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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 811-7838
---------------------------------------------
American Select Portfolio Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
800 Nicollet Mall Minneapolis, MN 55402
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Joseph M. Ulrey III 800 Nicollet Mall Minneapolis, MN 55402
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(Name and address of agent for service)
Registrant's telephone number, including area code: 800-677-3863
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Date of fiscal year end: November 30, 2003
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Date of reporting period: November 30, 2003
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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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[FIRST AMERICAN (TM) LOGO]
[GRAPHIC]
AMERICAN SELECT PORTFOLIO
INC.
SLA
NOVEMBER 30, 2003
ANNUAL REPORT
<Page>
[FIRST AMERICAN (TM) LOGO]
AMERICAN SELECT PORTFOLIO INC.
TABLE OF CONTENTS
<Table>
2 Fund Overview
7 Financial Statements
11 Notes to Financial Statements
24 Schedule of Investments
30 Independent Auditors' Report
31 Federal Income Tax Information
32 Shareholder Update
</Table>
PRIMARY INVESTMENTS
American Select Portfolio Inc. (the "Fund") invests in mortgage-related assets
that directly or indirectly represent a participation in or are secured by and
payable from mortgage loans. The Fund may also invest in U.S. government
securities and corporate debt securities. The Fund borrows through the use of
reverse repurchase agreements and revolving credit facilities. Use of borrowing
and certain other investments and investment techniques may cause the Fund's net
asset value ("NAV") to fluctuate to a greater extent than would be expected from
interest-rate movements alone.
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 objectives.
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.
NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
<Page>
[CHART]
AVERAGE ANNUALIZED TOTAL RETURNS
Based on NAV for the period ended November 30, 2003
<Table>
<Caption>
AMERICAN SELECT LEHMAN BROTHERS MUTUAL FUND
PORTFOLIO INC. GOVERNMENT/MORTGAGE INDEX
One Year 7.72% 3.48%
Five Year 9.27% 6.20%
Ten Year 8.53% 6.71%
</Table>
The average annualized total returns for the Fund are based on the change in
its NAV and assume reinvestment of distributions at NAV. NAV-based
performance is used to measure investment management results. o Average
annualized total returns based on the change in market price for the
one-year, five-year, and 10-year periods ended November 30, 2003, were
14.92%, 11.60%, and 8.94%, respectively. - Market price returns assume that
all distributions have been reinvested at actual prices pursuant to the
Fund's dividend reinvestment plan. Market price returns reflect any broker
commissions or sales charges on dividends reinvested at market price. -
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 NAV. Therefore, you may be unable to realize the full
NAV of your shares when you sell. - The Fund uses the Lehman Brothers Mutual
Fund Government/Mortgage Index as a benchmark. Although we believe this is
the most appropriate benchmark available, it is not a perfect match. The
benchmark index is comprised of U.S. government securities while the Fund is
comprised primarily of nonsecuritized, illiquid whole loans. This limits the
ability of the Fund to respond quickly to market changes. - The Lehman
Brothers Mutual Fund Government/Mortgage Index is comprised of all U.S.
government agency and Treasury securities and agency mortgage-backed
securities. Developed by Lehman Brothers for comparative use by the mutual
fund industry, this index is unmanaged and does not include any fees or
expenses in its total return calculations.
1
<Page>
Fund OVERVIEW
FUND MANAGEMENT
JOHN WENKER is primarily responsible for the management of the Fund. He has 21
years of financial experience.
CHRIS NEUHARTH, CFA is responsible for the management of the mortgage-backed
securities portion of the Fund. He has 23 years of financial experience.
RUSS KAPPENMAN is responsible for acquisition and management of the whole loans
portion of the Fund. He has 18 years of financial experience.
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2003, THE FUND HAD A TOTAL RETURN OF
7.72%, AFTER FEES AND EXPENSES, BASED ON ITS NAV. We are pleased that the Fund
outperformed its benchmark, the Lehman Brothers Mutual Fund Government/Mortgage
Index, which had a return of 3.48% during the period. We believe that the
outperformance was mainly a result of the higher income levels paid by our
mortgage investments compared to the securities that comprise the index. Over
the same period, the Fund returned 14.92% based on its market price. The Fund's
market price of $13.64 was at a 1.72% premium to its NAV of $13.41 as of
November 30, 2003. As always, past performance is no guarantee of future
results, and the Fund's NAV and market price will fluctuate.
DURING THE FISCAL YEAR ENDED NOVEMBER 30, 2003, THE U.S. ECONOMY SHOWED GRADUAL
IMPROVEMENT WITH PRODUCTIVITY, LOW INTEREST RATES, STABLE ENERGY PRICES, AND
CONTINUED IMPROVEMENT IN CORPORATE EARNINGS PROVIDING SUPPORT FOR ECONOMIC
GROWTH. The Federal Reserve cut its target lending rate to 1.00% at its June 25,
2003, Federal Open Market Committee meeting. Inflationary pressures continue to
remain low and provide the Fed with the flexibility to maintain an accommodative
monetary policy stance designed to ensure that a sustainable economic recovery
continues to develop.
THE PERIOD SAW STRENGTH IN THE FIXED-INCOME MARKETS, AS INVESTORS SOUGHT STABLE,
INCOME-ORIENTED INVESTMENTS. Every fixed-income product type experienced
positive returns during the fiscal year.
COMMERCIAL REAL ESTATE MARKETS HAVE BEEN WEAK THE LAST 12 MONTHS, WITH VACANCY
RATES INCREASING AND RENTAL RATES DECREASING. There are signs recently that
occupancy levels in some markets are bottoming and firming although not at
levels that permit an increase in rental rates. Historically, real estate
markets are a lagging indicator of the economy, taking longer to weaken and
longer to recover than the overall economy. Healthy real estate markets need job
growth to create demand for space. Most estimates do not
2
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see an appreciable increase in demand for apart ReportAmerican Select
Portfolioments or commercial space until substantial job growth occurs, possibly
in late 2004 or 2005. The property type and geographic diversification of the
Fund has been helpful so far in this weaker real estate environment.
AT NOVEMBER 30, 2003, THE FUND HAD NO MULTIFAMILY OR COMMERCIAL LOANS THAT
WERE IN DEFAULT. The Fund did not incur any capital losses during the fiscal
year from its investments in multifamily or commercial loans.
IN FEBRUARY 2003, THE FUND DECREASED ITS MONTHLY DIVIDEND FROM 10 CENTS PER
SHARE TO 8.75 CENTS PER SHARE. The dividend reserve for this Fund was at 2.73
cents per share as of the fiscal year end. The lower interest-rate environment
makes it more likely that loans will prepay and that reinvestment will be at
lower rates. These prepayments were the reason the Fund decreased its monthly
dividend. During the reporting period 12 loans in the portfolio paid off with a
weighted average coupon of 8.22%. We added 18 loans with a weighted average
coupon of 6.54%. During the fiscal year, the Fund paid out $1.075 per share in
dividends resulting in an annualized distribution rate of 7.88% based on the
[CHART]
PORTFOLIO COMPOSITION
As a percentage of total assets on November 30, 2003
<Table>
Commercial Loans 25%
Multifamily Loans 63%
Corporate Notes 4%
U.S. Government Agency Mortgage-backed Securities 7%
Short-term Securities 1%
</Table>
3
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November 30, 2003, market price. Please keep in mind that the Fund's
distribution rate and dividend reserve levels will fluctuate.
THE FUND CONTINUED TO BENEFIT FROM THE USE OF LEVERAGE (OR BORROWING) DURING THE
PERIOD. Low short-term interest rates allowed the Fund to borrow at attractive
rates. The borrowed money was then invested in higher-yielding mortgage
investments, which added to the income levels in the Fund. While the use of
leverage has resulted in more income for shareholders, it does increase
interest-rate risk in the Fund and will increase the volatility of the Fund's
NAV and market price.
WE BELIEVE THAT THE REAL ESTATE MARKETS WILL CONTINUE TO POSE CHALLENGES. The
low interest-rate environment will likely mean continued loan prepayments. The
weaker real estate markets could lead to increased levels of default. We
continue to diligently manage the risk in the Fund and believe it should hold up
well based on its current credit profile. As the U.S. economy and job growth
improves there should be increased demand for space and occupancy levels should
rise. Increased demand should lead to increases in rental rates and an improved
environment for our real estate investments.
AS YOU ARE PROBABLY AWARE, THE BOARD OF DIRECTORS FOR THE FUND, AS WELL AS
AMERICAN STRATEGIC INCOME PORTFOLIO INC., AMERICAN STRATEGIC INCOME PORTFOLIO
INC. II , AND AMERICAN STRATEGIC INCOME PORTFOLIO INC. III (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,
4
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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.
THANK YOU FOR YOUR INVESTMENT IN THE FUND AND YOUR TRUST DURING THIS DIFFICULT
ENVIRONMENT IN THE ECONOMY AND THE REAL ESTATE MARKETS. We will continue to
closely monitor the credit profiles of the Fund's whole loan investments as we
seek to achieve the Fund's objective of paying a high level of current income.
If you have any questions about the Fund, please call us at 800.677.FUND.
Sincerely,
/s/ Mark Jordahl
Mark Jordahl
Chief Investment Officer
U.S. Bancorp Asset Management, Inc.
/s/ John Wenker
John Wenker
Managing Director, Real Estate
U.S. Bancorp Asset Management, Inc.
5
<Page>
GEOGRAPHICAL DISTRIBUTION
We attempt to buy mortgage loans in many parts of the country to help avoid the
risks of concentrating in one area. These percentages reflect the value of whole
loans and participation mortgages as of November 30, 2003. Shaded areas without
values indicate states in which the Fund has invested less than 0.50% of its
assets.
[MAP OF THE UNITED STATES]
<Table>
Alabama
Alaska
Arizona 4%
Arkansas
California 14%
Colorado 4%
Connecticut
Delaware
Florida 8%
Georgia 6%
Hawaii
Idaho
Illinois 2%
Indiana
Iowa
Kansas
Kentucky
Louisiana 4%
Maine
Maryland
Massachusetts 1%
Michigan
Minnesota 12%
Mississippi
Missouri 3%
Montana
Nebraska
Nevada 2%
New Hampshire
New Jersey
New Mexico 2%
New York
North Carolina
North Dakota
Ohio 2%
Oklahoma 4%
Oregon 3%
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas 18%
Utah
Vermont
Virginia
Washington 15%
West Virginia
Wisconsin
Wyoming
</Table>
VALUATION OF INVESTMENTS
The Fund's investments in whole loans (multifamily and commercial) and
participation mortgages are generally not traded in any organized market;
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 and participation mortgage
investments are initially valued at cost and their values are subsequently
monitored and adjusted pursuant to a pricing model designed by U.S. Bancorp
Asset Management, Inc., 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 perceived liquidity of whole loans, participation mortgages, and
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
investments. 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 on a monthly basis and
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 and participation mortgages are
determined no less frequently than weekly.
6
<Page>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES November 30, 2003
<Table>
ASSETS:
Investments in unaffiliated securities, at value* (note 2) $ 189,561,318
Investments in affiliated money market fund, at value** (note 3) 1,347,194
Accrued interest receivable 1,015,976
Other assets 31,404
--------------
Total assets 191,955,892
--------------
LIABILITIES:
Reverse repurchase agreements payable (note 2) 48,669,390
Payable for investment management fees 58,605
Bank overdraft 40,120
Payable for administrative fees 29,303
Payable for interest expense 42,538
Payable for reorganization expenses (notes 3 and 6) 62,916
Payable for other expenses 37,042
--------------
Total liabilities 48,939,914
--------------
Net assets applicable to outstanding capital stock $ 143,015,978
==============
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital $ 139,930,119
Undistributed net investment income 291,238
Accumulated net realized loss on investments (1,482,070)
Unrealized appreciation of investments 4,276,691
--------------
Total-representing net assets applicable to capital stock $ 143,015,978
==============
*Investments in unaffiliated securities, at cost $ 185,284,627
==============
**Investments in affiliated money market fund, at cost $ 1,347,194
==============
NET ASSET VALUE AND MARKET PRICE OF CAPITAL STOCK:
Net assets outstanding $ 143,015,978
Shares outstanding (authorized 1 billion shares of $0.01 par value) 10,662,195
Net asset value per share $ 13.41
Market price per share $ 13.64
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<Page>
STATEMENT OF OPERATIONS For the Year Ended November 30, 2003
<Table>
INVESTMENT INCOME:
Interest (net of interest expense of $1,252,147) $ 12,775,115
Dividends 49,919
Interest from affiliated money market fund 26,095
--------------
Total investment income 12,851,129
--------------
EXPENSES (NOTE 3):
Investment management fees 716,354
Administrative fees 358,177
Custodian fees 28,654
Transfer agent fees 24,051
Exchange listing and registration fees 68,897
Reports to shareholders 50,917
Mortgage servicing fees 145,903
Directors' fees 23,224
Audit and legal fees 144,840
Financial advisory and accounting fees 71,610
Other expenses 51,296
--------------
Total expenses 1,683,923
--------------
Net investment income 11,167,206
--------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS (NOTE 4):
Net realized gain on investments in securities 1,158,848
Net change in unrealized appreciation or depreciation of investments (1,546,288)
--------------
Net loss on investments (387,440)
--------------
Net increase in net assets resulting from operations $ 10,779,766
==============
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<Page>
STATEMENT OF CASH FLOWS For the Year Ended November 30, 2003
<Table>
CASH FLOWS FROM OPERATING ACTIVITIES:
Investment income $ 12,851,129
Expenses (1,683,923)
--------------
Net investment income 11,167,206
--------------
Adjustments to reconcile net investment income to net cash provided by
operating activities:
Change in accrued interest receivable (27,807)
Net amortization of bond discount and premium 11,849
Change in accrued fees and expenses (157,281)
Change in other assets 2,604
--------------
Total adjustments (170,635)
--------------
Net cash provided by operating activities 10,996,571
--------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments 71,526,956
Purchases of investments (91,954,679)
Net sales of short-term securities 688,578
--------------
Net cash used by investing activities (19,739,145)
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from reverse repurchase agreements 20,169,390
Distributions paid to shareholders (11,461,860)
--------------
Net cash provided by financing activities 8,707,530
--------------
Net decrease in cash (35,044)
Bank overdraft at beginning of period (5,076)
--------------
Bank overdraft at end of period $ (40,120)
==============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,264,354
==============
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED YEAR ENDED
11/30/03 11/30/02
-------------- --------------
OPERATIONS:
Net investment income $ 11,167,206 $ 12,017,538
Net realized gain on investments 1,158,848 1,092,850
Net change in unrealized appreciation or depreciation
of investments (1,546,288) 765,118
-------------- --------------
Net increase in net assets resulting from operations 10,779,766 13,875,506
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (11,461,860) (12,794,634)
-------------- --------------
Total increase (decrease) in net assets (682,094) 1,080,872
Net assets at beginning of period 143,698,072 142,617,200
-------------- --------------
Net assets at end of period $ 143,015,978 $ 143,698,072
============== ==============
Undistributed net investment income $ 291,238 $ 585,892
============== ==============
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
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NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION American Select 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 and corporate debt
securities. 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 SLA.
(2) SUMMARY OF SECURITY VALUATIONS
SIGNIFICANT
ACCOUNTING Security valuations for the Fund's investments are furnished
POLICIES 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 within the bid/ask range, then that
price will be the closing price. 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
11
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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. If events occur that materially affect
the value of securities (including non-U.S. securities)
between the close of trading in those securities and the
close of regular trading on the New York Stock Exchange, the
securities will be valued at fair value. As of November 30,
2003, the Fund held fair valued securities with a value of
$175,856,625 or 123.0% of net assets. 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 (multifamily and
commercial) and participation mortgages 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 and participation mortgage investments are
initially valued at cost and their values are subsequently
monitored and adjusted using a U.S. Bancorp Asset
Management, Inc. ("USBAM") pricing model designed to
incorporate, among other
12
<Page>
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
perceived liquidity of whole loans or participation
mortgages, 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 investments. 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 and participation
mortgages 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 and participation mortgages can only be
determined in a negotiation between the Fund and third
parties.
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.
13
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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 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 November 30, 2003, no
multifamily or commercial loans were delinquent.
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 fiscal
year ended November 30, 2003, the Fund owned no real estate.
14
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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 fiscal year ended November 30, 2003, the
weighted average borrowings outstanding were $49,006,476 and
the weighted average interest rate was 2.22%.
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 November
30, 2003, the Fund had no outstanding when-issued or
forward-commitment securities.
FEDERAL TAXES
The Fund intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
15
<Page>
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 their ultimate
characterization for federal income tax purposes. 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 or losses were
recorded by the Fund.
Due to permanent book-to-tax differences, primarily relating
to expiring capital loss carryovers, the following
reclassifications have been made on the Statement of Assets
and Liabilities:
<Table>
<Caption>
ACCUMULATED NET ADDITIONAL
REALIZED LOSS PAID IN CAPITAL
--------------- ---------------
$ 13,303,535 $ (13,303,535)
</Table>
The tax character of distributions paid during the fiscal
years ended November 30, 2003 and 2002 was as follows:
<Table>
<Caption>
2003 2002
------------ ------------
Distributions paid from:
Ordinary income $ 11,461,860 $ 12,794,634
============ ============
</Table>
At November 30, 2003, the components of accumulated earnings
on a tax basis were as follows:
<Table>
Undistributed ordinary income $ 291,238
Accumulated capital losses (30,916)
Unrealized appreciation 2,825,537
------------
Accumulated earnings $ 3,085,859
============
</Table>
16
<Page>
The difference between book basis and tax basis unrealized
appreciation and accumulated realized losses at November 30,
2003, 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.
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
17
<Page>
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 IN PREPARATION OF FINANCIAL STATEMENTS
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 in an amount equal to an
annualized rate of 0.50% of the Fund's average weekly net
assets. 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 this
agreement, USBAM receives a monthly fee in an amount equal
to an annualized rate of 0.25% of the Fund's average weekly
net assets. For its fee, USBAM provides
18
<Page>
numerous services to the Fund including, but not limited to,
handling the general business affairs, financial and
regulatory reporting, and various other 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 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.
CUSTODIAN FEES
U.S. Bank serves as the Fund's custodian pursuant to a
custodian agreement with the Fund. The fee for the Fund is
equal to an annual rate of 0.02% of average weekly net
assets. These fees are computed weekly and paid monthly.
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
19
<Page>
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., American Strategic Income Portfolio Inc. II, and
American Strategic Income Portfolio Inc. III (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. 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 November 30, 2003, the Fund
would bear approximately 21% of the total expenses of the
reorganization allocated to the Existing Funds. During the
fiscal year ended November 30, 2003, the Fund incurred
$198,676 in total 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
20
<Page>
fees, registration fees, printing and shareholder reports,
transfer agent fees and expenses, 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 fiscal year ended November 30, 2003, fees for
custody services were paid to U.S. Bank.
(4) INVESTMENT Cost of purchases and proceeds from sales of securities and
SECURITY real estate, other than temporary investments in short-term
TRANSACTIONS securities, for the fiscal year ended November 30, 2003
aggregated $91,942,830 and $71,526,956, respectively.
Included in proceeds from sales are $1,105,663 from
prepayment penalties.
(5) CAPITAL LOSS For federal income tax purposes, the Fund had $30,916 of
CARRYOVER capital loss carryover at November 30, 2003, which, if not
offset by subsequent capital gains, will expire on the
Fund's 2010 fiscal year-end.
(6) PROPOSED A combined proxy statement/registration statement, last
REORGANIZATION 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. ("ASP"), American Strategic Income Portfolio
Inc. II ("BSP"), and American Strategic Income Portfolio
Inc. III ("CSP"), 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, ASP,
BSP, and CSP 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
21
<Page>
investment company with investment policies, restrictions,
and strategies substantially similar to those of the Fund,
ASP, BSP, and CSP. 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.
22
<Page>
(7) FINANCIAL Per-share data for a share of capital stock outstanding
HIGHLIGHTS throughout each period and selected information for each
period are as follows:
AMERICAN SELECT PORTFOLIO
<Table>
<Caption>
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------
2003 2002 2001 2000 1999
------------ ------------ ------------ ------------ ------------
PER-SHARE DATA
Net asset value, beginning of period $ 13.48 $ 13.38 $ 12.85 $ 12.67 $ 12.96
------------ ------------ ------------ ------------ ------------
Operations:
Net investment income 1.05 1.13 1.13 1.01 1.02
Net realized and unrealized gains
(losses) on investments (0.04) 0.17 0.47 0.18 (0.26)
------------ ------------ ------------ ------------ ------------
Total from operations 1.01 1.30 1.60 1.19 0.76
------------ ------------ ------------ ------------ ------------
Distributions to shareholders:
From net investment income (1.08) (1.20) (1.07) (1.01) (1.05)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 13.41 $ 13.48 $ 13.38 $ 12.85 $ 12.67
============ ============ ============ ============ ============
Market value, end of period $ 13.64 $ 12.86 $ 13.54 $ 11.50 $ 11.69
============ ============ ============ ============ ============
SELECTED INFORMATION
Total return, net asset value (a) 7.72% 10.13% 12.83% 9.87% 6.03%
Total return, market value (b) 14.92% 3.91% 28.22% 7.49% 5.21%
Net assets at end of period (in millions) $ 143 $ 144 $ 143 $ 137 $ 150
Ratio of expenses to average weekly net
assets including interest expense 2.05% 2.82% 3.02% 3.55% 3.28%
Ratio of expenses to average weekly net
assets excluding interest expense 1.18% 1.47% 1.02% 1.14% 1.11%
Ratio of net investment income to
average weekly net assets 7.79% 8.41% 8.56% 7.98% 7.88%
Portfolio turnover rate (excluding
short-term securities) 38% 31% 28% 44% 24%
Amount of borrowings outstanding at
end of period (in millions) $ 49 $ 29 $ 47 $ 46 $ 51
Per-share amount of borrowings
outstanding at end of period $ 4.57 $ 2.67 $ 4.44 $ 4.28 $ 4.30
Per-share amount of net assets,
excluding borrowings, at end
of period $ 17.98 $ 16.15 $ 17.82 $ 17.13 $ 16.97
Asset coverage ratio (c) 394% 604% 401% 401% 394%
</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.
23
<Page>
SCHEDULE OF INVESTMENTS
AMERICAN SELECT PORTFOLIO November 30, 2003
<Table>
<Caption>
DATE PAR
DESCRIPTION OF SECURITY ACQUIRED VALUE COST VALUE (a)
- ----------------------- ----------- ------------ ------------ ------------
(PERCENTAGES OF EACH INVESTMENT CATEGORY
RELATE TO NET ASSETS)
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES (b) (9.5%):
FIXED RATE (9.5%):
FHLMC, 5.50%, 1/1/18 $ 5,540,140 $ 5,728,683 $ 5,718,477
FHLMC, 7.50%, 12/1/29 1,246,962 1,223,184 1,333,476
FNMA, 5.00%, 11/1/17 2,210,057 2,223,001 2,245,285
FNMA, 6.50%, 6/1/29 3,634,949 3,609,773 3,798,522
FNMA, 7.50%, 5/1/30 342,205 330,510 365,626
FNMA, 8.00%, 5/1/30 124,966 123,361 134,964
------------ ------------
Total U.S. Government Agency
Mortgage-Backed Securities 13,238,512 13,596,350
------------ ------------
CORPORATE NOTES (e) (5.3%):
FIXED RATE (5.3%):
Olympus APGM,
9.25%, 11/1/04 10/14/03 2,500,000 2,500,000 2,525,000
Stratus Properties,
9.25%, 1/1/06 12/28/00 5,000,000 5,000,000 5,000,000
------------ ------------
Total Corporate Notes 7,500,000 7,525,000
------------ ------------
WHOLE LOANS AND PARTICIPATION
MORTGAGES (c,d,e) (117.7%):
COMMERCIAL LOANS (33.3%):
7 Broadway Place,
6.91%, 5/1/06 04/30/01 3,366,854(b) 3,366,854 3,467,860
Advanced Circuits and Hopkins II Business
Center,
7.40%, 12/1/04 11/08/01 2,097,743(b) 2,097,743 2,118,721
Best Buy,
8.63%, 1/1/11 12/29/00 1,880,329 1,880,329 1,974,345
Canyon Portal,
10.38%, 1/1/07 12/27/01 1,986,457 1,986,457 2,046,050
Career Education Corporation,
7.50%, 6/1/07 05/15/02 3,337,033(b) 3,337,033 3,503,885
Landmark Bank Center I,
7.90%, 6/1/07 05/30/02 4,045,915 4,045,915 4,207,752
</Table>
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS.
24
<Page>
<Table>
<Caption>
DATE PAR
DESCRIPTION OF SECURITY ACQUIRED VALUE COST VALUE (a)
- ----------------------- ----------- ------------ ------------ ------------
Landmark Bank Center II,
14.88%, 5/1/07 05/30/02 $ 817,500 $ 817,500 $ 850,200
Northlynn Plaza,
7.65%, 9/1/12 08/22/02 3,941,347(b) 3,941,347 4,138,414
Parkway Business Center,
5.50%, 1/1/05 10/22/98 3,619,301 3,619,301 3,270,642
Peony Promenade,
6.93%, 6/1/13 05/12/03 5,220,299 5,220,299 5,481,314
Point Plaza,
8.43%,1/1/11 12/14/00 6,227,120(b) 6,227,120 6,538,476
Poway Library Plaza,
7.40%, 1/1/10 12/19/02 2,967,345 2,967,345 3,115,713
Town Square #6,
7.40%, 9/1/12 08/02/02 4,037,099(b) 4,037,099 4,238,954
Victory Packaging,
8.53%, 1/1/12 12/20/01 2,557,891(b) 2,557,891 2,685,785
------------ ------------
46,102,233 47,638,111
------------ ------------
MULTIFAMILY LOANS (84.4%):
Briarhill Apartments I,
6.90%, 9/1/15 08/11/03 4,838,933 4,838,933 5,080,879
Briarhill Apartments II,
6.88%, 9/1/15 08/11/03 831,117 831,117 808,782
Casa del Vista Apartments,
8.40%, 1/1/08 12/15/00 2,941,325(b) 2,941,325 3,088,391
Castle Arms Apartments,
8.00%, 4/1/06 03/19/99 931,617 931,617 959,565
Centre Court, White Oaks, and
Green Acres Apartments,
8.65%, 1/1/09 12/30/98 3,872,679(b) 3,872,679 4,066,313
Churchill Park Apartments I,
6.53%, 2/1/06 12/23/02 8,650,000(b) 8,650,000 8,909,500
Churchill Park Apartments II,
9.88%, 2/1/06 12/23/02 375,000 375,000 379,495
Cypress Village Apartments,
5.43%, 11/1/06 10/02/03 8,200,000 8,200,000 8,446,000
El Conquistador Apartments,
7.65%, 4/1/09 03/24/99 2,765,355(b) 2,765,356 2,903,623
Evergreen, Northview,
Greenwood, and Fern Court
Apartments,
9.40%, 6/1/05 05/22/00 4,516,328 4,516,328 4,696,981
</Table>
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS.
25
<Page>
<Table>
<Caption>
DATE PAR
DESCRIPTION OF SECURITY ACQUIRED VALUE COST VALUE (a)
- ----------------------- ----------- ------------ ------------ ------------
Greenwood Residences,
7.63%, 4/1/08 03/12/98 $ 2,258,557(b) $ 2,258,557 $ 2,371,484
Hidden Colony Apartments,
7.90%, 6/1/08 03/22/94 2,954,641(b) 2,933,886 3,102,373
Hunter's Meadow,
7.80%, 8/1/12 07/02/02 6,400,751 6,400,751 6,720,789
La Casa Apartments,
6.80%, 1/1/06 12/30/02 5,059,898 5,059,898 5,211,695
Lakeside Villa Apartments I,
6.43%, 7/1/06 07/01/03 5,800,000 5,800,000 5,916,000
Lakeside Villa Apartments II,
11.88%, 7/1/06 07/01/03 600,000 600,000 612,000
Lakeville Apartments,
7.90%, 5/1/08 04/24/98 2,328,614(b) 2,328,614 2,445,045
Lambert Gardens Apartments,
6.90%, 2/1/08 01/17/03 4,500,886(b) 4,500,886 4,725,930
Park Vista Apartments,
8.58%, 9/1/05 08/30/00 2,200,000(b) 2,200,000 2,123,399
Parkside Apartments,
5.43%, 5/1/08 04/14/03 6,575,000 6,575,000 6,903,750
Revere Apartments,
7.28%, 5/1/09 04/22/99 1,237,157 1,237,157 1,299,015
Sheridan Ponds Apartments,
6.43%, 7/1/13 06/05/03 7,177,683 7,177,683 7,536,568
Signature Park Apartments,
9.90%, 12/1/07 11/14/02 4,725,000 4,725,000 4,725,000
Sterling Court Apartments I,
6.90%, 2/1/06 01/14/03 3,700,000(b) 3,700,000 3,848,000
Sterling Court Apartments II,
12.38%, 2/1/06 01/14/03 460,000 460,000 478,400
Summit Chase Apartments I,
4.23%, 5/1/06 04/15/03 8,200,000 8,200,000 8,446,000
Summit Chase Apartments II,
9.88%, 5/1/06 04/15/03 1,647,000 1,647,000 1,501,189
The Oaks of Lake Bluff Apartments,
8.40%, 2/1/06 01/24/01 3,821,384(b) 3,821,384 3,936,025
The Willows Retirement
Apartments at Bellingham,
9.38%, 3/1/05 02/14/02 1,488,343 1,488,343 1,448,029
Woodstock Apartments I,
7.43%, 1/1/05 12/06/01 8,300,000(b) 8,300,000 7,292,933
</Table>
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS.
26
<Page>
<Table>
<Caption>
DATE PAR VALUE/
DESCRIPTION OF SECURITY ACQUIRED SHARES COST VALUE (a)
- ----------------------- ----------- ------------ ------------- -------------
Woodstock Apartments II,
13.38%, 1/1/05 12/06/01 $ 1,000,000 $ 1,000,000 $ 710,362
------------- -------------
118,336,514 120,693,515
------------- -------------
Total Whole Loans and
Participation Mortgages 164,438,747 168,331,625
------------- -------------
PREFERRED STOCKS (0.1%):
REAL ESTATE INVESTMENT TRUSTS (0.1%):
Archstone Community Trust,
Series D 04/23/01 3,525 91,862 92,355
Duke Realty Investments,
Series E 04/30/01 625 15,506 15,987
------------- -------------
Total Preferred Stocks 107,368 108,342
------------- -------------
RELATED PARTY MONEY MARKET FUND (f) (0.9%):
First American Prime
Obligations Fund 1,347,194 1,347,194 1,347,194
------------- -------------
Total Investments in
Securities (g) (133.5%): $ 186,631,821 $ 190,908,512
============= =============
</Table>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 IN
NOTES TO FINANCIAL STATEMENTS.
(b) ON NOVEMBER 30, 2003, SECURITIES VALUED AT $89,101,460 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
- ------------ ----------- ---- -------- -------- ---------------
$ 11,244,500 11/10/03 1.11%* 12/10/03 $ 7,281 (1)
37,424,890 11/14/03 2.00%** 12/15/03 35,257 (2)
- ------------ --------
$ 48,669,390 $ 42,538
============ ========
</Table>
*RATE IS A NEGOTIATED FIXED RATE.
**INTEREST RATE AS OF NOVEMBER 30, 2003. RATE IS BASED ON THE LONDON INTERBANK
OFFERED RATE (LIBOR) AND RESET MONTHLY.
27
<Page>
NAME OF BROKER AND DESCRIPTION OF COLLATERAL:
(1) MORGAN STANLEY;
FHLMC, 5.50%, 1/1/18, $5,540,140 PAR
FHLMC, 7.50%, 12/1/29, $1,246,962 PAR
FNMA, 5.00%, 11/1/17, $2,210,057 PAR
FNMA, 6.50%, 6/1/29, $3,634,949 PAR
FNMA, 7.50%, 5/1/30, $342,205 PAR
FNMA, 8.00%, 5/1/30, $124,966 PAR
(2) MORGAN STANLEY;
7 BROADWAY PLACE, 6.91%, 5/1/06, $3,366,854 PAR
ADVANCED CIRCUITS AND HOPKINS II BUSINESS CENTER, 7.40%, 12/1/04,
$2,097,743 PAR
CAREER EDUCATION CORPORATION, 7.50%, 6/1/07, $3,337,033 PAR
CASA DEL VISTA APARTMENTS, 8.40%, 1/1/08, $2,941,325 PAR
CENTRE COURT, WHITE OAKS, AND GREEN ACRES APARTMENTS, 8.65%,
1/1/09, $3,872,679 PAR
CHURCHILL PARK APARTMENTS I, 6.53%, 2/1/06, $8,650,000 PAR
EL CONQUISTADOR APARTMENTS, 7.65%, 4/1/09, $2,765,355 PAR
GREENWOOD RESIDENCES, 7.63%, 4/1/08, $2,258,557 PAR
HIDDEN COLONY APARTMENTS, 7.90%, 6/1/08, $2,954,641 PAR
LAKEVILLE APARTMENTS, 7.90%, 5/1/08, $2,328,614 PAR
LAMBERT GARDENS APARTMENTS, 6.90%, 2/1/08, $4,500,886 PAR
NORTHLYNN PLAZA, 7.65%, 9/1/12, $3,941,347 PAR
PARK VISTA APARTMENTS, 8.58%, 9/1/05, $2,200,000 PAR
POINT PLAZA, 8.43%, 1/1/11, $6,227,120 PAR
STERLING COURT APARTMENTS I, 6.90%, 2/1/06, $3,700,000 PAR
THE OAKS OF LAKE BLUFF APARTMENTS, 8.40%, 2/1/06, $3,821,384 PAR
TOWN SQUARE #6, 7.40%, 9/1/12, $4,037,099 PAR
VICTORY PACKAGING, 8.53%, 1/1/12, $2,557,891 PAR
WOODSTOCK APARTMENTS I, 7.43%, 1/1/05, $8,300,000 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 $60,000,000 USING WHOLE LOANS AS COLLATERAL. THE FUND PAYS A FEE OF
0.15% TO MORGAN STANLEY ON ANY UNUSED PORTION OF THE $60,000,000 LENDING
COMMITMENT.
(c) INTEREST RATES ON COMMERCIAL AND MULTIFAMILY LOANS ARE THE RATES IN EFFECT
ON NOVEMBER 30, 2003.
(d) COMMERCIAL AND MULTIFAMILY LOANS ARE DESCRIBED BY THE NAME OF THE MORTGAGED
PROPERTY. THE GEOGRAPHICAL LOCATION OF THE MORTGAGED PROPERTIES IS
PRESENTED BELOW.
COMMERCIAL LOANS:
7 BROADWAY PLACE - ALBUQUERQUE, NM
ADVANCED CIRCUITS AND HOPKINS II BUSINESS CENTER - HOPKINS, MN
BEST BUY - FULLERTON, CA
CANYON PORTAL - SEDONA, CA
CAREER EDUCATION CORPORATION - ORLANDO, FL
LANDMARK BANK CENTER I - EULESS, TX
LANDMARK BANK CENTER II - EULESS, TX
NORTHLYNN PLAZA - LYNNWOOD, WA
PARKWAY BUSINESS CENTER - POWAY, CA
PEONY PROMENADE - PLYMOUTH, MN
POINT PLAZA - TUMWATER, WA
POWAY LIBRARY PLAZA - POWAY, CA
TOWN SQUARE #6 - OLYMPIA, WA
VICTORY PACKAGING - PHOENIX, AZ
28
<Page>
MULTIFAMILY LOANS:
BRIARHILL APARTMENTS I - EDEN PRAIRIE, MN
BRIARHILL APARTMENTS II - EDEN PRAIRIE, MN
CASA DEL VISTA APARTMENTS - CARSON CITY, NV
CASTLE ARMS APARTMENTS - AUSTIN, TX
CENTRE COURT, WHITE OAKS, AND GREEN ACRES APARTMENTS - NORTH CANTON
AND MASSILLON, OH
CHURCHILL PARK APARTMENTS I - SAN ANTONIO, TX
CHURCHILL PARK APARTMENTS II - SAN ANTONIO, TX
CYPRESS VILLAGE APARTMENTS - BUENA PARK, CA
EL CONQUISTADOR APARTMENTS - TUCSON, AZ
EVERGREEN, NORTHVIEW, GREENWOOD, AND FERN COURT APARTMENTS -
BUFFALO, MN
GREENWOOD RESIDENCES - MITON, WA
HIDDEN COLONY APARTMENTS - DORAVILLE, GA
HUNTER'S MEADOW APARTMENTS - COLORADO SPRINGS, CO
LA CASA APARTMENTS - SPOKANE, WA
LAKESIDE VILLA APARTMENTS I - ATLANTA, GA
LAKESIDE VILLA APARTMENTS II - ATLANTA, GA
LAKEVILLE APARTMENTS - LAKEVILLE, MN
LAMBERT GARDENS APARTMENTS - PORTLAND, OR
PARK VISTA APARTMENTS - REDMOND, WA
PARKSIDE APARTMENTS - MORENO VALLEY, CA
REVERE APARTMENTS - REVERE, MA
SHERIDAN PONDS APARTMENTS - TULSA, OK
SIGNATURE PARK APARTMENTS - BRYAN, TX
STERLING COURT APARTMENTS I - KANSAS CITY, MO
STERLING COURT APARTMENTS II - KANSAS CITY, MO
SUMMIT CHASE APARTMENTS I - CORAL SPRINGS, FL
SUMMIT CHASE APARTMENTS II - CORAL SPRINGS, FL
THE OAKS OF LAKE BLUFF APARTMENTS - LAKE BLUFF, IL
THE WILLOWS RETIREMENT APARTMENTS AT BELLINGHAM - BELLINGHAM, WA
WOODSTOCK APARTMENTS I - DALLAS, TX
WOODSTOCK APARTMENTS II - DALLAS, TX
(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 AND ARE VALUED AT FAIR VALUE.
THESE SECURITIES ARE FAIR VALUED IN ACCORDANCE WITH THE BOARD APPROVED
VALUATION PROCEDURES. ON NOVEMBER 30, 2003, THE TOTAL VALUE OF FAIR VALUED
SECURITIES WAS $175,856,625 OR 123.0% OF NET ASSETS. SEE NOTE 2 IN NOTES TO
FINANCIAL STATEMENTS.
(f) THIS MONEY MARKET FUND IS ADVISED BY U.S. BANCORP ASSET MANAGEMENT WHICH
ALSO SERVES AS ADVISOR FOR THE FUND. SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS.
(g) ON NOVEMBER 30, 2003, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $188,082,975. THE DIFFERENCE BETWEEN THE COST FOR
FEDERAL INCOME TAX AND BOOK PURPOSES IS DUE TO A ONE-TIME MARK TO MARKET
ELECTION MADE PURSUANT TO SECTION 311 OF THE TAXPAYER RELIEF ACT OF 1997.
THE AGGREGATE GROSS UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS
IN SECURITIES, BASED ON THIS COST WERE AS FOLLOWS:
<Table>
GROSS UNREALIZED APPRECIATION $ 4,766,170
GROSS UNREALIZED DEPRECIATION (1,940,633)
-----------
NET UNREALIZED APPRECIATION $ 2,825,537
===========
</Table>
ABBREVIATIONS:
APGM-ARNOLD PALMER GOLF MANAGEMENT
FHLMC-FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA-FEDERAL NATIONAL MORTGAGE ASSOCIATION
29
<Page>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
AMERICAN SELECT PORTFOLIO INC.:
We have audited the accompanying statement of assets and liabilities of American
Select Portfolio Inc., including the schedule of investments, as of November 30,
2003, and the related statements of operations and cash flows for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
examination or confirmation of securities owned as of November 30, 2003, with
the custodians. 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 financial highlights referred to
above present fairly, in all material respects, the financial position of
American Select Portfolio Inc. at November 30, 2003, the results of its
operations and its cash flows for the year then ended, and changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
January 9, 2004
30
<Page>
FEDERAL INCOME TAX INFORMATION (Unaudited)
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 advisor on how to
report these distributions at the state and local levels.
INCOME DISTRIBUTIONS (TAXABLE AS ORDINARY DIVIDENDS, NONE QUALIFYING FOR THE
DIVIDENDS RECEIVED DEDUCTION OR QUALIFYING AS QUALIFIED DIVIDEND INCOME)
<Table>
<Caption>
PAYABLE DATE AMOUNT
- ------------ ----------
December 18, 2002 $ 0.1000
January 9, 2003 0.1000
February 26, 2003 0.0875
March 26, 2003 0.0875
April 23, 2003 0.0875
May 28, 2003 0.0875
June 25, 2003 0.0875
July 23, 2003 0.0875
August 27, 2003 0.0875
September 24, 2003 0.0875
October 29, 2003 0.0875
November 19, 2003 0.0875
----------
Total $ 1.0750
==========
</Table>
31
<Page>
SHAREHOLDER UPDATE (Unaudited)
ANNUAL MEETING RESULTS
An annual meeting of the Fund's shareholders was held on October 28, 2003. 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 nine directors:
<Table>
<Caption>
SHARES SHARES WITHHOLDING
VOTED "FOR" AUTHORITY TO VOTE
----------- ------------------
Benjamin R. Field III 10,142,408 119,601
Mickey P. Foret 10,141,032 120,977
Roger A. Gibson 10,149,306 112,713
Victoria J. Herget 10,142,987 119,022
Leonard W. Kedrowski 10,153,233 108,776
Richard K. Riederer 10,152,331 109,678
Joseph D. Strauss 10,150,233 111,776
Virginia L. Stringer 10,150,447 111,562
James M. Wade 10,149,366 112,643
</Table>
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 fiscal year ending November 30, 2003. The following votes
were cast regarding this matter:
<Table>
<Caption>
SHARES SHARES BROKER
VOTED "FOR" VOTED "AGAINST" ABSTENTIONS NON-VOTES
- ----------- --------------- ----------- ---------
10,066,657 143,171 52,181 --
</Table>
TERMS AND CONDITIONS OF THE DIVIDEND REINVESTMENT PLAN
As a shareholder, you may choose to participate in the Dividend Reinvestment
Plan. It's a convenient and economical way to buy additional shares of the Fund
by automatically reinvesting dividends and capital gains. The plan is
administered by EquiServe, the plan agent.
32
<Page>
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 EquiServe at 800.426.5523. 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 EquiServe at least 10 days before each share's dividend and/or
capital gains distribution.
PLAN ADMINISTRATION
Beginning no more than 5 business days before the dividend payment date,
EquiServe 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 5% 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, EquiServe 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.
33
<Page>
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 5% 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
EquiServe 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.
EquiServe 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 EquiServe in noncertificated form in your name.
TAX INFORMATION
Distributions invested in additional shares of the Fund are subject to income
tax, to the same extent as 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
34
<Page>
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 EquiServe. 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 EquiServe with at least 90 days written notice to
participants in the plan.
Any questions about the plan should be directed to your investment professional
or to EquiServe LP, P.O. Box 43010, Providence, RI 02940-3010, 800.426.5523.
35
<Page>
HOW TO OBTAIN A COPY OF THE FUND'S PROXY VOTING POLICIES
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 firstamericanfunds.com; and (3) on
the U.S. Securities and Exchange Commission's website at sec.gov.
36
<Page>
This page has been left blank intentionally
<Page>
DIRECTORS AND OFFICERS OF THE FUND
DIRECTORS
<Table>
<Caption>
POSITION(S)
HELD WITH
NAME, ADDRESS, AND YEAR OF BIRTH FUND TERM OF OFFICE AND LENGTH OF TIME SERVED
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin R. Field III, Director Directors serve for a one-year term that expires at the next annual meeting
800 Nicollet Mall, of shareholders. Director of SLA since September 2003.
Minneapolis, MN 55402 (1938)
Mickey P. Foret, Director Directors serve for a one-year term that expires at the next annual meeting
800 Nicollet Mall, of shareholders. Director of SLA since September 2003.
Minneapolis, MN 55402 (1945)
Roger A. Gibson, Director Directors serve for a one-year term that expires at the next annual meeting
800 Nicollet Mall, of shareholders. Director of SLA since October 2000.
Minneapolis, MN 55402 (1946)
Victoria J. Herget, Director Directors serve for a one-year term that expires at the next annual meeting
800 Nicollet Mall, of shareholders. Director of SLA since September 2003.
Minneapolis, MN 55402 (1952)
Leonard W. Kedrowski, Director Directors serve for a one-year term that expires at the next annual meeting
800 Nicollet Mall, of shareholders. Director of SLA since October 2000.
Minneapolis, MN 55402 (1941)
Richard K. Riederer, Director Directors serve for a one-year term that expires at the next annual meeting
800 Nicollet Mall, of shareholders. Director of SLA since August 2001.
Minneapolis, MN 55402 (1944)
</Table>
38
<Page>
<Table>
<Caption>
NUMBER OF PORTFOLIOS IN
PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, ADDRESS, AND YEAR OF BIRTH DURING PAST 5 YEARS OVERSEEN BY DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin R. Field III, Senior Financial Advisor, Bemis Company, Inc. since First American Funds Complex: twelve
800 Nicollet Mall, 2002; Senior Vice President, Chief Financial Officer registered investment companies,
Minneapolis, MN 55402 (1938) and Treasurer, Bemis, through 2002. including sixty one portfolios
Mickey P. Foret, Consultant to Northwest Airlines, Inc. since 2002; First American Funds Complex: twelve
800 Nicollet Mall, Executive Vice President and Chief Financial Officer, registered investment companies,
Minneapolis, MN 55402 (1945) Northwest Airlines, through 2002. including sixty one portfolios
Roger A. Gibson, Vice President, Cargo-United Airlines, since July 2001; First American Funds Complex: twelve
800 Nicollet Mall, Vice President, North America-Mountain Region, United registered investment companies,
Minneapolis, MN 55402 (1946) Airlines, prior to July 2001. including sixty one portfolios
Victoria J. Herget, Investment consultant and non-profit board member since First American Funds Complex: twelve
800 Nicollet Mall, 2001; Managing Director of Zurich Scudder Investments registered investment companies,
Minneapolis, MN 55402 (1952) through 2001. including sixty one portfolios
Leonard W. Kedrowski, Owner, Executive and Management Consulting, Inc., a First American Funds Complex: twelve
800 Nicollet Mall, management consulting firm; Board member, GC McGuiggan registered investment companies,
Minneapolis, MN 55402 (1941) Corporation (dba Smyth Companies), a label printer; including sixty one portfolios
former Chief Executive Officer, Creative Promotions
International, LLC, a promotional award programs and
products company, through October 2003; Advisory Board
member, Designer Doors, manufacturer of designer doors,
through 2002; acted as CEO of Graphics Unlimited
Director through 1998.
Richard K. Riederer,
800 Nicollet Mall, Retired; Director, President and Chief Executive First American Funds Complex: twelve
Minneapolis, MN 55402 (1944) Officer, Weirton Steel through 2001. registered investment companies,
including sixty one portfolios
<Caption>
OTHER
DIRECTORSHIPS
HELD BY
NAME, ADDRESS, AND YEAR OF BIRTH DIRECTOR*
- ----------------------------------------------------------------
Benjamin R. Field III, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1938)
Mickey P. Foret, ADC Telecommunications,
800 Nicollet Mall, Inc.
Minneapolis, MN 55402 (1945)
URS Corporation
Champion Airlines, Inc.
Roger A. Gibson, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1946)
Victoria J. Herget, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1952)
Leonard W. Kedrowski, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1941)
Richard K. Riederer, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1944)
</Table>
39
<Page>
<Table>
<Caption>
POSITION(S)
HELD WITH
NAME, ADDRESS, AND YEAR OF BIRTH FUND TERM OF OFFICE AND LENGTH OF TIME SERVED
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph D. Strauss, Director Directors serve for a one-year term that expires at the next annual
800 Nicollet Mall, meeting of shareholders. Director of SLA since October 2000.
Minneapolis, MN 55402 (1940)
Virginia L. Stringer, Chair; Director Directors serve for a one-year term that expires at the next annual
800 Nicollet Mall, meeting of shareholders. Chair term three years, assuming reelection as
Minneapolis, MN 55402 (1944) a director. Chair of SLA's board since 1998; current term expires
September 2006. Director of SLA since August 1998.
James M. Wade, Director Directors serve for a one-year term that expires at the next annual
800 Nicollet Mall, meeting of shareholders. Director of SLA since August 2001.
Minneapolis, MN 55402 (1943)
</Table>
40
<Page>
<Table>
<Caption>
NUMBER OF PORTFOLIOS IN
PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, ADDRESS, AND YEAR OF BIRTH DURING PAST 5 YEARS OVERSEEN BY DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph D. Strauss, Owner and President, Excensus TM LLC, a consulting firm, First American Funds Complex: twelve
800 Nicollet Mall, since 2001; Owner and President, Strauss Management Company, registered investment companies,
Minneapolis, MN 55402 (1940) a Minnesota holding company for various organizational including sixty one portfolios
management business ventures; Owner, Chairman and Chief
Executive Officer, Community Resource Partnerships, Inc., a
strategic planning, operations management, government
relations, transportation planning and public relations
organization; attorney at law.
Virginia L. Stringer, Owner and President, Strategic Management Resources, Inc., a First American Funds Complex: twelve
800 Nicollet Mall, management consulting firm; Executive Consultant for State registered investment companies,
Minneapolis, MN 55402 (1944) Farm Insurance Company. including sixty one portfolios
James M. Wade, Owner and President, Jim Wade Homes, a homebuilding company, First American Funds Complex: twelve
800 Nicollet Mall, since 1999. registered investment companies,
Minneapolis, MN 55402 (1943) including sixty one portfolios
<Caption>
OTHER
DIRECTORSHIPS
HELD BY
NAME, ADDRESS, AND YEAR OF BIRTH DIRECTOR*
- ----------------------------------------------------------------
Joseph D. Strauss, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1940)
Virginia L. Stringer, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1944)
James M. Wade, None
800 Nicollet Mall,
Minneapolis, MN 55402 (1943)
</Table>
*Includes only directorships in a company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act or subject to the
requirements of Section 15(d) of the Securities Exchange Act, or any company
registered as an investment company under the Investment Company Act.
41
<Page>
OFFICERS
<Table>
<Caption>
POSITION(S)
HELD WITH
NAME, ADDRESS, AND YEAR OF BIRTH FUND TERM OF OFFICE AND LENGTH OF TIME SERVED
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas S. Schreier, Jr., President Re-elected by the Board annually; President of SLA since February 2001.
U.S. Bancorp Asset Management, Inc.,
800 Nicollet Mall,
Minneapolis, MN 55402 (1962)**
John G. Wenker, Senior Vice Re-elected by the Board annually; Senior Vice President of SLA since
U.S. Bancorp Asset Management, Inc., President May 2001.
800 Nicollet Mall,
Minneapolis,
Minnesota 55402(1953)**
Mark S. Jordahl, Vice President- Re-elected by the Board annually; Vice President Investments of SLA since
U.S. Bancorp Asset Management, Inc. Investments September 2001.
800 Nicollet Mall,
Minneapolis, MN 55402 (1960)**
Jeffery M. Wilson, Vice President- Re-elected by the Board annually; Vice President Administration of SLA since
U.S. Bancorp Asset Management, Inc. Administration October 2000.
800 Nicollet Mall,
Minneapolis, MN 55402 (1956)**
Russell J. Kappenman, Vice President- Re-elected by the Board annually; Vice President and Assistant Secretary of
U.S. Bancorp Asset Management, Inc., and Assistant SLA since May 2001.
800 Nicollet Mall, Minneapolis, Secretary
Minnesota 55402(1964)**
Julene R. Melquist, Vice President Re-elected by the Board annually; Vice President of SLA since May 2001.
U.S. Bancorp Asset Management, Inc.,
800 Nicollet Mall, Minneapolis,
Minnesota 55402(1966)**
Joseph M. Ulrey III, Treasurer Re-elected by the Board annually; Treasurer of SLA since December 2003.
U.S. Bancorp Asset Management, Inc.
800 Nicollet Mall,
Minneapolis, MN 55402 (1958)**
James D. Alt, Secretary Re-elected by the Board annually; Secretary of SLA since June 2002;
50 South Sixth Street, Suite 1500, Assistant Secretary of SLA from October 2000 to June 2002.
Minneapolis, MN 55402 (1951)
Michael J. Radmer, Assistant Re-elected by the Board annually; Assistant Secretary of SLA since
50 South Sixth Street, Suite 1500, Secretary October 2000.
Minneapolis, MN 55402 (1945)
Kathleen L. Prudhomme, Assistant Re-elected by the Board annually; Assistant Secretary of SLA since
50 South Sixth Street, Suite 1500, Secretary October 2000.
Minneapolis, MN 55402 (1953)
Richard J. Ertel, Assistant Re-elected by the Board annually; Assistant Secretary of SLA since
U.S. Bancorp Asset Management, Inc. Secretary June 2003.
800 Nicollet Mall,
Minneapolis, MN 55402 (1967)**
</Table>
**Messrs. Schreier, Wenker, Jordahl, Wilson, Kappenman, Ulrey, and Ertel and
Ms. Melquist are each officers of U.S. Bancorp Asset Management, Inc., which
serves as investment advisor for the Fund.
42
<Page>
<Table>
<Caption>
NAME, ADDRESS, AND YEAR OF BIRTH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- -----------------------------------------------------------------------------------------------------------------------
Thomas S. Schreier, Jr., Chief Executive Officer of U.S. Bancorp Asset Management, Inc. since May 2001;
U.S. Bancorp Asset Management, Inc., Chief Executive Officer of First American Asset Management from December 2000
800 Nicollet Mall, through May 2001 and of Firstar Investment & Research Management Company from
Minneapolis, MN 55402 (1962)** February 2001 through May 2001; Senior Managing Director and Head of Equity
Research of U.S. Bancorp Piper Jaffray from October 1998 through December 2000;
prior to October 1998, Senior Airline Equity Analyst and a Director in the
Equity Research Department, Credit Suisse First Boston.
John G. Wenker, Managing Director of U.S. Bancorp Asset Management, Inc. since May 2001; Managing
U.S. Bancorp Asset Management, Inc., Director of First American Asset Management from 1998 to May 2001; Managing
800 Nicollet Mall, Director of the Fixed Income Department at Piper Jaffray Inc. from 1992 to 1998.
Minneapolis,
Minnesota 55402(1953)**
Mark S. Jordahl, Chief Investment Officer of U.S. Bancorp Asset Management, Inc. since September
U.S. Bancorp Asset Management, Inc. 2001; President and Chief Investment Officer, ING Investment Management-Americas,
800 Nicollet Mall, September 2000 to June 2001; Senior Vice President and Chief Investment Officer,
Minneapolis, MN 55402 (1960)** ReliaStar Financial Corp., January 1998 to September 2000.
Jeffery M. Wilson, Senior Vice President of U.S. Bancorp Asset Management, Inc. since May 2001;
U.S. Bancorp Asset Management, Inc. prior thereto, Senior Vice President of First American Asset Management.
800 Nicollet Mall,
Minneapolis, MN 55402 (1956)**
Russell J. Kappenman, Managing Director of U.S. Bancorp Asset Management, Inc. since May 2001; Vice
U.S. Bancorp Asset Management, Inc., President of First American Asset Management from 1998 to May 2001; tax manager
800 Nicollet Mall, Minneapolis, and fixed income analyst with Piper Jaffray Inc. thru 1998.
Minnesota 55402(1964)**
Julene R. Melquist, Vice President of U.S. Bancorp Asset Management, Inc. since May 2001; analyst
U.S. Bancorp Asset Management, Inc., with First American Asset Management from 1998 to May 2001; Assistant Vice
800 Nicollet Mall, Minneapolis, President with Piper Capital Management Inc. through 1998.
Minnesota 55402(1966)**
Joseph M. Ulrey III, Senior Managing Director, Fund Treasury, since December 2003, and Senior
U.S. Bancorp Asset Management, Inc. Managing Director, Risk Management and Quantitative Analysis, since May 2001,
800 Nicollet Mall, U.S. Bancorp Asset Management, Inc.; from May 2001 through December 2001, Senior
Minneapolis, MN 55402 (1958)** Managing Director, Securities Lending and Money Market Funds, U.S. Bancorp Asset
Management, Inc.; prior thereto, Senior Managing Director, Securities Lending
and Money Market Funds, First American Asset Management.
James D. Alt, Partner, Dorsey & Whitney LLP, a Minneapolis-based law firm
50 South Sixth Street, Suite 1500,
Minneapolis, MN 55402 (1951)
Michael J. Radmer, Partner, Dorsey & Whitney LLP, a Minneapolis-based law firm
50 South Sixth Street, Suite 1500,
Minneapolis, MN 55402 (1945)
Kathleen L. Prudhomme, Partner, Dorsey & Whitney LLP, a Minneapolis-based law firm
50 South Sixth Street, Suite 1500,
Minneapolis, MN 55402 (1953)
Richard J. Ertel, Disclosure Counsel, U.S. Bancorp Asset Management, Inc. since May 2003; Associate
U.S. Bancorp Asset Management, Inc. Counsel, Hartford Life and Accident Insurance Company from April 2001 through
800 Nicollet Mall, May 2003; Attorney and Law Clerk, Fortis Financial Group, through March 2001.
Minneapolis, MN 55402 (1967)**
</Table>
43
<Page>
BOARD OF DIRECTORS
VIRGINIA STRINGER
Chairperson of American Select Portfolio Inc.
Owner and President of Strategic Management Resources, Inc.
BENJAMIN FIELD III
Director of American Select Portfolio Inc.
Senior Financial Advisor to, and formerly Senior Vice President, Chief Financial
Officer, and Treasurer of, Bemis Company, Inc.
MICKEY FORET
Director of American Select Portfolio Inc.
Consultant to, and formerly Executive Vice President and Chief Financial Officer
of, Northwest Airlines, Inc.
ROGER GIBSON
Director of American Select Portfolio Inc.
Vice President, Cargo-United Airlines
VICTORIA HERGET
Director of American Select Portfolio Inc.
Investment Consultant; former Managing Director of Zurich Scudder Investments
LEONARD KEDROWSKI
Director of American Select Portfolio Inc.
Owner and President of Executive and Management Consulting, Inc.
RICHARD RIEDERER
Director of American Select Portfolio Inc.
Retired; former President and Chief Executive Officer of Weirton Steel
JOSEPH STRAUSS
Director of American Select Portfolio Inc.
Owner and President of Strauss Management Company
JAMES WADE
Director of American Select Portfolio Inc.
Owner and President of Jim Wade Homes
AMERICAN SELECT PORTFOLIO INC.'S BOARD OF DIRECTORS IS COMPRISED ENTIRELY OF
INDEPENDENT DIRECTORS.
<Page>
[FIRST AMERICAN (TM) LOGO]
AMERICAN SELECT PORTFOLIO INC.
2003 ANNUAL REPORT
U.S. Bancorp Asset Management, Inc., is a wholly owned subsidiary of U.S. Bank
National Association, which is a wholly owned subsidiary of U.S. Bancorp.
[RECYCLED SYMBOL]
This document is printed on paper containing 10% postconsumer waste.
1/2004 0314-03 SLA-AR
<Page>
ITEM 2--CODE OF ETHICS - Did registrant adopt a code of ethics, as of the end of
the period covered by this report, that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party? If not, why not?
Briefly describe any amendments or waivers that occurred during the period.
State here if code of ethics/amendments/waivers are on website and give website
address. State here if fund will send code of ethics to shareholders without
charge upon request.
RESPONSE: The registrant has adopted a code of ethics (designated as the "Code
of Ethical Conduct") that applies to its principal executive officer and
principal financial officer. The registrant undertakes to furnish a copy of such
Code of Ethical Conduct to any person upon request, without charge, by calling
1-800-677-3863.
ITEM 3--AUDIT COMMITTEE FINANCIAL EXPERT - Did the registrant's board of
directors determine that the registrant either: (i) has at least one audit
committee financial expert serving on its audit committee; or (ii) does not have
an audit committee financial expert serving on its audit committee? If yes,
disclose name of financial expert and whether he/she is "independent," (fund
may, but is not required, to disclose name/independence of more than one
financial expert) If no, explain why not.
RESPONSE: The registrant's Board of Directors has determined that Leonard
Kedrowski, Benjamin Field, and Mickey Foret, members of the registrant's Audit
Committee, are each an "audit committee financial expert" and are "independent,"
as these terms are defined in this Item. This designation will not increase the
designees' duties, obligations or liability as compared to their duties,
obligations and liability as members of the Audit Committee and of the Board of
Directors.
ITEM 4--PRINCIPAL ACCOUNTANT FEES AND SERVICES - Disclose annually only (for
periods ending on or after December 15, 2003).
RESPONSE: Not required for annual reports filed for periods ending before
December 15, 2003.
(a) Audit Fees - Disclose aggregate fees billed for each of the last two fiscal
years for professional services rendered by the principal accountant for
the audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of the last two
fiscal years for assurance and related services by the principal accountant
that are reasonably related to the performance of the audit of the
registrant's financial statements and are not reported under paragraph (a)
of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(c) Tax Fees - Disclose aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant for
tax compliance, tax
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advice, and tax planning. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
(d) All Other Fees - Disclose aggregate fees billed in each of the last two
fiscal years for products and services provided by the principal
accountant, other than the services reported in paragraphs (a) through (c)
of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
pursuant to paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(e)(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) If greater than 50%, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial
statements for the most recent fiscal year that were attributed to work
performed by persons other than the principal accountant's full-time,
permanent employees.
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
registrant for each of the last two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee has considered whether
the provision of non-audit services that were rendered to the registrant's
investment adviser (not including any subadviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining
the principal accountant's independence.
ITEM 5--AUDIT COMMITTEE OF LISTED REGISTRANTS
RESPONSE: Not applicable.
ITEM 6 - Reserved.
ITEM 7--DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES - For closed-end funds that contain voting
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securities in their portfolio, describe the policies and procedures that it uses
to determine how to vote proxies relating to those portfolio securities.
RESPONSE:
GENERAL PRINCIPLES
U.S. Bancorp Asset Management, Inc. ("USBAM") is the investment manager for
the First American family of mutual funds and for other separately managed
accounts. As such, USBAM has been delegated the authority to vote proxies with
respect to the investments held in client accounts, unless the client has
specifically retained such authority in writing. It is USBAM's duty to vote
proxies in the best interests of clients in a timely and responsive manner. In
voting proxies, USBAM also seeks to maximize total investment return for
clients.
USBAM's Investment Policy Committee, comprised of the firm's most senior
investment professionals, is charged with oversight of the proxy voting policies
and procedures. The Investment Policy Committee is responsible for (1) approving
the proxy voting policies and procedures, (2) for overseeing the proxy voting
process, and (3) for reviewing the proxy voting record on a regular basis.
POLICIES AND PROCEDURES
POLICIES. The Investment Policy Committee, after reviewing and concluding
that such policies are reasonably designed to vote proxies in the best interests
of clients, has approved and adopted the proxy voting policies of ISS, a leading
national provider of proxy voting administrative and research services. As a
result, such policies set forth USBAM's positions on recurring proxy issues and
criteria for addressing non-recurring issues. A summary of these policies is
attached. These policies are reviewed periodically and therefore are subject to
change. Even though it has adopted ISS's policies, USBAM maintains the fiduciary
responsibility for all proxy voting decisions. In extraordinary situations, the
Investment Policy Committee may decide to override a standard policy position
for a particular vote, depending on the specific factual circumstances.
PROCEDURES. Responsibility for certain administrative aspects of proxy
voting rests with USBAM's Proxy Voting Administration Committee, which reports
to the Investment Policy Committee. The Proxy Voting Administration Committee
also supervises the relationship with two outside firms that assist with the
process, ISS and ADP Financial Services. These firms apprise USBAM of
shareholder meeting dates, forward proxy voting materials, provide USBAM with
research on proxy proposals and voting recommendations and cast the actual proxy
votes. ISS also serves as USBAM's proxy voting record keeper and generates
reports on how proxies were voted.
CONFLICTS OF INTEREST. As an affiliate of U.S. Bancorp, currently the
eighth largest financial services holding company in the United States, USBAM
recognizes that there are numerous situations wherein it may have a theoretical
or real conflict of interest in voting the proxies of issuers or proxy
proponents (e.g., a special interest group) who are clients or potential clients
of some part of the U.S. Bancorp enterprise. Directors and officers of such
companies also may have personal or familial relationships with the U.S. Bancorp
enterprise and its employees that could give rise to conflicts of interest.
Although USBAM strongly believes that, regardless of such real or
theoretical conflicts of interest, it would always vote proxies in its clients'
best interests, by adopting ISS's policies and generally deferring to ISS's
recommendations, USBAM believes the risk related to conflicts will be minimized.
To further minimize this risk, the Investment Policy Committee has also
reviewed ISS's conflict avoidance policy and has concluded that it adequately
addresses both the theoretical and actual conflicts of interest the proxy voting
service may face.
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In the event an extraordinary situation arises in which (1) the Investment
Policy Committee determines it is necessary in clients' best interests to
override a standard policy or (2) it is determined that ISS faces a material
conflict of interest with respect to a specific vote, the Investment Policy
Committee will direct ISS how to vote. Before doing so, however, the Proxy
Voting Administration Committee will confirm that USBAM and the Investment
Policy Committee face no material conflicts of the nature discussed above.
If the Proxy Voting Administration Committee concludes a material conflict
does exist, it will recommend a course of action designed to address the
conflict to the Investment Policy Committee. Such actions could include, but are
not limited to:
- - Obtaining instructions from the affected clients on how to vote the proxy;
- - Disclosing the conflict to the affected clients and seeking their consent to
permit USBAM to vote the proxy;
- - Voting in proportion to the other shareholders;
- - Recusing an Investment Policy Committee member from all discussion or
consideration of the matter, if the material conflict is due to such person's
actual or potential conflict of interest; or
- - Following the recommendation of a different independent third party.
In addition to all of the above, members of the Investment Policy Committee
and the Proxy Voting Administration Committee must notify USBAM's Chief
Compliance Officer of any direct, indirect or perceived improper influence made
by any employee, officer or director within the U.S. Bancorp enterprise or First
American Fund complex with regard to how USBAM should vote proxies. The Chief
Compliance Officer will investigate the allegations and will report the findings
to the USBAM Chief Executive Officer and the General Counsel. If it is
determined that improper influence was attempted, appropriate action shall be
taken. Such appropriate action may include disciplinary action, notification of
the appropriate senior managers within the U.S. Bancorp enterprise, or
notification of the appropriate regulatory authorities. In all cases, the
Investment Policy Committee shall not consider any improper influence in
determining how to vote proxies and will vote in the best interests of clients.
REVIEW AND REPORTS
On a calendar quarterly basis, the Proxy Voting Administration Committee
will review the proxy voting record to assess a number of matters, including the
following:
- - Whether proxy statements were timely forwarded to ISS;
- - Whether proxy votes were cast on a timely basis;
- - Whether proxy votes were cast consistent with the policies; and
- - Where the guidelines were overridden, whether such vote was communicated to
ISS in a timely manner and voted consistent with the communication.
The Proxy Voting Administration Committee will prepare a report on this
review for submission to the Investment Policy Committee. Such report will also
review all identified conflicts and how they were addressed during the quarter.
The Investment Policy Committee, on a calendar quarterly basis, will review
the report of the Proxy Voting Administration Committee, as well as ISS's proxy
voting policies and conflict of interest policies. The purpose of this review is
to ensure USBAM is voting proxies in a timely and responsive manner in the best
interests of clients. With respect to the review of votes cast on behalf of
investments by the First American family of mutual funds, such review will also
be reported to the independent Board of Directors of the First American Funds.
The actual proxy voting records of the First American Funds will be filed
with the U.S. Securities Exchange Commission and will be available to
shareholders after June 30, 2004. Such records will be
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available on the First American Funds' website at www.firstamericanfunds.com and
on the SEC's website at www.sec.gov.
USBAM's separately managed account clients should contact their
relationship manager for more information on USBAM's policies and the proxy
voting record for their account.
ISS PROXY VOTING GUIDELINES SUMMARY
The following is a concise summary of ISS's proxy voting policy guidelines.
1. AUDITORS
Vote FOR proposals to ratify auditors, unless any of the following apply:
- - An auditor has a financial interest in or association with the company, and
is therefore not independent
- - Fees for non-audit services are excessive, or
- - There is reason to believe that the independent auditor has rendered an
opinion which is neither accurate nor indicative of the company's financial
position.
2. BOARD OF DIRECTORS
VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS
Votes on director nominees should be made on a CASE-BY-CASE basis, examining the
following factors: independence of the board and key board committees,
attendance at board meetings, corporate governance provisions and takeover
activity, long-term company performance, responsiveness to shareholder
proposals, any egregious board actions, and any excessive non-audit fees or
other potential auditor conflicts.
CLASSIFICATION/DECLASSIFICATION OF THE BOARD
Vote AGAINST proposals to classify the board.
Vote FOR proposals to repeal classified boards and to elect all directors
annually.
INDEPENDENT CHAIRMAN (SEPARATE CHAIRMAN/CEO)
Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions
of chairman and CEO be held separately. Because some companies have governance
structures in place that counterbalance a combined position, certain factors
should be taken into account in determining whether the proposal warrants
support. These factors include the presence of a lead director, board and
committee independence, governance guidelines, company performance, and annual
review by outside directors of CEO pay.
MAJORITY OF INDEPENDENT DIRECTORS/ESTABLISHMENT OF COMMITTEES
Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
ISS's definition of independence.
Vote FOR shareholder proposals asking that board audit, compensation, and/or
nominating committees be composed exclusively of independent directors if they
currently do not meet that standard.
3. SHAREHOLDER RIGHTS
SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT
Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent.
Vote FOR proposals to allow or make easier shareholder action by written
consent.
SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS
Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings.
Vote FOR proposals that remove restrictions on the right of shareholders to act
independently of management.
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SUPERMAJORITY VOTE REQUIREMENTS
Vote AGAINST proposals to require a supermajority shareholder vote.
Vote FOR proposals to lower supermajority vote requirements.
CUMULATIVE VOTING
Vote AGAINST proposals to eliminate cumulative voting.
Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis
relative to the company's other governance provisions.
CONFIDENTIAL VOTING
Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators and use independent inspectors of
election, as long as the proposal includes a provision for proxy contests as
follows: In the case of a contested election, management should be permitted to
request that the dissident group honor its confidential voting policy. If the
dissidents agree, the policy remains in place. If the dissidents will not agree,
the confidential voting policy is waived.
Vote FOR management proposals to adopt confidential voting.
4. PROXY CONTESTS
VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Votes in a contested election of directors must be evaluated on a CASE-BY-CASE
basis, considering the factors that include the long-term financial performance,
management's track record, qualifications of director nominees (both slates),
and an evaluation of what each side is offering shareholders.
REIMBURSING PROXY SOLICITATION EXPENSES
Vote CASE-BY-CASE. Where ISS recommends in favor of the dissidents, we also
recommend voting for reimbursing proxy solicitation expenses.
5. POISON PILLS
Vote FOR shareholder proposals that ask a company to submit its poison pill for
shareholder ratification. Review on a CASE-BY-CASE basis shareholder proposals
to redeem a company's poison pill and management proposals to ratify a poison
pill.
6. MERGERS AND CORPORATE RESTRUCTURINGS
Vote CASE-BY-CASE on mergers and corporate restructurings based on such features
as the fairness opinion, pricing, strategic rationale, and the negotiating
process.
7. REINCORPORATION PROPOSALS
Proposals to change a company's state of incorporation should be evaluated on a
CASE-BY-CASE basis, giving consideration to both financial and corporate
governance concerns, including the reasons for reincorporating, a comparison of
the governance provisions, and a comparison of the jurisdictional laws. Vote FOR
reincorporation when the economic factors outweigh any neutral or negative
governance changes.
8. CAPITAL STRUCTURE
COMMON STOCK AUTHORIZATION
Votes on proposals to increase the number of shares of common stock authorized
for issuance are determined on a CASE-BY-CASE basis using a model developed by
ISS.
Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.
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Vote FOR proposals to approve increases beyond the allowable increase when a
company's shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.
DUAL-CLASS STOCK
Vote AGAINST proposals to create a new class of common stock with superior
voting rights.
Vote FOR proposals to create a new class of nonvoting or subvoting common stock
if:
- - It is intended for financing purposes with minimal or no dilution to current
shareholders
- - It is not designed to preserve the voting power of an insider or significant
shareholder
9. EXECUTIVE AND DIRECTOR COMPENSATION
Votes with respect to compensation plans should be determined on a CASE-BY-CASE
basis. Our methodology for reviewing compensation plans primarily focuses on the
transfer of shareholder wealth (the dollar cost of pay plans to shareholders
instead of simply focusing on voting power dilution). Using the expanded
compensation data disclosed under the SEC's rules, ISS will value every award
type. ISS will include in its analyses an estimated dollar cost for the proposed
plan and all continuing plans. This cost, dilution to shareholders' equity, will
also be expressed as a percentage figure for the transfer of shareholder wealth,
and will be considered long with dilution to voting power. Once ISS determines
the estimated cost of the plan, we compare it to a company-specific dilution
cap.
Vote AGAINST equity plans that explicitly permit repricing or where the company
has a history of repricing without shareholder approval.
MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS
Votes on management proposals seeking approval to reprice options are evaluated
on a CASE-BY-CASE basis giving consideration to the following:
- - Historic trading patterns
- - Rationale for the repricing
- - Value-for-value exchange
- - Option vesting
- - Term of the option
- - Exercise price
- - Participation
EMPLOYEE STOCK PURCHASE PLANS
Votes on employee stock purchase plans should be determined on a CASE-BY-CASE
basis.
Vote FOR employee stock purchase plans where all of the following apply:
- - Purchase price is at least 85 percent of fair market value
- - Offering period is 27 months or less, and
- - Potential voting power dilution (VPD) is ten percent or less.
Vote AGAINST employee stock purchase plans where any of the opposite
conditions obtain.
SHAREHOLDER PROPOSALS ON COMPENSATION
Vote on a CASE-BY-CASE basis for all other shareholder proposals regarding
executive and director pay, taking into account company performance, pay level
versus peers, pay level versus industry, and long term corporate outlook.
10. SOCIAL AND ENVIRONMENTAL ISSUES
These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human
rights, military business, and workplace diversity.
In general, vote CASE-BY-CASE. While a wide variety of factors goes into each
analysis, the overall principal guiding all vote recommendations focuses on how
the proposal will enhance the economic value of the company.
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ITEM 8 - Reserved.
ITEM 9--CONTROLS AND PROCEDURES
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR
270.30a-3(c))) based on their evaluation of these controls and procedures
as of a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph.
RESPONSE: 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.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c)))
that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
RESPONSE: There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal half-year that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 10 - EXHIBITS
10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or
amendments/waivers is on website or offered to shareholders upon request without
charge.
RESPONSE: Attached hereto.
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 Select Portfolio Inc.
By:
/s/ Thomas S. Schreier, Jr.
---------------------------
Thomas S. Schreier, Jr.
President
Date: February 5, 2004
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: February 5, 2004
By:
/s/ Joseph M. Ulrey III
-------------------------
Joseph M. Ulrey III
Treasurer
Date: February 5, 2004