FIRST AMERICAN
INVESTMENT FUNDS, INC.
BOND
FUNDS
1999 SEMIANNUAL REPORT
[LOGO] FIRST AMERICAN
THE POWER OF DISCIPLINED INVESTING(R)
<PAGE>
FIRST AMERICAN FAMILY OF FUNDS INVESTMENTS FOR EVERY GOAL
- ------------------ FIRST AMERICAN FUNDS OFFER A FULL RANGE
HIGHER RETURN OF INVESTMENT STRATEGIES TO HELP YOU
POTENTIAL CREATE A PERSONALIZED, DIVERSIFIED
- ------------------ PORTFOLIO. SUPPORTED BY EXTENSIVE
RESEARCH AND A HIGHLY DEVELOPED TEAM
SECTOR FUNDS APPROACH TO INVESTMENT DECISION MAKING,
FIRST AMERICAN FUNDS CAN HELP BUILD A
INTERNATIONAL FUNDS WINNING STRATEGY FOR ANY INVESTOR.
SMALL CAP FUNDS
MID CAP FUNDS
LARGE CAP FUNDS
STRATEGY FUNDS
BOND FUNDS
Adjustable Rate Mortgage Securities
Fixed Income
Intermediate Government Bond
Intermediate Term Income
Limited Term Income
Strategic Income
TAX FREE BOND FUNDS
MONEY MARKET FUNDS
- -----------------
LOWER RETURN
POTENTIAL
- -----------------
TABLE OF
CONTENTS
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MESSAGE TO SHAREHOLDERS 1
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STATEMENTS OF NET ASSETS 3
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STATEMENTS OF OPERATIONS 22
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STATEMENTS OF CHANGES IN NET ASSETS 24
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FINANCIAL HIGHLIGHTS 26
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NOTES TO FINANCIAL STATEMENTS 30
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NOTICE TO SHAREHOLDERS 40
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NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
<PAGE>
MESSAGE TO SHAREHOLDERS MAY 14, 1999
DEAR SHAREHOLDERS:
On behalf of the entire board of directors and management of First American
Asset Management -- we are pleased to welcome all new fund shareholders and to
thank our long-term shareholders for your continued support.
The economic environment has changed dramatically since September 30, the
date of our last shareholder update. At that time, worried investors drove the
Dow Jones Industrial Average down 20 percent, fueled by fears of an economic
crisis overseas. Some economists even predicted that problems in Asia could
ultimately send the U.S. economy into a recession.
Since then, the Dow has staged a non-stop rally, rising more than 2,000
points to surpass the 10,000 barrier. Many Asian nations have partially
recovered from their financial crises, while the U.S. economy continues to
expand at an unprecedented rate. Thanks to low unemployment, low inflation,
stable interest rates and strong consumer spending, it is business as usual for
our robust economy.
With the continuing strong economy, the bond market has weakened as
investors become more concerned about possible acceleration of inflation and
rising demand for capital. The new higher yields of fixed-income securities
represent much more attractive long-term values than those of a few months ago.
The bond market is likely to stay weak until the economy shows some signs of
slowing.
In these increasingly volatile markets, a well-balanced portfolio may
cushion you against unfavorable developments affecting any particular investment
style or asset class. We believe that successful long-term investing results
from asset allocation among bond, equity, and money market funds. An asset
allocation plan can help smooth out market fluctuations to produce more balanced
returns year after year.
As an investor in First American Funds, you can choose from 38 funds
spanning nine asset classes: money market, tax-free bond, bond, funds of funds,
and large-cap, mid-cap, small-cap, international and sector equity funds. First
American offers a wide range of funds to help you create a personalized,
diversified portfolio.
1 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
MESSAGE TO SHAREHOLDERS CONTINUED
In closing, we are pleased to announce that the First American family of
funds recently surpassed $30 billion in total assets -- a significant milestone
which illustrates the broad appeal of our team approach to management and our
commitment to disciplined investment processes.
Again, thank you for your confidence in our fund family. We look forward
to continuing to serve your investment needs.
Sincerely,
/s/ Virginia L. Stringer
VIRGINIA L. STRINGER
Chairman
First American Investment Funds, Inc.
/s/ James S. Doak
JAMES S. DOAK
Senior Managing Director, Equities
First American Asset Management
/s/ Paul A. Dow
PAUL A. DOW
Senior Managing Director, Fixed Income
First American Asset Management
2 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
ADJUSTABLE RATE MORTGAGE
SECURITIES FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED SECURITIES -- 93.0%
ADJUSTABLE RATE -- 81.1%
FHLMC Pool #350022
7.000%, 11/01/16 (A) $ 4,180 $ 4,206
FHLMC Pool #350036
7.250%, 01/01/17 (A) 512 519
FHLMC Pool #785781
6.491%, 02/01/27 (A) 3,798 3,828
FHLMC Series 1364 Class-A
5.450%, 09/15/07 (A) 4,238 4,249
FNMA Pool #093872
6.448%, 11/01/17 (A) 4,634 4,687
FNMA Pool #102549
7.176%, 01/01/20 (A) 1,001 1,031
FNMA Pool #176370
7.153%, 02/01/22 (A) 797 819
FNMA Pool #238842
7.029%, 03/01/28 (A) 3,261 3,337
FNMA Pool #325073
7.304%, 10/01/25 (A) 3,286 3,350
FNMA Pool #415285
5.764%, 02/01/28 (A) 7,153 7,208
FNMA Pool #605324
6.901%, 06/01/18 (A) 921 943
FNMA Pool #785730
6.273%, 12/01/26 (A) 3,126 3,133
FNMA Series 1993-65 Class-FC
5.510%, 06/25/12 (A) 5,500 5,438
FNMA Series 1993-170 Class-FC
5.458%, 09/25/08 (A) 1,000 985
FNMA Series 1994-12 Class-FB
5.710%, 01/25/09 (A) 2,403 2,395
FNMA Series 1994-30 Class-F
5.710%, 06/25/23 (A) 3,129 3,117
FNMA Series 1994-33 Class-FD
5.610%, 03/25/09 (A) 2,000 1,958
GNMA Pool #8006
6.625%, 07/20/22 (A) 3,878 3,962
GNMA Pool #8191
6.875%, 05/20/23 (A) 4,594 4,683
GNMA Pool #8288
6.625%, 09/20/23 (A) 3,978 4,066
GNMA Pool #8445
6.875%, 06/20/24 (A) 4,206 4,293
GNMA Pool #8699
6.625%, 09/20/25 (A) 3,508 3,576
GNMA Pool #8747
6.125%, 11/20/25 (A) 555 564
GNMA Pool #8824
6.625%, 08/20/21 (A) 3,638 3,717
GNMA Pool #8847
6.875%, 04/20/26 (A) 3,576 3,636
GNMA Pool #8855
6.125%, 10/20/21 (A) 3,466 3,522
GNMA Pool #80106
6.625%, 08/20/27 (A) 2,107 2,146
GNMA Pool #80154
6.000%, 01/20/28 (A) 2,338 2,373
GNMA Pool #80213
5.500%, 07/20/28 (A) 4,730 4,782
------------
92,523
------------
FIXED RATE -- 11.9%
FHLMC Pool #G10735
7.500%, 09/01/12 2,523 2,604
FHLMC Pool #G40274
6.000%, 06/01/03 3,228 3,239
ADJUSTABLE RATE MORTGAGE
SECURITIES FUND (CONCLUDED)
DESCRIPTION PAR (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
FHLMC Pool #N96388
5.500%, 04/01/03 $ 1,369 $ 1,357
FNMA Pool #450543
5.500%, 01/01/06 2,991 2,954
GNMA Pool #158777
9.000%, 05/15/16 599 641
GNMA Pool #780081
10.000%, 02/15/25 1,153 1,268
GNMA Pool #780398
9.000%, 04/15/21 1,449 1,567
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13,630
------------
TOTAL U.S. AGENCY MORTGAGE-BACKED SECURITIES
(Cost $105,715) 106,153
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PRIVATE MORTGAGE-BACKED SECURITIES -- 5.3%
FIXED RATE -- 1.8%
Residential Funding Series 1999-S5 Class-A1
6.000%, 02/25/29 2,000 1,996
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ADJUSTABLE RATE -- 3.5%
CMC Securities II Series 1993-2H Class-A1
7.040%, 09/25/23 (A) 4,003 4,016
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TOTAL PRIVATE MORTGAGE-BACKED SECURITIES
(Cost $6,075) 6,012
------------
RELATED PARTY MONEY MARKET FUND -- 1.3%
First American Prime Obligations
Fund (B) 1,495,488 1,495
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TOTAL RELATED PARTY MONEY MARKET FUND
(Cost $1,495) 1,495
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TOTAL INVESTMENTS -- 99.6%
(Cost $113,285) 113,660
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OTHER ASSETS AND LIABILITIES, NET -- 0.4% 415
------------
NET ASSETS:
Portfolio Capital--Class-A
($.0001 par value--2 billion authorized)
based on 13,980,401 outstanding shares 258,925
Portfolio Capital--Class-Y
($.0001 par value--2 billion authorized)
based on 99,489 outstanding shares 807
Distributions in excess of net investment income (110)
Accumulated net realized loss on investments (145,922)
Net unrealized appreciation of investments 375
------------
TOTAL NET ASSETS -- 100.0% $ 114,075
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Net asset value and redemption
price per share--Class-A $ 8.10
Maximum sales charge of 2.50% (C) 0.21
------------
Offering price per share--Class-A $ 8.31
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Net asset value, offering price, and
redemption price per share--Class-Y $ 8.11
------------
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of March 31, 1999.
(B) This money market fund is advised by U.S. Bank National Association who also
serves as Advisor for this Fund. See also the notes to the financial
statements.
(C) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.50%.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
The accompanying notes are an integral part of the financial statements.
3 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
FIXED INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY SECURITIES -- 40.8%
U.S. AGENCY DEBENTURES -- 6.3%
FHLMC
5.750%, 04/15/08 $ 2,000 $ 1,982
FNMA
5.560%, 07/24/00 72,125 72,499
5.625%, 03/15/01 15,000 15,113
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89,594
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U.S. TREASURIES -- 34.5%
U.S. Treasury Bonds
7.125%, 02/15/23 110,000 126,972
6.875%, 08/15/25 99,310 112,276
U.S. Treasury Notes
6.125%, 09/30/00 1,000 1,016
6.250%, 02/15/03 34,405 35,645
5.500%, 02/28/03 38,700 39,104
6.875%, 05/15/06 40,000 43,409
6.500%, 10/15/06 96,355 102,661
U.S. Treasury STRIPS
5.524%, 11/15/21 (A) 100,000 26,035
------------
487,118
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TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Cost $574,747) 576,712
------------
U.S. AGENCY MORTGAGE-BACKED SECURITIES -- 27.7%
FIXED RATE -- 25.3%
FHLMC Series 51 Class-VA
7.000%, 04/17/06 11,520 11,843
FHLMC Series 1638 Class-E
6.250%, 04/15/23 5,000 5,040
FHLMC Series 1643 Class-PK
6.500%, 12/15/23 5,439 5,383
FHLMC Series 1699 Class-TD
6.000%, 03/15/24 10,000 9,702
FHLMC Series 1723 Class-PJ
7.000%, 02/15/24 7,133 7,220
FHLMC Series 2115 Class-BJ
6.000%, 03/15/28 5,020 4,814
FHLMC Pool #A00894
9.500%, 06/01/21 2,474 2,649
FHLMC Pool #A01608
10.000%, 12/01/19 2,782 3,020
FHLMC Pool #C00029
9.000%, 03/01/21 1,029 1,098
FHLMC Pool #C00434
7.000%, 11/01/25 2,009 2,038
FHLMC Pool #C80334
7.500%, 08/01/25 8,036 8,265
FHLMC Pool #C80378
6.500%, 01/01/26 750 748
FHLMC Pool #C80433
6.500%, 08/01/26 3,377 3,363
FHLMC Pool #D65198
6.500%, 11/01/25 1,901 1,893
FHLMC Pool #D66778
6.500%, 01/01/26 1,938 1,931
FHLMC Pool #D69184
6.500%, 03/01/26 90 90
FHLMC Pool #D69402
6.500%, 03/01/26 461 460
FIXED INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
FHLMC Pool #D69965
6.500%, 04/01/26 $ 1,086 $ 1,082
FHLMC Pool #D70119
6.500%, 04/01/26 2,174 2,166
FHLMC Pool #D70229
6.500%, 04/01/26 620 618
FHLMC Pool #D70722
6.500%, 04/01/26 2,597 2,587
FHLMC Pool #D70890
6.500%, 04/01/26 6,129 6,105
FHLMC Pool #D71415
6.500%, 05/01/26 4,099 4,083
FHLMC Pool #E20194
7.000%, 09/01/10 6,697 6,850
FHLMC Pool #E59943
7.500%, 11/01/09 597 616
FHLMC Pool #E61199
7.000%, 09/01/10 941 962
FHLMC Pool #E61265
7.000%, 09/01/10 2,806 2,871
FHLMC Pool #G00445
6.500%, 02/01/26 2,888 2,876
FHLMC Pool #G10268
7.500%, 10/01/09 1,161 1,199
FHLMC Pool #G10308
7.500%, 12/01/09 1,570 1,621
FHLMC Pool #G10373
7.000%, 08/01/10 1,326 1,356
FNMA Series 163 Class-F
6.000%, 07/15/21 3,037 2,967
FNMA Series 1648 Class-LA
6.000%, 05/15/23 4,695 4,428
FNMA Series 1992 Class-169-J
6.500%, 03/25/21 10,000 10,019
FNMA Series 1996 Class-23
6.500%, 07/25/26 4,250 4,197
FNMA Series 1996 Class-53-PG
6.500%, 12/18/11 3,000 3,058
FNMA Series 1997 Class-1A-B
6.500%, 02/18/04 7,927 8,113
FNMA Series 1998 Class-M1-A2
6.250%, 01/25/08 7,500 7,495
FNMA Series 1999 Class-1-PG
6.500%, 04/25/28 15,343 15,317
FNMA Pool #100042
11.000%, 10/15/20 788 888
FNMA Pool #124654
7.000%, 12/01/07 3,658 3,740
FNMA Pool #125224
6.500%, 08/01/23 5,958 5,934
FNMA Pool #198657
7.000%, 01/01/08 454 464
FNMA Pool #238589
6.000%, 10/01/23 662 645
FNMA Pool #250055
7.000%, 05/01/09 1,569 1,604
FNMA Pool #250113
9.000%, 07/01/24 368 392
FNMA Pool #250359
7.000%, 10/01/25 3,870 3,925
FNMA Pool #250551
7.000%, 05/01/26 10,137 10,277
4 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
FIXED INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
FNMA Pool #250554
6.500%, 05/01/11 $ 10,121 $ 10,210
FNMA Pool #303675
10.000%, 10/01/17 382 416
FNMA Pool #303850
6.500%, 04/01/11 1,964 1,981
FNMA Pool #326129
6.500%, 09/01/25 3,248 3,233
FNMA Pool #340798
7.000%, 04/01/26 10,594 10,740
FNMA Pool #341863
6.500%, 04/01/11 1,364 1,376
FNMA Pool #342397
6.500%, 04/01/11 3,502 3,533
FNMA Pool #343468
6.500%, 04/01/11 3,245 3,274
FNMA Pool #353997
6.500%, 07/01/26 4,110 4,091
FNMA Pool #361764
7.500%, 10/01/26 3,343 3,436
FNMA Pool #361777
7.500%, 10/01/26 3,276 3,367
FNMA Pool #362480
7.500%, 10/01/26 2,725 2,800
FNMA Pool #419258
6.000%, 04/01/13 2,816 2,794
FNMA Pool #421576
6.000%, 04/01/13 2,712 2,691
FNMA Pool #422699
6.000%, 04/01/13 1,903 1,889
FNMA (TBA)
6.000%, 01/15/14 (B) 19,500 19,335
6.500%, 03/11/14 (B) 24,000 23,355
GNMA Pool #036899
10.000%, 01/15/10 691 757
GNMA Pool #364972
7.000%, 03/15/09 1,043 1,072
GNMA Pool #366889
9.000%, 10/15/24 277 297
GNMA Pool #377213
8.000%, 07/15/26 2,629 2,736
GNMA Pool #389939
7.000%, 03/15/09 1,397 1,436
GNMA Pool #405482
9.000%, 08/15/25 1,456 1,558
GNMA Pool #412638
8.000%, 07/15/26 1,751 1,822
GNMA Pool #426644
8.000%, 07/15/26 1,533 1,595
GNMA Pool #443774
7.500%, 12/15/27 2,724 2,805
GNMA Pool #443790
7.500%, 12/15/27 891 918
GNMA Pool #455879
7.500%, 11/15/27 2,368 2,438
GNMA Pool #460996
7.500%, 11/15/27 3,177 3,271
GNMA Pool #497638
6.000%, 02/15/29 20,000 19,425
GNMA Pool #780295
7.000%, 12/15/10 4,838 4,972
FIXED INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
GNMA Pool #780408
9.000%, 10/15/22 $ 4,204 $ 4,527
GNMA (TBA)
7.000%, 04/15/29 (B) 20,000 20,287
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356,449
------------
Z-BONDS -- 2.4%
FHLMC Series 1665 Class-KZ
6.500%, 01/15/24 (C) 8,086 7,742
FHLMC Series 1677 Class-Z
7.369%, 07/15/23 (C) 4,387 4,543
FNMA Series 1993 Class-160-ZA
6.692%, 09/25/23 (C) 1,007 970
FNMA Series 1993 Class-160 ZA
6.708%, 09/25/23 (C) 18 18
FNMA Series 1996 Class-35-Z
7.181%, 07/25/26 (C) 7,227 7,298
Vendee Mortgage Trust Series 1996
Class-1Z
6.474%, 02/15/26 (C) 12,777 13,179
6.750%, 02/15/26 (C) 144 149
------------
33,899
------------
TOTAL U.S. AGENCY MORTGAGE-BACKED SECURITIES
(Cost $377,038) 390,348
------------
CORPORATE BONDS -- 22.6%
CONSUMER GOODS -- 2.6%
Coca-Cola Enterprises
6.700%, 10/15/36 3,500 3,605
Nabisco
6.300%, 08/26/99 (D) 32,900 32,986
------------
36,591
------------
ENERGY -- 0.1%
Enron
7.125%, 05/15/07 1,000 1,033
------------
FINANCE -- 15.4%
Bank America National Trust & Savings
8.375%, 05/01/07 88 88
Bear Stearns
6.560%, 06/20/00 23,835 24,105
Chrysler Financial
5.850%, 05/15/00 45,945 46,166
Cigna
7.400%, 01/15/03 10,726 11,042
CIT Group Holdings
6.200%, 10/20/00 29,100 29,344
General Motors Acceptance
6.150%, 04/05/07 34,000 33,885
Lehman Brothers Holdings
6.000%, 03/23/00 25,200 25,163
Lehman Brothers Holdings,
Mandatory Put @ 100
7.500%, 08/01/03 (E) 3,000 3,078
Money Store
7.300%, 12/01/02 41,795 43,553
Salomon Smith Barney
5.980%, 03/26/01 1,275 1,278
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217,702
------------
5 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
FIXED INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
MANUFACTURING -- 1.5%
Boeing
7.250%, 06/15/25 $ 20,000 $ 20,790
------------
TECHNOLOGY -- 1.4%
AT&T
5.625%, 03/15/04 20,000 19,897
------------
TRANSPORTATION -- 1.6%
Conrail
6.760%, 05/25/15 895 926
Hertz
6.250%, 03/15/09 22,500 22,050
------------
22,976
------------
TOTAL CORPORATE BONDS
(Cost $318,493) 318,989
------------
PRIVATE MORTGAGE-BACKED SECURITIES -- 6.7%
FIXED RATE -- 4.4%
Countrywide Mortgage-Backed Securities
Series 1994 Class-GA3
6.500%, 04/25/24 2,380 2,380
General Electric Capital Mortgage
Series 1994 Class-11 A1
6.500%, 03/25/24 2,070 2,079
General Electric Capital Mortgage
Series 1994 Class-17 A6
7.000%, 05/25/24 7,000 7,122
General Electric Capital Mortgage
Series 1994 Class-17 A7
7.000%, 05/25/24 5,179 5,095
GMAC Commercial Mortgage Securities
Series 1997 Class-C1 B
6.918%, 09/15/07 41,074 42,049
Nomura Asset Securities Series 1996
Class-MD5 A1B
7.120%, 04/13/36 3,400 3,515
------------
62,240
------------
FLOATING RATE -- 2.3%
J.P. Morgan Commercial Mortgage Finance
Series 1995 Class-C1 B
7.663%, 07/25/10 (F) 10,329 10,412
Merrill Lynch Mortgage Series 1995
Class-C3 A3
7.061%, 12/26/25 (F) 9,560 9,984
Merrill Lynch Mortgage Investors
Series 1993 Class-A4 C
5.938%, 03/15/18 (F) 6,000 6,066
Prudential Home Mortgage Securities
Series 1994 Class-28 M
6.830%, 09/25/01 (F) 5,679 5,784
------------
32,246
------------
TOTAL PRIVATE MORTGAGE-BACKED SECURITIES
(Cost $92,856) 94,486
------------
FIXED INCOME FUND (CONTINUED)
DESCRIPTION PAR (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 3.3%
CREDIT CARDS -- 0.3%
Zale Funding 1994-1 B
7.500%, 05/15/03 (D) $ 4,100 $ 4,115
------------
HOME EQUITY -- 3.0%
Asset Securitization 1996-MD6 A1B
6.880%, 11/13/26 41,340 42,311
Drexel Burnham Lambert Trust S-2
9.000%, 08/01/18 298 298
------------
42,609
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $46,937) 46,724
------------
RELATED PARTY MONEY MARKET FUND -- 2.7%
First American Prime Obligations
Fund (G) 37,738,235 37,738
------------
TOTAL RELATED PARTY MONEY MARKET FUND
(Cost $37,738) 37,738
------------
TOTAL INVESTMENTS -- 103.8%
(Cost $1,447,809) 1,464,997
------------
OTHER ASSETS AND LIABILITIES, NET -- (3.8%) (H) (53,338)
------------
NET ASSETS:
Portfolio Capital--Class-A
($.0001 par value--2 billion authorized)
based on 14,442,635 outstanding shares 244,838
Portfolio Capital--Class-B
($.0001 par value--2 billion authorized)
based on 1,519,993 outstanding shares 16,601
Portfolio Capital--Class-C
($.0001 par value--2 billion authorized)
based on 3,411 outstanding shares 38
Portfolio Capital--Class-Y
($.0001 par value--2 billion authorized)
based on 111,760,280 outstanding shares 1,215,984
Undistributed net investment income 1,265
Accumulated net realized loss on investments (84,255)
Net unrealized appreciation of investments 17,188
------------
TOTAL NET ASSETS -- 100.0% $ 1,411,659
------------
Net asset value and redemption
price per share--Class-A $ 11.05
Maximum sales charge of 4.25% (I) 0.49
------------
Offering price per share--Class-A $ 11.54
------------
Net asset value and redemption
price per share--Class-B (J) $ 10.99
------------
Net asset value per share--Class-C (K) $ 11.05
Maximum sales charge of 1.00% (L) 0.11
------------
Offering price per share--Class-C $ 11.16
------------
Net asset value, offering price, and redemption
price per share--Class-Y $ 11.05
------------
6 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
FIXED INCOME FUND (CONCLUDED)
DESCRIPTION
- --------------------------------------------------------------------------------
(A) The rate shown is the effective yield at date of purchase.
(B) On March 31, 1999, the total cost of investments purchased on a when-issued
basis was $63,073,438.
(C) Z-Bond--Represents securities that pay no interest or principal during their
initial accrual periods, but accrue additional principal at specified rates.
Interest rate disclosed represents current yield based upon the cost basis
and estimate of future cash flows.
(D) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other "qualified
institutional investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(E) Mandatory Put Security--the mandatory put date is shown as the maturity date
in the Statement of Net Assets.
(F) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of March 31, 1999.
(G) This money market fund is advised by U.S. Bank National Association who also
serves as Advisor for this Fund. See also the notes to the financial
statements.
(H) Other assets and liabilities representing greater than five percent of total
net assets include the following (000):
Cash collateral received for securities lending $ 576,887
Payable upon return of securities on loan $(576,887)
(I) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.25%.
(J) Class-B has a contingent deferred sales charge. For a description of a
possible redemption charge, see the notes to the financial statements.
(K) Class-C has a contingent deferred sales charge. For a description of a
possible redemption charge, see the notes to the financial statements.
(L) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 1.00%.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GMAC--General Motors Acceptance Corporation
GNMA--Government National Mortgage Association
STRIPS--Separate Trading of Registered Interest and Principal of Securities
TBA--To Be Announced
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE GOVERNMENT BOND FUND
DESCRIPTION PAR (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY SECURITIES -- 96.9%
U.S. AGENCY DEBENTURES -- 26.9%
FFCB
5.125%, 04/02/01 $ 5,000 $ 4,994
5.600%, 01/14/03 3,600 3,599
6.100%, 11/04/04 6,350 6,483
FHLB
7.280%, 05/18/99 2,000 2,006
6.975%, 07/26/99 1,000 1,007
5.970%, 12/11/00 3,000 3,036
7.440%, 08/10/01 1,000 1,048
5.995%, 11/21/01 7,000 7,121
6.030%, 11/26/02 3,750 3,824
6.050%, 12/03/02 2,500 2,551
5.930%, 03/07/03 1,000 1,011
5.785%, 03/17/03 9,000 9,069
6.030%, 12/23/04 2,500 2,545
5.810%, 01/21/05 3,755 3,773
TVA
6.000%, 11/01/00 3,000 3,032
------------
55,099
------------
U.S. TREASURIES -- 70.0%
U.S. Treasury Notes
7.125%, 09/30/99 8,500 8,599
7.750%, 11/30/99 3,000 3,057
6.875%, 03/31/00 2,000 2,039
6.250%, 08/31/00 24,750 25,176
7.875%, 08/15/01 14,500 15,393
7.500%, 11/15/01 10,000 10,575
7.500%, 05/15/02 1,000 1,066
6.500%, 05/31/02 20,000 20,767
7.250%, 05/15/04 12,500 13,605
7.875%, 11/15/04 13,000 14,590
6.500%, 08/15/05 8,500 9,012
7.000%, 07/15/06 18,000 19,680
------------
143,559
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Cost $193,144) 198,658
------------
RELATED PARTY MONEY MARKET FUND -- 4.0%
First American Government Obligations
Fund (A) 8,143,977 8,144
------------
TOTAL RELATED PARTY MONEY MARKET FUND
(Cost $8,144) 8,144
------------
TOTAL INVESTMENTS -- 100.9%
(Cost $201,288) 206,802
------------
OTHER ASSETS AND LIABILITIES, NET -- (0.9%) (1,907)
------------
7 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
INTERMEDIATE GOVERNMENT BOND FUND
(CONCLUDED)
DESCRIPTION VALUE (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Capital--Class-A
($.0001 par value--2 billion authorized)
based on 553,867 outstanding shares $ 5,209
Portfolio Capital--Class-Y
($.0001 par value--2 billion authorized)
based on 21,345,844 outstanding shares 193,749
Undistributed net investment income 18
Accumulated net realized gain on investments 405
Net unrealized appreciation of investments 5,514
------------
TOTAL NET ASSETS -- 100.0% $ 204,895
------------
Net asset value and redemption
price per share--Class-A $ 9.37
Maximum sales charge of 2.50% (B) 0.24
------------
Offering price per share--Class-A $ 9.61
------------
Net asset value, offering price, and
redemption price per share--Class-Y $ 9.36
------------
(A) This money market fund is advised by U.S. Bank National Association who also
serves as Advisor for this Fund. See also the notes to the financial
statements.
(B) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.50%.
FFCB--Federal Farm Credit Bank
FHLB--Federal Home Loan Bank
TVA--Tennessee Valley Authority
The accompanying notes are an integral part of the financial statements.
INTERMEDIATE TERM INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY SECURITIES -- 48.3%
U.S. AGENCY DEBENTURES -- 7.6%
FHLB
7.280%, 05/18/99 $ 2,000 $ 2,006
5.985%, 11/26/02 2,175 2,215
FNMA
8.450%, 07/12/99 1,000 1,010
5.560%, 07/24/00 25,585 25,718
6.180%, 03/15/01 1,000 1,017
6.160%, 04/03/01 1,000 1,017
------------
32,983
------------
U.S. TREASURIES -- 40.7%
U.S. Treasury Notes
6.250%, 10/31/01 25,240 25,939
6.250%, 02/15/03 61,970 64,203
6.875%, 05/15/06 24,000 26,045
6.500%, 10/15/06 33,695 35,900
U.S. Treasury STRIPS
5.793%, 05/15/08 (A) 38,130 22,945
------------
175,032
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Cost $208,025) 208,015
------------
CORPORATE BONDS -- 26.6%
CONSUMER GOODS -- 0.5%
Coca-Cola Enterprises
6.700%, 10/15/36 2,000 2,060
------------
FINANCE -- 24.2%
American Express
6.500%, 08/01/00 1,000 1,013
Bear Stearns, Series B
6.238%, 10/03/00 13,000 13,098
Chrysler Financial
5.850%, 05/15/00 19,035 19,127
Cigna
7.400%, 01/15/03 3,075 3,166
CIT Group Holdings
6.200%, 10/20/00 12,725 12,832
First Chicago
7.625%, 01/15/03 1,000 1,053
Ford Motor Credit
6.250%, 11/08/00 13,200 13,341
7.000%, 09/25/01 2,000 2,060
General Motors Acceptance
6.150%, 04/05/07 10,000 9,966
Lehman Brothers Holdings
6.000%, 03/23/00 6,050 6,041
Lehman Brothers Holdings,
Mandatory Put @ 100
7.500%, 08/01/03 (B) 2,000 2,052
Metropolitan Life Insurance
6.300%, 11/01/03 (C) 15,145 15,253
Morgan Stanley Group
8.100%, 06/24/02 1,000 1,064
Nordstrom Credit
6.700%, 07/01/05 1,000 1,024
8 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
INTERMEDIATE TERM INCOME FUND
(CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
Safeco
7.875%, 04/01/05 $ 1,000 $ 1,058
Salomon Smith Barney Holdings
7.000%, 03/15/04 2,000 2,066
------------
104,214
------------
MANUFACTURING -- 0.7%
Boeing
6.350%, 06/15/03 1,000 1,010
Occidental Petroleum
6.410%, 11/30/00 1,000 1,000
Union Oil of California
8.750%, 08/15/01 1,000 1,058
------------
3,068
------------
TRANSPORTATION -- 0.5%
Hertz
6.300%, 11/15/06 2,000 2,006
------------
UTILITIES -- 0.7%
Hydro-Quebec
9.400%, 02/01/21 2,300 2,984
------------
TOTAL CORPORATE BONDS
(Cost $112,905) 114,332
------------
ASSET-BACKED SECURITIES -- 11.5%
AUTOMOBILES -- 0.1%
Daimler Benz Vehicle Trust Series 1996
Class-A
5.850%, 07/20/03 340 342
Norwest Auto Trust Series 1996 Class-A
5.900%, 03/15/00 118 119
------------
461
------------
CREDIT CARD -- 2.5%
Circuit City Credit Card Master Trust
Series 1995-1 Class-A
6.375%, 08/15/05 6,520 6,601
Citibank Credit Card Master Trust
Series 1997-7 Class-A
6.350%, 08/15/02 2,000 2,026
Zale Funding Series 1994-1 Class-B
7.500%, 05/15/03 (C) 2,000 2,008
------------
10,635
------------
HOME EQUITY -- 8.9%
American Southwest Financial Securities
Series 1995-C1 Class-A1B
7.400%, 11/17/04 8,795 9,143
Asset Securitization Series 1996-MD6
Class-A1B
6.880%, 11/13/26 18,400 18,832
Equicredit Home Equity Loan Trust
Series 1994-2 Class-A2
7.350%, 06/15/14 1,190 1,203
INTERMEDIATE TERM INCOME FUND
(CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
New Century Home Equity Loan Trust
Series1997-NC6 Class-A3
6.590%, 12/25/19 $ 9,200 $ 9,296
------------
38,474
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $49,184) 49,570
------------
U.S. AGENCY MORTGAGE-BACKED SECURITIES -- 6.7%
FIXED RATE -- 6.7%
FHLMC Pool #E20194
7.000%, 09/01/10 1,419 1,452
FHLMC Series 1606 Class-H
6.000%, 11/15/08 4,925 4,869
FHLMC Series 1659 Class-TN
5.500%, 01/15/01 914 913
FHLMC Series 1902 Class-C
7.000%, 05/15/03 2,309 2,363
FNMA Pool #050145
10.000%, 11/01/18 1,248 1,357
FNMA Pool #050776
6.000%, 08/01/08 1,205 1,198
FNMA Pool #250387
7.000%, 11/01/10 1,360 1,391
FNMA Pool #303357
7.000%, 06/01/10 378 387
FNMA Pool #303753
9.000%, 12/01/20 1,262 1,339
FNMA Pool #341727
9.500%, 06/01/21 1,396 1,494
FNMA Series 1993-55 Class-J
6.500%, 11/25/07 1,000 1,010
FNMA Series 1996-57 Class-E
7.000%, 06/25/03 2,064 2,109
GNMA Pool #002007
9.000%, 05/20/25 742 794
GNMA Pool #002038
8.500%, 07/20/25 1,175 1,244
GNMA Pool #312046
9.000%, 08/15/21 1,797 1,930
GNMA Pool #497638
6.000%, 02/15/29 5,000 4,856
------------
28,706
------------
TOTAL U.S. AGENCY MORTGAGE-BACKED SECURITIES
(Cost $28,287) 28,706
------------
PRIVATE MORTGAGE-BACKED SECURITIES -- 5.1%
FIXED RATE -- 0.0%
Drexel Burnham Lambert CMO Trust S-2
9.000%, 08/01/18 34 34
------------
9 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
INTERMEDIATE TERM INCOME FUND
(CONTINUED)
DESCRIPTION PAR (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
FLOATING RATE -- 5.1%
Merrill Lynch Mortgage Series 1995
Class-C3
7.061%, 12/26/25 (D) $ 18,725 $ 19,555
Prudential Home Mortgage Securities
Series 1994-28 Class M
6.830%, 09/25/01 (D) 2,162 2,202
------------
21,757
------------
TOTAL PRIVATE MORTGAGE-BACKED SECURITIES
(Cost $21,349) 21,791
------------
RELATED PARTY MONEY MARKET FUND -- 0.2%
First American Prime Obligations
Fund (E) 1,032,257 1,032
------------
TOTAL RELATED PARTY MONEY MARKET FUND
(Cost $1,032) 1,032
------------
TOTAL INVESTMENTS -- 98.4%
(Cost $420,782) 423,446
------------
OTHER ASSETS AND LIABILITIES, NET -- 1.6% (F) 6,853
------------
NET ASSETS:
Portfolio Capital--Class-A
($.0001 par value--2 billion authorized)
based on 3,970,644 outstanding shares 53,328
Portfolio Capital--Class-Y
($.0001 par value--2 billion authorized)
based on 39,050,537 outstanding shares 385,626
Distributions in excess of net investment income (1)
Accumulated net realized loss on investments (11,318)
Net unrealized appreciation of investments 2,664
------------
TOTAL NET ASSETS -- 100.0% $ 430,299
------------
Net asset value and redemption
price per share--Class-A $ 10.02
Maximum sales charge of 2.50% (G) 0.26
------------
Offering price per share--Class-A $ 10.28
------------
Net asset value, offering price, and redemption
price per share--Class-Y $ 10.00
------------
INTERMEDIATE TERM INCOME FUND
(CONCLUDED)
DESCRIPTION
- --------------------------------------------------------------------------------
(A) The rate shown is the effective yield at date of purchase.
(B) Mandatory Put Security--the mandatory put date is shown as the maturity date
on the Statement of Net Assets.
(C) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other "qualified
institutional investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(D) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of March 31, 1999.
(E) This money market fund is advised by U.S. Bank National Association who also
serves as Advisor for this fund. See also the notes to the financial
statements.
(F) Other assets and liabilities representing greater than five percent of total
net assets include the following (000):
Cash collateral received for securites on loan $ 205,527
Payable upon receipt of securities on loan $(205,527)
(G) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.50%.
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
STRIPS--Separate Trading of Registered Interest and Principal of Securities
The accompanying notes are an integral part of the financial statements.
10 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
LIMITED TERM INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 39.7%
AUTOMOBILES -- 13.5%
Auto Bond Receivables Trust
Series 1993-1 Class-A
6.125%, 08/15/99 (A) $ 106 $ 105
Budget Fleet Finance
Series 1994-A Class-A
5.435%, 04/25/00 (A) (B) 6,400 6,396
Fasco Auto Trust
Series 1996-1 1 Class-A
6.650%, 11/15/01 1,912 1,927
General Motors Acceptance
Series 1997 Class-A
6.500%, 04/15/02 1,857 1,875
MMCA Automobile Trust
Series 1997-1 Class-A3
6.080%, 05/15/01 6,654 6,688
NAFCO Auto Trust
Series 1996-1 Class-A
6.330%, 12/21/02 (A)
Southern Pacific Thrift & Loan Association
Series 1996-C1 Class-A1
5.287%, 04/25/28 (A) (B) 133 134
The Money Store Auto Grantor Trust
Series 1997-2 Class-A
6.170%, 03/20/01 1,145 1,150
------------
18,275
------------
CREDIT CARDS -- 15.7%
Discover Card Master Trust
Series 1993-1 Class-B
5.300%, 10/16/01 775 775
Fingerhut Master Trust
Series 1996-1 Class-A
6.450%, 02/20/02 4,349 4,372
First USA Credit Card Master
Series Trust 1996-1 Class-B
5.226%, 11/15/03 (A) (B) 1,500 1,505
Household Credit Card Master Trust
Series 1995-1 Class-B
5.286%, 12/15/02 (A) (B) 6,375 6,391
MBNA Master Credit Card Trust
Series 1994-B Class-A
5.047%, 01/15/02 (A) 8,250 8,261
------------
21,304
------------
EQUIPMENT LEASES -- 3.7%
Icon Receivables
Series 1997-A Class-A1
6.435%, 06/01/05 (B) 3,769 3,789
JLC Lease Receivables Trust
Series 1994-1 Class-A
5.219%, 12/22/99 (A) 1,253 1,254
------------
5,043
------------
LIMITED TERM INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
HOME EQUITY -- 6.1%
BCI Home Equity Loan
Series 1994-1 Class-B
5.600%, 03/29/44 (A) (B) $ 1,632 $ 1,647
Green Tree Home Improvement Loan Trust
Series 1996-F Class-HEA3
6.900%, 01/15/28 4,000 4,046
Prudential Home Mortgage Securities
Series 1992-36 Class-A7
6.500%, 11/25/99 412 412
The Money Store Home Equity Loan Trust
Series 1993-B Class-A1
5.400%, 08/15/05 198 198
Wilshire Mortgage Loan Trust
Series 1996-4 Class-A2
6.750%, 06/25/15 1,906 1,929
------------
8,232
------------
VACATION PROPERTIES -- 0.7%
Patten Series 1995-1A
7.250%, 08/01/11 (A) (B) 999 980
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $53,670) 53,834
------------
CORPORATE BONDS -- 31.4%
FINANCE -- 31.4%
Associates of North America
5.850%, 01/15/01 7,500 7,534
Bear Stearns, Series B
6.238%, 10/03/00 7,500 7,557
CIT Group Holdings
6.250%, 03/28/01 6,500 6,566
Commercial Credit
5.550%, 02/15/01 4,500 4,491
General Motors Acceptance
6.625%, 01/10/02 3,500 3,576
Lehman Brothers Holdings
6.900%, 03/30/01 5,000 5,047
Salomon Smith Barney
5.980%, 03/26/01 7,750 7,771
------------
42,542
------------
TOTAL CORPORATE BONDS
(Cost $42,402) 42,542
------------
U.S. GOVERNMENT AND AGENCY SECURITIES -- 20.2%
U.S. AGENCY DEBENTURES -- 4.1%
FHLB
5.690%, 08/07/01 5,500 5,549
------------
11 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
LIMITED TERM INCOME FUND (CONTINUED)
DESCRIPTION PAR (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
U.S. TREASURIES -- 16.1%
U.S. TREASURY NOTES
5.625%, 02/28/01 $ 16,500 $ 16,684
6.250%, 10/31/01 5,000 5,138
------------
21,822
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Cost $27,217) 27,371
------------
PRIVATE MORTGAGE-BACKED SECURITIES -- 3.6%
Merrill Lynch Mortgage Investors
Series 1993-A4 Class-C
5.938%, 03/15/18 (A) 4,850 4,903
------------
TOTAL PRIVATE MORTGAGE-BACKED SECURITIES
(Cost $4,856) 4,903
------------
U.S. AGENCY MORTGAGE-BACKED SECURITIES -- 1.3%
FNMA Series 1992-152 Class-J
7.000%, 05/25/06 1,731 1,734
------------
U.S. AGENCY MORTGAGE-BACKED SECURITIES
(Cost $1,735) 1,734
------------
RELATED PARTY MONEY MARKET FUND -- 2.9%
First American Prime Obligations
Fund (C) 3,949,292 3,949
------------
TOTAL RELATED PARTY MONEY MARKET FUND
(Cost $3,949) 3,949
------------
TOTAL INVESTMENTS -- 99.1%
(Cost $133,829) 134,333
------------
OTHER ASSETS AND LIABILITIES, NET -- 0.9% (D) 1,159
------------
NET ASSETS:
Portfolio Capital--Class-A
($.0001 par value--2 billion authorized)
based on 480,249 outstanding shares 5,386
Portfolio Capital--Class-Y
($.0001 par value--2 billion authorized)
based on 13,138,919 outstanding shares 133,459
Undistributed net investment income 40
Accumulated net realized loss on investments (3,897)
Net unrealized appreciation of investments 504
------------
TOTAL NET ASSETS -- 100.0% $ 135,492
------------
Net asset value and redemption
price per share--Class-A $ 9.95
Maximum sales charge of 2.50% (E) 0.26
------------
Offering price per share--Class-A $ 10.21
------------
Net asset value, offering price, and redemption
price per share--Class-Y $ 9.95
------------
LIMITED TERM INCOME FUND (CONCLUDED)
DESCRIPTION
- --------------------------------------------------------------------------------
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of March 31, 1999.
(B) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other "qualified
institutional investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(C) This money market fund is advised by U.S. Bank National Association who also
serves as Advisor for this Fund. See also the notes to the financial
statements.
(D) Other assets and liabilities representing greater than five percent of total
net assets include the following (000):
Cash collateral received for securities on loan $ 28,076
Payable upon return of securities on loan $(28,076)
(E) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 2.50%.
FHLB--Federal Home Loan Bank
FNMA--Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
12 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STRATEGIC INCOME FUND
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
HIGH YIELD CORPORATE OBLIGATIONS -- 41.7%
ADVERTISING/MARKETING -- 0.7%
Lamar Advertising,
Callable 09/15/02 @ 104.313
8.625%, 09/15/07 400 $ 424
Outdoor Systems,
Callable 06/15/02 @ 104.440
8.875%, 06/15/07 475 508
Sitel, Callable 3/15/02 @ 105.625
9.250%, 03/15/06 350 333
-------------
1,265
-------------
APPAREL/TEXTILES -- 0.4%
Glenoit, Callable 04/15/02 @ 105.500
11.000%, 04/15/07 (E) 100 93
Pillowtex, Callable 11/15/01 @ 105.000
10.000%, 11/15/06 100 105
Pillowtex, Callable 12/15/02 @ 104.500
9.000%, 12/15/07 450 459
------------
657
------------
AUTOMOTIVE -- 1.4%
Accuride, Callable 02/01/03 @ 104.625
9.250%, 02/01/08 200 201
Aftermarket Technology,
Callable 08/01/99 @ 106.000
12.000%, 08/01/04 412 423
American Axle,
Callable 03/01/04 @ 104.875
9.750%, 03/01/09 (D) 300 307
Collins & Aikman Products,
Callable 04/15/01 @ 105.750
11.500%, 04/15/06 725 776
HDA Parts System,
Callable 08/01/02 @ 106.000
12.000%, 08/01/05 (D) 150 146
Lear, Callable 07/15/01 @ 104.750
9.500%, 07/15/06 75 81
Lear Seating
8.250%, 02/01/02 200 200
Oshkosh Trucking,
Callable 03/01/03 @ 104.375
8.750%, 03/01/08 (E) 50 50
Oxford Automotive,
Callable 06/15/02 @ 105.063
10.125%, 06/15/07 350 363
------------
2,547
------------
BROADCAST RADIO & TELEVISION -- 7.3%
Acme Television,
Callable 09/30/01 @ 105.438
11.083%, 09/30/04 (C) (E) 500 422
Benedek Communcations,
Callable 05/15/01 @ 106.625
13.289%, 05/15/06 (C) 150 114
Big City Radio,
Callable 03/15/02 @ 105.625
14.130%, 03/15/05 (C) 400 280
Capstar Broadcasting,
Callable 07/1/02 @ 104.625
9.250%, 07/01/07 75 79
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
CBS Radio, Callable 01/15/02 @ 105.688
11.375%, 01/15/09 143 $ 167
Chancellor Media,
Callable 12/15/02 @ 104.063
8.125%, 12/15/07 1,200 1,221
Chancellor Media,
Callable 01/15/02 @ 105.250
10.500%, 01/15/07 (E) 50 55
Chancellor Media,
Callable 02/01/00 @ 104.688
9.375%, 10/01/04 50 52
Chancellor Media, Series B,
Callable 06/15/02 @ 104.375
8.750%, 06/15/07 100 104
Charter Communications,
Callable 04/01/04 @ 104.960
9.452%, 04/01/11 (C) (D) 750 484
Comcast UK Cable Partners,
Callable 11/15/00 @ 104.200
10.338%, 11/15/07 (C) (G) 125 111
Comcast, Callable 05/15/00 @ 104.690
9.375%, 05/15/05 75 80
CSC Holdings, Callable 02/15/03 @ 104.800
9.875%, 02/15/13 400 446
CSC Holdings, Callable 05/15/01 @ 104.938
9.875%, 05/15/06 50 54
CSC Holdings, Callable 11/01/00 @ 104.625
9.250%, 11/01/05 550 590
Cumulus Media,
Callable 07/01/03 @ 105.188
10.375%, 07/01/08 (E) 200 215
Diva Systems, Callable 03/0103 @ 106.310
21.532%, 03/01/08 (C) 75 25
Echostar DBS, Callable 2/01/04 @ 104.688
9.375%, 02/01/09 (D) 750 778
Fox/Liberty Networks,
Callable 08/15/02 @ 104.438
8.875%, 08/15/07 250 259
Fox/Liberty Networks,
Callable 8/15/02 @ 104.875
9.517%, 08/15/07 (C) 575 424
Grupo Televisa,
Callable 05/15/01 @ 106.625
11.749%, 05/15/08 (C) (D) (G) 1,500 1,260
International Cabletel,
Callable 02/01/01 @ 105.750
10.302%, 02/01/06 (C) 100 87
Lenfest Communications,
Callable 02/15/03 @ 104.125
8.250%, 02/15/08 525 544
NTL, Callable 04/01/03 @ 104.875
9.813%, 04/01/08 (C) 800 544
NTL, Callable 10/01/03 @ 106.188
10.336%, 10/01/08 (C) 1,100 754
NTL, Callable 10/01/03 @ 105.750
11.500%, 10/01/08 150 169
Pegasus Communications,
Callable 12/01/02 @ 104.875
9.750%, 12/01/06 (D) 300 310
Pegasus Communications, Series B,
Callable 10/15/01 @ 104.813
9.625%, 10/15/05 225 232
13 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
RCN, Callable 10/15/02 @ 105.562
11.369%, 10/15/07 (C) 250 $ 168
Rogers Cablesystem
10.000%, 03/15/05 (G) 650 733
Rogers Communications,
Callable 07/15/02 @ 104.750
8.875%, 07/15/07 400 415
SFX Broadcasting,
Callable 05/15/01 @ 105.375
10.750%, 05/15/06 150 159
Sinclair Broadcast Group,
Callable 07/15/02 @ 104.500
9.000%, 07/15/07 300 305
Sinclair Broadcast Group,
Callable 12/15/02 @ 104.375
8.750%, 12/15/07 975 985
Telewest Communications,
Callable 10/01/00 @ 100.000
10.474%, 10/01/07 (C) (G) 575 506
UIH Australia/Pacific, Series B,
Callable 05/15/01 @ 107.000
14.000%, 05/15/06 (C) 150 94
United International Holdings, Series B,
Callable 02/15/03 @ 105.375
10.683%, 02/15/08 (C) (E) 400 268
------------
13,493
------------
BUILDING & CONSTRUCTION PRODUCTS -- 0.6%
Albecca, Callable 08/15/03 @ 105.375
10.750%, 08/15/08 (D) 350 292
American Builders & Contractors, Series B,
Callable 05/15/02 @ 105.310
10.625%, 05/15/07 (E) 175 158
Falcon Building Products,
Callable 06/15/02 @ 105.250
13.130%, 06/15/07 (C) 575 346
Formica, Callable 03/01/04 @ 105.438
10.875%, 03/01/09 (D) 350 346
------------
1,142
------------
BUSINESS PRODUCTS & SERVICES -- 0.2%
United Stationers Supply,
Callable 05/01/00 @ 106.375
12.750%, 05/01/05 83 92
U.S. Office Products,
Callable 06/15/03 @ 104.875
9.750%, 06/15/08 400 232
------------
324
------------
CERAMIC & GLASS PRODUCTS -- 0.3%
Ball, Callable 8/01/03 @ 104.125
8.250%, 08/01/08 250 258
Russell Stanley Holdings,
Callable 02/15/04 @ 105.438
10.875%, 02/15/09 (D) 200 198
Tekni-Plex, Series B,
Callable 03/1/03 @ 104.625
9.250%, 03/01/08 (E) 100 102
------------
558
------------
CHEMICALS & PLASTICS -- 1.1%
Buckeye Cellulose,
Callable 09/15/01 @ 104.625
9.250%, 09/15/08 125 132
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
Huntsman, Callable 07/1/02 @ 104.750
9.500%, 07/01/07 (D) 800 $ 788
ISP Holdings, Callable 10/15/99 @ 104.500
9.000%, 10/15/03 150 153
Polymer Group,
Callable 03/01/03 @ 104.375
8.750%, 03/01/08 500 506
Polymer Group, Series B,
Callable 07/01/02 @ 104.625
9.000%, 07/01/07 100 102
Sterling Chemical Holdings,
Callable 08/15/01 @ 106.750
22.341%, 08/15/08 (C) 100 42
Sterling Chemical Holdings,
Callable 08/15/01 @ 105.875
11.750%, 08/15/06 250 234
Texas Petrochemical,
Callable 07/01/01 @ 105.560
11.125%, 07/01/06 150 140
------------
2,097
------------
COMPUTER SOFTWARE/SERVICES -- 0.2%
Dialog, Series A,
Callable 11/15/02 @ 105.500
11.000%, 11/15/07 (E) (G) 300 289
------------
CONSUMER PRODUCTS -- 2.3%
Amscan Holdings,
Callable 12/15/02 @ 104.937
9.875%, 12/15/07 250 213
Chattem, Callable 04/01/03 @ 104.438
8.875%, 04/01/08 200 201
Diamond Brands Operating,
Callable 04/15/03 @ 105.063
10.125%, 04/15/08 50 42
Diamond Holdings,
Callable 02/01/03 @ 104.563
9.125%, 02/01/08 (E) 125 130
Icon Fitness, Callable 11/15/01 @ 110.000
14.000%, 11/15/06 (C) 100 1
Playtex Family Products,
Callable 12/15/99 @ 103.000
9.000%, 12/15/03 400 411
Revlon Consumer Products,
Callable 02/01/03 @ 104.313
8.625%, 02/01/08 (E) 850 778
Simmons, Callable 03/15/04 @ 105.125
10.250%, 03/15/09 (D) 150 155
Sirona Dental Systems,
Callable 07/15/03 @ 104.563
9.125%, 07/15/08 (D) (G) EU 1,022 1,161
Texon International,
Callable 02/01/03 @ 105.000
10.000%, 02/01/08 (D) (G) DM 2,000 1,010
Volume Services America,
Callable 03/01/04 105.625
11.250%, 03/01/09 (D) 200 205
------------
4,307
------------
DIVERSIFIED OPERATIONS -- 0.9%
Eagle-Picher, Callable 03/01/03 @ 104.688
9.375%, 03/01/08 (E) 375 362
Mechala Group Jamaica, Series B
12.750%, 12/30/99 (G) 2,000 480
14 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
Voto-Votorantim Overseas,
Callable 06/27/02 @ 99.500
8.500%, 06/27/05 (G) 1,000 $ 830
------------
1,672
------------
ELECTRONIC EQUIPMENT -- 0.3%
Amphenol, Callable 05/15/02 @ 104.940
9.875%, 05/15/07 225 232
Electronic Retailing Systems,
Callable 02/01/01 @ 106.680
42.801%, 02/01/04 (C) 75 25
Fairchild Semiconductor,
Callable 04/01/03 @ 105.188
10.375%, 10/01/07 (D) 100 100
Metromedia Fiber,
Callable 11/15/03 @ 105.000
10.000%, 11/15/08 (D) 125 134
------------
491
------------
ELECTRICAL SERVICES -- 0.6%
CMS Energy
7.500%, 01/15/09 500 500
El Paso Electric, Callable 02/01/06 @ 104.700
9.400%, 05/01/11 150 168
Niagra Mohawk Power,
Callable 07/01/03 @ 104.250
7.514%, 07/01/10 (C) 450 346
------------
1,014
------------
ENVIRONMENTAL SERVICES -- 0.6%
Allied Waste North America,
Callable 01/01/04 @ 103.938
7.875%, 01/01/09 1,175 1,150
------------
EQUIPMENT LEASING & RENTALS -- 0.7%
National Equipment Services, Series B,
Callable 11/30/01 @ 105.000
10.000%, 11/30/04 50 51
National Equipment Services, Series D,
Callable 11/30/01 @ 105.000
10.000%, 11/30/04 200 202
NationsRent, Callable 12/15/03 @ 105.188
10.375%, 12/15/08 175 183
United Rentals, Callable 01/15/98 @ 104.625
9.250%, 01/15/09 (D) 600 600
Universal Compression,
Callable 02/15/03 @ 104.938
11.485%, 02/15/08 (C) 400 244
------------
1,280
------------
FINANCIAL SERVICES -- 1.7%
Bancomext Trust
11.250%, 05/30/06 1,250 1,320
Golden State Escrow
7.125%, 08/01/05 600 604
L-Bank
13.500%, 06/22/01 CK 40,000 1,249
Trizec Finance, Callable 10/15/00 @ 105.440
10.875%, 10/15/05 (G) 50 54
------------
3,227
------------
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.5%
Agrilink Foods, Callable 11/01/03 @ 105.938
11.875%, 11/01/08 (D) 375 $ 402
Aurora Foods, Callable 02/15/02 @ 104.940
9.875%, 02/15/07 75 81
Aurora Foods, Callable 07/01/03 @ 104.375
8.750%, 07/01/08 100 104
Canandaigua Brands,
Callable 03/01/04 @104.250
8.500%, 03/01/09 150 153
Eagle Family Foods,
Callable 01/15/03 @ 104.375
8.750%, 01/15/08 125 117
International Home Foods,
Callable 11/01/01 @ 105.190
10.375%, 11/01/06 (D) 475 517
Mastellone Hermanos,
Callable 04/01/03 @ 105.875
11.750%, 04/01/08 (D) (G) 1,000 870
National Wine & Spirits,
Callable 01/15/04 @ 105.063
10.125%, 01/15/09 (D) 350 360
Triarc Consumer Products,
Callable 2/15/04 @ 105.125
10.250%, 02/15/09 250 249
------------
2,853
------------
FOOD RETAILERS -- 0.8%
Ameriserve Food,
Callable 07/15/02 @ 105.063
10.125%, 07/15/07 650 465
Carr-Gottstein Foods,
Callable 11/15/00 @ 106.000
12.000%, 11/15/05 100 115
Carrols, Callable 12/01/03 @ 104.750
9.500%, 12/01/08 (D) 175 177
Domino's, Callable 1/15/04 @ 105.188
10.375%, 01/15/09 (D) 600 620
Jitney-Jungle Stores,
Callable 09/15/02 @ 105.188
10.375%, 09/15/07 75 77
------------
1,454
------------
HOTELS -- 0.4%
Host Marriott, Callable 08/01/03 @ 103.985
7.875%, 08/01/08 850 817
------------
INDUSTRIAL PRODUCTS -- 1.1%
Alvey Systems, Callable 01/31/00 @ 105.690
11.375%, 01/31/03 104 105
Cabot Safety, Callable 07/15/00 @ 106.250
12.500%, 07/15/05 150 162
Clark Material Handling, Series D,
Callable 11/15/01 @ 105.375
10.750%, 11/15/06 100 102
Continental Global Group,
Callable 04/01/02 @ 105.500
11.000%, 04/01/07 50 42
Euramax International,
Callable 10/01/01 @ 105.625
11.250%, 10/01/06 (G) 225 233
15 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
International Utility Structures,
Callable 02/1/03 @ 105.375
10.750%, 02/01/08 (G) 50 $ 51
MMI Products, Callable 04/15/02 @ 105.375
11.250%, 04/15/07 (D) 225 239
MMI Products, Series B,
Callable 04/15/02 @ 105.625
11.250%, 04/15/07 75 80
Neenah, Callable 05/01/02 @ 105.563
11.125%, 05/01/07 (D) 300 316
Statia Terminals, Series B,
Callable 11/15/00 @ 105.875
11.750%, 11/15/03 300 315
Unifrax Investment,
Callable 11/01/00 @ 105.250
10.500%, 11/01/03 100 102
Wesco Distribution,
Callable 06/01/03 @ 104.563
9.125%, 06/01/08 (E) 325 336
Wesco International,
Callable 6/1/03 @ 105.563
10.184%, 06/01/08 (C) 50 34
------------
2,117
------------
LEISURE & ENTERTAINMENT -- 1.3%
AMF Bowling Worldwide,
Callable 03/15/01 @ 106.125
18.237%, 03/15/06 (C) 153 88
Loews Cineplex Entertainment,
Callable 08/01/03 @ 104.437
8.875%, 08/01/08 600 598
Premier Parks, Callable 08/15/99 @ 106.000
12.000%, 08/15/03 150 161
Premier Parks, Step-Bond,
Callable 04/01/03 @ 105.000
9.609%, 04/01/08 (C) 1,450 1,011
Regal Cinemas, Callable 06/01/03 @ 104.750
9.500%, 06/01/08 525 537
Six Flags Theme Parks, Series A,
Callable 06/15/00 @ 106.000
12.250%, 06/15/05 100 110
------------
2,505
------------
MARINE TRANSPORTATION -- 0.5%
Gearbulk Holding,
Callable 12/01/99 @ 105.625
11.250%, 12/01/04 (G) 150 154
Stena, Callable 06/15/02 @ 104.375
8.750%, 06/15/07 (G) 525 486
Stena, Callable 12/15/00 @ 105.250
10.500%, 12/15/05 (G) 150 150
Stena Line, Callable 06/01/03 @ 105.313
10.625%, 06/01/08 (G) 200 152
------------
942
------------
MEDICAL PRODUCTS & SERVICES -- 1.8%
Conmed, Callable 03/15/03 @ 104.500
9.000%, 03/15/08 250 253
Dade International,
Callable 05/01/01 @ 105.560
11.125%, 05/01/06 150 164
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
Everest Healthcare Services,
Callable 05/01/03 @ 104.875
9.750%, 05/01/08 100 $ 99
Fisher Scientific International,
Callable 02/01/03 @ 104.500
9.000%, 02/01/08 (D) 1,000 1,010
Genesis Health Ventures,
Callable 01/15/04 @ 104.938
9.875%, 01/15/09 (D) 600 522
Hudson Respiratory Care,
Callable 04/15/03 @ 104.563
9.125%, 04/15/08 50 43
Tenet Healthcare
8.000%, 01/15/05 50 49
Tenet Healthcare,
Callable 06/01/03 @ 104.063
8.125%, 12/01/08 (D) 1,200 1,182
------------
3,322
------------
NATURAL RESOURCES -- 0.4%
AEI Holdings, Callable 12/15/02 @ 105.250
10.500%, 12/15/05 (D) 550 542
AEI Resources, Callable 12/15/02 @ 105.750
11.500%, 12/15/06 (D) 150 150
ISG Resources, Callable 04/15/03 @ 105.000
10.000%, 04/15/08 125 127
------------
819
------------
PAPER & RELATED PRODUCTS -- 1.4%
Advanced Argo Public
13.000%, 11/15/07 (D) (G) 1,000 830
Grupo Industrial Durango
12.625%, 08/01/03 (G) 1,500 1,448
Packaging Corp of America,
Callable 04/01/04 @ 104.813
9.625%, 04/01/09 (D) 150 150
SD Warren, Series B,
Callable 12/15/99 @ 104.500
12.000%, 12/15/04 100 108
Stone Container,
Callable 10/01/99 @ 104.310
11.500%, 10/01/04 150 158
------------
2,694
------------
PETROLEUM & FUEL PRODUCTS -- 1.5%
Chiles Offshore,
Callable 05/01/03 @ 105.000
10.000%, 05/01/08 100 72
Continental Resources,
Callable 08/01/03 @ 105.125
10.250%, 08/01/08 175 135
Dailey International, Series B,
Callable 2/15/03 @ 104.750
9.500%, 02/15/08 (E) 300 111
Forcenergy, Callable 11/01/01 @ 104.750
9.500%, 11/01/06 (N) 100 47
Houston Exploration,
Callable 01/01/03 @ 104.313
8.625%, 01/01/08 125 123
Nuevo Energy, Callable 06/01/03 @ 104.438
8.875%, 06/01/08 150 149
16 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
Pacalta Resources, Series B,
Callable 06/15/02 @ 105.375
10.750%, 06/15/04 50 $ 49
Perez
8.125%, 07/15/07 (G) 1,250 1,101
Petroleos Mexicanos
9.250%, 03/30/18 (G) 500 434
Pogo Producing,
Callable 02/15/04 @ 105.188
10.375%, 02/15/09 (D) 100 101
Pride Petroleum Services,
Callable 05/01/02 @ 104.688
9.375%, 05/01/07 275 263
R&B Falcon, Callable 03/26/99 @ 100.000
12.250%, 03/15/06 (D) 100 106
RBF Finance, Callable 03/15/04 @ 105.688
11.375%, 03/15/09 (D) 100 105
------------
2,796
------------
PRINTING & PUBLISHING -- 0.8%
Affiliated Newspapers Investments,
Callable 07/01/99 @ 106.750
11.554%, 07/01/06 (C) 200 210
Hollinger International Publishing,
Callable 02/01/01 @ 104.625
9.250%, 02/01/06 1,250 1,306
Hollinger International Publishing,
Callable 03/15/02 @ 104.625
9.250%, 03/15/07 50 53
------------
1,569
------------
STEEL & STEEL WORKS -- 0.4%
AK Steel, Callable 12/15/01 @ 104.560
9.125%, 12/15/06 150 159
Metals USA, Callable 02/15/03 @ 104.313
8.625%, 02/15/08 225 209
National Steel, Callable 03/01/04 @ 104.938
9.875%, 03/01/09 (D) 300 308
------------
676
------------
TELEPHONES & TELECOMMUNICATION -- 10.5%
American Cellular,
Callable 05/15/03 @ 105.250
10.500%, 05/15/08 (D) 450 473
Call-Net Enterprises,
Callable 08/15/03 @ 104.470
9.254%, 08/15/08 (C) 600 399
Call-Net Enterprises,
Callable 08/15/02 @ 104.635
9.350%, 08/15/07 (C) 375 275
Centennial Cellular,
Callable 12/15/03 @ 105.375
10.750%, 12/15/08 (D) 275 289
E.Spire Communications,
Callable 11/01/00 @ 110.000
15.293%, 11/01/05 (C) 150 110
Hermes Europe Railtel,
Callable 01/15/04 @ 105.188
10.375%, 01/15/09 (D) (G) 100 107
Hermes Europe Railtel,
Callable 08/15/02 @ 105.750
11.500%, 08/15/07 (G) 475 523
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
ICG Holdings, Callable 05/01/01 @ 106.250
11.537%, 05/01/06 (C) 400 $ 328
ICG Services, Callable 5/1/03 @ 104.938
11.421%, 05/01/08 (C) 125 75
Intermedia Communication,
Callable 07/15/02 @ 105.625
9.962%, 07/15/07 (C) 600 458
Intermedia Communications,
Callable 03/01/04 @ 106.125
10.780%, 03/01/09 (C) 500 315
Intermedia Communications,
Callable 06/01/03 @ 104.300
8.600%, 06/01/08 250 250
Intermedia Communications,
Callable 05/15/01 @ 106.250
10.524%, 05/15/06 (C) 250 216
IXC Communications,
Callable 04/15/03 @ 104.500
9.000%, 04/15/08 300 312
Level 3 Communications,
Callable 12/01/03 @ 105.250
10.336%, 12/01/08 (C) (D) 1,950 1,226
Level 3 Communications,
Callable 05/01/03 @ 104.563
9.125%, 05/01/08 750 754
McLeodusa, Callable 2/15/04 @ 104.063
8.125%, 02/15/09 325 326
McLeodusa, Callable 03/15/03 @ 104.188
8.375%, 03/15/08 (D) 225 227
McLeodusa, Callable 03/01/02 @ 105.250
9.361%, 03/01/07 (C) 525 420
Metronet Communications,
Callable 08/15/02 @ 106.000
12.000%, 08/15/07 (G) 100 119
Metronet Communications,
Callable 11/01/03 @ 105.313
10.625%, 11/01/08 (D) (G) 125 146
Metronet Communications,
Callable 06/15/03 @ 104.975
8.054%, 06/15/08 (C) (G) 450 348
Millicom International Cellular,
Callable 06/01/01 @ 106.750
13.824%, 06/01/06 (C) 450 333
Netia Holdings, Series B,
Callable 11/01/02 @105.125
10.250%, 11/01/07 (G) 1,500 1,403
Nextel Communications,
Callable 02/15/03 @ 104.975
9.600%, 02/15/08 (C) (E) 1,475 1,040
Nextel Communications,
Callable 09/15/02 @ 105.325
9.936%, 09/15/07 (C) 175 129
Nextel International,
Callable 04/15/03 @ 106.063
15.953%, 04/15/08 (C) 75 35
Nextel Partners,
Callable 02/01/04 @ 107.000
12.752%, 02/01/09 (C) (D) 150 86
Nextlink Communications,
Callable 03/15/03 @ 104.500
9.000%, 03/15/08 (E) 100 100
Nextlink Communications,
Callable 04/15/03 @ 104.725
10.499%, 04/15/08 (C) 775 492
17 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
Orange, Callable 08/01/03 @ 104.000
8.000%, 08/01/08 225 $ 231
Paging Network,
Callable 10/15/01 @ 105.000
10.000%, 10/15/08 350 292
Pathnet, Callable 04/15/03 @ 106.125
12.250%, 04/15/08 75 41
PSINet, Series B, Callable 02/15/02 @ 105.000
10.000%, 02/15/05 400 427
Qwest Communications,
Callable 10/15/02 @ 104.735
8.175%, 10/15/07 (C) (E) 600 476
Rogers Cantel, Callable 10/1/02 @ 104.400
8.800%, 10/01/07 100 104
SK Telecom
7.750%, 04/29/04 (G) 1,500 1,445
Telecommunications Techniques,
Callable 05/15/03 @ 104.875
9.750%, 05/15/08 625 634
Telesystem International Wireless,
Series B, Callable 6/30/02 @ 106.625
16.012%, 06/30/07 (C) (E) (G) 125 69
Telesystem International Wireless,
Callable 11/01/02 @ 105.500
15.614%, 11/01/07 (C) (E) (G) 50 24
Teligent, Callable 12/01/02 @ 105.750
11.500%, 12/01/07 450 426
Tricom, Callable 09/01/01 @ 105.688
11.375%, 09/01/04 (G) 1,000 890
Triton Communications,
Callable 05/1/03 @ 105.500
12.188%, 05/01/08 (C) 350 207
US Xchange
15.000%, 07/01/08 150 158
USA Mobile Communications,
Callable 02/01/99 @ 104.750
9.500%, 02/01/04 100 84
Verio, Callable 12/15/03 @105.625
11.250%, 12/01/08 (D) 275 310
Viatel, Callable 03/15/04 @ 105.750
11.500%, 03/15/09 (D) 100 104
Viatel, Callable 04/15/03 @ 105.575
11.150%, 04/15/08 (G) DM 3,250 1,862
Viatel, Callable 04/15/03 @ 105.625
11.250%, 04/15/08 75 76
Viatel, Callable 04/15/03 @ 106.250
12.507%, 04/15/08 (C) 525 322
------------
19,496
------------
TOTAL HIGH YIELD CORPORATE OBLIGATIONS
(Cost $79,001) 77,573
------------
CORPORATE OBLIGATIONS -- 2.7%
CONSUMER GOODS -- 0.6%
Royal Caribbean
8.125%, 07/28/04 1,000 1,055
------------
FINANCIAL SERVICES -- 2.1%
AT&T Capital
6.250%, 05/15/01 1,000 1,008
Ford Motor Credit
5.800%, 01/12/09 1,000 961
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
Lehman Brothers Holdings
7.375%, 05/15/04 1,000 $ 1,015
Merrill Lynch
6.000%, 02/17/09 1,000 966
------------
3,950
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $4,985) 5,005
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 15.3%
ADJUSTABLE RATE -- 0.6%
FNMA Series 1993-220, Class-FD
5.438%, 11/25/13 (A) 994 1,005
------------
FIXED RATE -- 14.7%
FHLMC Gold Pool #C2-3507
6.000%, 03/01/29 2,000 1,946
FHLMC Gold Pool #CL-8204
7.500%, 11/01/27 998 1,026
FHLMC Gold Pool #E6-5045
7.500%, 01/01/11 934 966
FHLMC Gold Pool #E6-9977
5.500%, 04/01/13 1,170 1,141
FHLMC Series 2126
6.000%, 02/15/29 1,500 1,387
FHLMC TBA 15 Year
6.000%, 12/15/13 (H) 2,000 1,986
FHLMC TBA 30 Year
6.500%, 11/01/28 (H) 2,000 1,991
FNMA Pool #381419
5.950%, 03/01/09 1,250 1,262
FNMA Pool #100042
11.000%, 10/15/20 157 178
FNMA Pool #250113
9.000%, 07/01/24 368 392
FNMA Pool #252334
6.500%, 02/01/29 1,505 1,483
FNMA Pool #303675
10.000%, 10/01/17 229 249
FNMA Pool #326580
8.000%, 03/01/08 723 746
FNMA Pool #329569
6.000%, 03/01/11 706 701
FNMA Pool #339839
6.000%, 03/01/26 808 786
FNMA Pool #367977
6.500%, 02/01/04 1,128 1,142
FNMA Pool #380781
5.805%, 10/01/08 1,241 1,216
FNMA Pool #380791
5.850%, 10/25/08 995 977
FNMA Pool #380859
6.095%, 12/01/08 997 995
FNMA Pool #380896
5.890%, 12/01/08 997 981
FNMA Series 1993-50, Class-PY
5.500%, 10/15/22 1,000 925
FNMA Series 1999-11, Class-C
5.500%, 10/25/12 2,000 1,851
FNMA Series G93-1, Class-H
6.700%, 02/25/21 1,000 1,008
18 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
FNMA TBA 15 Year
5.500%, 05/01/14 (H) 2,000 $ 1,946
GNMA Pool #160376X
9.000%, 06/15/16 99 107
------------
27,388
------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS
(Cost $28,611) 28,393
------------
OTHER MORTGAGE-BACKED OBLIGATIONS -- 1.1%
FIXED RATE -- 1.1%
GMAC Commercial Mortgage Securities,
Series 1998-C2, Class-A2
6.420%, 09/15/30 1,000 1,007
Residential Funding Mortgage Securities,
Series 1999-S5, Class-A1
6.000%, 02/25/29 1,000 998
------------
2,005
------------
TOTAL OTHER MORTGAGE-BACKED OBLIGATIONS
(Cost $2,016) 2,005
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 5.4%
Federal Farm Credit Bank
5.020%, 03/01/00 2,000 1,999
Federal Home Loan Bank
5.035%, 02/25/00 2,000 1,998
5.125%, 02/26/02 2,000 1,987
FNMA
6.590%, 09/17/07 2,000 2,091
6.210%, 11/07/07 2,000 2,039
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $10,206) 10,114
------------
ASSET-BACKED OBLIGATIONS -- 0.8%
CREDIT CARDS -- 0.8%
Discover Card Master Trust,
Series 1999-1, Class-A
5.300%, 08/15/04 1,500 1,474
------------
TOTAL ASSET-BACKED OBLIGATIONS
(Cost $1,499) 1,474
------------
U.S. TREASURY OBLIGATIONS -- 3.2%
U.S. Treasury Notes
8.750%, 08/15/00 750,000 787
5.750%, 11/15/00 1,000,000 1,011
6.375%, 03/31/01 1,150,000 1,179
6.250%, 08/15/23 2,000,000 2,089
U.S. Treasury STRIPS
6.129%, 02/15/18 (O) 1,500,000 480
6.284%, 08/15/18 (O) 1,500,000 466
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,167) 6,012
------------
FOREIGN GOVERNMENT BONDS -- 20.9%
ARGENTINA -- 2.5%
Republic of Argentina
8.750%, 07/10/02 (G) AR 1,250 1,092
11.750%, 02/12/07 (G) AR 1,500 1,352
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
11.375%, 01/30/17 (G) 1,200 $ 1,127
12.125%, 02/25/19 (G) 1,000 992
------------
4,563
------------
AUSTRIA -- 1.2%
Republic of Austria
7.625%, 10/18/04 EU 726 938
5.625%, 07/15/07 EU 1,100 1,311
------------
2,249
------------
BRAZIL -- 1.2%
Republic of Brazil
9.375%, 04/07/08 (G) 2,000 1,500
8.000%, 04/15/14 (G) 985 623
10.125%, 05/15/27 (G) 100 72
------------
2,195
------------
BULGARIA -- 1.0%
Bulgaria Government
5.875%, 07/28/11 (A) (D) (G) 1,500 1,003
6.688%, 07/28/11 (A) (D) (G) 800 534
6.688%, 07/28/24 (A) (D) (G) 600 406
------------
1,943
------------
CANADA -- 1.0%
Government of Canada
8.000%, 06/01/23 CD 2,000 1,801
------------
COLOMBIA -- 1.0%
Republic of Columbia
10.875%, 03/09/04 1,000 1,034
8.625%, 04/01/08 1,000 889
------------
1,923
------------
CROATIA -- 0.5%
Government of Croatia
5.813%, 07/31/06 (A) 1,150 945
------------
DENMARK -- 0.5%
Kingdom of Denmark
7.000%, 11/10/24 DK 5,500 979
------------
ECUADOR -- 0.3%
Republic of Ecuador
11.250%, 04/25/02 (D) (G) 1,000 650
------------
GREECE -- 1.0%
Hellenic Republic
8.600%, 03/26/08 GD 480,000 1,859
------------
HUNGARY -- 0.5%
Government of Hungary
13.000%, 07/24/03 HF 225,000 969
------------
KAZAKHSTAN -- 0.7%
Republic of Kazakhstan
8.375%, 10/02/02 1,500 1,351
------------
KOREA -- 0.7%
Republic of Korea (G)
8.875%, 04/15/08 1,200 1,278
------------
19 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
NET ASSETS MARCH 31, 1999 (UNAUDITED)
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION PAR (000) (F) VALUE (000)
- --------------------------------------------------------------------------------
MEXICO -- 2.1%
United Mexican States
11.375%, 09/15/16 (G) 1,800 $ 1,935
United Mexican States
6.250%, 12/31/19 700 550
United Mexican States
11.500%, 05/15/26 (G) 1,250 1,384
------------
3,869
------------
NETHERLANDS -- 0.5%
Government of the Netherlands
7.500%, 04/15/10 EU 680 943
------------
PANAMA -- 0.8%
Republic of Panama
8.250%, 04/22/08 (G) 1,500 1,403
------------
PHILIPPINES -- 1.1%
Philippines Republic
8.875%, 04/15/08 (G) 1,000 986
9.875%, 01/15/19 (G) 1,000 997
------------
1,983
------------
RUSSIA -- 0.2%
Russian Federation
10.000%, 06/26/07 (D) (G) 550 150
Russian-IAN
6.625%, 12/15/15 (A) (D) (G) 3,645 273
------------
423
------------
SOUTH AFRICA -- 1.0%
Republic of South Africa
12.500%, 01/15/02 (G) ZA 6,000 933
13.500%, 09/15/15 (G) ZA 6,500 971
------------
1,904
------------
SWEDEN -- 0.6%
Kingdom of Sweden, Series 1034
9.000%, 04/20/09 SE 6,500 1,083
------------
TURKEY -- 1.1%
Republic of Turkey,
Putable 12/15/03 @ 100.000
12.000%, 12/15/08 2,000 2,002
------------
UNITED KINGDOM -- 0.8%
United Kingdom Conversion Stock
9.500%, 04/18/05 UK 700 1,412
------------
VENEZUELA -- 0.6%
Republic of Venezuela, Series DL
5.938%, 12/18/07 (A) (G) 1,714 1,194
------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $42,320) 38,921
------------
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
COMMON STOCKS -- 0.0%
UNITED STATES -- 0.0%
Affiliated Newspapers Investments, Cl B* 500 $ 55
CS Wireless Systems* (D) 27 --
Pegasus Communications, Cl A* 225 6
------------
61
------------
TOTAL COMMON STOCKS
(Cost $3) 61
------------
PREFERRED STOCKS -- 0.5%
UNITED STATES -- 0.5%
Benedek Communications PIK* 50 38
Capstar Communications PIK, Series E* 749 90
Cumulus Media, Series A* 52 59
Nebco Evans Holding PIK* 277 11
Nextel Communications PIK, Series D* 56 63
Pegasus Communications PIK, Series A* 119 134
Primedia, Series F* 2,350 241
Primedia, Series H* 2,150 204
Sinclair Capital 750 84
Viatel PIK, Series A* 64 14
------------
938
------------
TOTAL PREFERRED STOCKS
(Cost $878) 938
------------
WARRANTS -- 0.0%
AUSTRALIA -- 0.0%
UIH Australia 150 --
------------
MEXICO -- 0.0%
United Mexican States VRR
0.000%, 06/30/03 5,383 --
------------
UNITED STATES -- 0.0%
Bar Technologies* (D) 50 3
Diva Systems* 225 --
Electronic Retailing System International* (D) 75 --
IHF Capital* (D) 150 --
Metronet Communications* (D) 100 7
Nextel Communications* 250 --
Pathnet* 75 1
Sterling Chemical Holdings* 100 2
Wireless One* 150 --
------------
13
------------
TOTAL WARRANTS
(Cost $15) 13
------------
RELATED PARTY MONEY MARKET FUND -- 8.8%
First American Prime Obligations
Fund (B) 16,400,653 16,401
------------
TOTAL RELATED PARTY MONEY MARKET FUND
(Cost $16,401) 16,401
------------
TOTAL INVESTMENTS -- 100.4%
(Cost $192,102) 186,910
------------
OTHER ASSETS AND LIABILITIES, NET -- (0.4%)(I) (780)
------------
20 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STRATEGIC INCOME FUND (CONTINUED)
DESCRIPTION VALUE (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Capital--Class-A
($.0001 par value--2 billion authorized)
based on 3,413,263 outstanding shares $ 48,974
Portfolio Capital--Class-B
($.0001 par value--2 billion authorized)
based on 36,178 outstanding shares 340
Portfolio Capital--Class-C
($.0001 par value--2 billion authorized)
based on 6,942 outstanding shares 66
Portfolio Capital--Class-Y
($.0001 par value--2 billion authorized)
based on 16,154,298 outstanding shares 156,299
Distributions in excess of net investment income (68)
Accumulated net realized loss on investments (14,245)
Net unrealized depreciation of investments (5,192)
Net unrealized depreciation of forward foreign
currency contracts, foreign currency and
translation of other assets and liabilities
in foreign currency (44)
------------
TOTAL NET ASSETS -- 100.0% $ 186,130
------------
Net asset value and redemption
price per share--Class-A $ 9.49
Maximum sales charge of 4.25% (J) 0.42
------------
Offering price per share-Class-A $ 9.91
------------
Net asset value and offering
price per share--Class-B (K) $ 9.47
------------
Net asset value per share--Class-C (L) $ 9.49
Maximum sales charge of 1.00% (M) 0.10
------------
Offering price per share--Class-C $ 9.59
------------
Net asset value, offering price, and redemption
price per share--Class-Y $ 9.49
------------
* Non-income producing security.
(A) Variable Rate Security--the rate reported on the Statement of Net Assets is
the rate in effect as of March 31, 1999.
(B) This money market fund is advised by U.S. Bank National Association who also
serves as advisor for this Fund. See also the notes to the financial
statements.
(C) Delayed Interest (Step-Bonds) -- Represents securities that remain
zero-coupon securities until a predetermined date at which time the stated
coupon rate becomes effective and interest becomes payable at regular
intervals. The interest rates disclosed represent yields at March 31, 1999,
based upon the estimated timing and amount of future interest and principal
payments.
(D) Security sold within the terms of a private placement memorandum, exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other "qualified
institutional investors". These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(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 illiquid. On March 31, 1999, the total market
value of these investments was $5,077,000 or 2.73% of total net assets.
Information regarding these securities is as follows:
STRATEGIC INCOME FUND (CONCLUDED)
DESCRIPTION
- --------------------------------------------------------------------------------
Date
Security Par Acquired Cost Basis
- --------------------------------------------------------------------------------
Acme Television $500,000 9/97-3/99 $410,892
American Builders &
Contractors 175,000 5/97-3/99 161,875
Chancellor Media Corp. 50,000 12/97 55,313
Cumulus Media 200,000 6/98-8/98 206,375
Daily International 300,000 2/98-8/98 290,500
Dialog 300,000 11/97-8/98 317,500
Diamond Holdings Plc 125,000 1/98 126,250
Eagle-Picher Industries 375,000 2/98-3/99 366,168
Glenoit 100,000 3/97-8/97 103,155
Nextel Communications 1,475,000 2/98-2/99 923,925
NextLink Communications 100,000 2/98 99,798
Oshkosh Trucking 50,000 2/98 50,000
Qwest Communications 600,000 10/97-9/98 424,606
Revlon Consumer Products 850,000 1/98-2/99 834,807
Tekni-Plex 100,000 2/98-4/98 101,063
Telesystems International
Wireless 50,000 10/97 29,958
Telesystems International
Wireless 125,000 6/97-10/97 72,696
United International Holdings 400,000 2/98-3/99 248,444
Wesco Distribution 325,000 5/98-8/98 322,569
(F) In U.S. dollars unless otherwise indicated.
(G) Represents a foreign high yield (non-investment grade) bond. On March 31,
1999, the total market value of these investments was $31,343,000 or 16.84%
of total net assets.
(H) On March 31, 1999, the total cost of investments purchased on a when-issued
basis was $5,944,062.
(I) Other assets and liabilities representing greater than five percent of total
net assets include the following (000):
Cash collateral received for securities on loan $ 11,836
Payable upon receipt of securities on loan $(11,836)
(J) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.25%.
(K) Retail Class-B has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
(L) Retail Class-C has a contingent deferred sales charge. For a description of
a possible redemption charge, see the notes to the financial statements.
(M) The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 1.00%.
(N) Security currently in default. Interest or principal payments are not made
on the date due.
(O) The rate shown is the effective yield at date of purchase.
AR--Argentina Peso
CD--Canadian Dollar
CK--Czech Republic Koruna
DK--Danish Kroner
DM--German Mark
EU--Euro
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GD--Greek Drachma
GMAC--General Motors Acceptance Corporation
GNMA--Government National Mortgage Association
HF--Hungarian Forint
IAN--Interest Arrears Note
PIK--Payment-in-Kind interest is generally paid by issuing additional par of the
security rather than paying cash.
SE--Swedish Krona
STRIPS--Separate Trading of Registered Interest and Principal of Securities
TBA--To Be Announced
UK--British Pound
VRR--Value Recovery Right
ZA--South African Rand
The accompanying notes are an integral part of the financial statements.
21 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1999, (UNAUDITED)
IN THOUSANDS
<TABLE>
<CAPTION>
ADJUSTABLE INTERMEDIATE
RATE MORTGAGE FIXED GOVERNMENT
SECURITIES FUND INCOME FUND BOND FUND
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 3,537 $ 43,546+ $ 6,761
Dividends -- -- --
- ----------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 3,537 43,546 6,761
====================================================================================================
EXPENSES:
Investment advisory fees 430 4,936 783
Less: Waiver of investment advisory fees (208) (1,189) (194)
Administrator fees 67 768 122
Transfer agent fees 82 98 16
Custodian fees 18 212 34
Directors' fees 1 14 2
Registration fees 1 35 7
Professional fees 2 18 3
Printing 3 42 7
Distribution fees - class-A 153 219 6
Less: Waiver of distribution fees - class-A (61) -- (6)
Distribution fees - class-B -- 84 --
Other 2 13 3
- ----------------------------------------------------------------------------------------------------
TOTAL NET EXPENSES 490 5,250 783
====================================================================================================
INVESTMENT INCOME - NET 3,047 38,296 5,978
====================================================================================================
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS - NET:
Net realized gain (loss) on investments (21) 13,260 651
Net realized loss on forward foreign currency contracts
and foreign currency transactions -- -- --
Net change in unrealized appreciation (depreciation) of
investments (588) (75,271) (7,626)
Net change in unrealized depreciation of forward
foreign currency contracts, foreign currency and
translation of other assets and liabilities denominated
in foreign currency -- -- --
- ----------------------------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS (609) (62,011) (6,975)
====================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,438 $(23,715) $ (997)
====================================================================================================
</TABLE>
+ Includes income from securities lending program. See the Notes to the
Financial Statements for additional information.
The accompanying notes are an integral part of the financial statements.
22 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM LIMITED TERM STRATEGIC
INCOME FUND INCOME FUND INCOME FUND
- --------------------------------------------------------
<S> <C> <C>
$ 13,039+ $ 4,832+ $ 6,048+
-- -- 23
- --------------------------------------------------------
13,039 4,832 6,071
========================================================
1,585 590 431
(378) (233) (35)
247 92 68
23 14 42
68 25 18
5 2 1
12 8 11
6 2 2
13 5 4
55 6 54
(22) (6) --
-- -- 1
4 2 2
- --------------------------------------------------------
1,618 507 599
========================================================
11,421 4,325 5,472
========================================================
2,781 (36) 854
-- -- (291)
(16,003) (1,494) 527
-- -- (48)
- --------------------------------------------------------
(13,222) (1,530) 1,042
========================================================
$ (1,801) $ 2,795 $ 6,514
========================================================
</TABLE>
23 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
STATEMENTS OF
CHANGES IN NET ASSETS IN THOUSANDS
<TABLE>
<CAPTION>
INTERMEDIATE
ADJUSTABLE RATE FIXED INCOME GOVERNMENT
MORTGAGE SECURITIES FUND FUND BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
10/1/98 10/1/97 10/1/98 10/1/97 10/1/98 10/1/97
to to to to to to
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
(unaudited) (unaudited) (unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income - net $ 3,047 $ 8,607 $ 38,296 $ 60,277 $ 5,978 $ 12,212
Net realized gain (loss) on investments (21) 665 13,260 20,003 651 179
Net realized loss on forward foreign currency contracts and foreign
currency transactions -- -- -- -- -- --
Net change in unrealized appreciation
(depreciation) of investments (588) (766) (75,271) 57,853 (7,626) 9,274
Net change in unrealized appreciation (depreciation) of forward
foreign currency contracts, foreign currency and translation of
other assets and liabilities denominated in foreign currency -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 2,438 8,506 (23,715) 138,133 (997) 21,665
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income - net:
Class-A (3,272) (8,473) (4,389) (1,694) (136) (225)
Class-B -- -- (370) (706) -- --
Class-C -- -- -- -- -- --
Class-Y (19) -- (32,563) (57,596) (5,835) (11,976)
Net realized gain on investments:
Class-A -- -- (2,343) (11) (5) --
Class-B -- -- (215) (19) -- --
Class-C -- -- -- -- -- --
Class-Y -- -- (15,597) (874) (197) --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (3,291) (8,473) (55,477) (60,900) (6,173) (12,201)
==================================================================================================================================
CAPITAL SHARE TRANSACTIONS(1):
Class-A:
Proceeds from sales 178 2,317 9,022 8,657 1,867 3,819
Shares issued in connection with acquisition of Qualivest Fund -- -- -- 526 -- --
Shares issued in connection with acquisition of Piper Fund -- -- -- 396,424 -- --
Reinvestment of distributions 362 3,652 3,315 351 90 137
Payments for redemptions (19,152) (57,967) (47,843) (215,619) (1,177) (3,088)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
Class-A transactions (18,612) (51,998) (35,506) 190,339 780 868
- ----------------------------------------------------------------------------------------------------------------------------------
Class-B:
Proceeds from sales -- -- 2,557 3,549 -- --
Reinvestment of distributions -- -- 518 615 -- --
Payments for redemptions -- -- (2,655) (3,225) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from
Class-B transactions -- -- 420 939 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class-C:
Proceeds from sales -- -- 38 -- -- --
Reinvestment of distributions -- -- -- -- -- --
Payment for redemptions -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from
Class-C transactions -- -- 38 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class-Y:
Proceeds from sales 1,013 1 257,293 453,638 17,189 80,734
Shares issued in connection with acquisition of Qualivest Fund -- -- -- 266,616 -- --
Shares issued in connection with acquisition of Piper Fund -- -- -- -- -- --
Reinvestment of distributions 2 -- 27,007 32,294 478 792
Payments for redemptions (209) -- (191,541) (317,426) (46,914) (36,741)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
Class-Y transactions 806 1 92,759 435,122 (29,247) 44,785
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
capital share transactions (17,806) (51,997) 57,711 626,400 (28,467) 45,653
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (18,659) (51,964) (21,481) 703,633 (35,637) 55,117
NET ASSETS AT BEGINNING OF PERIOD 132,734 184,698 1,433,140 729,507 240,532 185,415
==================================================================================================================================
NET ASSETS AT END OF PERIOD (2) $114,075 $132,734 $1,411,659 $1,433,140 $204,895 $240,532
==================================================================================================================================
</TABLE>
(1)See Note 4 in Notes to Financial Statements for additional information.
(2)Includes undistributed (distributions in excess of) net investment income
(000) of $(110) and $134 for Adjustable Rate Mortgage Securities Fund, $1,265
and $291 for Fixed Income Fund, $18 and $11 for Intermediate Government Bond
Fund, $(1) and $117 for Intermediate Term Income Fund, $40 and $4 for Limited
Term Income Fund, and $(68) and $(377) for Strategic Income Fund at March 31,
1999, and September 30, 1998, respectively.
(3)Commenced operations on July 24, 1998.
The accompanying notes are an integral part of the financial statements.
24 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM LIMITED TERM STRATEGIC
INCOME FUND INCOME FUND INCOME FUND
- -------------------------------------------------------------------------------------------
10/1/98 10/1/97 10/1/98 10/1/97 10/1/98 7/24/98
to to to to to to
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98(3)
(unaudited) (unaudited) (unaudited)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 11,421 $ 22,848 $ 4,325 $ 10,027 $ 5,472 $ 1,423
2,781 5,989 (36) 197 854 101
-- -- -- -- (291) (627)
(16,003) 14,591 (1,494) 1,621 527 (7,227)
-- -- -- -- (48) 4
- -------------------------------------------------------------------------------------------
(1,801) 43,428 2,795 11,845 6,514 (6,326)
- -------------------------------------------------------------------------------------------
(1,089) (607) (126) (270) (1,351) (521)
-- -- -- -- (8) (1)
-- -- -- -- -- --
(10,450) (22,110) (4,163) (9,753) (3,513) (651)
(564) (6) -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
(5,033) (624) -- -- -- --
- -------------------------------------------------------------------------------------------
(17,136) (23,347) (4,289) (10,023) (4,872) (1,173)
===========================================================================================
1,599 5,188 1,284 5,810 641 381
-- 814 -- -- -- --
-- 43,926 -- -- -- 86,421
960 426 119 250 739 344
(10,025) (5,294) (1,617) (8,234) (10,225) (43,019)
- -------------------------------------------------------------------------------------------
(7,466) 45,060 (214) (2,174) (8,845) 44,127
- -------------------------------------------------------------------------------------------
-- -- -- -- 265 112
-- -- -- -- 6 1
-- -- -- -- (44) --
- -------------------------------------------------------------------------------------------
-- -- -- -- 227 113
- -------------------------------------------------------------------------------------------
-- -- -- -- 66 --
-- -- -- -- -- --
-- -- -- -- -- --
- -------------------------------------------------------------------------------------------
-- -- -- -- 66 --
- -------------------------------------------------------------------------------------------
45,053 81,887 17,883 59,869 103,530 60,261
-- 187,587 -- -- -- --
-- 8,844 -- -- -- --
6,852 8,673 1,791 4,703 2,478 521
(75,005) (199,064) (60,646) (77,568) (7,843) (2,648)
- -------------------------------------------------------------------------------------------
(23,100) 87,927 (40,972) (12,996) 98,165 58,134
- -------------------------------------------------------------------------------------------
(30,566) 132,987 (41,186) (15,170) 89,613 102,374
- -------------------------------------------------------------------------------------------
(49,503) 153,068 (42,680) (13,348) 91,255 94,875
479,802 326,734 178,172 191,520 94,875 0
===========================================================================================
$ 430,299 $ 479,802 $ 135,492 $ 178,172 $ 186,130 $ 94,875
===========================================================================================
</TABLE>
25 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING, THROUGHOUT THE PERIODS
ENDED SEPTEMBER 30, UNLESS OTHERWISE INDICATED.
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET UNREALIZED DIVIDENDS
VALUE NET GAINS OR FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE SECURITIES FUND
Class-A(1)
1999*(unaudited) $ 8.16 $ 0.20 $(0.04) $(0.22) $ --
1998 8.15 0.48 -- (0.47) --
1997 8.06 0.47 0.09 (0.47) --
1996(2) 8.03 0.04 0.03 (0.04) --
1996(3) 7.99 0.49 0.01 (0.46) --
1995(3)(4) 8.10 0.47 (0.05) (0.53) --
1994(3) 8.88 0.55 (0.82) (0.51) --
Class-Y
1999*(unaudited) $ 8.16 $ 0.21 $(0.04) $(0.22) $ --
1998(5) 8.13 0.06 0.02 (0.05) --
FIXED INCOME FUND
Class-A
1999*(unaudited) $11.69 $ 0.29 $(0.49) $(0.29) $(0.15)
1998 10.97 0.57 0.73 (0.57) (0.01)
1997 10.77 0.59 0.27 (0.59) (0.07)
1996 10.98 0.61 (0.11) (0.61) (0.10)
1995 10.37 0.66 0.61 (0.63) (0.03)
1994 11.38 0.57 (0.89) (0.57) (0.12)
Class-B
1999*(unaudited) $11.63 $ 0.25 $(0.49) $(0.25) $(0.15)
1998 10.91 0.49 0.73 (0.49) (0.01)
1997 10.72 0.51 0.26 (0.51) (0.07)
1996 10.94 0.52 (0.11) (0.53) (0.10)
1995 10.35 0.58 0.60 (0.56) (0.03)
1994(6) 10.54 0.08 (0.17) (0.10) --
Class-C
1999(7)(unaudited) $11.33 $ 0.10 $(0.28) $(0.10) $ --
Class-Y
1999*(unaudited) $11.69 $ 0.31 $(0.50) $(0.30) $(0.15)
1998 10.96 0.60 0.74 (0.60) (0.01)
1997 10.76 0.62 0.27 (0.62) (0.07)
1996 10.97 0.63 (0.11) (0.63) (0.10)
1995 10.37 0.66 0.62 (0.65) (0.03)
1994(8) 11.11 0.38 (0.74) (0.38) --
INTERMEDIATE GOVERNMENT BOND FUND
Class-A
1999*(unaudited) $ 9.68 $ 0.26 $(0.30) $(0.26) $(0.01)
1998 9.28 0.52 0.40 (0.52) --
1997 9.19 0.54 0.09 (0.54) --
1996 9.29 0.54 (0.10) (0.54) --
1995 8.98 0.54 0.31 (0.54) --
1994 9.52 0.41 (0.51) (0.39) (0.05)
Class-Y
1999*(unaudited) $ 9.66 $ 0.26 $(0.29) $(0.26) $(0.01)
1998 9.27 0.52 0.39 (0.52) --
1997 9.18 0.54 0.09 (0.54) --
1996 9.29 0.54 (0.11) (0.54) --
1995 8.98 0.54 0.31 (0.54) --
1994(8) 9.41 0.27 (0.43) (0.27) --
INTERMEDIATE TERM INCOME FUND
Class-A
1999*(unaudited) $10.45 $ 0.25 $(0.31) $(0.25) $(0.12)
1998 10.00 0.53 0.47 (0.53) (0.02)
1997 9.93 0.55 0.15 (0.56) (0.07)
1996 9.94 0.55 -- (0.55) (0.01)
1995 9.55 0.59 0.38 (0.58) --
1994 10.22 0.46 (0.56) (0.46) (0.11)
Class-Y
1999*(unaudited) $10.42 $ 0.26 $(0.30) $(0.26) $(0.12)
1998 9.98 0.53 0.46 (0.53) (0.02)
1997 9.93 0.55 0.13 (0.56) (0.07)
1996 9.94 0.55 -- (0.55) (0.01)
1995 9.55 0.58 0.39 (0.58) --
1994(8) 10.01 0.31 (0.46) (0.31) --
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
+ Returns are for the period indicated and have not been annualized.
* For the six month period ended March 31. All ratios for the period have been
annualized.
(A)Excluding sales charges.
(1)The financial highlights for the Adjustable Rate Mortgage Securities Fund as
set forth herein include the historical financial highlights of the Piper
Adjustable Rate Mortgage Securities Fund class-A shares. The assets of the
Piper Adjustable Rate Mortgage Securities Fund were acquired by Adjustable
Rate Mortgage Securities Fund on July 31, 1998. In connection with such
acquisition, class-A shares of the Piper Adjustable Rate Mortgage Securities
Fund were exchanged for class-A shares of the Adjustable Rate Mortgage
Securities Fund. On July 31, 1998, the advisor changed from Piper Capital
Management, Inc. to U.S. Bank N.A.
(2)For the one month period ended September 30, 1996. All ratios for the period
have been annualized.
The accompanying notes are an integral part of the financial statements.
26 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET EXPENSES TO
NET ASSET RATIO OF INVESTMENT AVERAGE
VALUE NET ASSETS EXPENSES TO INCOME TO NET ASSETS PORTFOLIO
END OF TOTAL END OF AVERAGE AVERAGE (EXCLUDING TURNOVER
PERIOD RETURN (A) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) RATE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 8.10 1.97%+ $ 113,268 0.80% 4.96% 1.24% 29%
8.16 5.56 132,733 0.80 5.44 0.89 14
8.15 7.16 184,697 0.81 5.84 0.81 25
8.06 0.85+ 262,833 0.82 5.28 0.76 2
8.03 6.40 269,948 0.60 5.74 0.60 51
7.99 5.43 409,306 0.63 5.62 0.63 36
8.10 (3.18) 500,062 0.60 6.39 0.60 39
$ 8.11 2.17%+ $ 807 0.65% 4.97% 0.99% 29%
8.16 1.04+ 1 0.65 5.33 0.99 14
$11.05 (1.78)%+ $ 159,653 0.95% 5.21% 1.12% 30%
11.69 12.29 205,237 0.95 5.10 1.11 147
10.97 8.26 8,535 0.95 5.44 1.13 130
10.77 4.64 8,332 0.95 5.55 1.12 108
10.98 12.78 7,853 0.86 6.14 1.19 106
10.37 (2.92) 8,028 0.68 3.83 1.06 142
$10.99 (2.14)%+ $ 16,705 1.70% 4.47% 1.87% 30%
11.63 11.54 17,242 1.70 4.35 1.86 147
10.91 7.40 15,253 1.70 4.68 1.88 130
10.72 3.93 16,092 1.70 4.81 1.87 108
10.94 11.75 7,280 1.70 5.12 1.94 106
10.35 (0.88)+ 115 1.70 4.89 1.92 142
$11.05 (1.63)%+ $ 38 1.35% 6.21% 1.87% 30%
$11.05 (1.66)%+ $1,235,263 0.70% 5.48% 0.87% 30%
11.69 12.66 1,210,661 0.70 5.35 0.86 147
10.96 8.54 705,719 0.70 5.71 0.88 130
10.76 4.90 391,211 0.70 5.81 0.87 108
10.97 12.86 289,816 0.70 6.28 0.94 106
10.37 (3.23)+ 90,187 0.61 5.53 0.92 142
$ 9.37 (0.49)%+ $ 5,190 0.70% 5.35% 1.12% 2%
9.68 10.27 4,573 0.70 5.58 1.12 20
9.28 7.06 3,525 0.70 5.88 1.12 22
9.19 4.85 3,320 0.70 5.85 1.10 29
9.29 9.82 2,860 0.70 6.10 1.22 17
8.98 (1.13) 1,977 0.53 4.49 2.14 74
$ 9.36 (0.38)%+ $ 199,705 0.70% 5.34% 0.87% 2%
9.66 10.17 235,959 0.70 5.58 0.87 20
9.27 7.07 181,889 0.70 5.88 0.87 22
9.18 4.74 140,230 0.70 5.85 0.85 29
9.29 9.82 100,168 0.70 6.13 0.97 17
8.98 (1.66)+ 27,776 0.36 5.32 1.45 74
$10.02 (0.51)%+ $ 39,803 0.85% 4.91% 1.12% 22%
10.45 10.35 49,130 0.70 5.22 1.11 166
10.00 7.19 2,484 0.70 5.51 1.17 165
9.93 5.63 2,213 0.70 5.43 1.13 161
9.94 10.51 2,437 0.70 5.97 1.19 69
9.55 (1.05) 3,208 0.69 2.48 1.24 177
$10.00 (0.35)%+ $ 390,496 0.70% 5.06% 0.87% 22%
10.42 10.27 430,672 0.70 5.24 0.86 166
9.98 6.98 324,250 0.70 5.51 0.92 165
9.93 5.63 98,702 0.70 5.45 0.88 161
9.94 10.51 88,375 0.70 5.94 0.94 69
9.55 (1.48)+ 68,445 0.58 4.81 1.07 177
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(3)For the period ended August 31.
(4)On September 1, 1995, four closed end funds, American Adjustable Rate Term
Trust 1996, American Adjustable Rate Term Trust 1997, American Adjustable
Rate Term Trust 1998 (DDJ), American Adjustable Rate Term Trust 1999 were
combined to create the Fund. DDJ is considered the surviving entity for
financial reporting purposes. The financial highlights presented for the
periods prior to September 1, 1995, are those of DDJ. The per share
information for such periods has been restated to reflect the impact of
additional shares created resulting from the difference in the net asset
value per share of DDJ at the time of the merger ($8.71) and the initial net
asset value per share of the fund ($8.00).
(5)Class-Y shares have been offered since July 31, 1998. All ratios for the
period have been annualized.
(6)Class-B shares have been offered since August 15, 1994. All ratios for the
period have been annualized.
(7)For the period ended March 31. Class-C shares have been offered since
February 1, 1999. All ratios for the period have been annualized.
(8)Class-Y shares have been offered since February 4, 1994. All ratios for the
period have been annualized.
27 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING, THROUGHOUT THE PERIODS
ENDED SEPTEMBER 30, UNLESS OTHERWISE INDICATED.
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET UNREALIZED DIVIDENDS
VALUE NET GAINS OR FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIMITED TERM INCOME FUND
Class-A
1999*(unaudited) $10.04 $ 0.26 $(0.09) $(0.26) --
1998 9.94 0.53 0.10 (0.53) --
1997 9.91 0.56 0.03 (0.56) --
1996 9.92 0.58 (0.01) (0.58) --
1995 9.85 0.56 0.07 (0.56) --
1994 10.06 0.44 (0.22) (0.43) --
Class-Y
1999*(unaudited) $10.04 $ 0.26 $(0.09) $(0.26) --
1998 9.94 0.53 0.10 (0.53) --
1997 9.91 0.56 0.03 (0.56) --
1996 9.92 0.58 (0.01) (0.58) --
1995 9.85 0.56 0.07 (0.56) --
1994(1) 10.02 0.29 (0.17) (0.29) --
STRATEGIC INCOME FUND
Class-A
1999*(unaudited) $ 9.27 $ 0.44 $ 0.14 $(0.36) --
1998(2) 10.00 0.13 (0.75) (0.11) --
Class-B
1999*(unaudited) $ 9.27 $ 0.37 $ 0.16 $(0.33) --
1998(2) 10.00 0.09 (0.71) (0.11) --
Class-C
1999(3)(unaudited) $ 9.57 $ 0.12 $(0.07) $(0.13) --
Class-Y
1999*(unaudited) $ 9.27 $ 0.38 $ 0.21 $(0.37) --
1998(2) 10.00 0.14 (0.75) (0.12) --
- -------------------------------------------------------------------------------------------------------
</TABLE>
+ Returns are for the period indicated and have not been annualized.
* For the six months ended March 31. All ratios for the period have been
annualized.
(A)Excluding sales charges.
(1)Class-Y shares have been offered since February 4, 1994. All ratios for the
period have been annualized.
(2)Commenced operations July 24, 1998. All ratios for the period have been
annualized.
(3)For the six month period ended March 31. Class-C shares have been offered
since February 1, 1999. All ratios for the period have been annualized.
The accompanying notes are an integral part of the financial statements.
28 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET EXPENSES TO
NET ASSET RATIO OF INVESTMENT AVERAGE
VALUE NET ASSETS EXPENSES TO INCOME TO NET ASSETS PORTFOLIO
END OF TOTAL END OF AVERAGE AVERAGE (EXCLUDING TURNOVER
PERIOD RETURN (A) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) RATE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9.95 1.68%+ $ 4,778 0.60% 5.13% 1.13% 13%
10.04 6.55 5,036 0.60 5.33 1.12 112
9.94 6.09 7,152 0.60 5.61 1.15 147
9.91 5.93 7,627 0.60 5.80 1.09 61
9.92 6.57 9,977 0.60 5.60 1.22 120
9.85 2.21 9,509 0.60 4.17 1.23 48
$ 9.95 1.68%+ $130,714 0.60% 5.13% 0.88% 13%
10.04 6.55 173,136 0.60 5.33 0.87 112
9.94 6.09 184,368 0.60 5.60 0.90 147
9.91 5.93 93,588 0.60 5.80 0.84 61
9.92 6.57 111,439 0.60 5.67 0.97 120
9.85 1.24+ 70,266 0.60 4.40 1.03 48
$ 9.49 6.29%+ $ 32,429 1.15% 8.80% 1.19% 22%
9.27 (6.17)+ 40,270 1.15 8.19 1.30 61
$ 9.47 5.81%+ $ 347 1.90% 8.15% 1.94% 22%
9.27 (6.19)+ 114 1.90 7.44 2.05 61
$ 9.49 0.48%+ $ 66 1.55% 7.60% 1.94% 22%
$ 9.49 6.38%+ $153,288 0.90% 8.92% 0.94% 22%
9.27 (6.13)+ 54,491 0.90 8.44 1.05 61
- --------------------------------------------------------------------------------------------------------------
</TABLE>
29 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
NOTES TO
FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
1 ORGANIZATION
The First American Adjustable Rate Mortgage Securities Fund, Fixed Income Fund,
Intermediate Government Bond Fund, Intermediate Term Income Fund, Limited Term
Income Fund, and Strategic Income Fund are funds offered by First American
Investment Funds, Inc. (FAIF) (each a "Fund" collectively, "the Funds"). Other
funds that are offered by FAIF but are not included in this report are:
California Intermediate Tax Free Fund, Colorado Intermediate Tax Free Fund,
Intermediate Tax Free Fund, Minnesota Intermediate Tax Free Fund, Minnesota Tax
Free Fund, Oregon Intermediate Tax Free Fund, Tax Free Fund, Balanced Fund,
Equity Income Fund, Equity Index Fund, Large Cap Value Fund, Large Cap Growth
Fund, Mid Cap Growth Fund, Mid Cap Value Fund, Regional Equity Fund, Small Cap
Value Fund, Small Cap Growth Fund, Micro Cap Value Fund, Emerging Markets Fund,
International Index Fund, International Fund, Health Sciences Fund, Real Estate
Securities Fund and Technology Fund. FAIF is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The FAIF articles of incorporation permit the Board of Directors to create
additional funds in the future.
These FAIF Funds offer class-A and class-Y shares. Fixed Income Fund and
Strategic Income Fund also offer class-B and class-C shares. Class-A shares are
sold with a front-end sales charge. Class-B shares are subject to a contingent
deferred sales charge for six years and automatically convert to class-A shares
after eight years. Class-C shares are sold with a front-end sales charge and are
subject to a contingent deferred sales charge for 18 months. Class-Y shares have
no sales charge and are offered only to qualifying institutional investors.
The Funds' prospectuses provide a description of each Fund's investment
objectives, policies and strategies. All classes of shares have identical
voting, dividend, liquidation and other rights, and the same terms and
conditions, except that the level of distribution fees charged may differ among
classes.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
SECURITY VALUATION - Security valuations for FAIF Fund investments are furnished
by an independent pricing service that has been approved by the 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. 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 sixty days
to maturity are valued by an independent pricing service. The pricing service
may employ methodologies that utilize actual market transactions, broker-dealer
supplied valuations, or other electronic data processing 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 Board of Directors. Debt obligations
with
30 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
sixty days or less remaining until maturity may be valued at their amortized
cost. Foreign securities are valued at the closing prices on the principal
exchanges on which they trade. The prices for foreign securities are reported in
local currency and converted to U.S. dollars using currency exchange rates.
Exchange rates are provided daily by recognized independent pricing agents.
SECURITY TRANSACTIONS AND INVESTMENT INCOME - The Funds record security
transactions on the trade date of the security purchase or sale. Dividend income
is recorded on the ex-dividend date. Interest income, including amortization of
bond premium and discount is recorded on the accrual basis. Security gains and
losses are determined on the basis of identified cost, which is the same basis
used for Federal income tax purposes.
DISTRIBUTIONS TO SHAREHOLDERS - The Funds declare and pay income dividends
monthly.
Any net realized capital gains on sales of securities for a fund are distributed
to shareholders at least annually.
FEDERAL TAXES - It is each Fund's intention to continue to qualify as a
regulated investment company and to distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required. For Federal
income tax purposes, required distributions related to realized gains from
security transactions are computed as of October 31st.
The amounts of distributions from net investment income and net realized capital
gains are determined in accordance with Federal income tax regulations, which
may differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. These differences are primarily due to wash sales, foreign currency
gains and losses, and for international funds the "mark-to-market" of certain
forward foreign currency contracts and Passive Foreign Investment Companies
(PFICs) for tax purposes. The character of distributions made during the year
from net investment income or net realized gains, and the timing of
distributions where the fiscal year in which the amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the fund. To the extent these differences are permanent, adjustments are made to
the appropriate equity accounts in the period that the difference arises.
As of March 31, 1999, the Strategic Income Fund reclassified ($291,000) from
accumulated net realized foreign exchange loss to undistributed net investment
income. The reclassification is an estimate based on realized foreign exchange
losses for the period October 1, 1998 through March 31, 1999. Reclassifications
for federal income tax purposes will be finalized as of September 30, 1999. The
reclassification had no effect on net assets or net asset values per share.
FOREIGN CURRENCY TRANSLATION - The books and records of the Strategic Income
Fund are maintained in U.S. dollars on the following bases:
o market value of investment securities, assets and liabilities at the
current rate of exchange; and
o purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The Strategic Income Fund does not isolate the portion of gains and losses on
investments in equity securities that is due to changes in the foreign exchange
rates from that which
31 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
NOTES TO
FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
is due to change in market prices of equity securities. The Strategic Income
Fund does isolate the effect of fluctuations in foreign currency rates when
determining the gain or loss upon sale or maturity of foreign currency
denominated debt obligations pursuant to the Federal income tax regulations.
Such amounts are categorized as foreign currency gain or loss for both financial
reporting and income tax reporting purposes.
The Strategic Income Fund reports certain foreign currency related transactions
as components of realized gains for financial reporting purposes, whereas such
components are treated as ordinary income for Federal income tax purposes.
EXPENSES - Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses are allocated to the Funds on
the basis of relative net assets. Class specific expenses, such as the 12b-1
fees, are borne by that class. Income, other expenses and realized and
unrealized gains and losses of a Fund are allocated to the respective class on
the basis of the relative net assets each day.
SECURITIES LENDING - Each Fund may lend up to one-third of the value of its
total assets to broker-dealers, banks or other institutional borrowers of
securities in order to earn additional income. Each Fund's policy is to maintain
collateral in the form of cash, United States Government securities or other
high grade debt obligations equal to at least 100% of the value of securities
loaned. The collateral is then marked to market daily until the securities are
returned.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS - Delivery and payment for
securities which have been purchased by a Fund on a forward commitment or
when-issued basis can take place up to a month or more after the transaction
date. During this period, such securities are subject to market fluctuations and
the portfolio maintains, in a segregated account with its custodian, assets with
a market value equal to or greater than 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. At March 31, 1999, Fixed
Income Fund and Strategic Income Fund had outstanding when-issued commitments of
$63,073,438 and $5,944,062, respectively.
In connection with the ability to purchase securities on a when-issued basis,
the Fixed Income, Intermediate Government Bond, Intermediate Term Income and
Strategic Income Funds may enter into dollar rolls in which the Fund sells
securities purchased on a forward commitment basis and simultaneously contracts
with a counterparty to repurchase similar (same type, coupon, and maturity) but
not identical securities on a specified future date. Dollar rolls are considered
a form of leverage. As an inducement to "roll over" its purchase commitments,
the fund receives negotiated fees. For the six months ended March 31, 1999, the
fees earned by each Fund are as follows:
FUND FEE INCOME EARNED
-----------------------------------------
Fixed Income $133,092
Strategic Income 33,476
-----------------------------------------
HISTORICAL FINANCIAL STATEMENT INFORMATION - The financial information presented
for the Adjustable Rate Mortgage Securities Fund prior to July 31, 1998, is that
of Piper Adjustable Rate Mortgage Securities Fund. The historical information of
the Piper Fund was carried over to the newly formed FAIF fund.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The preparation of
financial statements, in conformity with generally accepted accounting
principles,
32 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
requires management to make estimates and assumptions that affect the reported
amount of net assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported results of
operations during the reporting period. Actual results could differ from those
estimates.
3 FEES AND EXPENSES
ADVISORY FEES - Pursuant to an investment advisory agreement (the Agreement),
U.S. Bank National Association (the Advisor) manages each Fund's assets and
furnishes related office facilities, equipment, research and personnel. The
Agreement requires each Fund to pay the Advisor a monthly fee based upon average
daily net assets. The fee for each Fund is equal to an annual rate of 0.70% of
the average daily net assets.
The Funds may invest in First American Funds, Inc. (FAF), subject to certain
limitations. The terms of such transactions are identical to those of
non-related entities except that, to avoid duplicative investment advisory fees,
the Advisor reimburses each FAIF Fund an amount equal to the investment advisory
fee earned by FAF related to such investments.
SUB-ADVISOR FEES - Federated Investment Counseling and Federated Global Research
Corp., both subsidiaries of Federated Investors, Inc. serve as sub-advisors to
the Strategic Income Fund under an agreement with the Advisor (the "Sub-Advisory
Agreement"). For their services under the Sub-Advisory agreement, each
Sub-Advisor is paid a monthly fee by the Advisor calculated on an annual basis
equal to 0.20% of the first $25 million of the Fund's average daily net assets,
0.165% of the Fund's average daily net assets in excess of $25 million up to $50
million, 0.13% of the Fund's average daily net assets in excess of $50 million
up to $100 million and 0.105% of the Fund's average daily net assets in excess
of $100 million.
ADMINISTRATION FEES - SEI Investments Management Corporation (SIMC) provides
administrative services, including certain accounting, legal and shareholder
services, at an annual rate of .12% of each FAIF Fund's average daily net
assets, with a minimum annual fee of $50,000 for Strategic Income Fund. To the
extent that the aggregate net assets of the First American Family of Funds
exceed $8 billion, the annual rate for each FAIF fund is reduced to .105% of
their relative share of the excess net assets.
SUB-ADMINISTRATION FEES - U.S. Bank National Association assists the
Administrator and provides sub-administration services for the Funds. For these
services, the Administrator compensates the sub-administrator at an annual rate
of up to 0.05% of each Fund's average daily net assets. Under this agreement,
SIMC paid $306,000 in aggregate for the funds in this report to U.S. Bank
National Association for the six months ended March 31, 1999. The fees for each
Fund for the period were approximately 0.025% of average daily net assets.
CUSTODIAN FEES - Through a separate contractual agreement, U.S. Bank National
Association serves as the Funds' custodian. The fee for each Fund is equal to an
annual rate of 0.03% of average daily net assets. All fees are computed daily
and paid monthly.
DISTRIBUTION FEES - SEI Investments Distribution Co. (SIDCO) serves as
distributor of the Funds. Under the distribution plan, each of the Funds pays
SIDCO a monthly distribution fee equal to an annual rate of 0.25% of each Fund's
average daily net assets of the class-A shares, 1.00% of the class-B shares, and
1.00% of the class-C shares, which may be used by SIDCO to provide compensation
for sales support and distribution
33 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
NOTES TO
FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
activities. No distribution fees are paid by class-Y shares. Under the
agreement, SIDCO paid the following amounts to U.S. Bank National Association
and its affiliates for the six months ended March 31, 1999:
----------------------------------------
U.S. Bancorp Piper Jaffray $190
U.S. Bank National Association 33
Var & Co. 5
----------------------------------------
TRANSFER AGENT FEES - DST Systems, Inc. provides transfer agency services for
the Funds. Effective October 1, 1998, FAIF has appointed U.S. Bank National
Association as servicing agent to perform certain transfer agent and dividend
disbursing agent services with respect to the class-A shares of the Funds held
through accounts at U.S. Bank National Association and its affiliates. For the
six months ended March 31, 1999, fees paid to U.S. Bank National Association
were as follows (000):
-------------------------------------------------
Adjustable Rate Mortgage Securities Fund $28
Fixed Income Fund 70
Intermediate Government Bond Fund --
Intermediate Term Income Fund 9
Limited Term Income Fund --
Strategic Income Fund 13
-------------------------------------------------
OTHER FEES - 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 shareholder reports, legal, auditing, insurance and other miscellaneous
expenses.
For the six months ended March 31, 1999, legal fees and expenses were paid to a
law firm of which the Secretary of the Funds is a partner.
SALES CHARGES - A Contingent Deferred Sales Charge (CDSC) is imposed on
redemptions made in class-B shares. The CDSC varies depending on the number of
years from time of payment for the purchase of class-B shares until the
redemption of such shares.
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF DOLLAR
YEAR SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
---------------------------------------------------------
First 5.00%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
---------------------------------------------------------
A CDSC of 1.00% is imposed on redemptions made in class-C shares for the first
eighteen months.
The CDSC for class-B and class-C shares is imposed on the value of the purchased
shares, or the value at the time of redemption, whichever is less.
For the six months ended March 31, 1999, sales charges retained by SIDCO for
distributing the First American Family of Funds' shares were approximately
$58,000.
34 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
4 CAPITAL SHARE TRANSACTIONS
Capital share transactions for the funds were as follows (000):
<TABLE>
<CAPTION>
INTERMEDIATE
ADJUSTABLE RATE FIXED INCOME GOVERNMENT
MORTGAGE SECURITIES FUND FUND BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
10/1/98 10/1/97 10/1/98 10/1/97 10/1/98 10/1/97
to to to to to to
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
(unaudited) (unaudited) (unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Class-A:
Shares issued 22 283 797 782 196 407
Shares issued in connection with acquisition of Qualivest Fund -- -- -- 47 -- --
Shares issued in connection with acquisition of Piper Fund -- -- -- 34,666 -- --
Shares issued in lieu of cash distributions 45 449 291 31 9 15
Shares redeemed (2,360) (7,120) (4,199) (18,751) (124) (330)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-A TRANSACTIONS (2,293) (6,388) (3,111) 16,775 81 92
==================================================================================================================================
Class-B:
Shares issued -- -- 228 317 -- --
Shares issued in lieu of cash distributions -- -- 46 55 -- --
Shares redeemed -- -- (236) (288) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-B TRANSACTIONS -- -- 38 84 -- --
==================================================================================================================================
Class-C:
Shares issued -- -- 3 -- -- --
Shares issued in lieu of cash distributions -- -- -- -- -- --
Shares redeemed -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-C TRANSACTIONS -- -- 3 -- -- --
==================================================================================================================================
Class-Y:
Shares issued 125 -- 22,739 40,454 1,807 8,629
Shares issued in connection with acquisition of Qualivest Fund -- -- -- 24,078 -- --
Shares issued in connection with acquisition of Piper Fund -- -- -- -- -- --
Shares issued in lieu of cash distributions -- -- 2,395 2,880 50 85
Shares redeemed (26) -- (16,917) (28,263) (4,937) (3,914)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-Y TRANSACTIONS 99 -- 8,217 39,149 (3,080) 4,800
==================================================================================================================================
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS (2,194) (6,388) 5,147 56,008 (2,999) 4,892
==================================================================================================================================
<CAPTION>
INTERMEDIATE TERM LIMITED TERM STRATEGIC
INCOME FUND INCOME FUND INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------
10/1/98 10/1/97 10/1/98 10/1/97 10/1/98 7/24/98
to to to to to to
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98(1)
(unaudited) (unaudited) (unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Class-A:
Shares issued 156 513 128 584 67 39
Shares issued in connection with acquisition of Qualivest Fund -- 81 -- -- -- --
Shares issued in connection with acquisition of Piper Fund -- 4,336 -- -- -- 8,642
Shares issued in lieu of cash distributions 94 41 12 25 78 37
Shares redeemed (981) (517) (162) (827) (1,074) (4,376)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-A TRANSACTIONS (731) 4,454 (22) (218) (929) 4,342
==================================================================================================================================
Class-B:
Shares issued -- -- -- -- 28 12
Shares issued in lieu of cash distributions -- -- -- -- 1 --
Shares redeemed -- -- -- -- (5) --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-B TRANSACTIONS -- -- -- -- 24 12
==================================================================================================================================
Class-C:
Shares issued -- -- -- -- 7 --
Shares issued in lieu of cash distributions -- -- -- -- -- --
Shares redeemed -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-C TRANSACTIONS -- -- -- -- 7 --
==================================================================================================================================
Class-Y:
Shares issued 4,432 7,740 1,789 6,008 10,847 6,106
Shares issued in connection with acquisition of Qualivest Fund -- 18,733 -- -- -- --
Shares issued in connection with acquisition of Piper Fund -- 875 -- -- -- --
Shares issued in lieu of cash distributions 675 859 179 473 261 56
Shares redeemed (7,373) (19,365) (6,076) (7,790) (830) (286)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS-Y TRANSACTIONS (2,266) 8,842 (4,108) (1,309) 10,278 5,876
==================================================================================================================================
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS (2,997) 13,296 (4,130) (1,527) 9,380 10,230
==================================================================================================================================
</TABLE>
(1) Commenced operations on July 24, 1998.
35 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
NOTES TO
FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
5 INVESTMENT SECURITY TRANSACTIONS
During the six months ended March 31, 1999, purchases of securities and proceeds
from sales of securities, other than temporary investments in short-term
securities, were as follows (000):
<TABLE>
<CAPTION>
U.S. GOVERNMENT OTHER INVESTMENT
SECURITIES SECURITIES
- ------------------------------------------------------------------------------------
PURCHASES SALES PURCHASES SALES
--------------------------------------------------
<S> <C> <C> <C> <C>
Adjustable Rate Mortgage
Securities Fund $ 6,077 $ 6,856 $ 2,011 $ --
Fixed Income Fund 284,402 290,260 117,823 101,192
Intermediate Government
Bond Fund 4,994 35,620 -- --
Intermediate Term
Income Fund 61,163 104,191 30,766 26,759
Limited Term
Income Fund 5,223 17,043 8,643 36,634
Strategic Income Fund 27,038 9,549 65,034 13,059
- ------------------------------------------------------------------------------------
</TABLE>
Including dollar rolls for Fixed Income Fund and Strategic Income Fund,
purchases aggregated (000) $422,525 and $112,844, and sales aggregated (000)
$391,452 and $49,750, respectively.
At March 31, 1999, the total cost of securities for Federal income tax purpose
was not materially different from amounts reported for financial reporting
purposes. The aggregate gross unrealized appreciation and depreciation for
securities held by the Funds at March 31, 1999, is as follows (000):
<TABLE>
<CAPTION>
AGGREGATE GROSS AGGREGATE GROSS
APPRECIATION DEPRECIATION NET
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Adjustable Rate Mortgage
Securities Fund $ 614 $ (239) $ 375
Fixed Income Fund 28,323 (11,135) 17,188
Intermediate Government
Bond Fund 5,528 (14) 5,514
Intermediate Term
Income Fund 4,328 (1,664) 2,664
Limited Term Income Fund 611 (107) 504
Strategic Income Fund 3,397 (8,589) (5,192)
- ------------------------------------------------------------------------------------
</TABLE>
6 SECURITIES LENDING TRANSACTIONS
In order to generate additional income, certain Funds may lend portfolio
securities representing up to one-third of the value of total assets (which
includes collateral received for securities on loan) to broker dealers, banks,
or other institutional borrowers of securities. As with other extensions of
credit, there may be risks of delay in recovery of the securities or even loss
of rights in the collateral should the borrower of the security fail
financially. The market value of the securities on loan at March 31, 1999, the
collateral purchased with cash received and held at March 31, 1999, with respect
to such loans, and income generated during the period from the program were as
follows (000):
<TABLE>
<CAPTION>
MARKET VALUE OF INCOME RECEIVED
FUND LOANED SECURITIES FROM SECURITIES LENDING
- -----------------------------------------------------------------------------------
<S> <C> <C>
Fixed Income $579,135 $411
Intermediate Term Income 206,327 156
Limited Term Income 28,186 26
Strategic Income 11,883 3
- -----------------------------------------------------------------------------------
</TABLE>
36 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE OF COLLATERAL PURCHASED WITH CASH RECEIVED
- ---------------------------------------------------------------------------------------------
REPURCHASE MONEY MARKET OTHER FIXED
FUND AGREEMENTS INSTRUMENT INCOME SECURITIES TOTAL
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed Income $399,325 $200 $177,362 $576,887
Intermediate Term Income 142,267 71 63,189 205,527
Limited Term Income 19,434 10 8,632 28,076
Strategic Income 8,193 4 3,639 11,836
- ---------------------------------------------------------------------------------------------
</TABLE>
U.S. Bank National Association acts as the securities lending agent in
transactions involving the lending of portfolio securities on behalf of the
Funds. For these services U.S. Bank National Association received $387,000 in
aggregate for the Funds included in this report for the six months ended March
31, 1999.
7 QUALIVEST MERGER
On November 21, 1997, the following reorganization of the Qualivest funds into
the First American Family of Funds took place pursuant to a Plan of
Reorganization approved by the Qualivest shareholders on October 31, 1997:
<TABLE>
<CAPTION>
QUALIVEST ACQUIRED FUND FAIF ACQUIRING FUND
- ------------------------------------------------------------------------------------
<S> <C>
Intermediate Bond Fund Intermediate Term Income Fund
Diversified Bond Fund Fixed Income Fund
- ------------------------------------------------------------------------------------
</TABLE>
Under the Agreement and Plan of Reorganization, the Qualivest class-A and
class-C shares were exchanged for FAIF class-A shares, and Qualivest class-Q and
class-Y shares were exchanged for FAIF class-Y shares.
The net assets prior to the reorganization and shares issued and redeemed were
as follows:
<TABLE>
<CAPTION>
ACQUIRING FUND'S ACQUIRED FUND'S
FAIF FUND NET ASSETS SHARES ISSUED SHARES REDEEMED
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermediate Term Income $320,221,620 18,814,377 18,616,555
Fixed Income 771,254,652 24,125,586 25,678,152
- ------------------------------------------------------------------------------------
</TABLE>
Included in the net assets from the Qualivest Funds were the following
components:
<TABLE>
<CAPTION>
DISTRIBUTIONS
IN EXCESS OF
NET INVESTMENT ACCUMULATED NET UNREALIZED
QUALIVEST FUND PAID IN CAPITAL INCOME REALIZED (LOSS) APPRECIATION NET ASSETS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Intermediate Bond $186,768,094 $ (14,028) $ (4,115) $1,651,503 $188,401,454
Diversified Bond 260,222,624 (3,156) -- 6,922,860 267,142,328
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions were accounted for by the method of accounting for tax free
mergers of investment companies (sometimes referred to as the pooling without
restatement method).
37 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
NOTES TO
FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
8 PIPER MERGER
The Board of Directors and shareholders of the Piper Funds approved a
reorganization of certain Piper Funds into the FAIF Funds which took place at
the close of business on July 31, 1998*:
<TABLE>
<CAPTION>
PIPER ACQUIRED FUND FAIF ACQUIRING FUND
- -----------------------------------------------------------------------------------------------
<S> <C>
Adjustable Rate Mortgage Securities Adjustable Rate Mortgage Securities
Intermediate Bond Fund Intermediate Term Income
Government Income Fund Fixed Income
American Government Income Fund NYSE Symbol: (AGF) Fixed Income
American Government Income Portfolio NYSE Symbol: (AAF) Fixed Income
American Opportunity Income Fund NYSE Symbol: (OIF) Fixed Income
The Americas Income Trust AMEX Symbol: (XUS) Strategic Income
Highlander Income AMEX Symbol: (HLA) Strategic Income
- -----------------------------------------------------------------------------------------------
</TABLE>
*For American Government Income Fund, American Government Income Portfolio, and
American Opportunity Income Fund the reorganization was effective as of August
28, 1998. The Americas Income Trust and Highlander Income Fund reorganizations
were effective as of July 24, 1998.
Under the Agreement and Plan of Reorganization, the Piper class-A shares were
exchanged for FAIF class-A shares, and Piper class-Y shares were exchanged for
FAIF class-Y shares.
The net assets prior to the reorganization and shares issued and redeemed were
as follows:
<TABLE>
<CAPTION>
ACQUIRING FUND'S ACQUIRED FUND'S
FAIF FUND NET ASSETS SHARES ISSUED SHARES REDEEMED
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Adjustable Rate Mortgage Securities $ -- 17,197,369 17,197,369
Intermediate Term Income 427,535,403 5,211,245 6,857,590
Fixed Income (Government Income) 1,168,413,969 5,137,676 6,252,004
Fixed Income (AGF) 1,250,228,424 8,290,249 16,080,952
Fixed Income (AAF) 1,250,228,424 11,203,772 18,357,910
Fixed Income (OIF) 1,250,228,424 10,034,207 16,990,545
Strategic Income (XUS) -- 5,749,951 6,251,304
Strategic Income (HLA) -- 2,892,106 1,989,467
- ------------------------------------------------------------------------------------------------
</TABLE>
Included in the net assets from the Piper Funds were the following components:
<TABLE>
<CAPTION>
DISTRIBUTIONS
IN EXCESS OF ACCUMULATED NET UNREALIZED
NET INVESTMENT REALIZED APPRECIATION/
PIPER FUND PAID IN CAPITAL INCOME GAIN/(LOSS) DEPRECIATION NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adjustable Rate Mortgage
Securities $285,449,774 $ (118,528) $ (146,484,460) $1,017,624 $139,864,410
Intermediate Bond 327,628,512 -- (275,850,285) 991,555 52,769,782
Government Income 70,538,606 -- (15,907,522) 3,411,144 58,042,228
American Government
Income Fund 127,321,753 -- (35,900,498) 3,578,713 94,999,968
American Government
Income Portfolio 183,194,571 -- (59,639,228) 4,835,535 128,390,878
American Opportunity
Income Fund 171,770,276 -- (61,997,942) 5,218,444 114,990,778
The Americas Income Trust 72,436,361 -- (15,154,616) 217,766 57,499,511
Highlander Income Fund 27,675,521 -- (44,950) 1,290,492 28,921,063
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions were accounted for by the method of accounting for tax free
mergers of investment companies (sometimes referred to as the pooling without
restatement method).
9 CONCENTRATION OF RISKS
The Strategic Income Fund (the "Fund") is subject to special risks associated
with investing in foreign securities and to a decline in net asset value
resulting from changes in
38 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
exchange rates between the United States dollar and foreign currencies. The Fund
is also subject to risks associated with investing in securities issued by
issuers in emerging market countries. Because of the special risks associated
with foreign investing, the Fund may be subject to greater volatility than most
mutual funds which invest primarily in domestic securities.
The Fund also invests in lower-rated (i.e., rated Ba or lower by Moody's or BB
or lower by Standard & Poor's) corporate and foreign debt obligations, which are
commonly referred to as "junk bonds". Lower-rated securities will usually offer
higher yields than higher-rated securities. However, there is more risk
associated with these investments. These lower-rated bonds may be more
susceptible to real or perceived adverse economic conditions than investment
grade bonds. Lower-rated securities tend to have more price volatility and carry
more risk to principal than higher-rated securities.
The summary of credit quality ratings for the securities held by the Fund as of
March 31, 1999, are as follows:
STANDARD & POORS: MOODY'S:
-------------------------------------------------------------
AAA 25.51% Aaa 29.39%
AA 0.52% Aa 2.06%
A 1.06% A 1.51%
BBB 6.34% Baa 4.21%
BB 16.59% Ba 14.32%
B 26.86% B 33.11%
CCC 1.80% Caa 3.27%
CC 0.44% Ca 0.15%
D 0.03% Not Rated 11.98%
-------
Not Rated 20.85% 100.00%
-------
100.00%
-------------------------------------------------------------
39 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
NOTICE TO
SHAREHOLDERS MARCH 31, 1999
ON SEPTEMBER 9, 1998, THE FUNDS' BOARD OF DIRECTORS, UPON THE RECOMMENDATION OF
THE AUDIT COMMITTEE, APPOINTED ERNST & YOUNG LLP THE INDEPENDENT ACCOUNTANTS FOR
THE FUNDS' FISCAL YEAR ENDING SEPTEMBER 30, 1999, AND DISMISSED KPMG PEAT
MARWICK LLP ("KPMG"). KPMG'S REPORTS ON THE FUNDS' FINANCIAL STATEMENTS FOR THE
PAST TWO YEARS HAVE NOT CONTAINED AN ADVERSE OPINION OR A DISCLAIMER OF OPINION
AND HAVE NOT BEEN QUALIFIED AS TO UNCERTAINTY, AUDIT SCOPE, OR ACCOUNTING
PRINCIPLES. IN ADDITION, THERE HAVE NOT BEEN ANY DISAGREEMENTS WITH KPMG DURING
THE FUNDS' TWO MOST RECENT FISCAL YEARS ON ANY MATTER OF ACCOUNTING PRINCIPLES
OR PRACTICES, FINANCIAL STATEMENT DISCLOSURE, OR AUDITING SCOPE OR PROCEDURE
WHICH, IF NOT RESOLVED TO THE SATISFACTION OF KPMG, WOULD HAVE CAUSED IT TO MAKE
A REFERENCE TO THE SUBJECT MATTER OF THE DISAGREEMENT IN CONNECTION WITH ITS
REPORTS.
40 '99 SEMIANNUAL REPORT FIRST AMERICAN FUNDS
<PAGE>
FIRST AMERICAN INVESTMENT FUNDS, INC.
BOARD OF DIRECTORS
MR. DAVID BENNETT
Director of First American Investment Funds, Inc.
Of counsel with Gray, Plant, Mooty, Mooty and Bennett,
Owner of three privately-held businesses
- --------------------------------------------------------------------------------
MR. ROBERT DAYTON
Director of First American Investment Funds, Inc.
Chief Executive Officer of Okabena Company
- --------------------------------------------------------------------------------
MR. ROGER GIBSON
Director of First American Investment Funds, Inc.
Vice President of North America-Mountain Region for United Airlines
- --------------------------------------------------------------------------------
MR. ANDREW HUNTER III
Director of First American Investment Funds, Inc.
Chairman of Hunter Keith Industries
- --------------------------------------------------------------------------------
MR. LEONARD KEDROWSKI
Director of First American Investment Funds, Inc.
Owner and President of Executive Management Consulting, Inc.
- --------------------------------------------------------------------------------
MR. ROBERT SPIES
Director of First American Investment Funds, Inc.
Retired Vice President, U.S. Bank National Association
- --------------------------------------------------------------------------------
MR. JOSEPH STRAUSS
Director of First American Investment Funds, Inc.
Former Chairman of First American Funds,
Owner and President of Strauss Management Company
- --------------------------------------------------------------------------------
MS. VIRGINIA STRINGER
Chairman of First American Investment Funds, Inc.
Owner and President of Strategic Management Resources, Inc.>>>
- --------------------------------------------------------------------------------
<PAGE>
FIRST AMERICAN INVESTMENT FUNDS, INC.
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
INVESTMENT ADVISOR
FIRST AMERICAN ASSET MANAGEMENT,
A DIVISION OF U.S. BANK NATIONAL ASSOCIATION
601 Second Avenue South
Minneapolis, Minnesota 55402
CUSTODIAN
U.S. BANK NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
ADMINISTRATOR
SEI INVESTMENTS MANAGEMENT
CORPORATION
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
TRANSFER AGENT
DST SYSTEMS, INC.
330 West Ninth Street
Kansas City, Missouri 64105
DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
1400 Pillsbury Center
200 South Sixth Street
Minneapolis, Minnesota 55402
COUNSEL
DORSEY & WHITNEY LLP
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, U.S. Bank 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.
Past performance does not guarantee future results. The principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
- --------------------------------------------------------------------------------
[LOGO] FIRST AMERICAN
THE POWER OF DISCIPLINED INVESTING(R)
5/1999 201-98
