American Strategic Income Portfolio Inc III NCSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-07444

American Strategic Income Portfolio Inc. III

(Exact name of registrant as specified in charter)


800 Nicollet Mall, Minneapolis, MN		55402
(Address of principal executive offices)		(Zip code)

Jill M. Stevenson, 800 Nicollet Mall, Minneapolis, MN 55402

(Name and address of agent for service)

Registrant’s telephone number, including area code: 800-677-3863

Date of fiscal year end: August 31

Date of reporting period: February 28, 2014

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507.

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SEMIANNUAL REPORT

February 28, 2014

LOGO


ASP				American Strategic Income Portfolio Inc.

BSP				American Strategic Income Portfolio Inc. II

CSP				American Strategic Income Portfolio Inc. III

SLA				American Select Portfolio Inc.

First American Mortgage Funds

OUR IMAGE–GEORGE WASHINGTON

His rich legacy as patriot and leader is widely recognized as embodying the sound judgment, reliability, and strategic vision that are central to our brand. Fashioned in a style reminiscent of an 18th century engraving, the illustration conveys the symbolic strength and vitality of Washington, which are attributes that we value at First American.

TABLE OF CONTENTS


	1			Explanation of Financial Statements

	2			Fund Overviews

	6			Schedule of Investments

	25			Statements of Assets and Liabilities

	26			Statements of Operations

	28			Statements of Changes in Net Assets

	30			Statements of Cash Flows

	31			Financial Highlights

	35			Notes to Financial Statements

	49			Notice to Shareholders

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NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

EXPLANATION OF FINANCIAL STATEMENTS

As a shareholder in one or more of the funds, you receive shareholder reports semiannually. We strive to present this financial information in an easy-to-understand format; however, for many investors, the information contained in this shareholder report may seem very technical. So, we would like to take this opportunity to explain several sections of the shareholder report.

The Schedule of Investments details all of the securities held in the fund and their related dollar values on the last day of the reporting period. Securities are usually presented by type (bonds, common stock, etc.) and by industry classification (healthcare, education, etc.). This information is useful for analyzing how your fund’s assets are invested and seeing where your portfolio manager believes the best opportunities exist to meet your objectives. Holdings are subject to change without notice and do not constitute a recommendation of any individual security. The Notes to Financial Statements provide additional details on how the securities are valued.

The Statement of Assets and Liabilities lists the assets and liabilities of the fund on the last day of the reporting period and presents the fund’s net asset value (“NAV”) and market price per share. The NAV is calculated by dividing the fund’s net assets (assets minus liabilities) by the number of shares outstanding. The market price is the closing price on the exchange on which the fund’s shares trade. This price, which may be higher or lower than the fund’s NAV, is the price an investor pays or receives when shares of the fund are purchased or sold. The investments, as presented in the Schedule of Investments, comprise substantially all of the fund’s assets. Other assets include cash and receivables for items such as income earned by the fund but not yet received. Liabilities include payables for items such as fund expenses incurred but not yet paid.

The Statement of Operations details the dividends and interest income earned from investments as well as the expenses incurred by the fund during the reporting period. Fund expenses may be reduced through fee waivers or reimbursements. This statement reflects total expenses before any waivers or reimbursements, the amount of waivers and reimbursements (if any), and the net expenses. This statement also shows the net realized and unrealized gains and losses from investments owned during the period. The Notes to Financial Statements provide additional details on investment income and expenses of the fund.

The Statement of Changes in Net Assets describes how the fund’s net assets were affected by its operating results and distributions to shareholders during the reporting period. This statement is important to investors because it shows exactly what caused the fund’s net asset size to change during the period.

The Statement of Cash Flows is required when a fund has a substantial amount of illiquid investments, a substantial amount of the fund’s securities are internally fair valued, or the fund carries some amount of debt. When presented, this statement explains the change in cash during the reporting period. It reconciles net cash provided by and used for operating activities to the net increase or decrease in net assets from operations and classifies cash receipts and payments as resulting from operating, investing, and financing activities.

The Financial Highlights provide a per-share breakdown of the components that affected the fund’s NAV for the current and past reporting periods. It also shows total return, net investment income ratios, expense ratios, and portfolio turnover rates. The net investment income ratios summarize the income earned less expenses, divided by the average net assets. The expense ratios represent the percentage of average net assets that were used to cover operating expenses during the period. The portfolio turnover rate represents the percentage of the fund’s holdings that have changed over the course of the period, and gives an idea of how long the fund holds onto a particular security. A 100% turnover rate implies that an amount equal to the value of the entire portfolio is turned over in a year through the purchase or sale of securities.

The Notes to Financial Statements disclose the organizational background of the fund, its significant accounting policies, federal tax information, fees and compensation paid to affiliates, and significant risks and contingencies.

We hope this guide to your shareholder report will help you get the most out of this important resource.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			1

Fund Overviews

American Strategic Income Portfolio (ASP)

Portfolio Allocation

As a percentage of total investments on February 28, 2014


Commercial Loans	28	%
Preferred Stocks	28
Corporate Bonds	24
U.S. Government Agency Mortgage-Backed Securities	10
Corporate Note	5
Real Estate Owned	3
Short-Term Investment	2
	100	%

Geographical Distribution

We attempt to buy mortgage loans in many parts of the country to help avoid the risks of concentrating in one area. These percentages reflect the fair value of whole loans as of February 28, 2014. Shaded areas without fair values indicate states in which the fund has invested less than 0.50% of its investments.

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Delinquent Loan Profile

The tables below show the percentages of single family loans and multifamily and commercial loans in the portfolio that are 30, 60, 90, or 120 or more days delinquent as of February 28, 2014, based on the fair value outstanding.


Single family loans
Current	100.0	%
30 Days	0.0
60 Days	0.0
90 Days	0.0
120+ Days	0.0
	100.0	%


Multifamily and commercial loans
Current	100.0	%
30 Days	0.0
60 Days	0.0
90 Days	0.0
120+ Days	0.0
	100.0	%


2		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio II (BSP)

Portfolio Allocation

As a percentage of total investments on February 28, 2014


Commercial Loans	30	%
Preferred Stocks	26
Corporate Bonds	21
Multifamily Loans	12
Corporate Notes	5
U.S. Government Agency Mortgage-Backed Securities	4
Asset-Backed Security	1
Short-Term Investment	1
	100	%

Geographical Distribution

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Delinquent Loan Profile


Single family loans
Current	85.6	%
30 Days	14.4
60 Days	0.0
90 Days	0.0
120+ Days	0.0
	100.0	%


Multifamily and commercial loans
Current	94.4	%
30 Days	0.0
60 Days	0.0
90 Days	0.0
120+ Days	5.6
	100.0	%


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			3

Fund Overviews

American Strategic Income Portfolio III (CSP)

Portfolio Allocation

As a percentage of total investments on February 28, 2014


Commercial Loans	29	%
Corporate Bonds	29
Preferred Stocks	27
Multifamily Loans	10
U.S. Government Agency Mortgage-Backed Securities	4
Short-Term Investment	1
	100	%

Geographical Distribution

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Delinquent Loan Profile

The table below shows the percentages of multifamily and commercial loans in the portfolio that are 30, 60, 90, or 120 or more days delinquent as of February 28, 2014, based on the fair value outstanding.


Multifamily and commercial loans
Current	75.5	%
30 Days	0.0
60 Days	0.0
90 Days	0.0
120+ Days	24.5
	100.0	%


4		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Select Portfolio (SLA)

Portfolio Allocation

As a percentage of total investments on February 28, 2014


Preferred Stocks	27	%
Commercial Loans	25
Corporate Bonds	24
U.S. Government Agency Mortgage-Backed Securities	9
Multifamily Loans	8
Corporate Notes	5
Short-Term Investment	1
Asset-Backed Security	1
	100	%

Geographical Distribution

LOGO

Delinquent Loan Profile


Multifamily and commercial loans
Current	91.6	%
30 Days	0.0
60 Days	0.0
90 Days	0.0
120+ Days	8.4
	100.0	%


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			5


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio (ASP)


DESCRIPTION	DATE ACQUIRED		PAR		COST		VALUE ¶

(Percentages of each investment category relate to total net assets)

Whole Loans ¥ p — 40.4%
Commercial Loans — 40.2%
45755 Five Mile Road, Plymouth Township, MI, 4.13%, 1/1/19 r		12/30/13	$	1,123,048	$	1,123,048	$	1,123,048
Apple Valley Retail Center, Apple Valley, MN, 4.78%, 10/1/23		9/26/13		1,485,756		1,485,756		1,529,248
Carl’s Jr., Idaho Springs, CO, 4.13%, 5/1/23		4/23/13		1,464,770		1,464,770		1,454,829
Chicago Social Security Building, Chicago, IL, 4.78%, 6/1/22		5/31/12		2,080,028		2,080,028		2,184,029
Copper Junction, Copper Mountain, CO, 6.38%, 7/1/17		6/14/07		1,792,415		1,792,415		1,882,035
Hampden Medical Office, Englewood, CO, 7.38%, 10/1/12 §		9/9/02		1,122,179		1,122,179		651,289
La Costa Meadows Industrial Park I, San Marcos, CA, 6.78%, 7/1/17		6/28/07		1,221,112		1,221,112		1,282,168
La Costa Meadows Industrial Park II, San Marcos, CA, 7.53%, 7/1/17		6/28/07		1,959,648		1,959,648		1,979,245
Palace Court, Santa Fe, NM, 4.88%, 8/1/15		10/2/06		1,858,914		1,858,914		1,033,556
Park Place, Northbrook, IL, 5.23%, 12/1/23		11/15/13		2,492,760		2,492,760		2,617,398
Perkins Restaurant, Maple Grove, MN, 6.38%, 1/1/18		12/23/05		1,275,379		1,275,379		1,313,641
Stephens Center, Missoula, MT, 6.88%, 9/1/15		4/20/06		1,620,158		1,620,158		1,652,561

						19,496,167		18,703,047

Single Family Loans — 0.2%
American Portfolio, 1 loan, California, 3.00%, 1/1/17		7/18/95		8,026		7,645		7,989
Bank of New Mexico, 1 loan, New Mexico, 3.63%, 2/1/18		5/31/96		14,278		14,278		14,706
Bluebonnet Savings & Loan, 1 loan, Texas, 2.88%, 11/1/15		5/22/92		9,481		9,481		9,579
McClemore, Matrix Funding Corporation, 1 loan, North Carolina, 10.50%, 8/1/19		9/9/92		28,055		26,653		28,898
Nomura III, 1 loan, California, 4.00%, 5/1/19		9/29/95		30,477		27,549		30,924

						85,606		92,096


Total Whole Loans						19,581,773		18,795,143


Corporate Note ¥ — 7.6%
Fixed Rate — 7.6%
Stratus Properties V, 7.25%, 3/31/15		6/1/07		3,500,000		3,500,000		3,535,000


Corporate Bonds — 34.0%
Real Estate Investment Trusts — 34.0%
BioMed Realty, 4.25%, 7/15/22				470,000		490,773		468,014
Brandywine Operating Partnership, 3.95%, 2/15/23 x				1,500,000		1,485,376		1,465,674
CommonWealth REIT, 5.88%, 9/15/20 x				1,325,000		1,422,871		1,423,818
Digital Realty, 3.63%, 10/1/22 x				1,500,000		1,498,179		1,386,251
Essex Portfolio, 3.63%, 8/15/22 x				679,000		647,844		658,046
Health Care REIT, 3.75%, 3/15/23				490,000		494,374		481,515
Host Hotels & Resorts, 5.25%, 3/15/22				495,000		511,750		537,402
Liberty Property, 3.38%, 6/15/23 x				1,500,000		1,496,777		1,412,268
Mid-America Apartments, 4.30%, 10/15/23 x				1,170,000		1,166,256		1,182,587
National Retail Properties, 3.80%, 10/15/22				1,225,000		1,263,409		1,214,298
Post Apartment Homes, 3.38%, 12/1/22				395,000		394,772		373,846
Realty Income, 4.65%, 8/1/23				265,000		268,814		278,512
Senior Housing Properties, 5.63%, 8/1/42 x				525,000		512,400		435,519
Ventas Realty, 4.75%, 6/1/21 x				1,350,000		1,462,416		1,452,932
Ventas Realty, 5.45%, 3/15/43				1,605,650		1,613,463		1,434,809
Weingarten Realty Investors, 3.38%, 10/15/22 x				1,700,000		1,701,385		1,612,525


Total Corporate Bonds						16,430,859		15,818,016


U.S. Government Agency Mortgage-Backed Securities — 13.5%
Fixed Rate — 13.5%
Federal Home Loan Mortgage Corporation,
5.50%, 1/1/18, #E93231 a				95,465		96,387		102,390

The accompanying notes are an integral part of the financial statements.


6		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio (ASP)


DESCRIPTION	PAR/ SHARES		COST		VALUE ¶

9.00%, 7/1/30, #C40149	$	27,781	$	28,264	$	33,161
5.00%, 5/1/39, #G05430 a		364,671		372,974		397,571
Federal National Mortgage Association,
6.00%, 10/1/16, #610761 a		26,991		27,113		27,967
5.00%, 7/1/18, #724954 a		426,365		426,169		457,096
6.50%, 6/1/29, #252497 a		35,346		35,194		39,954
7.50%, 5/1/30, #535289 a		11,578		11,325		13,250
8.00%, 5/1/30, #538266 a		6,646		6,591		6,967
6.00%, 5/1/31, #535909 a		51,548		51,742		58,117
6.50%, 11/1/31, #613339 a		40,262		40,858		45,874
5.50%, 7/1/33, #720735 a		424,139		420,650		470,053
5.00%, 7/1/39, #935588 a		230,303		235,055		252,151
4.00%, 12/1/40, #AB1959 a		853,812		851,601		896,121
4.00%, 12/1/40, #MA0583 a		390,020		394,070		409,272
4.00%, 1/1/41, #MA0614 a		635,515		629,557		666,899
3.50%, 3/1/41, #AE0981 a		1,139,662		1,174,779		1,156,782
3.50%, 3/1/42, #AB4749 a		1,201,555		1,241,373		1,219,566


Total U.S. Government Agency Mortgage-Backed Securities				6,043,702		6,253,191


Preferred Stocks — 39.5%
Real Estate Investment Trusts — 39.5%
Alexandria Real Estate Equities, Series E x		60,403		1,530,438		1,410,410
Boston Properties, Series B x		63,450		1,516,775		1,329,849
CommonWealth REIT, Series E x		58,480		1,508,824		1,401,695
Developers Diversified Realty, Series H x		3,193		65,457		80,751
Digital Realty, Series E x		48,414		1,231,102		1,166,477
Digital Realty, Series F x		6,000		152,580		137,813
Digital Realty, Series G		4,905		110,407		98,389
Duke Realty, Series J x		2,100		52,246		50,881
Duke Realty, Series L x		8,750		167,300		212,004
Equity Residential Properties, Series K x		10,000		557,500		600,313
Health Care REIT, Series J x		57,700		1,490,045		1,398,013
Hospitality Properties, Series D x		29,652		803,365		741,003
Kimco Realty, Series H		6,400		159,360		164,864
Kimco Realty, Series I		9,141		228,777		208,815
Kimco Realty, Series J x		20,000		503,000		419,600
Kimco Realty, Series K		6,519		167,212		139,181
National Retail Properties, Series D x		59,996		1,522,323		1,428,505
National Retail Properties, Series E		1,500		29,250		30,915
PS Business Parks, Series R x		9,500		234,175		240,445
PS Business Parks, Series S		24,291		606,546		574,968
PS Business Parks, Series T x		24,875		617,919		558,195
Public Storage, Series T		3,859		99,948		87,638
Public Storage, Series U x		41,000		954,300		911,430
Public Storage, Series V		2,960		75,036		63,166
Public Storage, Series W		11,000		277,750		228,030
Realty Income, Series E x		38,666		754,155		966,650
Realty Income, Series F		12,000		320,160		299,400
Regency Centers, Series F x		47,900		1,292,250		1,151,947
Regency Centers, Series G		5,000		126,900		108,906
Simon Property Group, Series J x		11,000		511,500		691,282
Vornado Realty, Series G x		30,000		483,000		753,750
Vornado Realty, Series J		3,614		89,989		92,157
Vornado Realty, Series K x		12,007		303,697		263,314
Vornado Realty, Series L		4,000		98,600		83,375


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			7


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio (ASP)


DESCRIPTION	SHARES		COST		VALUE ¶

Weingarten Realty Investors, Series F x		10,929	$	260,657	$	264,373


Total Preferred Stocks				18,902,543		18,358,504


Total Unaffiliated Investments				64,458,877		62,759,854


Real Estate Owned ¥ l — 3.6%
The Storage Place, Marana, AZ				3,189,940		1,700,000


Short-Term Investment — 3.2%
First American Prime Obligations Fund, Class Z, 0.02% W		1,474,112		1,474,112		1,474,112


Total Investments p — 141.8%			$	69,122,929	$	65,933,966

Other Assets and Liabilities, Net — (41.8)%						(19,432,232	)

Total Net Assets — 100.0%					$	46,501,734

¶	Securities are valued in accordance with procedures described in note 2 in Notes to Financial Statements.

Securities purchased as part of a private placement which have not been registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. On February 28, 2014, the total fair value of these securities was $24,030,143 or 51.7% of total net assets. See note 2 in Notes to Financial Statements.

Interest rates on commercial and multifamily loans are the net coupon rates in effect (after reducing the coupon rate by any mortgage servicing fees paid to mortgage servicers) on February 28, 2014. Interest rates and maturity dates disclosed on single family loans represent the weighted average coupon and weighted average maturity for the underlying mortgage loans as of February 28, 2014.

r	Variable Rate Security – The rate shown is the net coupon rate in effect as of February 28, 2014.

§	Loan has matured or will mature in the next couple of months and the fund is anticipating payoff or refinancing. Unless disclosed otherwise, the loan continues to make monthly payments.

Interest Only – Represents securities that entitle holders to receive only interest payments on the mortgage. Principal balance on the loan is due at maturity. The interest rate disclosed represents the net coupon rate in effect as of February 28, 2014.

x	Securities pledged as collateral for outstanding borrowings under a loan agreement with Bank of America, N.A. On February 28, 2014, securities valued at $27,208,320 were pledged as collateral for the following outstanding borrowings:


Amount		Rate*			Accrued Interest
$	13,800,000		1.01	%	$	385

Interest rate as of February 28, 2014. Rate is based on one-month London Interbank Offered Rate (“LIBOR”) plus 0.85%.

Description of collateral:

Corporate Bonds

Brandywine Operating Partnership, 3.95%, 2/15/23, $1,500,000 par

CommonWealth REIT, 5.88%, 9/15/20, $1,325,000 par

Digital Realty, 3.63%, 10/1/22, $1,500,000 par

Essex Portfolio, 3.63%, 8/15/22, $679,000 par

Liberty Property, 3.38%, 6/15/23, $1,500,000 par

Mid-America Apartments, 4.30%, 10/15/23, $1,170,000 par

Senior Housing Properties, 5.63%, 8/1/42, $525,000 par

Ventas Realty, 4.75%, 6/1/21, $1,350,000 par

Weingarten Realty Investors, 3.38%, 10/15/22, $1,700,000 par

Preferred Stocks

Alexandria Real Estate Equities, Series E, 60,403 shares

Boston Properties, Series B, 63,450 shares

CommonWealth REIT, Series E, 58,480 shares

Developers Diversified Realty, Series H, 3,193 shares

Digital Realty, Series E, 48,414 shares

Digital Realty, Series F, 6,000 shares

Duke Realty, Series J, 2,100 shares

Duke Realty, Series L, 8,750 shares

The accompanying notes are an integral part of the financial statements.


8		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio (ASP)

Equity Residential Properties, Series K, 10,000 shares

Health Care REIT, Series J, 57,700 shares

Hospitality Properties, Series D, 29,652 shares

Kimco Realty, Series J, 20,000 shares

National Retail Properties, Series D, 59,996 shares

PS Business Parks, Series R, 9,500 shares

PS Business Parks, Series T, 24,875 shares

Public Storage, Series U, 41,000 shares

Realty Income, Series E, 38,666 shares

Regency Centers, Series F, 47,900 shares

Simon Property Group, Series J, 11,000 shares

Vornado Realty, Series G, 30,000 shares

Vornado Realty, Series K, 12,007 shares

Weingarten Realty Investors, Series F, 10,929 shares

a	Securities pledged as collateral for outstanding reverse repurchase agreements. On February 28, 2014, securities valued at $6,220,030 were pledged as collateral for the following outstanding reverse repurchase agreements:


Amount		Acquisition Date		Rate*			Due		Accrued Interest		Name of Broker and Description of Collateral
$	5,946,000		2/6/14		0.36	%		3/7/14	$	1,368		(1	)

Interest rate as of February 28, 2014. Rate is based on one-month LIBOR plus a spread and reset monthly.

Name of broker and description of collateral:

(1)

Goldman Sachs:

Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $95,465 par

Federal Home Loan Mortgage Corporation, 5.00%, 5/1/39, $364,671 par

Federal National Mortgage Association, 6.00%, 10/1/16, $26,991 par

Federal National Mortgage Association, 5.00%, 7/1/18, $426,365 par

Federal National Mortgage Association, 6.50%, 6/1/29, $35,346 par

Federal National Mortgage Association, 7.50%, 5/1/30, $11,578 par

Federal National Mortgage Association, 8.00%, 5/1/30, $6,646 par

Federal National Mortgage Association, 6.00%, 5/1/31, $51,548 par

Federal National Mortgage Association, 6.50%, 11/1/31, $40,262 par

Federal National Mortgage Association, 5.50%, 7/1/33, $424,139 par

Federal National Mortgage Association, 5.00%, 7/1/39, $230,303 par

Federal National Mortgage Association, 4.00%, 12/1/40, $853,812 par

Federal National Mortgage Association, 4.00%, 12/1/40, $390,020 par

Federal National Mortgage Association, 4.00%, 1/1/41, $635,515 par

Federal National Mortgage Association, 3.50%, 3/1/41, $1,139,662 par

Federal National Mortgage Association, 3.50%, 3/1/42, $1,201,555 par

The fund has entered into a lending commitment with Goldman Sachs. The monthly agreement permits the fund to enter into reverse repurchase agreements using U.S. Government Agency Mortgage-Backed Securities as collateral.

l	Real Estate Owned. See note 2 in the Notes to Financial Statements.

W	Investment in affiliated security. This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as advisor for the fund. The rate shown is the annualized seven-day effective yield as of February 28, 2014. See note 2 in Notes to Financial Statements.

p	On February 28, 2014, the cost of investments for federal income tax purposes was approximately $69,122,929. The approximate aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:


Gross unrealized appreciation	$	1,651,843
Gross unrealized depreciation		(4,840,806	)

Net unrealized depreciation	$	(3,188,963	)

REIT–Real Estate Investment Trust


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			9


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio II (BSP)


DESCRIPTION	DATE ACQUIRED		PAR		COST		VALUE ¶

(Percentages of each investment category relate to total net assets)

Whole Loans ¥ p — 60.0%
Commercial Loans — 43.0%
5555 East Van Buren I, Phoenix, AZ, 4.93%, 10/1/14		6/23/04	$	6,035,296	$	6,035,296	$	4,008,559
5555 East Van Buren II, Phoenix, AZ, 4.88%, 10/1/14		8/18/06		1,255,552		1,255,552		699,501
American Mini-Storage, Memphis, TN, 6.80%, 12/1/11 §		11/5/07		2,962,479		2,962,479		2,962,479
Bigelow Office Building, Las Vegas, NV, 6.38%, 4/1/17		3/31/97		999,399		999,399		1,049,369
Hickman Road, Clive, IA, 4.93%, 4/1/16		12/3/07		5,294,897		5,294,897		5,400,795
Office City Plaza, Houston, TX, 3.90%, 3/1/17		2/10/12		3,900,000		3,900,000		3,900,000
Oyster Point Office Park, Newport News, VA, 4.18%, 5/1/16		1/4/06		11,831,854		11,831,854		11,717,345
Oyster Point Office Park II, Newport News, VA, 4.88%, 5/1/16		4/29/13		974,689		974,689		694,310
PennMont Office Plaza, Albuquerque, NM, 5.88%, 4/1/14		3/30/06		1,406,043		1,406,043		1,406,043
Perkins - Blaine, Blaine, MN, 6.63%, 1/1/17		12/13/06		1,665,386		1,665,386		1,748,655
Robberson Auto Dealerships, Bend and Prineville, OR, 6.40%, 4/1/17		3/30/07		6,436,555		6,436,555		6,565,286
Signal Butte, Mesa, AZ, 4.93%, 7/1/17		6/20/07		15,000,000		15,002,903		10,303,365
Station Square, Pompano Beach, FL, 6.33%, 5/1/14		1/19/07		11,741,992		11,741,992		11,741,992
Waste Connections Warehouse, Englewood, CO, 6.58%, 3/1/14		2/15/07		1,192,637		1,192,637		1,192,637

						70,699,682		63,390,336

Multifamily Loans — 16.9%
Meadows Point, College Station, TX, 7.93%, 5/1/16		1/24/08		5,400,000		5,400,000		5,186,921
Sapphire Skies I, Cle Elum, WA, 1.93%, 7/1/15		12/23/05		8,651,139		8,692,729		7,101,124
Sapphire Skies II, Cle Elum, WA, 7.90%, 7/1/15 S		3/20/09		3,200,000		3,200,000		32,000
Sapphire Skies III, Cle Elum, WA, 4.93%, 7/1/15 ¿		7/13/10		8,000,000		8,000,000		80,000
Sapphire Skies IV, Cle Elum, WA, 3.88%, 7/1/15		7/26/12		8,000,000		8,005,980		6,566,648
Sussex Club Apartments I, Athens, GA, 6.33%, 5/1/10 § ¿		4/17/07		8,800,000		8,800,000		4,892,800
Sussex Club Apartments II, Athens, GA, 6.88%, 5/1/10 § S		4/17/07		2,298,600		2,298,600		1,165,250

						44,397,309		25,024,743

Single Family Loans — 0.1%
Merchants Bank, 2 loans, Vermont, 11.27%, 11/24/16		12/18/92		27,343		27,568		28,163
PHH U.S. Mortgage, 2 loans, California & Delaware, 6.75%, 5/30/20		12/30/92		96,078		96,078		98,961

						123,646		127,124


Total Whole Loans						115,220,637		88,542,203


Corporate Notes ¥ — 7.6%
Fixed Rate — 7.6%
Stratus Properties II, 7.25%, 12/31/15		6/14/01		3,000,000		3,000,000		3,030,000
Stratus Properties III, 7.25%, 12/31/16		12/12/06		8,000,000		8,000,000		8,160,000


Total Corporate Notes						11,000,000		11,190,000


Corporate Bonds — 30.5%
Real Estate Investment Trusts — 30.5%
Alexandria Real Estate Equities, 4.60%, 4/1/22 x				1,750,000		1,864,199		1,812,806
BioMed Realty, 4.25%, 7/15/22 x				1,395,000		1,462,550		1,389,105
Brandywine Operating Partnership, 3.95%, 2/15/23 x				2,000,000		1,988,206		1,954,232
DCT Industrial Operating Partnership LP, 4.50%, 10/15/23 x ¢				1,000,000		1,007,471		997,778
Developers Diversified Realty, 4.63%, 7/15/22 x				1,980,000		2,138,564		2,077,574
Developers Diversified Realty, 3.38%, 5/15/23				1,000,000		938,853		944,146
Digital Realty, 5.25%, 3/15/21 x				2,000,000		2,209,567		2,112,910
Digital Realty, 3.63%, 10/1/22 x				800,000		793,941		739,334
Duke Realty, 4.38%, 6/15/22 x				1,410,000		1,496,299		1,440,142
Duke Realty, 3.88%, 10/15/22 x				2,500,000		2,558,169		2,448,772
Essex Portfolio LP, 3.25%, 5/1/23 x				1,000,000		936,167		939,999

The accompanying notes are an integral part of the financial statements.


10		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio II (BSP)


DESCRIPTION	PAR/ SHARES		COST		VALUE ¶

Health Care REIT, 3.75%, 3/15/23 x	$	2,000,000	$	1,993,365	$	1,965,368
Highwoods Realty, 3.63%, 1/15/23 x		3,300,000		3,249,635		3,134,815
Kilroy Realty, 3.80%, 1/15/23 x		3,050,000		3,071,742		2,973,594
Mid-America Apartments, 4.30%, 10/15/23		650,000		647,920		656,993
National Retail Properties, 3.80%, 10/15/22 x		1,450,000		1,472,896		1,437,333
Post Apartment Homes, 3.38%, 12/1/22 x		695,000		694,599		657,780
ProLogis, 6.88%, 3/15/20 x		2,000,000		2,362,273		2,394,314
Senior Housing Properties, 6.75%, 12/15/21 x		1,500,000		1,688,355		1,701,374
Senior Housing Properties, 5.63%, 8/1/42 x		2,275,000		2,205,600		1,887,249
Ventas Realty, 5.45%, 3/15/43 x		4,248,100		4,269,946		3,796,102
Vornado Realty, 5.00%, 1/15/22 x		3,500,000		3,843,651		3,743,645
Washington REIT, 3.95%, 10/15/22 x		3,850,000		3,955,949		3,772,715


Total Corporate Bonds				46,849,917		44,978,080


U.S. Government Agency Mortgage-Backed Securities a — 5.1%
Fixed Rate — 5.1%
Federal Home Loan Mortgage Corporation,
5.50%, 1/1/18, #E93231		509,147		514,060		546,081
9.00%, 7/1/30, #C40149		46,302		47,004		55,269
5.00%, 5/1/39, #G05430		776,094		793,765		846,113
3.50%, 6/1/42, #C09000		1,770,911		1,857,072		1,793,308
Federal National Mortgage Association,
6.00%, 10/1/16, #607030		25,066		25,098		25,946
5.50%, 6/1/17, #648508		35,320		35,369		37,756
5.00%, 9/1/17, #254486		57,347		57,392		61,423
5.00%, 11/1/17, #657356		77,836		77,961		83,455
6.50%, 6/1/29, #252497		235,642		234,623		266,356
7.50%, 5/1/30, #535289		41,681		40,768		47,700
8.00%, 5/1/30, #538266		23,924		23,726		25,081
8.00%, 6/1/30, #253347		60,033		59,537		72,449
5.00%, 11/1/33, #725027		2,031,791		2,069,534		2,238,452
5.00%, 7/1/39, #935588		1,381,820		1,407,028		1,512,905


Total U.S. Government Agency Mortgage-Backed Securities				7,242,937		7,612,294


Asset-Backed Security ¢ — 0.6%
Other — 0.6%
321 Henderson Receivables I LLC, Series 2007-3A, Class A, 6.15%, 10/15/48		804,771		889,968		904,970


Preferred Stocks — 37.8%
Real Estate Investment Trusts — 37.8%
Alexandria Real Estate Equities, Series E x		181,042		4,712,859		4,227,331
Boston Properties, Series B x		180,098		4,171,880		3,774,674
CommonWealth REIT, Series E x		161,500		4,172,200		3,870,961
Developers Diversified Realty, Series H x		1,747		35,813		44,182
Digital Realty, Series F x		155,754		4,029,076		3,577,482
Digital Realty, Series G x		30,624		730,783		614,287
Duke Realty, Series J x		38,000		893,000		920,702
Duke Realty, Series L x		74,260		1,529,361		1,799,246
Equity Residential Properties, Series K x		30,000		1,680,000		1,800,939
Health Care REIT, Series J x		176,000		4,399,968		4,264,304
Hospitality Properties, Series D x		61,211		1,639,301		1,529,663
Kimco Realty, Series H		9,600		239,040		247,296
Kimco Realty, Series I x		43,766		1,060,704		999,782
Kimco Realty, Series J x		113,000		2,743,850		2,370,740
Kimco Realty, Series K x		26,148		670,696		558,260


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			11


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio II (BSP)


DESCRIPTION	SHARES		COST		VALUE ¶

National Retail Properties, Series D x		177,437	$	4,443,124	$	4,224,775
National Retail Properties, Series E		6,400		124,800		131,904
PS Business Parks, Series S x		48,000		1,286,400		1,136,160
PS Business Parks, Series T x		123,501		3,074,190		2,771,362
PS Business Parks, Series U		3,000		62,700		63,810
PS Business Parks, Series V		18,600		406,590		394,506
Public Storage, Series R x		10,000		272,500		251,800
Public Storage, Series T x		21,719		568,822		493,238
Public Storage, Series U x		113,255		2,678,467		2,517,659
Public Storage, Series V x		18,752		475,363		400,168
Public Storage, Series W		6,985		176,371		144,799
Public Storage, Series X		16,000		359,400		331,680
Realty Income, Series E x		40,009		872,024		1,000,225
Realty Income, Series F x		39,000		1,052,550		973,050
Regency Centers, Series F x		152,936		3,977,775		3,677,958
Regency Centers, Series G x		27,908		690,049		607,872
Vornado Realty, Series J		5,490		136,701		139,995
Vornado Realty, Series K x		186,384		4,601,320		4,087,401
Vornado Realty, Series L		3,000		60,000		62,531
Weingarten Realty Investors, Series F x		70,352		1,735,319		1,701,815


Total Preferred Stocks				59,762,996		55,712,557


Total Unaffiliated Investments				240,966,455		208,940,104


Short-Term Investment — 1.4%
First American Prime Obligations Fund, Class Z, 0.02% W		2,044,325		2,044,325		2,044,325


Total Investments p — 143.0%			$	243,010,780	$	210,984,429

Other Assets and Liabilities, Net — (43.0)%						(63,477,208	)

Total Net Assets — 100.0%					$	147,507,221

¶	Securities are valued in accordance with procedures described in note 2 in Notes to Financial Statements.

Securities purchased as part of a private placement which have not been registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. On February 28, 2014, the total fair value of these securities was $99,732,203 or 67.6% of total net assets. See note 2 in Notes to Financial Statements.

§	Loan has matured or will mature in the next couple of months and the fund is anticipating payoff or refinancing. Unless disclosed otherwise, the loan continues to make monthly payments.

Participating Loan – A participating loan is one which contains provisions for the fund to participate in the income stream provided by the property, including net cash flows and capital proceeds. Monthly cash flow proceeds are only required to the extent excess cash flow is generated by the property as determined by the loan documents.

S	The participating loan is not currently making monthly cash flow payments or is making cash flow payments of less than original coupon rate disclosed.

¿	Loan is currently in default with regards to scheduled interest and/or principal payments.

The accompanying notes are an integral part of the financial statements.


12		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio II (BSP)

x	Securities pledged as collateral for outstanding borrowings under a loan agreement with Bank of America, N.A. On February 28, 2014, securities valued at $97,572,977 were pledged as collateral for the following outstanding borrowings:


Amount		Rate*			Accrued Interest
$	57,000,000		1.01	%		1,591

Interest rate as of February 28, 2014. Rate is based on one-month London Interbank Offered Rate (“LIBOR”) plus 0.85%.

Description of collateral:

Corporate Bonds

Alexandria Real Estate Equities, 4.60%, 4/1/22, $1,750,000 par

BioMed Realty, 4.25%, 7/15/22, $1,395,000 par

Brandywine Operating Partnership, 3.95%, 2/15/23, $2,000,000 par

DCT Industrial Operating Partnership LP, 4.50%, 10/15/23, $1,000,000 par

Developers Diversified Realty, 4.63%, 7/15/22, $1,980,000 par

Digital Realty, 5.25%, 3/15/21, $2,000,000 par

Digital Realty, 3.63%, 10/1/22, $800,000 par

Duke Realty, 4.38%, 6/15/22, $1,410,000 par

Duke Realty, 3.88%, 10/15/22, $2,500,000 par

Essex Portfolio LP, 3.25%, 5/1/23, $1,000,000 par

Health Care REIT, 3.75%, 3/15/23, $2,000,000 par

Highwoods Realty, 3.63%, 1/15/23, $3,300,000 par

Kilroy Realty, 3.80%, 1/15/23, $3,050,000 par

National Retail Properties, 3.80%, 10/15/22, $1,450,000 par

Post Apartment Homes, 3.38%, 12/1/22, $695,000 par

ProLogis, 6.88%, 3/15/20, $2,000,000 par

Senior Housing Properties, 6.75%, 12/15/21, $1,500,000 par

Senior Housing Properties, 5.63%, 8/1/42, $2,275,000 par

Ventas Realty, 5.45%, 3/15/43, $4,248,100 par

Vornado Realty, 5.00%, 1/15/22, $3,500,000 par

Washington REIT, 3.95%, 10/15/22, $3,850,000 par

Preferred Stocks

Alexandria Real Estate Equities, Series E, 181,042 shares

Boston Properties, Series B, 180,098 shares

CommonWealth REIT, Series E, 161,500 shares

Developers Diversified Realty, Series H, 1,747 shares

Digital Realty, Series F, 155,754 shares

Digital Realty, Series G, 30,624 shares

Duke Realty, Series J, 38,000 shares

Duke Realty, Series L, 74,260 shares

Equity Residential Properties, Series K, 30,000 shares

Health Care REIT, Series J, 176,000 shares

Hospitality Properties, Series D, 61,211 shares

Kimco Realty, Series I, 43,766 shares

Kimco Realty, Series J, 113,000 shares

Kimco Realty, Series K, 26,148 shares

National Retail Properties, Series D, 177,437 shares

PS Business Parks, Series S, 48,000 shares

PS Business Parks, Series T, 123,501 shares

Public Storage, Series R, 10,000 shares

Public Storage, Series T, 21,719 shares

Public Storage, Series U, 113,255 shares

Public Storage, Series V, 18,752 shares

Realty Income, Series E, 40,009 shares

Realty Income, Series F, 39,000 shares

Regency Centers, Series F, 152,936 shares

Regency Centers, Series G, 27,908 shares

Vornado Realty, Series K, 186,384 shares

Weingarten Realty Investors, Series F, 70,352 shares


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			13


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio II (BSP)

a	Securities pledged as collateral for outstanding reverse repurchase agreements. On February 28, 2014, securities valued at $7,612,294 were pledged as collateral for the following outstanding reverse repurchase agreements:


Amount		Acquisition Date		Rate*			Due		Accrued Interest		Name of Broker and Description of Collateral
$	7,321,000		2/6/14		0.36	%		3/7/14	$	1,684		(1	)

Interest rate as of February 28, 2014. Rate is based on one-month LIBOR plus a spread and reset monthly.

Name of broker and description of collateral:

(1)

Goldman Sachs:

Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $509,147 par

Federal Home Loan Mortgage Corporation, 9.00%, 7/1/30, $46,302 par

Federal Home Loan Mortgage Corporation, 5.00%, 5/1/39, $776,094 par

Federal Home Loan Mortgage Corporation, 3.50%, 6/1/42, $1,770,911 par

Federal National Mortgage Association, 6.00%, 10/1/16, $25,066 par

Federal National Mortgage Association, 5.50%, 6/1/17, $35,320 par

Federal National Mortgage Association, 5.00%, 9/1/17, $57,347 par

Federal National Mortgage Association, 5.00%, 11/1/17, $77,836 par

Federal National Mortgage Association, 6.50%, 6/1/29, $235,642 par

Federal National Mortgage Association, 7.50%, 5/1/30, $41,681 par

Federal National Mortgage Association, 8.00%, 5/1/30, $23,924 par

Federal National Mortgage Association, 8.00%, 6/1/30, $60,033 par

Federal National Mortgage Association, 5.00%, 11/1/33, $2,031,791 par

Federal National Mortgage Association, 5.00%, 7/1/39, $1,381,820 par

Securities purchased within terms of a private placement memorandum, exempt from registration under Rule 144A of the Securities Act of 1933, as amended, which may be sold only to dealers in that program or other “qualified institutional buyers”. On February 28, 2014, the total fair value of these investments was $1,902,748 or 1.3% of total net assets.

W	Investment in affiliated security. This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as advisor for the fund. The rate shown is the annualized seven-day effective yield as of February 28, 2014. See note 2 in Notes to Financial Statements.

p	On February 28, 2014, the cost of investments for federal income tax purposes was approximately $243,010,780. The approximate aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:


Gross unrealized appreciation......	$	1,650,118
Gross unrealized depreciation		(33,676,469	)

Net unrealized depreciation......	$	(32,026,351	)

REIT–Real Estate Investment Trust

The accompanying notes are an integral part of the financial statements.


14		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio III (CSP)


DESCRIPTION	DATE ACQUIRED		PAR		COST		VALUE ¶

(Percentages of each investment category relate to total net assets)

Whole Loans ¥ p — 54.4%
Commercial Loans — 40.1%
150 North Pantano I, Tucson, AZ, 5.90%, 8/1/14 ¿		1/4/05	$	3,525,000	$	3,526,138	$	1,959,900
150 North Pantano II, Tucson, AZ, 14.88%, 8/1/14 ¿		1/4/05		440,000		440,259		134,914
2165 Shermer Road, Northbrook, IL, 4.13%, 9/1/28		8/13/13		2,366,855		2,366,855		2,330,081
5600 University Boulevard, Albuquerque, NM, 5.10%, 2/1/24		1/31/14		3,000,000		3,000,000		3,149,580
8324 East Hartford Drive I, Scottsdale, AZ, 5.90%, 5/1/20		4/8/04		3,220,015		3,369,044		3,220,015
Allegiance Health, Jackson, MI, 5.88%, 1/1/21		12/28/10		8,179,372		8,179,372		8,588,340
Biltmore Lakes Corporate Center, Phoenix, AZ, 4.88%, 9/1/14		8/2/04		1,699,365		1,699,365		944,847
Cresthaven Medical, Memphis, TN, 3.88%, 6/1/18		5/6/13		2,343,750		2,343,750		2,292,408
Jilly’s American Grill, Scottsdale, AZ, 6.38%, 3/1/17		8/19/05		1,810,000		1,810,000		1,810,000
La Cholla Plaza I, Tucson, AZ, 3.43%, 8/1/14 ¿ r		7/26/06		11,135,604		11,136,400		6,191,396
La Cholla Plaza II, Tucson, AZ, 14.88%, 8/1/14 ¿		7/26/06		1,389,396		1,389,396		460,691
NCH Commercial Pool II, Rocky Point, Mexico, 11.93%, 8/1/14 ¿		12/4/07		14,000,000		14,237,806		6,934,999
Noah’s Ark Self Storage, San Antonio, TX, 6.48%, 9/1/11 §		8/24/07		2,350,000		2,350,000		2,350,000
North Austin Business Center, Austin, TX, 5.65%, 11/1/18		10/29/04		3,318,948		3,318,948		3,484,896
Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17		3/26/07		4,510,939		4,510,939		4,646,267
RealtiCorp Fund III, Orlando/Crystal River, FL, 5.93%, 7/1/14		2/28/06		3,972,755		3,972,755		3,972,755
Spa Atlantis, Pompano Beach, FL, 7.93%, 8/1/14		9/30/05		11,000,000		11,000,000		11,000,000
Tatum Ranch Center, Phoenix, AZ, 6.15%, 10/1/15		8/25/04		3,204,207		3,204,207		3,204,207

						81,855,234		66,675,296

Multifamily Loans — 14.3%
Chateau Club Apartments I, Athens, GA, 6.68%, 12/1/12 ¿ §		12/20/07		6,000,000		6,000,000		4,214,874
Chateau Club Apartments II, Athens, GA, 6.88%, 12/1/12 § S		12/20/07		2,991,624		2,991,624		2,054,172
El Dorado Apartments I, Tucson, AZ, 5.65%, 9/1/17		8/26/04		2,420,444		2,422,852		2,420,444
El Dorado Apartments II, Tucson, AZ, 7.13%, 9/1/17		8/26/04		358,094		358,094		292,369
Good Haven Apartments, Dallas, TX, 4.88%, 8/1/17		8/24/04		2,350,000		2,350,000		2,350,000
Montevista Apartments, Fort Worth, TX, 7.43%, 3/1/17		8/30/07		7,308,000		7,308,000		6,791,252
NCH Multifamily Pool, Oklahoma City, OK, 11.93%, 8/1/14 ¿		10/17/06		4,933,450		4,943,515		283,831
Plantation Pines I, Tyler, TX, 6.59%, 2/1/10 ¿ §		1/17/07		3,328,000		3,328,000		1,850,368
Plantation Pines II, Tyler, TX, 10.57%, 2/1/10 ¿ §		1/17/07		416,000		416,000		103,122
RiverPark Land Lot III, Oxnard, CA, 4.90%, 10/1/12 §		10/9/07		3,650,000		3,650,000		3,472,351

						33,768,085		23,832,783


Total Whole Loans						115,623,319		90,508,079


Private Mortgage-Backed Security ¥ Ä — 0.0%
Fixed Rate — 0.0%
First Gibraltar, Series 1992-MM, Class B, 6.06%, 10/25/21		7/30/93		25,226		19,316		—


Corporate Bonds — 40.0%
Consumer Cyclical x — 0.6%
American Water Capital, 4.30%, 12/1/42				1,000,000		1,017,250		949,848


Real Estate Investment Trusts — 39.4%
American Campus Communities Operating Partnership, 3.75%, 4/15/23				3,100,000		2,982,043		2,970,203
BioMed Realty, 4.25%, 7/15/22 x				1,755,000		1,839,982		1,747,583
Brandywine Operating Partnership, 3.95%, 2/15/23 x				2,000,000		1,988,206		1,954,232
BRE Properties, 3.38%, 1/15/23 x				2,425,000		2,391,250		2,297,105
Corporate Office Properties, 3.60%, 5/15/23				2,000,000		1,917,067		1,857,000
Developers Diversified Realty, 4.63%, 7/15/22 x				3,200,000		3,484,706		3,357,696
Digital Realty, 5.88%, 2/1/20 x				2,536,000		2,752,559		2,817,354
Digital Realty, 5.25%, 3/15/21 x				3,000,000		3,331,005		3,169,365
Duke Realty, 6.75%, 3/15/20				2,000,000		2,384,665		2,353,828

The accompanying notes are an integral part of the financial statements.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			15


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio III (CSP)


DESCRIPTION	PAR/ SHARES		COST		VALUE ¶

Duke Realty, 4.38%, 6/15/22	$	1,150,000	$	1,220,386	$	1,174,584
Equity One, 3.75%, 11/15/22 x		6,055,000		6,013,082		5,815,216
Essex Portfolio, 3.63%, 8/15/22 x		4,600,000		4,605,339		4,458,044
Health Care REIT, 3.75%, 3/15/23		1,175,000		1,185,489		1,154,654
Hospitality Properties, 5.00%, 8/15/22 x		4,390,000		4,502,797		4,576,812
Hospitality Properties, 4.50%, 6/15/23 x		2,000,000		1,999,981		1,990,866
Host Hotels & Resorts, 3.75%, 10/15/23 x		3,000,000		2,945,351		2,914,842
Kilroy Realty, 3.80%, 1/15/23 x		2,000,000		1,989,501		1,949,898
Mack-Cali Realty, 7.75%, 8/15/19 x		1,025,000		1,213,493		1,234,050
Mid-America Apartments, 4.30%, 10/15/23		1,650,000		1,644,720		1,667,751
National Retail Properties, 3.30%, 4/15/23 x		5,150,000		4,832,268		4,880,603
Post Apartment Homes, 3.38%, 12/1/22		595,000		594,656		563,135
Senior Housing Properties, 5.63%, 8/1/42 x		2,250,000		2,191,000		1,866,510
Ventas Realty, 5.45%, 3/15/43		4,970,225		4,998,520		4,441,393
Vornado Realty, 5.00%, 1/15/22 x		1,735,000		1,807,257		1,855,779
Washington REIT, 3.95%, 10/15/22 x		2,510,000		2,598,070		2,459,614

				67,413,393		65,528,117


Total Corporate Bonds				68,430,643		66,477,965


U.S. Government Agency Mortgage-Backed Securities a — 5.8%
Fixed Rate — 5.8%
Federal Home Loan Mortgage Corporation,
5.50%, 1/1/18, #E93231		509,147		514,060		546,081
9.00%, 7/1/30, #C40149		64,823		65,949		77,376
5.00%, 5/1/39, #G05430		1,065,960		1,090,232		1,162,131
3.50%, 6/1/42, #C09000		416,902		440,726		422,174
Federal National Mortgage Association,
6.00%, 10/1/16, #607030		25,066		25,098		25,946
5.50%, 2/1/17, #623874		40,649		40,624		43,422
5.50%, 6/1/17, #648508		35,320		35,369		37,756
5.00%, 9/1/17, #254486		57,347		57,392		61,423
5.00%, 11/1/17, #657356		77,836		77,961		83,455
6.50%, 6/1/29, #252497		164,949		164,236		186,450
7.50%, 5/1/30, #535289		41,681		40,768		47,700
8.00%, 5/1/30, #538266		23,924		23,726		25,081
8.00%, 6/1/30, #253347		54,030		53,583		65,204
5.00%, 12/1/35, #995317		1,773,429		1,820,014		1,944,593
5.00%, 7/1/39, #935512		944,133		960,462		1,034,129
5.00%, 7/1/39, #AA9716		3,633,177		3,720,546		3,975,360


Total U.S. Government Agency Mortgage-Backed Securities				9,130,746		9,738,281


Preferred Stocks — 36.8%
Real Estate Investment Trusts — 36.8%
Alexandria Real Estate Equities, Series E x		206,080		5,206,973		4,811,968
Boston Properties, Series B		233,480		5,673,701		4,893,507
CommonWealth REIT, Series E x		71,548		1,791,008		1,714,920
Digital Realty, Series E x		20,171		514,524		485,996
Digital Realty, Series F x		164,026		4,108,851		3,767,480
Digital Realty, Series G		26,367		599,121		528,896
Duke Realty, Series J x		56,556		1,203,278		1,370,295
Duke Realty, Series L x		13,000		325,650		314,977
Health Care REIT, Series J x		196,600		5,186,949		4,763,421
Hospitality Properties, Series D x		163,212		4,127,357		4,078,668
Kimco Realty, Series I		58,480		1,381,498		1,335,905

The accompanying notes are an integral part of the financial statements.


16		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio III (CSP)


DESCRIPTION	SHARES			COST		VALUE ¶

Kimco Realty, Series J x		126,891		$	3,184,070	$	2,662,173
Kimco Realty, Series K		42,333			1,070,441		903,810
National Retail Properties, Series D x		195,623	��		4,883,237		4,657,784
PS Business Parks, Series R		37,373			1,004,213		945,911
PS Business Parks, Series S x		27,800			724,910		658,026
PS Business Parks, Series T x		123,291			3,075,856		2,766,650
PS Business Parks, Series U		21,300			532,500		453,051
Public Storage, Series P		11,300			299,450		290,410
Public Storage, Series Q		24,892			615,870		640,969
Public Storage, Series R		4,000			100,600		100,720
Public Storage, Series S x		62,000			1,521,190		1,455,066
Public Storage, Series T x		63,578			1,670,070		1,443,856
Public Storage, Series U		20,894			441,908		464,474
Public Storage, Series X		20,200			507,660		418,746
Realty Income, Series E x		36,520			824,632		913,000
Realty Income, Series F x		153,162			4,062,388		3,821,392
Regency Centers, Series F x		191,817			4,987,634		4,613,007
Vornado Realty, Series J		6,496			161,750		165,648
Vornado Realty, Series K x		126,480			3,244,075		2,773,706
Vornado Realty, Series L		75,000			1,792,750		1,563,285
Weingarten Realty Investors, Series F x		56,143			1,279,575		1,358,099


Total Preferred Stocks					66,103,689		61,135,816


Total Unaffiliated Investments					259,307,713		227,860,141


Short-Term Investment — 1.5%
First American Prime Obligations Fund, Class Z, 0.02% W		2,545,312			2,545,312		2,545,312


Total Investments p — 138.5%				$	261,853,025	$	230,405,453

Other Assets and Liabilities, Net — (38.5)%							(64,087,448	)

Total Net Assets — 100.0%						$	166,318,005

¶	Securities are valued in accordance with procedures described in note 2 in Notes to Financial Statements.

Securities purchased as part of a private placement which have not been registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. On February 28, 2014, the total fair value of these securities was $90,508,079 or 54.4% of total net assets. See note 2 in Notes to Financial Statements.

¿	Loan is currently in default with regards to scheduled interest and/or principal payments.

r	Variable Rate Security – The rate shown is the net coupon rate in effect as of February 28, 2014.

§	Loan has matured or will mature in the next couple of months and the fund is anticipating payoff or refinancing. Unless disclosed otherwise, the loan continues to make monthly payments.

S	The participating loan is not currently making monthly cash flow payments or is making cash flow payments of less than original coupon rate disclosed.

Ä	Non-Income Producing Security – that is not considered to be in default of its original terms.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			17


Schedule of Investments		February 28, 2014 (unaudited)

American Strategic Income Portfolio III (CSP)

x	Securities pledged as collateral for outstanding borrowings under a loan agreement with Bank of America, N.A. On February 28, 2014, securities valued at $98,725,901 were pledged as collateral for the following outstanding borrowings:


Amount		Rate*			Accrued Interest
$	55,500,000		1.00	%	$	1,549

Interest rate as of February 28, 2014. Rate is based on one-month London Interbank Offered Rate (“LIBOR”) plus 0.85%.

Description of collateral:

Corporate Bonds

American Water Capital, 4.30%, 12/1/42, $1,000,000 par

BioMed Realty, 4.25%, 7/15/22, $1,755,000 par

Brandywine Operating Partnership, 3.95%, 2/15/23, $2,000,000 par

BRE Properties, 3.38%, 1/15/23, $2,425,000 par

Developers Diversified Realty, 4.63%, 7/15/22, $3,200,000 par

Digital Realty, 5.88%, 2/1/20, $2,536,000 par

Digital Realty, 5.25%, 3/15/21, $3,000,000 par

Equity One, 3.75%, 11/15/22, $6,055,000 par

Essex Portfolio, 3.63%, 8/15/22, $4,600,000 par

Hospitality Properties, 5.00%, 8/15/22, $4,390,000 par

Hospitality Properties, 4.50%, 6/15/23, $2,000,000 par

Host Hotels & Resorts, 3.75%, 10/15/23, $3,000,000 par

Kilroy Realty, 3.80%, 1/15/23, $2,000,000 par

Mack-Cali Realty, 7.75%, 8/15/19, $1,025,000 par

National Retail Properties, 3.30%, 4/15/23, $5,150,000 par

Senior Housing Properties, 5.63%, 8/1/42, $2,250,000 par

Vornado Realty, 5.00%, 1/15/22, $1,735,000 par

Washington REIT, 3.95%, 10/15/22, $2,510,000 par

Preferred Stocks

Alexandria Real Estate Equities, Series E, 206,080 shares

CommonWealth REIT, Series E, 71,548 shares

Digital Realty, Series E, 20,171 shares

Digital Realty, Series F, 164,026 shares

Duke Realty, Series J, 56,556 shares

Duke Realty, Series L, 13,000 shares

Health Care REIT, Series J, 196,600 shares

Hospitality Properties, Series D, 163,212 shares

Kimco Realty, Series J, 126,891 shares

National Retail Properties, Series D, 195,623 shares

PS Business Parks, Series S, 27,800 shares

PS Business Parks, Series T, 123,291 shares

Public Storage, Series S, 62,000 shares

Public Storage, Series T, 63,578 shares

Realty Income, Series E, 36,520 shares

Realty Income, Series F, 153,162 shares

Regency Centers, Series F, 191,817 shares

Vornado Realty, Series K, 126,480 shares

Weingarten Realty Investors, Series F, 56,143 shares

a	Securities pledged as collateral for outstanding reverse repurchase agreements. On February 28, 2014, securities valued at $9,738,281 were pledged as collateral for the following outstanding reverse repurchase agreements:


Amount		Acquisition Date		Rate*			Due		Accrued Interest		Name of Broker and Description of Collateral
$	9,452,000		2/6/14		0.36	%		3/7/14	$	2,173		(1	)

Interest rate as of February 28, 2014. Rate is based on one-month LIBOR plus a spread and reset monthly.

Name of broker and description of collateral:

(1)

Goldman Sachs:

Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $509,147 par

Federal Home Loan Mortgage Corporation, 9.00%, 7/1/30, $64,823 par

Federal Home Loan Mortgage Corporation, 5.00%, 5/1/39, $1,065,960 par

The accompanying notes are an integral part of the financial statements.


18		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Strategic Income Portfolio III (CSP)

Federal Home Loan Mortgage Corporation, 3.50%, 6/1/42, $416,902 par

Federal National Mortgage Association, 6.00%, 10/1/16, $25,066 par

Federal National Mortgage Association, 5.50%, 2/1/17, $40,649 par

Federal National Mortgage Association, 5.50%, 6/1/17, $35,320 par

Federal National Mortgage Association, 5.00%, 9/1/17, $57,347 par

Federal National Mortgage Association, 5.00%, 11/1/17, $77,836 par

Federal National Mortgage Association, 6.50%, 6/1/29, $164,949 par

Federal National Mortgage Association, 7.50%, 5/1/30, $41,681 par

Federal National Mortgage Association, 8.00%, 5/1/30, $23,924 par

Federal National Mortgage Association, 8.00%, 6/1/30, $54,030 par

Federal National Mortgage Association, 5.00%, 12/1/35, $1,773,429 par

Federal National Mortgage Association, 5.00%, 7/1/39, $944,133 par

Federal National Mortgage Association, 5.00%, 7/1/39, $3,633,177 par

W	Investment in affiliated security. This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as advisor for the fund. The rate shown is the annualized seven-day effective yield as of February 28, 2014. See note 2 in Notes to Financial Statements.

p	On February 28, 2014, the cost of investments for federal income tax purposes was approximately $261,853,025. The approximate aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:


Gross unrealized appreciation	$	2,150,758
Gross unrealized depreciation		(33,598,330	)

Net unrealized depreciation	$	(31,447,572	)

REIT–Real Estate Investment Trust


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			19


Schedule of Investments		February 28, 2014 (unaudited)

American Select Portfolio (SLA)


DESCRIPTION	DATE ACQUIRED		PAR		COST		VALUE ¶

(Percentages of each investment category relate to total net assets)

Whole Loans ¥ p — 46.5%
Commercial Loans — 35.6%
31601 Industrial Drive, Livonia, MI, 4.13%, 1/1/24 r		12/30/13	$	2,220,285	$	2,220,285	$	2,220,285
Clear Lake Central I, Webster, TX, 4.93%, 9/1/14		7/27/06		6,895,716		6,895,716		6,895,716
Gateway Business Center, St. Cloud, MN, 4.82%, 10/1/23		9/13/13		3,229,108		3,229,108		3,321,952
George Gee Hummer, Liberty Lake, WA, 6.38%, 7/1/18		6/30/05		2,106,753		2,106,753		1,999,315
George Gee Pontiac I, Liberty Lake, WA, 6.40%, 7/1/18		6/30/05		4,634,856		4,634,856		4,402,580
George Gee Pontiac II, Liberty Lake, WA, 6.38%, 7/1/18		9/14/06		743,560		743,560		705,545
George Gee Porsche, Liberty Lake, WA, 6.38%, 7/1/18		9/14/06		2,478,533		2,478,533		2,351,815
Hacienda Colorado Restaurant, Englewood, CO, 4.38%, 7/1/23		6/5/13		2,099,133		2,099,133		2,098,713
Jamestown Medical Office Building, Jamestown, ND, 4.43%, 5/1/23		4/5/13		6,102,252		6,102,252		6,148,769
Mandala Agency Building, Bend, OR, 6.38%, 6/1/17		5/23/07		2,137,672		2,137,672		2,159,049
Rivertree Court, Vernon Hills, IL, 5.19%, 12/1/23		11/8/13		2,090,762		2,090,762		2,195,300
RL Stowe Portfolio, Belmont, NC & Chattanooga, TN, 2.93%, 1/1/14 §		10/12/07		6,966,539		6,966,539		3,873,396
Superior Ford Dealership, Plymouth, MN, 6.43%, 7/1/17		6/28/07		4,602,388		4,602,388		4,832,507

						46,307,557		43,204,942

Multifamily Loans — 10.9%
Briarhill Apartments I, Eden Prairie, MN, 6.90%, 9/1/15		8/11/03		3,823,366		3,823,366		3,899,834
Briarhill Apartments II, Eden Prairie, MN, 6.88%, 9/1/15		8/11/03		16,239		16,239		16,405
Keystone Crossings, Springdale, AR, 8.15%, 7/5/16		6/27/07		4,875,000		4,875,000		4,564,053
NCH Multifamily Pool II, Rocky Point, Mexico, 11.93%, 8/1/14 ¿		10/1/07		5,400,000		5,647,813		4,750,000

						14,362,418		13,230,292


Total Whole Loans						60,669,975		56,435,234


Corporate Notes ¥ — 7.1%
Fixed Rate — 7.1%
Stratus Properties I, 7.25%, 3/31/15		12/28/00		5,000,000		5,000,000		5,050,000
Stratus Properties VII, 7.25%, 12/31/15		6/1/07		3,500,000		3,500,000		3,535,000


Total Corporate Notes						8,500,000		8,585,000


Corporate Bonds — 34.8%
Real Estate Investment Trusts — 34.8%
Brandywine Operating Partnership, 3.95%, 2/15/23 x				2,780,000		2,746,699		2,716,382
CommonWealth REIT, 5.88%, 9/15/20 x				1,375,000		1,476,564		1,477,547
Developers Diversified Realty, 4.63%, 7/15/22 x				2,200,000		2,364,191		2,308,416
Digital Realty, 5.88%, 2/1/20 x				1,000,000		1,085,394		1,110,944
Duke Realty, 6.75%, 3/15/20 x				1,600,000		1,907,732		1,883,062
Equity One, 3.75%, 11/15/22 x				2,203,000		2,181,947		2,115,759
HCP, 3.15%, 8/1/22				2,000,000		1,982,555		1,908,540
Health Care REIT, 5.25%, 1/15/22 x				1,750,000		1,954,444		1,925,948
Health Care REIT, 3.75%, 3/15/23				885,000		892,900		869,675
Healthcare Realty, 5.75%, 1/15/21 x				2,690,000		2,982,101		2,976,663
Highwoods Realty, 3.63%, 1/15/23				750,000		734,566		712,458
Host Hotels & Resorts, 5.25%, 3/15/22				1,000,000		1,027,474		1,085,660
Host Hotels & Resorts, 3.75%, 10/15/23				197,000		181,685		191,408
Kilroy Realty, 3.80%, 1/15/23 x				3,000,000		2,862,683		2,924,847
Liberty Property, 3.38%, 6/15/23 x				2,500,000		2,485,237		2,353,780
Mid-America Apartments, 4.30%, 10/15/23				1,100,000		1,096,480		1,111,834
National Retail Properties, 3.80%, 10/15/22 x				1,425,000		1,477,928		1,412,551
Post Apartment Homes, 3.38%, 12/1/22 x				1,515,000		1,514,125		1,433,866
Realty Income, 4.65%, 8/1/23				1,430,000		1,447,058		1,502,913
Senior Housing Properties, 6.75%, 12/15/21				340,000		388,371		385,645

The accompanying notes are an integral part of the financial statements.


20		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Select Portfolio (SLA)


DESCRIPTION	PAR/ SHARES		COST		VALUE ¶

Senior Housing Properties, 5.63%, 8/1/42	$	1,146,125	$	1,126,745	$	950,779
Ventas Realty, 3.25%, 8/15/22		1,015,000		997,190		973,937
Ventas Realty, 5.45%, 3/15/43		3,966,375		3,985,676		3,544,353
Washington REIT, 3.95%, 10/15/22 x		1,100,000		1,136,079		1,077,919
Weingarten Realty Investors, 3.38%, 10/15/22 x		3,450,000		3,424,464		3,272,477


Total Corporate Bonds				43,460,288		42,227,363


U.S. Government Agency Mortgage-Backed Securities a — 12.8%
Fixed Rate — 12.8%
Federal Home Loan Mortgage Corporation,
5.50%, 1/1/18, #E93231		286,395		289,158		307,171
7.50%, 12/1/29, #C00896		81,547		80,560		96,375
5.00%, 5/1/39, #G05430		532,980		545,116		581,066
Federal National Mortgage Association,
5.00%, 11/1/17, #657356		77,836		77,961		83,455
6.50%, 6/1/29, #252497		212,078		211,161		239,721
7.50%, 5/1/30, #535289		23,156		22,649		26,500
8.00%, 5/1/30, #538266		13,291		13,181		13,934
5.00%, 11/1/33, #725027		749,388		763,309		825,611
5.00%, 7/1/39, #935588		803,109		817,760		879,295
4.50%, 3/1/40, #932669		1,033,376		1,042,410		1,110,003
4.00%, 12/1/40, #MA0583		1,170,060		1,181,349		1,227,816
3.50%, 2/1/41, #AE0828		1,769,084		1,830,646		1,795,670
3.50%, 3/1/41, #AE0981		2,420,023		2,509,013		2,456,376
3.50%, 2/1/42, #AB4514		1,886,188		1,924,842		1,914,472
3.50%, 4/1/42, #MA1027		1,841,861		1,905,951		1,869,486
3.50%, 8/1/42, #AL2417		2,024,361		2,165,511		2,054,797


Total U.S. Government Agency Mortgage-Backed Securities				15,380,577		15,481,748


Asset-Backed Security ¢ — 0.8%
Other — 0.8%
321 Henderson Receivables I LLC, Series 2007-3A, Class A, 6.15%, 10/15/48		804,771		889,968		904,971


Preferred Stocks — 38.0%
Real Estate Investment Trusts — 38.0%
Alexandria Real Estate Equities, Series E x		143,250		3,612,290		3,344,887
Boston Properties, Series B x		177,874		4,220,719		3,728,061
CommonWealth REIT, Series E x		137,698		3,565,063		3,300,456
Developers Diversified Realty, Series H x		6,305		129,253		159,453
Digital Realty, Series E x		141,400		3,535,140		3,406,863
Digital Realty, Series G		8,500		171,530		170,502
Duke Realty, Series J		630		15,120		15,264
Duke Realty, Series K x		35,000		836,500		842,188
Duke Realty, Series L x		17,270		330,202		418,435
Equity Residential Properties, Series K x		18,000		991,800		1,080,563
Health Care REIT, Series J x		123,170		3,174,409		2,984,286
Hospitality Properties, Series D		44,420		1,204,560		1,110,056
Kimco Realty, Series I		56,355		1,345,579		1,287,362
Kimco Realty, Series J x		88,000		2,203,750		1,846,240
Kimco Realty, Series K		30,000		753,100		640,500
National Retail Properties, Series D x		146,840		3,680,710		3,496,260
National Retail Properties, Series E		10,100		196,950		208,161
PS Business Parks, Series S x		48,000		1,276,800		1,136,160
PS Business Parks, Series T x		75,875		1,866,356		1,702,635


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			21


Schedule of Investments		February 28, 2014 (unaudited)

American Select Portfolio (SLA)


DESCRIPTION	SHARES		COST		VALUE ¶

PS Business Parks, Series U		2,000	$	41,800	$	42,540
PS Business Parks, Series V		38,700		899,826		820,827
Public Storage, Series P		11,400		300,960		292,980
Public Storage, Series Q x		17,675		443,666		455,131
Public Storage, Series R x		36,500		931,975		919,070
Public Storage, Series T		7,715		199,819		175,208
Public Storage, Series U		18,930		471,977		420,814
Public Storage, Series V		23,288		590,351		496,966
Public Storage, Series W		7,015		177,129		145,421
Public Storage, Series X		34,800		810,840		721,404
Realty Income, Series E x		91,670		2,214,334		2,291,750
Realty Income, Series F		50,250		1,303,543		1,253,738
Regency Centers, Series F x		142,126		3,772,790		3,417,988
Regency Centers, Series G		14,400		365,472		313,651
Vornado Realty, Series G x		40,000		998,000		1,005,000
Vornado Realty, Series I x		24,000		596,400		595,896
Vornado Realty, Series J		4,400		109,560		112,200
Vornado Realty, Series K x		61,415		1,568,468		1,346,831
Vornado Realty, Series L		16,000		394,400		333,501


Total Preferred Stocks				49,301,141		46,039,248


Total Unaffiliated Investments				178,201,949		169,673,564


Short-Term Investment — 2.0%
First American Prime Obligations Fund, Class Z, 0.02% W		2,476,349		2,476,349		2,476,349


Total Investments p — 142.0%			$	180,678,298	$	172,149,913

Other Assets and Liabilities, Net — (42.0)%						(50,878,239	)

Total Net Assets — 100.0%					$	121,271,674

¶	Securities are valued in accordance with procedures described in note 2 in Notes to Financial Statements.

Securities purchased as part of a private placement which have not been registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. On February 28, 2014, the total fair value of these securities was $65,020,234 or 53.6% of total net assets. See note 2 in Notes to Financial Statements.

r	Variable Rate Security – The rate shown is the net coupon rate in effect as of February 28, 2014.

§	Loan has matured or will mature in the next couple of months and the fund is anticipating payoff or refinancing. Unless disclosed otherwise, the loan continues to make monthly payments.

¿	Loan is currently in default with regards to scheduled interest and/or principal payments.

x	Securities pledged as collateral for outstanding borrowings under a loan agreement with Bank of America, N.A. On February 28, 2014, securities valued at $66,468,314 were pledged as collateral for the following outstanding borrowings:


Amount		Rate*			Accrued Interest
$	36,700,000		1.00	%	$	1,024

Interest rate as of February 28, 2014. Rate is based on one-month London Interbank Offered Rate (“LIBOR”) plus 0.85%.

The accompanying notes are an integral part of the financial statements.


22		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

American Select Portfolio (SLA)

Description of collateral:

Corporate Bonds

Brandywine Operating Partnership, 3.95%, 2/15/23, $2,780,000 par

CommonWealth REIT, 5.88%, 9/15/20, $1,375,000 par

Developers Diversified Realty, 4.63%, 7/15/22, $2,200,000 par

Digital Realty, 5.88%, 2/1/20, $1,000,000 par

Duke Realty, 6.75%, 3/15/20, $1,600,000 par

Equity One, 3.75%, 11/15/22, $2,203,000 par

Health Care REIT, 5.25%, 1/15/22, $1,750,000 par

Healthcare Realty, 5.75%, 1/15/21, $2,690,000 par

Kilroy Realty, 3.80%, 1/15/23, $3,000,000 par

Liberty Property, 3.38%, 6/15/23, $2,500,000 par

National Retail Properties, 3.80%, 10/15/22, $1,425,000 par

Post Apartment Homes, 3.38%, 12/1/22, $1,515,000 par

Washington REIT, 3.95%, 10/15/22, $1,100,000 par

Weingarten Realty Investors, 3.38%, 10/15/22, $3,450,000 par

Preferred Stocks

Alexandria Real Estate Equities, Series E, 143,250 shares

Boston Properties, Series B, 177,874 shares

CommonWealth REIT, Series E, 137,698 shares

Developers Diversified Realty, Series H, 6,305 shares

Digital Realty, Series E, 141,400 shares

Duke Realty, Series K, 35,000 shares

Duke Realty, Series L, 17,270 shares

Equity Residential Properties, Series K, 18,000 shares

Health Care REIT, Series J, 123,170 shares

Kimco Realty, Series J, 88,000 shares

National Retail Properties, Series D, 146,840 shares

PS Business Parks, Series S, 48,000 shares

PS Business Parks, Series T, 75,875 shares

Public Storage, Series Q, 17,675 shares

Public Storage, Series R, 36,500 shares

Realty Income, Series E, 91,670 shares

Regency Centers, Series F, 142,126 shares

Vornado Realty, Series G, 40,000 shares

Vornado Realty, Series I, 24,000 shares

Vornado Realty, Series K, 61,415 shares

a	Securities pledged as collateral for outstanding reverse repurchase agreements. On February 28, 2014, securities valued at $15,481,748 were pledged as collateral for the following outstanding reverse repurchase agreements:


Amount		Acquisition Date		Rate*			Due		Accrued Interest		Name of Broker and Description of Collateral
$	14,812,000		2/6/14		0.36	%		3/7/14	$	3,407		(1	)

Interest rate as of February 28, 2014. Rate is based on one-month LIBOR plus a spread and reset monthly.

Name of broker and description of collateral:

(1)

Goldman Sachs:

Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $286,395 par

Federal Home Loan Mortgage Corporation, 7.50%, 12/1/29, $81,547 par

Federal Home Loan Mortgage Corporation, 5.00%, 5/1/39, $532,980 par

Federal National Mortgage Association, 5.00%, 11/1/17, $77,836 par

Federal National Mortgage Association, 6.50%, 6/1/29, $212,078 par

Federal National Mortgage Association, 7.50%, 5/1/30, $23,156 par

Federal National Mortgage Association, 8.00%, 5/1/30, $13,291 par

Federal National Mortgage Association, 5.00%, 11/1/33, $749,388 par

Federal National Mortgage Association, 5.00%, 7/1/39, $803,109 par

Federal National Mortgage Association, 4.50%, 3/1/40, $1,033,376 par

Federal National Mortgage Association, 4.00%, 12/1/40, $1,170,060 par

Federal National Mortgage Association, 3.50%, 2/1/41, $1,769,084 par

Federal National Mortgage Association, 3.50%, 3/1/41, $2,420,023 par

Federal National Mortgage Association, 3.50%, 2/1/42, $1,886,188 par

Federal National Mortgage Association, 3.50%, 4/1/42, $1,841,861 par

Federal National Mortgage Association, 3.50%, 8/1/42, $2,024,361 par


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			23


Schedule of Investments		February 28, 2014 (unaudited)

American Select Portfolio (SLA)

W	Investment in affiliated security. This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as advisor for the fund. The rate shown is the annualized seven-day effective yield as of February 28, 2014. See note 2 in Notes to Financial Statements.

p	On February 28, 2014, the cost of investments for federal income tax purposes was approximately $180,678,298. The approximate aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:


Gross unrealized appreciation	$	1,569,680
Gross unrealized depreciation		(10,098,065	)

Net unrealized depreciation	$	(8,528,385	)

REIT–Real Estate Investment Trust

The accompanying notes are an integral part of the financial statements.


24		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT


Statements of Assets and Liabilities		February 28, 2014 (unaudited)


	ASP			BSP			CSP			SLA
Assets:
Unaffiliated investments, at fair value (Cost: $64,458,877, $240,966,455, $259,307,713, $178,201,949) (note 2)	$	62,759,854		$	208,940,104		$	227,860,141		$	169,673,564
Affiliated money market fund, at fair value (Cost: $1,474,112, $2,044,325, $2,545,312, $2,476,349) (note 3)		1,474,112			2,044,325			2,545,312			2,476,349
Real estate owned, at fair value (Cost: $3,189,940, $—, $—, $—) (note 2)		1,700,000			—			—			—
Cash		—			2,558			—			—
Receivable for investments sold in affiliates		—			—			10,385			—
Receivable for accrued dividends and interest		368,334			1,029,418			1,086,570			820,088
Receivable for accrued dividends in affiliated money market fund		11			16			19			19
Prepaid expenses and other assets		84,177			35,532			39,433			37,714

Total assets		66,386,488			212,051,953			231,541,860			173,007,734


Liabilities:
Payable for investments purchased		—			40,742			—			—
Payable under loan agreement (note 2)		13,800,000			57,000,000			55,500,000			36,700,000
Payable for reverse repurchase agreements (note 2)		5,946,000			7,321,000			9,452,000			14,812,000
Bank overdraft		25,944			—			45,553			38,996
Payable for investment advisory fees		9,584			45,557			56,584			45,013
Payable for administrative fees		8,954			27,503			31,137			22,506
Payable for audit fees		33,259			33,259			33,259			33,259
Payable for legal fees		19,094			19,586			17,534			14,323
Payable for transfer agent fees		7,761			2,985			2,670			1,996
Payable for interest expense		1,753			3,275			3,722			4,431
Payable for other expenses		32,405			50,825			81,396			63,536

Total liabilities		19,884,754			64,544,732			65,223,855			51,736,060

Net assets applicable to outstanding capital stock	$	46,501,734		$	147,507,221		$	166,318,005		$	121,271,674


Composition of net assets:
Capital stock and additional paid-in capital	$	48,545,283		$	187,280,145		$	236,397,456		$	129,111,072
Undistributed (distributions in excess of) net investment income		207,221			(57,515	)		(404,115	)		671,797
Accumulated net realized gain (loss) on investments		938,193			(7,689,058	)		(38,227,764	)		17,190
Net unrealized depreciation of investments		(1,699,023	)		(32,026,351	)		(31,447,572	)		(8,528,385	)
Net unrealized appreciation (depreciation) of real estate owned		(1,489,940	)		—			—			—


Total–representing net assets applicable to capital stock	$	46,501,734		$	147,507,221		$	166,318,005		$	121,271,674


Net asset value and market price of capital stock:
Net assets applicable to capital stock	$	46,501,734		$	147,507,221		$	166,318,005		$	121,271,674
Shares outstanding (authorized 1 billion shares of each fund of $0.01 par value)		4,231,331			15,985,741			21,356,023			10,662,195
Net asset value per share	$	10.99		$	9.23		$	7.79		$	11.37
Market price per share	$	10.13		$	8.27		$	7.15		$	9.91

The accompanying notes are an integral part of the financial statements.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			25


Statements of Operations		For the six-month period ended February 28, 2014 (unaudited)


	ASP			BSP			CSP			SLA
Investment Income:
Interest from unaffiliated investments	$	1,160,146		$	3,656,413		$	4,157,329		$	2,869,662
Dividends from unaffiliated investments		677,172			2,045,266			2,247,692			1,704,479
Participating income from investments no longer held (note 2)		—			—			493,815			233,317
Dividends from affiliated money market fund		45			104			108			87
Net operating income from real estate owned (note 2)		28,389			—			—			—

Total investment income		1,865,752			5,701,783			6,898,944			4,807,545


Expenses (note 3):
Investment advisory fees		125,432			385,818			454,936			296,166
Interest expense		84,408			305,226			320,148			221,740
Administration fees		58,647			178,365			199,127			148,083
Custodian fees		4,692			14,273			15,933			11,847
Mortgage servicing fees		9,209			21,143			57,965			40,869
Legal fees		17,549			17,549			17,510			17,510
Audit fees		28,935			28,935			28,935			28,935
Postage and printing fees		4,750			11,594			13,097			9,227
Transfer agent fees		8,429			9,185			9,182			8,517
Listing fees		11,785			12,484			12,702			11,785
Directors’ fees		34,548			34,548			34,548			34,548
Insurance fees		17,228			17,253			17,257			17,246
Pricing fees		10,829			10,829			10,829			10,829
Other expenses		15,908			13,612			15,354			13,489

Total expenses		432,349			1,060,814			1,207,523			870,791

Less: Fee reimbursements (note 3)		(672	)		(945	)		(980	)		(1,072	)
Less: Indirect payments from custodian (note 3)		(3	)		(3	)		(8	)		(15	)

Total net expenses		431,674			1,059,866			1,206,535			869,704


Net investment income		1,434,078			4,641,917			5,692,409			3,937,841


Net realized and unrealized gains (losses) on investments (notes 2 and 4):
Net realized gain (loss) on investments		(242,043	)		(3,543,595	)		(160,821	)		22,136
Net change in unrealized appreciation or depreciation of investments		1,523,828			6,535,714			4,476,449			5,601,049


Net gain on investments		1,281,785			2,992,119			4,315,628			5,623,185


Net increase in net assets resulting from operations	$	2,715,863		$	7,634,036		$	10,008,037		$	9,561,026

The accompanying notes are an integral part of the financial statements.


26		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

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FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			27

Statements of Changes in Net Assets


	ASP						BSP
	Six-Month Period Ended 2/28/14 (unaudited)			Year Ended 8/31/13			Six-Month Period Ended 2/28/14 (unaudited)			Year Ended 8/31/13
Operations:
Net investment income	$	1,434,078		$	3,105,870		$	4,641,917		$	9,754,680
Net realized gain (loss) on investments		(242,043	)		6,158,132			(3,543,595	)		8,982,423
Net realized loss on real estate owned		—			—			—			—
Net change in unrealized appreciation or depreciation of investments		1,523,828			(9,840,940	)		6,535,714			(28,043,535	)
Net change in unrealized appreciation or depreciation of real estate owned		—			(1,489,940	)		—			—


Net increase (decrease) in net assets resulting from operations		2,715,863			(2,066,878	)		7,634,036			(9,306,432	)


Distributions to shareholders (note 2):
From net investment income		(1,216,508	)		(3,215,812	)		(4,795,722	)		(9,351,660	)
From net realized gain on investments		(3,404,529	)		(1,422,150	)		—			—

Total distributions		(4,621,037	)		(4,637,962	)		(4,795,722	)		(9,351,660	)


Total increase (decrease) in net assets		(1,905,174	)		(6,704,840	)		2,838,314			(18,658,092	)

Net assets at beginning of period		48,406,908			55,111,748			144,668,907			163,326,999


Net assets at end of period	$	46,501,734		$	48,406,908		$	147,507,221		$	144,668,907


Undistributed (distributions in excess of) net investment income	$	207,221		$	(10,349	)	$	(57,515	)	$	96,290

The accompanying notes are an integral part of the financial statements.


28		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT


CSP						SLA
Six-Month Period Ended 2/28/14 (unaudited)			Year Ended 8/31/13			Six-Month Period Ended 2/28/14 (unaudited)			Year Ended 8/31/13

$	5,692,409		$	12,621,686		$	3,937,841		$	8,488,038
	(160,821	)		(2,212,161	)		22,136			6,468,764
	—			(503,425	)		—			—
	4,476,449			(13,471,780	)		5,601,049			(15,465,772	)
	—			171,672			—			—


	10,008,037			(3,394,008	)		9,561,026			(508,970	)


	(5,552,567	)		(9,823,773	)		(3,065,381	)		(7,943,336	)
	—			—			(4,613,532	)		—

	(5,552,567	)		(9,823,773	)		(7,678,913	)		(7,943,336	)


	4,455,470			(13,217,781	)		1,882,113			(8,452,306	)

	161,862,535			175,080,316			119,389,561			127,841,867


$	166,318,005		$	161,862,535		$	121,271,674		$	119,389,561


$	(404,115	)	$	(543,957	)	$	671,797		$	(200,663	)


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			29


Statements of Cash Flows		For the six-month period ended February 28, 2014 (unaudited)


	ASP			BSP			CSP			SLA
Cash flows from operating activities:
Net increase in net assets resulting from operations	$	2,715,863		$	7,634,036		$	10,008,037		$	9,561,026
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Purchases of investments		(7,845,458	)		(7,076,790	)		(8,375,265	)		(18,082,397	)
Proceeds from paydowns and sales of investments and real estate owned		11,266,920			7,497,754			14,998,628			23,704,608
Net purchases/sales of short-term investments		90,949			512,324			(338,571	)		102,130
Net amortization/accretion of bond discount and premium		38,571			101,774			108,602			93,021
Net change in unrealized appreciation or depreciation of investments		(1,523,828	)		(6,535,714	)		(4,476,449	)		(5,601,049	)
Net realized gain (loss) on investments		242,043			3,543,595			160,821			(22,136	)
Decrease in receivable for accrued interest and dividends		71,048			75,620			90,340			63,477
Increase (decrease) in prepaid expenses and other assets		(25,263	)		3,909			7,093			4,611
Increase (decrease) in accrued fees and expenses		7,181			(14,180	)		(3,354	)		9,936

Net cash provided by operating activities		5,038,026			5,742,328			12,179,882			9,833,227


Cash flows from financing activities:
Net proceeds (payments) from borrowings under loan agreement		100,000			—			(5,300,000	)		(1,500,000	)
Net payments for reverse repurchase agreements		(385,000	)		(853,000	)		(1,331,000	)		(924,000	)
Distributions paid to shareholders		(4,621,037	)		(4,795,722	)		(5,552,567	)		(7,678,913	)

Net cash used in financing activities		(4,906,037	)		(5,648,722	)		(12,183,567	)		(10,102,913	)


Net increase (decrease) in cash		131,989			93,606			(3,685	)		(269,686	)
Cash (bank overdraft) at beginning of period		(157,933	)		(91,048	)		(41,868	)		230,690

Cash (bank overdraft) at end of period	$	(25,944	)	$	2,558		$	(45,553	)	$	(38,996	)


Supplemental disclosure of cash flow information:
Cash paid for interest	$	84,898		$	307,106		$	322,399		$	223,123

The accompanying notes are an integral part of the financial statements.


30		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

Financial Highlights

Per-share data for a share of capital stock outstanding throughout each period and selected information for each period are as follows:

ASP


	Six-Month Period Ended 2/28/14 (unaudited)			Year Ended August 31,
	Six-Month Period Ended 2/28/14 (unaudited)			2013			2012			2011			2010			2009
Per-Share Data
Net asset value, beginning of period	$	11.44		$	13.02		$	12.46		$	13.30		$	12.44		$	11.72

Operations:
Net investment income		0.34			0.73			0.84			0.79			0.85			0.81
Net realized and unrealized gain (losses) on investments		0.30			(1.21	)		0.62			(0.39	)		1.20			0.70

Total from operations		0.64			(0.48	)		1.46			0.40			2.05			1.51

Distributions to shareholders:
From net investment income		(0.29	)		(0.76	)		(0.90	)		(0.86	)		(0.84	)		(0.77	)
From net realized gain on investments		(0.80	)		(0.34	)		—			—			—			—
From return of capital		—			—			—			(0.38	)		(0.35	)		(0.02	)

Total distributions		(1.09	)		(1.10	)		(0.90	)		(1.24	)		(1.19	)		(0.79	)

Net asset value, end of period	$	10.99		$	11.44		$	13.02		$	12.46		$	13.30		$	12.44

Market value, end of period	$	10.13		$	9.56		$	12.09		$	11.01		$	13.00		$	10.75

Selected Information
Total return, net asset value ¹		6.14	% ⁴		(4.19	)%		12.27	%		3.17	%		17.33	%		13.89	%
Total return, market value ²		18.75	% ⁴		(12.99	)%		19.02	%		(5.90	)%		33.60	%		20.61	%
Net assets at end of period (in millions)	$	47		$	48		$	55		$	53		$	56		$	53
Ratio of expenses to average weekly net assets before fee reimbursements		1.84	% ⁵		1.80	%		1.93	%		2.43	%		2.43	%		2.81	%
Ratio of expenses to average weekly net assets after fee reimbursements		1.84	% ⁵		1.80	%		1.93	%		2.43	%		2.43	%		2.81	%
Ratio of expenses to average weekly net assets excluding interest expense and fee reimbursements		1.48	% ⁵		1.44	%		1.59	%		1.41	%		1.29	%		1.41	%
Ratio of net investment income to average weekly net assets before fee reimbursements		6.11	% ⁵		5.85	%		6.69	%		6.18	%		6.65	%		7.19	%
Ratio of net investment income to average weekly net assets after fee reimbursements		6.11	% ⁵		5.85	%		6.69	%		6.18	%		6.65	%		7.19	%
Portfolio turnover rate		12	%		50	%		18	%		13	%		6	%		22	%
Amount of borrowings outstanding at end of period (in millions)	$	20		$	20		$	22		$	19		$	16		$	17
Per-share amount of borrowings outstanding at end of period	$	4.67		$	4.73		$	5.11		$	4.41		$	3.85		$	4.13
Per-share amount of net assets, excluding borrowings, at end of period	$	15.66		$	16.17		$	18.13		$	16.87		$	17.15		$	16.57
Asset coverage ratio ³		335	%		342	%		355	%		383	%		445	%		401	%

¹	Assumes reinvestment of distributions at net asset value.

²	Assumes reinvestment of distributions at actual prices pursuant to the fund’s dividend reinvestment plan.

³	Represents net assets, excluding borrowings, at end of period divided by borrowings outstanding at end of period.

⁴	Total return has not been annualized.

⁵	Annualized.

The accompanying notes are an integral part of the financial statements.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			31

Financial Highlights

Per-share data for a share of capital stock outstanding throughout each period and selected information for each period are as follows:

BSP


	Six-Month Period Ended 2/28/14 (unaudited)			Year Ended August 31,
	Six-Month Period Ended 2/28/14 (unaudited)			2013			2012			2011			2010			2009
Per-Share Data
Net asset value, beginning of period	$	9.05		$	10.22		$	9.98		$	10.82		$	11.36		$	11.51

Operations:
Net investment income		0.29			0.61			0.61			0.59			0.64			0.78
Net realized and unrealized gain (losses) on investments		0.19			(1.19	)		0.25			(0.30	)		(0.02	)		(0.20	)

Total from operations		0.48			(0.58	)		0.86			0.29			0.62			0.58

Distributions to shareholders:
From net investment income		(0.30	)		(0.59	)		(0.62	)		(0.58	)		(0.66	)		(0.73	)
From return of capital		—			—			—			(0.55	)		(0.50	)		—

Total distributions		(0.30	)		(0.59	)		(0.62	)		(1.13	)		(1.16	)		(0.73	)

Net asset value, end of period	$	9.23		$	9.05		$	10.22		$	9.98		$	10.82		$	11.36

Market value, end of period	$	8.27		$	8.17		$	8.81		$	8.75		$	10.14		$	9.71

Selected Information
Total return, net asset value ¹		5.45	% ⁴		(6.15	)%		9.08	%		2.72	%		5.64	%		5.57	%
Total return, market value ²		5.07	% ⁴		(0.86	)%		8.50	%		(2.42	)%		16.91	%		8.04	%
Net assets at end of period (in millions)	$	148		$	145		$	163		$	160		$	173		$	182
Ratio of expenses to average weekly net assets before fee reimbursements		1.49	% ⁵		1.63	%		2.00	%		2.68	%		2.56	%		2.86	%
Ratio of expenses to average weekly net assets after fee reimbursements		1.49	% ⁵		1.63	%		2.00	%		2.68	%		2.56	%		2.86	%
Ratio of expenses to average weekly net assets excluding interest expense and fee reimbursements		1.06	% ⁵		1.06	%		1.13	%		1.02	%		0.96	%		1.06	%
Ratio of net investment income to average weekly net assets before fee reimbursements		6.50	% ⁵		6.08	%		6.18	%		5.60	%		5.74	%		7.23	%
Ratio of net investment income to average weekly net assets after fee reimbursements		6.50	% ⁵		6.08	%		6.18	%		5.60	%		5.74	%		7.23	%
Portfolio turnover rate		3	%		34	%		31	%		11	%		9	%		19	%
Amount of borrowings outstanding at end of period (in millions)	$	64		$	65		$	67		$	71		$	77		$	71
Per-share amount of borrowings outstanding at end of period	$	4.02		$	4.08		$	4.18		$	4.44		$	4.82		$	4.44
Per-share amount of net assets, excluding borrowings, at end of period	$	13.25		$	13.13		$	14.40		$	14.42		$	15.64		$	15.80
Asset coverage ratio ³		329	%		322	%		344	%		325	%		324	%		356	%

¹	Assumes reinvestment of distributions at net asset value.

²	Assumes reinvestment of distributions at actual prices pursuant to the fund’s dividend reinvestment plan.

³	Represents net assets, excluding borrowings, at end of period divided by borrowings outstanding at end of period.

⁴	Total return has not been annualized.

⁵	Annualized.

The accompanying notes are an integral part of the financial statements.


32		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

Per-share data for a share of capital stock outstanding throughout each period and selected information for each period are as follows:

CSP


	Six-Month Period Ended 2/28/14 (unaudited)			Year Ended August 31,
	Six-Month Period Ended 2/28/14 (unaudited)			2013			2012			2011			2010			2009
Per-Share Data
Net asset value, beginning of period	$	7.58		$	8.20		$	8.43		$	9.19		$	10.67		$	11.24

Operations:
Net investment income		0.27			0.59			0.48			0.46			0.43			0.73
Net realized and unrealized gain (losses) on investments and real estate owned		0.20			(0.75	)		(0.21	)		(0.15	)		(0.86	)		(0.53	)

Total from operations		0.47			(0.16	)		0.27			0.31			(0.43	)		0.20

Distributions to shareholders:
From net investment income		(0.26	)		(0.46	)		(0.38	)		(0.45	)		(0.51	)		(0.70	)
From return of capital		—			—			(0.12	)		(0.62	)		(0.54	)		(0.07	)

Total distributions		(0.26	)		(0.46	)		(0.50	)		(1.07	)		(1.05	)		(0.77	)

Net asset value, end of period	$	7.79		$	7.58		$	8.20		$	8.43		$	9.19		$	10.67

Market value, end of period	$	7.15		$	6.84		$	7.35		$	7.57		$	8.67		$	8.83

Selected Information
Total return, net asset value ¹		6.40	% ⁴		(2.17	)%		3.38	%		3.61	%		(4.26	)%		1.98	%
Total return, market value ²		8.65	% ⁴		(0.87	)%		4.30	%		0.26	%		10.25	%		(0.88	)%
Net assets at end of period (in millions)	$	166		$	162		$	175		$	180		$	196		$	228
Ratio of expenses to average weekly net assets before fee reimbursements		1.51	% ⁵		1.73	%		2.11	%		2.72	%		2.52	%		2.75	%
Ratio of expenses to average weekly net assets after fee reimbursements		1.51	% ⁵		1.73	%		2.11	%		2.72	%		2.52	%		2.75	%
Ratio of expenses to average weekly net assets excluding interest expense and fee reimbursements		1.11	% ⁵		1.11	%		1.11	%		0.97	%		0.90	%		1.03	%
Ratio of net investment income to average weekly net assets before fee reimbursements		7.14	% ⁵		7.30	%		5.89	%		5.23	%		4.38	%		6.92	%
Ratio of net investment income to average weekly net assets after fee reimbursements		7.14	% ⁵		7.30	%		5.89	%		5.23	%		4.38	%		6.92	%
Portfolio turnover rate		4	%		44	%		52	%		13	%		10	%		16	%
Amount of borrowings outstanding at end of period (in millions)	$	65		$	72		$	73		$	79		$	88		$	81
Per-share amount of borrowings outstanding at end of period	$	3.04		$	3.35		$	3.42		$	3.71		$	4.12		$	3.78
Per-share amount of net assets, excluding borrowings, at end of period	$	10.83		$	10.93		$	11.62		$	12.14		$	13.31		$	14.45
Asset coverage ratio ³		356	%		326	%		340	%		327	%		323	%		383	%

¹	Assumes reinvestment of distributions at net asset value.

²	Assumes reinvestment of distributions at actual prices pursuant to the fund’s dividend reinvestment plan.

³	Represents net assets, excluding borrowings, at end of period divided by borrowings outstanding at end of period.

⁴	Total return has not been annualized.

⁵	Annualized.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			33

Financial Highlights

Per-share data for a share of capital stock outstanding throughout each period and selected information for each period are as follows:

SLA


	Six-Month Period Ended 2/28/14 (unaudited)			Year Ended August 31,
	Six-Month Period Ended 2/28/14 (unaudited)			2013			2012			2011			2010			2009
Per-Share Data
Net asset value, beginning of period	$	11.20		$	11.99		$	11.53		$	12.09		$	12.33		$	12.42

Operations:
Net investment income		0.37			0.79			0.80			0.79			0.78			0.87
Net realized and unrealized gain (losses) on investments		0.52			(0.83	)		0.50			(0.12	)		0.25			(0.09	)

Total from operations		0.89			(0.04	)		1.30			0.67			1.03			0.78

Distributions to shareholders:
From net investment income		(0.29	)		(0.75	)		(0.84	)		(0.83	)		(0.83	)		(0.87	)
From net realized gain on investment		(0.43	)		—			—			—			—			(0.00	)⁴
From return of capital		—			—			—			(0.40	)		(0.44	)		(0.00	)⁴

Total distributions		(0.72	)		(0.75	)		(0.84	)		(1.23	)		(1.27	)		(0.87	)

Net asset value, end of period	$	11.37		$	11.20		$	11.99		$	11.53		$	12.09		$	12.33

Market value, end of period	$	9.91		$	9.48		$	10.91		$	10.34		$	12.18		$	10.64

Selected Information
Total return, net asset value ¹		7.99	% ⁵		(0.61	)%		11.82	%		5.82	%		8.73	%		6.93	%
Total return, market value ²		12.52	% ⁵		(6.81	)%		14.58	%		(4.78	)%		27.56	%		9.94	%
Net assets at end of period (in millions)	$	121		$	119		$	128		$	123		$	129		$	131
Ratio of expenses to average weekly net assets before fee reimbursements		1.47	% ⁶		1.43	%		1.95	%		2.73	%		2.75	%		2.93	%
Ratio of expenses to average weekly net assets after fee reimbursements		1.47	% ⁶		1.43	%		1.95	%		2.73	%		2.75	%		2.93	%
Ratio of expenses to average weekly net assets excluding interest expense and fee reimbursements		1.10	% ⁶		1.07	%		1.15	%		1.08	%		1.02	%		1.05	%
Ratio of net investment income to average weekly net assets before fee reimbursements		6.64	% ⁶		6.63	%		6.86	%		6.68	%		6.33	%		7.43	%
Ratio of net investment income to average weekly net assets after fee reimbursements		6.64	% ⁶		6.63	%		6.86	%		6.68	%		6.33	%		7.43	%
Portfolio turnover rate		9	%		48	%		44	%		10	%		12	%		13	%
Amount of borrowings outstanding at end of period (in millions)	$	52		$	54		$	52		$	53		$	53		$	53
Per-share amount of borrowings outstanding at end of period	$	4.84		$	5.06		$	4.90		$	5.02		$	4.99		$	5.01
Per-share amount of net assets, excluding borrowings, at end of period	$	16.21		$	16.26		$	16.89		$	16.55		$	17.08		$	17.34
Asset coverage ratio ³		335	%		321	%		345	%		330	%		342	%		346	%

¹	Assumes reinvestment of distributions at net asset value.

²	Assumes reinvestment of distributions at actual prices pursuant to the fund’s dividend reinvestment plan.

³	Represents net assets, excluding borrowings, at end of period divided by borrowings outstanding at end of period.

⁴	Amount rounds to less than $0.01 per share.

⁵	Total return has not been annualized.

⁶	Annualized.

The accompanying notes are an integral part of the financial statements.


34		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT


Notes to Financial Statements		(unaudited as to February 28, 2014)

(1)

Organization

American Strategic Income Portfolio Inc., American Strategic Income Portfolio Inc. II, American Strategic Income Portfolio Inc. III, and American Select Portfolio Inc. (the “funds”) are registered under the Investment Company Act of 1940, as amended (“Investment Company Act”), as diversified, closed-end management investment companies. The funds emphasize investments in mortgage-related assets that directly or indirectly represent a participation in or are secured by and payable from mortgage loans. They may also invest in U.S. Government securities, corporate debt securities, and preferred stock issued by real estate investment trusts. In addition, the funds may borrow using reverse repurchase agreements and credit facilities. Fund shares are listed on the New York Stock Exchange (“NYSE”) under the symbols ASP, BSP, CSP, and SLA, respectively.

(2)

Summary of
Significant
Accounting
Policies

Security Valuations

Security valuations for the funds’ investments (other than whole loans) are generally furnished by an independent

pricing service that has been approved by the funds’ board of directors. Investments in equity securities that are traded on a national securities exchange (or reported on the Nasdaq national market system) are stated at the last quoted sales price if readily available for such securities on each business day. For securities traded on the Nasdaq national market system, the funds utilize the Nasdaq Official Closing Price, which compares the last trade to the bid/ask price of a security. If the last trade falls within the bid/ask range, then that price will be the closing price. If the last trade is outside the bid/ask range, and falls above the ask, the ask price will be the closing price. If the last trade is below the bid, then the bid will be the closing price. Other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Investments in open-end funds are valued at their net asset values on the valuation date.

Debt obligations exceeding 60 days to maturity are valued by an independent pricing service. 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. Debt obligations with 60 days or less remaining until maturity may be valued at their amortized cost which approximates market value.

The following investment vehicles, when held by a fund, are priced as follows: exchange listed futures and options on futures are priced at their last sale price on the exchange on which they are principally traded, as determined by the funds’ investment advisor, U.S. Bancorp Asset Management, Inc. (“USBAM”) on the day the valuation is made. If there were no sales on that day, futures and options on futures will be valued at the last reported bid price. Options on securities and indices traded on Nasdaq or listed on a stock exchange are valued at the last sale price on Nasdaq or on any exchange on the day the valuation is made. If there were no sales on that day, the options will be valued at the last sale price on the previous valuation date. Last sale prices are obtained from an independent pricing service. Swaps and over-the-counter options on securities and indices are valued at the quotations received from an independent pricing service, if available.

The funds’ investments in whole loans (single family, multifamily, and commercial) are generally not traded in any organized market therefore, market quotations are not readily available. These investments are valued at fair value according to procedures adopted by the funds’ board of directors.

When market quotations are not readily available, securities are internally valued at fair value as determined in good faith by procedures established and approved by the funds’ board of directors. Some of the factors that may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on disposition; trading in similar securities of the same issuer or comparable companies; information from broker-dealers; and an evaluation of the forces that influence the market in which the securities are purchased or sold. If events occur that materially affect the value of securities between the close of trading in those securities and the close of regular trading on the NYSE, the securities will be valued at fair value. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without fair value pricing.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			35

Notes to Financial Statements

In accordance with the valuation procedures adopted by the funds’ board of directors, real estate acquired through foreclosure, if any, is initially valued similar to defaulted multifamily and commercial whole loans. The value is subsequently revised to an estimated market value, as determined by independent third party appraisals, less estimated selling costs.

As of February 28, 2014, the funds held internally fair valued securities as follows:


Fund	Fair Value		Percentage of Total Net Assets
ASP	$	24,030,143		51.7	%
BSP		99,732,203		67.6
CSP		90,508,079		54.4
SLA		65,020,234		53.6

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. The funds’ financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

GAAP requires disclosures regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. the exit price). GAAP establishes a three-tier fair value hierarchy for observable and unobservable inputs used in measuring fair value. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability and are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. Fair value inputs are summarized in the three broad levels listed below:

Level 1 - Quoted prices in active markets for identical securities.

Level 2 - Other significant observable inputs (including quoted prices for similar securities, with similar interest rates, prepayment speeds, credit risk, etc.).

Level 3 - Significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments). Generally, the types of securities included in Level 3 of a fund are securities that are not traded in any organized market, or for which there are significant unobservable fair value inputs available such as the funds’ investments in whole loans.

The fair value levels are not necessarily an indication of the risk associated with investing in these investments.


36		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

As of February 28,2014, each fund’s investments were classified as follows:


Fund	Level 1		Level 2		Level 3		Total Fair Value
ASP
Whole Loans	$	—	$	—	$	18,795,143	$	18,795,143
Corporate Note		—		—		3,535,000		3,535,000
Corporate Bonds		1,870,328		13,947,688		—		15,818,016
U.S. Government Agency Mortgage-Backed Securities		—		6,253,191		—		6,253,191
Preferred Stocks		18,358,504		—		—		18,358,504
Real Estate Owned		—		—		1,700,000		1,700,000
Short-Term Investment		1,474,112		—		—		1,474,112

Total Investments	$	21,702,944	$	20,200,879	$	24,030,143	$	65,933,966

BSP
Whole Loans	$	—	$	—	$	88,542,203	$	88,542,203
Corporate Notes		—		—		11,190,000		11,190,000
Corporate Bonds		5,683,351		39,294,729		—		44,978,080
U.S. Government Agency Mortgage-Backed Securities		—		7,612,294		—		7,612,294
Asset-Backed Security		—		904,970		—		904,970
Preferred Stocks		55,712,557		—		—		55,712,557
Short-Term Investment		2,044,325		—		—		2,044,325

Total Investments	$	63,440,233	$	47,811,993	$	99,732,203	$	210,984,429

CSP
Whole Loans	$	—	$	—	$	90,508,079	$	90,508,079
Private Mortgage-Backed Security†		—		—		—		—
Corporate Bonds		6,307,903		60,170,062		—		66,477,965
U.S. Government Agency Mortgage-Backed Securities		—		9,738,281		—		9,738,281
Preferred Stocks		61,135,816		—		—		61,135,816
Short-Term Investment		2,545,312		—		—		2,545,312

Total Investments	$	69,989,031	$	69,908,343	$	90,508,079	$	230,405,453

SLA
Whole Loans	$	—	$	—	$	56,435,234	$	56,435,234
Corporate Notes		—		—		8,585,000		8,585,000
Corporate Bonds		4,495,132		37,732,231		—		42,227,363
U.S. Government Agency Mortgage-Backed Securities		—		15,481,748		—		15,481,748
Asset-Backed Security		—		904,971		—		904,971
Preferred Stocks		46,039,248		—		—		46,039,248
Short-Term Investment		2,476,349		—		—		2,476,349

Total Investments	$	53,010,729	$	54,118,950	$	65,020,234	$	172,149,913

† This category includes one security classified in Level 3 which is valued at zero.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			37

Notes to Financial Statements

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:


Fund	Whole Loans			Corporate Notes			Private Mortgage- Backed Security†			Real Estate Owned		Total Fair Value
ASP
Balance as of August 31, 2013	$	13,719,843		$	3,535,000		$	—		$	1,700,000	$	18,954,843
Accrued discounts/premiums		—			—			—			—		—
Realized gain (loss)		379			—			—			—		379
Net change in unrealized appreciation or depreciation		227,665			—			—			—		227,665
Purchases		5,140,000			—			—			—		5,140,000
Sales		(292,744	)		—			—			—		(292,744	)

Balance as of February 28, 2014	$	18,795,143		$	3,535,000		$	—		$	1,700,000	$	24,030,143

Net change in unrealized appreciation or depreciation during the period of Level 3 investments held as of February 28, 2014	$	227,665		$	—		$	—		$	—	$	227,665

BSP
Balance as of August 31, 2013	$	92,806,490		$	11,300,000		$	—		$	—	$	104,106,490
Accrued discounts/premiums		—			—			—			—		—
Realized gain (loss)		(3,606,595	)		—			—			—		(3,606,595	)
Net change in unrealized appreciation or depreciation		3,987,862			(110,000	)		—			—		3,877,862
Purchases		—			—			—			—		—
Sales		(4,645,554	)		—			—			—		(4,645,554	)

Balance as of February 28, 2014	$	88,542,203		$	11,190,000		$	—		$	—	$	99,732,203

Net change in unrealized appreciation or depreciation during the period of Level 3 investments held as of February 28, 2014	$	514,987		$	(110,000	)	$	—		$	—	$	404,987

CSP
Balance as of August 31, 2013	$	94,435,747		$	—		$	—		$	—	$	94,435,747
Accrued discounts/premiums		—			—			383			—		383
Realized gain (loss)		(45,035	)		—			—			—		(45,035	)
Net change in unrealized appreciation or depreciation		701,226			—			(383	)		—		700,843
Purchases		3,024,094			—			—			—		3,024,094
Sales		(7,607,953	)		—			—			—		(7,607,953	)

Balance as of February 28, 2014	$	90,508,079		$	—		$	—		$	—	$	90,508,079

Net change in unrealized appreciation or depreciation during the period of Level 3 investments held as of February 28, 2014	$	(63,325	)	$	—		$	(383	)	$	—	$	(63,708	)

SLA
Balance as of August 31, 2013	$	49,236,724		$	8,620,000		$	—		$	—	$	57,856,724
Accrued discounts/premiums		—			—			—			—		—
Realized gain (loss)		—			—			—			—		—
Net change in unrealized appreciation or depreciation		2,689,488			(35,000	)		—			—		2,654,488
Purchases		7,625,205			—			—			—		7,625,205
Sales		(3,116,183	)		—			—			—		(3,116,183	)

Balance as of February 28, 2014	$	56,435,234		$	8,585,000		$	—		$	—	$	65,020,234

Net change in unrealized appreciation or depreciation during the period of Level 3 investments held as of February 28, 2014	$	2,689,488		$	(35,000	)	$	—		$	—	$	2,654,488

† This category includes one security classified in Level 3 which is valued at zero for CSP.


38		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

During the six-month period ended February 28, 2014, the funds recognized no transfers between valuation levels 1 and 2.

Valuation Methodologies for Fair Value Measurements Categorized within Levels 2 and 3

U.S. Government Agency Mortgage-Backed Securities, Asset-Backed Securities, and Corporate Bonds

U.S. government agency mortgage-backed securities, asset-backed securities, and corporate bonds are valued by an independent pricing service. The pricing service may employ methodologies that utilize actual market transactions, broker-dealer supplied valuations, or other formula-driven valuation techniques. These techniques generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings, and general market conditions.

Commercial and Multifamily Whole Loans

Commercial and multifamily whole loans are analyzed using a pricing methodology designed to incorporate, among other things, the present value of the projected stream of cash flows on such investments (the “discounted cash flow” methodology). For commercial and multifamily whole loans, this pricing methodology takes into account a number of relevant factors, including changes in prevailing interest rates, yield spreads, the borrower’s creditworthiness (i.e. the debt service coverage ratio), lien position, delinquency status, and the projected rate of prepayments. For first lien loans, if the resulting price from the discounted cash flow methodology is lower than the current average loss recovery on commercial mortgage-backed securities (the “price floor”), the loan will be fair valued at the price floor (the “price floor” methodology). In addition, for all loans, if the resulting price from the discounted cash flow methodology is above the loan’s par value plus any prepayment penalty (the “price ceiling”), the loan will be fair valued at the price ceiling (the “anticipated recovery rate” methodology). Newly purchased loans are fair valued at cost and subsequently analyzed using the discounted cash flow methodology. Loans with a pending short payoff will be fair valued at the anticipated recovery rate. If the USBAM valuation committee concludes that the fundamentals of a loan or its underlying collateral do not support the use of the discounted cash flow, price ceiling or price floor methodologies, a fair value determination may be made that incorporates other relevant factors (e.g., appraisal of loan collateral). Valuations of commercial and multifamily whole loans are determined no less frequently than weekly. Although USBAM believes the pricing methodologies to be reasonable and appropriate, the actual values that may be realized upon the sale of whole loans can only be determined in negotiations between the funds’ and third parties.

The significant unobservable inputs used in the determination of fair value using the discounted cash flow methodology for commercial and multifamily whole loans include yield spreads and debt service coverage ratios. Significant increases (decreases) in yield spreads would result in lower (higher) fair values. A significant decrease (increase) in the debt service coverage ratio of a loan’s borrower could result in lower (higher) fair values.

Single Family Whole Loans

Single family whole loans are analyzed using the discounted cash flow methodology. For single family whole loans, the pricing methodology takes into account a number of relevant factors, including changes in prevailing interest rates, yield spreads, delinquency status, loan to value, lien position, and prepayment speeds. If the resulting price from the discounted cash flow methodology is above 103% of the loan’s par value (the “price ceiling”), the loan will be fair valued at the price ceiling (the “price ceiling” methodology). Valuations of single family whole loans are determined no less frequently than weekly. Although USBAM believes the pricing methodologies to be reasonable and appropriate, the actual values that may be realized upon the sale of whole loans can only be determined in negotiations between the fund and third parties.

The significant unobservable input used in the determination of fair value using the discounted cash flow methodology for single family whole loans is the yield spread. Significant increases (decreases) in yield spreads would result in lower (higher) fair values.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			39

Notes to Financial Statements

Corporate Notes

Corporate notes are analyzed using the discounted cash flow methodology. For corporate notes, the pricing methodology takes into account changes in prevailing interest rates and yield spreads. If the resulting price from the discounted cash flow methodology is above the note’s par value plus any prepayment penalty (the “price ceiling”), the note will be fair valued at the price ceiling (the “price ceiling” methodology). Currently all corporate notes are fair valued at the price ceiling. Valuations of corporate notes are determined no less frequently than weekly. Although USBAM believes the pricing methodologies to be reasonable and appropriate, the actual values that may be realized upon the sale of corporate notes can only be determined in negotiations between the fund and third parties.

The significant unobservable input used in the determination of fair value using the discounted cash flow methodology for corporate notes is the yield spread. Significant increases (decreases) in yield spreads would result in lower (higher) fair values.

Real Estate Owned

Real Estate Owned properties are valued, whenever possible, using an appraisal or broker’s opinion of value. If an appraisal or broker’s opinion is not available, a property is valued at the current average loss recovery on commercial mortgage-backed securities (the “average recovery rate” methodology).


40		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

For commercial, multifamily and single family whole loans and corporate notes, if USBAM’s valuation committee concludes that the fundamentals of a loan or its underlying collateral do not support the use of the discounted cash flow, price ceiling or price floor methodologies, a fair value determination may be made as described below:

Quantitative Information about Level 3 Fair Value Measurements


Fund	Fair Value as of February 28, 2014		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
ASP
Commercial Whole Loans	$	3,635,366	Discounted Cash Flow	Yield Spread	2.16% – 2.20% (2.19%)
				Debt Service Coverage Ratio	0.69 – 1.61 (1.37)
Commercial Whole Loans and Corporate Notes		17,569,125	Price Ceiling	N/A	N/A
Commercial Whole Loans		1,033,556	Price Floor	Loss Severity	44.4%
Single Family Whole Loans		48,492	Discounted Cash Flow	Yield Spread	1.32% – 3.00% (2.67%)
Single Family Whole Loans		43,604	Price Ceiling	N/A	N/A
Real Estate Owned		1,700,000	Appraisal	N/A	N/A

BSP
Commercial & Multifamily Whole Loans	$	33,775,251	Discounted Cash Flow	Yield Spread Debt Service Coverage Ratio	2.12% – 2.20% (2.16%) 0.64 – 1.16 (0.95)
Commercial Whole Loans and Corporate Notes		47,157,256	Price Ceiling	N/A	N/A
Multifamily Whole Loans		4,892,800	Price Floor	Loss Severity	44.4%
Single Family Whole Loans		127,124	Price Ceiling	N/A	N/A
Multifamily Whole Loans		13,779,772	Appraisal	N/A	N/A

CSP*
Commercial & Multifamily Whole Loans	$	22,107,294	Discounted Cash Flow	Yield Spread Debt Service Coverage Ratio	2.12% – 2.20% (2.14%) 0.00 – 1.87 (1.29)
Commercial & Multifamily Whole Loans		47,046,924	Price Ceiling	N/A	N/A
Commercial & Multifamily Whole Loans		10,946,511	Price Floor	Loss Severity	44.4%
Commercial & Multifamily Whole Loans		10,407,350	Appraisal	N/A	N/A

SLA
Commercial & Multifamily Whole Loans	$	25,609,147	Discounted Cash Flow	Yield Spread Debt Service Coverage Ratio	2.12% – 2.30% (2.21%) 1.00 – 2.44 (1.40)
Commercial & Multifamily Whole Loans, Corporate Notes		30,787,691	Price Ceiling	N/A	N/A
Commercial & Multifamily Whole Loans		3,873,396	Price Floor	Loss Severity	44.4%
Multifamily Whole Loans		4,750,000	Appraisal	N/A	N/A

* The fund’s investments classified as Level 3 include a private mortgage-backed security that is fair valued at zero.

Valuation Process for Fair Value Measurements Categorized within Level 3

The funds’ board of directors (the “board”) has adopted policies and procedures for the valuation of the funds’ investments (the “valuation procedures”). The valuation procedures establish a valuation committee consisting of representatives from USBAM’s investment management, legal, treasury and compliance departments (the “valuation committee”). The board has authorized the valuation committee to make fair value determinations in accordance with the valuation procedures. The audit committee of the board meets on a regular basis to, among other things, review fair value determinations made by the valuation committee, monitor the appropriateness of any previously determined fair value methodology, and approve in advance any proposed changes to such methodology, and presents such changes for ratification by the board.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			41

Notes to Financial Statements

Security Transactions and Investment Income

For financial statement purposes, 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 accretion of bond discounts and amortization of bond premiums, is recorded on an 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. The resulting gain/loss is calculated as the difference between the sales price and the underlying cost of the security on the transaction date.

Distributions to Shareholders

Distributions from net investment income are declared and paid on a monthly basis. Any net realized gains on sales of securities for the funds are distributed to shareholders at least annually. These distributions are recorded as of the close of business on the ex-dividend date.

The funds will provide a notice, as required by Section 19(a) of the Investment Company Act, for any distribution that does not consist solely of net investment income. Any such notice will provide information regarding the estimated amounts of the distribution derived from net investment income, net realized capital gains, and return of capital. Such notices will be for informational purposes only and the amounts indicated in such notices likely will differ from the ultimate federal income tax characterization of distributions reported to shareholders on Form 1099-DIV after year end.

Distributions are payable in cash or, pursuant to the funds’ dividend reinvestment plans, reinvested in additional shares of the funds’ capital stock. Under each fund’s plan, fund shares will be purchased in the open market unless the market price plus commissions exceeds the net asset value by 5% or more. If, at the close of business on the dividend payment date, the shares purchased in the open market are insufficient to satisfy the dividend reinvestment requirement, the funds will issue new shares at a discount of up to 5% from the current market price.

The funds receive substantial distributions from holdings in real estate investment trusts (“REITs”). Distributions from REITs may be characterized as ordinary income, net capital gain, or a return of capital to the REIT shareholder. The proper characterization of REIT distributions is generally not known until after the end of each calendar year. As such, the funds must use estimates in reporting the character of its income and distributions for financial statement purposes. The actual character of distributions to a fund’s shareholders will be reflected on the Form 1099 received by shareholders after the end of the calendar year. Due to the nature of REIT investments, a portion of the distributions received by a fund shareholder may represent a return of capital.

Federal Taxes

Each fund is treated as a separate taxable entity. Each fund intends to continue to qualify as a regulated investment company as provided in Subchapter M of the Internal Revenue Code, as amended, and to distribute all taxable income, if any, to its shareholders. Accordingly, no provision for federal income taxes is required. Each fund also intends to distribute its taxable net investment income and realized gains, if any, to avoid the payment of any federal excise taxes. As of February 28, 2014, the funds did not have any tax positions that did not meet the “more-likely-than-not” threshold of being sustained by the applicable taxing authority. Generally, tax authorities can examine all the tax returns filed for the last three years.

Net investment income and net realized gains and losses may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are primarily due to deferred wash sale losses, paydown gains and losses, tax mark-to-market adjustments under Section 311(e) of the Taxpayer Relief Act of 1997, tax deductions for real estate owned, and investments in REITs. To the extent these differences are permanent, reclassifications are made to the appropriate capital accounts in the fiscal period that the differences arise.

The character of distributions made during the fiscal period from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend


42		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

distributions, the fiscal period in which amounts are distributed may differ from the fiscal period that the income or realized gains or losses were recorded by the funds.

The character of distributions paid during the six-month period ended February 28, 2014, (estimated) and the fiscal year ended August 31, 2013, were as follows:


	ASP				BSP
	02/28/14		8/31/13		02/28/14		8/31/13
Distributions paid from:
Ordinary income	$	1,216,508	$	3,215,812	$	4,795,722	$	9,351,660
Long-term capital gains		3,404,529		1,422,150		—		—

Total	$	4,621,037	$	4,637,962	$	4,795,722	$	9,351,660


	CSP				SLA
	02/28/14		8/31/13		02/28/14		8/31/13
Distributions paid from:
Ordinary income	$	5,552,567	$	9,823,773	$	3,065,381	$	7,943,336
Long-term capital gains		—		—		4,613,532		—

Total	$	5,552,567	$	9,823,773	$	7,678,913	$	7,943,336

As of August 31, 2013, the components of accumulated earnings (deficits) on a tax basis were as follows:


	ASP			BSP			CSP			SLA
Undistributed ordinary income	$	26,332		$	222,994		$	1,202,801		$	364,651
Undistributed long-term capital gains		3,378,267			—			—			4,613,334
Accumulated capital and post-October losses		—			(4,092,712	)		(38,059,098	)		—
Unrealized appreciation (depreciation)		(4,719,376	)		(38,636,437	)		(35,949,989	)		(14,140,420	)
Other accumulated gain (loss)		1,176,402			(105,083	)		(1,728,635	)		(559,076	)

Accumulated earnings (deficits)	$	(138,375	)	$	(42,611,238	)	$	(74,534,921	)	$	(9,721,511	)

The difference between book and tax basis unrealized appreciation (depreciation) at August 31, 2013, is attributable to adjustments for REITs, tax deferral of losses on wash sales, and a one-time tax election whereby the funds marked appreciated securities to market creating capital gains that were used to reduce capital loss carryovers and increase tax cost basis.

Under the Regulated Investment Company Modernization Act of 2010, the funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, the following funds had capital loss carryovers as of August 31, 2013, the funds’ most recently completed fiscal year-end, which, if not offset by subsequent capital gains, will expire on the funds’ fiscal year-ends as follows:


	Expiration
Fund	2015		2016		2017		2018		2019		Indefinite		Total
ASP	$	—	$	—	$	—	$	—	$	—	$	—	$	—
BSP		—		—		1,884,191		2,208,521		—		—		4,092,712
CSP		551,492		381,985		5,238,593		2,790,093		8,176,579		16,279,297		33,418,039
SLA		—		—		—		—		—		—		—

During the fiscal year, BSP and SLA utilized capital loss carryovers in the amounts of $4,301,698 and $1,578,427, respectively.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			43

Notes to Financial Statements

The funds incurred a loss for tax purposes for the period from November 1, 2012 to August 31, 2013. As permitted by tax regulations, the funds intend to elect to defer and treat the losses as arising in the fiscal year ending August 31, 2014. The deferred losses were as follow:


Fund	Amount
ASP	$	—
BSP		—
CSP		4,641,059
SLA		—

Whole Loans

Whole loans may bear a greater risk of loss arising from a default on the part of the borrower of the underlying loans than do traditional mortgage-backed securities. This is because whole loans, unlike most mortgage-backed securities, generally are not backed by any government guarantee or private credit enhancement. Such risk may be greater during a period of declining or stagnant real estate values. The funds may invest in single family, multifamily, and commercial loans. Each fund currently limits its investment in commercial loans to 50% of its total assets. A participating loan is a whole loan which contains provisions for the lender to participate in the income stream provided by the property, including net cash flow and capital proceeds. CSP and SLA received income during the period from participating loans on which the mortgage obligation had previously been fully repaid. An outstanding participating loan agreement may provide excess cash flows and certain appreciation rights after the mortgage obligation has been fully paid and before the sale of the property to a third party.

At February 28, 2014, no single family or commercial loans in ASP were 120 or more days delinquent.

At February 28, 2014, BSP had two multifamily loans representing 3.37% of total net assets and 19.87% of total multifamily loans outstanding that were 120 or more days delinquent as to the timely monthly payment of principal and interest. At February 28, 2014, no single family or commercial loans were 120 or more days delinquent.

At February 28, 2014, CSP had four multifamily loans representing 3.88% of total net assets and 27.07% of total multifamily loans outstanding and five commercial loans representing 9.43% of total net assets and 23.66% of total commercial loans outstanding that were 120 or more days delinquent as to the timely monthly payment of principal and interest.

At February 28, 2014, SLA had one multifamily loan representing 3.92% of total net assets and 35.90% of total multifamily loans outstanding that were 120 or more days delinquent as to the timely monthly payment of principal and interest. At February 28, 2014, no commercial loans were 120 or more days delinquent.

The funds may incur certain costs and delays in the event of a foreclosure. Also, there is no assurance that the subsequent sale of the property will produce an amount equal to the sum of the unpaid principal balance of the loan as of the date the borrower went into default, the accrued unpaid interest, and all of the foreclosure expenses. In this case, the funds may suffer a loss.

Real estate may be acquired through foreclosure or deed in lieu of foreclosure on whole loans or similar obligations. The funds may receive rental or other income as a result of holding real estate. This income would generally fail to meet the test for “qualifying income” set forth in Section 851 of the Internal Revenue Code and could result in adverse tax consequences to the funds. In addition, the funds may incur expenses associated with maintaining or improving any real estate owned. Real estate income is recorded on a net basis in the income section of the funds’ Statement of Operations. Capital improvements are recorded as an addition to the cost basis of the property, which will increase any loss at sale. As of February 28, 2014, ASP held real estate owned through foreclosure as follows:


Fund	2/28/14 Cost		2/28/14 Value		Unrealized Depreciation
ASP
The Storage Place	$	3,189,940	$	1,700,000	$	(1,489,940	)


44		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

The net operating income and capital improvements for the six-month period ended February 28, 2014 were:


Fund	Gross Rental Income		Operating Expenses		Net Operating Income (Loss)		Improvements
ASP
The Storage Place	$	129,261	$	100,872	$	28,389	$	—

As of and for the six-month period ended February 28, 2014, BSP, CSP, and SLA owned no real estate.

Mortgage Servicing Rights

The funds may acquire interests in the cash flow from servicing fees through contractual arrangements with mortgage servicers. Mortgage servicing rights, similar to interest-only securities, generate no further cash flow when a mortgage is prepaid or goes into default. Mortgage servicing rights are accounted for on a level-yield basis with recognized income based on the estimated amounts and timing of cash flows. Such estimates are adjusted periodically as the underlying market conditions change. As of and for the six-month period ending February 28, 2014, the funds held no mortgage servicing rights.

Securities Purchased on a When-Issued Basis

Delivery and payment for securities that have been purchased by the funds on a when-issued or forward-commitment basis can take place a month or more after the transaction date. Such securities do not earn interest, are subject to market fluctuation, and may increase or decrease in value prior to their delivery. Each fund segregates, 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 a fund’s net asset value if the fund makes such purchases while remaining substantially fully invested. As of February 28, 2014, the funds had no outstanding when-issued or forward-commitment securities.

Borrowings & Reverse Repurchase Agreements

Effective July 18, 2011, the funds entered into loan agreements with Bank of America, N.A. (“BofA”). Under the loan agreements, as amended, BofA has agreed to make credit facilities available to ASP, BSP, CSP, and SLA up to $15,000,000, $61,000,000, $65,000,000, and $40,000,000, respectively. Each credit facility continue on a revolving basis unless terminated in writing by BofA upon 180 days notice. Loans made under the loan agreements are secured by the respective fund’s holdings in REIT preferred stock and corporate bonds and bear interest at one-month LIBOR plus 0.85%. In addition, for any month in which less than 80% of a fund’s facility limit is outstanding, the respective fund pays a commitment fee equal to 0.40% per annum on the average daily undrawn portion of the respective fund’s facility limit.

The funds may also borrow money by entering into reverse repurchase agreements, which involve the sale of portfolio-eligible securities by the funds, coupled with an agreement to repurchase the securities at a specified date and price. Borrowings may increase volatility of the funds’ net asset values and involve the risk that interest costs on money borrowed may exceed the return on securities purchased with that borrowed money. Each fund is subject to a restriction on borrowing under which each fund must maintain asset coverage of at least 300%. The interest expense incurred on borrowings is recognized as “Interest Expense” in the Statements of Operations. For the six-month period ended February 28, 2014, the weighted average borrowings outstanding for ASP, BSP, CSP, and SLA were $20,502,000, $64,539,000, $68,726,833, and $52,868,333, respectively, and the weighted average interest rates paid by the funds on such borrowings were 0.82%, 0.95%, 0.93%, and 0.84%, respectively.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			45

Notes to Financial Statements

The table below shows the offsetting assets and liabilities relating to the reverse repurchase agreements shown on the Statement of Assets and Liabilities:


	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts Presented in the Statement of Assets and Liabilities		Gross Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Recognized Liabilities						Financial Instruments		Collateral Pledged (Received)		Net Amount ⁽¹⁾
ASP
Reverse Repurchase Agreements	$	5,946,000	$	—	$	5,946,000	$	—	$	5,946,000	$	—

BSP
Reverse Repurchase Agreements	$	7,321,000	$	—	$	7,321,000	$	—	$	7,321,000	$	—

CSP
Reverse Repurchase Agreements	$	9,452,000	$	—	$	9,452,000	$	—	$	9,452,000	$	—

SLA
Reverse Repurchase Agreements	$	14,812,000	$	—	$	14,812,000	$	—	$	14,812,000	$	—

(1) Net amount represents the net amount due (to) from counterparty in the event of a default based on the contractual set-off rights under the agreement. Net amount excludes any over-collateralized amounts. Net amount excludes exchange traded derivatives.

Repurchase Agreements

For repurchase agreements entered into with certain broker-dealers, the funds, along with other affiliated registered investment companies, may transfer uninvested cash balances into a joint trading account, the daily aggregate of which is invested in repurchase agreements secured by U.S. Government or agency obligations. Securities pledged as collateral for all individual and joint repurchase agreements are held by the funds’ custodian or sub-custodian until maturity of the repurchase agreement. All agreements require that the daily market value of the eligible securities be in excess of the repurchase amount, including accrued interest, to protect the funds in the event of a default. As of February 28, 2014, the funds had no outstanding repurchase agreements.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting period. Actual results could differ from these estimates.

Events Subsequent to Period End

On January 23, 2014, ASP and SLA announced that each fund’s directors had approved proposals to reorganize the funds into a newly-organized closed-end fund managed by NFA and sub-advised by NAM, both current sub-advisors of the funds. It was anticipated that the proposals would have been submitted to shareholders of each fund for a vote at a special meeting of shareholders anticipated to be held during the second quarter of 2014.

On March 27, 2014, ASP and SLA announced that the previously announced reorganization will not occur as originally planned. It is expected that the directors will consider a revised reorganization proposal from USBAM, NFA, and NAM at a meeting to be held in late April 2014 and that further information will be announced at that time.

On April 14, 2014, TIAA-CREF announced an agreement to acquire Nuveen Investments, Inc. The acquisition is expected to be completed by December 31, 2014, subject to customary closing conditions, including approval by


46		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

the shareholders of the funds. The current sub-advisors of the funds, NFA and NAM, are, respectively, direct and indirect wholly-owned subsidiaries of Nuveen Investments, Inc.

(3)

Fees and
Expenses

Investment Advisory Fees

Pursuant to investment advisory agreements with each fund, USBAM, a subsidiary of U.S. Bank National Association (“U.S. Bank”), manages the funds’ assets and furnishes related office facilities, equipment, research, and personnel. For ASP, BSP, and CSP, the agreement provides USBAM with a monthly investment advisory fee in an amount equal to an annualized rate of 0.20% of the respective fund’s average weekly net assets and 4.50% of the daily gross income accrued by such fund during the month (i.e., investment income, including accretion of bond discounts and amortization of premiums, other than gains from the sale of securities or gains from options and futures contracts less interest on money borrowed by the funds). The monthly investment advisory fee may not exceed, in the aggregate, 1/12 of 0.725% of the respective fund’s average weekly net assets during the month (approximately 0.725% on an annual basis). For SLA, the agreement provides USBAM with a monthly investment advisory fee in an amount equal to an annualized rate of 0.50% of the fund’s average weekly net assets. For its fees, USBAM provides investment advice and, in general, conducts the management and investment activities of the funds.

The funds may invest in money market funds that are series of First American Funds, Inc., subject to certain limitations. In order to avoid the payment of duplicative investment advisory fees to USBAM, which acts as the investment advisor to the investing funds and the related money market funds, USBAM will reimburse to each investing fund an amount equal to that portion of USBAM’s investment advisory fee received from the related money market funds that is attributable to the assets of the investing fund. This reimbursement, if any, is included in “Fee reimbursements” in the Statements of Operations.

Nuveen Asset Management, LLC (“NAM”) and Nuveen Fund Advisors, Inc. (“NFA”) each serve as investment sub-advisor to each fund pursuant to separate investment sub-advisory agreements with USBAM. NAM makes investment decisions for the funds, places purchase and sale orders for each fund’s portfolio transactions, and employs the funds’ portfolio managers and the securities analysts that provide research services relating to the funds. NFA provides certain other investment sub-advisory services to the funds, including assisting in the supervision of each fund’s investment program, risk monitoring, managing the forms and level of leverage employed by a fund, assisting in dividend and distribution level determinations, providing tax advice on issues arising in connection with management of a fund’s portfolio, and assisting with pricing of a fund’s portfolio securities.

With respect to each fund, USBAM pays monthly fees to NAM and NFA for the services provided under their respective sub-advisory agreements with USBAM. For ASP, BSP, and CSP, USBAM pays NAM a monthly fee in an amount equal to an annualized rate of 0.10% of the respective fund’s average weekly net assets and 3.00% of the daily gross income accrued by such fund during the month (i.e., investment income, including amortization of discount income, other than gains from the sale of securities or gains received from options and futures contracts less interest on money borrowed by the fund). The monthly investment sub-advisory fee may not exceed, in the aggregate, 1/12 of 0.45% of the respective fund’s average weekly net assets during the month (approximately 0.45% on an annual basis). For SLA, USBAM pays NAM a monthly fee in an amount equal to an annualized rate of 0.30% of the fund’s average weekly net assets.

For ASP, BSP, and CSP, USBAM pays NFA a monthly fee in an amount equal to 1.50% of the daily gross income accrued by the respective fund during the month (i.e., investment income, including amortization of discount income, other than gains from the sale of securities or gains received from options and futures contracts less interest on money borrowed by the fund). The monthly investment sub-advisory fee may not exceed, in the aggregate, 1/12 of 0.175% of the respective fund’s average weekly net assets during the month (approximately 0.175% on an annual basis). For SLA, USBAM pays NFA a monthly fee in an amount equal to an annualized rate of 0.10% of the funds average weekly net assets.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			47

Notes to Financial Statements

Administration Fees

USBAM serves as the funds’ administrator pursuant to administration agreements between USBAM and each fund. Under these agreements, USBAM receives a monthly administration fee from each fund in an amount equal to 0.25% of the fund’s average weekly net assets. For its fee, USBAM provides numerous services to the funds including, but not limited to, handling the general business affairs, financial and regulatory reporting, and various other services.

Pursuant to a sub-administration agreement between USBAM and NFA, USBAM also pays NFA an annual fee, calculated weekly and paid monthly, equal to 0.10% of the average weekly net assets of each fund for certain administrative and other services that NFA provides to the funds.

Custodian Fees

U.S. Bank serves as each fund’s custodian pursuant to a custodian agreement with the funds. The custodian fee charged to each fund is equal to an annual rate of 0.02% of such fund’s average weekly net assets. These fees are computed weekly and paid monthly.

Under the custodian agreement, interest earned on uninvested cash balances is used to reduce a portion of each fund’s custodian expenses. These credits, if any, are disclosed as “Indirect payments from custodian” in the Statements of Operations. Conversely, the custodian charges a fee for any cash overdrafts incurred, which will increase the fund’s custodian expenses. For the six-month period ended February 28, 2014, custodian fees for ASP, BSP, CSP, and SLA were increased by $1, $4, $3, and $0 as a result of overdrafts and reduced by $3, $3, $8, and $15, as a result of interest earned, respectively.

Mortgage Servicing Fees

The funds may enter into mortgage servicing agreements with mortgage servicers for whole loans and participation mortgages. For a fee, mortgage servicers maintain loan records, such as insurance and taxes and the proper allocation of payments between principal and interest.

Other Fees and Expenses

In addition to the investment advisory, administrative, custodian, and mortgage servicing fees, the funds are responsible for paying most other operating expenses, including: legal, auditing and accounting services, postage and printing of shareholder reports, transfer agent fees and expenses, listing fees, outside directors’ fees and expenses, insurance, pricing, interest, expenses related to real estate owned, fees to outside parties retained to assist in conducting due diligence, taxes, and other miscellaneous expenses.

Expenses that are directly related to a fund are charged directly to that fund. Other operating expenses of the First American Family of Funds are allocated to the funds on several bases, including evenly across all funds, allocated based on relative net assets of all funds within the First American Family of Funds, or a combination of both methods.

(4)

Investment
Security
Transactions

Cost of purchases and proceeds from sales of securities and real estate, other than temporary investments in short-term securities, for the six-month period ended February 28, 2014, were as follows:


Fund	Cost of Purchases		Proceeds from Sales
ASP	$	7,806,887	$	11,266,920
BSP		7,015,758		7,497,754
CSP		8,266,663		15,009,013
SLA		15,483,139		17,670,610

(5)

Indemnifications

The funds enter into contracts that contain a variety of indemnifications. The funds’ maximum exposure under these arrangements is unknown. However, the funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.


48		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT


Notice to Shareholders		(unaudited)

HOW TO OBTAIN A COPY OF THE FUNDS’ PROXY VOTING POLICIES AND PROXY VOTING RECORD

A description of the policies and procedures that the funds use to determine how to vote proxies relating to portfolio securities, as well as information regarding how each fund voted proxies relating to portfolio securities, is available without charge upon request by calling 800.677.3863 and on the U.S. Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.

FORM N-Q HOLDINGS INFORMATION

The funds are required to file their complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC on Form N-Q. The funds’ Forms N-Q are available without charge (1) upon request by calling 800.677.3863 and (2) on the SEC’s website at www.sec.gov. In addition, you may review and copy the funds’ Forms N-Q at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling 800.SEC.0330.

QUARTERLY PORTFOLIO HOLDINGS

The funds will make portfolio holdings information publicly available by posting the information at FirstAmericanFunds.com on a quarterly basis. The funds will attempt to post such information within 10 business days of the calendar quarter end.


FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT			49

First American Funds’ Privacy Policy

We want you to understand what information we collect and how it’s used.

“Nonpublic personal information” is nonpublic information that we obtain while providing financial products or services to you.

How we collect your information

We obtain nonpublic information about you during the account opening process from the applications and other forms you are asked to complete and from the transactions you make with us. We may also receive nonpublic information about you from companies affiliated with us or from other companies that provide services to you. We do not use nonpublic information received from our affiliates for marketing purposes.

Why we collect your information

We gather nonpublic personal information about you and your accounts so that we can:

•

Know who you are and prevent unauthorized access to your information.

•

Comply with the laws and regulations that govern us.

The types of information we collect

We may collect the following nonpublic personal information about you:

•

Information about your identity, such as your name, address, and social security number.

•

Information about your transactions with us.

•

Information you provide on applications, such as your beneficiaries and banking information, if provided to us.

Confidentiality and security

To protect nonpublic personal information about you, we restrict access to such information to only those employees and authorized agents who need to use the information. We maintain physical, electronic, and procedural safeguards to maintain the confidentiality and security of nonpublic information about you. In addition, we require our service providers to restrict access to nonpublic personal information about you to those employees who need that information in order to provide products or services to you. We also require them to maintain physical, electronic, and procedural safeguards that comply with applicable federal standards and regulations to guard your information.

What information we disclose

We may share some or all of the nonpublic personal information that we collect about you with our affiliated providers of financial services, including our family of funds and their advisor, and with companies that perform marketing services on our behalf.

We’re permitted by law to disclose nonpublic personal information about you to other third parties in certain circumstances. For example, we may disclose nonpublic personal information about you to affiliated and nonaffiliated third parties to assist us in servicing your account (e.g., mailing of fund-related materials) and to government entities (e.g., IRS for tax purposes).

We’ll continue to adhere to the privacy policies and practices described here even after your account is closed or becomes inactive.

Additional rights and protections

You may have other privacy protections under applicable state laws. To the extent that these state laws apply, we will comply with them when we share information about you. This privacy policy does not apply to your relationship with other financial service providers, such as broker-dealers. We may amend this privacy notice at any time, and we will inform you of changes as required by law.

Our pledge applies to products and services offered by


• First American Funds, Inc.		• American Municipal Income Portfolio Inc.
• American Strategic Income Portfolio Inc.		• Minnesota Municipal Income Portfolio Inc.
• American Strategic Income Portfolio Inc. II		• First American Minnesota Municipal Income Fund II, Inc.
• American Strategic Income Portfolio Inc. III		• American Income Fund Inc.
• American Select Portfolio Inc.

NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE


50		FIRST AMERICAN MORTGAGE FUNDS		2014 SEMIANNUAL REPORT

BOARD OF DIRECTORS

Leonard Kedrowski

Chairperson of First American Mortgage Funds

Owner and President of Executive and Management Consulting, Inc.

Roger Gibson

Director of First American Mortgage Funds

Director of Charterhouse Group, Inc.

John Kayser

Director of First American Mortgage Funds

Retired; former Principal of William Blair & Company, LLC

Richard Riederer

Director of First American Mortgage Funds

Owner and Chief Executive Officer of RKR Consultants, Inc.

James Wade

Director of First American Mortgage Funds

Owner and President of Jim Wade Homes

First American Mortgage Funds’ Board of Directors is comprised entirely of independent directors.

LOGO

P.O. Box 1330

Minneapolis, MN 55440-1330

American Strategic Income Portfolio Inc.

American Strategic Income Portfolio Inc. II

American Strategic Income Portfolio Inc. III

American Select Portfolio Inc.

2014 Semiannual Report

U.S. Bancorp Asset Management, Inc. is a wholly owned subsidiary of U.S. Bank National Association, which is a wholly owned subsidiary of U.S. Bancorp.

LOGO

This document is printed on paper containing 10% postconsumer waste.

4/2014 0047-14 WHOLELOAN-SAR

Item 2—Code of Ethics

Not applicable to the semi-annual report.

Item 3—Audit Committee Financial Expert

Not applicable to the semi-annual report.

Item 4—Principal Accountant Fees and Services

Not applicable to the semi-annual report.

Item 5—Audit Committee of Listed Registrants

Not applicable to the semi-annual report.

Item 6—Schedule of Investments

The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7—Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to the semi-annual report.

Item 8—Portfolio Managers of Closed-End Management Investment Companies

Not applicable to the semi-annual report.

Item 9—Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Neither the registrant nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act, purchased any shares or other units of any class of the registrant’s equity securities that is registered pursuant to Section 12 of the Exchange Act.

Item 10—Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (as required by Item 22(b)(15) of Schedule 14A), or this item.

Item 11—Controls and Procedures

(a)

The registrant’s principal executive officer and principal financial officer have evaluated the effectiveness of the registrant’s disclosure controls and procedures within 90 days of the date of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized and reported timely.

(b)

There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12—Exhibits


(a)(1)		Not applicable.

(a)(2)		Certifications of the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 are filed as exhibits hereto.

(a)(3)		Not applicable.

(b)		Certifications of the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 are filed as exhibits hereto.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


American Strategic Income Portfolio Inc. III

By:		/s/ Joseph M. Ulrey III
		Joseph M. Ulrey III
		President

Date: April 21, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ Joseph M. Ulrey III
		Joseph M. Ulrey III
		President

Date: April 21, 2014

By:		/s/ Jill M. Stevenson
		Jill M. Stevenson
		Treasurer

Date: April 21, 2014

American Strategic Income Portfolio Inc III (CSP) Inactive N-CSRSCertified semi-annual shareholder report (management investment company)