FIRST OMAHA FUNDS INC, 485BPOS, 2000-07-28

FIRST OMAHA FUNDS INC
485BPOS, 2000-07-28

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

1933 Act Registration Number 33-85982
1940 Act Registration Number 811-8846
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ x ]

Pre-Effective Amendment
---- [ ]
Post-Effective Amendment No. 11 [ x ]

and/or

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

Amendment No. 12 [ x ]

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

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

ONE FIRST NATIONAL CENTER
OMAHA, NE 68102-1596
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code:
(402) 341-0500

MARC M. DIEHL
ONE FIRST NATIONAL CENTER
OMAHA, NE 68102-1596
(Name and Address of Agent for Service)

---------------------------------------------------
Copies of all communications to:

DONALD F. BURT, ESQ. RANDY M. PAVLICK
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER SUNSTONE FINANCIAL GROUP, INC.
1900 FIRSTIER BANK BUILDING 207 E. BUFFALO, SUITE 400
LINCOLN, NE 68508 MILWAUKEE, WI 53202

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

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

[X ] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
------
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) of rule 485.
------
If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>

Prospectus July 28, 2000

FIRST OMAHA U.S. GOVERNMENT MONEY MARKET FUND(SM)
FIRST OMAHA SHORT/INTERMEDIATE FIXED INCOME FUND(R)
FIRST OMAHA FIXED INCOME FUND(R)
FIRST OMAHA BALANCED FUND(R)
FIRST OMAHA EQUITY FUND(R)
FIRST OMAHA GROWTH FUND(SM)
FIRST OMAHA SMALL CAP VALUE FUND(R)

(LOGO)

FIRST OMAHA
FAMILY OF FUNDS

<PAGE>
NOTICE TO INVESTORS

SHARES OF FIRST OMAHA FUNDS ARE:

--------------------------------------------------------------------------------
NOT FDIC INSURED
--------------------------------------------------------------------------------
MAY LOSE VALUE NO BANK GUARANTEE
--------------------------------------------------------------------------------

AN INVESTMENT IN THE U.S. GOVERNMENT MONEY MARKET FUND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. 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.

FIRST OMAHA FUNDS ARE DISTRIBUTED BY AN INDEPENDENT THIRD PARTY, SUNSTONE
DISTRIBUTION SERVICES, LLC.

THESE PAGES ARE FOLLOWED BY A PROSPECTUS WHICH DESCRIBES IN DETAIL THE FUNDS'
OBJECTIVES, INVESTMENT POLICIES, RISKS, FEES AND OTHER MATTERS OF INTEREST.
PLEASE READ IT CAREFULLY BEFORE INVESTING.

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

FIRST OMAHA FUNDS

A FAMILY OF NO-LOAD MUTUAL FUNDS

> FIRST OMAHA U.S. GOVERNMENT MONEY MARKET FUND(SM)
> FIRST OMAHA SHORT/INTERMEDIATE FIXED INCOME FUND(R)
> FIRST OMAHA FIXED INCOME FUND(R)
> FIRST OMAHA BALANCED FUND(R)
> FIRST OMAHA EQUITY FUND(R)
> FIRST OMAHA GROWTH FUND(SM)
> FIRST OMAHA SMALL CAP VALUE FUND(R)

PROSPECTUS

JULY 28, 2000

Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, the First National Bank of Omaha, FNC Trust Group, n.a., First
National Colorado, Inc., their parent, First National of Nebraska, Inc., or any
of their affiliates. Shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other governmental
agency. An investment in a Fund involves certain investment risks, including the
possible loss of principal.

AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>
PROSPECTUS > FIRST OMAHA FUNDS
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Table of Contents

THE FUNDS

PRINCIPAL INVESTMENT STRATEGIES AND RISKS, EXPENSES AND PERFORMANCE

First Omaha U.S. Government Money Market Fund....................... 1
First Omaha Short/Intermediate Fixed Income Fund.................... 3

First Omaha Fixed Income Fund....................................... 6
First Omaha Balanced Fund........................................... 9
First Omaha Equity Fund.............................................12

First Omaha Growth Fund.............................................14
First Omaha Small Cap Value Fund....................................16

YOUR INVESTMENT

BUYING AND SELLING SHARES, ACCOUNT POLICIES AND MANAGEMENT

Buying Shares.......................................................19
Selling Shares......................................................19
Exchanging Shares...................................................20
Transaction Policies................................................20
Dividends and Taxes.................................................21
Management of the Company...........................................22
Financial Highlights................................................25

FOR MORE INFORMATION Back cover

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------
The FUNDS

First Omaha U.S. Government Money Market Fund/SM

OBJECTIVE

The investment objective of the Money Market Fund is maximum current income
while preserving capital and maintaining liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

The Money Market Fund invests only in U.S. dollar-denominated instruments that
the adviser determines present minimal credit risks. They must be rated at
purchase in one of the two highest rating categories of a national rating
organization, or if unrated, considered at purchase to be of comparable quality
by the Fund's investment adviser. The Fund will invest no more than 5% of its
assets in securities rated in the second highest category.

All securities in which the Fund invests mature within 397 calendar days. The
dollar-weighted average maturity of the Fund's securities will not exceed 90
days.

The Fund may invest in:

> U.S. Treasury obligations, offering varied interest rates, maturities, and
times of issuance. These include "stripped" obligations such as Treasury
Receipts, representing either future interest or principal payments.

> Obligations issued and/or guaranteed by agencies or instrumentalities of the
U.S. government. The Fund may invest not only in obligations of certain
agencies and instrumentalities of the U.S. government which are backed by the
full faith and credit of the U.S. government, but also in such obligations
that are supported only by the issuer's right to borrow from the U.S.
Treasury (such as those of the Federal National Mortgage Association), by the
discretionary authority of the U.S. government to purchase the agency's
obligations (such as those of the Student Loan Marketing Association and the
Federal Home Loan Banks), or by the credit of the instrumentality (such as
those of the Federal Farm Credit Banks). The Fund will invest in the
obligations of such agencies or instrumentalities only when the Fund's
investment adviser determines that they present minimal credit risk.

> Repurchase agreements.

PRINCIPAL RISKS

PRESERVATION OF VALUE. An investment in the Fund is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. 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.

INTEREST RATE. Changes in interest rates affect the value of the Fund's debt
securities, including securities issued or guaranteed by the U.S. government or
other government agencies. The rate of income on Fund shares will vary from day
to day so that dividends on your investment will vary. The Fund is subject to
interest rate risk; when interest rates increase, fixed income securities will
decline in value.

DERIVATIVE RISKS. Stripped securities are issued at a discount to their face
value and may be more volatile than ordinary debt securities because of the way
their principal and interest are returned to investors.

LENDING RISKS. If the seller of a repurchase agreement defaults, the Fund may be
exposed to possible loss because of adverse market conditions or a delay in
selling the underlying securities to another person.

GOVERNMENT SECURITIES. No assurance can be given that the U.S. government will
provide financial support to U.S. government-sponsored agencies or
instrumentalities if it is not obligated to do so by law.

PERFORMANCE HISTORY

The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year and the table shows the Fund's average annual returns. The
variability of performance over time provides an indication of the risks of
investing in the Fund. As with all mutual funds, past performance is no
guarantee of future results.

< 1
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ----
3.27 2.56 3.56 5.36 4.80 4.90 4.81 4.69

The Fund's total return for the three-month period ended March 31, 2000 was
1.38%.

BEST QUARTER WORST QUARTER
------------ -------------
2Q 1995 2Q 1993
1.36% 0.61%

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR 5 YEARS (12/4/91)
------ ------- ---------------
U.S. Government
Money Market Fund 4.69% 4.91% 4.24%

The performance information stated above, from inception through April 9, 1995,
relates to a predecessor mutual fund, First Omaha U.S. Government Obligations
Fund, which began operations on December 4, 1991. The Fund acquired all of the
net assets of the predecessor mutual fund on April 9, 1995.

IF YOU WOULD LIKE TO KNOW THE CURRENT SEVEN-DAY YIELD FOR THE FUND, CALL THE
FUND'S TOLL-FREE NUMBER, 1-800-OMAHA-03.

EXPENSES

This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual fund
operating expenses are deducted from Fund assets, so their effect is reflected
in the Fund's share price.

FEE TABLE

U.S. Government Money Market Fund
Annual Fund Operating Expenses
(% of average net assets)

Management Fees<F1> 0.25%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 0.30%
Total Fund Operating Expenses<F1> 0.56%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 2000 were 0.14% and
0.25%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 2000 were 0.39%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.

<F2>The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

The example below is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds and shows what you could
pay in expenses over time, based on Total Fund Operating Expenses described in
the Fee Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.

EXPENSE EXAMPLE

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$57 $179 $313 $701

> 2

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
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FIRST OMAHA SHORT/INTERMEDIATE FIXED INCOME FUND(R)

OBJECTIVE

This Fund seeks generation of current income consistent with the preservation of
capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

Under normal market conditions, this Fund intends to invest primarily all, but
must invest at least 65%, of its assets in fixed income securities, consisting
of:

> bonds, notes and debentures from a wide range of U.S. corporate issuers;

> mortgage-related securities;

> state, municipal or industrial revenue bonds;

> obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities;

> fixed income securities that can be converted into or exchanged for common
stock; or

> repurchase agreements.

The Fund's investment strategy emphasizes fundamental analysis, relative value
and a long-term outlook. "Relative value" is the value the Fund places on a
security by comparing it to historical valuations, comparable securities in the
same sector, and other securities in different sectors of the fixed income
market. The Fund's "long-term outlook" is typically a minimum three to five year
view of general market conditions that may affect the overall structure of the
Fund's portfolio. The adviser looks for securities that appear to be underpriced
compared to other investments available and that keep the Fund diversified.

Fixed income securities are chosen so their maturities are staggered, to manage
reinvestment risk and value fluctuations. However, the adviser can go outside
this laddered approach if the adviser believes a security appears to offer
greater relative value.

The Fund seeks to maintain a dollar-weighted average portfolio maturity of two
to five years under normal market conditions, and is expected to be somewhat
less volatile than the Fixed Income Fund. To calculate maturity, the adviser
uses each instrument's ultimate maturity date, or the probable date of a call,
refunding or redemption provision, or other maturity-shortening device. For
securities expected to be repaid before their maturity date (such as
mortgage-backed securities), the adviser uses the effective maturity, which is
shorter than the stated maturity.

The Fund also seeks to maintain an average portfolio duration comparable to the
Lehman Bros. Mutual Fund Short (1-5) U.S. Gov't. Bond Index average duration.
Duration is an indicator of the expected volatility of a bond position in
response to changes in interest rates. In calculating duration, the Fund
measures the average time required to receive all cash flows associated with
those debt securities--representing payments of principal and interest--by
considering the timing, frequency and amount of payment expected from each
portfolio debt security.

The fixed income securities in which the Fund invests will be "investment
grade," which means they will be:

> rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation; or

> if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.

MORTGAGE-RELATED SECURITIES. Under normal market conditions, the Fund will
invest no more than 25% of its assets in mortgage-related securities, which are
backed by obligations such as:

> conventional 30-year fixed rate mortgages;

> 15-year mortgages; or

> adjustable-rate mortgages.

Mortgage-related securities are pass-through securities--an interest in a pool
or pools of mortgage obligations. The cash flow from the mortgage obligations is
"passed through" to the securities' holders as periodic payments of interest,
principal and prepayments (net of service fees).

Other mortgage securities the Fund may purchase include collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs), some
of which are issued privately. CMOs may be collateralized by whole-mortgage
loans or, more typically, by portfolios of pass-through securities guaranteed by
the Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Federal National Mortgage Association.

3 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------
PRINCIPAL RISKS

The value of the Fund's shares depends on the value of the securities it owns.
An investment in the Fund is not a deposit of the bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The value of your investment may fluctuate significantly, which means
you could lose money.

GENERAL MARKET RISKS. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.

INTEREST RATE RISK. Changes in interest rates affect the value of the Fund's
debt securities, including securities issued or guaranteed by the U.S.
government or other government agencies. When interest rates rise, the value of
the Fund's securities and its shares will decline. A change in interest rates
will also affect the amount of income the Fund generates.

CREDIT RISK. The value of the Fund's fixed income securities is affected by the
issuer's continued ability to make interest and principal payments. The Fund
could lose money if the issuers cannot meet their financial obligation or go
bankrupt.

Securities rated in the lowest of the investment-grade categories (e.g., Baa or
BBB) are considered more speculative than higher rated securities. Their issuers
may not be as financially strong as those of higher rated bonds and may be more
vulnerable to periods of economic uncertainty or downturn.

If the seller of a repurchase agreement defaults, the Fund may be exposed to
possible loss because of adverse market conditions or a delay in selling the
underlying securities to another person.

REINVESTMENT RISK. When interest rates decline, cash flows from maturing
securities may have to be reinvested at a lower rate.

PREPAYMENT RISK. Mortgage- and asset-backed securities involve prepayment risk,
which is the risk that the underlying mortgages or other debts may be refinanced
or paid off before they mature during a period of declining interest rates. That
will tend to lower the Fund's return and could result in losses to the Fund if
it acquired some securities at a premium. Due to prepayments and the need to
reinvest principal payments at current rates, mortgage-related securities may be
less effective than bonds at maintaining yields when interest rates decline.
Mortgage-related securities may be more volatile than other fixed income
securities.

PERFORMANCE HISTORY

The bar chart and table below show the Fund's annual returns and its long-term
performance and provide some indication of the risks of an investment in the
Fund. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table compares the Fund's performance over time to that of the
Lehman Bros. Mutual Fund Short (1-5) U.S. Gov't. Index(R). Both the bar chart
and table assume reinvestment of dividends and distributions. As with all mutuaL
funds, past performance is no guarantee of future results.

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ----
17.61 5.85 6.38 -1.33 12.74 3.38 6.71 7.75 -1.40

The Fund's total return for the three-month period ended March 31, 2000 was
1.40%.

BEST QUARTER WORST QUARTER
------------ -------------
1Q 1991 1Q 1994
8.38% -1.31%

> 4

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FIRST OMAHA FUNDS > PROSPECTUS
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AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR 5 YEARS (1/1/91)
------ ------- ---------------
Short/Intermediate
Fixed Income Fund -1.40% 5.73% 6.25%

Lehman Bros. Mutual
Fund Short (1-5) U.S.
Gov't. Bond Index<F1> 1.96% 6.74% 6.55%

<F1>The Lehman Bros. Mutual Fund Short (1-5) U.S. Gov't. Index is an index made
up of the Treasury Bond Index (all public obligations of the U.S. Treasury,
excluding flower bonds and foreign-targeted issues) and the Agency Bond Index
(all publicly issued debt of the U.S. government agencies and quasi- federal
corporations, and corporate debt guaranteed by the U.S. government). A flower
bond is a type of U.S. government bond that, regardless of its cost price, can
be redeemed at par value in payment of estate taxes if owned by the decedent at
the time of death. Foreign-targeted issues are securities targeted for foreign
investors. The returns for this index do not reflect any fees or expenses. It is
not possible to make a direct investment in an index.

The above performance information of this Fund includes the performance of the
Fund's respective predecessor mutual fund and common trust fund. Performance
data from December 13, 1992 through April 9, 1995 relates to a predecessor
mutual fund, First Omaha Short/Intermediate Fixed Income Fund. The Fund acquired
all of the net assets of the predecessor mutual fund on April 9, 1995. The
performance prior to December 13, 1992 relates to a predecessor common trust
fund. The common trust fund was managed by First National Bank of Omaha, which
manages the Fund. The bar chart and table above include information regarding
the common trust fund's operations for periods before the Fund's registration
statement became effective, as adjusted to reflect the higher expenses incurred
by the Funds. The common trust fund was not registered under the Investment
Company Act of 1940 and therefore was not subject to certain investment
restrictions that are imposed by that Act. If the common trust fund had been
registered, its performance might have been adversely affected.

EXPENSES

FEE TABLE

SHORT/INTERMEDIATE FIXED INCOME FUND
ANNUAL FUND OPERATING EXPENSES
(% OF AVERAGE NET ASSETS)

Management Fees<F1> 0.50%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 0.68%
Total Fund Operating Expenses<F1> 1.19%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain service
providers voluntarily waived a portion of their respective fees. Taking these
waivers into account, the actual Management Fees and Other Expenses incurred for
the fiscal year ended March 31, 2000 were 0.45% and 0.57%, respectively. The
actual Total Fund Operating Expenses incurred by the Fund for the fiscal year
ended March 31, 2000 were 1.02%. These waivers by the service providers are
voluntary and therefore may be eliminated at any time.

<F2>The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no more
than 0.25% of the average daily net asset value of the Fund. As of the date of
this Prospectus, it is estimated that 12b-1 expenses will be 0.01% of average
daily net assets of the Fund. As these fees are paid out of the Fund's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$121 $378 $654 $1,443

5 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------
FIRST OMAHA FIXED INCOME FUND(R)

OBJECTIVE

This Fund seeks current income consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

Under normal market conditions, the Fund intends to invest primarily all, but
must invest at least 65%, of its assets in fixed income securities, consisting
of:

> bonds, notes and debentures from a wide range of U.S. corporate issuers;

> mortgage-related securities;

> state, municipal or industrial revenue bonds;

> obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities;

> fixed income securities that can be converted into or exchanged for common
stock; or

> repurchase agreements.

The Fund's investment strategy emphasizes fundamental analy sis, relative value,
and a long-term outlook. "Relative value" is the value the Fund places on a
security by comparing it to historical valuations, comparable securities in the
same sector, and other securities in different sectors of the fixed income
market. The Fund's "long-term outlook" is typically a minimum three to five year
view of general market conditions that may affect the overall structure of the
Fund's portfolio. The adviser looks for securities that appear to be underpriced
compared to other investments available and that keep the Fund diversified.

The Fund seeks to maintain a dollar-weighted average portfolio maturity of five
years or more under normal market conditions. To calculate maturity, the adviser
uses each instrument's ultimate maturity date, or the probable date of a call,
refunding or redemption provision, or other maturity-shortening device. For
securities expected to be repaid before their maturity date (such as
mortgage-backed securities), the adviser uses the effective maturity, which is
shorter than the stated maturity.

The Fund also seeks to maintain an average portfolio duration comparable to the
Lehman Bros. Gov't./Corp. Bond Index average duration. Duration is an indicator
of the expected volatility of a bond position in response to changes in interest
rates. In calculating duration, the Fund measures the average time required to
receive all cash flows associated with those debt securities--representing
payments of principal and interest--by considering the timing, frequency and
amount of payment expected from each portfolio debt security.

The fixed income securities in which the Fund invests will be "investment
grade," which means they will be:

> rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation; or

> if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.

MORTGAGE-RELATED SECURITIES. Under normal market conditions, the Fund will
invest no more than 25% of its value in mortgage-related securities, which are
backed by obligations such as:

> conventional 30-year fixed rate mortgages;

> 15-year mortgages; or

> adjustable-rate mortgages.

Other mortgage securities the Fund may purchase include collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs), some
of which are issued privately. CMOs may be collateralized by whole mortgage
loans or, more typically, by portfolios of pass-through securities guaranteed by
the Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Federal National Mortgage Association.

<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------
PRINCIPAL RISKS

CREDIT RISK. The value of the Fund's fixed-income securities is affected by the
issuer's continued ability to make interest and principal payments. The Fund
could lose money if the issuers cannot meet their financial obligation or go
bankrupt.

Securities rated in the lowest of the investment grade categories (e.g., Baa or
BBB) are considered more speculative than higher rated securities. Their issuers
may not be as financially strong as those of higher rated bonds and may be more
vulnerable to periods of economic uncertainty or downturn.

If the seller of a repurchase agreement defaults, the Fund may be exposed to
possible loss because of adverse market conditions or a delay in selling the
underlying securities to another person.

REINVESTMENT RISK. When interest rates decline, cash flows from maturing
securities may have to be reinvested at a lower rate.

PERFORMANCE HISTORY

The bar chart and table below show the Fund's annual returns and its long-term
performance and provide some indication of the risks of an investment in the
Fund. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table compares the Fund's performance over time to that of the
Lehman Bros. Gov't./Corp. Bond Index(R). Both the bar chart and table assume
reinvestment of dividends and distributions. As with all mutual funds, past
performance is no guarantee of future results.

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
7.62 14.13 7.55 11.06 -4.73 20.43 0.89 9.47 9.37 -4.60

The Fund's total return for the three-month period ended March 31, 2000 was
2.03%.

BEST QUARTER WORST QUARTER
------------ -------------
2Q 1989 1Q 1996
7.50% -3.40%

7 <
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FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (1/31/75)
------ ------- -------- ---------------
Fixed Income Fund -4.60% 6.77% 6.85% 8.32%
Lehman Bros.
Gov't./Corp.
Bond Index<F1> -2.15% 7.60% 7.66% 9.13%

<F1>The Lehman Bros. Gov't./Corp. Bond Index is an index that includes all
public obligations of the U.S. Treasury, excluding flower bonds and foreign-
targeted issues; all publicly issued debt of U.S. government agencies and
quasi-federal corporations, and corporate debt guaranteed by the U.S.
government; and all publicly issued, fixed rate, nonconvertible, investment
grade, dollar-denominated, SEC-registered corporate debt (including debt issued
or guaranteed by foreign sovereign governments, municipalities, or governmental
agencies, or international agencies). A flower bond is a type of U.S. government
bond that, regardless of its cost price, can be redeemed at par value in payment
of estate taxes if owned by the decedent at the time of death. Foreign-targeted
issues are securities targeted for foreign investors. The returns for this index
do not reflect any fees or expenses. It is not possible to make a direct
investment in an index.

The above performance information of this Fund includes
the performance of the Fund's respective predecessor mutual fund and common
trust fund. Performance data from December 13, 1992 through April 9, 1995
relates to a predecessor mutual fund, First Omaha Fixed Income Fund. The Fund
acquired all of the net assets of the predecessor mutual fund on April 9, 1995.
The performance prior to December 13, 1992 relates to a predecessor common trust
fund. The common trust fund was managed by First National Bank of Omaha, which
manages the Fund. The bar chart and table above include information regarding
the common trust fund's operations for periods before the Fund's registration
statement became effective, as adjusted to reflect the higher expenses incurred
by the Funds. The common trust fund was not registered under the Investment
Company Act of 1940 and therefore was not subject to certain investment
restrictions that are imposed by that Act. If the common trust fund had been
registered, its performance might have been adversely affected.

EXPENSES

FEE TABLE

FIXED INCOME FUND
ANNUAL FUND OPERATING EXPENSES
(% OF AVERAGE NET ASSETS)

Management Fees<F1> 0.60%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 0.48%
Total Fund Operating Expenses<F1> 1.09%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain service
providers voluntarily waived a portion of their respective fees. Taking these
waivers into account, the actual Management Fees and Other Expenses incurred for
the fiscal year ended March 31, 2000 were 0.55% and 0.36%, respectively. The
actual Total Fund Operating Expenses incurred by the Fund for the fiscal year
ended March 31, 2000 were 0.91%. These waivers by the service providers are
voluntary and therefore may be eliminated at any time.

<F2>The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no more
than 0.25% of the average daily net asset value of the Fund. As of the date of
this Prospectus, it is estimated that 12b-1 expenses will be 0.01% of average
daily net assets of the Fund. As these fees are paid out of the Fund's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$111 $347 $601 $1,329

> 8

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------
FIRST OMAHA BALANCED FUND(R)

OBJECTIVE

The investment objective of the Balanced Fund is capital appreciation and
current income.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

Based on the adviser's assessment of market conditions, the Balanced Fund will
allocate its assets among stocks, fixed income securities and cash equivalents.
The Fund will invest 35% to 65% of its total assets in stocks and con vertible
securities, and at least 35% of its total assets in fixed income securities.
However, under normal market conditions, the Fund intends to maintain an
approximately equal allocation between stocks and fixed income securities.

EQUITIES. In general, the equity portion of the Balanced Fund mirrors the Equity
Fund's holdings, and consists primarily of common stocks and securities that can
be converted into common stocks, such as convertible bonds, convertible
preferred stock, warrants, options and rights. The Balanced Fund will invest in
domestic companies with market capitalizations comparable to those of the
largest 25% of companies listed on the New York Stock Exchange, currently over
$1.5 billion.

The Fund's investment adviser uses a value-oriented investment approach, looking
for companies whose stock is trading below book value or what the adviser
considers its actual value. The adviser may also consider other factors,
including a company's earnings record and/or dividend growth.

FIXED INCOME SECURITIES. The fixed income portion of the Balanced Fund generally
mirrors the Fixed Income Fund's holdings, and includes:

> bonds, notes and debentures from a wide range of U.S. corporate issuers;

> mortgage-related securities;

> state, municipal or industrial revenue bonds;

> obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities; or

> fixed income securities that can be converted into or exchanged for common
stock.

In addition, the Balanced Fund may invest in U.S. Treasury obligations, cash
equivalents, repurchase agreements or asset-backed securities.

The fixed income securities in which the Fund invests will be "investment
grade," which means they will be:

> rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation; or

> if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.

With respect to the fixed income portion of the Balanced Fund, the Fund seeks to
maintain a dollar-weighted average portfolio maturity of five years or more. To
calculate maturity, the adviser uses each instrument's ultimate maturity date,
or the probable date of a call, refunding or redemption provision, or other
maturity-shortening device. For securities expected to be repaid before their
maturity date (such as mortgage-backed securities), the adviser uses the
effective maturity, which is shorter than the stated maturity.

The Fund also seeks to maintain, with respect to the fixed income portion of the
Fund, an average portfolio duration comparable to the Lehman Bros. Gov't./Corp.
Bond Index average duration. Duration is an indicator of the expected volatility
of a bond position in response to changes in interest rates. In calculating
duration, the Fund measures the average time required to receive all cash flows
associated with those debt securities--representing payments of principal and
interest--by considering the timing, frequency and amount of payment expected
from each portfolio debt security.

PRINCIPAL RISKS

9 <
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PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

PRINCIPAL RISKS - STOCKS

The stock portion of the Balanced Fund is subject to the risks of equity
investing, which include:

COMMON STOCKS. Risks associated with common stock investing include:

> A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for its
products or services. Negative performance may affect the valuation and
earnings growth the adviser anticipated when selecting the stock.

> Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
or decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental or regulatory change. Company news or a change
in expected earnings could also affect prices.

OVER-THE-COUNTER MARKET. Some of the common stocks in which the Fund invests
trade in the over-the-counter market. These "unlisted common stocks" generally
trade at a lower volume, which may limit their liquidity.

VALUE INVESTING. This Fund is primarily value oriented and
it may not perform as well as other types of mutual funds when its investing
style is out of favor. There is also a risk that the stocks selected for this
Fund may not reach what the adviser believes are their full value.

PRINCIPAL RISKS - FIXED INCOME SECURITIES

The fixed income securities portion of the Balanced Fund is subject to the risks
associated with the Fixed Income Fund, which include:

If the seller of a repurchase agreement defaults, the Fund may be exposed to
possible loss because of adverse market conditions or a delay in selling the
underlying securities to another person.

REINVESTMENT RISK. When interest rates decline, cash flows from maturing
securities may have to be reinvested in securities with lower yields.

PREPAYMENT RISK. Mortgage- and asset-backed securities involve prepayment risk,
which is the risk that the underlying mortgages or other debts may be refinanced
or paid off before they mature during a period of declining interest rates. That
will tend to lower the Fund's return and could result in losses to the Fund if
it acquired these securities at a premium. Due to prepayments and the need to
reinvest principal payments at current rates, mortgage-related securities may be
less effective than bonds at maintaining yields when interest rates decline.
Mortgage-related securities may be more volatile than other fixed income
securities.

PERFORMANCE HISTORY

The bar chart and table below show the Fund's annual returns and its long-term
performance and provide some indication of the risks of an investment in the
Fund. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table compares the Fund's performance over time to that of the
S&P 500(R) Index, the S&P 500/Barra Value Index(R) and the Lehman Bros.
Gov't./Corp. Bond Index. Both the bar chart and table assume reinvestment of
dividends and distributions. As with all mutual funds, past performance is no
guarantee of future results.

> 10

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1997 1998 1999
---- ---- ----
14.96 7.66 -7.32

The Fund's total return for the three-month period ended March 31, 2000 was
-3.33%.

BEST QUARTER WORST QUARTER
------------ -------------
2Q 1997 3Q 1999
9.25% -7.60%

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR (8/6/96)
------- ---------------
Balanced Fund -7.32% 5.84%
S&P 500 Index<F1> 21.04% 28.45%
S&P 500/Barra Value Index<F1> 12.72% 21.90%
Lehman Bros. Gov't./Corp.
Bond Index<F1> -2.15% 6.29%

<F1>The S&P 500 Index is an unmanaged index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The S&P 500/Barra Value Index is a market capitalization-weighted index
of all the stocks in the S&P 500 that have low price to book ratios. It is
designed so that approximately 50% of the S&P 500 market capitalization is in
the Barra Value Index. The other 50% is in the Barra Growth Index. The Lehman
Bros. Gov't./Corp. Bond Index includes all public obligations of the U.S.
Treasury, excluding flower bonds and foreign-targeted issues; all publicly
issued debt of U.S. government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. government; and all publicly issued, fixed
rate, nonconvertible, investment grade, dollar-denominated, SEC-registered
corporate debt (including debt issued or guaranteed by foreign sovereign
governments, municipalities, governmental agencies, or international agencies).
The Fund uses equity and fixed income indices for comparison because it
generally holds both equity and fixed income securities. In addition, the Fund
uses the S&P 500/Barra Value Index because this index is more representative of
the Fund's investment style. The returns for these indices do not reflect any
fees or expenses. It is not possible to make a direct investment in an index.

EXPENSES

FEE TABLE

BALANCED FUND

ANNUAL FUND OPERATING EXPENSES
(% OF AVERAGE NET ASSETS)

Management Fees<F1> 0.75%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 0.67%
Total Fund Operating Expenses<F1> 1.43%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain service
providers voluntarily waived a portion of their respective fees. Taking these
waivers into account, the actual Management Fees and Other Expenses incurred for
the fiscal year ended March 31, 2000 were 0.55% and 0.55%, respectively. The
actual Total Fund Operating Expenses incurred by the Fund for the fiscal year
ended March 31, 2000 were 1.10%. These waivers by the service providers are
voluntary and therefore may be eliminated at any time.

<F2>The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no more
than 0.25% of the average daily net asset value of the Fund. As of the date of
this Prospectus, it is estimated that 12b-1 expenses will be 0.01% of average
daily net assets of the Fund. As these fees are paid out of the Fund's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$146 $452 $782 $1,713

11 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

FIRST OMAHA EQUITY FUND(R)

OBJECTIVE

The investment objective of the Equity Fund is long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

Under normal market conditions, at least 65% of the Fund's total assets will be
invested in common stocks and securities that can be converted into common
stocks, such as convertible bonds, convertible preferred stock, warrants,
options and rights. The Fund invests in domestic companies with market
capitalizations comparable to those of the largest 25% of companies listed on
the New York Stock Exchange, currently over $1.5 billion. The Fund may also
invest up to 35% of its total assets in preferred stocks, warrants and common
stocks other than those described above.

To meet liquidity, redemption and short-term investing needs, the Fund may
invest in short-term obligations including money market funds, repurchase
agreements and U.S. government securities. The Fund may also take a temporary
defensive position in such investments, which could keep the Fund from achieving
its investment objective.

PRINCIPAL RISKS

COMMON STOCKS. This Fund invests primarily in common stocks of large companies.
The risks of common stock investing include:

> Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
or decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental, or regulatory change. Company news or a change
in expected earnings could also affect prices.

PERFORMANCE HISTORY

The bar chart and table below show the Fund's annual returns and its long-term
performance and provide some indication of the risks of an investment in the
Fund. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table compares the Fund's performance over time to that of the
S&P 500 Index and the S&P 500/Barra Value Index. Both the bar chart and table
assume reinvestment of dividends and distributions. As with all mutual funds,
past performance is no guarantee of future results.

>12

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
----- ---- ---- ---- ---- ---- ---- ---- ----
-0.76 25.01 8.32 10.87 7.41 26.86 15.77 19.25 7.72 -9.19

The Fund's total return for the three-month period ended March 31, 2000 was
-6.98%.

BEST QUARTER WORST QUARTER
------------ -------------
2Q 1999 3Q 1999
15.50% -12.70%

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (1/31/75)
------ ------- -------- ---------------
Equity Fund -9.19% 11.37% 10.61% 14.22%
S&P 500 Index<F1> 21.04% 28.56% 18.21% 16.75%
S&P 500/Barra Value
Index<F1> 12.72% 22.94% 15.37% 16.70%

The above performance information of this Fund includes the performance of the
Fund's respective predecessor mutual fund and common trust fund. Performance
data from December 13, 1992 through April 9, 1995 relates to a predecessor
mutual fund, First Omaha Equity Fund. The Fund acquired all of the net assets of
the predecessor mutual fund on April 9, 1995. The performance prior to December
13, 1992 relates to a predecessor common trust fund. The common trust fund was
managed by First National Bank of Omaha, which manages the Fund. The bar chart
and table above include information regarding the common trust fund's operations
for periods before the Fund's registration statement became effective, as
adjusted to reflect the higher expenses incurred by the Funds. The common trust
fund was not registered under the Investment Company Act of 1940 and therefore
was not subject to certain investment restrictions that are imposed by that Act.
If the common trust fund had been registered, its performance might have been
adversely affected.

EXPENSES

FEE TABLE

EQUITY FUND
ANNUAL FUND OPERATING EXPENSES
(% OF AVERAGE NET ASSETS)

Management Fees<F1> 0.75%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 0.43%
Total Fund Operating Expenses<F1> 1.19%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Other Expenses incurred for
the fiscal year ended March 31, 2000 were 0.32%. The actual Total Fund
Operating Expenses incurred by the Fund for the fiscal year ended March 31,
2000 were 1.07%. These waivers by the service providers are voluntary and
therefore may be eliminated at any time.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

13 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

EXPENSE EXAMPLE

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$121 $378 $654 $1,443

FIRST OMAHA GROWTH FUND (SM)

OBJECTIVE

The investment objective of the Growth Fund is long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

In pursuit of long-term capital appreciation, this Fund invests principally in
companies the adviser believes have the potential to grow earnings more rapidly
than their competitors. Under normal market conditions, more than 50% of the
Fund's total assets will be invested in the common stock and convertible
securities of companies with capitalizations from $1 billion to $10 billion. The
Fund may also invest up to 35% of its total assets in preferred stocks and
warrants, or for liquidity needs, pending investment or expense payments, in
short-term obligations including commercial paper, bankers' acceptances,
certificates of deposit, money market funds, repurchase agreements, and U.S.
government obligations.

The rest of the Fund's assets may be invested in companies with market
capitalizations over $10 billion. Holdings are typically diversified across the
major sectors.

In choosing investments, the Fund's investment adviser looks for companies with:

> market share gains;

> product innovation;

> low-cost production;

> a history of above-average earnings and dividend growth; and

> valuations that are low relative to their current earnings or their
projected earnings growth rate.

PRINCIPAL RISKS

The value of the Fund's shares depends on the value of
the securities it owns. An investment in the Funds is not a deposit of the bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. The value of your investment may fluctuate
significantly, which means you could lose money.

COMMON STOCKS. This Fund invests primarily in common stocks, whose risks
include:

> A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for
its products or services. Negative performance may affect the earnings
growth the adviser anticipated when selecting the stock.

> Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
oR decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental or regulatory change. Company news or a change
in expected earnings could also affect prices.

> 14

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

MID-CAP STOCKS. The emphasis on medium-capitalization companies may lead to
risks greater than those of other equity investments. Mid-cap stocks are
generally less liquid than large-cap stocks, and may be more affected by
technological, environmental or regulatory change.

OVER-THE-COUNTER MARKET. Some of the stocks in which the Fund invests trade in
the over-the-counter market. These "unlisted common stocks" generally trade at a
lower volume, which may limit their liquidity.

GROWTH INVESTING. This Fund is primarily growth oriented and may not perform as
well as other types of mutual funds when its investing style is out of favor.
There is also a risk that the stocks selected for this Fund may not grow as the
adviser anticipates.

PERFORMANCE HISTORY

The bar chart and table below show the Fund's annual returns and its long-term
performance and provide some indication of the risks of an investment in the
Fund. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table compares the Fund's performance over time to that of the
S&P MidCap 400 Index(R). Both the bar chart and table assume reinvestment of
dividends and distributions. As with all mutual funds, past performance is no
guarantee of future results.

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
-0.16 -0.49 37.77 12.81 25.86 8.18 11.87

The Fund's total return for the three-month period ended March 31, 2000 was
4.38%.

BEST QUARTER WORST QUARTER
------------ -------------
4Q 1998 3Q 1998
16.95% -11.95%

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR 5 YEARS (11/30/92)
------ ------- ---------------
Growth Fund 11.87% 18.81% 12.82%
S&P MidCap 400 Index<F1> 14.72% 23.05% 17.85%

<F1>The S&P MidCap 400 Index is an unmanaged index of 400 domestic stocks,
chosen for market size, liquidity and industry group representation. The
returns for this index do not reflect any fees or expenses. It is not
possible to make a direct investment in an index.

The above performance information of this Fund includes the performance of the
Fund's predecessor common trust fund. The performance prior to April 1, 1998
relates to a predecessor common trust fund. The common trust fund was managed by
FNC Trust Group, n.a., which manages the Fund. The bar chart and table above
include information regarding the common trust fund's operations for periods
before the Fund's registration statement became effective, as adjusted to
reflect the higher expenses incurred by the Funds. The common trust fund was not
registered under the Investment Company Act of 1940 and therefore was not
subject to certain investment restrictions that are imposed by that Act. If the
common trust fund had been registered, its performance might have been adversely
affected.

EXPENSES

15 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

FEE TABLE

Growth Fund
Annual Fund Operating Expenses
(% of average net assets)

Management Fees<F1> 0.75%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 0.66%
Total Fund Operating Expenses<F1> 1.42%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 2000 were 0.50% and
0.53%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 2000 were 1.03%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

EXPENSE EXAMPLE

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$145 $449 $776 $1,702

FIRST OMAHA SMALL CAP VALUE FUND(R)

OBJECTIVE

The investment objective of the Small Cap Value Fund is long-term capital
appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS

PRINCIPAL INVESTMENTS

Under normal market conditions, the Fund invests at least 65% of its assets in
common stocks and convertible securities of companies with small market
capitalization. A company's market capitalization is considered "small" if it is
less than those of the largest 25% of companies listed on the New York Stock
Exchange, currently $1.5 billion. The Fund expects most of these companies will
have a market cap of $200 million to $1.5 billion.

The Fund's investment adviser follows a value-oriented investment style, looking
for companies whose stock is trading below book value or what the adviser
considers its actual value. The adviser may also consider other factors,
including a company's earnings record and/or dividend growth. This Fund does not
emphasize current dividend or interest income.

In choosing investments, the adviser looks at quantitative and qualitative
measures of a company.

Quantitative measures of a company include:

> price-to-earnings ratio;

> balance sheet strength;

> cash flow; and

> dividend growth potential.

Qualitative measures of a company include:

> efficient use of capital;

> management style and adaptability;

> market share;

> product lines and pricing flexibility;

> distribution systems; and

> use of technology to improve productivity and quality.

> 16

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

The Fund typically diversifies across major industries,
hold ing 30 to 65 companies at a time. Turnover is expected to be low, around
20% under normal market conditions. However, the Fund will sell a security
without regard to how long it has owned the security if the investment adviser
believes this necessary.

The Fund may also invest up to 35% of its total assets in:

> preferred stocks;

> common stocks other than those described above; or

> corporate bonds, notes and warrants.

Any fixed income securities in which the Fund invests will be "investment
grade," which means they will be:

> rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation; or

> if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.

Principal risks

COMMON STOCKS. This Fund invests primarily in common stocks, whose risks
include:

> A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for
its products or services. Negative performance may affect the full value
potential the adviser anticipated when selecting the stock.

SMALL-CAP STOCKS. The price of smaller-cap companies may fluctuate dramatically
due to such factors as:

> the company's greater dependence on key personnel;

> potentially limited internal resources;

> difficulty obtaining adequate working resources;

> greater dependence on newer products and/or markets;

> technological, regulatory or environmental changes; and

> predatory pricing.

In short, the Fund's risks are likely to be greater than those
of other equity investments. It will typically be more volatile than the stock
market in general, as measured by the S&P 500 Index.

PERFORMANCE HISTORY

17 <
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PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

of the S&P SmallCap 600 Index(R) and the S&P SmallCap 600/Barra Value Index(R).
Both the bar chart and table assume reinvestment of dividends and distributioNS.
As with all mutual funds, past performance is no guarantee of future results.

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)

1997 1998 1999
21.75 -3.36 -4.97

The Fund's total return for the three-month period ended March 31, 2000 was
-1.20%.

BEST QUARTER WORST QUARTER
------------ -------------

2Q 1999 3Q 1998
14.34% -13.57%

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99

SINCE INCEPTION
1 YEAR (6/10/96)
------- ---------------
Small Cap Value Fund -4.97% 5.46%
S&P SmallCap 600 Index<F1> 12.40% 11.41%
S&P SmallCap 600/
Barra Value Index<F1> 3.03% 11.64%

<F1>The S&P SmallCap 600 Index is a market-weighted index of 600 domestic stocks
chosen for market size, liquidity and industry group representation. The S&P
SmallCap 600/Barra Value Index is a market capitalization-weighted index of all
the stocks in the S&P SmallCap 600 that have low price to book ratios. It is
designed so that approximately 50% of the S&P SmallCap 600 market capitalization
is in the Barra Value Index. The other 50% is in the Barra Growth Index. The S&P
SmallCap 600 Barra Value Index is included for comparison purposes because the
securities in the index are indicative of the types of securities held in the
Fund. The returns for these indices do not reflect any fees or expenses. It is
not possible to make a direct investment in an index.

EXPENSES

FEE TABLE

SMALL CAP VALUE FUND
ANNUAL FUND OPERATING EXPENSES
(% OF AVERAGE NET ASSETS)

Management Fees<F1> 0.85%
Distribution (12b-1) Fees<F2> 0.01%

Other Expenses<F1><F3> 1.17%
Total Fund Operating Expenses<F1> 2.03%

<F1>The table above reflects all fees the Fund's service providers were entitled
to receive during the fiscal year ended March 31, 2000 pursuant to their
contracts with the Fund or others. However, during that year, certain service
providers voluntarily waived a portion of their respective fees. Taking these
waivers into account, the actual Management Fees and Other Expenses incurred for
the fiscal year ended March 31, 2000 were 0.50% and 0.96%, respectively. The
actual Total Fund Operating Expenses incurred by the Fund for the fiscal year
ended March 31, 2000 were 1.46%. These waivers by the service providers are
voluntary and therefore may be eliminated at any time.

<F2>The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no more
than 0.25% of the average daily net asset value of the Fund. As of the date of
this Prospectus, it is estimated that 12b-1 expenses will be 0.01% of average
daily net assets of the Fund. As these fees are paid out of the Fund's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

<F3>"Other Expenses" include miscellaneous fund expenses such as administration,
legal, accounting, custody, shareholder servicing and transfer agent fees.

EXPENSE EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$206 $637 $1,093 $2,358

> 18

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

BUYING, SELLING and EXCHANGING Shares

BUYING SHARES

You can buy First Omaha shares by mail or wire, or through the First National
Bank of Omaha and its affiliates, your broker/ dealer, or other institutions.
For a Purchase Application, call 1-800-OMAHA-03. The Funds reserve the right to
refuse purchases and redemptions that may adversely affect the Funds.

OPENING AN ACCOUNT BY MAIL

Make out a check or money order for the amount you want to invest, payable to
the Fund you want. See page 20 for minimum amounts.

Mail the check or money order and a completed Purchase Application to:
First Omaha Funds, Inc.
P.O. Box 219022
Kansas City, MO 64121-9022

ADDING TO YOUR ACCOUNT BY MAIL

Make out a check or money order for the amount you want to invest, payable to
the Fund you want. See page 20 for minimum amounts.

Mail the check or money order and a note with your account number to:
First Omaha Funds, Inc.
P.O. Box 219022
Kansas City, MO 64121-9022

ADDING TO YOUR ACCOUNT BY WIRE

Call 1-800-OMAHA-03 for the account number to which funds should be wired. Your
bank may charge a wire transfer fee.

THROUGH FIRST NATIONAL BANK OF OMAHA,

ITS CORRESPONDENTS OR AFFILIATES

You may be able to buy shares through some bank accounts, including those that
sweep cash into Money Market Fund shares. These accounts have their own
requirements and may charge fees associated with your investment, which will
reduce your net return. For details, see your bank representative.

THROUGH OTHER INSTITUTIONS

To find out if you can buy shares through your bank, broker/dealer, or other
institution, call 1-800-OMAHA-03. Check with your institution on account
requirements, procedures, and any fees, which will reduce your net return.

AUTO INVEST PLAN

You can make regular monthly or quarterly purchases by ACH transfer from your
bank account. The minimum investment to open your account is $100; the minimum
for additional investments is $50. To start, complete the Auto Invest Plan
Section of the Purchase Application. To change your plan, send the Funds a
signature-guaranteed written request. See "Signature Guarantees," on page 21.

SELLING (REDEEMING) SHARES

If you purchase your shares from the Funds, you can redeem them as described
below. If you purchase shares through a bank or other institution, you need to
meet that institution's account requirements.

BY MAIL

> Send a written request to:
First Omaha Funds, Inc.
P.O. Box 219022
Kansas City, MO 64121-9022

> The Funds will mail a check payable to the Shareholder(s) of record to the
address of record, or wire the funds at no charge to a previously designated
bank account. Check with your bank to determine if it charges a wire
transfer fee. See "Signature Guarantees," on page 21.

BY PHONE

> When you open your account, check the box authorizing telephone redemptions
on your Purchase Application.

> Call 1-800-OMAHA-03 to request the redemption.

> The Funds will mail a check payable to the Shareholder(s) of record to the
address of record, or transfer the funds via ACH to a previously designated
bank account. There is no charge for ACH transfers. See "Telephone
Transactions," on page 21.

19 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

AUTO WITHDRAWAL PLAN

You can redeem shares automatically every month or quarter and have a check for
the specified amount mailed to you. The minimum withdrawal is $100. To start,
call 1-800-OMAHA-03. To change your plan, send the Funds a signature-guaranteed
written request. See "Signature Guarantees," on page 21. You could have negative
tax results if you purchase shares while you're making withdrawals. Be sure to
check with your tax adviser on the effects of this plan, especially if you're
also purchasing shares.

EXCHANGING SHARES

You can exchange shares of one First Omaha Fund for shares of another. An
exchange is considered a sale of shares; you may have a capital gain or loss for
federal income tax purposes.

> Read the Prospectus of the Fund whose shares you want to buy in the
exchange.

> Mail the Funds your request or call 1-800-OMAHA-03.

> The amount to be exchanged must meet minimum investment requirements,
described below.

The Funds may change or eliminate the exchange privilege with 60 days' notice to
Shareholders, though there are no plans to do so. You may exchange only into
Fund shares legally available in your state.

TRANSACTION Policies
--------------------------------------------------------------------------------
SHARE PRICE

The price per share for each Fund, equal to net asset value (NAV), is calculated
each business day at the close of trading on the New York Stock Exchange
(typically 4 p.m. Eastern Time). A business day is a day on which the NYSE is
open for trading. A Fund is not required to calculate NAV if none of its shares
were bought or sold that day.

If the Funds receive your buy or sell order before the daily valuation time, you
will pay or receive that day's NAV for each share. Otherwise you will pay or
receive the next business day's NAV for each share.

To calculate the NAV, First Omaha Funds adds up the value of all a Fund's
securities and other assets, subtracts any liabilities, and divides by the
number of shares of that Fund outstanding. You can determine the value of your
account on any particular day by multiplying the number of shares you own by
that day's NAV.

Assets in the Money Market Fund are valued using the amortized cost method. The
other Funds' securities are valued at market value.

If market prices aren't available, the Funds' Board of Directors will choose
another valuation method. For details, see "Net Asset Value" in the Statement of
Additional Information ("SAI").

MINIMUM INVESTMENT

The minimum initial investment for each Fund is $500. For additional
investments, it's $50. Under the Auto Invest Plan, the required initial
investment drops to $100. The Funds may also waive minimum requirements for
Individual Retirement Accounts and payroll deduction plans.

If an exchange or redemption causes the value of your account (other than an
Auto Invest Plan or payroll deduction account) to fall below $500, the Funds may
ask you to add to your account. If the balance remains below the minimum after
60 days, the Funds may close out your account and mail you the proceeds.

> 20

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

CONFIRMATION

You'll receive an account statement after each transaction. However, any Auto
Invest Plan, Auto Withdrawal Plan, automatic dividend reinvestment and capital
gain distribution transactions are reported on your quarterly statement. If you
want to confirm these transactions before the end of the quarter, call
1-800-OMAHA-03.

The Funds do not issue share certificates.

REDEMPTION PAYMENTS

If you redeem shares, you'll receive payment within seven days of the Transfer
Agent receiving your request. Shares are sold at the next NAV calculated after
your request is received in good order. Unless it would hurt a Fund or its Share
holders, the Funds try to honor requests for next-day payment if your order is
received on a business day before 4 p.m. Eastern Time, or second-day payment if
your order is received after that time.

Before selling recently purchased shares, please note that
if the Transfer Agent has not yet collected payment for the shares you are
selling, it may delay sending the proceeds for up to 15 calendar days. This is
intended to protect the Funds and their Shareholders from loss.

The Funds intend to pay cash for all shares redeemed, but under unusual
conditions may make payment wholly or partly in portfolio securities whose
market value equals the redemption price. You will incur brokerage costs when
converting them to cash.

The Funds may also suspend redemptions and payments if the New York Stock
Exchange closes or in other emergencies. See "Additional Purchase and Redemption
Information" in the SAI.

SIGNATURE GUARANTEES

Signature guarantees are designed to prevent unauthorized transactions. The
guarantor pledges that the signature presented is genuine--and, unlike a notary
public, is financially responsible if it's not.

You can obtain signature guarantees from banks, brokers/dealers, credit unions,
securities exchanges and some other institutions. A notary public is not
acceptable. The Funds require a signature guarantee to change the address to
which a redemption check is to be mailed or to make the check payable to someone
other than the Shareholder(s) of record. The Transfer Agent reserves the right
to reject any signature guarantee.

TELEPHONE TRANSACTIONS

For purchases made by telephone, the Funds and their agents will use reasonable
procedures to confirm telephone instructions are genuine. These procedures may
include, among others, requiring some form of identification before acting on
telephone instructions; providing written confirmation of all such transactions;
and tape recording all telephone instructions. If reasonable procedures are
followed, the Funds and their agents will not be liable for any loss, cost, or
expense due to an investor's telephone instructions or an unauthorized telephone
redemption.

If, because of peak activity or adverse conditions, you can't place a telephone
transaction, consider mailing your request as described in "Buying Shares" and
"Selling Shares" on page 19. The Funds reserve the right to refuse a telephone
transaction.

DIVIDENDS and TAXES
--------------------------------------------------------------------------------

The Funds generally pass net investment income and realized capital gains, if
any, on to Shareholders in the form of dividends and capital gains.

DIVIDENDS

The Money Market Fund declares income dividends daily and pays them monthly.
Shares purchased before 4 p.m. Eastern Time accrue interest on the date of
purchase. The other Funds declare and pay dividends monthly, generally during
the last week of each month.

The Funds automatically reinvest your dividends in more shares of the Fund
unless you choose to receive them in cash. To receive dividends in cash, or to
change that election, notify the Funds in writing.

If you redeem all your shares in a Fund, you'll receive accrued dividends, if
applicable, in cash within seven business days.

Distributable net realized capital gains are distributed at least annually. The
Money Market Fund does not expect to realize any long-term capital gains or pay
any capital gains distributions.

21 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

TAXES

Here's an overview of important information about taxes.

> Dividends and distributions you receive, whether in cash or additional
shares, are generally taxable.

> Distributions from a Fund's long-term capital gains over net short-term
capital losses are taxable as long-term capital gains in the year you
receive them, no matter how long you've held the shares.

> Some dividends paid in January may be taxable as if you had received them
the previous December.

> Dividends attributable to interest on U.S. Treasury obligations may be
subject to state and local taxes, even though the interest would be
tax-exempt if you received it directly.

> If the distribution of income or gain realized on the sale of securities
causes a share's NAV to fall below what you paid for it, the distribution is
a "return of invested principal" but is still taxable as described above.

> If you buy shares shortly before the record date of a Fund's dividend or
capital gains distribution, the payment of those dividends or capital gains
will reduce your NAV per share. All or a part of such distributions are
taxable.

> Corporations may be eligible for a dividends-received deduction on certain
dividends. Because the Money Market Fund expects to derive its net
investment income from earned interest and short-term capital gains, none of
its distributions are expected to qualify for the dividends-received
deduction.

At least annually, the Funds will advise you of the source and tax status of all
the distributions you've received.

This Prospectus gives only general tax information. Before you invest, consult
your tax adviser on federal, state and local tax considerations for your
specific situation.

MANAGEMENT of the Company
--------------------------------------------------------------------------------

INVESTMENT ADVISERS

For six of the seven Funds (the Money Market Fund, the Short/Intermediate Fixed
Income Fund, the Fixed Income Fund, the Balanced Fund, the Equity Fund and the
Small Cap Value Fund), First National Bank of Omaha ("First National"), One
First National Center, Omaha, NE is the investment adviser. These Funds are
managed by a committee.

First National is a subsidiary of First National of Nebraska, Inc., a Nebraska
corporation with total assets of about $8.6 billion as of December 31, 1999.
First National offers clients in the Midwest a full range of financial services
and has more than 65 years of experience in trust and investment management. As
of December 31, 1999, First National's trust division had about $8.5 billion in
assets under administration, with about $2.9 billion under management.

The Growth Fund is advised by FNC Trust Group, n.a., ("FNC"), established in May
1997 as a wholly-owned subsidiary of First National Colorado, Inc.--which is a
wholly-owned subsidiary of First National of Nebraska, Inc.

FNC was created to offer a full range of trust and asset management services,
both directly and as an agent for banks with trust powers. Currently FNC is an
agent for clients of Union Colony Bank, Greeley, Colorado, and serves customers
directly from its offices in Boulder and Loveland, Colorado.

The predecessor to FNC was Union Colony Bank's trust division, whose staff moved
to FNC when it was formed. The Adviser has no previous experience managing a
registered investment company.

As of December 31, 1999, FNC had $34 million in assets under administration,
directly or as an agent, including more than $33 million under investment
management.

RESPONSIBILITIES

Supervised by the Board of Directors and following each Fund's investment
objectives and restrictions, the Adviser:

> manages a Fund's investments;

> 22

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

> makes buy/sell decisions and places the orders; and

> keeps records of purchases and sales.

PORTFOLIO MANAGERS

For six of the seven Funds (the Money Market Fund, the Short/Intermediate Fixed
Income Fund, the Fixed Income Fund, the Balanced Fund, the Equity Fund and the
Small Cap Value Fund), investment decisions are made by committee. No one person
is primarily responsible for making investment recommendations.

The Growth Fund is managed by David Jordan. Mr. Jordan has been the senior
investment officer of First National Bank of Fort Collins since 1996. From
1992-96 he was portfolio manager and primarily responsible for making investment
decisions for First Interstate Bank of Denver. He is a Chartered Financial
Analyst and has managed institutional portfolios since 1982.

FEES

For services and related expenses, First National receives a fee from the six
Funds it advises. Computed daily and paid monthly, the fee is a percent of each
Fund's average daily net assets at these annual rates:

> Small Cap Value Fund: 0.85%

> Equity Fund: 0.75%

> Balanced Fund: 0.75%

> Fixed Income Fund: 0.60%

> Short/Intermediate Fixed Income Fund: 0.50%

> Money Market Fund: 0.25%

Similarly, FNC's fee for advising the Growth Fund is 0.75% of average daily net
assets, or a lesser fee agreed to in writing.

First National and FNC (collectively, the "Advisers") may choose to waive all or
some of their advisory fees, which will cause a Fund's yield and total return to
be higher than it would be without the waiver. The Advisers may end such waivers
anytime and may not seek reimbursement.

OTHER SERVICE PROVIDERS

The Funds' Board of Directors has appointed various parties to advise and
administer the Funds.

ADMINISTRATOR AND DISTRIBUTOR

Sunstone Financial Group, Inc., 207 E. Buffalo St., Suite 400, Milwaukee, WI
53202-5712, is Administrator for each Fund, providing clerical, compliance,
regulatory, accounting and other services. Sunstone Distribution Services, LLC,
an affiliate of the administrator, is Distributor for the Funds.

CUSTODIAN AND TRANSFER AGENT

First National in its capacity as Custodian provides for the safekeeping of the
Funds' assets. First National also serves as the Funds' Transfer Agent. DST
Systems, Inc., 210 W. 10th Street, Kansas City, MO 64105 is Sub-Transfer Agent,
whose functions include disbursing dividends and other distributions.

All service providers receive fees. They may choose to waive some or all of
their fees, which will cause the Funds' returns to be higher than they would
have been without the waiver.

DISTRIBUTION AND SERVICE PLAN

The Company has adopted a plan under federal securities Rule 12b-1 that allows
the Funds to pay fees for the sale and distribution of their respective shares.
The fees will not exceed an annual rate of 0.25% of a Fund's average daily net
assets. Because these fees are paid regularly out of the Fund's assets, over
time they will increase the cost of your investment and may cost you more than
paying other types of sales charges.

The Company has also adopted an Administrative Service Plan under which each
Fund may pay compensation to banks and other financial institutions that provide
various administrative services for Shareholders. The fees will not exceed an
annual rate of 0.25% of a Fund's average daily net assets. Such institutions may
include the Advisers, their correspondent and affiliated banks, and the
Administrator and its affiliates.

The Funds' agreement with First National sets that institution's administrative
service fee at the annual rate of 0.10% of the average aggregate net asset value
of shares of each Fund held during the period by customers for whom First
National provided services under the Servicing Agreement.

23 <
<PAGE>

PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

First National may choose to waive some or all of this fee, which will cause a
Fund's total return and yield to be higher than without the waiver.

BANKING LAWS

First National believes it has authority under current law
to act as Adviser, Custodian and Transfer Agent, and FNC as Adviser and to
receive fees for these services and for services they each provide to
Shareholders. If banking laws or interpretations change, that could change the
way the companies operate; however, the Funds believe this wouldn't affect net
asset value per share or result in financial loss to any Shareholder. See
"Management of the Company - Glass-Steagall Act" in the SAI for further
discussion.

> 24

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

Financial HIGHLIGHTS(1)

The following tables show you each Fund's financial performance for the past
five years, or if shorter, the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in each Fund, assuming reinvestment of all dividends and
distributions. This information has been audited by KPMG LLP, the Funds'
independent accountants. Their report, along with the Funds' financial
statements, is included in the SAI, which is available upon request.

U.S. GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, 1995<F2>JULY 1, 1994
MAR. 31, MAR. 31, MAR. 31, MAR. 31, TO TO
2000 1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:

Net investment income ...................... 0.05 0.05 0.05 0.05 0.05 0.04
Net realized and unrealized gains (losses)
on investments ............................. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ........... 0.05 0.05 0.05 0.05 0.05 0.04
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ....... 0.05 0.05 0.05 0.05 0.05 0.04
Distributions from capital gains ........... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ........................ 0.05 0.05 0.05 0.05 0.05 0.04
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== =========== ===========
TOTAL RETURN<F3>............................. 5.06% 4.63% 4.95% 4.76% 5.14% 3.51%
SUPPLEMENTAL DATA AND RATIOS:

Net assets, end of period (000s) ........... $ 307,884 $ 133,730 $ 100,497 $ 125,413 $ 87,715 $ 76,105
Ratio of net expenses to average net
assets<F4>................................ 0.39% 0.54% 0.55% 0.58% 0.54% 0.63%
Ratio of net investment income to average
net assets<F4>.............................. 5.10% 4.52% 4.83% 4.66% 5.12% 4.46%
Ratio of net expenses to average net
assets<F4><F5>............................ 0.55% 0.58% 0.58% 0.59% 0.59% 1.23%
Ratio of net investment income to average
net assets<F4><F5>.......................... 4.94% 4.48% 4.80% 4.65% 5.07% 3.86%
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>

<F1>Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.

<F2>Commencement of operations

<F3>Not annualized

<F4>Annualized

<F5>During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

25 <
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PROSPECTUS > FIRST OMAHA FUNDS
--------------------------------------------------------------------------------

Financial HIGHLIGHTS<F1>(continued)

<TABLE>
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME FUND
-----------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, 1995<F2>JULY 1, 1994
MAR. 31, MAR. 31, MAR. 31, MAR. 31, TO TO
2000 1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD .. $ 10.01 $ 9.97 $ 9.73 $ 9.85 $ 9.66 $ 9.62
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................ 0.51 0.51 0.56 0.49 0.52 0.42
Net realized and unrealized gains
(losses) on investments ............ (0.45) 0.04 0.24 (0.10) 0.17 0.05
------------ ------------ ------------ ------------ ------------ ------------
Total from investment operations ..... 0.06 0.55 0.80 0.39 0.69 0.47
------------ ------------ ------------ ------------ ------------ ------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income . 0.51 0.51 0.56 0.51 0.50 0.43
Distributions from capital gains ..... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions .................. 0.51 0.51 0.56 0.51 0.50 0.43
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD ........ $ 9.56 $ 10.01 $ 9.97 $ 9.73 $ 9.85 $ 9.66
============ ============ ============ ============ ============ ============
TOTAL RETURN<F3>....................... 0.71% 5.61% 8.37% 4.00% 7.24% 5.05%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) ..... $ 21,008 $ 21,636 $ 19,509 $ 21,042 $ 22,056 $ 22,130
Ratio of net expenses to average
net assets<F4>...................... 1.02% 0.97% 0.99% 0.97% 0.89% 0.88%
Ratio of net investment income to
average net assets<F4>.............. 5.28% 5.05% 5.54% 5.01% 5.34% 5.63%
Ratio of net expenses to average
net assets<F4><F5>.................. 1.18% 1.13% 1.15% 1.08% 1.02% 1.51%
Ratio of net investment income
to average net assets<F4><F5>....... 5.12% 4.89% 5.38% 4.90% 5.21% 5.00%
Portfolio turnover rate<F3>........... 36.41% 21.36% 26.58% 4.73% 41.45% 9.93%
</TABLE>

<F1>Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.

<F2>Commencement of operations

<F3>Not annualized

<F4>Annualized

<F5>During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

> 26

<PAGE>
FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FIXED INCOME FUND
----------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, 1995<F2>JULY 1, 1994
MAR. 31, MAR. 31, MAR. 31, MAR. 31, TO TO
2000 1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . $ 10.42 $ 10.45 $ 9.84 $ 10.00 $ 9.63 $ 9.58
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............... 0.57 0.61 0.59 0.45 0.59 0.51
Net realized and unrealized gains
(losses) on investments ............. (0.67) -- 0.61 (0.15) 0.35 0.07
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .... (0.10) 0.61 1.20 0.30 0.94 0.58
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.58 0.61 0.59 0.46 0.57 0.53
Distributions from capital gains .... 0.15 0.03 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................. 0.73 0.64 0.59 0.46 0.57 0.53
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD ....... $ 9.59 $ 10.42 $ 10.45 $ 9.84 $ 10.00 $ 9.63
=========== =========== =========== =========== =========== ===========
TOTAL RETURN<F3>...................... (0.90)% 5.93% 12.50% 3.06% 9.79% 6.35%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) .... $ 48,544 $ 82,420 $ 77,671 $ 75,524 $ 76,342 $ 66,488
Ratio of net expenses to average
net assets<F4>..................... 0.91% 0.88% 0.89% 0.89% 0.83% 0.87%
Ratio of net investment income
to average net assets<F4>.......... 5.68% 5.78% 5.74% 4.48% 5.94% 6.98%
Ratio of net expenses to average
net assets<F4><F5>................. 1.08% 1.05% 1.05% 1.00% 0.96% 1.51%
Ratio of net investment income
to average net assets<F4><F5>...... 5.51% 5.61% 5.58% 4.37% 5.81% 6.34%
Portfolio turnover rate<F3>.......... 18.39% 31.35% 19.03% 12.66% 37.35% 7.04%
</TABLE>

<F1>Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.

<F2>Commencement of operations

<F3>Not annualized

<F4>nnualized

<F5>During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

27 <
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FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

Financial HIGHLIGHTS<F1>(continued)

<TABLE>
<CAPTION>
BALANCED FUND
--------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED AUG. 6, 1996<F2>
MAR. 31, MAR. 31, MAR. 31, TO
2000 1999 1998 MAR. 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 11.06 $ 12.24 $ 10.41 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. 0.34 0.38 0.38 0.21
Net realized and unrealized gains (losses)
on investments ..................................... (0.98) (0.81) 1.90 0.40
--------------- --------------- --------------- ---------------
Total from investment operations ................... (0.64) (0.43) 2.28 0.61
--------------- --------------- --------------- ---------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:

Dividends from net investment income ............... 0.35 0.38 0.38 0.20
Distributions from capital gains ................... 0.78 0.37 0.07 --
--------------- --------------- --------------- ---------------
Total distributions ................................ 1.13 0.75 0.45 0.20
--------------- --------------- --------------- ---------------
NET ASSET VALUE, END OF PERIOD ...................... $ 9.29 $ 11.06 $ 12.24 $ 10.41
=============== =============== =============== ===============
TOTAL RETURN<F3>..................................... (6.18)% (3.73)% 22.34% 6.14%
SUPPLEMENTAL DATA AND RATIOS:

Net assets, end of period (000s) ................... $ 12,010 $ 23,883 $ 25,692 $ 10,895
Ratio of net expenses to average net assets<F4>..... 1.10% 1.01% 0.88% 1.16%
Ratio of net investment income to average
net assets<F4>...................................... 3.16% 3.20% 3.37% 3.25%
Ratio of net expenses to average net assets<F4><F5>. 1.42% 1.32% 1.43% 3.04%
Ratio of net investment income to average
net assets<F4><F5>.................................. 2.84% 2.89% 2.82% 1.37%
Portfolio turnover rate<F3>......................... 31.43% 33.17% 10.46% 5.92%
</TABLE>

<F1>Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.

<F2>Commencement of operations

<F3>Not annualized

<F4>Annualized

<F5>During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

> 28

<PAGE>

FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EQUITY FUND
----------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, 1995<F2>JULY 1, 1994
MAR. 31, MAR. 31, MAR. 31, TO TO TO
2000 1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ... $ 13.36 $ 16.19 $ 13.74 $ 13.07 $ 11.39 $ 10.48
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.19 0.26 0.29 0.30 0.28 0.21
Net realized and unrealized gains
(losses) on investments ............. (1.21) (1.66) 3.50 1.63 2.13 1.48
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ...... (1.02) (1.40) 3.79 1.93 2.41 1.69
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income .. 0.19 0.26 0.29 0.30 0.28 0.22
Distributions from capital gains ...... 3.15 1.17 1.05 0.96 0.45 0.56
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................... 3.34 1.43 1.34 1.26 0.73 0.78
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD ......... $ 9.00 $ 13.36 $ 16.19 $ 13.74 $ 13.07 $ 11.39
=========== =========== =========== =========== =========== ===========
TOTAL RETURN<F3>........................ (9.29)% (9.20)% 28.89% 14.99% 21.52% 16.48%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) ...... $ 87,537 $ 231,586 $ 312,073 $ 259,200 $ 224,169 $ 161,323
Ratio of net expenses to average net
assets<F4>........................... 1.07% 1.03% 1.03% 1.04% 0.99% 1.03%
Ratio of net investment income
to average net assets<F4>............ 1.47% 1.74% 1.89% 2.17% 2.32% 2.50%
Ratio of net expenses to average net
assets<F4><F5>....................... 1.18% 1.15% 1.14% 1.10% 1.07% 1.62%
Ratio of net investment income to
average net assets<F4><F5>........... 1.36% 1.62% 1.78% 2.11% 2.24% 1.91%
Portfolio turnover rate<F3>............ 23.29% 24.19% 15.87% 25.66% 26.60% 14.36%
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>

29 <
<PAGE>

FIRST OMAHA FUNDS > PROSPECTUS
--------------------------------------------------------------------------------

Financial HIGHLIGHTS<F1>(continued)

<TABLE>
<CAPTION>
GROWTH FUND SMALL CAP VALUE FUND
--------------------------- ---------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED JUNE 10, 1996<F2>
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, TO
2000 1999 2000 1999 1998 MAR. 31, 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . $ 9.48 $ 10.00 $ 9.85 $ 12.94 $ 10.52 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............... 0.01 0.10 0.10 0.18 0.19 0.15
Net realized and unrealized gains
(losses) on investments ........... 1.95 (0.53) 0.65 (2.73) 2.88 0.58
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .... 1.96 (0.43) 0.75 (2.55) 3.07 0.73
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income -- 0.09 0.10 0.18 0.19 0.15
Distributions from capital gains .... -- -- 0.19 0.36 0.46 0.06
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................. -- 0.09 0.29 0.54 0.65 0.21
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD ....... $ 11.44 $ 9.48 $ 10.31 $ 9.85 $ 12.94 $ 10.52
=========== =========== =========== =========== =========== ===========
TOTAL RETURN<F3>...................... 20.72% (4.28)% 7.55% (20.18)% 29.60% 7.30%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) .... $ 23,013 $ 14,318 $ 8,624 $ 13,096 $ 17,019 $ 7,173
Ratio of net expenses to average
net assets<F4>..................... 1.03% 1.21% 1.46% 1.21% 1.11% 1.34%
Ratio of net investment income to
average net assets<F4>............. 0.10% 1.15% 0.89% 1.55% 1.62% 2.15%
Ratio of net expenses to average
net assets<F4><F5>................. 1.41% 1.63% 2.02% 1.71% 1.92% 3.76%
Ratio of net investment income to
average net assets<F4><F5>......... (0.28)% 0.73% 0.33% 1.05% 0.81% (0.27)%
Portfolio turnover rate<F3>.......... 73.90% 71.80% 36.71% 26.20% 16.54% 7.45%
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>

<F1>Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.
<F2>Commencement of operations
<F3>Not annualized
<F4>Annualized
<F5>During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

> 30

<PAGE>

For more information on the Funds, ask for a free copy of the following:

STATEMENT OF ADDITIONAL INFORMATION (SAI). The SAI has been filed with the
Securities and Exchange Commission and is incorporated by reference, which means
it is legally considered part of this Prospectus. It contains more details on
all aspects of the Funds.

ANNUAL/SEMI-ANNUAL REPORTS. These reports describe the Funds' performance, list
portfolio holdings and include financial statements. The Annual Report contains
a discussion of the market conditions and investment strategies that
significantly affected each Fund's performance during its last fiscal year.

TO OBTAIN INFORMATION:

BY PHONE
Call 1-800-OMAHA-03

BY MAIL

Write to: First Omaha Funds
P.O. Box 219022
Kansas City, MO 64141-9022

ON THE INTERNET

View or download Fund documents at:

WWW.FIRSTOMAHAFUNDS.COM

You can review and copy information about First Omaha Funds (including the SAI)
at the SEC's Public Reference Room in Washington, D.C. You can call
1-202-942-8090 for information on the operations of the Public Reference Room.
Reports and other information about First Omaha Funds are also available at the
SEC's Internet site at http://www.sec.gov and copies of this information may be
obtained, upon payment of a duplicating fee, by writing to the address below or
by electronic request to [email protected].

Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-6009

SEC File Number 811-8846

[FIRST OMAHA FAMILY OF FUNDS LOGO]
P.O. Box 219022
Kansas City, MO 64141-9022

514571

<PAGE>

First Omaha U.S. Government Money Market Fund

First Omaha Short/Intermediate Fixed Income Fund

First Omaha Fixed Income Fund

First Omaha Balanced Fund

First Omaha Equity Fund

First Omaha Growth Fund

First Omaha Small Cap Value Fund

Each an Investment Portfolio of

FIRST OMAHA FUNDS, INC.

Statement of Additional Information

July 28, 2000

This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus (the "Prospectus") of First Omaha U.S.
Government Money Market Fund (the "Money Market Fund"), First Omaha
Short/Intermediate Fixed Income Fund (the "Short/Intermediate Fund"), First
Omaha Fixed Income Fund (the "Fixed Income Fund"), First Omaha Balanced Fund
(the "Balanced Fund"), First Omaha Equity Fund (the "Equity Fund"), First Omaha
Growth Fund (the "Growth Fund"), and First Omaha Small Cap Value Fund (the
"Small Cap Value Fund"), (Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund,
hereinafter collectively referred to as the "Funds" and singly, a "Fund") dated
as of the date hereof. The Funds are each separate investment portfolios of
First Omaha Funds, Inc. (the "Company"). This Statement of Additional
Information is incorporated in its entirety into the Prospectus. No investment
in shares of a Fund should be made without first reading such Fund's Prospectus.
Copies of the Prospectus may be obtained by writing the Company, P.O. Box
219022, Kansas City, Missouri, 64141-6022, or by telephoning toll free (800)
OMAHA-03. Capitalized terms used but not defined herein have the same meanings
as in the Prospectus.

<PAGE>
TABLE OF CONTENTS
-----------------
PAGE

THE COMPANY ..............................................................B-1

INVESTMENT OBJECTIVES, POLICIES, AND RISKS................................B-1

Additional Information on Portfolio Instruments......................B-1
Investment Restrictions.............................................B-13
Portfolio Turnover..................................................B-16

NET ASSET VALUE..........................................................B-16

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................B-19

MANAGEMENT OF THE COMPANY ...............................................B-20

Directors and Officers..............................................B-20
Investment Advisers.................................................B-22
Portfolio Transactions..............................................B-25
Banking Regulations.................................................B-27
Administrator/Fund Accountant.......................................B-28
Expenses............................................................B-29
Distributor.........................................................B-30
Administrative Services Plan........................................B-32
Custodian...........................................................B-33
Transfer Agency Services............................................B-33
Auditors............................................................B-34
Legal Counsel.......................................................B-34
Codes of Ethics.....................................................B-34

ADDITIONAL INFORMATION...................................................B-35

Organization and Capital Structure..................................B-35
Shareholder Meetings................................................B-36
Ownership of Shares.................................................B-36
Vote of a Majority of the Outstanding Shares........................B-37
Additional Tax Information..........................................B-37
Yield of the Money Market Fund......................................B-38
Yield of the Fixed Income Fund and the Short/Intermediate Fund......B-39
Calculation of Total Return.........................................B-39
Distribution Rates..................................................B-40
Performance Comparisons.............................................B-40
Miscellaneous.......................................................B-41
Financial Statements................................................B-41

FINANCIAL STATEMENTS

APPENDIX.................................................................A-1

<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

THE COMPANY

First Omaha Funds, Inc. (the "Company") is an open-end management
investment company which currently offers seven diversified investment
portfolios: the Money Market Fund, the Short/Intermediate Fund, the Fixed Income
Fund, the Balanced Fund, the Equity Fund, the Growth Fund and the Small Cap
Value Fund.

INVESTMENT OBJECTIVES, POLICIES, AND RISKS

ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS
-----------------------------------------------

The following policies supplement the investment objective, policies and
risks of each Fund as set forth in the Prospectus for such Fund.

BANK OBLIGATIONS. Each of the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund, may invest in
bank obligations such as bankers' acceptances, certificates of deposit, and
demand and time deposits.

Bankers' acceptances are negotiable drafts or bills of exchange typically
drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity. Bankers' acceptances
invested in by the Funds will be those guaranteed by domestic and foreign banks
having, at the time of investment, capital, surplus, and undivided profits in
excess of $100,000,000 (as of the date of their most recently published
financial statements).

Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return. Certificates of deposit and
demand and time deposits will be those of domestic and foreign banks and savings
and loan associations, if (a) at the time of investment the depository
institution has capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of its most recently published financial
statements), or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation.

The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund may also invest in Eurodollar Certificates
of Deposit, which are U.S. dollar denominated certificates of deposit issued by
offices of foreign and domestic banks located outside the United States; Yankee
Certificates of Deposit, which are certificates of deposit issued by a U.S.
branch of a foreign bank denominated in U.S. dollars and held in the United
States; Eurodollar Time Deposits ("ETDs"), which are U.S. dollar denominated
deposits in a foreign branch of a U. S. bank or a foreign bank; and Canadian
Time Deposits, which are basically the same as ETDs except they are issued by
Canadian offices of major Canadian banks.

B-1
<PAGE>

COMMERCIAL PAPER. Commercial paper consists of unsecured promissory notes
issued by corporations. Except as noted below with respect to variable amount
master demand notes, issues of commercial paper normally have maturities of less
than nine months and fixed rates of return.

The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund may invest in domestic and foreign
commercial paper which must be rated by an NRSRO in one of the top three
categories. In general, investment in lower-rated instruments is more risky than
investment in instruments in higher-rated categories. The Short/Intermediate
Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap
Value Fund may also invest in Canadian commercial paper, which is commercial
paper issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and in Europaper, which is U.S. dollar denominated commercial paper
of a foreign issuer.

Under normal market conditions, the Small Cap Value Fund will invest at least
65% of its total assets in common stocks and securities convertible into common
stocks [such as convertible bonds, convertible preferred stocks, warrants,
options and rights] issued by companies having small market capitalization.

VARIABLE AMOUNT MASTER DEMAND NOTES. Variable amount master demand notes,
in which the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity
Fund, Growth Fund and Small Cap Value Fund may invest, are unsecured demand
notes that permit the indebtedness thereunder to vary and provide for periodic
adjustments in the interest rate according to the terms of the instrument.
Because master demand notes are direct lending arrangements between a Fund and
the issuer, they are not normally traded. Although there is no secondary market
in the notes, a Fund may demand payment of principal and accrued interest at any
time. The Advisers will consider the earning power, cash flow, and other
liquidity ratios of the issuers of such notes and will continuously monitor
their financial status and ability to meet payment on demand. In determining
average weighted portfolio maturity, a variable amount master demand note will
be deemed to have a maturity equal to the longer of the period of time remaining
until the next interest rate adjustment or the period of time remaining until
the principal amount can be recovered from the issuer through demand. No Fund
will invest more than 5% of its assets in such securities.

FOREIGN INVESTMENTS. The Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund may each invest
up to 10% of its assets in foreign securities either directly or through the
purchase of sponsored and unsponsored American Depository Receipts ("ADRs").
Unsponsored ADRs may be less liquid than sponsored ADRs, and there may be less
information available regarding the underlying foreign issuer for unsponsored
ADRs. Investments in securities issued by foreign branches of U.S. banks,
foreign banks, or other foreign issuers, including ADRs, investment companies
that invest in foreign securities and securities purchased on foreign securities
exchanges, may subject the Funds to investment risks that differ in some
respects from those related to investment in obligations of U.S. domestic
issuers or in U.S. securities

B-2
<PAGE>

markets. Such risks include trade balances and imbalances, and related economic
policies, future adverse political, economic, and social developments, possible
imposition of withholding taxes on interest and dividend income, possible
seizure, nationalization, or expropriation of foreign investments or deposits,
currency blockage, less stringent disclosure requirements, the possible
establishment of exchange controls or taxation at the source, or the adoption of
other foreign governmental restrictions. In addition, foreign branches of U.S.
banks, foreign banks and foreign issuers may be subject to less stringent
reserve requirements and to different accounting, auditing, reporting, and
record keeping standards than those applicable to domestic branches of U.S.
banks and U.S. domestic issuers, and securities markets in foreign countries may
be structured differently from and may not be as liquid as the U.S. markets.
Where purchases of foreign securities are made in foreign currencies, a Fund may
incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. Investments
in emerging markets involve even greater risks such as immature economic
structures and different legal systems.

FIXED INCOME SECURITIES. The Equity Fund and Growth Fund may each invest in
fixed income securities. Any fixed income securities in which either of these
Funds invest will be "investment grade," which means that they will be rated at
purchase within the four highest ratings of a nationally recognized rating
organization, such as Moody's Investors Service, Inc. and Standard & Poor's
Corporation; or if unrated, considered by the Fund's investment adviser to be of
comparable quality.

U.S. GOVERNMENT OBLIGATIONS. Each of the Funds may invest in obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, including bills, notes and bonds issued by the U.S. Treasury.
The Money Market Fund may also invest in "stripped" U.S. Treasury obligations
such as Treasury Receipts issued by the U.S. Treasury representing either future
interest or principal payments. Stripped securities are issued at a discount to
their "face value" and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors.

Obligations of certain agencies and instrumentalities of the U.S.
government are supported by the full faith and credit of the U.S. government,
such as those of the Government National Mortgage Association and the
Export-Import Bank of the United States; others, such as those of the Federal
National Mortgage Association, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the Student Loan Marketing
Association and the Federal Home Loan Banks, are supported by the discretionary
authority of the U.S. government to purchase the agency's obligations; and still
others, such as those of the Federal Farm Credit Banks or the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the instrumentality.
No assurance can be given that the U.S. government would provide financial
support to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund and Balanced Fund will invest in the obligations of such agencies or
instrumentalities only when First National believes that the credit risk with
respect thereto is minimal.

B-3
<PAGE>

BONDS. The Short/Intermediate Fund, Fixed Income Fund and Balanced Fund may
each invest in the following short-term obligations: U.S. dollar-denominated
international bonds traded primarily in the United States or abroad; Canadian
bonds; and bonds issued by institutions such as the World Bank, the European
Community, or two or more sovereign governments.

These Funds each also expect to invest in bonds, notes and debentures of a
wide range of U.S. corporate issuers. Such obligations, in the case of
debentures, will represent unsecured promises to pay, and in the case of notes
and bonds, may be secured by mortgages on real property or security interests in
personal property and will in most cases differ in their interest rates,
maturities and times of issuance.

PREFERRED STOCK. The Short/Intermediate Fund and Fixed Income Fund may each
invest up to 15% of their assets, respectively, in preferred stocks. Some of the
preferred stocks in which the Funds invest trade in the over-the-counter market.
These "unlisted preferred stocks" generally trade at a lower volume, which may
limit their liquidity.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. Each Fund may purchase
securities on a "when-issued" or delayed-delivery basis. These transactions are
arrangements in which a Fund purchases securities with payment and delivery
scheduled for a future time. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield and
thereby involve a risk that the yield obtained in the transaction will be less
than that available in the market when delivery takes place. A Fund will
generally not pay for such securities or start earning interest on them until
they are received on the settlement date. When a Fund agrees to purchase
securities on a "when-issued" basis, the Custodian will set aside cash or liquid
portfolio securities equal to the amount of the commitment in a separate
account. Normally, the Custodian will set aside portfolio securities to satisfy
the purchase commitment, and in such a case, such Fund may be required
subsequently to place additional assets in the separate account in order to
assure that the value of the account remains equal to the amount of a Fund's
commitment. Each Fund's commitments to purchase when-issued securities will not
exceed 25% of the value of its total assets absent unusual market conditions. It
may be expected that a Fund's net assets will fluctuate to a greater degree when
it sets aside portfolio securities to cover such purchase commitments than when
it sets aside cash. In addition, because a Fund will set aside cash or liquid
portfolio securities to satisfy its purchase commitments in the manner described
above, a Fund's liquidity and the ability of the Adviser to manage it might be
affected in the event its commitments to purchase "when-issued" securities ever
exceeded 25% of the value of its assets.

When a Fund engages in "when-issued" transactions, it relies on the seller
to consummate the trade. Failure of the seller to do so may result in a Fund
incurring a loss or missing the opportunity to obtain a price or yield
considered to be advantageous. Each of the Funds will engage in "when-issued"
delivery transactions only for the purpose of acquiring portfolio securities
consistent with and in furtherance of the Fund's investment objectives and
policies and not for investment leverage, although such transactions represent a
form of leveraging.

B-4
<PAGE>

MORTGAGE-RELATED SECURITIES. The Short/Intermediate Fund, Fixed Income Fund
and Balanced Fund may, consistent with their respective investment objective and
policies, invest in mortgage-related securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.

Mortgage-related securities, for purposes of such Funds' Prospectus and
this Statement of Additional Information, represent pools of mortgage loans
assembled for sale to investors by various governmental agencies such as the
Government National Mortgage Association and government-related organizations
such as the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, as well as by non-governmental issuers such as commercial
banks, savings and loan institutions, mortgage bankers and private mortgage
insurance companies. Although certain mortgage-related securities are guaranteed
by a third party or otherwise similarly secured, the market value of the
security, which may fluctuate, is not so secured. If a Fund purchases a
mortgage-related security at a premium, that portion may be lost if there is a
decline in the market value of the security whether resulting from changes in
interest rates or prepayments in the underlying mortgage collateral. As with
other interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true, since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment, thereby shortening the
average life of the security and shortening the period of time over which income
at the higher rate is received. Conversely, when interest rates are rising, the
rate of prepayment tends to decrease, thereby lengthening the average life of
the security and lengthening the period of time over which income at the lower
rate is received. For these and other reasons, a mortgage-related security's
average maturity may be shortened or lengthened as a result of interest rate
fluctuations and, therefore, it is not possible to predict accurately the
security's return to the Short/Intermediate Fund, Fixed Income Fund and the
Balanced Fund. In addition, regular payments received in respect of
mortgage-related securities include both interest and principal. No assurance
can be given as to the return the Funds will receive when these amounts are
reinvested.

The Short/Intermediate Fund, Fixed Income Fund and Balanced Fund may also
invest in mortgage-related securities which are collateralized mortgage
obligations structured on pools of mortgage pass-through certificates or
mortgage loans. Mortgage-related securities will be purchased only if rated in
the four highest bond rating categories assigned by one or more appropriate
NRSROs, or, if unrated, which the Advisers deems to present attractive
opportunities and are of comparable quality.

There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the U.S. government. GNMA is a
wholly-owned U.S. government corporation within the Department of Housing and
Urban Development. GNMA certificates also are

B-5
<PAGE>

supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the U.S. government. The FNMA is a government-sponsored organization
owned entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of the principal and interest by FNMA. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCS"). The
FHLMC is a corporate instrumentality of the U.S. government, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the U.S. government or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the U.S. government or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. The FHLMC guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When the FHLMC does not guarantee timely payment of principal,
FHLMC may remit the amount due on account of its guarantee of ultimate payment
of principal at any time after default on an underlying mortgage, but in no
event later than one year after it becomes payable.

As stated in the Prospectus, also included among the mortgage-related
securities that such Funds may purchase are collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs") Certain CMOs
and REMICs are issued by private issuers. Such securities may be eligible for
purchase by the Short/Intermediate Fund, Fixed Income Fund and Balanced Fund if:
(1) the issuer has obtained an exemptive order from the Commission regarding
purchases by investment companies of equity interests of other investment
companies, or (2) such purchase is within the limitations imposed by Section 12
of the Investment Company Act of 1940, as amended (the "1940 Act").

Certain debt securities such as, but not limited to, mortgage-backed
securities, CMOs, asset-backed securities and securitized loan receivables, as
well as securities subject to prepayment of principal prior to the stated
maturity date, are expected to be repaid prior to their stated maturity dates.
As a result, the effective maturity of these securities is expected to be
shorter than the stated maturity. For purposes of compliance with stated
maturity policies and calculation of the Short/Intermediate Fund's and Fixed
Income Fund's weighted average maturity, the effective maturity of such
securities will be used. Depending upon the prevailing market conditions, First
National may purchase debt securities at a discount from face value, which
produces a yield greater than the coupon rate. Conversely, if debt securities
are purchased at a premium over face value, the yield will be lower than the
coupon rate. In making investment decisions, Fist National will consider many
factors other than current yield, including the preservation of capital,
maturity and yield to maturity.

OTHER ASSET-BACKED SECURITIES. The Short/Intermediate Fund, Fixed Income
Fund and Balanced Fund may also invest in interests in pools of receivables,
such as motor vehicle installment purchase obligations (known as Certificates of
Automobile Receivables

B-6
<PAGE>

or CARs) and credit card receivables (known as Certificates of Amortizing
Revolving Debts or CARDs). Such securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in the
underlying pools of assets. Such securities may also be debt instruments which
are also known as collateralized obligations and are generally issued as the
debt of a special purpose entity organized solely for the purpose of owning such
assets and issuing such debt.

Such securities are not issued or guaranteed by the U.S. government or its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities.
Non-mortgage-backed securities will be purchased by the Short/Intermediate Fund,
Fixed Income Fund or Balanced Fund only when rated in one of the four highest
rating categories for such securities by one or more appropriate NRSROs at the
time of purchase. In addition, such securities generally will have remaining
estimated lives at the time of purchase of seven years or less.

The development of these asset-backed securities is at an early state
compared to mortgage-backed securities. While the market for asset-backed
securities is becoming increasingly liquid, the market for mortgage-backed
securities issued by certain private organizations and non-mortgage-backed
securities is not as well developed. The Advisers will limit purchases of
asset-backed securities to securities that are deemed to be readily marketable
by the Advisers at the time of purchase.

Asset-backed securities held by the Short/Intermediate Fund, Fixed Income
Fund or Balanced Fund arise through the grouping by governmental,
government-related and private organizations of loans, receivables and other
assets originated by various lenders. Interests in pools of these assets differ
from other forms of debt securities, which normally provide for periodic payment
of interest in fixed amounts with principal paid at maturity or specified call
dates. Instead, asset-backed securities provide periodic payments which
generally consist of both interest and principal payments.

The estimated life of an asset-backed security may vary with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of an asset-backed security, will be a function
of current market interest rates and other economic and demographic factors.
Since prepayment experience can vary, asset-backed securities may be a less
effective vehicle for locking in high long-term yields. None of these Funds will
invest more than 5% of its assets in such other asset-backed securities.

MEDIUM-GRADE DEBT SECURITIES. As stated in the Prospectus, the
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth
Fund and Small Cap Value Fund may each invest in securities within the four
highest rating groups assigned by one or more appropriate NRSROs, including
securities rated in the fourth highest rating group or, if unrated, judged by
the Advisers to be of comparable quality ("Medium-Grade Securities").

B-7
<PAGE>

As with other fixed-income securities, Medium-Grade Securities are subject
to credit risk and market risk. Market risk relates to changes in a security's
value as a result of changes in interest rates. Credit risk relates to the
ability of the issuer to make payments of principal and interest. Medium-Grade
Securities are considered by Moody's to have speculative characteristics.

Medium-Grade Securities are considered by Moody's and Standard & Poor's to
have some speculative characteristics, and are generally subject to greater
credit risk because issuers are more vulnerable to changes in economic
conditions, higher interest rates or adverse issuer-specific developments which
are more likely to lead to a weaker capacity to make principal and interest
payments than comparable higher-rated debt securities. In addition, the price of
Medium-Grade Securities is generally subject to greater market risk and
therefore reacts more sharply to changes in interest rates. The value and
liquidity of Medium-Grade Securities may be diminished by adverse publicity and
investor perceptions.

Because certain Medium-Grade Securities are traded only in markets where
the number of potential purchasers and sellers, if any, is limited, the ability
of the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund to sell such securities at their fair value
either to meet redemption requests or to respond to changes in the financial
markets may be limited.

Particular types of Medium-Grade Securities may present special concerns.
Some Medium-Grade Securities in which the Short/Intermediate Fund, Fixed Income
Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund may
invest may be subject to redemption or call provisions that may limit increases
in market value that might otherwise result from lower interest rates while
increasing the risk that such Funds may be required to reinvest redemption or
call proceeds during a period of relatively low interest rates.

The credit ratings issued by NRSROs are subject to various limitations. For
example, while such ratings evaluate credit risk, they ordinarily do not
evaluate the market risk of Medium-Grade Securities. In certain circumstances,
the ratings may not reflect in a timely fashion adverse developments affecting
an issuer. For these reasons, the Advisers conduct their own independent credit
analysis of Medium-Grade Securities.

Should subsequent events cause the rating of a debt security purchased by
one of the Funds to fall below the fourth highest rating category, as the case
may be, the Advisers will consider such an event in determining whether that
Fund should continue to hold that security. The Advisers expect that they would
not retain more than 5% of the assets of any Fund in such downgraded securities.
In no event, however, would that Fund be required to liquidate any such
portfolio security where the Fund should suffer a loss on the sale of such
security.

SECURITIES OF OTHER INVESTMENT COMPANIES. Each of the Money Market Fund,
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth
Fund and Small Cap Value Fund may invest in securities issued by other
investment companies. Each of the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund,

B-8
<PAGE>

Growth Fund and Small Cap Value Fund may also invest in Shares of the Money
Market Fund. Each of the Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund
currently intends to limit its investments so that, as determined immediately
after a securities purchase is made: (a) not more than 5% of the value of its
total assets will be invested in the securities of any one investment company;
(b) not more than 10% of the value of its total assets will be invested in the
aggregate in securities of investment companies as a group; and (c) not more
than 3% of the outstanding voting stock of any one investment company will be
owned by any of these Funds. As a shareholder of another investment company, a
Fund would bear, along with other shareholders, its pro rata portion of that
company's expenses, including advisory fees. These expenses would be in addition
to the advisory and other expenses that such Fund bears directly in connection
with its own operations. Investment companies in which a Fund may invest, other
than the Money Market Fund, may also impose a sales or distribution charge in
connection with the purchase or redemption of their shares and other types of
commissions or charges. Such charges will be payable by that Fund and,
therefore, will be borne directly by shareholders. In order to reduce the
imposition of additional fees as a result of investing in shares of the Money
Market Fund, the Advisers, the Administrator and their affiliates will reduce
their fees charged to a Fund by an amount equal to the fees charged by such
service providers based on a percentage of that Fund's assets attributable to
such Fund's investment in the Money Market Fund.

INCOME PARTICIPATION LOANS. The Short/Intermediate Fund, Fixed Income Fund
and Balanced Fund may make or acquire participation in privately negotiated
loans to borrowers. Frequently, such loans have variable interest rates and may
be backed by a bank letter of credit; in other cases they may be unsecured. Such
transactions may provide an opportunity to achieve higher yields than those that
may be available from other securities offered and sold to the general public.

Privately arranged loans, however, will generally not be rated by a credit
rating agency and will normally be liquid, if at all, only through a provision
requiring repayment following demand by the lender. Such loans made by the
Short/Intermediate Fund, Fixed Income Fund and Balanced Fund may have a demand
provision permitting such Fund to require repayment within seven days.
Participation in such loans, however, may not have such a demand provision and
may not be otherwise marketable. To the extent these securities are not readily
marketable, they will be subject to the Fund's 5% limitation on investments in
illiquid securities. Recovery of an investment in any such loan that is illiquid
and payable on demand will depend on the ability of the borrower to meet an
obligation for full repayment of principal and payment of accrued interest
within the demand period, normally seven days or less (unless such Fund
determines that a particular loan issue, unlike most such loans, has a readily
available market). As it deems appropriate, the Company's Board of Directors
will establish procedures to monitor the credit standing of each such borrower,
including its ability to honor contractual payment obligations.

The Short/Intermediate Fund, Fixed Income Fund and Balanced Fund will
purchase income participation loans only if such instruments are, in the opinion
of the Advisers, of comparable quality to securities rated within the four
highest rating groups assigned by one

B-9
<PAGE>

or more appropriate NRSROs. None of these Funds will invest more than 5% of its
assets in such securities.

OTHER LOANS. In order to generate additional income, each Fund (excluding
the Money Market Fund) may, from time to time, lend it portfolio securities to
broker-dealers, banks or institutional borrowers of securities. A Fund must
receive 100% collateral in the form of cash or U.S. government securities. This
collateral will be valued daily by the Advisers. Should the market value of the
loaned securities increase, the borrower must furnish additional collateral to
that Fund. During the time portfolio securities are on loan, the borrower pays
that Fund any dividends or interest received on such securities. Loans are
subject to termination by such Fund or the borrower at any time. While a Fund
does not have the right to vote securities on loan, each Fund intends to
terminate the loan and regain the right to vote if that is considered important
with respect to the investment. In the event the borrower would default in its
obligations, such Fund bears the risk of delay in recovery of the portfolio
securities and the loss of rights in the collateral. A Fund will enter into loan
agreements only with broker-dealers, banks or other institutions that the
Advisers have determined are creditworthy under guidelines established by the
Company's Board of Directors.

REPURCHASE AGREEMENTS. Securities held by each of the Funds may be subject
to repurchase agreements. Under the terms of a repurchase agreement, a Fund
would acquire securities from member banks of the Federal Deposit Insurance
Corporation and/or registered broker-dealers which the Advisers deem
credit-worthy under guidelines approved by the Company's Board of Directors,
subject to the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price would generally equal the price
paid by a Fund plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. Securities subject to repurchase agreements will be of the same type
and quality as those in which such Fund may invest directly. The seller under a
repurchase agreement will be required to maintain continually the value of
collateral held pursuant to the agreement at not less than the repurchase price
(including accrued interest) plus the transaction costs, including loss of
interest, that such Fund reasonably could expect to incur if the seller
defaults. This requirement will be continually monitored by the Advisers If the
seller were to default on its repurchase obligation or become insolvent, a Fund
holding such obligation would suffer a loss to the extent that the proceeds from
a sale of the underlying portfolio securities were less than the repurchase
price under the agreement, or to the extent that the disposition of such
securities by such Fund were delayed pending court action. Additionally, there
is no controlling legal precedent confirming that a Fund would be entitled, as
against a claim by such seller or its receiver or trustee in bankruptcy, to
retain the underlying securities, although the Board of Directors of the Company
believes that, under the regular procedures normally in effect for custody of a
Fund's securities subject to repurchase agreements and under federal laws, a
court of competent jurisdiction would rule in favor of the Company if presented
with the question. Securities subject to repurchase agreements will be held by
that Fund's custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to be
loans by a Fund under the 1940 Act.

B-10
<PAGE>

REVERSE REPURCHASE AGREEMENTS. As discussed in the Prospectus, each of the
Funds may borrow funds for temporary purposes by entering into reverse
repurchase agreements in accordance with that Fund's investment restrictions.
Pursuant to such agreements, a Fund would sell portfolio securities to financial
institutions such as banks and broker-dealers, and agree to repurchase the
securities at a mutually agreed-upon date and price. Each Fund intends to enter
into reverse repurchase agreements only to avoid otherwise selling securities
during unfavorable market conditions to meet redemptions. At the time a Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account assets such as U.S. government securities or other liquid,
high grade debt securities consistent with such Fund's investment restrictions
having a value equal to the repurchase price (including accrued interest), and
will subsequently continually monitor the account to ensure that such equivalent
value is maintained at all times. Reverse repurchase agreements involve the risk
that the market value of the securities sold by a Fund may decline below the
price at which a Fund is obligated to repurchase the securities and that the
buyer may default on its obligation to sell such securities back to a Fund
Reverse repurchase agreements are considered to be borrowings by a Fund under
the 1940 Act.

Except as otherwise disclosed to the Shareholders of a Fund, the Company
will not execute portfolio transactions through, acquire portfolio securities
issued by, make savings deposits in, or enter into repurchase or reverse
repurchase agreements with the Advisers, the Administrator, or their affiliates,
and will not give preference to the Advisers' correspondents with respect to
such transactions, securities, savings deposits, repurchase agreements and
reverse repurchase agreements.

ILLIQUID SECURITIES. Each Fund may invest up to 5% of its net assets in
illiquid securities (i.e., securities that cannot be disposed of within seven
days in the normal course of business at approximately the amount at which the
Fund has valued the securities). The Board of Directors has the ultimate
authority to determine which securities are liquid or illiquid for purposes of
this limitation. Certain securities ("restricted securities") exempt from
registration or issued in transactions exempt from registration under the
Securities Act of 1933, as amended ("Securities Act") (securities that may be
resold pursuant to Rule 144A or Regulation S under the Securities Act), may be
considered liquid. The Board has delegated to the Advisers the day-to-day
determination of the liquidity of a security, although it has retained oversight
and ultimate responsibility for such determinations. Although no definite
quality criteria are used, the Board of Directors has directed the Advisers to
look to such factors as (a) the nature of the market for a security (including
the institutional private or international resale market), (b) the terms of
these securities or other instruments allowing for the disposition to a third
party or the issuer thereof (e.g., certain repurchase obligations and demand
instruments), (c) the availability of market quotations (e.g., for securities
quoted in PORTAL system), and (d) other permissible relevant factors. Certain
securities, such as repurchase obligations maturing in more than seven days, are
currently considered illiquid.

Restricted securities may be sold only in privately negotiated or other
exempt transactions, qualified non-U.S. transactions, such as under Regulation
S, or in a public offering with respect to which a registration statement is in
effect under the Securities Act of 1933. Where registration is required, a Fund
may be obligated to pay all or part of the

B-11
<PAGE>

registration expenses and a considerable time may elapse between the decision to
sell and the sale date. If, during such period, adverse market conditions were
to develop, that Fund might obtain a less favorable price than prevailed when it
decided to sell. Restricted securities will be priced at fair value as
determined in good faith by the Board of Directors. If through the appreciation
of illiquid securities or the depreciation of liquid securities, a Fund should
be in a position where more than 5% of the value of its net assets is invested
in illiquid assets, including restricted securities which are not readily
marketable, that Fund will take such steps as it deems advisable, if any, to
reduce the percentage of such securities to 5% or less of the value of its net
assets.

TEMPORARY DEFENSIVE POSITIONS. During temporary defensive periods as
determined by First National, the Equity Fund, Growth Fund and Small Cap Value
Fund may each hold up to 100% of its total assets in high-quality short-term
obligations including domestic bank certificates of deposit, bankers'
acceptances and repurchase agreements secured by bank instruments. However, to
the extent that a Fund is so invested in debt obligations, such Fund may not
achieve its investment objective.

OVER-THE-COUNTER MARKET. The Balanced Fund, Equity Fund, Growth Fund and
Small Cap Value Fund may each invest in common stocks, some of which will be
traded in the over-the-counter market. In contrast to the securities exchanges,
the over-the counter market is not a centralized facility which limits trading
activity to securities of companies which initially satisfy certain defined
standards. Any security can be traded in the over-the-counter market as long as
an individual or firm is willing to make a market in the security. Because there
are no minimum requirements for a company's assets or earnings or the number of
its stockholders in order for its stock to be traded over-the-counter, there is
great diversity in the size and profitability of companies whose stocks trade in
this market, ranging from relatively small little-known companies to
well-established corporations. When the Fund disposes of such a stock it may
have to offer the shares at a discount from recent prices or sell the shares in
small lots over an extended period of time.

SMALL-AND-MEDIUM-CAPITALIZATION COMPANIES. The Growth Fund may invest in
securities issued by companies with relatively smaller or medium capitalization.
Some securities issued by companies with relatively smaller market
capitalizations in general present greater risks than securities issued by
companies with larger market capitalization and may be subject to large, abrupt
or erratic fluctuations in price due, in part, to such factors as the issuer's
dependence upon key personnel, the lack of internal resources, the inability to
obtain funds from external sources, and dependence on a new product or service
for which there is no firmly established market. Therefore, the net asset value
of the Fund could be influenced by such price fluctuations in the securities of
small-capitalization companies held by the Fund. An emphasis on appreciation and
medium-capitalization companies may result in even greater risk than is inherent
in other equity investment alternatives. The Fund will likely have somewhat
greater volatility than the stock market generally, as measured by the S&P 500
Index.

B-12
<PAGE>

INVESTMENT RESTRICTIONS
-----------------------

FUNDAMENTAL RESTRICTIONS

Each Fund's investment objective is a fundamental policy and may not be
changed without a vote of the holders of a majority of such Fund's outstanding
Shares. In addition, the following investment restrictions may be changed with
respect to a particular Fund only by a vote of the majority of the outstanding
Shares of that Fund (as defined under "ADDITIONAL INFORMATION - Vote of a
Majority of the Outstanding Shares").

Each of the Funds will not:

1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities, if,
immediately after such purchase: (a) more than 5% of the value of such Fund's
total assets would be invested in such issuer; or (b) such Fund would hold
more than 10% of the outstanding voting securities of such issuer, except
that up to 25% of the value of a Fund's total assets may be invested without
regard to such limitations. There is no limit to the percentage of assets
that may be invested in U.S. Treasury bills, notes, or other obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

2. Purchase any securities which would cause more than 25% of the value of a
Fund's total assets at the time of purchase to be invested in securities of
one or more issuers conducting their principal business activities in the
same industry, provided that: (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and repurchase agreements secured by obligations of the
U.S. government or its agencies or instrumentalities; (b) wholly-owned
finance companies will be considered to be in the industries of their parents
if their activities are primarily related to financing the activities of
their parents; and (c) utilities will be divided according to their services.
For example, gas, gas transmission, electric and gas, electric and telephone
will each be considered a separate industry.

3. Borrow money or issue senior securities, except that each Fund may borrow
from banks or enter into reverse repurchase agreements for temporary purposes
in amounts up to 10% of the value of its total assets at the time of such
borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of the value of such Fund's total
assets at the time of its borrowing. A Fund will not purchase securities
while its borrowings (including reverse repurchase agreements) exceed 5% of
its total assets.

4. Make loans, except that each Fund may purchase or hold debt instruments and
lend portfolio securities in accordance with its investment objective and
policies, and may enter into repurchase agreements.

In addition, the Money Market Fund may not:

B-13
<PAGE>

1. Purchase securities on margin, sell securities short, participate on a
joint or joint and several basis in any securities trading account, or
underwrite the securities of other issuers, except to the extent that such Fund
may be deemed to be an underwriter under certain securities laws, in the
disposition of "restricted securities" acquired in accordance with that Fund's
investment objectives and policies;

2. Purchase or sell commodities, commodity contracts (including futures
contracts), oil, gas or mineral exploration or development programs, or real
estate (although investments by such Fund in marketable securities of companies
engaged in such activities are not hereby precluded);

3. Write or purchase put or call options;

4. Invest in any issuer for purposes of exercising control or management;
and

5. Purchase or retain securities of any issuer if the officers or Directors
of the Company or the officers or directors of its investment adviser owning
beneficially more than one-half of 1% of the securities of such issuer together
own beneficially more than 5% of such securities.

In addition, none of the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund and Small Cap Value Fund may:

1. Purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases of portfolio securities;

2. Engage in any short sales;

3. Underwrite the securities issued by other persons, except to the extent
that a Fund may be deemed to be an underwriter under certain securities laws in
the disposition of "restricted securities";

4. Purchase or sell commodities or commodities contracts, unless and until
disclosed in the current Prospectus of the Funds; and

5. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities are not prohibited by this
restriction).

In addition, the Growth Fund may not:

1. Act as an underwriter or distributor of securities other than shares of
the Fund except to the extent that the Fund's participation as part of a group
in bidding or by bidding alone, for the purchase of permissible investments
directly from an issuer or selling shareholders for the Fund's own portfolio may
be deemed an underwriting, and except to the extent that the Fund may be deemed
an underwriter under the Securities Act, by virtue of disposing of portfolio
securities;

2. Purchase or sell commodities or commodities contracts unless acquired as
a result of ownership of securities or other instruments (but this shall not
prevent the Fund

B-14
<PAGE>

from engaging in transactions involving foreign currencies, futures contracts,
options on futures contracts or options, or from investing in securities or
other instruments backed by physical commodities); and

3. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities are not prohibited by this
restriction).

NON-FUNDAMENTAL RESTRICTIONS

The following additional investment restrictions may be changed by the
Board of Directors without the vote of a majority of the outstanding Shares of a
Fund:

Each Fund may not:

1. Purchase or otherwise acquire any securities if, as a result, more than
5% of that Fund's net assets would be invested in securities that are illiquid.

2. Purchase securities of other investment companies except (a) to the
extent permitted by the Investment Company Act of 1940 and the rules,
regulations and orders thereunder, or (b) in connection with a merger,
consolidation, acquisition or reorganization.

In addition, the Money Market Fund may not buy common stocks or voting
securities.

Irrespective of fundamental investment restriction number 1 above, and
pursuant to Rule 2a-7 under the 1940 Act, the Money Market Fund will, with
respect to 100% of its total assets, limit its investment in the securities of
any one issuer in the manner provided by such Rule.

The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund
and Small Cap Value Fund may not:

1. Purchase participations or direct interests in oil, gas or other mineral
exploration or development programs (although investments by such Funds in
marketable securities of companies engaged in such activities are not prohibited
in this restriction);

2. Purchase or retain the securities of an issuer if, to the knowledge of
such Fund's management, the officers or Directors of the Company, and the
officers or directors of First National, who each owns beneficially more than
.5% of the outstanding securities of such issuer, together own beneficially more
than 5% of such securities.

The Growth Fund may not:

1. Purchase securities on margin (except to obtain such short-term credits
as are necessary for the clearance of purchases and sales of securities) or
participate in a joint trading account; provided, however, the Fund may (i)
purchase or sell futures contracts, (ii) make initial and variation margin
payments in connection with purchases or sales of futures contracts or options
on futures contracts, (iii) write or invest in put or call options on securities
and indexes, and (iv) engage in foreign currency transactions. (The "bunching"

B-15
<PAGE>

of orders for the sale or purchase of marketable portfolio securities with other
accounts under the management of FNC to save brokerage costs on average prices
among them is not deemed to result in a securities trading account.);

2. Acquire illiquid securities if, as a result of such investments, more
than five percent (5%) of the Fund's net assets (taken at market value at the
time of each investment) would be invested in illiquid securities. "Illiquid
securities" means securities that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which the Fund has
valued the securities; and

3. Engage in any short sales.

If any percentage restriction described above (and in the Prospectus) is
satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in asset value will not constitute a
violation of such restriction. However, should a change in net asset value or
other external events cause a Fund's investment in illiquid securities to exceed
such Fund's limit on its investments in such securities, that Fund will act to
cause the aggregate amount of illiquid securities to come within such limit as
soon as reasonably practicable. In such an event, however, a Fund would not be
required to liquidate any portfolio securities where such Fund would suffer a
loss on the sale of such securities.

PORTFOLIO TURNOVER

The portfolio turnover rate for each of the Funds is calculated by dividing
the lesser of a Fund's purchases or sales of portfolio securities for the year
by the monthly average value of the portfolio securities. The Commission
requires that the calculation exclude all securities whose remaining maturities
at the time of acquisition were one year or less.

Because the Money Market Fund intends to invest entirely in securities with
remaining maturities of less than one year and because the Commission requires
such securities to be excluded from the calculation of portfolio turnover rate,
the portfolio turnover with respect to the Money Market Fund is expected to be
zero percent for regulatory purposes. The portfolio turnover rate may vary
greatly from year to year as well as within a particular year, and may also be
affected by cash requirements for redemptions of Shares. Portfolio turnover will
not be a limiting factor in making investment decisions.

NET ASSET VALUE

As indicated in the Prospectus, the net asset value of each Fund is
determined and the Shares of each Fund are priced each Business Day at the close
of trading on the New York Stock Exchange ("NYSE") (typically 4 p.m. Eastern
time), except for Money Market Fund shares, which are priced at 2 p.m. A
"Business Day" is a day on which the NYSE is open for trading. A Fund is not
required to calculate NAV if none of its shares were bought or sold that day.
The NYSE will not open in observance of the following holidays: New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

B-16
<PAGE>

Shares are purchased at their net asset value per share. Each Fund, except
the Money Market Fund, calculates its net asset value (NAV) as follows:

NAV= (VALUE OF FUND ASSETS)-(FUND LIABILITIES)
-----------------------------------------
Number of Outstanding Shares

VALUATION OF THE MONEY MARKET FUND. A security listed or traded on a
recognized stock exchange or quoted on Nasdaq is valued at its last sale price
prior to the time when assets are valued on the principal exchange on which the
security is traded or on Nasdaq. If no sale is reported at that time the most
current bid price will be used. All other securities for which over-the-counter
market quotations are readily available are valued at the most current bid
price. Where quotations are not readily available, the Funds' investments are
valued at fair value as determined by management and approved in good faith by
the Directors. Debt securities which will mature in more than 60 days are valued
at prices furnished by a pricing service approved by the Directors subject to
review and determination of the appropriate price by the Company, whenever a
furnished price is significantly different from the previous day's furnished
price. Securities which will mature in 60 days or less are valued at amortized
cost, which approximates market value.

Generally, trading in foreign securities, as well as U.S. Government
securities and certain cash equivalents and repurchase agreements, is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value of the
shares of the Funds are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the NYSE.
Occasionally, events affecting the value of such securities and such exchange
rates may occur between the times at which they are determined and at the close
of the NYSE, which will not be reflected in the computation of net asset value.
If during such periods, events occur which materially affect the value of such
securities, the securities will be valued at their fair market value as
determined by management and approved in good faith by the Directors.

For purposes of determining the net asset value per share of each Fund,
all assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars furnished by a pricing
service approved by the Directors.

A Fund's net asset value per share will be calculated separately from the
per share net asset value of the other funds of the Company. "Assets belonging
to" a fund consist of the consideration received upon the issuance of shares of
the particular fund together with all net investment income, earnings, profits,
realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of the Company not belonging to a particular series. Each Fund will be
charged with the direct liabilities of that Fund and with a share of the general
liabilities of the Company's Funds.

B-17
<PAGE>

The Money Market Fund has elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act, which the Directors of the
Company believe fairly reflects the market-based net asset value per share This
involves valuing an instrument at its cost initially 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. This
method may result in periods during which value, as determined by amortized
cost, is higher or lower than the price the Money Market Fund would receive if
it sold the instrument. The value of securities in the Money Market Fund can be
expected to vary inversely with changes in prevailing interest rates.

Pursuant to Rule 2a-7, the Money Market Fund will maintain a
dollar-weighted average portfolio maturity appropriate to the Money Market
Fund's objective of maintaining a stable net asset value per share, provided
that the Money Market Fund will not purchase any security with a remaining
maturity of more than 397 days (13 months) (securities subject to repurchase
agreements may bear longer maturities) nor maintain a dollar-weighted average
portfolio maturity which exceeds 90 days. The Company's Board of Directors has
also undertaken to establish procedures reasonably designed, taking into account
current market conditions and the investment objective of the Money Market Fund,
to stabilize the net asset value per share of the Money Market Fund for purposes
of sales and redemptions at $1.00; although the Fund seeks to maintain a net
asset value per share at $1.00, there can be no assurance that net asset value
will not vary. These procedures include review by the Directors, at such
intervals as they deem appropriate, to determine the extent, if any, to which
the net asset value per share of the Money Market Fund calculated by using
available market quotations deviates from $1.00 per Share. In the event such
deviation exceeds one-half of one percent, Rule 2a-7 requires that the Board of
Directors promptly consider what action, if any, should be initiated. If the
Directors believe that the extent of any deviation from the Money Market Fund's
$1.00 amortized cost price per Share may result in material dilution or other
unfair results to new or existing investors, they will take such steps as they
consider appropriate to eliminate or reduce, to the extent reasonably
practicable, any such dilution or unfair results. These steps may include
selling portfolio instruments prior to maturity, shortening the average
portfolio maturity, withholding or reducing dividends, reducing the number of
the Money Market Fund's outstanding Shares without monetary consideration, or
utilizing a net asset value per share determined by using available market
quotations.

VALUATION OF THE OTHER FUNDS.
-----------------------------

Each security traded on a U.S. national securities exchange or quoted on
the Nasdaq National Market System ordinarily will be valued on the basis of its
last sale price on the date of valuation or, if there are no sales that day, at
the closing bid quotation. Securities traded on exchanges located outside of the
U.S. will be valued on the basis of the price as of the most recent close of
business on the exchange preceding the time of valuation. Debt securities (other
than short-term instruments are valued at prices furnished by a pricing service.
Securities and other assets for which quotations are not readily available are
valued at their fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of the
Directors of the Company. Short-term securities are valued at either amortized
cost or original cost plus accrued interest, which approximates current value.

B-18
<PAGE>
ADDITIONAL PURCHASE, REDEMPTION, AND EXCHANGE INFORMATION

PURCHASES. Shares of the Funds are sold on a continuous basis by the
Distributor, and the Shares may be purchased either directly from the Funds or
through Banks or certain other institutions. Investors purchasing Shares of the
Funds may include officers, directors, or employees of the Advisers or their
correspondent or affiliated banks.

Customers of First National and FNC or their correspondent or affiliated
banks (collectively, the "Banks") may purchase shares in connection with the
requirements of their qualified accounts maintained at the Banks. In the case of
the Money Market Fund, these procedures may include instructions under which a
customer's account is "swept" automatically no less frequently than weekly and
amounts in excess of a minimum amount agreed upon by the Bank and the customer
are invested in shares of the Money Market Fund.

Shares of the Funds purchased through the Banks acting in a fiduciary,
advisory, custodial, or other similar capacity on behalf of customers will
normally be held of record by the Banks. With respect to shares of the Funds so
sold, it is the responsibility of the particular Bank to transmit purchase or
redemption orders to the Company and to deliver federal funds for purchase on a
timely basis. Beneficial ownership of shares will be recorded by the Banks and
reflected in the account statements provided by the Banks to customers. A Bank
will exercise voting authority for those shares for which it is granted
authority by the customer.

The Banks and other institutions may impose particular customer account
requirements in connection with investments in the Funds, such as minimum
account size or minimum account thresholds above which excess cash balances may
be invested in Fund shares. In addition, depending on the terms of the
particular account used to purchase shares of the Funds, the Banks or other
institutions may impose charges against the account. These charges could include
asset allocation fees, account maintenance fees, sweep fees, compensatory
balance requirements, transaction charges or other charges based upon account
transactions, assets or income. The charges will reduce the net return on an
investment in a Fund. Investors should contact their institutions with respect
to these fees and the particular institution's procedures for purchasing or
redeeming shares. This Prospectus should be read in conjunction with any such
information received from the Banks or the institutions.

EXCHANGES. If shares are purchased through a Bank or other institution, the
shares may be exchanged only in accordance with the instructions and procedures
pertaining to that account.

REDEMPTIONS. If a customer has agreed with a Bank to maintain a minimum
balance in his or her account with the Bank, and the balance in that account
falls below that minimum, the customer may be obligated to redeem, or the Bank
may redeem on behalf of

B-19
<PAGE>

the customer, all or part of the customer's shares of a Fund to the extent
necessary to maintain the required minimum balance. The minimum balance required
by any such Bank or other institution may be higher than the minimum required by
the Company.

The Transfer Agent reserves the right to reject any signature guarantee if:
(1) it has reason to believe that the signature is not genuine; (2) it has
reason to believe that the transaction would otherwise be improper; or (3) the
guarantor institution is a broker or dealer that is neither a member of a
clearing corporation nor maintains net capital of at least $100,000.

The Company may suspend the right of redemption or postpone the date of
payment for Shares of a Fund during any period when (a) trading on the New York
Stock Exchange is restricted by applicable rules and regulations of the
Commission, (b) the New York Stock Exchange is closed for other than customary
weekend and holiday closings, (c) the Commission has by order permitted such
suspension, or (d) an emergency exists as a result of which (i) disposal by the
Company of securities owned by it is not reasonably practical, or (ii) it is not
reasonably practical for the Company to determine the fair value of its net
assets.

The Company may redeem Shares of the Money Market Fund involuntarily if
redemption appears appropriate in light of the Company's responsibilities under
the 1940 Act. See "NET ASSET VALUE -Valuation of the Money Market Fund" in this
Statement of Additional Information.

MANAGEMENT OF THE COMPANY

DIRECTORS AND OFFICERS
----------------------

Overall responsibility for management of the Company rests with its Board
of Directors, which is elected by the Shareholders of the Company. The Company
will be managed by the Directors in accordance with the laws of Nebraska
governing corporations. The Directors elect the officers of the Company to
supervise actively its day-to-day operations.

The names of the Directors and officers of the Company, their addresses,
and principal occupations during the past five years are as follows:

POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE WITH THE COMPANY DURING PAST 5 YEARS
---------------------- ---------------- -------------------
David P. Greer* President and Trust Officer, First
3623 South 107th Avenue Director National Bank of Omaha
Omaha, NE 68124 (1987-1994); presently
Age: 70 retired

B-20
<PAGE>

Randy M. Pavlick Vice President - General
207 East Buffalo Street Secretary Counsel, Sunstone Financial
Suite 400 Group, Inc. (1993-present);
Milwaukee, WI 53202 previously in private law
Age: 40 practice with Foley &
Lardner, a law firm
Administration Services

Paul Schmanski Vice President Manager, Sunstone Financial
207 East Buffalo Street and Treasurer Group, Inc. (1995-present);
Suite 400 previously Staff Accountant,
Milwaukee, WI 53202 PriceWaterhouse LLP
Age: 30 (1991-1995)

Joseph Caggiano Director Vice Chairman (1967-1993),
302 South 36th Street Chief Financial Officer
Omaha, NE 68131 (1967-1991) and
Age: 74 Vice-Chairman Emeritus
(1993-present) of Bozell Jacobs

Harry A. Koch, Jr.* Director President and Treasurer, The
P.O. Box 6215 Harry A. Koch Co., insurance
Omaha, NE 68106 agents and brokers
Age: 70 (1958-present)

Robert A. Reed Director President and Chief
2600 Dodge Street Executive Officer,
Omaha, NE 68131 Physicians Mutual Insurance
Age: 60 Company and Physicians Life
Insurance Company
(1974-present)

Gary Witt Director President and Shareholder,
11837 Miracle Hills Drive Lutz & Company, P.C.,
Suite 100 Certified Public Accountants
Omaha, NE 68154 (1987-present)
Age: 48

-----------------
* Denotes "interested directors" as defined in the 1940 Act.

<PAGE>

The following table sets forth certain information concerning compensation
paid by the Company to its Directors and officers in the fiscal year ending
March 31, 2000.

PENSION OR
RETIREMENT
BENEFITS
AGGREGATE ACCRUED ESTIMATED
COMPENSATION AS PART OF ANNUAL TOTAL
NAME AND TO BE PAID COMPANY RETIREMENT COMPENSATION
POSITION BY COMPANY EXPENSES BENEFITS FROM COMPANY
-------- ------------ ---------- ---------- ------------
David P. Greer
President and
Director $7,500 -0- -0- $7,500

Randy M. Pavlick
Secretary -0- -0- -0- -0-

Paul Schmanski
Vice President and
Treasurer -0- -0- -0- -0-

Joseph Caggiano
Director $6,000 -0- -0- $6,000

Harry A. Koch, Jr.
Director $6,000 -0- -0- $6,000

Robert A. Reed
Director $6,000 -0- -0- $6,000

Gary Witt
Director $7,500 -0- -0- $7,500

As of March 31, 2000, the Company's officers and Directors, as a group,
owned less than 1% of each Fund's outstanding Shares. As of March 31, 2000, the
Funds were not aware of any entities that owned a controlling interest
(ownership of greater than 25%) or beneficially owned or owned of record 5% of
more of the outstanding shares of any Fund.

The officers of the Company receive no compensation directly from the
Company for performing the duties of their offices. The officers of the Company
may, from time to time, serve as officers of other investment companies.
Sunstone Financial Group, Inc. receives fees from each of the Funds for acting
as administrator and the Administrator or its affiliates may receive fees from
each of the Funds pursuant to the Distribution and Service Plan and the
Administrative Services Plan described below. Messrs. Pavlick and Schmanski are
employees of, and are compensated by, the Administrator.

INVESTMENT ADVISERS
-------------------

Investment advisory services are provided to the Money Market Fund,
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund by First National Bank of Omaha, Omaha, Nebraska ("First
National"), pursuant to the Investment Advisory Agreement dated as of December
20, 1994 as amended as of December 5, 1995 and June 4, 1996 (the "Investment
Advisory Agreement"). First National is a wholly owned subsidiary of First
National of Nebraska, Inc., a Nebraska corporation.

Investment advisory services are provided to the Growth Fund by FNC Trust
Group, n.a. ("FNC") pursuant to the Investment Advisory Agreement dated as of
February 3, 1998 (the "Growth Fund Advisory Agreement"). FNC is a wholly owned
subsidiary of First National Colorado, Inc. which is a wholly owned subsidiary
of First National of Nebraska, Inc., a Nebraska corporation.

B-22
<PAGE>

Under the Advisory Agreements, the Advisers have agreed to provide
investment advisory services as described in the Prospectus of the Funds. For
the services provided and expenses assumed pursuant to the Advisory Agreements,
Money Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced Fund,
Equity Fund and Small Cap Value Fund, pay the Advisers a fee equal to the lesser
of (a) a fee computed daily and paid monthly, at an annual rate of twenty-five
one-hundredths of one percent (.25%), fifty one-hundredths of one percent (.50%)
sixty one-hundredths of one percent (.60%), seventy-five one-hundredths of one
percent (.75%), seventy-five one-hundredths of one percent (.75%), seventy-five
one-hundredths of one percent (.75%), eighty-five one-hundredths of one percent
(.85%), respectively, of the average daily net assets of that Fund, or (b) such
other fee as may be agreed upon from time to time in writing by the Company and
the Advisers. The Advisers may periodically voluntarily reduce all or a portion
of their advisory fees with respect to any Fund, which reduction would increase
the net income of that Fund available for distribution as dividends.

Set forth below are the advisory fees, net of fee waivers, First National earned
for the three previous fiscal periods ended March 31.

Fiscal Year Ended March 31, 1998:

FUND ADVISORY FEES FEE WAIVERS
(NET OF FEE WAIVERS)

Money Market $275,046 $0
Short/Intermediate $89,772 $9,975
Fixed Income $422,736 $38,430
Balanced $68,635 $78,438
Equity $2,151,925 $0
Small Cap Value $33,894 $62,141

B-23
<PAGE>
Fiscal Year Ended March 31, 1999:

FUND ADVISORY FEES FEE WAIVERS
(NET OF FEE WAIVERS)

Money Market $268,858 $0
Short/Intermediate $94,050 $10,450
Fixed Income $450,197 $40,927
Equity $140,350 $51,037
Balanced $2,111,587 $0
Small Cap Value $76,625 $53,638

Fiscal Year Ended March 31, 2000:

FUND ADVISORY FEES FEE WAIVERS
(NET OF FEE WAIVERS)

Money Market $281,295 $204,180
Short/Intermediate $87,890 $9,766
Fixed Income $366,311 $33,301
Balanced $105,551 $38,382
Equity $1,252,545 $0
Small Cap Value $54,023 $37,817

Set forth below are the advisory fees, net of fee waivers, FNC earned for the
two previous fiscal periods ended March 31.

Fiscal Year Ended March 31, 1999:

FUND ADVISORY FEES FEE WAIVERS
(NET OF FEE WAIVERS)
Growth $61,210 $30,604

Fiscal Year Ended March 31, 2000:

FUND ADVISORY FEES FEE WAIVERS
(NET OF FEE WAIVERS)
Growth $85,189 $42,595

Unless otherwise terminated, the Advisory Agreements remain in effect from
year to year for successive annual periods ending on June 30 if, as to each
Fund, such continuance

B-24
<PAGE>

is approved at least annually by the Company's Board of Directors or by vote of
a majority of the outstanding Shares of that Fund (as defined under "ADDITIONAL
INFORMATION" in the Statement of Additional Information), and a majority of the
Directors who are not parties to the Advisory Agreements or interested persons
(as defined in the 1940 Act) of any party to the Advisory Agreements by votes
cast in person at a meeting called for such purpose. The Advisory Agreements are
terminable as to a Fund at any time on 60 days written notice without penalty by
the Directors, by vote of a majority of the outstanding Shares of that Fund, or
by the Advisers. The Advisory Agreements also terminate automatically in the
event of any assignment, as defined in the 1940 Act.

The Advisory Agreements provide that the Advisers shall not be liable for
any error of judgement or mistake of law or for any loss suffered by a Fund in
connection with the performance of the Advisory Agreements, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Advisers in the performance of
their duties, or from reckless disregard by the Advisers of their duties and
obligations thereunder.

First National also serves as the Funds' custodian as more fully discussed
under "Custodian" below.

PORTFOLIO TRANSACTIONS
----------------------

Pursuant to the Advisory Agreements, the Advisers determine, subject to the
general supervision of the Board of Directors of the Company and in accordance
with each Fund's investment objective and restrictions, which securities are to
be purchased and sold by a Fund, and which brokers are to be eligible to execute
such Fund's portfolio transactions. Purchases and sales of fixed income debt
securities acquired for the Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund usually are principal transactions in which portfolio
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. Purchases from underwriters of
other portfolio securities for the Funds generally include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers may include the spread between the bid and asked price.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally principal
transactions with dealers. With respect to the over-the-counter market, the
Company, where possible, will deal directly with dealers who make a market in
the securities involved except in those circumstances where better price and
execution are available elsewhere.

Allocation of transactions, including their frequency, to various brokers
and dealers is determined by the Advisers in their best judgment and in a manner
deemed fair and reasonable to Shareholders. The primary consideration is prompt
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, brokers and dealers who provide supplemental investment
research to the Advisers may receive orders for transactions on behalf of the
Funds. Information so received is in addition to and not in lieu of services
required to be performed by the Advisers and does not reduce the advisory fees
payable to the Advisers by the Funds. Such information may be useful to the
Advisers

B-25
<PAGE>

in serving a Fund and other clients and, conversely, supplemental information
obtained by the placement of business of other clients may be useful to the
Advisers in carrying out their obligations to each of the Funds. The Advisers
may authorize a Fund to pay a commission in excess of the commission another
broker-dealer would have charged if the Advisers determine in good faith that
such commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed either in terms of that
particular transaction or the Advisers' overall responsibilities to the accounts
they manage.

While the Advisers generally seek competitive commissions, the Company may
not necessarily pay the lowest commission available on each brokerage
transaction, for reasons discussed above. For the three previous fiscal years
ending on March 31, the Funds paid the following brokerage commissions on their
respective total transactions:

Fiscal Period Ended March 31, 1998

FUND BROKERAGE COMMISSIONS TOTAL TRANSACTIONS

Balanced $11,362 $15,999,858
Equity $90,644 $168,119,274
Small Cap Value $18,033 $13,224,031

Fiscal Period Ended March 31, 1999

FUND BROKERAGE COMMISSIONS TOTAL TRANSACTIONS

Balanced $15,578 $19,848,197
Equity $245,701 $202,491,981
Growth $43,980 $32,671,469
Small Cap Value $22,005 $10,475,475

Fiscal Period Ended March 31, 2000

FUND BROKERAGE COMMISSIONS TOTAL TRANSACTIONS

Balanced $18,569 $28,300,615
Equity $327,538 $194,132,653
Growth $41,244 $28,068,161
Small Cap Value $20,148 $14,139,889

During the fiscal year ended March 31, 2000, the Funds did not direct
brokerage transactions to brokers because of research services provided.

Except as otherwise disclosed to the Shareholders of the Funds and as
permitted by applicable laws, rules and regulations, the Company will not, on
behalf of any of the Funds, execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Advisers, the Distributor,
or their affiliates, and will not give preference to the Advisers'

B-26
<PAGE>

correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.

Investment decisions for each Fund are made independently from those for
the other Funds of the Company, any other investment company or account managed
by the Advisers. Any such other fund, investment company or account may also
invest in the same securities as the Company. When a purchase or sale of the
same security is made at substantially the same time on behalf of a Fund and
another investment company or account, the transaction will be averaged as to
price, and available investments will be allocated as to amount in a manner
which the Advisers believe to be equitable to the Fund and such other investment
company or account. In some instances, this investment procedure may adversely
affect the price paid or received by a Fund or the size of the position obtained
by a Fund. To the extent permitted by law, the Advisers may aggregate the
securities to be sold or purchased for a Fund with those to be sold or purchased
for the other investment companies or accounts in order to obtain best
execution. As provided by the Advisory Agreements, in making investment
recommendations for each of the Funds, the Advisers will not inquire or take
into consideration whether an issuer of securities proposed for purchase or sale
by the Company is a customer of the Advisers, their parent or subsidiaries or
affiliates and, in dealing with its customers, the Advisers, their parent,
subsidiaries, and affiliates will not inquire or take into consideration whether
securities of such customers are held by the Funds.

BANKING REGULATIONS
-------------------

Prior to November, 1999, various judicial and administrative
interpretations had interpreted Federal law, including the Federal
Glass-Steagall Act, as limiting the mutual fund activities of certain banks and
bank holding companies. The Gramm-Leach-Bliley Financial Modernization Act was
passed in November, 1999 and effectively repeals the Glass-Steagall Act.

The Advisers believe that they possessed, prior to the repeal of the
Glass-Steagall Act, and continue to possess, the legal authority to perform the
services for each of the Funds contemplated by the Prospectus, this Statement of
Additional Information, the Advisory Agreements, the Custodian Agreement and the
Servicing Agreement without violation of applicable statutes and regulations.
The Advisers have been advised by their counsel that counsel believes that such
laws should not prevent the Advisers from providing the services required of
them under the Advisory Agreements, the Custodian Agreement, and the Servicing
Agreement. Future changes in either Federal or state statutes and regulations
relating to the permissible activities of banks or bank holding companies and
the subsidiaries or affiliates of those entities, as well as further judicial or
administrative decisions or interpretations of present and future statutes and
regulations, could prevent or restrict the Advisers from continuing to perform
such services for the Company. Depending upon the nature of any changes in the
services which could be provided by the Advisers, the Board of Directors of the
Company would review the Company's relationship with the Advisers and consider
taking all action necessary in the circumstances.

B-27
<PAGE>

ADMINISTRATOR/FUND ACCOUNTANT
-----------------------------

Sunstone Financial Group, Inc. serves as administrator and fund accountant
(the "Administrator") to each of the Funds pursuant to the Amended and Restated
Administration and Fund Accounting Agreement dated November 4, 1997 and amended
February 3, 1998 (the "Administration Agreement"). The Administrator and its
affiliates provide administration, distribution and fund accounting services to
other investment companies.

Under the Administration Agreement, the Administrator has agreed to provide
office space, facilities, equipment and personnel, compile data for and prepare
with respect to the Funds timely Notices to the Commission required pursuant to
Rule 24f-2 under the Act and semi-annual reports on Form N-SAR; prepare and file
all federal income and excise tax returns and state income tax returns (and such
other required tax filings as may be agreed to by the parties) other than those
required to be made by the Funds' custodian or transfer agent; prepare
compliance filings relating to the registration of the securities of the Funds
pursuant to state securities laws with the advice of Funds' counsel; perform
securities valuations; determine the income and expense accruals of the Funds;
calculate daily net asset values and income factors of the Funds; maintain all
general ledger accounts and related subledgers; prepare financial statements for
the Annual and Semi-Annual Reports required pursuant to Section 30(d) under the
Act; review the Registration Statement for the Funds (on Form N-1A or any
replacement therefor) and any amendments thereto, and proxy materials; prepare
and monitor each Fund's expense accruals and cause all appropriate expenses to
be paid from Fund assets on proper authorization from the Funds; assist in the
acquisition of First Omaha Funds' fidelity bond required by the Act, monitor the
amount of the bond and make the necessary Commission filings related thereto;
check each Fund's compliance with the policies and limitations relating to
portfolio investments as set forth in the Prospectus, Statement of Additional
Information and Articles of Incorporation and monitor each Fund's status as a
regulated investment company under Subchapter M of the Internal Revenue Code, as
amended; maintain, and/or coordinate with the other service providers the
maintenance of, the accounts, books and other documents required pursuant to
Rule 31a-1(a) and (b) under the Act; and generally assist in each Fund's
administrative operations.

The Administrator receives a fee from each Fund for its services as
administrator and fund accountant and expenses assumed pursuant to the
Administration Agreement, equal to the lesser of a fee calculated daily and paid
periodically, at the annual rate of twenty one-hundredths of one percent (.20%)
of that Fund's average daily net assets subject to a minimum fee of $300,000 for
the Money Market Fund, Short/Intermediate Fund, Fixed Income Fund and Equity
Fund in the aggregate and to a minimum fee of $50,000 for each of the Balanced
Fund, Growth Fund and Small Cap Value Fund or such other fee as may be agreed
upon in writing by the Company and the Administrator. The Administrator may
periodically voluntarily reduce all or a portion of its fee with respect to a
Fund in order to increase the net income of one or more of the Funds available
for distribution as dividends.

Unless otherwise terminated as provided therein, the Administration
Agreement remains in effect from year to year for successive annual periods
ending on April 10. The Administration Agreement is terminable with respect to a
particular Fund only upon mutual

B-28
<PAGE>

agreement of the parties to the Administration Agreement and on not less than 90
days' notice by the Company's Board of Directors or by the Administrator.

The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or any loss suffered by any
of the Funds in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or from the reckless
disregard by the Administrator of its obligations and duties thereunder. For the
fiscal period ended March 31, 1998, the Administrator earned $183,788, $33,264,
$127,827, $35,000, $477,003 and $30,000, net of fee waivers of $36,249, $6,635,
$25,895, $15,000, $96,844 and $20,000 for the Money Market Fund,
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund, respectively. For the fiscal period ended March 31, 1999, the
Administrator earned $172,610, $33,545, $131,378, $40,958, $451,890, $33,333 and
$37,663 net of fee waivers of $42,477, $8,255, $32,330, $10,079, $111,200,
$16,667 and $12,337 for the Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund,
respectively. For the fiscal period ended March 31, 2000, the Administrator
earned $274,579, $31,039, $105,846, $30,499, $265,412, $33,517 and $35,566, net
of fee waivers of $113,801, $8,023, $27,358, $7,883, $68,600, $16,757 and
$14,708 for the Money Market Fund, Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund, respectively.

EXPENSES
--------

The Advisory Agreements provide that if total expenses borne by any of the
Funds in any fiscal year exceed expense limitations imposed by applicable state
securities regulations, the Advisers will reimburse that Fund by the amount of
such excess in proportion to its respective fees. As of the date of this
Statement of Additional Information, the Funds are not aware of any state
imposed expense limitation applicable to the Funds. Fees imposed upon customer
accounts by the Advisers or their affiliated or correspondent banks for cash
management services are not included within Fund expenses for purposes of any
such expense limitation.

The Advisers and the Administrator each bear all expenses in connection
with the performance of their services as investment advisers and administrator,
respectively, other than the cost of securities (including brokerage
commissions, and issue and transfer taxes, if any) purchased for a Fund. Each
Fund will bear the following expenses relating to its operations: organizational
expenses; taxes; interest; any brokerage fees and commissions; fees and expenses
of the Directors of the Company; Commission fees; state securities qualification
fees; costs of preparing and printing Prospectuses for regulatory purposes and
for distribution to its current Shareholders; outside auditing and legal
expenses; advisory and administration fees; fees and out-of-pocket expenses of
the Administrator, Custodian and Transfer Agent; costs for independent pricing
service; certain insurance premiums; costs of maintenance of the Company's
existence; costs of Shareholders' and Directors' reports and meetings;
distribution expenses incurred pursuant to the Distribution and

B-29
<PAGE>

Service Plan described below; and any extraordinary expenses incurred in a
Fund's operation.

DISTRIBUTOR
-----------

Sunstone Distribution Services, LLC serves as agent for each of the Funds in the
distribution of its Shares pursuant to a Distribution Agreement dated January 1,
1997 and amended February 3, 1998 (the "Distribution Agreement"). Prior to that
date, Sunstone Financial Group, Inc., an affiliate of Sunstone Distribution
Services, served as agent for each of the Funds in the distribution of its
Shares. Unless otherwise terminated, the Distribution Agreement remains in
effect from year to year for successive annual periods ending on June 30 if
approved at least annually (a) by the Company's Board of Directors or by the
vote of a majority of the outstanding shares of the Company, and (b) by the vote
of a majority of the Directors of the Company who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of any
party to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement may be terminated
in the event of any assignment, as defined in the 1940 Act.

The Distributor solicits orders for the sale of Shares, advertises and pays
the costs of advertising, office space and the personnel involved in such
activities. The Distributor receives no compensation under the Distribution
Agreement with the Company, but may receive compensation under the Distribution
and Service Plan described below.

As described in the Prospectus, the Company has adopted a Distribution and
Service Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act under which
each Fund is authorized to make payments to banks, including the Advisers, other
institutions and broker-dealers, (with all of the foregoing organizations being
referred to as "Participating Organizations") for providing distribution or
shareholder service assistance. Payments to such Participating Organizations may
be made pursuant to agreements entered into upon the recommendation of the
Distributor. The Plan authorizes each Fund to make payments in an amount not in
excess, on an annual basis, of 0.25% of the average daily net assets of that
Fund.

Payments may be made by the Funds under the Plan for the purpose of
financing any activity primarily intended to result in the sales of shares of
the Funds as determined by the Board of Directors. Such activities typically
include advertising; compensation for sales and sales marketing activities of
financial services agents and others, such as dealers or distributors;
shareholder account servicing; production and dissemination of prospectuses and
sales and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the extent
any activity is one which the Funds may finance without a Plan, the Funds may
also make payments to finance such activity outside of the Plan and not subject
to its limitations. Payments under the Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.

B-30
<PAGE>

For the fiscal period ended March 31, 2000, no 12b-1 payments were made under
the Plan.

As required by Rule 12b-1, the Plan was approved by the sole shareholder of
each of the Funds and by the Board of Directors, including a majority of the
Directors who are not interested persons of any of the Funds and who have no
direct or indirect financial interest in the operation of the Plan (the
"Independent Directors"). The Plan may be terminated as to a Fund by vote of a
majority of the Independent Directors, or by vote of majority of the outstanding
Shares of that Fund. Any change in the Plan that would materially increase the
distribution cost to a Fund requires Shareholder approval. The Directors review
quarterly a written report of such costs and the purposes for which such costs
have been incurred. The Plan may be amended by vote of the Directors including a
majority of the Independent Directors, cast in person at a meeting called for
that purpose. For so long as the Plan is in effect, selection and nomination of
those Directors who are not interested persons of the Company shall be committed
to the discretion of such disinterested persons. All agreements with any person
relating to the implementation of the Plan may be terminated at any time on 60
days' written notice without payment of any penalty, by vote of a majority of
the Independent Directors or by a vote of the majority of the outstanding Shares
of any of the Funds. The Plan will continue in effect for successive one-year
periods, provided that each such continuance is specifically approved (a) by the
vote of a majority of the Independent Directors, and (b) by a vote of a majority
of the entire Board of Directors cast in person at a meeting called for that
purpose. The Board of Directors has a duty to request and evaluate such
information as may be reasonably necessary for them to make an informed
determination of whether the Plan should be implemented or continued. In
addition, the Directors in approving the Plan must determine that there is a
reasonable likelihood that the Plan will benefit each Fund and its Shareholders.

The Board of Directors of the Company believes that the Plan is in the best
interests of each Fund since it encourages Fund growth. As a Fund grows in size,
certain expenses, and therefore total expenses, per Share, may be reduced and
overall performance per Share may be improved.

ADMINISTRATIVE SERVICES PLAN
----------------------------

As described in the Prospectus, the Company has also adopted an
Administrative Services Plan (the "Services Plan") under which each Fund is
authorized to pay certain financial institutions, including First National, its
correspondent and affiliated banks, and the Distributor (a "Service
Organization"), to provide certain ministerial, recordkeeping, and
administrative support services to their customers who own of record or
beneficially Shares in a Fund, such as processing dividend and distribution
payments from the Funds on behalf of customers, providing periodic statements to
customers showing their positions in the shares of the Funds, providing
sub-accounting with respect to shares beneficially owned by such customers and
providing customers with a service that invests the assets of their accounts in
shares of the Funds pursuant to specific or pre-authorized instructions Payments
to such service organizations are made pursuant to Servicing Agreements between
the Company and the Service Organization. The Services Plan authorizes each Fund
to make payments to Service Organizations in an amount, on an annual basis, of
up to

B-31
<PAGE>

0.25% of the average daily net assets of that Fund. The Services Plan has been
approved by the Board of Directors of the Company, including a majority of the
Directors who are not interested persons of the Company (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of
the Services Plan or in any Servicing Agreements thereunder (the "Disinterested
Directors"). The Services Plan may be terminated as to a Fund by a vote of a
majority of the Disinterested Directors. The Directors review quarterly a
written report of the amounts expended pursuant to the Services Plan and the
purposes for which such expenditures were made. The Services Plan may be amended
by a vote of the Directors, provided that any material amendments also require
the vote of a majority of the Disinterested Directors. For so long as the
Services Plan is in effect, selection and nomination of those Disinterested
Directors shall be committed to the discretion of the Company's Disinterested
Directors. All Servicing Agreements may be terminated at any time without the
payment of any penalty by a vote of a majority of the Disinterested Directors.
The Services Plan will continue in effect for successive one-year periods,
provided that each such continuance is specifically approved by a majority of
the Board of Directors, including a majority of the Disinterested Directors.

As authorized by the Services Plan, the Company has entered into a
Servicing Agreement with the First National pursuant to which First National has
agreed to provide certain administrative support services in connection with
Shares of the Funds owned of record or beneficially by its customers. Such
administrative support services may include, but are not limited to, (a)
processing dividend and distribution payments from a Fund on behalf of
customers; (b) providing periodic statements to its customers showing their
positions in the Shares; (c) arranging for bank wires; (d) responding to routine
customer inquiries relating to services performed by First National; (e)
providing sub-accounting with respect to the Shares beneficially owned by First
National's customers or the information necessary for sub-accounting; (f) if
required by law, forwarding shareholder communications from a Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to its customers; (g) aggregating and
processing purchase, exchange, and redemption requests from customers and
placing net purchase, exchange, and redemption orders for customers; and (h)
providing customers with a service that invests the assets of their account in
the Shares pursuant to specific or preauthorized instructions. In consideration
of such services, the Company, on behalf of each Fund, except the Money Market
Fund and the Growth Fund, may pay First National a monthly fee, computed at the
annual rate of .10% of the average aggregate net asset value of Shares of that
Fund held during the period by customers for whom First National has provided
services under the Servicing Agreement. For the fiscal period ended March 31,
1998, First National earned fees of $9,126, $36,899, $8,360, $130,664 and
$5,302, net of fee waivers of $9,125, $36,900, $8,361, $130,685 and $5,302 for
the Short/Intermediate Fund, Fixed Income Fund, Equity Fund, Balanced Fund and
Small Cap Value Fund, respectively. For the fiscal period ended March 31, 1999,
First National earned fees of $9,325, $37,997, $10,276, $125,882 and $7,074, net
of fee waivers of $9,332, $38,004, $10,294, $125,905 and $7,077 for the
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund, respectively. For the fiscal period ended March 31, 2000, First
National earned fees of $8,849, $30,064, $7,759, $71,658 and $5,059, net of fee
waivers of $8,837, $30,051, $7,732, $71,677 and

B-32
<PAGE>

$5,053 for the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity
Fund and Small Cap Value Fund, respectively.

In addition, the Company, on behalf of a Fund, may enter into, from time to
time, other Servicing Agreements with other service organizations pursuant to
which such Service Organizations will provide similar services as those
discussed above.

CUSTODIAN
---------

First National Bank of Omaha (the "Custodian"), One First National Center,
Omaha, Nebraska 68102, in addition to serving as an investment adviser and
Transfer Agent to the Funds, also serves as custodian to each of the Funds
pursuant to the Custodian Agreement dated December 20, 1994 and amended as of
December 5, 1995, June 4, 1996 and February 3, 1998 (the "Custodian Agreement").
The Custodian's responsibilities include safeguarding and controlling each
Fund's cash and securities, handling the receipt and delivery of securities, and
collecting interest on each Fund's investments. In consideration of such
services, each Fund pays the Custodian a fee, computed daily and paid monthly,
at the annual rate of .03% of such Fund's average daily net assets.

For the fiscal period ended March 31, 1998, the Custodian earned custody
fees of $33,005 for the Money Market Fund and earned and waived $5,986, $23,063,
$5,874, $86,097 and $3,383, for the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund and Small Cap Value Fund, respectively. For the
fiscal period ended March 31, 1999, the Custodian earned Custody fees of $32,263
for the Money Market Fund and earned and waived $6,270, $24,556, $7,655,
$84,463, $3,673 and $4,598 for the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund, respectively.
For the fiscal period ended March 31, 2000, the Custodian earned custody fees of
$58,257 for the Money Market Fund and earned and waived $5,859, $19,981, $5,757,
$50,102, $5,111 and $3,241 for the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund, respectively.

In the opinion of the staff of the Commission, since the custodian is
serving as both an investment adviser and custodian of the Funds, the Funds and
the Custodian are subject to the requirements of Rule 17f-2 under the 1940 Act,
and therefore the Funds and the Custodian will comply with the requirements of
such rule.

TRANSFER AGENCY SERVICES
------------------------

First National Bank of Omaha (the "Transfer Agent") serves as Transfer
Agent and dividend disbursing agent for the Company pursuant to the Transfer
Agency Agreement dated December 20, 1994 and amended as of December 5, 1995,
June 4, 1996 and February 3, 1998. Pursuant to such Agreement, the Transfer
Agent, among other things, performs the following services in connection with
each Fund's shareholders of record: maintenance of shareholder records for each
of the Company's shareholders of record; processing shareholder purchase and
redemption orders; processing transfers and exchanges of shares of the Company
on the shareholder files and records; processing dividend payments and
reinvestments; and assistance in the mailing of shareholder reports

B-33
<PAGE>

and proxy solicitation materials. For such services the Transfer Agent receives
a fee based on the number of shareholders of record. Pursuant to authority in
the Transfer Agency Agreement, the Transfer Agent has appointed as sub-transfer
agent DST Systems, Inc., 210 West 10th Street, Kansas City, Missouri 64105. DST
Systems, Inc. performs the principal services as transfer agent for the Funds
under such Agreement and receives a fee from the Transfer Agent for such
services.

In the fiscal period ended March 31, 1998, Transfer Agent fees of $24,948,
$24,957, $24,970, $24,341, $32,300 and $24,354 were incurred by the Money Market
Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and
Small Cap Value Fund, respectively. In the fiscal period ended March 31, 1999,
Transfer Agent fees of $27,391, $26,479, $27,193, $26,512, $36,175, $17,237 and
$26,434 were incurred by the Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund,
respectively. In the fiscal period ended March 31, 2000, Transfer Agent fees of
$26,908, $25,317, $25,959, $25,369, $29,807, $24,688 and $25,243 were incurred
by the Money Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced
Fund, Equity Fund, Growth Fund and Small Cap Value Fund, respectively.

AUDITORS
--------

The financial statements of each Fund as of March 31, 2000 appearing in this
Statement of Additional Information have been audited by KPMG LLP, Two Central
Park Plaza, Suite 1501, Omaha, Nebraska 68102, as set forth in their report
appearing elsewhere herein, and are included in reliance upon such report and on
the authority of such firm as experts in auditing and accounting.

LEGAL COUNSEL
-------------

Cline, Williams, Wright, Johnson & Oldfather, 1900 FirsTier Bank Building,
Lincoln, Nebraska 68508, is counsel to the Company.

CODES OF ETHICS
---------------

Rule 17j-1 under the Investment Company Act is designed to prevent abuses that
could occur as a result of conflicts of interest arising out of personal trading
by persons involved with or with access to information about a fund's investment
activities. The Company and FNC Trust Group have each adopted Codes of Ethics
regarding personal investing by their personnel pursuant to Rule 17j-1 under the
Investment Company Act. The Company's Code of Ethics requires First National
Bank of Omaha personnel who are "access persons" of any Fund within the meaning
of Rule 17j-1 to comply with the Company's Code of Ethics adopted pursuant to
Rule 17j-1. The Company's Code therefore applies to First National Bank of Omaha
personnel who are access persons under Rule 17-1. Each Code of Ethics permits
personnel to invest in securities, including securities that may be purchased or
held by a Fund.

B-34
<PAGE>
Sunstone Distribution Services LLC has also adopted a Code of Ethics regarding
personal investing by its personnel. The Code permits personnel to invest in
securities, including securities that may be purchased or held by a Fund.

ADDITIONAL INFORMATION

The Company was organized as a Nebraska corporation on October 12, 1994. The
Company and its Money Market Fund, Short/Intermediate Fund, Fixed Income Fund
and Equity Fund, were organized to acquire the assets and continue the business
of the corresponding substantially identical investment portfolios of The
Sessions Group, an Ohio business trust. On April 10, 1995 the Company acquired
approximately $326 million of assets from The Sessions Group in return for an
equivalent dollar amount of shares of the Company. The Small Cap Value Fund was
added and became effective on March 29, 1996. The Balanced Fund became effective
on July 29, 1996. The Growth Fund became effective on April 1, 1998. Each Share
of a Fund represents an equal proportionate interest in that Fund with other
shares of the same Fund, and is entitled to such dividends and distributions out
of the income earned on the assets belonging to that Fund as are declared at the
discretion of the Directors.

ORGANIZATION AND CAPITAL STRUCTURE
----------------------------------

The Company is authorized to issue a total of 1,000,000,000 Shares of
common stock in series with a par value of $.00001 per share. Six Hundred
million of these Shares have been authorized by the Board of Directors to be
issued in series designated for the existing seven Funds. The Board of Directors
may authorize additional Shares in series, or may divide the Shares of any
existing or new series into two or more subseries or classes, all without
shareholder approval.

All Shares, when issued, will be fully paid and non-assessable and will be
redeemable and freely transferable. All Shares have equal voting rights. They
can be issued as full or fractional Shares. A fractional Share has pro rata the
same kind of rights and privileges as a full Share. The Shares possess no
preemptive or conversion rights.

Each Share of a Fund has one vote (with proportionate voting for fractional
shares) irrespective of the relative net asset value of the Shares. On some
issues, such as the election of directors, all Shares of the Fund vote together
as one series. Cumulative voting is authorized. This means that in a vote for
the election of directors, Shareholders may multiply the number of Shares they
own by the number of directorships being filled and then allocate such votes to
one or more directors. On issues affecting only a particular Fund, the Shares of
the affected Fund vote as a separate series. An example of such an issue would
be a fundamental investment restriction pertaining to only one Fund.

The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common shares relating to new
investment portfolios or to subdivide existing series of shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for example,
in the sales load, Rule 12b-1 fees or service plan fees

B-35
<PAGE>

applicable to different classes of shares offered by a particular Fund. Such an
arrangement could enable the Company to tailor its marketing efforts to a
broader segment of the investing public with a goal of attracting additional
investments in the Funds.

While the Board of Directors of the Company has not created any such subseries
or classes, it could do so in the future without shareholder approval. However,
any such creation of classes would require compliance with regulations the
Commission has adopted under the 1940 Act.

SHAREHOLDER MEETINGS
--------------------

It is possible that the Company will not hold annual or periodically
scheduled regular meetings of Shareholders. Annual meetings of Shareholders will
not be held unless called by the Shareholders pursuant to the Nebraska Business
Corporation Act or unless required by the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder. Special meetings of the
Shareholders may be held, however, at any time and for any purpose, if called by
(a) the Chairman of the Board, the President and two or more directors, (b) by
one or more Shareholders holding ten percent or more of the Shares entitled to
vote on matters presented to the meeting, or (c) if the annual meeting is not
held within any thirteen month period, the local district court, upon
application of any Shareholder, may summarily order that such meeting be held.
In addition, the 1940 Act requires a Shareholder vote for all amendments to
fundamental investment policies, investment advisory contracts and amendments
thereto.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the approval
of principal underwriting contracts, and the election of Directors may be
effectively acted upon by Shareholders of the Company voting without regard to
series.

OWNERSHIP OF SHARES
-------------------

As of June 30, 2000, the Advisers and their affiliates held of record
substantially all of the outstanding Shares of the Funds as agent, custodian,
trustee or investment adviser on behalf of their customers. At such date, First
National Bank of Omaha, One First National Center, Omaha, Nebraska 68102-1596,
and its affiliates held as beneficial owner five percent or more of the
outstanding Shares of the Funds because they possessed sole or shared voting or
investment power with respect to such Shares.

B-36
<PAGE>

VOTE OF A MAJORITY OF THE OUTSTANDING SHARES
--------------------------------------------

As used in the Prospectus and this Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of a Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of Shareholders of such Fund present at a meeting at which the
holders of more than 50% of the votes attributable to Shareholders of record of
that Fund are represented in person or by proxy, or (b) the holders of more than
50% of the outstanding Shares of that Fund.

ADDITIONAL TAX INFORMATION
--------------------------

Each of the Funds of the Company is treated as a separate entity for federal
income tax purposes and each intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for so long as such qualification is in the best interest of such
Fund's Shareholders. Qualification as a regulated investment company under the
Code requires, among other things, that the regulated investment company
distribute to its Shareholders at least 90% of its investment company taxable
income. Each Fund contemplates declaring as dividends 100% of that Fund's
investment company taxable income (before deduction of dividends paid). Because
all of the Money Market Fund's net investment income is expected to be derived
from earned interest and short-term capital gains, it is anticipated that no
part of any distribution will be eligible for the dividends-received deduction
for corporations. The Money Market Fund does not expect to realize any long-term
capital gains and, therefore, does not foresee paying any "capital gains
dividends" as described in the Code. In order to avoid the imposition of an
excise tax, each Fund is required to distribute annually, prior to calendar year
end, 98% of taxable ordinary income on a calendar year basis, 98% of capital
gain net income realized in the 12 months preceding October 31, and the balance
of undistributed taxable ordinary income and capital gain net income from the
prior calendar year. If distributions during the calendar year are less than the
required amounts, that Fund would be subject to a nondeductible 4% excise tax on
the deficiency.

Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located, or
in which it is otherwise deemed to be conducting business, a Fund may be subject
to the tax laws of such states or localities. In addition, if for any taxable
year that Fund does not qualify for the special tax treatment afforded regulated
investment companies, all of its taxable income will be subject to federal tax
at regular corporate rates (without any deduction for distributions to its
Shareholders). In such event, dividend distributions would be taxable to
Shareholders to the extent of earnings and profits, and would be eligible for
the dividends received deduction for corporations.

Foreign taxes may be imposed on a Fund by foreign countries with respect to
its income from foreign securities. Since less than 50% in value of a Fund's
total assets at the end of its fiscal year are expected to be invested in stocks
or securities of foreign corporations, such Fund will not be entitled under the
Code to pass through to its

B-37
<PAGE>

Shareholders their pro rata share of the foreign taxes paid by the Fund. These
taxes will be taken as a deduction by such Fund.

Each Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends paid to any Shareholder who has
provided either an incorrect tax identification number or no number at all, or
who is subject to withholding by the Internal Revenue Service for failure
properly to include on their return payments of interest or dividends.

In addition, to the extent Shareholders receive distributions of income
attributable to investments in repurchase agreements by a Fund, such
distribution may also be subject to state or local taxes.

Information set forth in the Prospectus and this Statement of Additional
Information which relates to federal taxation is only a summary of some of the
important federal tax considerations generally affecting purchasers of Shares of
a Fund. No attempt has been made to present a detailed explanation of the
federal income tax treatment of a Fund or its Shareholders and this discussion
is not intended as a substitute for careful tax planning. Accordingly, potential
purchasers of Shares of a Fund are urged to consult their tax advisers with
specific reference to their own tax situation. In addition, the tax discussion
in the Prospectus and this Statement of Additional Information is based on tax
laws and regulations which are in effect on the date of the Prospectus and this
Statement of Additional Information; such laws and regulations may be changed by
legislative or administrative action.

YIELD OF THE MONEY MARKET FUND
------------------------------

For the seven-day period ended March 31, 2000, the yield and effective
yield, respectively, of the Money Market Fund were 5.66% and 5.82%. For the
30-day period ended March 31, 2000, the yield for such Fund was 5.59%. In the
absence of fee waivers, the yields for the period ended March 31, 2000 would
have been 5.48%, 5.63% and 5.41%, respectively. The yield figures are based on
historical earnings and are not intended to indicate future performance. The
standardized seven-day yield for the Money Market Fund is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account in the Money Market Fund having a balance of
one Share at the beginning of the 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 net
change in the account value of the Money Market Fund includes the value of
additional Shares purchased with dividends from the original Share, dividends
declared on both the original Share and any such additional Shares, and all
fees, other than non-recurring account or sales charges, that are charged to all
Shareholder accounts in proportion to the length of the base period and assuming
the Money Market Fund's average account size. The capital changes to be excluded
from the calculation of the net change in account value are realized gains and
losses from the sale of securities and unrealized appreciation and depreciation.
The 30-day yield and effective yield are calculated as described above except
that the base period is 30 days rather than seven days.

B-38
<PAGE>

The effective yield for the Money Market Fund is computed by compounding
the base period return, as calculated above, by adding 1 to the base period
return raising the sum to a power equal to 365 divided by seven and subtracting
1 from the result.

YIELD OF THE FIXED INCOME FUND AND THE SHORT/INTERMEDIATE FUND
--------------------------------------------------------------

As summarized in the Prospectus under the heading "The Funds," yield of
each of the Short/Intermediate Fund and Fixed Income Fund will be computed by
annualizing net investment income per share for a recent 30-day period and
dividing that amount by such Share's net asset value per share (reduced by any
undeclared earned income expected to be paid shortly as a dividend) on the last
trading day of that period. Net investment income will reflect amortization of
any market value, premium or discount of fixed income securities (except for
obligations backed by mortgages or other assets) and may include recognition of
a pro rata portion of the stated dividend rate of dividend paying portfolio
securities. The yield of each of the Short/Intermediate Fund and the Fixed
Income Fund will vary from time to time depending upon market conditions, the
composition of such Fund's portfolio and operating expenses of the Company
allocated to such Fund. These factors and possible differences in the methods
used in calculating yield, should be considered when comparing a Fund's yield to
yields published for other investment companies and other investment vehicles.
Yield should also be considered relative to changes in the value of a Fund's
shares and to the relative risks associated with the investment objective and
policies of each Fund.

For the 30-day period ended March 31, 2000, the yields for
Short/Intermediate Fund and the Fixed Income Fund were 5.96% and 6.31%,
respectively. In the absence of fee waivers, the yields for the
Short/Intermediate Fund and the Fixed Income Fund would have been 5.79% and
6.17%, respectively.

The yield figures are based on historical earnings and are not intended to
indicate future performance.

CALCULATION OF TOTAL RETURN
---------------------------

As summarized in the Prospectus under the headings "The Funds," average
annual total return is a measure of the change in value of an investment in a
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in such Fund immediately rather than paid to the
investor in cash. Average annual total return will be calculated by: (a) adding
to the total number of Shares purchased by a hypothetical $10,000 investment in
that Fund all additional Shares which would have been purchased if all dividends
and distributions paid during the period had been immediately reinvested; (b)
calculating the value of the hypothetical initial investment of $10,000 as of
the end of the period by multiplying the total number of Shares owned at the end
of the period by the net asset value per share on the last trading day of the
period; (c) assuming redemption at the end of the period; and (d) dividing this
account value for the hypothetical investor by the initial $10,000 investment.
Aggregate total return is a measure of change in value of an investment in a
Fund over the relevant period and is similar to average annual total return
except that the result is not annualized.

B-39
<PAGE>

The Funds may, when citing performance in marketing and sales literature,
include the performance of investment vehicles which were predecessors to the
Funds.

DISTRIBUTION RATES
------------------

The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund may from time to time advertise current
distribution rates which are calculated by dividing the distributions per share
made by a Fund over a 12-month period by the maximum offering price per share.
The calculation of income in the distribution rate includes both income and
capital gain dividends and does not reflect unrealized gains or losses, although
each Fund may also present a distribution rate excluding the effect of capital
gains. The distribution rate differs from the yield, because it includes capital
items which are often non-recurring in nature, whereas yield does not include
such items. Distribution rate information will be accompanied by the
standardized yield and total return data.

PERFORMANCE COMPARISONS
-----------------------

Investors may judge the performance of each of the Funds by comparing them
to the performance of other mutual funds with comparable investment objectives
and policies through various mutual fund or market indices such as those
prepared by Dow Jones & Co., Inc. and Standard & Poor's Corporation and to data
prepared by Lipper Analytical Services, Inc., a widely recognized independent
service which monitors the performance of mutual funds. Comparisons may also be
made to indices or data published in Donoghue's MONEY MARKET REPORT, a
nationally recognized money market fund reporting service, Money Magazine,
Forbes, Barron's, The Wall Street Journal, Morningstar, Inc., Ibbotson
Associates, CDA/Wiesenberger, The New York Times, Business Week, U.S.A. Today
and local periodicals. In addition to performance information, general
information about each of the Funds that appears in a publication such as those
mentioned above may be included in advertisements, sales literature and reports
to Shareholders.

From time to time, each of the Funds may include general comparative
information, such as statistical data regarding inflation, securities indices or
the features or performance of alternative investments, in advertisements, sales
literature and reports to Shareholders. A Fund may also include calculations,
such as hypothetical compounding examples, which describe hypothetical
investment results in such communications. Such performance examples will be
based on an express set of assumptions and are not indicative of performance of
any of the Funds.

Current yields or total return will fluctuate from time to time and are not
necessarily representative of future results. Accordingly, a Fund's yield or
total return may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and total
return are functions of a Fund's quality, composition and maturity, as well as
expenses allocated to such Fund. Fees imposed upon Customer accounts by the
Advisers or their affiliated or correspondent banks for cash management services
will reduce a Fund's effective yield and total return to Customers.

B-40
<PAGE>

MISCELLANEOUS
-------------

The Prospectus and this Statement of Additional Information omit certain of
the information contained in the Registration Statement filed with the
Commission. Copies of such information may be obtained from the commission upon
payment of the prescribed fee.

The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.

FINANCIAL STATEMENTS
--------------------

The following audited financial statements are attached hereto:

Money Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced
Fund, Equity Fund, Growth Fund and Small Cap Value Fund
1. Schedules of Portfolio Investments as of March 31, 2000
2. Statements of Assets and Liabilities as of March 31, 2000
3. Statements of Operations for the period ended March 31, 2000
4. Statements of Changes in Net Assets for the periods ended
March 31, 2000 and 1999
5. Financial Highlights
6. Notes to Financial Statements
7. Independent Auditors' Report

B-41
<PAGE>
APPENDIX

COMMERCIAL PAPER RATINGS. Commercial paper ratings of Standard & Poor's
Corporation ("S&P") are current assessments of the likelihood of timely payment
of debt considered short-term in the relevant market. Commercial paper rated A-1
by S&P indicates that the degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted A-l+. Commercial paper rated A-2 by S&P indicates that capacity for
timely payment on issues is satisfactory. However, the relative degree of safety
is not as high as for issues designated A-1. Commercial paper rated A-3 by S&P
indicates adequate capacity for timely payment. Such paper is, however, more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying the higher designations. Commercial paper rated B by S&P is regarded as
having only speculative capacity for timely payment. Commercial paper rated C by
S&P is regarded as short-term obligations with a doubtful capacity for payment.
Commercial paper rated D by S&P is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due,
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period.

Moody's Investors Service, Inc.'s ("Moody's") commercial paper rating are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. The rating Prime-1 is
the highest commercial paper rating assigned by Moody's. Issuers rated Prime-1
(or supporting institutions) are considered to have a superior capacity for
repayment of senior short-term debt obligations. Prime-1 repayment ability will
often be evidenced by many of the following characteristics: leading market
positions in well established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics of Prime-1 rated issuers, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variations. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is maintained.
Issuers rated Prime-3 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. The effects of industry
characteristics and market composition may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and the requirement for relatively high financial leverage.
Adequate alternate liquidity is maintained. Issuers rated Not Prime do not fall
within any of the Prime rating categories.

Commercial paper rated F-l+ by Fitch Investors Service ("Fitch") is
regarded as having the strongest degree of assurance for timely payments.
Commercial paper rated F-1 by Fitch is regarded as having an assurance of timely
payment only slightly less than the strongest rating, i.e., F-l+. Commercial
paper rated F-2 by Fitch is regarded as having a satisfactory degree of
assurance of timely payment, but the margin of safety is not as great as for
issues

A-1
<PAGE>

assigned F-l+ or F-1 ratings. Commercial paper rated F-3 by Fitch is
regarded as having characteristics suggesting that the degree of assurance for
timely payment is adequate, however, near-term adverse changes could cause these
securities to be rated below investment grade. Commercial paper rated F-S by
Fitch is regarded as having characteristics suggesting a minimal degree of
assurance for timely payment and is vulnerable to near term adverse changes in
financial and economic conditions. Commercial paper rated D by Fitch is in
actual or imminent payment default.

The description of the three highest short-term debt ratings by Duff &
Phelps, Inc. ("Duff") (Duff incorporates gradations of "1+" (one plus) and "1-"
(one minus) to assist investors in recognizing quality differences within the
highest rating category) are as follows. Duff 1+ is regarded as having the
highest certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is outstanding,
and safety is just below risk-free U.S. Treasury short-term obligations. Duff 1
is regarded as having a very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors. Risk factors
are minor. Duff 1- is regarded as having a high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are minor. Duff 2 is regarded as having a good certainty
of timely payment. Liquidity factors and company fundamentals are sound.
Although ongoing funding needs may enlarge total financing requirements, access
to capital markets is good. Risk factors are small. Duff 3 is regarded as having
a satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected. Duff 4 is considered as having
speculative investment characteristics. Liquidity is not sufficient to insure
against disruption in debt service. Operating factors and market access may be
subject to a high degree of variation. Duff 5 indicates that the issuer has
failed to meet scheduled principal and/or interest payments.

Commercial paper rated A1 by IBCA Limited and its affiliate, IBCA Inc.
(collectively "IBCA") is regarded by IBCA as obligations supported by the
highest capacity for timely repayment. Where issues possess a particularly
strong credit feature, a rating of Al+ is assigned. Obligations rated A2 are
supported by a good capacity for timely repayment. Obligations rated A3 are
supported by a satisfactory capacity for timely repayment. Obligations rated B
are those for which there is an uncertainty as to the capacity to ensure timely
repayment. Obligations rated C are those for which there is a high risk of
default or which are currently in default.

The following summarizes the description of the three highest short-term
ratings of Thomson BankWatch, Inc. ("Thomson"). TBW-1 is the highest category
and indicates a very high likelihood that principal and interest will be paid on
a timely basis. TBW-2 is the second highest category indicating that while the
degree of safety regarding timely repayment of principal and interest is strong,
the relative degree of safety is not as high as for issues rated "TBW-1." TBW-3
is the lowest investment grade category and indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.

A-2
<PAGE>

TBW-4 is the lowest rating category and is regarded as non-investment grade
and therefore speculative.

The plus (+) sign is used after a rating symbol to designate the relative
position of an issuer within the rating category.

CORPORATE DEBT RATINGS. A S&P corporate debt rating is a current assessment
of the credit-worthiness of an obligor with respect to a specific obligation.
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest
and repay principal is extremely strong. Debt rated AA has a very strong
capacity to pay interest and to repay principal and differs from the highest
rated issues only in small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to adverse
effects of changes in circumstances and economic conditions than debt in higher
rated categories. Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.

The following summarizes the four highest ratings used by Moody's for
corporate debt. Bonds that are rated Aaa by Moody's are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." 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
that are 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 which make the
long-term risks appear somewhat larger than in Aaa securities. Bonds that are
rated A by Moody's possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future. Bonds that
are rated Baa by Moody's are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Moody's applies numerical modifiers (1, 2, and 3) with respect to bonds
rated Aa through Baa. The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.

A-3
<PAGE>

The following summarizes the four highest long-term debt ratings by Duff.
Debt rated AAA has the highest credit quality. The risk factors are negligible
being only slightly more than for risk-free U.S. Treasury debt. Debt rated AA
has a high credit quality and protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions. Debt rated A
has protection factors that are average but adequate. However, risk factors are
more variable and greater in periods of economic stress. Debt rated BBB has
below average protection factors but is still considered sufficient for prudent
investment. However, there is considerable variability in risk during economic
cycles.

To provide more detailed indications of credit quality, the ratings from AA
to BBB may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.

The following summarizes the four highest long-term debt ratings by Fitch
(except for AAA ratings, plus or minus signs are used with a rating symbol to
indicate the relative position of the credit within the rating category). Bonds
rated AAA are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events. Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated "F-1+". Bonds rated as A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Bonds
rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings for these bonds will fall
below investment grade is higher than for bonds with higher ratings.

The following summarizes IBCA's four highest long-term debt ratings.
Obligations rated AAA are those for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly. Obligations
rated AA are those for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic, or financial conditions may increase investment
risk albeit not very significantly. Obligations rated A are those for which
there is a low expectation of investment risk. Capacity for timely repayment of
principal and interest is strong, although adverse changes in business, economic
or financial conditions may lead to increased investment risk. Obligations rated
BBB are those for which there is currently a low expectation of investment risk.
Capacity for timely repayment of principal and interest is

A-4
<PAGE>

adequate, although adverse changes in business, economic, or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.

The following summarizes Thomson's description of its four highest
long-term debt ratings (Thomson may include a plus (+) or minus (-) designation
to indicate where within the respective category the issue is placed). AAA is
the highest category and indicates that the ability to repay principal and
interest on a timely basis is very high. AA is the second highest category and
indicates a superior ability to repay principal and interest on a timely basis
with limited incremental risk versus issues rated in the highest category. A is
the third highest category and indicates the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
BBB is the lowest investment grade category and indicates an acceptable capacity
to repay principal and interest. Issues rated BBB are, however, more vulnerable
to adverse developments (both internal and external) than obligations with
higher ratings.

MUNICIPAL OBLIGATIONS RATINGS
-----------------------------

The following summarizes the three highest ratings used by Moody's for
state and municipal short-term obligations. Obligations bearing MIG-1 or VMIG-1
designations are of the best quality, enjoying strong protection by established
cash flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing. Obligations rated MIG-2 or VMIG-2 denote high quality
with ample margins of protection although not so large as in the preceding
rating group. Obligations bearing MIG-3 or VMIG-3 denote favorable quality. All
security elements are accounted for but there is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.

S&P SP-1, SP-2, and SP-3 municipal note ratings (the three highest ratings
assigned) are described as follows:

"SP-1": Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.

"SP-2": Satisfactory capacity to pay principal and interest.

"SP-3": Speculative capacity to pay principal and interest.

The following summarizes the four highest ratings used by Moody's for state
and municipal bonds:

"Aaa": Bonds 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.

A-5
<PAGE>
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.

"Aa": Bonds 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 which make the long-term risks
appear somewhat larger than in Aaa securities.

"A": Bonds which possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.

"Baa": Bonds which are considered as medium grade obligations, i.e,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

The following summarizes the four highest ratings used by S&P for state and
municipal bonds:

"AAA": Debt which has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

"AA": Debt which has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small
degree.

"A": Debt which has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.

"BBB": Debt which has adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.

DEFINITIONS OF CERTAIN MONEY MARKET INSTRUMENTS
-----------------------------------------------

Commercial Paper

A-6
<PAGE>

Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.

Certificates of Deposit

Certificates of Deposit are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return.

Bankers' Acceptances

Bankers' acceptances are negotiable drafts or bills of exchange, normally
drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity.

U.S. Treasury Obligations

U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. government.

U.S. Government Agency and Instrumentality Obligations

Obligations of the U.S. government include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of agencies and instrumentalities of
the U.S. government, such as the Government National Mortgage Association, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association, are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Student Loan Marketing Association,
are supported by the discretionary authority of the U.S. government to purchase
the agency's obligations; still others, such as those of the Federal Farm Credit
Banks, are supported only by the credit of the instrumentality. No assurance can
be given that the U. S. government would provide financial support to U.S.
government-sponsored instrumentalities if it is not obligated to do so by law.

A-7
<PAGE>
PART C

Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.

OTHER INFORMATION

ITEM 23. EXHIBITS

a-1 Articles of Incorporation (incorporated by reference to exhibit
1.1 to PEA No. 5 on Form N-1A Registration Statement filed July
23, 1996)

a-2 Amendment to Articles of Incorporation, dated December 19, 1994
(incorporated by reference to exhibit 1.2 to PEA No. 5 on Form
N-1A Registration Statement filed July 23, 1996)

a-3 Amendment to Articles of Incorporation, dated January 31, 1996
(incorporated by reference to exhibit 1.3 to PEA No. 5 on Form
N-1A Registration Statement filed July 23, 1996)

a-4 Amendment to Articles of Incorporation, dated July 29, 1996
(incorporated by reference to exhibit 1.4 to PEA No.6 on Form N-1A
Registration Statement filed December 10, 1996)

a-5 Amendment to Articles of Incorporation, dated July 8, 1998

a-6 Amendment to Articles of Incorporation, dated October 15, 1999

a-7 Amendment to Articles of Incorporation, dated July 24, 2000

b. Bylaws (incorporated by reference to exhibit 2 to PEA No. 5 on
Form N-1A Registration Statement filed July 23, 1996

c. Not applicable.

d-1 Investment Advisory Agreement, as amended (incorporated by
reference to exhibit 5.1 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996)

d-2 Investment Advisory Agreement relating to the First Omaha
Growth Fund (incorporated by reference to exhibit 5.2 to PEA
No. 8 on Form N-1A Registration Statement filed January 9, 1998)

e-1 Distribution Agreement (incorporated by references to exhibit 6
to original Form N-1A Registration Statement filed November 1,
1994) (superceded)
<PAGE>

e-2 Amended Schedule A to the Distribution Agreement by and between
First Omaha Funds, Inc. and Sunstone Financial Group, Inc.
(incorporated by reference to exhibit 6.2 to PEA No. 5 on Form
N-1A Registration Statement filed July 23, 1996) (superceded)

e-3 Distribution Agreement by and between First Omaha Funds, Inc.
and Sunstone Distribution Services, LLC (incorporated by
reference to exhibit 6.3 to PEA No. 7 on Form N-1A Registration
Statement filed July 22, 1997)

e-4 Amended and Restated Schedule A to the Distribution Agreement by
and between the Registrant and Sunstone Distribution Services, LLC
(incorporated by reference to exhibit 6.4 to PEA No. 8 on Form
N-1A Registration Statement filed January 9, 1998)

f. Not applicable

g-1 Custodian Agreement, as amended (incorporated by reference to
exhibit 8.1 to PEA No. 5 on Form N-1A Registration Statement
filed July 23, 1996)

g-2 Amended Schedule A to the Custodian Agreement (incorporated by
reference to exhibit 8.2 to PEA No. 8 on Form N-1A Registration
Statement filed January 9, 1998)

h-1 Administration and Fund Accounting Agreement (incorporated by
reference to exhibit 9.1 to PEA No. 7 on Form N-1A Registration
Statement filed July 22, 1997) (superceded)

h-2 Form of Amended and Restated Schedule A to the Administration
and Fund Accounting Agreement by and between First Omaha Funds,
Inc. and Sunstone Financial Group, Inc. (incorporated by
reference to exhibit 9.2 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996) (superceded)

h-3 Administrative Services Plan and Servicing Agreement
(incorporated by reference to exhibit 9.3 to PEA No. 5 on Form
N-1A Registration Statement filed July 23, 1996)

h-4 Transfer Agency Agreement, as amended (incorporated by
reference to exhibit 9.4 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996)

h-5 Form of Amended and Restated Schedule A to the Transfer Agency
Agreement by and between First Omaha Funds, Inc. and First
National Bank of Omaha (incorporated by reference to exhibit
9.5 to PEA No. 5 on Form N-1A Registration Statement filed July
23, 1996) (superceded)
<PAGE>

h-6 Form of Amended and Restated Servicing Agreement to
Administrative Services Plan (incorporated by reference to
exhibit 9.6 to PEA No. 6 on Form N-1A Registration Statement
filed December 10, 1996)

h-7 Amended and Restated Administration and Fund Accounting
Agreement by and between the Registrant and Sunstone Financial
Group, Inc. (incorporated by reference to exhibit 9.7 to PEA
No. 8 on Form N-1A Registration Statement filed January 9, 1998)

h-8 Amended and Restated Schedule A to the Transfer Agency Agreement
by and between the Registrant and First National Bank of Omaha
(incorporated by reference to exhibit 9.8 to PEA No. 8 on Form
N-1A Registration Statement filed January 9, 1998)

h-9 Amended Appendix A to the Servicing Agreement to Administrative
Services Plan (incorporated by reference to exhibit 9.9 to PEA
No. 8 on Form N-1A Registration Statement filed January 9, 1998)

i. Opinion and Consent of Messrs. Cline, Williams, Wright, Johnson
& Oldfather (incorporated by reference to exhibit 10 to PEA No.
5 on Form N-1A Registration Statement filed July 23, 1996)

j. Consent of Independent Certified Public Accountants

k. Not applicable

l. Subscription Agreement of Miriam M. Allison (incorporated by
reference to exhibit 13 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996)

m Distribution and Service Plan and Related Agreement, as amended
(incorporated by reference to exhibit (m) to PEA No.10 on Form
N-1A Registration Statement filed May 26, 1999)

n. Not applicable

o. Not applicable

p. Code of Ethics of the Registrant and FNC Trust Group

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

None.
<PAGE>

ITEM 25. INDEMNIFICATION

Section 21-2004 (15) of Nebraska Business Corporation Act allows
indemnification of officers and directors of the Registrant under circumstances
set forth therein. The Registrant has made such indemnification mandatory.
Reference is made to Article 8-D of the Articles of Incorporation (Exhibit 1),
Article XIII of the Bylaws of Registrant (Exhibit 2).

The general effect of such provision is to require indemnification of
persons who are in an official capacity with the corporation against judgments,
penalties, fines and reasonable expenses including attorneys' fees incurred by
said person if: (1) the person has not been indemnified by another organization
for the same judgments, penalties, fines and expenses for the same acts or
omissions; (2) the person acted in good faith; (3) the person received no
improper personal benefit; (4) in the case of a criminal proceeding, the person
had no reasonable cause to believe the conduct was unlawful; and (5) in the case
of directors, officers and employees of the corporation, such persons reasonably
believed that the conduct was in the best interest of the corporation, or in the
case of directors, officers or employees serving at the request of the
corporation for another organization, such person reasonably believed that the
conduct was not opposed to the best interests of the corporation. A corporation
is permitted to maintain insurance on behalf of any officer, director, employee
or agent of the corporation, or any person serving as such at the request of the
corporation, against any liability of such person.

Nevertheless, Article 8-D of the Articles of Incorporation prohibits any
indemnification which would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereafter amended and Article XIII of the
Fund's Bylaws prohibits any indemnification inconsistent with the guidelines set
forth in Investment Company Act Releases No. 7221 (June 9, 1972) and No. 11330
(September 2, 1980). Such Releases prohibit indemnification in cases involving
willful misfeasance, bad faith, gross negligence and reckless disregard of duty
and establish procedures for the determination of entitlement to indemnification
and expense advances.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 by the Registrant is against public policy as expressed in
the Act and, therefore, may be unenforceable. In the event that a claim for such
indemnification (except insofar as it provides for the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person and the Securities
and Exchange Commission is still of the same opinion, 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 of whether
or not such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
<PAGE>
In addition to the indemnification provisions contained in the
Registrant's Articles and Bylaws, there are also indemnification and hold
harmless provisions contained in the Investment Advisory Agreement, Distribution
Agreement, Administration and Fund Accounting Agreement and Custodian Agreement.
Finally, the Registrant has also included in its Articles of Incorporation (See
Article X of the Articles of Incorporation (Exhibit 1)) a provision which
eliminates the liability of outside directors to monetary damages for breach of
fiduciary duty by such directors. Pursuant to Neb. Rev. Stat. Section 21-2035
(2), such limitation of liability does not eliminate or limit liability of such
directors for any act or omission not in good faith which involves intentional
misconduct or a knowing violation of law, any transaction from which such
director derived an improper direct or indirect financial benefit, for paying a
dividend or approving a stock repurchase which was in violation of the Nebraska
Business Corporation Act and for any act or omission which violates a
declaratory or injunctive order obtained by the Registrant or its shareholders.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

First National Bank of Omaha ("First National") is the investment adviser
for First Omaha Small Cap Value Fund, First Omaha Equity Fund, First Omaha
Balanced Fund, First Omaha Fixed Income Fund, First Omaha Short/Intermediate
Fixed Income Fund and First Omaha U.S. Government Money Market Fund. FNC Trust
Group, n.a. ("FNC"), a subsidiary of First National Colorado, Inc. is the
investment adviser for the First Omaha Growth Fund. Both First National and
First National Colorado, Inc. are subsidiaries of First National of Nebraska,
Inc., a Nebraska corporation with total assets of approximately $8.6 billion as
of December 31, 1999. The advisers provide a full range of financial and trust
services to businesses, individuals, and government entities. The Advisers serve
Nebraska, as well as other areas of the Midwest. As of December 31, 1999, First
National's Trust Division had approximately $8.5 billion of assets under
administration, including approximately $2.9 billion under management. As of
December 31, 1999, FNC had $34 million of assets under administration, directly
or as agent, including approximately $33 million under management.

To the knowledge of Registrant, none of the directors or officers of the
Adviser is or has been at any time during the past two fiscal years engaged in
any other business, profession, vocation or employment of a substantial nature,
except that certain officers and directors of the Adviser also hold positions
with the Adviser's parent, First National of Nebraska, Inc., or its subsidiaries
or affiliates.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Sunstone Distribution Services, LLC currently serves as distributor of
the shares of Haven Capital Management Trust, Green Century Funds, The
JohnsonFamily Funds, the Marsico Investment Fund, Choice Funds,
e-harmon Funds, RREEF Securities Trust, Lend Lease Funds and LaCrosse
Funds
<PAGE>

(b) To the best of Registrant's knowledge, the directors and executive
officers of Sunstone Distribution Services, LLC, distributor for
Registrant, are as follows:

--------------------------------------------------------------------
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
--------------------------------------------------------------------
Miriam M. Allison President and Member None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
--------------------------------------------------------------------
Peter Hammond Vice President None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
--------------------------------------------------------------------

(c) Commissions and other compensation received, directly or indirectly,
from the Registrant during the fiscal year ended March 31, 2000 by
Registrant's principal underwriter:

---------------------------------------------------------------------------
NET COMPENSATION
UNDERWRITING ON
NAME OF DISCOUNTS REDEMPTION
PRINCIPAL AND AND BROKERAGE OTHER
UNDERWRITER COMMISSIONS REPURCHASE COMMISSION COMPENSATION
---------------------------------------------------------------------------
Sunstone
Distribution
Services, LLC $0 $0 $0 $0 $0
---------------------------------------------------------------------------

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

Records relating to Sunstone Financial Group, Inc.'s functions as fund
accountant and administrator for the Registrant are located at 207 E. Buffalo
Street, Suite 400, Milwaukee, WI 53202. All other accounts, books and other
documents required to be maintained under section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder are in the physical
possession of First National, One First National Center, Omaha, Nebraska 68102,
FNC, 1701 23rd Avenue, Greeley, Colorado 80632, or DST Systems, Inc., 210 W.
10th Street, Kansas City, Missouri 64105.

ITEM 29. MANAGEMENT SERVICES

Not applicable.
<PAGE>

ITEM 30. UNDERTAKINGS

The Registrant undertakes to provide a copy of its Annual Report to
Shareholders upon request and without charge to each person to whom the
Prospectus of the Funds has been delivered.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the require-
ments for effectiveness of this registration statement under Rule 485(b) under
the Securities Act and that it has duly caused this Post-Effective Amendment
to the Registration Statement on Form N-1A to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Omaha and the
State of Nebraska, on the 26th day of July.

FIRST OMAHA FUNDS, INC.
By: /s/ David P. Greer
__________________________________
David P. Greer, President

Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on July 26, 2000.

SIGNATURE TITLE
--------- -----

/s/ David P. Greer President, Principal
------------------------------ Executive, Financial
David P. Greer & Accounting Officer
& Director

/s/ Joseph Caggiano* Director
------------------------------
Joseph Caggiano

/s/ Robert A. Reed* Director */s/ David P. Greer
------------------------------ ----------------------------------
Robert A. Reed by David P. Greer, attorney-in-fact

/s/ Harry A. Koch, Jr.* Director
------------------------------
Harry A. Koch, Jr.

/s/ Gary Witt* Director
------------------------------
Gary Witt
<PAGE>

As adopted by the Board of Directors of First Omaha Funds, Inc. on May 2,
2000.

Power of Attorney

RESOLVED, that the Directors and officers of First Omaha Funds, Inc. who
may be required to execute any amendment to the Registration Statement of First
Omaha Funds, Inc. be, and each of them hereby is, authorized to execute a power
of Attorney appointing David P. Greer, Randy M. Pavlick, Craig McGarry and each
of them, their true and lawful attorney or attorneys, to execute in their name,
place and stead, in their capacity as Director or officer, or both, of the First
Omaha Funds, Inc. any and all amendments to said Registration Statement, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission.

<PAGE>
FIRST OMAHA FUNDS, INC.

POWER OF ATTORNEY

Know All Men by These Presents, that the undersigned, David Greer, hereby
constitutes and appoints, Randy M. Pavlick and Craig McGarry and each of them,
his true and lawful attorney, to execute in his name, place and stead, in his
capacity as Director and Officer of First Omaha Funds, Inc., the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.

DATED: May 2, 2000

/s/ David Greer
------------------------------
David Greer

<PAGE>
FIRST OMAHA FUNDS, INC.

POWER OF ATTORNEY

Know All Men by These Presents, that the undersigned, Joseph Caggiano,
hereby constitutes and appoints, David Greer, Randy M. Pavlick and Craig McGarry
and each of them, his true and lawful attorney, to execute in his name, place
and stead, in his capacity as Director of First Omaha Funds, Inc., the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission and with the states; and said attorney shall have full
power of substitution and resubstitution.

DATED: May 2, 2000

/s/ Joseph Caggiano
------------------------------
Joseph Caggiano

<PAGE>
FIRST OMAHA FUNDS, INC.

POWER OF ATTORNEY

Know All Men by These Presents, that the undersigned, Robert Reed, hereby
constitutes and appoints, David Greer, Randy M. Pavlick and Craig McGarry and
each of them, his true and lawful attorney, to execute in his name, place and
stead, in his capacity as Director of First Omaha Funds, Inc., the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.

DATED: May 2, 2000

/s/ Robert Reed
------------------------------
Robert Reed

<PAGE>
FIRST OMAHA FUNDS, INC.

POWER OF ATTORNEY

Know All Men by These Presents, that the undersigned, Harry Koch, hereby
constitutes and appoints, David Greer, Randy M. Pavlick and Craig McGarry and
each of them, his true and lawful attorney, to execute in his name, place and
stead, in his capacity as Director of First Omaha Funds, Inc., the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.

DATED: May 2, 2000

/s/ Harry Koch
------------------------------
Harry Koch

<PAGE>
FIRST OMAHA FUNDS, INC.

POWER OF ATTORNEY

Know All Men by These Presents, that the undersigned, Gary Witt, hereby
constitutes and appoints, David Greer, Randy M. Pavlick and Craig McGarry and
each of them, his true and lawful attorney, to execute in his name, place and
stead, in his capacity as Director of First Omaha Funds, Inc., the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.

DATED: May 2, 2000

/s/ Gary Witt
------------------------------
Gary Witt

<PAGE>
EXHIBIT INDEX