FIRST AMERICAN FUNDS INC, 485APOS, 1998-12-02

FIRST AMERICAN FUNDS INC
485APOS, 1998-12-02

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1933 Act Registration No. 2-74747
1940 Act Registration No. 811-3313

As filed with the Securities and Exchange Commission on December 2, 1998

FORM N-1A

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 30 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]

Amendment No. 30

FIRST AMERICAN FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)

OAKS, PENNSYLVANIA 19456
(Address of Principal Executive Offices) (Zip Code)

(610) 676-1924
(Registrant's Telephone Number, including Area Code)

JAMES R. FOGGO
C/O SEI INVESTMENTS COMPANY, OAKS, PENNSYLVANIA 19456
(Name and Address of Agent for Service)

COPIES TO:
Kathleen L. Prudhomme, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402

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

[ ] immediately upon filing pursuant to paragraph (b) of rule 485
[ ] on (date) pursuant to paragraph (b) of rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[X] on February 1, 1999 pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

<PAGE>

FEBRUARY 1, 1999

MONEY MARKET FUNDS
CLASS A, CLASS B AND CLASS C SHARES

GOVERNMENT OBLIGATIONS FUND

PRIME OBLIGATIONS FUND

TAX FREE OBLIGATIONS FUND

TREASURY OBLIGATIONS FUND

FIRST AMERICAN
FUNDS, INC.

PROSPECTUS

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

[LOGO] FIRST AMERICAN
THE POWER OF DISCIPLINED INVESTING(R)

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
FUND SUMMARIES
- --------------------------------------------------------------------------------
Government Obligations Fund 2
- --------------------------------------------------------------------------------
Prime Obligations Fund 4
- --------------------------------------------------------------------------------
Tax Free Obligations Fund 6
- --------------------------------------------------------------------------------
Treasury Obligations Fund 8
- --------------------------------------------------------------------------------
POLICIES & SERVICES
- --------------------------------------------------------------------------------
Buying Shares 10
- --------------------------------------------------------------------------------
Selling Shares 13
- --------------------------------------------------------------------------------
Managing Your Investment 14
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Management 16
- --------------------------------------------------------------------------------
More About The Funds 17
- --------------------------------------------------------------------------------
Financial Highlights 18
- --------------------------------------------------------------------------------
FOR MORE INFORMATION Back Cover
- --------------------------------------------------------------------------------

<PAGE>

FUND SUMMARIES

INTRODUCTION

This section of the prospectus describes the objectives of the First American
Money Market Funds, summarizes the main investment strategies used by each fund
in trying to achieve its objectives, and highlights the risks involved with
these strategies. It also provides you with information about the performance,
fees and expenses of the funds.

AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OF U.S. BANK NATIONAL ASSOCIATION
AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUNDS.

1 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES

GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE

Government Obligations Fund seeks maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Government Obligations Fund invests exclusively in short-term U.S. government
securities and repurchase agreements secured by U.S. government securities.

U.S. government securities are bonds or other debt obligations issued or
guaranteed as to principal and interest by the U.S. government or one of its
agencies or instrumentalities. U.S. Treasury securities and some obligations of
U.S. government agencies and instrumentalities are supported by the "full faith
and credit" of the United States government. Other U.S. government securities
are backed by the right of the issuer to borrow from the U.S. Treasury. Still
others are supported only by the credit of the issuer or instrumentality.

To generate additional income, the fund may lend securities representing up to
one-third of the value of its total assets to broker-dealers, banks and other
institutions.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND, OR A SECURITIES LENDING AGREEMENT ENTERED INTO BY THE
FUND, COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

o THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

o BY INVESTING SOLELY IN U.S. GOVERNMENT SECURITIES AND REPURCHASE AGREEMENTS
SECURED BY THOSE SECURITIES, THE FUND MAY OFFER LESS INCOME THAN A MONEY
MARKET FUND INVESTING IN OTHER HIGH-QUALITY MONEY MARKET SECURITIES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

The illustrations below provide you with information on the fund's volatility
and performance. Of course, how the fund has performed in the past does not
necessarily indicate how it will perform in the future.

The bar chart shows you how performance of the fund's shares has varied from
year to year. The table illustrates the fund's average annual total returns over
different time periods. Both the chart and the table assume that all
distributions have been reinvested.

Information in the bar chart and the table is for the fund's class Y shares,
which are offered through another prospectus. Class A shares commenced
operations on ___________________. The classes will have substantially similar
returns, because they are invested in the same portfolio of securities. However,
class A share returns will be lower because these shares have higher expenses.

2 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since
AS OF 12/31/98 Inception Date One Year Five Years Inception
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Government Obligations Fund (Class Y) 3/1/90 % % %
- ----------------------------------------------------------------------------------------------

</TABLE>

- --------------------------------------------------------------------------------
FEES AND EXPENSES

- -----------------------------------------------------------------------
SHAREHOLDER FEES
- -----------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.25%
Other Expenses %
TOTAL %
- -----------------------------------------------------------------------

(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information --
Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE CURRENT
FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED 0.76%. FEE
WAIVERS MAY BE DISCONTINUED AT ANY TIME.

- --------------------------------------------------------------------------------
FOR 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. It assumes that
you invest $10,000 for the time periods indicated, that your investment has a
5% return each year, and that the fund's operating expenses remain as set
forth in the above table, without any waivers. Although your actual costs and
returns may differ, based on these assumptions your costs would be:

1 year $
3 years $
5 years $
10 years $
- --------------------------------------------------------------------------------

3 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
OBJECTIVE

Prime Obligations Fund seeks maximum current income to the extent consistent
with preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Prime Obligations Fund invests in high-quality short-term debt obligations,
including:

o SECURITIES ISSUED BY THE U.S. GOVERNMENT OR ONE OF ITS AGENCIES OR
INSTRUMENTALITIES;

o U.S. DOLLAR-DENOMINATED OBLIGATIONS OF DOMESTIC AND FOREIGN BANKS WITH TOTAL
ASSETS OF AT LEAST $500 MILLION (INCLUDING FIXED AND VARIABLE RATE
CERTIFICATES OF DEPOSIT, TIME DEPOSITS AND BANKERS' ACCEPTANCES);

o COMMERCIAL PAPER;

o NON-CONVERTIBLE CORPORATE DEBT SECURITIES;

o LOAN PARTICIPATION INTERESTS; AND

o REPURCHASE AGREEMENTS FOR THE SECURITIES IN WHICH THE FUND MAY INVEST.

The fund may invest up to 25% of its total assets in dollar-denominated
obligations of U.S. branches of foreign banks which are subject to the same
regulation as U.S. banks. The fund also may invest up to 25% of its total
assets, collectively, in dollar-denominated obligations of foreign branches of
domestic banks, foreign banks and foreign corporations.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

o THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

o FOREIGN SECURITIES IN WHICH THE FUND INVESTS, ALTHOUGH DOLLAR DENOMINATED,
MAY PRESENT SOME ADDITIONAL RISK. CURRENCY FLUCTUATIONS, POLITICAL OR SOCIAL
INSTABILITY OR DIPLOMATIC DEVELOPMENTS COULD ADVERSELY AFFECT THE
SECURITIES. THERE IS ALSO THE RISK OF POSSIBLE WITHHOLDING TAXES, SEIZURE OF
FOREIGN DEPOSITS, CURRENCY CONTROLS, INTEREST LIMITATIONS, OR OTHER
GOVERNMENTAL RESTRICTIONS WHICH MIGHT AFFECT THE PAYMENT OF PRINCIPAL OR
INTEREST ON SECURITIES OWNED BY THE FUND. IN ADDITION, THERE MAY BE LESS
PUBLIC INFORMATION AVAILABLE ABOUT FOREIGN CORPORATIONS AND FOREIGN BANKS
AND THEIR BRANCHES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

The bar chart shows you how performance of the fund's class A shares has varied
from year to year. The performance of class B and class C shares will be lower
due to their higher expenses. The table illustrates the fund's average annual
total returns over different time periods. Both the chart and the table assume
that all distributions have been reinvested.

4 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
PRIME OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- --------------------------------------------------------------------------------
1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98 Inception Date One Year Since Inception
- --------------------------------------------------------------------------------
Prime Obligations Fund (Class A) 1/21/95 % %
- --------------------------------------------------------------------------------
Prime Obligations Fund (Class B) 1/23/95
- --------------------------------------------------------------------------------
Prime Obligations Fund (Class C) 1/31/99 N/A N/A
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FEES AND EXPENSES

CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) None None(2) 1.00%(2)
MAXIMUM DEFERRED SALES CHARGE (LOAD) PROCEEDS, WHICHEVER IS LESS None 5.00%(2) 1.00%(2)

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------------------
Management Fees 0.40% 0.40% 0.40%
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00%
Other Expenses % % %
TOTAL % % %
- -------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Actual expenses for the fiscal year were lower than those shown in the
table because of voluntary fee waivers by the advisor. See "Additional
Information -- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES
DURING THE CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT
EXCEED 0.78%, 1.53% AND 1.53%, RESPECTIVELY, FOR CLASS A, CLASS B AND CLASS
C SHARES. FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

(2) Class B and class C shares are available only in exchange for class B or
class C shares, respectively, of another First American fund. The
contingent deferred sales charge imposed when you sell your class B or
class C shares of Prime Obligations Fund will be based on the date you
purchased shares of the original First American fund.

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

FOR 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. It assumes that
you invest $10,000 for the time periods indicated, that your investment has a
5% return each year, and that the fund's operating expenses remain as set
forth in the above table, without any waivers. Although your actual costs and
returns may differ, based on these assumptions your costs would be:

CLASS B CLASS B CLASS C CLASS C
assuming assuming no assuming assuming no
redemption redemption redemption redemption
at end of at end of at end of at end of
CLASS A each period each period each period each period
--------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
1 year $ $ $ $ $
3 years $ $ $ $ $
5 years $ $ $ $ $
10 years $ $ $ $ $
</TABLE>

5 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TAX FREE OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Tax Free Obligations Fund seeks maximum current income exempt from federal
income taxes consistent with the preservation of capital and maintenance of
liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Tax Free Obligations Fund invests at least 80% of its total assets in
high-quality, short-term municipal securities that pay interest that is exempt
from federal income tax, including the federal alternative minimum tax.
Municipal securities are issued by state and local governments and certain U.S.
territorial possessions to finance public infrastructure projects such as
streets and highways, schools, water and sewer systems, hospitals, and airports.
They also may be issued to refinance outstanding obligations as well as to
obtain funds for general operating expenses and for loans to other public
institutions and facilities. There are two principal classifications of
municipal securities:

o GENERAL OBLIGATION BONDS, WHICH ARE BACKED BY THE FULL FAITH, CREDIT AND
TAXING POWER OF THE ISSUER, AND

o REVENUE BONDS, WHICH ARE PAYABLE ONLY FROM THE REVENUES GENERATED BY A
SPECIFIC PROJECT OR FROM ANOTHER SPECIFIC REVENUE SOURCE.

The balance of the fund's total assets may be invested in taxable money market
securities and municipal securities subject to the alternative minimum tax. Any
taxable money market securities purchased by the fund will be of the types
described above for Prime Obligations Fund.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

o THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

6 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TAX FREE OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- --------------------------------------------------------------------------------
1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

</TABLE>

- --------------------------------------------------------------------------------
FEES AND EXPENSES

SHAREHOLDER FEES Class A
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

7 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TREASURY OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Treasury Obligations Fund seeks maximum current income consistent with the
preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Treasury Obligations Fund invests exclusively in short-term U.S. Treasury
obligations and repurchase agreements secured by U.S. Treasury obligations. The
U.S. Treasury obligations in which the fund invests include U.S. Treasury bonds,
notes and bills. These types of Treasury securities are essentially the same
except for differences in interest rates, maturities and dates of issuance. U.S.
Treasury obligations are backed by the full faith and credit of the United
States government.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A REPURCHASE AGREEMENT HELD BY THE
FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

o THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

o BY INVESTING SOLELY IN U.S. TREASURY OBLIGATIONS AND REPURCHASE AGREEMENTS
SECURED BY THOSE SECURITIES, THE FUND MAY OFFER LESS INCOME THAN A MONEY
MARKET FUND INVESTING IN OTHER HIGH-QUALITY MONEY MARKET SECURITIES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

The bar chart is designed to show you how performance of the fund's shares has
varied from year to year. However, the fund's class A shares have only been
offered for one calendar year. The table illustrates the fund's average annual
total returns over different time periods. Both the chart and the table assume
that all distributions have been reinvested.

8 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TREASURY OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- --------------------------------------------------------------------------------
1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

- --------------------------------------------------------------------------------
FEES AND EXPENSES

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

9 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
BUYING SHARES

You may become a shareholder in any of the funds with an initial investment of
$1,000 or more ($250 for a retirement plan). Additional investments can be made
for as little as $100 ($25 for a retirement plan). The funds have the right to
waive these minimum investment requirements for employees of the funds' advisor
and its affiliates. The funds also have the right to reject any purchase order.

- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS

All funds in this prospectus offer class A shares. Prime Obligations Fund also
offers class B and class C shares.

Each class has its own cost structure. Class B and class C shares are available
only in exchange for class B or class C shares, respectively, of another First
American fund or, in the case of class B shares, to set up a systematic exchange
program to purchase class B shares of other First American funds.

CLASS A SHARES
Class A shares are offered at net asset value with no front-end or contingent
deferred sales charge.

CLASS B SHARES
Prime Obligations Fund class B shares are available only in exchange for class B
shares of another First American fund, or to set up a systematic exchange
program that will be used to purchase class B shares of other First American
funds. See "Managing Your Investment -- Systematic Exchange Program."

Class B shares have no front-end sales charge, however they do have:

o HIGHER ANNUAL EXPENSES THAN CLASS A SHARES. (SEE "FEES AND EXPENSES" IN THE
"FUND SUMMARIES" SECTION.)

o A BACK-END SALES CHARGE, CALLED A "CONTINGENT DEFERRED SALES CHARGE," IF YOU
REDEEM YOUR SHARES WITHIN SIX YEARS OF THE DATE YOU PURCHASED THE ORIGINAL
FIRST AMERICAN FUND SHARES.

o AUTOMATIC CONVERSION TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE, THEREBY REDUCING FUTURE ANNUAL EXPENSES.

CLASS C SHARES
Prime Obligations Fund class C shares are available only in exchange for class C
shares of another First American fund. Class C shares of the other First
American funds have a front-end sales charge. You pay no front-end sales charge
when you exchange other First American fund class C shares for Prime Obligations
Fund class C shares. However, Prime Obligations Fund class C shares:

o ARE SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE IF YOU REDEEM YOUR
SHARES WITHIN 18 MONTHS OF THE DATE YOU PURCHASED THE ORIGINAL FIRST
AMERICAN FUND SHARES.

o HAVE HIGHER ANNUAL EXPENSES THAN CLASS A SHARES. (SEE "FEES AND EXPENSES" IN
THE "FUND SUMMARIES" SECTION.)

o DO NOT CONVERT TO CLASS A SHARES.

Because class C shares do not convert to class A shares, they will continue to
have higher annual expenses than class A shares for as long as you hold them.

- --------------------------------------------------------------------------------
12B-1 FEES

Under Rule 12b-1 of the Investment Company Act, each fund is allowed to pay the
fund's distributor an annual fee for the distribution and sale of its shares and
for services provided to shareholders.

FOR 12B-1 FEES ARE EQUAL TO:
- -----------------------------------------------------
CLASS A SHARES 0.25% OF AVERAGE DAILY NET ASSETS
CLASS B SHARES 1% OF AVERAGE DAILY NET ASSETS
CLASS C SHARES 1% OF AVERAGE DAILY NET ASSETS

Because these fees are paid out of a fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.

The class A share 12b-1 fee is a shareholder servicing fee. For class B and
class C shares, a portion of the 12b-1 fee equal to 0.25% of average daily net
assets is a shareholder servicing fee, and the rest is a distribution fee.

The funds' distributor uses the shareholder servicing fee to compensate brokers,
participating institutions and "one-stop" mutual fund networks for providing
ongoing services to shareholder accounts. These institutions receive annual fees
equal to 0.25% of a fund's class A and class B share average daily net assets
and 0.15% of a fund class C share average daily net assets attributable to
shares sold through such institutions. The funds' distributor also pays
institutions which sell class C shares a 0.50% annual distribution fee beginning
one year after the shares are sold. The distributor may pay additional fees to
institutions out of its own assets, in exchange for sales and/or administrative
services performed on behalf of the institution's customers.

- --------------------------------------------------------------------------------
CALCULATING YOUR SHARE PRICE

Your purchase price will be based on the fund's net asset value (NAV) per share,
which is generally calculated as of the close of regular trading on the New York
Stock Exchange (usually 3 p.m. Central time) every day the exchange and
federally chartered banks are open. As discussed below, your order must be
received by the funds by 11:30 a.m. Central time for Tax Free Obligations Fund,
and by 2:00 p.m. Central time for Government Obligations Fund, Prime Obligations
Fund and Treasury Obligations Fund, in order for shares to be priced at that
day's NAV.

A fund's NAV is equal to the market value of its investments and other assets,
less any liabilities, divided by the number of fund shares. The securities held
by the funds are valued on the basis of amortized cost. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization of any
discount or premium until the instrument's maturity, rather than looking at
actual changes in the market

10 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
BUYING SHARES (CONTINUED)

value of the instrument. Each fund's net asset value is normally expected to be
$1 per share.

CLASS A SHARES
Your purchase price for class A shares is their net asset value. You pay no
front-end or contingent deferred sales charge.

Your purchase price for class B shares is their net asset value -- there is no
front-end sales charge. However, if you redeem your shares within six years of
the date you purchased the original First American fund shares, you will pay a
back-end sales charge, called a contingent deferred sales charge (CDSC).
Although you pay no front-end sales charge when you buy class B shares, the
funds' distributor pays a sales commission of 4.25% of the amount invested to
brokers and financial institutions which sell class B shares. The funds'
distributor receives any CDSC imposed when you sell your class B shares.

Your CDSC will be based on the value of your original First American fund shares
when they were purchased or on the value of the Prime Obligations Fund class B
shares at the time of sale, whichever is less. The charge does not apply to
shares you acquired by reinvesting your dividend or capital gain distributions.
Shares will be sold in the order that minimizes your CDSC.

YEAR SINCE PURCHASE OF ORIGINAL CDSC AS A % OF THE
FIRST AMERICAN FUND SHARES VALUE OF YOUR SHARES
- ---------------------------------------------------------
FIRST 5%
SECOND 5%
THIRD 4%
FOURTH 3%
FIFTH 2%
SIXTH 1%
SEVENTH 0%
EIGHTH 0%

Your class B shares will automatically convert to class A shares, eight years
after the first day of the month following your purchase of the original First
American fund shares. For example, if you purchase class B shares of one of the
First American funds on June 15, 1999, and later exchange them for Prime
Obligations Fund class B shares, the Prime Obligations Fund shares will convert
to class A shares on June 1, 2007.

The CDSC will be waived for:

o REDEMPTIONS FOLLOWING THE DEATH OR DISABILITY OF A SHAREHOLDER.

o REDEMPTIONS THAT EQUAL THE MINIMUM REQUIRED DISTRIBUTION FROM AN INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER RETIREMENT PLAN TO A SHAREHOLDER WHO HAS REACHED
THE AGE OF 70 1/2.

o REDEMPTIONS THROUGH A SYSTEMATIC WITHDRAWAL PLAN, AT A RATE OF UP TO 12% A
YEAR OF YOUR ACCOUNT'S VALUE. DURING THE FIRST YEAR, THE 12% ANNUAL LIMIT
WILL BE BASED ON THE VALUE OF YOUR ACCOUNT ON THE DATE THE PLAN IS
ESTABLISHED. THEREAFTER, IT WILL BE BASED ON THE VALUE OF YOUR ACCOUNT ON
THE PRECEDING DECEMBER 31.

CLASS C SHARES
Prime Obligations Fund class C shares are available only in exchange for class C
shares of another First American fund. The purchase price for class C shares of
the other First American funds is their net asset value plus a front-end sales
charge equal to 1% of the purchase price (1.01% of the net amount invested). You
pay no front-end sales charge when you exchange other First American fund class
C shares for Prime Obligations Fund class C shares. However, if you redeem your
shares within 18 months of the date you purchased the original First American
fund shares, you will be assessed a contingent deferred sales charge (CDSC) of
1% of the value of the original First American fund shares at the time of
purchase or the Prime Obligations Fund class C shares at the time of sale,
whichever is less. The CDSC does not apply to shares you acquired by reinvesting
your dividend or capital gain distributions. Shares will be sold in the order
that minimizes your CDSC.

The distributor receives any CDSC imposed when you sell your class C shares.

The CDSC for class C shares will be waived in the same circumstances as the
class B share CDSC. See "Class B Shares" above.

Unlike class B shares, class C shares do not convert to class A shares after a
specified period of time. Therefore, your shares will continue to have higher
annual expenses than class A shares.

- --------------------------------------------------------------------------------
HOW TO BUY SHARES

BY PHONE
You may purchase shares by calling your broker or financial institution, if they
have a sales agreement with the funds' distributor. In order for shares to be
purchased at that day's price, your broker or financial institution must
transmit orders to the funds by 11:30 a.m. Central time for Tax Free Obligations
Fund and 2:00 p.m. Central time for Government Obligations Fund, Prime
Obligations Fund and Treasury Obligations Fund. Your broker or financial
institution will specify the time by which they must receive your purchase order
to assure same day processing.

Some financial institutions may charge a fee for helping you purchase shares.
Contact your broker or financial institution for more information.

If you are paying by wire, you may purchase shares by calling 1-800-637-2548
before 11:30 a.m. Central time for Tax Free Obligations Fund, and before 2 p.m.
Central time for Government Obligations Fund, Prime Obligations Fund and
Treasury Obligations Fund. All information will be taken over the telephone, and
your order will be placed when the funds' custodian receives payment by wire.
Wire federal funds as follows:

U.S. BANK NATIONAL ASSOCIATION, MINNEAPOLIS, MN
ABA NUMBER 091000022

FOR CREDIT TO: DST SYSTEMS, INC.:
ACCOUNT NUMBER 160234580266

11 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
BUYING SHARES (CONTINUED)

FOR FURTHER CREDIT TO (INVESTOR NAME AND FUND NAME)

You cannot purchase shares by wire on days when the New York Stock Exchange or
federally chartered banks are closed.

BY MAIL
To purchase shares by mail, simply complete and sign a new account form, enclose
a check made payable to the fund you wish to invest in, and mail both to:

FIRST AMERICAN FUNDS
C/O DST SYSTEMS, INC.
P.O. BOX 419382
KANSAS CITY, MISSOURI 64141-6382.

After you have established an account, you may continue to purchase shares by
mailing your check to First American Funds at the same address.

Please note the following:

o ALL PURCHASES MUST BE MADE IN U.S. DOLLARS.

o THIRD-PARTY CHECKS, CREDIT CARDS, CREDIT CARD CHECKS AND CASH ARE NOT
ACCEPTED.

o IF A CHECK DOES NOT CLEAR YOUR BANK, THE FUNDS RESERVE THE RIGHT TO CANCEL
THE PURCHASE, AND YOU COULD BE LIABLE FOR ANY LOSSES OR FEES INCURRED.

- --------------------------------------------------------------------------------
INVESTING AUTOMATICALLY

To purchase shares as part of a savings discipline, you may add to your
investment on a regular basis by having $100 or more automatically withdrawn
from your bank account on a periodic basis and invested in fund shares. You may
apply for participation in this program through your broker or financial
institution or by calling 1-800-637-2548.

12 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
SELLING SHARES

- --------------------------------------------------------------------------------
HOW TO SELL SHARES

You may sell your shares on any day when the New York Stock Exchange and
federally chartered banks are open. Your shares will be sold at the net asset
value determined on the day your redemption is processed. There are no deferred
sales charges or redemption fees.

The proceeds from your sale normally will be mailed or wired within one day, but
in no event more than seven days, after your request is received in proper form.

BY PHONE
If you purchased shares through a broker or financial institution, simply call
them to sell your shares. Your broker or financial institution must transmit
redemption requests to the funds by 11:30 a.m. Central time for Tax Free
Obligations Fund and 2:00 p.m. Central time for Government Obligations Fund,
Prime Obligations Fund and Treasury Obligations Fund in order for redemptions to
be processed on that day. Your broker or financial institution will specify the
time by which they must receive your redemption request to assure same day
processing. Contact your broker or financial institution directly for more
information.

If you did not purchase shares through a broker or financial institution, you
may sell your shares by calling 1-800-637-2548 before 11:30 a.m. Central time
for Tax Free Obligations Fund, and before 2:00 p.m. Central time for Government
Obligations Fund, Prime Obligations Fund and Treasury Obligations Fund. Calls
received after these times will be processed the following business day.
Proceeds can be wired to your bank account (if the proceeds are at least $1,000
and you have previously supplied your bank account information to the transfer
agent) or sent to you by check.

If you recently purchased your shares by check or through the Automated Clearing
House (ACH), proceeds from the sale of those shares may not be available until
your check or ACH payment has cleared, which may take up to 10 calendar days.

BY MAIL
To sell shares by mail, send a written request to your broker or financial
institution, or to the funds' transfer agent at the following address:

FIRST AMERICAN FUNDS
C/O DST SYSTEMS, INC.
P.O. BOX 419382
KANSAS CITY, MISSOURI 64141-6382.

Your request should include the following information:

o NAME OF THE FUND,

o ACCOUNT NUMBER,

o DOLLAR AMOUNT OR NUMBER OF SHARES REDEEMED,

o NAME ON THE ACCOUNT AND

o SIGNATURES OF ALL REGISTERED ACCOUNT OWNERS.

Signatures on a written request must be guaranteed if:

o YOU WOULD LIKE THE PROCEEDS FROM THE SALE TO BE PAID TO ANYONE OTHER THAN TO
THE SHAREHOLDER OF RECORD.

o YOU WOULD LIKE THE CHECK MAILED TO AN ADDRESS OTHER THAN THE ADDRESS ON THE
FUNDS' RECORDS.

o YOUR REDEMPTION REQUEST IS FOR $25,000 OR MORE.

A signature guarantee assures that a signature is genuine and protects
shareholders from unauthorized account transfers. Banks, savings and loan
associations, trust companies, credit unions, broker-dealers and member firms of
a national securities exchange may guarantee signatures. Call your financial
institution to determine if it has this capability.

Proceeds from a written redemption request will be sent to you by check.

BY CHECKING ACCOUNT
You may sign up for checkwriting privileges when you complete a new account
form, or by calling your broker, financial institution or the funds. [Confirm]
With a fund checking account, you may redeem shares simply by writing a check
for $100 or more. A fee is charged for this service. Call 1-800-637-2548 for
more information.

Please note that you may not use a check to close your account.

- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWALS

If your account has a value of $5,000 or more, you may redeem a specific dollar
amount from your account on a regular basis. To set up systematic withdrawals,
contact your broker or financial institution.

You should not make systematic withdrawals if you plan to continue investing in
the fund, due to sales charges and tax liabilities. In addition, it may not be
in your best interest to make systematic withdrawals of class B or class C
shares, since these withdrawals may be subject to a CDSC.

ACCOUNTS WITH LOW BALANCES

Except for retirement plans, if your account balance falls below $500 as a
result of selling or exchanging shares, you will be given 60 days to
re-establish the minimum balance. If you do not, the fund may close your
account and send you the proceeds, less any applicable contingent deferred
sales charge.

13 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
MANAGING YOUR INVESTMENT

- --------------------------------------------------------------------------------
SYSTEMATIC EXCHANGE PROGRAM

You may make automatically monthly exchanges of your class A or class B shares
of Prime Obligations Fund for the same class of shares of another First American
fund. Investing a fixed dollar amount at regular intervals, sometimes referred
to as "dollar cost averaging," has the effect of reducing the average cost per
share of the fund acquired.

To set up a systematic exchange program, you initially purchase an amount of
class A or class B shares of Prime Obligations Fund equal to the total amount
that you wish to invest in the other First American fund. On a monthly basis,
the dollar amount of Prime Obligations Fund shares that you specify will then be
exchanged for shares of the other First American fund. Exchanges of class A
shares will be subject to the applicable sales charge imposed by the First
American fund into which you are exchanging. Therefore, you may wish to execute
a letter of intent in connection with a class A share systematic exchange
program. (A letter of intent indicates a non-binding intent to purchase $50,000
or more of First American fund class A shares over a 13-month period, which
lowers your sales charge. See the prospectus of the First American fund into
which you plan to exchange for more information.) Exchanges of Prime Obligations
Fund class B shares will not be subject to a CDSC. See "Exchanging Shares,"
below. However, if you redeem the Prime Obligations Fund class B shares in your
account, rather than exchange them, they will be subject to a CDSC.

You may set up a systematic exchange program through your broker or financial
institution, or by calling 1-800-637-2548.

- --------------------------------------------------------------------------------
EXCHANGING SHARES

If your investment goals or your financial needs change, you may move from one
First American fund to another. There is no fee to exchange shares.

You may exchange your shares only for shares of the same class of the other
First American fund. Exchanges are made based on the net asset value per share
of each fund at the time of the exchange. When you exchange your class A shares
for class A shares of another First American fund, you will have to pay the
sales charge imposed by the other fund, unless your money market fund shares
were originally issued in exchange for shares of a First American fund that had
a sales charge. When you exchange your class B or class C shares for class B or
class C shares of another First American fund, the time you held the shares of
the "old" fund will be added to the time you hold the shares of the "new" fund
for purposes of determining your CDSC or, in the case of class B shares,
calculating when your shares convert to class A shares.

Before exchanging into any fund, be sure to read its prospectus carefully. A
fund may change or cancel its exchange policies at any time. You will be
notified of any changes. The funds have the right to limit exchanges to four
times per year.

BY PHONE
You may exchange shares by calling your broker, your financial institution, or
the funds' transfer agent, provided that both funds have identical shareholder
registrations. To request an exchange through the funds' transfer agent, call
1-800-637-2548. Your instructions must be received by the funds' transfer agent
before 11:30 a.m. Central time for Tax Free Obligations Fund and before 2 p.m.
Central time for Government Obligations Fund, Prime Obligations Fund and
Treasury Obligations Fund, or by an earlier time specified by your broker or
financial institution, in order for shares to be exchanged the same day.

BY MAIL
To exchange shares by written request, please follow the procedures under
"Selling Shares." Be sure to include the names of both funds involved in the
exchange.

- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS

You may buy, sell or exchange shares by telephone, unless you elected on
your new account form to restrict this privilege. If you wish to reinstate
this option on an existing account, please call Investor Services at
1-800-637-2548 to request the appropriate form.

The funds and their agents will not be responsible for any losses that may
result from acting on wire or telephone instructions that they reasonably
believe to be genuine. The funds and their agents will each follow
reasonable procedures to confirm that instructions received by telephone are
genuine, which may include taping telephone conversations.

It may be difficult to reach the funds by telephone during periods of
unusual market activity. If you are unable to reach the funds or their
agents by telephone, please consider sending written instructions.

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

STAYING INFORMED

SHAREHOLDER REPORTS
Shareholder reports are mailed twice a year, in November and May. They include
financial statements, performance information, a message from your portfolio
managers, and, on an annual basis, the auditors' report.

In an attempt to reduce shareholder costs and help eliminate duplication, the
funds will try to limit their mailings to one report for each address that lists
one or more shareholders with the same last name. If you would like additional
copies, please call 1-800-637-2548.

STATEMENTS AND CONFIRMATIONS
Statements summarizing activity in your account are mailed at least quarterly.
Confirms are mailed following each purchase or sale of fund shares.

14 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS
<PAGE>

POLICIES & SERVICES
MANAGING YOUR INVESTMENT (CONTINUED)

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS

Dividends from a fund's net investment income are declared daily, starting on
the day you purchase your shares, and paid monthly. You will not receive a
dividend for the day on which you sell shares.

Dividends will be reinvested in additional shares of the same fund, unless you
request cash payments on your new account form or by writing to the fund.

- --------------------------------------------------------------------------------
TAXES

Some of the tax consequences of investing in the funds are discussed below. More
information about taxes is in the Statement of Additional Information. However,
because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.

For Government Obligations Fund, Prime Obligations Fund and Tax Free Obligations
Fund, dividends you receive from the fund are generally taxable as ordinary
income, whether you reinvest them or take them in cash. Dividends attributable
to income from U.S. government securities may be exempt from state personal
income taxes. You should consult your tax advisor for more information.

Tax Free Obligations Fund intends to meet certain federal tax requirements so
that distributions of tax-exempt interest income may be treated as
"exempt-interest dividends." These dividends are not subject to regular federal
tax. However, the fund may invest up to 20% of its net assets in municipal
securities subject to the federal alternative minimum tax. Any portion of
exempt-interest dividends attributable to interest on these securities may
increase some shareholders' alternative minimum tax.

15 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
MANAGEMENT

INVESTMENT ADVISOR
FIRST AMERICAN ASSET MANAGEMENT
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402

U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of December 31, 1998, it had more than $_____ in assets under
management, including investment company assets of approximately $_____. As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
Each fund pays the investment advisor a monthly fee for providing investment
advisory services. During their most recent fiscal years, the funds paid the
following investment advisory fees to First American Asset Management:

ADVISORY FEE
AS A % OF
AVERAGE DAILY
NET ASSETS
- --------------------------------------------
GOVERNMENT OBLIGATIONS FUND %
PRIME OBLIGATIONS FUND %
TAX FREE OBLIGATIONS FUND %
TREASURY OBLIGATIONS FUND %
- --------------------------------------------

CUSTODIAN
U.S. BANK NATIONAL ASSOCIATION
U.S. BANK CENTER
180 EAST FIFTH STREET
ST. PAUL, MINNESOTA 55101

ADMINISTRATOR
SEI INVESTMENTS MANAGEMENT CORPORATION
OAKS, PENNSYLVANIA 19456

DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
OAKS, PENNSYLVANIA 19456

TRANSFER AGENT
DST SYSTEMS, INC.
330 WEST NINTH STREET
KANSAS CITY, MISSOURI 64105

ADDITIONAL COMPENSATION
In addition to receiving compensation for acting as the funds' investment
advisor as described above, U.S. Bank and its affiliates receive compensation in
connection with the following:

CUSTODY SERVICES. As compensation for acting as the funds' custodian, U.S. Bank
is paid monthly fees equal, on an annual basis, to 0.03% of a fund's average
daily net assets. In addition, U.S. Bank is reimbursed for its out-of-pocket
expenses incurred while providing custody services to the funds.

SUB-ADMINISTRATION SERVICES. U.S. Bank assists the administrator and provides
sub-administration services to the funds. For providing these services, U.S.
Bank is compensated by the funds' administrator at an annual rate of up to
0.05% of each fund's average daily net assets.

TRANSFER AGENT SERVICES. U.S. Bank performs certain transfer agent and dividend
disbursing agent services with respect to the class A, class B and class C
shares of the funds held through accounts at U.S. Bank and its affiliates. The
funds pay U.S. Bank an annual fee of $15 per account for providing these
services.

BROKERAGE TRANSACTIONS. The funds purchase most of their portfolio securities
directly from the issuer or from an underwriter or market maker, and not from a
broker acting as agent. However, the funds may from time to time use brokers
when buying portfolio securities. The funds' investment advisor may place
trades through its affiliates, U.S. Bancorp Investments, Inc. and U.S. Bancorp
Piper Jaffray Inc., which will earn commissions on such transactions.

SALES OF FUND SHARES. U.S. Bancorp Investments, Inc. and U.S. Bancorp Piper
Jaffray Inc., broker-dealers affiliated with U.S. Bank, have entered into
agreements with the funds' distributor to sell fund shares and will earn
commissions on these sales.

ERISA ACCOUNTS. U.S. Bank and other affiliates of U.S. Bancorp may act as
fiduciary with respect to plans subject to the Employee Retirement Income
Security Act of 1974 (ERISA) and other trust and agency accounts that invest in
the funds.

PORTFOLIO MANAGEMENT
Each fund's investments are managed by a team of persons associated with First
American Asset Management.

16 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
MORE ABOUT THE FUNDS

- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES

The funds' main investment strategies are discussed in the "Fund Summaries"
section. These are the strategies that the funds' investment advisor believes
are most likely to be important in trying to achieve the funds' objectives. You
should be aware that each fund may also use strategies and invest in securities
that are not described in this prospectus, but that are described in the
Statement of Additional Information (SAI). For a copy of the SAI, call Investor
Services at 1-800-637-2548.

In addition to the securities specified in the "Fund Summaries" section, each
fund may invest in other money market funds that invest in the same types of
securities as the respective fund, including money market funds advised by U.S.
Bank.

INVESTMENT APPROACH
Each fund complies with Securities and Exchange Commission regulations that
apply to money market funds. These regulations require that each fund's
investments mature within 397 days from the date of purchase, and that the
average maturity of each fund's investments (on a dollar-weighted basis) be 90
days or less. The funds may invest in securities with variable or floating
interest rates and securities with demand features. The maturities of these
securities are determined according to regulations which allow the funds to
consider some of these securities as having maturities shorter than their stated
maturity dates. All of the funds' investments must be in U.S. dollar-denominated
high quality securities which have been determined by the funds' advisor to
present minimal credit risks.

When selecting securities for the funds, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities. The portfolio managers look for value while adhering
to the credit and other restrictions on money market funds.

- --------------------------------------------------------------------------------
YEAR 2000 ISSUES

Like other mutual funds and business and financial organizations, the funds
could be adversely affected if the computer systems used by the funds' advisor,
sub-advisors, other service providers and entities with computer systems that
are linked to fund records do not properly process and calculate date-related
information from and after January 1, 2000. While year 2000-related computer
problems could have a negative effect on the funds, the funds' administrator has
undertaken a program designed to assess and monitor the steps being taken by the
funds' service providers to address year 2000 issues.This program includes
seeking assurances from service providers that their systems are or will be year
2000 compliant and reviewing service providers' periodic reports to monitor
their status concerning their year 2000 readiness and compliance.

The administrator and the advisor also report regularly to the funds' board of
directors concerning their own and other service providers' progress toward year
2000 readiness. Although these reports indicate that service providers are or
expect to be year 2000 compliant, there can be no assurance that this will be
the case in all instances or that year 2000 difficulties experienced by others
in the financial services industry will not impact the funds. In addition, there
can be no assurance that year 2000 difficulties will not have an adverse effect
on the funds' investments or on global markets or economies, generally. The
funds are not bearing any of the expenses incurred by their service providers in
preparing for the year 2000.

17 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the class A shares
of each fund and the class B shares of Prime Obligations Fund. There were no
class C shares outstanding during the periods for which information is
presented. This information is intended to help you understand each fund's
financial performance for the past five years or, if shorter, the period of the
fund's operations. Some of this information reflects financial results for a
single fund share. Total returns in the tables represent the rate that you would
have earned or lost on an investment in a fund, excluding sales charges and
assuming you reinvested all of your dividends and distributions.

This information has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report, along with the funds' financial statements, is included
in the funds' annual report, which is available upon request.

GOVERNMENT OBLIGATIONS FUND

Fiscal period ended
CLASS A SHARES September 30, 1998(1)
- --------------------------------------------------------------------------------
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00
Net Investment Income:
Dividends (from net investment income):
Net Asset Value, End of Period $ 1.00
Total Return %

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $
Ratio of Expenses to Average Net Assets %
Ratio of Net Income to Average Net Assets %
Ratio of Expenses to Average Net Assets (excluding waivers) %
Ratio of Net Income to Average Net Assets (excluding waivers) %
- --------------------------------------------------------------------------------

(1) Commenced operations on ______________, 1998. All ratios for the period have
been annualized.

18 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)

PRIME OBLIGATIONS FUND

Fiscal period ended September 30,
CLASS A SHARES 1998 1997 1996 1995(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.04
Dividends (from net investment income): (0.05) (0.05) (0.04)
-------- -------- -------
Net Asset Value, End of Period $ $ 1.00 $ 1.00 $ 1.00
======== ======== =======
Total Return 5.06% 5.08% 3.84%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $218,261 $135,146 $96,083
Ratio of Expenses to Average Net Assets % 0.70% 0.70% 0.70%
Ratio of Net Income to Average Net Assets % 4.95% 4.94% 5.43%
Ratio of Expenses to Average Net Assets (excluding waivers) % 0.77% 0.79% 0.82%
Ratio of Net Income to Average Net Assets (excluding waivers) % 4.88% 4.85% 5.31%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Commenced operations on January 21, 1995. All ratios for the period have
been annualized.

Fiscal period ended September 30,
CLASS B SHARES 1998 1997 1996 1995(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.04 0.04 0.03
Dividends (from net investment income): (0.04) (0.04) (0.03)
------- ------- -------
Net Asset Value, End of Period $ $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total Return 4.27% 4.29% 3.28%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $ 2,018 $ 1,763 $ 14
Ratio of Expenses to Average Net Assets % 1.45% 1.45% 1.45%
Ratio of Net Income to Average Net Assets % 4.17% 4.15% 4.70%
Ratio of Expenses to Average Net Assets (excluding waivers) % 1.52% 1.54% 1.57%
Ratio of Net Income to Average Net Assets (excluding waivers) % 4.10% 4.06% 4.58%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Commenced operations on January 23, 1995. All ratios for the period have
been annualized.

19 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)

TAX FREE OBLIGATIONS FUND

Fiscal period Fiscal period
ended ended
September 30, November 30, Fiscal year ended July 31
1998(1) 1997(1) 1997 1996 1995(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.01 0.03 0.03 0.02
Dividends (from net investment income): (0.01) (0.03) (0.03) (0.02)
------- ------- ------- -------
Net Asset Value, End of Period $ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total Return % 0.96% 2.76% 2.81% 1.66%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $28,662 $31,668 $30,143 $33,569
Ratio of Expenses to Average Net Assets 0.89% 0.88% 0.89% 1.00%
Ratio of Net Income to Average Net Assets 2.83% 2.73% 2.78% 2.98%
Ratio of Expenses to Average Net Assets
(excluding waivers) % 1.23% 1.23% 1.25% 1.36%
Ratio of Net Income to Average Net Assets
(excluding waivers) % 2.49% 2.38% 2.42% 2.62%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) All ratios for the period have been annualized.

(2) Commenced operations on January 9, 1995. All ratios for the period have been
annualized.

TREASURY OBLIGATIONS FUND

Fiscal period ended
September 30, 1998(1)
- --------------------------------------------------------------------------------
<S> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $
Net Investment Income:
Dividends (from net investment income):
Net Asset Value, End of Period $

Total Return

(1) Commenced operations on November 3, 1997. All ratios for the period have
been annualized.

20 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FOR MORE INFORMATION

More information about the funds is available in the funds' Statement of
Additional Information and annual and semiannual reports.

STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more details about the funds and their policies. A current SAI
is on file with the Securities and Exchange Commission (SEC) and is incorporated
into this prospectus by reference (which means that it is legally considered
part of this prospectus).

ANNUAL AND SEMIANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semiannual reports to shareholders. In the funds' annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during their last fiscal year.

You can obtain a free copy of the funds' SAI and/or free copies of the funds'
most recent annual or semiannual reports by calling Investor Services at
1-800-637-2548. The material you request will be sent by first-class mail or
other means designed to ensure equally prompt delivery, within three business
days of receipt of the request.

You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC, or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009. For more information, call
1-800-SEC-0330.

Information about the funds is also available on the Internet. Text-only
versions of fund documents can be viewed online or down-loaded from the SEC's
Internet site at http://www.sec.gov.

SEC file number: 811-3313

FAIF-1001 (9/1998)

<PAGE>

FEBRUARY 1, 1999

MONEY MARKET FUNDS
CLASS Y SHARES

GOVERNMENT OBLIGATIONS FUND

PRIME OBLIGATIONS FUND

TAX FREE OBLIGATIONS FUND

TREASURY OBLIGATIONS FUND

FIRST AMERICAN
FUNDS, INC.

PROSPECTUS

[LOGO] FIRST AMERICAN
THE POWER OF DISCIPLINED INVESTING(R)

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TABLE OF CONTENTS

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FUND SUMMARIES
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Government Obligations Fund 2
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Prime Obligations Fund 4
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Tax Free Obligations Fund 6
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Treasury Obligations Fund 8
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POLICIES & SERVICES
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Buying and Selling Shares 10
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Managing Your Investment 11
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Management 12
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More About The Funds 13
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Financial Highlights 14
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FOR MORE INFORMATION Back Cover
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FUND SUMMARIES
INTRODUCTION

1 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND

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OBJECTIVE

Government Obligations Fund seeks maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Government Obligations Fund invests exclusively in short-term U.S. government
securities and repurchase agreements secured by U.S. government securities.

To generate additional income, the fund may lend securities representing up to
one-third of the value of its total assets to broker-dealers, banks and other
institutions.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

O BY INVESTING SOLELY IN U.S. GOVERNMENT SECURITIES AND REPURCHASE AGREEMENTS
SECURED BY THOSE SECURITIES, THE FUND MAY OFFER LESS INCOME THAN A MONEY
MARKET FUND INVESTING IN OTHER HIGH-QUALITY MONEY MARKET SECURITIES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

2 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND (CONTINUED)

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FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- ----------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year Five Years (3/1/90)
- ----------------------------------------------------------------------------
Government Obligations Fund % % %
- ----------------------------------------------------------------------------

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FEES AND EXPENSES

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SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses %
TOTAL %
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE
CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED
0.45%. FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

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3 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
PRIME OBLIGATIONS FUND

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OBJECTIVE

Prime Obligations Fund seeks maximum current income to the extent consistent
with preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Prime Obligations Fund invests in high-quality short-term debt obligations,
including:

o SECURITIES ISSUED BY THE U.S. GOVERNMENT OR ONE OF ITS AGENCIES OR
INSTRUMENTALITIES;

O U.S. DOLLAR-DENOMINATED OBLIGATIONS OF DOMESTIC AND FOREIGN BANKS WITH TOTAL
ASSETS OF AT LEAST $500 MILLION (INCLUDING FIXED AND VARIABLE RATE
CERTIFICATES OF DEPOSIT, TIME DEPOSITS AND BANKERS' ACCEPTANCES);

O COMMERCIAL PAPER;

O NON-CONVERTIBLE CORPORATE DEBT SECURITIES;

O LOAN PARTICIPATION INTERESTS; AND

O REPURCHASE AGREEMENTS FOR THE SECURITIES IN WHICH THE FUND MAY INVEST.

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MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

O FOREIGN SECURITIES IN WHICH THE FUND INVESTS, ALTHOUGH DOLLAR DENOMINATED,
MAY PRESENT SOME ADDITIONAL RISK. CURRENCY FLUCTUATIONS, POLITICAL OR SOCIAL
INSTABILITY OR DIPLOMATIC DEVELOPMENTS COULD ADVERSELY AFFECT THE
SECURITIES. THERE IS ALSO THE RISK OF POSSIBLE WITHHOLDING TAXES, SEIZURE OF
FOREIGN DEPOSITS, CURRENCY CONTROLS, INTEREST LIMITATIONS, OR OTHER
GOVERNMENTAL RESTRICTIONS WHICH MIGHT AFFECT THE PAYMENT OF PRINCIPAL OR
INTEREST ON SECURITIES OWNED BY THE FUND. IN ADDITION, THERE MAY BE LESS
PUBLIC INFORMATION AVAILABLE ABOUT FOREIGN CORPORATIONS AND FOREIGN BANKS
AND THEIR BRANCHES.

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FUND PERFORMANCE

4 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
PRIME OBLIGATIONS FUND (CONTINUED)

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FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- ----------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year Five Years (3/1/90)
- ----------------------------------------------------------------------------
Prime Obligations Fund % % %
- ----------------------------------------------------------------------------

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FEES AND EXPENSES

As an investor, you pay fees and expenses to buy and hold shares of the fund.
You pay shareholder fees directly when you buy or sell shares. You pay annual
fund operating expenses indirectly. They are deducted from fund assets and their
effect is reflected in the share price. The figures below show fund expenses
before any waivers during the fiscal year ended September 30, 1998.(1)
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SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) 1.00%
MAXIMUM DEFERRED SALES CHARGE (LOAD) PROCEEDS, WHICHEVER IS LESS 1.00%

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses %
TOTAL %
- --------------------------------------------------------------------------------
(1)Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE
CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED
0.45%. FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

5 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
TAX FREE OBLIGATIONS FUND

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OBJECTIVE

Tax Free Obligations Fund seeks maximum current income exempt from federal
income taxes consistent with the preservation of capital and maintenance of
liquidity.

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MAIN INVESTMENT STRATEGIES

o GENERAL OBLIGATION BONDS, WHICH ARE BACKED BY THE FULL FAITH, CREDIT AND
TAXING POWER OF THE ISSUER, AND

O REVENUE BONDS, WHICH ARE PAYABLE ONLY FROM THE REVENUES GENERATED BY A
SPECIFIC PROJECT OR FROM ANOTHER SPECIFIC REVENUE SOURCE.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

6 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
TAX FREE OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- -------------------------------------------------------------
1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year (1/9/95)
- -------------------------------------------------------------
Tax Free Obligations Fund % %
- -------------------------------------------------------------

- --------------------------------------------------------------------------------
FEES AND EXPENSES

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

7 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
TREASURY OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Treasury Obligations Fund seeks maximum current income consistent with the
preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A REPURCHASE AGREEMENT HELD BY THE
FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

O BY INVESTING SOLELY IN U.S. TREASURY OBLIGATIONS AND REPURCHASE AGREEMENTS
SECURED BY THOSE SECURITIES, THE FUND MAY OFFER LESS INCOME THAN A MONEY
MARKET FUND INVESTING IN OTHER HIGH-QUALITY MONEY MARKET SECURITIES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

8 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
TREASURY OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- -------------------------------------------------------------
1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year (1/24/95)
- -------------------------------------------------------------
Treasury Obligations Fund % %
- -------------------------------------------------------------

- --------------------------------------------------------------------------------
FEES AND EXPENSES

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

9 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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POLICIES & SERVICES
BUYING AND SELLING SHARES

Class Y shares are offered through banks and other financial institutions that
have entered into sales agreements with the funds' distributor. Class Y shares
are available to these financial institutions for the investment of their own
funds. Class Y shares also are available to certain accounts for which the
financial institution acts in a fiduciary, agency or custodial capacity, such as
certain trust accounts and investment advisory accounts. To find out whether you
may purchase class Y shares, contact your financial institution.

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CALCULATING YOUR SHARE PRICE

Your purchase price will be equal to the fund's net asset value (NAV) per share,
which is generally calculated as of the close of regular trading on the New York
Stock Exchange (usually 3 p.m. Central time) every day the exchange and
federally chartered banks are open. As discussed below, your order must be
received by the funds by 11:30 a.m. Central time for Tax Free Obligations Fund,
and by 2:00 p.m. Central time for Government Obligations Fund, Prime Obligations
Fund and Treasury Obligations Fund, in order for shares to be priced at that
day's NAV.

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HOW TO BUY AND SELL SHARES

You may purchase or sell shares by calling your financial institution. Shares
may be purchased and sold only on days when both the New York Stock Exchange and
federally chartered banks are open.

When purchasing shares, payment must be made by wire transfer, which can be
arranged by your financial institution.

Purchase orders and redemption requests must be received by your financial
institution by the time specified by the institution to be assured same day
processing. In order for shares to be purchased or sold at that day's price, the
funds must receive your purchase order or redemption request by 11:30 a.m.
Central time for Tax Free Obligations Fund, and by 2:00 p.m. Central time for
Government Obligations Fund, Prime Obligations Fund and Treasury Obligations
Fund. It is the responsibility of your financial institution to promptly
transmit orders to the funds. In addition, a purchase order will be effective on
the day given only if the funds' custodian receives payment by wire before the
close of business.

If a fund receives a redemption request by the time specified above, payment
will be made the same day by transfer of federal funds. Otherwise, payment will
be made on the next business day.

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HOW TO EXCHANGE SHARES

If your investment goals or your financial needs change, you may exchange your
shares for class Y shares of another First American fund. Exchanges will be made
at the net asset value per share of each fund at the time of the exchange. There
is no fee to exchange shares. If you are no longer eligible to hold class Y
shares, for example, if you decide to discontinue your fiduciary, agency or
custodian account, you may exchange your shares for class A shares at net asset
value. Class A shares have higher expenses than class Y shares.

To exchange your shares, call your financial institution. In order for your
shares to be exchanged the same day, you must call your financial institution by
the time specified by the institution and your exchange order must be received
by the funds by 11:30 a.m. Central time. It is the responsibility of your
financial institution to promptly transmit your exchange order to the funds.
Before exchanging into any fund, be sure to read its prospectus carefully. A
fund may change or cancel its exchange policies at any time. You will be
notified of any changes. The funds have the right to limit exchanges to four
times per year.

10 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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POLICIES & SERVICES
MANAGING YOUR INVESTMENT

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STAYING INFORMED

STATEMENTS AND CONFIRMATIONS
Statements summarizing activity in your account are mailed at least quarterly.
Confirms are mailed following each purchase or sale of fund shares.

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS

Dividends from a fund's net investment income are declared daily, starting on
the day you purchase your shares, and paid monthly. You will not receive a
dividend for the day on which you sell shares.

Dividends will be reinvested in additional shares of the same fund, unless you
request cash payments on your new account form or by writing to the fund.

- --------------------------------------------------------------------------------
TAXES

Tax Free Obligations Fund intends to meet certain federal tax requirements so
that distributions of tax-exempt interest income may be treated as "exempt-
interest dividends." These dividends are not subject to regular federal tax.
However, the fund may invest up to 20% of its net assets in municipal securities
subject to the federal alternative minimum tax. Any portion of exempt-interest
dividends attributable to interest on these securities may increase some
shareholders' alternative minimum tax.

11 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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ADDITIONAL INFORMATION
MANAGEMENT

INVESTMENT ADVISOR
FIRST AMERICAN ASSET MANAGEMENT
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402

U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of December 31, 1998, it had more than $ in assets under
management, including investment company assets of approximately $ . As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
Each fund pays the investment advisor a monthly fee for providing investment
advisory services. During their most recent fiscal years, the funds paid the
following investment advisory fees to First American Asset Management:

ADVISORY FEE
AS A % OF
AVERAGE DAILY
NET ASSETS
- --------------------------------------------------------------------------------

GOVERNMENT OBLIGATIONS FUND %
PRIME OBLIGATIONS FUND %
TAX FREE OBLIGATIONS FUND %
TREASURY OBLIGATIONS FUND %
- --------------------------------------------------------------------------------

CUSTODIAN
U.S. BANK NATIONAL ASSOCIATION
U.S. BANK CENTER
180 EAST FIFTH STREET
ST. PAUL, MINNESOTA 55101

ADMINISTRATOR
SEI INVESTMENTS MANAGEMENT CORPORATION
OAKS, PENNSYLVANIA 19456

DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
OAKS, PENNSYLVANIA 19456

TRANSFER AGENT
DST SYSTEMS, INC.
330 WEST NINTH STREET
KANSAS CITY, MISSOURI 64105

PORTFOLIO MANAGEMENT
Each fund's investments are managed by a team of persons associated with First
American Asset Management.

12 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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ADDITIONAL INFORMATION
MORE ABOUT THE FUNDS

- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES

- --------------------------------------------------------------------------------
YEAR 2000 ISSUES

13 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the class Y shares
of each fund. This information is intended to help you understand each fund's
financial performance for the past five years or, if shorter, the period of the
fund's operations. Some of this information reflects financial results for a
single fund share. Total returns in the tables represent the rate that you would
have earned or lost on an investment in a fund, assuming you reinvested all of
your dividends and distributions.

GOVERNMENT OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal year ended September 30
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.05 0.03
Dividends (from net investment income): (0.05) (0.05) (0.05) (0.03)
------- -------- -------- -------- --------
Net Asset Value, End of Period 1.00 1.00 1.00 1.00 1.00
======= ======== ======== ======== ========
Total Return 5.20% 5.24% 5.55% 3.48%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $946,196 $777,594 $551,286 $455,869
Ratio of Expenses to Average Net Assets 0.45% 0.45% 0.45% 0.45%
Ratio of Net Income to Average Net Assets 5.07% 5.10% 5.44% 3.61%
Ratio of Expenses to Average Net Assets
(excluding waivers) 0.52% 0.54% 0.60% 0.61%
Ratio of Net Income to Average Net Assets
(excluding waivers) % %
- -------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Commenced operations on _______, 1998. All ratios for the period have been
annualized.

14 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)

PRIME OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.06 0.04
Dividends (from net investment income): (0.05) (0.05) (0.06) (0.04)
---------- ---------- ---------- ---------
Net Asset Value, End of Period $ $ 1.00 $ 1.00 $ 1.00 1.00
========== ========== ========== ==========
Total Return 5.32% 5.34% 5.64% 3.56%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $3,615,873 $3,166,213 $2,911,055 $1,307,347
Ratio of Expenses to Average Net Assets % 0.45% 0.45% 0.45% 0.45%
Ratio of Net Income to Average Net Assets % 5.19% 5.20% 5.53% 3.58%
Ratio of Expenses to Average Net Assets (excluding waivers) % 0.52% 0.54% 0.60% 0.60%
Ratio of Net Income to Average Net Assets (excluding waivers) % % % % %
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

15 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)

TAX FREE OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal period Fiscal period
ended ended
September 30, November 30, Fiscal year ended July 31
1998(1) 1997(1) 1997 1996 1995(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.01 0.03 0.03 0.02
Dividends (from net investment income): (0.01) (0.03) (0.03) (0.02)
------- ------- ------- -------
Net Asset Value, End of Period $ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total Return % 1.08% 3.17% 3.22% 1.88%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $10,703 $ 9,137 $ 3,895 $ 1,264
Ratio of Expenses to Average Net Assets 0.64% 0.48% 0.41% 0.59%
Ratio of Net Income to Average Net Assets 3.09% 3.13% 2.92% 3.38%
Ratio of Expenses to Average Net Assets
(excluding waivers) % 0.97% 0.83% 0.79% 0.94%
Ratio of Net Income to Average Net Assets
(excluding waivers) % % % % %
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All ratios for the period have been annualized.

(2) Commenced operations on January 9, 1995. All ratios for the period have been
annualized.

TREASURY OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.04
Dividends (from net investment income): (0.05) (0.05) (0.04)
-------- -------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======== ======== ========
Total Return 5.14% 5.15% 3.83%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $897,797 $317,392 $117,171
Ratio of Expenses to Average Net Assets % 0.45% 0.45% 0.45%
Ratio of Net Income to Average Net Assets % 5.03% 5.00% 5.50%
Ratio of Expenses to Average Net Assets (excluding waivers) % 0.53% 0.55% 0.55%
Ratio of Net Income to Average Net Assets (excluding waivers) % % % %
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Commenced operations on January 24, 1995. All ratios for the period have
been annualized.

16 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>
FOR MORE INFORMATION

More information about the funds is available in the funds' Statement of
Additional Information and annual and semiannual reports.

Information about the funds is also available on the Internet. Text-only
versions of fund documents can be viewed online or down-loaded from the SEC's
Internet site at http://www.sec.gov.

SEC file number: 811-3313

FAIF-1001 (9/1998)

<PAGE>

FEBRUARY 1, 1999

MONEY MARKET FUNDS
CLASS D SHARES

GOVERNMENT OBLIGATIONS FUND

PRIME OBLIGATIONS FUND

TAX FREE OBLIGATIONS FUND

TREASURY OBLIGATIONS FUND

FIRST AMERICAN
FUNDS, INC.

PROSPECTUS

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

[LOGO] FIRST AMERICAN
THE POWER OF DISCIPLINED INVESTING(R)

<PAGE>

TABLE OF CONTENTS

<PAGE>

FUND SUMMARIES
INTRODUCTION

1 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Government Obligations Fund seeks maximum current income to the extent
consistent with the preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Government Obligations Fund invests exclusively in short-term U.S. government
securities and repurchase agreements secured by U.S. government securities.

To generate additional income, the fund may lend securities representing up to
one-third of the value of its total assets to broker-dealers, banks and other
institutions.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

2 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

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FUND SUMMARIES
GOVERNMENT OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31/ EACH YEAR

- -------------------------------------------------------------
1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year (1/21/95)
- -------------------------------------------------------------
Government Obligations Fund % %
- -------------------------------------------------------------
- --------------------------------------------------------------------------------
FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses %
TOTAL %
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE
CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED
0.76%. FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

3 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
PRIME OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Prime Obligations Fund seeks maximum current income to the extent consistent
with preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

Prime Obligations Fund invests in high-quality short-term debt obligations,
including:

o SECURITIES ISSUED BY THE U.S. GOVERNMENT OR ONE OF ITS AGENCIES OR
INSTRUMENTALITIES;

o COMMERCIAL PAPER;

o NON-CONVERTIBLE CORPORATE DEBT SECURITIES;

o LOAN PARTICIPATION INTERESTS; AND

o REPURCHASE AGREEMENTS FOR THE SECURITIES IN WHICH THE FUND MAY INVEST.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

o THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

4 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
PRIME OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- --------------------------------------------------------------
1996 1997 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year (1/24/95)
- -------------------------------------------------------------
Prime Obligations Fund % %
- -------------------------------------------------------------

- --------------------------------------------------------------------------------
FEES AND EXPENSES

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) PROCEEDS, WHICHEVER IS LESS None

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses %
TOTAL %
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE
CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED %.
FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

5 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TAX FREE OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Tax Free Obligations Fund seeks maximum current income exempt from federal
income taxes consistent with the preservation of capital and maintenance of
liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

o GENERAL OBLIGATION BONDS, WHICH ARE BACKED BY THE FULL FAITH, CREDIT AND
TAXING POWER OF THE ISSUER, AND

O REVENUE BONDS, WHICH ARE PAYABLE ONLY FROM THE REVENUES GENERATED BY A
SPECIFIC PROJECT OR FROM ANOTHER SPECIFIC REVENUE SOURCE.

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A SECURITY OR REPURCHASE AGREEMENT
HELD BY THE FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

The bar chart is intended to show you how performance of the fund's shares has
varied from year to year. However, because class D shares were first offered in
1997, only one calendar year of information is available. The table illustrates
the fund's average annual total returns over different time periods. Both the
chart and the table assume that all distributions have been reinvested.

6 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TAX FREE OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- -------------------------------------------------------------
1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year (1/26/97)
- -------------------------------------------------------------
Tax Free Obligations Fund % %
- -------------------------------------------------------------

- --------------------------------------------------------------------------------
FEES AND EXPENSES

The fund does not impose any sales charges (loads) or other fees when you buy,
sell or exchange shares. However, when you hold shares of the fund you
indirectly pay a portion of the fund's operating expenses. These expenses are
deducted from fund assets and their effect is reflected in the share price. The
figures below show expenses before any waivers during the fiscal year ended
September 30, 1998.(1)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None
MAXIMUM DEFERRED SALES CHARGE (LOAD) None

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses %
TOTAL %
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE
CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED
0.74%. FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

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

1 year $
3 years $
5 years $
10 years $

7 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TREASURY OBLIGATIONS FUND

- --------------------------------------------------------------------------------
OBJECTIVE

Treasury Obligations Fund seeks maximum current income consistent with the
preservation of capital and maintenance of liquidity.

- --------------------------------------------------------------------------------
MAIN INVESTMENT STRATEGIES

- --------------------------------------------------------------------------------
MAIN RISKS

The main risks of investing in this fund include:

o ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. A MAJOR
CHANGE IN INTEREST RATES OR A DEFAULT ON A REPURCHASE AGREEMENT HELD BY THE
FUND COULD CAUSE THE VALUE OF YOUR INVESTMENT TO DECLINE.

O THE LEVEL OF INCOME YOU RECEIVE FROM THE FUND WILL BE AFFECTED BY MOVEMENTS
IN SHORT-TERM INTEREST RATES.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

8 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

FUND SUMMARIES
TREASURY OBLIGATIONS FUND (CONTINUED)

- --------------------------------------------------------------------------------
FUND PERFORMANCE (CONTINUED)
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR

- ----------------------------------------------------------------------------
1994 1995 1996 197 1998

Best Quarter: Quarter ending , 199 %
Worst Quarter: Quarter ending , 199 %

AVERAGE ANNUAL TOTAL RETURNS Since Inception
AS OF 12/31/98 One Year Five Years (10/4/93)
- ---------------------------------------------------------------------------
Treasury Obligations Fund % % %
- ---------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES AS A % OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Management Fees 0.40%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses %
TOTAL %
- --------------------------------------------------------------------------------
(1) Actual expenses for the fiscal year were lower than those shown in the table
because of voluntary fee waivers by the advisor. See "Additional Information
-- Financial Highlights." THE ADVISOR INTENDS TO WAIVE FEES DURING THE
CURRENT FISCAL YEAR SO THAT TOTAL FUND OPERATING EXPENSES DO NOT EXCEED %.
FEE WAIVERS MAY BE DISCONTINUED AT ANY TIME.

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

- --------------------------------------------------------------------------------
1 year $
3 years $
5 years $
10 years $

9 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
BUYING AND SELLING SHARES

Class D shares are offered to corporations and certain governmental entities.
Class D shares may be purchased through banks and other financial institutions
that have entered into sales agreements with the funds' distributor.

- --------------------------------------------------------------------------------
12b-1 FEES

Under Rule 12b-1 of the Investment Company Act, each fund is allowed to pay the
fund's distributor an annual fee equal to 0.15% of average daily net assets for
services provided to shareholders.

Because these fees are paid out of a fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.

The funds' distributor uses the shareholder servicing fee to compensate brokers,
participating institutions and "one-stop" mutual fund networks for providing
ongoing services to shareholder accounts. These institutions receive annual fees
equal to 0.15% of a fund's class Y share average daily net assets attributable
to shares sold through such institutions. The distributor may pay additional
fees to institutions out of its own assets, in exchange for sales and/or
administrative services performed on behalf of the institution's customers.

- --------------------------------------------------------------------------------
CALCULATING YOUR SHARE PRICE

- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES

Corporations and governmental entities eligible to purchase class D shares may
purchase and sell shares by calling their financial institution. Shares may be
purchased and sold only on days when both the New York Stock Exchange and
federally chartered banks are open. When purchasing shares, payment must be made
by wire transfer.

Purchase orders and redemption requests must be received by the investor's
financial institution by the time specified by the institution to be assured
same day processing. In order for shares to be purchased or sold at that day's
price, the funds must receive purchase orders or redemption requests by 11:30
a.m. Central time for Tax Free Obligations Fund, and by 2:00 p.m. Central time
for Government Obligations Fund, Prime Obligations Fund and Treasury Obligations
Fund. It is the responsibility of the financial institution to promptly transmit
orders to the funds. In addition, a purchase order will be effective on the day
given only if the funds' custodian receives payment by wire before the close of
business.

If a fund receives a redemption request by the time specified above, payment
will be made the same day by transfer of federal funds. Otherwise, payment will
be made on the next business day.

10 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

POLICIES & SERVICES
MANAGING YOUR INVESTMENT

- --------------------------------------------------------------------------------
STAYING INFORMED

STATEMENTS AND CONFIRMATIONS
Statements summarizing activity in your account are mailed at least quarterly.
Confirms are mailed following each purchase or sale of fund shares.

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS

Dividends from a fund's net investment income are declared daily, starting on
the day you purchase your shares, and paid monthly. You will not receive a
dividend for the day on which you sell shares.

Dividends will be reinvested in additional shares of the same fund, unless you
request cash payments on your new account form or by writing to the fund.

- --------------------------------------------------------------------------------
TAXES

Tax Free Obligations Fund intends to meet certain federal tax requirements so
that distributions of tax-exempt interest income may be treated as "exempt-
interest dividends." These dividends are not subject to regular federal tax.
However, the fund may invest up to 20% of its net assets in municipal securities
subject to the federal alternative minimum tax. Any portion of exempt-interest
dividends attributable to interest on these securities may increase some
shareholders' alternative minimum tax.

11 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
MANAGEMENT

INVESTMENT ADVISOR
FIRST AMERICAN ASSET MANAGEMENT
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402

U.S. Bank National Association (U.S. Bank), acting through its First American
Asset Management division, is the funds' investment advisor. First American
Asset Management provides investment management services to individuals and
institutions, including corporations, foundations, pensions and retirement
plans. As of December 31, 1998, it had more than $ in assets under
management, including investment company assets of approximately $ . As
investment advisor, First American Asset Management manages the funds' business
and investment activities, subject to the authority of the board of directors.
Each fund pays the investment advisor a monthly fee for providing investment
advisory services. During their most recent fiscal years, the funds paid the
following investment advisory fees to First American Asset Management:

ADVISORY FEE
AS A % OF
AVERAGE DAILY
NET ASSETS
- --------------------------------------------------------------------------------

GOVERNMENT OBLIGATIONS FUND %

PRIME OBLIGATIONS FUND %

TAX FREE OBLIGATIONS FUND %

TREASURY OBLIGATIONS FUND %
- --------------------------------------------------------------------------------

CUSTODIAN
U.S. BANK NATIONAL ASSOCIATION
U.S. BANK CENTER
180 EAST FIFTH STREET
ST. PAUL, MINNESOTA 55101

ADMINISTRATOR
SEI INVESTMENTS MANAGEMENT CORPORATION
OAKS, PENNSYLVANIA 19456

DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
OAKS, PENNSYLVANIA 19456

TRANSFER AGENT
DST SYSTEMS, INC.
330 WEST NINTH STREET
KANSAS CITY, MISSOURI 64105

PORTFOLIO MANAGEMENT
Each fund's investments are managed by a team of persons associated with First
American Asset Management.

12 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
MORE ABOUT THE FUNDS

- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES

- --------------------------------------------------------------------------------
YEAR 2000 ISSUES

13 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the class D shares
of each fund. This information is intended to help you understand each fund's
financial performance for the past five years or, if shorter, the period of the
fund's operations. Some of this information reflects financial results for a
single fund share. Total returns in the tables represent the rate that you would
have earned or lost on an investment in a fund, assuming you reinvested all of
your dividends and distributions.

GOVERNMENT OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1998 1997 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.04
Dividends (from net investment income): (0.05) (0.05) (0.04)
-------- -------- -------- ---------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return 5.04% 5.08% 3.85%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $337,199 $269,382 $198,859
Ratio of Expenses to Average Net Assets 0.60% 0.60% 0.60%
Ratio of Net Income to Average Net Assets 4.92% 4.96% 5.45%
Ratio of Expenses to Average Net Assets (excluding waivers) 0.67% 0.69% 0.70%
Ratio of Net Income to Average Net Assets (excluding waivers) % % %
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class D shares have been offered since January 21, 1995. All ratios for the
period have been annualized.

14 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)

PRIME OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.04
Dividends (from net investment income): (0.05) (0.05) (0.04)
------ -------- -------- -------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======== ======== =======
Total Return 5.16% 5.18% 3.86%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $113,064 $109,213 $ 9,735
Ratio of Expenses to Average Net Assets % 0.60% 0.60% 0.60%
Ratio of Net Income to Average Net Assets % 4.92% 4.96% 5.45%
Ratio of Expenses to Average Net Assets (excluding waivers) % 0.67% 0.69% 0.70%
Ratio of Net Income to Average Net Assets (excluding waivers) % % % %
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Commenced operations on January 24, 1995. All ratios for the period have
been annualized.

15 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>

ADDITIONAL INFORMATION
FINANCIAL HIGHLIGHTS (CONTINUED)

TAX FREE OBLIGATIONS FUND

Fiscal period Fiscal period
ended ended
September 30, November 30,
19981 1997(1)
- --------------------------------------------------------------------------------
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
Net Investment Income: --
Dividends (from net investment income): --
------ -------
Net Asset Value, End of Period $ 1.00 $ 1.00
====== =======
Total Return % 0.04%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $ 1
Ratio of Expenses to Average Net Assets 0.60%
Ratio of Net Income to Average Net Assets 3.20%
Ratio of Expenses to Average Net Assets
(excluding waivers) % 9.07%
Ratio of Net Income to Average Net Assets
(excluding waivers) % %
- --------------------------------------------------------------------------------
(1) Class D shares have been offered since November 26, 1997. All ratios for the
period have been annualized.

TREASURY OBLIGATIONS FUND

<TABLE>
<CAPTION>
Fiscal year ended September 30,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income: 0.05 0.05 0.05 0.03
Dividends (from net investment income): (0.05) (0.05) (0.05) (0.03)
-------- ---------- ---------- ---------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========== ========== ========== ========
Total Return 4.98% 5.00% 5.22% 3.12%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ $2,847,215 $1,616,130 $1,038,818 $746,090
Ratio of Expenses to Average Net Assets 0.60% 0.60% 0.60% 0.58%
Ratio of Net Income to Average Net Assets 4.88% 4.86% 5.13% 3.19%
Ratio of Expenses to Average Net Assets (excluding
waivers) 0.68% 0.70% 0.70% 0.68%
Ratio of Net Income to Average Net Assets (excluding
waivers) % % % %
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Commenced operations on October 4, 1993. All ratios for the period have been
annualized.

16 PROSPECTUS - FIRST AMERICAN MONEY MARKET FUNDS

<PAGE>
FOR MORE INFORMATION

More information about the funds is available in the funds' Statement of
Additional Information and annual and semiannual reports.

Information about the funds is also available on the Internet. Text-only
versions of fund documents can be viewed online or down-loaded from the SEC's
Internet site at http://www.sec.gov.

SEC file number: 811-3313

FAIF-1001 (9/1998)

<PAGE>

FIRST AMERICAN FUNDS, INC.

STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 1, 1999

TREASURY OBLIGATIONS FUND
GOVERNMENT OBLIGATIONS FUND
PRIME OBLIGATIONS FUND
TAX FREE OBLIGATIONS FUND

This Statement of Additional Information relates to the Class A, Class
Y and Class D Shares of Treasury Obligations Fund, Government Obligations Fund,
Prime Obligations Fund and Tax Free Obligations Fund and the Class B and Class C
Shares of Prime Obligations Fund, each of which is a series of First American
Funds, Inc. This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the Funds' current Prospectuses. This
Statement of Additional Information is incorporated into the Funds' Prospectuses
by reference. To obtain copies of the Prospectuses, call (800) 637-2548 or write
SEI Investments Distribution Co., Oaks, Pennsylvania 19456. Please retain this
Statement of Additional Information for future reference.

<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS

PAGE
----

<S> <C>
GENERAL INFORMATION...............................................................................................1

INVESTMENT RESTRICTIONS...........................................................................................1
Treasury Obligations Fund................................................................................1
Government Obligations Fund..............................................................................2
Prime Obligations Fund...................................................................................3
Tax Free Obligations Fund................................................................................4

ADDITIONAL RESTRICTIONS...........................................................................................5

INVESTMENT OBJECTIVES AND POLICIES................................................................................6
Municipal Securities.....................................................................................6
Loan Participations; Section 4(2) and Rule 144A Securities...............................................7
Securities of Foreign Banks and Branches.................................................................7
United States Government Securities......................................................................7
Repurchase Agreements....................................................................................8
Credit Enhancement Agreements............................................................................8
Put Options..............................................................................................8
Variable and Floating Rate Obligations...................................................................8
Lending of Portfolio Securities..........................................................................9
When-Issued and Delayed Delivery Securities..............................................................9
Money Market Funds.......................................................................................9
CFTC Information........................................................................................10

PORTFOLIO TURNOVER...............................................................................................10

DIRECTORS AND EXECUTIVE OFFICERS.................................................................................10
Directors...............................................................................................10
Executive Officers......................................................................................11
Compensation............................................................................................12

INVESTMENT ADVISORY AND OTHER SERVICES...........................................................................13
Investment Advisor......................................................................................13
Distributor and Distribution Plans......................................................................14
Custodian; Administrator; Transfer Agent; Counsel; Accountants..........................................17

PORTFOLIO TRANSACTIONS...........................................................................................17

CAPITAL STOCK....................................................................................................20

NET ASSET VALUE AND PUBLIC OFFERING PRICE........................................................................21

VALUATION OF PORTFOLIO SECURITIES................................................................................22

TAXES ........................................................................................................22

CALCULATION OF PERFORMANCE DATA..................................................................................23

ADDITIONAL INFORMATION ABOUT SELLING SHARES......................................................................25
By Telephone............................................................................................25

-i-

<PAGE>

By Mail.................................................................................................25
By Checking Account.....................................................................................26
Redemption Before Purchase Instruments Clear............................................................26

COMMERCIAL PAPER AND BOND RATINGS................................................................................26
Commercial Paper Ratings................................................................................26
Corporate Bond Ratings..................................................................................27

FINANCIAL STATEMENTS.............................................................................................27

</TABLE>

-ii-

<PAGE>

GENERAL INFORMATION

First American Funds, Inc. ("FAF") was incorporated under the name
"First American Money Fund, Inc." The Board of Directors and shareholders, at
meetings held December 6, 1989 and January 18, 1990, respectively, approved
amendments to the Articles of Incorporation providing that the name "First
American Money Fund, Inc." be changed to "First American Funds, Inc."

As set forth in the Prospectuses, FAF is organized as a series fund,
and currently issues its shares in four series. Each series of shares represents
a separate investment portfolio with its own investment objective and policies
(in essence, a separate mutual fund). The series of FAF to which this Statement
of Additional Information relates are named on the cover hereof. These series
are referred to in this Statement of Additional Information as the "Funds."

Shareholders may purchase shares of each Fund through separate classes.
Prime Obligations Fund offers its shares in five classes, Class A, Class B,
Class C, Class Y and Class D. Treasury Obligations Fund, Government Obligations
Fund and Tax Free Obligations Fund offer their shares in three classes, Class A,
Class Y and Class D. The various classes provide for variations in distribution
costs, voting rights and dividends. To the extent permitted under the Investment
Company Act of 1940 (the "1940 Act"), the Funds may also provide for variations
in other costs among the classes although they have no present intention to do
so. Except for differences among the classes pertaining to distribution costs,
each share of each Fund represents an equal proportionate interest in that Fund.

FAF has prepared and will provide a separate Prospectus relating to the
Class A, Class B and Class C (the "Class A, Class B and Class C Shares
Prospectus"), the Class Y (the "Class Y Shares Prospectus") and the Class D
Shares of the Funds (the "Class D Shares Prospectus"), respectively. These
Prospectuses can be obtained by calling or writing SEI Investments Distribution
Co. at the address and telephone number set forth on the cover of this Statement
of Additional Information. This Statement of Additional Information relates to
all Prospectuses for the various classes of shares of the Funds. It should be
read in conjunction with the applicable Prospectus.

The Bylaws of FAF provide that meetings of shareholders be held only
with such frequency as required under Minnesota law and the 1940 Act. Minnesota
corporation law requires only that the Board of Directors convene shareholders'
meetings when it deems appropriate. In addition, Minnesota law provides that if
a regular meeting of shareholders has not been held during the immediately
preceding 15 months, a shareholder or shareholders holding 3% or more of the
voting shares of FAF may demand a regular meeting of shareholders by written
notice given to the chief executive officer or chief financial officer of FAF.
Within 30 days after receipt of the demand, the Board of Directors shall cause a
regular meeting of shareholders to be called, which meeting shall be held no
later than 40 days after receipt of the demand, all at the expense of FAF. In
addition, the 1940 Act requires a shareholder vote for all amendments to
fundamental investment policies and restrictions, for approval of all investment
advisory contracts and amendments thereto, and for all amendments to Rule 12b-1
distribution plans.

INVESTMENT RESTRICTIONS

TREASURY OBLIGATIONS FUND

Treasury Obligations Fund has adopted the following investment
limitations and fundamental policies. These limitations cannot be changed by the
Fund without approval by the holders of a majority of the outstanding shares of
the Fund as defined in the 1940 Act (i.e., the lesser of the vote of (a) 67% of
the shares of the Fund at a meeting where more than 50% of the outstanding
shares are present in person or by proxy or (b) more than 50% of the outstanding
shares of the Fund). Treasury Obligations Fund may not:

1. Borrow money except that the Fund may borrow from banks or
enter into reverse repurchase agreements for temporary or
emergency purposes, for the purpose of meeting redemption
requests which might otherwise require the untimely
disposition of securities in aggregate amounts not exceeding
10% of the value of the Fund's total assets (including the
amount borrowed or subject to reverse repurchase agreements)
valued at the lesser of cost or market less liabilities (not
including the amount borrowed or subject to reverse repurchase
agreements) at the time the borrowing or reverse

-1-

<PAGE>

repurchase agreement is entered into. Any borrowings will be
repaid before any additional investments are made. During the
period any reverse repurchase agreements are outstanding, the
Fund will restrict the purchase of portfolio securities to
instruments maturing on or before the expiration date of the
reverse repurchase agreements, but only to the extent
necessary to assure completion of the reverse repurchase
agreements. Interest paid on borrowed funds will decrease the
net earnings of the Fund. The Fund will not borrow or enter
into reverse repurchase agreements to increase income
(leveraging).

2. Issue any senior securities (as defined in the 1940 Act),
except as set forth in investment restriction number (1)
above, and except to the extent that purchasing or selling on
a when-issued, delayed delivery or forward commitment basis or
using similar investment strategies may be deemed to
constitute issuing a senior security.

3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of its
total assets but only to secure borrowings for temporary or
emergency purposes.

4. Sell securities short or purchase securities on margin.

5. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter, under
federal securities laws, in connection with the disposition of
portfolio securities.

6. Invest 25% or more of its assets in the securities of issuers
in any single industry; provided that there shall be no
limitation on the purchase of obligations issued or guaranteed
by the United States, its agencies or instrumentalities, or
obligations of domestic commercial banks, excluding for this
purpose, for branches of domestic commercial banks.

7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests.

8. Lend money to others except through the purchase of debt
obligations of the type which the Fund is permitted to
purchase (see "Investment Objectives and Policies" below).

As a non-fundamental policy, Treasury Obligations Fund will not invest
more than 10% of its net assets in illiquid assets, including, without
limitation, repurchase agreements maturing in more than seven days.

As to investment restriction (6) above, utility companies, gas,
electric, water and telephone companies are considered separate industries, and
as to finance companies, the following two categories are each considered a
separate industry:

A. business credit institutions, such as Honeywell Finance
Corporation and General Electric Credit Corp., and

B. personal credit institutions, such as Sears Roebuck Acceptance
Corp. and Household Finance Corporation.

GOVERNMENT OBLIGATIONS FUND

Government Obligations Fund has adopted the following investment
limitations and fundamental policies. These limitations cannot be changed by the
Fund without approval by the holders of a majority of the outstanding shares of
the Fund as defined in the 1940 Act. Government Obligations Fund may not:

1. Borrow money except from banks for temporary or emergency
purposes for the purpose of meeting redemption requests which
might otherwise require the untimely disposition of
securities. Borrowing in the aggregate may not exceed 10% of
the value of the Fund's total assets (including the amount
borrowed) valued at the lesser of cost or market less
liabilities (not including the amount borrowed)

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at the time the borrowing is made. The borrowings will be
repaid before any additional investments are made. Interest
paid on borrowed funds will decrease the net earnings of the
Fund. The Fund will not borrow to increase income
(leveraging).

3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of its
total assets but only to secure borrowings for temporary or
emergency purposes.

4. Sell securities short or purchase securities on margin.

6. Invest more than 10% of its net assets in illiquid assets,
including, without limitation, repurchase agreements maturing
in more than seven days.

7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil or gas
interests.

8. Lend money to others except through purchase of debt
obligations of the type which the Fund is permitted to
purchase (see "Investment Objectives and Policies" below).

PRIME OBLIGATIONS FUND

Prime Obligations Fund has adopted the following investment limitations
and fundamental policies. These policies and limitations cannot be changed by
the Fund without approval by the holders of a majority of the outstanding shares
of the Fund as defined in the 1940 Act. Prime Obligations Fund may not:

1. Purchase common stocks, preferred stocks, warrants, other
equity securities, corporate bonds or debentures, state bonds,
municipal bonds, or industrial revenue bonds (except through
the purchase of obligations referred to under "Investment
Objectives and Policies" below).

3. Issue any senior securities (as defined in the 1940 Act),
except as set forth in investment restriction number (2)
above, and except to the extent that purchasing or selling on
a when-issued, delayed delivery or forward commitment basis or
using similar investment strategies may be deemed to
constitute issuing a senior security.

4. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of its
total assets but only to secure borrowings for temporary or
emergency purposes.

5. Sell securities short or purchase securities on margin.

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6. Write or purchase put or call options, except that the Fund
may write or purchase put or call options in connection with
the purchase of variable rate certificates of deposit
described below.

7. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter, under
federal securities laws, in connection with the disposition of
portfolio securities, or purchase securities with contractual
or other restrictions on resale.

8. Invest more than 10% of its net assets in illiquid assets,
including, without limitation, time deposits and repurchase
agreements maturing in more than seven days.

9. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests.

10. Lend money to others except through the purchase of debt
obligations of the type which the Funds are permitted to
purchase (see "Investment Objectives and Policies" below).

11. Invest 25% or more of its assets in the securities of issuers
in any single industry; provided that there shall be no
limitation on the purchase of obligations issued or guaranteed
by the United States, its agencies or instrumentalities, or
obligations of domestic commercial banks, excluding for this
purpose, foreign branches of domestic commercial banks. As to
utility companies, gas, electric, water, and telephone
companies are considered as separate industries. As to finance
companies, the following two categories are each considered a
separate industry: (A) business credit institutions, such as
Honeywell Finance Corporation and General Electric Credit
Corp., and (B) personal credit institutions, such as Sears
Roebuck Acceptance Corp. and Household Finance Corporation.

12. Invest in companies for the purpose of exercising control.

13. Purchase or retain the securities of any issuer if any of the
officers or directors of the Fund or its investment advisor
owns beneficially more than 1/2 of 1% of the securities of
such issuer and together own more than 5% of the securities of
such issuer.

TAX FREE OBLIGATIONS FUND

Tax Free Obligations Fund has adopted the following investment
limitations and fundamental policies. These policies and limitations cannot be
changed by the Fund without approval by the holders of a majority of the
outstanding shares of the Fund as defined in the 1940 Act. Tax Free Obligations
Fund may not:

2. Borrow money except from banks for temporary or emergency
purposes for the purpose of meeting redemption requests which
might otherwise require the untimely disposition of
securities. Borrowing in the aggregate may not exceed 10% of
the value of the Fund's total assets (including the amount
borrowed) valued at the lesser of cost or market less
liabilities (not including the amount borrowed) at the time
the borrowing is made. The borrowings will be repaid before
any additional investments are made. However, even with such
authority to borrow money, there is no assurance that the Fund
will not have to dispose of securities on an untimely basis to
meet redemption requests. For the purpose of this investment
restriction, the use of options and futures transactions and
the purchase of securities on a when-issued or
delayed-delivery basis shall not be deemed the borrowing of
money. (As a fundamental policy, the Fund will not make
additional investments while its borrowings exceed 5% of total
assets).

3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of its
total assets but only to secure borrowings for temporary or
emergency purposes.

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<PAGE>

4. Sell securities short or purchase securities on margin.

5. Write or purchase put or call options, except that the Fund
may write or purchase put or call options in connection with
the purchase of variable rate certificates of deposit
described below and as otherwise permitted as provided under
"Investment Objectives and Policies" below.

6. Underwrite the securities of other issuers except to the
extent the Fund may be deemed to be an underwriter, under
federal securities laws, in connection with the disposition of
portfolio securities, or purchase securities with contractual
or other restrictions on resale.

7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests.

8. Lend money to others except through the purchase of debt
obligations of the type which the Fund is permitted to
purchase (see "Investment Objectives and Policies" below).

9. Invest in companies for the purpose of exercising control.

10. Issue any senior securities (as defined in the 1940 Act),
except as set forth in investment restriction number (2)
above, and except to the extent that using options, futures
contracts and options on futures contracts, purchasing or
selling on a when-issued, delayed delivery or forward
commitment basis or using similar investment strategies may be
deemed to constitute issuing a senior security.

11. Invest 25% or more of its total assets in the securities of
any industry; provided that there shall be no limitation on
the purchase of obligations issued or guaranteed by the United
States, its agencies or instrumentalities, or obligations of
domestic commercial banks, excluding for this purpose, foreign
branches of domestic commercial banks. As to utility
companies, gas, electric, water, and telephone companies are
considered as separate industries. As to finance companies,
the following two categories are each considered a separate
industry: (A) business credit institutions, such as Honeywell
Finance Corporation and General Electric Credit Corp., and (B)
personal credit institutions, such as Sears Roebuck Acceptance
Corp. and Household Finance Corporation.

As a non-fundamental policy, Tax Free Obligations Fund may not invest
more than 10% of its net assets in illiquid assets, including, without
limitation, time deposits and repurchase agreements maturing in more than seven
days. The Funds may not invest in obligations of any affiliate of U.S. Bancorp,
including U.S. Bank National Association ("U.S. Bank" or the "Advisor").

ADDITIONAL RESTRICTIONS

Short-term investments and repurchase agreements may be entered into on
a joint basis by the Funds and other funds advised by the Advisor to the extent
permitted by Securities and Exchange Commission exemptive order.

The Funds are subject to the investment restrictions of Rule 2a-7 under
the 1940 Act in addition to other policies and restrictions discussed herein.
Pursuant to Rule 2a-7, each Fund is required to invest exclusively in securities
that mature within 397 days from the date of purchase and to maintain an average
weighted maturity of not more than 90 days. Under Rule 2a-7, securities which
are subject to specified types of demand or put features may be deemed to mature
at the next demand or put date although they have a longer stated maturity. Rule
2a-7 also requires that all investments by each Fund be limited to United States
dollar-denominated investments that (a) present "minimal credit risk" and (b)
are at the time of acquisition "Eligible Securities." Eligible Securities
include, among others, securities that are rated by two Nationally Recognized
Statistical Rating Organizations ("NRSROs") in one of the two highest categories
for short-term debt obligations, such as A-1 or A-2 by Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"),
or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's"). It is the
responsibility of the Advisor to determine that the Funds' investments present
only "minimal credit risk" and are Eligible Securities. The Board of Directors
of FAF has established written guidelines and

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<PAGE>

procedures for the Advisor and oversees the Advisor's determination that the
Funds' portfolio securities present only "minimal credit risk" and are Eligible
Securities.

Rule 2a-7 requires, among other things, that each Fund may not invest,
other than in United States "Government Securities" (as defined in the 1940
Act), more than 5% of its total assets in securities issued by the issuer of the
security; provided that the applicable Fund may invest in First Tier Securities
(as defined in Rule 2a-7) in excess of that limitation for a period of up to
three business days after the purchase thereof provided that the Fund may not
make more than one such investment at any time. Rule 2a-7 also requires that
each Fund may not invest, other than in United States Government securities, (a)
more than 5% of its total assets in Second Tier Securities (i.e., Eligible
Securities that are not rated by two NRSROs in the highest category such as A-1
and Prime-1) and (b) more than the greater of 1% of its total assets or
$1,000,000 in Second Tier Securities of any one issuer.

INVESTMENT OBJECTIVES AND POLICIES

The main investment strategies of the Funds are set forth in the Funds'
current Prospectuses under "Fund Summaries." This Section describes in detail
the Funds' main investment strategies and other secondary investment strategies.

MUNICIPAL SECURITIES

Tax Free Obligations Fund invests principally in municipal securities
such as municipal bonds and other debt obligations. These municipal bonds and
debt securities are issued by the states and by their local and special-purpose
political subdivisions. The term "municipal bond" as used in this Section
includes short-term municipal notes and other commercial paper issued by the
states and their political subdivision.

Two general classifications of municipal bonds are "general obligation"
bonds and "revenue" bonds. General obligation bonds are secured by the
governmental issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. They are usually paid from general revenues
of the issuing governmental entity. Revenue bonds, on the other hand, are
usually payable only out of a specific revenue source rather than from general
revenues. Revenue bonds ordinarily are not backed by the faith, credit or
general taxing power of the issuing governmental entity. The principal and
interest on revenue bonds for private facilities are typically paid out of rents
or other specified payments made to the issuing governmental entity by a private
company which uses or operates the facilities. Examples of these types of
obligations are industrial revenue bonds and pollution control revenue bonds.
Industrial revenue bonds are issued by governmental entities to provide
financing aid to community facilities such as hospitals, hotels, business or
residential complexes, convention halls and sport complexes. Pollution control
revenue bonds are issued to finance air, water and solids pollution control
systems for privately operated industrial or commercial facilities.

Revenue bonds for private facilities usually do not represent a pledge
of the credit, general revenues or taxing powers of the issuing governmental
entity. Instead, the private company operating the facility is the sole source
of payment of the obligation. Sometimes, the funds for payment of revenue bonds
come solely from revenue generated by operation of the facility. Revenue bonds
which are not backed by the credit of the issuing governmental entity frequently
provide a higher rate of return than other municipal obligations, but they
entail greater risk than obligations which are guaranteed by a governmental unit
with taxing power. Federal income tax laws place substantial limitations on
industrial revenue bonds, and particularly certain specified private activity
bonds issued after August 7, 1986. In the future, legislation could be
introduced in Congress which could further restrict or eliminate the income tax
exemption for interest on debt obligations in which the Fund may invest.

Tax Free Obligations Fund's investment in municipal bonds and other
debt obligations that are purchased from financial institutions such as
commercial and investment banks, savings associations and insurance companies
may take the form of participations, beneficial interests in a trust,
partnership interests or any other form of indirect ownership that allows the
Fund to treat the income from the investment as exempt from federal income tax.

In addition, Tax Free Obligations Fund may invest in other federal
income tax-free securities such as (i) tax and revenue anticipation notes issued
to finance working capital needs in anticipation of receiving taxes or other

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revenues, (ii) bond anticipation notes that are intended to be refinanced
through a later issuance of longer-term bonds, (iii) variable and floating rate
obligations including variable rate demand notes and (iv) participation, trust
and partnership interests in any of the foregoing obligations.

LOAN PARTICIPATIONS; SECTION 4(2) AND RULE 144A SECURITIES

Prime Obligations Fund and Tax Free Obligations Fund may invest in loan
participation interests. A loan participation interest represents a pro rata
undivided interest in an underlying bank loan. Participation interests, like the
underlying loans, may have fixed, floating, or variable rates of interest. The
bank selling a participation interest generally acts as a mere conduit between
its borrower and the purchasers of interests in the loan. The purchaser of an
interest (for example, a Fund) generally does not have recourse against the bank
in the event of a default on the underlying loan. Therefore, the credit risk
associated with such instruments is governed by the creditworthiness of the
underlying borrowers and not by the banks selling the interests. Loan
participation interests that can be sold within a seven-day period are deemed by
the Advisor to be liquid investments. If a loan participation interest is
restricted from being sold within a seven-day period, then Prime Obligations
Fund (as a non-fundamental policy) and Tax Free Obligations Fund (as a
fundamental policy) will be limited, together with other illiquid investments,
to not more than 10% of the applicable Fund's net assets. Commercial paper
issued in reliance on the exemption from registration afforded by Section 4(2)
of the Securities Act of 1933 and corporate obligations qualifying for resale to
certain "qualified institutional buyers" pursuant to Rule 144A under the
Securities Act of 1933 that meet the criteria for liquidity established by the
Board of Directors are considered liquid. Consequently, Prime Obligations Fund
and Tax Free Obligations Fund do not intend to subject such securities to the
limitation applicable to restricted securities. Investing in Rule 144A
securities could have the effect of increasing the level of illiquidity in a
Fund to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities.

SECURITIES OF FOREIGN BANKS AND BRANCHES

Prime Obligations Fund and Tax Free Obligations Fund may invest in
obligations of foreign branches of United States banks and United States
branches of foreign banks. Various provisions of federal law governing the
establishment and operation of domestic branches do not apply to foreign
branches of domestic banks. Obligations of United States branches of foreign
banks may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by federal
and state regulation as well as by governmental action in the country in which
the foreign bank has its head office.

Because the portfolios of Prime Obligations Fund's and Tax Free
Obligations Fund's investments in taxable money market securities may contain
securities of foreign branches of domestic banks, foreign banks, and United
States branches of foreign banks, such Funds may be subject to additional
investment risks that are different in some respects from those incurred by a
fund that invests only in debt obligations of United States banks. These risks
may include future unfavorable political and economic developments and possible
withholding taxes, seizure of foreign deposits, currency controls, interest
limitations, or other governmental restrictions which might affect the payment
of principal or interest on securities owned by such Fund. Additionally, there
may be less public information available about foreign banks and their branches.
The Advisor carefully considers these factors when making investments. The Funds
have agreed that, in connection with investment in securities issued by foreign
banks, United States branches of foreign banks, and foreign branches of domestic
banks, consideration will be given to the domestic marketability of such
securities in light of these factors.

UNITED STATES GOVERNMENT SECURITIES

Each Fund may invest in securities issued or guaranteed as to principal
or interest by the United States Government, or agencies or instrumentalities of
the United States Government. These investments include direct obligations of
the United States Treasury such as United States Treasury bonds, notes, and
bills. The Treasury securities are essentially the same except for differences
in interest rates, maturities, and dates of issuance. In addition to Treasury
securities, Government Obligations Fund, Prime Obligations Fund and Tax Free
Obligations Fund may invest in securities, such as notes, bonds, and discount
notes which are issued or guaranteed by agencies of the United States Government
and various instrumentalities which have been established or sponsored by the
United States Government. Except for United States Treasury securities, these
United States Government obligations, even those which are

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guaranteed by federal agencies or instrumentalities, may or may not be backed by
the "full faith and credit" of the United States. In the case of securities not
backed by the full faith and credit of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment and may not be able to assert a claim against the United States itself
in the event the agency or instrumentality does not meet its commitment. The
Advisor considers securities guaranteed by an irrevocable letter of credit
issued by a government agency to be guaranteed by that agency.

United States Treasury obligations include bills, notes and bonds
issued by the United States Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). STRIPS are sold as zero coupon securities,
which means that they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments of interest or
principal. This discount is accreted over the life of the security, and such
accretion will constitute the income earned on the security for both accounting
and tax purposes. Because of these features, such securities may be subject to
greater interest rate volatility than interest paying United States Treasury
obligations. A Fund's investments in STRIPS will be limited to components with
maturities of less than 397 days and the Funds will not actively trade such
components.

REPURCHASE AGREEMENTS

Each Fund may engage in repurchase agreements with respect to any of
its portfolio securities. In a repurchase agreement, a Fund buys a security at
one price and simultaneously promises to sell that same security back to the
seller at a mutually agreed upon time and price. Each Fund may engage in
repurchase agreements with any member bank of the Federal Reserve System or
dealer in United States Government securities. Repurchase agreements usually are
for short periods, such as under one week, not to exceed 30 days. In all cases,
the Advisor must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of
bankruptcy of the other party to a repurchase agreement, a Fund might experience
delays in recovering its cash. To the extent that, in the meantime, the value of
the securities the Fund purchased may have decreased, the Fund could experience
a loss.

CREDIT ENHANCEMENT AGREEMENTS

Prime Obligations Fund and Tax Free Obligations Fund may arrange for
guarantees, letters of credit, or other forms of credit enhancement agreements
(collectively, "Guarantees") for the purpose of further securing the payment of
principal and/or interest on such Funds' investment securities. Although each
investment security, at the time it is purchased, must meet such Funds'
creditworthiness criteria, Guarantees sometimes are purchased from banks and
other institutions (collectively, "Guarantors") when the Advisor, through yield
and credit analysis, deems that credit enhancement of certain of such Funds'
securities is advisable. As a non-fundamental policy, Prime Obligations Fund and
Tax Free Obligations Fund will limit the value of all investment securities
issued or guaranteed by each Guarantor to not more than 10% of the value of such
Fund's total assets.

PUT OPTIONS

Tax Free Obligations Fund may purchase tax-exempt securities which
provide for the right to resell them to the issuer, a bank or a broker-dealer at
a specified price within a specified period of time prior to the maturity date
of such obligations. Such a right to resell, which is commonly known as a "put,"
may be sold, transferred or assigned only with the underlying security or
securities. The Fund may pay a higher price for a tax-exempt security with a put
than would be paid for the same security without a put. The primary purpose of
purchasing such securities with puts is to permit the Fund to be as fully
invested as practicable in tax-exempt securities while at the same time
providing the Fund with appropriate liquidity.

VARIABLE AND FLOATING RATE OBLIGATIONS

Certain of the obligations in which Tax Free Obligations Fund may
invest may be variable or floating rate obligations in which the interest rate
is adjusted either at predesignated periodic intervals (variable rate) or when
there is a change in the index rate of interest on which the interest rate
payable on the obligation is based (floating rate).

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Variable or floating rate obligations may include a demand feature which is a
put that entitles the holder to receive the principal amount of the underlying
security or securities and which may be exercised either at any time on no more
than 30 days' notice or at specified intervals not exceeding 397 calendar days
on no more than 30 days' notice. Variable or floating rate instruments with a
demand feature enable the Fund to purchase instruments with a stated maturity in
excess of 397 calendar days. The Fund determines the maturity of variable or
floating rate instruments in accordance with Securities and Exchange Commission
("SEC") rules which allow the Fund to consider certain of such instruments as
having maturities that are less than the maturity date on the face of the
instrument.

In connection with Prime Obligation Fund's and Tax Free Obligations
Fund's purchase of variable rate certificates of deposit ("CDs"), it may enter
into agreements with banks or dealers allowing the Fund to resell the
certificates to the bank or dealer, at the Fund's option. Time deposits which
may be purchased by such Fund are deposits held in foreign branches of United
States banks which have a specified term or maturity. The Funds purchase CDs
from only those domestic savings and loan institutions which are regulated by
the Office of Thrift Supervision and the Federal Deposit Insurance Corporation
("FDIC"), and whose deposits are insured by either the Savings Association
Insurance Fund or the Bank Insurance Fund, each of which is administered by the
FDIC. However, because such Funds purchase large denomination CDs, they do not
expect to benefit materially from such insurance. The policies described in this
paragraph are non-fundamental and may be changed by the Board of Directors.

LENDING OF PORTFOLIO SECURITIES

In order to generate additional income, each of the Funds may lend
portfolio securities representing up to one-third of the value of its total
assets to broker-dealers, bank or other institutional borrowers of securities.
If the Funds engage in securities lending, distributions paid to shareholders
from the resulting income will not be excludable from a shareholder's gross
income for income tax purposes. As with other extensions of credit, there may be
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However, the
Funds will only enter into loan arrangements with broker-dealers, banks, or
other institutions which the Advisor has determined are creditworthy under
guidelines established by the Board of Directors. In these loan arrangements,
the Funds will receive collateral in the form of cash, United States Government
securities or other high-grade debt obligations equal to at least 100% of the
value of the securities loaned. Collateral is marked to market daily. When a
Fund lends portfolio securities, it continues to be entitled to the interest
payable on the loaned securities and, in addition, receives interest on the
amount of the loan at a rate negotiated with the borrower. The Funds will pay a
portion of the income earned on the lending transaction to the placing broker
and may pay administrative and custodial fees (including fees to an affiliate of
the Advisor) in connection with these loans which, in the case of U.S. Bank, are
40% of the Funds' income from such securities lending transactions. U.S. Bank
may act as securities lending agent for the Funds subject to U.S. Bank's
compliance with conditions contained in an SEC exemptive order permitting U.S.
Bank to provide such services and receive compensation.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

Each Fund may purchase securities on a when-issued or delayed delivery
basis. The settlement dates for these types of transactions are determined by
mutual agreement of the parties and may occur a month or more after the parties
have agreed to the transaction. Securities purchased on a when-issued or delayed
delivery basis are subject to market fluctuation and no interest accrues to the
Fund during the period prior to settlement. At the time a Fund commits to
purchase securities on a when-issued or delayed delivery basis, it will record
the transaction and thereafter reflect the value, each day, of such security in
determining its net asset value. At the time of delivery of the securities, the
value may be more or less than the purchase price. Each Fund will also establish
a segregated account with its custodian in which it will maintain cash or cash
equivalents or other portfolio securities equal in value to commitments for such
when-issued or delayed delivery securities. A Fund will not purchase securities
on a when-issued or delayed delivery basis if, as a result thereof, more than
15% of that Fund's net assets would be so invested.

MONEY MARKET FUNDS

Each of the Funds may invest, to the extent permitted by the 1940 Act,
in securities issued by other money market funds, provided that the permitted
investments of such other money market funds constitute permitted investments of
the investing Fund. The money market funds in which the Funds may invest include
other money market

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funds advised by the Advisor. Investments by a Fund in other money market funds
advised by the Advisor are subject to certain restrictions contained in an
exemptive order issued by the SEC.

CFTC INFORMATION

The Commodity Futures Trading Commission (the "CFTC"), a federal
agency, regulates trading activity pursuant to the Commodity Exchange Act, as
amended. The CFTC requires the registration of "commodity pool operators," which
are defined as any person engaged in a business which is of the nature of an
investment trust, syndicate or a similar form of enterprise, and who, in
connection therewith, solicits, accepts or receives from others funds,
securities or property for the purpose of trading in any commodity for future
delivery on or subject to the rules of any contract market. The CFTC has adopted
Rule 4.5, which provides an exclusion from the definition of commodity pool
operator for any registered investment company which (i) will use commodity
futures or commodity options contracts solely for bona fide hedging purposes
(provided, however, that in the alternative, with respect to each long position
in a commodity future or commodity option contract, an investment company may
meet certain other tests set forth in Rule 4.5); (ii) will not enter into
commodity futures and commodity options contracts for which the aggregate
initial margin and premiums exceed 5% of its assets; (iii) will not be marketed
to the public as a commodity pool or as a vehicle for investing in commodity
interests; (iv) will disclose to its investors the purposes of and limitations
on its commodity interest trading; and (v) will submit to special calls of the
CFTC for information. Any investment company desiring to claim this exclusion
must file a notice of eligibility with both the CFTC and the National Futures
Association. FAF has made such notice filings with respect to those Funds which
may invest in commodity futures or commodity options contracts.

PORTFOLIO TURNOVER

The Funds generally intend to hold their portfolio securities to
maturity. In certain instances, however, a Fund may dispose of its portfolio
securities prior to maturity when it appears such action will be in the best
interest of the Fund because of changing money market conditions, redemption
requests, or otherwise. A Fund may attempt to maximize the total return on its
portfolio by trading to take advantage of changing money market conditions and
trends or to take advantage of what are believed to be disparities in yield
relationships between different money market instruments. Because each Fund
invests in short-term securities and manages its portfolio as described above in
"Investment Restrictions" and "Investment Objectives and Policies" above and as
set forth under "Fund Summaries" in the Funds' Prospectuses, each Fund's
portfolio will turn over several times a year. Because brokerage commissions as
such are not usually paid in connection with the purchase or sale of the
securities in which the Funds invest and because the transactional costs are
small, the high turnover is not expected materially to affect net asset values
or yields. Securities with maturities of less than one year are excluded from
required portfolio turnover rate calculations, and, therefore, each Fund's
turnover rate for reporting purposes will be zero.

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of FAF are listed below, together
with their business addresses and their principal occupations during the past
five years. Directors who are "interested persons" (as that term is defined in
the 1940 Act) of FAF are identified with an asterisk.

DIRECTORS

Robert J. Dayton, 5140 Norwest Center, Minneapolis, Minnesota 55402:
Director of FAF since December 1994 and of First American Investment Funds, Inc.
("FAIF") since September 1994 and of First American Strategy Funds, Inc.
("FASF") since June 1996; Chairman (1989-1993) and Chief Executive Officer
(1993-present), Okabena Company (private family investment office). Age: 54.

Roger A. Gibson, 1020 15th Street, Ste. 41A, Denver, Colorado 80202:
Director of FAF, FAIF and FASF since October 1997; Vice President North
America-Mountain Region for United Airlines since June 1995; prior to his

-10-

<PAGE>

current position, served most recently as Vice President Customer Service for
United Airlines in the West Region in San Francisco and the Mountain Region in
Denver, Colorado; employee at United Airlines since 1967. Age: 51.

David T. Bennett, ______________: Director of FAIF, FAF and FASF since
August 1998; Of Counsel, Gray, Plant, Mooty, Mooty & Bennett P.A., from
____________ to _________________. Age 56.

Andrew M. Hunter III, 537 Harrington Road, Wayzata, Minnesota 55391:
Director of FAIF, FAF and FASF since January 1997; Chairman of Hunter, Keith
Industries, a diversified manufacturing and services management company, since
1975. Age: 49.

Leonard W. Kedrowski, 16 Dellwood Avenue, Dellwood, Minnesota 55110:
Director of FAF and FAIF since November 1993 and of FASF since June 1996;
President and owner of Executive Management Consulting, Inc., a management
consulting firm; Vice President, Chief Financial Officer, Treasurer, Secretary
and Director of Anderson Corporation, a large privately-held manufacturer of
wood windows, from 1983 to October 1992. Age: 55.

* Robert L. Spies, 4715 Twin Lakes Avenue, Brooklyn Center, Minnesota
55429: Director of FAIF, FAF and FASF since January 31, 1997; employed by First
Bank System, Inc. and subsidiaries from 1957 to January 31, 1997, most recently
as Vice President, First Bank National Association. Age: 62.

Joseph D. Strauss, 8617 Edenbrook Crossing, # 443, Brooklyn Park,
Minnesota 55443: Director of FAF since 1984 and of FAIF since April 1991 and of
FASF since June 1996; Chairman of FAF's and FAIF's Boards from 1993 to September
1997 and of FASF's Board from June 1996 to September 1997; President of FAF and
FAIF from June 1989 to November 1989; Owner and President, Strauss Management
Company, since 1993; Owner and President, Community Resource Partnerships, Inc.,
a community business retention survey company, since 1992; attorney-at-law.
Age: 56.

Virginia L. Stringer, 712 Linwood Avenue, St. Paul, Minnesota 55105:
Director of FAIF since August 1987 and of FAF since April 1991 and of FASF since
June 1996; Chair of FAIF's, FAF's and FASF's Boards since September 1997; Owner
and President, Strategic Management Resources, Inc. since 1993; formerly
President and Director of The Inventure Group, a management consulting and
training company, President of Scott's, Inc., a transportation company, and Vice
President of Human Resources of The Pillsbury Company. Age: 52.

EXECUTIVE OFFICERS

Mark Nagle, SEI Investments Company, Oaks, Pennsylvania 19456;
President of FAIF, FAF and FASF since September 1998; Vice President of the
Administrator and Distributor since November 1996; Vice President of Fund
Accounting, BISYS Fund Services, Inc., from November 1995 to November 1996;
Senior Vice President, Fidelity Investments, from __________, 1994 to November
1995. Age: 40.

Joseph M. O'Donnell, Vice President and Assistant Secretary of FAIF,
FAF and FASF beginning in February 1998; Vice President and Assistant Secretary
of the Administrator and Distributor since January 1998; Vice President and
General Counsel, FPS Services, Inc. from 1993 to 1997; Staff Counsel and
Secretary, Provident Mutual Family of Funds from 1990 to 1993. Age: 44.

Michael G. Beattie, SEI Investments Company, Oaks, Pennsylvania 19456;
Controller and Assistant Treasurer of FAIF, FAF and FASF since December 1997;
Associate Director, Fund Accounting, SEI Investments Company since July 1997;
prior to his current position, served most recently as Fund Accounting Manager
of SEI (1993-1997); Registered Representative, First Investors, from 1988 to
1990. Age: 32.

Lydia A. Gavalis, SEI Investments Company, Oaks, Pennsylvania 19456;
Vice President and Assistant Secretary of FAIF, FAF and FASF, and Vice President
and Assistant Secretary of the Administrator and the Distributor each since
January 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange from 1989 to 1998. Age: 34.

-11-

<PAGE>

Lynda J. Streigel, SEI Investments Company, Oaks, Pennsylvania 19456;
Vice President and Assistant Secretary of FAIF, FAF and FASF, and Vice President
and Assistant Secretary of the Administrator and the Distributor since January
1998; Senior Asset Management Counsel, Barnett Banks, Inc. from 1993 to 1997;
Partner, Groom and Nordberg, Chartered from 1996 to 1997; and Associate General
Counsel, Riggs Bank, N.A. from 1992 to 1995. Age:
50.

Kathy Heilig, SEI Investments Company, Oaks, Pennsylvania 19456; Vice
President and Assistant Secretary of FAIF, FAF and FASF, and Treasurer of SEI
Investments Company since 1997; Assistant Controller of SEI Investments Company
from 1995 to 1997; and Vice President of SEI Investments Company from 1991 to
1995. Age:
40.

James R. Foggo, SEI Investments Company, Oaks, Pennsylvania 19456; Vice
President and Assistant Secretary of FAIF, FAF and FASF since September 1998;
Vice President and Assistant Secretary of the Administrator and Distributor
since September 1998; Associate Attorney, Paul, Weiss, Rifkind, Wharton and
Garrison from January 1998 to August 1998; Associate Attorney, Baker & McKenzie
from January 1995 to January 1998. Age: 34.

Michael J. Radmer, 220 South Sixth Street, Minneapolis, Minnesota
55402; Secretary of FAIF since April 1991 and of FAF since 1981 and of FASF
since June 1996; Partner, Dorsey & Whitney LLP, a Minneapolis-based law firm and
general counsel of FAIF, FAF and FASF. Age: 52.

COMPENSATION

The First American Family of Funds, which includes FAF, FAIF and FASF,
currently pays only to directors of the funds who are not paid employees or
affiliates of the funds a fee of $15,000 per year ($22,500 in the case of the
Chair) plus $2,500 ($3,750 in the case of the Chair) per meeting of the Board
attended and $800 per committee meeting attended ($1,600 in the case of a
committee chair) and reimburses travel expenses of directors and officers to
attend Board meetings. In the event of telephonic Board or committee meetings,
each director receives a fee of $500 per Board or committee meeting ($750 in the
case of the Chair or a committee chair). In addition, directors may receive a
per diem fee of $1,000 per day plus travel expenses when directors travel out of
town on Fund business. However, directors do not receive the $1,000 per diem
amount plus the foregoing Board or committee fee for an out of town Board or
committee meeting but instead receive the greater of the total per diem fee or
meeting fee. Legal fees and expenses are also paid to Dorsey & Whitney LLP, the
law firm of which Michael J. Radmer, secretary of FAF, FAIF and FASF, is a
partner. The following table sets forth information concerning aggregate
compensation paid to each director of FAF (i) by FAF (column 2), and (ii) by
FAF, FAIF and FASF collectively (column 5) during the fiscal year ended
September 30, 1998. No executive officer or affiliated person of FAF had
aggregate compensation from FAF in excess of $60,000 during such fiscal year:

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
PENSION OR
RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL FROM REGISTRANT AND
COMPENSATION AS PART OF FUND BENEFITS UPON FUND COMPLEX PAID
NAME OF PERSON, POSITION FROM REGISTRANT EXPENSES RETIREMENT TO DIRECTORS
- ------------------------------------- ---------------- --------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Robert J. Dayton, Director $ -0- -0- $
Roger A. Gibson, Director -0- -0-
David T. Bennett, Director -0- -0-
Andrew M. Hunter III, Director -0- -0-
Leonard W. Kedrowski, Director -0- -0-
Robert L. Spies, Director -0- -0-
Joseph D. Strauss, Director -0- -0-
Virginia L. Stringer, Director -0- -0-

</TABLE>

Under Minnesota law, each director owes certain fiduciary duties to the
Funds and to their shareholders. Minnesota law provides that a director "shall
discharge the duties of the position of director in good faith, in a manner the
director reasonably believes to be in the best interest of the corporation, and
with the care an ordinarily prudent person in a like position would exercise
under similar circumstances." Fiduciary duties of a director of a Minnesota
corporation include, therefore, both a duty of "loyalty" (to act in good faith
and in a manner reasonably believed to be

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<PAGE>

in the best interest of the corporation) and a duty of "care" (to act with the
care an ordinarily prudent person in a like position would exercise under
similar circumstances). In 1987, Minnesota enacted legislation which authorizes
corporations to eliminate or limit the personal liability of a director to the
corporation or its shareholders for monetary damages for breach of the fiduciary
duty of "care." Minnesota law does not, however, permit a corporation to
eliminate or limit the liability of a director (a) for any breach of the
director's duty of "loyalty" to the corporation or its shareholders, (b) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of the law, (c) for authorizing a dividend, stock repurchase
or redemption, or other distribution in violation of Minnesota law or for
violation of certain provisions of Minnesota securities laws, or (d) for any
transaction from which the director derived an improper personal benefit. FAF's
Board of Directors and shareholders, at meetings held December 10, 1987 and
March 15, 1988, respectively, approved an amendment to the Articles of
Incorporation that limits the liability of directors to the fullest extent
permitted by the Minnesota legislation and the 1940 Act.

Minnesota law does not eliminate the duty of "care" imposed on a
director. It only authorizes a corporation to eliminate monetary liability for
violations of that duty. Further, Minnesota law does not permit elimination or
limitation of liability of "officers" to the corp oration for breach of their
duties as officers. Minnesota law does not permit elimination or limitation of
the availability of equitable relief, such as injunctive or rescissionary
relief. These remedies, however, may be ineffective in situations where
shareholders become aware of such a breach after a transaction has been
consummated and rescission has become impractical. Minnesota law does not permit
elimination or limitation of a director's liability under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended. The 1940
Act prohibits elimination or limitation of a director's liability for acts
involving willful malfeasance, bad faith, gross negligence, or reckless
disregard of the duties of a director.

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISOR

U.S. Bank National Association, 601 Second Avenue South, Minneapolis,
Minnesota 55402, serves as the investment advisor and manager of the Funds
through its First American Asset Management group. The Advisor is a national
banking association that has professionally managed accounts for individuals,
insurance companies, foundations, commingled accounts, trust funds, and others
for over 75 years. The Advisor is a subsidiary of U.S. Bancorp ("USB"), 601
Second Avenue South, Minneapolis, Minnesota 55402, which is a regional,
multi-state bank holding company headquartered in Minneapolis, Minnesota. USB
operates five banks and eleven trust companies with offices in 17 contiguous
states from Illinois to Washington. USB also has various other subsidiaries
engaged in financial services. At December 31, 1998 on a pro forma combined
basis, USB and consolidated subsidiaries had consolidated assets of
approximately $__ billion, consolidated deposits of $ billion and shareholders'
equity of $__ billion.

Pursuant to an Investment Advisory Agreement, effective as of January
20, 1995 (the "Advisory Agreement") between FAF, on behalf of each Fund, and the
Advisor, the Funds engage the Advisor to act as investment advisor for and to
manage the investment of the Funds' assets. The Advisory Agreement requires each
Fund to pay the Advisor a monthly fee equal, on an annual basis, to .40 of 1% of
the Fund's average daily net assets.

The Advisory Agreement requires the Advisor to arrange, if requested by
FAF, for officers or employees of the Advisor to serve without compensation from
the Funds as directors, officers, or employees of FAF if duly elected to such
positions by the shareholders or directors of FAF. The Advisor has the authority
and responsibility to make and execute investment decisions for the Funds within
the framework of the Funds' investment policies, subject to review by the Board
of Directors of FAF. The Advisor is also responsible for monitoring the
performance of the various organizations providing services to the Funds,
including the Funds' distributor, shareholder services agent, custodian, and
accounting agent, and for periodically reporting to FAF's Board of Directors on
the performance of such organizations. The Advisor will, at its own expense,
furnish the Funds with the necessary personnel, office facilities, and equipment
to service the Funds' investments and to discharge its duties as investment
advisor of the Funds. In addition to the investment advisory fee, each Fund pays
all of its expenses that are not expressly assumed by the Advisor or any other
organization with which the Fund may enter into an agreement for the performance
of services. Each Fund is liable for such nonrecurring expenses as may arise,
including litigation to which the Fund may be a party. FAF may

-13-

<PAGE>

have an obligation to indemnify its directors and officers with respect to such
litigation. The Advisor will be liable to the Funds under the Advisory Agreement
for any negligence or willful misconduct by the Advisor other than liability for
investments made by the Advisor in accordance with the explicit direction of the
Board of Directors or the investment objectives and policies of the Funds. The
Advisor has agreed to indemnify the Funds with respect to any loss, liability,
judgment, cost or penalty that a Fund may suffer due to a breach of the Advisory
Agreement by the Advisor. The Advisor may, at its option, waive any or all of
its fees, or reimburse expenses, with respect to each of the Funds from time to
time. Any such waiver or reimbursement is voluntary and may be discontinued at
any time unless as otherwise set forth in the Prospectus. The Advisor also may
absorb or reimburse expenses of the Funds from time to time, in its discretion,
while retaining the ability to be reimbursed by the Funds for such amounts prior
to the end of the fiscal year. This practice would have the effect of lowering a
Fund's overall expense ratio and of increasing yield to investors, or the
converse, at the time such amounts are absorbed or reimbursed, as the case may
be.

The Glass-Steagall Act generally prohibits banks from engaging in the
business of underwriting, selling, or distributing securities and from being
affiliated with companies principally engaged in those activities. In addition,
administrative and judicial interpretations of the Glass-Steagall Act prohibit
bank holding companies and their bank and nonbank subsidiaries from organizing,
sponsoring, or controlling registered open-end investment companies that are
continuously engaged in distributing their shares. Bank holding companies and
their bank and nonbank subsidiaries may serve, however, as investment advisors
to registered investment companies, subject to a number of terms and conditions.

Although the scope of the prohibitions and limitations imposed by the
Glass-Steagall Act has not been fully defined by the courts or the appropriate
regulatory agencies, FAF has received an opinion from its counsel that the
Advisor is not prohibited from performing the investment advisory services
described above, and that certain broker-dealers affiliated with the Advisor,
are not prohibited from serving as a Participating Institution (as defined in
"-- Distributor and Distribution Plans" below). In the event of changes in
federal or state statutes or regulations or judicial and administrative
interpretations or decisions pertaining to permissible activities of bank
holding companies and their bank and nonbank subsidiaries, the Advisor and
certain affiliated broker-dealers might be prohibited from continuing these
arrangements. In that event, it is expected that the Board of Directors would
make other arrangements and shareholders would not suffer adverse financial
consequences.

The following table sets forth total advisory fees before waivers and
after waivers for each of the Funds for the fiscal years ended September 30,
1996, September 30, 1997 and September 30, 1998:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
ADVISORY FEE ADVISORY FEE ADVISORY FEE ADVISORY FEE ADVISORY FEE ADVISORY FEE
BEFORE WAIVERS AFTER WAIVERS BEFORE WAIVERS AFTER WAIVERS BEFORE WAIVERS AFTER WAIVERS
-------------- ------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Obligations Fund $ 6,253,637 $ 4,688,746 $ 12,432,597 $ 9,904,279 $ $
Government Obligations Fund 3,821,969 3,007,413 4,856,530 4,020,449
Prime Obligations Fund 11,293,845 8,866,700 14,885,761 12,400,673
Tax Free Obligations Fund -- -- 46,188(1) 1,174(1)

</TABLE>

(1) Information is for the four month period from August 1, 1997 to
November 30, 1997.

DISTRIBUTOR AND DISTRIBUTION PLANS

SEI Investments Distribution Co. (the "Distributor" ) serves as the
distributor for the Class A, Class B, Class C, Class Y and Class D Shares of the
Funds. The Distributor is a wholly-owned subsidiary of SEI Investments Company,
which also owns the Funds' Administrator. See "-- Custodian; Administrator;
Transfer Agent; Counsel; Accountants" below.

The Distributor serves as distributor for the Class A, Class Y and
Class D Shares pursuant to a Distribution Agreement effective as of January 20,
1995 between itself and the Funds, as the distributor for the Class B Shares
pursuant to a Distribution and Service Agreement dated January 20, 1995 (the
"Class B Distribution Agreement") between itself and the Funds, and as the
distributor for the Class C Shares pursuant to a Distribution and Service
Agreement dated ______ (the "Class C Distribution Agreement") between itself and
the Funds. These agreements are referred to collectively as the "Distribution
Agreements."

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<PAGE>

Under the Distribution Agreements, the Distributor has agreed to
perform all distribution services and functions of the Funds to the extent such
services and functions are not provided to the Funds pursuant to another
agreement. The shares of the Funds are distributed through the Distributor and
through securities firms, financial institutions (including, without limitation,
banks) and other industry professionals (the "Participating Institutions") which
enter into sales agreements with the Distributor to perform share distribution
or shareholder support services.

U.S. Bancorp Investment Services, Inc. ("USBI"), a subsidiary of the
Advisor, and U.S. Bancorp Piper Jaffray Inc., a broker-dealer affiliated with
the Advisor ("Piper"), are Participating Institutions. The Advisor pays USBI and
Piper up to .25% of the portion of each Fund's average daily net assets
attributable to Class Y Shares for which USBI or Piper are responsible,
respectively, in connection with USBI's or Piper's provision of shareholder
support services. Such amounts paid to USBI and Piper, by the Advisor will not
affect any agreement by the Advisor to limit expenses of each Fund.

The Class A Shares pay to the Distributor a shareholder servicing fee
at an annual rate of 0.25% of the average daily net assets of the Class A
Shares, which fee may be used by the Distributor to provide compensation for
shareholder servicing activities with respect to the Class A Shares. The
shareholder servicing fee is intended to compensate the Distributor for ongoing
servicing and/or maintenance of shareholder accounts and may be used by the
Distributor to provide compensation to institutions through which shareholders
hold their shares for ongoing servicing and/or maintenance of shareholder
accounts. This fee is calculated and paid each month based on average daily net
assets of Class A of each Fund for that month.

The Class B and Class C Shares pay to the Distributor a distribution
fee at an annual rate of 0.75% of the average daily net assets of the Class B
and Class C Shares, respectively, which fee may be used by the Distributor to
provide compensation for sales support and distribution activities with respect
to the Class B and Class C Shares. This fee is calculated and paid each month
based on average daily net assets of the respective Class B and Class C Shares
for that month. In addition to this fee, the Distributor is paid a shareholder
servicing fee at an annual rate of 0.25% of the average daily net assets of
Prime Obligations Fund's Class B and Class C Shares pursuant to the Class B
Distribution Agreement and the Class C Distribution Agreement, respectively, and
a service plan for each such class (collectively, the "Class B and Class C
Service Plan"), which fee may be used by the Distributor to provide compensation
for shareholder servicing activities with respect to the Class B and Class C
Shares of the Prime Obligations Fund. The shareholder servicing fee is intended
to compensate the Distributor for ongoing servicing and/or maintenance of
shareholder accounts and may be used by the Distributor to provide compensation
to institutions through which shareholders hold their shares for ongoing
servicing and/or maintenance of shareholder accounts. The Distributor also
receives any contingent deferred sales charges paid with respect to sales of
Class B and Class C Shares.

The Distributor receives no compensation for distribution of the Class
Y Shares. The Class D Shares of each Fund pay a shareholder servicing fee to the
Distributor monthly at the annual rate of 0.15% of each Fund's Class D average
daily net assets, which fee may be used by the Distributor to provide
compensation for shareholder servicing activities with respect to the Class D
Shares of the kinds described in the Class D Shares Prospectus. This fee is
calculated and paid each month based on average daily net assets of Class D of
each Fund for that month.

The Distribution Agreements provide that they will continue in effect
for a period of more than one year from the date of their execution only so long
as such continuance is specifically approved at least annually by the vote of a
majority of the Board members of FAF and by the vote of the majority of those
Board members of FAF who are not interested persons of FAF and who have no
direct or indirect financial interest in the operation of FAF's Rule 12b-1 Plans
of Distribution or in any agreement related to such plans.

The Underwriter received the following compensation from each Fund
during its most recent fiscal year.

<TABLE>
<CAPTION>
NET UNDERWRITING COMPENSATION ON
DISCOUNTS AND REDEMPTIONS AND BROKERAGE OTHER
COMMISSIONS REPURCHASES COMMISSIONS COMPENSATION*
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Treasury Obligations Fund None None $ $
Government Obligations Fund None None $ $
Prime Obligations Fund None None $ $
Tax Free Obligations Fund None None $ $
</TABLE>

* Consists of distribution and servicing fees.

FAF has adopted Plans of Distribution (the "Plans") with respect to
Class A, Class B, Class C and Class D Shares of the Funds, respectively,
pursuant to Rule 12b-1 under the 1940 Act. Rule 12b-1 provides in substance that
a mutual fund may not engage directly or indirectly in financing any activity
which is primarily intended to result in the sale of shares, except pursuant to
a plan adopted under the Rule. The Plans authorize the Funds to pay the
Distributor fees for the services it performs for the Funds as described in the
preceding paragraphs. The Class B Plan and Class C Plan also authorize the
Distributor to retain the contingent deferred sales charge applied on
redemptions of Class B Shares and Class C Shares, respectively. The Plans
recognize that the Advisor, the Administrator, the Distributor, and any
Participating Institution, in their discretion, may use their own assets to pay
for certain additional costs of

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<PAGE>

distributing shares of the Funds. Any such arrangement to pay such additional
costs may be commenced or discontinued by the Advisor, the Administrator, the
Distributor, or any Participating Institution at any time.

Each Plan is a "compensation-type" plan under which the Distributor is
entitled to receive the distribution fee regardless of whether its actual
distribution expenses are more or less than the amount of the fee. If, after
payments by the Distributor for advertising, marketing, and distribution, there
are any remaining fees, these may be used as the Distributor may elect. Because
the amounts payable under the Plans will be commingled with the Distributor's
general funds, including the revenues it receives in the conduct of its
business, it is possible that certain of the Distributor's overhead expenses
will be paid out of Plan fees and that these expenses may include items which
the SEC Staff has noted, for example, the costs of leases, depreciation,
communications, salaries, training, and supplies. The Funds believe that such
expenses, if paid, will be paid only indirectly out of the fees being paid under
the Plans.

The following tables set forth the total Rule 12b-1 fees, after
waivers, paid by each class of the Funds for the fiscal years ended September
30, 1996, September 30, 1997 and September 30, 1998. Please note that there were
no Class C Shares outstanding as of September 30, 1998.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996
CLASS A CLASS B CLASS Y CLASS D
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Treasury Obligations Fund $ * $ * $ * $ 982,300
Government Obligations Fund * * 0 199,644
Prime Obligations Fund 140,285 92 0 6,634
Tax Free Obligations Fund * * * *

YEAR ENDED SEPTEMBER 30, 1997
CLASS A CLASS B CLASS Y CLASS D
------------- ------------ ------------ -------------
Treasury Obligations Fund $ * $ * $ 0 $ 3,609,010
Government Obligations Fund * * 0 484,747
Prime Obligations Fund 317,080 7,227 0 222,621
Tax Free Obligations Fund (1) 39,839 * 4,123 *

YEAR ENDED SEPTEMBER 30, 1998
CLASS A CLASS B CLASS Y CLASS D
------------- ------------ ------------ -------------
Treasury Obligations Fund $ $ $ $
Government Obligations Fund
Prime Obligations Fund
Tax Free Obligations Fund

</TABLE>

* The Fund was not in operation during this fiscal year.

(1) Information is for the period from August 1, 1997 to November 30, 1997. Of
these amounts, $38,857 and $4,123 are distribution fees from the Class A
and Class Q shares of the Qualivest Tax-Free Obligations Fund,
respectively. On November 25, 1997 Tax Free Obligations Fund acquired the
assets of the Qualivest Tax-Free Money Market Fund. In connection with such
acquisition, Class A shares of the Qualivest Tax-Free Money Market Fund
were exchanged for Class A shares of Tax Free Obligations Fund, and Class Q
and Y shares of the Qualivest Tax-Free Money Market Fund were exchanged for
former Class C Shares (now designated Class Y Shares) of Tax Free
Obligations Fund.

-16-

<PAGE>

CUSTODIAN; ADMINISTRATOR; TRANSFER AGENT; COUNSEL; ACCOUNTANTS

U.S. Bank National Association (the "Custodian") acts as custodian of
the Funds' assets and portfolio securities pursuant to a Custodian Agreement
between First Trust National Association and the Funds. First Trust's rights and
obligations under the Custodian Agreement were assigned to U.S. Bank pursuant to
an Assignment and Assumption Agreement between First Trust and U.S. Bank. The
Custodian takes no part in determining the investment policies of the Funds or
in deciding which securities are purchased or sold by the Funds. The duties of
the Custodian are limited to receiving and safeguarding the assets and
securities of the Funds and to delivering or disposing of them pursuant to the
Funds' order. The Funds compensate the Custodian at such rates and at such times
as the Funds and the Custodian may agree on in writing from time to time, and
the Custodian is granted a lien for unpaid compensation upon any cash or
securities held by it for the Funds.

The following table sets forth total custodian fees, after waivers,
paid by each of the Funds for the fiscal years ended September 30, 1996,
September 30, 1997, and September 30, 1998:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
----------------- ------------------ ------------------
<S> <C> <C> <C>
Treasury Obligations Fund $ 467,928 $ 932,086 $
Government Obligations Fund 278,285 358,464
Prime Obligations Fund 842,325 1,107,820
Tax Free Obligations Fund -- 1,000(1)

</TABLE>

(1) For the four month period from August 1, 1997 to November 30, 1997.

The Administrator, a wholly-owned subsidiary of SEI Investments
Company, provides administrative services to the Funds for a fee as described in
the prospectus. The following table sets forth total administrative fees, after
waivers, paid by each of the Funds for the fiscal years ended September 30,
1996, September 30, 1997, and September 30, 1998:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
----------------- ------------------ ------------------
<S> <C> <C> <C>
Treasury Obligations Fund $ 1,076,226 $ 1,976,528 $
Government Obligations Fund 659,381 775,846
Prime Obligations Fund 1,945,261 2,375,994
Tax Free Obligations Fund -- 16,689(1)

</TABLE>

(1) For the four month period from August 1, 1997 to November 30, 1997.

DST Systems, Inc., 330 West Ninth Street, Kansas City, Missouri 64105,
is transfer agent (the "Transfer Agent") and dividend disbursing agent for the
shares of the Funds. The transfer agent is not affiliated with the Distributor,
the Administrator or the Advisor.

Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota
55402, is independent general counsel for the Funds.

KPMG Peat Marwick LLP, 90 South Seventh Street, Minneapolis, Minnesota
55402, serves as the Funds' independent auditors, providing audit services,
including audits of the annual financial statements and assistance and
consultation in connection with SEC filings.

PORTFOLIO TRANSACTIONS

As the Funds' portfolios are exclusively composed of debt, rather than
equity securities, most of the Funds' portfolio transactions are effected with
dealers without the payment of brokerage commissions but at net prices, which
usually include a spread or markup. In effecting such portfolio transactions on
behalf of the Funds, the Advisor seeks the most favorable net price consistent
with the best execution. The Advisor may, however, select a dealer to effect a
particular transaction without communicating with all dealers who might be able
to effect such transaction because of

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<PAGE>

the volatility of the money market and the desire of the Advisor to accept a
particular price for a security because the price offered by the dealer meets
guidelines for profit, yield, or both.

Decisions with respect to placement of the Funds' portfolio
transactions are made by the Advisor. The primary consideration in making these
decisions is efficiency in executing orders and obtaining the most favorable net
prices for the Funds. Most Fund transactions are with the issuer or with major
dealers acting for their own account and not as brokers. When consistent with
these objectives, business may be placed with broker-dealers who furnish
investment research services to the Advisor. Such research services would
include advice, both directly and in writing, as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
availability of securities or purchasers or sellers of securities, as well as
analyses and reports concerning issues, industries, securities, economic factors
and trends, portfolio strategy, and the performance of accounts.

The research services may allow the Advisor to supplement its own
investment research activities and enable the Advisor to obtain the views and
information of individuals and research staffs of many different securities
firms prior to making investment decisions for the Funds. To the extent
portfolio transactions are effected with broker-dealers who furnish research
services, the Advisor would receive a benefit, which is not capable of
evaluation in dollar amounts, without providing any direct monetary benefit to
the Funds from these transactions.

The Advisor has not entered into any formal or informal agreements with
any broker-dealers, and does not maintain any "formula" that must be followed in
connection with the placement of Fund portfolio transactions in exchange for
research services provided to the Advisor, except as noted below. The Advisor
may, from time to time, maintain an informal list of broker-dealers that will be
used as a general guide in the placement of Fund business in order to encourage
certain broker-dealers to provide the Advisor with research services, which the
Advisor anticipates will be useful to it. Any list, if maintained, would be
merely a general guide, which would be used only after the primary criteria for
the selection of broker-dealers (discussed above) has been met, and,
accordingly, substantial deviations from the list could occur. While it is not
expected that any Fund will pay brokerage commissions, if it does, the Advisor
would authorize the Fund to pay an amount of commission for effecting a
securities transaction in excess of the amount of commission another
broker-dealer would have charged only if the Advisor determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either that particular transaction or the overall responsibilities of the
Advisor with respect to the Funds.

No Fund effects brokerage transactions in its portfolio securities with
any broker-dealer affiliated directly or indirectly with its Advisor or
Distributor unless such transactions, including the frequency thereof, the
receipt of commissions payable in connection therewith, and the selection of the
affiliated broker-dealer effecting such transactions are not unfair or
unreasonable to the shareholders of the Fund, as determined by the Board of
Directors. Any transactions with an affiliated broker-dealer must be on terms
that are both at least as favorable to the Fund as such Fund can obtain
elsewhere and at least as favorable as such affiliate broker-dealer normally
gives to others.

When two or more clients of the Advisor are simultaneously engaged in
the purchase or sale of the same security, the prices and amounts are allocated
in accordance with a formula considered by the Advisor to be equitable to each
client. In some cases, this system could have a detrimental effect on the price
or volume of the security as far as each client is concerned. In other cases,
however, the ability of the clients to participate in volume transactions will
produce better executions for each client.

During the fiscal year ended September 30, 1998, Treasury Obligations
Fund, Government Obligations Fund, and Prime Obligations Fund paid brokerage
commissions to SEI Investments Distribution Co. ("SIDCO") totaling $__, $__, and
$__, respectively, in connection with portfolio transactions transacted through
SIDCO. SIDCO also acts as the Funds' Distributor and is under common control
with the Funds' Administrator. These commissions represented 100% of the
aggregate brokerage commissions paid by each Fund during the fiscal year.
Transactions effected by Treasury Obligations Fund, Government Obligations Fund,
and Prime Obligations Fund through SIDCO represented 100% of the aggregate
dollar amount of transactions involving the payment of commissions effected by
each of these Funds during the fiscal year.

-18-

<PAGE>

At September 30, 1998, Prime Obligations Fund held securities of
broker-dealers which are deemed to be "regular brokers or dealers" of the Funds
under the 1940 Act (or of such broker-dealers' parent companies) in the
following amounts: Bankers Trust certificate of deposit, $__; Bankers Trust
note, $__; Bear Stearns commercial paper, $__; First Boston commercial paper,
$__; Goldman Sachs note, $__; and Morgan Stanley medium term note, $__.

-19-

<PAGE>

CAPITAL STOCK

Each Fund's shares of common stock, and each class thereof, have a par
value of $.01 per share, and have equal voting rights to share in dividends and
assets. The shares possess no preemptive or conversion rights. As of _______,
1998, the directors of FAF owned shares of FAF, FAIF and FASF with an aggregate
net asset value of $__. As of _______, 1998, the directors and officers of FAF
as a group owned less than one percent of each class of each Fund's outstanding
shares. As of that date, the Funds were aware that the following persons owned
of record five percent or more of the outstanding shares of each class of stock
of the Funds. Please note that there were no Class C Shares outstanding as of
_______, 199_.

<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING SHARES
---------------------------------------------------------
CLASS A CLASS B CLASS Y CLASS D
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
TREASURY OBLIGATIONS FUND
BHC Securities, Inc.
2005 Market St.
Philadelphia, PA 19103-7042
VAR & Co.
First Trust National Assn.
P.O. Box 64010
St. Paul, MN 55164-0010
Special Custody Account for the exclusive benefit of customers of FBS
Investment Services, Inc.
Attn: Money Fund Unit R/R
100 South Fifth St., Suite 1400
Minneapolis, MN 55402-1217
VAR & Co.
First Trust National Assn.
Attn: Mutual Funds Unit
P.O. Box 64010
St. Paul, MN 55164-0010
GOVERNMENT OBLIGATIONS FUND
Special Custody Account for the exclusive benefit of customers of FBS
Investment Services, Inc.
Attn: Money Fund Unit R/R
100 South Fifth St., Suite 1400
Minneapolis, MN 55402-1217
VAR & Co.
First Trust National Assn.
Attn: Mutual Funds Unit
P.O. Box 64010
St. Paul, MN 55164-0010
VAR & Co.
First Trust National Assn.
Attn: Mutual Funds Unit
P.O. Box 64010
St. Paul, MN 55164-0010
PRIME OBLIGATIONS FUND
BHC Securities, Inc.
2005 Market St.
Philadelphia, PA 19103-7042
Special Custody Account for the exclusive benefit of customers of FBS
Investment Services, Inc.
Attn: Money Fund Unit R/R
100 South Fifth St., Suite 1400
Minneapolis, MN 55402-1217
National Financial Services Corporation for the exclusive benefit of our customers
P.O. Box 3752
Church Street Station
New York, NY 10008-3752
NFSC FEBO # 03M-862193
First Bank NA Cust
IRA of Russell C. Eidal
320 Bluff Drive
Lowell, AR 72745-9117
NFSC FEBO # 03M-817783
First Bank NA Cust
IRA of Donald M. Haas
510 Alvarado Lane
Plymouth, MN 55447-3327
NFSC FEBO # 03M-516724
Judi L. Brink T/O/D et al
5018 Picket Drive
Colorado Springs, CO 80918-3618
VAR & Co.
First Trust National Assn.
Attn: Mutual Funds Unit
P.O. Box 64010
St. Paul, MN 55164-0010

-20-

<PAGE>

PERCENTAGE OF OUTSTANDING SHARES
------------------------------------------------------
CLASS A CLASS B CLASS Y CLASS D
------------ ------------ ----------- --------------
Special Custody Account for the exclusive benefit of customers of FBS
Investment Services, Inc.
Attn: Money Fund Unit R/R
100 South Fifth St., Suite 1400
Minneapolis, MN 55402-1217
Telco
Attn: Trust Mutual Funds
P.O. Box 3168
Portland, OR 97208-3168
VAR & Co.
First Trust National Assn.
Attn: Mutual Funds Unit
P.O. Box 64010
St. Paul, MN 55164-0010
TAX FREE OBLIGATIONS FUND
BHC Securities, Inc.
Trade House Account - Retail
One Commerce Square
Attn: Sweeps Department
2005 Market St.
Philadelphia, PA 19103-7042
SEI Corporation
Attn: Rob Silvestri
One Freedom Valley Dr.
Oaks, PA 19456 VAR & Co.
First Trust National Assn.
Attn: Mutual Funds Unit
P.O. Box 64010
St. Paul, MN 55164-0010
Telco
C/O U.S. Bank of Oregon - Trust
555 S.W. Oak
Portland, O 97204-1752
</TABLE>

NET ASSET VALUE AND PUBLIC OFFERING PRICE

The method for determining the public offering price of Fund shares is
summarized in the applicable Prospectuses. Each Fund is open for business and
its net asset value per share is calculated on every day the New York Stock
Exchange and federally-chartered banks are open for business. The New York Stock
Exchange is not open for business on the following holidays (or on the nearest
Monday or Friday if the holiday falls on a weekend): New Year's Day, Martin
Luther King, Jr. Day, Washington's Birthday (observed), Good Friday, Memorial
Day (observed), Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day. Each year the New York Stock Exchange may designate different dates for the
observance of these holidays as well as designate other holidays for closing in
the future. To the extent that the securities of a Fund are traded on days that
the Fund is not open for business, the Funds' net asset value per share may be
affected on days when investors may not purchase or redeem shares. On September
30, 1998, the net asset value per share for the Funds was calculated as set
forth below. Please note that there were no Class C Shares outstanding as of
_______.

<TABLE>
<CAPTION>
NET ASSET
NET ASSETS SHARES VALUE PER SHARE
(IN DOLLARS) / OUTSTANDING = (IN DOLLARS)
----------------- ------------------ ------------------
<S> <C> <C> <C>
TREASURY OBLIGATIONS FUND
Class A * * *
Class Y / = $ 1.00
Class D / = 1.00
GOVERNMENT OBLIGATIONS FUND
Class A * / * = *
Class Y / = 1.00
Class D / = 1.00
PRIME OBLIGATIONS FUND
Class A * / * = *
Class B / = 1.00
Class Y / = 1.00
Class D / = 1.00
TAX FREE OBLIGATIONS FUND
Class A / = 1.00

</TABLE>

-21-

<PAGE>

</TABLE>

* Not operation during fiscal year ended September 30, 1998.

VALUATION OF PORTFOLIO SECURITIES

The Funds' portfolio securities are valued on the basis of the
amortized cost method of valuation. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Fund would receive if it sold the instrument.
During periods of declining interest rates, the daily yield on shares of a Fund
computed as described above may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by a Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would result from
investment in a fund utilizing solely market values, and existing investors in
the Fund would receive less investment income. The converse would apply in a
period of rising interest rates.

The valuation of the Funds' portfolio instruments based upon their
amortized cost and the concomitant maintenance of the Funds' per share net asset
value of $1.00 is permitted in accordance with Rule 2a-7 under the 1940 Act,
under which the Funds must adhere to certain conditions. The Funds must maintain
a dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less from the date of
purchase, and invest only in securities determined by the Board of Directors to
present minimal credit risks and which are of high quality as determined by
major rating services, or, in the case of any instrument which is not so rated,
which are of comparable quality as determined by the Board of Directors. The
maturities of variable rate demand instruments held in the Funds' portfolio will
be deemed to be the longer of the demand period, or the period remaining until
the next interest rate adjustment, although stated maturities may be in excess
of one year. It is the normal practice of the Funds to hold portfolio securities
to maturity and realize par therefor unless such sale or other disposition is
mandated by redemption requirements or other extraordinary circumstances. The
Board of Directors must establish procedures designed to stabilize, to the
extent reasonably possible, the Funds' price per share as computed for the
purpose of sales and redemptions at a single value. It is the intention of the
Funds to maintain a per share net asset value of $1.00. Such procedures will
include review of the Funds' portfolio holdings by the Directors at such
intervals as they may deem appropriate, to determine whether the Funds' net
asset value calculated by using available market quotations deviates from $1.00
per share and, if so, whether such deviation may result in material dilution or
is otherwise unfair to existing shareholders. In the event the Board of
Directors determines that such a deviation exists, they will take such
corrective action as they regard as necessary and appropriate, such as selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity, withholding dividends, or establishing a net
asset value per share by using available market quotations.

TAXES

Each Fund intends to elect each year to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If so qualified, each Fund will not be liable for federal
income taxes to the extent it distributes its taxable income to its
shareholders.

Each Fund expects to distribute net realized short-term gains (if any)
once each year, although it may distribute them more frequently, if necessary in
order to maintain the Funds' net asset value at $1.00 per share. Distributions
of net investment income and net short-term capital gains are taxable to
investors as ordinary income.

-22-

<PAGE>

Under the Code, each Fund is required to withhold 31% of reportable
payments (including dividends, capital gain distributions, if any, and
redemptions) paid to certain shareholders who have not certified that the social
security number or taxpayer identification number supplied by them is correct
and that they are not subject to backup withholding because of previous under
reporting to the IRS. These backup withholding requirements generally do not
apply to shareholders that are corporations or governmental units or certain
tax-exempt organizations.

Under the Code, interest on indebtedness incurred or continued to
purchase or carry shares of an investment company paying exempt-interest
dividends, such as Tax Free Obligations Fund, will not be deductible by a
shareholder in proportion to the ratio of exempt-interest dividends to all
dividends other than those treated as long-term capital gains. Indebtedness may
be allocated to shares of Tax Free Obligations Fund even though not directly
traceable to the purchase of such shares. Federal tax law also restricts the
deductibility of other expenses allocable to shares of Tax Free Obligations
Fund.

For shareholders who are or may become recipients of Social Security
benefits, exempt-interest dividends are includable in computing "modified
adjusted gross income" for purposes of determining the amount of Social Security
benefits, if any, that is required to be included in gross income. The maximum
amount of Social Security benefits includable in gross income is 85%.

The Code imposes requirements on certain tax-exempt bonds which, if not
satisfied, could result in loss of tax-exemption for interest on such bonds,
even retroactively to the date of issuance of the bonds. Proposals may be
introduced before Congress in the future, the purpose of which will be to
further restrict or eliminate the federal income tax exemption for certain
tax-exempt securities. Tax Free Obligations Fund cannot predict what additional
legislation may be enacted that may affect shareholders. The Fund will avoid
investment in such tax-exempt securities which, in the opinion of the Advisor,
pose a material risk of the loss of tax exemption. Further, if such tax-exempt
security in the Fund's portfolio loses its exempt status, the Fund will make
every effort to dispose of such investment on terms that are not detrimental to
the Fund.

CALCULATION OF PERFORMANCE DATA

The Funds may issue current yield quotations. Simple yields are
computed by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of a recent seven calendar day period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
365/7. The resulting yield figure will be carried to at least the nearest
hundredth of one percent. Effective yields are computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of a recent
seven calendar day period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then compounding the base period return by adding 1, raising the sum
to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula:

EFFECTIVE YIELD -- [(BASE PERIOD RETURN + 1)365/7]-1

When calculating the foregoing yield or effective yield quotations, the
calculation of net change in account value will include the value of additional
shares purchased with dividends from the original share and dividends declared
on both the original share and any such additional shares, and all fees, other
than nonrecurring accounts or sales charges that are charged to all shareholder
accounts in proportion to the length of the base period. Realized gains and
losses from the sale of securities and unrealized appreciation and depreciation
are excluded from the calculation of yield and effective yield.

From time to time, a Fund may advertise its "yield" and "effective
yield." These yield figures are based upon historical earnings and are not
intended to indicate future performance. The "yield" of a Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized,"
that is, the amount of income generated by the investment during that week is
assumed

-23-

<PAGE>

to be generated each week over a 52-week period and is shown as a percentage of
the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. For the
seven-day period ended September 30, 1998, the yield and effective yield,
respectively, for the Funds were as set forth below. Please note that there were
no Class C Shares outstanding as of _______.

<TABLE>
<CAPTION>
YIELD EFFECTIVE YIELD
------------------ ------------------
<S> <C> <C>
TREASURY OBLIGATIONS FUND
Class A
Class Y
Class D
GOVERNMENT OBLIGATIONS FUND
Class A
Class Y
Class D
PRIME OBLIGATIONS FUND
Class A
Class B
Class Y
Class D
TAX FREE OBLIGATIONS FUND
Class A
Class Y
Class D
</TABLE>

Tax Free Obligations Fund may also advertise its tax equivalent yield.
This yield will be computed by dividing that portion of the seven-day yield or
effective yield of the Fund (computed as set forth above) which is tax-exempt by
one minus a stated income tax rate and adding the product of that portion, if
any, of the yield of the Fund that is not tax-exempt. For the seven day period
ended September 30, 1998, the tax-equivalent yield for Tax Free Obligations Fund
was as follows:

<TABLE>
<CAPTION>
YIELD EFFECTIVE YIELD
------------------ ------------------
<S> <C> <C>
TAX FREE OBLIGATIONS FUND
Class A
Class Y
Class D

</TABLE>

Yield information may be useful in reviewing the Funds' performance and
for providing a basis for comparison with other investment alternatives.
However, yields fluctuate, unlike investments which pay a fixed yield for a
stated period of time. Yields for the Funds are calculated on the same basis as
other money market funds as required by applicable regulations. Investors should
give consideration to the quality and maturity of the portfolio securities of
the respective investment companies when comparing investment alternatives.

Investors should recognize that in periods of declining interest rates
the Funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the Funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a Fund from the continuous sale of its shares will likely be invested
in portfolio instruments producing lower yields than the balance of the Funds'
portfolio, thereby reducing the current yield of the Fund. In periods of rising
interest rates, the opposite can be expected to occur.

Should a Fund incur or anticipate any unusual expense, loss, or
depreciation which would adversely affect its net asset values per share or
income for a particular period, the Directors would at that time consider
whether to adhere

-24-

<PAGE>

to the present dividend policy described above or revise it in light of the then
prevailing circumstances. For example, if a Fund's net asset value per share
were reduced, or were anticipated to be reduced, below $1.00, the Directors may
suspend further dividend payments until net asset value returned to $1.00. Thus,
such expenses or losses or depreciation may result in the investor receiving
upon redemption a price per share lower than that which the investor paid.

ADDITIONAL INFORMATION ABOUT SELLING SHARES

BY TELEPHONE

A shareholder may redeem shares of a Fund, if he or she elects the
privilege on the initial shareholder application, by calling his or her
financial institution to request the redemption. Shares will be redeemed at the
net asset value next determined after the Fund receives the redemption request
from the financial institution (less the amount of any applicable contingent
deferred sales charge). Redemption requests must be received by the financial
institution by the time specified by the institution to be assured same day
processing and redemption requests must be transmitted to and received by the
Funds by 2:00 p.m. Central Time (for Treasury Obligations Fund, Government
Obligations Fund and Prime Obligations Fund) and by 11:30 a.m. Central Time (for
Tax Free Obligations Fund), for same day processing. Pursuant to instructions
received from the financial institution, redemptions will be made by check or by
wire transfer. It is the financial institution's responsibility to transmit
redemption requests promptly. Redemptions processed by 2:00 p.m. Central Time
(for Treasury Obligations Fund, Government Obligations Fund and Prime
Obligations Fund) and by 11:30 a.m. Central Time (for Tax Free Obligations Fund)
will not receive that day's dividend. Redemption requests placed after that
respective time will earn that day's dividend, but will not receive proceeds
until the following day.

Shareholders who did not purchase their shares through a financial
institution may redeem Fund shares by telephoning (800) 637-2548. At the
shareholder's request, redemption proceeds will be paid by check and mailed to
the shareholder's address of record or wire transferred to the shareholder's
account at a domestic commercial bank that is a member of the Federal Reserve
System, normally within one business day, but in no event longer than seven days
after the request. Wire instructions must be previously established in the
account or provided in writing. The minimum amount for a wire transfer is
$1,000. If at any time a Fund determines it necessary to terminate or modify
this method of redemption, shareholders will be promptly notified.

In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption should be considered. Neither the Transfer Agent
nor any Fund will be responsible for any loss, liability, cost or expense for
acting upon wire instructions or upon telephone instructions that it reasonably
believes to be genuine. The Transfer Agent and the Funds will each employ
reasonable procedures to confirm that instructions communicated are genuine.
These procedures may include taping of telephone conversations. To ensure
authenticity of redemption or exchange instructions received by telephone, the
Transfer Agent examines each shareholder request by verifying the account number
and/or taxpayer identification number at the time such request is made. The
Transfer Agent subsequently sends confirmations of both exchange sales and
exchange purchases to the shareholder for verification. If reasonable procedures
are not employed, the Transfer Agent and the Funds may be liable for any losses
due to unauthorized or fraudulent telephone transactions.

BY MAIL

Any shareholder may redeem Fund shares by sending a written request to
the Transfer Agent, shareholder servicing agent, or financial institution. The
written request should include the shareholder's name, the Fund name, the
account number, and the share or dollar amount requested to be redeemed, and
should be signed exactly as the shares are registered. Shareholders should call
the Funds, shareholder servicing agent or financial institution for assistance
in redeeming by mail. A check for redemption proceeds normally is mailed within
one business day, but in no event more than seven business days, after receipt
of a proper written redemption request.

Shareholders requesting a redemption of $5,000 or more, a redemption of
any amount to be sent to an address other than that on record with the Funds, or
a redemption payable other than to the shareholder of record, must have
signatures on written redemption requests guaranteed by:

-25-

<PAGE>

o a trust company or commercial bank, the deposits of which are
insured by the Bank Insurance Fund, which is administered by
the Federal Deposit Insurance Corporation ("FDIC");

o a member firm of the New York, American, Boston, Midwest, or
Pacific Stock Exchanges or the National Association for
Securities Dealers;

o a savings bank or savings and loan association the deposits of
which are insured by the Savings Association Insurance Fund,
which is administered by the FDIC; or

o any other "eligible guarantor institution," as defined in the
Securities Exchange Act of 1934.

The Funds do not accept signatures guaranteed by a notary public.

The Funds and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantees to institutions that are members
of a signature guarantee program. The Funds and the Transfer Agent reserve the
right to amend these standards at any time without notice.

BY CHECKING ACCOUNT

At the shareholder's request, the Transfer Agent will establish a
checking account for redeeming Fund shares. With a Fund checking account, shares
may be redeemed simply by writing a check for $100 or more. The redemption will
be made at the net asset value on the date that the Transfer Agent presents the
check to a Fund. A check may not be written to close an account. If a
shareholder wishes to redeem shares and have the proceeds available, a check may
be written and negotiated through the shareholder's bank. Checks should never be
sent to the Transfer Agent to redeem shares. Copies of canceled checks are
available upon request. A fee is charged for this service. For further
information, contact the Funds.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

When shares are purchased by check or with funds transferred through
the Automated Clearing House, the proceeds of redemption of those shares are not
available until the Transfer Agent is reasonably certain that the purchase
payment has cleared, which could take up to ten calendar days from the purchase
date.

COMMERCIAL PAPER AND BOND RATINGS

COMMERCIAL PAPER RATINGS

Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's") commercial paper ratings are graded into
four categories, ranging from "A" for the highest quality obligations to "D" for
the lowest. Issues assigned the A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further defined with
the designation 1, 2 and 3 to indicate the relative degree of safety. The "A-1"
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus sign
designation.

Moody's Investors Service, Inc. ("Moody's") commercial paper ratings
are opinions of the ability of the issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months. Moody's
makes no representation that such obligations are exempt from registration under
the Securities Act of 1933, and it does not represent that any specific note is
a valid obligation of a rated issuer or issued in conformity with any applicable
law. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:

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<PAGE>

PRIME-1......................... Superior capacity for repayment

PRIME-2......................... Strong capacity for repayment

PRIME-3......................... Acceptable capacity for repayment

CORPORATE BOND RATINGS

Standard & Poor's ratings for corporate bonds include the following:

Bonds rated "AAA" have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.

Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest-rated issues only in small
degree.

Moody's ratings for corporate bonds include the following:

Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.

Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or
fluctuation of protective elements may be of greater amplitude, or
there may be other elements present that make the long-term risks
appear somewhat larger than the Aaa securities.

FINANCIAL STATEMENTS

The financial statements of FAF included in its annual reports to
shareholders dated September 30, 1998 are incorporated herein by reference. Such
annual reports to shareholders accompany this Statement of Additional
Information.

-27-

<PAGE>

FIRST AMERICAN FUNDS, INC.
PART C -- OTHER INFORMATION

ITEM 24. EXHIBITS

(a)(1) Amended and Restated Articles of Incorporation, as amended through
October 2, 1997. (Incorporated by reference to Exhibit (1) to
Post-Effective Amendment No. 22, Exhibit (1)(b) to Post-Effective
Amendment No. 25 and Exhibit (1)(b) to Post-Effective Amendment
No. 28.)

** (a)(2) Certificate of Designation designating Class C Shares.

(b) Bylaws, as amended through February 23, 1998 (Incorporated by
reference to Exhibit (2) to Post-Effective Amendment No. 28.)

(d)(1) Investment Advisory Agreement, dated January 20, 1995, between the
Registrant and First Bank National Association. (Incorporated by
reference to Exhibit (5) to Post-Effective Amendment No. 22.)

(d)(2) Amendment to Exhibit A to Investment Advisory Agreement.
(Incorporated by reference to Exhibit (5)(b) to Post-Effective
Amendment No. 27.)

(e)(1) Distribution Agreement and Service Agreement relating to the Class
B Shares, dated January 20, 1995, between the Registrant and SEI
Financial Services Company. (Incorporated by reference to Exhibit
(6)(a) to Post-Effective Amendment No. 22.)

(e)(2) Distribution Agreement relating to the Class A, Class Y and Class
D Shares, dated January 20, 1995, between the Registrant and SEI
Financial Services Company. (Incorporated by reference to Exhibit
(6)(b) to Post-Effective Amendment No. 22.)

** (e)(3) Distribution and Service Agreement relating to the Class C Shares,
dated _________, 1998, between Registrant and SEI Investments
Distribution Co.

(f) Not applicable.

(g)(1) Custodian Agreement dated September 20, 1993, between the
Registrant and First Trust National Association. (Incorporated by
reference to Exhibit (8)(a) to Post-Effective Amendment No. 22.)

(g)(2) Compensation Agreement, dated January 20, 1995, pursuant to
Custodian Agreement. (Incorporated by reference to Exhibit (8)(b)
to Post-Effective Amendment No. 22.)

(g)(3) Compensation Agreement dated October 8, 1997, pursuant to
Custodian Agreement. (Incorporated by reference to Exhibit (5)(b)
to Post-Effective Amendment No. 27.)

* (g)(4) Assignment of Custodian Agreements and Security Lending Agency
Agreement to U.S. Bank National Association, dated May 1, 1998.

(h)(1) Transfer Agency Agreement dated March 31, 1994, between the
Registrant and Supervised Service Company. [superseded]
(Incorporated by reference to Exhibit (9)(a) to Post-Effective
Amendment No. 22.)

(h)(2) Assignment of Transfer Agency Agreement to DST Systems, Inc.
[superseded] (Incorporated by reference to Exhibit (9)(b) to
Post-Effective Amendment No. 22.)

C-1

<PAGE>

(h)(3) Administration Agreement dated January 1, 1995 between the
Registrant and SEI Financial Management Corporation. (Incorporated
by reference to Exhibit (9)(c) to Post-Effective Amendment No.
22.)

(h)(4) Transfer Agency Agreement dated as of October 1, 1996, between
Registrant and DST Systems, Inc. (Incorporated by reference to
Exhibit 9(d) to Post-Effective Amendment No. 23.)

(h)(5) Agreement dated July 1, 1997 between SEI and First Bank National
Association. (Incorporated herein by reference to Exhibit 9(e) to
Post-Effective Amendment No. 25.)

(h)(6) Amended and Restated Administration Agreement, dated July 1, 1997,
by and between the Registrant and SEI Investments Management
Corporation. (Incorporated herein by reference to Exhibit 9(f) to
Post-effective Amendment No. 26.)

(h)(7) Sub-Administration Agreement effective January 1, 1998, by and
between SEI and First Bank National Association. (Incorporated
herein by reference to Exhibit (9)(g) to Post-Effective Amendment
No. 26.)

(h)(8) Agreement dated July 1, 1997, by and between First Bank National
Association and SEI Investments Management Corporation.
(Incorporated herein by reference to Exhibit (9)(h) to
Post-Effective Amendment No. 26.)

* (h)(9) Shareholder Account Serving Agreement, dated October 1, 1998,
between the Registrant and U.S. Bank National Association.

(i)(1) Opinion and Consent of Dorsey & Whitney, dated January 26, 1982.
(Incorporated by reference to Exhibit (10)(a) to Post-Effective
Amendment No. 22.)

(i)(2) Opinion and Consent of William N. Koster, Esq., dated November 5,
1981. (Incorporated by reference to Exhibit (10)(b) to
Post-Effective Amendment No. 22.)

(j)(1) Opinion and Consent of Melissa R. Fogelberg, dated February 6,
1985. (Incorporated by reference to Exhibit (11)(b) to
Post-Effective Amendment No. 22.)

(j)(2) Opinion and Consent of Dorsey & Whitney, dated November 25, 1991.
(Incorporated by reference to Exhibit (11)(c) to Post-Effective
Amendment No. 22.)

(k) Not applicable.

(l) Letter of Investment Intent, dated November 3, 1981. (Incorporated
by reference to Exhibit (13) to Post-Effective Amendment No. 22.)

(m)(1) Distribution Plan for Class A Shares. (Incorporated by reference
to Exhibit (15)(a) to Post- Effective Amendment No. 22.)

(m)(2) Distribution Plan for Class B Shares. (Incorporated by reference
to Exhibit (15)(b) to Post- Effective Amendment No. 22.)

(m)(3) Distribution Plan for Class D Shares. (Incorporated by reference
to Exhibit (15)(c) to Post- Effective Amendment No. 22.)

** (m)(4) Distribution Plan for Class C Shares.

C-2

<PAGE>

(m)(5) Service Plan for Class B Shares. (Incorporated by reference to
Exhibit (15)(d) to Post- Effective Amendment No. 22.)

** (m)(6) Service Plan for Class C Shares.

(n) Not applicable.

(o) Multiple Class Plan Pursuant to Rule 18f-3. (Incorporated by
reference to Exhibit (18) to Post-Effective Amendment No. 22.)

* Filed herewith.
** To be filed by amendment.

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

Not applicable.

ITEM 25. INDEMNIFICATION

The Registrant's Articles of Incorporation and Bylaws provide that the
Registrant shall indemnify such persons for such expenses and liabilities, in
such manner, under such circumstances, and to the full extent as permitted by
Section 302A.521 of the Minnesota Statutes, as now enacted or hereafter amended;
provided, however, that no such indemnification may be made if it would be in
violation of Section 17(h) of the Investment Company Act of 1940, as now enacted
or hereafter amended, and any rules, regulations, or releases promulgated
thereunder.

Section 302A.521 of the Minnesota Statutes, as now enacted, provides
that a corporation shall indemnify a person made or threatened to be made a
party to a proceeding by reason of the former or present official capacity of
the person against judgments, penalties, fines, settlements and reasonable
expenses, including attorneys' fees and disbursements, incurred by the person in
connection with the proceeding if, with respect to the acts or omissions of the
person complained of in the proceeding, the person has not been indemnified by
another organization for the same judgments, penalties, fines, settlements, and
reasonable expenses incurred by the person in connection with the proceeding
with respect to the same acts or omissions; acted in good faith, received no
improper personal benefit, and the Minnesota Statutes dealing with directors'
conflicts of interest, if applicable, have been satisfied; in the case of a
criminal proceeding, had no reasonable cause to believe that the conduct was
unlawful; and reasonably believed that the conduct was in the best interests of
the corporation or, in certain circumstances, reasonably believed that the
conduct was not opposed to the best interests of the corporation.

The Registrant undertakes that no indemnification or advance will be
made unless it is consistent with Sections 17(h) or 17(i) of the Investment
Company Act of 1940, as now enacted or hereafter amended, and Securities and
Exchange Commission rules, regulations, and releases (including, without
limitation, Investment Company Act of 1940 Release No. 11330, September 2,
1980).

Insofar as the indemnification for liability arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.

C-3

<PAGE>

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Information on the business of the Registrant's investment adviser,
U.S. Bank National Association (the "Manager"), is described in the section of
each series' Statement of Additional Information, filed as part of this
Registration Statement, entitled "Investment Advisory and Other Services." The
directors and officers of the Manager are listed below, together with their
principal occupation or other positions of a substantial nature during the past
two fiscal years.
<TABLE>
<CAPTION>

POSITIONS AND OFFICES OTHER POSITIONS AND OFFICES
NAME WITH THE MANAGER AND PRINCIPAL BUSINESS ADDRESS
---- ---------------- ------------------------------
<S> <C> <C>
John F. Grundhofer Chairman, President and Chief Chairman, President and Chief
Executive Officer Executive Officer of U.S. Bancorp*

Richard A. Zona Director and Vice Chairman--Finance Vice Chairman--Finance of U.S. Bancorp*

Philip G. Heasley Director and Vice Chairman Vice Chairman and Group Head of the
Retail Product Group of U.S. Bancorp*

J. Robert Hoffmann Director, Chief Credit Officer Executive Vice President and Chief
and Executive Vice President Credit Officer of U.S. Bancorp*

Lee R. Mitau Director, General Counsel, Executive Vice President, Secretary,
Executive Vice President and Secretary and General Counsel of U.S. Bancorp*

Susan E. Lester Director, Executive Vice President and Executive Vice President and Chief
Chief Financial Officer Financial Officer of U.S. Bancorp*

Robert D. Sznewajs Director and Vice Chairman Vice Chairman of U.S. Bancorp*

Gary T. Duim Director and Vice Chairman Vice Chairman of U.S. Bancorp*
- ---------------
</TABLE>

* Address: 601 Second Avenue South, Minneapolis, Minnesota 55402.

ITEM 27. PRINCIPAL UNDERWRITERS:

(a) State the name of each investment company (other than the
Registrant) for which each principal underwriter currently distributing the
Registrant's securities also acts as a principal underwriter, distributor or
investment adviser:

Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor") acts as distributor for SEI Liquid Asset Trust, SEI Daily Income
Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI Institutional Managed Trust,
SEI Institutional International Trust, The Advisors' Inner Circle Fund, Pillar
Funds, CUFund, STI Classic Funds, CoreFunds, Inc., First American Funds, Inc.,
First American Investment Funds, Inc., The Arbor Fund, Boston 1784 Funds, PBHG
Funds, Inc., Marquis Funds, Morgan Grenfell Investment Trust, The Achievement
Funds Trust, Bishop Street Funds, CrestFunds, Inc., STI Classic Variable Trust,
ARK Funds, Monitor Funds, SEI Asset Allocation Trust, Expedition Funds, TIP
Funds, SEI Institutional Investments Trust, First American Strategy Funds, Inc.,
Highmark Funds, Armada Funds, PBHG Insurance Series Fund, Inc., TIP
Institutional Funds, Oak Associates Funds and The Nevis Funds, Inc., pursuant to
distribution agreements dated November 29, 1982, July 15, 1982, December 3,
1982, July 10, 1985, January 22, 1987,

C-4

<PAGE>

August 30, 1988, November 14, 1991, February 28, 1992, May 1, 1992, May 29,
1992, October 30, 1992, November 1, 1992, November 1, 1992, January 28, 1993,
June 1, 1993, July 16, 1993, August 17, 1993, January 3, 1994, December 27,
1994, January 27, 1995, March 1, 1995, August 18, 1995, November 1, 1995,
January 11, 1996, April 1, 1996, April 29, 1996, June 14, 1996, October 1, 1996,
February 15, 1997, March 8, 1997, April 1, 1997, June 9, 1997, January 1, 1998,
February 27, 1998 and June 29, 1998, respectively.

The Distributor provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement, and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").

(b) Provide the information required by the following table for each
director, officer, or partner of each principal underwriter named in the
response to Item 20. Unless otherwise noted, the business address of each
director or officer is One Freedom Valley Drive, Oaks, Pennsylvania 19456.
<TABLE>
<CAPTION>

NAME POSITIONS AND OFFICES WITH UNDERWRITER POSITIONS AND OFFICES WITH REGISTRANT
- ---- -------------------------------------- -------------------------------------

<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief --
Executive Officer
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President -
Investment Services Division --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchinson Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President & Assistant Secretary
Patrick K. Walsh Senior Vice President --
Ronert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary --
S. Courtney E. Collier Vice President & Assistant Secretary Vice President & Assistant Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
James R. Foggo Vice President & Assistant Secretary
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President & Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
</TABLE>

C-5

<S> <C> <C>
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President President
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President & Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President & Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Donald Pepin Vice President & Managing Director --
Kim Rainey Vice President --
Rob Redecan Vice President --
Maria Reinhart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary --
Lynda J. Striegel Vice President & Assistant Secretary Vice President & Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books, and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained by SEI Investments Distribution Co., Oaks,
Pennsylvania 19456.

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS

Not applicable.

C-6

<PAGE>

SIGNATURES

As required by the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement No. 2-74747 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Oaks, Commonwealth of Pennsylvania, on the 1st day of December, 1998.

FIRST AMERICAN FUNDS, INC.

ATTEST: /s/ Michael G. Beattie By: /s/ James R. Foggo
----------------------- ----------------------------------
Michael G. Beattie James R. Foggo
Vice President

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed below by
the following persons in the capacity and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Michael G. Beattie Controller (Principal **
-------------------------- Financial and Accounting
Michael G. Beattie Officer)

* Director **
--------------------------
David T. Bennett

* Director **
--------------------------
Robert J. Dayton

* Director **
--------------------------
Andrew M. Hunter III

* Director **
--------------------------
Leonard W. Kedrowski

* Director **
--------------------------
Robert L. Spies

* Director **
--------------------------
Joseph D. Strauss

* Director **
--------------------------
Virginia L. Stringer

* Director **
--------------------------
Roger A. Gibson

* By: /s/ James R. Foggo
--------------------------
James R. Foggo
Attorney in Fact

** December 1, 1998

EXHIBIT (g)(4)

ASSIGNMENT AND ASSUMPTION AGREEMENT
(Custodian Agreements and Securities Lending Agency Agreement)

This Assignment and Assumption Agreement (this "Assignment"), is made
and entered into as of May 1, 1998 (the "Effective Date"), by and between First
Trust National Association, a national banking association ("First Trust"), and
U.S. Bank National Association, a national banking association ("U.S. Bank").

WHEREAS, First Trust desires to assign to U.S. Bank, and U.S. Bank
desires to acquire and assume from First Trust, all of First Trust's right,
title and interest in, to and under the following agreements (collectively, the
"Assumed Agreements"):

a. Custodian Agreement dated as of September 20, 1993, by and
between First American Investment Funds, Inc. and First
Trust, as amended and supplemented through the Effective
Date.

b. Custodian Agreement dated as of January 20, 1995, by and
between First American Funds, Inc. and First Trust, as
amended and supplemented through the Effective Date.

c. Custodian Agreement dated as of October 1, 1996, by and
between First American Strategy Funds, Inc. and First Trust,
as amended and supplemented through the Effective Date.

d. Securities Lending Agreement (Customer Agreement) dated as
of January 31, 1997, by and between First Trust and First
American Investment Funds, Inc. and First American Funds,
Inc., as amended and supplemented through the Effective
Date.

NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1. First Trust hereby grants, assigns, transfers and conveys to U.S.
Bank its entire right, title and interest in, to and under the Assumed
Agreements. First Trust further agrees to indemnify and save harmless U.S. Bank
from and against any claims which arise in connection with the failure of First
Trust to perform its obligations under the Assumed Agreements applicable to that
period prior to the Effective Date.

2. U.S. Bank hereby accepts the foregoing assignment and hereby
assumes and agrees to perform all of the obligations of First Trust under the
Assumed Agreements applicable to the period beginning the Effective Date. U.S.
Bank agrees to comply with the representations and conditions of that no-action
letter dated April 6, 1998, issued by the Staff of the Securities and Exchange
Commission in connection with the foregoing assignment. U.S. Bank further agrees
to indemnify and save harmless First Trust from and against any claims which
arise in connection with U.S. Bank's failure to perform such obligations on and
after the Effective Date.

<PAGE>

3. First Trust and U.S. Bank each hereby represents and warrants that
it has not entered into any assignments, contracts or understandings with third
parties in conflict herewith.

4. The terms, covenants and provisions of this Assignment are binding
upon and shall inure to the benefit of First Trust and U.S. Bank and their
respective successors and assigns.

5. This Assignment is and shall be governed by and construed in
accordance with the laws of the State of Minnesota.

IN WITNESS WHEREOF, the parties have caused this Assignment to be duly
executed and delivered as of the date first stated above.

FIRST TRUST NATIONAL ASSOCIATION

By /s/ Jeff Wilson
Its Vice President

U.S. BANK NATIONAL ASSOCIATION

By /s/ Jeff Wilson
Its Vice President

CONSENT

First American Investment Funds, Inc., First American Funds, Inc., and
First American Strategy Funds, Inc. each hereby expressly consents to First
Trust's assignment of each Assumed Agreement to which it is a party to U.S. Bank
in accordance with the terms of this Assignment. First American Investment
Funds, Inc., First American Funds, Inc., and First American Strategy Funds, Inc.
each represents and warrants that its consent as set forth herein has been
authorized by its Board of Directors.

Dated as of the date first FIRST AMERICAN INVESTMENT FUNDS, INC.
stated above.

By /s/ Kathryn L. Stanton
Its Acting President

[signatures continue on following page]

- 2 -

<PAGE>

FIRST AMERICAN FUNDS, INC.

By /s/ Kathryn L. Stanton
Its Acting President

FIRST AMERICAN STRATEGY FUNDS, INC.

By /s/ Kathryn L. Stanton
Its Acting President

- 3 -

EXHIBIT (h)(9)

SHAREHOLDER ACCOUNT SERVICING AGREEMENT

THIS AGREEMENT, made this 1st day of October, 1998, by and between
First American Funds, Inc., a Minnesota corporation (the "Company"), on behalf
of each series of the Company's common stock (such series are referred to herein
individually as a "Fund" and collectively as the "Funds"), and U.S. Bank
National Association, a national banking association (the "Servicing Agent").

WITNESSETH:

WHEREAS, the Company has entered into an Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST was appointed as Transfer Agent and
Dividend Disbursing Agent for the Funds; and

WHEREAS, management of the Company has determined that it would be in
the best interests of each Fund and its shareholders to maintain with DST
certain omnibus accounts, with each such account representing the accounts of a
number of individual shareholders who maintain accounts with the Servicing Agent
or its affiliates in which Class A and Class B shares of the Funds are held, and
to have the Servicing Agent provide transfer agent and dividend disbursing agent
services for such underlying individual shareholder accounts.

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:

1. Scope of Appointment.

(a) Subject to the conditions set forth in this Agreement, the Company
hereby appoints the Servicing Agent to perform certain transfer agent and
dividend disbursing agent services, and the Servicing Agent accepts such
appointment.

(b) Such services shall be provided with respect to all individual
shareholder accounts encompassed within the omnibus accounts referenced above.

(c) The Servicing Agent agrees to provide the necessary facilities,
equipment and personnel to perform its duties and obligations hereunder in
accordance with industry practice.

(d) The Servicing Agent agrees to perform the usual and ordinary
services of transfer agent and dividend disbursing agent not performed by DST
with respect to the shareholder accounts outlined in Section 1(b), including,
without limitation, the following: maintaining all shareholder accounts;
preparing shareholder meeting lists; mailing shareholder reports and
prospectuses; tracking shareholder accounts for blue sky and Rule 12b-1
purposes; withholding taxes on non-resident

<PAGE>

alien and foreign corporation accounts; preparing and mailing checks for
disbursement of income dividends and capital gains distributions; preparing and
filing U.S. Treasury Department Form 1099 for all shareholders; preparing and
mailing confirmation forms to shareholders and dealers with respect to all
purchases, exchanges and liquidations of Fund shares and other transactions in
shareholder accounts for which confirmations are required; recording
reinvestments of dividends and distributions in Fund shares; recording
redemptions of Fund shares; and preparing and mailing checks for payments upon
redemption and for disbursements to withdrawal plan holders.

(e) The Servicing Agent shall perform all services relating to
shareholder transactions, share redemptions and maintaining shareholder accounts
on the same business day as the request for the transaction is received. The
Servicing Agent shall perform all services relating to payouts of monies no
later than three business days following the date of receipt of the request for
the transaction. The Servicing Agent shall perform all services relating to the
provision of confirmations no later than three business days following the
transaction. Any activities not enumerated will be fulfilled no later than the
time required by applicable law. In each case the time standards will be
adjusted to meet any applicable requirements of law. The time frames above
include not only the performance of the activity, but the appropriate quality
control and mailing of the related checks, confirms, letters or other documents.

The Servicing Agent will maintain records of its performance,
available to the Company for inspection upon reasonable notice.

2. Compensation. As compensation for the services to be provided by
the Servicing Agent hereunder, each Fund will pay to the Servicing Agent an
annual per-account fee as set forth in Exhibit A hereto. Such fee shall be
payable on a monthly basis at a rate of 1/12th of the annual per-account charge,
with payment being made within ten business days following the end of the month
covered by such payment. Such fee covers all services outlined in Section 1(d)
with the exception of preparing shareholder meeting lists and mailing
shareholder reports and prospectuses. These services, along with proxy
processing (if applicable) and other special service requests, will be billable
as performed at a mutually agreed upon fee in addition to the annual fee as
noted, provided that such mutually agreed upon fee shall be fair and reasonable
in light of the usual and customary charges made by others for services of the
same nature and quality.

3. Records

(a) The Servicing Agent will maintain customary records in connection
with its agency appointment hereunder, and in particular will maintain those
records

<PAGE>

required to be maintained pursuant to subparagraph 2(iv) of paragraph (b) of
Rule 31a-1 under the Investment Company Act of 1940, as amended (the "1940
Act").

(b) To the extent required by Section 31 of the 1940 Act and the rules
and regulations thereunder, the Servicing Agent agrees that all records
maintained by the Servicing Agent relating to the services to be performed by it
under this Agreement are the property of the Company and will be preserved in
accordance with Rule 31a-2 under the 1940 Act and will be surrendered promptly
to the Company upon request.

4. Complaints and Regulatory Actions. The Servicing Agent and the
Company shall cooperate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to the Servicing Agent, the
Company, their affiliates (as defined in the 1940 Act) and/or their agents,
representatives or employees to the extent that such investigation or proceeding
is in connection with the services subject to this Agreement. Without limiting
the foregoing, the parties shall notify each other promptly of the receipt of
notice of any such investigation or proceeding and of any customer complaint
relating to or learned of in the course of the provision of services subject to
this Agreement.

In the case of any such customer complaint, the Servicing Agent and the
Company and their affiliates shall cooperate in investigating such complaint.
Any response to a customer complaint relating to the Company must be approved in
writing by the Company prior to it being sent to the customer or any regulatory
authority. The Company agrees to review any such response to such substantive
complaint prepared by the Servicing Agent within three (3) business days of its
receipt by the Company, except that, if a more prompt response is required, the
Company shall review such response within the required shorter time period. Any
response by the Servicing Agent to a customer complaint which relates to the
Servicing Agent or its affiliates shall be provided to the Company no later than
the time it is provided to the customer or any regulatory authority.

5. Fund Shares Held on Behalf of Servicing Agent Clients. Fund shares
held by the Servicing Agent on behalf of a client of the Servicing Agent or its
affiliates shall be carried in a custody account for the exclusive benefit of
clients of the Servicing Agent or such affiliate, as the case may be, and shall
not be subject to any right, charge, security interest, lien or other claim
against the Servicing Agent or such affiliate in favor of the Company or any
Fund.

6. Indemnification.

(a) The Servicing Agent will not be responsible for, and the Company
will hold harmless and indemnify the Servicing Agent from and against, any loss
by or liability to the Company or a third party, including attorneys' fees, in
connection

<PAGE>

with any claim or suit asserting any such liability arising out of or
attributable to actions taken by the Servicing Agent pursuant to this
Agreement, unless the Servicing Agent has acted negligently or in bad faith.
Without limitation of the foregoing:

(i) at any time the Servicing Agent may apply to any officer of
the Company for instructions, and may consult with legal counsel for the Company
or its own legal counsel at the expense of the Company, with respect to any
matter arising in connection with its agency, and the Servicing Agent will not
be liable for any action taken or omitted by it in good faith reliance upon such
instructions or upon the opinion of such counsel; and

(ii) the Servicing Agent may rely upon and will be protected in
acting upon any paper or document reasonably believed by it to be genuine and to
have been signed by the proper person or persons and will not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Company.

(b) The Servicing Agent will hold harmless and indemnify the Company
from and against any loss or liability arising out of the Servicing Agent's
failure to comply with the terms of this Agreement or arising out of the
Servicing Agent's negligence, misconduct or bad faith.

7. Interpretation; Governing Law. This Agreement shall be subject to
and interpreted in accordance with all applicable provisions of law, including,
without limitation, the 1940 Act and the rules and regulations promulgated
thereunder. To the extent the provisions herein contained conflict with any such
applicable provisions of law, the latter shall control. The laws of the State of
Minnesota shall otherwise govern the construction, validity and effect of this
Agreement.

8. Effective Date; Duration; Termination.

(a) This Agreement shall be effective as of the date first set forth
above.

(b) Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect from year to year but only so long as such continuance
is specifically approved at least annually by the Board of Directors of the
Company, including a majority of the Directors who are not parties to this
Agreement or "interested persons" of any such party (as defined in the 1940
Act), by vote cast in person at a meeting called for the purpose of voting on
such approval.

(c) This Agreement may be terminated at any time without the payment
of any penalty by either party upon not less than 60 days' written notice to the
other party. Upon the effective termination date, the Servicing Agent shall make

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available to the Company or its designated record keeping successor all of the
records of the Company maintained under this Agreement then in the Servicing
Agent's possession.

(d) This Agreement shall automatically terminate in the event of its
assignment (as defined by the provisions of the 1940 Act) unless such assignment
is approved in advance by the Board of Directors, including a majority of the
directors of the Company who are not parties to this Agreement or "interested
persons" of any such party (as defined in the 1940 Act).

9. Amendments. No material amendment to this Agreement shall be
effective until approved by the Servicing Agent and by a vote of the Board of
Directors of the Company, including a majority of the Directors who are not
parties to this Agreement or "interested persons" of any such party (as defined
in the 1940 Act).

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized officers as of the day and year first above
written.

FIRST AMERICAN FUNDS, INC.

By /s/ Kathryn L. Stanton
Its Vice President

U.S. BANK NATIONAL
ASSOCIATION

By /s/ Jeff Wilson
Its Vice President

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EXHIBIT A TO SHAREHOLDER ACCOUNT SERVICING AGREEMENT
SCHEDULE OF CHARGES

Money Market Fund Accounts

$9 per account

Non-Money Market Fund Accounts

$15 per account