<PAGE>
PIPER FUNDS INC. PIPER GLOBAL FUNDS INC.
SMALL COMPANY GROWTH FUND EMERGING MARKETS GROWTH FUND
EMERGING GROWTH FUND PACIFIC-EUROPEAN GROWTH FUND
GROWTH FUND
GROWTH AND INCOME FUND
BALANCED FUND
GOVERNMENT INCOME FUND PIPER FUNDS INC.--II
INTERMEDIATE BOND FUND ADJUSTABLE RATE MORTGAGE SECURITIES FUND
NATIONAL TAX-EXEMPT FUND
MINNESOTA TAX-EXEMPT FUND
MONEY MARKET FUND PIPER INSTITUTIONAL FUNDS INC.
U.S. GOVERNMENT MONEY MARKET FUND INSTITUTIONAL MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
SUPPLEMENT DATED MAY 1, 1998 TO PROSPECTUSES DATED NOVEMBER 24, 1997
AND JANUARY 30, 1998 (FOR INSTITUTIONAL MONEY MARKET FUND)
Piper Capital Management Incorporated ("Piper Capital") is the investment
advisor to the funds named above (the "Funds"). On May 1, 1998, Piper Capital's
parent company, Piper Jaffray Companies Inc., was acquired by U.S. Bancorp (the
"Acquisition"). U.S. Bancorp is a multi-state bank holding company
headquartered in Minneapolis, Minnesota with a geographic service area spanning
17 states. As of December 31, 1997, U.S. Bancorp was the 15th largest U.S.
commercial bank holding company, with assets of nearly $71.3 billion. U.S. Bank
National Association ("U.S. Bank"), a wholly owned subsidiary of U.S. Bancorp,
currently acts as the investment adviser to 32 mutual funds (the "First American
Funds"). As of December 31, 1997, U.S. Bank, acting through its First American
Asset Management group, managed more than $55 billion in assets, including
approximately $20.5 billion in assets of the First American Funds.
In connection with the Acquisition, SEI Investments Distribution Company
("SEI") has assumed the role of principal distributor for shares of the Funds.
SEI is a Pennsylvania corporation and is the principal distributor for a number
of investment companies. SEI, which is not affiliated with U.S. Bancorp, is a
wholly-owned subsidiary of SEI Investments Company and is located at Oaks,
Pennsylvania 19456. SEI has entered into a sales agreement with U.S. Bancorp
Piper Jaffray Inc. (formerly Piper Jaffray Inc.) for the sale of Fund shares.
Therefore, you may continue to buy and sell shares of the Funds by calling your
U.S. Bancorp Piper Jaffray Investment Executive.
Also in connection with the Acquisition, the Funds' Board of Directors has
recommended that each of the Funds (other than Money Market Fund, U.S.
Government Money Market Fund, Tax-Exempt Money Market Fund and Institutional
Money Market Fund) be merged into a corresponding fund in the First American
Funds family. Each such fund is a series of First American Investment Funds,
Inc. ("FAIF"). Each proposed merger is subject to the approval of shareholders
of the applicable Piper Fund. A shareholder meeting to vote on the proposed
mergers will be held on July 10, 1998. Piper Fund shareholders of record as of
the close of business on May 13, 1998 will be entitled to notice of, and to vote
at, the meeting. Proxy materials are expected to be mailed to shareholders in
late May 1998. The following table sets forth the proposed mergers.
Piper Fund Corresponding FAIF Fund+
- ---------- ------------------------
Small Company Growth Fund Small Cap Growth Fund (currently
named Emerging Growth Fund)
Emerging Growth Fund Mid Cap Growth Fund*
<PAGE>
Piper Fund Corresponding FAIF Fund
- ---------- -----------------------
Growth Fund Large Cap Growth Fund (currently
named Diversified Growth Fund)
Growth and Income Fund Large Cap Value Fund (currently
named Stock Fund)
Balanced Fund Balanced Fund
Government Income Fund Fixed Income Fund
Intermediate Bond Fund Intermediate Term Income Fund
Minnesota Tax-Exempt Fund Minnesota Tax Free Fund*
National Tax-Exempt Fund Tax Free Fund*
Adjustable Rate Mortgage Adjustable Rate Mortgage
Securities Fund Securities Fund*
Pacific-European Growth Fund International Fund
Emerging Markets Growth Fund Emerging Markets Fund*
- ------------------------------
+ The names of certain FAIF Funds will change as indicated, effective
May 29, 1998
* Indicates a newly formed fund created for purposes of the proposed merger
SHARES OF THE FUNDS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY AND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF,
OR GUARANTEED BY, ANY BANK, INCLUDING U.S. BANK NATIONAL ASSOCIATION OR ANY OF
ITS AFFILIATES. SHARES OF THE FUNDS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
