<PAGE>
PIPER INSTITUTIONAL FUNDS INC.
SUPPLEMENT DATED AUGUST 28, 1996 TO
PROSPECTUS DATED NOVEMBER 1, 1995, AS SUPPLEMENTED JUNE 24, 1996
For the fiscal year ended June 30, 1996, Piper Capital Management
Incorporated (the "Adviser") reimbursed Institutional Government Adjustable
Portfolio ("Adjustable Portfolio") to the extent that Adjustable Portfolio's
total operating expenses exceeded .60% per annum of its average daily net
assets. The Adviser has determined that it will not reimburse any Adjustable
Portfolio expenses for the fiscal year ending June 30, 1997. Given this
determination, the Fund Expenses table for Adjustable Portfolio appearing on
page 4 of the Prospectus is hereby revised as follows to reflect Adjustable
Portfolio's actual expenses (absent voluntary expense reimbursements by the
Adviser) for the fiscal year ended June 30, 1996:
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . 1.00%(1)
Exchange Fee (2). . . . . . . . . . . . . . . . . . . . . . . $0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees . . . . . . . . . . . . . . . . . . . . . . . .30%
Rule 12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . 1.45%
Total Fund Operating Expenses . . . . . . . . . . . . . . . . 1.75%
- --------------------
(1) The sales charge is reduced to .50% of the offering price on purchases of
$250,000 or more. In connection with purchases of $500,000 or more, there
is no initial sales charge. See "How to Purchase Shares -- Public Offering
Price."
(2) There is a $5.00 fee for each exchange in excess of four exchanges per
year. See "How to Purchase Shares -- Exchange Privilege."
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming a
5% annual return and redemption at the end of each time period:
1 Year . . . . . . . . . . . . . . . . . . . . . . . $28
3 Years . . . . . . . . . . . . . . . . . . . . . . . $65
5 Years . . . . . . . . . . . . . . . . . . . . . . . $104
10 Years . . . . . . . . . . . . . . . . . . . . . . . $214
The purpose of the above table is to assist you in understanding the
various costs and expenses that investors in Adjustable Portfolio will bear
directly or indirectly. THE EXAMPLE CONTAINED IN THE TABLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
