First American Strategy Funds Profile
February 1, 2000
This Profile summarizes key information about the funds that is included in the
funds' prospectus. The funds' prospectus includes additional information about
the funds, including a more detailed description of the risks associated with
investing in the funds that you may want to consider before you invest. You may
obtain the prospectus and other information about the funds at no cost by
calling us at 1-800-637-2548, or by contacting your investment professional.
1. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
STRATEGY AGGRESSIVE GROWTH FUND seeks a high level of capital growth.
STRATEGY GROWTH FUND seeks capital growth with a moderate level of current
income.
STRATEGY GROWTH AND INCOME FUND seeks both capital growth and current income.
STRATEGY INCOME FUND seeks a high level of current income consistent with
limited risk to capital.
2. WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
Each of the funds described in this prospectus is a "fund of funds." The funds
are intended to provide differing balances between the objectives of current
income and growth of capital. Each fund seeks to achieve its objectives by
investing in a variety of other mutual funds that are also advised by the funds'
investment advisor. Strategy Aggressive Growth Fund and Strategy Growth Fund
seek their objectives by providing high allocations to various equity
categories, including small company and international company equity securities,
with relatively little emphasis on fixed income securities. Strategy Growth and
Income Fund takes a more evenly balanced approach to equity securities and fixed
income investments. Strategy Income Fund provides a high allocation to fixed
income investments, but also has a limited equity component designed to help
offset inflation and provide a source for potential increases in income over
time.
The underlying funds in which the Strategy Funds invest include the 11 equity
funds and two fixed income funds named in the table below and Prime Obligations
Fund, a money market fund. The funds' advisor allocates and reallocates each
fund's assets among the underlying funds within ranges designed to reflect the
funds' differing balances between the investment objectives of current income
and growth of capital. The following table illustrates these ranges, expressed
as percentages of the funds' net assets.
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- ----------------------------------------------------------------------------------------------------------------------
MIN MAX MIN MAX MIN MAX MIN MAX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS AS A WHOLE 60% 100% 50% 90% 35% 75% 15% 45%
Equity Index Fund 0% 80% 0% 75% 0% 60% 0% 35%
Large Cap Growth Fund 5% 50% 5% 45% 5% 40% 0% 25%
Large Cap Value Fund 5% 50% 5% 45% 5% 40% 0% 25%
Mid Cap Growth Fund 0% 40% 0% 30% 0% 20% 0% 10%
Mid Cap Value Fund 0% 40% 0% 30% 0% 20% 0% 10%
Small Cap Growth Fund 0% 40% 0% 30% 0% 20% 0% 10%
Small Cap Value Fund 0% 40% 0% 30% 0% 20% 0% 10%
Equity Income Fund 0% 15% 0% 25% 0% 35% 0% 45%
Real Estate Securities Fund 0% 15% 0% 15% 0% 15% 0% 15%
Emerging Markets Fund 0% 15% 0% 15% 0% 10% 0% 5%
International Fund 0% 35% 0% 30% 0% 25% 0% 15%
FIXED INCOME FUNDS AS A WHOLE 0% 40% 10% 50% 25% 65% 55% 85%
Fixed Income Fund 0% 40% 0% 50% 10% 65% 25% 85%
Strategic Income Fund 0% 15% 0% 20% 0% 20% 0% 25%
PRIME OBLIGATIONS FUND 0% 35% 0% 35% 0% 35% 0% 35%
</TABLE>
<PAGE>
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders. In the funds' annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during the last fiscal year. You
may obtain either or both of these reports at no cost by calling us at
1-800-637-2548.
3. WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
The value of your investment in a fund will change daily, which means you could
lose money. The main risks of investing in the funds include:
Active Management: Each fund is actively managed and its performance therefore
will reflect in part the advisor's ability to make asset allocation and other
investment decisions which are suited to achieving the fund's investment
objectives. Due to their active management, the funds could underperform other
mutual funds with similar investment objectives.
Additional Expenses: Investing in the underlying funds through an investment in
one of the funds involves additional expenses that would not be present in a
direct investment in the underlying funds.
Risks Associated with the Underlying Funds: The funds are subject to the risks
of the underlying funds in which they invest. These risks include:
* The underlying funds (other than Equity Index Fund) are actively
managed and therefore may underperform other mutual funds with similar
investment objectives.
* Each underlying fund is subject to the risk of generally adverse
markets. In general, the market prices of equity securities frequently
are subject to greater volatility than the prices of fixed income
securities. Therefore, the net asset values of funds which invest
higher proportions of their assets in equity funds may be more
volatile than funds which are limited to lower proportions.
* Small Cap Growth Fund, Small Cap Value Fund, Emerging Markets Fund and
International Fund are subject to the risks of investing in small
capitalization companies. These stocks historically have experienced
greater price volatility than stocks of larger capitalization
companies.
* Mid Cap Growth Fund and Mid Cap Value Fund invest in stocks of mid
capitalization companies. Although these stocks may be slightly less
volatile than those of small capitalization companies, they still
involve substantial risk.
* Real Estate Securities Fund is subject to risks associated with
non-diversification and with concentrating its investments in the real
estate industry, and to the risks associated with direct investments
in real estate investment trusts.
* International Fund, Emerging Markets Fund and Strategic Income Fund
are subject to risks associated with investing in foreign securities,
including currency risk. These risks are particularly significant in
emerging markets, where Strategic Income Fund may invest and where
Emerging Markets Fund primarily invests. International Fund and
Emerging Markets Fund are also subject to the risks of entering into
foreign currency hedging transactions.
* Equity Index Fund is subject to risks associated with its use of
options, futures, contracts and options on futures contracts if
securities prices do not move in the direction anticipated by the
fund's advisor when entering into the options or the futures
contracts.
<PAGE>
* Most of the other equity funds invest a portion of their assets in
foreign securities which are dollar-denominated and publicly traded in
the United States, and which may involve risks not associated with the
securities of domestic issuers.
* The fixed income funds are subject to interest rate risk (the risk
that debt securities held by a fund will decrease in value when
interest rates rise), income risk (the risk that a fund's income could
decline due to falling market interest rates), credit risk (the risk
that the issuer of debt securities will not make timely principal or
interest payments on its securities), and call risk (the risk that the
issuer of debt securities will prepay those securities before their
stated maturity, requiring the fund to reinvest the prepayment at a
lower interest rate).
* The fixed income funds may invest in mortgage- and/or asset-backed
securities. These are subject to the risk that falling interest rates
will cause faster than expected prepayments of the obligations
underlying the securities, which must be reinvested at lower interest
rates. They are also subject to the risk that rising interest rates
will cause prepayments to slow, extending the life of mortgage- and
asset-backed securities with lower interest rates.
* Each fixed income fund may invest up to 25% of its total assets in
dollar roll transactions, which could increase the volatility of the
fund's share price and possibly diminish the fund's investment
performance.
* Most of the underlying funds lend their portfolio securities to
broker-dealers, banks and other institutions. These funds are subject
to the risk that the other party to the securities lending agreement
will default on its obligations.
* Strategic Income Fund may invest a significant portion of its assets
in non-investment grade debt obligations, which are commonly called
"high-yield" securities or "junk bonds." In addition, Equity Income
Fund may invest in non-investment grade convertible debt obligations.
High yield securities generally have more volatile prices and carry
more risk to principal than investment grade securities.
Fund Performance Information
The following illustrations provide you with information on each fund's
volatility and performance. Of course, past performance does not guarantee
future results. Each fund's bar chart show shows you how performance of the
fund's shares has varied from year to year. The tables compare each fund's
performance over different time periods to that of the fund's benchmark indices,
which are broad measures of market performance. Each fund's performance reflects
fund expenses; the benchmarks are unmanaged and have no expenses. Both the
charts and the tables assume that all distributions have been reinvested.
STRATEGY AGGRESSIVE GROWTH FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
18.01% 7.36%
- ---------------------------------
1997 1998 1999
BEST QUARTER:
Quarter ending: 12/31/98
Total return 14.77%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -14.93%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Aggressive Growth Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
STRATEGY GROWTH FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
16.36% 7.52%
- ---------------------------------
1997 1998 1999
<PAGE>
BEST QUARTER:
Quarter ending: 12/31/98
Total return 12.19%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -11.92%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Growth Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
STRATEGY GROWTH AND INCOME FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
13.96% 8.20%
- ---------------------------------
1997 1998 1999
BEST QUARTER:
Quarter ending: 12/31/98
Total return 10.00%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -8.30%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Growth and Income Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
STRATEGY INCOME FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
12.72% 8.46%
- ---------------------------------
1997 1998 1999
BEST QUARTER:
Quarter ending: 12/31/98
Total return 4.87%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -0.04%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Income Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
4. WHAT ARE THE FEES AND EXPENSES OF THE FUND?
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the funds. The funds do not impose any sales charges (loads)
when you buy, sell or exchange shares. Each fund imposes a redemption fee of 1%
if you redeem your shares within 12 months of purchase. In addition,
<PAGE>
when you hold shares of one of the funds, you indirectly pay a portion of that
fund's operating expenses. The figures below are based on fund expenses during
the fiscal year ended September 30, 1999.(1) As illustrated in other tables
under this caption, fund shareholders also indirectly bear a portion of the
underlying funds' expenses.
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- ----------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAXIMUM SALES
CHARGE (LOAD) None None None None
MAXIMUM DEFERRED SALES CHARGE
(LOAD) None None None None
REDEMPTION FEE(2)
AS A % OF AMOUNT REDEEMED 1.00% 1.00% 1.00% 1.00%
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
(expenses that are deducted from fund assets)
- ----------------------------------------------------------------------------------------------------------------
Management Fees 0.25% 0.25% 0.25% 0.25%
Distribution and Service
(12b-1) Fees None None None None
Other Expenses
Shareholder Servicing Fee 0.25% 0.25% 0.25% 0.25%
Miscellaneous ______% ______% ______% ______%
TOTAL ______% ______% ______% ______%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers and expense reimbursements by the advisor. THE
ADVISOR INTENDS TO WAIVE FEES AND REIMBURSE EXPENSES DURING THE CURRENT FISCAL
YEAR SO THAT TOTAL OPERATING EXPENSES FOR EACH FUND DO NOT EXCEED ____%. WAIVERS
AND REIMBURSEMENTS MAY BE DISCONTINUED AT ANY TIME.
(2) Payable if you redeem your shares within 12 months of purchase.
RANGES OF COMBINED DIRECT AND INDIRECT EXPENSE RATIOS
As noted above, in addition to the funds' direct expenses, fund shareholders
also indirectly bear their proportionate share of the underlying funds'
expenses. The following table lists the ranges of combined direct and indirect
expense ratios borne by fund shareholders, taking into account underlying fund
expenses indirectly borne by fund shareholders. Ranges are presented because the
underlying funds' expense ratios differ from one another, so that the actual
combined direct and indirect expense ratios of the funds will depend on the
allocation of fund assets among the underlying funds.
<TABLE>
<CAPTION>
Growth
RANGES OF COMBINED DIRECT and
AND INDIRECT EXPENSE RATIOS Aggressive Growth Income Income
AS A % OF AVERAGE NET ASSETS(1) Growth Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
____% to ____% ____% to ____% ____% to ____% ____% to ____%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The underlying funds' advisor intends to waive fees during the current
fiscal year so that expense ratios do not exceed certain levels, as set forth in
footnote 1 to the Underlying Fund Expense Ratios table below. In addition, the
funds' advisor intends to waive fees and reimburse expenses during the current
fiscal year so that total operating expenses for each fund do not exceed 0.30%.
Taking these waivers and reimbursements into account, the ranges of combined
direct and indirect expense ratios would be _____% to _____% for Aggressive
Growth Fund, _____% to _____% for Growth Fund, _____% to _____% for Growth and
Income Fund, and _____% to _____% for Income Fund. Waivers and reimbursements
may be discontinued at any time.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the funds with the cost of investing in other mutual funds. It is based upon the
midpoint of the expense ranges set forth above, and assumes that you invest
$10,000 for the time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your investment has a 5%
return each year, and that each fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your cost would be:
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year $ ______ $ ______ $ ______ $ ______
3 years $ ______ $ ______ $ ______ $ ______
5 years $ ______ $ ______ $ ______ $ ______
10 years $ ______ $ ______ $ ______ $ ______
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year $ ______ $ ______ $ ______ $ ______
3 years $ ______ $ ______ $ ______ $ ______
5 years $ ______ $ ______ $ ______ $ ______
10 years $ ______ $ ______ $ ______ $ ______
</TABLE>
5. WHO MANAGES THE FUNDS?
U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of December 31, 1999, it had more than $ ____ billion in assets under
management, including investment company assets of more than $ ____ billion. As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
The fund is managed by a team of persons associated with First American Asset
Management.
6. HOW DO I BUY FUND SHARES?
You may become a shareholder in any of the funds with an initial investment of
$1,000 or more ($250 for a retirement plan or a UGMA/UTMA account). Additional
investments can be made for as little as $100 ($25 for a retirement plan or a
UGMA/UTMA account). You may purchase shares by calling your broker or financial
institution, or by simply completing and signing a new account form, enclose a
check made payable to the fund you wish to invest in, and mailing both to: First
American Funds, c/o DST Systems, Inc., P.O. Box 219382, Kansas City, Missouri
64121-9382. New account forms may be obtained by calling us at 1-800-637-2548.
7. HOW CAN I SELL FUND SHARES?
If you purchased shares through a broker or financial institution, simply call
them to sell your shares. If you did not purchase shares through a broker or
financial institution, you may sell your shares by calling 1-800-637-2548. To
sell shares by mail, send a written request to your broker or financial
institution, or to the funds at the following address: First American Funds, c/o
DST Systems, Inc., P.O. Box 219382, Kansas City, Missouri 64121-9382.
8. HOW ARE FUND DISTRIBUTIONS MADE AND TAXED?
Dividends from a fund's net investment income are declared and paid monthly. Any
capital gains are distributed at least once each year. For most investors, fund
dividends and distributions are considered taxable whether they are reinvested
or taken in cash (unless your investment is in an IRA or other tax-advantaged
account). Dividends from a fund's net investment income and short-term capital
gains are taxable as ordinary income. Distributions of a fund's long-term
capital gains are taxable as long-term capital gains, regardless of how long you
have held your shares.
9. WHAT SERVICES ARE OFFERED BY THE FUNDS?
First American offers several ways to make it easier for you to manage your
account, such as: telephone transactions; wire and electronic funds transfers;
automatic investing; systematic withdrawals; and exchange privileges with other
First American Funds. Personal service is always available by calling Investor
Services at 1-800-637-2548.
<PAGE>
First American Strategy Funds Profile
U.S. Bancorp 401(k) Savings Plan
February 1, 2000
This Profile summarizes key information about the funds that is included in the
funds' prospectus. The funds' prospectus includes additional information about
the funds, including a more detailed description of the risks associated with
investing in the funds that you may want to consider before you invest. You may
obtain the prospectus and other information about the funds at no cost by
calling us at 1-800-637-2548, or by contacting your investment professional.
1. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
STRATEGY AGGRESSIVE GROWTH FUND seeks a high level of capital growth.
STRATEGY GROWTH FUND seeks capital growth with a moderate level of current
income.
STRATEGY GROWTH AND INCOME FUND seeks both capital growth and current income.
STRATEGY INCOME FUND seeks a high level of current income consistent with
limited risk to capital.
2. WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
Each of the funds described in this prospectus is a "fund of funds." The funds
are intended to provide differing balances between the objectives of current
income and growth of capital. Each fund seeks to achieve its objectives by
investing in a variety of other mutual funds that are also advised by the funds'
investment advisor. Strategy Aggressive Growth Fund and Strategy Growth Fund
seek their objectives by providing high allocations to various equity
categories, including small company and international company equity securities,
with relatively little emphasis on fixed income securities. Strategy Growth and
Income Fund takes a more evenly balanced approach to equity securities and fixed
income investments. Strategy Income Fund provides a high allocation to fixed
income investments, but also has a limited equity component designed to help
offset inflation and provide a source for potential increases in income over
time.
The underlying funds in which the Strategy Funds invest include the 11 equity
funds and two fixed income funds named in the table below and Prime Obligations
Fund, a money market fund. The funds' advisor allocates and reallocates each
fund's assets among the underlying funds within ranges designed to reflect the
funds' differing balances between the investment objectives of current income
and growth of capital. The following table illustrates these ranges, expressed
as percentages of the funds' net assets.
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- ----------------------------------------------------------------------------------------------------------------------
MIN MAX MIN MAX MIN MAX MIN MAX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS AS A WHOLE 60% 100% 50% 90% 35% 75% 15% 45%
Equity Index Fund 0% 80% 0% 75% 0% 60% 0% 35%
Large Cap Growth Fund 5% 50% 5% 45% 5% 40% 0% 25%
Large Cap Value Fund 5% 50% 5% 45% 5% 40% 0% 25%
Mid Cap Growth Fund 0% 40% 0% 30% 0% 20% 0% 10%
Mid Cap Value Fund 0% 40% 0% 30% 0% 20% 0% 10%
Small Cap Growth Fund 0% 40% 0% 30% 0% 20% 0% 10%
Small Cap Value Fund 0% 40% 0% 30% 0% 20% 0% 10%
Equity Income Fund 0% 15% 0% 25% 0% 35% 0% 45%
Real Estate Securities Fund 0% 15% 0% 15% 0% 15% 0% 15%
Emerging Markets Fund 0% 15% 0% 15% 0% 10% 0% 5%
International Fund 0% 35% 0% 30% 0% 25% 0% 15%
FIXED INCOME FUNDS AS A WHOLE 0% 40% 10% 50% 25% 65% 55% 85%
Fixed Income Fund 0% 40% 0% 50% 10% 65% 25% 85%
Strategic Income Fund 0% 15% 0% 20% 0% 20% 0% 25%
PRIME OBLIGATIONS FUND 0% 35% 0% 35% 0% 35% 0% 35%
</TABLE>
<PAGE>
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders. In the funds' annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during the last fiscal year. You
may obtain either or both of these reports at no cost by calling us at
1-800-637-2548.
3. WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
The value of your investment in a fund will change daily, which means you could
lose money. The main risks of investing in the funds include:
Active Management: Each fund is actively managed and its performance therefore
will reflect in part the advisor's ability to make asset allocation and other
investment decisions which are suited to achieving the fund's investment
objectives. Due to their active management, the funds could underperform other
mutual funds with similar investment objectives.
Additional Expenses: Investing in the underlying funds through an investment in
one of the funds involves additional expenses that would not be present in a
direct investment in the underlying funds.
Risks Associated with the Underlying Funds: The funds are subject to the risks
of the underlying funds in which they invest. These risks include:
* The underlying funds (other than Equity Index Fund) are actively
managed and therefore may underperform other mutual funds with similar
investment objectives.
* Each underlying fund is subject to the risk of generally adverse
markets. In general, the market prices of equity securities frequently
are subject to greater volatility than the prices of fixed income
securities. Therefore, the net asset values of funds which invest
higher proportions of their assets in equity funds may be more
volatile than funds which are limited to lower proportions.
* Small Cap Growth Fund, Small Cap Value Fund, Emerging Markets Fund and
International Fund are subject to the risks of investing in small
capitalization companies. These stocks historically have experienced
greater price volatility than stocks of larger capitalization
companies.
* Mid Cap Growth Fund and Mid Cap Value Fund invest in stocks of mid
capitalization companies. Although these stocks may be slightly less
volatile than those of small capitalization companies, they still
involve substantial risk.
* Real Estate Securities Fund is subject to risks associated with
non-diversification and with concentrating its investments in the real
estate industry, and to the risks associated with direct investments
in real estate investment trusts.
* International Fund, Emerging Markets Fund and Strategic Income Fund
are subject to risks associated with investing in foreign securities,
including currency risk. These risks are particularly significant in
emerging markets, where Strategic Income Fund may invest and where
Emerging Markets Fund primarily invests. International Fund and
Emerging Markets Fund are also subject to the risks of entering into
foreign currency hedging transactions.
* Equity Index Fund is subject to risks associated with its use of
options, futures, contracts and options on futures contracts if
securities prices do not move in the direction anticipated by the
fund's advisor when entering into the options or the futures
contracts.
<PAGE>
* Most of the other equity funds invest a portion of their assets in
foreign securities which are dollar-denominated and publicly traded in
the United States, and which may involve risks not associated with the
securities of domestic issuers.
* The fixed income funds are subject to interest rate risk (the risk
that debt securities held by a fund will decrease in value when
interest rates rise), income risk (the risk that a fund's income could
decline due to falling market interest rates), credit risk (the risk
that the issuer of debt securities will not make timely principal or
interest payments on its securities), and call risk (the risk that the
issuer of debt securities will prepay those securities before their
stated maturity, requiring the fund to reinvest the prepayment at a
lower interest rate).
* The fixed income funds may invest in mortgage- and/or asset-backed
securities. These are subject to the risk that falling interest rates
will cause faster than expected prepayments of the obligations
underlying the securities, which must be reinvested at lower interest
rates. They are also subject to the risk that rising interest rates
will cause prepayments to slow, extending the life of mortgage- and
asset-backed securities with lower interest rates.
* Each fixed income fund may invest up to 25% of its total assets in
dollar roll transactions, which could increase the volatility of the
fund's share price and possibly diminish the fund's investment
performance.
* Most of the underlying funds lend their portfolio securities to
broker-dealers, banks and other institutions. These funds are subject
to the risk that the other party to the securities lending agreement
will default on its obligations.
* Strategic Income Fund may invest a significant portion of its assets
in non-investment grade debt obligations, which are commonly called
"high-yield" securities or "junk bonds." In addition, Equity Income
Fund may invest in non-investment grade convertible debt obligations.
High yield securities generally have more volatile prices and carry
more risk to principal than investment grade securities.
Fund Performance Information
The following illustrations provide you with information on each fund's
volatility and performance. Of course, past performance does not guarantee
future results. Each fund's bar chart show shows you how performance of the
fund's shares has varied from year to year. The tables compare each fund's
performance over different time periods to that of the fund's benchmark indices,
which are broad measures of market performance. Each fund's performance reflects
fund expenses; the benchmarks are unmanaged and have no expenses. Both the
charts and the tables assume that all distributions have been reinvested.
STRATEGY AGGRESSIVE GROWTH FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
18.01% 7.36%
- ---------------------------------
1997 1998 1999
BEST QUARTER:
Quarter ending: 12/31/98
Total return 14.77%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -14.93%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Aggressive Growth Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
STRATEGY GROWTH FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
16.36% 7.52%
- ---------------------------------
1997 1998 1999
<PAGE>
BEST QUARTER:
Quarter ending: 12/31/98
Total return 12.19%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -11.92%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Growth Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
STRATEGY GROWTH AND INCOME FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
13.96% 8.20%
- ---------------------------------
1997 1998 1999
BEST QUARTER:
Quarter ending: 12/31/98
Total return 10.00%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -8.30%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Growth and Income Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
STRATEGY INCOME FUND
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR
12.72% 8.46%
- ---------------------------------
1997 1998 1999
BEST QUARTER:
Quarter ending: 12/31/98
Total return 4.87%
WORST QUARTER:
Quarter ending: 9/30/98
Total Return -0.04%
AVERAGE ANNUAL TOTAL RETURNS Inception Since
AS OF 12/31/99 Date One Year Inception
- --------------------------------------------------------------------------------
Strategy Income Fund 10/01/96 ______ ______
- --------------------------------------------------------------------------------
Standard & Poor's Composite 500 Index ______ ______
- --------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index ______ ______
- --------------------------------------------------------------------------------
4. WHAT ARE THE FEES AND EXPENSES OF THE FUND?
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the funds. The funds do not impose any sales charges (loads)
when you buy, sell or exchange shares. Each fund imposes a redemption fee of 1%
if you redeem your shares within 12 months of purchase. In addition,
<PAGE>
when you hold shares of one of the funds, you indirectly pay a portion of that
fund's operating expenses. The figures below are based on fund expenses during
the fiscal year ended September 30, 1999.(1) As illustrated in other tables
under this caption, fund shareholders also indirectly bear a portion of the
underlying funds' expenses.
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- ----------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAXIMUM SALES
CHARGE (LOAD) None None None None
MAXIMUM DEFERRED SALES CHARGE
(LOAD) None None None None
REDEMPTION FEE(2)
AS A % OF AMOUNT REDEEMED None None None None
ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
(expenses that are deducted from fund assets)
- ----------------------------------------------------------------------------------------------------------------
Management Fees 0.25% 0.25% 0.25% 0.25%
Distribution and Service
(12b-1) Fees None None None None
Other Expenses
Shareholder Servicing Fee 0.25% 0.25% 0.25% 0.25%
Miscellaneous ______% ______% ______% ______%
TOTAL ______% ______% ______% ______%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers and expense reimbursements by the advisor. THE
ADVISOR INTENDS TO WAIVE FEES AND REIMBURSE EXPENSES DURING THE CURRENT FISCAL
YEAR SO THAT TOTAL OPERATING EXPENSES FOR EACH FUND DO NOT EXCEED ____%. WAIVERS
AND REIMBURSEMENTS MAY BE DISCONTINUED AT ANY TIME.
(2) Payable if you redeem your shares within 12 months of purchase.
RANGES OF COMBINED DIRECT AND INDIRECT EXPENSE RATIOS
As noted above, in addition to the funds' direct expenses, fund shareholders
also indirectly bear their proportionate share of the underlying funds'
expenses. The following table lists the ranges of combined direct and indirect
expense ratios borne by fund shareholders, taking into account underlying fund
expenses indirectly borne by fund shareholders. Ranges are presented because the
underlying funds' expense ratios differ from one another, so that the actual
combined direct and indirect expense ratios of the funds will depend on the
allocation of fund assets among the underlying funds.
<TABLE>
<CAPTION>
Growth
RANGES OF COMBINED DIRECT and
AND INDIRECT EXPENSE RATIOS Aggressive Growth Income Income
AS A % OF AVERAGE NET ASSETS(1) Growth Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
____% to ____% ____% to ____% ____% to ____% ____% to ____%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The underlying funds' advisor intends to waive fees during the current
fiscal year so that expense ratios do not exceed certain levels, as set forth in
footnote 1 to the Underlying Fund Expense Ratios table below. In addition, the
funds' advisor intends to waive fees and reimburse expenses during the current
fiscal year so that total operating expenses for each fund do not exceed 0.30%.
Taking these waivers and reimbursements into account, the ranges of combined
direct and indirect expense ratios would be _____% to _____% for Aggressive
Growth Fund, _____% to _____% for Growth Fund, _____% to _____% for Growth and
Income Fund, and _____% to _____% for Income Fund. Waivers and reimbursements
may be discontinued at any time.
- --------------------------------------------------------------------------------
EXAMPLE This example is intended to help you compare the cost of investing in
the funds with the cost of investing in other mutual funds. It is based upon the
midpoint of the expense ranges set forth above, and assumes that you invest
$10,000 for the time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your investment has a 5%
return each year, and that each fund's operating expenses remain the same.
Although your actual costs and returns may differ, based on these assumptions
your cost would be:
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year $ ______ $ ______ $ ______ $ ______
3 years $ ______ $ ______ $ ______ $ ______
5 years $ ______ $ ______ $ ______ $ ______
10 years $ ______ $ ______ $ ______ $ ______
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
Aggressive Growth and
Growth Fund Growth Fund Income Fund Income Fund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year $ ______ $ ______ $ ______ $ ______
3 years $ ______ $ ______ $ ______ $ ______
5 years $ ______ $ ______ $ ______ $ ______
10 years $ ______ $ ______ $ ______ $ ______
</TABLE>
5. WHO MANAGES THE FUNDS?
U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of December 31, 1999, it had more than $ ____ billion in assets under
management, including investment company assets of more than $ ____ billion. As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
The fund is managed by a team of persons associated with First American Asset
Management.
6. HOW DO I REVIEW AND MAKE CHANGES TO MY INVESTMENT OPTIONS?
You may review and make changes to your investment options by calling U-Connect
at 1-800-806-7009 or logging on to the U.S. Bancorp 401(k) Savings Plan Web site
at www.rsweb.com/60587.
7. HOW ARE FUND DISTRIBUTIONS MADE AND TAXED?
Distributions may be requested by calling U-Connect at 1-800-806-7009.
Distributions from the U.S. Bancorp 401(k) Savings Plan are generally taxable
and subject to withholding in the current year unless the participant requests a
direct rollover to an IRA or another qualified plan. Certain distributions such
as distributions from an employee's after-tax account or, in some circumstances,
portions of distributions made after a participant has attained age 70-1/2 may
not be rolled over to an IRA or another qualified plan. Generally, an employee's
distribution will be taxed at ordinary income tax rates. Distributions made
before a participant attains age 59-1/2 are subject to a 10% penalty tax unless
an exception applies.
Participants in the U.S. Bancorp 401(k) Savings Plan will not be taxed on pretax
earnings reductions or on employer contributions at the time such amounts are
allocated to their accounts. Pretax contributions, however, are subject to tax
under FICA and FUTA. Participants will not be taxed on the income earned on any
securities in the trust fund until they are withdrawn or distributed under the
Plan.
