BREMER INVESTMENT FUNDS INC, 485BPOS, 2000-01-28

BREMER INVESTMENT FUNDS INC
485BPOS, 2000-01-28

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As filed with the Securities and Exchange Commission on January 28, 2000.

1933 Act Registration No. 333-15969
1940 Act Registration No. 811-7919
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A

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REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 7 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7
</TABLE>

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BREMER INVESTMENT FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)

P.O. Box 1956
St. Cloud, Minnesota 56302
(Address of Principal Executive Offices)(Zip Code)

Registrant's Telephone Number, Including Area Code: (320) 255-7174

Steven A. Laraway
P.O. Box 1956
St. Cloud, Minnesota 56302
(Name and Address of Agent for Service)
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Christopher C. Cleveland, Esq.
Briggs and Morgan, P.A.
2400 IDS Center
Minneapolis, Minnesota 55402
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Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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LEGACY MINNESOTA MUNICIPAL BOND FUND
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PROSPECTUS

DATED JANUARY 28, 2000

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This prospectus provides information about the Legacy Minnesota Municipal
Bond Fund. The Fund is part of a family of mutual funds offered by Bremer
Investment Funds, Inc. (Bremer Funds), a registered, open-end, management
investment company.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUND
INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, DUE TO
FLUCTUATION IN THE FUND'S NET ASSET VALUE.

This Prospectus, which you should retain for future reference, is designed
to set forth concisely the information you should know before you invest. A
Statement of Additional Information dated January 28, 2000, and incorporated
herein by reference, has been filed with the Securities and Exchange Commission.
A copy of the Statement may be obtained, without charge, by writing to or
calling the Fund.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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TABLE OF CONTENTS

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PAGE
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Risk/Return Summary......................................... 1
Fund Expenses............................................... 3
Financial Highlights........................................ 4
Investment Objectives and Policies.......................... 5
Principal Securities and Techniques Used by the Fund........ 5
Risk Factors................................................ 10
Investment Restrictions..................................... 12
Management of the Funds..................................... 13
Plan of Distribution........................................ 14
Fund Shares and Organization................................ 15
Price of Shares............................................. 16
Purchasing Shares........................................... 16
Redeeming Shares............................................ 17
Dividends................................................... 19
Taxes....................................................... 19
Performance Information..................................... 21
Shareholder Services........................................ 21
</TABLE>

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RISK/RETURN SUMMARY

INVESTMENT OBJECTIVES

The Fund seeks to provide current income exempt from federal regular income
tax and Minnesota regular personal income tax, consistent with the preservation
of capital and prudent investment management.

INVESTMENT STRATEGIES

The Fund will seek to invest its assets in investment grade debt securities
issued by the State of Minnesota and its political subdivisions, duly
constituted authorities and corporations. The Fund may also invest in municipal
securities issued by various territories and possessions of the United States,
such as Puerto Rico, that are exempt from Minnesota state taxes. As a
fundamental policy, except during periods when the Fund assumes a temporary
defensive position, the Fund will invest at least 80% of its total assets in
securities exempt from both federal and Minnesota state income taxes. The Fund's
investments will generally have a duration between three and six years. Although
the Fund does not intend to invest for the purpose of seeking short-term
profits, securities in its portfolio will be sold whenever the Investment
Adviser believes it is appropriate to do so in light of the Fund's investment
objective, without regard to the length of time a particular security may have
been held.

PRINCIPAL INVESTMENT RISKS

- General Investment Risk. Loss of money is a risk of investing in the
Fund. This could occur if the value of the municipal bonds and other securities
making up the Fund's investment portfolio were to decrease. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

- Fund Management. The Fund is actively managed by the Investment Adviser.
Fund performance depends on the ability of the Investment Adviser to select and
maintain a portfolio of securities which will achieve the Fund's investment
objectives. The Fund could under-perform compared with other funds having
similar investment objectives.

- Credit Risk. The Fund invests in debt securities consisting principally
of investment grade municipal bonds, and is subject to credit risk, which is the
risk that the issuer of a debt security will fail to make payments of interest
and principal when due.

- Interest Rate Risk. The Fund is subject to interest rate risk, which is
the risk that the value of a debt security will decline due to changes in market
interest rates. In general, when interest rates rise, the value of a debt
security such as a municipal bond declines. When interest rates decline, the
value of a debt security generally increases. The final maturity of the debt
also will affect interest rate risk and price volatility of the portfolio.
Generally, a debt security with a longer maturity will have greater price
volatility as a result of interest rate changes than a debt security with a
shorter maturity.

- Yields. The yields of Minnesota municipal bonds will vary depending on a
number of factors, including conditions in the municipal bond and fixed income
markets, the maturity of the bonds, the rating of the issue and the size of a
particular offering.

- Non-Investment Grade Securities. The Fund may invest up to 25% of its
total assets in municipal bonds that are not considered to be investment grade.
These securities provide less protection for payment of principal and interest
but may produce greater returns than higher quality securities.

1
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- Geographic Concentration. The Fund invests principally in municipal bonds
of Minnesota issuers, and is therefore more susceptible to factors adversely
affecting Minnesota issuers than would be a more geographically diverse bond
portfolio. The value of the Fund's shares may be affected by downturns in the
Minnesota economy and other factors specifically affecting the ability of
Minnesota issuers to pay interest and principal.

Related Issuers. The issuers of municipal bonds may be related in such a
way that an economic or political development negatively affecting one municipal
bond would have a similar effect on another municipal bond. The Fund will not
invest more than 25% of its total assets in securities that are related or in
revenue bonds whose payments are derived from projects or facilities within a
single industry (except for housing authority bonds or bonds issued by
governments or their political subdivisions).

- Fund Diversification. The Fund is non-diversified, which means that it
has greater latitude than a diversified fund to invest its assets in the
securities of a relatively few municipal issuers. An investment in the Fund may
present greater risks than an investment in a diversified fund, because the Fund
is more susceptible to adverse developments affecting any one issuer of
securities held in its portfolio.

RISK AND RETURN BAR CHART AND TABLE

The Fund began operations on April 12, 1999 and does not have annual return
information for a full calendar year. The Fund's first prospectus prepared after
December 31, 2000 will include a bar chart and table which show how the Fund has
performed for the calendar year and how it compares in relation to other
measures of market performance.

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FUND EXPENSES

This table describes the fees and expenses you might pay if you buy and
hold shares of the Fund.

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SHAREHOLDER FEES (fees paid directly from your investment)
Maximum sales charge (load) on purchases (as a percentage
of offering price)..................................... 2.75%
Maximum deferred sales charge (load)...................... None
Maximum sales charge (load) imposed on reinvested
dividends.............................................. None
Redemption fee............................................ None(1)
Exchange fee.............................................. None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees........................................... 0.55%
Distribution (12b-1) fees................................. 0.25%(2)
Other expenses............................................ 0.31%
Total annual fund operating expenses...................... 1.11%
Fee waiver................................................ 0.23%(2)
Net expenses.............................................. 0.88%
</TABLE>

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(1) A fee of $12 is charged for each wire redemption. See "Redeeming Shares."

(2) The Fund has adopted a written plan of distribution under Rule 12b-1. The
Board of Directors has authorized the payment of fees under the plan
pursuant to a Distribution Agreement with the Fund's principal underwriter.
The distribution fees paid by the Fund may not exceed an annual rate of
0.25% of the Fund's average daily net assets. The Board of Directors has
agreed to waive distribution fees equivalent to 0.23% for the fiscal year
ending September 30, 2000. If additional distribution fees are paid in the
future, long-term shareholders may pay more than the economic equivalent of
the maximum front end sales charge permitted by the National Association of
Securities Dealers, Inc. See "Plan of Distribution."

EXAMPLE

This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund 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 the Fund's operating expenses remain the same. Although your actual
costs maybe higher or lower, based on these assumptions your costs would be:

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ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
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$362 $548 $749 $1,330
</TABLE>

The Fund does not intend to impose sales charges (loads) on reinvested
dividends. If sales charges (loads) were included, your costs would be higher
than those shown in the example. Federal securities regulations require the
example to assume an annual rate of return of 5%, but the actual return for the
Fund may be more or less than 5%.

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FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
Fund's financial performance since the Fund started operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the Fund, assuming reinvestment of all dividends and
distributions. This information has been audited by Arthur Andersen LLP,
independent public accountants, whose report, along with the Fund's financial
statements, are included in the Fund's Annual Report for the period from April
12, 1999 (commencement of operations) through September 30, 1999. The Annual
report may be obtained, without charge, by writing or calling the Fund.

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<CAPTION>
APRIL 12, 1999(1)
THROUGH
SEPTEMBER 30, 1999
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PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD...................... $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income.................................. 0.16
Net realized and unrealized gain (loss) on
investments........................................... (0.26)
Total from investment operations..................... (0.10)
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income................... (0.16)
Distributions in excess of net investment income....... (0.03)
Total dividends and distributions.................... (0.19)
NET ASSET VALUE, END OF PERIOD............................ $ 9.71
TOTAL RETURN................................................ (0.96)%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period................................. $57,220,849
Ratio of net expenses to average net assets............... 0.88%(3)
Ratio of net investment income to average net assets...... 3.53%(3)
Portfolio turnover rate................................... 18.86%
</TABLE>

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(1) Commencement of Operations.

(2) Not annualized.

(3) Annualized.

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INVESTMENT OBJECTIVES AND POLICIES

Investment Objectives. The Fund seeks to provide current income exempt from
federal regular income tax and Minnesota regular personal income tax, consistent
with the preservation of capital and prudent investment management. There can be
no assurance that the Fund's objectives will be achieved. The investment
objectives are not fundamental and may be changed without a vote of the
shareholders, which could result in the Fund having investment objectives
different from those which a shareholder considered appropriate for its
investment needs at the time of its investment. The Fund will provide its
shareholders with written notification at least 30 days prior to any change in
the Fund's investment objectives.

Investment Policies. The Fund will seek to invest its assets in investment
grade municipal securities issued by the State of Minnesota and its political
subdivisions, duly constituted authorities and corporations. Municipal
securities also include securities issued by various territories and possessions
of the United States, such as Puerto Rico, that are exempt from Minnesota state
taxes. In order to respond to business and financial conditions, the Fund may
invest up to 20% of its assets in instruments on which the interest is subject
to taxation. As a fundamental policy, except during periods when the Fund
assumes a temporary defensive position, the Fund will invest at least 80% of its
total assets in securities exempt from both federal and Minnesota state income
taxes (including the federal alternative minimum tax).

Generally, at least 75% of the Fund's assets will be invested in municipal
securities that are rated within the four highest rating categories by a
nationally recognized statistical rating organization at the time they are
purchased by the Fund. For municipal bonds, these categories are "Aaa," "Aa,"
"A" and "Baa" for Moody's and "AAA," "AA," "A" and "BBB" for S&P and Fitch.
Bonds with these ratings are generally considered to be investment grade,
although Moody's states that municipal securities rated "Baa" have speculative
characteristics. The Fund also may invest in unrated securities that the
Investment Adviser believes are comparable in quality to the rated securities in
which the Fund invests.

The obligations in which the Fund invests will have various maturities
depending upon current and forecasted levels of interest rates and the shape of
the yield curve. The Fund's investments will generally have a duration between
three and six years. Duration is a measure of the expected life of a fixed
income security and is generally considered to be more precise than the concept
of "term to maturity." Duration incorporates a bond's yield, coupon interest
payments, final maturity and call features to predict price sensitivity to
changes in interest rates. For example, if interest rates were to rise 1%, the
market value of a fixed income security with a duration of four years would fall
an estimated 4%. The opposite would be true if interest rates fell. Duration is
one of the fundamental tools used by the Investment Adviser in portfolio
selection for the Fund.

PRINCIPAL SECURITIES AND TECHNIQUES USED BY THE FUND

Municipal Securities. The fund will invest primarily in municipal
securities of Minnesota issuers, which include municipal bonds, notes and
leases. Yields on municipal securities depend on a variety of factors, including
the general condition of the municipal securities markets and fixed income
markets, the size of a particular offering, the maturity of the obligation and
its rating. The Fund's ability to meet its investment
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objectives depends in part on the continuing ability of the issuers of municipal
securities to pay principal and interest when due.

Municipal bonds can be classified as either "general obligation" bonds or
"revenue" bonds. General obligation bonds are secured by a municipality's pledge
of its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are usually payable only from the revenues generated by
a particular facility or from the proceeds of a special excise or other tax, but
not from general tax revenues. Municipal bonds also include industrial
development bonds and private activity bonds, which are usually not secured by a
pledge of the credit of a municipality. The payment of the principal and
interest on these bonds comes solely from the user of the facilities financed by
the bonds and the pledge, if any, of real and personal property as security for
such payment.

Municipal notes, which may be either general obligation or revenue
securities, are issued to meet the short-term capital needs of the issuer and
generally have original maturities not exceeding one year. They include bond
anticipation notes, revenue anticipation notes, tax anticipation notes,
construction loan notes and tax-exempt commercial paper. Municipal leases are
issued by state and local governments to acquire equipment such as emergency and
other specialized motor vehicles, computer and telecommunications equipment and
other capital assets.

Housing Authority Bonds. The Fund may invest in obligations of municipal
housing authorities, including single-family and multi-family mortgage revenue
bonds. Changes in federal housing subsidy programs may reduce subsidies
available for payments on multifamily housing authority bonds. Higher interest
rates and construction and operating costs may also adversely affect revenues of
housing authorities. Mortgage revenue bonds are subject to mandatory redemption
at par as a result of prepayments of the underlying mortgage loans or if the
proceeds from the bonds are not used.

Certain housing authority bonds must qualify under relevant provisions of
the Code and under provisions of federal law relating to the occupants, location
and cost of the housing financed by the bonds. The failure to meet these
requirements could cause the interest on the bonds to become taxable, which
would reduce the value of the bonds and subject shareholders to unanticipated
tax liabilities.

Variable and Floating Rate Securities. The Fund may invest in securities
with variable or floating rates of interest that are adjusted according to a
specified formula, usually with reference to an interest rate index or market
interest rate. These adjustments minimize changes in the market value of the
obligation and enhance the ability of the Fund to maintain a stable net asset
value. Like fixed rate debt securities, variable and floating rate securities
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.

There may not be an active secondary market for certain floating or
variable rate securities, and the Fund could suffer a loss on the sale of these
securities.

Zero-Coupon Securities. Zero-coupon securities are sold at original issue
discount and pay no interest to holders prior to maturity. The Fund is required
to include the original issue discount of zero-coupon securities as

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income. The Fund ordinarily will distribute all of its net investment income,
and may have to sell securities to distribute imputed income generated by
zero-coupon securities. These sales may result in a taxable gain or loss.
Zero-coupon securities may also be subject to greater fluctuation in market
value than the other securities in which the Fund invests.

Participation Interests. The Fund may purchase participation interests in
municipal securities that are held by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or other financial institution permitting the
holder to tender the participation interest back to the bank or other financial
institution.

Repurchase Agreements and Lending of Portfolio Securities. The Fund may
seek to generate income by entering into repurchase agreements or by lending
securities from its portfolio to brokers, dealers and other financial
institutions. Repurchase agreements are transactions in which the Fund purchases
a security and simultaneously agrees to resell that security to the seller at a
specified price on a specified date, normally one to seven days later. The
resale price reflects a market rate of interest that is not related to the
coupon rate or maturity of the purchased security. The Fund will only enter into
loan arrangements with broker-dealers, banks or other institutions which the
Investment Adviser has determined are creditworthy under guidelines established
by the Board of Directors and will receive collateral in the form of cash or
U.S. Government securities equal to at least 100% of the value of the securities
loaned. The Fund will, as a fundamental policy, limit securities lending to not
more than one-third of the value of its total assets. These activities may
involve risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty in these transactions or a counterparty defaulted on its
obligations, the Fund might suffer a loss.

When-Issued Securities and Forward Commitments. The Fund may purchase
securities on a "when-issued" or "forward commitment" basis. In these
transactions, the price of the securities is fixed at the time the purchase
commitment is made, but delivery and payment for the securities take place at a
later date, generally within three months after the purchase commitment.

During the period between a commitment and delivery, the Fund is not
entitled to any interest. However, the Fund immediately assumes the risk of
ownership, including price fluctuation. The Fund could suffer a loss in a
when-issued or forward commitment transaction if the seller fails to deliver the
securities to the Fund. Any significant commitment by the Fund to purchase
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value.

When-issued and forward commitment transactions may enable the Fund to
hedge against predicted changes in interest rates and prices. If the Fund
incorrectly forecasts interest rate trends, however, it could be required to
complete when-issued or forward transactions at prices below then current market
values. The Fund may dispose of a commitment prior to settlement if the
Investment Adviser deems it advantageous to do so. In addition, the Fund may
enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.

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Taxable Investments. The Fund may invest up to 20% of the value of its
total assets in cash equivalents which generate interest income that is not
exempt from federal income tax or that is treated as a preference item for
purposes of the federal alternative minimum tax. The Fund may hold in excess of
20% of its assets in cash and cash-equivalents, pending investment in municipal
securities, to meet requests for redemptions or to assume a temporary defensive
position.

Borrowing. The Fund may borrow money from banks or by entering into reverse
repurchase agreements and, as a fundamental policy, will limit the amount of
total borrowings to one-third of the value of the Fund's total assets. Borrowing
for other than temporary or emergency purposes or meeting redemption requests
may not exceed 5% of the value of the Fund's assets. The Fund may not make
additional investments if borrowings exceed 5% of its total assets.

Restricted and Other Illiquid Securities. The Fund may purchase securities
which are subject to legal, contractual or other restrictions on resale, and may
purchase illiquid securities, which are securities that cannot be sold in the
ordinary course of business within seven days. Because of such resale
limitations, the Fund might not be able to dispose of these securities at
reasonable prices or at an advantageous time. The Fund intends to limit the
purchase of restricted or illiquid securities to not more than 15% of its net
assets.

Temporary Investments. As a temporary defensive measure, as determined by
the Investment Adviser, the Fund may invest its assets in the following
securities:

- Short-term money market investments;

- Securities issued or guaranteed as to payment of principal and interest
by the U.S. Government, its agencies or instrumentalities; and

- Repurchase agreements.

If the Fund makes temporary investments, shareholders will be subject to
federal and state income taxes on any corresponding income received from the
Fund.

Put and Call Options. The Fund may purchase put options as a hedge to
attempt to protect securities which it holds against decreases in value. The
Fund will purchase put options only if they are listed on a recognized options
exchange and the underlying securities are held in its portfolio.

The Fund may also write call options on securities either held in its
portfolio, or which it has the right to obtain without payment of further
consideration, or for which it has segregated cash in the amount of any
additional consideration. The call options which the Fund writes and sells must
be listed on a recognized options exchange. Writing of calls is intended to
generate income and, thereby, protect against price movements in particular
securities in the Fund's portfolio. Prior to exercise or expiration, an option
position can only be terminated by entering into a closing purchase or sale
transaction. This requires a secondary market on an exchange which may or may
not exist for any particular call or put option at any specific time. The
absence of a liquid market to close options could have an adverse impact on the
Fund's ability to effectively hedge its portfolio.

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Securities of Other Registered Investment Companies. The Fund may invest up
to 10% of its total assets in shares of other registered investment companies,
principally money market funds. An investment in a registered investment company
involves investment risk. In addition, by investing in other registered
investment companies, the Fund incurs the expenses and distribution costs
charged by the other registered investment companies.

Portfolio Turnover. Although the Fund does not intend to invest for the
purpose of seeking short-term profits, securities in its portfolio will be sold
whenever the Investment Adviser believes it is appropriate to do so in light of
the Fund's investment objective, without regard to the length of time a
particular security may have been held. The annual portfolio turnover rate is
estimated to be up to 100%. The Fund would have an annual portfolio turnover
rate of 100% if all of its securities were replaced within one year. High
portfolio turnover (generally over 100%) generally results in greater brokerage
commissions and transaction costs, which are paid directly by the Fund.

Hedging Strategies. The Fund may buy and sell interest rate futures
contracts, futures contracts on securities and fixed income securities indices
and options on such contracts for the purpose of hedging against changes in the
value of securities which the Fund owns or anticipates purchasing due to
anticipated changes in interest rates. Participation in the options and futures
markets involves additional investment risks and transaction costs. If the
Investment Adviser's assumptions regarding the direction of the securities and
interest rate markets are incorrect, the value of the Fund may be lower than if
the hedging strategy had not been used. There can be no assurance that a liquid
market will exist at a time when the Fund seeks to close out a futures contract
or a futures option position.

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RISK FACTORS

Although the Fund seeks to moderate risk by investing in diversified
portfolios of securities, an investment in the Fund involves certain risks.

General Investment Risk. Loss of money is a risk of investing in the Fund.
This could occur if the value of the municipal bonds and other securities making
up the Fund's investment portfolio were to decrease. An investment in the Fund
is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

Fund Management. The Fund is actively managed by the Investment Adviser.
Fund performance depends on the ability of the Investment Adviser to select and
maintain a portfolio of securities which will achieve the Fund's investment
objectives. The Fund could under-perform compared with other funds having
similar investment objectives.

Credit Risk. The Fund invests in debt securities and is subject to credit
risk, which is the risk that the issuer of a debt security will fail to make
payments of interest and principal when due. Shareholders in the Fund bear the
risk that payment defaults could cause the value of the Fund's investment
portfolio to decline. The Fund's permitted investments are intended to limit the
amount of credit risk undertaken by the Fund, although the Fund is permitted to
invest up to 25% of its assets in securities rated below investment grade.

Interest Rate Risk. The Fund is subject to interest rate risk, which is the
risk that the value of a debt security will decline due to changes in market
interest rates. In general, when interest rates rise, the value of a debt
security declines. When interest rates decline, the value of a debt security
generally increases. The final maturity of the debt also will affect interest
rate risk and price volatility of the portfolio. Generally, a debt security with
a longer maturity will have greater price volatility as a result of interest
rate changes than a debt security with a shorter maturity. Therefore, Fund
shareholders bear the risk that increases in market interest rates will cause
the value of the investment portfolio to decline. Although the Investment
Adviser may engage in transactions intended to hedge the value of the Fund's
portfolios against changes in market interest rates, there is no assurance that
such hedging transactions will be undertaken or will successfully protect the
value of the portfolio.

Yields. The yields of Minnesota municipal bonds will vary depending on a
number of factors, including conditions in the municipal bond and fixed income
markets, the maturity of the bonds, the rating of the issue and the size of a
particular offering. In some cases, Minnesota municipal bonds may have yields
that are slightly lower than the yields of municipal bonds issued in other
states, because of a favorable Minnesota state tax exemption on bonds issued in
Minnesota.

Non-Investment Grade Securities. The Fund may invest up to 25% of its total
assets in municipal bonds rated in the fifth highest rating category of a
nationally recognized statistical rating organization ("Ba" by Moody's or "BB"
by S&P or Fitch), or which are unrated and determined by the Investment Adviser
to be of comparable quality to securities rated in the fifth highest category.
Securities rated in this category are not considered to be investment grade and
have speculative or predominantly speculative characteristics.

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<PAGE> 14

Non-investment grade, high risk securities provide less protection for payment
of principal and interest but may produce greater returns than higher quality
securities. They also have greater risk of default or price changes due to
changes in the issuer's creditworthiness compared to higher quality securities.
Lower rated bonds can fluctuate more in market price than higher quality bonds
and can decline significantly in value during periods of general economic stress
or rising interest rates. In addition, the market for lower rated bonds tends to
be less active than that for higher quality bonds, which may affect the price at
which the lower rated bonds can be sold.

The Fund may hold securities whose ratings have been lowered below the
fifth highest rating category and unrated securities which the Investment
Adviser determines are comparable in quality to rated securities. A ratings
downgrade usually results in a lower market price for the security, and the sale
of a downgraded security could result in a loss.

Geographic Concentration. Because the Fund invests principally in municipal
bonds of Minnesota issuers, the Fund is more susceptible to factors adversely
affecting Minnesota issuers than would be a more geographically diverse bond
portfolio. The value of the Fund's shares may be affected by downturns in the
Minnesota economy and other factors specifically affecting the ability of
Minnesota issuers to pay interest and principal. As a result, the value of the
Fund's shares may fluctuate more than the value of shares of a fund investing in
bonds issued in more than one state.

The ability of state, county or local governments to meet their obligations
will depend primarily on the availability of tax and other revenues, which may
be affected by economic and political conditions in Minnesota. Constitutional or
statutory restrictions may limit a government's power to raise revenues or
increase taxes. In addition, the availability of federal, state and local aid to
governmental issuers may affect their ability to meet obligations. Payments of
principal and interest on private activity bonds depend on the economic
performance of the projects financed by the bonds, which may also be affected by
economic and political conditions in Minnesota. If an issuer of a bond or other
security is unable to meet its financial obligations, the Fund's income and the
value of its portfolio of assets would be adversely affected.

Fund Diversification. The Fund is non-diversified, which means that it has
greater latitude than a diversified fund to invest its assets in the securities
of relatively few municipal issuers. An investment in the Fund may present
greater risks than an investment in a diversified fund, because the Fund is more
susceptible to adverse developments affecting any one issuer of securities held
in its portfolio. The Fund intends, however, to comply with applicable
diversification requirements of the Internal Revenue Code. These requirements
provide that, as of the last day of each fiscal quarter, with respect to 50% of
its total assets, the Fund may not: (1) own the securities of a single issuer
with a value of more than 5% of the Fund's total assets; or (2) own more than
10% of the

11
<PAGE> 15

outstanding voting securities of a single issuer. These limits do not apply to
U.S. Government securities and the securities of investment companies.

Except for investment in U.S. Government securities, no more than 25% of
the total assets of the Fund may be invested in securities of any one issuer.

The "issuer" is the entity whose assets and revenues back the securities,
and may be a governmental entity or a non-governmental user of facilities
financed through industrial development bonds issued by or on behalf of a public
authority or entity.

INVESTMENT RESTRICTIONS

The Fund has adopted certain restrictions designed to reduce investment
risk. Certain of these investment restrictions are fundamental policies, and may
not be changed without shareholder approval. The Fund may not:

- With respect to 50% of its total assets, invest more than 5% of its total
assets in securities of any one issuer (other than U.S. Government
securities), measured as of the last day of each fiscal quarter of the
Fund.

- Invest more than 25% of its total assets in securities rated below the
four highest rating categories by Moody's, S&P or Fitch at the time they
are purchased by the Fund.

- Invest 25% or more of its total assets (determined at the time of
investment) in one or more issuers having their principal business
activities in a single industry.

- Lend money.

- Purchase or sell real estate or interests in real estate, commodities or
commodity futures.

As a matter of operating policy (though not of fundamental policy), the
Fund intends to limit certain of its investments to no more than 15% of the
value of its net assets, in accordance with Securities and Exchange Commission
guidelines pertaining to open-end investment companies. The investments in this
15% limit include (i) those which are restricted (securities which cannot freely
be sold for legal or contractual reasons); (ii) fixed time deposits subject to
withdrawal penalties (other than overnight deposits); and (iii) repurchase
agreements having a maturity of more than seven days. The 15% limitation does
not include obligations which are payable at principal amount plus accrued
interest within seven days after purchase.

Additional information about the Fund's investment restrictions is
contained in the Statement of Additional Information.

12
<PAGE> 16

MANAGEMENT OF THE FUNDS

The Board of Directors of Bremer Funds has overall responsibility for
overseeing the management of the Fund. BIFI employs the Investment Adviser,
Bremer Trust, National Association, P.O. Box 1956, St. Cloud, Minnesota 56302,
to manage the Fund's investment portfolio and certain other business affairs
under an agreement that compensates the Investment Adviser at the annual rate of
0.55% of the average daily net assets of the Fund computed daily and paid
monthly.

The Investment Adviser has managed Bremer Funds since December 1996, and
has not served as investment adviser to any other registered investment company.
As of December 31, 1999, the Investment Adviser managed accounts with an
aggregate value of approximately $1.18 billion. The Investment Adviser is a
wholly owned subsidiary of Bremer Financial Corporation, 445 Minnesota Street,
Suite 2000, St. Paul, Minnesota 55101-2107, a bank holding company.

The Investment Adviser has engaged Richfield Bank & Trust Co. to act as a
sub-adviser to the Fund. The sub-adviser assists in the management of the Fund
consistent with the Fund's objectives and policies, and under the direction and
supervision of the Investment Adviser. The fees paid to the sub-adviser are
included in the compensation the Fund pays to the Investment Adviser, as
described above. Consequently, the services of the sub-adviser will be at no
additional cost to shareholders of the Fund. Richfield Bank & Trust Co. is a
wholly owned subsidiary of Richfield State Agency, Inc., a Minnesota one bank
holding company.

Portfolio Managers. The Fund is managed by Paul W. Gifford, Jr.

PAUL W. GIFFORD, JR., CFA is Assistant Vice President/Portfolio and Product
Manager of the Investment Adviser and has held various positions with the
Investment Adviser since December 1990. Paul's primary focus is on fixed income
strategies including the management of the Bremer Bond Fund and an internal bond
fund. In addition, he assists in stock selection for funds and accounts with the
Investment Adviser. Paul is an investment officer for the Investment Adviser and
serves on its Investment Committee. He has nine years of investment experience
since completing his Business Degree at Mankato State University.

Firstar Bank, N.A., 615 East Michigan Street, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701 (telephone 877-554-4484) acts as Custodian for the Fund.
Firstar Mutual Fund Services, LLC, a wholly owned subsidiary of Firstar Bank,
N.A., serves as transfer agent and dividend disbursing agent for the Funds.
Firstar controls all securities and cash for the Fund, receives and pays for
securities purchased, delivers against payment for securities sold, receives and
collects income from investments, makes all payments for Fund expenses and
performs other administrative services. Firstar is not affiliated with Bremer
Funds or the Investment Adviser.

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<PAGE> 17

PLAN OF DISTRIBUTION

The purchase price you pay for shares in the Fund is the "net asset value"
of the shares plus a front-end sales charge. You may calculate your sales charge
by the following table:

<TABLE>
<CAPTION>
SALES CHARGE AS A SALES CHARGE AS A
TOTAL PURCHASE PRICE PERCENTAGE OF PURCHASE PRICE PERCENTAGE OF NET AMOUNT INVESTED
- -------------------- ---------------------------- ---------------------------------
<S> <C> <C>
Less than $100,000............................ 2.75% 2.83%
$100,000 to $149,999.......................... 2.25% 2.30%
$150,000 to $249,999.......................... 2.00% 2.04%
$250,000 to $499,999.......................... 1.50% 1.52%
$500,000 to $999,999.......................... 1.00% 1.01%
$1,000,000 or above........................... 0.00%
</TABLE>

You may purchase shares without a sales charge if:

- You purchase shares through an account for which Bremer Trust, N.A. or
Richfield Bank & Trust Co., or their affiliates, serve in a trust, agency
or custodial capacity.

- You are a registered investment adviser purchasing shares for client
accounts over which you have discretion or for your own account.

- You are an employee, retiree or director of Bremer Trust, N.A. or
Richfield Bank & Trust Co., or their affiliates.

- You invest $1,000,000 or more in the Fund.

The Fund has adopted a written plan of distribution in accordance with Rule
12b-1 under the Investment Company Act of 1940. The 12b-1 plan authorizes the
Fund to make payments in connection with the distribution of shares at an annual
rate, as determined from time to time by the Board of Directors, of up to 0.25%
of the Fund's average daily net assets. Payments made pursuant to the 12b-1 plan
may only be used to pay distribution expenses actually incurred. Expenses
incurred in one year may be carried forward and paid from amounts available in
future years. The Rule 12b-1 fees may be used to finance any activity which is
primarily intended to result in the sale of shares of the Fund, including, but
not limited to, advertising, compensation for sales and marketing activities of
financial institutions and others such as dealers and distributors, shareholder
account servicing, the printing and mailing of prospectuses and the printing and
mailing of sales literature. The 12b-1 plan permits the Fund to employ a
distributor of shares, in which case payments under the 12b-1 plan will be made
to the distributor and may be spent by the distributor on any activities or
expenses primarily intended to result in the sale of the Fund's shares,
including but not limited to, compensation to, and expenses of, employees of the
distributor who engage in or support distribution of the Fund's shares, printing
of prospectuses and reports, advertising and preparation and distribution of
sales literature. Overhead and salaries will be allocated based on the
percentage of time devoted to distribution activities. The Fund's Board of
Directors has authorized the payment of fees under the 12b-1 plan to the Fund's
principal underwriter. See "Fund Expenses."

14
<PAGE> 18

The Fund will pay all expenses not assumed by the Investment Adviser,
including the costs of preparing and printing registration statements required
under the Securities Act of 1933 and the Investment Company Act of 1940 and any
amendments thereto, the expenses of qualifying shares for sale in various
states, the printing and distribution costs of prospectuses provided to existing
shareholders, the cost of director and officer liability insurance, reports to
shareholders, reports to government authorities and proxy statements, interest
charges, brokerage commissions, and expenses incurred in connection with
portfolio transactions. The Fund will also pay fees of directors who are not
employees or interested persons of the Fund, auditing and accounting services,
fees and expenses of any custodian or trustee having custody of the Fund's
assets, expenses of calculating the net asset value and repurchasing and
redeeming shares, and charges and expenses of dividend disbursing agents,
registrars, and share transfer agents, including the cost of keeping all
necessary shareholder records and accounts.

The Fund has entered into an administration agreement with Firstar Mutual
Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202. Under
the administration agreement, the administrator maintains the books, accounts
and other documents required by the Investment Company Act of 1940, responds to
shareholder inquiries, prepares the Fund's financial statements and tax returns,
prepares certain reports and filings with the Securities and Exchange Commission
and with state regulatory authorities, furnishes statistical and research data,
clerical, accounting and bookkeeping services, keeps and maintains the Fund's
financial and accounting records and generally assists in all aspects of the
Fund's operations. The administrator, at its own expense and without
reimbursement from the Fund, furnishes office space and all necessary office
facilities, equipment and executive personnel for performing the services
required to be performed by it under the administration agreement. For its
services during the Fund's fiscal year ending September 30, 2000, the Fund will
pay the administrator a fee, paid monthly at an annual rate of 0.06% of the
first $200,000,000 of the Fund's average net assets, 0.05% of the next
$500,000,000 of the Fund's average net assets, and 0.03% of each Fund's net
assets in excess of $700,000,000. The administrator's minimum annual fee,
regardless of net asset value, is $20,000.

Firstar Mutual Fund Services, LLC also provides transfer agency and
accounting services for the Fund and Firstar Bank, N.A. provides custodial
services for the Fund. Information about the fees paid for these services by the
Fund is provided in the Statement of Additional Information.

FUND SHARES AND ORGANIZATION

Bremer Funds is an open-end investment company which offers shares in
mutual funds. It was incorporated under the laws of Maryland on August 26, 1996
and is registered under the Investment Company Act of 1940. The Articles of
Incorporation authorize the Board of Directors to issue up to 500 million shares
of Common Stock, $.0001 par value per share. Of these shares, 50 million have
been authorized for the Fund. Fund shares are fully paid and non-assessable when
issued; have no preference as to conversion, exchange, dividends, redemption or
other features; and have no preemptive rights. The shares have no cumulative
voting rights, meaning that the holders of more than 50% of the shares voting
for the election of directors can elect 100% of the directors. Shares may be
issued as either full or fractional shares. Fractional shares have, pro rata,
the same rights and privileges as full shares.

15
<PAGE> 19

Each share of the Fund has one vote. On certain matters, such as the
election of directors, all shares of all of the Fund vote together as one
series. On matters affecting only a particular Fund or class, the shares of that
Fund or class will vote as a separate series. An example of such a matter would
be a proposal to alter a fundamental investment restriction pertaining to the
Fund.

Under the laws of the State of Maryland and Bremer Fund's Bylaws, Bremer
Funds is not required to hold shareholder meetings unless they are required by
the Investment Company Act of 1940 or are requested in writing by the holders of
10% or more of the outstanding shares of entitled to vote at a meeting of
shareholders.

As of December 31, 1999, no person owned a controlling interest in the
Fund.

PRICE OF SHARES

Shares of the Fund are sold at their net asset value plus a front-end sales
charge and are redeemed at their net asset value. The sales charges are
described under "Plan of Distribution." The net asset value per share for
purchase and redemption orders is determined once daily, as of the close of
regular trading hours (currently 3:00 p.m., Central time) of the New York Stock
Exchange on each day the Exchange is open for trading. Net asset value per share
of the Fund is calculated by dividing the total market value of the Fund's
investments and other assets, less any liabilities, by the total outstanding
shares of the Fund.

For the purpose of determining the aggregate net assets of the Fund, cash
and receivables will be valued at their face amounts. Interest will be recorded
as accrued and dividends will be recorded on the ex-dividend date. Debt
obligations exceeding 60 days to maturity which are actively traded are valued
by an independent pricing service at the most recently quoted bid price. Debt
obligations with 60 days or less remaining until maturity may be valued at their
amortized cost, which approximates market value. Options purchased or written by
the Fund are valued at the average of the current bid and asked prices. For
securities where quotations are not readily available, or where the last quoted
sale price is not considered representative of the value of that security if it
were to be sold on that day, the security will be valued at fair value as
determined in good faith by the Investment Adviser, under the supervision of the
Fund's Board of Directors.

PURCHASING SHARES

BY MAIL: Subscription for shares should be addressed to the Legacy
Minnesota Municipal Bond Fund, c/o Firstar Mutual Fund Services, LLC, Mutual
Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Express or
registered mail should be sent to the Legacy Minnesota Municipal Bond Fund, c/o
Firstar Mutual Fund Services, LLC, Third Floor, 615 East Michigan Street,
Milwaukee, Wisconsin 53202. The U.S. Postal Service or independent delivery
services are not agents of the Fund, and deposit in the mail or with a delivery
service of purchase applications does not constitute receipt by Firstar or the
Fund.

BY WIRE: Before wiring funds, an investor should call Firstar Mutual Fund
Services, LLC at 877-554-4484 to advise that funds are being wired. To purchase
by wire transfer, federal funds should be transmitted to Firstar Bank N.A., ABA
#0750-00022/ For Credit to: Firstar Mutual Fund Services, LLC, Account
#112-952-137/For

16
<PAGE> 20

Further Credit: Legacy Minnesota Municipal Bond Fund [shareholder account
number], [name of account]. An Account Application Form must be on file with
Firstar Mutual Fund Services, LLC before purchasing shares by wire. Neither the
Fund nor its agents are responsible for the consequences of delays resulting
from the bank or Federal Reserve wire system.

The purchase price, less the applicable sales charge, will be invested in
the net asset value next computed after the time the properly completed
application and funds are received by the Transfer Agent. The determination of
net asset value for a particular day is applicable to all applications for the
purchase of shares received at or before the close of trading on the Exchange.
Accordingly, purchase orders received on a day the Exchange is open for trading,
prior to the close of trading on that day, will be valued as of the close of
trading on that day. Applications for purchase of shares received after the
close of trading on the Exchange will be based upon the net asset value as
determined as of the close of trading on the next day the Exchange is open.

An initial purchase must be at least $2,000 and each subsequent purchase
must be at least $100, although the Fund reserves the right to waive or change
these minimums at its discretion. All applications to purchase capital stock are
subject to acceptance or rejection by authorized officers of the Fund and are
not binding until accepted. Applications will not be accepted unless accompanied
by payment in U.S. funds. Payment should be made by check or wire transfer drawn
on a U.S. bank, savings and loan, or credit union. The Fund will not accept
payment in cash or third party checks for the purchase of shares. The Transfer
Agent will charge a $25 fee against an investor's account for any check that
does not clear. Additionally, the investor may be responsible for certain
expenses incurred by the Fund if a purchase is cancelled due to non-payment.

REDEEMING SHARES

Shareholders may redeem for cash all or a portion of their shares by
instructing the Transfer Agent at its office in Milwaukee, Wisconsin. Shares
will be redeemed at the net asset value next computed after the receipt of a
properly completed redemption request. The determination of net asset value for
a particular day is applicable to all requests for the redemption of shares
received at or before the close of trading on the Exchange on that day (usually
3:00 p.m. Central time). Requests received for redemption on a day the Exchange
is open for trading, prior to the close of trading on that day, will be valued
as of the close of trading on that day. Requests for redemption of shares
received after the close of trading on the Exchange will be based upon the net
asset value as determined as of the close of trading on the next day the
Exchange is open. A redemption request must be properly completed before the
proceeds can be released. This means the following will be required:

(i) A letter of instruction specifying the account number, number of shares
or dollar amount to be redeemed, signed by all owners of the shares
exactly as their names appear in the Fund's shareholder records. If
certificates have been issued representing shares to be redeemed, they
must accompany the letter and must be endorsed on the back with the
signature of the person whose name appears on the certificate.

(ii) A guarantee of the signature of each owner by an eligible signature
guarantor such as a U.S. commercial bank, trust company, or member of
the New York Stock Exchange for redemption requests greater than
17
<PAGE> 21

$10,000, if the address of record has been changed within the 15 days
preceding any liquidation, or if the proceeds of any redemption are
requested to be made payable to or sent to other than the address of
record.

(iii) In the case of estates, trusts, guardianships, custodianships, and
corporations, other supporting legal documents may be required.

If any portion of the shares to be redeemed represents an investment made
by check, the Fund will delay the payment of the redemption proceeds until the
transfer agent is reasonably satisfied that the check has been collected, which
may take up to 12 days from the purchase date.

Payment for shares redeemed will be mailed generally within two business
days, but no later than the seventh business day after receipt by the Transfer
Agent of the properly completed redemption request, or within such shorter
period as may legally be required. If payment of redemption proceeds is to be
made by federal wire transfer, a $12 wire fee will be applied.

No redemption request will become effective until all documents have been
received in proper form by Firstar Mutual Fund Services, LLC. The shareholder
should contact Firstar for further information concerning documentation required
for a redemption of Fund shares. The U.S. Postal Service or independent delivery
services are not agents of the Fund, and deposit in the mail or with a delivery
service of redemption requests does not constitute receipt by Firstar or the
Fund.

A redemption order may not be canceled or revoked by the shareholder once
it has been received and accepted by the Fund. Since the redemption price is the
net asset value per share determined at the same time and in the same manner as
for a purchase order received at that time, it reflects the market value of the
Fund's investments at the time of redemption. This value may be more or less
than the price originally paid for the shares, and the investor may realize a
gain or loss on redemption.

To redeem shares by telephone, an investor must check the appropriate box
on the account application. Proceeds redeemed by telephone will be mailed, sent
by electronic funds transfer or wired only to an investor's address or bank of
record as shown on the records of the Transfer Agent. In the case of redemption
proceeds that are sent by wire transfer, the investor will be charged a $12
wiring fee. In order to arrange for telephone redemptions after an account has
been opened or to change the bank, account, or address designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent. The
request must be signed by each shareholder of the account with the signatures
guaranteed. Further documentation may be requested from corporations, executors,
administrators, trustees and guardians.

Neither the Fund nor the Transfer Agent will be responsible for the
authenticity of redemption instructions received by telephone. The Transfer
Agent has adopted certain procedures to safeguard against unauthorized telephone
instructions including recording all telephone transactions and sending written
confirmation of such transactions. The Fund reserves the right to refuse a
telephone redemption if they believe it is advisable to do so. Procedures for
redeeming shares by telephone may be modified or terminated by the Fund at any
time. During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If an

18
<PAGE> 22

investor is unable to contact the Transfer Agent by telephone, shares may also
be redeemed by delivering the redemption request to the Transfer Agent in person
or by mail as described above.

DIVIDENDS

The Fund will distribute all of its net investment income to shareholders
in the form of dividends declared daily and paid monthly. If net capital gains
are realized, the Fund will distribute them near year-end in the year in which
such gains are realized.

Investors in the Fund may elect to have all income dividends and capital
gains distributions reinvested in shares of the Fund or paid in cash. Further
information about dividend reinvestment is contained in the New Account
Application form accompanying this Prospectus. If an election is not specified,
all dividends and capital gains distributions will automatically be reinvested
in full and fractional shares of the Fund, calculated to the nearest 1,000th of
a share. There is no sales charge imposed on dividend reinvestments.

Shares are purchased at the net asset value in effect on the business day
after the dividend record date and are credited to the investor's account on the
dividend payment date. Cash dividends are also paid on the dividend payment
date. Investors will be informed of the number of shares purchased and the price
following each reinvestment. An election to reinvest or receive dividends and
distributions in cash will apply to all shares registered in an investor's name,
including those previously purchased through dividend reinvestment.

Any dividends and capital gain distributions declared in December to
shareholders of record on a date in that month will be deemed to have been paid
by the Funds and received by shareholders on December 31 if the distributions
are paid before February 1 of the following year.

An investor may change an election at any time by notifying the Fund in
writing. If such notice is received between a dividend declaration date and the
corresponding payment date, it will become effective on the day following the
payment date. The Fund may modify or terminate the dividend reinvestment program
at any time on 30 days' notice to participants.

TAXES

The Fund intends to comply with the special provisions of Subchapter M of
the Internal Revenue Code that relieve it from federal income tax on net
investment income and capital gains currently distributed to shareholders. The
Internal Revenue Code requires all regulated investment companies to pay a
nondeductible 4% excise tax if at least 98% of ordinary income and 98% of
capital gains are not paid out to shareholders during the year in which they are
earned or realized. The Fund intends to distribute income and capital gains in
such a manner as to avoid the imposition of this excise tax.

Federal Income Taxes. Dividends from tax-exempt interest income earned by
the Fund generally are exempt from federal regular income taxes. Although the
Fund intends to invest primarily in municipal securities exempt from federal
taxes, the Fund may invest in taxable obligations, which generate interest
taxable as

19
<PAGE> 23

ordinary income. Dividends, whether paid in cash or reinvested in additional
shares, from net investment income and net short-term capital gains, if any,
will be taxable to shareholders as ordinary income. Distributions of net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
are taxable to shareholders as long-term capital gain, whether paid in cash or
additional shares, and regardless of the length of time the shares have been
owned by the shareholder. Shareholders are notified annually as to the federal
tax status of dividends and other distributions paid by the Funds. If a
shareholder is not required to pay taxes on income, such shareholder is
generally not required to pay federal income tax on the amounts distributed to
him or her.

When a shareholder redeems shares of the Fund, the redemption may result in
a taxable gain or loss, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the shares. In addition, if Fund
shares are purchased within 30 days before or after selling other Fund shares at
a loss, all or a portion of the loss will not be deductible. Capital gain on
redeemed shares held for more than one year will be long-term capital gain, in
which event it will be subject to federal income tax.

Certain Fund shareholders may transfer appreciated assets to the Fund in
exchange for Fund shares (for example, upon the transfer of securities from a
predecessor common or collective fund). Upon a redemption of Fund shares, such
shareholders would realize taxable gain on the appreciation of such assets prior
to the time of the exchange, in addition to any subsequent appreciation of Fund
shares.

Dividends and distributions are paid on a per share basis. At the time of
such payment, therefore, the value of each share will be reduced by the amount
of the payment. If shares are purchased shortly before the payment of a dividend
or a capital gains distribution, purchasers will pay the full price for the
shares and then receive some portion of the price back as a taxable dividend or
distribution.

The Fund may be required to withhold federal income tax at a rate of 31%
(backup withholding) from dividend payments, distributions, and redemption
proceeds if a shareholder fails to furnish the Fund with a social security or
tax identification number. The shareholder also must certify that the number is
correct and that the shareholder is not subject to backup withholding. The
certification is included as part of the share purchase application form.

Minnesota Income Taxes. Interest earned on Minnesota municipal securities
is generally excluded from taxable net income for Minnesota state income tax
purposes, provided that at least 95% of the exempt-interest dividends paid by
the Fund are derived from Minnesota municipal securities. Exempt-interest
dividends received by shareholders which are corporations or financial
institutions are treated as taxable income.

Dividends treated as capital gain distributions for federal tax purposes
are treated as long-term capital gains for Minnesota tax purposes. Shareholders
may be subject to the Minnesota alternative minimum tax on exempt-interest
dividends derived from private activity bonds.

The foregoing is only a general summary of some of the current federal and
Minnesota income tax considerations regarding the Fund. Investors should consult
with their own tax adviser regarding federal, state and local tax consequences
of an investment in the Fund.

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<PAGE> 24

PERFORMANCE INFORMATION

The Fund may, from time to time, advertise information regarding its
performance. The Fund's average annual total rate of return will be expressed in
terms of the average annual compounded rate of return on a hypothetical
investment in the Fund over a specified period, will reflect the deduction of a
proportional share of Fund expenses (on an annual basis) and will assume that
all dividends and capital gains distributions are reinvested when paid. Total
return indicates the positive or negative rate of return that a shareholder
would have earned from reinvested dividends and distributions and changes in net
asset value per share during the period.

Performance information for the Fund may be compared, in reports and
promotional literature to: (i) the Lehman Brothers 5 Year Municipal Bond Index
or the Merrill Lynch Three to Seven Year Municipal Bond Index or various other
unmanaged indices, and (ii) the performance of other mutual funds. Unmanaged
indices may assume the reinvestment of income distributions, but generally do
not reflect deductions for administrative and management costs and expenses.

Performance information for the Fund reflects only the performance of
hypothetical investments in the Fund during the particular time periods on which
the calculations are based. Such information should not be considered as
representative of the performance of the Fund in the future. The performance of
the Fund will vary based not only on the current market value of the securities
held in its portfolio, but also on changes in the Fund's expenses and in the
asset size of the Fund. Performance information should be considered in light of
the Fund's investment objectives and policies, the types and quality of the
Fund's portfolio investments, market conditions during the particular time
period and operating expenses.

SHAREHOLDER SERVICES

Shareholder Reports. Shareholders will receive a confirmation statement
reflecting each purchase and redemption of Fund shares, as well as periodic
statements detailing distributions made by the Fund. In addition, the Fund will
send reports to shareholders semi-annually showing the Fund's portfolio holdings
and will provide tax information annually.

Systematic Investments. Shareholders may arrange to make regular monthly or
quarterly investments in the Fund through automatic withdrawals from a bank
account. The minimum for each systematic investment in the Fund is $100 and a
shareholder must have a minimum of $2,000 invested in the Fund before making
systematic investments. A shareholder may specify systematic investments on the
initial account application or by submitting a Systematic Investment application
at a later date.

Systematic Withdrawals. Shareholders may arrange to make regular monthly or
quarterly withdrawals of cash (minimum of $250 per withdrawal) from the Fund if
the shareholder has a minimum balance of $50,000 at the time the systematic
withdrawal election is made. To activate systematic withdrawals, a shareholder
must submit a Systematic Withdrawal application to the Fund. There is no charge
for withdrawals, unless the proceeds are wired to the shareholder's bank.
Withdrawal payments are derived from liquidation of sufficient shares from a
shareholder's account to make the designated payments. If systematic withdrawals
exceed reinvested dividends and capital gain distributions, a shareholder's
original investment will be reduced and ultimately exhausted. Withdrawals are
redemptions of shares and may cause a shareholder to realize gains or losses for
tax purposes. The withdrawal plan may be terminated at any time by calling or
writing to the Fund.

21
<PAGE> 25

NEW ACCOUNT INFORMATION:

877-554-4484

SHAREHOLDER ACCOUNT INFORMATION:

877-554-4484

INVESTMENT ADVISER:

Bremer Trust, National Association
P.O. Box 986
St. Cloud, Minnesota 56302-0986

SUB-ADVISER:

Richfield Bank & Trust Co.
6625 Lyndale Avenue South
Richfield, Minnesota 55423

TRANSFER AGENT:

Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
(Regular Mail Address)

Mutual Fund Services
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202
(Overnight or Express Mail Address)

CUSTODIAN:

Firstar Bank, N.A.

615 East Michigan Street
Milwaukee, Wisconsin 53201

DISTRIBUTOR:

Rafferty Capital Markets, Inc.

1311 Mamaroneck Avenue

White Plains, New York 10605

INDEPENDENT PUBLIC ACCOUNTANTS:

Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

LEGAL COUNSEL:

Briggs and Morgan,
Professional Association
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402

ADDITIONAL INFORMATION

- Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's
annual report, you will also find a discussion of the market conditions
and investment strategies that significantly affected the Fund's
performance during the last fiscal year.

- Additional information is contained in the Statement of Additional
Information (SAI), which provides more details about the Fund and its
investment policies and restrictions.

22
<PAGE> 26

- You can obtain free copies of the annual report, semi-annual report or
SAI, request other information about the Fund, or make shareholder
inquiries by calling 1-877-554-4484.

- Documents filed with the SEC by the Fund are available on the SEC's
internet site at http:// www.sec.gov, where they are listed under
"Bremer Investment Funds, Inc."

- Documents filed with the SEC can also be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. You can also obtain
copies, after paying a duplicating fee, by electronic request at the
following E-mail address: [email protected], or by writing to the SEC's
Public Reference Section, Washington, DC 20549-6009. Information about
the operation of the Public Reference Room is available by calling the
SEC at 1-800-SEC-0330.

- The Fund's Investment Company Act file number is 811-7919.

23
<PAGE> 27

LEGACY MINNESOTA MUNICIPAL BOND FUND
STATEMENT OF ADDITIONAL INFORMATION

DATED JANUARY 28, 2000

Legacy Minnesota Municipal Bond Fund is part of a family of mutual funds
offered by Bremer Investment Funds, Inc. (Bremer Funds), an open-end,
diversified investment company.

This Statement of Additional Information is not a prospectus, but contains
information in addition to and more detailed than what is contained in the
Prospectus for the Fund. It should be read in conjunction with the Prospectus,
dated January 28, 2000, which has been filed with the Securities and Exchange
Commission and can be obtained, without charge, by calling 1-877-554-4484 or
writing to the Fund, c/o Firstar Mutual Fund Services, LLC, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701. This Statement of Additional Information has
been incorporated by reference into the Prospectus.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Investment Objectives and Policies.......................... 2
Investment Limitations...................................... 2
Portfolio Turnover.......................................... 2
Purchasing and Redeeming Shares............................. 3
Officers and Directors...................................... 3
Principal Holders of Securities............................. 5
Investment Adviser.......................................... 6
Transfer Agent and Custodian................................ 7
Portfolio Transactions...................................... 7
Dividends, Distributions and Tax Consequences............... 8
Underwriters................................................ 9
Financial Statements........................................ 9
</TABLE>

<PAGE> 28

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives, policies and limitations of the Fund are
described in the Prospectus under the heading "Investment Objectives and
Policies."

INVESTMENT LIMITATIONS

The Fund is subject to certain fundamental investment restrictions
described in the Prospectus under the heading "Investment Restrictions." Such
investment restrictions may not be changed without the approval of a majority of
the shareholders of the Fund. The vote of a majority of the shareholders means
the vote, at a meeting of the shareholders, of holders representing (a) 67% or
more of the voting securities present at such meeting, if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy; or (b) more than 50% of the outstanding voting securities, whichever is
less.

In addition, the Fund has adopted other investment limitations and will
not:

1) Purchase securities on margin, participate in a joint trading account or
sell securities short.

2) Borrow money except temporarily from a bank (5% of lower of cost or
market value of total assets) for emergency or extraordinary purposes.

3) Purchase securities if borrowings exceed 5% of its total assets.

4) Purchase securities of other regulated investment companies, except in
open market transactions limited to not more than 10% of its total
assets, or except as part of merger, consolidation or other acquisition.

5) Invest more than 15% of its total assets in fixed income securities of
any issuer which are not readily marketable.

6) With respect to 50% of its total assets, invest more than 5% of its
total assets in securities of any one issuer (except cash, cash items,
repurchase agreements and U.S. Government obligations).

7) Hold more than 25% of its total net assets in bonds rated less than Baa
by Moody's or BBB by S&P or Fitch.

PORTFOLIO TURNOVER

The annual portfolio turnover rate is not expected to exceed 100%. No
limit, however, has been placed on the rate of portfolio turnover of the Fund,
and securities may be sold without regard to the time they have been held when,
in the opinion of the Investment Adviser, investment considerations warrant such
action. Portfolio turnover rate is calculated by dividing the lesser of the
Fund's annual sales or purchases of portfolio securities (exclusive of
securities with maturities of one year or less at the time the Fund acquired
them) by the monthly

2
<PAGE> 29

average value of the securities in the Fund's portfolio during the year. For the
period from April 12, 1999 (commencement of operations) through September 30,
1999, the Fund's portfolio turnover rate was 18.86%.

PURCHASING AND REDEEMING SHARES

The purchase and redemption of shares of the Fund are subject to the
procedures described under the headings "Purchasing Shares" and "Redeeming
Shares" in the Prospectus, which is incorporated herein by reference.

OFFICERS AND DIRECTORS

The officers and directors of Bremer Funds and their principal occupations
for the last five years are set forth below. Unless otherwise noted, the address
for each director and officer is Bremer Investment Funds, Inc., P.O. Box 1956,
St. Cloud, Minnesota 56302.

<TABLE>
<CAPTION>
POSITION(S) HELD
WITH BREMER PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS FUNDS DURING PAST FIVE YEARS
- ---------------- ---------------- -----------------------
<S> <C> <C>
Steven A. Laraway*................... President and President/Chief Executive Officer of Bremer
Director Trust, National Association since February
1992; Vice President of Bank One Ohio Trust
Company from March 1987 to February 1992.

David J. Erickson*................... Vice President Vice President/Investment Officer of Bremer
Trust, National Association since January
1993; Vice President -- Investments of
North Central Trust Company from September
1987 to January 1993.

Sandra A. Schimek*................... Vice President Senior Vice President/Chief Investment
Officer of Bremer Trust, National
Association since April 1999; Senior
Portfolio Manager and various other
positions with Bank One Investment Advisers
from 1986 to April 1999.

Paul W. Gifford, Jr.*................ Secretary Assistant Vice President/Portfolio and
Product Manager of Bremer Trust, National
Association. Mr. Gifford has held various
positions with Bremer Trust since December
1990.
</TABLE>

3
<PAGE> 30

<TABLE>
<CAPTION>
POSITION(S) HELD
WITH BREMER PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS FUNDS DURING PAST FIVE YEARS
- ---------------- ---------------- -----------------------
<S> <C> <C>
Richard A. DiNello*.................. Treasurer Chief Financial Officer of Bremer Trust,
National Association. Mr. DiNello has held
various positions with Bremer Trust since
July 1986.

John M. Bishop....................... Director President of Bishop Communications Corp.
Lakedale Telephone Company for more than the past five years.
Highway 55 East
Annadale, MN 55302

Stanley K. Dardis*................... Director President and Chief Executive Officer of
445 Minnesota St., Bremer Financial Corporation since March
Suite 2000 1998, Executive Vice President and Chief
St. Paul, MN 55101-2107 Operating Officer of Bremer Financial
Corporation from June 1996 to March 1998,
and Executive Vice President and Retail
Banking Services Director of Bremer
Financial Corporation from December 1993 to
June 1996.

John J. Feda......................... Director Retired.
607 South First Street
Marshall, MN 56258

Barbara A. Grachek................... Director Associate Vice President for Academic
107 Woodhill Road Affairs, St. Cloud State University since
St. Cloud, MN 56301-4498 1997 and Vice President for Academic
Affairs from 1991 to 1997.
</TABLE>

- -------------------------
* Interested person of the Fund, as defined in the Investment Company Act of
1940.

4
<PAGE> 31

The following table provides compensation information for Bremer Funds'
directors for the year ended September 30, 1999 and projected information for
the fiscal year ending September 30, 2000. Executive officers of Bremer Funds
and directors who are deemed to be interested persons of Bremer Funds, as
defined in the Investment Company Act of 1940, do not receive compensation from
Bremer Funds. Bremer Funds currently pays fees to outside directors of $1,000
for each in-person meeting and $500 for each telephonic meeting attended, plus
out-of-pocket expenses for attending directors' meetings.

<TABLE>
<CAPTION>
PROJECTED
AGGREGATE 1999 AGGREGATE 2000
COMPENSATION PROJECTED COMPENSATION
AGGREGATE 1999 FROM THIS FUND AGGREGATE 2000 FROM THIS FUND
COMPENSATION AND FUND COMPENSATION AND FUND
NAME AND POSITION FROM THIS FUND COMPLEX FROM THIS FUND COMPLEX
----------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
John M. Bishop........................... $333 $1,900 $833 $2,500
Director
Stanley K. Dardis........................ -0- -0- -0- -0-
Director
John J. Feda............................. 166 1,400 833 2,500
Director
Barbara A. Grachek....................... 333 1,000 833 2,500
Director
Steven A. Laraway........................ -0- -0- -0- -0-
President and Director
</TABLE>

The Fund, the Investment Adviser and the Fund's principal underwriter have
adopted codes of ethics under Rule 17(j)-l of the Investment Company Act. These
codes of ethics permit personnel subject to the codes to invest in securities,
including securities that may be purchased or held by the Fund.

PRINCIPAL HOLDERS OF SECURITIES

As of December 31, 1999, Bremer Funds' officers and directors, as a group,
owned less than 1% of the outstanding common stock of the Fund.

5
<PAGE> 32

As of December 31, 1999, the following persons owned of record or, to the
knowledge of the Fund, beneficially, 5% or more of the outstanding shares of the
Fund.

<TABLE>
<CAPTION>
PERCENTAGE OF FUND PERCENTAGE OF FUND
NAME AND ADDRESS HELD OF RECORD HELD BENEFICIALLY
---------------- ------------------ ------------------
<S> <C> <C>
Kirchbak Company
6625 Lyndale Ave. S.
Richfield, MN 55423......................................... 71.03% -0-
JAS & Co.
c/o Bremer Trust
4150 2nd St. S.
St. Cloud, MN 56301......................................... 28.90% -0-
</TABLE>

INVESTMENT ADVISER

Bremer Trust, National Association (the "Investment Adviser") serves as the
investment adviser of the Fund under the terms of an Investment Advisory
Agreement dated December 17, 1996. The Investment Advisory Agreement must be
approved annually by the Board of Directors of Bremer Funds, including a
majority of those directors who are not parties to such contract or "interested
persons" of any such party as defined in the Investment Company Act of 1940, by
vote cast in person at a meeting called for such purpose. The Agreement may be
terminated at any time, without penalty, on 60 days' written notice by Bremer
Funds' Board of Directors, by the holders of a majority of the Fund's
outstanding voting securities or by the Investment Adviser. The Agreement
automatically terminates in the event of its assignment (as defined in the
Investment Company Act of 1940 and the rules thereunder).

As compensation for its services to the Funds, the Investment Adviser
receives monthly compensation at the annual rate of 0.55% of the average daily
net assets of the Fund, computed daily and paid monthly. The Fund paid the
Investment Adviser total fees of $149,719 for the period from April 12, 1999
through September 30, 1999.

Bremer Funds bears all expenses of its operation, other than those assumed
by the Investment Adviser. Such expenses include payment for distribution,
transfer agent services, accounting services, certain administration services,
legal fees and payment of taxes. The expenses of organizing Bremer Funds and
registering and qualifying its initial shares under federal and state securities
laws are being charged to Bremer Funds' operations as an expense amortized over
a period not to exceed five years.

The Investment Adviser is a wholly owned subsidiary of Bremer Financial
Corporation, a bank holding company. The officers of Bremer Funds also serve as
officers of the Investment Adviser, as described above in "Officers and
Directors."

6
<PAGE> 33

The Investment Adviser has appointed Richfield Bank & Trust Co. to act as a
sub-adviser to the Fund under a Sub-Adviser Agreement dated January 14, 1999.
The fees paid to the sub-adviser are included in the compensation the Fund pays
to the Investment Adviser. Consequently, the services of the sub-adviser will be
at no additional cost to shareholders of the Fund. The sub-adviser will receive
fees at an annual rate of 0.50% for the 12 months ending March 31, 2000, 0.45%
for the 12 months ending March 31, 2001 and 0.40% from April 1, 2001 and
thereafter, calculated in each case on the average daily net assets of the Fund
attributable to shares beneficially owned by holders of accounts maintained with
the sub-adviser or sold through a specified broker-dealer. The sub-adviser will
receive a fee at an annual rate of 0.275% of the average net daily net assets of
the Fund attributable to shares which are not beneficially owned by holders of
accounts maintained with either the Investment Adviser or the sub-adviser and
which were not sold through specified broker-dealers. In the case of any shares
of the Fund sold through an arrangement in which a portion of the total
management fee of 0.55% is paid to a third party institution, the Investment
Adviser and sub-adviser will split the remaining portion of the total management
fee. Richfield Bank & Trust Co. is a wholly owned subsidiary of Richfield State
Agency, Inc., a Minnesota one bank holding company.

Bremer Funds has adopted a written plan of distribution in accordance with
Rule 12b-1 under the Investment Company Act of 1940. Bremer Funds paid $5,445
under the plan during the period from April 12, 1999 through September 30, 1999.
See "Plan of Distribution" in the Prospectus.

TRANSFER AGENT AND CUSTODIAN

Firstar Bank, N.A. acts as custodian and Firstar Mutual Fund Services, LLC,
its wholly owned subsidiary, acts as administrator, transfer agent and dividend
disbursing agent. Firstar is reimbursed for all expenditures incurred in the
discharge of these responsibilities. Firstar's address is P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, (telephone 877-554-4484).

Firstar Bank, N.A. and Bremer Funds are parties to a Custodian Agreement.
Firstar Mutual Fund Services, LLC and Bremer Funds are parties to a Fund
Administration Servicing Agreement, Fund Accounting Servicing Agreement and
Transfer Agent Agreement. Pursuant to such agreements, Firstar controls all
securities and cash for the Funds, receives and pays for securities purchased,
delivers against payment for securities sold, receives and collects income from
investments, makes all payments for Fund expenses and performs other
administrative services, as directed in writing by authorized officers of the
Funds. Certain information regarding the administrative services provided by
Firstar Mutual Fund Services, LLC is contained in the Prospectus under the
heading "Plan of Distribution."

PORTFOLIO TRANSACTIONS

Subject to policies established by Bremer Funds' Board of Directors, the
Investment Adviser is responsible for the Fund's portfolio decisions and the
placing of orders to effect the Fund's portfolio transactions. With respect to
such transactions, the Investment Adviser seeks to obtain the best net results
for the Fund, taking into

7
<PAGE> 34

account such factors as price (including the applicable brokerage commission or
dealer spread), size of order, difficulty of execution and operational
facilities of the firm involved. While the Investment Adviser generally seeks
reasonably competitive commission rates, the Fund will not necessarily be paying
the lowest commission or spread available. Bremer Funds has no obligation to
deal with any broker or dealer in the execution of its portfolio transactions.
There is no affiliation between any broker-dealer or affiliated persons of any
broker-dealer who executes transactions for the Fund and Bremer Funds' officers
and directors or the Investment Adviser.

In addition to the Fund, the Investment Adviser also manages two other
funds issued by Bremer Funds, the Bremer Growth Stock Fund and the Bremer Bond
Fund. Investment decisions for each of these funds are made independently. When
the funds are simultaneously engaged in the purchase or sale of the same
securities, the transactions are averaged as to price and allocated as to amount
in accordance with a formula deemed equitable to each fund. In some cases this
system could adversely affect the price paid or received by the Fund, or the
size of the position obtainable for the Fund.

Decisions with respect to allocations of portfolio brokerage will be made
by the Investment Adviser. Portfolio transactions are normally placed with
broker-dealers which provide the Investment Adviser with research and
statistical assistance. Recognizing the value of these factors, the Fund may pay
brokerage commissions in excess of those which another broker might charge for
effecting the same transaction.

DIVIDENDS, DISTRIBUTIONS AND TAX CONSEQUENCES

The Fund intends to distribute all net investment income, if any, together
with any realized net capital gains in the amount and at the times that will
avoid federal income and excise tax liability. To avoid federal income tax on
income and gains that are distributed, the Fund must qualify for the special tax
treatment afforded to a regulated investment company under the Internal Revenue
Code of 1986, as amended. To qualify for that treatment, the Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment income
and net short-term capital gains) and must meet several additional requirements.
For the Fund, these requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, futures and forward contracts) derived with respect to its
business of investing in securities or currencies; and (2) at the close of each
quarter of the Fund's taxable year, (i) at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other registered investment companies, and other securities, with
these other securities limited, in respect of any one issuer, to an amount that
does not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's voting securities, and (ii) not more
than 25% of the value of its total assets may be invested in securities (other
than U.S. Government securities or the securities of other registered investment
companies) of any one issuer or two or more issuers which the Fund controls.

8
<PAGE> 35

The Fund's use of hedging strategies, such as writing (selling) and
purchasing options and futures and entering into forward contracts, involves
complex rules that will determine for income tax purposes the amount, character,
and timing of recognition of the gains and losses it realizes from such hedging
strategies.

Undistributed net investment income is included in the Fund's net assets
for the purpose of calculating net asset value per share. Therefore, on the
"ex-dividend" date, the net asset value per share excludes the dividend, because
it is reduced by the per share amount of the dividend. Dividends and other
distributions paid shortly after the purchase of shares by an investor, although
in effect a return of capital, are taxable to the investor.

As stated in the Prospectus, unless a shareholder elects otherwise in
writing, all dividends and other distributions are automatically paid in
additional Fund shares at net asset value (as of the business day following the
record date). A shareholder may elect to have all income dividends and capital
gains distributions reinvested in shares of the Fund or paid in cash. A
shareholder may change an election at any time by notifying the Fund in writing.
If such notice is received between a dividend declaration date and the
corresponding payment date, it will become effective on the day following the
payment date. An account statement is sent to shareholders whenever an income
dividend or other distribution is paid.

UNDERWRITERS

Rafferty Capital Markets, Inc. (the "Distributor") has entered into a
Distribution Agreement with Bremer Funds effective December 31, 1998. The
Distributor is not affiliated with Bremer Funds or the Investment Adviser. The
Distributor will offer the Fund's common stock continuously, on a best efforts
basis, by receiving purchase and redemption orders on behalf of the Fund. The
Distributor is not obligated to sell any particular number of shares. For
calendar year 1999, the Distributor received a fee equal to .0075% annually of
the average daily net assets of the Fund, computed daily and paid monthly. The
Distributor will receive the same fee for calendar year 2000.

FINANCIAL STATEMENTS

The Fund's financial statements, including a listing of portfolio
securities as of September 30, 1999, are included in the Fund's Annual Report to
Shareholders for the period from April 12, 1999 (commencement of operations)
through September 30, 1999 and are incorporated herein by reference. The
financial statements have been audited by Arthur Andersen LLP, independent
public accountants, as set forth in their report appearing in the Annual Report
and incorporated herein by reference. Additional copies of the Annual Report may
be obtained, without charge, by writing or calling the Fund.

9
<PAGE> 36

ITEM 22. FINANCIAL STATEMENTS

(a) Financial Statements

The financial statements identified in the index below, together with the
report of Arthur Andersen LLP dated October 22, 1999, appearing on pages 3 to 16
of the September 30, 1999 Annual Report are incorporated herein by reference to
registrant's Form N-30D, filed December 6, 1999.

<TABLE>
<CAPTION>
PAGE NUMBER IN:
--------------------------
PROSPECTUS ANNUAL REPORT
---------- -------------
<S> <C> <C>
Statement of Assets and Liabilities at September 30, 1999... 3
Statement of Operations for the period April 12, 1999
through September 30, 1999................................ 4
Statement of Changes in Net Assets for the period April 12,
1999 through September 30, 1999........................... 5
Financial Highlights for the period April 12, 1999 through
September 30, 1999........................................ 4 6
Schedule of Investments at September 30, 1999............... 7
Notes to the Financial Statements........................... 13
Report of Independent Public Accountants.................... 16
</TABLE>

Schedules are omitted because they are not required, are not applicable, or
the required information is shown in the financial statements or notes thereto.

B-1
<PAGE> 37

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

<TABLE>
<S> <C>
(a) Articles of Incorporation.(1)
(b) Bylaws.(1)
(c) Articles of Incorporation, Article IV and Article VII. (See
Exhibit (a)).
(d)(1) Form of Investment Advisory Agreement between Registrant and
Bremer Trust, National Association dated December 17,
1996.(2)
(d)(2) Addition of the Legacy Minnesota Municipal Bond Fund to the
Investment Advisory Agreement dated March 23, 1999.(3)
(d)(3) First Amendment to Investment Sub-Advisory Agreement between
Bremer Trust, N.A. and Richfield Bank & Trust Co. dated
January 26, 2000, relating to the Legacy Minnesota Municipal
Bond Fund (filed herewith).
(e) Distribution Agreement between Registrant and Rafferty
Capital Markets, Inc. dated November 24, 1998.(4)
(f) Not applicable.
(g) Custodian Agreement between the Registrant and Firstar Trust
Company dated November 5, 1996.(1)
(h)(1) Fund Administration Servicing Agreement between the
Registrant and Firstar Trust Company dated November 5,
1996.(1)
(h)(2) Fund Accounting Servicing Agreement between the Registrant
and Firstar Trust Company dated November 5, 1996.(1)
(h)(3) Transfer Agent Agreement between the Registrant and Firstar
Trust Company dated November 5, 1996.(1)
(i) Opinion and consent of Briggs and Morgan, Professional
Association.(5)
(j) Consent of Arthur Andersen LLP (filed herewith).
(k) None.
(l) Not applicable.
(m) Plan of Distribution.(1)
(n) Not applicable.
(o) Not applicable.
(p) Code of Ethics (filed herewith).
</TABLE>

- -------------------------

(1) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, filed November 12 1996.

(2) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, Pre-Effective Amendment
No. 1, filed December 19, 1996.

(3) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, Post-Effective Amendment
No. 5, filed March 31, 1999.

C-1
<PAGE> 38

(4) Incorporated by reference from registrant's Registration
Statement on Form N-1A, 1933 Act Reg. No. 333-15969,
Post-Effective Amendment No. 3, filed November 30, 1998.

(5) Incorporated by reference from registrant's Registration
Statement on Form N-1A, 1933 Act Reg. No. 333-15969,
Post-Effective Amendment No. 4, filed January 15, 1999.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Not applicable.

ITEM 25. INDEMNIFICATION

The Registrant's Articles of Incorporation state that each present
or former director, officer, agent and employee of the Registrant or any
predecessor or constituent corporation, and each person, who, at the
request of the Registrant, serves or has served another business
enterprise in any such capacity, and the heirs and personal
representatives of each of the foregoing shall be indemnified by the
Registrant to the fullest extent permitted by Maryland law against all
expenses, including without limitation amounts of judgments, fines,
amounts paid in settlement, attorneys' and accountants' fees, and costs
of litigation, which shall necessarily or reasonably be incurred by him
or her in connection with any action, suit or proceeding to which he or
she was, is or shall be a party, or with which he or she may be
threatened, by reason of his or her being or having been a director,
officer, agent or employee of the Registrant or such predecessor or
constituent corporation or such business enterprise, whether or not he
or she continues to be such at the time of incurring such expenses. Such
indemnification may include without limitation the purchase of insurance
and advancement of any expenses, and the Registrant shall be empowered
to enter into agreements to limit the liability of directors and
officers of the Registrant. No indemnification shall be made in
violation of the Maryland General Corporation Law or the Investment
Company Act of 1940.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Not applicable.

ITEM 27. PRINCIPAL UNDERWRITERS

The Fund's principal underwriter, Rafferty Capital Markets, Inc.,
also acts as a distributor for the Bremer Bond Fund and the Bremer
Growth Stock Fund, which are issued by Bremer Funds. Rafferty

C-2
<PAGE> 39

Capital Markets, Inc. also acts as a distributor for the following
funds, none of which are affiliated with Bremer Funds:

Badgley Funds

Bearguard Funds

The HomeState Group

IAI Funds

Ingenuity Trust

Kirr Marbach Partners Value Fund

Leuthold Funds, Inc.

Potomac Funds

Texas Capital Value Funds

The following table provides certain information with respect to
the directors and officers of Rafferty Capital Markets, Inc. The
principal business address of each person named in the table is 1311
Mamaroneck Avenue, White Plains, New York 10605.

<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- ------------------------------------ ---------------------
<S> <C> <C>
Lawrence C. Rafferty............ Director and Chief Executive Officer None
Thomas A. Mulrooney............. Director and President None
Stephen P. Sprague.............. Director and Chief Financial Office None
</TABLE>

C-3
<PAGE> 40

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

<TABLE>
<S> <C>
Custodian: Firstar Bank, N.A.
615 East Michigan Street
Milwaukee, WI 53202

Transfer Agent: Overnight Deliveries Firstar Mutual Fund Services, LLC
Mutual Fund Services
615 Michigan Street,
3rd Floor
Milwaukee, WI 53202

Transfer Agent: Mailing Address Firstar Mutual Fund Services, LLC
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701

Investment Adviser: Bremer Trust,
National Association
P.O. Box 986
St. Cloud, MN 56302

Sub-Adviser: Richfield Bank & Trust Co.
6625 Lyndale Avenue South
Richfield, MN 55423
</TABLE>

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS

Not applicable.

C-4
<PAGE> 41

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Cloud, and State of Minnesota on the 28th day of
January, 2000.

BREMER INVESTMENT FUNDS, INC.

By: /s/ STEVEN A. LARAWAY

--------------------------------------
Steven A. Laraway
President

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Steven A.
Laraway and Richard A. DiNello, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his or
her behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all post-effective amendments to this
Registration Statement.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN A. LARAWAY President and Director
- --------------------------------------------- (Principal Executive Officer)
Steven A. Laraway January 28, 2000

/s/ RICHARD A. DINELLO Treasurer
- --------------------------------------------- (Principal Financial and Accounting
Richard A. DiNello Officer) January 28, 2000

* Director
- ---------------------------------------------
John M. Bishop January 28, 2000

* Director
- ---------------------------------------------
Stanley K. Dardis January 28, 2000

* Director
- ---------------------------------------------
John J. Feda January 28, 2000

* Director
- ---------------------------------------------
Barbara A. Grachek January 28, 2000

*By: /s/ STEVEN A. LARAWAY
---------------------------------------
Steven A. Laraway
Attorney-In-Fact
</TABLE>

C-5
<PAGE> 42

EXHIBIT INDEX

- -------------------------

(1) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, filed November 12, 1996.

(2) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, Pre-Effective Amendment
No. 1, filed December 19, 1996.

(3) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, Post-Effective Amendment
No. 5, filed March 31, 1999.

(4) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, Post-Effective Amendment
No. 3, filed November 30, 1998.

(5) Incorporated by reference from registrant's Registration Statement
on Form N-1A, 1933 Act Reg. No. 333-15969, Post-Effective Amendment
No. 4, filed January 15, 1999.

<PAGE> 1
Exhibit (d)(3)

FIRST AMENDMENT TO
INVESTMENT SUB-ADVISORY AGREEMENT

FIRST AMENDMENT made this 26th day of January, 2000, to the Investment
Sub-Advisory Agreement dated January 14, 1999, between Bremer Trust, N.A., (the
"Adviser") and Richfield Bank & Trust Co. (the "Sub-Adviser").

WHEREAS, Bremer Investment Funds, Inc., a Maryland corporation (the
"Fund"), is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");

WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated December 17, 1996 (the "Advisory Agreement") with the Fund, pursuant to
which the Adviser will act as investment adviser to the Legacy Minnesota
Municipal Bond Fund (the "Portfolio"), which is a series of the Fund;

WHEREAS, the Adviser, with the approval of the Fund, has retained the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio; and

WHEREAS, the parties hereto desire to amend this Agreement to clarify
certain of the duties of the Sub-Adviser contained in Section 1d. hereof.

NOW, THEREFORE, the parties hereto amend and restate this Agreement as
follows:

1. Duties of the Sub-Adviser. Subject to supervision by the Adviser
and the Fund's Board of Directors, the Sub-Adviser will manage the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), in accordance with the Portfolio's investment objectives,
policies and restrictions as stated in the Portfolio's prospectus and
statement of additional information, as amended or supplemented from time
to time (referred to collectively as the "Prospectus"), and subject to the
following:

a. The Sub-Adviser will, in consultation with and subject to
the direction of the Adviser, determine from time to time what Assets will be
purchased, retained or sold by the Portfolio, and what portion of the Assets
will be invested or held uninvested in cash.

b. In the performance of its duties and obligations under this
Agreement, the Sub-Adviser will act in conformity with the Fund's Articles of
Incorporation (as defined herein) and the Prospectus and with the instructions
and directions of the Adviser and of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986, and all other applicable federal and state laws and
regulations, as each is amended from time to time.

<PAGE> 2

c. At the direction of the Adviser, the Sub-Adviser may place
orders with or through such persons, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Directors or the Adviser
may direct from time to time, in conformity with federal securities laws. In
executing Portfolio transactions, the Sub-Adviser will use its best efforts to
seek on behalf of the Portfolio the best overall terms available. The
Sub-Adviser may cause the Portfolio to pay a broker-dealer which provides
brokerage and research services, as such services are defined in Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting such transaction, if the
Sub-Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of brokerage and research services provided
by the executing broker-dealer, viewed in terms of either that particular
transaction or such broker-dealer's overall responsibilities with respect to the
accounts as to which such broker-dealer exercises investment discretion (as
defined in Section 3(a)(35) of the Exchange Act). In addition, the Sub-Adviser
may, at the direction of the Adviser, allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, Sub-Adviser or the Fund's principal underwriter) to
take into account the sale of shares of the Fund if the Sub-Adviser believes
that the quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will the
Assets be purchased from or sold to the Adviser, Sub-Adviser, the Fund's
principal underwriter, or any affiliated person of either the Fund, Adviser, the
Sub-Adviser or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission ("SEC") and the 1940 Act.

d. The Sub-Adviser will provide the Adviser with such
investment portfolio accounting and will maintain and provide such detailed
records and reports relating to the activities of the Sub-Adviser as the Adviser
may from time to time reasonably request, including daily processing of
investment transactions and periodic valuations of investment portfolio
positions conducted by the Sub-Adviser and preparation of such reports and
compilation of such data as may be required by the Adviser to comply with the
obligations imposed upon it under the Management Agreement. The Adviser
acknowledges and agrees that such accounts and records may be maintained by a
third-party service provider on behalf of the Fund and the Sub-Adviser. The
Sub-Adviser will provide to the Adviser or the Board of Directors such periodic
and special reports, balance sheets or financial information, and such other
information with regard to its affairs as the Adviser or Board of Directors may
reasonably request.

The Sub-Adviser will timely furnish to the Adviser all
information relating to the Sub-Adviser's services under this Agreement needed
by the Adviser to keep the books and records of the Portfolio required by Rule
31a-1 under the 1940 Act.

The Sub-Adviser agrees that all records that it maintains
on behalf of the Portfolio are property of the Portfolio and the Sub-Adviser
will surrender promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser may retain a copy
of such records. In addition, for the duration of this Agreement, the
Sub-Adviser will preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any such records as are

<PAGE> 3

required to be maintained by it pursuant to this Agreement, and will transfer
said records to any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Adviser).

e. On each business day on which there is a transaction by the
Sub-Adviser concerning the Assets, the Sub-Adviser will provide the Portfolio's
custodian and the Adviser with a report detailing such transactions.

f. The investment management services provided by the
Sub-Adviser under this Agreement are not to be deemed exclusive and the
Sub-Adviser will be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the Fund.

g. The Sub-Adviser will promptly notify the Adviser of any
financial condition that is likely to impair the Sub-Adviser's ability to
fulfill its commitment under this Agreement.

Services to be furnished by the Sub-Adviser under this
Agreement may be furnished through the medium of any of the Sub-Adviser's
partners, officers or employees.

2. Duties of the Adviser.

a. The Adviser will continue to have responsibility for all
services to be provided to the Portfolio pursuant to the Advisory Agreement and
will oversee and review the Sub-Adviser's performance of its duties under this
Agreement; provided, however, that in connection with its management of the
Assets, nothing herein will be construed to relieve the Sub-Adviser of
responsibility for compliance with the Fund's Articles of Incorporation (as
defined herein), the Prospectus, the instructions and directions of the Board of
Directors of the Fund, the requirements of the 1940 Act, the Internal Revenue
Code of 1986, and all other applicable federal and state laws and regulations,
as each is amended from time to time.

b. On each business day on which there is a transaction by the
Adviser concerning the Assets, the adviser will provide the Portfolio's
custodian and the Sub-Adviser with a report detailing such transactions.

3. Delivery of Documents. The Adviser has furnished the Sub-Adviser
with copies properly certified or authenticated of each of the following
documents:

a. The Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland (such Articles of Incorporation, as in effect on
the date of this Agreement and as amended from time to time, herein called the
"Articles of Incorporation");

b. Bylaws of the Fund (such Bylaws, as in effect on the date
of this Agreement and as amended from time to time, are herein called the
"Bylaws");

c. Prospectus(es) of the Portfolio.

<PAGE> 4

4. Compensation to the Sub-Adviser. For the services to be provided by
the Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor,
a sub-advisory fee calculated in accordance with the Schedule which is attached
hereto and made part of this Agreement. The fee will be paid to the Sub-Adviser
monthly. The Sub-Adviser will not be entitled to any compensation for any period
after which this Agreement is terminated. Except as may otherwise be prohibited
by law or regulation (including any then current SEC staff interpretation), the
Sub-Adviser may, in its discretion and from time to time, waive a portion of its
fee.

5. Indemnification. The Sub-Adviser will indemnify and hold harmless
the Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 will be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Adviser, is caused
by or is otherwise directly related to (a) the carrying out by the Sub-Adviser
of a specific direction made by the Adviser to the Sub-Adviser, (b) the
Adviser's own willful misfeasance, bad faith or negligence, or (c) the reckless
disregard of the Adviser's duties under this Agreement. The Adviser will
indemnify and hold harmless the Sub-Adviser from and against any and all
claims, losses, liabilities or damages (including reasonable attorneys' fees and
other related expenses) howsoever arising from or in connection with the
performance of the Sub-Adviser's duties under this Agreement as a result of a
specific direction made by the Adviser to the Sub-Adviser; provided, however,
that the Adviser's obligations under this Section 5 will be reduced to the
extent that the claim against, or the loss, liability or damage experienced by
the Sub-Adviser, is caused by or is otherwise directly related to the
Sub-Adviser's own willful misfeasance, bad faith or negligence or the reckless
disregard of the Sub-Adviser's duties under this Agreement.

6. Representations and Warranties of Sub-Adviser. The Sub-Adviser
represents and warrants that it is either (a) registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), or (b) is exempt from registration under the Advisers Act and any
applicable state law pertaining to the regulation of investment advisers.

7. Duration and Termination. This Agreement will become effective upon
its approval by the Fund's Board of Directors and a vote of a majority of the
outstanding voting securities of the Portfolio. This Agreement will continue in
effect for a period of more than two years from the date hereof only so long as
continuance is specifically approved at least annually in conformance with the
1940 Act; provided, however, that this Agreement may be terminated with respect
to the Portfolio (a) by the Portfolio at any time, without the payment of any
penalty, by the vote of a majority of Directors of the Fund or by the vote of a
majority of the outstanding voting securities of the Portfolio, (b) by the
Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser. This Agreement will terminate automatically and
immediately in the event of its assignment, or in the event of a termination of
the Adviser's agreement with the Fund. As used in this Section 7, the terms
"assignment" and "vote of a majority of the outstanding voting securities" will
have the respective

<PAGE> 5

meanings set forth in the 1940 Act and the rules and regulations thereunder,
subject to such exceptions as may be granted by the SEC under the 1940 Act.

8. Governing Law. This Agreement will be governed by the internal laws
of Minnesota without regard to conflict of law principles; provided, however,
that nothing herein will be construed as being inconsistent with the 1940 Act.

9. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby. This Agreement will be binding upon and will inure to
the benefit of the parties hereto and their respective successors.

10. Notice: Any notice, advice or report to be given pursuant to this
Agreement will be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:

To the Adviser at:
- ------------------

Mr. Paul W. Gifford, Jr.
Bremer Trust, N.A.
4150 Second Street south
St. Cloud, MN 56302

To the Sub-Adviser at:
- ----------------------

Richfield Bank & Trust Co.
6625 Lyndale Avenue South
Richfield, MN 55423

11. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which will be deemed to
be an original, but such counterparts will, together, constitute only one
instrument.

Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision will be deemed to
incorporate the effect of such rule, regulation or order.

<PAGE> 6

IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Agreement to be executed by their officers designated below as
of the day and year first written above.

BREMER TRUST, N.A. RICHFIELD BANK & TRUST CO.

By: /s/ Steven A. Laraway By: /s/ Harvey R. Peck
----------------------------- -----------------------------------
Name: Steven A. Laraway Name: Harvey R. Peck
Title: President Title: Vice President

<PAGE> 7

SCHEDULE
TO THE
SUB-ADVISORY AGREEMENT

Pursuant to Article 4, the Adviser will pay the Sub-Adviser
compensation for services under the Agreement as described in this Schedule.

Under the terms of the separate Advisory Agreement between the Fund and
the Adviser, the Fund is obligated to pay the Adviser a management fee at an
annual rate of 0.55% of the average daily net assets of the Portfolio, computed
daily and paid monthly. This amount is referred to herein as the "Total
Management Fee." The average daily net assets of the Portfolio, computed on a
daily basis, are referred to herein as the "NAV."

The Total Management Fee will be allocated among the Adviser and
Sub-Adviser in accordance with the arrangements described below. The amount of
the Total Management Fee allocated to the Sub-Adviser will constitute the
Sub-Adviser's fee under the Agreement.

1. The Sub-Adviser will receive a fee at an annual rate of 0.50% of the
NAV for the period from April 1, 1999 to March 31, 2000, attributable to shares
of the Portfolio beneficially owned by holders of accounts maintained with the
Sub-Adviser and shares of the Portfolio sold through the broker-dealers
designated on Exhibit A hereto.

2. The Sub-Adviser will receive a fee at an annual rate of 0.45% of the
NAV for the period from April 1, 2000 to March 31, 2001, attributable to shares
of the Portfolio beneficially owned by holders of accounts maintained with the
Sub-Adviser and shares of the Portfolio sold through the broker-dealers
designated on Exhibit A hereto.

3. The Sub-Adviser will receive a fee at an annual rate of 0.40% of the
NAV for the period from April 1, 2001 and thereafter, attributable to shares of
the Portfolio beneficially owned by holders of accounts maintained with the
Sub-Adviser and shares of the Portfolio sold through the broker-dealers
designated on Exhibit A hereto.

4. The Sub-Adviser will receive a fee at an annual rate of 0.275% of
the NAV attributable to shares of the Portfolio which are not beneficially owned
by holders of accounts maintained with either the Adviser or the Sub-Adviser and
which were not sold through the broker-dealers designated on Exhibit A hereto.

5. In the case of any shares of the Portfolio sold through an
arrangement in which a portion of the Total Management Fee is paid to a
third-party institution, the Adviser and Sub-Adviser will split the remaining
portion of the Total Management Fee equally.

Any portion of the Total Management Fee which is not required to be
paid to the Sub-Adviser under paragraphs 1 through 5 above will be paid to the
Adviser as its management fee.

[End of Schedule.]

<PAGE> 1
Exhibit (j)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to all references to our
firm included in this Form N-1A registration statement, Amendment No. 7, for
Bremer Investment Funds, Inc.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin
January 26, 2000

<PAGE> 1
BREMER INVESTMENT FUNDS, INC.

CODE OF ETHICS

In accordance with Rule 17j-1 under the Investment Company Act of 1940 (the
"Act"), Bremer Investment Funds, Inc. (the "Fund") has adopted the following
code of ethics.

1. All access persons, namely the Fund's officers, directors and advisory
persons, should be familiar with Rule 17j-1 under the Act and be governed
by the spirit it represents.

2. No access person, in connection with the purchase or sale, directly or
indirectly, by such person of a security held or to be acquired by the
Fund shall

(a) employ any device, scheme or artifice to defraud the Fund;

(b) make to the Fund any untrue statement of a material fact or omit
to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
are made, not misleading;

(c) engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon the Fund; or

(d) engage in any manipulative practice with respect to the Fund.

3. No access person, or a person acting on his or her behalf, shall act
in such a way as to benefit materially from the knowledge that the
Fund has taken or is considering taking an investment position in a
security, where such an action by the Fund is likely to influence the
market price of that security. In such cases, all access persons are
prohibited from executing personal transactions on a day during which
the Fund has a pending "buy" or "sell" order in that same security
until that order is executed or withdrawn. In addition, each Fund
portfolio manager is prohibited from buying or selling a security
within at least seven calendar days before and after the Fund that he
or she manages trades in that security. All trades by access persons
in securities either held by the Fund or being considered for purchase
by the Fund require preclearance authorization before execution.

4. Access persons (other than directors who are not "interested persons"
within the meaning of section 2(a)(19) of the Act) are required to
report all transactions within 10 days of the end of each calendar
quarter. A director who is not an "interested person" will not be
required to report transactions, except where such director knew or,
in the ordinary course of fulfilling his or her official duties as a
director of the Fund, should have known that during the 15-day period
immediately preceding or after the date of the transaction in a
security by the director such security is or was purchased or sold by
the Fund or such purchase or sale by the Fund is or was

<PAGE> 2

considered by the Fund or its investment adviser. The quarterly report
shall include the date, description of security, amount, number of
shares, type of transaction (buy or sell), price and broker used. A
signed statement by each access person will be required on a quarterly
basis even if no personal trades were executed during the previous
three-month period. A copy of each report shall be kept for a period
of at least five years following the end of the fiscal year in which
it is made, the first two years in an easily accessible place.

5. It shall be the responsibility of the compliance officer designated
for the Fund to report quarterly to the Board of Directors any
violations of this code. Violations shall be recorded, with an
appropriate course of action, and kept for at least five years
following the end of the fiscal year in which the violation occurs.

6. The Fund shall identify each access person, supply each access person
with a copy of this code, and shall inform such persons of their duty
to report transactions.

7. A copy of this code of ethics shall be kept in an easily accessible
place.