenses.................................... 4,835
----------
Total expenses.................................. 375,251
----------
Net investment income........................... 1,915,755
----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS (NOTE 4):
Net realized gain on investments in securities.... 57,854
Net change in unrealized appreciation or
depreciation of investments..................... (74,409)
----------
Net loss on investments......................... (16,555)
----------
Net increase in net assets resulting from
operations.................................. $1,899,200
==========
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 2 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
STATEMENT OF CASH FLOWS For the Six Months Ended May 31, 2003
.................................................................................
<Table>
CASH FLOWS FROM OPERATING ACTIVITIES:
Investment income................................. $ 2,291,006
Expenses.......................................... (375,251)
-----------
Net investment income........................... 1,915,755
-----------
Adjustments to reconcile net investment income to
net cash provided by operating activities:
Net accretion of bond discounts and amortization
of premiums................................... 1,986
Change in accrued interest receivable........... 51,116
Change in accrued fees and expenses............. (61,679)
Change in other assets.......................... 22,353
-----------
Total adjustments............................. 13,776
-----------
Net cash provided by operating activities....... 1,929,531
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments................ 15,853,519
Purchases of investments.......................... (13,009,092)
Net purchases of short-term securities............ (198,352)
-----------
Net cash provided by investing activities..... 2,646,075
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments for reverse repurchase agreements.... (2,724,283)
Distributions paid to shareholders................ (1,840,178)
-----------
Net cash used by financing activities......... (4,564,461)
-----------
Net increase in cash.............................. 11,145
Cash at beginning of period....................... 21,199
-----------
Cash at end of period......................... $ 32,344
===========
Supplemental disclosure of cash flow information:
Cash paid for interest.......................... $ 236,903
===========
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 3 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
FINANCIAL STATEMENTS (Unaudited) continued
STATEMENTS OF CHANGES IN NET ASSETS
.................................................................................
<Table>
<Caption>
SIX MONTHS ENDED
5/31/03 YEAR ENDED
(UNAUDITED) 11/30/02
---------------- -------------
OPERATIONS:
Net investment income................... $ 1,915,755 $ 4,029,062
Net realized gain (loss) on
investments........................... 57,854 (491,966)
Net change in unrealized appreciation or
depreciation of investments........... (74,409) 734,941
----------- -----------
Net increase in net assets resulting
from operations..................... 1,899,200 4,272,037
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income.............. (1,840,178) (4,346,628)
----------- -----------
Total increase (decrease) in net
assets.............................. 59,022 (74,591)
Net assets at beginning of period....... 53,352,147 53,426,738
----------- -----------
Net assets at end of period............. $53,411,169 $53,352,147
=========== ===========
Undistributed net investment income..... $ 84,544 $ 8,967
=========== ===========
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 4 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) ORGANIZATION
.............................
American Strategic Income Portfolio Inc. (the "Fund") is
registered under the Investment Company Act of 1940 (as amended)
as a diversified, closed-end management investment company. The
Fund emphasizes investments in mortgage-related assets that
directly or indirectly represent a participation in or are
secured by and payable from mortgage loans. It may also invest
in U.S. government securities, corporate debt securities, and
mortgage servicing rights. In addition, the Fund may borrow
using reverse repurchase agreements and revolving credit
facilities. Fund shares are listed on the New York Stock
Exchange under the symbol ASP.
(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
.............................
SECURITY VALUATIONS
Security valuations for the Fund's investments (other than whole
loans) are furnished by one or more independent pricing services
that have been approved by the Fund's board of directors.
Investments in equity securities that are traded on a national
securities exchange (or reported on the NASDAQ national market
system) are stated at the last quoted sales price if readily
available for such securities on each business day. For
securities traded on the NASDAQ national market system, the Fund
utilizes the NASDAQ Official Closing Price which compares the
last trade to the bid/ask price of a security. If the last trade
is outside the bid/ask range, and falls above the ask, the ask
price will be the closing price. If the last trade is below the
bid, the bid will be the closing price. Other equity securities
traded in the over-the-counter market and listed equity
securities for which no sale was reported on that date are
stated at the last quoted bid price.
Debt obligations exceeding 60 days to maturity are valued by an
independent pricing service. The pricing service may employ
methodologies that utilize actual
2003 SEMIANNUAL REPORT 5 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited) continued
market transactions, broker-dealer supplied valuations, or other
formula driven valuation techniques. These techniques generally
consider such factors as yields or prices of bonds of comparable
quality, type of issue, coupon, maturity, ratings, and general
market conditions. 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. When market quotations are not
readily available, securities are valued at fair value as
determined in good faith by procedures established and approved
by the Fund's board of directors. Debt obligations with 60 days
or less remaining until maturity may be valued at their
amortized cost which approximates market value. Security
valuations are performed once a week and at the end of each
month.
The Fund's investments in whole loans (single family,
multifamily and commercial), participation mortgages and
mortgage servicing rights are generally not traded in any
organized market and therefore market quotations are not readily
available. These investments are valued at "fair value"
according to procedures adopted by the Fund's board of
directors. Pursuant to these procedures, whole loan investments
are initially valued at cost and their values are subsequently
monitored and adjusted pursuant to a U.S. Bancorp Asset
Management, Inc. ("USBAM") pricing model designed to
incorporate, among other things, the present value of the
projected stream of cash flows on such investments. The pricing
model takes into account a number of relevant factors including
the projected rate of prepayments, the delinquency profile, the
historical payment record, the expected yield at purchase,
changes in prevailing interest rates, and changes in the real or
2003 SEMIANNUAL REPORT 6 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
perceived liquidity of whole loans, participation mortgages, or
mortgage servicing rights, as the case may be. The results of
the pricing model may be further subject to price ceilings due
to the illiquid nature of the loans. Changes in prevailing
interest rates, real or perceived liquidity, yield spreads, and
creditworthiness are factored into the pricing model each week.
Certain mortgage loan information is received once a month. This
information includes, but is not limited to, the projected rate
of prepayments, projected rate and severity of defaults, the
delinquency profile, and the historical payment record.
Valuations of whole loans, participation mortgages, and mortgage
servicing rights are determined no less frequently than weekly.
Although we believe the pricing model to be reasonable and
appropriate, the actual values that may be realized upon the
sale of whole loans, participation mortgages, and mortgage
servicing rights can only be determined in a negotiation between
the Fund and third parties.
As of May 31, 2003, the Fund held fair valued securities with a
fair value of $40,821,748 or 76.4% of total net assets.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date securities
are purchased or sold. Realized gains and losses are calculated
on the identified-cost basis. Dividend income is recorded on the
ex-dividend date. Interest income, including accretion of bond
discounts and amortization of premiums, is recorded on an
accrual basis.
WHOLE LOANS AND PARTICIPATION MORTGAGES
Whole loans and participation mortgages may bear a greater risk
of loss arising from a default on the part of
2003 SEMIANNUAL REPORT 7 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited) continued
the borrower of the underlying loans than do traditional
mortgage-backed securities. This is because whole loans and
participation mortgages, unlike most mortgage-backed securities,
generally are not backed by any government guarantee or private
credit enhancement. Such risk may be greater during a period of
declining or stagnant real estate values. In addition, the
individual loans underlying whole loans and participation
mortgages may be larger than the loans underlying
mortgage-backed securities. With respect to participation
mortgages, the Fund generally will not be able to unilaterally
enforce its rights in the event of a default, but rather will be
dependent on the cooperation of the other participation holders.
The Fund does not record past due interest as income until
received. The Fund may incur certain costs and delays in the
event of a foreclosure. Also, there is no assurance that the
subsequent sale of the property will produce an amount equal to
the sum of the unpaid principal balance of the loan as of the
date the borrower went into default, the accrued unpaid
interest, and all of the foreclosure expenses. In this case, the
Fund may suffer a loss. At May 31, 2003, there were no loans
that were 60 or more days delinquent as to the timely monthly
payment of principal and interest.
Real estate acquired through foreclosure, if any, is recorded at
estimated fair value. The Fund may receive rental or other
income as a result of holding real estate. In addition, the Fund
may incur expenses associated with maintaining any real estate
owned. As of and for the six months ended May 31, 2003, the Fund
owned no real estate.
2003 SEMIANNUAL REPORT 8 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of a
portfolio-eligible security by the Fund, coupled with an
agreement to repurchase the security at a specified date and
price. Reverse repurchase agreements may increase volatility of
the Fund's net asset value and involve the risk that interest
costs on money borrowed may exceed the return on securities
purchased with that borrowed money. Reverse repurchase
agreements are considered to be borrowings by the Fund, and are
subject to the Fund's overall restriction on borrowing under
which it must maintain asset coverage of at least 300%. For the
six months ended May 31, 2003, the weighted average borrowings
outstanding were $15,540,291 and the weighted average interest
rate was 2.60%.
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 May 31, 2003, the
Fund had no outstanding when-issued or forward commitments.
MORTGAGE SERVICING RIGHTS
The Fund may acquire interests in the cash flow from servicing
fees through contractual arrangements with
2003 SEMIANNUAL REPORT 9 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited) continued
mortgage servicers. Mortgage servicing rights, similar to
interest-only securities, generate no further cash flow when a
mortgage is prepaid or goes into default. Mortgage servicing
rights are accounted for on a level-yield basis with recognized
income based on the estimated amounts and timing of cash flows.
Such estimates are adjusted periodically as the underlying
market conditions change.
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 and losses may
differ for financial statement and tax purposes primarily
because of the timing of recognition of income on certain
collateralized mortgage-backed securities. The character of
distributions made during the year from net investment income or
net realized gains may differ from its ultimate characterization
for federal income tax purposes.
The tax character of distributions paid during the six months
ended May 31, 2003 (estimated) and the fiscal year ended
November 30, 2002 were as follows:
<Table>
<Caption>
2003 2002
---------- ----------
Distributions paid from ordinary
income................................ $1,840,178 $4,346,628
========== ==========
</Table>
2003 SEMIANNUAL REPORT 10 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
At November 30, 2002, the Fund's most recently completed fiscal
year end, the components of accumulated earnings (deficit) on a
tax basis were as follows:
<Table>
Undistributed ordinary income..................... $ 8,967
Accumulated realized losses on investments........ (7,941,527)
Unrealized appreciation of investments............ 767,281
-----------
Accumulated deficit............................... $(7,165,279)
===========
</Table>
The difference between book basis and tax basis unrealized
appreciation and accumulated realized losses at November 30,
2002 is attributable to a one time tax election whereby the Fund
marked appreciated securities to market creating capital gains
that were used to reduce capital loss carryovers and increase
tax cost basis.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are made monthly and
realized capital gains, if any, will be distributed at least
annually. These distributions are recorded as of the close of
business on the ex-dividend date. Such distributions are payable
in cash or, pursuant to the Fund's dividend reinvestment plan,
reinvested in additional shares of the Fund's capital stock.
Under the plan, Fund shares will be purchased in the open market
unless the market price plus commissions exceeds the net asset
value by 5% 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.
2003 SEMIANNUAL REPORT 11 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited) continued
REPURCHASE AGREEMENTS AND OTHER SHORT-TERM SECURITIES
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 balance 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. In addition to repurchase agreements, the
Fund may invest in money market funds advised by USBAM.
USE OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual
results could differ from these estimates.
(3) EXPENSES
.............................
INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
Pursuant to an investment advisory agreement (the "Agreement"),
USBAM, a subsidiary of U.S. Bank National Association ("U.S.
Bank"), manages the Fund's assets and furnishes related office
facilities, equipment, research, and personnel. The Agreement
provides USBAM with a monthly investment management fee equal to
an annualized rate of 0.20% of the Fund's average weekly net
assets and 4.50% of the daily gross income accrued by the Fund
during the month (i.e., investment income, including accretion
of bond
2003 SEMIANNUAL REPORT 12 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
discounts and amortization of premiums, other than gains from
the sale of securities or gains from options and futures
contracts less interest on money borrowed by the Fund). The
monthly investment management fee shall not exceed in the
aggregate 1/12 of 0.725% of the Fund's average weekly net assets
during the month (approximately 0.725% on an annual basis). For
the six months ended May 31, 2003, the effective investment
management fee incurred by the Fund was 0.59%. For its fee,
USBAM provides investment advice and, in general, conducts the
management and investment activities of the Fund.
Pursuant to a co-administration agreement (the
"Co-Administration Agreement"), USBAM serves as co-administrator
for the Fund (U.S. Bancorp Fund Services, LLC, a subsidiary of
U.S. Bancorp is also co-administrator but currently has no
functional responsibilities related to the Fund) and provides
administrative services, including legal and shareholder
services, to the Fund. Under the Co-Administration Agreement,
USBAM receives a monthly administrative fee equal to an
annualized rate of 0.25% of the Fund's average weekly net
assets. For its fee, USBAM provides numerous services to the
Fund including, but not limited to, handling the general
business affairs, financial and regulatory reporting, and
various record-keeping services. Separate from the
Co-Administration Agreement, USBAM (from its own resources) has
retained SEI Investments, Inc. as a sub-administrator to
perform, among other services, net asset value calculations.
The Fund may invest in money market funds that are series of
First American Funds, Inc. ("FAF"), subject to certain
limitations. The terms of such investments are identical to
those of investments by non-related entities
2003 SEMIANNUAL REPORT 13 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited) continued
except that, to avoid duplicative investment advisory fees,
USBAM reimburses the Fund an amount equal to the investment
advisory fee paid by FAF to USBAM related to such investments.
For financial statement purposes, this reimbursement is recorded
as investment income.
MORTGAGE SERVICING FEES
The Fund enters into mortgage servicing agreements with mortgage
servicers for whole loans and participation mortgages. For a
fee, mortgage servicers maintain loan records, such as insurance
and taxes and the proper allocation of payments between
principal and interest.
PROPOSED REORGANIZATION EXPENSES
As discussed in Note 6, the Fund has taken certain steps to
reorganize along with certain other similar entities managed by
USBAM. As set forth below, certain costs and expenses incurred
in connection with the proposed reorganization of the Fund
(including, but not limited to, the preparation of all necessary
registration statements, proxy materials and other documents,
preparation for and attendance at board and committee,
shareholder, planning, organizational and other meetings and
costs and expenses of accountants, attorneys, financial
advisors, and other experts engaged in connection with the
reorganization) shall be borne by the Fund, American Strategic
Income Portfolio Inc. II, American Strategic Income Portfolio
Inc. III, and American Select Portfolio Inc. (collectively, the
"Existing Funds"). The Existing Funds as a group will bear the
first $3,400,000 of such expenses and will, subject to certain
exceptions, equally share all transaction expenses in excess of
$3,400,000 with USBAM. Such costs and expenses will be allocated
among the Existing Funds based on their relative net asset
values whether or not an Existing Fund participates in the
reorganization.
2003 SEMIANNUAL REPORT 14 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
Additionally, costs and expenses incurred in connection with the
legal representation of USBAM's interests with respect to the
reorganization and related matters will be borne by USBAM. The
current estimated costs and expenses related to the
reorganization are $4,500,000. Based on the net asset values of
the Existing Funds as of May 31, 2003, the Fund would bear
approximately 8% of the total expenses of the reorganization.
During the six months ended May 31, 2003, the Fund incurred
$53,990 in reorganization expenses.
OTHER FEES AND EXPENSES
In addition to the investment management, administrative, and
mortgage servicing fees, the Fund is responsible for paying most
other operating expenses, including: outside directors' fees and
expenses, custodian fees, exchange listing and registration
fees, printing and shareholder reports, transfer agent fees and
expenses, financial advisory, legal, auditing and accounting
services, insurance, interest, expenses related to real estate
owned, fees to outside parties retained to assist in conducting
due diligence, taxes, and other miscellaneous expenses.
During the six months ended May 31, 2003, fees for custody
services were paid to U.S. Bank.
(4) INVESTMENT
SECURITY
TRANSACTIONS
.............................
Cost of purchases and proceeds from sales of securities and real
estate, other than temporary investments in short-term
securities, for the six months ended May 31, 2003, aggregated
$13,007,106 and $16,676,844, respectively. Included in proceeds
from sales are $40,000 from prepayment penalties.
2003 SEMIANNUAL REPORT 15 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
NOTES TO FINANCIAL STATEMENTS (Unaudited) continued
(5) CAPITAL LOSS
CARRYOVER
.............................
For federal income tax purposes, the Fund had capital loss
carryovers at November 30, 2002, which, if not offset by
subsequent capital gains, will expire on the Fund's fiscal
year-ends as indicated below.
<Table>
<Caption>
CAPITAL LOSS
CARRYOVER EXPIRATION
- ------------ ----------
$6,239,966 2003
964,494 2008
737,527 2010
----------
$7,941,987
==========
</Table>
(6) PROPOSED
REORGANIZATION
.............................
A combined proxy statement/registration statement, last amended
on April 22, 2003, has been filed with the Securities and
Exchange Commission ("SEC") in which it is proposed that the
Fund, along with American Strategic Income Portfolio Inc. II
("BSP"), American Strategic Income Portfolio Inc. III ("CSP"),
and American Select Portfolio Inc. ("SLA"), reorganize into
First American Strategic Real Estate Portfolio, Inc., a
specialty real estate finance company that would elect to be
taxed as a real estate investment trust ("REIT"). Shareholders
of the Fund, BSP, CSP, and SLA who do not wish to receive shares
of the REIT will have the option, subject to certain
limitations, of electing to exchange their shares for shares in
First American Strategic Income Portfolio Inc., a newly formed
closed-end management investment company with investment
policies, restrictions and strategies substantially similar to
those of the Fund, BSP, CSP, and SLA. This transaction is
subject to review by the SEC, approval by the Fund's
shareholders, and certain other conditions. There is no
assurance that the transaction will be completed.
2003 SEMIANNUAL REPORT 16 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
(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:
AMERICAN STRATEGIC INCOME PORTFOLIO
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
5/31/03 ------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
----------- -------- -------- -------- -------- --------
PER-SHARE DATA
Net asset value,
beginning of period.... $12.61 $12.63 $12.51 $12.35 $12.98 $12.88
====== ====== ====== ====== ====== ======
Operations:
Net investment
income............... 0.45 0.96 1.05 0.97 1.00 1.01
Net realized and
unrealized gains
(losses) on
investments.......... -- 0.05 0.13 0.15 (0.62) 0.06
------ ------ ------ ------ ------ ------
Total from
operations......... 0.45 1.01 1.18 1.12 0.38 1.07
------ ------ ------ ------ ------ ------
Distributions to
shareholders:
From net investment
income............... (0.43) (1.03) (1.06) (0.96) (1.01) (0.97)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $12.63 $12.61 $12.63 $12.51 $12.35 $12.98
====== ====== ====== ====== ====== ======
Market value, end of
period................. $12.72 $12.05 $12.79 $11.19 $11.44 $12.13
====== ====== ====== ====== ====== ======
SELECTED INFORMATION
Total return, net asset
value (a).............. 3.66% 8.15% 9.85% 9.55% 3.03% 8.56%
Total return, market
value (b).............. 9.34% 2.32% 24.73% 6.68% 2.76% 10.69%
Net assets at end of
period (in millions)... $ 53 $ 53 $ 53 $ 53 $ 58 $ 61
Ratio of expenses to
average weekly net
assets including
interest expense....... 2.24% (d) 2.81% 2.70% 3.92% 3.83% 2.89%
Ratio of expenses to
average weekly net
assets excluding
interest expense....... 1.41% (d) 1.63% 1.34% 1.56% 1.52% 1.47%
Ratio of net investment
income to average
weekly net assets...... 7.20% (d) 7.56% 8.25% 7.85% 7.86% 7.74%
Portfolio turnover rate
(excluding short-term
securities)............ 20% 18% 30% 32% 22% 38%
Amount of borrowings
outstanding at end of
period (in millions)... $ 14 $ 17 $ 22 $ 12 $ 21 $ 17
Per-share amount of
borrowings outstanding
at end of period....... $ 3.28 $ 3.92 $ 5.19 $ 2.77 $ 4.50 $ 3.49
Per-share amount of net
assets, excluding
borrowings, at end of
period................. $15.91 $16.53 $17.82 $15.28 $16.85 $16.47
Asset coverage
ratio (c).............. 485% 421% 343% 552% 375% 471%
</Table>
(a) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
(b) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
(c) REPRESENTS NET ASSETS, EXCLUDING BORROWINGS, AT END OF PERIOD DIVIDED BY
BORROWINGS OUTSTANDING AT END OF PERIOD.
(d) ANNUALIZED.
2003 SEMIANNUAL REPORT 17 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
INVESTMENTS IN SECURITIES (Unaudited)
<Table>
<Caption>
AMERICAN STRATEGIC INCOME PORTFOLIO May 31, 2003
Date Par
Description of Security Acquired Value Cost Value (a)
- ------------------------------ -------- --------------- ----------- -----------
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (28.5%):
FIXED RATE (28.5%):
FHLMC, 5.50%,
1/1/18.............. $ 2,574,988(b) $ 2,664,713 $ 2,666,658
FHLMC, 9.00%,
7/1/30.............. 862,664 885,990 933,567
FNMA, 6.00%,
10/1/16............. 2,564,513(b) 2,620,712 2,671,866
FNMA, 6.50%, 6/1/29... 1,059,308(b) 1,051,916 1,106,320
FNMA, 7.50%, 3/1/30... 2,829,453(b) 2,782,345 3,025,157
FNMA, 7.50%, 5/1/30... 301,677(b) 291,309 321,380
FNMA, 8.00%, 5/1/30... 96,864(b) 95,613 104,431
FNMA, 6.00%, 5/1/31... 2,349,561(b) 2,363,236 2,441,667
FNMA, 6.50%,
11/1/31............. 1,879,851(b) 1,922,392 1,959,195
----------- -----------
Total U.S. Government
Agency
Mortgage-Backed
Securities.......... 14,678,226 15,230,241
----------- -----------
CORPORATE NOTE (e) (4.7%):
FIXED RATE (4.7%):
Oly Holigan, LP,
9.25%, 1/1/04....... 12/26/00 2,500,000 2,500,000 2,500,000
----------- -----------
PRIVATE MORTGAGE-BACKED SECURITY (e) (0.1%):
FIXED RATE (0.1%):
Minnesota Mortgage
Corporation, 13.04%,
7/25/14............. 05/19/92 33,306 33,976 33,806
----------- -----------
WHOLE LOANS AND PARTICIPATION MORTGAGES (c,d,e) (71.6%):
COMMERCIAL LOANS (37.9%):
Advance Self Storage,
9.13%, 12/1/05...... 11/29/00 1,262,165 1,262,165 1,300,030
Buca Restaurant,
8.63%, 1/1/11....... 12/27/00 925,194 925,194 971,453
Dietzgen Industrial
Building, 9.00%,
1/1/06.............. 12/14/00 1,387,173 1,387,173 1,414,917
Hampden Medical
Office, 7.38%,
10/1/12............. 09/09/02 1,786,138 1,786,138 1,875,445
Integrity Plaza
Shopping Center,
7.88%, 7/1/12....... 06/11/02 2,128,697 2,128,697 2,235,132
Main Street Office
Building, 8.38%,
11/1/07............. 10/21/97 826,949 825,571 868,297
</Table>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
2003 SEMIANNUAL REPORT 18 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
<Table>
<Caption>
AMERICAN STRATEGIC INCOME PORTFOLIO
(CONTINUED)
Date Par
Description of Security Acquired Value Cost Value (a)
- ------------------------------ -------- --------------- ----------- -----------
Monroe Court, 10.38%,
2/1/06.............. 01/15/03 $ 1,550,000 $ 1,550,000 $ 1,596,500
One Eastern Heights
Office Building,
8.21%, 12/1/07...... 11/07/97 1,010,357 1,010,357 863,061
Orchard Commons,
8.75%, 4/1/11....... 03/28/01 1,006,696 1,006,696 1,057,031
Pacific Periodicals
Building, 8.03%,
1/1/08.............. 12/09/97 1,266,956 1,266,956 1,330,304
Rockwood Galleria,
7.25%, 2/1/11....... 01/06/03 1,595,991 1,595,991 1,675,790
Schendel Office
Building, 8.20%,
10/1/07............. 09/30/97 1,072,127 1,072,127 1,028,995
Sherwin Williams,
8.50%, 1/1/04....... 12/20/96 1,311,479 1,311,479 1,324,594
Stephens Retail
Center, 9.23%,
8/1/03.............. 09/06/96 1,090,358 1,085,815 1,090,358
Voit Office Building,
8.13%, 9/1/08....... 08/17/01 1,536,000 1,536,000 1,612,800
----------- -----------
19,750,359 20,244,707
----------- -----------
MULTIFAMILY LOANS (28.4%):
Applewood Manor,
8.63%, 1/1/08....... 12/23/93 634,753 631,579 666,491
Charleston Plaza
Apartments, 7.38%,
7/1/08.............. 07/01/98 1,472,973 1,472,973 1,546,621
El Dorado
Apartments I, 7.13%,
10/1/05............. 09/04/02 2,090,000 2,090,000 2,152,700
El Dorado Apartments
II, 9.88%,
10/1/05............. 09/04/02 468,000 468,000 428,864
Franklin Woods
Apartments, 9.78%,
3/1/10.............. 02/24/95 1,079,939 1,077,019 1,133,936
Garden Oaks
Apartments, 8.43%,
4/1/06.............. 03/07/96 1,656,604 1,653,495 1,706,302
Park Hollywood, 7.38%,
6/1/12.............. 05/31/02 1,167,114 1,167,114 1,225,470
Rush Oaks Apartments,
7.78%, 12/1/07...... 11/26/97 507,077 507,077 532,431
Upland Apartments,
5.38%, 6/1/06....... 05/23/03 1,200,000 1,200,000 1,236,000
Vanderbilt
Condominiums, 8.04%,
10/1/09............. 09/29/99 1,161,224 1,161,224 1,219,285
Villa Bonita, Chez
Royalle, Fitzhugh
Apartments I, 7.25%,
3/1/06.............. 02/21/03 1,900,000 1,900,000 1,957,000
Villa Bonita, Chez
Royalle, Fitzhugh
Apartments II,
9.88%, 3/1/06....... 02/21/03 350,000 350,000 290,928
</Table>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
2003 SEMIANNUAL REPORT 19 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
INVESTMENTS IN SECURITIES (Unaudited) continued
<Table>
<Caption>
AMERICAN STRATEGIC INCOME PORTFOLIO
(CONTINUED)
Date Par
Description of Security Acquired Value Cost Value (a)
- ------------------------------ -------- --------------- ----------- -----------
Woodland Garden
Apartments, 7.38%,
9/1/08.............. 08/26/98 $ 1,012,199 $ 1,012,199 $ 1,062,809
----------- -----------
14,690,680 15,158,837
----------- -----------
SINGLE FAMILY LOANS (5.3%):
Aegis, 10.00%,
3/26/10............. 10/26/95 49,562 46,822 51,049
Aegis II, 9.66%,
1/28/14............. 12/28/95 274,423 251,440 282,656
American Bank,
Mankato, 10.00%,
12/10/12............ 12/15/92 31,796 25,958 32,750
American Portfolio,
4.88%, 10/18/15..... 07/18/95 29,022 27,645 29,892
Anivan, 5.19%,
4/14/12............. 06/14/96 125,985 126,800 126,269
Bank of New Mexico,
6.23%, 3/31/10...... 05/31/96 85,752 84,156 88,325
Bluebonnet Savings and
Loan, 6.66%,
8/31/10............. 05/22/92 245,529 224,947 248,743
Bluebonnet Savings and
Loan II, 11.50%,
8/31/10............. 05/22/92 12,118 11,874 11,893
CLSI Allison Williams,
9.38%, 8/1/17....... 02/28/92 125,059 115,024 128,662
Cross Roads Savings
and Loan, 6.25%,
1/1/21.............. 01/07/92 45,478 43,009 46,843
Cross Roads Savings
and Loan II, 8.34%,
1/1/21.............. 01/07/92 69,262 65,138 71,340
Fairbanks, Utah,
5.50%, 9/23/15...... 05/21/92 25,226 21,410 25,982
First Boston Mortgage
Pool, 9.04%,
6/29/03............. 06/23/92 92,741 75,799 94,604
Hamilton Financial,
4.97%, 6/29/10...... 07/08/92 98,524 90,396 98,741
Huntington MEWS,
9.00%, 8/1/17....... 01/22/92 174,775 150,887 180,019
Knutson Mortgage
Portfolio I, 9.37%,
8/1/17.............. 02/26/92 200,132 190,971 206,136
McClemore, Matrix
Funding Corporation,
10.50%, 9/30/12..... 09/09/92 132,919 126,273 136,907
Meridian, 9.73%,
12/1/20............. 12/21/92 177,391 169,187 182,713
Nomura III, 8.20%,
4/29/17............. 09/29/95 471,319 426,046 474,774
Rand Mortgage
Corporation, 9.50%,
8/1/17.............. 02/01/92 119,730 98,218 123,322
</Table>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
2003 SEMIANNUAL REPORT 20 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
<Table>
<Caption>
AMERICAN STRATEGIC INCOME PORTFOLIO
(CONTINUED)
Date Par Value/
Description of Security Acquired Shares Cost Value (a)
- ------------------------------ -------- --------------- ----------- -----------
Salomon II, 9.34%,
11/23/14............ 12/23/94 $ 122,967 $ 107,036 $ 125,489
Valley Bank of
Commerce, N.M.,
9.01%, 8/31/10...... 05/07/92 46,951 39,939 48,316
----------- -----------
2,518,974 2,815,425
----------- -----------
Total Whole Loans and
Participation
Mortgages........... 36,960,013 38,218,969
----------- -----------
MORTGAGE SERVICING RIGHTS (e,f) (0.1%):
Matrix Servicing
Rights, 0.12%,
7/10/22............. 07/10/92 8,529,933 71,436 68,973
----------- -----------
PREFERRED STOCKS (10.1%):
REAL ESTATE INVESTMENT TRUSTS (10.1%):
Archstone Community
Trust, Series D..... 13,125 342,037 356,868
Avalonbay Communities,
Series H............ 6,000 163,621 167,880
BRE Properties,
Series B............ 20,500 539,150 563,545
Developers Divers
Realty.............. 13,500 341,991 338,580
Developers Divers
Realty.............. 13,000 338,650 346,710
Duke Realty
Investments,
Series E............ 625 15,506 16,219
Equity Office
Properties Trust,
Series C............ 7,800 203,234 199,212
Equity Office
Properties Trust,
Series G............ 11,000 271,563 293,150
Equity Residential
Properties,
Series D............ 1,600 42,553 44,240
Equity Residential
Properties,
Series L............ 11,700 286,543 297,063
Federal Realty
Investment Trust.... 26,000 685,683 692,900
HRPT Properties Trust,
Series A............ 8,400 225,120 227,892
HRPT Properties Trust,
Series B............ 17,900 466,010 483,300
Prologis Trust,
Series D............ 15,900 401,377 404,496
Prologis Trust,
Series E............ 9,400 248,914 241,580
PS Business Park,
Series D............ 12,500 334,955 340,000
PS Business Park,
Series F............ 13,600 357,040 366,520
----------- -----------
Total Preferred
Stocks.............. 5,263,947 5,380,155
----------- -----------
</Table>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
2003 SEMIANNUAL REPORT 21 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
INVESTMENTS IN SECURITIES (Unaudited) continued
<Table>
<Caption>
AMERICAN STRATEGIC INCOME PORTFOLIO
(CONTINUED)
Description of Security Shares Cost Value (a)
- ----------------------------------- --------------- ----------- -----------
RELATED PARTY MONEY MARKET FUND (g) (8.9%):
First American Prime
Obligations Fund......... 4,736,289 $ 4,736,289 $ 4,736,289
----------- -----------
Total Investments in
Securities (h)........... $64,243,887 $66,168,433
=========== ===========
</Table>
NOTES TO INVESTMENTS IN SECURITIES:
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 IN
NOTES TO FINANCIAL STATEMENTS
(b) ON MAY 31, 2003, SECURITIES VALUED AT $14,239,964 WERE PLEDGED AS
COLLATERAL FOR THE FOLLOWING OUTSTANDING REVERSE REPURCHASE AGREEMENTS:
<Table>
<Caption>
NAME OF
BROKER
ACQUISITION ACCRUED AND DESCRIPTION
AMOUNT DATE RATE* DUE INTEREST OF COLLATERAL
- --------------------- ----------- -------- --------- -------- ---------------
$13,875,717 5/15/2003 1.33% 6/10/2003 $8,715 (1)
</Table>
* RATE IS A NEGOTIATED FIXED RATE.
NAME OF BROKER AND DESCRIPTION OF COLLATERAL:
(1) MORGAN STANLEY;
FHLMC, 5.50%, 1/1/18, $2,574,988 PAR
FNMA, 6.00%, 10/1/16, $2,564,513 PAR
FNMA, 6.50%, 6/1/29, $1,059,308 PAR
FNMA, 7.50%, 3/1/30, $2,776,403 PAR
FNMA, 7.50%, 5/1/30, $301,677 PAR
FNMA, 8.00%, 5/1/30, $96,864 PAR
FNMA, 6.00%, 5/1/31, $2,349,561 PAR
FNMA, 6.50%, 11/1/31, $1,879,851 PAR
THE FUND HAS ENTERED INTO A LENDING COMMITMENT WITH MORGAN STANLEY. THE
AGREEMENT PERMITS THE FUND TO ENTER INTO REVERSE REPURCHASE AGREEMENTS UP TO
$10,000,000 USING WHOLE LOANS AS COLLATERAL. THE FUND PAYS A FEE OF 0.15% TO
MORGAN STANLEY ON ANY UNUSED PORTION OF THE $10,000,000 LENDING COMMITMENT.
(c) INTEREST RATES ON COMMERCIAL AND MULTIFAMILY LOANS ARE THE RATES IN EFFECT
ON MAY 31, 2003. INTEREST RATES AND MATURITY DATES DISCLOSED ON SINGLE
FAMILY LOANS REPRESENT THE WEIGHTED AVERAGE COUPON AND WEIGHTED AVERAGE
MATURITY FOR THE UNDERLYING MORTGAGE LOANS AS OF MAY 31, 2003.
2003 SEMIANNUAL REPORT 22 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
(d) COMMERCIAL AND MULTIFAMILY LOANS ARE DESCRIBED BY THE NAME OF THE MORTGAGED
PROPERTY. POOLS OF SINGLE FAMILY LOANS ARE DESCRIBED BY THE NAME OF THE
INSTITUTION FROM WHICH THE LOANS WERE PURCHASED. THE GEOGRAPHICAL LOCATION
OF THE MORTGAGED PROPERTIES AND, IN THE CASE OF SINGLE FAMILY, THE NUMBER
OF LOANS, IS PRESENTED BELOW.
COMMERCIAL LOANS:
ADVANCE SELF STORAGE - LINCOLN, NE
BUCA RESTAURANT - MAPLE GROVE, MN
DIETZGEN INDUSTRIAL BUILDING - GARDENA, CA
HAMPDEN MEDICAL OFFICE - ENGLEWOOD, CO
INTEGRITY PLAZA SHOPPING CENTER - ALBUQUERQUE, NM
MAIN STREET OFFICE BUILDING - PARK CITY, UT
MONROE COURT - SPOKANE, WA
ONE EASTERN HEIGHTS OFFICE BUILDING - WOODBURY, MN
ORCHARD COMMONS - ENGLEWOOD, CO
PACIFIC PERIODICALS BUILDING - LAKEWOOD, WA
ROCKWOOD GALLERIA - GRESHAM, OR
SCHENDEL OFFICE BUILDING - BEAVERTON, OR
SHERWIN WILLIAMS - ORLANDO, FL
STEPHENS RETAIL CENTER - MISSOULA, MT
VOIT OFFICE BUILDING - ORANGE, CA
MULTIFAMILY LOANS:
APPLEWOOD MANOR - DULUTH, MN
CHARLESTON PLAZA APARTMENTS - LAS VEGAS, NV
EL DORADO APARTMENTS I - TUCSON, AZ
EL DORADO APARTMENTS II - TUCSON, AZ
FRANKLIN WOODS APARTMENTS - FRANKLIN, NH
GARDEN OAKS APARTMENTS - COON RAPIDS, MN
PARK HOLLYWOOD - PORTLAND, OR
RUSH OAKS APARTMENTS - LAPORTE, TX
UPLAND APARTMENTS - UPLAND, CA
VANDERBILT CONDOMINIUMS - AUSTIN, TX
VILLA BONITA, CHEZ ROYALLE, FITZHUGH APARTMENTS I - DALLAS, TX
VILLA BONITA, CHEZ ROYALLE, FITZHUGH APARTMENTS II - DALLAS, TX
WOODLAND GARDEN APARTMENTS - ARLINGTON, WA
SINGLE FAMILY LOANS:
AEGIS - 1 LOAN, MASSACHUSETTS
AEGIS II - 3 LOANS, TEXAS
AMERICAN BANK, MANKATO - 1 LOAN, MINNESOTA
AMERICAN PORTFOLIO - 1 LOAN, CALIFORNIA
ANIVAN - 2 LOANS, MARYLAND AND VIRGINIA
BANK OF NEW MEXICO - 2 LOANS, NEW MEXICO
BLUEBONNET SAVINGS AND LOAN - 9 LOANS, TEXAS
BLUEBONNET SAVINGS AND LOAN II - 1 LOAN, TEXAS
CLSI ALLISON WILLIAMS - 10 LOANS, TEXAS
CROSS ROADS SAVINGS AND LOAN - 1 LOAN, OKLAHOMA
CROSS ROADS SAVINGS AND LOAN II - 3 LOANS, OKLAHOMA
2003 SEMIANNUAL REPORT 23 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
INVESTMENTS IN SECURITIES (Unaudited) continued
FAIRBANKS, UTAH - 1 LOAN, UTAH
FIRST BOSTON MORTGAGE POOL - 5 LOANS, CALIFORNIA, NEW MEXICO, VIRGINIA
HAMILTON FINANCIAL - 1 LOAN, CALIFORNIA
HUNTINGTON MEWS - 10 LOANS, NEW JERSEY
KNUTSON MORTGAGE PORTFOLIO I - 3 LOANS, KANSAS, MAINE, MONTANA
MCCLEMORE, MATRIX FUNDING CORPORATION - 2 LOANS, NORTH CAROLINA
MERIDIAN - 3 LOANS, CALIFORNIA
NOMURA III - 9 LOANS, UNITED STATES
RAND MORTGAGE CORPORATION - 3 LOANS, TEXAS
SALOMON II - 3 LOANS, ILLINOIS AND LOUISIANA
VALLEY BANK OF COMMERCE, N.M. - 5 LOANS, NEW MEXICO
(e) SECURITIES PURCHASED AS PART OF A PRIVATE PLACEMENT WHICH HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933 AND ARE CONSIDERED TO BE ILLIQUID. ON MAY 31, 2003, THE TOTAL
VALUE OF FAIR VALUED SECURITIES WAS $40,821,748 OR 76.4% OF TOTAL NET
ASSETS.
(f) INTEREST RATE DISCLOSED REPRESENTS THE CURRENT YIELD BASED ON THE CURRENT
COST BASIS AND ESTIMATED FUTURE CASH FLOWS.
(g) THIS MONEY MARKET FUND IS ADVISED BY U.S. BANCORP ASSET MANAGEMENT, INC.,
WHICH ALSO SERVES AS THE ADVISOR FOR THIS FUND. SEE NOTE 3 IN NOTES TO
FINANCIAL STATEMENTS.
(h) ON MAY 31, 2003, THE COST OF INVESTMENTS IN SECURITIES WAS $64,243,887. THE
AGGREGATE GROSS UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS IN
SECURITIES BASED ON THIS COST WERE AS FOLLOWS:
<Table>
<Caption>
GROSS UNREALIZED APPRECIATION..................... $2,233,005
GROSS UNREALIZED DEPRECIATION..................... (308,459)
----------
NET UNREALIZED APPRECIATION..................... $1,924,546
==========
</Table>
FHLMC-FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA-FEDERAL NATIONAL MORTGAGE ASSOCIATION
2003 SEMIANNUAL REPORT 24 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
SHAREHOLDER UPDATE (Unaudited)
ANNUAL MEETING RESULTS
An annual meeting of the Fund's shareholders was held on
October 1, 2002. 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 eight
directors:
<Table>
<Caption>
SHARES SHARES WITHHOLDING
VOTED "FOR" AUTHORITY TO VOTE
------------- ------------------
Roger A. Gibson......................... 3,710,620 348,044
Andrew M. Hunter III*................... 3,961,806 96,858
Leonard W. Kedrowski.................... 3,961,806 96,858
John M. Murphy, Jr.**................... 3,712,226 346,438
Richard K. Riederer..................... 3,968,706 89,958
Joseph D. Strauss....................... 3,953,615 100,049
Virginia L. Stringer.................... 3,959,749 98,915
James M. Wade........................... 3,964,006 94,658
</Table>
* ANDREW M. HUNTER III TENDERED HIS RESIGNATION FROM THE BOARD OF
DIRECTORS, EFFECTIVE DECEMBER 2002.
** JOHN M. MURPHY, JR. TENDERED HIS RESIGNATION FROM THE BOARD OF
DIRECTORS, EFFECTIVE MAY 2003.
(2) The Fund's shareholders ratified the selection by the Fund's
Board of Directors of Ernst & Young LLP as the independent
public accountants for the Fund for the most recently
completed fiscal year ended November 30, 2002. The following
votes were cast regarding this matter:
<Table>
<Caption>
SHARES SHARES BROKER
VOTED "FOR" VOTED "AGAINST" ABSTENTIONS NON-VOTES
- ------------- ----------------- ----------- ---------
3,767,149 268,338 23,176 --
</Table>
HOW TO OBTAIN A COPY OF THE PROXY VOTING POLICY
A description of the policies and procedures that the Fund uses
to determine how to vote proxies relating to portfolio
securities is available (1) without charge upon request by
calling 800.677.FUND; (2) at www.firstamericanfunds.com; and (3)
on the U.S. Securities and Exchange Commission's website at
http://www.sec.gov.
2003 SEMIANNUAL REPORT 25 AMERICAN STRATEGIC INCOME PORTFOLIO
<Page>
BOARD OF DIRECTORS
ROGER GIBSON
Director of American Strategic Income Portfolio Inc.
Vice President, Cargo-United Airlines
LEONARD KEDROWSKI
Director of American Strategic Income Portfolio Inc.
Owner and President of Executive and Management Consulting, Inc.
RICHARD RIEDERER
Director of American Strategic Income Portfolio Inc.
Retired; former President and Chief Executive Officer of Weirton Steel
JOSEPH STRAUSS
Director of American Strategic Income Portfolio Inc.
Former Chairperson of First American Investment Funds, Inc.
Owner and President of Strauss Management Company
VIRGINIA STRINGER
Chairperson of American Strategic Income Portfolio Inc.
Owner and President of Strategic Management Resources, Inc.
JAMES WADE
Director of American Strategic Income Portfolio Inc.
Owner and President of Jim Wade Homes
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AMERICAN STRATEGIC INCOME PORTFOLIO INC.
2003 SEMIANNUAL REPORT
U.S. Bancorp Asset Management, Inc., a subsidiary of U.S. Bank National
Association, is a separate entity and wholly owned subsidiary of U.S. Bancorp.
[RECYCLED SYMBOL]
This document is printed on paper containing 10% postconsumer waste.
7/2003 0099-03 ASP-SAR
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ITEM 2 - Code of Ethics
RESPONSE: Not applicable to semi-annual report
ITEM 3 - Audit Committee Financial Expert
RESPONSE: Not applicable to semi-annual report
ITEM 4 - Principal Accountant Fees and Services
RESPONSE: Not applicable to semi-annual report
ITEM 5 - Audit Committee of Listed Registrant
RESPONSE: Not applicable to semi-annual report
ITEM 6 - Reserved
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
RESPONSE: Not applicable to semi-annual report
ITEM 8 - Reserved
ITEM 9 Controls and Procedures
RESPONSE:
(a) The registrant's Principal Executive Officer and Principal Financial
Officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the date of this filing and have concluded that the
registrant's disclosure controls and procedures were effective, as of that
date, in ensuring that information required to be disclosed by the
registrant in this Form N-CSR was recorded, processed, summarized and
reported timely. Notwithstanding this conclusion, the registrant's
Principal Executive Officer and Principal Financial Officer seek continuous
improvements to its disclosure controls and procedures.
(b) There were no significant changes in registrant's internal controls or in
other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10 - EXHIBITS
10(a) - Code of Ethics
RESPONSE: Not applicable to semi-annual report.
10(b) - Attach certifications (4 in total pursuant to Sections 302 and 906
for PEO/PFO).
RESPONSE: Attached hereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
American Strategic Income Portfolio Inc.
By /s/ THOMAS S. SCHREIER, JR.
----------------------------
Thomas S. Schreier, Jr.
President
Date: August 5, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ THOMAS S. SCHREIER, JR.
----------------------------
Thomas S. Schreier, Jr.
President
Date: August 5, 2003
By /s/ ROBERT H. NELSON
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Robert H. Nelson
Treasurer
Date: August 5, 2003