FIRST AMERICAN FUNDS, INC.
SEMI-ANNUAL REPORT
MARCH 31, 1995
[LOGO] FIRST AMERICAN FUNDS
The power of disciplined investing
TABLE OF CONTENTS
MESSAGE FROM YOUR CHAIRMAN 1
ECONOMIC AND INVESTMENT REVIEW 2
STATEMENTS OF NET ASSETS 4
STATEMENTS OF OPERATIONS 10
STATEMENTS OF CHANGES IN NET ASSETS 11
FINANCIAL HIGHLIGHTS 12
NOTES TO FINANCIAL STATEMENTS 13
Message From Your Chairman
March 31, 1995
Dear Shareholder:
The past six months have been a period of tremendous growth and change for First
American Funds. As you know individual funds were merged, restructured and
renamed to provide operational efficiencies and additional distribution
opportunities. These efforts were successful as assets under management have
increased by over $700 million since the last fiscal year-end and now total in
excess of $3.5 billion.
In addition to the First American Funds, the First American Investment Funds,
Inc. are also a part of the First American Family of Funds, and offer a wide
array of equity, fixed income and tax-free income funds. Many of these funds
have received national recognition based upon performance results and are
excellent choices for the investor looking for consistent competitive returns in
the equity and bond markets.
As we look forward to the second half of the fiscal year, we continue to
anticipate growth, especially if short-term interest rates remain at current
levels. We will continue to strive for consistent, competitive returns based on
high quality, liquid, short-term investments, so that we help you meet your
investment objectives.
Sincerely,
/s/ Joseph D. Strauss
Joseph D. Strauss
Chairman
Economic and Investment Review
March 31, 1995
At the halfway point in the First American Funds' fiscal year, major changes in
the economic and policy environment have become readily apparent. The Federal
Reserve's seven step doubling of short term interest rates and the accompanying
increase in bond yields have slowed final demand in the domestic economy to a
pace that better matches its productive capacity, thereby reducing inflationary
pressures. Perhaps consumers were riveted to the O.J. Simpson trial, but more
likely, rising indebtedness and a pervasive sense of job insecurity, despite
growing payrolls, sapped the urge to spend this year. In any event, slowing
retail sales, reduced auto production schedules, accumulation of inventory, and
lower housing starts tell us that the economy is now growing at a 2.0% to 3.0%
annual rate in contrast to the 4.0% to 5.0% that characterized the latter
portion of 1994.
Productivity growth and very modest wage gains have kept the cost of labor at
extraordinarily low levels during this expansion. With labor's two-thirds of
input costs well contained, American industry has absorbed higher raw material
prices and still produced surprisingly strong profits with only small end
product price increases. This is fortunate, since current competitive conditions
rarely allow pricing flexibility. With inflation contained, consumer and
business credit available, and personal income growing with healthy job
creation, there is good reason to expect the economic expansion to enjoy
additional years of life.
For years the United States has generated insufficient savings to fully fund its
fiscal deficit and the related excess demand for goods and services. The
shortfall has been funded in international financial markets. Although the
anti-inflationary monetary policy of recent years has been confidence building,
our foreign creditors have become restive with chronic fiscal deficits,
expanding trade imbalances, and a growing abundance of dollars in international
currency markets. Into this unstable condition, mix a generous helping of
uncoordinated international fiscal and monetary policy initiatives,
foot-dragging on needed trade reform by our major overseas trading partners, and
a collapse of the Mexican peso and economy. Finally, add a fiscal crisis in
Canada and a slide in its dollar. In these circumstances can the accelerating
erosion of the U.S. dollar during the past few months seem so surprising? The
sweeping election victory that yielded Republican majorities in both houses of
Congress may launch a more responsible approach to fiscal management, but fine
print of the Contract With America calls for Middle-America to part with
entitlements, long held sacred, in favor of budgetary balance. We can be sure
our international creditors are watching developments in Washington with
particular interest. Thus far, their assessment is not particularly optimistic.
By contrast, we believe the value of the dollar reflects undue pessimism. By
virtually any standard comparing purchasing power, the dollar is significantly
undervalued versus the yen and the mark. As a result, it is not hard to see the
dollar stabilizing, if not appreciating modestly, in the visible future.
Has the Fed finished tightening credit? This question is asked and answered by
investors every day, since the perceived trend of short interest rates largely
determines the valuation of the bond and stock markets. Today's slowing economy
and low inflation bode well for unchanged, if not lower, short interest rates.
The weak dollar and soaring input prices suggest the opposite. The current level
of the bond and stock markets seems to imply a consensus for no additional
increases in short rates. We are not as sure, but believe that if monetary
policy is tightened one more notch, the lift in rates would probably be the last
for this cycle.
Bond yields peaked just as the Funds' fiscal year began last fall. The slowing
economy, low inflation, new Congressional budget balancing initiatives, and
strong internal corporate financing capability combined to drive the meaningful
bond market rally that lifted your fixed income portfolios this fiscal year.
Yields all along the curve fell with a particularly dramatic drop in
intermediate bond yields. The 5 year treasury yield has fallen almost one
percentage point while long treasury bond yields declined about three-quarters
of a percent and could fall further, although we believe the rally is close to
its finish. First American bond funds extended maturity last fall to
successfully capture much of the rally's benefit. Believing bonds to be near
fair value, the fixed income funds recently shortened maturity to a neutral
stance versus their respective benchmark averages.
The slowing of economic growth to a sustainable pace carried the prospect of an
end to monetary tightening, a lesson not lost on the stock market this fiscal
year. Stocks rallied strongly and the market averages now stand at record highs.
Surprisingly strong earning gains have supported equity valuations for many
months and promise to remain a favorable factor in the investment equation for
at least several more quarters. This is not to ignore the heated debate over the
impact of slowing domestic economic growth, but extensive restructuring of
American corporations in both the manufacturing and service sectors has produced
cost structures which seems capable of surprising investors with better than
expected earnings gains. Stocks of companies that are "fixing problems" have
been rewarding investments for the funds.
Although the weak dollar may be a concern for the United States in general, it
has accentuated comparatively our low unit labor costs, which favor export
oriented corporations versus their competitors in other established industrial
nations. First American Funds in both value and growth styles have invested in
the stock of firms that are well positioned to profit from our country's
increasing competitive stature in global markets. We have also focused on firms
with operations or expansion plans reaching rapidly growing free markets
worldwide. Our international investment strategy focuses on rapidly growing
world product markets as opposed to the comparatively lethargic, mature
industrial economies.
The family of First American Funds offers investors a wide choice of investment
alternatives in equity, fixed income, or money market portfolios. Each fund
employs a well defined discipline in its management. The confidence of fund
shareholders has been reflected in significant growth of investment assets. It
has been a privilege to serve our shareholders.
Sincerely,
/s/ John M. Murphy, Jr.
John M. Murphy, Jr.
Senior Managing Director
First Asset Management
Chairman, First Trust
Statement of Net Assets----March 31, 1995 (Unaudited)
PRIME OBLIGATIONS FUND
Description Par (000) Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
COMMERCIAL PAPER--41.6%
Aes Barbers Point (LOC: Bank of America)
6.137%, 04/07/95 $27,000 $26,970
Asset Securitization
6.194%, 04/18/95 (C) 10,000 9,971
6.196%, 04/19/95 (C) 10,000 9,970
6.259%, 04/25/95 (C) 5,000 4,979
Banco Real S.A. (LOC: Barclays Bank PLC)
6.122%, 04/19/95 2,000 1,994
6.249%, 07/14/95 14,400 14,145
Blue Hawk Funding
6.055%, 04/11/95 (C) 10,245 10,228
6.084%, 04/12/95 (C) 5,119 5,110
6.055%, 04/25/95 (C) 6,945 6,917
6.128%, 04/27/95 (C) 5,550 5,526
6.082%, 04/28/95 (C) 3,000 2,986
6.086%, 05/03/95 (C) 4,351 4,328
Bridge Oil International Finance
(LOC: Westpac Bank)
6.193%, 04/11/95 16,500 16,472
6.193%, 04/11/95 1,500 1,497
6.222%, 04/24/95 12,690 12,640
Centerior Fuel (LOC: Barclays Bank PLC)
6.034%, 04/05/95 10,454 10,447
Cosco Company Limited
(LOC: Credit Suisse)
6.323%, 08/21/95 10,000 9,757
6.383%, 09/15/95 10,550 10,247
Crown Leasing USA (LOC: Bank of Tokyo)
6.082%, 04/06/95 (C) 10,000 9,992
DIC Americans (LOC: Mitsubishi Bank)
6.052%, 04/03/95 10,000 9,997
Distribution Funding
6.185%, 04/04/95 (C) 2,000 1,999
6.257%, 04/17/95 (C) 10,540 10,511
6.235%, 04/21/95 (C) 20,000 19,932
6.096%, 05/01/95 (C) 2,000 1,990
6.187%, 05/03/95 (C) 16,320 16,232
6.185%, 05/08/95 (C) 7,768 7,719
6.293%, 05/08/95 (C) 14,100 14,010
6.177%, 06/14/95 (C) 5,000 4,937
Enterprise Funding
6.289%, 04/03/95 (C) 8,000 7,997
6.033%, 04/04/95 (C) 15,000 14,993
6.042%, 04/06/95 (C) 12,000 11,990
6.163%, 04/17/95 (C) 11,774 11,742
6.164%, 04/17/95 (C) 6,351 6,334
6.129%, 04/28/95 (C) 5,829 5,802
6.261%, 04/28/95 (C) 4,406 4,386
6.141%, 05/12/95 (C) 5,000 4,965
6.224%, 06/06/95 (C) 10,000 9,888
Equipment Funding
6.049%, 04/04/95 (C) 23,687 23,675
6.034%, 04/05/95 (C) 4,621 4,618
Equipment Intermediation Partnership
6.051%, 04/27/95 (C) 10,000 9,957
6.118%, 04/27/95 (C) 5,890 5,864
First Deposit Master Trust
6.130%, 04/12/95 (C) 19,800 19,763
6.073%, 04/19/95 (C) 2,400 2,393
6.294%, 04/20/95 (C) 10,000 9,967
6.051%, 04/27/95 (C) 5,812 5,787
6.264%, 05/02/95 (C) 4,940 4,914
6.212%, 05/05/95 (C) 5,000 4,971
6.247%, 05/16/95 (C) 10,000 9,923
6.114%, 05/17/95 (C) 7,140 7,085
6.247%, 06/05/95 (C) 10,000 9,889
Fleet Funding
6.111%, 04/06/95 (C) 11,500 11,490
Goldman Sachs Group
6.265%, 05/01/95 10,000 9,949
International Lease Finance
6.267%, 04/10/95 10,000 9,985
Merrill Lynch
6.115%, 04/12/95 13,400 13,375
Nichimen Americas (LOC: Sanwa Bank)
6.084%, 04/12/95 12,500 12,477
6.085%, 04/13/95 12,500 12,475
Orix America (LOC: Sanwa Bank)
6.054%, 04/05/95 (C) 4,000 3,997
6.084%, 04/10/95 (C) 4,000 3,994
6.072%, 04/27/95 (C) 11,000 10,952
6.086%, 05/02/95 (C) 2,000 1,990
Pemex Capital (LOC: Credit Suisse)
6.055%, 04/28/95 13,530 13,469
Petroleo Brasileiro S.A.
(LOC: Barclays Bank PLC)
6.216%, 05/09/95 10,000 9,935
6.217%, 05/10/95 10,000 9,934
6.194%, 06/13/95 10,000 9,876
Pooled Certificate (Guarantor: FGIC)
6.066%, 04/24/95 (C) 1,705 1,698
6.260%, 04/25/95 (C) 5,807 5,783
Premium Funding
6.129%, 04/10/95 (C) 10,000 9,985
Prospect Street Senior Portfolio
(Guarantor: FSA)
6.055%, 04/24/95 (C) 4,829 4,810
6.081%, 04/28/95 (C) 4,021 4,003
6.197%, 06/16/95 (C) 3,507 3,462
Receivables Capital
6.056%, 04/13/95 (C) 20,000 19,960
6.065%, 04/13/95 (C) 5,177 5,167
6.057%, 04/19/95 (C) 19,000 18,943
6.067%, 04/20/95 (C) 18,145 18,087
6.038%, 04/21/95 (C) 8,126 8,099
Ryobi Financial (LOC: Mitsubishi bank)
6.080%, 04/06/95 12,000 11,990
Towson Town Center
(LOC: Mitsubishi Bank)
6.102%, 04/07/95 10,000 9,990
US Prime Property (LOC: Westpac Bank)
6.185%, 06/19/95 21,100 20,818
6.184%, 06/20/95 10,000 9,865
6.190%, 06/22/95 14,000 13,805
TOTAL COMMERCIAL PAPER
(Cost $758,769) 758,769
CORPORATE OBLIGATIONS--19.4%
Associates Corporation of North America
6.930%, 04/03/95 2,000 2,000
6.375%, 04/15/95 2,000 2,001
Bankers Trust of New York
6.340%, 04/03/95 (A) (C) 10,000 10,000
Bear Stearns
6.820%, 04/03/95 (A) (C) 17,000 17,000
Beneficial
9.550%, 04/03/95 (C) 5,000 5,001
Beta Finance
6.750%, 04/03/95 (A) (C) 50,000 50,000
Commercial Credit Group
7.700%, 08/15/95 12,000 12,084
Ford Motor Credit
9.700%, 06/02/95 (C) 1,000 1,007
5.300%, 09/11/95 (C) 7,500 7,479
General Electric Capital
6.320%, 04/03/95 (A) 50,000 49,940
Goldman Sachs Group
5.062%, 04/10/95 (C) 10,000 10,000
7.000%, 07/05/95 45,000 45,000
6.562%, 12/19/95 (C) 10,000 10,000
International Lease Finance
8.200%, 04/15/95 17,775 17,796
Key Bank of New York
6.260%, 04/03/95 (A) 27,000 26,991
Merrill Lynch
6.340%, 04/03/95 (A) 30,000 30,000
Morgan Stanley Group
6.750%, 04/10/95 (C) 10,000 10,003
Structured Enhanced Return Trust 1995 A-5
6.175%, 04/25/95 (A) (C) 47,000 46,992
TOTAL CORPORATE OBLIGATIONS
(Cost $353,294) 353,294
U.S. GOVERNMENT AGENCY OBLIGATIONS--10.9%
Export-Import Bank
6.372%, 04/15/95 (A) (C) 70,455 70,443
Export-Import Bank/KA leasing
6.332%, 04/15/95 (A) (C) 36,163 36,163
FHLB
6.450%, 04/06/95 (A) 25,000 25,025
6.580%, 04/03/95 (A) 25,000 25,056
FNMA
6.400%, 04/03/95 (A) 20,000 19,995
SLMA
6.270%, 04/04/95 (A) 200 200
6.195%, 04/04/95 (A) 200 200
6.170%, 04/04/95 (A) 11,150 11,138
6.170%, 04/04/95 (A) 10,000 9,994
U.S. Agency For International Development
6.470%, 04/04/95 (A) 1,250 1,248
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $199,462) 199,462
LOAN PARTICIPATION CERTIFICATES--10.0%
Barclays Bank PLC (Cargill Financial)
6.020%, 04/04/95 10,000 10,000
6.050%, 04/20/95 5,000 5,000
6.050%, 04/20/95 28,000 28,000
6.050%, 04/26/95 20,000 20,000
Barclays Bank PLC (ITT Hartford)
6.100%, 04/11/95 10,000 10,000
Barclays Bank PLC (Lincoln National
Corporation)
6.030%, 04/13/95 9,800 9,800
Barclays Bank PLC (National Rural Utilities)
6.050%, 04/18/95 10,000 10,000
6.100%, 05/17/95 20,000 20,000
CoreStates Bank (Weyerhauser Mortgage)
6.120%, 04/18/95 42,000 42,000
Toronto Dominion Bank (National Rural
Utilities)
6.080%, 04/03/95 5,000 5,000
6.070%, 04/10/95 12,000 12,000
6.060%, 04/13/95 11,500 11,500
TOTAL LOAN PARTICIPATION CERTIFICATES
(Cost $183,300) 183,300
ASSET BACKED SECURITIES--6.1%
CARCO Auto Loan Master Trust 1993-2 A1
6.145%, 04/15/95 (A) 60,500 60,500
Money Market Auto Loan Trust
6.245%, 04/15/95 (A) (C) 51,500 51,506
TOTAL ASSET BACKED SECURITIES
(Cost $112,006) 112,006
CERTIFICATES OF DEPOSIT--2.7%
Mercantile Safe Deposit & Trust
6.175%, 04/07/95 (A) 20,000 20,000
6.175%, 04/07/95 (A) 30,000 30,000
TOTAL CERTIFICATES OF DEPOSIT
(Cost $50,000) 50,000
MASTER NOTES--1.6%
Barclays Bank PLC
5.980%, 04/03/95 (B) 12,563 12,563
Goldman Sachs
6.080%, 04/04/95 (B) 3,181 3,181
Heller Financial
6.057%, 04/04/95 (B) 12,636 12,636
TOTAL MASTER NOTES
(Cost $28,380) 28,380
EUROPEAN TIME DEPOSIT--1.1%
Toronto Dominion Bank
6.375%, 04/03/95 20,000 20,000
TOTAL EUROPEAN TIME DEPOSIT
(Cost $20,000) 20,000
REPURCHASE AGREEMENTS--6.7%
Salomon Brothers 6.30%, dated 03/31/95,
matures 04/03/95, repurchase price
$121,655,489 (collateralized by various
FHLMC and FNMA Bonds, total par value
$573,105,826, with rates ranging from
0.00% to 16.00%, maturities ranging
from 1999 to 2024, total market value
$124,302,124) 121,592 121,592
TOTAL REPURCHASE AGREEMENTS
(Cost $121,592) 121,592
TOTAL INVESTMENTS--100.1%
(Cost $1,826,803) 1,826,803
OTHER ASSETS AND LIABILITIES--(0.1%)
Other Assets and Liabilities, Net (2,167)
NET ASSETS:
Portfolio shares--Institutional Class
($.01 par value--20 billion authorized)
based on 1,746,811,991 outstanding shares $1,746,812
Portfolio shares--Retail Class A
($.01 par value--20 billion authorized)
based on 72,038,605 outstanding shares 72,039
Portfolio shares--Retail Class B
($.01 par value--20 billion authorized)
based on 13,373 outstanding shares 13
Portfolio shares--Corporate Trust Class
($.01 par value--20 billion authorized)
based on 5,766,591 outstanding shares 5,767
Accumulated net realized gain on investments 5
TOTAL NET ASSETS:--100.0% $1,824,636
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--INSTITUTIONAL CLASS $ 1.00
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--RETAIL CLASS A $ 1.00
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--RETAIL CLASS B (1) $ 1.00
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE--CORPORATE TRUST CLASS $ 1.00
</TABLE>
(A) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995. The date shown is the
next reset date.
(B) Variable Rate Security with Demand Features--the rate reported on the
Statement of Net Assets is the rate as of March 31, 1995. The date shown
is the longer of the reset or demand date.
(C) Securities sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) or 144A of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors". These securities have been determined to
be liquid by the Board of Directors.
LOC--Letter Of Credit
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance
FHLB--Federal Home Loan Board
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
SLMA--Student Loan Marketing Association
(1) Retail Class B has a contingent deferred sales charge. For a description
of a possible redemption charge, see the notes to the financial
statements.
The accompanying notes are an integral part of the financial statements.
GOVERNMENT OBLIGATIONS FUND
Description Par (000) Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--42.2%
Export-Import Bank
6.332%, 04/15/95 (A) (B) $18,199 $ 18,199
6.372%, 04/15/95 (A) (B) 30,000 29,991
6.313%, 04/15/95 (A) (B) 25,000 25,000
FHLB
6.083%, 06/07/95 10,000 9,889
FHLMC
6.078%, 06/02/95 14,200 14,054
6.093%, 06/09/95 10,000 9,885
6.420%, 04/07/95 (A) 15,000 15,006
FNMA
5.992%, 04/17/95 10,000 9,974
6.196%, 05/03/95 15,000 14,919
6.273%, 07/17/95 15,000 14,728
6.380%, 08/16/95 10,000 9,765
6.191%, 09/25/95 20,000 19,410
SBA
7.000%, 04/03/95 (A) 1,630 1,636
7.000%, 04/03/95 (A) 1,971 1,971
7.000%, 04/03/95 (A) 2,268 2,268
7.000%, 04/03/95 (A) 2,797 2,797
7.000%, 04/03/95 (A) 11,943 11,943
SLMA
6.170%, 04/04/95 (A) 15,000 15,000
6.010%, 04/04/95 (A) 10,000 10,000
6.010%, 04/07/95 (A) 20,000 20,000
U.S. Agency For International Development
6.270%, 04/05/95 (A) 10,000 10,027
6.270%, 04/07/95 (A) 13,000 13,000
6.270%, 04/07/95 (A) 11,000 11,000
6.270%, 04/04/95 (A) 1,000 1,000
6.368%, 04/07/95 (A) 10,000 9,987
6.358%, 04/04/95 (A) 15,000 15,000
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $316,449) 316,449
OTHER U.S. GOVERNMENT OBLIGATIONS--19.0%
Downey Savings & Loan (LOC: Federal
Home Loan Bank of San Francisco)
6.160%, 04/20/95 25,000 24,919
6.354%, 09/01/95 25,000 24,344
Fidelity Federal Bank, FSA (LOC: Federal
Home Loan Bank of San Francisco)
6.220%, 04/04/95 9,500 9,495
6.222%, 04/07/95 20,000 19,980
6.141%, 04/10/95 10,000 9,985
6.153%, 04/18/95 15,000 14,957
6.154%, 04/19/95 5,000 4,985
6.195%, 04/19/95 14,500 14,456
6.215%, 04/24/95 20,000 19,922
TOTAL OTHER U.S. GOVERNMENT OBLIGATIONS
(Cost $143,043) 143,043
U.S. TREASURY OBLIGATIONS--2.7%
U.S. Treasury Note
8.500%, 05/15/95 20,000 20,077
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $20,077) 20,077
REPURCHASE AGREEMENTS--36.1%
Bear Stearns 6.17%, dated 03/31/95,
matures 04/03/95, repurchase price
$70,035,992 (collateralized by various
U.S. Treasury STRIPS, total par value
$156,380,000, maturities from 1998 to
2008, total market value $71,400,000) 70,000 70,000
Daiwa Securities 6.25%, dated 03/31/95,
matures 04/03/95, repurchase price
$30,015,625 (collateralized by U.S.
Treasury Bond, total par value
$28,600,000, 8.25%, matures 2019,
total market value $30,600,000) 30,000 30,000
Morgan Stanley 6.03%, dated 03/31/95,
matures 04/03/95, repurchase price
$15,599,855 (collateralized by various
FNMA obligations, total par value
$447,141,947, with interest rates from
8.50% to 9.00%, maturities from 2024 to
2025, total market value $15,984,060) 15,592 15,592
Saloman Brothers 6.30%, dated 03/31/95,
matures 04/03/95, repurchase price
$155,042,756 (collateralized by various
FNMA and FHLMC obligations, total par
value $45,141,981, with interest rates
from 0.00% to 42.80%, maturities from
1998 to 2025, total market value
$158,325,877) 154,961 154,961
TOTAL REPURCHASE AGREEMENTS
(Cost $270,553) 270,553
TOTAL INVESTMENTS--100.0%
(Cost $750,122) 750,122
OTHER ASSETS AND LIABILITIES--0.0%
Other Assets and Liabilities, Net (1)
NET ASSETS:
Portfolio shares--Institutional Class
($.01 par value--20 billion authorized) based on
580,638,848 outstanding shares $580,639
Portfolio shares--Corporate Trust Class
($.01 par value--20 billion authorized) based on
169,472,105 outstanding shares 169,472
Accumulated net realized gain on investments 10
TOTAL NET ASSETS:--100.0% $750,121
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 1.00
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--CORPORATE TRUST CLASS $ 1.00
</TABLE>
(A) Variable Rate Security--the rate reported on the Statement of Net
Assets is the rate in effect as of March 31, 1995. The date shown is the
next reset date.
(B) Securities sold within the terms of a private placement memorandum,
exempt from registration under Section 4[2] or 144A of the Securities
Act of 1993, as amended, and may be sold only to dealers in that
program or other "accredited investors." These securities have been
determined to be liquid under guidelines established by the Board of
Directors.
LOC--Letter of Credit
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
SBA--Small Business Administration
SLMA--Student Loan Mortgage Association
STRIPS--Separately Trading of Registered Interest and
Principal of Securities
The accompanying notes are an integral part of the financial statements.
TREASURY OBLIGATIONS FUND
Description Par (000) Value (000)
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. TREASURY OBLIGATIONS--26.3%
U.S. Treasury Bills
5.860%, 05/25/95 $ 25,000 $ 24,779
5.920%, 05/25/95 25,000 24,778
5.840%, 06/01/95 25,000 24,753
6.045%, 07/20/95 25,000 24,538
5.920%, 07/27/95 25,000 24,519
6.010%, 08/24/95 25,000 24,395
5.805%, 09/07/95 25,000 24,359
5.900%, 09/14/95 25,000 24,320
5.830%, 09/21/95 25,000 24,300
5.840%, 10/19/95 25,000 24,185
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $244,926) 244,926
REPURCHASE AGREEMENTS--74.0%
BA Securities 6.20%, dated 03/31/95,
matures 04/03/95, repurchase price
$100,051,667 (collateralized by U.S.
Treasury Notes, total par value
$100,035,000, interest rates from
6.88% to 7.50%, maturities from
05/15/96 to 02/28/97, total market
value $102,000,000) 100,000 100,000
Bear Stearns 6.17%, dated 03/31/95,
matures 04/03/95, repurchase price
$190,097,692 (collateralized by various
U.S. Treasury STRIPS, total par value
$340,225,000, principal only, maturities
from 1998 to 2005, total market value
$193,800,000) 190,000 190,000
BT Securities 6.03%, dated 03/31/95,
matures 04/03/95, repurchase price
$45,022,613 (collateralized by U.S.
Treasury Note, total par value
$42,580,000, 8.88%, matures 11/15/97,
total market value $45,900,000) 45,000 45,000
Daiwa Securities 6.25%, dated
03/31/95, matures 04/03/95, repurchase
price $88,045,833 (collateralized by
U.S. Treasury Bonds, total par value
$66,630,000, interest rates from
10.38% to 12%, maturities from 2005 to
2012, total market value $89,760,000) 88,000 88,000
Goldman Sachs 6.05%, dated 03/31/95,
matures 04/03/95, repurchase price
$42,021,175 (collateralized by U.S.
Treasury Notes and Bonds, total par
value $39,520,000, interest rates from
6% to 8.13%, maturities from 1997 to
2021, total market value $42,840,000) 42,000 42,000
Lehman Brothers 6.15%, dated 03/31/95,
matures 04/03/95, repurchase price
$45,023,063 (collateralized by U.S.
Treasury Bills, total par value
$45,055,000, interest rates from 4.63%
to 8.50%, maturities from 05/15/95 to
08/15/95, total market value
$45,900,000) 45,000 45,000
Merrill Lynch 5.85%, dated 03/31/95,
matures 04/03/95, repurchase price
$17,008,288 (collateralized by U.S.
Treasury Note, total par value
$17,000,000, 6.88%, matures 02/28/97,
total market value $17,340,000) 17,000 17,000
Morgan Stanley 5.98%, dated 03/31/95,
matures 04/03/95, repurchase price
$73,284,614 (collateralized by U.S.
Treasury Bills and Bonds, total par
value $73,398,000, with rates ranging
from 7.125% to 11.75%, maturities from
1995 to 2023, total market value
$75,251,988) 73,248 73,248
Nomura Securities 6.08%, dated
03/31/95, matures 04/03/95, repurchase
price $42,021,280 (collateralized by
U.S. Treasury Bonds, total par value
$34,000,000, interest rates from 6.25%
to 8.50%, maturities from 2020 to
2023, total market value $46,840,000) 42,000 42,000
Prudential Securities 6.13%, dated
03/31/95, matures 04/03/95, repurchase
price $46,420,512 (collateralized by
various U.S. Treasury Notes, total par
value $47,167,000, interest rates from
4.25% to 8.875%, maturities from 1996
to 2003, a U.S Treasury Bond, interest
rate 11.625%, maturity 11/15/2004, and
a U.S. Treasury STRIP, principal only,
maturity 02/15/2003, total market
value $47,325,001) 46,397 46,397
TOTAL REPURCHASE AGREEMENTS
(Cost $688,645) 688,645
TOTAL INVESTMENTS--100.3%
(Cost $933,571) 933,571
OTHER ASSETS AND LIABILITIES--(0.3%)
Other Assets and Liabilities, Net (3,177)
NET ASSETS:
Portfolio shares--Institutional Class ($.01 par
value--20 billion authorized) based on 42,426,906
outstanding shares $ 42,427
Portfolio shares--Corporate Trust Class ($.01 par
value--20 billion authorized) based on 887,964,853
outstanding shares 887,965
Accumulated net realized gain on investments 2
TOTAL NET ASSETS:--100.0% $930,394
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 1.00
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE--CORPORATE TRUST CLASS $ 1.00
</TABLE>
STRIPS--Separately Trading of Registered Interest and Principal of
Securities
The accompanying notes are an integral part of the financial statements
Statements of Operations (000) (Unaudited)
For the period ended March 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRIME GOVERNMENT TREASURY
OBLIGATIONS OBLIGATIONS OBLIGATIONS
FUND FUND FUND
INVESTMENT INCOME:
Interest $44,172 $17,615 $22,687
EXPENSES:
Investment advisory fees 3,036 1,225 1,906
Distribution Fees -- Institutional Class 571 263 --
Distribution fees -- Retail Class A 33 -- --
Distribution Fees -- Corporate Trust
Class 1 45 248
Administrator fees 531 214 290
Custodian fees 229 92 124
Registration fees 220 89 137
Professional fees 122 48 66
Transfer agent fees 27 15 11
Printing 34 14 18
Directors' fees 23 9 13
Amortization of organizational costs 2 2 1
Other 25 10 21
TOTAL EXPENSES 4,854 2,026 2,835
LESS: EXPENSES WAIVED (1,405) (603) (350)
TOTAL NET EXPENSES 3,449 1,423 2,485
INVESTMENT INCOME--NET 40,723 16,192 20,202
NET REALIZED GAIN (LOSS) ON INVESTMENTS 3 (25) 2
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $40,726 $16,167 $20,204
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statements of Changes in Net Assets (000) (Unaudited)
<TABLE>
<CAPTION>
PRIME GOVERNMENT TREASURY
OBLIGATIONS FUND OBLIGATIONS FUND OBLIGATIONS FUND
10/1/94 10/1/93 10/1/94 10/1/93 10/1/94 10/4/93(1)
TO TO TO TO TO TO
<S> <C> <C> <C> <C> <C> <C>
3/31/95 9/30/94 3/31/95 9/30/94 3/31/95 9/30/94
OPERATIONS:
Investment income--net $ 40,723 $ 35,066 $ 16,192 $ 11,389 $ 20,202 $ 18,457
Net realized gain (loss) on investments 3 -- (25) 42 2 --
Net increase in net assets resulting from
operations 40,726 35,066 16,167 11,431 20,204 18,457
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net
Institutional class (39,977) (35,064) (14,551) (11,389) (141) --
Retail class A (723) -- -- -- -- --
Retail class B -- -- -- -- -- --
Corporate Trust class (25) -- (1,641) -- (20,061) (18,457)
Net realized gain on investments
Institutional class -- -- -- (17) -- --
Retail class A -- -- -- -- -- --
Retail class B -- -- -- -- -- --
Corporate Trust class -- -- -- -- -- --
Total distributions (40,725) (35,064) (16,192) (11,406) (20,202) (18,457)
CAPITAL SHARE TRANSACTIONS
AT NET ASSET VALUE OF $1.00 PER SHARE:
Institutional Class
Proceeds from sales 5,543,343 7,496,942 2,250,000 3,213,046 61,093 --
Reinvestment of distributions 15,488 13,344 6,711 5,280 31 --
Payments for redemptions (5,119,362) (6,885,929) (2,131,906) (2,999,813) (18,697) --
Increase in net assets from
Institutional Class transactions 439,469 624,357 124,805 218,513 42,427 --
Retail Class A:
Proceeds from sales 27,070 -- -- -- -- --
Shares issued in connection with
acquisition of Money Fund 63,816 -- -- -- -- --
Reinvestment of distributions 396 -- -- -- -- --
Payments for redemptions (19,243) -- -- -- -- --
Increase in net assets from Retail Class
A transactions 72,039 -- -- -- -- --
Retail Class B:
Proceeds from sales 13 -- -- -- -- --
Reinvestment of distributions -- -- -- -- -- --
Payments for redemptions -- -- -- -- -- --
Increase in net assets from Retail Class
B transactions 13 -- -- -- -- --
Corporate Trust Class:
Proceeds from sales 6,994 -- 104,779 -- 1,680,930 3,642,667
Shares issued in connection with
acquisition of CT Government Fund -- -- 156,260 -- -- --
Reinvestment of distributions -- -- -- -- -- --
Payments for redemptions (1,227) -- (91,567) -- (1,539,055) (2,896,577)
Increase in net assets from Corporate
Trust Class transactions 5,767 -- 169,472 -- 141,875 746,090
Increase in net assets from capital share
transactions 517,288 624,357 294,277 218,513 184,302 746,090
Total increase in net assets 517,289 624,359 294,252 218,538 184,304 746,090
Net assets at beginning of period 1,307,347 682,988 455,869 237,331 746,090 --
Net assets at end of period (2) $ 1,824,636 $ 1,307,347 $ 750,121 $ 455,869 $ 930,394 $ 746,090
</TABLE>
(1)The Treasury Obligations Fund commenced operations on October 4, 1993.
(2)Including undistributed net investment income (000) of $0 and $2 for Prime
Obligations Fund at March 31, 1995 and September 30, 1994, respectively.
The accompanying notes are an integral part of the financial statements.
Financial Highlights (Unaudited)
For the period ended March 31, 1995 and the periods ended September 30, For a
share outstanding throughout the period
<TABLE>
<CAPTION>
RATIO OF
NET NET RATIO EXPENSES
ASSET DIVIDENDS ASSET NET RATIO OF OF NET TO AVERAGE
VALUE NET FROM NET VALUE ASSETS EXPENSES INCOME TO NET ASSETS
BEGINNING INVESTMENT INVESTMENT END OF TOTAL END OF TO AVERAGE AVERAGE (EXCLUDING
OF PERIOD INCOME INCOME PERIOD RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIME OBLIGATIONS
INSTITUTIONAL CLASS
1995* $1.00 $0.027 $(0.027) $1.00 2.68%+ $1,746,817 0.45% 5.36% 0.64%
1994 1.00 0.035 (0.035) 1.00 3.56 1,307,347 0.45 3.58 0.60
1993 1.00 0.030 (0.030) 1.00 3.02 682,988 0.45 2.97 0.62
1992 1.00 0.039 (0.039) 1.00 4.02 203,765 0.45 3.90 0.59
1991 1.00 0.064 (0.064) 1.00 6.60 193,650 0.45 6.43 0.57
1990(1) 1.00 0.046 (0.046) 1.00 4.73+ 239,231 0.45 7.90 0.55
RETAIL CLASS A
1995(3) $1.00 $0.025 $(0.025) $1.00 2.33%+ $ 72,039 0.70% 5.48% 0.82%
RETAIL CLASS B
1995(4) $1.00 $0.009 $(0.009) $1.00 0.88%+ $ 13 1.45% 4.65% 1.54%
CORPORATE TRUST CLASS
1995(5) $1.00 $0.010 $(0.010) $1.00 1.03%+ $ 5,767 0.60% 5.66% 0.71%
GOVERNMENT OBLIGATIONS
INSTITUTIONAL CLASS
1995* $1.00 $0.026 $(0.026) $1.00 2.63%+ $ 580,648 0.45% 5.26% 0.66%
1994 1.00 0.034 (0.034) 1.00 3.48 455,869 0.45 3.61 0.61
1993 1.00 0.028 (0.028) 1.00 2.87 237,331 0.45 2.83 0.65
1992 1.00 0.038 (0.038) 1.00 3.85 93,770 0.45 3.71 0.64
1991 1.00 0.060 (0.060) 1.00 6.22 72,824 0.45 5.90 0.68
1990(1) 1.00 0.045 (0.045) 1.00 4.56+ 29,704 0.45 7.60 0.98
CORPORATE TRUST CLASS
1995(3) $1.00 $0.025 $(0.025) $1.00 2.30%+ $ 169,473 0.60% 5.49% 0.70%
TREASURY OBLIGATIONS
INSTITUTIONAL CLASS
1995(5) $1.00 $0.010 $(0.010) $1.00 1.01%+ $ 42,427 0.45% 5.57% 0.53%
CORPORATE TRUST CLASS
1995* $1.00 $0.024 $(0.024) $1.00 2.44%+ $ 887,967 0.60% 4.87% 0.68%
1994(2) 1.00 0.031 (0.031) 1.00 3.12+ 746,090 0.58 3.19 0.68
</TABLE>
+Returns are for the period indicated and have not been annualized
*All ratios for the periods have been annualized.
(1)Commenced operations on March 1, 1990. All ratios for the period have been
annualized.
(2)Commenced operations on October 4, 1993. All ratios for the period have
been annualized.
(3)Commenced operations on January 21, 1995. All ratios for the period have
been annualized.
(4)Commenced operations on January 23, 1995. All ratios for the period have
been annualized.
(5)Commenced operations on January 24, 1995. All ratios for the period have
been annualized.
The accompanying notes are an integral part of the financial statements.
Notes to Financial Statements----March 31, 1995 (Unaudited)
1 ORGANIZATION
First American Funds, Inc. (FAF) is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end, management investment company.
FAF presently consists of a series of three funds (the Funds) which includes the
First American Prime Obligations Fund (formerly the Institutional Money Fund),
First American Government Obligations Fund (formerly the Institutional
Government Fund), and First American Treasury Obligations Fund (formerly CT
Treasury Fund). FAF's articles of incorporation permit the board of directors to
create additional funds in the future.
Prime Obligations Fund offers four classes of shares: the Institutional Class C
Shares, the Retail Class A Shares, the Retail Class B Shares, and Corporate
Trust Class D Shares. Government Obligations Fund and Treasury Obligations Fund
offer two classes of shares: the Institutional Class C Shares, and Corporate
Trust Class D Shares. Each class is sold pursuant to different sales
arrangements and bear different expenses.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
Security Valuation -- Investment securities of the Funds are stated at amortized
cost which approximates market value. Under this valuation method, purchase
discounts and premiums are accreted and amortized ratably to maturity and are
included in interest income.
Security Transactions and Investment Income -- Security transactions are
accounted for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold, adjusted for the accretion and
amortization of purchase discounts and premiums during the respective holding
period which is calculated using the straight-line method.
Interest income is recorded on the accrual basis.
Repurchase Agreements -- Securities pledged as collateral for Repurchase
Agreements are held by each Fund's custodian bank until maturity of the
Repurchase Agreements. The Fund's may also invest in tri-party repurchase
agreements. Securities held as collateral for tri-party repurchase agreements
are maintained in a segregated account by the broker's custodian bank until the
maturity of the repurchase agreement. Provisions of the Agreements and
procedures adopted by the Adviser ensure that the market value of the
collateral, including accrued interest thereon, is sufficient in the event of
default by the counterparty. If the counterparty defaults and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.
Distributions to Shareholders -- Distributions from net investment income are
declared on a daily basis and are payable on the first business day of the
following month. Any net realized capital gains on sales of securities for a
Fund are distributed to its shareholders at least annually.
Expenses -- Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses of the Funds are prorated to the
Funds on the basis of relative net assets. Class specific expenses, such as
12b-1 fees, are borne by that class. Income, other expenses and realized gains
and losses of a Fund are allocated to the respective class on the basis of the
relative net asset value each day.
Federal Income Taxes -- It is each Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required.
Organization Costs -- Organization expenses were incurred with the start-up and
initial registration of the Prime Obligations Fund, Government Obligations Fund,
and Treasury Obligations Fund. These costs are being amortized over 60 months on
a straight-line basis.
3 FEES AND EXPENSES
Pursuant to an investment advisory agreement (the Agreement), First Bank
National Association (the Adviser) manages each Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Agreement
requires each Fund to pay the Adviser a monthly fee based upon average daily net
assets. The fee for each of the Funds is equal to an annual rate of .40% of a
Fund's average daily net assets. Through a separate contractual agreement, First
Trust National Association (the custodian), an affiliate of the Adviser, serves
as the Funds' custodian.
SEI Financial Services Company (SFS) and SEI Financial Management Corporation
(SFM) serve as distributor and administrator of the Funds, respectively. The
distribution plan for Prime Obligations calls for the Fund to pay SFS a
distribution and servicing fee monthly at an annual rate of 0.25% of the Fund's
Class A Shares' average daily net assets. With respect to the Class B Shares of
Prime Obligations, the distributor is authorized to retain a contingent deferred
sales charge that may be paid upon redemption of Class B Shares. The
distribution plan also calls for the Fund to pay SFS a distribution and
servicing fee monthly at an annual rate of 1.00% of the Fund's Class B Shares'
average daily net assets. Under the distribution plan for Prime Obligations,
Government Obligations, and Treasury Obligations Class D shares, each fund pays
SFS a distribution and servicing fee monthly at an annual rate of 0.15% of the
Fund's Class D Shares' average daily net assets. All distribution fees were
waived by the distributor through January 20, 1995.
A Contingent Deferred Sales Charge (CDSL) is imposed on redemptions made in the
Retail Class B. The CDSL varies depending on the number of years from time of
payment for the purchase of Class B shares until the redemption of such shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE
YEAR SINCE AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
FIRST 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
</TABLE>
SFM provides administrative services, including certain accounting, legal and
shareholder services, at an annual rate of .07% of each Fund's average daily net
assets, with a minimum annual fee of $50,000 per Fund.
In addition to the investment advisory and management fees, custodian fees,
distribution fees, administrator and transfer agent fees, each fund is
responsible for paying most other operating expenses including organization
costs, fees and expenses of outside directors, registration fees, printing and
shareholder reports, legal, auditing, insurance and other miscellaneous
expenses.
During the period ended March 31, 1995, the Adviser and other parties waived a
portion of their contractual fees in order to assist the Funds in maintaining a
competitive expense ratio. Expenses were waived as follows (in thousands):
<TABLE>
<CAPTION>
PRIME GOVERNMENT TREASURY
OBLIGATIONS OBLIGATIONS OBLIGATIONS
FUND FUND FUND
<S> <C> <C> <C>
WAIVER OF
INVESTMENT
ADVISORY FEES $ 834 $340 $350
Waiver of
distribution
fees 571 263 --
$1,405 $603 $350
</TABLE>
Certain officers of the funds are also officers of the Administrator and/or
Distributor. Such officers are paid no fees by the funds for serving in their
respective roles.
For the period ended March 31, 1995, legal fees and expenses were paid to a law
firm of which the Secretary of the Funds is a partner.
Effective April 14, 1995, Supervised Service Company was acquired by DST
Systems, Inc. DST Systems, Inc. now provides transfer agent services for the
Funds.
4 ACQUISITION OF FIRST AMERICAN MONEY FUND AND FIRST AMERICAN CT
GOVERNMENT FUND
On January 20, 1995 First American Prime Obligations Fund acquired all net
assets of First American Money Fund and First American Government Obligations
Fund acquired all net assets of First American CT Government Fund pursuant to a
plan of reorganization approved by First American shareholders on December 16,
1994. The acquisitions were accompanied by a tax-free exchange of 63,816,319
shares of Money Fund for 63,816,319 shares of Prime Obligations Retail Class A
outstanding and an exchange of 156,260,107 shares of CT Government Fund for
156,260,107 shares of Government Obligations Corporate Trust Class as of the
close of business on January 20, 1995. The aggregate net assets of First
American Prime Obligations Fund and Money Fund before the acquisition were
$1,498,492,068 and $63,816,316 respectively, and the aggregate net assets of
First American Government Obligations Fund and CT Government Fund before the
acquisition were $602,905,803 and $156,260,107 respectively.
FIRST AMERICAN FUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Investment Adviser
First Bank National Association
601 Second Avenue South
Minneapolis, Minnesota 55402
Custodian
First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Administrator
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
Transfer Agent
DST SYSTEMS, INC.
811 Main Street
Kansas City, Missouri 64105
Distributor
SEI Financial Services Company
680 East Swedesford Road
Wayne, Pennsylvania 19087
Independent Auditors
KPMG Peat Marwick LLP
90 South Seventh Street
Minneapolis, Minnesota 55402
Counsel
Dorsey & Whitney P.L.L.P.
220 South Sixth Street
Minneapolis, Minnesota 55402
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the corporation. The report is not
authorized for distribution to prospective investors in the corporation unless
preceded or accompanied by an effective prospectus for each of the Funds
included. Shares in the Funds are not deposits or obligations of, or guaranteed
or endorsed by, First Bank National Association or any of its affiliates. Such
shares are also not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency. Investment in the
shares involve investment risk including loss of principal amount invested.
FAF-1976 5/95
