and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
		Amendment No. 103		þ

FIRST AMERICAN INVESTMENT FUNDS, INC.

(Exact Name of Registrant as Specified in Charter)

800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of Principal Executive Offices) (Zip Code)

(612) 303-7557
(Registrant’s Telephone Number, including Area Code)

Richard J. Ertel
U.S. Bancorp Center
800 Nicollet Mall, BC-MN-H04N
Minneapolis, Minnesota 55402
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

	o		immediately upon filing pursuant to paragraph (b) of Rule 485.
	o		on (date) pursuant to paragraph (b) of Rule 485.
	o		60 days after filing pursuant to paragraph (a)(1) of Rule 485.
	þ		on October 28, 2010 pursuant to paragraph (a)(1) of Rule 485.
	o		75 days after filing pursuant to paragraph (a)(2) of Rule 485.
	o		on (date) pursuant to paragraph (a)(2) of Rule 485.

 

 

 

 

 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the shares of these funds, or determined if the information in this prospectus is accurate or complete. Any statement to the contrary is a criminal offense.

 

 

 

Important Notice to Shareholders

 

On July 28, 2010, U.S. Bancorp, the indirect parent company of FAF Advisors, Inc. (the “Advisor”), entered into an agreement to sell a portion of the Advisor’s asset management business to Nuveen Investments, Inc. (the “Purchaser”). Included in the sale will be that part of the Advisor’s asset management business that advises the Funds. The sale is subject to the satisfaction of customary conditions, and is currently expected to close by the end of 2010.

 

Under the Investment Company Act of 1940, the closing of the transaction will cause each Fund’s current investment advisory agreement with the Advisor to terminate. In connection with the transaction, the Funds’ Board of Directors will be asked to consider and approve new investment advisory agreements for the Funds with Nuveen Asset Management, a subsidiary of the Purchaser. If approved by the Board of Directors, each Fund’s new investment advisory agreement will be submitted to the Fund’s shareholders for their approval and, if approved, will take effect upon the closing of the transaction (or such later time as shareholder approval is obtained). The Funds’ Board of Directors also will be asked to consider and approve new distribution agreements with Nuveen Investments, LLC. There will be no change in the Funds’ investment objectives or policies as a result of the transaction.

Fund Summaries

 

Core Bond Fund

 

 

Fund Summaries

 

Core Bond Fund continued

 

 

Principal Investment Strategies

 

Under normal market conditions, Core Bond Fund invests primarily (at least 80% of its net assets, plus the amount of any borrowings for investment purposes) in debt securities, such as:

 

 

Up to 10% of the fund’s total assets may be invested collectively in the following categories of debt securities:

 

 

The fund may invest up to 25% of its total assets in U.S. dollar denominated debt obligations of foreign corporations and governments that are not located in emerging market countries.

 

The fund’s advisor selects securities using a “top-down” approach, which begins with the formulation of the advisor’s general economic outlook. Following this, various sectors and industries are analyzed and selected for investment. Finally, the advisor selects individual securities within these sectors or industries.

 

The fund invests primarily in debt securities rated investment grade at the time of purchase by a nationally recognized statistical rating organization or in unrated securities of comparable quality. As noted above, however, up to 10% of the fund’s total assets may be invested in securities that are rated lower than investment grade at the time of purchase or that are unrated and of comparable quality. Quality determinations regarding unrated securities will be made by the fund’s advisor. If the rating of a security is reduced or the credit quality of an unrated security declines after purchase, the fund is not required to sell the security, but may consider doing so. At least 65% of the fund’s debt securities must be either U.S. government securities or securities that are rated A or better or are unrated and of comparable quality. Unrated securities will not exceed 25% of the fund’s total assets.

 

Under normal market conditions the fund attempts to maintain a weighted average effective maturity for its portfolio securities of fifteen years or less and an average effective duration of three to eight years. The fund’s weighted average effective maturity and average effective duration are measures of how the fund may react to interest rate changes.

 

To generate additional income, the fund may invest up to 25% of its total assets in dollar roll transactions. In a dollar roll transaction, the fund sells mortgage-backed securities for delivery in the current month while contracting with the same party to repurchase similar securities at a future date.

 

The fund may utilize the following derivatives: options; futures contracts; options on futures contracts; interest rate caps, collars, and floors; foreign currency contracts; options on foreign currencies; swap agreements, including swap agreements on interest rates, currency rates, security indexes and specific securities, and credit default swap agreements; and options on the foregoing types of swap agreements. The fund may enter into standardized derivatives contracts traded on domestic or foreign securities exchanges, boards of trade, or similar entities, and non-standardized derivatives contracts traded in the over-the-counter (“OTC”) market. The fund may use these derivatives in an attempt to manage market risk, currency risk, credit risk and yield curve risk, to manage the effective maturity or duration of securities in the fund’s portfolio or for speculative purposes in an effort to increase the fund’s yield or to enhance returns. The fund may also use derivatives to gain exposure to non-dollar denominated securities markets to the extent it does not do so through direct investments. The use of a derivative is speculative if the fund is primarily seeking to enhance returns, rather than offset the risk of other positions. When the fund invests in a derivative for speculative purposes, the fund will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The fund may not use any derivative to gain exposure to a security or type of security that it would be prohibited by its investment restrictions from purchasing directly.

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Prospectus – First American Income Funds              

Fund Summaries

 

Core Bond Fund continued

 

Principal Risks

 

The price and yield of this fund will change daily due to changes in interest rates and other factors, which means you could lose money. The principal risks of investing in this fund are described below:

 

Active Management Risk  — Because the fund is actively managed, the fund could underperform its benchmark or other mutual funds with similar investment objectives.

 

Call Risk  — If an issuer calls higher-yielding bonds held by the fund, performance could be adversely impacted.

 

Credit Risk  — The issuer of a debt security could suffer adverse changes in financial condition that result in a payment default or a downgrade of the security. Parties to contracts with the fund could default on their obligations.

 

Derivatives Risk  — The use of derivative instruments involves additional risks and transaction costs which could leave the fund in a worse position than if it had not used these instruments. Derivatives may entail investment exposures that are greater than their cost would suggest. As a result, a small investment in derivatives could have a large impact on performance.

 

Dollar Roll Transaction Risk  — The use of dollar rolls can increase the volatility of the fund’s share price, and it may have an adverse impact on performance unless the advisor correctly predicts mortgage prepayments and interest rates.

 

Emerging Markets Risk  — Investments in emerging markets are subject to special political, economic, and market risks that can make the fund’s emerging market investments more volatile and less liquid than investments in developed markets.

 

Foreign Security Risk  — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.

 

High-Yield Securities Risk  — High-yield securities generally are less liquid, have more volatile prices, and have greater credit risk than investment grade securities.

 

Income Risk  — The fund’s income could decline during periods of falling interest rates.

 

Interest Rate Risk  — Interest rate increases can cause the value of debt securities to decrease.

 

International Investing Risk  — Investing in non-dollar denominated foreign securities involves risk not typically associated with U.S. investing, such as currency risk, risks of trading in foreign securities markets, and political and economic risks.

 

Liquidity Risk  — Trading opportunities are more limited for debt securities that have received ratings below investment grade.

 

Mortgage- and Asset-Backed Securities Risk  — These securities generally can be prepaid at any time. Prepayments that occur either more quickly or more slowly than expected can adversely impact the fund.

 

Fund Summaries

 

Core Bond Fund continued

 

Both the bar chart and the table assume that all distributions have been reinvested. Performance reflects any fee waivers in effect during the periods presented. If these waivers were not in place, performance would be reduced.

 

 

 

 

 

Fund Summaries

 

High Income Bond Fund

 

 

 

Fund Summaries

 

High Income Bond Fund continued

 

 

Portfolio Turnover

 

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was     % of the average value of its portfolio.

 

 

Fund Summaries

 

High Income Bond Fund continued

 

Foreign Security Risk  — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.

 

High-Yield Securities Risk  — High-yield securities generally are less liquid, have more volatile prices, and have greater credit risk than investment grade securities.

 

Income Risk  — The fund’s income could decline during periods of falling interest rates.

 

Interest Rate Risk  — Interest rate increases can cause the value of debt securities to decrease.

 

Liquidity Risk  — Trading opportunities are more limited for debt securities that have received ratings below investment grade.

 

 

 

Fund Summaries

 

Inflation Protected Securities Fund

 

 

 

Fund Summaries

 

Inflation Protected Securities Fund continued

 

Principal Investment Strategies

 

Under normal market conditions, Inflation Protected Securities Fund invests primarily (at least 80% of its net assets, plus the amount of any borrowings for investment purposes) in inflation protected debt securities. These securities will be issued by the U.S. and non-U.S. governments, their agencies and instrumentalities, and domestic and foreign corporations. The fund’s investments in U.S. Government inflation protected securities will include U.S. Treasury inflation protected securities as well as inflation protected securities issued by agencies and instrumentalities of the U.S. Government. Securities issued by the U.S. Treasury are backed by the full faith and credit of the U.S. Government. Some securities issued by agencies and instrumentalities of the U.S. Government are supported only by the credit of the issuing agency or instrumentality.

 

Inflation protected debt securities are designed to provide protection against the negative effects of inflation. Unlike traditional debt securities, which pay regular fixed interest payments on a fixed principal amount, interest payments on inflation protected debt securities will vary with the rate of inflation. The U.S. Treasury used the Consumer Price Index for Urban Consumers (CPI-U) as the inflation measure. Inflation protected debt securities issued by foreign governments and corporations are generally linked to a non-U.S. inflation rate.

 

Inflation protected debt securities have two common structures. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. If the index measuring the rate of inflation rises, the principal value of the security will increase. Because interest payments will be calculated with respect to a larger principal amount, interest payments also will increase. Conversely, if the index measuring the rate of inflation falls, the principal value of the security will fall and interest payments will decrease. Other issuers adjust the interest rates payable on the security according to the rate of inflation, but the principal amount remains the same.

 

In the event of sustained deflation, the U.S. Treasury has guaranteed that it will repay at maturity at least the original face value of the inflation protected securities that it issues. Other inflation protected debt securities that accrue inflation into their principal value may or may not provide a similar guarantee. For securities that do not provide such a guarantee, the adjusted principal value of the security repaid at maturity may be less than the original principal value.

 

Up to 20% of the fund’s assets may be invested in holdings that are not inflation protected. These holdings may include the following:

 

 

When selecting securities for the fund, the fund’s advisor uses a “top-down” approach, looking first at general economic factors and market conditions. The advisor then selects securities that it believes have strong relative value based on an analysis of a security’s characteristics (such as principal value, coupon rate, maturity, duration and yield) in light of these general economic factors and market conditions. The advisor will sell securities if the securities no longer meet these criteria, if other investments appear to be a better relative value, to manage the duration of the fund, or to meet redemption requests.

 

The fund invests primarily in securities rated investment grade at the time of purchase by a nationally recognized statistical rating organization or in unrated securities of comparable quality. However, up to 10% of the fund’s net assets may be invested in securities that are rated lower than investment grade at the time of purchase or that are unrated and of comparable quality (securities commonly referred to as “high-yield” securities or “junk bonds”). The fund will not invest in securities rated lower than B at the time of purchase or in unrated securities of equivalent quality. Quality determinations regarding unrated securities will be made by the fund’s advisor.

 

The fund may invest up to 20% of its net assets in non-dollar denominated securities, and may invest without limitation in U.S. dollar denominated securities of foreign corporations and governments.

 

The fund may invest in debt securities of any maturity, but expects to maintain, under normal market conditions, a weighted average effective maturity of between eight and fifteen years and an average effective duration of between four and ten years. The fund’s weighted average effective maturity and average effective duration are measures of how the fund may react to interest rate changes.

 

The fund may utilize the following derivatives: options; futures contracts; options on futures contracts; foreign currency contracts; options on foreign currencies; interest rate caps, collars, and floors; index- and other asset-linked notes; swap agreements, including swap agreements on interest rates, currency rates, security indexes and specific securities, and credit default swap agreements; and options on the foregoing types of swap agreements. The fund may enter into standardized derivatives contracts traded on domestic or foreign securities exchanges, boards of trade, or similar entities, and non-standardized derivatives contracts traded in the over-the-counter (“OTC”) market. The fund may use these derivatives in an attempt to manage market risk, currency risk, credit risk and yield curve risk, to manage the effective maturity or duration of securities in the fund’s portfolio or for speculative purposes in an effort to increase the fund’s yield or to enhance returns. The fund may also use derivatives to gain exposure to non-dollar denominated securities markets to the extent it does not do so through direct investments. The use of a derivative is speculative if the fund is primarily seeking to enhance returns, rather than offset the risk of other positions. When the fund invests in a derivative

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Prospectus – First American Income Funds              

Fund Summaries

 

Inflation Protected Securities Fund continued

 

for speculative purposes, the fund will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The fund may not use any derivative to gain exposure to a security or type of security that it would be prohibited by its investment restrictions from purchasing directly.

 

 

Fund Summaries

 

Inflation Protected Securities Fund continued

 

and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown only for Class A shares; after-tax returns for other share classes will vary.

 

Both the bar chart and the table assume that all distributions have been reinvested. Performance reflects any fee waivers in effect during the periods presented. If these waivers were not in place, performance would be reduced.

 

 

 

 

 

Fund Summaries

 

Intermediate Government Bond Fund

 

 

 

Fund Summaries

 

Intermediate Government Bond Fund continued

 

 

Portfolio Turnover

 

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was     % of the average value of its portfolio.

 

 

Fund Summaries

 

Intermediate Government Bond Fund continued

 

Derivatives Risk  — The use of derivative instruments involves additional risks and transaction costs which could leave the fund in a worse position than if it had not used these instruments. Derivatives may entail investment exposures that are greater than their cost would suggest. As a result, a small investment in derivatives could have a large impact on performance.

 

Dollar Roll Transaction Risk  — The use of dollar rolls can increase the volatility of the fund’s share price, and it may have an adverse impact on performance unless the advisor correctly predicts mortgage prepayments and interest rates.

 

Income Risk  — The fund’s income could decline during periods of falling interest rates.

 

Interest Rate Risk  — Interest rate increases can cause the value of debt securities to decrease.

 

Mortgage- and Asset-Backed Securities Risk  — These securities generally can be prepaid at any time. Prepayments that occur either more quickly or more slowly than expected can adversely impact the fund.

 

Fund Summaries

 

Intermediate Government Bond Fund continued

 

Investment Advisor

 

FAF Advisors, Inc.

 

Portfolio Managers

 

 

Other Information

 

For important information about the purchase and sale of fund shares, tax information, and financial intermediary compensation, please see “Additional Summary Information” on page    of the prospectus.

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Prospectus – First American Income Funds              

Fund Summaries

 

Intermediate Term Bond Fund

 

 

 

Fund Summaries

 

Intermediate Term Bond Fund continued

 

not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was     % of the average value of its portfolio.

 

 

Fund Summaries

 

Intermediate Term Bond Fund continued

 

Foreign Security Risk  — Securities of foreign issuers, even when dollar denominated and publicly traded in the United States, may involve risks not associated with the securities of domestic issuers.

 

Income Risk  — The fund’s income could decline during periods of falling interest rates.

 

Interest Rate Risk  — Interest rate increases can cause the value of debt securities to decrease.

 

Mortgage- and Asset-Backed Securities Risk  — These securities generally can be prepaid at any time. Prepayments that occur either more quickly or more slowly than expected can adversely impact the fund.

 

 

 

Other Information

 

For important information about the purchase and sale of fund shares, tax information, and financial intermediary compensation, please see “Additional Summary Information” on page    of the prospectus.

20      

Prospectus – First American Income Funds              

Fund Summaries

 

Short Term Bond Fund