N-14 1 faif025924_n14.txt FAIF, INC. FORM N-14 As filed with the Securities and Exchange Commission on December 20, 2002 Registration No.___________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. __ [ ] Post-Effective Amendment No. ___ FIRST AMERICAN INVESTMENT FUNDS, INC. (Exact Name of Registrant as Specified in Charter) 800 Nicollet Mall Minneapolis, Minnesota 55402 (Address of Principal Executive Offices) (612) 303-1606 (Registrant's Area Code and Telephone Number) Christopher O. Petersen U.S. Bancorp Asset Management, Inc. 800 Nicollet Mall, BC-MN-H210 Minneapolis, MN 55402-7020 (Name And Address Of Agent For Service) Copy To: Mark D. Perlow, Esq. Kirkpatrick & Lockhart LLP Four Embarcadero Center, 10th Floor San Francisco, CA 94111 Approximate Date of Proposed Public Offering: as soon as practicable after this Registration Statement becomes effective under the Securities Act of 1933. The title of securities being registered is common stock, par value $0.0001 per share. It is proposed that this filing will automatically become effective on January 21, 2003 pursuant to Rule 488. No filing fee is required because of Registrant's reliance on Section 24(f) of the Investment Company Act of 1940, as amended. FIRST AMERICAN INVESTMENT FUNDS, INC. REGISTRATION STATEMENT ON FORM N-14 CONTENTS OF REGISTRATION STATEMENT ON FORM N-14 This Registration Statement consists of the following papers and documents: Cover Sheet Contents of Registration Statement on Form N-14 Documents Incorporated by Reference Herein Letter to Shareholders Shareholder Q&A Notice of Special Meeting of Shareholders Part A - Prospectus/Proxy Statement Part B - Statement of Additional Information Part C - Other Information Signature Page Exhibits FIRST AMERICAN INVESTMENT FUNDS, INC. REGISTRATION STATEMENT ON FORM N-14 DOCUMENTS INCORPORATED BY REFERENCE HEREIN The following documents are incorporated by reference into the Prospectus/Proxy Statement and Statement of Additional Information: 1. Prospectuses, dated January 28, 2002, as supplemented May 17, 2002, for Class A, Class B and Class C shares of Large Cap Growth Fund, Large Cap Core Fund, and Health Sciences Fund, previously filed on EDGAR, Accession Number 0000897101-02-000047 and 0000897101-02-000395, respectively. 2. Prospectuses, dated January 28, 2002, as supplemented May 17, 2002, for Class S shares of Large Cap Growth Fund, Large Cap Core Fund, and Health Sciences Fund, previously filed on EDGAR, Accession Number 0000897101-02-000047 and 0000897101-02-000395, respectively. 3. Prospectuses, dated January 28, 2002, as supplemented May 17, 2002, for Class Y shares of Large Cap Growth Fund, Large Cap Core Fund, and Health Sciences Fund, previously filed on EDGAR, Accession Number 0000897101-02-000047 and 0000897101-02-000395, respectively. 4. Prospectuses, dated January 28, 2002, for Class A, Class B and Class C shares of Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEXTM Fund, High Yield Bond Fund, Mid Cap Core Fund, Small Cap Core Fund, International Fund, Fixed Income Fund and Strategic Income Fund, previously filed on EDGAR, Accession Number 0000897101-02-000047. 5. Prospectuses, dated January 28, 2002, for Class S shares of Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEXTM Fund, High Yield Bond Fund, Mid Cap Core Fund, Small Cap Core Fund, International Fund, Fixed Income Fund and Strategic Income Fund, previously filed on EDGAR, Accession Number 0000897101-02-000047. 6. Prospectuses, dated January 28, 2002, for Class Y shares of Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEXTM Fund, High Yield Bond Fund, Mid Cap Core Fund, Small Cap Core Fund, International Fund, Fixed Income Fund and Strategic Income Fund, previously filed on EDGAR, Accession Number 0000897101-02-000047. 7. Supplement, dated December 12, 2002, to Class A, Class B, Class C shares Prospectus, Class S shares Prospectus and Class Y shares Prospectus of Bond IMMDEXTM Fund, High Yield Bond Fund, Strategic Income Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Large Cap Growth Fund, Emerging Markets Fund, previously filed on EDGAR, Accession Number 0000897101-02-000867. 8. Statement of Additional Information, dated January 28, 2002, previously filed on EDGAR, Accession Number 0000897101-02-000047. 9. Annual Report for Stock Funds for the fiscal year ended September 30, 2002, previously filed on EDGAR, Accession Number 0001047469-02-005244. 10. Annual Report for Bond Funds for the fiscal year ended September 30, 2002, previously filed on EDGAR, Accession Number 0001047469-02-005243. 2 [LOGO] FIRST AMERICAN INVESTMENT FUNDS, INC. 800 Nicollet Mall Minneapolis, MN 55402 January __, 2003 Dear Shareholders: As a shareholder of Large Cap Growth Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEX(TM) Fund, or High Yield Bond Fund (each an "Acquired Fund"), each a separate series of First American Investment Funds, Inc. ("FAIF"), you are invited to vote on a proposal to reorganize your Acquired Fund into another separate series of FAIF (each an "Acquiring Fund"), as follows: Large Cap Growth Fund and Health Sciences Fund into Large Cap Core Fund; Mid Cap Growth Fund into Mid Cap Core Fund; Small Cap Growth Fund into Small Cap Core Fund; Emerging Markets Fund into International Fund; Bond IMMDEX(TM) Fund into Fixed Income Fund; and High Yield Bond Fund into Strategic Income Fund. The proposals will be voted on at a special meeting of shareholders to be held on March 6, 2003 (the "Meeting"). Before the Meeting, I would like to ask for your vote on this important proposal affecting your Acquired Fund, as described in the accompanying Prospectus/Proxy Statement. The Prospectus/Proxy Statement describes the proposed reorganization of each Acquired Fund (each a "Reorganization"). If the proposal affecting an Acquired Fund is approved by its shareholders, all the Acquired Fund's assets would be acquired by its corresponding Acquiring Fund in exchange solely for shares of the Acquiring Fund and the assumption by the Acquiring Fund of all the Acquired Fund's liabilities. Each Acquired Fund shareholder will receive shares of the corresponding Acquiring Fund that are of the same class, and with the same total value, as their Acquired Fund shares. The Reorganizations are intended to qualify for federal income tax purposes as tax-free reorganizations. As a result, it is anticipated that shareholders will not recognize any gain or loss in connection with the Reorganizations. THE BOARD OF DIRECTORS OF FAIF BELIEVES THAT THE REORGANIZATIONS ARE IN THE BEST INTERESTS OF EACH ACQUIRED FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL AFFECTING YOUR ACQUIRED FUND. YOUR VOTE IS EXTREMELY IMPORTANT. YOU CAN VOTE QUICKLY AND EASILY BY TOLL-FREE TELEPHONE CALL, BY THE INTERNET, BY FAX OR BY MAIL BY FOLLOWING THE INSTRUCTIONS THAT APPEAR ON YOUR PROXY CARD, WHICH YOU WILL RECEIVE FOR EACH ACQUIRED FUND IN WHICH YOU OWN SHARES. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE HELP THE ACQUIRED FUNDS AVOID THE COST OF A FOLLOW-UP MAILING BY VOTING AS SOON AS POSSIBLE. IF YOU HAVE ANY QUESTIONS ABOUT THE PROXY CARD, PLEASE CALL 1-800-677-FUND. NOTE: You may receive more than one proxy package if you hold shares in more than one Acquired Fund or account. You must return separate proxy cards for separate holdings. Thank you for taking this matter seriously and participating in this important process. Sincerely, Thomas S. Schreier, Jr., President First American Investment Funds, Inc. 2 SHAREHOLDER Q&A Within this package you will find the following: o Prospectus/Proxy Statement describing the proposed reorganizations o Current prospectuses of the Acquiring Funds o Voting instructions o Proxy card o Business reply envelope The Board of Directors of FAIF ("Board of Directors") unanimously approved the proposed Reorganizations listed below and recommends that you vote in favor of the Reorganization of your Acquired Fund. The following questions and answers provide a brief overview of the proposal. The Board of Directors also encourages you to read the full text of the enclosed Prospectus/Proxy Statement carefully. WHAT AM I BEING ASKED TO VOTE ON? Shareholders of each Acquired Fund are being asked to consider and approve the proposed Reorganization of that fund into the existing Acquiring Fund set forth below. Effective January 31, 2003, each Acquiring Fund, with the exception of International Fund, will be renamed as indicated below. ACQUIRING FUND NAME ACQUIRED FUND ACQUIRING FUND (effective 1/31/03) ------------- -------------- ------------------- Large Cap Growth Fund -> Large Cap Core Fund Large Cap Growth Opportunities Fund Health Sciences Fund -> Large Cap Core Fund Large Cap Growth Opportunities Fund Mid Cap Growth Fund -> Mid Cap Core Fund Mid Cap Growth Opportunities Fund Small Cap Growth Fund -> Small Cap Core Fund Small Cap Select Fund Emerging Markets Fund -> International Fund International Fund Bond IMMDEX(TM) Fund -> Fixed Income Fund Core Bond Fund High Yield Bond Fund -> Strategic Income Fund High Income Bond Fund WHY HAS THE BOARD OF DIRECTORS RECOMMENDED THAT I VOTE IN FAVOR OF THE REORGANIZATIONS? The Board of Directors believes that the Reorganizations are in the best interests of shareholders of the Acquired Funds and may provide several benefits to shareholders, including the merger of smaller, less efficient funds into larger, more efficient funds, which would allow U.S. Bancorp Asset Management, Inc. (the "Advisor"), the investment advisor to each Acquired Fund and each Acquiring Fund (each a "Fund") to focus its resources. Moreover, by consolidating Funds and increasing Fund size, the combined Funds may achieve the economies of scale often associated with larger funds and thereby reduce operating expenses on a per share basis. HOW DO THE FUNDS' INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RISKS COMPARE? The investment objective of each Acquired Fund is identical or substantially similar to that of its corresponding Acquiring Fund. The principal investment strategies and risk factors of each Acquired Fund (with the exception of Health Sciences Fund) are similar to those of its corresponding Acquiring Fund. The investment objective, principal investment strategies and risk factors of each Acquired Fund compared to those of its corresponding Acquiring Fund are described in the enclosed Prospectus/Proxy Statement. WHICH CLASS OF SHARES WILL I RECEIVE IN THE REORGANIZATION? The share class structure for each Fund involved in the Reorganizations is identical. Thus, you will receive the same class of shares in the Reorganizations that you currently hold. WHAT ARE THE TAX CONSEQUENCES OF THE REORGANIZATIONS? A Reorganization, if approved by the affected Acquired Fund's shareholders, will not be a taxable event for federal income tax purposes. Acquired Fund shareholders will not realize any capital gain or loss as a result of the proposed Reorganizations, although you may receive a distribution of ordinary income and/or net capital gain immediately before the Reorganization of your Acquired Fund to the extent the Fund has undistributed income and/or gain. WHO WILL PAY FOR THE REORGANIZATIONS? The expenses of the Reorganizations, including legal expenses, printing, packaging, and postage, plus the cost of any supplementary solicitations, will be borne by the Advisor. WILL THE FUNDS' EXPENSES REMAIN THE SAME? Each Acquiring Fund has the same or lower overall expense ratio relative to its corresponding Acquired Fund with the exception of Bond IMMDEX(TM) Fund. If the reorganization of Bond IMMDEX(TM) Fund into Fixed Income Fund is approved, shareholders of Bond IMMDEX(TM) Fund will pay higher management fees and annual fund operating expenses. WILL I HAVE THE SAME SHAREHOLDER PRIVILEGES AFTER THE REORGANIZATIONS? Yes. You will continue to enjoy the same shareholder privileges as a shareholder of an Acquiring Fund as you currently have as a shareholder of an Acquired Fund. WHAT IS THE ANTICIPATED TIMING OF THE REORGANIZATIONS? 2 The Meeting to consider the proposals is scheduled to occur on March 6, 2003. If all necessary approvals are obtained, the Reorganizations will likely take place shortly thereafter. WHO WILL RECEIVE THE PROXY MATERIALS? The proxy materials are first being mailed to all persons and entities that held shares of record in the Acquired Funds on January 6, 2003. Please note that in some cases, record ownership of and/or voting authority over Fund shares may reside with a fiduciary or other agent. In these cases, the fiduciary or other agent may receive the proxy. WHEN IS MY PROXY DUE? We would like to receive your vote as soon as possible. You may cast your vote: BY PHONE: Please see the voting instructions on your proxy card. Call the 800 number listed and follow the recorded instructions. BY FAX: Please see the voting instructions on your proxy card. Fax your completed proxy card to the fax number located on your proxy card. BY THE INTERNET: Visit http://www.proxyvote.com. Once there, enter the 12-digit control number located on your proxy card. BY MAIL: Please note that you received one proxy card for each Fund you own. All proxy cards must be marked with your vote and returned in the business reply envelope included in this package. If you misplaced your envelope, please mail your proxy card to: Proxy Services P.O. Box Xxx, XX, ##### PLEASE READ THE FULL TEXT OF THE ENCLOSED PROSPECTUS/PROXY STATEMENT FOR FURTHER INFORMATION. IF YOU HAVE QUESTIONS, PLEASE CALL YOUR INVESTMENT PROFESSIONAL OR FIRST AMERICAN FUNDS AT 800-677-FUND. 3 FIRST AMERICAN INVESTMENT FUNDS, INC. 800 NICOLLET MALL MINNEAPOLIS, MN 55402 LARGE CAP GROWTH FUND HEALTH SCIENCES FUND MID CAP GROWTH FUND SMALL CAP GROWTH FUND EMERGING MARKETS FUND BOND IMMDEX(TM) FUND HIGH YIELD BOND FUND NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 6, 2003 To the Shareholders of the above funds: NOTICE IS HEREBY GIVEN THAT a Special Meeting of Shareholders (the "Meeting") of Large Cap Growth Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEX(TM) Fund, and High Yield Bond Fund (each an "Acquired Fund"), each a separate series of First American Investment Funds, Inc. ("FAIF"), a Maryland corporation, will be held at 800 Nicollet Mall, 5th Floor, Minneapolis, Minnesota 55402, on March 6, 2003, at 10:00 a.m., Central Time. The purpose of the Meeting is to consider and act upon the following proposals and to transact other business that properly comes before the Meeting or any adjournments thereof. Approval of each proposal will be determined solely by approval of the shareholders of the Acquired Fund affected thereby. It will not be necessary for each proposal to be approved for any one of them to be approved. 1. FOR LARGE CAP GROWTH FUND SHAREHOLDERS ONLY. To approve a Plan of Reorganization and Termination adopted by FAIF (the "Reorganization Plan") insofar as it provides for (a) the acquisition of all the assets of Large Cap Growth Fund, a separate series of FAIF, by Large Cap Core Fund, another separate series of FAIF, in exchange solely for shares of Large Cap Core Fund and Large Cap Core Fund's assumption of all the liabilities of Large Cap Growth Fund, followed by (b) the distribution of those Large Cap Core Fund shares to Large Cap Growth Fund's shareholders in liquidation of Large Cap Growth Fund and (c) Large Cap Growth Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to FAIF's Amended and Restated Articles of Incorporation (the "Articles") effecting the foregoing transactions. 2. FOR HEALTH SCIENCES FUND SHAREHOLDERS ONLY. To approve the Reorganization Plan insofar as it provides for (a) the acquisition of all the assets of Health Sciences Fund, a separate series of FAIF, by Large Cap Core Fund, another separate series of FAIF, in exchange solely for shares of Large Cap Core Fund and Large Cap Core Fund's assumption of all the liabilities of Health Sciences Fund, followed by (b) the distribution of those Large Cap Core Fund shares to Health Sciences Fund's shareholders in liquidation of Health Sciences Fund and (c) Health Sciences Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting the foregoing transactions. 3. FOR MID CAP GROWTH FUND SHAREHOLDERS ONLY. To approve the Reorganization Plan insofar as it provides for (a) the acquisition of all the assets of Mid Cap Growth Fund, a separate series of FAIF, by Mid Cap Core Fund, another separate series of FAIF, in exchange solely for shares of Mid Cap Core Fund and Mid Cap Core Fund's assumption of all the liabilities of Mid Cap Growth Fund, followed by (b) the distribution of those Mid Cap Core Fund shares to Mid Cap Growth Fund's shareholders in liquidation of Mid Cap Growth Fund and (c) Mid Cap Growth Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting the foregoing transactions. 4. FOR SMALL CAP GROWTH FUND SHAREHOLDERS ONLY. To approve the Reorganization Plan insofar as it provides for (a) the acquisition of all the assets of Small Cap Growth Fund, a separate series of FAIF, by Small Cap Core Fund, another separate series of FAIF, in exchange solely for shares of Small Cap Core Fund and Small Cap Core Fund's assumption of all the liabilities of Small Cap Growth Fund, followed by (b) the distribution of those Small Cap Core Fund shares to Small Cap Growth Fund's shareholders in liquidation of Small Cap Growth Fund and (c) Small Cap Growth Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting the foregoing transactions. 5. FOR EMERGING MARKETS FUND SHAREHOLDERS ONLY. To approve the Reorganization Plan insofar as it provides for (a) the acquisition of all the assets of Emerging Markets Fund, a separate series of FAIF, by International Fund, another separate series of FAIF, in exchange solely for shares of International Fund and International Fund's assumption of all the liabilities of Emerging Markets Fund, followed by (b) the distribution of those International Fund shares to Emerging Markets Fund's shareholders in liquidation of Emerging Markets Fund and (c) Emerging Markets Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting the foregoing transactions. 6. FOR BOND IMMDEX(TM) FUND SHAREHOLDERS ONLY. To approve the Reorganization Plan insofar as it provides for (a) the acquisition of all the assets of Bond IMMDEX(TM) Fund, a separate series of FAIF, by Fixed Income Fund, another separate series of FAIF, in exchange solely for shares of Fixed Income Fund and Fixed Income Fund's assumption of all the liabilities of Bond IMMDEX(TM) Fund, followed by (b) the distribution of those Fixed Income Fund 2 shares to Bond IMMDEX(TM) Fund's shareholders in liquidation of Bond IMMDEX(TM) Fund and (c) Bond IMMDEX(TM) Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting the foregoing transactions. 7. FOR HIGH YIELD BOND FUND SHAREHOLDERS ONLY. To approve the Reorganization Plan insofar as it provides for (a) the acquisition of all the assets of High Yield Bond Fund, a separate series of FAIF, by Strategic Income Fund, another separate series of FAIF, in exchange solely for shares of Strategic Income Fund and Strategic Income Fund's assumption of all the liabilities of High Yield Bond Fund, followed by (b) the distribution of those Strategic Income Fund shares to High Yield Bond Fund's shareholders in liquidation of High Yield Bond Fund and (c) High Yield Bond Fund's subsequent termination. A vote in favor of the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting the foregoing transactions. The Board of Directors of FAIF has fixed the close of business on January 6, 2003, as the record date for determination of shareholders of each Fund entitled to notice of, and to vote at, the Meeting and any adjournments thereof. YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY CARD(S) PROMPTLY. EACH SHAREHOLDER IS URGED TO COMPLETE, DATE AND SIGN, AND RETURN THE ENCLOSED PROXY CARD(S) IN THE ENVELOPE PROVIDED, EVEN IF YOU PLAN TO ATTEND THE MEETING. ALTERNATIVELY, YOU MAY VOTE VIA FAX, THE INTERNET OR TELEPHONE, AS INDICATED ON THE PROXY CARD. By order of the Board of Directors James D. Alt SECRETARY January ___, 2003 3 FIRST AMERICAN INVESTMENT FUNDS, INC. 800 NICOLLET MALL MINNEAPOLIS, MN 55402 (800) 677-3863 LARGE CAP GROWTH FUND HEALTH SCIENCES FUND MID CAP GROWTH FUND SMALL CAP GROWTH FUND EMERGING MARKETS FUND BOND IMMDEX(TM) FUND HIGH YIELD BOND FUND PROSPECTUS/PROXY STATEMENT JANUARY __, 2003 This Prospectus/Proxy Statement is being furnished to shareholders of Large Cap Growth Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEX(TM) Fund and High Yield Bond Fund (each an "Acquired Fund"), each a separate series FAIF, in connection with the solicitation of proxies by FAIF's Board of Directors (the "Board of Directors" or the "Board") for use at the Special Meeting of Shareholders of the Acquired Funds (the "Meeting") to be held on March 6, 2003, at 10:00 a.m., Central Time, at 800 Nicollet Mall, 5th Floor, Minneapolis, Minnesota 55402, and any adjournments thereof. As more fully described in this Prospectus/Proxy Statement, the purpose of the Meeting is to consider and act upon the proposed Plan of Reorganization and Termination (the "Reorganization Plan") under the terms of which Large Cap Core Fund, Mid Cap Core Fund, Small Cap Core Fund, International Fund, Fixed Income Fund and Strategic Income Fund (each an "Acquiring Fund") would acquire substantially all the assets of Large Cap Growth Fund and Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEX(TM) Fund and High Yield Bond Fund, respectively, in exchange solely for shares of the Acquiring Fund and the assumption by the Acquiring Fund of all the Acquired Fund's liabilities (each such exchange, together with distribution of the shares received on the exchange, as described in the following paragraph, is referred to herein as a "Reorganization"). The Acquired Funds and the Acquiring Funds are sometimes referred to herein individually as a "Fund," and the Acquired Fund and the Acquiring Fund involved in a particular Reorganization are sometimes referred to herein as "corresponding" Funds. If a Reorganization is approved, shares of the Acquiring Fund involved therein will be distributed to the shareholders of the corresponding Acquired Fund in liquidation of the 1 Acquired Fund, which will be terminated as a series of FAIF. Each shareholder of an Acquired Fund will be entitled to receive that number of full and fractional shares of the corresponding Acquiring Fund of the same class that he or she held in the Acquired Fund, with an aggregate net asset value equal to the aggregate net asset value of the shareholder's Acquired Fund shares held as of the closing date of the Reorganization. These transactions are being structured as tax-free reorganizations. See "Information About the Reorganizations - Federal Income Tax Considerations." Shareholders should consult their tax advisors to determine the actual impact of a Reorganization in light of their individual tax circumstances. A vote to approve the Reorganization Plan will be considered a vote in favor of an amendment to the Articles effecting a Reorganization. The amendment is attached to the form of Reorganization Plan attached as Appendix A to this Prospectus/Proxy Statement. The Board of Directors has approved the proposed Reorganizations. You are being asked to approve the Reorganization Plan (insofar as it relates to your Acquired Fund(s)) pursuant to which the Reorganizations would be accomplished. Because shareholders of the Acquired Funds are being asked to approve transactions that will result in their holding shares of the corresponding Acquiring Funds, this Proxy Statement also serves as a Prospectus for the Acquiring Funds. Each Fund is a separate diversified series (except Health Sciences Fund, which is a non-diversified series) of FAIF, a Maryland corporation that is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). U.S. Bancorp Asset Management, Inc. is the investment advisor (the "Advisor") for each of the Funds. As shown in the table below, the investment objective of each Acquired Fund is identical or substantially similar to that of its corresponding Acquiring Fund. -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- Large Cap Growth Fund (Acquired Fund) Long-term growth of capital. -------------------------------------------------------------------------------- Large Cap Core Fund (Acquiring Fund) Long-term growth of capital. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- Health Sciences Fund (Acquired Fund) Long-term growth of capital. -------------------------------------------------------------------------------- Large Cap Core Fund (Acquiring Fund) Long-term growth of capital. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- Mid Cap Growth Fund (Acquired Fund) Growth of capital. -------------------------------------------------------------------------------- Mid Cap Core Fund (Acquiring Fund) Capital appreciation. -------------------------------------------------------------------------------- 2 -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- Small Cap Growth Fund (Acquired Fund) Growth of capital. -------------------------------------------------------------------------------- Small Cap Core Fund (Acquiring Fund) Capital Appreciation. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- Emerging Markets Fund (Acquired Fund) Long-term growth of capital. -------------------------------------------------------------------------------- International Fund (Acquiring Fund) Long-term growth of capital. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- Bond IMMDEX(TM) Fund (Acquired Fund) High current income consistent with limited risk to capital. -------------------------------------------------------------------------------- Fixed Income Fund (Acquiring Fund) High current income consistent with limited risk to capital. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Fund Investment Objective -------------------------------------------------------------------------------- High Yield Bond Fund (Acquired Fund) High level of current income. -------------------------------------------------------------------------------- Strategic Income Fund (Acquiring Fund) High level of current income. -------------------------------------------------------------------------------- This Prospectus/Proxy Statement explains concisely the information about the Acquiring Fund that is acquiring the assets of your Acquired Fund that you should know before voting on the Reorganization. Please read it carefully and keep it for future reference. Additional information concerning the Funds and the Reorganizations is contained in the documents described below, all of which have been filed with the Securities and Exchange Commission ("SEC"): o Prospectuses relating to the designated share classes of each Fund, dated January 28, 2002, including any supplements. o Annual Report relating to each Fund for the fiscal year ended September 30, 2002. 3 o Statement of Additional Information relating to each Fund ("SAI"), dated January 28, 2002, including any supplements. o Statement of Additional Information, dated January ___, 2003, which relates to this Prospectus/Proxy Statement and the Reorganizations ("Reorganization SAI"). The Funds' prospectuses and SAI and the Reorganization SAI are incorporated into this Prospectus/Proxy Statement by this reference. (This means that information therein is legally considered to be part of this Prospectus/Proxy Statement.) This Prospectus/Proxy Statement is accompanied by a copy of each Acquiring Fund's current prospectus (including any supplements). Appendix B to this Prospectus/Proxy Statement contains excerpts from the Acquiring Funds' Annual Report, dated September 30, 2002, setting forth the factors that materially affected each Acquiring Fund's performance during the fiscal year then ended. For a free copy of an Acquired Fund's prospectus, the Funds' SAI or Annual Report, or the Reorganization SAI, please call (800) 677-3863 or write to First American Investment Funds, Inc., 800 Nicollet Mall, Minneapolis, MN 55402. You can also obtain copies of any of these documents without charge on the EDGAR database on the SEC's Internet site at http://www.sec.gov. Copies are available for a fee by electronic request at the following e-mail address: publicinfo@sec.gov, or from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549. THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE ACQUIRING FUNDS' SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 4 TABLE OF CONTENTS PAGE SYNOPSIS.....................................................................7 The Proposed Reorganizations...............................................7 Comparison of Fees.........................................................8 Examples of Fund Expenses.................................................19 Comparison of Investment Objectives and Principal Investment Strategies...27 Additional Investment Strategies..........................................42 Performance Comparison of the Funds.......................................43 Additional Performance Information........................................56 Form of Organization......................................................56 Investment Advisory Services..............................................56 Operations of the Acquiring Funds Following the Reorganizations...........58 Federal Income Tax Consequences of the Reorganizations....................58 PRINCIPAL RISK FACTORS......................................................58 COMPARISION OF DISTRIBUTION POLICIES AND PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES.......................................................67 Distribution of Shares....................................................67 Purchase and Redemption Procedures........................................69 Exchange Privileges.......................................................70 Dividends and Distributions...............................................70 INFORMATION ABOUT THE REORGANIZATIONS.......................................70 Plan of Reorganization and Termination....................................70 Reasons for the Reorganizations...........................................72 Description of Securities to be Issued....................................73 Federal Income Tax Considerations.........................................74 Capitalization............................................................75 VOTING INFORMATION..........................................................83 Outstanding Shares........................................................85 Control Persons and Principal Holders of Securities.......................86 ADDITIONAL INFORMATION ABOUT THE FUND.......................................87 MISCELLANEOUS...............................................................87 OTHER BUSINESS..............................................................87 BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES....................................................................88 BOARD RECOMMENDATION........................................................88 APPENDIX A Form of Plan of Reorganization and Termination..................A-1 APPENDIX B Management Discussion of Fund Performance.......................B-1 5 APPENDIX C Financial Highlights............................................C-1 6 SYNOPSIS The following is a summary of certain information contained elsewhere in this Prospectus/Proxy Statement, the Funds' prospectuses, and the Reorganization Plan (the form of which is attached as Appendix A), which are incorporated herein by this reference. This summary may not contain all of the information that is important to you. Shareholders should read the entire Prospectus/Proxy Statement for more complete information. THE PROPOSED REORGANIZATIONS The Board of Directors considered and approved the Reorganizations at a meeting of the Board held on December 3-4, 2002. The Reorganizations would combine each Acquired Fund into a corresponding Acquiring Fund. The Reorganizations are proposed to be accomplished pursuant to the Reorganization Plan, which provides for the acquisition of all the assets of each Acquired Fund by a corresponding Acquiring Fund, in exchange solely for shares of that Acquiring Fund and the assumption by that Acquiring Fund of all the Acquired Fund's liabilities. Approval of each Reorganization will be determined solely by a vote of the majority of outstanding shares of the Acquired Fund involved. It will not be necessary for each Reorganization to be approved for any one of them to take place. If a Reorganization is approved, the Acquired Fund involved therein will cease to exist and the shareholders of the Acquired Fund will become shareholders of the Acquiring Fund listed opposite that Acquired Fund's name in the table below. You will receive shares of the Acquiring Fund that are of the same class, and with the same total value, as the Acquired Fund shares you hold as of the closing date of the Reorganization. In addition, effective January 31, 2003, each Acquiring Fund, with the exception of International Fund, will be renamed as indicated below. ACQUIRING FUND NAME ACQUIRED FUND ACQUIRING FUND (effective 1/31/03) ------------- -------------- ------------------- Large Cap Growth Fund -> Large Cap Core Fund Large Cap Growth Opportunities Fund Health Sciences Fund -> Large Cap Core Fund Large Cap Growth Opportunities Fund Mid Cap Growth Fund -> Mid Cap Core Fund Mid Cap Growth Opportunities Fund Small Cap Growth Fund -> Small Cap Core Fund Small Cap Select Fund Emerging Markets Fund -> International Fund International Fund Bond IMMDEX(TM) Fund -> Fixed Income Fund Core Bond Fund High Yield Bond Fund -> Strategic Income Fund High Income Bond Fund 7 The investment objective of each Acquired Fund is identical or substantially similar to that of its corresponding Acquiring Fund. The principal investment strategies and principal risk factors of each Acquired Fund (with the exception of Health Sciences Fund) are similar to those of its corresponding Acquiring Fund. For more complete information regarding the investment objectives, principal investment strategies and principal risk factors of each Acquired Fund compared with those of the Acquiring Fund with which it will be combined, please refer to the "Comparison of Investment Objectives and Principal Investment Strategies" and "Principal Risk Factors" sections below. Each Fund currently offers five classes of shares -- Classes A, B, C, S and Y. The Class A, B, C, S and Y shares of each Acquired Fund have identical characteristics to the Class A, B, C, S and Y shares, respectively, of the corresponding Acquiring Fund. The Reorganizations will not affect your right to purchase and redeem shares, to exchange among other First American Funds and to receive dividends and other distributions. No sales charges will be imposed on the issuance of each Acquiring Fund's shares as a result of the Reorganizations. For more information about the characteristics of Class A, B, C, S and Y shares of the Funds, see the "Comparison of Distribution Policies and Purchase, Exchange and Redemption Procedures" section below. As described more fully below under "Information about the Reorganizations - Reasons for the Reorganizations," the Board of Directors, including the directors who are not "interested persons," as such term is defined in the 1940 Act (the "Independent Directors"), have concluded that the Reorganizations are in the best interests of the shareholders of the Acquired Funds and that the interests of each Acquired Fund's existing shareholders will not be diluted as a result of the transactions contemplated by the Reorganizations. Therefore, the Board of Directors has approved the Reorganizations and has submitted the Reorganization Plan for approval by each Acquired Fund's shareholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE REORGANIZATION OF YOUR ACQUIRED FUND. COMPARISON OF FEES The following tables allow you to compare the various fees and expenses that you may pay for buying and holding Class A, B, C, S and Y shares of each Acquired Fund and the corresponding Acquiring Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) Shareholders pay the following fees directly when they buy or sell shares. The following table shows the shareholder fees paid by shareholders of Large Cap Growth Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Large Cap Core Fund, Mid Cap Core Fund, Small Cap Core Fund and International Fund (the "Equity Funds"). As reflected in the table, the shareholder fees for each Fund that is an Equity Fund, as well as the shareholder fees for the Pro Forma Combined Funds, are identical. 8 ALL EQUITY FUNDS AND PRO FORMA COMBINED FUNDS
------------------------------------------------------------------------------------------------------------- SHAREHOLDER FEES Class A Class B Class C Class S Class Y ------------------------------------------------------------------------------------------------------------- Maximum Sales Charge (Load) 5.50% 5.00% 2.00% None None Maximum Sales Charge (Load) imposed on purchases 5.50%(1) 0.00% 1.00% None None (as a % of offering price) Maximum Deferred Sales Charge (Load) 0.00%(2) 5.00% 1.00% None None (as a % of original purchase price or redemption proceeds, whichever is less) ------------------------------------------------------------------------------------------------------------- Annual Maintenance Fee(3) $ 25 $ 25 $ 25 None None only charged to accounts with balances below $500 -------------------------------------------------------------------------------------------------------------
(1)Certain investors may qualify for reduced sales charges. Generally, Class A share investments will qualify for a reduced sales charge if the amount of the purchase is from $50,000 to $999,999, and the sales charge will be eliminated if the purchase is $1 million or more. (2)Class A share investments of $1 million or more on which no front-end sales charge is paid may be subject to a 1% contingent deferred sales charge if they are sold within 18 months of purchase. (3)Each Fund reserves the right to charge your account an annual maintenance fee of $25 if your balance falls below $500 as a result of selling or exchanging shares. The following table shows the shareholder fees paid by shareholders of Bond IMMDEX(TM) Fund, High Yield Bond Fund, Fixed Income Fund and Strategic Income Fund (the "Income Funds"). As reflected in the table, the shareholder fees for each Fund that is an Income Fund, as well as the shareholder fees for the Pro Forma Combined Funds, are identical. ALL INCOME FUNDS AND PRO FORMA COMBINED FUNDS
------------------------------------------------------------------------------------------------------------- SHAREHOLDER FEES Class A Class B Class C Class S Class Y ------------------------------------------------------------------------------------------------------------- Maximum Sales Charge (Load) 4.25% 5.00% 2.00% None None Maximum Sales Charge (Load) imposed on purchases 4.25%(1) 0.00% 1.00% None None (as a % of offering price) Maximum Deferred Sales Charge (Load) 0.00%(2) 5.00% 1.00% None None (as a % of original purchase price or redemption proceeds, whichever is less) ------------------------------------------------------------------------------------------------------------- Annual Maintenance Fee(3) $ 25 $ 25 $ 25 None None only charged to accounts with balances below $500 -------------------------------------------------------------------------------------------------------------
(1)Certain investors may qualify for reduced sales charges. Generally, Class A share investments will qualify for a reduced sales charge if the amount of the purchase is from $50,000 to $999,999, and the sales charge will be eliminated if the purchase is $1 million or more. (2)Class A share investments of $1 million or more on which no front-end sales charge is paid may be subject to a 1% contingent deferred sales charge if they are sold within 18 months of purchase. (3)Each Fund reserves the right to charge your account an annual maintenance fee of $25 if your balance falls below $500 as a result of selling or exchanging shares. The shareholder fees set forth in the tables above will not be affected by the Reorganizations. Shareholders will not pay any initial or deferred sales charge in connection with the Reorganizations. If the Reorganization affecting your Acquired Fund is approved, its shareholders will continue to be subject to the same shareholder fees that are currently in place for that Fund. 9 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) The tables below compare the annual fund operating expenses as a percentage of average daily net assets for each Fund for the fiscal year ended September 30, 2002, and PRO FORMA expenses, based on the annual fund operating expenses for the Acquiring Fund's shares. The "Pro Forma Combined Fund" column in each table below shows you what the fees and expenses are estimated to be assuming the Reorganizations are approved. Shareholders pay the following fees and expenses when they hold shares. These fees are paid indirectly since they are deducted from Fund assets. The expense information in the tables below has been restated to reflect a decrease in expenses that is expected to occur during the current fiscal year. 10 LARGE CAP GROWTH FUND, LARGE CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- LARGE CAP LARGE CAP PRO FORMA ANNUAL FUND GROWTH CORE COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES Class A 0.65% 0.65% 0.65% Class B 0.65% 0.65% 0.65% Class C 0.65% 0.65% 0.65% Class S 0.65% 0.65% 0.65% Class Y 0.65% 0.65% 0.65% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.31% 0.31% 0.31% Class B 0.31% 0.31% 0.31% Class C 0.31% 0.31% 0.31% Class S(1) 0.56% 0.56% 0.56% Class Y 0.31% 0.31% 0.31% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES Class A 1.21%(2) 1.21%(3) 1.21%(4) Class B 1.96%(2) 1.96%(3) 1.96%(4) Class C 1.96%(2) 1.96%(3) 1.96%(4) Class S 1.21%(2) 1.21%(3) 1.21%(4) Class Y 0.96%(2) 0.96%(3) 0.96%(4) -------------------------------------------------------------------------------- (1)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (2)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.15%, 1.90%, 1.90%, 1.15% and 0.90%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Large Cap Growth Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (3)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.15%, 1.90%, 1.90%, 1.15% and 0.90%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Large Cap Core Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (4)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.15%, 1.90%, 1.90%, 1.15% and 0.90%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of the Combined Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 11 HEALTH SCIENCES FUND, LARGE CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- HEALTH LARGE CAP PRO FORMA ANNUAL FUND SCIENCES CORE COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES Class A 0.70% 0.65% 0.65% Class B 0.70% 0.65% 0.65% Class C 0.70% 0.65% 0.65% Class S 0.70% 0.65% 0.65% Class Y 0.70% 0.65% 0.65% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.49% 0.31% 0.31% Class B 0.49% 0.31% 0.31% Class C 0.49% 0.31% 0.31% Class S(1) 0.74% 0.56% 0.56% Class Y 0.49% 0.31% 0.31% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES Class A 1.44%(2) 1.21%(3) 1.21%(4) Class B 2.19%(2) 1.96%(3) 1.96%(4) Class C 2.19%(2) 1.96%(3) 1.96%(4) Class S 1.44%(2) 1.21%(3) 1.21%(4) Class Y 1.19%(2) 0.96%(3) 0.96%(4) -------------------------------------------------------------------------------- (1)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (2)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.23%, 1.98%, 1.98%, 1.23% and 0.98%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Health Sciences Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (3)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.15%, 1.90%, 1.90%, 1.15% and 0.90%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Large Cap Core Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (4)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.15%, 1.90%, 1.90%, 1.15% and 0.90%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of the Combined Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 12 MID CAP GROWTH FUND, MID CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- MID CAP MID CAP PRO FORMA ANNUAL FUND GROWTH CORE COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES Class A 0.70% 0.70% 0.70% Class B 0.70% 0.70% 0.70% Class C 0.70% 0.70% 0.70% Class S 0.70% 0.70% 0.70% Class Y 0.70% 0.70% 0.70% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.32% 0.31% 0.31% Class B 0.32% 0.31% 0.31% Class C 0.32% 0.31% 0.31% Class S(1) 0.57% 0.56% 0.56% Class Y 0.32% 0.31% 0.31% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES(2) Class A 1.27% 1.26% 1.26% Class B 2.02% 2.01% 2.01% Class C 2.02% 2.01% 2.01% Class S 1.27% 1.26% 1.26% Class Y 1.02% 1.01% 1.01% -------------------------------------------------------------------------------- (1)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (2)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.20%, 1.95%, 1.95%, 1.20% and 0.95%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Mid Cap Growth Fund and Mid Cap Core Fund. After the Reorganization, the Combined Fund will continue to be subject to these fee waivers and expense reimbursements. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 13 SMALL CAP GROWTH FUND, SMALL CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- SMALL CAP SMALL CAP PRO FORMA ANNUAL FUND GROWTH CORE COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES Class A 0.70% 0.70% 0.70% Class B 0.70% 0.70% 0.70% Class C 0.70% 0.70% 0.70% Class S 0.70% 0.70% 0.70% Class Y 0.70% 0.70% 0.70% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.32% 0.31% 0.31% Class B 0.32% 0.31% 0.31% Class C 0.32% 0.31% 0.31% Class S(1) 0.57% 0.56% 0.56% Class Y 0.32% 0.31% 0.31% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES Class A 1.27%(2) 1.26%(3) 1.26%(4) Class B 2.02%(2) 2.01%(3) 2.01%(4) Class C 2.02%(2) 2.01%(3) 2.01%(4) Class S 1.27%(2) 1.26%(3) 1.26%(4) Class Y 1.02%(2) 1.01%(3) 1.01%(4) -------------------------------------------------------------------------------- (1)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (2)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.23%, 1.98%, 1.98%, 1.23% and 0.98%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Small Cap Growth Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (3)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.21%, 1.96%, 1.96%, 1.21% and 0.96%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Small Cap Core Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (4)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.21%, 1.96%, 1.96%, 1.21% and 0.96%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of the Combined Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 14 EMERGING MARKETS FUND, INTERNATIONAL FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- EMERGING PRO FORMA ANNUAL FUND MARKETS INTERNATIONAL COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES Class A 1.15% 1.10% 1.10% Class B 1.15% 1.10% 1.10% Class C 1.15% 1.10% 1.10% Class S 1.15% 1.10% 1.10% Class Y 1.15% 1.10% 1.10% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.39% 0.31% 0.31% Class B 0.39% 0.31% 0.31% Class C 0.39% 0.31% 0.31% Class S(1) 0.64% 0.56% 0.56% Class Y 0.39% 0.31% 0.31% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES Class A 1.79%(2) 1.66%(3) 1.66%(4) Class B 2.54%(2) 2.41%(3) 2.41%(4) Class C 2.54%(2) 2.41%(3) 2.41%(4) Class S 1.79%(2) 1.66%(3) 1.66%(4) Class Y 1.54%(2) 1.41%(3) 1.41%(4) -------------------------------------------------------------------------------- (1)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (2)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.70%, 2.45%, 2.45%, 1.70% and 1.45%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Emerging Markets Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (3)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.60%, 2.35%, 2.35%, 1.60% and 1.35%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of International Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (4)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.60%, 2.35%, 2.35%, 1.60% and 1.35%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of the Combined Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 15 BOND IMMDEX(TM) FUND, FIXED INCOME FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- BOND FIXED PRO FORMA ANNUAL FUND IMMDEX(TM) INCOME COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES(1) Class A 0.30% 0.50% 0.50% Class B 0.30% 0.50% 0.50% Class C 0.30% 0.50% 0.50% Class S 0.30% 0.50% 0.50% Class Y 0.30% 0.50% 0.50% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.31% 0.31% 0.31% Class B 0.31% 0.31% 0.31% Class C 0.31% 0.31% 0.31% Class S(2) 0.56% 0.56% 0.56% Class Y 0.31% 0.31% 0.31% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES Class A 0.86%(3) 1.06%(4) 1.06%(5) Class B 1.61%(3) 1.81%(4) 1.81%(5) Class C 1.61%(3) 1.81%(4) 1.81%(5) Class S 0.86%(3) 1.06%(4) 1.06%(5) Class Y 0.61%(3) 0.81%(4) 0.81%(5) -------------------------------------------------------------------------------- (1)It is anticipated that the Management Fee for the Combined Fund will be that of Fixed Income Fund, which is at the average of the Lipper peer group median. Although former shareholders of Bond IMMDEX(TM) Fund will pay a Management Fee that is 0.20% higher following the Reorganization, this increase is largely the result of an adjustment to the Management Fee charged to Bond IMMDEX(TM) Fund. At a meeting of the Board of Directors held on December 3-4, 2002, the Advisor advised the Board that circumstances have evolved so that management of the Bond IMMDEX(TM) Fund has required the use of active investment management techniques to an extent beyond that originally envisioned. The Advisor further noted that, as a result, the Management Fee paid by Bond IMMDEX(TM) Fund is significantly lower than management fees paid by other funds in its peer group that are similarly managed. Moreover, any increase in expenses may potentially be mitigated by other benefits resulting from the Reorganization, such as increased investment diversification and more favorable trading terms often associated with larger funds. (2)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (3)The Advisor currently does not waive fees for Bond IMMDEX(TM) Fund. (4)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 0.95%, 1.70%, 1.70%, 0.95% and 0.70%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Fixed Income Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 16 (5)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 0.95%, 1.70%, 1.70%, 0.95% and 0.70%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Combined Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 17 HIGH YIELD BOND FUND, STRATEGIC INCOME FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- HIGH YIELD STRATEGIC PRO FORMA ANNUAL FUND BOND INCOME COMBINED OPERATING EXPENSES FUND FUND FUND -------------------------------------------------------------------------------- MANAGEMENT FEES Class A 0.70% 0.70% 0.70% Class B 0.70% 0.70% 0.70% Class C 0.70% 0.70% 0.70% Class S 0.70% 0.70% 0.70% Class Y 0.70% 0.70% 0.70% -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Class A 0.25% 0.25% 0.25% Class B 1.00% 1.00% 1.00% Class C 1.00% 1.00% 1.00% Class S None None None Class Y None None None -------------------------------------------------------------------------------- OTHER EXPENSES Class A 0.39% 0.33% 0.33% Class B 0.39% 0.33% 0.33% Class C 0.39% 0.33% 0.33% Class S(1) 0.64% 0.58% 0.58% Class Y 0.39% 0.33% 0.33% -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES Class A 1.34%(2) 1.28%(3) 1.28%(4) Class B 2.09%(2) 2.03%(3) 2.03%(4) Class C 2.09%(2) 2.03%(3) 2.03%(4) Class S 1.34%(2) 1.28%(3) 1.28%(4) Class Y 1.09%(2) 1.03%(3) 1.03%(4) -------------------------------------------------------------------------------- (1)"Other Expenses" of Class S shares include a 0.25% shareholder servicing fee. (2)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.23%, 1.98%, 1.98%, 1.23% and 0.98%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of High Yield Bond Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (3)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.20%, 1.95%, 1.95%, 1.20% and 0.95%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of Strategic Income Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. (4)The Advisor has agreed to waive fees and reimburse other fund expenses so that Total Annual Fund Operating Expenses do not exceed 1.20%, 1.95%, 1.95%, 1.20% and 0.95%, respectively, for Class A, Class B, Class C, Class S and Class Y shares of the Combined Fund. These fee waivers and expense reimbursements may be discontinued or modified at any time by the Advisor in its discretion. 18 EXAMPLES OF FUND EXPENSES The tables below show examples of the total expenses you would pay on a $10,000 investment over one-, three-, five- and ten-year periods. The examples are intended to help you compare the cost of investing in each Acquired Fund and corresponding Acquiring Fund, as well as the combined fund on a PRO FORMA (estimated) basis, assuming the Reorganizations take place. The examples assume a 5% average annual return and that each Fund's total annual operating expenses remain the same in each period. The examples also assume that you reinvest all of your dividends and distributions. THE EXAMPLES ARE FOR ILLUSTRATION ONLY, AND YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER. 19 LARGE CAP GROWTH FUND, LARGE CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- Large Cap Growth Fund Class A $ 667 $ 913 $1,178 $1,935 Class B(1) $ 699 $1,015 $1,257 $2,089 Class B(2) $ 199 $ 615 $1,057 $2,089 Class C(1) $ 397 $ 709 $1,147 $2,168 Class C(2) $ 297 $ 709 $1,147 $2,168 Class S $ 123 $ 384 $ 665 $1,466 Class Y $ 98 $ 306 $ 531 $1,178 -------------------------------------------------------------------------------- Large Cap Core Fund Class A $ 667 $ 913 $1,178 $1,935 Class B(1) $ 699 $1,015 $1,257 $2,089 Class B(2) $ 199 $ 615 $1,057 $2,089 Class C(1) $ 397 $ 709 $1,147 $2,168 Class C(2) $ 297 $ 709 $1,147 $2,168 Class S $ 123 $ 384 $ 665 $1,466 Class Y $ 98 $ 306 $ 531 $1,178 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 667 $ 913 $1,178 $1,935 Class B(1) $ 699 $1,015 $1,257 $2,089 Class B(2) $ 199 $ 615 $1,057 $2,089 Class C(1) $ 397 $ 709 $1,147 $2,168 Class C(2) $ 297 $ 709 $1,147 $2,168 Class S $ 123 $ 384 $ 665 $1,466 Class Y $ 98 $ 306 $ 531 $1,178 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 20 HEALTH SCIENCES FUND, LARGE CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- Health Sciences Fund Class A $ 689 $ 980 $1,294 $2,179 Class B(1) $ 722 $1,085 $1,375 $2,331 Class B(2) $ 222 $ 685 $1,175 $2,331 Class C(1) $ 420 $ 778 $1,263 $2,408 Class C(2) $ 320 $ 778 $1,263 $2,408 Class S $ 147 $ 456 $ 787 $1,724 Class Y $ 121 $ 378 $ 654 $1,443 -------------------------------------------------------------------------------- Large Cap Core Fund Class A $ 667 $ 913 $1,178 $1,935 Class B(1) $ 699 $1,015 $1,257 $2,089 Class B(2) $ 199 $ 615 $1,057 $2,089 Class C(1) $ 397 $ 709 $1,147 $2,168 Class C(2) $ 297 $ 709 $1,147 $2,168 Class S $ 123 $ 384 $ 665 $1,466 Class Y $ 98 $ 306 $ 531 $1,178 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 667 $ 913 $1,178 $1,935 Class B(1) $ 699 $1,015 $1,257 $2,089 Class B(2) $ 199 $ 615 $1,057 $2,089 Class C(1) $ 397 $ 709 $1,147 $2,168 Class C(2) $ 297 $ 709 $1,147 $2,168 Class S $ 123 $ 384 $ 665 $1,466 Class Y $ 98 $ 306 $ 531 $1,178 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 21 MID CAP GROWTH FUND, MID CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- Mid Cap Growth Fund Class A $ 627 $ 931 $1,209 $2,000 Class B(1) $ 705 $1,034 $1,288 $2,153 Class B(2) $ 205 $ 634 $1,088 $2,153 Class C(1) $ 403 $ 727 $1,177 $2,231 Class C(2) $ 303 $ 727 $1,177 $2,231 Class S $ 129 $ 403 $ 697 $1,534 Class Y $ 104 $ 325 $ 563 $1,248 -------------------------------------------------------------------------------- Mid Cap Core Fund Class A $ 671 $ 928 $1,204 $1,989 Class B(1) $ 704 $1,030 $1,283 $2,142 Class B(2) $ 204 $ 630 $1,083 $2,142 Class C(1) $ 402 $ 724 $1,172 $2,414 Class C(2) $ 302 $ 724 $1,172 $2,414 Class S $ 128 $ 400 $ 692 $1,523 Class Y $ 103 $ 322 $ 558 $1,236 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 671 $ 928 $1,204 $1,989 Class B(1) $ 704 $1,030 $1,283 $2,142 Class B(2) $ 204 $ 630 $1,083 $2,142 Class C(1) $ 402 $ 724 $1,172 $2,414 Class C(2) $ 302 $ 724 $1,172 $2,414 Class S $ 128 $ 400 $ 692 $1,523 Class Y $ 103 $ 322 $ 558 $1,236 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 22 SMALL CAP GROWTH FUND, SMALL CAP CORE FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- Small Cap Growth Fund Class A $ 627 $ 931 $1,209 $2,000 Class B(1) $ 705 $1,034 $1,288 $2,153 Class B(2) $ 205 $ 634 $1,088 $2,153 Class C(1) $ 403 $ 727 $1,177 $2,231 Class C(2) $ 303 $ 727 $1,177 $2,231 Class S $ 129 $ 403 $ 697 $1,534 Class Y $ 104 $ 325 $ 563 $1,248 -------------------------------------------------------------------------------- Small Cap Core Fund Class A $ 671 $ 928 $1,204 $1,989 Class B(1) $ 704 $1,030 $1,283 $2,142 Class B(2) $ 204 $ 630 $1,083 $2,142 Class C(1) $ 402 $ 724 $1,172 $2,414 Class C(2) $ 302 $ 724 $1,172 $2,414 Class S $ 128 $ 400 $ 692 $1,523 Class Y $ 103 $ 322 $ 558 $1,236 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 671 $ 928 $1,204 $1,989 Class B(1) $ 704 $1,030 $1,283 $2,142 Class B(2) $ 204 $ 630 $1,083 $2,142 Class C(1) $ 402 $ 724 $1,172 $2,414 Class C(2) $ 302 $ 724 $1,172 $2,414 Class S $ 128 $ 400 $ 692 $1,523 Class Y $ 103 $ 322 $ 558 $1,236 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 23 EMERGING MARKETS FUND, INTERNATIONAL FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- Emerging Markets Fund Class A $ 722 $1,082 $1,466 $2,539 Class B(1) $ 757 $1,191 $1,550 $2,689 Class B(2) $ 257 $ 791 $1,350 $2,689 Class C(1) $ 455 $ 883 $1,437 $2,762 Class C(2) $ 355 $ 883 $1,437 $2,762 Class S $ 182 $ 563 $ 970 $2,105 Class Y $ 157 $ 486 $ 839 $1,834 -------------------------------------------------------------------------------- International Fund Class A $ 709 $1,045 $1,403 $2,407 Class B(1) $ 744 $1,151 $1,485 $2,557 Class B(2) $ 244 $ 751 $1,285 $2,557 Class C(1) $ 442 $ 844 $1,373 $2,632 Class C(2) $ 342 $ 844 $1,373 $2,632 Class S $ 169 $ 523 $ 902 $1,965 Class Y $ 144 $ 446 $ 771 $1,691 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 709 $1,045 $1,403 $2,407 Class B(1) $ 744 $1,151 $1,485 $2,557 Class B(2) $ 244 $ 751 $1,285 $2,557 Class C(1) $ 442 $ 844 $1,373 $2,632 Class C(2) $ 342 $ 844 $1,373 $2,632 Class S $ 169 $ 523 $ 902 $1,965 Class Y $ 144 $ 446 $ 771 $1,691 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 24 BOND IMMDEX(TM) FUND, FIXED INCOME FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- Bond IMMDEX(TM) Fund Class A $ 509 $ 688 $ 882 $1,441 Class B(1) $ 664 $ 908 $1,076 $1,708 Class B(2) $ 164 $ 508 $ 876 $1,708 Class C(1) $ 362 $ 603 $ 967 $1,791 Class C(2) $ 262 $ 603 $ 967 $1,791 Class S $ 88 $ 274 $ 477 $1,061 Class Y $ 62 $ 195 $ 340 $ 762 -------------------------------------------------------------------------------- Fixed Income Fund Class A $ 528 $ 748 $ 985 $1,664 Class B(1) $ 684 $ 969 $1,180 $1,928 Class B(2) $ 184 $ 569 $ 980 $1,928 Class C(1) $ 382 $ 664 $1,070 $2,008 Class C(2) $ 282 $ 664 $1,070 $2,008 Class S $ 108 $ 337 $ 585 $1,294 Class Y $ 83 $ 259 $ 450 $1,002 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 528 $ 748 $ 985 $1,664 Class B(1) $ 684 $ 969 $1,180 $1,928 Class B(2) $ 184 $ 569 $ 980 $1,928 Class C(1) $ 382 $ 664 $1,070 $2,008 Class C(2) $ 282 $ 664 $1,070 $2,008 Class S $ 108 $ 337 $ 585 $1,294 Class Y $ 83 $ 259 $ 450 $1,002 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 25 HIGH YIELD BOND FUND, STRATEGIC INCOME FUND AND PRO FORMA COMBINED FUND -------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- High Yield Bond Fund Class A $ 556 $ 831 $1,128 $1,969 Class B(1) $ 712 $1,055 $1,324 $2,227 Class B(2) $ 212 $ 655 $1,124 $2,227 Class C(1) $ 410 $ 748 $1,212 $2,304 Class C(2) $ 310 $ 748 $1,212 $2,304 Class S $ 136 $ 425 $ 734 $1,613 Class Y $ 111 $ 347 $ 601 $1,329 -------------------------------------------------------------------------------- Strategic Income Fund Class A $ 550 $ 814 $1,097 $1,905 Class B(1) $ 706 $1,037 $1,293 $2,163 Class B(2) $ 206 $ 637 $1,093 $2,163 Class C(1) $ 404 $ 730 $1,182 $2,242 Class C(2) $ 304 $ 730 $1,182 $2,242 Class S $ 130 $ 406 $ 702 $1,545 Class Y $ 105 $ 328 $ 569 $1,259 -------------------------------------------------------------------------------- Pro Forma Combined Fund Class A $ 550 $ 814 $1,097 $1,905 Class B(1) $ 706 $1,037 $1,293 $2,163 Class B(2) $ 206 $ 637 $1,093 $2,163 Class C(1) $ 404 $ 730 $1,182 $2,242 Class C(2) $ 304 $ 730 $1,182 $2,242 Class S $ 130 $ 406 $ 702 $1,545 Class Y $ 105 $ 328 $ 569 $1,259 -------------------------------------------------------------------------------- (1)Assumes redemption at the end of each period. (2)Assumes no redemption at the end of each period. 26 COMPARISON OF INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES The following tables compare each Acquired Fund and its corresponding Acquiring Fund with respect to their investment objectives and principal investment strategies. Please carefully review the following tables. As described below, the investment objective of each Acquired Fund is identical or substantially similar to that of its corresponding Acquiring Fund. A Fund's objective may be changed without shareholder approval. If a Fund's objective changes, you would be notified at least 60 days in advance. Please remember: There is no guarantee that any Fund will achieve its objective. As more fully set forth below, the principal investment strategies of each Acquired Fund (with the exception of Health Sciences Fund) are similar to those of its corresponding Acquiring Fund. A Fund's principal investment strategies are the strategies that the Advisor believes are most likely to be important in trying to achieve the Fund's objective. You should be aware that each Fund may also use strategies to invest in securities that are not described in this Prospectus/Proxy Statement but that are described in its prospectuses and SAI. COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: LARGE CAP GROWTH FUND AND LARGE CAP CORE FUND As set forth in the tables below, Large Cap Growth Fund and Large Cap Core Fund have identical investment objectives and substantially similar principal investment strategies. The investment objective of each Fund is to seek long-term growth of capital. Both Funds invest primarily in large-capitalization companies. Large Cap Growth Fund invests primarily in common stocks of companies that have market capitalizations within the range of market capitalizations of companies constituting the Russell 1000 Index, which consists of companies with market capitalization ranging from approximately $238 million to $292 billion. Large Cap Core Fund invests primarily in common stocks of companies that have market capitalizations within the range of market capitalizations of companies constituting the Standard & Poor's 500 Composite Stock Index ("S&P 500 Index"), which consists of companies with market capitalizations ranging from approximately $209 million to $292 billion. Large Cap Growth Fund and Large Cap Core Fund typically invest in common stocks that have market capitalizations of at least $5 billion and $3 billion, respectively, at the time of purchase. -------------------------------------------------------------------------------- LARGE CAP GROWTH FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Long-term growth of capital. Objective -------------------------------------------------------------------------------- 27 -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of large-capitalization companies, defined as companies that have market capitalizations within the range of market capitalizations of companies constituting the Russell 1000 Index. This index measures the performance of the 1,000 largest U.S. companies based on total market capitalization. While the market capitalizations of companies in the Russell 1000 Index ranged from $238 million to $292 billion as of September 2002, the Advisor typically invests in common stocks that have market capitalizations of at least $5 billion at the time of purchase, and the weighted average market capitalization of the Fund is approximately $100 million. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o above average growth in revenue and earnings. o strong competitive position. o strong management. o sound financial condition. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- 28 -------------------------------------------------------------------------------- LARGE CAP CORE FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Long-term growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of large-capitalization companies, defined as companies that have market capitalizations within the range of market capitalizations of companies constituting the S&P 500 Index. The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. While the market capitalizations of companies in the S&P 500 Index ranged from $209 million to $292 billion as of September 2002, the Advisor typically invests in common stocks that have market capitalizations of at least $3 billion at the time of purchase. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o strong competitive position. o strong management. o sound financial condition. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: HEALTH SCIENCES FUND AND LARGE CAP CORE FUND The investment objectives of Health Sciences Fund and Large Cap Core Fund are identical - both Funds seek long-term growth of capital. As set forth in the tables below, there are differences between the investment strategies of Health Sciences Fund and Large Cap Core Fund. As a non-diversified sector fund, Health Sciences Fund invests primarily in common stocks of companies principally engaged in developing, producing or distributing products or services connected with health care or medicine. In contrast, Large Cap Core Fund does not restrict its investments to a particular business sector of the market. In addition, Health Sciences Fund's investments may include development stage companies, small- and mid-capitalization companies, as well as IPOs under certain market conditions, while Large Cap Core Fund invests primarily in large capitalization companies. 29 -------------------------------------------------------------------------------- HEALTH SCIENCES FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Long-term growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of companies that develop, produce or distribute products or services connected with health care or medicine, and that derive at least 50% of their assets, revenues or profits from these products or services at the time of investment. Examples of products or services connected with health care or medicine include: o pharmaceuticals. o health care services and administration. o diagnostics. o medical equipment and supplies. o medical technology. o medical research and development. The Advisor invests in companies that it believes have the potential for above average growth in revenue and earnings as a result of new or unique products, processes or services; increasing demand for a company's products or services; established market leadership; or exceptional management. The Fund's investments may include development stage companies (companies that do not have significant revenues) and small- and mid-capitalization companies. The Fund may also invest in real estate investment trusts ("REITs") that finance medical care facilities. REITs are publicly traded corporations or trusts that acquire, hold and manage real estate. Under certain market conditions, the Fund may frequently invest in companies at the time of their IPO. By virtue of its size and institutional nature, the Advisor may have greater access to IPOs than individual investors have, including access to so-called "hot issues" that are generally traded in the aftermarket at prices in excess of the IPO price. IPOs will frequently be sold within 12 months of purchase, which may result in increased short-term capital gains. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or -------------------------------------------------------------------------------- 30 -------------------------------------------------------------------------------- represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LARGE CAP CORE FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Long-term growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of large-capitalization companies, defined as companies that have market capitalizations within the range of market capitalizations of companies constituting the S&P 500 Index. The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. While the market capitalizations of companies in the S&P 500 Index ranged from $209 million to $292 billion as of September 2002, the Advisor typically invests in common stocks that have market capitalizations of at least $3 billion at the time of purchase. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o strong competitive position. o strong management. o sound financial condition. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: MID CAP GROWTH FUND AND MID CAP CORE FUND As set forth in the tables below, Mid Cap Growth Fund and Mid Cap Core Fund have substantially similar investment objectives and investment strategies. The investment objective of Mid Cap Growth Fund is growth of capital, while Mid Cap Core Fund seeks capital appreciation. Both Funds invest primarily in mid-capitalization companies. Mid Cap Growth Fund invests primarily in common stocks of companies that have market capitalizations within 31 the range of market capitalizations of companies constituting the Russell Midcap Index, which consists of companies with market capitalization ranging from approximately $163 million to $11.4 billion. Mid Cap Core Fund invests primarily in common stocks of companies that have market capitalizations within the range of market capitalizations of companies constituting the Standard & Poor's MidCap 400 Index ("S&P MidCap 400 Index"), which consists of companies with market capitalizations ranging from approximately $48 million to $7.2 billion. -------------------------------------------------------------------------------- MID CAP GROWTH FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of mid-capitalization companies, defined as companies that have market capitalizations at the time of purchase within the range of market capitalizations of companies constituting the Russell Midcap Index. This index measures the performance of the 800 smallest companies in the Russell 1000 Index (which is made up of the 1,000 largest U.S. companies based on total market capitalization). As of September 2002, market capitalizations of companies in the Russell Midcap Index ranged from approximately $163 million to $11.4 billion. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o above average growth in revenue and earnings. o strong competitive position. o strong management. o sound financial condition. Under certain market conditions, the Fund may frequently invest in companies at the time of their IPO. By virtue of its size and institutional nature, the Advisor may have greater access to IPOs than individual investors have, including access to so-called "hot issues" that are generally traded in the aftermarket at prices in excess of the IPO price. IPOs will frequently be sold within 12 months of purchase, which may result in increased short-term capital gains. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- 32 -------------------------------------------------------------------------------- MID CAP CORE FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Capital appreciation. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of mid-capitalization companies, defined as companies that have market capitalizations at the time of purchase within the range of market capitalizations of companies constituting the S&P MidCap 400 Index. This index measures the performance of 400 selected common stocks representing the middle capitalization segment of the U.S. stock market. As of September 2002, market capitalizations of companies in the S&P MidCap 400 Index ranged from approximately $48 million to $7.2 billion. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o strong competitive position. o strong management. o sound financial condition. Under certain market conditions, the Fund may frequently invest in companies at the time of their IPO. By virtue of its size and institutional nature, the Advisor may have greater access to IPOs than individual investors have, including access to so-called "hot issues" that are generally traded in the aftermarket at prices in excess of the IPO price. IPOs will frequently be sold within 12 months of purchase, which may result in increased short-term capital gains. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: SMALL CAP GROWTH FUND AND SMALL CAP CORE FUND As set forth in the tables below, Small Cap Growth Fund and Small Cap Core Fund have substantially similar investment objectives and investment strategies. The investment objective of Small Cap Growth Fund is growth of capital, while Small Cap Core Fund seeks capital appreciation. Both Funds invest primarily in small-capitalization companies. Small Cap Growth 33 Fund invests primarily in common stocks of companies that have market capitalizations within the range of market capitalizations of companies constituting the Russell 2000 Index, which consists of companies with market capitalizations ranging from approximately $8 million to $1.8 billion. Small Cap Core Fund invests primarily in common stocks of companies that have market capitalizations within the range of market capitalizations of companies constituting the Standard & Poor's Small Cap 600 Index ("S&P Small Cap 600 Index"), which consists of companies with market capitalizations ranging from approximately $23 million to $2.6 billion. -------------------------------------------------------------------------------- SMALL CAP GROWTH FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in common stocks of small-capitalization companies, defined as companies that have market capitalizations at the time of purchase within the range of market capitalizations of companies constituting the Russell 2000 Index. This index measures the performance of the 2,000 smallest companies in the Russell 3000 Index (which is made up of the 3,000 largest U.S. companies based on total market capitalization). As of September 2002, market capitalizations of companies in the Russell 2000 Index ranged from approximately $8 million to $1.8 billion. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o above average growth in revenue and earnings. o strong competitive position. o strong management. o sound financial condition. Under certain market conditions, the Fund may frequently invest in companies at the time of their IPO. By virtue of its size and institutional nature, the Advisor may have greater access to IPOs than individual investors have, including access to so-called "hot issues" that are generally traded in the aftermarket at prices in excess of the IPO price. IPOs will frequently be sold within 12 months of purchase, which may result in increased short-term capital gains. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- 34 -------------------------------------------------------------------------------- SMALL CAP CORE FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Capital appreciation. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at least 80% of net assets, plus the amount of any borrowings for investment purposes) in common stocks of small-capitalization companies, defined as companies that have market capitalizations at the time of purchase within the range of market capitalizations of companies constituting the S&P Small Cap 600 Index. This index measures the performance of 600 selected common stocks representing the small company segment of the U.S. market. As of September 2002, market capitalizations of companies in the S&P Small Cap 600 Index ranged from approximately $23 million to $2.6 billion. The Advisor selects companies that it believes exhibit the potential for superior growth based on factors such as: o above average growth in revenue and earnings. o strong competitive position. o strong management. o sound financial condition. Under certain market conditions, the Fund may frequently invest in companies at the time of their IPO. By virtue of its size and institutional nature, the Advisor may have greater access to IPOs than individual investors have, including access to so-called "hot issues" that are generally traded in the aftermarket at prices in excess of the IPO price. IPOs will frequently be sold within 12 months of purchase, which may result in increased short-term capital gains. Up to 25% of the Fund's total assets may be invested in securities of foreign issuers that are either listed on a U.S. stock exchange or represented by American Depositary Receipts. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: EMERGING MARKETS FUND AND INTERNATIONAL FUND The investment objectives of Emerging Markets Fund and International Fund are identical - each Fund seeks long-term growth of capital. As set forth in the tables below, 35 although the Funds both primarily invest in equity securities that trade in markets other than the U.S., there are differences between the Funds' investment strategies. For example, International Fund may select investments from a broader universe of companies than Emerging Markets Fund - International Fund invests primarily in equity securities that trade in markets other than the U.S., while Emerging Markets Fund invests primarily in equity securities of issuers in emerging markets (I.E., countries with a relatively low gross national product per capita compared to the world's major economies and the potential for rapid growth). Each Fund uses a different approach for selecting investments. The sub-advisor for Emerging Markets Fund places primary emphasis on country selection, followed by selection of industries or sectors within those countries and selection of individual stocks within those industries or sectors. The sub-advisor for International Fund selects investments through the use of a screening tool that focuses on valuation ranges to determine which companies represent the best values relative to their long-term growth prospects and local markets. In addition, Emerging Markets Fund normally invests in securities of issuers in at least six foreign countries, while International Fund normally invests in securities traded in at least three foreign countries. -------------------------------------------------------------------------------- EMERGING MARKETS FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Long-term growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in equity securities of issuers in emerging markets. Normally, the Fund invests in securities of issuers from at least six foreign countries. A country is considered to have an "emerging market" if it has a relatively low gross national product per capita compared to the world's major economies and the potential for rapid economic growth. Countries with emerging markets include: o those that have an emerging stock market (as defined by the International Financial Corporation). o those with low- to middle-income economies (according to the World Bank). o those listed in World Bank publications as "developing." A company is considered to be an emerging markets issuer if any of the following apply: o its securities are principally traded in an emerging market (including Hong Kong and Singapore). o it derives at least 50% of its total revenue from goods produced, sales made or services performed in emerging markets countries (including Hong Kong and Singapore). -------------------------------------------------------------------------------- 36 -------------------------------------------------------------------------------- o it maintains 50% or more of its assets in one or more emerging markets countries (including Hong Kong and Singapore). o it is organized under the laws of, or has a principal office in, an emerging markets country (including Hong Kong and Singapore). In choosing investments for the Fund, its sub-advisor generally places primary emphasis on country selection. This is followed by the selection of industries or sectors within or across countries and the selection of individual stocks within those industries or sectors. The Fund is not subject to any restrictions on the size of the companies in which it invests and it may invest in smaller capitalization companies. Equity securities in which the Fund invests include common and preferred stock. In addition, the Fund may invest in securities representing underlying international securities, such as American Depositary Receipts and European Depositary Receipts, and in securities of other investment companies. In order to hedge against adverse movements in currency exchange rates, the Fund may enter into forward foreign currency exchange contracts. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- INTERNATIONAL FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Long-term growth of capital. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in equity securities that trade in markets other than the U.S. These securities generally are issued by companies: o that are domiciled in countries other than the U.S., or o that derive at least 50% of either their revenues or their pre-tax income from activities outside of the U.S. Normally, the Fund invests in securities traded in at least three foreign countries. Stocks are selected by determining which companies represent the best values relative to their long-term growth prospects and local markets through the use of a screening tool that focuses on valuation ranges. Focus is placed on companies with steady, sustainable earnings growth rates that sell at a multiple lower than the average for that growth rate in the local market. Fundamental analysis is another important factor in terms of evaluating companies' balance sheets, market share and strength of management. -------------------------------------------------------------------------------- 37 -------------------------------------------------------------------------------- Equity securities in which the Fund invests include common and preferred stock. In addition, the Fund may invest in securities representing underlying international securities, such as American Depositary Receipts and European Depositary Receipts, and in securities of other investment companies. In order to hedge against adverse movements in currency exchange rates, the Fund may enter into forward foreign currency exchange contracts. -------------------------------------------------------------------------------- COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: BOND IMMDEX(TM) FUND AND FIXED INCOME FUND As set forth in the tables below, Bond IMMDEX(TM) Fund and Fixed Income Fund have identical investment objectives and similar investment strategies. The investment objective of each Fund is to provide investors with high current income consistent with limited risk to capital. Both Funds normally invest primarily in securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, corporate debt obligations and mortgage- and asset-backed securities. Bond IMMDEX(TM) Fund may also invest in debt obligations issued by foreign governments and other foreign issuers. Debt securities in each Fund are rated investment grade at the time of purchase or, if unrated, determined to be of comparable quality by the Advisor. Unrated securities will not exceed 25% of either Fund's total assets. The primary difference between the two Funds is that Bond IMMDEX(TM) Fund attempts to make its duration, return and overall interest rate sensitivity comparable to that of the Lehman Brothers Government/Credit Bond Index ("Lehman Index"), while Fixed Income Fund uses a "top down" approach to select investments. In selecting securities for Fixed Income Fund, the Advisor begins by formulating its general economic outlook followed by analysis and identification of various sectors and industries from which individual securities are selected. Fixed Income Fund normally attempts to maintain a weighted average effective maturity for its portfolio securities of 15 years or less and an average effective duration of three to eight years. In addition, Fixed Income Fund may invest up to 25% of total assets in dollar roll transactions (I.E., the sale of mortgage-backed securities for delivery in the current month while contracting with the same party to repurchase similar securities at a future date) to generate additional income. -------------------------------------------------------------------------------- BOND IMMDEX(TM) FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Provide investors with high current income consistent with Objective limited risk to capital. -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in a combination of: o securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. -------------------------------------------------------------------------------- 38 -------------------------------------------------------------------------------- o corporate debt obligations. o debt obligations issued by foreign governments and other foreign issuers. o mortgage- and asset-backed securities. The Advisor attempts to make the Fund's duration, return and overall interest rate sensitivity comparable to that of the Lehman Index. The Lehman Index is a good proxy for measuring the return and other characteristics of the fixed-rate debt market. However, the Fund is not an index fund and may invest a substantial portion of its assets in securities not included in the Lehman Index. Debt securities in the Fund are rated investment grade at the time of purchase or, if unrated, determined to be of comparable quality by the Advisor. If the rating of a security is reduced or discontinued after purchase, the Fund is not required to sell the security but may consider doing so. Unrated securities will not exceed 25% of the Fund's total assets. The Fund may invest up to 15% of its total assets in foreign securities payable in U.S. dollars. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. During normal market conditions, the Fund attempts to maintain a weighted average effective maturity and an average effective duration for its portfolio securities comparable to that of the Lehman Index. The Fund's weighted average effective maturity and effective duration are measures of how the Fund may react to interest rate changes. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FIXED INCOME FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Provide investors with high current income consistent with Objective limited risk to capital. -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests in investment Investment grade debt securities, such as: Strategies o U.S. government securities, (securities issued or guaranteed by the U.S. government or its agencies or instrumentalities), including zero coupon securities. o mortgage- and asset-backed securities. o corporate debt obligations. The Advisor selects securities using a "top-down" approach, which begins with the formulation of their general economic outlook. Following this, -------------------------------------------------------------------------------- 39 -------------------------------------------------------------------------------- various sectors and industries are analyzed and selected for investment. Finally, the Advisor selects individual securities within these sectors or industries. Debt securities the Fund holds are rated investment grade at the time of purchase or, if unrated, determined to be of comparable quality by the Advisor. If the rating of a security is reduced or the credit quality of an unrated security declines after purchase, the Fund is not required to sell the security, but may consider doing so. At least 65% of the Fund's debt securities have received at least an A or equivalent rating. Unrated securities will not exceed 25% of the Fund's total assets. At least 80% of the Fund's net assets (plus the amount of any borrowings for investment purposes) will be invested in fixed rate obligations. The Fund may invest up to 15% of its total assets in foreign securities payable in U.S. dollars. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. Under normal market conditions, the Fund attempts to maintain a weighted average effective maturity for its portfolio securities of 15 years or less and an average effective duration of three to eight years. The Fund's weighted average effective maturity and average effective duration are measures of how the Fund may react to interest rate changes. To generate additional income, the Fund may invest up to 25% of total assets in dollar roll transactions. In a dollar roll transaction, the Fund sells mortgage-backed securities for delivery in the current month while contracting with the same party to repurchase similar securities at a future date. -------------------------------------------------------------------------------- COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES: HIGH YIELD BOND FUND AND STRATEGIC INCOME FUND The investment objectives of High Yield Bond Fund and Strategic Income Fund are identical - each Fund seeks to provide investors with a high level of current income. As set forth in the tables below, although both Funds normally invest in "high-yield" securities (I.E., securities rated lower than investment grade at the time of purchase or unrated securities of comparable quality), there are differences between the Funds' investment strategies. For example, High Yield Bond Fund invests primarily in high-yield securities, while Strategic Income Fund currently invests primarily in a combination of (1) securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, (2) high-yield debt obligations issued by domestic issuers and (3) investment grade and high-yield debt obligations issued by foreign governments and other foreign issuers. As authorized by the Board at its meeting on December 3-4, 2002, Strategic Income Fund will be renamed High Income Bond Fund, effective January 31, 2003. It is anticipated that High Income Bond Fund will invest primarily in high-yield securities. 40 -------------------------------------------------------------------------------- HIGH YIELD BOND FUND (ACQUIRED FUND) -------------------------------------------------------------------------------- Investment Provide investors with a high level of current income. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowing for Strategies investment purposes) in securities rated lower than investment grade at the time of purchase or in unrated securities of comparable quality (securities commonly referred to as high-yield securities or "junk bonds"). These securities generally provide high income in an effort to compensate investors for their higher risk of default, which is the failure to make required interest or principal payments. High-yield bond issuers include small or relatively new companies lacking the history or capital to merit investment grade status, former blue chip companies downgraded because of financial problems, companies electing to borrow heavily to finance or avoid a takeover or buyout, and firms with heavy debt loads. The Advisor employs a bottom up approach to investing. It devotes more resources to evaluating individual securities rather than assessing macro-economic trends. Securities are selected using fundamental credit research to identify relative value in the market. Positions are sold in anticipation of credit deterioration or when a security is priced expensively relative to other comparable investments. There is no minimum rating requirement and no limitation on the average effective maturity or average effective duration of securities held by the Fund. The Fund may invest up to 25% of its total assets in foreign debt securities payable in U.S. dollars. These securities may be of the same type as the Fund's permissible investments in U.S. domestic securities. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- STRATEGIC INCOME FUND (ACQUIRING FUND) -------------------------------------------------------------------------------- Investment Provide investors with a high level of current income. Objective -------------------------------------------------------------------------------- Principal Under normal market conditions, the Fund invests primarily (at Investment least 80% of net assets, plus the amount of any borrowings for Strategies investment purposes) in a combination of: o securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including mortgage-backed securities, and investment grade debt obligations issued by domestic users. o high-yield (non-investment grade) debt obligations issued by domestic issuers. -------------------------------------------------------------------------------- 41 -------------------------------------------------------------------------------- o investment grade and high-yield debt obligations issued by foreign governments and other foreign issuers. The Fund's foreign investments may include investments in emerging markets. The Fund's investments may include securities that do not pay interest currently, such as zero coupon securities and delayed interest securities. The Fund also may invest in payment-in-kind bonds, on which interest is paid in other securities rather than cash. In addition to debt obligations, the Fund may invest in preferred stock, convertible securities and equity securities, including common stock and warrants. These investments may be denominated in U.S. dollars or foreign currencies. There is no minimum rating requirement for securities in which the Fund may invest (which means that the Fund may invest in high-yield securities). In addition, there is no limitation on the average maturity or average effective duration of securities held by the Fund. To generate additional income, the Fund may invest up to 25% of total assets in dollar roll transactions. In a dollar roll transaction, the Fund sells mortgage-backed securities for delivery in the current month while contracting with the same party to repurchase similar securities at a future date. -------------------------------------------------------------------------------- ADDITIONAL INVESTMENT STRATEGIES In addition to the principal investment strategies of each Fund described above, each Fund may also engage in other types of investment practices, including: Temporary Investments. In an attempt to respond to adverse market, economic, political, or other conditions, each Fund may temporarily invest without limit in cash and in U.S. dollar-denominated high-quality money market instruments and other short-term securities. Being invested in these securities may keep a Fund from participating in a market upswing and prevent the Fund from achieving its investment objectives. Portfolio Turnover. Fund managers may trade securities frequently, resulting, from time to time, in an annual portfolio turnover rate of over 100%. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of commissions or mark-ups to broker-dealers that the Fund pays when it buys and sells securities. The "Financial Highlights Tables" in Appendix C show each Fund's historical portfolio turnover rate. Additional information about each Fund's investment strategies is set forth in the Funds' prospectuses and SAI. The Acquiring Funds' prospectuses are enclosed with this 42 Prospectus/Proxy Statement. The Acquired Funds' prospectuses and the Funds' SAI are available upon request by calling 1-800-677-FUND. PERFORMANCE COMPARISON OF THE FUNDS The performance information below compares the performance of each Acquired Fund to that of its corresponding Acquiring Fund. The bar charts and tables illustrate the variability of each Fund's performance over time. The bar charts show each Fund's performance from year to year (using the class of the Acquiring Fund with the longest operating history as an example and basis of comparison). The tables compare the performance of each class of each Fund to the performance of a market index (or indexes) over various periods of time. The average annual total returns for each class of each Fund include the effect of sales charges. Of course, PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS. After-tax returns are only shown for one class (using the class of the Acquiring Fund with the longest operating history as a basis for comparison) and after-tax returns for other classes will vary. After-tax returns are calculated using the historically highest individual federal marginal income tax rates, but do not reflect the impact of state or local taxes. Actual after-tax returns depend on your tax situation and may differ from the returns shown below. The after-tax returns are not relevant if you hold your Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. The bar charts and tables assume reinvestment of all dividends and other distributions. Performance reflects fee waivers in effect. If these fee waivers were not in place, each Fund's performance would be reduced. 43 PERFORMANCE COMPARISON: LARGE CAP GROWTH FUND AND LARGE CAP CORE FUND - CLASS Y SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR LARGE CAP CORE FUND [BAR CHART] 9.98% -5.34% 30.03% 18.15% 22.91% 30.46% 14.29% -1.22% -22.21% -------------------------------------------------------------------------------- 1993 1994 1995 1996 1997 1998 1999 2000 2001 Best Quarter: Q4 '98 24.04% Worst Quarter: Q3 '01 (17.48)% Year-to-date total return as of September 30, 2002 was (29.38)% LARGE CAP GROWTH FUND [BAR CHART] 28.22% 25.84% -11.86% -23.86% ----------------------------------------------- 1998 1999 2000 2001 Best Quarter: Q4 '98 29.76% Worst Quarter: Q1 '01 (20.11)% Year-to-date total return as of September 30, 2002 was (35.16)% AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
-------------------------------------------------------- ------------- ------------- ---------- ------------------ Inception Since LARGE CAP CORE FUND(1) Date 1 Year 5 Years Inception -------------------------------------------------------- ------------- ------------- ---------- ------------------ Class A - Return Before Taxes 1/9/95 (26.68)% 5.62% 10.54% Class B - Return Before Taxes 3/1/99 (26.86)% N/A (5.91)% Class C - Return Before Taxes(2) 9/24/01 N/A N/A N/A Class S - Return Before Taxes 11/27/00 (22.40)% N/A (21.66)% Class Y - Return Before Taxes 12/29/92 (22.21)% 7.09% 9.49% Return After Taxes on Distributions (22.28)% 4.81% 8.01% Return After Taxes on Distributions and Sale of Fund Shares (13.53)% 5.42% 7.73% S&P 500(3) (reflects no deduction for fees, expenses or taxes) N/A (11.88)% 10.70% N/A -------------------------------------------------------- ------------- ------------- ---------- ------------------ LARGE CAP GROWTH FUND(4) -------------------------------------------------------- ------------- ------------- ---------- ------------------ Class A - Return Before Taxes 3/31/00 (28.23)% N/A (25.40)% Class B - Return Before Taxes 12/12/94 (28.42)% 5.58% 11.58% Class C - Return Before Taxes(2) 9/24/01 N/A N/A N/A Class S - Return Before Taxes 12/11/00 (24.05)% N/A (29.73)% Class Y - Return Before Taxes 8/18/97 (23.86)% N/A 3.07% Return After Taxes on Distributions (23.83)% N/A 2.11% Return After Taxes on Distributions and Sale of Fund Shares (14.51)% N/A 2.11% Russell 1000 Growth Index(5) (reflects no deduction for fees, expenses or taxes) N/A (20.42)% 8.27% N/A -------------------------------------------------------- ------------- ------------- ---------- ------------------
(1)On 9/24/01, Large Cap Core Fund became the successor by merger to Firstar Large Cap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, Large Cap Core Fund had no assets or liabilities. Performance presented prior to 9/24/01 represents that of Firstar Large Cap Core Equity Fund. (2)No information is presented for Class C shares of Large Cap Core Fund and Large Cap Growth Fund because such shares were not offered for a full calendar year. (3)An unmanaged index of large capitalization stocks. (4)On 5/17/02, Capital Growth Fund merged into Large Cap Growth Fund, each a series of FAIF. Performance presented prior to 5/17/02 represents that of Capital Growth Fund. On 9/24/01, Capital Growth Fund became the successor by merger to Firstar Large Cap Growth Fund, a series of Firstar Funds, Inc. Prior to the merger, Large Cap Growth Fund had no assets or liabilities. Performance presented prior to 9/24/01 represents that of Firstar Large Cap Growth Fund. Firstar 44 Large Cap Growth Fund was organized on 12/11/00 and, prior to that, was a separate series of Firstar Stellar Funds, Inc. (5)The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 1000 companies include the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represent approximately 98% of the investable U.S. equity market. 45 PERFORMANCE COMPARISON: HEALTH SCIENCES FUND AND LARGE CAP CORE FUND - CLASS Y SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR LARGE CAP CORE FUND [BAR CHART] 9.98% -5.34% 30.03% 18.15% 22.91% 30.46% 14.29% -1.22% -22.21% -------------------------------------------------------------------------------- 1993 1994 1995 1996 1997 1998 1999 2000 2001 Best Quarter: Q4 '98 24.04% Worst Quarter: Q3 '01 (17.48)% Year-to-date total return as of September 30, 2002 was (29.38)% HEALTH SCIENCES FUND [BAR CHART] 16.50% -6.87% -0.82% 47.09% -11.73% -------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 Best Quarter: Q2 '00 20.07% Worst Quarter: Q3 '98 (22.38)% Year-to-date total return as of September 30, 2002 was (24.10)% AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
-------------------------------------------------------- ------------- ------------- ---------- ------------------ Inception Since LARGE CAP CORE FUND(1) Date 1 Year 5 Years Inception -------------------------------------------------------- ------------- ------------- ---------- ------------------ Class A - Return Before Taxes 1/9/95 (26.68)% 5.62% 10.54% Class B - Return Before Taxes 3/1/99 (26.86)% N/A (5.91)% Class C - Return Before Taxes(2) 9/24/01 N/A N/A N/A Class S - Return Before Taxes 11/27/00 (22.40)% N/A (21.66)% Class Y - Return Before Taxes 12/29/92 (22.21)% 7.09% 9.49% Return After Taxes on Distributions (22.28)% 4.81% 8.01% Return After Taxes on Distributions and Sale of Fund Shares (13.53)% 5.42% 7.73% S&P 500(3) (reflects no deduction for fees, expenses or taxes) N/A (11.88)% 10.70% N/A -------------------------------------------------------- ------------- ------------- ---------- ------------------ HEALTH SCIENCES FUND -------------------------------------------------------- ------------- ------------- ---------- ------------------ Class A - Return Before Taxes 1/31/96 (16.83)% 5.44% 4.49% Class B - Return Before Taxes 1/31/96 (17.01)% 5.54% 4.59% Class C - Return Before Taxes 2/1/00 (14.39)% N/A 8.55% Class S - Return Before Taxes 1/31/96 (11.98)% 6.64% 5.49% Class Y - Return Before Taxes 1/31/96 (11.73)% 6.92% 5.76% Return After Taxes on Distributions (11.73)% 5.42% 4.42% Return After Taxes on Distributions and Sale of Fund Shares (7.14)% 5.18% 4.26% Standard & Poor's Health Care Composite Index(4) (reflects no deduction for fees, expenses or taxes) N/A (12.88)% 16.00% N/A -------------------------------------------------------- ------------- ------------- ---------- ------------------
(1)On 9/24/01, Large Cap Core Fund became the successor by merger to Firstar Large Cap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, Large Cap Core Fund had no assets or liabilities. Performance presented prior to 9/24/01 represents that of Firstar Large Cap Core Equity Fund. (2)No information is presented for Class C shares of Large Cap Core Fund because such shares were not offered for a full calendar year. (3)An unmanaged index of large capitalization stocks. (4)An unmanaged index comprised of health care stocks in the S&P 500 Index (an unmanaged index of large capitalization stocks). 46 PERFORMANCE COMPARISON: MID CAP GROWTH FUND AND MID CAP CORE FUND - CLASS Y SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR MID CAP CORE FUND [BAR CHART] 7.22% 8.02% -2.01% 29.64% 18.87% 17.42% 4.91% 2.53% 25.60% -3.41% -------------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Best Quarter: Q4 '99 24.27% Worst Quarter: Q3 '01 (19.85)% Year-to-date total return as of September 30, 2002 was (21.07)% MID CAP GROWTH FUND [BAR CHART] 10.84% 55.02% 3.84% -29.05% -------------------------------------------------------------------------------- 1998 1999 2000 2001 Best Quarter: Q4 '99 47.87% Worst Quarter: Q3 '01 (28.64)% Year-to-date total return as of September 30, 2002 was (36.09)% AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
----------------------------------------------- ------------- -------------- ------------ ----------- ------------ Inception Since MID CAP CORE FUND(1) Date 1 Year 5 Years 10 Years Inception ----------------------------------------------- ------------- -------------- ------------ ----------- ------------ Class A - Return Before Taxes 1/9/95 (8.95)% 7.42% N/A 12.11% Class B - Return Before Taxes 3/1/99 (9.23)% N/A N/A 11.10% Class C - Return Before Taxes(2) 9/24/01 N/A N/A N/A N/A Class S - Return Before Taxes 12/11/00 (3.68)% N/A N/A (5.87) Class Y -Return Before Taxes 12/28/89 (3.41)% 8.91% 10.38% N/A Return After Taxes on Distributions (3.41)% 5.80% 7.87% N/A Return After Taxes on Distributions and Sale of Fund Shares (2.08)% 6.21% 7.73% N/A Standard & Poor's MidCap 400 Index(3) (reflects no deduction for fees, expenses or taxes) N/A (0.61)% 16.11% 15.02% N/A ----------------------------------------------- ------------- -------------- ------------ ----------- ------------ MID CAP GROWTH FUND (4,5) ----------------------------------------------- ------------- -------------- ------------ ----------- ------------ Class A - Return Before Taxes 4/23/90 (33.14)% 7.86% 10.64% N/A Class B - Return Before Taxes 8/7/98 (33.30)% N/A N/A 4.67% Class C - Return Before Taxes(2) 2/1/99 (31.11)% N/A N/A 2.86% Class S - Return Before Taxes 4/23/90 (29.25)% 9.09% N/A 11.27% Class Y -Return Before Taxes 2/18/97 (29.05)% N/A N/A 9.11% Return After Taxes on Distributions (29.05)% N/A N/A 3.74% Return After Taxes on Distributions and Sale of Fund Shares (17.69)% N/A N/A 6.45% Russell MidCap Growth Index(6) (reflects no deduction for fees, expenses or taxes) N/A (20.15)% 9.02% 11.10% N/A ----------------------------------------------- ------------- -------------- ------------ ----------- ------------
(1)On 9/24/01, Mid Cap Core Fund became the successor by merger to Firstar MidCap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, Mid Cap Core Fund had no assets or liabilities. Performance presented prior to 9/24/01 represents the performance of Firstar MidCap Core Equity Fund. (2)No information is presented for Class C shares because such shares were not offered for a full calendar year. (3)An unmanaged, capitalization weighted index that represents the aggregate market value of the common equity of 400 companies chosen by Standard & Poor's with a median capitalization of approximately $700 million and measures the performance of the mid-range sector of the U.S. stock market. 47 (4)Mid Cap Growth Fund's 1999 returns were higher due in part to its strategy of investing in IPOs in a period favorable for IPO investing. Of course, such favorable returns involve accepting the risk of volatility, and there is no assurance that the Fund's investment in IPOs will have the same effect on performance as it did in 1999. (5)On 8/7/98, Mid Cap Growth Fund became the successor by merger to Piper Emerging Growth Fund, a series of Piper Funds Inc. Prior to the merger, Mid Cap Growth Fund had no assets or liabilities. Performance presented prior to 8/7/98 represents that of Piper Emerging Growth Fund. (6)An unmanaged index that measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. 48 PERFORMANCE COMPARISON: SMALL CAP GROWTH FUND AND SMALL CAP CORE FUND - CLASS A SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR SMALL CAP CORE FUND [BAR CHART] 23.58% 2.26% 17.14% 10.50% 20.51% -8.07% 16.70% 19.71% 12.08% --------------------------------------------------------------------------------------------- 1993 1994 1995 1996 1997 1998 1999 2000 2001
Best Quarter: Q4 '01 27.35% Worst Quarter: Q3 '98 (24.80)% Year-to-date total return as of September 30, 2002 was (25.05)% SMALL CAP GROWTH FUND [BAR CHART] 11.47% 10.98% -2.44% 20.20% 11.68% 29.23% 7.73% 66.76% -5.97% -20.60% -------------------------------------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Best Quarter: Q4 '99 51.34% Worst Quarter: Q3 '01 (28.97)% Year-to-date total return as of September 30, 2002 was (34.84)% AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
-------------------------------------------------- ----------- ----------- ---------- ------------- ------------ Inception Since SMALL CAP CORE FUND(1) Date 1 Year 5 Years 10 Years Inception -------------------------------------------------- ----------- ----------- ---------- ------------- ------------ Class A - Return Before Taxes 5/6/92 5.93% 10.39% N/A 12.51% Return After Taxes on Distributions 4.55% 8.11% N/A 9.50% Return After Taxes on Distributions and Sale of Fund Shares 4.71% 7.78% N/A 9.03% Class B - Return Before Taxes 3/6/95 6.36% 10.63% N/A 11.09% Class C - Return Before Taxes(2) 9/24/01 N/A N/A N/A N/A Class S - Return Before Taxes 1/3/94 12.36% 11.70% N/A 10.95% Class Y - Return Before Taxes 5/6/92 12.39% 11.97% N/A 13.42% Standard & Poor's SmallCap 600 Index(3) (reflects no deduction for fees, expenses or taxes) N/A 6.54% 10.66% N/A N/A -------------------------------------------------- ----------- ----------- ---------- ------------- ------------ SMALL CAP GROWTH FUND(4,5) -------------------------------------------------- ----------- ----------- ---------- ------------- ------------ Class A - Return Before Taxes 3/16/87 (24.97)% 10.37% 10.25% N/A Return After Taxes on Distributions (24.97)% 7.57% 7.47% N/A Return After Taxes on Distributions and Sale of Fund Shares (15.21)% 7.96% 7.61% N/A Class B - Return Before Taxes 7/31/98 (25.18)% N/A N/A 7.35% Class C - Return Before Taxes 2/1/99 (22.83)% N/A N/A 6.03% Class S - Return Before Taxes 3/16/87 (20.60)% 11.63% 10.88% N/A Class Y - Return Before Taxes 7/31/98 (20.42)% N/A N/A 9.13% Russell 2000 Growth Index(6) (reflects no deduction for fees, expenses or taxes) N/A (9.23)% 2.87% 7.19% N/A -------------------------------------------------- ----------- ----------- ---------- ------------- ------------
(1)On 9/24/01, Small Cap Core Fund became the successor by merger to Firstar Small Cap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, Small Cap Core Fund had no assets or liabilities. Performance presented prior to 9/24/01 represents that of Firstar Small Cap Core Equity Fund. Firstar Small Cap Core Equity Fund was organized on 11/27/00 and, prior to that, was a separate series of Mercantile Mutual Funds, Inc. 49 (2)No information is presented for Class C shares because such shares were not offered for a full calendar year. (3)An unmanaged, capitalization weighted index that measures the performance of selected U.S. stocks with small market capitalizations. (4)Small Cap Growth Fund's 1999 returns were higher due in part to its strategy of investing in IPOs in a period favorable for IPO investing. Of course, such favorable returns involve accepting the risk of volatility, and there is no assurance that the fund's future investment in IPOs will have the same effect on performance as it did in 1999. (5)On 7/31/98, the Small Cap Growth Fund became the successor by merger to the Piper Small Company Growth Fund, a series of Piper Funds Inc. Performance presented prior to 7/31/98 represents that of the Piper Small Company Growth Fund. On 9/21/96, shareholders approved a change in the fund's investment objective from high total investment return consistent with prudent investment risk to long-term capital appreciation. In connection with this change, the fund's investment policies were revised. (6)An unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. 50 PERFORMANCE COMPARISON: EMERGING MARKETS FUND AND INTERNATIONAL FUND - CLASS A SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR INTERNATIONAL FUND [BAR CHART] 9.41% 9.98% 4.68% 17.42% 50.47% -15.58% -23.52 -------------------------------------------------------------------------------- 1995 1996 1997 1998 1999 2000 2001 Best Quarter: Q4 '99 27.41% Worst Quarter: Q3 '99 (17.12)% Year-to-date total return as of September 30, 2002 was (23.08)%. EMERGING MARKETS FUND [BAR CHART] -18.10% -21.77% 29.31% -1.27% -30.08% 60.16% -22.89% -11.05% -------------------------------------------------------------------------------- 1994 1995 1996 1997 1998 1999 2000 2001 Best Quarter: Q4 '99 49.04% Worst Quarter: Q1 `95 (30.83)% Year-to-date total return as of September 30, 2002 was (10.12)%. AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
----------------------------------------------------------- ----------- ------------- -------------- ------------- Inception Since INTERNATIONAL FUND(1) Date 1 Year 5 Years Inception ----------------------------------------------------------- ----------- ------------- -------------- ------------- Class A - Return Before Taxes 5/2/94 (27.75)% 2.45% 3.91% Return After Taxes on Distributions (27.75)% 0.33% 2.35% Return After Taxes on Distributions and Sale of Fund Shares (16.90)% 1.28% 2.64% Class B - Return Before Taxes 3/6/95 (27.93)% 2.55% 5.36% Class C - Return Before Taxes(2) 9/24/01 N/A N/A N/A Class S - Return Before Taxes 4/24/94 (23.45)% 3.62% 4.90% Class Y - Return Before Taxes 4/4/94 (23.38)% 3.90% 5.09% Morgan Stanley Capital International Europe, Australasia, Far East Index(3) (reflects no deduction for fees, expenses or taxes) N/A (21.21)% 1.17% N/A ----------------------------------------------------------- ----------- ------------- -------------- ------------- EMERGING MARKETS FUND(4) ----------------------------------------------------------- ----------- ------------- -------------- ------------- Class A - Return Before Taxes 11/9/93 (15.92)% (6.44)% (5.04)% Return After Taxes on Distributions (15.92)% (6.46)% (5.06)% Return After Taxes on Distributions and Sale of Fund Shares (9.69)% (5.02)% (3.88)% Class B - Return Before Taxes 8/7/98 (16.30)% N/A (3.07)% Class C - Return Before Taxes 2/1/00 (13.53)% N/A (18.31)% Class S - Return Before Taxes(2) 9/24/01 N/A N/A N/A Class Y - Return Before Taxes 8/7/98 (10.92)% N/A (1.17)% Morgan Stanley Capital International Emerging Markets Free Index(5) (reflects no deduction for fees, expenses or taxes) N/A (2.84)% (5.83)% N/A ----------------------------------------------------------- ----------- ------------- -------------- -------------
(1)On 7/1/01, Clay Finlay, Inc. was hired as sub-advisor to manage International Fund's assets. On 9/24/01, International Fund merged with Firstar International Growth Fund and Firstar International Value Fund, both sub-advised by Clay Finlay, Inc. Performance history prior to 9/24/01 represents that of Firstar International Growth Fund. (2)No information is presented for Class C shares of International Fund or Class S shares of Emerging Markets Fund because such shares were not offered for a full calendar year. 51 (3)An unmanaged index including approximately 1,100 companies representing the stock markets of 20 European countries, Australia, New Zealand, Japan, Hong Kong and Singapore. (4)On 8/7/98, Emerging Markets Fund became the successor by merger to the Piper Emerging Markets Growth Fund. Prior to the merger, Emerging Markets Fund had no assets or liabilities. Performance presented from 6/21/96 to 8/7/98 is that of Emerging Markets Growth Fund, a series of Piper Global Funds Inc. for which Edinburgh Fund Managers acted as sub-advisor. Performance presented prior to 6/21/96 is that of the Hercules Latin Value Fund, a series of Hercules Funds, Inc. for which Banker's Trust Company acted as sub-advisor. (5)An unmanaged index of securities from emerging markets that are open to foreign investors. 52 PERFORMANCE COMPARISON: BOND IMMDEX(TM) FUND AND FIXED INCOME FUND - CLASS A SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR FIXED INCOME FUND [BAR CHART] 6.46 9.65% -2.42% 17.02% 3.20% 8.47% 8.67% -3.00% 10.79% 7.84% -------------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Best Quarter: Q2 '95 6.06% Worst Quarter: Q1 '94 (2.04)% Year-to-date total return as of September 30, 2002 was 6.58%. BOND IMMDEX(TM) FUND [BAR CHART] 2.79% 9.16% 8.94% -1.64% 11.61% 6.66% -------------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 Best Quarter: Q2 '95 6.58% Worst Quarter: Q1 '96 (2.33)% Year-to-date total return as of September 30, 2002 was 7.49%. AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
--------------------------------------------- ----------- ------------- -------------- ------------- ------------ Inception Since FIXED INCOME FUND Date 1 Year 5 Years 10 Years Inception --------------------------------------------- ----------- ------------- -------------- ------------- ------------ Class A - Return Before Taxes 12/22/87 3.30% 5.52% 6.05% N/A Return After Taxes on Distributions 1.12% 3.19% 3.58% N/A Return After Taxes on Distributions and Sale of Fund Shares 1.97% 3.24% 3.60% N/A Class B - Return Before Taxes 8/15/94 2.02% 5.34% N/A 6.18% Class C - Return Before Taxes 2/1/99 5.01% N/A N/A N/A Class S - Return Before Taxes 12/22/87 7.84% 6.44% 6.51% N/A Class Y - Return Before Taxes 2/4/94 8.10% 6.72% N/A 6.39% Lehman Aggregate Bond Index(1) (reflects no deduction for fees, expenses or taxes) N/A (21.21)% 1.17% N/A N/A --------------------------------------------- ----------- ------------- -------------- ------------- ------------ BOND IMMDEX(TM) FUND(2) --------------------------------------------- ----------- ------------- -------------- ------------- ------------ Class A - Return Before Taxes 1/9/95 2.13% 5.92% N/A 7.30% Return After Taxes on Distributions (0.16)% 3.45% N/A 4.77% Return After Taxes on Distributions and Sale of Fund Shares 1.29% 3.49% N/A 4.61% Class B - Return Before Taxes 3/1/99 0.91% N/A N/A 4.62% Class C - Return Before Taxes(3) 9/24/01 N/A N/A N/A N/A Class S - Return Before Taxes 12/11/00 6.67% N/A N/A 7.78% Class Y - Return Before Taxes 12/29/89 6.96% 7.11% 7.23% N/A Lehman Government/Credit Bond Index(4) (reflects no deduction for fees, expenses or taxes) N/A 8.50% 7.36% 7.27% N/A --------------------------------------------- ----------- ------------- -------------- ------------- ------------
(1)An unmanaged index composed of the Lehman Government/Credit Bond Index, the Lehman Mortgage Backed Securities Index and the Lehman Asset Backed Securities Index. The Lehman Government/Credit Bond Index is comprised of Treasury securities, other securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including U.S. agency mortgage securities, and investment-grade corporate debt securities. The Lehman Mortgage Backed Securities Index is comprised of the mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae, and Freddie Mac. The Lehman Asset-Backed Index is comprised of debt securities rated investment grade or higher that are backed by credit card, auto and home equity loans. 53 (2)On 9/24/01, Bond IMMDEX(TM) Fund became the successor by merger to the Firstar Bond IMMDEX(TM) Fund, a series of Firstar Funds, Inc. Prior to the merger, Bond IMMDEX(TM) Fund had no assets or liabilities. Performance presented prior to 9/24/01 represents that of the Firstar Bond IMMDEX(TM) Fund. (3)No information is presented for Class C shares because such shares were not offered for a full calendar year. (4)An unmanaged index of Treasury securities, other securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, including U.S. agency mortgage securities, and investment-grade corporate debt securities, in each case with maturities of not less than one year. 54 PERFORMANCE COMPARISON: HIGH YIELD BOND FUND AND STRATEGIC INCOME FUND - CLASS Y SHARES YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31 EACH YEAR STRATEGIC INCOME FUND [BAR CHART] 3.32% 3.17% 6.95% -------------------------------------------------------------------------------- 1999 2000 2001 Best Quarter: Q4 '01 4.99% Worst Quarter: Q3 '01 (1.83)% Year-to-date total return as of September 30, 2002 was ____%. Because High Yield Bond Fund shares were not offered for a full calendar year, no performance information is presented for High Yield Bond Fund. Best Quarter: Q4 '01 4.99% Worst Quarter: Q3 '01 (1.83)% Year-to-date total return as of September 30, 2002 was ____%. AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
-------------------------------------------------------------------------- ----------- -------------- ------------ Inception Since STRATEGIC INCOME FUND Date 1 Year Inception -------------------------------------------------------------------------- ----------- -------------- ------------ Class A - Return Before Taxes 7/24/98 2.14% 2.05% Class B - Return Before Taxes 7/24/98 2.02% 1.89% Class C - Return Before Taxes 2/1/99 3.69% 3.27% Class S - Return Before Taxes 7/24/98 6.69% 3.34% Class Y - Return Before Taxes 7/24/98 6.95% 3.62% Return After Taxes on Distributions 3.34% 0.43% Return After Taxes on Distributions and Sale of Fund Shares 4.18% 1.27% Lehman Aggregate Bond Index(1) (reflects no deduction for fees, expenses or taxes) N/A 8.44% N/A -------------------------------------------------------------------------- ----------- -------------- ------------
(1)An unmanaged index composed of the Lehman Government/Credit Bond Index, the Lehman Mortgage Backed Securities Index and the Lehman Asset Backed Securities Index. The Lehman Government/Credit Bond Index is comprised of Treasury securities, other securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including U.S. agency mortgage securities, and investment-grade corporate debt securities. The Lehman Mortgage Backed Securities Index is comprised of the mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae, and Freddie Mac. The Lehman Asset-Backed Index is comprised of debt securities rated investment grade or higher that are backed by credit card, auto and home equity loans. 55 ADDITIONAL PERFORMANCE INFORMATION Information concerning the factors that materially affected each Fund's performance during the fiscal year ended September 30, 2002, is excerpted from the Funds' Annual Report for such year and is included in Appendix B to this Prospectus/Proxy Statement. FORM OF ORGANIZATION Each Fund is a separate series of FAIF, a Maryland corporation that is registered as an open-end management investment company under the 1940 Act. FAIF was incorporated in the State of Maryland on August 20, 1987, under the name "SECURAL Mutual Funds, Inc." The Board of Directors and shareholders, at meetings held January 10, 1991, and April 2, 1991, respectively, approved amendments to the Articles of Incorporation providing that the name "SECURAL Mutual Funds, Inc." be changed to "First American Investment Funds, Inc." FAIF is organized as a series fund and currently issues 43 series, including the Funds. Each series of shares represents a separate investment portfolio with its own investment objective and policies. INVESTMENT ADVISORY SERVICES Each Fund has the same investment advisor, U.S. Bancorp Asset Management, Inc. (the "Advisor"). Pursuant to an Investment Advisory Agreement with FAIF, the Advisor manages the Funds' business and investment activities, subject to the authority of the Board of Directors. A team of portfolio managers employed by the Advisor, or by a sub-advisor retained by the Advisor, manages each Acquiring Fund. Investment Advisor. The Advisor is located at 800 Nicollet Mall, Minneapolis, MN 55402. The Advisor is a subsidiary of U.S. Bank National Association (which, in turn, is a subsidiary of U.S. Bancorp, formerly Firstar Corporation). The Advisor succeeded First American Asset Management ("FAAM"), a division of U.S. Bank National Association, on May 1, 2001, when the business and assets of FAAM and Firstar Investment Research & Management Company, LLC ("FIRMCO"), a subsidiary of U.S. Bancorp, were combined to form the Advisor. The Advisor provides investment management services to individuals and institutions, including corporations, foundations, pensions and retirement plans. As of September 30, 2002, the Advisor and its affiliates had more than $111 billion in assets under management, including investment company assets of more than $51 billion. As described above in "Comparison of Fees," each Fund pays the Advisor a monthly fee for providing investment advisory services. The Advisor may, at its discretion, reduce or waive its fee or reimburse each Fund for certain of its other expenses in order to reduce the expense ratios from time to time. Unless otherwise agreed upon, the Advisor may also reduce or cease these voluntary waivers and reimbursements at any time. Sub-Advisors. Clay Finlay, Inc. ("Clay Finlay"), located at 200 Park Avenue, New York, NY 10166, is the sub-advisor to the International Fund and is responsible for the investment and reinvestment of the Fund's assets and the placement of brokerage transactions for the Fund. 56 Clay Finlay has been retained by the Advisor and is paid a portion of the advisory fee. Clay Finlay is an international equity investment management firm that was founded in 1982 and offers a full range of global, international and regional equity mandates. Clay Finlay is a wholly owned subsidiary of Old Mutual plc., a publicly owned international financial services group listed on the London Stock Exchange. As of September 30, 2002, Clay Finlay had $4.7 billion in assets under management. Federated Global Investment Management Corp. ("Federated"), a subsidiary of Federated Investors, Inc., is a sub-advisor to the Strategic Income Fund. Federated is located at 175 Water Street, New York, New York 10038-4964. Federated has been retained by the Advisor and is paid a portion of the advisory fee. Federated and other subsidiaries of Federated Investors serve as investment advisors to a number of investment companies and private accounts. As of September 30, 2002, Federated Investors, Inc. managed approximately $181 billion in assets. Federated will be terminated as the sub-advisor to the Strategic Income Fund, effective January 31, 2003, after which time Strategic Income Fund will be renamed High Income Bond Fund and managed by the Advisor. Marvin & Palmer Associates ("Marvin & Palmer"), 1201 North Market Street, Suite 2300, Wilmington, Delaware 19801, is the sub-advisor to Emerging Markets Fund and is responsible for the investment and reinvestment of the Fund's assets and the placement of brokerage transactions for the Fund. Marvin & Palmer has been retained by the Fund's Advisor and is paid a portion of the advisory fee. A privately held company founded in 1986, Marvin & Palmer is engaged in the management of global, non-U.S., domestic, and emerging markets equity portfolios, principally for institutional accounts. As of September 30, 2002, the sub-advisor managed a total of approximately $5.8 billion in investments. Portfolio Management. Except for Strategic Income Fund, Emerging Markets Fund and International Fund, each Fund's investments are managed by a team of persons employed by the Advisor. In the case of Strategic Income Fund, the Advisor manages the Fund's investments in U.S. government obligations, investment grade and high-yield domestic debt obligations, and U.S. dollar-denominated foreign corporate debt obligations, while a team of persons employed by Federated currently manages the Fund's investments in investment grade and high yield foreign government and foreign corporate debt obligations. Effective January 31, 2003, Strategic Income Fund will be renamed High Income Bond Fund and its investments will be managed by a team of persons employed by the Advisor. Emerging Markets Fund's investments are managed by a team of persons employed by Marvin & Palmer. International Fund's investments are managed by a team of persons employed by Clay Finlay. 57 OPERATIONS OF THE ACQUIRING FUNDS FOLLOWING THE REORGANIZATIONS Based on its review of each Fund's investment portfolio, the Advisor believes that most of the assets held by each Acquired Fund will be consistent with the corresponding Acquiring Fund's investment objective and policies and thus can be transferred to and held by that Acquiring Fund if the Reorganization Plan is approved for those Funds. If, however, any Acquired Fund has any assets that the corresponding Acquiring Fund may not hold, those assets will be sold prior to the Reorganizations. The proceeds of those sales will be held in temporary investments or reinvested in assets that the corresponding Acquiring Fund may hold. The possible need for an Acquired Fund to dispose of assets prior to the Reorganizations could result in selling securities at a disadvantageous time and could result in an Acquired Fund's realizing losses that would not otherwise have been realized. Alternatively, these sales could result in an Acquired Fund's realizing gains that would not otherwise have been realized, the net proceeds of which would be included in a distribution to its shareholders prior to the Reorganizations. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS As a condition to the closing of each Reorganization, FAIF will receive an opinion from Kirkpatrick & Lockhart LLP to the effect that the Reorganization will qualify as a tax-free reorganization for federal income tax purposes. Accordingly, shareholders will not recognize taxable gain or loss as a direct result of a Reorganization. Each Acquired Fund shareholder's aggregate tax basis in the Acquiring Fund shares it receives in a Reorganization will be the same as the aggregate tax basis in the Acquired Fund shares the shareholder constructively exchanges therefor, and the shareholder's holding period for those Acquiring Fund shares will include its holding period for those Acquired Fund shares. In addition, an Acquiring Fund's aggregate tax basis in the assets it receives from the corresponding Acquired Fund will be the same as the latter's aggregate tax basis therein, and the Acquiring Fund's holding period for those assets will include that Acquired Fund's holding period therefor immediately before the Reorganization. If an Acquired Fund sells securities prior to the closing of a Reorganization, it may recognize net gains or losses. Any net gains recognized on those sales would increase the amount of any distribution that the Acquired Fund must make to its shareholders prior to that closing. You should separately consider any state, local and other tax consequences in consultation with your tax advisor. See "Information About the Reorganizations - Federal Income Tax Considerations" below for more detailed information about federal income tax considerations. PRINCIPAL RISK FACTORS As indicated above, the investment objectives of each Acquired Fund are identical or substantially similar to those of its corresponding Acquiring Fund. In addition, the principal investment strategies of each Acquired Fund (with the exception of Health Sciences Fund) are similar to those of the corresponding Acquiring Fund. Because of these similarities, an investment in each of the Acquiring Funds will be subject to similar, and in some cases identical, 58 risks of investing in the Acquired Fund. The principal risk factors associated with each Acquired Fund and those of the corresponding Acquiring Fund are set forth below. COMPARISON OF RISKS: LARGE CAP GROWTH FUND AND LARGE CAP CORE FUND Investments in Large Cap Growth Fund and Large Cap Core Fund are subject to the following principal risks: o Risks of Common Stocks. Stocks may decline significantly in price over short or extended periods of time. Price changes may occur in the market as a whole, or they may occur in only a particular company, industry, or sector of the market. Each Fund invests in growth stocks and/or large-capitalization stocks which may underperform the market as a whole. o Foreign Security Risk. Securities of foreign issuers, even when dollar-denominated and publicly traded in the U.S., may involve risks not associated with the securities of domestic issuers, including the risks of adverse currency fluctuations and of political or social instability or diplomatic developments that could adversely affect the securities. o Risks of Securities Lending. To generate additional income, each Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions. When a Fund engages in this practice, it is subject to the risk that the other party to a securities lending agreement will default on its obligations. o Risks of Derivative Instruments. A Fund will suffer a loss in connection with its use of derivatives such as options, futures contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Advisor when entering into the derivative instrument. COMPARISON OF RISKS: HEALTH SCIENCES FUND AND LARGE CAP CORE FUND Investments in Health Sciences Fund and Large Cap Core Fund are subject to the following principal risks: o Risks of Common Stocks. Stocks may decline significantly in price over short or extended periods of time. Price changes may occur in the market as a whole, or they may occur in only a particular company, industry, or sector of the market. o Foreign Security Risk. Securities of foreign issuers, even when dollar-denominated and publicly traded in the U.S., may involve risks not associated with the securities of domestic issuers, including the risks of adverse currency fluctuations and of political or social instability or diplomatic developments that could adversely affect the securities. 59 o Risks of Securities Lending. To generate additional income, each Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions. When a Fund engages in this practice, it is subject to the risk that the other party to a securities lending agreement will default on its obligations. o Risks of Derivative Instruments. A Fund will suffer a loss in connection with its use of derivatives such as options, futures contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Advisor when entering into the derivative instrument. Because Health Sciences Fund is a non-diversified fund which focuses its investments on a specific sector of the market - health care or medicine - it is subject to non-diversification and sector-specific risks. In addition, because it employs different investment strategies than Large Cap Core Fund, Health Sciences Fund is subject to additional principal risks. Health Sciences Fund is subject to the following additional principal risks: o Risks of the Health Sciences Sector. Because Health Sciences Fund invests primarily in stocks related to health care or medicine, it is particularly susceptible to risks associated with the health sciences industries. Many products and services in the health sciences industries may become rapidly obsolete due to technological and scientific advances. In addition, governmental regulation may have a material effect on the demand for products and services in these industries. o Risks of Non-Diversification. Health Sciences Fund is non-diversified. This means that it may invest a larger portion of its assets in a limited number of companies than a diversified fund. Because a relatively high percentage of the Fund's assets may be invested in the securities of a limited number of issuers, and because those issuers will be in the same or related economic sectors, the Fund's portfolio securities may be more susceptible to any single economic, technological or regulatory occurrence than the portfolio securities of a diversified fund. o Risks of Development Stage, Small- and Mid-Cap Stocks. Stocks of development stage and small-capitalization companies involve substantial risk. These stocks historically have experienced greater price volatility than stocks of more established and larger-capitalization companies, and they may be expected to do so in the future. While stocks of mid-cap companies may be slightly less volatile than those of small-cap companies, they still involve substantial risk and their prices may be subject to more abrupt or erratic movements than those of larger, more established companies or the market averages in general. o Risks of Real Estate Investment Trusts ("REITs"). REITs will be affected by changes in the values of and incomes from the properties they own or the credit quality of the mortgages they hold. REITs are dependent on specialized management skills which may affect their ability to generate cash flow for operating purposes and to make distributions to shareholders or unitholders. 60 o Risks of IPOs. Companies involved in IPOs generally have limited operating histories and prospects for future profitability are uncertain. Prices of IPOs may also be unstable because of the absence of a prior public market, the small number of shares available for trading and limited investor information. IPOs will frequently be sold within 12 months of purchase. This may result in increased short-term capital gains, which will be taxable to shareholders as ordinary income. COMPARISON OF RISKS: MID CAP GROWTH FUND AND MID CAP CORE FUND Investments in Mid Cap Growth Fund and Mid Cap Core Fund are subject to the same principal risks, which are as follows: o Risks of Common Stocks. Stocks may decline significantly in price over short or extended periods of time. Price changes may occur in the market as a whole, or they may occur in only a particular company, industry, or sector of the market. In addition, growth stocks and/or mid-cap stocks may underperform the market as a whole. o Risks of Mid-Cap Stocks. While stocks of mid-cap companies may be slightly less volatile than those of small-cap companies, they still involve substantial risk and their prices may be subject to more abrupt or erratic movements than those of larger, more established companies or the market averages in general. o Risks of IPOs. Companies involved in IPOs generally have limited operating histories, and prospects for future profitability are uncertain. Prices of IPOs may also be unstable because of the absence of a prior public market, the small number of shares available for trading, and limited investor information. IPOs will frequently be sold within 12 months of purchase. This may result in increased short-term capital gains, which will be taxable to shareholders as ordinary income. o Foreign Security Risk. Securities of foreign issuers, even when dollar-denominated and publicly traded in the U.S., may involve risks not associated with the securities of domestic issuers, including the risks of adverse currency fluctuations and of political or social instability, or diplomatic developments that could adversely affect the securities. o Risks of Securities Lending. To generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions. When the Fund engages in this practice, it is subject to the risk that the other party to a securities lending agreement will default on its obligations. o Risks of Derivative Instruments. The Fund will suffer a loss in connection with its use of derivatives such as options, futures 61 contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Fund's Advisor when entering into the derivative instrument. COMPARISON OF RISKS: SMALL CAP GROWTH FUND AND SMALL CAP CORE FUND Investments in Small Cap Growth Fund and Small Cap Core Fund are subject to the same principal risks, which are as follows: o Risks of Common Stocks. Stocks may decline significantly in price over short or extended periods of time. Price changes may occur in the market as a whole, or they may occur in only a particular company, industry, or sector of the market. In addition, growth stocks and/or small-cap stocks may underperform the market as a whole. o Risks of Small-Cap Stocks. Stocks of small-capitalization companies involve substantial risk. These stocks historically have experienced greater price volatility than stocks of more established and larger-capitalization companies, and they may be expected to do so in the future. o Risks of IPOs. Companies involved in IPOs generally have limited operating histories, and prospects for future profitability are uncertain. Prices of IPOs may also be unstable because of the absence of a prior public market, the small number of shares available for trading, and limited investor information. IPOs will frequently be sold within 12 months of purchase. This may result in increased short-term capital gains, which will be taxable to shareholders as ordinary income. o Foreign Security Risk. Securities of foreign issuers, even when dollar-denominated and publicly traded in the U.S., may involve risks not associated with the securities of domestic issuers, including the risks of adverse currency fluctuations and of political or social instability, or diplomatic developments that could adversely affect the securities. o Risks of Securities Lending. To generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions. When the Fund engages in this practice, it is subject to the risk that the other party to a securities lending agreement will default on its obligations. o Risks of Derivative Instruments. The Fund will suffer a loss in connection with its use of derivatives such as options, futures contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Fund's Advisor when entering into the derivative instrument. COMPARISON OF RISKS: EMERGING MARKETS FUND AND INTERNATIONAL FUND 62 Investments in Emerging Markets Fund and International Fund are subject to the following principal risks: o Risks of Equity Securities. Equity securities may decline significantly in price over short or extended periods of time. Price changes may occur in the world market as a whole, or they may occur in only a particular country, company, industry, or sector of the world market. o Risks of International Investing. International investing involves risks not typically associated with domestic investing. Because of these risks, and because of the sub-advisor's ability to invest substantial portions of the Fund's assets in a small number of countries, the Fund may be subject to greater volatility than mutual funds that invest principally in domestic securities. Risks of international investing include adverse currency fluctuations, potential political and economic instability, limited liquidity and volatile prices of non-U.S. securities, limited availability of information regarding non-U.S. companies, investment and repatriation restrictions, and foreign taxation. o Risks of Emerging Markets. The risks of international investing are particularly significant in emerging markets. Investing in emerging markets generally involves exposure to economic structures that are less diverse and mature, and to political systems that are less stable, than those of developed countries. In addition, issuers in emerging markets typically are subject to a greater degree of change in earnings and business prospects than are companies in developed markets. o Risks of Smaller-Capitalization Companies. Stocks of small-capitalization companies involve substantial risk and their prices may be subject to more abrupt or erratic movements than those of larger, more established companies or of market averages in general. o Risks of Foreign Currency Hedging Transactions. If the sub-advisor's forecast of exchange rate movements is incorrect, the Fund may realize losses on its foreign currency transactions. In addition, the Fund's hedging transactions may prevent the Fund from realizing the benefits of a favorable change in the value of foreign currencies. o Risks of Derivative Instruments. The Fund will suffer a loss in connection with its use of derivatives such as options, futures contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Fund's Advisor when entering into the derivative instrument. International Fund is subject to the following additional principal risk: o Risks of Securities Lending. To generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions. When the Fund engages in this practice, it 63 is subject to the risk that the other party to a securities lending agreement will default on its obligations. COMPARISON OF RISKS: BOND IMMDEX(TM) FUND AND FIXED INCOME FUND Investments in Bond IMMDEX(TM) Fund and Fixed Income Fund are subject to the following principal risks: o Interest Rate Risk. Debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. o Income Risk. The Fund's income could decline due to falling market interest rates. o Credit Risk. An issuer of debt securities may not make timely principal or interest payments on its securities, or the other party to a contract may default on its obligations. o Call Risk. During periods of falling interest rates, a bond issuer may "call" - or repay - its high-yielding bonds before their maturity date. The Fund would then be forced to invest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. o Risks of Mortgage- and Asset-Backed Securities. Falling interest rates could cause faster than expected prepayments of the obligations underlying mortgage- and asset-backed securities, which the Fund would have to invest at lower interest rates. On the other hand, rising interest rates could cause prepayments of the obligations to decrease, extending the life of mortgage- and asset-backed securities with lower payment rates. o Foreign Security Risk. Securities of foreign issuers, even when dollar-denominated and publicly traded in the U.S., may involve risks not associated with the securities of domestic issuers, including the risks of adverse currency fluctuations and of political or social instability, or diplomatic developments that could adversely affect the securities. o Risks of Securities Lending. To generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks and other institutions. When the Fund engages in this practice, it is subject to the risk that the other party to a securities lending agreement will default on its obligations. o Risks of Derivative Instruments. The Fund will suffer a loss in connection with its use of derivatives such as options, futures contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Fund's Advisor when entering into the derivative instrument. 64 Bond IMMDEX(TM) Fund is subject to the following additional principal risk: o Risk of Underperforming the Index. While the Advisor believes purchasing securities which are not in the Lehman Brothers Government/Credit Bond Index (the "Lehman Index") or not consistent with the "mix" of the Lehman Index provides the opportunity to achieve an enhanced gross return compared to the Lehman Index, the Advisor may err in its choices of securities or portfolio mixes. Furthermore, because of the smaller number of issues held by the Fund compared to the Lehman Index, material events affecting the Fund's portfolio (for example, an issuer's decline in credit quality) may influence the performance of the Fund to a greater degree than such events will influence the Lehman Index. Fixed Income Fund is subject to the following additional principal risk: o Risks of Dollar Roll Transactions. The use of mortgage dollar rolls could increase the volatility of the Fund's share price. It could also diminish the Fund's investment performance if the Advisor does not predict mortgage prepayments and interest rates correctly. COMPARISON OF RISKS: HIGH YIELD BOND FUND AND STRATEGIC INCOME FUND Investments in High Yield Bond Fund and Strategic Income Fund are subject to the following principal risks: o Interest Rate Risk. Debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. o Credit Risk. An issuer of debt securities may not make timely principal or interest payments on its securities, or the other party to a contract may default on its obligations. If an issuer defaults, the Fund will lose money. Companies issuing high yield bonds are not as strong financially as those with higher credit ratings, so the bonds are usually considered speculative investments. These companies are more vulnerable to financial setbacks and recession than more creditworthy companies, which may impair their ability to make interest payments. Therefore, the credit risk for each Fund's portfolio may increase when the U.S. economy slows or enters a recession. o Income Risk. The Fund's income could decline due to falling market interest rates. o Call Risk. During periods of falling interest rates, a bond issuer may "call" - or repay - its high-yielding bonds before their maturity date. The Fund would then be forced to invest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. o Risks of High-Yield Securities. Securities rated lower than investment grade or unrated securities of comparable quality are commonly called "high-yield" 65 securities or "junk bonds." High Yield Bond Fund invests primarily in high-yield securities and a significant portion of Strategic Income Fund's portfolio may consist of high yield securities. High-yield securities have more volatile prices and carry more risk to principal than investment grade securities. High-yield securities may be more susceptible to real or perceived adverse economic conditions than investment grade securities. In addition, the secondary trading market in high-yield securities may be less liquid. o Risks of Foreign Securities. Investing in foreign securities involves risks not typically associated with U.S. investing. Risks of foreign investing include adverse currency fluctuations, potential political and economic instability, limited liquidity and volatile prices of non-U.S. securities, limited availability of information regarding non-U.S. companies, investment and repatriation restrictions and foreign taxation. o Risks of Securities Lending. To generate additional income, the Fund may lend securities representing up to one-third of the value of its total assets to broker-dealers, banks, and other institutions. When the Fund engages in this practice, it is subject to the risk that the other party to a securities lending agreement will default on its obligations. o Risks of Derivative Instruments. The Fund will suffer a loss in connection with its use of derivatives such as options, futures contracts, and options on futures contracts if securities prices do not move in the direction anticipated by the Fund's Advisor when entering into the derivative instrument. High Yield Bond Fund is subject to the following additional principal risk: o Liquidity and Pricing Risk. High-yield bonds generally have more limited trading opportunities than higher credit quality securities. This makes it more difficult to buy and/or sell a security at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash or give up an investment opportunity, any of which could have a negative effect on the Fund's performance. Infrequent trading of securities may also lead to an increase in their price volatility. Because of their limited trading, market prices may be unavailable for these securities, in which case their fair value prices will be determined in good faith using methods approved by the Fund's board of directors. Strategic Income Fund is subject to the following additional principal risks: o Risks of Emerging Markets. The Fund may invest in emerging markets, where the risks of foreign investing are higher. Investing in emerging markets generally involves exposure to economic structures that are less diverse and mature, and to political systems that are less stable, than those of developed countries. In addition, issuers in emerging markets typically are subject to a greater degree of 66 change in earnings and business prospects than are companies in developed countries. o Risks of Mortgage- and Asset-Backed Securities. Falling interest rates could cause faster than expected prepayments of the obligations underlying mortgage- and asset-backed securities, which the Fund would have to invest at lower interest rates. On the other hand, rising interest rates could cause prepayments of the obligations to decrease, extending the life of mortgage- and asset-backed securities with lower payment rates. o Risks of Common Stocks. The Fund's investments may include common stock and warrants to purchase, or securities convertible into, common stocks. Stocks may decline significantly in price over short or extended periods of time. Price changes may occur in the market as a whole, or they may occur in only a particular company, industry, or sector of the market. o Risks of Dollar Roll Transactions. The use of mortgage dollar rolls could increase the volatility of the Fund's share price. It could also diminish the Fund's investment performance if the Advisor does not predict mortgage prepayments and interest rates correctly. In addition to the principal risk factors described above, the Funds are subject to additional risks, which are described in the Funds' prospectuses. COMPARISON OF DISTRIBUTION POLICIES, AND PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES DISTRIBUTION OF SHARES The distribution arrangements applicable to Class A, Class B, Class C, Class S and Class Y shares of each Acquired Fund are identical to the distribution arrangements of Class A, Class B, Class C, Class S and Class Y shares, respectively, of each Acquiring Fund. Quasar Distributors, LLC (the "Distributor"), an affiliate of the Advisor, is the principal underwriter for Class A, Class B, Class C, Class S and Class Y shares of each Fund. FAIF has entered into distribution agreements with the Distributor with respect to each class. Under Distribution Plans adopted by FAIF with respect to Class A, Class B and Class C shares pursuant to Rule 12b-1 under the 1940 Act (each, a "Distribution Plan"), Service Plans adopted by FAIF with respect to Class B and Class C shares (each, a "Service Plan"), and a Shareholder Service Plan and Agreement adopted by FAIF with respect to Class S shares (the "Shareholder Service Plan and Agreement"), the Class A, Class B, Class C and Class S shares of each Fund are authorized to pay the Distributor certain fees for the distribution and sale of shares of the Fund and/or for shareholder servicing as described below. There is no Distribution Plan or Service Plan in effect for Class Y shares. Class A Shares. FAIF has adopted a Distribution Plan for Class A shares which provides that a Fund may pay to the Distributor a fee of up to 0.25% of the average daily net assets 67 attributable to Class A shares which the Distributor can use to compensate investment professionals, participating institutions and "one-stop" mutual fund networks (institutions) for providing ongoing shareholder services to shareholder accounts. For net asset value sales of Class A shares on which the institution receives a commission, the institution does not begin to receive its shareholder servicing fee until one year after such Class A shares are sold. The Distribution Plan provides that all or any portion of the total 0.25% fee may be payable as a shareholder servicing fee and all or any portion of such total fee may be payable as a distribution fee, as determined from time to time by FAIF's Board of Directors. Until further action by FAIF's Board of Directors, all of the 0.25% fee is designated and payable as a shareholder servicing fee. Class B Shares. FAIF has adopted a Distribution Plan for Class B shares which provides that a Fund may pay to the Distributor a distribution fee of up to 0.75% of the average daily net assets attributable to Class B shares, which the Distributor retains to finance the payment of sales commissions to institutions which sell Class B shares. Distribution services and expenses include compensating dealers for sales of Class B shares, payments for other advertising and promotional expenses, preparation and distribution of sales literature and expenses incurred in connection with the costs of printing and mailing prospectuses, statements of additional information and shareholder reports to prospective investors. The Service Plan for Class B shares further provides that a Fund may pay the Distributor a shareholder servicing fee of up to 0.25% of the average daily net assets attributable to Class B shares, which the distributor can use to compensate investment professionals, participating institutions and "one-stop" mutual fund networks (institutions) for providing ongoing shareholder services to shareholder accounts. The Service Plan provides compensation for personal, ongoing servicing and/or maintenance of shareholder accounts, including administrative or accounting services. Class C Shares. FAIF has adopted a Distribution Plan for Class C shares which provides that a Fund may pay to the Distributor a distribution fee of up to 0.75% of the average daily net assets attributable to Class C shares. The Distributor may use the distribution fee to provide compensation to institutions through which shareholders hold their shares beginning one year after purchase. The Service Plan for Class C shares further provides that a Fund may pay the Distributor a shareholder servicing fee of up to 0.25% of the average daily net assets attributable to Class C shares, which the distributor can use to compensate investment professionals, participating institutions and "one-stop" mutual fund networks (institutions) for providing ongoing shareholder services to shareholder accounts. The Service Plan provides compensation for personal, ongoing servicing and/or maintenance of shareholder accounts, including administrative or accounting services. Class S Shares. FAIF has adopted a Shareholder Service Plan and Agreement for Class S shares which provides that a Fund may pay to the Distributor a shareholder servicing fee of up to 0.25% of the average daily net assets attributable to Class S shares. The Distributor can use the shareholder servicing fee to compensate investment professionals, participating institutions and "one stop" mutual fund networks (institutions) for providing ongoing shareholder services to shareholder accounts. The shareholder servicing fee may be used to provide ongoing service and/or maintenance of shareholder accounts including administrative or accounting services. 68 Class Y Shares. Class Y shares are not subject to any 12b-1 (distribution) or shareholder servicing fees. In addition to distribution and/or shareholder servicing fees paid by the Funds, the Advisor or one of its affiliates may make payments to investment professionals and financial institutions, using their own assets, in exchange for sales and/or administrative services performed on behalf of the investment professional's or financial institution's customers. PURCHASE AND REDEMPTION PROCEDURES Purchases of Class A, Class B and Class C shares of the Funds are made through dealers, at the net asset value per share next determined after receipt of the purchase order by the transfer agent, plus a sales charge which may be imposed (i) at the time of purchase (Class A or Class C shares) and/or (ii) on a deferred basis (Class B or Class C shares). The minimum initial investment for Class A, Class B and Class C shares of each Fund is $1,000 ($250 for a retirement plan or a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act (UGMA/UTMA) account), and the minimum subsequent investment is $100 for such classes ($25 for a retirement plan or an UGMA/UTMA account). Class A shares of each Equity Fund are sold with an initial sales charge of up to 5.50% of the purchase price. Class A shares of each Income Fund are sold with an initial sales charge of up to 4.25% of the purchase price. Certain investors are eligible to purchase Class A shares without a sales charge. Class B shares of each Fund are sold without an initial sales charge but are subject to a contingent deferred sales charge ("CDSC") (declining from 5% to 0% of the lower of the amount invested or the redemption proceeds) which will be imposed on certain redemptions made within six years of purchase. This CDSC will be waived under certain conditions. Although Class B shares are subject to higher ongoing distribution-related expenses than Class A shares, Class B shares will automatically convert to Class A shares of the same Fund (which are subject to lower ongoing distribution-related expenses) eight years after the calendar month in which the purchase order for Class B shares was accepted. Class C shares of each Fund are subject to an initial sales charge equal to 1% of the purchase price and a 1% CDSC on redemptions within 18 months after purchase. Like Class B shares, the CDSC will be waived under certain conditions. Also like Class B shares, Class C shares are subject to higher ongoing distribution-related expenses than Class A shares but, unlike Class B shares, Class C shares do not convert to another class. Class S and Class Y shares of each Fund are sold through banks and other financial institutions that have entered into sales agreements with the Distributor. Class S and Class Y shares are available to a limited group of investors, and are typically held pursuant to an omnibus account arrangement with the transfer agent. Class S and Class Y shares are sold at their net asset value per share without either an initial sales charge or CDSC. Shares of each Fund may be redeemed at any time at the net asset value next determined after the order is accepted by the Fund. As indicated above, the proceeds of redemptions of Class B and Class C shares (and Class A shares originally purchased as part of an investment of $1 million or more on which no front-end sales charge was paid) may be subject to a CDSC. 69 EXCHANGE PRIVILEGES The exchange privileges available to Class A, Class B, Class C, Class S and Class Y shareholders of each Acquired Fund are identical to the exchange privileges of Class A, Class B, Class C, Class S and Class Y shareholders, respectively, of each Acquiring Fund. Shareholders of each Fund may exchange shares of the Fund for the same class of shares of any other series of the First American funds. No fee will be charged upon the exchange of shares. Generally, shares may be exchanged only for shares of the same class. However, Class A shares may be exchanged for Class S shares or Class Y shares of the same or another First American fund when Class A shareholders become eligible to participate in Class S or Class Y. Shares of a Fund subject to an exchange will be processed at net asset value per share of each Fund at the time of the exchange. In determining the CDSC applicable to shares being redeemed subsequent to an exchange or, in the case of Class B shares, calculating when shares convert to Class A shares, the length of time the shares were held prior to the exchange will be taken into account. DIVIDENDS AND OTHER DISTRIBUTIONS Dividends from net investment income, if any, of Large Cap Growth Fund, Large Cap Core Fund, Mid Cap Growth Fund, Mid Cap Core Fund, Bond IMMDEX(TM) Fund, Fixed Income Fund, High Yield Bond Fund and Strategic Income Fund are declared and paid monthly. Dividends from net investment income, if any, of Health Sciences Fund, Small Cap Growth Fund and Small Cap Core Fund are declared and paid quarterly. Dividends from Emerging Markets Fund's and International Fund's net investment income, if any, are declared and paid annually. Any capital gains are distributed at least once each year. Unless notified otherwise, dividends and capital gain distributions, if any, will be automatically reinvested in shares of the distributing Fund and the class on which they were paid at net asset value. Such reinvestments automatically occur on the payment date of such dividends and capital gain distributions. Alternatively, shareholders may request that dividends and capital gain distributions be reinvested in shares of another First American Fund or paid in cash. An Acquired Fund shareholder's election with respect to reinvestment of dividends and other distributions will be automatically applied with respect to the Acquiring Fund shares he or she receives pursuant to the Reorganization. Each Fund has qualified, and intends to continue to qualify, to be treated as a regulated investment company under the Internal Revenue Code of 1986, as amended (the "Code"). To remain qualified for that treatment, a Fund must distribute at least 90% of its taxable income and diversify its holdings as required by the Code. While so qualified, so long as a Fund distributes to its shareholders all of its investment company taxable income and any net realized capital gain, that Fund will not be required to pay any federal income tax on the distributed amounts. INFORMATION ABOUT THE REORGANIZATIONS PLAN OF REORGANIZATION AND TERMINATION The terms and conditions under which the proposed Reorganizations will be consummated are set forth in the Reorganization Plan. Significant provisions of the Reorganization Plan are summarized below; however, this summary is qualified in its entirety by 70 reference to the Reorganization Plan, the form of which is attached as Appendix A to this Prospectus/Proxy Statement. The Reorganization Plan provides, with respect to each Reorganization, for (a) the Acquiring Fund's acquisition, as of the close of business on the date of the closing of the Reorganization or other time FAIF determines (the "Effective Time"), of all the assets of the corresponding Acquired Fund in exchange solely for Acquiring Fund shares and the Acquiring Fund's assumption of all the Acquired Fund's liabilities and (b) the distribution of those shares, by class, to the Acquired Fund's shareholders. An Acquired Fund's assets to be acquired by its corresponding Acquiring Fund include all cash, cash equivalents, securities, receivables, claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on the Acquired Fund's books, and other property the Acquired Fund owns at the Effective Time. An Acquiring Fund will assume from its corresponding Acquired Fund all its liabilities, debts, obligations and duties of whatever kind or nature; provided, however, that each Acquired Fund will use its best efforts to discharge all its known liabilities before the Effective Time. The value of each Acquired Fund's assets to be acquired by its corresponding Acquiring Fund and the net asset value ("NAV") per share of each class of the Acquiring Fund shares to be exchanged for those assets will be determined as of the close of regular trading on the New York Stock Exchange on the date of the Reorganization closing, using the valuation procedures described in the Funds' prospectuses and the SAI. Each Acquired Fund's net value will be the value of its assets as so determined, less the amount of its liabilities determined as of the close of such trading. At, or as soon as practicable after, the Effective Time, each Acquired Fund will distribute, by class, the Acquiring Fund shares it receives in a Reorganization PRO RATA to its shareholders of record as of the Effective Time, so that each shareholder will receive a number of full and fractional Acquiring Fund shares of the same class that is equal in aggregate value to the shareholder's Acquired Fund shares. The shares will be distributed by opening accounts on the Acquiring Fund's books in the names of the shareholders and by transferring to those accounts the shares previously credited to the Acquired Fund's account on those books. Fractional Acquiring Fund shares will be rounded to the third decimal place. Each Acquired Fund will be terminated as soon as practicable after the share distribution. Because Acquiring Fund shares will be issued at their NAV in exchange for the net assets of the corresponding Acquired Fund, the aggregate value of the Acquiring Fund shares issued to shareholders in a Reorganization will equal the aggregate value of the Acquired Fund shares they surrender. The NAV per share of each class of each Acquiring Fund will be unchanged by a Reorganization. Thus, the Reorganizations will not result in dilution of any shareholder's interest. In determining contingent deferred sales charges applicable to Class B Acquiring Fund shares and Class C Acquiring Fund shares issued in a Reorganization and the date on which such Class B Acquiring Fund shares convert to Class A Acquiring Fund shares, the Acquiring Fund involved in that Reorganization will give each holder thereof credit for the period during which the holder held the corresponding Class B Acquired Fund shares or Class C Acquired Fund shares, as the case may be, in exchange for which the Acquiring Fund shares were issued. If 71 Class A Acquiring Fund shares are issued in a Reorganization to shareholders that formerly held Class A Acquired Fund shares with respect to which the front-end sales charge was waived due to a purchase of $1 million or more, then, in determining whether a deferred sales charge is payable on the sale of those Class A Acquiring Fund shares, the Acquiring Fund will give the holder thereof credit for the period during which the holder held those Acquired Fund shares. Any transfer taxes payable on the issuance of Acquiring Fund shares in a name other than that of the registered shareholder will be paid by the person to whom those shares are to be issued as a condition of the transfer. Any reporting responsibility of an Acquired Fund to a public authority will continue to be its responsibility until it is dissolved. The Advisor will bear the entire cost of the Reorganizations, including professional fees and the cost of soliciting proxies for the Meeting, which principally consists of printing and mailing expenses, and the cost of any supplementary solicitation. In approving the Reorganization Plan, the Board of Directors reviewed various factors about the Funds and each Reorganization. The Board considered the relative size of the Funds as well as the similarity of the Funds' investment objectives and principal investment strategies. The Board evaluated the potential economies of scale associated with larger mutual funds and concluded that operating efficiencies may be achieved by combining the Funds. The Board also considered the performance history of each Fund and the relative expenses of the Funds. With respect to the proposed Reorganizations of Health Sciences Fund and Emerging Markets Fund, the Board considered liquidation as alternatives to the Reorganizations, as well as the consequences of such a liquidation to each shareholder of those Funds. After such consideration, the Board concluded that each Reorganization would be in the best interests of the Funds participating therein. The consummation of each Reorganization is subject to a number of conditions set forth in the Reorganization Plan (not including consummation of any other Reorganization), some of which may be waived by FAIF. In addition, FAIF may amend the Reorganization Plan in any manner, except that no amendment may be made subsequent to the Meeting that has a material adverse effect on the interests of an Acquired Fund's shareholders. REASONS FOR THE REORGANIZATIONS The Board, including a majority of the Independent Directors, has determined that each Reorganization is in the best interests of the Funds participating therein and that the interests of each Fund's shareholders will not be diluted as a result of the Reorganizations. In approving each Reorganization, the Board, including a majority of the Independent Directors, considered a number of factors, including the following: (1) the terms and conditions of the Reorganization; (2) the compatibility of the Funds' investment objectives, policies, and restrictions; (3) the Funds' relative investment performance; (4) the Funds' relative asset size; (5) the investment experience and expertise of each Fund's portfolio managers; (6) the effect of the Reorganization on the Funds' expected investment performance; 72 (7) the effect of the Reorganization on each Fund's expense ratio relative to its current expense ratio; (8) the fact that the Advisor will bear the expenses incurred by each Fund in connection with the Reorganization; (9) the tax consequences of the Reorganization; (10) alternatives available to shareholders of the Acquired Fund, including the ability to redeem their shares; (11) the effect of the Reorganization on each Fund's shareholders' rights; (12) the potential benefits of the Reorganization to the Advisor and other persons; and (13) the alternatives to the Reorganization, including liquidation. The Advisor recommended the Reorganizations to the Board at a meeting of the Board held on December 3-4, 2002. In recommending the Reorganizations, the Advisor advised the Board that the management fee and other expenses schedule applicable to each Acquiring Fund (with the exception of Bond IMMDEX(TM) Fund) is equal to or less than that currently in effect for the corresponding Acquired Fund. The Advisor advised the Board that the management fee for Bond IMMDEX(TM) Fund will increase 0.20% following the Reorganization and that this increase is largely the result of an adjustment to the management fee charged to Bond IMMDEX(TM) Fund. The Advisor advised the Board that circumstances have evolved so that management of Bond IMMDEX(TM) Fund has required the use of active investment management techniques to an extent beyond that originally envisioned. The Advisor further noted that, as a result, the management fee paid by Bond IMMDEX(TM) Fund is significantly lower than management fees paid by other funds in its peer group that are similarly managed, so that the long-term viability of the Fund is in question. The Advisor also advised the Board that Health Sciences Fund and Emerging Markets Fund have had difficulty in attracting sufficient assets to be economically viable, and that liquidating economically unviable funds is generally a taxable event to shareholders. The Board considered the fact that each Acquiring Fund has a better or comparable performance record and the same or lower overall expense ratio relative to the corresponding Acquired Fund (with the exception of Bond IMMDEX(TM) Fund) and that the Advisor will bear the expenses incurred in connection with the Reorganizations. In addition, the Board considered that the investment objective of each Acquired Fund is identical or substantially similar to that of its corresponding Acquiring Fund and that the principal investment strategies of each Acquired Fund (with the exception of Health Sciences Fund) are similar to those of the corresponding Acquiring Fund. Further, the Advisor advised the Board that, because each Acquiring Fund has greater net assets than the corresponding Acquired Fund, combining the Funds could further reduce the expenses that the Acquiring Fund bears as a percentage of net assets. The Advisor also advised the Board that any reduction in the Funds' expense ratios as a result of the Reorganizations could benefit the Advisor by reducing or eliminating any reimbursements or waivers of expenses resulting from its obligation to limit each Fund's expenses. DESCRIPTION OF SECURITIES TO BE ISSUED 73 FAIF is registered with the SEC as an open-end management investment company. Fund shares entitle their holders to one vote per full share and fractional votes for fractional shares held. Each Acquiring Fund currently has Class A, Class B, Class C, Class S and Class Y shares outstanding. If the Reorganization Plan is approved with respect to an Acquired Fund, each shareholder thereof will receive Acquiring Fund shares of the same class as their Acquired Fund shares and having a net asset value equal to the total net asset value of their Acquired Fund shares. FEDERAL INCOME TAX CONSIDERATIONS The exchange of an Acquired Fund's assets for shares of its corresponding Acquiring Fund and the Acquiring Fund's assumption of that Acquired Fund's liabilities, and the subsequent distribution of those shares, is intended to qualify for federal income tax purposes as a tax-free reorganization under section 368(a)(1)(C) of the Code. FAIF will receive a tax opinion from Kirkpatrick & Lockhart LLP substantially to the effect that, with respect to each Reorganization -- (1) The Acquiring Fund's acquisition of the Acquired Fund's assets in exchange solely for Acquiring Fund shares and the Acquiring Fund's assumption of the Acquired Fund's liabilities, followed by the Acquired Fund's distribution of those shares PRO RATA to its shareholders constructively in exchange for their Acquired Fund shares, will qualify as a "reorganization" as defined in section 368(a)(1)(C) of the Code, and each Fund will be "a party to a reorganization" within the meaning of section 368(b) of the Code; (2) The Acquired Fund will recognize no gain or loss on the transfer of its assets to the Acquiring Fund in exchange solely for Acquiring Fund shares and the Acquiring Fund's assumption of the Acquired Fund's liabilities or on the subsequent distribution of those shares to the Acquired Fund's shareholders in constructive exchange for their Acquired Fund shares; (3) The Acquiring Fund will recognize no gain or loss on its receipt of the transferred assets in exchange solely for Acquiring Fund shares and its assumption of the Acquired Fund's liabilities; (4) The Acquiring Fund's basis in the transferred assets will be the same as the Acquired Fund's basis therein immediately before the Reorganization, and the Acquiring Fund's holding period for those assets will include the Acquired Fund's holding period therefor; (5) An Acquired Fund shareholder will recognize no gain or loss on the constructive exchange of all its Acquired Fund shares solely for Acquiring Fund shares pursuant to the Reorganization; and (6) An Acquired Fund shareholder's aggregate basis in the Acquiring Fund shares it receives in the Reorganization will be the same as the aggregate basis in its Acquired Fund shares it constructively surrenders in exchange for those Acquiring Fund shares, and its holding period for those Acquiring Fund shares will include its holding period for those Acquired Fund shares, provided the shareholder holds them as capital assets at the Effective Time. 74 The tax opinion will state that no opinion is expressed as to the effect of a Reorganization on the Funds participating therein or any shareholder with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting. An Acquiring Fund's utilization after a Reorganization of (1) carryovers of pre-Reorganization capital losses realized by its corresponding Acquired Fund and (2) capital losses it realizes after the Reorganization that are attributable to that Acquired Fund's built-in unrealized capital losses as of the Effective Time will be subject to limitation under the Code. Acquired Fund shareholders should consult their tax advisers regarding the effect, if any, of the Reorganizations in light of their individual circumstances. Because the foregoing discussion only relates to the federal income tax consequences of the Reorganizations, those shareholders also should consult their tax advisers about state and local tax consequences, if any, of the Reorganizations. CAPITALIZATION The following tables set forth the capitalization of each Acquired Fund and the corresponding Acquiring Fund and the capitalization of the combined Acquiring Fund on a PRO FORMA basis as of September 30, 2002 (unaudited), giving effect to the proposed acquisitions of assets of the Acquired Fund at its then current net asset value. 75 CAPITALIZATION OF LARGE CAP GROWTH FUND, LARGE CAP CORE FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- LARGE CAP GROWTH LARGE CAP CORE PRO FORMA FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $52,419 $24,647 $77,066 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $36,546 $2,928 $39,474 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $9,652 $476 $10,128 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $9,020 $2,376 $11,396 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $436,199 $255,311 $691,510 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $543,836 $285,738 $829,574 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $6.76 $19.16 $19.16 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $6.44 $18.64 $18.64 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $6.57 $19.03 $19.03 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $6.76 $19.17 $19.17 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $6.86 $19.59 $19.59 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 7,754 1,286 4,022 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 5,673 157 2,118 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 1,469 25 532 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 1,335 124 594 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 63,592 13,036 35,302 ------------------------- ---------------------- ----------------------- ----------------------
76 CAPITALIZATION OF HEALTH SCIENCES FUND, LARGE CAP CORE FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- HEALTH SCIENCES LARGE CAP CORE FUND PRO FORMA COMBINED FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $5,235 $24,647 $29,882 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $2,821 $2,928 $5,749 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $3,815 $476 $4,291 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $32 $2,376 $2,408 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $12,421 $255,311 $267,732 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $24,324 $285,738 $310,062 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $7.91 $19.16 $19.16 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $7.50 $18.64 $18.64 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $7.76 $19.03 $19.03 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $7.90 $19.17 $19.17 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $8.00 $19.59 $19.59 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 662 1,286 1,559 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 376 157 308 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 492 25 225 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 4 124 126 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 1,552 13,036 13,670 ------------------------- ---------------------- ----------------------- ----------------------
77 CAPITALIZATION OF MID CAP GROWTH FUND, MID CAP CORE FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- MID CAP GROWTH FUND MID CAP CORE FUND PRO FORMA FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $58,896 $75,002 $133,898 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $2,578 $4,227 $6,805 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $3,742 $1,136 $4,878 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $13 $5,869 $5,882 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $157,688 $477,210 $634,898 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $222,917 $563,444 $786,361 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $4.35 $26.45 $26.45 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $4.14 $25.56 $25.56 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $4.18 $26.29 $26.29 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $4.35 $26.43 $26.43 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $4.48 $27.25 $27.25 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 13,538 2,836 5,063 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 622 165 266 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 896 43 185 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 3 222 223 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 35,232 17,515 23,302 ------------------------- ---------------------- ----------------------- ----------------------
78 CAPITALIZATION OF SMALL CAP GROWTH FUND, SMALL CAP CORE FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- SMALL CAP GROWTH FUND SMALL CAP CORE FUND PRO FORMA FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $22,397 $33,586 $55,983 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $3,933 $4,613 $8,546 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $4,659 $3,096 $7,755 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $32 $7,640 $7,672 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $205,253 $403,027 $608,280 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $236,274 $451,962 $688,236 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $8.79 $10.68 $10.68 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $8.07 $9.95 $9.95 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $8.52 $10.62 $10.62 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $8.79 $10.66 $10.66 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $8.97 $11.00 $11.00 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 2,548 3,144 5,241 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 487 463 858 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 547 292 731 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 4 717 720 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 22,877 36,650 55,309 ------------------------- ---------------------- ----------------------- ----------------------
79 CAPITALIZATION OF EMERGING MARKETS FUND, INTERNATIONAL FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- EMERGING MARKETS FUND INTERNATIONAL PRO FORMA FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $2,487 $37,232 $39,719 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $252 $7,459 $7,711 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $90 $11,027 $11,117 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $11 $10,817 $10,828 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $46,006 $540,495 $586,501 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $48,846 $607,030 $655,876 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $6.22 $7.33 $7.33 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $6.02 $6.85 $6.85 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $6.10 $7.09 $7.09 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $6.19 $7.31 $7.31 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $6.26 $7.40 $7.40 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 400 5,081 5,420 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 42 1,088 1,125 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 15 1,555 1,568 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 2 1,479 1,481 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 7,347 73,052 79,269 ------------------------- ---------------------- ----------------------- ----------------------
80 CAPITALIZATION OF BOND IMMDEX(TM) FUND, FIXED INCOME FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- BOND IMMDEX(TM) FUND FIXED INCOME PRO FORMA FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $87,096 $122,354 $209,450 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $14,592 $16,741 $31,333 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $1,919 $9,672 $11,591 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $18,179 $33,270 $51,449 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $710,922 $1,204,555 $1,915,477 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $832,708 $1,386,592 $2,219,300 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $29.21 $11.45 $11.45 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $29.18 $11.38 $11.38 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $29.16 $11.42 $11.42 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $29.21 $11.45 $11.45 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $29.23 $11.45 $11.45 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 2,982 10,682 18,289 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 500 1,471 2,753 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 66 847 1,015 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 622 2,905 4,493 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 24,322 105,171 167,260 ------------------------- ---------------------- ----------------------- ----------------------
81 CAPITALIZATION OF HIGH YIELD BOND FUND, STRATEGIC INCOME FUND AND PRO FORMA COMBINED FUND (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------- ---------------------- ----------------------- ---------------------- HIGH YIELD BOND FUND STRATEGIC INCOME PRO FORMA FUND FUND COMBINED FUND ------------------------- ---------------------- ----------------------- ---------------------- TOTAL NET ASSETS ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $23,900 $18,006 $41,906 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $774 $4,179 $4,953 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $7,213 $6,213 $13,426 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $87 $6 $93 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $21,157 $135,665 $156,822 ------------------------- ---------------------- ----------------------- ---------------------- TOTAL $53,131 $164,069 $217,200 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- NET ASSET VALUE PER SHARE ------------------------- ---------------------- ----------------------- ---------------------- CLASS A $7.96 $7.99 $7.96 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B $7.97 $7.96 $7.97 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C $7.97 $7.96 $7.97 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S $7.96 $8.06 $7.96 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y $7.98 $7.99 $7.98 ------------------------- ---------------------- ----------------------- ---------------------- ------------------------- ---------------------- ----------------------- ---------------------- SHARES OUTSTANDING ------------------------- ---------------------- ----------------------- ---------------------- CLASS A 3,001 2,254 5,263 ------------------------- ---------------------- ----------------------- ---------------------- CLASS B 97 525 621 ------------------------- ---------------------- ----------------------- ---------------------- CLASS C 905 780 1,685 ------------------------- ---------------------- ----------------------- ---------------------- CLASS S 11 1 12 ------------------------- ---------------------- ----------------------- ---------------------- CLASS Y 2,653 16,973 19,654 ------------------------- ---------------------- ----------------------- ----------------------
82 The tables set forth above should not be relied upon to reflect the number of Acquiring Fund shares to be issued in, and outstanding immediately following, a Reorganization; the actual number of shares to be issued and outstanding will depend upon the net asset value and number of shares of each Acquired Fund and the corresponding Acquiring Fund at the time of the Reorganization. VOTING INFORMATION This Prospectus/Proxy Statement is being sent to shareholders of Large Cap Growth Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEX(TM) Fund, and High Yield Bond Fund, each a series of FAIF, in connection with a solicitation of voting instructions by the directors of FAIF, to be used at the Meeting. This Prospectus/Proxy Statement, along with a Notice of the Meeting and a proxy card, is first being mailed to shareholders of the Acquired Funds on or about January ___, 2003. The Board of Directors of FAIF has fixed the close of business on January 6, 2003, as the record date (the "Record Date") for determining the shareholders of the Acquired Funds entitled to receive notice of the Meeting and to give voting instructions, and for determining the number of shares for which such instructions may be given, with respect to the Meeting or any adjournment thereof. Shares which represent interests in a particular Acquired Fund vote separately on the Reorganization and those matters pertaining only to that Acquired Fund. Approval of a Reorganization will require the affirmative vote of a majority of the outstanding shares of each Acquired Fund, with all classes of the Acquired Fund voting together and not by class. Abstentions will be counted for purposes of determining a quorum, but will not be included in the amount of shares voted. Accordingly, an abstention will have the effect of a negative vote. Approval of the Reorganization Plan with respect to an Acquired Fund will be considered approval of the amendment to the Amended and Restated Articles of Incorporation of FAIF, attached to the form of the Plan of Reorganization and Termination attached as Appendix A to this Prospectus/Proxy Statement, required to effect the Reorganization. If a proxy that is properly executed and returned represents a broker "non-vote" (broker non-votes are shares held by a broker or nominee for which an executed proxy is received by the Fund but are not voted as to the proposal because instructions have not been received from the beneficial owners or persons entitled to vote, and the broker or nominee holding the shares does not have discretionary voting power), the shares represented thereby will only be considered present for purposes of determining the existence of a quorum for the transaction of business and will not be included in determining the number of votes cast. The individuals named as proxies on the enclosed proxy card will vote in accordance with your direction as indicated thereon, if your card is received properly executed by you or by your duly appointed agent or attorney-in-fact. If your card is properly executed and you give no voting instructions, your shares will be voted FOR the applicable Reorganization. You can also 83 vote by fax, by telephone, with a toll-free call to the appropriate number on the proxy card, and through the Internet Website stated on the proxy card. You may revoke any proxy by giving another proxy or by letter or telegram revoking the initial proxy. In addition, you can revoke a prior proxy by simply voting again using the proxy card, by fax, by a toll-free call to the appropriate number on the proxy card, or through the Internet Website stated on the proxy card. To be effective, your revocation must be received prior to the Meeting and must indicate your name and account number. In addition, if you attend the Meeting in person you may, if you wish, vote by ballot at the Meeting, thereby canceling any proxy previously given. Proxy solicitations will be made primarily by mail but may also be made by telephone, through the Internet or personal solicitations conducted by officers and employees of the Advisor, its affiliates or other representatives of the Acquired Funds (who will not be paid for their soliciting activities). The costs of solicitation and the expenses incurred in connection with preparing this Prospectus/Proxy Statement and its enclosures will be paid by the Advisor. Neither the Acquired Funds nor the Acquiring Funds will bear any costs associated with the Meeting, this proxy solicitation or any adjourned session. If shareholders of a Acquired Fund do not vote to approve the applicable Reorganization, the directors of FAIF will consider other possible courses of action in the best interests of shareholders. If a quorum is not present at the Meeting, or if a quorum is present at the Meeting but sufficient votes to approve a Reorganization are not received, the persons named as proxies on a proxy form sent to the shareholders may propose one or more adjournments of the Meeting to permit further proxy solicitation. In determining whether to adjourn the Meeting, the following factors may be considered: the percentage of votes actually cast, the percentage of negative votes actually cast, the nature of any further solicitation and the information to be provided to shareholders with respect to the reasons for the solicitation. Any adjournment will require an affirmative vote of a majority of those shares represented at the Meeting in person or by proxy. The persons named as proxies will vote upon such adjournment after consideration of all circumstances which may bear upon a decision to adjourn the Meeting. A shareholder of an Acquired Fund who objects to a proposed Reorganization will not be entitled under either Maryland law or the Amended and Restated Articles of Incorporation of FAIF to demand payment for, or an appraisal of, his or her shares. However, shareholders should be aware that each Reorganization as proposed is not expected to result in recognition of gain or loss to shareholders for federal income tax purposes. In addition, if a Reorganization is consummated, the rights of shareholders to exchange among other First American funds or to sell Fund shares will not be affected. FAIF does not hold annual shareholder meetings. If a Reorganization is not approved, shareholders wishing to submit proposals to be considered for inclusion in a proxy statement for a subsequent shareholder meeting should send their written proposals to the Secretary of FAIF at the address set forth on the cover of this Prospectus/Proxy Statement so that they will be received by FAIF in a reasonable period of time prior to that meeting. 84 The votes of the shareholders of each Acquiring Fund are not being solicited by this Prospectus/Proxy Statement and are not required to carry out the Reorganizations. OUTSTANDING SHARES The shareholders of each Acquired Fund as of the Record Date will be entitled to be present and vote at the Meeting with respect to shares of the applicable Acquired Fund owned as of the Record Date. The following tables identify the number of shares of each class of each Acquired Fund and Acquiring Fund that were outstanding as of the close of business on the Record Date: SHARES OUTSTANDING ON RECORD DATE
------------------------------- ---------------------------- ---------------------------- ---------------------------- LARGE CAP GROWTH FUND HEALTH SCIENCES FUND LARGE CAP CORE FUND ------------------------------- ---------------------------- ---------------------------- ---------------------------- Class A ------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B ------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C ------------------------------- ---------------------------- ---------------------------- ---------------------------- Class S ------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y ------------------------------- ---------------------------- ---------------------------- ---------------------------- MID CAP GROWTH FUND MID CAP CORE FUND ---------------------------------------- -------------------------------------- -------------------------------------- Class A ---------------------------------------- -------------------------------------- -------------------------------------- Class B ---------------------------------------- -------------------------------------- -------------------------------------- Class C ---------------------------------------- -------------------------------------- -------------------------------------- Class S ---------------------------------------- -------------------------------------- -------------------------------------- Class Y ---------------------------------------- -------------------------------------- -------------------------------------- SMALL CAP GROWTH FUND SMALL CAP CORE FUND ---------------------------------------- --------------------------------------- ------------------------------------- Class A ---------------------------------------- --------------------------------------- ------------------------------------- Class B ---------------------------------------- --------------------------------------- ------------------------------------- Class C ---------------------------------------- --------------------------------------- ------------------------------------- Class S ---------------------------------------- --------------------------------------- ------------------------------------- Class Y ---------------------------------------- --------------------------------------- ------------------------------------- EMERGING MARKETS FUND INTERNATIONAL FUND ---------------------------------------- -------------------------------------- -------------------------------------- Class A ---------------------------------------- -------------------------------------- -------------------------------------- Class B ---------------------------------------- -------------------------------------- -------------------------------------- Class C ---------------------------------------- -------------------------------------- -------------------------------------- Class S ---------------------------------------- -------------------------------------- -------------------------------------- Class Y ---------------------------------------- -------------------------------------- -------------------------------------- BOND IMMDEX(TM) FUND FIXED INCOME FUND ---------------------------------------- -------------------------------------- -------------------------------------- Class A ---------------------------------------- -------------------------------------- -------------------------------------- 85 ---------------------------------------- -------------------------------------- -------------------------------------- Class B ---------------------------------------- -------------------------------------- -------------------------------------- Class C ---------------------------------------- -------------------------------------- -------------------------------------- Class S ---------------------------------------- -------------------------------------- -------------------------------------- Class Y ---------------------------------------- -------------------------------------- -------------------------------------- HIGH YIELD BOND FUND STRATEGIC INCOME FUND ---------------------------------------- -------------------------------------- -------------------------------------- Class A ---------------------------------------- -------------------------------------- -------------------------------------- Class B ---------------------------------------- -------------------------------------- -------------------------------------- Class C ---------------------------------------- -------------------------------------- -------------------------------------- Class S ---------------------------------------- -------------------------------------- -------------------------------------- Class Y ---------------------------------------- -------------------------------------- --------------------------------------
As of January ___, 2003, the officers and directors of FAIF beneficially owned as a group less than 1% of the outstanding shares of each Fund, respectively. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES As of the Record Date, the Funds were aware that the following persons owned of record 5% or more of the outstanding shares of each class of stock of the Funds:
-------------------------------------------------- ------------------------------------------------------------------- PERCENTAGE OF OUTSTANDING SHARES -------------------------------------------------- ------------------------------------------------------------------- CLASS A CLASS B CLASS C CLASS S CLASS Y -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- LARGE CAP GROWTH FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- HEALTH SCIENCES FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- LARGE CAP CORE FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- MID CAP GROWTH FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- MID CAP CORE FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- SMALL CAP GROWTH FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- SMALL CAP CORE FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- EMERGING MARKETS FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- INTERNATIONAL FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- BOND IMMDEX(TM) FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- FIXED INCOME FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- HIGH YIELD BOND FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- STRATEGIC INCOME FUND -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ -------------
86
-------------------------------------------------- ------------------------------------------------------------------- PERCENTAGE OF OUTSTANDING SHARES -------------------------------------------------- ------------------------------------------------------------------- CLASS A CLASS B CLASS C CLASS S CLASS Y -------------------------------------------------- ------------ ------------ -------------- ------------ ------------- -------------------------------------------------- ------------ ------------ -------------- ------------ -------------
ADDITIONAL INFORMATION ABOUT THE FUNDS Information concerning the Funds in the Funds' current prospectuses and SAI (including any supplements), and the Reorganization SAI is incorporated into this Prospectus/Proxy Statement by reference. (This means that such information is legally considered to be part of this Prospectus/Proxy Statement.) For a free copy of an Acquired Fund's prospectus, the Funds' SAI or Annual Report, or the Reorganization SAI, please call (800) 677-3863 or write to First American Investment Funds, Inc., 800 Nicollet Mall, Minneapolis, MN 55402. Each Fund is subject to the informational requirements of the Securities Exchange Act of 1934 and the 1940 Act, and in accordance therewith files reports and other information including proxy material and charter documents with the SEC. These items can be inspected and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at Woolworth Building, 233 Broadway, New York, New York 10279. Copies of such materials can also be obtained at prescribed rates from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549. MISCELLANEOUS LEGAL MATTERS Certain legal matters in connection with the issuance of Acquiring Fund shares as part of the Reorganizations will be passed on by Kirkpatrick & Lockhart LLP, 4 Embarcadero Center, 10th Floor, San Francisco, CA 94111. EXPERTS The audited financial statements of each Fund, incorporated by reference into the Reorganization SAI, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report appearing in the Funds' Annual Reports for the fiscal year ended September 30, 2002. The financial statements audited by Ernst & Young LLP have been incorporated by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. OTHER BUSINESS The Board of Directors does not intend to present any other business at the Meeting. If, however, any other matters are properly brought before the Meeting, the persons named in the accompanying form of proxy will vote thereon in accordance with their judgment. 87 NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES Please advise FAIF, in care of [Quasar Distributors, LLC, 615 E. Michigan Street, Milwaukee, WI 53202] [P.O. BOX #], whether other persons are beneficial owners of Acquired Fund shares for which proxies are being solicited and, if so, the number of copies of this Prospectus/Proxy Statement you wish to receive in order to supply copies to the beneficial owners of the respective shares. BOARD RECOMMENDATION REQUIRED VOTE. Approval of the Reorganization Plan with respect to an Acquired Fund requires the affirmative vote of a majority of the Fund's outstanding voting securities. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REORGANIZATION OF YOUR ACQUIRED FUND AND TO APPROVE THE REORGANIZATION PLAN WITH RESPECT TO YOUR ACQUIRED FUND. _________, 2002 88 APPENDIX A FORM OF PLAN OF REORGANIZATION AND TERMINATION THIS PLAN OF REORGANIZATION AND TERMINATION ("Plan") is adopted by First American Investment Funds, Inc., a Maryland corporation with its principal place of business at 800 Nicollet Mall, Minneapolis, Minnesota 55402 ("FAIF"), on behalf of each segregated portfolio of assets ("series") thereof listed on Schedule A to this Plan ("Schedule A"). (Each such series listed under the heading "Acquired Funds" is referred to herein as an "Acquired Fund," each such series listed under the heading "Acquiring Funds" is referred to herein as an "Acquiring Fund," and all such series are sometimes referred to herein individually as a "Fund" and collectively as the "Funds.") FAIF wishes to effect seven separate reorganizations, each described in section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"), and intends this Plan to be, and adopts it as, a "plan of reorganization" within the meaning of the regulations under section 368 of the Code ("Regulations"). Each reorganization will involve the transfer of an Acquired Fund's assets to the Acquiring Fund listed on Schedule A opposite its name (each, a "corresponding Acquiring Fund") in exchange solely for voting shares of common stock, par value $ 0.0001 per share, of that Acquiring Fund ("Acquiring Fund Shares") and that Acquiring Fund's assumption of that Acquired Fund's liabilities, followed by the constructive distribution of those shares PRO rata to the holders of shares of common stock, par value $ 0.0001 per share, of that Acquired Fund ("Acquired Fund Shares") in exchange therefor, all on the terms and conditions set forth herein. (Each such series of transactions involving each Acquired Fund and its corresponding Acquiring Fund is referred to herein as a "Reorganization.") The consummation of one Reorganization is not contingent on the consummation of any other Reorganization. (For convenience, the balance of this Plan refers only to a single Reorganization, one Acquired Fund, and one Acquiring Fund, but the terms and conditions hereof apply separately to each Reorganization and the Funds participating therein.) Each Fund is a duly established and designated series of FAIF. The Acquired Fund Shares are divided into five classes, designated Class A, Class B, Class C, Class S, and Class Y Shares ("Class A Acquired Fund Shares," "Class B Acquired Fund Shares," "Class C Acquired Fund Shares," "Class S Acquired Fund Shares," and "Class Y Acquired Fund Shares," respectively). The Acquiring Fund Shares also are divided into five classes, also designated Class A, Class B, Class C, Class S, and Class Y Shares ("Class A Acquiring Fund Shares," "Class B Acquiring Fund Shares," "Class C Acquiring Fund Shares," "Class S Acquiring Fund Shares," and "Class Y Acquiring Fund Shares," respectively). Each class of Acquiring Fund Shares is substantially similar to the corresponding class of Acquired Fund Shares, I.E., the Funds' Class A, Class B, Class C, Class S, and Class Y Shares correspond to each other. 1. PLAN OF REORGANIZATION AND TERMINATION 1.1 At the Closing (as defined in paragraph 3.1), Acquired Fund shall assign, sell, convey, transfer, and deliver all of its assets described in paragraph 1.2 ("Assets") to Acquiring Fund. In exchange therefor, Acquiring Fund shall: a) issue and deliver to Acquired Fund the number of full and fractional (rounded to the third decimal place) (i) Class A Acquiring Fund Shares determined by dividing the net value of Acquired Fund (computed as set forth in paragraph 2.1) ("Acquired Fund Value") attributable to the Class A Acquired Fund Shares by the net asset value ("NAV") of a Class A Acquiring Fund Share (computed as set forth in paragraph 2.2), (ii) Class B Acquiring Fund Shares determined by dividing the Acquired Fund Value attributable to the Class B Acquired Fund Shares by the NAV of a Class B Acquiring Fund Share (as so computed), (iii) Class C Acquiring Fund Shares determined by dividing the Acquired Fund Value attributable to the Class C Acquired Fund Shares by the NAV of a Class C Acquiring Fund Share (as so computed), (iv) Class S Acquiring Fund Shares determined by dividing the Acquired Fund Value attributable to the Class S Acquired Fund Shares by the NAV of a Class S Acquiring Fund Share (as so computed), and (v) Class Y Acquiring Fund Shares determined by dividing the Acquired Fund Value attributable to the Class Y Acquired Fund Shares by the NAV of a Class Y Acquiring Fund Share (as so computed), and b) assume all of Acquired Fund's liabilities described in paragraph 1.3 ("Liabilities"). 1.2 The Assets shall consist of all cash, cash equivalents, securities, receivables (including interest and dividends receivable), claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on Acquired Fund's books, and other property owned by Acquired Fund at the Effective Time (as defined in paragraph 3.1). 1.3 The Liabilities shall consist of all of Acquired Fund's liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Effective Time, and whether or not specifically referred to in this Plan. Notwithstanding the foregoing, Acquired Fund shall use its best efforts to discharge all its known Liabilities before the Effective Time. 1.4 At or immediately before the Effective Time, Acquired Fund shall declare and pay to its shareholders a dividend and/or other distribution in an amount large enough so that it will have distributed substantially all (and in any event not less than 90%) of its "investment company taxable income" and substantially all of its "net capital gain," if any (as such terms are defined in sections 852(b)(2) and 1222(11), respectively, of the Code, both computed without regard to any deduction for dividends paid) for the current taxable year through the Effective Time. A-2 1.5 At the Effective Time (or as soon thereafter as is reasonably practicable), Acquired Fund shall distribute the Acquiring Fund Shares it receives pursuant to paragraph 1.1 to its shareholders of record, determined as of the Effective Time (each a "Shareholder" and collectively "Shareholders"), in constructive exchange for their Acquired Fund Shares. That distribution shall be accomplished by FAIF's transfer agent's opening accounts on Acquiring Fund's share transfer books in the Shareholders' names and transferring those Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with the respective PRO RATA number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares due that Shareholder, by class (I.E., the account for a shareholder of Class A Acquired Fund Shares shall be credited with the respective PRO rata number of Class A Acquiring Fund Shares due that Shareholder, the account for a Shareholder of Class B Acquired Fund Shares shall be credited with the respective PRO RATA number of Class B Acquiring Fund Shares due that Shareholder, the account for a Shareholder of Class C Acquired Fund Shares shall be credited with the respective PRO RATA number of Class C Acquiring Fund Shares due that Shareholder, the account for a Shareholder of Class S Acquired Fund Shares shall be credited with the respective PRO RATA number of Class S Acquiring Fund Shares due that Shareholder, and the account for a shareholder of Class Y Acquired Fund Shares shall be credited with the respective PRO RATA number of Class Y Acquiring Fund Shares due that Shareholder). All outstanding Acquired Fund Shares, including any represented by certificates, shall simultaneously be canceled on Acquired Fund's share transfer books. Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares issued in connection with the Reorganization. 1.6 As soon as reasonably practicable after distribution of the Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within six months after the Effective Time, Acquired Fund shall be terminated as a series of FAIF and any further actions shall be taken in connection therewith as required by applicable law. 1.7 Any reporting responsibility of Acquired Fund to a public authority is and shall remain its responsibility up to and including the date on which it is terminated. 1.8 Any transfer taxes payable on issuance of Acquiring Fund Shares in a name other than that of the registered holder on Acquired Fund's books of the Acquired Fund Shares constructively exchanged therefor shall be paid by the person to whom those Acquiring Fund Shares are to be issued, as a condition of that transfer. 1.9 Before the Effective Time, FAIF shall (a) obtain approval, pursuant to Maryland law, of Articles of Amendment ("Amendment") to its Amended and Restated Articles of Incorporation ("Articles") (in substantially the form attached hereto as Exhibit A) and (b) file the Amendment with the State of Maryland Department of Assessments and Taxation. 1.10 In determining contingent deferred sales charges applicable to Class B Acquiring Fund Shares and Class C Acquiring Fund Shares issued in the Reorganization and the date on which such Class B Acquiring Fund Shares convert to Class A Acquiring Fund Shares, Acquiring Fund shall give each holder thereof credit for the period during which such holder held the Class B Acquired Fund Shares or Class C Acquired Fund Shares, as the case may be, in exchange for which such Acquiring Fund Shares were issued. If Class A Acquiring Fund Shares are issued in the Reorganization to Shareholders that formerly held Class A Acquired Fund Shares with A-3 respect to which the front-end sales charge was waived due to a purchase of $1 million or more, then, in determining whether a deferred sales charge is payable on the sale of such Class A Acquiring Fund Shares, Acquiring Fund shall give the holder thereof credit for the period during which such holder held such Acquired Fund Shares. 2. VALUATION 2.1 For purposes of paragraph 1.1(a), Acquired Fund's net value shall be (a) the value of the Assets computed as of the close of regular trading on the New York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"), using the valuation procedures set forth in Acquired Fund's then-current prospectuses and FAIF's statement of additional information ("SAI") less (b) the amount of the Liabilities as of the Valuation Time. 2.2 For purposes of paragraph 1.1(a), the NAV per share of each class of Acquiring Fund Shares shall be computed as of the Valuation Time, using the valuation procedures set forth in Acquiring Fund's then-current prospectuses and the SAI. 2.3 All computations pursuant to paragraphs 2.1 and 2.2 shall be made by or under the direction of U.S. Bancorp Asset Management, Inc. ("USBAM"). 3. CLOSING AND EFFECTIVE TIME 3.1 The Reorganization, together with related acts necessary to consummate the same ("Closing"), shall occur at FAIF's principal office on or about ____, 2003, or at such other place and/or on such other date FAIF determines. All acts taking place at the Closing shall be deemed to take place simultaneously as of the close of business on the date thereof or at such other time FAIF determines ("Effective Time"). If, immediately before the Valuation Time, (a) the NYSE is closed to trading or trading thereon is restricted or (b) trading or the reporting of trading on the NYSE or elsewhere is disrupted, so that accurate appraisal of Acquired Fund's net value and/or the NAV per share of each class of Acquiring Fund Shares is impracticable, the Effective Time shall be postponed until the first business day after the day when that trading has been fully resumed and that reporting has been restored. 3.2 FAIF's fund accounting and pricing agent shall deliver at the Closing a certificate of an authorized officer verifying that the information (including adjusted basis and holding period, by lot) concerning the Assets, including all portfolio securities, transferred by Acquired Fund to Acquiring Fund, as reflected on Acquiring Fund's books immediately after the Closing, does or will conform to that information on Acquired Fund's books immediately before the Closing. FAIF's custodian shall deliver at the Closing a certificate of an authorized officer stating that (a) the Assets it holds will be transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes in conjunction with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. 3.3 FAIF's transfer agent shall deliver at the Closing a certificate as to the opening on Acquiring Fund's share transfer books of accounts in the Shareholders' names and a confirmation, or other evidence satisfactory to FAIF, that the Acquiring Fund Shares to be credited to Acquired Fund at the Effective Time have been credited to Acquired Fund's account on Acquiring Fund's books. A-4 4. CONDITIONS PRECEDENT 4.1 FAIF's obligation to implement this Plan on each Fund's behalf shall be subject to satisfaction of the following conditions either at the time stated therein or, if no time is so stated, at or before (and continuing through) the Effective Time: 4.1.1 This Plan has been approved by Acquired Fund's shareholders in accordance with applicable law; 4.1.2 The fair market value of the Acquiring Fund Shares each Shareholder receives will be approximately equal to the fair market value of the Acquired Fund Shares it constructively surrenders in exchange therefor; 4.1.3 Its management (a) is unaware of any plan or intention of Shareholders to redeem, sell, or otherwise dispose of (i) any portion of their Acquired Fund Shares before the Reorganization to any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to either Fund or (ii) any portion of the Acquiring Fund Shares they receive in the Reorganization to any person "related" (within such meaning) to Acquiring Fund, (b) does not anticipate dispositions of those Acquiring Fund Shares at the time of or soon after the Reorganization to exceed the usual rate and frequency of dispositions of shares of Acquired Fund as a series of an open-end investment company, (c) expects that the percentage of Shareholder interests, if any, that will be disposed of as a result of or at the time of the Reorganization will be DE MINIMIS, and (d) does not anticipate that there will be extraordinary redemptions of Acquiring Fund Shares immediately following the Reorganization; 4.1.4 Each Shareholder will pay his or her own expenses (including fees of personal investment or tax advisors for advice regarding the Reorganization), if any, he or she incurs in connection with the Reorganization; 4.1.5 The fair market value of the Assets on a going concern basis will equal or exceed the Liabilities to be assumed by Acquiring Fund and those to which the Assets are subject; 4.1.6 There is no intercompany indebtedness between the Funds that was issued or acquired, or will be settled, at a discount; 4.1.7 Pursuant to the Reorganization, Acquired Fund will transfer to Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the fair market value of the net assets, and at least 70% of the fair market value of the gross assets, Acquired Fund held immediately before the Reorganization. For the purposes of the foregoing, any amounts Acquired Fund uses to pay its Reorganization expenses and to make redemptions and distributions immediately before the Reorganization (except (a) redemptions in the ordinary course of its business required by section 22(e) of the Investment Company Act of 1940, as amended ("1940 Act"), and (b) regular, normal dividend distributions made to conform to its policy of distributing all or substantially all of its income and gains to avoid the obligation to pay federal income tax and/or the excise tax under section 4982 of the Code) will be included as assets held thereby immediately before the Reorganization; 4.1.8 None of the compensation received by any Shareholder who is an employee of or service provider to Acquired Fund will be separate consideration for, or A-5 allocable to, any of the Acquired Fund Shares that Shareholder held; none of the Acquiring Fund Shares any such Shareholder receives will be separate consideration for, or allocable to, any employment agreement, investment advisory agreement, or other service agreement; and the consideration paid to any such Shareholder will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm's-length for similar services; 4.1.9 Immediately after the Reorganization, the Shareholders will not own shares constituting "control" (as defined in section 304(c) of the Code) of the Acquiring Fund; 4.1.10 Neither Fund will be reimbursed for any expenses incurred by it or on its behalf in connection with the Reorganization unless those expenses are solely and directly related to the Reorganization (determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization Expenses"); 4.1.11 The aggregate value of the acquisitions, redemptions, and distributions limited by paragraphs 4.2.6, 4.3.4, and 4.3.9 will not exceed 50% of the value (without giving effect to such acquisitions, redemptions, and distributions) of the proprietary interest in Acquired Fund at the Effective Time; 4.1.12 FAIF has called a special meeting of Acquired Fund's shareholders ("Meeting") to consider and act on this Plan and to take all other action necessary to obtain their approval, to the extent same is required, of the transactions contemplated herein; and such approval has been obtained; 4.1.13 This Plan has been duly authorized by all necessary action on the part of FAIF's board of directors ("Board"), which has made the determinations required by Rule 17a-8(a) under the 1940 Act; and, subject to Acquired Fund's shareholders' approval in accordance with the Articles and applicable law, this Plan constitutes a valid and legally binding obligation of each Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors' rights and by general principles of equity; 4.1.14 FAIF has filed the Amendment in accordance with applicable provisions of Maryland law; and 4.1.15 FAIF has received an opinion of Kirkpatrick & Lockhart LLP ("Counsel"), addressed to and in form and substance reasonably satisfactory to it, as to the federal income tax consequences mentioned below ("Tax Opinion"). In rendering the Tax Opinion, Counsel may assume satisfaction of all the conditions set forth in this paragraph 4, may treat them as representations and warranties FAIF made to Counsel, and may rely as to any factual matters, exclusively and without independent verification, on such representations and warranties and any other representations responsible officers of FAIF make to Counsel. The Tax Opinion shall be substantially to the effect that, based on the facts and assumptions stated therein and conditioned on the Reorganization's being consummated in accordance with this Plan, for federal income tax purposes: A-6 4.1.15.1 Acquiring Fund's acquisition of the Assets in exchange solely for Acquiring Fund Shares and its assumption of the Liabilities, followed by Acquired Fund's distribution of those shares PRO rata to the Shareholders constructively in exchange for their Acquired Fund Shares, will qualify as a "reorganization" as defined in section 368(a)(1)(C) of the Code, and each Fund will be "a party to a reorganization" within the meaning of section 368(b) of the Code; 4.1.15.2 Acquired Fund will recognize no gain or loss on the transfer of the Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities or on the subsequent distribution of those shares to the Shareholders in constructive exchange for their Acquired Fund Shares; 4.1.15.3 Acquiring Fund will recognize no gain or loss on its receipt of the Assets in exchange solely for Acquiring Fund Shares and its assumption of the Liabilities; 4.1.15.4 Acquiring Fund's basis in the Assets will be the same as Acquired Fund's basis therein immediately before the Reorganization, and Acquiring Fund's holding period for the Assets will include Acquired Fund's holding period therefor; 4.1.15.5 A Shareholder will recognize no gain or loss on the constructive exchange of all its Acquired Fund Shares solely for Acquiring Fund Shares pursuant to the Reorganization; and 4.1.15.6 A Shareholder's aggregate basis in the Acquiring Fund Shares it receives in the Reorganization will be the same as the aggregate basis in its Acquired Fund Shares it constructively surrenders in exchange for those Acquiring Fund Shares, and its holding period for those Acquiring Fund Shares will include its holding period for those Acquired Fund Shares, provided the Shareholder holds them as capital assets at the Effective Time. Notwithstanding subparagraphs 4.1.15.2 and 4.1.15.4, the Tax Opinion may state that no opinion is expressed as to the effect of the Reorganization on the Funds or any Shareholder with respect to any Asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting. 4.2 FAIF's obligation to implement this Plan on Acquiring Fund's behalf shall be subject to satisfaction of the following conditions either at the time stated therein or, if no time is so stated, at or before (and continuing through) the Effective Time: 4.2.1 At the Effective Time, Acquired Fund will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer, and deliver the Assets free of any liens or other encumbrances (except securities that are subject to A-7 "securities loans" as referred to in section 851(b)(2) of the Code); and on delivery and payment for the Assets, Acquiring Fund will acquire good and marketable title thereto; 4.2.2 Acquired Fund incurred the Liabilities in the ordinary course of its business; 4.2.3 Acquired Fund is a "fund" as defined in section 851(g)(2) of the Code; it qualified for treatment as a regulated investment company under Subchapter M of the Code ("RIC") for each past taxable year since it commenced operations and will continue to meet all the requirements for that qualification for its current taxable year; it will invest the Assets at all times through the Effective Time in a manner that ensures compliance with the foregoing; and it has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it; 4.2.4 Acquired Fund is not under the jurisdiction of a court in a "title 11 or similar case" (as defined in section 368(a)(3)(A) of the Code); 4.2.5 From the date it commenced operations through the Effective Time, Acquired Fund will conduct its "historic business" (within the meaning of section 1.368-1(d)(2) of the Regulations) in a substantially unchanged manner; and before the Effective Time Acquired Fund will not (a) dispose of and/or acquire any assets (i) for the purpose of satisfying Acquiring Fund's investment objective or policies or (ii) for any other reason except in the ordinary course of its business as a RIC, or (b) otherwise change its historic investment policies; 4.2.6 During the five-year period ending at the Effective Time, (a) neither Acquired Fund nor any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it will have acquired Acquired Fund Shares, either directly or through any transaction, agreement, or arrangement with any other person, with consideration other than Acquiring Fund Shares or Acquired Fund Shares, except for shares redeemed in the ordinary course of Acquired Fund's business as a series of an open-end investment company as required by section 22(e) of the 1940 Act, and (b) no distributions will have been made with respect to Acquired Fund Shares, other than normal, regular dividend distributions made pursuant to Acquired Fund's historic dividend-paying practice and other distributions that qualify for the deduction for dividends paid (within the meaning of section 561 of the Code) referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code; and 4.2.7 Not more than 25% of the value of Acquired Fund's total assets (excluding cash, cash items, and U.S. government securities) is invested in the stock and securities of any one issuer, and not more than 50% of the value of such assets is invested in the stock and securities of five or fewer issuers. 4.3 FAIF's obligation to implement this Plan on Acquired Fund's behalf shall be subject to satisfaction of the following conditions either at the time stated therein or, if no time is so stated, at or before (and continuing through) the Effective Time: 4.3.1 No consideration other than Acquiring Fund Shares (and Acquiring Fund's assumption of the Liabilities) will be issued in exchange for the Assets in the Reorganization; A-8 4.3.2 The Acquiring Fund Shares to be issued and delivered to Acquired Fund hereunder will have been duly authorized at the Effective Time and, when issued and delivered as provided herein, will be duly and validly issued and outstanding shares of Acquiring Fund, fully paid and non-assessable by FAIF; 4.3.3 Acquiring Fund is a "fund" as defined in section 851(g)(2) of the Code; it qualified for treatment as a RIC for each past taxable year since it commenced operations and will continue to meet all the requirements for such qualification for its current taxable year; it intends to continue to meet all such requirements for the next taxable year; and it has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M of the Code did not apply to it; 4.3.4 Acquiring Fund has no plan or intention to issue additional Acquiring Fund Shares following the Reorganization except for shares issued in the ordinary course of its business as a series of an open-end investment company; nor does Acquiring Fund, or any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it, have any plan or intention to acquire -- during the five-year period beginning at the Effective Time, either directly or through any transaction, agreement, or arrangement with any other person -- with consideration other than Acquiring Fund Shares, any Acquiring Fund Shares issued to the Shareholders pursuant to the Reorganization, except for redemptions in the ordinary course of such business as required by section 22(e) of the 1940 Act; 4.3.5 Following the Reorganization, Acquiring Fund (a) will continue Acquired Fund's "historic business" (within the meaning of section 1.368-1(d)(2) of the Regulations) and (b) will use a significant portion of Acquired Fund's "historic business assets" (within the meaning of section 1.368-1(d)(3) of the Regulations) in a business; in addition, (c) Acquiring Fund has no plan or intention to sell or otherwise dispose of any of the Assets, except for dispositions made in the ordinary course of that business and dispositions necessary to maintain its status as a RIC, and (d) expects to retain substantially all the Assets in the same form as it receives them in the Reorganization, unless and until subsequent investment circumstances suggest the desirability of change or it becomes necessary to make dispositions thereof to maintain such status; 4.3.6 There is no plan or intention for Acquiring Fund to be dissolved or merged into another corporation or a business trust or any "fund" thereof (as defined in section 851(g)(2) of the Code) following the Reorganization; 4.3.7 Immediately after the Reorganization, (a) not more than 25% of the value of Acquiring Fund's total assets (excluding cash, cash items, and U.S. government securities) will be invested in the stock and securities of any one issuer and (b) not more than 50% of the value of such assets will be invested in the stock and securities of five or fewer issuers; 4.3.8 Acquiring Fund does not directly or indirectly own, nor at the Effective Time will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of Acquired Fund; and 4.3.9 During the five-year period ending at the Effective Time, neither Acquiring Fund nor any person "related" (within the meaning of section 1.368-1(e)(3) of A-9 the Regulations) to it will have acquired Acquired Fund Shares with consideration other than Acquiring Fund Shares. 4.4 At any time before the Effective Time, FAIF may waive any of the conditions set forth in this paragraph 4 if, in the judgment of the Board, such a waiver will not have a material adverse effect on either Fund's shareholders' interests. 5. EXPENSES USBAM shall bear the total Reorganization Expenses. 6. TERMINATION AND AMENDMENT OF PLAN 6.1 The Board may terminate this Plan and abandon the Reorganization at any time before the Effective Time if circumstances develop that, in its judgment, make proceeding with the Reorganization inadvisable for either Fund. 6.2 The Board may amend, modify, or supplement this Plan at any time in any manner, notwithstanding Acquired Fund's shareholders' approval thereof; provided that following such approval no such amendment, modification, or supplement shall have a material adverse effect on the Shareholders' interests. 7. MISCELLANEOUS 7.1 This Plan shall be governed by and construed in accordance with the internal laws of the State of Maryland; provided that, in the case of any conflict between such laws and the federal securities laws, the latter shall govern. 7.2 In the case of any inconsistency between the terms hereof and the terms of the Amendment, the latter shall apply. 7.3 Nothing expressed or implied herein is intended or shall be construed to confer on or give any person, firm, trust, or corporation other than the Funds and their respective successors and assigns any rights or remedies under or by reason of this Plan. A-10 SCHEDULE A --------------------------------------- ---------------------------------------- ACQUIRED FUNDS ACQUIRING FUNDS --------------------------------------- ---------------------------------------- Large Cap Growth Fund Large Cap Core Fund(1) --------------------------------------- ---------------------------------------- Health Sciences Fund Large Cap Core Fund(1) --------------------------------------- ---------------------------------------- Mid Cap Growth Fund Mid Cap Core Fund(2) --------------------------------------- ---------------------------------------- Small Cap Growth Fund Small Cap Core Fund(3) --------------------------------------- ---------------------------------------- Emerging Markets Fund International Fund --------------------------------------- ---------------------------------------- Bond IMMDEX Fixed Income Fund(4) --------------------------------------- ---------------------------------------- High Yield Bond Fund Strategic Income Fund(5) --------------------------------------- ---------------------------------------- (1) To be renamed "Large Cap Growth Opportunities Fund" after the Reorganization. (2) To be renamed "Mid Cap Growth Opportunities Fund" after the Reorganization. (3) To be renamed "Small Cap Select Fund" after the Reorganization. (4) To be renamed "Core Bond Fund" after the Reorganization. (5) To be renamed "High Income Bond Fund" after the Reorganization. A-11 Exhibit A --------- FORM OF ARTICLES OF AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION OF FIRST AMERICAN INVESTMENT FUNDS, INC. The undersigned officer of First American Investment Funds, Inc. (the "Corporation"), a Maryland corporation, hereby certifies that the following amendments to the Corporation's Amended and Restated Articles of Incorporation have been adopted by the Board of Directors and by the requisite vote of shareholders of the Corporation in the manner required by Maryland General Corporation Law: WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class S shares of the Corporation (also known as "Large Cap Growth Fund") that the assets belonging to such class, subject to all liabilities of such class be sold to a separate portfolio of the Corporation which is known as "Large Cap Core Fund" and which is represented by the Corporation's Class QQ shares, in exchange for shares of Large Cap Core Fund, which shares will be distributed PRO RATA to the former shareholders of Large Cap Growth Fund; WHEREAS, Large Cap Growth Fund and Large Cap Core Fund have entered into a Plan of Reorganization and Termination providing for the foregoing transactions; and WHEREAS, the Plan of Reorganization and Termination requires that, in order to bind all holders of shares of Large Cap Growth Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding Large Cap Growth Fund shares, it is necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(K) immediately following Article IV(J) thereof: ARTICLE IV(K). (a) For the purposes of this Article IV(K), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's Large Cap Growth Fund, which is represented by the Corporation's Class S shares. "Class A Acquired Fund Shares" means the Corporation's Class S Common Shares. A-12 "Class B Acquired Fund Shares" means the Corporation's Class S, Series 2 Common Shares. "Class C Acquired Fund Shares" means the Corporation's Class S, Series 4 Common Shares. "Class S Acquired Fund Shares" means the Corporation's Class S, Series 5 Common Fund Shares. "Class Y Acquired Fund Shares" means the Corporation's Class S, Series 3 Common Shares. "Acquiring Fund" means the Corporation's Large Cap Core Fund, which is represented by the Corporation's Class QQ shares. "Class A Acquiring Fund Shares" means the Corporation's Class QQ Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class QQ, Series 2 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class QQ, Series 3 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class QQ, Series 5 Common Shares. "Class Y Acquiring Fund Shares" means the Corporation's Class QQ, Series 4 Common Shares. "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___ 2002 between the Acquiring Fund and Acquired Fund. "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. A-13 (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is A-14 the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class S Common Shares of the Corporation, without designation as to series. WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class W shares of the Corporation (also known as "Health Sciences Fund") that the assets belonging to such class, subject to all liabilities of such class, be sold to a separate portfolio of the Corporation which is known as "Large Cap Core Fund" and which is represented by the Corporation's Class QQ shares, in exchange for shares of Large Cap Core Fund, which shares will be distributed PRO RATA to the former shareholders of Health Sciences Fund; A-15 WHEREAS, Health Sciences Fund and Large Cap Core Fund have entered into a Plan of Reorganization and Termination providing for the foregoing transactions; and WHEREAS, the Plan of Reorganization and Termination requires that, in order to bind all holders of shares of Health Sciences Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding Health Sciences Fund shares, it is necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(L) immediately following Article IV(K) thereof: ARTICLE IV(L). (a) For the purposes of this Article IV(L), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's Health Sciences Fund, which is represented by the Corporation's Class W shares. "Class A Acquired Fund Shares" means the Corporation's Class W Common Shares. "Class B Acquired Fund Shares" means the Corporation's Class W, Series 2 Common Shares. "Class C Acquired Fund Shares" means the Corporation's Class W, Series 4 Common Shares. "Class S Acquired Fund Shares" means the Corporation's Class W, Series 5 Common Fund Shares. "Class Y Acquired Fund Shares" means the Corporation's Class W, Series 3 Common Shares. "Acquiring Fund" means the Corporation's Large Cap Core Fund, which is represented by the Corporation's Class QQ shares. "Class A Acquiring Fund Shares" means the Corporation's Class QQ Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class QQ, Series 2 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class QQ, Series 3 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class QQ, Series 5 Common Fund Shares. A-16 "Class Y Acquiring Fund Shares" means the Corporation's Class QQ, Series 4 Common Shares. "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___, 2002 between the Acquired Fund and the Acquiring Fund. "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. A-17 (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. A-18 (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class W Common Shares of the Corporation, without designation as to series. WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class FF shares of the Corporation (also known as "Mid Cap Growth Fund") that the assets belonging to such class, subject to all liabilities of such class, be sold to a separate portfolio of the Corporation which is known as "Mid Cap Core Fund" and which is represented by the Corporation's Class SS shares, in exchange for shares of Mid Cap Core Fund, which shares will be distributed PRO RATA to the former shareholders of Mid Cap Growth Fund; WHEREAS, Mid Cap Growth Fund and Mid Cap Core Fund have entered into a Plan of Reorganization and Termination providing for the foregoing transactions; and WHEREAS, the Plan of Reorganization and Termination requires that, in order to bind all holders of shares of Mid Cap Growth Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding Mid Cap Growth Fund shares, it is necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(M) immediately following Article IV(L) thereof: ARTICLE IV(M). (a) For the purposes of this Article IV(M), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's Mid Cap Growth Fund, which is represented by the Corporation's Class FF shares. "Class A Acquired Fund Shares" means the Corporation's Class FF Common Shares. "Class B Acquired Fund Shares" means the Corporation's Class FF, Series 2 Common Shares. A-19 "Class C Acquired Fund Shares" means the Corporation's Class FF, Series 4 Common Shares. "Class S Acquired Fund Shares" means the Corporation's Class FF, Series 5 Common Fund Shares. "Class Y Acquired Fund Shares" means the Corporation's Class FF, Series 3 Common Shares. "Acquiring Fund" means the Corporation's Mid Cap Core Fund, which is represented by the Corporation's Class SS shares. "Class A Acquiring Fund Shares" means the Corporation's Class SS Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class SS, Series 2 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class SS, Series 3 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class SS, Series 5 Common Fund Shares. "Class Y Acquiring Fund Shares" means the Corporation's Class SS, Series 4 Common Shares. "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___, 2002 between the Acquired Fund and the Acquiring Fund. "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: A-20 (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. A-21 (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class FF Common Shares of the Corporation, without designation as to series. WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class O shares of the Corporation (also known as "Small Cap Growth Fund") that the assets belonging to such class, subject to all liabilities of such class, be sold to a separate portfolio of the Corporation which is known as "Small Cap Core Fund" and which is represented by the Corporation's Class UU shares, in exchange for shares of Small Cap Core Fund, which shares will be distributed PRO RATA to the former shareholders of Small Cap Growth Fund; WHEREAS, Small Cap Growth Fund and Small Cap Core Fund have entered into Plan of Reorganization and Termination providing for the foregoing transactions; and A-22 WHEREAS, the Plan of Reorganization requires that, in order to bind all holders of shares of Small Cap Growth Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding Small Cap Growth Fund shares, it is necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(N) immediately following Article IV(M) thereof: ARTICLE IV(N). (a) For the purposes of this Article IV(N), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's Small Cap Growth Fund, which is represented by the Corporation's Class O shares. "Class A Acquired Fund Shares" means the Corporation's Class O Common Shares. "Class B Acquired Fund Shares" means the Corporation's Class O, Series 3 Common Shares. "Class C Acquired Fund Shares" means the Corporation's Class O, Series 4 Common Shares. "Class S Acquired Fund Shares" means the Corporation's Class O, Series 5 Common Fund Shares. "Class Y Acquired Fund Shares" means the Corporation's Class O, Series 2 Common Shares. "Acquiring Fund" means the Small Cap Core Fund, which is represented by the Corporation's Class UU shares. "Class A Acquiring Fund Shares" means the Corporation's Class UU Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class UU, Series 2 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class UU, Series 3 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class UU, Series 5 Common Fund Shares. "Class Y Acquiring Fund Shares" means the Corporation's Class UU, Series 4 Common Shares. A-23 "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___, 2002 between the Acquired Fund and the Acquiring Fund. "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired A-24 Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in A-25 the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class O Common Shares of the Corporation, without designation as to series. WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class GG shares of the Corporation (also known as "Emerging Markets Fund") that the assets belonging to such class, subject to all liabilities of such class, be sold to a separate portfolio of the Corporation which is known as "International Fund" and which is represented by the Corporation's Class Q shares, in exchange for shares of International Fund, which shares will be distributed PRO RATA to the former shareholders of Emerging Markets Fund; WHEREAS, Emerging Markets Fund and International Fund have entered into a Plan of Reorganization and Termination providing for the foregoing transactions; and WHEREAS, the Plan of Reorganization requires that, in order to bind all holders of shares of Small Cap Growth Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding Emerging Markets Fund shares, it is necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(O) immediately following Article IV(N) thereof: ARTICLE IV(O). (a) For the purposes of this Article IV(O), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's Emerging Markets Fund, which is represented by the Corporation's Class GG shares. "Class A Acquired Fund Shares" means the Corporation's Class GG Common Shares. "Class B Acquired Fund Shares" means the Corporation's Class GG, Series 2 Common Shares. "Class C Acquired Fund Shares" means the Corporation's Class GG, Series 4 Common Shares. A-26 "Class S Acquired Fund Shares" means the Corporation's Class GG, Series 5 Common Fund Shares. "Class Y Acquired Fund Shares" means the Corporation's Class GG, Series 3 Common Shares. "Acquiring Fund" means the International Fund, which is represented by the Corporation's Class Q shares. "Class A Acquiring Fund Shares" means the Corporation's Class Q Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class Q, Series 3 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class Q, Series 4 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class Q, Series 5 Common Fund Shares. "Class Y Acquiring Fund Shares" means the Corporation's Class Q, Series 2 Common Shares. "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___, 2002 between the Acquired Fund and the Acquiring Fund. "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y A-27 Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired A-28 Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class GG Common Shares of the Corporation, without designation as to series. WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class YY shares of the Corporation (also known as "Bond IMMDEX Fund") that the assets belonging to such class, subject to all liabilities of such class, be sold to a separate portfolio of the Corporation which is known as "Fixed Income Fund" and which is represented by the Corporation's Class B shares, in exchange for shares of Fixed Income Fund, which shares will be distributed PRO RATA to the former shareholders of Bond IMMDEX Fund; WHEREAS, Bond IMMDEX and Fixed Income Fund have entered into Plan of Reorganization and Termination providing for the foregoing transactions; and WHEREAS, the Plan of Reorganization requires that, in order to bind all holders of shares of Bond IMMDEX Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding Bond IMMDEX shares, it is A-29 necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(P) immediately following Article IV(O) thereof: ARTICLE IV(P). (a) For the purposes of this Article IV(P), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's Bond IMMDEX Fund, which is represented by the Corporation's Class YY shares. "Class A Acquired Fund Shares" means the Corporation's Class YY Common Shares. "Class B Acquired Fund Shares" means the Corporation's Class YY, Series 2 Common Shares. "Class C Acquired Fund Shares" means the Corporation's Class YY, Series 3 Common Shares. "Class S Acquired Fund Shares" means the Corporation's Class YY, Series 5 Common Fund Shares. "Class Y Acquired Fund Shares" means the Corporation's Class YY, Series 4 Common Shares. "Acquiring Fund" means the Fixed Income Fund, which is represented by the Corporation's Class B shares. "Class A Acquiring Fund Shares" means the Corporation's Class B Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class B, Series 3 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class B, Series 4 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class B, Series 5 Common Fund Shares. "Class Y Acquiring Fund Shares" means the Corporation's Class B, Series 2 Common Shares. "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___, 2002 between the Acquired Fund and the Acquiring Fund. A-30 "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is A-31 the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing A-32 provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class YY Common Shares of the Corporation, without designation as to series. WHEREAS, the Corporation is registered as an open-end management investment company (I.E., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets; WHEREAS, it is desirable and in the best interests of the holders of the Class NN shares of the Corporation (also known as "High Yield Bond Fund") that the assets belonging to such class, subject to all liabilities of such class, be sold to a separate portfolio of the Corporation which is known as "Strategic Income Fund" and which is represented by the Corporation's Class HH shares, in exchange for shares of Strategic Income Fund, which shares will be distributed PRO RATA to the former shareholders of High Yield Bond Fund; WHEREAS, High Yield Bond Fund and Strategic Income Fund have entered into Plan of Reorganization and Termination providing for the foregoing transactions; and WHEREAS, the Plan of Reorganization requires that, in order to bind all holders of shares of High Yield Bond Fund to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of the outstanding High Yield Bond Fund shares, it is necessary to adopt an amendment to the Corporation's Amended and Restated Articles of Incorporation. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and Restated Articles of Incorporation be, and the same hereby are, amended to add the following Article IV(Q) immediately following Article IV(P) thereof: ARTICLE IV(Q). (a) For the purposes of this Article IV(Q), the following terms shall have the following meanings: "Acquired Fund" means the Corporation's High Yield Fund, which is represented by the Corporation's Class NN shares. "Class A Acquired Fund Shares" means the Corporation's Class NN Common Shares. "Class B Acquired Fund Shares" means the Corporation's Class NN, Series 2 Common Shares. "Class C Acquired Fund Shares" means the Corporation's Class NN, Series 3 Common Shares. "Class S Acquired Fund Shares" means the Corporation's Class NN, Series 5 Common Fund Shares. A-33 "Class Y Acquired Fund Shares" means the Corporation's Class NN, Series 4 Common Shares. "Acquiring Fund" means Strategic Income Fund, which is represented by the Corporation's Class HH shares. "Class A Acquiring Fund Shares" means the Corporation's Class HH Common Shares. "Class B Acquiring Fund Shares" means the Corporation's Class HH, Series 2 Common Shares. "Class C Acquiring Fund Shares" means the Corporation's Class HH, Series 4 Common Shares. "Class S Acquiring Fund Shares" means the Corporation's Class HH, Series 5 Common Fund Shares. "Class Y Acquiring Fund Shares" means the Corporation's Class HH, Series 3 Common Shares. "Reorganization Agreement" means that Plan of Reorganization and Termination dated ___, 2002 between the Acquired Fund and the Acquiring Fund. "Effective Time" means the date and time at which delivery of the assets of the Acquired Fund and the shares of the Acquiring Fund to be issued pursuant to the Reorganization Agreement, and the liquidation of the Acquired Fund, occurs. "Valuation Time" means the close of business on the New York Stock Exchange, normally 4:00 p.m. Eastern Time, on the business day immediately prior to the Effective Time. (b) At the Effective Time, the assets belonging to the Acquired Fund, the liabilities belonging to the Acquired Fund, and the General Assets and General Liabilities allocated to the Acquired Fund, shall be sold to and assumed by the Acquiring Fund in return for Acquiring Fund shares, all pursuant to the Reorganization Agreement. For purposes of the foregoing, the terms "assets belonging to," "liabilities belonging to," "General Assets" and "General Liabilities" have the meanings assigned to them in Article IV, Section 1(d)(i) and (ii) of the Corporation's Amended and Restated Articles of Incorporation. (c) The numbers of Class A, Class B, Class C, Class S and Class Y Acquiring Fund Shares to be received by the Acquired Fund and distributed by it to the holders of Class A, Class B, Class C, Class S and Class Y Acquired Fund Shares shall be determined as follows: (i) The net asset value per share of the Acquired Fund's and the Acquiring Fund's Class A Shares, Class B Shares, Class C Shares, Class S Shares and Class Y Shares shall be computed as of the Valuation Time using the valuation procedures set forth in the Corporation's Articles of Incorporation and Bylaws and then-current A-34 Prospectus and Statement of Additional Information and as may be required by the Investment Company Act of 1940, as amended (the "1940 Act"). (ii) The total number of Class A Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class A Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class A Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class A Acquiring Fund Shares, each as determined pursuant to (i) above. (iii) The total number of Class B Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class B Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class B Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class B Acquiring Fund Shares, each as determined pursuant to (i) above. (iv) The total number of Class C Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class C Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class C Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class C Acquiring Fund Shares, each as determined pursuant to (i) above. (v) The total number of Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class S Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class S Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class S Acquiring Fund Shares, each as determined pursuant to (i) above. (vi) The total number of Class Y Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for assets and liabilities of the Acquired Fund shall be determined as of the Effective Time by multiplying the number of Class Y Acquired Fund Shares outstanding times a fraction, the numerator of which is the net asset value per share of Class Y Acquired Fund Shares, and the denominator of which is the net asset value per share of the Class Y Acquiring Fund Shares, each as determined pursuant to (i) above. (vii) At the Effective Time, the Acquired Fund shall distribute to the Acquired Fund shareholders of the respective classes PRO RATA within such classes (based upon the ratio that the number of Acquired Fund shares of the respective classes owned by each Acquired Fund shareholder bears to the total number of issued and outstanding Acquired Fund shares of the respective classes) the full and fractional Acquiring Fund shares of the respective classes received by the Acquired Fund pursuant to (ii) through (vi) above. A-35 Accordingly, each Class A Acquired Fund shareholder shall receive, at the Effective Time, Class A Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class A Acquired Fund Shares owned by such Acquired Fund shareholder; each Class B Acquired Fund shareholder shall receive, at the Effective Time, Class B Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class B Acquired Fund Shares owned by such Acquired Fund shareholder; each Class C Acquired Fund shareholder shall receive, at the Effective Time, Class C Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class C Acquired Fund Shares owned by such Acquired Fund shareholder; each Class S Acquired Fund shareholder shall receive, at the Effective Time, Class S Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class S Acquired Fund Shares owned by such Acquired Fund shareholder; and each Class Y Acquired Fund shareholder shall receive, at the Effective Time, Class Y Acquiring Fund Shares with an aggregate net asset value equal to the aggregate net asset value of the Class Y Acquired Fund Shares owned by such Acquired Fund shareholder. (d) The distribution of Acquiring Fund shares to Acquired Fund shareholders provided for in paragraph (c) above shall be accomplished by an instruction, signed by the Corporation's Secretary, to transfer the Acquiring Fund shares then credited to the Acquired Fund's account on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders in amounts representing the respective PRO RATA number of Acquiring Fund shares due each such shareholder pursuant to the foregoing provisions. All issued and outstanding shares of the Acquired Fund shall simultaneously be cancelled on the books of the Acquired Fund and retired. (e) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to paragraph (d) above shall have the status of authorized and unissued Class NN Common Shares of the Corporation, without designation as to series. The undersigned officer of the Corporation hereby acknowledges, in the name and on behalf of the Corporation, the foregoing Articles of Amendment to be the corporate act of the Corporation and further certifies that, to the best of his or her knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury. A-36 IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be signed in its name and on its behalf by its President or a Vice President and witnessed by its Secretary or an Assistant Secretary on ______________, 2002. FIRST AMERICAN INVESTMENT FUNDS, INC. By ______________________________ Its _____________________________ WITNESS: ________________________________________________ Secretary, First American Investment Funds, Inc. A-37 APPENDIX B MANAGEMENT DISCUSSION OF FUND PERFORMANCE (EXCERPTED FROM THE FUNDS' ANNUAL REPORTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002) LARGE CAP GROWTH Investment Objective: LONG-TERM GROWTH OF CAPITAL In a challenging environment for growth-oriented stocks, the First American Large Cap Growth Fund (the "Fund") Class Y shares declined 26.87% for the fiscal year ended September 30, 2002 (Class A shares declined 27.08% on net asset value). Similarly, the Fund's benchmark, the Russell 1000 Growth Index, declined 22.51% over the same timeframe*. The period began in October 2001 shortly after the terrorist attacks of September 11. In the initial months, the Federal Reserve continued to reduce interest rates in order to boost prospects for the U.S. economy. Investors anticipated an economic recovery and improved corporate earnings. As a result, growth stocks enjoyed a solid rebound, which lasted through the end of 2001. Early in the new year, the environment began to change. Investors received troubling news of accounting problems involving a number of major companies, including Enron and Global Crossing. Later in the year, more companies were caught up in the scandals, including Worldcom. The onslaught of bad news took a toll on investor confidence and, at the same time, the economy, while moving in a positive direction, proved to be disappointing to the markets. Once again, growth stocks bore the brunt of the damage, and declined for much of the rest of the Fund's fiscal year. Every key industry segment in the broad market moved lower over the fiscal year. However, the Fund's holdings in basic materials stocks, Ecolab, energy issues such as Apache Corporation, and retail issues such as Kohl's held up better than most. Among the weakest performing stocks were utilities issues such as Enron and Mirant, and technology issues such as Texas Instruments and EDS. Throughout the year, the Fund's technology position was reduced as this area of the market continued to face severe challenges. It seems clear that prospects for growth stocks aren't likely to dramatically improve until the U.S. economy shows more consistent growth. Given the number of uncertainties in the market, ranging from corporate accounting issues to growing global tensions, a fair amount of volatility is likely to remain in the near term. At current valuations, investors may find large-cap growth issues attractive, which could create some positive opportunities for the Fund in the year ahead. Efforts will continue to be made to actively position the portfolio to take advantage of opportunities that may arise. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) ----------------------------------------------------------- 1 YEAR 5 YEARS 12/11/1994 8/18/1997 3/31/2000 12/11/2000 9/24/2001 -------------------------------------------------------------------------------------------------------------- Class A NAV -27.08% -- -- -- -30.00% -- -- Class A POP -31.09% -- -- -- -31.57% -- -- Class B NAV -27.64% -7.13% 4.35% -- -- -- -- Class B POP -31.26% -7.47% 4.35% -- -- -- -- Class C NAV -27.48% -- -- -- -- -- -25.32% Class C POP -28.99% -- -- -- -- -- -26.79% Class S -27.08% -- -- -- -- -36.09% -- Class Y -26.87% -6.63% -- -5.71% -- -- -- Russell 1000 Growth Index(3) -22.51% -4.87% 7.01% -3.89% -31.52% -30.04% -22.51%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-2 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS B FIRST AMERICAN LARGE FIRST AMERICAN LARGE CAP GROWTH FUND, CAP GROWTH FUND, RUSSELL 1000 CLASS B NAV CLASS B POP GROWTH INDEX(3) -------------------------------------------------------------------------------- 12/1992 $ 10,000 $ 10,000 $ 10,000 11/1995 $ 12,949 $ 12,949 $ 13,639 11/1996 $ 16,487 $ 16,487 $ 17,227 11/1997 $ 20,215 $ 20,215 $ 21,795 11/1998 $ 24,426 $ 24,426 $ 28,041 11/1999 $ 30,583 $ 30,583 $ 36,871 10/2000 $ 33,185 $ 33,185 $ 38,247 9/2001 $ 19,259 $ 19,259 $ 21,824 9/2002 $ 13,936 $ 13,936 $ 16,912 [CHART] CLASS Y FIRST AMERICAN LARGE CAP GROWTH FUND, CLASS Y RUSSELL 1000 GROWTH INDEX(3) -------------------------------------------------------------- 8/1997 $ 10,000 $ 10,000 11/1997 $ 10,462 $ 10,533 11/1998 $ 12,649 $ 13,552 11/1999 $ 15,891 $ 17,820 10/2000 $ 17,293 $ 18,485 9/2001 $ 10,122 $ 10,548 9/2002 $ 7,403 $ 8,174 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On May 17, 2002, Capital Growth Fund merged into Large Cap Growth Fund, each a series of First American Investment Funds, Inc. Performance presented prior to May 17, 2002 represents that of Capital Growth Fund. On September 24, 2001, Capital Growth Fund became the successor by merger to Firstar Large Cap Growth Fund, a series of Firstar Funds, Inc. Prior to the merger, the First American Fund had no assets or liabilities. Performance presented prior to September 24, 2001 represents that of the Firstar Large Cap Growth Fund. The Firstar Large Cap Growth Fund was organized on December 11, 2000 and, prior to that, was a separate series of Firstar Stellar Funds, inc. Performance presented prior to December 11, 2000 represents that of the Firstar Stellar Growth Equity Fund. (2) Performance for Class A, Class C, and Class S shares is not presented. Performance for Class A and Class S is higher due to lower expenses. Performance for Class C is substantially similar to Class B due to similar expenses. (3) An unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 1000 companies include the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-3 HEALTH SCIENCES Investment Objective: LONG-TERM GROWTH OF CAPITAL Last year, the stock market faced many challenges, and health care stocks were not immune to the maladies of the general market. The First American Health Sciences Fund (the "Fund") Class Y shares lost 19.44% (Class A shares declined 19.61% on net asset value) for the fiscal year. The Fund's benchmark, the S&P Health Care Composite Index, was down 22.38% for the same period*. While health care stocks typically offer stability and protection in a volatile market due to their low correlation with the economy, the sector as a whole was not able to escape the market's challenges in the past year. Issues that affected the broader market, including economic sluggishness and global uncertainties, also played a role in the decline of health care stocks. Notably, pharmaceutical stocks, which make up a majority of the sector on a market capitalization-weighted basis, declined significantly during the period. Many of the larger pharmaceutical companies are dealing with significant fundamental issues (patent risk, inventory management and regulatory compliance) that have hurt their ability to generate acceptable profit growth. While the Fund had exposure in this sector, it was largely underweight in the group and avoided many of the blow-ups, which assisted in the Fund's out-performance in this critical sector. Among the Fund's largest contributors was Pharmacia, which is being acquired by Pfizer at a 40% premium. Pharmacia, the Fund's second largest position, was up 2.10% during the fiscal year. Among the weak performers that dragged down the Fund's performance were King Pharmaceuticals and Pfizer. The three other major sectors represented in the health care marketplace were a mixed bag. Biotechnology stocks, another significant component in the sector, did not fare much better than pharmaceuticals. Many of the Fund's largest losers reside in the biotech sector as the inherent risk in this industry is significant. A bright spot in this difficult market was the health care services area, which includes hospitals and managed care organizations. One stock that worked particularly well for the Fund was Wellpoint Health Networks, a managed care company, which posted a gain of 34.3% during the period. Medical device companies also enjoyed sound performance; the Fund benefited from a core group of holdings including Boston Scientific and Zimmer. In the closing months of the fiscal year, the managers concentrated the number of holdings in the Fund in an effort to improve the quality of the portfolio. While volatility is typical in a sector fund such as this, the long-term outlook for strong companies in the health care market is positive. With an aging population worldwide, demand for medical care is likely to rise. Further, given the decline in valuations, many of these stocks look attractive at levels we have not seen in years. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002 SINCE INCEPTION(4) ---------------------------------- 1 YEAR 5 YEARS 1/31/1996 2/1/2000 9/24/2001 ------------------------------------------------------------------------------ Class A NAV -19.61% -3.13% 0.60% -- -- Class A POP -24.02% -4.22% -0.25% -- -- Class B NAV -20.21% -3.83% -0.14% -- -- Class B POP -24.20% -4.12% -0.14% -- -- Class C NAV -20.25% -- -- -4.22% -- Class C POP -21.85% -- -- -4.59% -- Class S -19.72% -- -- -- -12.50% Class Y -19.44% -2.89% 0.84% -- -- S&P Health Care Composite Index(3) -22.38% 4.61% 9.44% -1.58% -22.38% * Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-4 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN HEALTH SCIENCES FUND, HEALTH SCIENCES FUND, S&P HEALTH CARE CLASS A NAV CLASS A POP COMPOSITE INDEX(3) -------------------------------------------------------------------------------- 1/1996 $ 10,000 $ 9,452 $ 10,000 9/1996 $ 9,868 $ 9,327 $ 10,926 9/1997 $ 12,197 $ 11,528 $ 14,704 9/1998 $ 9,119 $ 8,619 $ 20,030 9/1999 $ 9,673 $ 9,142 $ 19,925 9/2000 $ 15,659 $ 14,801 $ 24,768 9/2001 $ 12,943 $ 12,234 $ 23,720 9/2002 $ 10,405 $ 9,834 $ 18,411 [CHART] CLASS Y FIRST AMERICAN HEALTH SCIENCES FUND, S&P HEALTH CARE CLASS Y COMPOSITE INDEX(3) --------------------------------------------------------- 1/1996 $ 10,000 $ 10,000 9/1996 $ 9,880 $ 10,926 9/1997 $ 12,241 $ 14,704 9/1998 $ 9,168 $ 20,030 9/1999 $ 9,772 $ 19,925 9/2000 $ 15,840 $ 24,768 9/2001 $ 13,124 $ 23,720 9/2002 $ 10,573 $ 18,411 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Sector funds such as the First American Health Sciences Fund are more vulnerable to price fluctuation as a result of events that may affect the industry in which they focus than are funds that invest in multiple industries. Share prices of sector funds also will fluctuate with changing market conditions, as will share prices of other stock funds. Sector funds should not be treated as a core investment; rather, their role is to round out the growth portion of a well-diversified investment portfolio. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. The Health Sciences Fund's 2000 returns were higher due in part to its strategy of investing in IPOs in a period favorable for IPO investing. Of course, such favorable returns involve accepting the risk of volatility, and there is no assurance that the Fund's future investment in IPOs will have the same effect on performance as it had in 1999 and 2000. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index comprised of health care stocks in the S&P 500 Composite Index (an unmanaged index of large-capitalization stocks). (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-5 LARGE CAP CORE Investment Objective: LONG-TERM GROWTH OF CAPITAL A general market decline took a significant toll on stocks, including those of the largest companies. The First American Large Cap Core Fund (the "Fund") Class Y shares declined 21.23% for the fiscal year ended September 30, 2002 (Class A shares declined 21.46% on net asset value). Over the same 12-month period, the Fund's benchmark, the S&P 500 Composite Index, declined 20.49%*. The period began in a very positive way, as the Federal Reserve responded to the economic setback of the September 11, 2001 terrorist attacks with additional cuts of short-term interest rates. The stock market performed solidly in the first few months of the Fund's fiscal year as investors anticipated an economic recovery. However, the market remained volatile, and a number of issues came to the forefront in early 2002, which obscured the positive economic trends, including ongoing terrorist concerns, rising global tensions, and corporate accounting scandals. As a result, stocks reversed course and declined significantly for much of the rest of the fiscal year. While it was a challenging environment in which to find productive stocks, a few areas generated reasonable returns. Several consumer stocks, including retailers such as Kohl's and Lowe's performed well, as did auto parts retailer Autozone. The Fund also added stock of Carnival Cruise Line after it was driven down in the wake of the terrorist attack, and the stock rebounded nicely. Cash levels in the Fund were also relatively high due to the market's volatility. A number of areas detracted from performance, including stocks of companies caught up in some of the corporate governance issues, Enron and Tyco. Large pharmaceutical stocks such as Bristol-Myers, Merck, and Baxter International also declined significantly, hurting the Fund's performance. The bear market has created a number of attractive buying opportunities in high-quality stocks. The Fund has begun to add positions in companies that are in a strong financial position and seem well-positioned for a rebound. Some of these opportunities can be found in the health care, technology, and telecommunications sectors. Given the extent of the market's decline in recent months, it seems reasonable to expect that a recovery is in order. Good stocks are available at reasonable valuations, which may create the potential for gains in the months ahead. While the markets are likely to remain volatile on a day-to-day basis, stocks may begin to look fairly attractive when compared to other assets in the current investment environment. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) --------------------------------------------------------- 1 YEAR 5 YEARS 12/29/1992 1/9/1995 3/1/1999 11/27/2000 9/24/2001 --------------------------------------------------------------------------------------------------------------- Class A NAV -21.46% -4.30% -- 5.40% -- -- -- Class A POP -25.76% -5.38% -- 4.62% -- -- -- Class B NAV -22.06% -- -- -- -13.09% -- -- Class B POP -25.95% -- -- -- -13.71% -- -- Class C NAV -22.03% -- -- -- -- -- -19.48% Class C POP -23.62% -- -- -- -- -- -21.05% Class S -21.45% -- -- -- -- -28.47% -- Class Y -21.23% -4.06% 4.92% -- -- -- -- S&P 500 Composite Index(3) -20.49% -1.63% 8.69% 9.25% -11.06% -21.87% -20.49%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-6 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A
FIRST AMERICAN LARGE FIRST AMERICAN LARGE CAP CORE FUND, CAP CORE FUND, CLASS A NAV CLASS A POP S&P 500 COMPOSITE INDEX(3) ------------------------------------------------------------------------------------------------------- 1/1995 $ 10,000 $ 9,452 $ 10,000 10/1995 $ 12,347 $ 11,666 $ 12,603 10/1996 $ 14,635 $ 13,828 $ 15,640 10/1997 $ 17,753 $ 16,774 $ 20,663 10/1998 $ 21,051 $ 19,890 $ 25,204 10/1999 $ 24,823 $ 23,453 $ 31,671 10/2000 $ 29,768 $ 28,126 $ 33,599 9/2001 $ 19,103 $ 18,049 $ 24,760 9/2002 $ 15,006 $ 14,178 $ 19,691
[CHART] CLASS Y FIRST AMERICAN LARGE CAP CORE FUND, CLASS Y S&P 500 COMPOSITE INDEX(3) ------------------------------------------------------------------------------- 12/1992 $ 10,000 $ 10,000 10/1993 $ 10,753 $ 10,981 10/1994 $ 10,813 $ 11,406 10/1995 $ 12,927 $ 14,422 10/1996 $ 15,360 $ 17,897 10/1997 $ 18,675 $ 23,644 10/1998 $ 22,203 $ 28,840 10/1999 $ 26,241 $ 36,241 10/2000 $ 31,552 $ 38,447 10/2001 $ 20,288 $ 28,332 10/2002 $ 15,981 $ 22,531 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On September 24, 2001, the Large Cap Core Fund became the successor by merger to the Firstar LargeCap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, the First American Fund had no assets or liabilities. Performance presented prior to September 24, 2001, represents that of the Firstar LargeCap Core Equity Fund. Prior to January 10, 1995, the Firstar Fund offered one class of shares to investors without a distribution or shareholder servicing fee. Performance presented prior to January 10, 1995, does not reflect these fees. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index of large-capitalization stocks. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-7 MID CAP GROWTH Investment Objective: GROWTH OF CAPITAL Growth stocks continued to find themselves in the midst of a serious bear market during the fiscal year ended September 30, 2002. The First American Mid Cap Growth Fund (the "Fund") was hard hit, with Class Y shares declining 22.63% (Class A shares declined 22.74% at net asset value). The Fund lagged its benchmark, the Russell MidCap Growth Index, which declined 15.50% over the same period*. As has been the case since the bear market began in early 2000, growth stocks have borne the brunt of investors' wrath. During the past 12 months, many companies continued to struggle to meet profit expectations. This fact proved to be particularly damaging to prospects for growth stocks, and the issues owned in the Fund were no exception. There was some positive movement in the first few months of the period, which occurred on the heels of a major selloff in stocks triggered by the events of September 11, 2001. After the immediate impact of the terrorist attacks faded, investors were initially encouraged about prospects for a better profit environment, and the Fund benefited as a result through the end of 2001, into the early months of 2002. The environment quickly changed as investors became unsettled about the inability of many companies to meet profit expectations.From early 2002 forward, mid-cap growth stocks as a whole generally declined. As has been the case for much of the bear market cycle, technology stocks proved to be a particularly weak sector. Given the challenges of the market, the Fund took a somewhat more defensive approach, which included holding more cash than is typical, and avoiding any significant concentration in any specific sector of the market. In particular, throughout most of the period, the Fund had a below-average position in technology and telecommunications stocks, which continued to lag the market as a whole. The Fund benefited during the year from contributions among some retail stocks such as Michael's Stores, and a variety of other issues. Among the best performers were the gaming software company International Gaming Technology and the medical firm Zimmer Holdings. Among the stocks that were most detrimental were the software company Siebel Systems and financial provider Bisys Group. Despite the troubles of recent years, mid-cap growth stocks may be attractively positioned going forward. Given current valuations and the extent of the market's downturn, there is reason to be optimistic that the next year will be more productive for investors in this segment of the market, and the Fund will be positioned accordingly. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) -------------------------------------------- 1 YEAR 5 YEARS 10 YEARS 2/18/1997 8/7/1998 2/01/1999 9/24/2001 ------------------------------------------------------------------------------------------------------------ Class A NAV -22.74% -4.60% 7.32% -- -- -- -- Class A POP -27.01% -5.68% 6.72% -- -- -- -- Class B NAV -23.47% -- -- -- -6.72% -- -- Class B POP -27.30% -- -- -- -6.90% -- -- Class C NAV -23.44% -- -- -- -- -9.44% -- Class C POP -24.90% -- -- -- -- -9.69% -- Class S -22.74% -- -- -- -- -- -21.03% Class Y -22.63% -4.34% -- -0.41% -- -- -- Russell MidCap Growth Index(3) -15.50% -4.06% 6.95% 0.05% -0.88% -8.62% -15.50%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-8 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN MID CAP GROWTH FUND, MID CAP GROWTH FUND, RUSSELL MIDCAP CLASS A NAV CLASS A POP GROWTH INDEX(3) ----------------------------------------------------------------------- 9/1992 $ 10,000 $ 9,452 $ 10,000 9/1993 $ 13,689 $ 12,936 $ 12,023 9/1994 $ 13,356 $ 12,621 $ 12,315 9/1995 $ 17,989 $ 16,999 $ 15,968 9/1996 $ 21,198 $ 20,031 $ 18,576 9/1997 $ 25,658 $ 24,245 $ 24,082 9/1998 $ 22,309 $ 21,081 $ 21,826 9/1999 $ 29,378 $ 27,761 $ 29,943 9/2000 $ 51,836 $ 48,982 $ 48,020 9/2001 $ 26,240 $ 24,796 $ 23,161 9/2002 $ 20,274 $ 19,158 $ 19,571 [CHART] CLASS Y FIRST AMERICAN MID CAP GROWTH FUND, RUSSELL MIDCAP CLASS Y GROWTH INDEX(3) ------------------------------------------------ 2/1997 $ 10,000 $ 10,000 9/1997 $ 12,193 $ 12,338 9/1998 $ 10,633 $ 11,182 9/1999 $ 14,032 $ 15,341 9/2000 $ 24,820 $ 24,603 9/2001 $ 12,604 $ 11,867 9/2002 $ 9,769 $ 10,027 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Indexes are for illustrative purposes only and are not available for investment. Stocks of mid-capitalization companies may be slightly less volatile than those of small-capitalization companies, but they still involve substantial risk and may be subject to more abrupt or erratic price fluctuations than large-capitalization companies. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On August 7, 1998, the Mid Cap Growth Fund became the successor by merger to the Piper Emerging Growth Fund, a series of Piper Funds Inc. Prior to the merger, the First American Fund had no assets or liabilities. Performance prior to August 7, 1998, is that of the Piper Emerging Growth Fund. The Mid Cap Growth Fund's 1999 returns were higher due in part to its strategy of investing in IPOs in a period favorable for IPO investing. Of course, such favorable returns involve accepting the risk of volatility, and there is no assurance that the Fund's future investment in IPOs will have the same effect on performance as it had in 1999 and 2000. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index that measures the performance of those Russell MidCap Index companies with higher price-to-book ratios and higher forecasted growth values. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-9 MID CAP CORE Investment Objective: CAPITAL APPRECIATION With investor confidence sagging through much of 2002, mid-cap stocks moved in a negative direction, though they generally fared better than the stock market as a whole. For its fiscal year ending September 30, 2002, the First American Mid Cap Core Fund (the "Fund") Class Y shares fell by 6.39% (Class A shares lost 6.64% on net asset value). The Fund's benchmark, the S&P 400 MidCap Index, declined 4.70% for the period*. A trend that began in earlier years continued for much of the past fiscal year, as mid-cap stocks tended to outpace their blue-chip counterparts. With issues such as corporate accounting scandals taking a major toll on a number of well-known companies, many of the firms in the mid-cap universe escaped those problems as few concerns surfaced about accounting problems at smaller companies. In addition, earnings on mid-cap stocks generally held up better than for the market as a whole. In the closing months of the Fund's fiscal year, damage from the bear market broadened, and mid-cap stocks declined comparably to the rest of the equity market. Although the environment presented serious challenges, several stocks performed well for the Fund during the year. One area of strength was the education market, where two post-secondary education companies, Corinthian Colleges and Career Education, generated solid returns. The food company Dreyer's Grand Ice Cream turned in positive results and accepted a buyout from Nestle's, boosting its stock price. USA Interactive and Westwood One, both media companies, also performed well. Among the stocks detracting from performance was King Pharmaceuticals, which struggled due to a number of issues that arose from some of its high-profit drugs. Polycom, a video-conferencing company that experienced disappointing business, and Health South, which saw Medicare payments for its rehabilitation services decline, also hurt portfolio performance. The Fund remains well-diversified with a broad mix of stocks from the mid-cap universe, including a mild preference for growth-oriented stocks. A rebound in stock performance will likely hinge on faster economic growth, which may be dependent in large part on increasing corporate expenditures-something that has been lacking in recent years. As the year progresses, we anticipate that business spending will pick up, which should give a number of stocks a reasonable boost. Given the current low valuations of many stocks, the Fund is seeking to position itself to benefit from a more favorable economic environment in the months to come. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) --------------------------------------------- 1 YEAR 5 YEARS 10 YEARS 1/9/1995 3/01/1999 12/11/2000 9/24/2001 --------------------------------------------------------------------------------------------------------- Class A NAV -6.64% -0.02% -- 8.30% -- -- -- Class A POP -11.77% -1.15% -- 7.51% -- -- -- Class B NAV -7.36% -- -- -- 2.08% -- -- Class B POP -11.99% -- -- -- 1.54% -- -- Class C NAV -7.20% -- -- -- -- -- -3.99% Class C POP -9.06% -- -- -- -- -- -5.88% Class S -6.58% -- -- -- -- -15.43% -- Class Y -6.39% 0.22% 8.57% -- -- -- -- S&P MidCap 400 Index(3) -4.70% 5.39% 12.57% 13.47% 4.23% -11.80% -4.70%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-10 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN MID CAP CORE FUND, MID CAP CORE FUND, S&P MIDCAP 400 CLASS A NAV CLASS A POP INDEX(3) --------------------------------------------------------------------- 1/1995 $ 10,000 $ 9,452 $ 10,000 10/1995 $ 12,873 $ 12,166 $ 12,449 10/1996 $ 14,453 $ 13,658 $ 14,608 10/1997 $ 17,658 $ 16,688 $ 19,381 10/1998 $ 16,615 $ 15,702 $ 20,681 10/1999 $ 16,832 $ 15,907 $ 25,038 10/2000 $ 24,783 $ 23,421 $ 32,962 9/2001 $ 19,826 $ 18,736 $ 27,636 9/2002 $ 18,510 $ 17,493 $ 26,338 [CHART] CLASS Y FIRST AMERICAN MID CAP CORE FUND, S&P MIDCAP CLASS Y 400 INDEX(3) -------------------------------------------------- 10/1992 $ 10,000 $ 10,000 10/1993 $ 11,615 $ 12,153 10/1994 $ 11,937 $ 12,443 10/1995 $ 15,015 $ 15,082 10/1996 $ 16,905 $ 17,698 10/1997 $ 20,699 $ 23,480 10/1998 $ 19,526 $ 25,055 10/1999 $ 19,831 $ 30,334 10/2000 $ 29,268 $ 39,935 9/2001 $ 23,462 $ 34,963 9/2002 $ 21,954 $ 31,909 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Stocks of mid-capitalization companies may be slightly less volatile than those of small-capitalization companies, but they still involve substantial risk and may be subject to more abrupt or erratic price fluctuations than large-capitalization companies. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On September 24, 2001, the Mid Cap Core Fund became the successor by merger to the Firstar MidCap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, the First American Fund had no assets or liabilities. Performance presented prior to September 24, 2001, represents that of the Firstar MidCap Core Equity Fund. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged, capitalization-weighted index that represents the aggregate market value of the common equity of 400 companies chosen by Standard & Poor's with a median capitalization of approximately $700 million and measures the performance of the mid-range sector of the U.S. stock market. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-11 SMALL CAP GROWTH Investment Objective: GROWTH OF CAPITAL Growth stocks continued to struggle in the ongoing bear market environment throughout the fiscal year. As a result, the First American Small Cap Growth Fund (the "Fund") Class Y shares declined 22.00% during the period (Class A shares declined 22.07% on net asset value). For the same period, the Fund's benchmark, the Russell 2000 Growth Index, was down 18.16%*. The fiscal year began on the heels of a significantly difficult year that was capped by the terrorist attacks of September 11, 2001. In the closing months of 2001, there seemed to be reason for optimism. All indications pointed to an economy in recovery, fueling expectations that improved corporate profits wouldn't be far behind. This was a particularly important trend for growth stocks, which generally move higher on good earnings news. Unfortunately, the optimism began to fade near the onset of 2002. A number of large companies became embroiled in accounting irregularities, events that shook investor confidence throughout the equity market. In addition, investors became wary of some economic signals, which lowered expectations for corporate earnings. As a result, growth stocks resumed their downward trend and reached extremely low levels in July and, then again, in September, the closing month of the Fund's fiscal year. In such a negative environment, an extra premium was placed on analysis and individual stock selection. The Fund took a fairly neutral approach to the market, avoiding significant commitments to any particular sector. Most notably, the portfolio de-emphasized technology and telecommunications issues, which continued to be among the hardest hit areas of the market. Cash levels were also slightly higher than is usually the case, contributing to the Fund's defensive posture. Stocks of companies that managed to generate solid results helped the Fund's performance. Among the contributors were Take Two Interactive Software, a computer game maker, and two health care related stocks, Amylin Pharmaceuticals and Techne Corporation. On the downside, two stocks related to the struggling broadband communications industry hurt the Fund's returns, including Centillium Corporation and Microtune Inc. The bear market has lasted for more than two-and-one-half years, but it appears to be close to wearing down. Stock valuations have been hard hit, and investors may begin to recognize long-term growth opportunities. Small-cap growth stocks have sometimes performed well coming out of such an environment, and this could potentially happen again. As more encouraging economic signals appear, the Fund will position itself to take advantage of any opportunities. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) ----------------------------------- 1 YEAR 5 YEARS 10 YEARS 7/31/1998 2/1/1999 9/24/2001 ------------------------------------------------------------------------------------------------- Class A NAV -22.07% -3.31% 6.51% -- -- -- Class A POP -26.38% -4.40% 5.91% -- -- Class B NAV -22.70% -- -- -4.02% -- -- Class B POP -26.57% -- -- -4.34% -- -- Class C NAV -22.69% -- -- -- -6.68% -- Class C POP -24.22% -- -- -- -6.94% -- Class S -22.07% -- -- -- -- -21.00% Class Y -22.00% -- -- -3.05% -- -- Russell 2000 Growth Index(3) -18.16% -9.49% 3.49% -8.69% -9.89% -18.16%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-12 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN SMALL CAP GROWTH FUND, SMALL CAP GROWTH FUND, RUSSELL 2000 CLASS A NAV CLASS A POP GROWTH INDEX(3) ------------------------------------------------------------------------------ 9/1992 $ 10,000 $ 9,452 $ 10,000 9/1993 $ 12,453 $ 11,766 $ 12,920 9/1994 $ 12,717 $ 12,016 $ 13,031 9/1995 $ 14,480 $ 13,682 $ 16,706 9/1996 $ 15,260 $ 14,419 $ 18,813 9/1997 $ 22,229 $ 21,004 $ 23,206 9/1998 $ 18,084 $ 17,087 $ 17,443 9/1999 $ 25,517 $ 24,110 $ 23,134 9/2000 $ 41,356 $ 39,076 $ 29,997 9/2001 $ 24,107 $ 22,778 $ 17,223 9/2002 $ 18,786 $ 17,750 $ 14,095 [CHART] CLASS Y FIRST AMERICAN SMALL CAP GROWTH FUND, RUSSELL 2000 CLASS Y GROWTH INDEX(3) -------------------------------------------------------- 7/1998 $ 10,000 $ 10,000 9/1998 $ 8,383 $ 8,471 9/1999 $ 11,856 $ 11,235 9/2000 $ 19,275 $ 14,568 9/2001 $ 11,267 $ 8,364 9/2002 $ 8,788 $ 6,845 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Stocks of small-capitalization companies involve substantial risk. These stocks historically have experienced greater volatility than stocks of larger companies and they may be expected to do so in the future. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On July 31, 1998, the Small Cap Growth Fund became the successor by merger to the Piper Small Company Growth Fund, a series of Piper Funds Inc. Performance presented prior to July 31, 1998, is that of the Piper Small Companies Growth Fund. On September 21, 1996, shareholders approved a change in the Fund's investment objective from high total investment return consistent with prudent investment risk to long-term capital appreciation. In connection with this change, the Fund's investment policies were revised. The Small Cap Growth Fund's 1999 returns were higher due in part to its strategy of investing in IPOs in a period favorable for IPO investing. Of course, such favorable returns involve accepting the risk of volatility, and there is no assurance that the Fund's future investment in IPOs will have the same effect on performance as it did in 1999. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged index comprised of the smallest 2,000 companies in the Russell 3000 index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The Russell 3000 Index is composed of 3,000 large U.S. companies based on total market capitalization, representing approximately 98% of the investable U.S. equity market. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-13 SMALL CAP CORE Investment Objective: CAPITAL APPRECIATION As the bear market continued throughout the fiscal year, small stocks managed to avoid many of the problems, but still lost ground. The First American Small Cap Core Fund (the "Fund") Class Y shares declined 4.19% for the fiscal year ended September 30, 2002 (Class A shares declined 4.56% on net asset value). Over the same 12 months, the Fund's benchmark, the S&P SmallCap 600 Index, declined 1.79%*. Small-cap stocks appeared attractively valued in comparison to larger stocks as the fiscal year began, and that was borne out in an early rally that favored this segment of the market. The Fund enjoyed solid gains in the first half of its fiscal year. However, the environment changed in April 2002 as investors became concerned that the U.S. economy was not meeting expectations for recovery. Other issues also hampered investor psychology, including concerns about global conflicts and credibility over corporate accounting problems. Investors began to pull money out of what were viewed as more risky areas of the market. As a result, a major sell-off in small-cap stocks occurred for much of the rest of the period. A number of stocks performed well, particularly in the earlier part of the year. Among the Fund's biggest contributors was Performance Food Group, a fast-growing food distribution company. Hospital firms such as Community Health Systems and Triad Hospitals generated positive results, as did retail companies Gymboree and Advanced Auto Parts. Among the detractors from Fund performance were two semiconductor stocks, Entegris and ATMI, that started the year well, but lost ground as sales of semiconductor chips turned disappointing. Weakness in consumer stocks also took a toll, including poor returns from cable TV providers Insight Communications and Rogers Communications. Although the Fund cut back on holdings in the weak telecommunications sector, one holding that had a particularly negative impact on the Fund was the wireless firm Airgate PCS. The downturn that plagued the market in recent months created positive buying opportunities for the Fund. In particular, positions have been increased in the hard-hit energy sector, which appears well-positioned for a rebound. The number of stocks in the Fund has been reduced, allowing the portfolio to own larger positions in favored issues. This could prove effective for the Fund, as the portfolio has been able to build its holdings in high-quality companies with strong franchises and a dominant position in their marketplace. While we anticipate a volatile market in the near term, we expect to see an improving environment over the next year. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) ----------------------------------- 1 YEAR 5 YEARS 10 YEAR 12/31/1993 3/6/1995 9/24/2001 ------------------------------------------------------------------------------------------------- Class A NAV -4.56% 0.44% 9.69% -- -- -- Class A POP -9.83% -0.69% 9.07% -- -- -- Class B NAV -5.23% -0.24% -- -- 5.76% -- Class B POP -9.64% -0.50% -- -- 5.76% -- Class C NAV -5.09% -- -- -- -- -3.02% Class C POP -6.91% -- -- -- -- -4.87% Class S -4.48% 0.49% -- 6.41% -- -- Class Y -4.19% 0.74% 9.96% -- -- -- S&P SmallCap 600 Index(3) -1.79% 0.83% 10.93% 8.41% 9.92% -1.79%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-14 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN SMALL CAP CORE FUND, SMALL CAP CORE FUND, S&P SMALL CAP CLASS A NAV CLASS A POP 600 INDEX(3) -------------------------------------------------------------------------------- 11/1992 $ 10,000 $ 9,452 $ 10,000 11/1993 $ 11,975 $ 11,320 $ 11,871 11/1994 $ 12,858 $ 12,155 $ 11,436 11/1995 $ 15,619 $ 14,764 $ 14,977 11/1996 $ 16,924 $ 15,998 $ 18,255 11/1997 $ 20,216 $ 19,110 $ 22,735 11/1998 $ 17,347 $ 16,399 $ 21,516 11/1999 $ 20,334 $ 19,221 $ 23,776 10/2000 $ 26,362 $ 24,920 $ 28,589 9/2001 $ 23,033 $ 21,773 $ 25,396 9/2002 $ 21,983 $ 20,780 $ 24,940 [CHART] CLASS Y FIRST AMERICAN SMALL CAP CORE FUND, S&P SMALL CAP CLASS Y 600 INDEX(3) ---------------------------------------------------------- 11/1992 $ 10,000 $ 10,000 11/1993 $ 11,971 $ 11,871 11/1994 $ 12,876 $ 11,436 11/1995 $ 15,670 $ 14,977 11/1996 $ 17,046 $ 18,255 11/1997 $ 20,416 $ 22,735 11/1998 $ 17,578 $ 21,516 11/1999 $ 20,665 $ 23,776 10/2000 $ 26,866 $ 28,589 9/2001 $ 23,510 $ 25,396 9/2002 $ 22,526 $ 24,940 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Indexes are for illustrative purposes only and are not available for investment. Stocks of small-capitalization companies involve substantial risk. These stocks historically have experienced greater price volatility than stocks of larger companies, and they may be expected to do so in the future. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On September 24, 2001, the Small Cap Core Fund became the successor by merger to the Firstar SmallCap Core Equity Fund, a series of Firstar Funds, Inc. Prior to the merger, the First American Fund had no assets or liabilities. Performance presented prior to September 24, 2001, represents that of the Firstar SmallCap Core Equity Fund. The Firstar SmallCap Core Equity Fund was organized on November 27, 2000, and prior to that, was a separate series of Mercantile Funds, Inc. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged, capitalization-weighted index that measures the performance of selected U.S. stocks with small market capitalizations. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-15 EMERGING MARKETS Investment Objective: LONG-TERM GROWTH OF CAPITAL Typically, volatile emerging markets actually provided a source of refuge from a bear market environment in the 12-month period ended September 30, 2002. The First American Emerging Markets Fund (the "Fund") Class Y shares gained 6.10% for the fiscal year (Class A shares returned 5.96% at net asset value). By comparison, the Fund's benchmark index, the MSCI Emerging Markets Free Index, earned 8.15%*. The period began in October 2001 as a globally felt recession was nearing an end. Investors appeared to give, what had been hard-hit emerging markets, the early benefit of what was expected to become a more favorable environment in 2002. While economic results turned out to be a bit mixed around the world, a number of developing markets were able to capitalize on some favorable trends. Asian markets in particular performed quite well. These nations not only benefited from increased manufacturing activity for export markets, but also saw very strong domestic consumer demand. Eastern European markets also generated positive results. The clear weak link in the emerging market universe were Latin American countries, where economic and political issues had an overriding impact. The Fund began the fiscal year with a fairly balanced portfolio from a regional perspective. However, the emphasis was quickly shifted to favor Asian and Eastern European markets. This included a particular focus on South Korea, Thailand, and Russia. Among the prominent contributors to the Fund's performance were Hite Brewery and Hyundai Motors in Korea, Bangkok Bank, and Land and Houses in Thailand, and two oil companies, Lukoil Holdings and Yukos in Russia. Detracting from performance were weak returns from stocks in Latin America, most notably, Brazil, which is in the midst of political upheaval. As a result, the Fund reduced its position in this region. The Fund utilizes a "top-down" investment style, determining first which regions and markets are best positioned to benefit from current economic and market trends. From that point, individual stock selections are made within the most attractive emerging market nations. Stock selection is based on fundamental research and an assessment of the company's earnings growth prospects. Going forward, we expect that the Pacific Basin will continue to provide investment opportunities. While there has been some disappointment about the strength of the global economic recovery, it seems likely that trends should continue to move in a positive direction. In this environment, we believe emerging markets should continue to provide attractive return opportunities for investors. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) -------------------------------------------- 1 YEAR 5 YEARS 11/9/1993 8/7/1998 2/1/2000 9/24/2001 ------------------------------------------------------------------------------------------- Class A NAV 5.96% -10.75% -5.17% -- -- -- Class A POP 0.16% -11.75% -5.77% -- -- -- Class B NAV 5.06% -- -- -4.45% -- -- Class B POP 0.06% -- -- -4.91% -- -- Class C NAV 5.17% -- -- -- -16.82% -- Class C POP 3.11% -- -- -- -17.13% -- Class S 5.77% -- -- -- -- 8.40% Class Y 6.10% -- -- -3.46% -- -- MSCI Emerging Markets Free Index(3) 8.15% -9.92% -4.11% 4.74% -19.68% 8.15%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-16 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A
FIRST AMERICAN EMERGING MARKETS FUND, FIRST AMERICAN EMERGING MSCI EMERGING MARKETS CLASS A NA MARKETS FUND, CLASS A POP FREE INDEX(3) ------------------------------------------------------------------------------------------------- 11/1993 $ 10,000 $ 9,452 $ 10,000 9/1994 $ 11,920 $ 11,267 $ 12,615 9/1995 $ 7,300 $ 6,900 $ 10,380 9/1996 $ 8,850 $ 8,365 $ 10,922 9/1997 $ 11,016 $ 10,412 $ 11,638 9/1998 $ 5,628 $ 5,319 $ 6,075 9/1999 $ 6,791 $ 6,419 $ 9,508 9/2000 $ 8,527 $ 8,059 $ 9,547 9/2001 $ 5,888 $ 5,566 $ 6,382 9/2002 $ 6,240 $ 5,898 $ 6,902
[CHART] CLASS Y FIRST AMERICAN EMERGING MARKETS FUND, MSCI EMERGING MARKETS CLASS Y FREE INDEX(3) ----------------------------------------------------------- 8/1998 $ 10,000 $ 10,000 9/1998 $ 7,730 $ 10,634 9/1999 $ 9,354 $ 16,645 9/2000 $ 11,774 $ 16,714 9/2001 $ 8,143 $ 11,172 9/2002 $ 8,640 $ 12,083 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. International investing involves risks not typically associated with domestic investing, including risks of adverse currency fluctuations, potential political and economic instability, different accounting standards, foreign government regulations, currency exchange rates, limited liquidity, and volatile prices. The risks of international investing are particularly significant in emerging markets. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On August 7, 1998, the Emerging Markets Fund became the successor by merger to the Piper Emerging Markets Growth Fund, a series of Piper Global Funds Inc. Prior to the merger, the First American Fund had no assets or liabilities. Performance presented from June 21, 1996, to August 7, 1998, is that of Piper Emerging Markets Growth Fund for which Edinburgh Fund Managers acted as subadvisor. Performance prior to June 21, 1996, is that of the Hercules Latin American Value Fund, a series of Hercules Funds Inc. for which Bankers Trust company acted as subadvisor. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index of securities from emerging markets that are open to foreign investors. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-17 INTERNATIONAL Investment Objective: LONG-TERM GROWTH OF CAPITAL A volatile investment environment proved to be challenging for global investors for the 12-month period ended September 30, 2002. As a result, the First American International Fund (the "Fund") Class Y shares declined 18.05% (Class A shares declined 18.19% on net asset value). By comparison, the Fund's benchmark, the MSCI EAFE Index, lost 15.26% over the same timeframe*. The early months of the period were among the most productive overall. In the aftermath of the tragic terrorist attacks of September 11, 2001, signs of recovery in global economies gave world markets a boost. European stocks performed particularly well. However, the new year brought about increasing concerns about the strength of any recovery, and stocks resumed the struggles that began two years ago. One of the more favorable surprises during the past year was the performance of Japan's market. Stocks in Japan have generally been in decline for more than a decade. However, signs that much-needed economic reforms might be making some headway created a more encouraging environment for investors, and the Japanese market managed to hold up better than most during the 12-month period. The Fund maintained a strong position in Japan, and its weighting in that market actually increased by the end of the fiscal year. Among the most notable contributors to performance in this area were Brother Industries and Shiseido Pharmaceuticals. Other Pacific Basin markets, such as Australia and Hong Kong, performed relatively well. Australia benefited, in large part, from favorable price trends on commodities, an important aspect of business in that nation. However, the Fund's exposure to Australian stocks was more limited than that of the benchmark. The biggest disappointment over the 12 months was the European markets. Within the region, the Fund's leaning toward growth-oriented stocks proved to be a disadvantage for much of the year, as investors appeared to favor issues that offered more attractive valuations. Europe's economic sluggishness took a toll on corporate earnings, and that had a particularly negative impact on the Fund's return. Industrial stocks and health care issues struggled most significantly. While the effort to achieve a full-fledged economic recovery seems to have stalled in the past year, we expect the global economic environment to improve in the months ahead. Japan and other Asian nations, as well as emerging market countries, appear to be positioned to benefit from a global economic turnaround. Eventually, European markets may respond more favorably as well. The Fund is putting greater emphasis on stocks of companies that appear to be well-positioned to benefit from an economic recovery. Once economic activity increases, these companies should see better profit improvement, which is likely to be reflected in improving stock prices. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) ----------------------------------------------------- 1 YEAR 5 YEARS 4/4/1994 4/24/1994 5/2/1994 3/6/1995 9/24/2001 ------------------------------------------------------------------------------------------------------ Class A NAV -18.19% -3.88% -- -- 1.05% -- -- Class A POP -22.76% -4.96% -- -- 0.38% -- -- Class B NAV -18.94% -4.59% -- -- -- 1.16% -- Class B POP -22.99% -4.87% -- -- -- 1.16% -- Class C NAV -18.97% -- -- -- -- -- -14.46% Class C POP -20.60% -- -- -- -- -- -16.10% Class S -18.42% -3.95% -- 1.22% -- -- -- Class Y -18.05% -3.61% 1.47% -- -- -- -- MSCI EAFE Index(3) -15.26% -5.37% -0.04% -0.04% 0.03% -0.31% -15.26%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-18 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN INTERNATIONAL FUND, INTERNATIONAL FUND, CLASS A NAV CLASS A POP MSCI EAFE INDEX(3) ----------------------------------------------------------------------------- 5/1994 $ 10,000 $ 9,452 $ 10,000 11/1994 $ 9,778 $ 9,242 $ 9,998 11/1995 $ 10,641 $ 10,058 $ 10,788 11/1996 $ 11,920 $ 11,266 $ 12,092 11/1997 $ 12,220 $ 11,550 $ 12,076 11/1998 $ 14,097 $ 13,324 $ 14,103 11/1999 $ 19,260 $ 18,204 $ 17,127 10/2000 $ 18,562 $ 17,545 $ 16,107 9/2001 $ 13,365 $ 12,632 $ 11,830 9/2002 $ 10,921 $ 10,322 $ 10,024 [CHART] CLASS Y FIRST AMERICAN INTERNATIONAL FUND, CLASS Y MSCI EAFE INDEX(3) ------------------------------------------------------------- 4/1994 $ 10,000 $ 10,000 11/1994 $ 9,924 $ 9,943 11/1995 $ 10,807 $ 10,729 11/1996 $ 12,147 $ 12,025 11/1997 $ 12,497 $ 12,010 11/1998 $ 14,458 $ 14,025 11/1999 $ 19,817 $ 17,032 10/2000 $ 19,167 $ 16,017 9/2001 $ 13,813 $ 11,764 9/2002 $ 11,320 $ 9,968 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. International investing involves risks not typically associated with domestic investing, including risks of adverse currency fluctuations, potential political and economic instability, different accounting standards, foreign government regulations, currency exchange rates, limited liquidity, and volatile prices. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 5.50% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On July 1, 2001, Clay Finlay Inc. was hired as subadvisor to manage the Fund's assets. On September 24, 2001, the First American International Fund merged with Firstar International Growth Fund and Firstar International Value Fund, both subadvised by Clay Finlay Inc. Performance history prior to September 24, 2001, represents that of the Firstar International Growth Fund. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index including approximately 1,100 companies representing stock markets of 20 European countries, Australia, New Zealand, Japan, Hong Kong, and Singapore. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-19 BOND IMMDEX(TM) Investment Objective: HIGH CURRENT INCOME CONSISTENT WITH LIMITED RISK TO CAPITAL In the declining interest-rate environment of the past fiscal year, bonds generally offered positive returns relative to other markets. The First American Bond IMMDEX(TM) Fund (the "Fund") Class Y shares gained 6.44% (Class A shares earned 6.18% over the same period). By comparison, the Fund's benchmark, the Lehman U.S. Government/Credit Bond Index, gained 9.21% in the same period*. The widely held belief that a recovery was in full bloom early in the fiscal year gave way to concern that it would not be as vibrant as anticipated. As a result, treasury yields ended the period sharply lower than where they had begun. This is a somewhat surprising development given the historically low level to which interest rates had already moved at the conclusion of the prior fiscal year. In that environment, the Fund's holdings of government bonds performed very well. An emphasis in 5- to 10-year maturity government securities proved particularly helpful to the Fund, relatively speaking. The news was not as good for corporate bonds. A variety of concerns, ranging from accounting scandals to economic uncertainty, took a toll on this market sector. Names like Enron, Global Crossing, and Worldcom dominated the news and, in fact, these issues hurt the performance of the Fund. Additionally, less well-reported problems in other names, such as those in the airline industry, further challenged the Fund. The Fund's duration neutral posture ensured that these negative developments were not compounded by a bad call on interest rates. As the year came to an end, the Fund held a slightly higher weighting in corporate bonds than that of the benchmark. Given expectations that the U.S. economy should be improving more noticeably from here, it is reasonable to expect confidence in companies' credit worthiness to enhance the prospects for corporate bond results. As such, management thinks that this area is likely to outperform the government market over the next 12 months. In the near term, management is cautious as 2002 comes to a close, but the spread advantage in corporate bonds may begin to pay off once this period of illiquidity and market jitters is past. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) -------------------------------------------------- 1 YEAR 5 YEARS 10 YEARS 1/9/1995 3/1/1999 12/11/2000 9/24/2001 ------------------------------------------------------------------------------------------------------------------------------ Class A NAV 6.18% 7.10% -- 8.17% -- -- -- Class A POP 1.68% 6.17% -- 7.57% -- -- -- Class B NAV 5.39% -- -- -- 6.35% -- -- Class B POP 0.39% -- -- -- 5.62% -- -- Class C NAV 5.37% -- -- -- -- -- 6.03% Class C POP 3.38% -- -- -- -- -- 4.02% Class S 6.20% -- -- -- -- 8.76% -- Class Y 6.44% 7.36% 7.26% -- -- -- -- Lehman U.S. Government/Credit Bond Index(3) 9.21% 7.93% 7.44% 8.55% 8.06% 9.21% 10.16%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-20 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN BOND FIRST AMERICAN BOND LEHMAN U.S. IMMDEX(TM) FUND, IMMDEX(TM) FUND, GOVERNMENT/CREDIT BOND CLASS A NAV CLASS A POP INDEX(3) ------------------------------------------------------------------------------- 1/1995 $ 10,000 $ 9,576 $ 10,000 10/1995 $ 11,570 $ 11,080 $ 11,344 10/1996 $ 12,155 $ 11,640 $ 11,955 10/1997 $ 13,210 $ 12,650 $ 13,008 10/1998 $ 14,414 $ 13,803 $ 14,344 10/1999 $ 14,407 $ 13,796 $ 14,249 10/2000 $ 15,414 $ 14,760 $ 15,262 9/2001 $ 17,278 $ 16,545 $ 17,165 9/2002 $ 18,345 $ 17,568 $ 18,750 [CHART] CLASS Y FIRST AMERICAN BOND LEHMAN U.S. IMMDEX(TM) FUND, GOVERNMENT/CREDIT BOND CLASS Y INDEX(3) --------------------------------------------------------- 10/1992 $ 10,000 $ 10,000 10/1993 $ 11,330 $ 11,363 10/1994 $ 10,889 $ 10,836 10/1995 $ 12,660 $ 12,588 10/1996 $ 13,338 $ 13,267 10/1997 $ 14,525 $ 14,436 10/1998 $ 15,892 $ 15,919 10/1999 $ 15,923 $ 15,813 10/2000 $ 17,084 $ 16,940 9/2001 $ 19,192 $ 19,052 9/2002 $ 20,427 $ 20,808 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 4.25% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. On September 24, 2001, the Bond IMMDEX(TM) Fund became the successor by merger to the Firstar Bond IMMDEX(TM) Fund, a series of Firstar Funds Inc. Prior to the merger, the First American fund had no assets or liabilities. Performance presented prior to September 24, 2001 represents that of the Firstar Bond IMMDEX(TM) Fund. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index of Treasury securities, other securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including U.S. agency mortgage securities and investment-grade corporate-debt securities, in each case with maturities of not less than one year. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-21 FIXED INCOME Investment Objective: HIGH CURRENT INCOME CONSISTENT WITH LIMITED RISK TO CAPITAL The bond market enjoyed a generally favorable environment, and the First American Fixed Income Fund (the "Fund") Class Y shares returned 6.04% for the fiscal year ended September 30, 2002. (Class A shares were up 5.77% on net asset value). By comparison, the Fund's benchmark, the Lehman U.S. Aggregate Bond Index, generated a return of 8.60% over the same period*. The fiscal year began on the heels of the tragedy of the terrorist attacks of September 11, 2001. In the aftermath of that event, it appeared that investors began to anticipate an economic recovery. Initially, that boosted the fortunes of corporate bonds, which were among the market's best performers. The Fund's heavy emphasis on corporate issues initially proved to be strategically effective. As the calendar turned to 2002, the environment changed. Numerous revelations of corporate accounting irregularities began to take a toll on investor confidence, and that was reflected in weakened performance of corporate debt securities. The Fund was specifically hurt by its holdings in a number of companies directly involved in the accounting issues, including Enron and Worldcom. However, positions in investment-grade bonds issued by financial firms performed better within the Fund. Eventually, the Fund's corporate bond position was reduced. The Fund's mortgage-backed securities performed well in the first few months of the fiscal year, but started to lag the performance of Treasury bonds as interest rates came down again in 2002. In recent months, as these issues became more attractively priced, the Fund's position in mortgage-backed issues was increased. At the same time, Treasury holdings were reduced, with the anticipation that interest rates on government-issued bonds are approaching a low point. The Fund has maintained a neutral stance in terms of interest-rate sensitivity. As the fiscal year came to an end, yields on long-term bonds were significantly higher than those of short-term securities. The difference narrowed a bit in the closing months of the fiscal year, but it appears that there still may be additional narrowing ahead. In general, it is anticipated that after an extended downward trend, interest rates in general will begin to move higher in the months ahead, assuming the U.S. economy improves. The Fund is likely to take a bit more cautious approach in regard to its interest-rate structure as signs of a change in the interest-rate environment become apparent. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002
SINCE INCEPTION(4) -------------------------------------------------- 1 YEAR 5 YEARS 10 YEARS 2/4/1994 8/15/1994 2/1/1999 9/24/2001 ------------------------------------------------------------------------------------------------------------------------------ Class A NAV 5.77% 6.70% 6.48% -- -- -- -- Class A POP 1.32% 5.77% 6.02% -- -- -- -- Class B NAV 5.12% 5.95% -- -- 6.36% -- -- Class B POP 0.12% 5.63% -- -- 6.36% -- -- Class C NAV 5.02% -- -- -- -- 5.18% -- Class C POP 3.02% -- -- -- -- 4.91% -- Class S 5.77% -- -- -- -- -- 6.51% Class Y 6.04% 6.97% -- 6.62% -- -- -- Lehman U.S. Aggregate Bond Index(3) 8.60% 7.83% 7.37% 7.49% 8.17% 7.98% 8.60%
* Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-22 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN LEHMAN U.S. FIXED INCOME FUND, FIXED INCOME FUND, AGGREGATE BOND CLASS A NAV CLASS A POP INDEX(3) ------------------------------------------------------------------- 9/1992 $ 10,000 $ 9,578 $ 10,000 9/1993 $ 10,920 $ 10,460 $ 10,998 9/1994 $ 10,602 $ 10,155 $ 10,643 9/1995 $ 11,957 $ 11,453 $ 12,140 9/1996 $ 12,512 $ 11,985 $ 12,734 9/1997 $ 13,545 $ 12,974 $ 13,971 9/1998 $ 15,211 $ 14,568 $ 15,580 9/1999 $ 14,804 $ 14,180 $ 15,523 9/2000 $ 17,708 $ 16,961 $ 18,759 9/2001 $ 18,730 $ 17,940 $ 20,371 9/2002 [CHART] CLASS Y FIRST AMERICAN LEHMAN U.S. FIXED INCOME FUND, AGGREGATE BOND CLASS Y INDEX(3) ----------------------------------------------- 2/1994 $ 10,000 $ 10,000 9/1994 $ 9,677 $ 9,712 9/1995 $ 10,921 $ 11,078 9/1996 $ 11,457 $ 11,620 9/1997 $ 12,434 $ 12,752 9/1998 $ 14,009 $ 14,219 9/1999 $ 13,668 $ 14,165 9/2000 $ 14,568 $ 15,155 9/2001 $ 16,428 $ 17,119 9/2002 $ 17,419 $ 18,589 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assume reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 4.25% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index comprised of the Lehman Government/Credit Bond Index, the Lehman Mortgage Backed Securities Index, and the Lehman Asset Backed Securities Index. The Lehman Government/Credit Bond Index is comprised of Treasury securities, other securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including U.S. agency mortgage securities and investment grade corporate debt securities. The Lehman Mortgage Backed Securities Index is comprised of the mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae, and Freddie Mac. The Lehman Asset Backed Securities Index is comprised of debt securities rated investment grade or higher that are backed by credit card, auto, and home equity loans. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-23 HIGH YIELD BOND Investment Objective: HIGH CURRENT INCOME With the U.S. economy proving to be surprisingly sluggish, the market for high-yield bonds was generally unfavorable. In this challenging environment, the First American High Yield Bond Fund (the "Fund") Class Y shares declined 6.33% for the fiscal year ended September 30, 2002 (Class A shares were down 6.66% on net asset value). The Fund's benchmark, the Lehman Corporate High Yield Index, declined 2.29% during the same period*. The fiscal year began in a favorable way for high-yield bonds. In the closing months of 2001, the U.S. was bouncing back from the impact of the terrorist attacks of September 11, and investors appeared encouraged by prospects for an economic recovery. But, by January, a series of startling revelations about corporate accounting scandals began to shake investor confidence. This had a particularly negative impact on what are viewed as higher-risk securities, including those of lower-rated bond issuers. However, confidence soon returned to the market, and high-yield issues performed well again in March and April, coinciding with more encouraging economic signals. But, once again, the market reversed course and took a decidedly negative turn in the last five months of the fiscal year. Since the Fund just began operations in August 2001, the process to invest initial assets of the portfolio was still underway as the fiscal year began due to limited availability in the high-yield market in the fall of 2001. Because of this, a portion of the Fund's assets was temporarily placed in investment-grade bonds. As a result, the Fund missed some of the positive returns that the high-yield market enjoyed in the early months of the period. Eventually, better buying opportunities emerged, and the Fund became fully invested in low-grade bonds. A series of corporate accounting issues provided the Fund's biggest hurdle during the year. Investments in bonds issued by troubled companies, such as Global Crossing, Enron, and Adelphia, hurt performance. Positive performance was generated by the Fund's heavy emphasis in consumer issues, including bonds from gaming, health care, leisure, and restaurant companies. The market for high-yield bonds should begin to improve if expectations of a better economic environment become a reality. The high interest rates paid on low-grade bonds look particularly attractive in the current environment where rates have reached such low levels in other parts of the bond market. This should create favorable potential for investors going forward. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002 SINCE INCEPTION(4) ---------------------- 1 YEAR 8/30/2001 9/24/2001 ------------------------------------------------------------------------- Class A NAV -6.66% -11.85% -- Class A POP -10.6% -15.28% -- Class B NAV -7.26% -12.29% -- Class B POP -11.54% -16.01% -- Class C NAV -7.34% -12.38% -- Class C POP -9.07% -13.92% -- Class S -6.66% -8.31% Class Y -6.33% -11.47% -- Lehman Corporate High Yield Index(3) -2.29% -8.21% -2.29% * Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-24 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN HIGH FIRST AMERICAN HIGH LEHMAN CORPORATE YIELD BOND FUND, YIELD BOND FUND, HIGH YIELD CLASS A NAV CLASS A POP INDEX(3) ------------------------------------------------------------------------ 8/2001 $ 10,000 $ 9,579 $ 10,000 9/2001 $ 9,339 $ 8,945 $ 9,328 9/2002 $ 8,721 $ 8,354 $ 9,114 [CHART] CLASS Y FIRST AMERICAN HIGH LEHMAN CORPORATE YIELD BOND FUND, HIGH YIELD CLASS Y INDEX(3) ----------------------------------------------------- 8/2001 $ 10,000 $ 10,000 9/2001 $ 9,349 $ 9,328 9/2002 $ 8,762 $ 9,114 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. A significant portion of the Fund's portfolio may consist of lower-rated debt obligations, which are commonly called "high-yield" securities or "junk bonds." High-yield securities generally have more volatile prices and carry more risk to principal than investment-grade securities. These bonds are almost always uncollateralized and subordinate to other debt than an issuer may have outstanding. The Fund may also invest in foreign securities. International investing involves risks not typically associated with domestic investing, including risks of adverse currency fluctuations, potential political and economic instability, different accounting standards, limited liquidity, and volatile prices. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 4.25% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index that covers the universe of fixed-rate, dollar-denominated, below-investment-grade debt with at least one year to final maturity. Pay-in-kind bonds, Eurobonds, and emerging markets debt securities are excluded, but SEC-registered Canadian and global bonds of issuers in nonemerging countries are included. Original issue zeroes, step-up coupon structures, and Rule 144-As are also included. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-25 STRATEGIC INCOME Investment Objective: HIGH CURRENT INCOME The past year proved to be a mixed bag for the broad bond market despite a generally favorable interest-rate environment. The First American Strategic Income Fund (the "Fund") Class Y shares returned 3.44% for the fiscal year ended September 30, 2002 (Class A shares rose 3.31% on net asset value), compared to the Fund's benchmark, the Lehman U.S. Aggregate Bond Index, which returned 8.60% for the same period*. The Fund consists of three sub-portfolios representing different aspects of the bond market. One part of the portfolio is dedicated to high-quality bonds (primarily investment-grade issues), one part to domestic high-yield bonds (primarily below investment grade), and a third part to international bonds (subadvised by Federated Investors in New York). This Fund provides shareholders with "built-in" diversification among these sectors. The modest return achieved by the Fund over the fiscal year reflects in large part a very difficult environment for corporate bonds, particularly among low-grade debt issuers. In an environment where the economy continued to struggle and equity markets were weak, investors stayed away from the higher-risk, low-grade bond area. By contrast, higher-quality domestic bonds enjoyed solid returns. The fiscal year began on the heels of the tragedy of the terrorist attacks of September 11, 2001. In the aftermath of that event, investors began to anticipate an economic recovery. This led interest rates higher and boosted the fortunes of domestic corporate bonds in the first months of the period. However, the combination of increasing global tensions, ongoing terrorist concerns and disturbing revelations of corporate accounting problems began to have an impact on the market. U.S. economic performance, while positive, was seen as disappointing. Corporations clearly had difficulty achieving their earnings expectations, and interest rates again headed lower. The Fund's high-quality domestic bond portfolio performed best throughout the period. Treasury securities worked well for the Fund, particularly at times when interest rates declined. Mortgage-backed securities also enjoyed solid performance for extended periods during the fiscal year. While corporate bonds performed well in the closing months of 2001, various problems, often tied to corporate accounting issues, played havoc with this part of the market for much of the rest of the fiscal year. Still, investors generally sought the refuge of higher-quality investments as concerns about the economy and other matters came to the forefront. The international bond portfolio experienced two diverse periods during the year. In the first six months, emerging market bonds, which represent the bulk of this portfolio, performed well. These bonds provided both attractive yields and solid price appreciation as interest rate trends were generally favorable. For instance, the Brazilian bond market generated a return of 26% between October 2001 and March 2002. However, serious political problems developed in Brazil, and the impact reduced investor confidence throughout debt markets for emerging nations. In fact, Brazil's market declined by 37% from April through the end of September. Other Latin American markets such as Venezuela and Ecuador suffered similar setbacks in the second half of the period. Bond markets in Mexico, Russia, and the Philippines held up better, but still lagged the levels achieved earlier in the period. The market was even more challenging for the high-yield portion of the portfolio. This part of the bond market performed well in the closing months of 2001, but increasing concerns related to the economy and high-profile accounting scandals such as Enron and Global Crossing (two holdings in the Fund's portfolio) resulted in a serious setback for the high-yield portfolio. Fortunately, careful analysis helped the Fund avoid bonds from other less attractive issuers. The market recovered some lost ground in March and April, but the summer months proved to be particularly difficult. Once again, investors lost faith in the direction of the economy and steered away from higher-risk issues. As a result, low-grade bonds lost ground as the period came to a close, and that had a negative impact on the overall performance of the Fund. ANNUALIZED PERFORMANCE(1) AS OF SEPTEMBER 30, 2002 SINCE INCEPTION(4) ---------------------------------------- 1 YEAR 7/24/1998 2/1/1999 9/24/2001 ------------------------------------------------------------------------------- Class A NAV 3.31% 2.35% -- -- Class A POP -1.18% 1.30% -- -- Class B NAV 2.46% 1.61% -- -- Class B POP -2.31% 1.25% -- -- Class C NAV 2.44% -- 2.26% -- Class C POP 0.53% -- 1.97% -- Class S 3.26% -- -- 2.96% Class Y 3.44% 2.59% -- -- Lehman U.S. Aggregate Bond Index(3) 8.60% 7.66% 7.98% 8.60% * Unlike mutual funds, index returns do not reflect any expenses, transaction costs, or cash flow effects. B-26 VALUE OF A $10,000 INVESTMENT(1),(2) AS OF SEPTEMBER 30, 2002 [CHART] CLASS A FIRST AMERICAN FIRST AMERICAN LEHMAN U.S. STRATEGIC INCOME FUND, STRATEGIC INCOME FUND, AGGREGATE BOND CLASS A NAV CLASS A POP INDEX(3) -------------------------------------------------------------------------- 7/1998 $ 10,000 $ 9,579 10000 9/1998 $ 9,385 $ 8,989 $ 10,401 9/1999 $ 9,922 $ 9,504 $ 10,362 9/2000 $ 10,473 $ 10,032 $ 11,086 9/2001 $ 10,682 $ 10,231 $ 12,523 9/2002 $ 11,022 $ 10,557 $ 13,600 [CHART] CLASS Y FIRST AMERICAN LEHMAN U.S. STRATEGIC INCOME FUND, AGGREGATE BOND CLASS Y INDEX(3) ------------------------------------------------- 7/1998 $ 10,000 $ 10,000 9/1998 $ 9,388 $ 10,401 9/1999 $ 9,948 $ 10,362 9/2000 $ 10,538 $ 11,086 9/2001 $ 10,762 $ 12,523 9/2002 $ 11,132 $ 13,600 (1) Past performance does not guarantee future results and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. A significant portion of the Fund's portfolio may consist of lower-rated debt obligations, which are commonly called "high-yield" securities or "junk bonds." High-yield securities generally have more volatile prices and carry more risk to principal than investment-grade securities. The Fund may also invest in foreign securities including emerging markets. International investing involves risks not typically associated with domestic investing, including risks of adverse currency fluctuations, potential political and economic instability, different accounting standards, limited liquidity, and volatile prices. The risks of international investing are particularly significant in emerging markets. Performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced. Index is for illustrative purposes only and is not available for investment. Total returns at net asset value ("NAV") reflect performance over the time period indicated without including the Fund's maximum sales charge and assumes reinvestment of all distributions at NAV. Total returns at public offering price ("POP") reflect performance over the time period indicated including maximum sales charges of 4.25% for Class A shares, 1% for Class C shares, and the maximum contingent deferred sales charge ("CDSC") for Class B and Class C shares for the relevant period. Maximum CDSC for Class B shares is 5.00% and 1.00% for Class C shares. Total returns assume reinvestment of all distributions at NAV. (2) Performance for Class B, Class C, and Class S shares is not presented. Performance for Class B and Class C is lower due to higher expenses. Performance for Class S is substantially similar to Class A due to similar expenses. (3) An unmanaged index comprised of the Lehman Government/Credit Bond Index, the Lehman Mortgage Backed Securities Index, and the Lehman Asset Backed Securities Index. The Lehman Government/Credit Bond Index is comprised of Treasury securities, other securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including U.S. agency mortgage securities and investment-grade corporate debt securities. The Lehman Mortgage Backed Securities Index is comprised of the mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae, and Freddie Mac. The Lehman Asset Backed Securities Index is comprised of debt securities rated investment grade or higher that are backed by credit card, auto, and home equity loans. (4) The performance since inception for the index is calculated from the month end following the inception of the class. B-27 APPENDIX C FINANCIAL HIGHLIGHTS The financial highlights tables are intended to help you understand each Fund's financial performance for the past 5 years or, if shorter, the period of operations for the Fund or class of shares. Some of this information reflects financial results for a single Fund share. Total returns in the tables represent the rate that you would have earned or lost on an investment in the Fund, assuming you reinvested all of your dividends and distributions. This information has been audited by Ernst & Young LLP, independent auditors, whose reports, along with the Funds' financial statements, are included in the Funds' Annual Reports, which are available upon request. LARGE CAP GROWTH FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS OR FROM NET DISTRIBUTIONS BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS -------------------------------------------------------------------------------------------------------------------- LARGE CAP GROWTH FUND (7) Class A 2002 $ 9.27 $ (0.01) $ (2.50) $ -- $ -- 2001 (3) 16.36 (0.05) (6.59) -- (0.45) 2000 (8) (9) 17.01 (0.02) (0.63) -- -- Class B 2002 $ 8.90 $ (0.02) $ (2.44) $ -- $ -- 2001 15.81 (0.13) (6.33) -- (0.45) 2000 (8) 14.57 (0.06) 1.30 -- -- 1999 11.91 (0.02) 2.96 (0.01) (0.27) 1998 10.47 0.01 2.04 (0.02) (0.59) Class C 2002 $ 9.06 $ (0.03) $ (2.46) $ -- $ -- 2001 (5) 8.84 -- 0.22 -- -- Class S 2002 $ 9.27 $ (0.03) $ (2.48) $ -- $ -- 2001 (10) 15.15 (0.05) (5.83) -- -- Class Y 2002 $ 9.38 $ (0.04) $ (2.48) $ -- $ -- 2001 (3) 16.52 (0.03) (6.66) -- (0.45) 2000 (8) 15.18 (0.02) 1.36 -- -- 1999 12.39 0.04 3.07 (0.04) (0.28) 1998 10.91 0.04 2.09 (0.04) (0.61) -------------------------------------------------------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT VALUE NET ASSETS EXPENSES TO INCOME (LOSS) END OF TOTAL END OF AVERAGE TO AVERAGE PERIOD RETURN (11) PERIOD (000) NET ASSETS NET ASSETS --------------------------------------------------------------------------------------------------------------------- LARGE CAP GROWTH FUND (7) Class A 2002 $ 6.76 (27.08)% $ 52,419 1.15% (0.20)% 2001 (3) 9.27 (41.57) 8,598 1.39 (0.55) 2000 (8) (9) 16.36 (3.82) 1,177 1.40 (0.75) Class B 2002 $ 6.44 (27.64)% $ 36,546 1.90% (1.00)% 2001 8.90 (41.97) 46,103 2.07 (1.19) 2000 (8) 15.81 8.50 100,689 1.38 (0.40) 1999 14.57 25.26 90,468 1.36 (0.08) 1998 11.91 20.76 66,478 1.34 0.12 Class C 2002 $ 6.57 (27.48)% $ 9,652 1.90% (0.91)% 2001 (5) 9.06 2.58 -- -- -- Class S 2002 $ 6.76 (27.08)% $ 9,020 1.15% (0.25)% 2001 (10) 9.27 (38.82) 11,881 1.39 (0.55) Class Y 2002 $ 6.86 (26.87)% $ 436,199 0.90% 0.05% 2001 (3) 9.38 (41.46) 131,961 1.14 (0.27) 2000 (8) 16.52 8.83 239,576 1.13 (0.15) 1999 15.18 25.61 186,177 1.11 0.17 1998 12.39 20.91 121,475 1.09 0.37 ---------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE]
RATIO OF RATIO OF NET EXPENSES TO INVESTMENT AVERAGE INCOME (LOSS) NET ASSETS TO AVERAGE NET PORTFOLIO (EXCLUDING ASSETS (EXCLUDING TURNOVER WAIVERS) WAIVERS) RATE ----------------------------------------------------------------------------------------- LARGE CAP GROWTH FUND (7) Class A 2002 1.26% (0.31) 62% 2001 (3) 1.56 (0.72) 38 2000 (8) (9) 1.49 (0.84) 35 Class B 2002 2.01% (1.11)% 62% 2001 2.19 (1.31) 38 2000 (8) 1.48 (0.50) 35 1999 1.52 (0.24) 28 1998 1.54 (0.08) 48 Class C 2002 2.01% (1.02)% 62% 2001 (5) -- -- 38 Class S 2002 1.26% (0.36)% 62% 2001 (10) 1.60 (0.76) 38 Class Y 2002 1.01% (0.06)% 62% 2001 (3) 1.26 (0.39) 38 2000 (8) 1.23 (0.25) 35 1999 1.27 0.01 28 1998 1.29 0.17 48 -----------------------------------------------------------------------------------------
(1) The financial highlights for the Large Cap Core Fund as set forth herein include the historical financial highlights of the Firstar Large Cap Core Equity Fund. The assets of the Firstar Fund were acquired by the First American Large Cap Core Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Large Cap Core Fund were exchanged for Class A shares of the First American Large Cap Core Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (2) Per share data calculated using average shares outstanding method. (3) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Class of shares has been offered since March 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Class of shares has been offered since November 27, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (7) The financial highlights for the Large Cap Growth Fund as set forth herein include the historical financial highlights of the Firstar Large Cap Growth Fund. The assets of the Firstar Fund were acquired by the First American Capital Growth Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Large Cap Growth Fund were exchanged for Class A shares of the First American Capital Growth Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (8) Effective in 2000, the Fund's fiscal year end was changed from November 30 to October 31. (9) Class of shares has been offered since March 31, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (10) Class of shares has been offered since December 11, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (11) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-2 HEALTH SCIENCES FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS VALUE NET GAINS OR FROM NET DISTRIBUTIONS FROM BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM RETURN OF OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS CAPITAL ------------------------------------------------------------------------------------------------------------------------ HEALTH SCIENCES FUND Class A 2002 $ 9.84 $ (0.05) $ (1.88) $ -- $ -- $ -- 2001 (1) 13.34 (0.03) (2.10) -- (1.37) -- 2000 8.24 (0.02) 5.12 -- -- -- 1999 7.82 0.01 0.46 (0.01) (0.04) -- 1998 12.05 0.01 (2.78) -- (1.46) -- Class B 2002 $ 9.40 $ (0.11) $ (1.79) $ -- $ -- $ -- 2001 (1) 12.89 (0.11) (2.01) -- (1.37) -- 2000 8.02 (0.08) 4.95 -- -- -- 1999 7.65 0.01 0.40 -- (0.04) -- 1998 11.90 (0.02) (2.77) -- (1.46) -- Class C 2002 $ 9.73 $ (0.13) $ (1.84) $ -- $ -- $ -- 2001 (1) 13.29 (0.11) (2.08) -- (1.37) -- 2000 (2) 9.76 (0.03) 3.56 -- -- -- Class S 2002 $ 9.84 $ (0.02) $ (1.92) $ -- $ -- $ -- 2001 (1) (3) 9.06 -- 0.78 -- -- -- Class Y 2002 $ 9.93 $ (0.02) $ (1.91) $ -- $ -- $ -- 2001 (1) 13.42 -- (2.12) -- (1.37) -- 2000 8.28 -- 5.14 -- -- -- 1999 7.84 0.04 0.48 (0.04) (0.04) -- 1998 12.08 0.03 (2.78) (0.03) (1.46) -- ------------------------------------------------------------------------------------------------------------------------ RATIO OF RATIO OF NET EXPENSES TO NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS END OF TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING PERIOD RETURN (4) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ---------------------------------------------------------------------------------------------------------------------- HEALTH SCIENCES FUND Class A 2002 $ 7.91 (19.61)% $ 5,235 1.23% (0.50)% 1.75% 2001 (1) 9.84 (17.35) 6,514 1.15 (0.28) 1.42 2000 13.34 61.89 6,645 1.17 (0.27) 1.46 1999 8.24 6.08 1,383 1.16 0.11 1.30 1998 7.82 (25.24) 2,017 1.15 0.04 1.20 Class B 2002 $ 7.50 (20.21)% $ 2,821 1.98% (1.25)% 2.50% 2001 (1) 9.40 (17.99) 3,496 1.90 (1.04) 2.17 2000 12.89 60.72 4,221 1.92 (1.02) 2.21 1999 8.02 5.37 1,029 1.92 (0.64) 2.05 1998 7.65 (25.80) 645 1.90 (0.73) 1.95 Class C 2002 $ 7.76 (20.25)% $ 3,815 1.98% (1.24)% 2.50% 2001 (1) 9.73 (17.92) 5,329 1.90 (1.04) 2.17 2000 (2) 13.29 36.17 4,347 1.92 (1.02) 2.21 Class S 2002 $ 7.90 (19.72)% $ 32 1.23% (0.72)% 1.75% 2001 (1) (3) 9.84 8.61 -- -- -- -- Class Y 2002 $ 8.00 (19.44)% $ 12,421 0.98% (0.24)% 1.50% 2001 (1) 9.93 (17.15) 17,141 0.90 (0.04) 1.17 2000 13.42 62.10 19,175 0.92 (0.02) 1.21 1999 8.28 6.59 12,192 0.90 0.38 1.05 1998 7.84 (25.10) 21,977 0.90 0.27 0.95 ----------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE ------------------------------------------------------------ HEALTH SCIENCES FUND Class A 2002 (1.02)% 98% 2001 (1) (0.55) 103 2000 (0.56) 104 1999 (0.03) 53 1998 (0.01) 45 Class B 2002 (1.77)% 98% 2001 (1) (1.31) 103 2000 (1.31) 104 1999 (0.77) 53 1998 (0.78) 45 Class C 2002 (1.76)% 98% 2001 (1) (1.31) 103 2000 (2) (1.31) 104 Class S 2002 (1.24)% 98% 2001 (1) (3) -- 103 Class Y 2002 (0.76)% 98% 2001 (1) (0.31) 103 2000 (0.31) 104 1999 0.23 53 1998 0.22 45 ------------------------------------------------------------ (1) Per share data calculated using average shares outstanding method. (2) Commenced operations on February 1, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (3) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-3 LARGE CAP CORE FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS OR FROM NET DISTRIBUTIONS BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS -------------------------------------------------------------------------------------------------------------------- LARGE CAP CORE FUND (1) Class A (2) 2002 $ 24.44 $ -- $ (5.23) $ (0.05) $ -- 2001 (3) 43.33 (0.01) (14.00) -- (4.88) 2000 37.96 (0.15) 7.55 -- (2.03) 1999 35.72 (0.12) 6.42 (0.02) (4.04) 1998 35.27 (0.02) 5.66 (0.02) (5.17) 1997 30.32 (0.05) 6.30 -- (1.30) Class B (2) 2002 $ 23.94 $ (0.18) $ (5.09) $ (0.03) $ -- 2001 (3) 42.80 (0.22) (13.76) -- (4.88) 2000 37.78 (0.47) 7.52 -- (2.03) 1999 (4) 36.92 (0.29) 1.15 -- -- Class C (2) 2002 $ 24.44 $ (0.18) $ (5.19) $ (0.04) $ -- 2001 (5) 23.75 -- 0.69 -- -- Class S (2) 2002 $ 24.45 $ -- $ (5.23) $ (0.05) $ -- 2001 (6) 35.53 (0.01) (11.07) -- -- Class Y (2) 2002 $ 24.93 $ 0.06 $ (5.33) $ (0.07) $ -- 2001 (3) 44.00 0.06 (14.25) -- (4.88) 2000 38.42 (0.04) 7.65 -- (2.03) 1999 36.05 (0.02) 6.47 (0.04) (4.04) 1998 35.48 0.07 5.70 (0.03) (5.17) 1997 30.43 0.04 6.31 -- (1.30) RATIO OF NET NET ASSETS RATIO OF INVESTMENT VALUE NET ASSETS EXPENSES TO INCOME (LOSS) END OF TOTAL END OF AVERAGE TO AVERAGE PERIOD RETURN (11) PERIOD (000) NET ASSETS NET ASSETS --------------------------------------------------------------------------------------------------------------------- LARGE CAP CORE FUND (1) Class A (2) 2002 $ 19.16 (21.46)% $ 24,647 1.15% (0.02)% 2001 (3) 24.44 (35.83) 34,330 1.20 (0.04) 2000 43.33 19.92 51,232 1.20 (0.35) 1999 37.96 17.92 47,238 1.19 (0.31) 1998 35.72 18.58 38,213 1.14 (0.05) Class B (2) 2002 $ 18.64 (22.06)% $ 2,928 1.90% (0.75)% 2001 (3) 23.94 (36.28) 2,954 1.93 (0.79) 2000 42.80 19.06 1,483 1.95 (1.10) 1999 (4) 37.78 2.33 722 1.96 (1.17) Class C (2) 2002 $ 19.03 (22.03)% $ 476 1.90% (0.73)% 2001 (5) 24.44 2.95 -- -- -- Class S (2) 2002 $ 19.17 (21.45)% $ 2,376 1.15% -- 2001 (6) 24.45 (31.16) 2,802 1.18 (0.03) Class Y (2) 2002 $ 19.59 (21.23)% $ 255,311 0.90% 0.24% 2001 (3) 24.93 (35.70) 316,213 0.94 0.20 2000 44.00 20.24 339,166 0.95 (0.10) 1999 38.42 18.18 306,832 0.94 (0.06) 1998 36.05 18.89 197,798 0.89 0.20 ---------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE]
RATIO OF RATIO OF NET EXPENSES TO INVESTMENT AVERAGE INCOME (LOSS) NET ASSETS TO AVERAGE NET PORTFOLIO (EXCLUDING ASSETS (EXCLUDING TURNOVER WAIVERS) WAIVERS) RATE ----------------------------------------------------------------------------------------- LARGE CAP CORE FUND (1) Class A (2) 2002 1.22% (0.09)% 43% 2001 (3) 1.24 (0.08) 40 2000 1.21 (0.36) 60 1999 1.20 (0.32) 59 1998 1.21 (0.12) 52 Class B (2) 2002 1.97% (0.82)% 43% 2001 (3) 1.97 (0.83) 40 2000 1.96 (1.11) 60 1999 (4) 1.97 (1.18) 59 Class C (2) 2002 1.97% (0.80)% 43% 2001 (5) -- -- 40 Class S (2) 2002 1.22% (0.07)% 43% 2001 (6) 1.22 (0.07) 40 Class Y (2) 2002 0.97% 0.17% 43% 2001 (3) 0.98 0.16 40 2000 0.96 (0.11) 60 1999 0.95 (0.07) 59 1998 0.96 0.13 52 -----------------------------------------------------------------------------------------
(1) The financial highlights for the Large Cap Core Fund as set forth herein include the historical financial highlights of the Firstar Large Cap Core Equity Fund. The assets of the Firstar Fund were acquired by the First American Large Cap Core Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Large Cap Core Fund were exchanged for Class A shares of the First American Large Cap Core Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (2) Per share data calculated using average shares outstanding method. (3) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Class of shares has been offered since March 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Class of shares has been offered since November 27, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (7) The financial highlights for the Large Cap Growth Fund as set forth herein include the historical financial highlights of the Firstar Large Cap Growth Fund. The assets of the Firstar Fund were acquired by the First American Capital Growth Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Large Cap Growth Fund were exchanged for Class A shares of the First American Capital Growth Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (8) Effective in 2000, the Fund's fiscal year end was changed from November 30 to October 31. (9) Class of shares has been offered since March 31, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (10) Class of shares has been offered since December 11, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (11) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-4 MID CAP GROWTH FUND
REALIZED AND NET ASSET UNREALIZED NET ASSET VALUE NET GAINS OR DISTRIBUTIONS VALUE BEGINNING INVESTMENT (LOSSES) ON FROM END OF OF PERIOD INCOME (LOSS) INVESTMENTS CAPITAL GAINS PERIOD ------------------------------------------------------------------------------------------------------------------- MID CAP GROWTH FUND (7) Class A 2002 $ 5.63 $ (0.12) $ (1.16) $ -- $ 4.35 2001 (2) 18.88 (0.04) (6.36) (6.85) 5.63 2000 12.87 (0.12) 8.80 (2.67) 18.88 1999 11.80 (0.07) 3.40 (2.26) 12.87 1998 15.25 (0.09) (1.80) (1.56) 11.80 Class B 2002 $ 5.41 $ (0.11) $ (1.16) $ -- $ 4.14 2001 (2) 18.51 (0.10) (6.15) (6.85) 5.41 2000 12.75 (0.16) 8.59 (2.67) 18.51 1999 11.78 (0.10) 3.33 (2.26) 12.75 1998 (8) 13.86 (0.01) (2.07) -- 11.78 Class C 2002 $ 5.46 $ (0.13) $ (1.15) $ -- $ 4.18 2001 (2) 18.61 (0.09) (6.21) (6.85) 5.46 2000 12.80 (0.14) 8.62 (2.67) 18.61 1999 (9) 12.43 (0.06) 0.43 -- 12.80 Class S 2002 $ 5.63 $ (0.04) $ (1.24) $ -- $ 4.35 2001 (2) (5) 5.53 -- 0.10 -- 5.63 Class Y 2002 $ 5.79 $ (0.03) $ (1.28) $ -- $ 4.48 2001 (2) 19.14 (0.02) (6.48) (6.85) 5.79 2000 12.99 (0.08) 8.90 (2.67) 19.14 1999 11.87 (0.03) 3.41 (2.26) 12.99 1998 15.29 (0.04) (1.82) (1.56) 11.87 ------------------------------------------------------------------------------------------------------------------- RATIO OF RATIO OF NET EXPENSES TO RATIO OF INVESTMENT AVERAGE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING RETURN (10) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ------------------------------------------------------------------------------------------------------------------------ MID CAP GROWTH FUND (7) Class A 2002 (22.74)% $ 58,896 1.20% (0.89)% 1.32% 2001 (2) (49.38) 102,837 1.15 (0.40) 1.19 2000 76.44 264,570 1.15 (0.70) 1.17 1999 31.69 165,072 1.14 (0.48) 1.19 1998 (13.05) 188,763 1.18 (0.60) 1.34 Class B 2002 (23.47)% $ 2,578 1.95% (1.64)% 2.07% 2001 (2) (49.65) 3,518 1.90 (1.17) 1.94 2000 75.14 4,812 1.90 (1.45) 1.92 1999 30.66 360 1.89 (1.26) 1.98 1998 (8) (15.01) 17 1.87 (1.12) 1.87 Class C 2002 (23.44)% $ 3,742 1.95% (1.64)% 2.07% 2001 (2) (49.73) 6,246 1.91 (1.17) 1.95 2000 75.10 5,971 1.90 (1.45) 1.92 1999 (9) 3.06 466 1.89 1.27 1.98 Class S 2002 (22.74)% $ 13 1.20% (0.90)% 1.32% 2001 (2) (5) 1.81 -- -- -- -- Class Y 2002 (22.63)% $ 157,688 0.95% (0.64)% 1.07% 2001 (2) (49.22) 227,035 0.90 (0.17) 0.94 2000 76.88 361,567 0.90 (0.46) 0.92 1999 31.97 211,527 0.89 (0.25) 0.96 1998 (12.79) 73,356 0.87 (0.27) 0.87 ------------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE --------------------------------------------------------------------------- MID CAP GROWTH FUND (7) Class A 2002 (1.01)% 266% 2001 (2) (0.44) 264 2000 (0.72) 217 1999 (0.53) 94 1998 (0.76) 39 Class B 2002 (1.76)% 266% 2001 (2) (1.21) 264 2000 (1.47) 217 1999 (1.35) 94 1998 (8) (1.12) 39 Class C 2002 (1.76)% 266% 2001 (2) (1.21) 264 2000 (1.47) 217 1999 (9) 1.18 94 Class S 2002 (1.02)% 266% 2001 (2) (5) -- 264 Class Y 2002 (0.76)% 266% 2001 (2) (0.21) 264 2000 (0.48) 217 1999 (0.32) 94 1998 (0.27) 39 --------------------------------------------------------------------------- (1) The financial highlights for the Mid Cap Core Fund as set forth herein include the historical financial highlights of the Firstar Mid Cap Core Equity Fund. The assets of the Firstar Fund were acquired by the First American Mid Cap Core Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Mid Cap Core Equity Fund were exchanged for Class A shares of the First American Mid Cap Core Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (2) Per share data calculated using average shares outstanding method. (3) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Class of shares has been offered since March 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Class of shares has been offered since December 11, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (7) The financial highlights for the Mid Cap Growth Fund as set forth herein include the financial highlights of the Piper Emerging Growth Fund Class A shares and Class Y shares. The assets of the Piper Emerging Growth Fund were acquired by Mid Cap Growth Fund on August 7, 1998. In connection with such acquisition, (i) Class A shares of the Piper Emerging Growth Fund were exchanged for Class A shares of the Mid Cap Growth Fund, and (ii) Class Y shares of the Piper Emerging Growth Fund were exchanged for Class Y shares of the Mid Cap Growth Fund. (8) Class of shares has been offered since August 7,1998. All ratios for the period have been annualized, except total return and portfolio turnover. (9) Class of shares has been offered since February 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (10) Total return does not include sales charges. Total return would have been lower had certain expenses not been waived. C-5 MID CAP CORE FUND
REALIZED AND NET ASSET UNREALIZED NET ASSET VALUE NET GAINS OR DISTRIBUTIONS VALUE BEGINNING INVESTMENT (LOSSES) ON FROM END OF OF PERIOD INCOME (LOSS) INVESTMENTS CAPITAL GAINS PERIOD ------------------------------------------------------------------------------------------------------------------- MID CAP CORE FUND (1) Class A 2002 $ 28.33 $ (0.11) $ (1.77) $ -- $ 26.45 2001 (2) (3) 54.63 (0.06) (8.40) (17.84) 28.33 2000 (2) 37.80 (0.18) 17.80 (0.79) 54.63 1999 (2) 37.59 (0.08) 0.60 (0.31) 37.80 1998 (2) 44.36 (0.24) (2.07) (4.46) 37.59 1997 41.38 (0.20) 8.44 -- (5.26) Class B 2002 $ 27.59 $ (0.18) $ (1.85) $ -- $ 25.56 2001 (2) (3) 53.97 (0.29) (8.25) (17.84) 27.59 2000 (2) 37.63 (0.53) 17.66 (0.79) 53.97 1999 (2) (4) 37.57 (0.23) 0.29 -- 37.63 Class C 2002 $ 28.33 $ (0.10) $ (1.94) $ -- $ 26.29 2001 (2) (5) 27.40 -- 0.93 -- 28.33 Class S 2002 $ 28.29 $ (0.07) $ (1.79) $ -- $ 26.43 2001 (2) (6) 35.75 (0.06) (7.40) -- 28.29 Class Y 2002 $ 29.11 $ (0.05) $ (1.81) $ -- $ 27.25 2001 (2) (3) 55.52 0.02 (8.59) (17.84) 29.11 2000 (2) 38.32 (0.05) 18.04 (0.79) 55.52 1999 (2) 38.01 0.02 0.60 (0.31) 38.32 1998 (2) 44.70 (0.14) (2.09) (4.46) 38.01 1997 41.58 (0.11) 8.49 -- (5.26) RATIO OF RATIO OF NET EXPENSES TO RATIO OF INVESTMENT AVERAGE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING RETURN (10) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ------------------------------------------------------------------------------------------------------------------------ MID CAP CORE FUND (1) Class A 2002 (6.64)% $ 75,002 1.20% (0.34)% 1.26% 2001 (2) (3) (20.00) 82,043 1.20 (0.19) 1.22 2000 (2) 47.23 108,326 1.20 (0.38) 1.22 1999 (2) 1.31 95,758 1.19 (0.21) 1.21 1998 (2) (5.91) 136,146 1.13 (0.57) 1.20 Class B 2002 (7.36)% $ 4,227 1.95% (1.08)% 2.01% 2001 (2) (3) (20.60) 2,606 1.94 (0.95) 1.97 2000 (2) 46.13 666 1.95 (1.13) 1.97 1999 (2) (4) 0.16 126 1.95 (0.89) 1.97 Class C 2002 (7.20)% $ 1,136 1.95% (1.07)% 2.01% 2001 (2) (5) 3.39 -- -- -- -- Class S 2002 (6.58)% $ 5,869 1.20% (0.33)% 1.26% 2001 (2) (6) (20.87) 1,484 1.19 (0.24) 1.23 Class Y 2002 (6.39)% $ 477,210 0.95% (0.08)% 1.01% 2001 (2) (3) (19.84) 406,349 0.95 0.06 0.97 2000 (2) 47.56 435,613 0.95 (0.13) 0.97 1999 (2) 1.56 359,947 0.94 0.04 0.96 1998 (2) (5.66) 464,858 0.88 (0.32) 0.95
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE --------------------------------------------------------------------------- MID CAP CORE FUND (1) Class A 2002 (0.40)% 162% 2001 (2) (3) (0.21) 204 2000 (2) (0.40) 205 1999 (2) (0.23) 140 1998 (2) (0.64) 77 Class B 2002 (1.14)% 162% 2001 (2) (3) (0.98) 204 2000 (2) (1.15) 205 1999 (2) (4) (0.91) 140 Class C 2002 (1.13)% 162% 2001 (2) (5) -- 204 Class S 2002 (0.39)% 162% 2001 (2) (6) (0.28) 204 Class Y 2002 (0.14)% 162% 2001 (2) (3) 0.04 204 2000 (2) (0.15) 205 1999 (2) 0.02 140 1998 (2) (0.39) 77 (1) The financial highlights for the Mid Cap Core Fund as set forth herein include the historical financial highlights of the Firstar Mid Cap Core Equity Fund. The assets of the Firstar Fund were acquired by the First American Mid Cap Core Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Mid Cap Core Equity Fund were exchanged for Class A shares of the First American Mid Cap Core Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (2) Per share data calculated using average shares outstanding method. (3) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Class of shares has been offered since March 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Class of shares has been offered since December 11, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (7) The financial highlights for the Mid Cap Growth Fund as set forth herein include the financial highlights of the Piper Emerging Growth Fund Class A shares and Class Y shares. The assets of the Piper Emerging Growth Fund were acquired by Mid Cap Growth Fund on August 7, 1998. In connection with such acquisition, (i) Class A shares of the Piper Emerging Growth Fund were exchanged for Class A shares of the Mid Cap Growth Fund, and (ii) Class Y shares of the Piper Emerging Growth Fund were exchanged for Class Y shares of the Mid Cap Growth Fund. (8) Class of shares has been offered since August 7,1998. All ratios for the period have been annualized, except total return and portfolio turnover. (9) Class of shares has been offered since February 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (10) Total return does not include sales charges. Total return would have been lower had certain expenses not been waived. C-6 SMALL CAP GROWTH FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS VALUE NET GAINS OR FROM NET DISTRIBUTIONS FROM BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM RETURN OF OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS CAPITAL (6) ------------------------------------------------------------------------------------------------------------------------ SMALL CAP GROWTH FUND (1) Class A 2002 (2) $ 11.28 $ (0.09) $ (2.40) $ -- $ -- $ -- 2001 (2) 24.47 (0.08) (8.55) -- (4.46) (0.10) 2000 16.77 (0.12) 9.89 -- (2.07) -- 1999 11.90 (0.06) 4.95 -- (0.02) -- 1998 17.41 (0.09) (2.67) -- (2.64) (0.11) Class B 2002 (2) $ 10.44 $ (0.16) $ (2.21) $ -- $ -- $ -- 2001 (2) 23.17 (0.19) (7.98) -- (4.47) (0.09) 2000 16.07 (0.23) 9.40 -- (2.07) -- 1999 11.50 (0.14) 4.73 -- (0.02) -- 1998 (3) 13.74 (0.02) (2.22) -- -- -- Class C 2002 (2) $ 11.02 $ (0.17) $ (2.33) $ -- $ -- $ -- 2001 (2) 24.17 (0.20) (8.39) -- (4.49) (0.07) 2000 16.68 (0.13) 9.69 -- (2.07) -- 1999 (4) 15.48 (0.08) 1.28 -- -- -- Class S 2002 (2) $ 11.28 $ (0.07) $ (2.42) $ -- $ -- $ -- 2001 (2) (5) 11.17 -- 0.11 -- -- -- Class Y 2002 (2) $ 11.50 $ (0.06) $ (2.47) $ -- $ -- $ -- 2001 (2) 24.79 (0.04) (8.69) -- (4.49) (0.07) 2000 16.92 (0.06) 10.00 -- (2.07) -- 1999 11.98 (0.02) 4.98 -- (0.02) -- 1998 (3) 14.29 -- (2.31) -- -- -- ------------------------------------------------------------------------------------------------------------------------ RATIO OF RATIO OF NET EXPENSES TO NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS END OF TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING PERIOD RETURN(7) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ------------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH FUND (1) Class A 2002 (2) $ 8.79 (22.07)% $ 22,397 1.23% (0.78)% 1.29% 2001 (2) 11.28 (41.71) 31,913 1.15 (0.51) 1.15 2000 24.47 62.07 57,148 1.14 (0.57) 1.14 1999 16.77 41.11 32,203 1.14 (0.39) 1.15 1998 11.90 (18.66) 28,252 1.29 (0.61) 1.43 Class B 2002 (2) $ 8.07 (22.70)% $ 3,933 1.98% (1.53)% 2.04% 2001 (2) 10.44 (42.14) 5,009 1.90 (1.27) 1.90 2000 23.17 60.95 8,440 1.89 (1.30) 1.89 1999 16.07 39.92 2,217 1.90 (1.16) 1.91 1998 (3) 11.50 (16.30) 1,104 1.90 (1.20) 1.90 Class C 2002 (2) $ 8.52 (22.69)% $ 4,659 1.98% (1.54)% 2.04% 2001 (2) 11.02 (42.14) 6,378 1.90 (1.28) 1.90 2000 24.17 61.06 8,205 1.89 (1.28) 1.89 1999 (4) 16.68 7.75 309 1.90 (1.18) 1.91 Class S 2002 (2) $ 8.79 (22.07)% $ 32 1.23% (0.67)% 1.29% 2001 (2) (5) 11.28 0.98 -- -- -- -- Class Y 2002 (2) $ 8.97 (22.00)% $ 205,253 0.98% (0.54)% 1.04% 2001 (2) 11.50 (41.55) 330,917 0.90 (0.28) 0.90 2000 24.79 62.58 478,975 0.89 (0.30) 0.89 1999 16.92 41.42 248,679 0.90 (0.16) 0.91 1998 (3) 11.98 (16.17) 113,874 0.90 (0.20) 0.90 -------------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE --------------------------------------------------------------- SMALL CAP GROWTH FUND (1) Class A 2002 (2) (0.84)% 286% 2001 (2) (0.51) 265 2000 (0.57) 230 1999 (0.40) 110 1998 (0.75) 92 Class B 2002 (2) (1.59)% 286% 2001 (2) (1.27) 265 2000 (1.30) 230 1999 (1.17) 110 1998 (3) (1.20) 92 Class C 2002 (2) (1.60)% 286% 2001 (2) (1.28) 265 2000 (1.28) 230 1999 (4) (1.19) 110 Class S 2002 (2) (0.73)% 286% 2001 (2) (5) -- 265 Class Y 2002 (2) (0.60)% 286% 2001 (2) (0.28) 265 2000 (0.30) 230 1999 (0.17) 110 1998 (3) (0.20) 92 --------------------------------------------------------------- (1) Historical per share data amounts have been adjusted to reflect the conversion ratios utilized for the reorganization of the FAIF Small Cap Growth Fund and Piper Small Company Growth Fund that occurred on July 31, 1998. Piper Small Company Growth Fund is the financial reporting survivor. Therefore, the financial highlights for the Small Cap Growth Fund represent the financial highlights information of the former Piper Small Company Growth Fund. On July 31, 1998, the Fund's advisor changed from Piper Capital Management, Incorporated to U.S. Bank National Association. (2) Per share data calculated using average shares outstanding method. (3) Class of shares has been offered since July 31, 1998. There is no historical information for these classes of Piper Small Company Growth Fund prior to the reorganization on July 31, 1998. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Class of shares has been offered since February 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Distributions from return of capital for the Small Cap Value Fund were less than $0.01 per share for the fiscal year ended September 30, 2002. (7) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-7 SMALL CAP CORE FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS VALUE NET GAINS OR FROM NET DISTRIBUTIONS FROM BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM RETURN OF OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS CAPITAL (10) -------------------------------------------------------------------------------------------------------------------- SMALL CAP CORE FUND (4) Class A 2002 (2) $ 11.97 $ (0.10) $ (0.30) $ -- $ (0.89) $ -- 2001 (1) (2) 17.60 (0.03) (1.89) -- (3.71) -- 2000 (2) (5) 13.84 (0.10) 4.13 (0.01) (0.26) -- 1999 (2) 11.86 (0.07) 2.10 -- (0.05) -- 1998 15.03 (0.06) (1.89) -- (1.22) -- 1997 13.40 (0.05) 2.50 -- (0.82) -- Class B 2002 (2) $ 11.28 $ (0.19) $ (0.25) $ -- $ (0.89) $ -- 2001 (1) (2) 16.90 (0.12) (1.79) -- (3.71) -- 2000 (2) (5) 13.38 (0.13) 3.92 -- (0.27) -- 1999 (2) 11.53 (0.16) 2.06 -- (0.05) -- 1998 14.74 (0.14) (1.85) -- (1.22) -- 1997 13.24 (0.13) 2.45 -- (0.82) -- Class C 2002 (2) $ 11.97 $ (0.20) $ (0.26) $ -- $ (0.89) $ -- 2001 (2) (3) 11.72 -- 0.25 -- -- -- Class S 2002 (2) $ 11.94 $ (0.10) $ (0.29) $ -- $ (0.89) $ -- 2001 (1) (2) 17.55 (0.01) (1.89) -- (3.71) -- 2000 (2) (5) 13.80 (0.01) 4.03 (0.01) (0.26) -- 1999 (2) 11.82 (0.07) 2.10 -- (0.05) -- 1998 14.98 (0.07) (1.87) -- (1.22) -- 1997 13.36 (0.04) 2.48 -- (0.82) -- Class Y 2002 (2) $ 12.26 $ (0.07) $ (0.30) $ -- $ (0.89) $ -- 2001 (1) (2) 17.92 -- (1.95) -- (3.71) -- 2000 (2) (5) 14.07 0.05 4.10 (0.03) (0.27) -- 1999 (2) 12.02 (0.03) 2.13 -- (0.05) -- 1998 15.17 (0.02) (1.91) -- (1.22) -- 1997 13.49 0.01 2.50 (0.01) (0.82) -- -------------------------------------------------------------------------------------------------------------------- RATIO OF RATIO OF NET EXPENSES TO NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS END OF TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING PERIOD RETURN (6) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ------------------------------------------------------------------------------------------------------------------------ SMALL CAP CORE FUND (4) Class A 2002 (2) $ 10.68 (4.56)% $ 33,586 1.21% (0.81)% 1.25% 2001 (1) (2) 11.97 (12.63) 17,351 1.19 (0.24) 1.22 2000 (2) (5) 17.60 29.65 9,538 1.28 (0.01) 1.39 1999 (2) 13.84 17.21 8,885 1.26 (0.57) 1.36 1998 11.86 (14.19) 11,601 1.25 (0.45) 1.35 Class B 2002 (2) $ 9.95 (5.23)% $ 4,613 1.96% (1.56)% 2.00% 2001 (1) (2) 11.28 (13.21) 1,979 1.93 (0.99) 1.97 2000 (2) (5) 16.90 28.81 1,331 1.98 (0.71) 2.09 1999 (2) 13.38 16.57 1,094 1.96 (1.27) 2.06 1998 11.53 (14.79) 1,286 1.95 (1.15) 2.05 Class C 2002 (2) $ 10.62 (5.09)% $ 3,096 1.96% (1.61)% 2.02% 2001 (2) (3) 11.97 2.13 -- -- -- -- Class S 2002 (2) $ 10.66 (4.48)% $ 7,640 1.21% (0.80)% 1.25% 2001 (1) (2) 11.94 (12.52) 3,721 1.07 (0.05) 1.14 2000 (2) (5) 17.55 29.67 4,442 1.28 (0.01) 1.39 1999 (2) 13.80 17.27 2,448 1.26 (0.59) 1.36 1998 11.82 (14.17) 25,037 1.25 (0.45) 1.35 Class Y 2002 (2) $ 11.00 (4.19)% $ 403,027 0.96% (0.55)% 1.00% 2001 (1) (2) 12.26 (12.49) 291,706 0.93 0.01 0.96 2000 (2) (5) 17.92 30.01 134,617 0.98 0.29 1.39 1999 (2) 14.07 17.57 111,643 0.96 (0.26) 1.36 1998 12.02 (13.90) 129,591 0.95 (0.16) 1.35 ------------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE ------------------------------------------------------------ SMALL CAP CORE FUND (4) Class A 2002 (2) (0.85)% 171% 2001 (1) (2) (0.27) 204 2000 (2) (5) (0.12) 91 1999 (2) (0.67) 72 1998 (0.55) 70 Class B 2002 (2) (1.60)% 171% 2001 (1) (2) (1.03) 204 2000 (2) (5) (0.82) 91 1999 (2) (1.37) 72 1998 (1.25) 70 Class C 2002 (2) (1.67)% 171% 2001 (2) (3) -- 204 Class S 2002 (2) (0.84)% 171% 2001 (1) (2) (0.12) 204 2000 (2) (5) (0.12) 91 1999 (2) (0.69) 72 1998 (0.55) 70 Class Y 2002 (2) (0.59)% 171% 2001 (1) (2) (0.02) 204 2000 (2) (5) (0.12) 91 1999 (2) (0.66) 72 1998 (0.56) 70 ------------------------------------------------------------ (1) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and potfolio turnover. (2) Per share data calculated using average shares outstanding method. (3) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (4) The financial highlights for the Small Cap Core Fund as set forth herein include the historical financial highlights of the Firstar Small Cap Core Equity Fund. The assets of the Firstar Fund were acquired by the First American Small Cap Core Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar Small Cap Core Fund were exchanged for Class A shares of the First American Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. (5) Effective in 2000, the Fund's fiscal year end was changed from November 30 to October 31. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. (7) Distributions from return of capital for the Small Cap Core Fund were less than $0.01 per share for the fiscal year ended September 30, 2002. C-8 EMERGING MARKETS FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS OR FROM NET DISTRIBUTIONS BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS ------------------------------------------------------------------------------------------------------- EMERGING MARKETS FUND (1) Class A 2002 (2) $ 5.87 $ (0.04) $ 0.39 $ -- $ -- 2001 (2) 8.50 0.02 (2.65) -- -- 2000 (2) 6.77 (0.06) 1.79 -- -- 1999 (2) 5.61 (0.04) 1.20 -- -- 1998 10.96 (0.15) (5.18) (0.02) -- Class B 2002 (2) $ 5.73 $ (0.09) $ 0.38 $ -- $ -- 2001 (2) 8.37 (0.03) (2.61) -- -- 2000 (2) 6.72 (0.11) 1.76 -- -- 1999 (2) 5.60 (0.08) 1.20 -- -- 1998 (3) 7.27 -- (1.67) -- -- Class C (2) 2002 $ 5.80 $ (0.09) $ 0.39 $ -- $ -- 2001 8.46 -- (2.66) -- -- 2000 (4) 9.96 (0.06) (1.44) -- -- Class S (2) 2002 $ 5.87 $ 0.01 $ 0.33 $ (0.02) $ -- 2001 (5) 5.72 -- 0.15 -- -- Class Y 2002 (2) $ 5.92 $ (0.02) $ 0.38 $ (0.02) $ -- 2001 (2) 8.55 0.06 (2.69) -- -- 2000 (2) 6.80 (0.04) 1.79 -- -- 1999 (2) 5.62 (0.02) 1.20 -- -- 1998 (3) 7.27 0.01 (1.66) -- -- RATIO OF RATIO OF NET EXPENSES TO NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS END OF TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING PERIOD RETURN (9) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ---------------------------------------------------------------------------------------------------------------------- EMERGING MARKETS FUND (1) Class A 2002 (2) $ 6.22 5.96% $ 2,487 1.70% (0.53)% 1.89% 2001 (2) 5.87 (30.94) 3,244 1.70 0.26 1.92 2000 (2) 8.50 25.55 4,338 1.70 (0.70) 1.89 1999 (2) 6.77 20.68 4,551 1.70 (0.54) 2.02 1998 5.61 (48.91) 5,384 1.96 (1.09) 3.43 Class B 2002 (2) $ 6.02 5.06% $ 252 2.45% (1.24)% 2.64% 2001 (2) 5.73 (31.54) 173 2.45 (0.37) 2.64 2000 (2) 8.37 24.55 107 2.45 (1.21) 2.66 1999 (2) 6.72 20.00 13 2.45 (1.19) 2.72 1998 (3) 5.60 (22.97) 1 2.46 (0.43) 4.30 Class C (2) 2002 $ 6.10 5.17% $ 90 2.45% (1.24)% 2.64% 2001 5.80 (31.44) 90 2.45 0.02 2.70 2000 (4) 8.46 (15.06) 4 2.45 (0.99) 2.64 Class S (2) 2002 $ 6.19 5.77% $ 11 1.70% 0.20% 1.89% 2001 (5) 5.87 2.62 -- -- -- -- Class Y 2002 (2) $ 6.26 6.10% $ 46,006 1.45% (0.28)% 1.64% 2001 (2) 5.92 (30.84) 40,282 1.45 0.88 1.67 2000 (2) 8.55 25.74 55,753 1.45 (0.42) 1.64 1999 (2) 6.80 21.00 40,255 1.45 (0.35) 1.73 1998 (3) 5.62 (22.70) 7,444 1.46 0.83 3.30
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE --------------------------------------------------------------- EMERGING MARKETS FUND (1) Class A 2002 (2) (0.72)% 138% 2001 (2) 0.04 132 2000 (2) (0.89) 149 1999 (2) (0.86) 138 1998 (2.56) 48 Class B 2002 (2) (1.43)% 138% 2001 (2) (0.56) 132 2000 (2) (1.42) 149 1999 (2) (1.46) 138 1998 (3) (2.27) 48 Class C (2) 2002 (1.43)% 138% 2001 (0.23) 132 2000 (4) (1.18) 149 Class S (2) 2002 0.01% 138% 2001 (5) -- 132 Class Y 2002 (2) (0.47)% 138% 2001 (2) 0.66 132 2000 (2) (0.61) 149 1999 (2) (0.63) 138 1998 (3) (1.01) 48 (1) The financial highlights for Emerging Markets Fund as set forth herein include the historical financial highlights of the Piper Emerging Markets Growth Fund Class A shares. The assets of the Piper Emerging Markets Growth Fund were acquired by Emerging Markets Fund on August 7, 1998. In connection with such acquisition, Class A shares of the Piper Emerging Markets Growth Fund were exchanged for Class A shares of the Emerging Markets Fund. On August 7, 1998, the Fund's advisor changed from Piper Capital Management Incorporated to U.S. Bank National Association. (2) Per share data calculated using average shares outstanding method. (3) Class of shares has been offered since August 10, 1998. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Commenced operations February 1, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) The financial highlights for the International Fund as set forth herein include the historical financial highlights of the Firstar International Growth Fund. The assets of the Firstar Fund were acquired by the First American International Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar International Growth Fund were exchanged for Class A shares of the First American International Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. Historical per share amounts have been adjusted to reflect the conversion ratios utilized for the merger of the International Fund and Firstar International Growth Fund. Firstar International Growth Fund is the accounting survivor. (7) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and portfolio turnover. (8) Effective in 2000, the Fund's fiscal year end was changed from November 30 to October 31. All ratios for the period have been annualized, except total return and portfolio turnover. (9) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-9 INTERNATIONAL FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS OR FROM NET DISTRIBUTIONS BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM OF PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS ------------------------------------------------------------------------------------------------------- INTERNATIONAL FUND (6) Class A 2002 (2) $ 8.96 $ -- $ (1.63) $ -- $ -- 2001 (2) (7) 13.96 0.10 (3.63) (0.10) (1.37) 2000 (2) (8) 15.94 (0.03) (0.42) (0.10) (1.43) 1999 12.42 -- 4.26 (0.04) (0.70) 1998 11.22 0.01 1.66 (0.07) (0.40) 1997 11.28 (.02) 0.30 (0.25) (0.29) Class B 2002 (2) $ 8.45 $ (0.06) $ (1.54) $ -- $ -- 2001 (2) (7) 13.28 0.01 (3.43) (0.07) (1.34) 2000 (2) (8) 15.27 (0.10) (0.42) (0.07) (1.40) 1999 11.97 (0.09) 4.09 (0.01) (0.69) 1998 10.87 (0.08) 1.60 (0.02) (0.40) 1997 10.99 (0.08) 0.28 (0.03) (0.29) Class C (2) 2002 $ 8.75 $ (0.06) $ (1.60) $ -- $ -- 2001 (5) 8.31 0.01 0.43 -- -- Class S 2002 (2) $ 8.96 $ 0.01 $ (1.66) $ -- $ -- 2001 (2) (7) 13.97 (0.04) (3.50) (0.10) (1.37) 2000 (2) (8) 15.95 (0.03) (0.42) (0.10) (1.43) 1999 12.43 (0.01) 4.27 (0.04) (0.70) 1998 11.23 -- 1.67 (0.07) (0.40) 1997 11.29 (0.03) 0.31 (0.06) (0.29) Class Y 2002 (2) $ 9.03 $ 0.03 $ (1.66) $ -- $ -- 2001 (2) (7) 14.03 0.07 (3.61) (0.11) (1.35) 2000 (2) (8) 15.97 0.01 (0.42) (0.12) (1.41) 1999 12.42 0.06 4.25 (0.06) (0.70) 1998 11.21 0.04 1.67 (0.10) (0.40) 1997 11.24 0.01 0.31 (0.06) (0.29) ------------------------------------------------------------------------------------------------------- RATIO OF RATIO OF NET EXPENSES TO NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME (LOSS) NET ASSETS END OF TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING PERIOD RETURN (9) PERIOD (000) NET ASSETS NET ASSETS WAIVERS) ---------------------------------------------------------------------------------------------------------------------- INTERNATIONAL FUND (6) Class A 2002 (2) $ 7.33 (18.19)% $ 37,232 1.60% 0.04% 1.66% 2001 (2) (7) 8.96 (28.00) 64,907 1.49 1.02 1.59 2000 (2) (8) 13.96 (3.59) 3,591 1.58 (0.26) 1.76 1999 15.94 36.62 3,939 1.56 (0.01) 1.75 1998 12.42 15.33 3,154 1.58 0.02 1.75 Class B 2002 (2) $ 6.85 (18.94)% $ 7,459 2.35% (0.68)% 2.41% 2001 (2) (7) 8.45 (28.57) 10,857 2.17 0.06 2.27 2000 (2) (8) 13.28 (4.22) 732 2.28 (0.96) 2.46 1999 15.27 35.65 781 2.26 (0.71) 2.45 1998 11.97 14.48 624 2.28 (0.70) 2.45 Class C (2) 2002 $ 7.09 (18.97)% $ 11,027 2.35% (0.71)% 2.41% 2001 (5) 8.75 5.29 17,806 1.48 4.15 1.48 Class S 2002 (2) $ 7.31 (18.42)% $ 10,817 1.60% 0.16% 1.66% 2001 (2) (7) 8.96 (28.03) 9,461 1.46 (0.33) 1.61 2000 (2) (8) 13.97 (3.59) 16,373 1.58 (0.26) 1.76 1999 15.95 36.61 11,307 1.56 -- 1.75 1998 12.43 15.37 8,058 1.58 0.01 1.75 Class Y 2002 (2) $ 7.40 (18.05)% $ 540,495 1.35% 0.36% 1.41% 2001 (2) (7) 9.03 (27.93) 661,886 1.23 0.67 1.36 2000 (2) (8) 14.03 (3.27) 122,329 1.28 0.04 1.76 1999 15.97 36.98 92,778 1.26 0.28 1.75 1998 12.42 15.73 60,647 1.28 0.34 1.75 ----------------------------------------------------------------------------------------------------------------------
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE --------------------------------------------------------------- INTERNATIONAL FUND (6) Class A 2002 (2) (0.02)% 72% 2001 (2) (7) 0.92 72 2000 (2) (8) (0.44) 90 1999 (0.20) 94 1998 (0.15) 89 Class B 2002 (2) (0.74)% 72% 2001 (2) (7) (0.04) 72 2000 (2) (8) (1.14) 90 1999 (0.90) 94 1998 (0.87) 89 Class C (2) 2002 (0.77)% 72% 2001 (5) 4.15 72 Class S 2002 (2) 0.10% 72% 2001 (2) (7) (0.48) 72 2000 (2) (8) (0.44) 90 1999 (0.19) 94 1998 (0.16) 89 Class Y 2002 (2) 0.30% 72% 2001 (2) (7) 0.54 72 2000 (2) (8) (0.44) 90 1999 (0.21) 94 1998 (0.13) 89 --------------------------------------------------------------- (1) The financial highlights for Emerging Markets Fund as set forth herein include the historical financial highlights of the Piper Emerging Markets Growth Fund Class A shares. The assets of the Piper Emerging Markets Growth Fund were acquired by Emerging Markets Fund on August 7, 1998. In connection with such acquisition, Class A shares of the Piper Emerging Markets Growth Fund were exchanged for Class A shares of the Emerging Markets Fund. On August 7, 1998, the Fund's advisor changed from Piper Capital Management Incorporated to U.S. Bank National Association. (2) Per share data calculated using average shares outstanding method. (3) Class of shares has been offered since August 10, 1998. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Commenced operations February 1, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (6) The financial highlights for the International Fund as set forth herein include the historical financial highlights of the Firstar International Growth Fund. The assets of the Firstar Fund were acquired by the First American International Fund on September 24, 2001. In connection with such acquisition, (i) Class A shares of the Firstar International Growth Fund were exchanged for Class A shares of the First American International Fund, (ii) Firstar Class B shares were exchanged for Class B shares of the First American Fund, (iii) Firstar Class Y shares were exchanged for Class S shares of the First American Fund, and (iv) Firstar Institutional Class shares were exchanged for Class Y shares of the First American Fund. Historical per share amounts have been adjusted to reflect the conversion ratios utilized for the merger of the International Fund and Firstar International Growth Fund. Firstar International Growth Fund is the accounting survivor. (7) Effective in 2001, the Fund's fiscal year end was changed from October 31 to September 30. All ratios for the period have been annualized, except total return and portfolio turnover. (8) Effective in 2000, the Fund's fiscal year end was changed from November 30 to October 31. All ratios for the period have been annualized, except total return and portfolio turnover. (9) Total return does not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-10 BOND IMMDEX(TM) FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS FROM NET DISTRIBUTIONS BEGINNING INVESTMENT OR (LOSSES) INVESTMENT FROM CAPITAL OF PERIOD INCOME ON INVESTMENTS INCOME GAINS ----------------------------------------------------------------------------------------------------------- BOND IMMDEX(TM) FUND(1) Class A 2002 $ 29.15 $ 1.63 $ 0.08 $ (1.59) $ (0.06) 2001(2)(3) 27.49 1.51 1.73 (1.47) (0.11) 2000(2)(4) 27.36 1.71 0.13 (1.71) -- 1999(2)(4) 29.01 1.64 (1.66) (1.63) -- 1998(4) 28.16 1.64 0.85 (1.64) -- 1997(2)(4) 27.54 1.66 0.64 (1.68) -- Class B 2002 $ 29.13 $ 1.43 $ 0.06 $ (1.38) $ (0.06) 2001(2)(3) 27.49 1.32 1.72 (1.29) (0.11) 2000(4) 27.36 1.53 0.13 (1.53) -- 1999(2)(4)(5) 28.34 0.92 (0.91) (0.99) -- Class C 2002 $ 29.15 $ 1.43 $ 0.06 $ (1.42) $ (0.06) 2001(2)(6) 28.94 0.07 0.14 -- -- Class S 2002 $ 29.15 $ 1.64 $ 0.07 $ (1.59) $ (0.06) 2001(2)(7) 27.88 1.31 1.29 (1.33) -- Class Y 2002 $ 29.17 $ 1.70 $ 0.08 $ (1.66) $ (0.06) 2001(2)(3) 27.51 1.58 1.72 (1.53) (0.11) 2000(4) 27.37 1.94 0.13 (1.93) -- 1999(4) 29.02 1.70 (1.65) (1.70) -- 1998(4) 28.16 1.72 0.85 (1.71) -- 1997(4) 27.55 1.75 0.61 (1.75) -- RATIO OF RATIO OF NET EXPENSES NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME TO NET ASSETS END OF TOTAL END OF AVERAGE AVERAGE (EXCLUDING PERIOD RETURN(8) PERIOD(000) NET ASSETS NET ASSETS WAIVERS) --------------------------------------------------------------------------------------------------------------------- BOND IMMDEX(TM) FUND(1) Class A 2002 $ 29.21 6.18% $ 87,096 0.73% 5.72% 0.83% 2001(2)(3) 29.15 12.09 87,775 0.73 5.82 0.76 2000(2)(4) 27.49 6.99 82,131 0.74 6.30 0.74 1999(2)(4) 27.36 (0.05) 95,635 0.72 5.80 0.74 1998(4) 29.01 9.11 95,301 0.67 5.77 0.74 1997(2)(4) 28.16 8.68 64,144 0.67 6.08 0.74 Class B 2002 $ 29.18 5.39% $ 14,592 1.48% 5.03% 1.58% 2001(2)(3) 29.13 11.32 8,505 1.48 5.02 1.52 2000(4) 27.49 6.22 2,689 1.49 5.55 1.49 1999(2)(4)(5) 27.36 0.04 1,869 1.49 5.06 1.49 Class C 2002 $ 29.16 5.37% $ 1,919 1.48% 5.23% 1.58% 2001(2)(6) 29.15 0.69 46,666 0.41 5.06 0.48 Class S 2002 $ 29.21 6.20% $ 18,179 0.72% 5.78% 0.82% 2001(2)(7) 29.15 9.56 10,330 0.73 5.64 0.79 Class Y 2002 $ 29.23 6.44% $ 710,922 0.48% 5.98% 0.58% 2001(2)(3) 29.17 12.33 645,134 0.48 6.06 0.51 2000(4) 27.51 7.29 477,455 0.49 6.55 0.49 1999(4) 27.37 0.20 421,897 0.47 6.05 0.48 1998(4) 29.02 9.41 471,425 0.42 6.02 0.49 1997(4) 28.16 8.90 408,018 0.42 6.33 0.49
[WIDE TABLE CONTINUED FROM ABOVE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE ------------------------------------------------------------------- BOND IMMDEX(TM) FUND(1) Class A 2002 5.62% 46% 2001(2)(3) 5.79 16 2000(2)(4) 6.30 25 1999(2)(4) 5.78 57 1998(4) 5.70 20 1997(2)(4) 6.01 35 Class B 2002 4.93% 46% 2001(2)(3) 4.98 16 2000(4) 5.55 25 1999(2)(4)(5) 5.06 57 Class C 2002 5.13% 46% 2001(2)(6) 4.99 16 Class S 2002 5.68% 46% 2001(2)(7) 5.58 16 Class Y 2002 5.88% 46% 2001(2)(3) 6.03 16 2000(4) 6.55 25 1999(4) 6.04 57 1998(4) 5.95 20 1997(4) 6.26 35 (1) The financial highlights for the Bond IMMDEX(TM) Fund as set forth herein include the historical financial highlights of the Firstar Bond IMMDEX(TM) Fund Class A shares, Class B shares, Class Y shares, and Class I shares. The assets of the Firstar Bond IMMDEX(TM) Fund were acquired by Bond IMMDEX(TM) Fund on September 24, 2001. In connection with such acquisition, Class A shares, Class B shares, Class Y shares, and Class I shares of the Firstar Bond IMMDEX(TM) Fund were exchanged for Class A shares, Class B shares, Class S shares, and Class Y shares of Bond IMMDEX(TM) Fund, respectively. (2) Per share data calculated using average shares outstanding method. (3) Effective in 2001, the Fund's fiscal year end was changed to September 30 from October 31. (4) For the fiscal year ended October 31. (5) Class of shares has been offered since March 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (6) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (7) Class of shares has been offered since December 11, 2000. All ratios for the period have been annualized, except total return and portfolio turnover. (8) Total returns do not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-11 FIXED INCOME FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS FROM NET DISTRIBUTIONS RETURN BEGINNING INVESTMENT OR (LOSSES) INVESTMENT FROM CAPITAL OF OF PERIOD INCOME ON INVESTMENTS INCOME GAINS CAPITAL --------------------------------------------------------------------------------------------------------------------- FIXED INCOME FUND Class A 2002 $ 11.37 $ 0.55 $ 0.08 $ (0.55) $ -- $ -- 2001(1) 10.69 0.61 0.69 (0.62) -- -- 2000 10.65 0.61 0.04 (0.61) -- -- 1999 11.69 0.59 (0.89) (0.59) (0.15) -- 1998 10.97 0.57 0.73 (0.57) (0.01) -- Class B 2002 $ 11.29 $ 0.47 $ 0.09 $ (0.47) $ -- $ -- 2001(1) 10.63 0.52 0.68 (0.54) -- -- 2000 10.58 0.53 0.05 (0.53) -- -- 1999 11.63 0.51 (0.90) (0.51) (0.15) -- 1998 10.91 0.49 0.73 (0.49) (0.01) -- Class C 2002 $ 11.34 $ 0.47 $ 0.08 $ (0.47) $ -- $ -- 2001(1) 10.66 0.52 0.70 (0.54) -- -- 2000 10.64 0.52 0.04 (0.54) -- -- 1999(2) 11.33 0.38 (0.69) (0.38) -- -- Class S 2002 $ 11.37 $ 0.55 $ 0.08 $ (0.55) $ -- $ -- 2001(1)(3) 11.28 0.01 0.08 -- -- -- Class Y 2002 $ 11.37 $ 0.58 $ 0.08 $ (0.58) $ -- $ -- 2001(1) 10.69 0.63 0.70 (0.65) -- -- 2000 10.65 0.63 0.04 (0.63) -- -- 1999 11.69 0.61 (0.89) (0.61) (0.15) -- 1998 10.96 0.60 0.74 (0.60) (0.01) -- RATIO OF RATIO OF NET EXPENSES NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME TO NET ASSETS END OF TOTAL END OF AVERAGE AVERAGE (EXCLUDING PERIOD RETURN(5) PERIOD(000) NET ASSETS NET ASSETS WAIVERS) --------------------------------------------------------------------------------------------------------------------- FIXED INCOME FUND Class A 2002 $ 11.45 5.77% $ 122,354 0.95% 4.93% 1.03% 2001(1) 11.37 12.50 119,067 0.95 5.50 1.13 2000 10.69 6.33 110,490 0.95 5.76 1.14 1999 10.65 (2.67) 137,133 0.95 5.29 1.14 1998 11.69 12.29 205,237 0.95 5.10 1.11 Class B 2002 $ 11.38 5.12% $ 16,741 1.70% 4.17% 1.78% 2001(1) 11.29 11.59 15,071 1.70 4.75 1.88 2000 10.63 5.70 11,550 1.70 5.02 1.89 1999 10.58 (3.48) 14,639 1.70 4.53 1.89 1998 11.63 11.54 17,242 1.70 4.35 1.86 Class C 2002 $ 11.42 5.02% $ 9,672 1.70% 4.18% 1.78% 2001(1) 11.34 11.68 7,148 1.70 4.65 1.88 2000 10.66 5.50 566 1.70 5.02 1.89 1999(2) 10.64 (2.75) 719 1.35 5.09 1.89 Class S 2002 $ 11.45 5.77% $ 33,270 0.95% 4.93% 1.03% 2001(1)(3) 11.37 0.80 35,062 1.58 6.36 1.76 Class Y 2002 $ 11.45 6.04% $ 1,204,555 0.70% 5.18% 0.78% 2001(1) 11.37 12.76 1,368,812 0.70 5.76 0.88 2000 10.69 6.59 1,299,941 0.70 6.03 0.89 1999 10.65 (2.44) 1,239,900 0.70 5.57 0.89 1998 11.69 12.66 1,210,661 0.70 5.35 0.86
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE -------------------------------------------------------------------- FIXED INCOME FUND Class A 2002 4.85% 115% 2001(1) 5.32 81 2000 5.57 54 1999 5.10 90 1998 4.94 147 Class B 2002 4.09% 115% 2001(1) 4.57 81 2000 4.83 54 1999 4.34 90 1998 4.19 147 Class C 2002 4.10% 115% 2001(1) 4.47 81 2000 4.83 54 1999(2) 4.55 90 Class S 2002 4.85% 115% 2001(1)(3) 6.18 81 Class Y 2002 5.10% 115% 2001(1) 5.58 81 2000 5.84 54 1999 5.38 90 1998 5.19 147 (1) Per share data calculated using average shares outstanding method. (2) Class of shares has been offered since February 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (3) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Commenced operations on August 30, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Total returns do not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-12 HIGH YIELD BOND FUND
RATIO OF RATIO OF NET EXPENSES NET ASSET RATIO OF INVESTMENT AVERAGE VALUE NET ASSETS EXPENSES TO INCOME TO NET ASSETS END OF TOTAL END OF AVERAGE AVERAGE (EXCLUDING PERIOD RETURN(5) PERIOD(000) NET ASSETS NET ASSETS WAIVERS) --------------------------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND Class A 2002 $ 7.96 (6.66)% $ 23,900 1.10% 7.64% 1.47% 2001(1)(4) 9.30 (6.55) 161 1.10 6.53 1.33 Class B 2002 $ 7.97 (7.26)% $ 774 1.80% 7.49% 2.28% 2001(1)(4) 9.31 (6.47) 40 1.77 6.02 2.02 Class C 2002 $ 7.97 (7.34)% $ 7,213 1.83% 7.08% 2.26% 2001(1)(4) 9.31 (6.50) 3,749 1.94 5.53 2.21 Class S 2002 $ 7.96 (6.66)% $ 87 1.01% 8.46% 1.57% 2001(1)(3) 9.30 (1.90) -- 0.00 1.23 0.00 Class Y 2002 $ 7.98 (6.33)% $ 21,157 0.82% 8.19% 1.27% 2001(1)(4) 9.31 (6.47) 8,308 0.96 6.06 1.23
[WIDE TABLE CONTINUED FROM ABOVE] RATIO OF NET INVESTMENT INCOME TO AVERAGE NET PORTFOLIO ASSETS (EXCLUDING TURNOVER WAIVERS) RATE -------------------------------------------------------------------- HIGH YIELD BOND FUND Class A 2002 7.27% 86% 2001(1)(4) 6.30 53 Class B 2002 7.01% 86% 2001(1)(4) 5.77 53 Class C 2002 6.65% 86% 2001(1)(4) 5.26 53 Class S 2002 7.90% 86% 2001(1)(3) 1.23 53 Class Y 2002 7.74% 86% 2001(1)(4) 5.79 53 (1) Per share data calculated using average shares outstanding method. (2) Class of shares has been offered since February 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (3) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Commenced operations on August 30, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Total returns do not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-13 STRATEGIC INCOME FUND
REALIZED AND NET ASSET UNREALIZED DIVIDENDS VALUE NET GAINS FROM NET BEGINNING INVESTMENT OR (LOSSES) INVESTMENT OF PERIOD INCOME ON INVESTMENTS INCOME ---------------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND Class A 2002(1) $ 8.37 $ 0.68 $ (0.39) $ (0.67) 2001(1) 8.91 0.76 (0.59) (0.71) 2000(1) 9.09 0.64 (0.15) (0.67) 1999(1) 9.27 0.78 (0.25) (0.71) 1998(2) 10.00 0.13 (0.75) (0.11) Class B 2002(1) $ 8.35 $ 0.60 $ (0.38) $ (0.61) 2001(1) 8.89 0.69 (0.58) (0.65) 2000(1) 9.07 0.56 (0.14) (0.60) 1999(1) 9.27 0.71 (0.26) (0.65) 1998(2) 10.00 0.09 (0.71) (0.11) Class C(1) 2002 $ 8.35 $ 0.60 $ (0.38) $ (0.61) 2001 8.90 0.69 (0.59) (0.65) 2000 9.08 0.59 (0.14) (0.63) 1999(3) 9.57 0.45 (0.47) (0.47) Class S(1) 2002 $ 8.38 $ 0.65 $ (0.36) $ (0.61) 2001(4) 8.40 -- (0.02) -- Class Y 2002(1) $ 8.38 $ 0.70 $ (0.40) $ (0.69) 2001(1) 8.92 0.79 (0.59) (0.74) 2000(1) 9.09 0.66 (0.14) (0.69) 1999(1) 9.27 0.80 (0.25) (0.73) 1998(2) 10.00 0.14 (0.75) (0.12) RATIO OF NET NET ASSETS RATIO OF INVESTMENT VALUE NET ASSETS EXPENSES TO INCOME TO END OF TOTAL END OF AVERAGE AVERAGE PERIOD RETURN(5) PERIOD(000) NET ASSETS NET ASSET ----------------------------------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND Class A 2002(1) $ 7.99 3.31% $ 18,006 1.20% 7.98% 2001(1) 8.37 1.99 19,014 1.15 8.62 2000(1) 8.91 5.56 21,737 1.15 7.08 1999(1) 9.09 5.73 27,768 1.15 8.30 1998(2) 9.27 (6.17) 40,270 1.15 8.19 Class B 2002(1) $ 7.96 2.46% $ 4,179 1.95% 7.13% 2001(1) 8.35 1.17 2,426 1.90 7.88 2000(1) 8.89 4.83 1,401 1.90 6.20 1999(1) 9.07 4.90 788 1.90 7.56 1998(2) 9.27 (6.19) 114 1.90 7.44 Class C(1) 2002 $ 7.96 2.44% $ 6,213 1.95% 7.16% 2001 8.35 1.04 4,240 1.91 7.89 2000 8.90 5.16 1,241 1.65 6.46 1999(3) 9.08 (0.28) 1,058 1.55 7.34 Class S(1) 2002 $ 8.06 3.26% $ 6 1.20% 7.77% 2001(4) 8.38 (0.24) -- 0.00 0.00 Class Y 2002(1) $ 7.99 3.44% $ 135,665 0.95% 8.22% 2001(1) 8.38 2.12 155,146 0.90 8.89 2000(1) 8.92 5.94 237,730 0.90 7.26 1999(1) 9.09 5.96 184,666 0.90 8.56 1998(2) 9.27 (6.13) 54,491 0.90 8.44
[WIDE TABLE CONTINUED FROM ABOVE]
RATIO OF RATIO OF NET EXPENSES TO INVESTMENT AVERAGE INCOME NET ASSETS TO AVERAGE NET PORTFOLIO (EXCLUDING ASSETS(EXCLUDING TURNOVER WAIVERS) WAIVERS) RATE ------------------------------------------------------------------------------------ STRATEGIC INCOME FUND Class A 2002(1) 1.28% 7.90% 59% 2001(1) 1.17 8.60 80 2000(1) 1.17 7.06 90 1999(1) 1.21 8.24 40 1998(2) 1.30 8.04 61 Class B 2002(1) 2.03% 7.05% 59% 2001(1) 1.91 7.87 80 2000(1) 1.91 6.19 90 1999(1) 1.96 7.50 40 1998(2) 2.05 7.29 61 Class C(1) 2002 2.03% 7.08% 59% 2001 1.92 7.88 80 2000 1.73 6.38 90 1999(3) 1.90 6.99 40 Class S(1) 2002 1.28% 7.69% 59% 2001(4) 0.00 0.00 80 Class Y 2002(1) 1.03% 8.14% 59% 2001(1) 0.92 8.87 80 2000(1) 0.91 7.25 90 1999(1) 0.93 8.53 40 1998(2) 1.05 8.29 61
(1) Per share data calculated using average shares outstanding method. (2) Commenced operations on July 24, 1998. All ratios for the period have been annualized, except total return and portfolio turnover. (3) Class of shares has been offered since February 1, 1999. All ratios for the period have been annualized, except total return and portfolio turnover. (4) Class of shares has been offered since September 24, 2001. All ratios for the period have been annualized, except total return and portfolio turnover. (5) Total returns do not reflect sales charges. Total return would have been lower had certain expenses not been waived. C-14 Part B Form N-14 FIRST AMERICAN INVESTMENT FUNDS, INC. 800 Nicollet Mall Minneapolis, MN 55402 (800) 677-3863 Statement of Additional Information January __, 2003 This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the Prospectus/Proxy Statement dated January __, 2003, relating to the proposed reorganizations of Large Cap Growth Fund, Health Sciences Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Emerging Markets Fund, Bond IMMDEX(TM) Fund, and High Yield Bond Fund (each an "Acquired Fund"), each a separate series of First American Investment Funds, Inc. ("FAIF"), with and into Large Cap Core Fund, Mid Cap Core Fund, Small Cap Core Fund, International Fund, Fixed Income Fund or Strategic Income Fund, as applicable (each an "Acquiring Fund"), each a separate series of FAIF. A copy of the Prospectus/Proxy Statement may be obtained without charge by calling or writing to FAIF at the telephone number or address set forth above. This Statement of Additional Information has been incorporated by reference into the Prospectus/Proxy Statement. Further information about the Acquired Funds and the Acquiring Funds is contained in their Prospectuses, each dated January 28, 2002, as supplemented, their Statement of Additional Information dated January 28, 2002 ("SAI"), and their Annual Report to Shareholders for the fiscal year ended September 30, 2002 ("Annual Report"). This Statement of Additional Information incorporates by reference the SAI and the Annual Report, each of which accompanies this Statement of Additional Information. DIRECTORS AND EXECUTIVE OFFICERS The directors and executive officers of FAIF are listed below, together with their business addresses and their principal occupations during the past five years. The Board of Directors is generally responsible for the overall operation and management of FAIF. Directors who are "interested persons" (as that term is defined in the 1940 Act) of FAIF are identified with an asterisk. INDEPENDENT DIRECTORS
----------------------------------------------------------------------------------------------------------------------- NUMBER OF PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS AND AGE HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY WITH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR* ----------------------------------------------------------------------------------------------------------------------- Roger A. Director Term expiring earlier Vice President, Cargo - First American None Gibson, 1200 of death, United Airlines, since July Funds Complex: Algonquin Road, resignation, removal, 2001; Vice President, North Fifteen Elk Grove disqualification, or America-Mountain Region for registered Village, IL successor duly United Airlines (1995-2001) investment 60007 (56) elected and companies, qualified. Director including 70 of FAIF since October portfolios 1997 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Andrew M. Director Term expiring earlier Chairman, Hunter, Keith First American None Hunter III, 537 of death, Industries, a diversified Funds Complex: Harrington resignation, removal, manufacturing and services Fifteen Road, Wayzata, disqualification, or management company, since registered Minnesota 55391 successor duly 1975 investment (55)** elected and companies, qualified. Director including 70 of FAIF since January portfolios 1997 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Leonard W. Director Term expiring earlier Owner, Executive and First American None Kedrowski, 16 of death, Management Consulting, Inc., Funds Complex: Dellwood resignation, removal, a management consulting Fifteen Avenue, disqualification, or firm, since 1992; Chief registered Dellwood, successor duly Executive Officer, Creative investment Minnesota 55110 elected and Promotions International, companies, (61) qualified. Director LLC, a promotional award including 70 of FAIF since programs and products portfolios November 1993 company, since 1999; Board member, GC McGuiggan Corporation (dba Smyth Companies), manufacturer of designer doors; acted as CEO of Graphics Unlimited from 1996-1998 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Richard K. Director Term expiring earlier Retired; President and Chief First American None Riederer, 741 of death, Executive Officer, Weirton Funds Complex: Chestnut Road, resignation, removal, Steel (1995-2001); Director, Fifteen Sewickley, disqualification, or Weirton Steel (1993-2001) registered Pennsylvania successor duly investment 15143 (58) elected and companies, qualified. Director including 70 of FAIF since August portfolios 2001 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Joseph D. Director Term expiring earlier Chairman of FAF's and FAIF's First American None Strauss, 8525 of death, Boards from 1993 to Funds Complex: Edinbrook resignation, removal, September 1997 and of FASF's Fifteen Crossing, Suite disqualification, or Board from June 1996 to registered 5, Brooklyn successor duly September 1997; President of investment Park, Minnesota elected and FAF and FAIF from June 1989 companies, 55443 (62) qualified. Director to November 1989; Owner and including 70 of FAIF since Executive Officer, Excensus portfolios September 1991 TM LLC, a consulting firm, since 2001; Owner and President, Strauss Management Company, a Minnesota holding company for various organizational management business ventures, since 1993; Owner, Chairman and Chief Executive Officer, Community Resource Partnerships, Inc., a strategic planning, operations management, government relations, transportation planning and public relations organization, since 1993; attorney at law -----------------------------------------------------------------------------------------------------------------------
2
----------------------------------------------------------------------------------------------------------------------- NUMBER OF PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS AND AGE HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY WITH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR* ----------------------------------------------------------------------------------------------------------------------- Virginia L. Chair; Chair Term three Owner and President, First American None Stringer, 712 Director years. Directors Strategic Management Funds Complex: Linwood Avenue, Term expiring earlier Resources, Inc., a Fifteen St. Paul, of death, management consulting firm, registered Minnesota 55105 resignation, removal, since 1993; Executive investment (58) disqualification, or Consultant for State Farm companies, successor duly Insurance Company since including 70 elected and 1997; formerly President and portfolios qualified. Chair of Director, The Inventure FAIF's Board since Group, a management September 1997; consulting and training Director of FAIF company; President, Scott's, since September 1987 Inc., a transportation company, and Vice President of Human Resources, The Pillsbury Company ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- James M. Wade, Director Term expiring earlier Owner and President, Jim First American None 2802 Wind Bluff of death, Wade Homes, a homebuilding Funds Complex: Circle, resignation, removal, company, since 1999 thirteen Wilmington, disqualification, or registered North Carolina successor duly investment 28409 (59) elected and companies, qualified. Director including 70 of FAIF since August portfolios 2001 -----------------------------------------------------------------------------------------------------------------------
* Includes only directorships in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or any company registered as an investment company under the Investment Company Act. ** On December 4, 2002, Mr. Hunter tendered his resignation from the Board of Directors, effective December 31, 2002. INTERESTED DIRECTOR(S)
----------------------------------------------------------------------------------------------------------------------- NUMBER OF PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS AND AGE HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY WITH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR* ----------------------------------------------------------------------------------------------------------------------- John M. Murphy, Director Term expiring earlier Executive Vice President, First American None Jr., 800 of death, U.S. Bancorp since January Funds Complex: Nicollet Mall, resignation, removal, 1999; Minnesota State thirteen Minneapolis, disqualification, or Chairman - U.S. Bancorp registered Minnesota 55402 successor duly since 2000; Chairman and investment (61) ** elected and Chief Investment Officer, companies, qualified. Director First American Asset including 70 of FAIF since June Management and U.S. Bank portfolios 1999 Trust, N.A., and Executive Vice President, U.S. Bancorp (1991-1999). -----------------------------------------------------------------------------------------------------------------------
* Includes only directorships in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or any company registered as an investment company under the Investment Company Act. ** Mr. Murphy is considered an "interested" Director because of his employment with U.S. Bancorp, U.S. Bancorp Asset Management (and its predecessor, First American Asset Management) and U.S. Bank Trust National Association, and his ownership of securities issued by U.S. Bancorp. 3 OFFICERS
----------------------------------------------------------------------------------------------------------------------- POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS NAME, ADDRESS, AND AGE HELD AND LENGTH OF WITH FUND TIME SERVED ----------------------------------------------------------------------------------------------------------------------- Thomas S. Schreier, President Re-elected by the Chief Executive Officer of U.S. Bancorp Asset Jr., U.S. Bancorp Board annually; Management, Inc. since May 2001; Chief Executive Asset Management, President of FAIF Officer of First American Asset Management from Inc., 800 Nicollet since February December 2000 through May 2001 and of Firstar Mall, Minneapolis, 2001 Investment & Research Management Company from February Minnesota 55402 (40) * 2001 through May 2001; Senior Managing Director and Head of Equity Research of U.S. Bancorp Piper Jaffray from October 1998 through December 2000; Senior Airline Analyst and Director of Equity Research of Credit Suisse First Boston through 1998 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Mark S. Jordahl, U.S. Vice President Re-elected by the Chief Investment Officer of U.S. Bancorp Asset Bancorp Asset - Investments Board annually; Management, Inc. since September 2001; President and Management, Inc. 800 Vice President - Chief Investment Officer, ING Investment Management - Nicollet Mall, Investments of Americas (September 2000 to June 2001); Senior Vice Minneapolis, Minnesota FAIF since President and Chief Investment Officer, ReliaStar 55402 (42) * September 2001 Financial Corp. (January 1998 to September 2000); Executive Vice President and Managing Director, Washington Square Advisers (January 1996 to December 1997) ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Jeffery M. Wilson, Vice President Re-elected by the Senior Vice President of U.S. Bancorp Asset Management U.S. Bancorp Asset - Administration Board annually; since May 2001; Senior Vice President of First Management, Inc. 800 Vice President - American Asset Management through May 2001 Nicollet Mall, Administration of Minneapolis, Minnesota FAIF since March 55402 (46) * 2000 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Robert H. Nelson, U.S. Treasurer Re-elected by the Senior Vice President of U.S. Bancorp Asset Management Bancorp Asset Board annually; since May 2001; Senior Vice President of First Management, Inc. 800 Treasurer of FAIF American Asset Management from 1998 through May 2001 Nicollet Mall, since March 2000 and of Firstar Investment & Research Management Minneapolis, Minnesota Company from February 2001 through May 2001; Senior 55402 (39) * Vice President of Piper Capital Management Inc. through 1998 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- James D. Alt, 50 South Secretary Re-elected by the Partner, Dorsey & Whitney LLP, a Minneapolis- based Sixth Street, Suite Board annually; law firm 1500, Minneapolis, Assistant Minnesota 55402 (51) Secretary of FAIF from September 1998 through June 2002. Secretary of FAIF since June 2002. ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Michael J. Radmer, 50 Assistant Re-elected by the Partner, Dorsey & Whitney LLP, a Minneapolis- based South Sixth Street, Secretary Board annually; law firm Suite 1500, Assistant Secretary Minneapolis, Minnesota of FAIF since March 55402 (57) 2000; Secretary of FAIF from September 1999 through March 2000 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Kathleen L. Prudhomme, Assistant Re-elected by the Partner, Dorsey & Whitney LLP, a Minneapolis- based 50 South Sixth Street, Secretary Board annually; law firm Suite 1500, Assistant Minneapolis, Minnesota Secretary of FAIF 55402 (49) since September 1998 -----------------------------------------------------------------------------------------------------------------------
4
----------------------------------------------------------------------------------------------------------------------- POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS NAME, ADDRESS, AND AGE HELD AND LENGTH OF WITH FUND TIME SERVED ----------------------------------------------------------------------------------------------------------------------- Douglas G. Hess, 612 Assistant Re-elected by the Assistant Vice President, Fund Compliance E. Michigan Street, Secretary Board annually; Administrator, U.S. Bancorp Fund Services, LLC (fka Milwaukee, WI 53202 Assistant Firstar Mutual Fund Services, LLC) since March 1997 (35) * Secretary of FAIF since September 2001 -----------------------------------------------------------------------------------------------------------------------
* Messrs. Schreier, Jordahl, Wilson, and Nelson are each officers of U.S. Bancorp Asset Management, Inc., which serves as investment adviser for FAIF. Mr. Hess is an officer of U.S. Bancorp Fund Services, LLC, which is a subsidiary of U.S. Bancorp and which serves as Co-Administrator for FAIF. STANDING COMMITTEES OF THE BOARD OF DIRECTORS There are currently three standing committees of the FAIF Board of Directors: Audit Committee, Pricing Committee and Nominating Committee.
----------------------------------------------------------------------------------------------------------------------- NUMBER OF FUND COMPLEX COMMITTEE MEETINGS HELD DURING LAST COMMITTEE FUNCTION COMMITTEE MEMBERS FISCAL YEAR ----------------------------------------------------------------------------------------------------------------------- Audit Committee The Committee will recommend annually to the Leonard Kedrowski (Chair) 8 Board of Directors a firm of independent Roger Gibson certified public accountants to audit the Richard Riederer books and records of the funds for the ensuing Virginia Stringer year. In connection therewith, the Committee (ex-officio) will monitor that firm's performance, including a review of each audit and review of fees paid, confer with that firm as to the funds' financial statements and internal controls, evaluate the firm's independence, review procedures to safeguard portfolio securities, review the purchase by the funds from the firm of nonaudit services, facilitate communications with management and service providers and review funds' back-up procedures and disaster recovery plans. ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Pricing The Committee is responsible for valuing Joseph Strauss (Chair) 8 Committee portfolio securities for which market Andrew Hunter quotations are not readily available, pursuant John Murphy to procedures established by the Board of Virginia Stringer Directors. (ex-officio) ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Nominating The Committee is responsible for recommending Andrew Hunter (Chair) 2 Committee to the Board of Directors (1) nominees for Roger Gibson election as directors, (2) a successor to the Richard Riederer Chair when a vacancy occurs, and (3) Virginia Stringer compensation plans and arrangements for the (ex-officio) directors; and reviewing with the Chair, the Chair's recommended Committee assignments. -----------------------------------------------------------------------------------------------------------------------
FUND SHARES OWNED BY THE DIRECTORS The information in the table below discloses the dollar ranges of (i) each Director's beneficial ownership in FAIF, and (ii) each Director's aggregate beneficial ownership in all funds within the First American Funds complex. 5
----------------------------------------------------------------------------------------------------------------------- NAME OF DIRECTOR DOLLAR RANGE OF EQUITY SECURITIES IN FAIF AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN THE FIRST AMERICAN FUNDS COMPLEX* ----------------------------------------------------------------------------------------------------------------------- Virginia Stringer Over $100,000 Over $100,000 ----------------------------------------------------------------------------------------------------------------------- Leonard Kedrowski Over $100,000 Over $100,000 ----------------------------------------------------------------------------------------------------------------------- Roger Gibson $10,001-$50,000 $10,001-$50,000 ----------------------------------------------------------------------------------------------------------------------- Andrew Hunter None Over $100,000 ----------------------------------------------------------------------------------------------------------------------- Joseph Strauss Over $100,000 Over $100,000 ----------------------------------------------------------------------------------------------------------------------- Richard Riederer $50,001-$100,000 $50,001-$100,000 ----------------------------------------------------------------------------------------------------------------------- James Wade Over $100,000 Over $100,000 ----------------------------------------------------------------------------------------------------------------------- John Murphy $1 - $10,000 Over $100,000 -----------------------------------------------------------------------------------------------------------------------
* The dollar range disclosed is based on the value of the securities as of October 1, 2002. As of October 1, 2002, none of the independent Directors or their immediate family members owned, beneficially, or of record, any securities in (i) an investment advisor or principal underwriter of the Fund or (ii) a person (other than a registered investment company) directly of indirectly controlling, controlled by, or under common control with an investment advisor or principal underwriter of the Fund. APPROVAL OF INVESTMENT ADVISORY CONTRACT With respect to all Funds, the Board of Directors last reviewed the Advisory Agreement and approved its continuation on June 5, 2002. In connection with its re-approval, the Board of Directors reviewed and considered the following factors with respect to each Fund: o the terms of the Advisory Agreement, including the nature and scope of services to be provided by the Advisor to the Fund; o the structure and rate of the fees charged by the Advisor under the Advisory Agreement (both before and after fee waivers by the Advisor), as compared to the advisory fees paid by similar funds managed by other investment advisors; o the historical profitability of the Advisory Agreement to the Advisor with respect to the Fund, and the other benefits that may be received by the Advisor or its affiliates in providing services to the Fund (including soft dollar benefits received by the Advisor in addition to its investment advisory fee); o the total fees and expenses paid by the Fund, as compared to the total fees and expenses paid by similar funds managed by other investment advisors; o the historical investment performance of the Fund, as compared to the historical investment performance of (a) similar funds managed by other investment advisors, and (b) one or more unmanaged "benchmark" indices for the Fund; o information and reports concerning the management and performance of each Fund which were provided to the Board on a regular basis throughout the course of the year; o an in-depth review of strategies and performance which the Board performs with respect to each Fund at least annually; 6 o the steps taken by the Advisor since the Board's last re-approval of the Advisory Agreement to improve the performance of certain Funds, and the changes in performance of such Funds; and o the nature and scope of the investment advisory services that historically have been provided by the Advisor to the Fund, and the ability of the Advisor to continue to provide the same level and quality of investment advisory services to the Fund in light of the experience and qualifications of the Advisor and its personnel, the Advisor's financial condition, and the terms of the Advisory Agreement. The "similar funds managed by other investment advisors" referred to above were selected by Lipper Inc., an organization which is not affiliated with the Advisor. The information concerning such funds was compiled and provided to the Board of Directors by Lipper Inc. The Board of Directors was led in its review and deliberations by James M. Wade, a "disinterested" director of the Funds whom the Board has designated as Fund Review Liaison. The Board was advised and assisted by counsel to the independent directors and fund counsel. On the basis of the Board's review and analysis of the foregoing information, the Board found in the exercise of its business judgment that the terms of the Advisory Agreement are fair and reasonable and in the best interest of shareholders of each Fund. The Board also performed a similar, but less extensive, analysis of each sub-advisory agreement with respect to the Funds and found in the exercise of its business judgment that the terms of each such agreement are fair and reasonable and in the best interest of shareholders of the relevant Funds. No single factor or group of factors was deemed to be determinative by the Board in making these judgments. Instead, the Board based its decisions on the totality of the information which it requested and reviewed. COMPENSATION The First American Family of Funds (which includes FAIF; First American Funds, Inc. ("FAF"); First American Strategy Funds, Inc. ("FASF"); First American Insurance Portfolios, Inc. ("FAIP"); and ten separate closed-end funds (American Strategic Income Portfolio Inc., American Strategic Income Portfolio Inc. II, American Strategic Income Portfolio Inc. III, American Municipal Income Portfolio Inc., Minnesota Municipal Income Portfolio Inc., Minnesota Municipal Income Fund Inc. II, American Select Portfolio Inc., American Municipal Term Trust Inc. III., Minnesota Municipal Term Trust Inc. II, and American Income Fund, Inc.), collectively referred to as the First American Closed-End Funds ("FACEF")) currently pays only directors of the funds who are not paid employees or affiliates of the Funds, a fee of $40,000 per year ($60,000 in the case of the Chair) plus $10,000 ($15,000 in the case of the Chair) per meeting of the Board attended and $2,500 per Nominating Committee or Audit Committee meeting attended ($3,750 in the case of a committee chair) and reimburses travel expenses of directors and officers to attend Board meetings. In the event of telephonic Board meetings, each participating director receives a fee of $5,000 ($7,500 in the case of the Chair), and in the event of all Pricing Committee meetings and telephonic Nominating or Audit Committee meetings, each participating director receives a fee of $1,250 ($1,875 in the case of the committee chair). In addition, directors may receive a per diem fee of $2,500 per day, plus travel expenses when directors travel out of town on Fund business. However, directors do not receive the $2,500 per diem amount plus the foregoing Board or committee fee for an out-of-town committee or Board meeting but instead receive the greater of the total per diem fee or meeting fee. Legal fees and expenses are also paid to Dorsey & Whitney LLP, the law firm of which James D. Alt, Secretary, and Michael J. Radmer, and Kathleen L. Prudhomme, Assistant Secretaries of FAIF, FAF, FASF, FAIP and FACEF, are partners. The following table sets forth information concerning aggregate compensation paid to each director of FAIF (i) by FAIF (column 2), and (ii) by FAIF, FAF, FASF, FAIP and FACEF collectively (column 5) during the fiscal year ended September 30, 2002. No executive officer or affiliated person of FAIF received any compensation from FAIF in excess of $60,000 during such fiscal year: 7
-------------------------------------------------------------------------------------------------------------- PENSION OR TOTAL AGGREGATE RETIREMENT COMPENSATION FROM NAME OF PERSON, POSITION COMPENSATION BENEFITS ACCRUED ESTIMATED REGISTRANT AND FROM AS PART OF FUND ANNUAL BENEFITS FUND COMPLEX PAID REGISTRANT (1) EXPENSES UPON RETIREMENT TO DIRECTORS (2) -------------------------------------------------------------------------------------------------------------- Robert J. Dayton (3) $16,073 -0- -0- $ 58,616 -------------------------------------------------------------------------------------------------------------- Andrew S. Duff (4) -0- N/A N/A -0- -------------------------------------------------------------------------------------------------------------- Roger A. Gibson, Director 27,210 -0- -0- 104,350 -------------------------------------------------------------------------------------------------------------- Andrew M. Hunter III, Director 21,640 -0- -0- 87,500 -------------------------------------------------------------------------------------------------------------- Leonard W. Kedrowski, Director 38,043 -0- -0- 153,825 -------------------------------------------------------------------------------------------------------------- John M. Murphy, Jr., Director (5) -0- N/A N/A -0- -------------------------------------------------------------------------------------------------------------- Richard K. Riederer, Director 36,469 -0- -0- 133,000 -------------------------------------------------------------------------------------------------------------- Joseph D. Strauss, Director 28,130 -0- -0- 102,875 -------------------------------------------------------------------------------------------------------------- Virginia L. Stringer, Director & 47,599 -0- -0- 176,125 Chair -------------------------------------------------------------------------------------------------------------- James M. Wade, Director 26,392 -0- -0- 96,250 --------------------------------------------------------------------------------------------------------------
(1) Included in the Aggregate Compensation From Registrant under column 2 are amounts deferred by Directors pursuant to the Deferred Compensation Plan discussed below. Pursuant to this Plan, compensation was deferred for the following directors: Roger A. Gibson, $12,904; Andrew M. Hunter III, $21,640; Leonard W. Kedrowski, $38,043; Joseph D. Strauss, $730; and Virginia L. Stringer, $6,399. (2) Deferred compensation is included in the Total Compensation under column 5 for the following directors: Roger A. Gibson, $52,175; Andrew M. Hunter III, $87,500; Leonard W. Kedrowski, $153,825; Joseph D. Strauss, $2,950; and Virginia L. Stringer, $25,875. (3) On May 15, 2002, Robert J. Dayton tendered his resignation from the Board of Directors of the Funds, effective September 30, 2002. (4) At the August 30, 2001 shareholder meeting, Andrew S. Duff was elected to the Board of Directors. Mr. Duff, who was an "interested person," did not receive any compensation and resigned from the Board of Directors on December 5, 2001. (5) As an "interested person," John M. Murphy do not receive compensation from FAIF, FAF, FASF, FAIP or FACEF for his position on the Board of Directors. ---------- The directors may elect to defer payment of up to 100% of the fees they receive in accordance with a Deferred Compensation Plan (the "Plan"). Under the Plan, a director may elect to have his or her deferred fees treated as if they had been invested in the shares of one or more funds and the amount paid to the director under the Plan will be determined based on the performance of such investments. Distributions may be taken in a lump sum or over a period years. The Plan will remain unfunded for federal income tax purposes under the Internal Revenue Code of 1986, as amended. Deferral of director fees in accordance with the Plan will have a negligible impact on Fund assets and liabilities and will not obligate the Funds to retain any director or pay any particular level of compensation. 8 FUND PERFORMANCE Linked Performance. Advertisements and other sales literature for the Funds' Class Y shares may include linked performance where there is a performance history of less than five years. That is, in situations where a Fund has a share class with an inception date reflecting a performance history longer than five years, but that same Fund's Class Y shares have an inception date reflecting a shorter performance history, the Fund may advertise Class Y share performance "linked" to the inception date of the older share class. This performance presentation will not be adjusted to reflect actual Class Y share fees and expenses, and the Fund will (additionally) provide performance based on the Fund's actual Class Y share inception date. Fund prospectuses and annual report(s) will continue to reflect actual share class performance from actual inception dates. Performance Presentation. Advertisements and other sales literature for the Funds may refer to a Fund's "average annual total return" and "cumulative total return." In addition, each Fund may provide yield calculations in advertisements and other sales literature. All such yield and total return quotations are based on historical earnings and are not intended to indicate future performance. The return on and principal value of an investment in any of the Funds will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Average Annual Total Return. Average annual total return is the average annual compounded rate of return on a hypothetical $1,000 investment made at the beginning of the advertised period. Average annual total return figures are computed according to the following formula: P(1 + T)(n) = ERV Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value at the end of the period of a hypothetical $1,000 payment made at the beginning of such period This calculation deducts the maximum sales charge from the initial hypothetical $1,000 investment, assumes all dividends and capital gains distributions are reinvested at net asset value on the appropriate reinvestment dates as described in the applicable Prospectus, and includes all recurring fees, such as investment advisory and management fees, charged to all shareholder accounts. For Class B and Class C Shares, the calculation assumes the maximum deferred sales load is deducted at the times, in the amounts and under the terms disclosed in the applicable Prospectus. Average annual total return quotations may be accompanied by quotations that do not reflect the sales charges, and therefore will be higher. The Advisor and Distributor have waived a portion of their fees on a voluntary basis, thereby increasing total return and yield. These fees may or may not be waived in the future in the Advisor's or Distributor's discretion. 9 Cumulative Total Return. Cumulative total return is calculated by subtracting a hypothetical $1,000 investment in a Fund from the redeemable value of such investment at the end of the advertised period, dividing such difference by $1,000 and multiplying the quotient by 100. Cumulative total return is computed according to the following formula: CTR = (ERV-P) 100 ----- P Where: CTR = Cumulative total return; ERV = ending redeemable value at the end of the period of a hypothetical $1,000 payment made at the beginning of such period; and P = initial payment of $1,000. This calculation assumes all dividends and capital gain distributions are reinvested at net asset value on the appropriate reinvestment dates as described in the applicable Prospectus and includes all recurring fees, such as investment advisory and management fees, charged to all shareholder accounts. Based on the foregoing, the cumulative and the average annual total returns for each class of the Funds from inception through September 30, 2002, were as set forth below. The performance for Class A, Class B, Class C and Class S Shares will normally be lower than for Class Y Shares because Class A, Class B, Class C and Class S Shares are subject to sales and distribution charges and/or shareholder servicing fees not charged to Class Y Shares. Inception dates of Share Classes are listed in parentheses.
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Large Cap Core Fund(1)(2) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 50.06 41.78 5.40 4.62 (21.45) (25.76) (4.30) (5.38) na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 33.13 25.78 3.77 3.01 (21.50) (25.81) (6.35) (7.40) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 41.10 34.41 4.56 3.90 (13.16) (15.80) (3.19) (4.02) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) (39.52) (41.04) (13.09) (13.71) (22.06) (25.95) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (41.93) (43.44) (14.07) (14.70) (22.09) (25.98) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (30.58) (31.80) (9.69) (10.13) (13.54) (15.93) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (19.76) (21.36) (19.48) (21.05) (22.06) (23.62) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (19.81) (21.40) (19.52) (21.10) (22.10) (23.66) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (15.82) (17.10) (15.59) (16.85) (13.53) (14.49) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 50.06 na 5.40 na (21.48) na (4.30) na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 33.13 na 3.77 na (21.54) na (6.35) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 41.09 na 4.56 na (13.18) na (3.19) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 59.81 na 4.92 na (21.23) na (4.06) na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 41.34 na 3.61 na (21.30) na (6.11) na na na on distributions) ---------------------------------------------------------------------------------------------------------------------------------
10
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 48.42 na 4.13 na (13.02) na (3.03) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- LARGE CAP GROWTH FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) (59.03) (61.28) (30.00) (31.57) (27.08) (31.09) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (59.27) (61.51) (30.17) (31.73) (27.08) (31.09) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (47.00) (48.81) (22.42) (23.49) (16.62) (19.09) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 39.36 39.36 4.35 4.35 (27.64) (31.26) (7.13) (7.47) na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 25.80 25.80 2.99 2.99 (27.64) (31.26) (7.85) (8.19) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 26.66 26.66 3.08 3.08 (16.97) (19.19) (5.62) (5.87) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (25.68) (27.16) (25.32) (26.79) (27.56) (28.99) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (25.68) (27.16) (25.32) (26.79) (27.56) (28.99) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (20.54) (21.73) (20.25) (21.42) (16.92) (17.80) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) (59.00) na (29.98) na (27.08) na na na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (59.25) na (30.15) na (27.08) na na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (46.98) na (22.40) na (16.62) na na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) (25.97) na (5.71) na (26.87) na (6.63) na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (28.95) na (6.46) na (26.87) na (7.38) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (21.26) na (4.56) na (16.50) na (5.26) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- HEALTH SCIENCES FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 4.05 (1.66) 0.60 (0.25) (19.61) (24.02) (3.13) (4.22) na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (3.33) (8.63) (0.51) (1.34) (19.61) (24.02) (4.45) (5.52) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 1.94 (2.55) 0.29 (0.39) (12.04) (14.75) (2.66) (3.50) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) (0.93) (0.93) (0.14) (0.14) (20.21) (24.20) (3.83) (4.12) na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (8.01) (8.01) (1.25) (1.25) (20.21) (24.20) (5.15) (5.47) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (1.84) (1.84) (0.28) (0.28) (12.41) (14.86) (3.17) (3.40) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (10.86) (11.76) (4.22) (4.59) (20.25) (21.85) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (13.45) (14.32) (5.28) (5.64) (20.25) (21.85) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (8.71) (9.43) (3.36) (3.65) (12.43) (13.41) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 4.05 na 0.60 na (19.61) na (3.13) na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (3.33) na (0.51) na (19.61) na (4.45) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 1.94 na 0.29 na (12.04) na (2.66) na na na on distributions and sale of fund shares) ---------------------------------------------------------------------------------------------------------------------------------
11
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 5.73 na 0.84 na (19.44) na (2.89) na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (1.97) na (0.30) na (19.44) na (4.24) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 3.11 na 0.46 na (11.93) na (2.50) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- MID CAP CORE FUND(1)(2) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 85.11 74.93 8.30 7.51 (6.64) (11.77) (0.02) (1.15) na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 48.16 40.02 5.22 4.45 (6.64) (11.77) (2.92) (4.01) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 56.06 48.58 5.93 5.26 (4.07) (7.23) (0.68) (1.56) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 7.65 5.61 2.08 1.54 (7.36) (11.99) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (4.74) (6.78) (1.35) (1.94) (7.36) (11.99) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 3.15 1.51 0.87 0.42 (4.52) (7.36) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (4.05) (5.97) (3.99) (5.88) (7.20) (9.06) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (4.05) (5.97) (3.99) (5.88) (7.20) (9.06) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (3.24) (4.78) (3.19) (4.70) (4.42) (5.56) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 85.02 na 8.29 na (6.58) na (0.03) na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 48.10 na 5.22 na (6.58) na (2.93) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 56.00 na 5.93 na (4.04) na (0.69) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 242.86 na 10.14 na (6.43) na 0.22 na 8.57 na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 165.74 na 7.96 na (6.43) na (2.64) na 6.11 na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 165.99 na 7.97 na (3.95) na (0.49) na 6.41 na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- MID CAP GROWTH FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 195.12 178.94 9.09 8.60 (22.74) (27.01) (4.60) (5.68) 7.32 6.72 --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 121.16 109.04 6.59 6.11 (22.74) (27.01) (9.23) (10.25) 4.29 3.71 on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 164.20 150.82 8.12 7.67 (13.96) (16.59) (3.04) (3.88) 6.52 5.98 on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) (25.06) (25.66) (6.72) (6.90) (23.47) (27.30) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (39.90) (40.50) (11.55) (11.77) (23.47) (27.30) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (16.84) (17.32) (4.35) (4.48) (14.41) (16.76) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (30.43) (31.15) (9.44) (9.69) (23.30) (24.90) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (41.33) (41.94) (13.56) (13.80) (23.30) (24.90) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (20.72) (21.34) (6.15) (6.35) (14.31) (15.29) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 195.12 na 9.09 na (22.74) na (4.60) na (7.32) na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 121.16 na 6.59 na (22.74) na (9.23) na 4.29 na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 164.20 na 8.12 na (13.96) na (3.04) na 6.52 na on distributions and sale of fund shares) ---------------------------------------------------------------------------------------------------------------------------------
12
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) (2.31) na (0.41) na (22.49) na (4.34) na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (23.60) na (4.68) na (22.49) na (8.93) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 1.00 na 0.18 na (13.81) na (2.87) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- SMALL CAP CORE FUND (1)(2) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 147.42 133.86 9.10 8.51 (4.56) (9.83) 0.44 (0.69) 9.69 9.07 --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 90.43 79.99 6.39 5.81 (5.80) (11.01) (1.64) (2.75) 6.86 6.26 on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 92.41 82.96 6.49 5.98 (1.27) (4.59) 0.00 (0.89) 6.95 6.41 on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 52.74 52.74 5.76 5.76 (5.23) (9.64) (0.24) (0.50) na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 29.35 29.35 3.46 3.46 (6.54) (10.95) (2.40) (2.68) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 34.95 34.95 4.04 4.04 (1.58) (4.29) (0.54) (0.74) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (3.06) (4.94) (3.02) (4.87) (5.09) (6.91) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (4.33) (6.20) (4.26) (6.10) (6.33) (8.14) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (2.06) (3.57) (2.03) (3.51) (1.59) (2.72) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) na na (4.48) na 0.49 na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes na na (5.73) na (1.60) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes na na (1.22) na 0.04 na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 153.54 na 9.36 na (4.19) na 0.74 na 9.96 na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 95.25 na 6.64 na (5.40) na (1.33) na 7.13 na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 96.34 na 6.70 na (1.08) na 0.23 na 7.16 na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH FUND (1)(2) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 175.89 160.69 6.75 6.36 (22.07) (26.38) (3.31) (4.40) 6.51 5.91 --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 108.80 97.29 4.85 4.47 (22.07) (26.38) (5.76) (6.82) 3.82 3.24 on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 125.24 113.92 5.36 5.01 (13.55) (16.20) (2.41) (3.26) 4.96 4.44 on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) (15.70) (16.88) (4.02) (4.34) (22.70) (26.57) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (23.54) (24.71) (6.24) (6.58) (22.70) (26.57) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (11.56) (12.50) (2.90) (3.15) (13.94) (16.31) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (22.36) (23.16) (6.68) (6.94) (22.69) (24.22) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (29.26) (29.99) (9.03) (9.28) (22.69) (24.22) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (16.99) (17.64) (4.96) (5.16) (13.93) (14.87) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 175.89 na 6.75 na (22.07) na (3.31) na 6.51 na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 108.80 na 4.85 na (22.07) na (5.76) na 3.82 na on distributions) ---------------------------------------------------------------------------------------------------------------------------------
13
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 125.24 na 5.36 na (13.55) na (2.41) na 4.96 na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 178.30 na 6.81 na (22.00) na (3.14) na 6.60 na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 110.87 na 4.92 na (22.00) na (5.58) na 3.93 na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 126.75 na 5.41 na (13.51) na (2.29) na 5.03 na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- INTERNATIONAL FUND (1)(2) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 9.21 3.22 1.05 0.38 (18.28) (22.76) (3.88) (4.96) na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (2.74) (8.07) (0.33) (1.00) (18.28) (22.76) (5.84) (6.90) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 4.70 0.06 0.55 0.01 (11.23) (13.98) (3.40) (4.23) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 9.15 9.15 1.16 1.16 (18.94) (22.99) (4.59) (4.87) na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (2.56) (2.56) (0.34) (0.34) (18.94) (22.99) (6.52) (6.82) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 4.97 4.97 0.64 0.64 (11.63) (14.11) (3.90) (4.12) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (14.68) (16.34) (14.46) (16.10) (18.97) (20.60) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (14.68) (16.34) (14.46) (16.10) (18.97) (20.60) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (11.74) (13.07) (11.57) (12.87) (11.65) (12.65) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 10.76 na 1.22 na (18.51) na (3.95) na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (1.38) na (0.17) na (18.51) na (5.92) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 5.92 na 0.68 na (11.36) na (3.45) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 13.20 na 1.47 na (18.05) na (3.61) na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 1.78 na 0.21 na (18.05) na (5.39) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 8.93 na 1.01 na (11.08) na (3.00) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- EMERGING MARKETS FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) (37.60) (41.02) (5.17) (5.77) 5.96 0.16 (10.75) (11.75) na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (37.68) (41.10) (5.18) (5.78) 5.96 0.16 (10.76) (11.77) na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (30.11) (32.85) (3.95) (4.38) 3.66 0.10 (8.17) (8.88) na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) (17.19) (18.85) (4.45) (4.91) 5.06 0.06 na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (17.19) (18.85) (4.45) (4.91) 5.06 0.06 na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (13.75) (15.08) (3.50) (3.86) 3.11 0.04 na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (38.75) (39.36) (16.82) (17.13) 5.17 3.11 na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (38.75) (39.36) (16.13) (17.13) 5.17 3.11 na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (31.00) (31.49) (13.01) (13.24) 3.18 1.91 na na na na on distributions and sale of fund shares) ---------------------------------------------------------------------------------------------------------------------------------
14
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) (37.72) na (5.19) na 5.77 na (10.78) na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (37.87) na (5.21) na 5.64 na (10.82) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (30.23) na (3.97) na 3.55 na (8.20) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) (36.99) na (5.06) na 6.10 na (10.57) na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (37.15) na (5.09) na 5.96 na (10.61) na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (29.66) na (3.88) na 3.75 na (8.06) na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- FIXED INCOME FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 198.28 185.70 7.68 7.36 5.77 1.32 6.70 5.77 6.48 6.02 --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 112.72 103.75 5.24 4.93 3.78 (0.59) 4.38 3.47 4.02 3.57 on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 108.50 100.55 5.10 4.82 3.48 0.75 4.20 3.45 3.95 3.56 on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 65.03 65.03 6.36 6.36 5.12 0.12 5.95 5.63 na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 39.69 39.69 4.20 4.20 3.42 (1.58) 3.92 3.58 na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 37.78 37.78 4.02 4.02 3.09 0.02 3.75 3.47 na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) 20.32 19.16 5.18 4.91 5.02 3.02 na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes 12.24 11.16 3.21 2.93 3.33 1.35 na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes 11.96 11.07 3.13 2.91 3.03 1.81 na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 198.29 na 7.68 na 5.77 na 6.70 na 6.48 na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 112.73 na 5.24 na 3.78 na 4.38 na 4.02 na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 108.51 na 5.10 na 3.49 na 4.21 na 3.95 na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 74.19 na 6.62 na 6.04 na 6.97 na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 41.78 na 4.12 na 3.94 na 4.56 na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 40.77 na 4.03 na 3.64 na 4.38 na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- BOND IMMDEX FUND(1)(2) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 83.46 75.68 8.17 7.57 6.18 1.68 7.10 6.17 na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 53.01 46.53 5.66 5.07 3.84 (0.55) 4.64 3.74 na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 49.52 44.04 5.35 4.84 3.72 0.97 4.46 3.70 na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 24.67 21.67 6.35 5.62 5.39 0.39 na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 15.77 12.77 4.17 3.41 3.36 (1.64) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes 15.04 12.64 3.99 3.38 3.26 0.19 na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) 6.14 4.09 6.03 4.02 5.41 3.38 na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes 4.04 2.01 3.97 1.98 3.33 1.32 na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes 3.85 2.24 3.79 2.20 3.26 2.02 na na na na on distributions and sale of fund shares) ---------------------------------------------------------------------------------------------------------------------------------
15
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 83.57 na 8.18 na 6.20 na 7.11 na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 53.07 na 5.67 na 3.85 na 4.65 na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 49.58 na 5.35 na 3.73 na 4.46 na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 173.25 na 8.20 na 6.44 na 7.36 na 7.26 na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 100.39 na 5.60 na 4.00 na 4.80 na 4.61 na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 95.81 na 5.41 na 3.88 na 4.61 na 4.50 na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) 10.22 5.57 2.35 1.30 3.19 (1.18) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (2.84) (6.94) (0.69) (1.70) 0.08 (4.15) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes 1.61 (1.83) 0.38 (0.44) 1.99 (0.69) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) 6.93 5.34 1.61 1.25 2.46 (2.31) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (4.76) (6.35) (1.16) (1.56) (0.36) (5.13) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (0.28) (1.55) (0.07) (0.37) 1.54 (1.38) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) 8.54 7.41 2.26 1.97 2.44 0.53 na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (2.21) (3.22) (0.61) (0.89) (0.37) (2.26) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes 1.51 0.67 0.41 0.18 1.54 0.36 na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) 10.29 na 2.37 na 3.26 na na na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (2.47) na (0.60) na 0.46 na na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes 1.81 na 0.43 na 2.04 na na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) 11.32 na 2.59 na 3.44 na na na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (2.25) na (0.54) na 0.23 na na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes 2.22 na 0.53 na 2.14 na na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND(1) --------------------------------------------------------------------------------------------------------------------------------- Class A (return before taxes) (12.79) (16.46) (11.85) (15.28) (6.66) (10.60) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (15.82) (19.36) (14.67) (17.99) (9.74) (13.55) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class A (return after taxes (11.54) (14.42) (10.69) (13.37) (3.97) (6.40) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class B (return before taxes) (13.26) (17.24) (12.29) (16.01) (7.26) (11.54) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (16.05) (20.04) (14.90) (18.63) (10.09) (14.37) na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class B (return after taxes (11.81) (15.00) (10.94) (13.91) (4.35) (6.97) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class C (return before taxes) (13.36) (15.01) (12.38) (13.92) (7.34) (9.07) na na na na --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (16.11) (17.73) (14.95) (16.47) (10.13) (11.84) na na na na on distributions) ---------------------------------------------------------------------------------------------------------------------------------
16
--------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE AVERAGE AVERAGE AVERAGE AVERAGE SINCE ANNUAL ANNUAL ANNUAL ANNUAL INCEPTION SINCE INCEPTION ONE YEAR FIVE YEAR TEN YEAR --------------------------------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH --------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------------------- % % % % % % % % % % --------------------------------------------------------------------------------------------------------------------------------- Class C (return after taxes (11.87) (13.18) (11.00) (12.21) (4.39) (5.46) na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class S (return before taxes) (8.44) na (8.31) na (6.66) na na na na na --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (11.45) na (11.28) na (9.74) na na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class S (return after taxes (8.05) na (7.92) na (3.98) na na na na na on distributions and sale of fund shares) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return before taxes) (12.38) na (11.47) na (6.33) na na na na na --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (15.49) na (14.37) na (9.49) na na na na na on distributions) --------------------------------------------------------------------------------------------------------------------------------- Class Y (return after taxes (11.25) na (10.42) na (3.77) na na na na na on distributions and sale of fund shares) ---------------------------------------------------------------------------------------------------------------------------------
(1) Inception dates for each Fund are as follows: Large Cap Core Fund Class A (1/9/95), Class B (3/1/99), Class C (9/24/01), Class S (11/27/00), Class Y (12/29/92); Large Cap Growth Fund Class A (12/18/92), Class B (8/15/94), Class C (2/1/99), Class S (9/24/01), Class Y (8/2/94); Health Sciences Fund Class A (1/31/96), Class B (1/31/96), Class C (2/1/00), Class S (9/24/01), Class Y (1/312/96); Mid Cap Core Fund Class A (1/9/95), Class B (3/1/99), Class C (9/24/01), Class S (12/11/00), Class Y (12/28/89); Mid Cap Growth Fund Class A (7/31/98), Class B (7/31/98), Class C (2/1/99), Class S (9/24/01), Class Y (2/4/94); Small Cap Core Fund Class A (5/6/92), Class B (3/6/95), Class C (9/24/01), Class S (12/31/93), Class Y (5/6/92); Small Cap Growth Fund Class A (7/31/98), Class B (7/31/98), Class C (2/1/99), Class S (9/24/01), Class Y (7/31/98); International Fund Class A (1/9/95), Class B (3/1/99), Class C (9/24/01), Class S (11/27/00), Class Y (12/29/92); Emerging Markets Fund Class A (7/31/98), Class B (7/31/98), Class C (2/1/99), Class S (9/24/01), Class Y (7/31/98); Fixed Income Fund Class A (12/22/87), Class B (8/15/94), Class C (2/1/99), Class S (9/24/01), Class Y (4/4/94); Bond IMMDEX Fund Class A (1/9/95), Class B (3/1/99), Class C (9/24/01), Class S (12/11/00), Class Y (12/29/89); Strategic Income Fund Class A (7/20/98), Class B (7/20/98), Class C (2/1/99), Class S (9/24/01), Class Y (7/20/98); High Yield Bond Fund Class A (8/30/01), Class B (8/30/01), Class C (8/30/01), Class S (9/24/01), Class Y (8/30/01). (2) Firstar Large Cap Core Fund is the accounting survivor of the reorganization transaction with First American Large Cap Core Fund, consummated on September 24, 2001. Firstar Mid Cap Core Fund is the accounting survivor of the reorganization transaction with First American Mid Cap Core Fund, consummated on September 24, 2001. Firstar Small Cap Core Fund is the accounting survivor of the reorganization transaction with First American Small Cap Core Fund, consummated on September 24, 2001. Piper Small Company Growth Fund is the accounting survivor of First American Small Cap Growth Fund, consummated on July 31, 1998. Effective September 12, 1996, shareholders of Piper Small Company Growth Fund approved a change in the Fund's investment objective from high total investment return consistent with prudent investment risk to long-term capital appreciation. In connection with this change, the fund's investment policies were revised accordingly. Firstar International Growth Fund is the accounting survivor of the reorganization transaction with First American International Fund, consummated on September 24, 2001. Firstar Bond IMMDEX Fund is the accounting survivor of the reorganization transaction with First American Bond IMMDEX Fund, consummated on September 24, 2001. 17 FIRST AMERICAN LARGE CAP CORE FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) SEPTEMBER 30, 2002 (UNAUDITED)
FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN LARGE LARGE CAP HEALTH FUNDS LARGE CAP GROWTH GROWTH SCIENCES CAP CORE OPPORTUNITIES FUND FUND FUND ADJUSTMENTS FUND (A) --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value* $ 542,248 $ 24,509 $ 286,042 $ -- $ 852,799 Dividends and interest receivable 596 2 305 -- 903 Collateral for securities loaned, at value 271,641 11,168 131,167 -- 413,976 Receivable for securities sold 5,994 39 1,594 -- 7,627 Capital shares sold 369 3 248 -- 620 Other receivables 5 1 -- -- 6 Prepaid expenses and other assets 27 13 15 -- 55 --------------------------------------------------------------------------------------------------------------------------------- Total Assets 820,880 35,735 419,371 -- 1,275,986 --------------------------------------------------------------------------------------------------------------------------------- LIABILITIES: Written options, at value 84 -- -- -- 84 Payable for securities purchased 4,040 187 1,929 -- 6,156 Capital shares redeemed 870 31 320 -- 1,221 Payable upon return of securities loaned 271,641 11,168 131,167 -- 413,976 Bank overdraft 1 1 1 -- 3 Payable for advisory, co-administration, and custodian fees 349 16 205 -- 570 Distribution and shareholder servicing fees 55 7 9 -- 71 Accrued expenses and other liabilities 4 1 2 -- 7 --------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 277,044 11,411 133,633 -- 422,088 --------------------------------------------------------------------------------------------------------------------------------- Net Assets $ 543,836 $ 24,324 $ 285,738 $ -- $ 853,898 ================================================================================================================================= COMPOSITION OF NET ASSETS: Portfolio capital $ 953,245 $ 29,640 $ 382,486 $ -- $ 1,365,371 Undistributed net investment income -- -- 443 -- 443 Accumulated net realized loss (285,833) (1,576) (73,835) -- (361,244) Unrealized depreciation of investments (123,614) (3,740) (23,356) -- (150,710) Unrealized appreciation of options written 38 -- -- -- 38 --------------------------------------------------------------------------------------------------------------------------------- Net Assets $ 543,836 $ 24,324 $ 285,738 $ -- $ 853,898 ================================================================================================================================= *Investments in securities, at cost $ 665,862 $ 28,249 $ 309,398 $ -- $ 1,003,509 Class A: Net Assets $ 52,419 $ 5,235 $ 24,647 $ -- $ 82,301 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 7,754 662 1,286 (5,407)(b) 4,295 Net asset value and redemption price per share $ 6.76 $ 7.91 $ 19.16 $ -- $ 19.16 Maximum offering price per share (c) $ 7.15 $ 8.37 $ 20.29 $ -- $ 20.29 Class B: Net Assets $ 36,546 $ 2,821 $ 2,928 $ -- $ 42,295 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 5,673 376 157 (3,937)(b) 2,269 Net asset value and offering price per share (e) $ 6.44 $ 7.50 $ 18.64 $ -- $ 18.64 Class C: Net assets $ 9,652 $ 3,815 $ 476 $ -- $ 13,943 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 1,469 492 25 (1,253)(b) 733 Net asset value per share (e) $ 6.57 $ 7.76 $ 19.03 $ -- $ 19.03 Maximum offering price per share (d) $ 6.64 $ 7.84 $ 19.22 $ -- $ 19.22 Class S: Net assets $ 9,020 $ 32 $ 2,376 $ -- $ 11,428 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 1,335 4 124 (867)(b) 596 Net asset value, offering price, and redemption price per share $ 6.76 $ 7.90 $ 19.17 $ -- $ 19.17 Class Y: Net assets $ 436,199 $ 12,421 $ 255,311 $ -- $ 703,931 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 63,592 1,552 13,036 (42,244)(b) 35,936 Net asset value, offering price, and redemption price per share $ 6.86 $ 8.00 $ 19.59 $ -- $ 19.59 ---------------------------------------------------------------------------------------------------------------------------------
(a) First American Large Cap Core Fund is the accounting survivor. (b) Reflects new shares issued by acquiring fund, net of retired shares of the acquired Fund. (c) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 5.50%. (d) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 1.00% (e) Class B & C have a contingent deferred sales charge. See accompanying notes to the pro forma financial statements. 18 FIRST AMERICAN MID CAP CORE FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (AMOUNT IN THOUSANDS, EXCEPT PER SHARE DATA) SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST AMERICAN MID AMERICAN FIRST CAP GROWTH MID CAP AMERICAN FUND GROWTH MID CAP OPPORTUNITIES FUND CORE FUND ADJUSTMENTS (a) ----------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value* $ 226,757 $ 561,813 $ -- $ 788,570 Cash 519 188 -- 707 Dividends and interest receivable 71 218 -- 289 Collateral for securities loaned, at value 111,674 260,300 -- 371,974 Receivable for securities sold 1,721 5,558 -- 7,279 Capital shares sold 95 574 -- 669 Other receivables 1 6 -- 7 Prepaid expenses and other assets 17 22 -- 39 ----------------------------------------------------------------------------------------------------------------------- Total Assets 340,855 828,679 -- 1,169,534 ----------------------------------------------------------------------------------------------------------------------- LIABILITIES Payable for securities purchased 5,709 3,747 -- 9,456 Capital shares redeemed 343 746 -- 1,089 Payable upon return of securities loaned 111,674 260,300 -- 371,974 Payable for advisory, co-administration, and custodian fees 190 418 -- 608 Distribution and shareholder servicing fees 18 22 -- 40 Accrued expenses and other liabilities 4 2 -- 6 ----------------------------------------------------------------------------------------------------------------------- Total Liabilities 117,938 265,235 -- 383,173 ----------------------------------------------------------------------------------------------------------------------- Net Assets $ 222,917 $ 563,444 $ -- $ 786,361 ======================================================================================================================= COMPOSITION OF NET ASSETS: Portfolio capital $ 472,351 $ 657,268 $ -- $ 1,129,619 Accumulated net investment loss -- (4) -- (4) Accumulated net realized loss (223,536) (49,136) -- (272,672) Unrealized depreciation of investments (25,898) (44,684) -- (70,582) ----------------------------------------------------------------------------------------------------------------------- Net Assets $ 222,917 $ 563,444 $ -- $ 786,361 ======================================================================================================================= *Investments in securities, at cost $ 252,655 $ 606,497 $ -- $ 859,152 Class A: Net Assets $ 58,896 $ 75,002 $ -- $ 133,898 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 13,538 2,836 (11,311)(b) 5,063 Net asset value and redemption price per share $ 4.35 $ 26.45 $ -- $ 26.45 Maximum offering price per share (c) $ 4.60 $ 27.99 $ -- $ 27.99 Class B: Net Assets $ 2,578 $ 4,227 $ -- $ 6,805 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 622 165 (521)(b) 266 Net asset value and offering price per share (e) $ 4.14 $ 25.56 $ -- $ 25.56 Class C: Net assets $ 3,742 $ 1,136 $ -- $ 4,878 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 896 43 (754)(b) 185 Net asset value per share (e) $ 4.18 $ 26.29 $ -- $ 26.29 Maximum offering price per share (d) $ 4.22 $ 26.56 $ -- $ 26.56 Class S: Net assets $ 13 $ 5,869 $ -- $ 5,882 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 3 222 (3)(b) 222 Net asset value, offering price, and redemption price per share $ 4.35 $ 26.43 $ -- $ 26.43 Class Y: Net assets $ 157,688 $ 477,210 $ -- $ 634,898 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 35,232 17,515 (29,445)(b) 23,302 Net asset value, offering price, and redemption price per share $ 4.48 $ 27.25 $ -- $ 27.25 -----------------------------------------------------------------------------------------------------------------------
(a) First American Mid Cap Core Fund is the accounting survivor. (b) Reflects new shares issued by acquiring fund, net of retired shares of the acquired Fund. (c) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 5.50%. (d) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 1.00%. (e) Class B & C have a contingent deferred sales charge. See accompanying notes to the pro forma financial statements. 19 FIRST AMERICAN SMALL CAP CORE FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (AMOUNT IN THOUSANDS, EXCEPT PER SHARE DATA) SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN SMALL SMALL CAP SMALL CAP CAP SELECT GROWTH FUND GROWTH FUND ADJUSTMENTS FUND (a) ------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value* $ 242,076 $ 446,926 $ -- $ 689,002 Cash 142 670 -- 812 Dividends and interest receivable 134 73 -- 207 Collateral for securities loaned, at value 52,063 169,494 -- 221,557 Receivable for securities sold 6,120 6,546 -- 12,666 Capital shares sold 192 439 -- 631 Other receivables 1 9 -- 10 Prepaid expenses and other assets 18 29 -- 47 ------------------------------------------------------------------------------------------------------------------- Total Assets 300,746 624,186 -- 924,932 ------------------------------------------------------------------------------------------------------------------- LIABILITIES: Payable for securities purchased 11,718 2,165 -- 13,883 Capital shares redeemed 489 233 -- 722 Payable upon return of securities loaned 52,063 169,494 -- 221,557 Payable for advisory, co-administration, and custodian fees 185 316 -- 501 Distribution and shareholder servicing fees 12 15 -- 27 Accrued expenses and other liabilities 5 1 -- 6 ------------------------------------------------------------------------------------------------------------------- Total Liabilities 64,472 172,224 -- 236,696 ------------------------------------------------------------------------------------------------------------------- Net Assets $ 236,274 $ 451,962 $ -- $ 688,236 =================================================================================================================== COMPOSITION OF NET ASSETS Portfolio capital $ 426,025 $ 521,477 $ -- $ 947,502 Accumulated net investment loss -- (2) -- (2) Accumulated net realized loss (164,679) (15,582) -- (180,261) Unrealized depreciation of investments (25,072) (53,931) -- (79,003) ------------------------------------------------------------------------------------------------------------------- Net Assets $ 236,274 $ 451,962 $ -- $ 688,236 =================================================================================================================== *Investments in securities, at cost $ 267,148 $ 500,857 $ -- $ 768,005 Class A: Net Assets $ 22,397 $ 33,586 $ -- $ 55,983 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 2,548 3,144 (451)(b) 5,241 Net asset value and redemption price per share $ 8.79 $ 10.68 $ -- $ 10.68 Maximum offering price per share (c) $ 9.30 $ 11.30 $ -- $ 11.30 Class B: Net Assets $ 3,933 $ 4,613 $ -- $ 8,546 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 487 463 (92)(b) 858 Net asset value and offering price per share (e) $ 8.07 $ 9.95 $ -- $ 9.95 Class C: Net assets $ 4,659 $ 3,096 $ -- $ 7,755 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 547 292 (108)(b) 731 Net asset value per share (e) $ 8.52 $ 10.62 $ -- $ 10.62 Maximum offering price per share (d) $ 8.61 $ 10.73 $ -- $ 10.73 Class S: Net assets $ 32 $ 7,640 $ -- $ 7,672 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 4 717 (1)(b) 720 Net asset value, offering price, and redemption price per share $ 8.79 $ 10.66 $ -- $ 10.66 Class Y: Net assets $ 205,253 $ 403,027 $ -- $ 608,280 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 22,877 36,650 (4,218)(b) 55,309 Net asset value, offering price, and redemption price per share $ 8.97 $ 11.00 $ -- $ 11.00 -------------------------------------------------------------------------------------------------------------------
(a) First American Small Cap Core Fund is the accounting survivor. (b) Reflects new shares issued by acquiring fund, net of retired shares of the acquired Fund. (c) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 5.50%. (d) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 1.00%. (e) Class B & C have a contingent deferred sales charge. See accompanying notes to the pro forma financial statements. 20 FIRST AMERICAN INTERNATIONAL FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (AMOUNT IN THOUSANDS, EXCEPT PER SHARE DATA) SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA FIRST COMBINED AMERICAN FIRST FIRST EMERGING AMERICAN AMERICAN MARKETS INTERNATIONAL INTERNATIONAL FUND FUND ADJUSTMENTS FUND (A) -------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value* $ 48,773 $ 604,677 $ -- $ 653,450 Cash denominated in foreign currencies, at value** 453 1,751 -- 2,204 Dividends and interest receivable 60 2,447 -- 2,507 Receivable for securities sold 261 243 -- 504 Capital shares sold 2 469 -- 471 Other receivables -- 78 -- 78 Prepaid expenses and other assets 15 30 -- 45 -------------------------------------------------------------------------------------------------------------------- Total Assets 49,564 609,695 -- 659,259 -------------------------------------------------------------------------------------------------------------------- LIABILITIES Payable for securities purchased 492 213 -- 705 Capital shares redeemed 12 1,115 -- 1,127 Bank overdraft 212 773 -- 985 Payable for advisory, co-administration, and custodian fees 1 544 -- 545 Distribution and shareholder servicing fees 1 15 -- 16 Accrued expenses and other liabilities -- 5 -- 5 -------------------------------------------------------------------------------------------------------------------- Total Liabilities 718 2,665 -- 3,383 -------------------------------------------------------------------------------------------------------------------- Net Assets $ 48,846 $ 607,030 $ -- $ 655,876 ==================================================================================================================== COMPOSITION OF NET ASSETS: Portfolio capital $ 59,823 $ 1,027,930 $ -- $ 1,087,753 Accumulated net investment income (loss) 1 (5) -- (4) Accumulated net realized loss (9,231) (268,575) -- (277,806) Net unrealized depreciation of investments (1,742) (152,331) -- (154,073) Net unrealized appreciation (depreciation) of foreign currency, and translation of other assets and liabilities in foreign currency (5) 11 -- 6 -------------------------------------------------------------------------------------------------------------------- Net Assets $ 48,846 $ 607,030 $ -- $ 655,876 ==================================================================================================================== *Investments in securities at cost $ 50,515 $ 757,008 $ -- $ 807,523 **Cash denominated in foreign currencies, at cost 458 1,740 -- 2,198 Class A: Net Assets $ 2,487 $ 37,232 $ -- $ 39,719 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 400 5,081 (61)(b) 5,420 Net asset value and redemption price per share $ 6.22 $ 7.33 $ -- $ 7.33 Maximum offering price per share (c) $ 6.58 $ 7.76 $ -- $ 7.76 Class B: Net Assets $ 252 $ 7,459 $ -- $ 7,711 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 42 1,088 (5)(b) 1,125 Net asset value and offering price per share (e) $ 6.02 $ 6.85 $ -- $ 6.85 Class C: Net assets $ 90 $ 11,027 $ -- $ 11,117 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 15 1,555 (2)(b) 1,568 Net asset value per share (e) $ 6.10 $ 7.09 $ -- $ 7.09 Maximum offering price per share (d) $ 6.16 $ 7.16 $ -- $ 7.16 Class S: Net assets $ 11 $ 10,817 $ -- $ 10,828 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 2 1,479 --(b) 1,481 Net asset value, offering price, and redemption price per share $ 6.19 $ 7.31 $ -- $ 7.31 Class Y: Net assets $ 46,006 $ 540,495 $ -- $ 586,501 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 7,347 73,052 (1,130)(b) 79,269 Net asset value, offering price, and redemption price per share $ 6.26 $ 7.40 $ -- $ 7.40 --------------------------------------------------------------------------------------------------------------------
(a) First American International Fund is the accounting survivor. (b) Reflects new shares issued by acquiring fund, net of retired shares of the acquired Fund. (c) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 5.50%. (d) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 1.00%. (e) Class B & C have a contingent deferred sales charge. 21 FIRST AMERICAN FIXED INCOME FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (AMOUNT IN THOUSANDS, EXCEPT PER SHARE DATA) SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA FIRST FIRST COMBINED AMERICAN AMERICAN FIRST BOND IMMDEX FIXED INCOME AMERICAN CORE FUND FUND ADJUSTMENTS BOND FUND (a) ---------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value* $ 820,817 $ 1,443,763 $ -- $ 2,264,580 Cash 30 13,324 -- 13,354 Dividends and interest receivable 11,397 13,237 -- 24,634 Collateral for securities loaned, at value 417,238 443,510 -- 860,748 Receivable for securities sold -- 13,008 -- 13,008 Capital shares sold 1,971 936 -- 2,907 Prepaid expenses and other assets 24 44 -- 68 ---------------------------------------------------------------------------------------------------------------------------- Total Assets 1,251,477 1,927,822 -- 3,179,299 ---------------------------------------------------------------------------------------------------------------------------- LIABILITIES: Payable for securities purchased -- 95,164 -- 95,164 Capital shares redeemed 1,193 1,737 -- 2,930 Payable upon return of securities loaned 417,238 443,510 -- 860,748 Payable for advisory, co-administration, and custodian fees 309 765 -- 1,074 Distribution and shareholder servicing fees 27 54 -- 81 Accrued expenses and other liabilities 2 -- -- 2 ---------------------------------------------------------------------------------------------------------------------------- Total Liabilities 418,769 541,230 -- 959,999 ---------------------------------------------------------------------------------------------------------------------------- Net Assets $ 832,708 $ 1,386,592 $ -- $ 2,219,300 ============================================================================================================================ COMPOSITION OF NET ASSETS: Portfolio capital $ 783,917 $ 1,348,677 $ -- $ 2,132,594 Accumulated net investment income 2,441 -- -- 2,441 Accumulated net realized loss (854) (25,795) -- (26,649) Unrealized appreciation of investments 47,204 63,710 -- 110,914 ---------------------------------------------------------------------------------------------------------------------------- Net Assets $ 832,708 $ 1,386,592 $ -- $ 2,219,300 ============================================================================================================================ *Investments in securities, at cost $ 773,613 $ 1,380,053 $ 2,306,006 Class A: Net Assets $ 87,096 $ 122,354 $ -- $ 209,450 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 2,982 10,682 4,625(b) 18,289 Net asset value and redemption price per share $ 29.21 $ 11.45 -- $ 11.45 Maximum offering price per share (c) $ 30.51 $ 11.96 -- $ 11.96 Class B: Net Assets $ 14,592 $ 16,741 $ -- $ 31,333 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 500 1,471 782(b) 2,753 Net asset value and offering price per share (e) $ 29.18 $ 11.38 -- $ 11.38 Class C: Net assets $ 1,919 $ 9,672 $ -- $ 11,591 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 66 847 102(b) 1,015 Net asset value per share (e) $ 29.16 $ 11.42 -- $ 11.42 Maximum offering price per share (d) $ 29.45 $ 11.54 -- $ 11.54 Class S: Net assets $ 18,179 $ 33,270 $ -- $ 51,449 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 622 2,905 966(b) 4,493 Net asset value, offering price, and redemption price per share $ 29.21 $ 11.45 -- $ 11.45 Class Y: Net assets $ 710,922 $ 1,204,555 $ -- $ 1,915,477 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 24,322 105,171 37,767(b) 167,260 Net asset value, offering price, and redemption price per share $ 29.23 $ 11.45 -- $ 11.45 ----------------------------------------------------------------------------------------------------------------------------
(a) First American Fixed Income Fund is the accounting survivor. (b) Reflects new shares issued by acquiring fund, net of retired shares of the acquired Fund. (c) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 5.50%. (d) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 1.00%. (e) Class B & C have a contingent deferred sales charge. See accompanying notes to the pro forma financial statements. 22 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN STRATEGIC HIGH HIGH INCOME YIELD BOND INCOME BOND FUND FUND ADJUSTMENTS FUND (a) -------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value* $ 145,843 $ 52,244 $ -- $ 198,087 Cash 15,458 -- -- 15,458 Dividends and interest receivable 3,278 1,356 -- 4,634 Receivable for securities sold 2,951 -- -- 2,951 Capital shares sold 72 58 -- 130 Prepaid expenses and other assets 16 16 -- 32 -------------------------------------------------------------------------------------------------------------------- Total Assets 167,618 53,674 -- 221,292 -------------------------------------------------------------------------------------------------------------------- LIABILITIES Payable for securities purchased 3,262 406 -- 3,668 Capital shares redeemed 156 93 -- 249 Payable for advisory, co-administration, and custodian fees 119 31 -- 150 Distribution and shareholder servicing fees 12 12 -- 24 Accrued expenses and other liabilities -- 1 -- 1 -------------------------------------------------------------------------------------------------------------------- Total Liabilities 3,549 543 -- 4,092 -------------------------------------------------------------------------------------------------------------------- Net Assets $ 164,069 $ 53,131 $ -- $ 217,200 ==================================================================================================================== COMPOSITION OF NET ASSETS: Portfolio capital $ 207,066 $ 62,226 $ -- $ 269,292 Undistributed net investment income 3 -- -- 3 Accumulated net realized loss on investments (31,528) (3,648) -- (35,176) Net unrealized depreciation of investments (11,465) (5,447) -- (16,912) Net unrealized depreciation on forward foreign currency contracts, foreign currency, and translation of assets and liabilities denominated in foreign currency (7) -- -- (7) -------------------------------------------------------------------------------------------------------------------- Net Assets $ 164,069 $ 53,131 $ -- $ 217,200 ==================================================================================================================== *Investments in securities, at cost $ 157,308 $ 57,691 $ -- $ 214,999 Class A: Net Assets $ 18,006 $ 23,900 $ -- $ 41,906 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 2,254 3,001 8(b) 5,263 Net asset value and redemption price per share $ 7.99 $ 7.96 $ -- $ 7.96 Maximum offering price per share (c) $ 8.34 $ 8.31 $ -- $ 8.31 Class B: Net Assets $ 4,179 $ 774 $ -- $ 4,953 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 525 97 (1)(b) 621 Net asset value and offering price per share (e) $ 7.96 $ 7.97 $ -- $ 7.97 Class C: Net assets $ 6,213 $ 7,213 $ -- $ 13,426 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 780 905 --(b) 1,685 Net asset value per share (e) $ 7.96 $ 7.97 $ -- $ 7.97 Maximum offering price per share (d) $ 8.04 $ 8.05 $ -- $ 8.05 Class S: Net assets $ 6 $ 87 $ -- $ 93 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 1 11 --(b) 12 Net asset value, offering price, and redemption price per share $ 8.06 $ 7.96 $ -- $ 7.96 Class Y: Net assets $ 135,665 $ 21,157 $ -- $ 156,822 Shares issued and outstanding ($0.0001 par value - 2 billion authorized) 16,973 2,653 28(b) 19,654 Net asset value, offering price, and redemption price per share $ 7.99 $ 7.98 $ -- $ 7.98 --------------------------------------------------------------------------------------------------------------------
(a) First American High Yield Bond Fund is the accounting survivor. (b) Reflects new shares issued by acquiring fund, net of retired shares of the acquired Fund. (c) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 5.50%. (d) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 1.00%. (e) Class B & C have a contingent deferred sales charge. See accompanying notes to the pro forma financial statements 23 FIRST AMERICAN LARGE CAP CORE FUND PRO FORMA STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS) FOR THE YEAR ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN LARGE CAP LARGE CAP HEALTH LARGE GROWTH GROWTH SCIENCES CAP CORE OPPORTUNITIES FUND FUND FUND ADJUSTMENTS FUND (a) --------------------------------------------------------------------------------------------------------------------------------- Investment Income: Interest $ 172 $ 32 $ 518 -- $ 722 Dividends 3,377 178 3,468 -- 7,023 Less: Foreign taxes withheld (1) -- (3) -- (4) Securities lending 79 7 91 -- 177 Other 6 6 6 -- 18 --------------------------------------------------------------------------------------------------------------------------------- Total investment income 3,633 223 4,080 -- 7,936 Expenses: Investment advisory fees 2,511 212 2,328 (15)(b) 5,036 Co-administration fees and expenses (including per account transfer agency fees) 1,264 195 1,030 (185)(c) 2,304 Custodian fees 39 3 36 -- 78 Directors' fees 7 2 4 (9)(d) 4 Registration fees 45 35 48 (80)(d) 48 Professional fees 8 1 6 (9)(d) 6 Printing 25 3 16 (28)(d) 16 Other 21 3 8 -- 32 Distribution and shareholder servicing fees - Class A 73 16 83 -- 172 Distribution and shareholder servicing fees - Class B 471 34 34 -- 539 Distribution and shareholder servicing fees - Class C 43 49 4 -- 96 Shareholder servicing fees - Class S 33 -- 6 -- 39 --------------------------------------------------------------------------------------------------------------------------------- Total expenses 4,540 553 3,603 (326) 8,370 Less: Waiver of expenses (443) (158) (250) 302 (549) --------------------------------------------------------------------------------------------------------------------------------- Total next expenses 4,097 395 3,553 (24) 7,821 --------------------------------------------------------------------------------------------------------------------------------- Investment income (loss) - net (464) (172) 727 24 115 --------------------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gains (Losses) on Investments: Net realized loss on investments (122,684) (1,421) (38,565) -- (162,670) Net realized loss on options written (856) -- -- -- (856) Net change in unrealized appreciation or depreciation of written options 244 -- -- -- 244 Net change in unrealized appreciation or depreciation of investments (98,811) (4,687) (37,497) -- (141,995) --------------------------------------------------------------------------------------------------------------------------------- Net loss on investments (223,107) (6,108) (76,062) -- (305,277) --------------------------------------------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $(223,571) $(6,280) $(75,335) $ 24 $(305,162) =================================================================================================================================
(a) First American Large Cap Core Fund is the accounting survivor. (b) Reflects decrease in management fee structure for former shareholders of Health Sciences Fund. (c) Adjustment based on the contractual agreements with the transfer agent for a combined fund. (d) Reflects anticipated savings from the merger. See accompanying notes to the pro forma financial statements. 24 FIRST AMERICAN MID CAP CORE FUND PRO FORMA STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS) FOR THE YEAR ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST FIRST AMERICAN MID AMERICAN AMERICAN CAP GROWTH MID CAP MID CAP OPPORTUNITIES GROWTH FUND CORE FUND ADJUSTMENTS FUND (a) -------------------------------------------------------------------------------------------------------------------------------- Investment Income: Interest $ 264 $ 562 $ -- $ 826 Dividends 636 4,326 -- 4,962 Less: Foreign taxes withheld -- (7) -- (7) Securities lending 153 202 -- 355 Other 8 405 -- 413 -------------------------------------------------------------------------------------------------------------------------------- Total investment income 1,061 5,488 -- 6,549 Expenses: Investment advisory fees 2,289 4,356 -- 6,645 Co-administration fees and expenses (including per account transfer agency fees) 1,117 1,722 (93)(b) 2,746 Custodian fees 33 62 -- 95 Directors fees 4 8 (4)(c) 8 Registration fees 25 70 (25)(c) 70 Professional fees 6 11 (6)(c) 11 Printing 6 40 (6)(c) 40 Other 4 10 -- 14 Distribution and shareholder servicing fees - Class A 236 227 -- 463 Distribution and shareholder servicing fees - Class B 38 40 -- 78 Distribution and shareholder servicing fees - Class C 60 4 -- 64 Shareholder servicing fees - Class S -- 14 -- 14 -------------------------------------------------------------------------------------------------------------------------------- Total expenses 3,818 6,564 (134) 10,248 Less: Waiver of expenses (378) (369) 131 (616) -------------------------------------------------------------------------------------------------------------------------------- Total net expenses 3,440 6,195 (3) 9,632 -------------------------------------------------------------------------------------------------------------------------------- Investment loss - net (2,379) (707) 3 (3,083) -------------------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gains (Losses) on Investments: Net realized loss on investments (95,549) (33,072) -- (128,621) Net change in unrealized appreciation or depreciation of investments 33,512 (19,320) -- 14,192 -------------------------------------------------------------------------------------------------------------------------------- Net loss on investments (62,037) (52,392) -- (114,429) -------------------------------------------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $(64,416) $(53,099) $ 3 $(117,512) ================================================================================================================================
(a) First American Mid Cap Core Fund is the accounting survivor. (b) Adjustment based on the contractual agreements with the transfer agent for the combined fund. (c) Reflects anticipated savings from the merger. See accompanying notes to the pro forma financial statements. 25 FIRST AMERICAN SMALL CAP CORE FUND PRO FORMA STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS) FOR THE YEAR ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST AMERICAN FIRST AMERICAN SMALL CAP AMERICAN SMALL CAP GROWTH SMALL CAP SELECT FUND CORE FUND ADJUSTMENTS FUND (a) ------------------------------------------------------------------------------------------------------------------------------ Investment Income: Interest $ 366 $ 660 $ -- $ 1,026 Dividends 710 1,019 -- 1,729 Less: Foreign taxes withheld (5) (6) -- (11) Securities lending 198 180 -- 378 Other 351 98 -- 449 ------------------------------------------------------------------------------------------------------------------------------ Total investment income 1,620 1,951 -- 3,571 Expenses: Investment advisory fees 2,483 3,316 -- 5,799 Co-administration fees and expenses (including per account transfer agency fees) 1,070 1,289 (93)(b) 2,266 Custodian fees 36 47 -- 83 Directors' fees 5 5 (5)(c) 5 Registration fees 34 39 (34)(c) 39 Professional fees 14 7 (14)(c) 7 Printing 14 20 (14)(c) 20 Other 20 11 -- 31 Distribution and shareholder servicing fees - Class A 80 77 -- 157 Distribution and shareholder servicing fees - Class B 53 37 -- 90 Distribution and shareholder servicing fees - Class C 66 15 -- 81 Shareholder servicing fees - Class S -- 18 -- 18 ------------------------------------------------------------------------------------------------------------------------------ Total expenses 3,875 4,881 (160) 8,596 Less: Waiver of expenses (199) (183) 84 (298) ------------------------------------------------------------------------------------------------------------------------------ Total net expenses 3,676 4,698 (76) 8,298 ------------------------------------------------------------------------------------------------------------------------------ Investment loss - net (2,056) (2,747) 76 (4,727) ------------------------------------------------------------------------------------------------------------------------------ Realized and Unrealized Gains (Losses) on Investments: Net realized loss on investments (91,989) (14,145) -- (106,134) Net change in unrealized appreciation (depreciation) of investments 25,583 (37,514) -- (8,931) ------------------------------------------------------------------------------------------------------------------------------ Net loss on investments (63,406) (51,659) -- (115,065) ------------------------------------------------------------------------------------------------------------------------------ Net decrease in net assets resulting from operations $(65,462) $(54,406) $ 76 $(119,792) ==============================================================================================================================
(a) First American Small Cap Core Fund is the accounting survivor. (b) Adjustment based on the contractual agreements with the transfer agent for the combined fund. (c) Reflects anticipated savings from the merger. See accompanying notes to the pro forma financial statements. 26 FIRST AMERICAN INTERNATIONAL FUND PRO FORMA STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS) FOR THE YEAR ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA FIRST COMBINED AMERICAN FIRST FIRST EMERGING AMERICAN AMERICAN MARKETS INTERNATIONAL INTERNATIONAL FUND FUND ADJUSTMENTS FUND (a) -------------------------------------------------------------------------------------------------------------------------------- Investment Income: Interest $ -- $ 544 $ -- $ 544 Dividends 857 12,882 -- 13,739 Less: Foreign taxes withheld (69) (1,435) -- (1,504) Securities lending -- 914 -- 914 Other 56 34 -- 90 -------------------------------------------------------------------------------------------------------------------------------- Total investment income 844 12,939 -- 13,783 Expenses: Investment advisory fees 628 8,354 (27)(d) 8,955 Co-administration fees and expenses (including per account transfer agency fees) 222 2,175 (93)(b) 2,304 Custodian fees 8 75 -- 83 Directors' fees 1 5 (1)(c) 5 Registration fees 28 48 (28)(c) 48 Professional fees 4 14 (4)(c) 14 Printing 3 40 (3)(c) 40 Other 5 24 -- 29 Distribution and shareholder servicing fees - Class A 8 139 -- 147 Distribution and shareholder servicing fees - Class B 2 101 -- 103 Distribution shareholder and servicing fees - Class C 1 158 -- 159 Shareholder servicing fees - Class S -- 31 -- 31 -------------------------------------------------------------------------------------------------------------------------------- Total expenses 910 11,164 (156) 11,918 Less: Waiver of expenses (104) (480) 92 (492) -------------------------------------------------------------------------------------------------------------------------------- Total net expenses 806 10,684 (64) 11,426 -------------------------------------------------------------------------------------------------------------------------------- Investment loss - net 38 2,255 64 2,357 -------------------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gains (Losses) on Investments and Foreign Currency Transactions - Net: Net realized loss on investments (1,566) (111,725) -- (113,291) Net realized loss on foreign currency transactions (166) (704) -- (870) Net change in unrealized appreciation or depreciation of investments 4,364 (21,835) -- (17,471) Net change in unrealized appreciation or depreciation of foreign currency, and translation of other assets and liabilities denominated in foreign currency (13) (145) -- (158) -------------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments 2,619 (134,409) -- (131,790) -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 2,657 $(132,154) $ 64 $(129,433) ================================================================================================================================
(a) First American International Fund is the accounting survivor. (b) Adjustment based on the contractual agreements with the transfer for the combined fund. (c) Reflects the anticipated savings of the merger. (d) Reflects decrease in management fee structure for former shareholders of Emerging Markets Fund. See accompanying notes to the pro forma financial statements. 27 FIRST AMERICAN FIXED INCOME FUND PRO FORMA STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS) FOR THE YEAR ENDED SEPTEMBER 30, 2002 (UNAUDITED)
FIRST PRO FORMA FIRST AMERICAN COMBINED AMERICAN FIXED FIRST BOND IMMDEX INCOME AMERICAN CORE FUND FUND ADJUSTMENTS BOND FUND (a) ---------------------------------------------------------------------------------------------------------------------------------- Investment Income: Interest $ 49,876 $ 83,000 $ -- $ 132,876 Dividends -- -- -- -- Securities lending 331 393 -- 724 Other -- 773 -- 773 ---------------------------------------------------------------------------------------------------------------------------------- Total investment income 50,207 84,166 -- 134,373 Expenses: Investment advisory fees 2,332 7,158 1,555(d) 11,045 Co-administration fees and expenses (including per account transfer agency fees) 2,007 3,673 (93)(b) 5,587 Custodian fees 83 143 -- 226 Directors' fees 6 16 (6)(c) 16 Registration fees 37 70 (37)(c) 70 Professional fees 13 39 (13)(c) 39 Printing 28 33 (28)(c) 33 Other 11 47 -- 58 Distribution and shareholder servicing fees - Class A 213 292 -- 505 Distribution and shareholder servicing fees - Class B 114 155 -- 269 Distribution and shareholder servicing fees - Class C 6 94 -- 100 Shareholder servicing fees - Class S 35 81 -- 116 ---------------------------------------------------------------------------------------------------------------------------------- Total expenses 4,885 11,801 1,378 18,064 Less: Waiver of expenses (786) (1,157) 332 (1,611) ---------------------------------------------------------------------------------------------------------------------------------- Total net expenses 4,099 10,644 1,710 16,453 ---------------------------------------------------------------------------------------------------------------------------------- Investment income - net 46,108 73,522 (1,710) 117,920 ---------------------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gains (Losses) on Investments: Net realized gain (loss) on investments (749) 13,696 -- 12,947 Net change in unrealized appreciation or depreciation of investments 3,892 (5,915) -- (2,023) ---------------------------------------------------------------------------------------------------------------------------------- Net gain (loss) on investments 3,143 7,781 -- 10,924 ---------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $ 49,251 $ 81,303 $(1,710) $ 128,844 ==================================================================================================================================
(a) First American Fixed Income Fund is the accounting survivor. (b) Adjustment based on the contractual agreements with the transfer agent for the combined fund. (c) Reflects anticipated savings from the merger. (d) Reflects the increase in management fees for the former shareholders of the Bond IMMDEX(TM) Fund. See accompanying notes to the pro forma financial statements. 28 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS) FOR THE YEAR ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PRO FORMA COMBINED FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME FUND BOND FUND ADJUSTMENTS FUND (A) ----------------------------------------------------------------------------------------------------------------------------- Investment Income: Interest $ 16,289 $ 4,275 $ -- $ 20,564 Dividends 61 98 -- 159 Other 108 41 -- 149 ----------------------------------------------------------------------------------------------------------------------------- Total investment income 16,458 4,414 -- 20,872 Expenses: Investment advisory fees 1,257 349 -- 1,606 Co-administration fees and expenses (including per account transfer agency fees) 537 228 (93)(b) 672 Custodian fees 18 5 -- 23 Directors' fees 2 1 (2)(c) 1 Registration fees 18 28 (18)(c) 28 Professional fees 6 2 (6)(c) 2 Printing 6 4 (6)(c) 4 Other 4 2 -- 6 Distribution and shareholder servicing fees - Class A 47 76 -- 123 Distribution and shareholder servicing fees - Class B 36 4 -- 40 Distribution and shareholder servicing fees - Class C 55 60 -- 115 Shareholder servicing fees - Class S -- -- -- 0 ----------------------------------------------------------------------------------------------------------------------------- Total expenses 1,986 759 (125) 2,620 Less: Waiver of expenses (142) (198) 177 (63) ----------------------------------------------------------------------------------------------------------------------------- Total net expenses 1,844 561 52 2,457 ----------------------------------------------------------------------------------------------------------------------------- Investment income - net 14,614 3,853 (52) 18,415 ----------------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gains (Losses) on Investments: Net realized loss on investments (13,064) (3,620) -- (16,684) Net realized gain on forward foreign currency contracts and foreign currency transactions 2 -- -- 2 Net change in unrealized appreciation or depreciation of investments 4,732 (4,667) -- 65 Net change in unrealized appreciation or depreciation of forward foreign currency contracts, foreign currency, and translation of other assets and liabilities denominated in foreign currency (19) -- -- (19) ----------------------------------------------------------------------------------------------------------------------------- Net loss on investments (8,349) (8,287) -- (16,636) ----------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 6,265 $(4,434) $ (52) $ 1,779 =============================================================================================================================
(a) First American High Yield Bond Fund is the accounting survivor. (b) Adjustment based on the contractual agreements with the transfer agent for the combined fund. (c) Reflects anticipated savings from the merger. See accompanying notes to the pro forma financial statements. 29 FIRST AMERICAN LARGE CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets)
PRO FORMA FIRST FIRST FIRST COMBINED FIRST AMERICAN AMERICAN AMERICAN AMERICAN LARGE LARGE CAP HEALTH LARGE CAP CAP GROWTH GROWTH FUND SCIENCES CORE FUND OPPORTUNITIES SHARES FUND SHARES SHARES FUND SHARES ----------- ----------- ---------- -------------- Common Stocks - 94.9% Consumer Discretionary - 13.7% AOL Time Warner* (A) 356,490 -- 233,850 590,340 Autozone* (A) -- -- 32,900 32,900 Best Buy* (A) 126,105 -- 44,550 170,655 Carnival (A) -- -- 92,300 92,300 Clear Channel Communications (A) 105,990 -- 23,000 128,990 Costco Wholesale* (A) -- -- 22,900 22,900 Cox Communications, Cl A 59,000 -- -- 59,000 Dollar General 307,500 -- 167,300 474,800 Dow Jones & Company (A) -- -- 11,700 11,700 Gannett (A) -- -- 22,300 22,300 Harley-Davidson (A) 34,100 -- 36,200 70,300 Home Depot (A) 309,647 -- 143,800 453,447 Interpublic Group Companies (A) -- -- 26,700 26,700 Johnson Controls (A) 28,700 -- -- 28,700 Jones Apparel Group* (A) 45,500 -- -- 45,500 Kohl's* (A) 78,275 -- 43,000 121,275 Lowe's (A) 118,200 -- 45,000 163,200 McDonald's -- -- 85,900 85,900 MGM MIRAGE* (A) 80,000 -- 32,500 112,500 Office Depot* (A) 238,100 -- 160,100 398,200 Omnicom Group (A) 24,400 -- 15,900 40,300 Ross Stores 40,800 -- -- 40,800 Target 134,250 -- 61,300 195,550 Toys 'R' Us* (A) -- -- 77,300 77,300 Viacom, CI B* (A) 40,610 -- 51,087 91,697 Wal-Mart Stores (A) 409,440 -- 101,600 511,040 Walt Disney -- -- 112,100 112,100 Yum! Brands* 50,800 -- -- 50,800 Commercial Services & Supplies - 0.0% IMS Health -- 12,300 -- 12,300 Consumer Staples - 9.4% Anheuser-Busch (A) 100,850 -- 43,900 144,750 Avon Products (A) -- -- 23,700 23,700 Clorox -- -- 17,500 17,500 Coca-Cola 184,480 -- 84,300 268,780 H.J. Heinz (A) 108,090 -- -- 108,090 Kimberly-Clark 170,100 -- -- 170,100 Kraft Foods (A) 158,100 -- 32,900 191,000 Kroger* (A) 115,600 -- -- 115,600 PepsiCo 173,750 -- 94,600 268,350 Philip Morris 135,800 -- 80,400 216,200 Procter & Gamble 71,500 -- 41,600 113,100 Safeway* (A) 106,354 -- -- 106,354 Sysco (A) -- -- 51,900 51,900 Walgreen 90,490 -- 42,900 133,390 Energy - 4.7% Amerada Hess 5,900 -- -- 5,900 Anadarko Petroleum (A) 75,125 -- 28,000 103,125 Apache (A) 48,500 -- 21,530 70,030 Baker Hughes (A) -- -- 47,000 47,000 Chevron Texaco -- -- 53,515 53,515 ConocoPhilips, Cl B -- -- 96,700 96,700 ENSCO International (A) -- -- 42,900 42,900 EOG Resources -- -- 43,100 43,100 Exxon Mobil 44,266 -- 99,900 144,166 GlobalSantaFe (A) 174,322 -- -- 174,322 Marathon Oil 84,930 -- -- 84,930 Murphy Oil (A) 43,900 -- -- 43,900 Nabors Industries* (A) -- -- 26,000 26,000 Schlumberger (A) -- -- 31,400 31,400 Transocean Sedco Forex 93,400 -- 30,700 124,100 Financials - 12.2% ACE (A) 61,320 -- -- 61,320 AFLAC (A) -- -- 61,500 61,500 Allstate -- -- 29,500 29,500 Ambac Financial Group (A) -- -- 23,000 23,000 American Express 93,200 -- 47,900 141,100 American International Group 193,729 -- 98,645 292,374 Bank of America -- -- 63,700 63,700 BB&T (A) -- -- 47,100 47,100 Capital One Financial (A) 26,690 -- 36,100 62,790 Chubb -- -- 27,000 27,000 Citigroup (A) 133,526 -- 170,049 303,575 Fannie Mae 125,030 -- 57,300 182,330 Federal Home Loan Mortgage 86,180 -- 73,100 159,280 Fifth Third Bancorp (A) -- -- 54,050 54,050 Goldman Sachs Group (A) 25,710 -- -- 25,710 Hartford Financial Services Group -- -- 52,600 52,600 J P Morgan Chase -- -- 113,700 113,700 Lehman Brothers Holdings (A) 37,420 -- -- 37,420 MBNA (A) 208,050 -- 239,412 447,462 Mellon Financial -- -- 47,400 47,400 Merrill Lynch & Company (A) -- -- 63,600 63,600 Morgan Stanley -- -- 55,000 55,000 State Street (A) -- -- 40,500 40,500 TCF Financial (A) 42,230 -- -- 42,230 Travelers Property Casualty, Cl A* -- -- 7,346 7,346 Travelers Property Casualty, Cl B* -- -- 15,094 15,094 Washington Mutual (A) 141,980 -- -- 141,980 Wells Fargo 69,270 -- 80,400 149,670 PRO FORMA COMBINED FIRST AMERICAN LARGE FIRST AMERICAN FIRST AMERICAN FIRST AMERICAN CAP GROWTH LARGE CAP HEALTH SCIENCES LARGE CAP CORE OPPORTUNITIES GROWTH FUND FUND MARKET FUND MARKET FUND MARKET MARKET VALUE VALUE VALUE VALUE -------------- --------------- -------------- -------------- Common Stocks - 94.9% Consumer Discretionary - 13.7% AOL Time Warner* (A) $ 4,171 $ -- $ 2,736 $ 6,907 Autozone* (A) -- -- 2,594 2,594 Best Buy* (A) 2,813 -- 994 3,807 Carnival (A) -- -- 2,317 2,317 Clear Channel Communications (A) 3,683 -- 799 4,482 Costco Wholesale* (A) -- -- 741 741 Cox Communications, Cl A 1,451 -- -- 1,451 Dollar General 4,127 -- 2,245 6,372 Dow Jones & Company (A) -- -- 449 449 Gannett (A) -- -- 1,610 1,610 Harley-Davidson (A) 1,584 -- 1,681 3,265 Home Depot (A) 8,082 -- 3,753 11,835 Interpublic Group Companies (A) -- -- 423 423 Johnson Controls (A) 2,205 -- -- 2,205 Jones Apparel Group* (A) 1,397 -- -- 1,397 Kohl's* (A) 4,760 -- 2,615 7,375 Lowe's (A) 4,893 -- 1,863 6,756 McDonald's -- -- 1,517 1,517 MGM MIRAGE* (A) 2,984 -- 1,212 4,196 Office Depot* (A) 2,938 -- 1,976 4,914 Omnicom Group (A) 1,359 -- 885 2,244 Ross Stores 1,454 -- -- 1,454 Target 3,963 -- 1,810 5,773 Toys 'R' Us* (A) -- -- 787 787 Viacom, CI B* (A) 1,647 -- 2,072 3,719 Wal-Mart Stores (A) 20,161 -- 5,003 25,164 Walt Disney -- -- 1,697 1,697 Yum! Brands* 1,408 -- -- 1,408 -------------- --------------- -------------- -------------- 75,080 -- 41,779 116,859 -------------- --------------- -------------- -------------- Commercial Services & Supplies - 0.0% -------------- --------------- -------------- -------------- IMS Health -- 184 -- 184 -------------- --------------- -------------- -------------- -- 184 -- 184 -------------- --------------- -------------- -------------- Consumer Staples - 9.4% Anheuser-Busch (A) 5,103 -- 2,221 7,324 Avon Products (A) -- -- 1,093 1,093 Clorox -- -- 703 703 Coca-Cola 8,848 -- 4,043 12,891 H.J. Heinz (A) 3,607 -- -- 3,607 Kimberly-Clark 9,634 -- -- 9,634 Kraft Foods (A) 5,764 -- 1,200 6,964 Kroger* (A) 1,630 -- -- 1,630 PepsiCo 6,420 -- 3,495 9,915 Philip Morris 5,269 -- 3,120 8,389 Procter & Gamble 6,391 -- 3,718 10,109 Safeway* (A) 2,372 -- -- 2,372 Sysco (A) -- -- 1,473 1,473 Walgreen 2,783 -- 1,320 4,103 -------------- --------------- -------------- -------------- 57,821 -- 22,386 80,207 -------------- --------------- -------------- -------------- Energy - 4.7% Amerada Hess 401 -- -- 401 Anadarko Petroleum (A) 3,346 -- 1,247 4,593 Apache (A) 2,883 -- 1,280 4,163 Baker Hughes (A) -- -- 1,364 1,364 Chevron Texaco -- -- 3,706 3,706 ConocoPhilips, Cl B -- -- 4,471 4,471 ENSCO International (A) -- -- 1,074 1,074 EOG Resources -- -- 1,550 1,550 Exxon Mobil 1,412 -- 3,187 4,599 GlobalSantaFe (A) 3,896 -- -- 3,896 Marathon Oil 1,926 -- -- 1,926 Murphy Oil (A) 3,603 -- -- 3,603 Nabors Industries* (A) -- -- 851 851 Schlumberger (A) -- -- 1,208 1,208 Transocean Sedco Forex 1,943 -- 639 2,582 -------------- --------------- -------------- -------------- 19,410 -- 20,577 39,987 -------------- --------------- -------------- -------------- Financials - 12.2% ACE (A) 1,816 -- -- 1,816 AFLAC (A) -- -- 1,887 1,887 Allstate -- -- 1,049 1,049 Ambac Financial Group (A) -- -- 1,239 1,239 American Express 2,906 -- 1,494 4,400 American International Group 10,597 -- 5,396 15,993 Bank of America -- -- 4,064 4,064 BB&T (A) -- -- 1,650 1,650 Capital One Financial (A) 932 -- 1,261 2,193 Chubb -- -- 1,480 1,480 Citigroup (A) 3,959 -- 5,042 9,001 Fannie Mae 7,444 -- 3,412 10,856 Federal Home Loan Mortgage 4,817 -- 4,086 8,903 Fifth Third Bancorp (A) -- -- 3,309 3,309 Goldman Sachs Group (A) 1,698 -- -- 1,698 Hartford Financial Services Group -- -- 2,157 2,157 J P Morgan Chase -- -- 2,159 2,159 Lehman Brothers Holdings (A) 1,835 -- -- 1,835 MBNA (A) 3,824 -- 4,400 8,224 Mellon Financial -- -- 1,229 1,229 Merrill Lynch & Company (A) -- -- 2,096 2,096 Morgan Stanley -- -- 1,863 1,863 State Street (A) -- -- 1,565 1,565 TCF Financial (A) 1,788 -- -- 1,788 Travelers Property Casualty, Cl A* -- -- 97 97 Travelers Property Casualty, Cl B* -- -- 204 204 Washington Mutual (A) 4,468 -- -- 4,468 Wells Fargo 3,336 -- 3,872 7,208 -------------- --------------- -------------- -------------- 49,420 -- 55,011 104,431 -------------- --------------- -------------- --------------
30 FIRST AMERICAN LARGE CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets)
PRO FORMA FIRST FIRST FIRST COMBINED FIRST AMERICAN AMERICAN AMERICAN AMERICAN LARGE LARGE CAP HEALTH LARGE CAP CAP GROWTH GROWTH FUND SCIENCES CORE FUND OPPORTUNITIES SHARES FUND SHARES SHARES FUND SHARES ----------- ----------- ---------- -------------- Health Care - 23.9% Abbott Laboratories 245,460 31,700 79,500 356,660 Advance PCS* (A) -- 12,300 -- 12,300 AmerisourceBergen (A) -- 5,072 -- 5,072 Amgen* (A) 278,410 20,260 73,000 371,670 Andrx Group* (A) 55,500 6,600 -- 62,100 Anthem* -- -- 11,000 11,000 Apria Healthcare Group* -- 14,830 -- 14,830 Baxter International 143,980 19,500 132,600 296,080 Biogen* 83,900 7,200 17,300 108,400 Biomet (A) 94,140 3,700 39,500 137,340 Cardinal Health (A) 129,855 5,475 40,775 176,105 Caremark Rx* (A) -- 10,800 -- 10,800 Community Health Systems* (A) -- 10,600 -- 10,600 Covance* -- 12,200 -- 12,200 CTI Molecular Imaging* -- 6,900 -- 6,900 Eli Lilly (A) 57,660 -- -- 57,660 First Health Group* (A) -- 5,200 -- 5,200 First Horizon Pharmaceutical* -- 53,500 -- 53,500 Forest Laboratories, Cl A* (A) 44,400 3,700 19,600 67,700 Gilead Sciences* (A) 114,430 20,500 40,200 175,130 HCA - Healthcare (A) 166,100 6,000 44,300 216,400 HealthSouth* -- 29,450 134,600 164,050 IDEC Pharmaceuticals* (A) 41,180 14,500 36,600 92,280 Johnson & Johnson 278,850 14,500 80,600 373,950 King Pharmaceuticals* (A) 41,300 37,466 59,500 138,266 Laboratory Corporation of America* (A) -- 8,600 -- 8,600 Lifecore Biomedical* -- 16,500 -- 16,500 Lincare Holdings* -- 4,900 -- 4,900 Manor Care* (A) -- 5,900 -- 5,900 McKesson HBOC -- 10,100 -- 10,100 Medtronic (A) 378,110 14,900 68,300 461,310 Omnicare (A) -- 14,775 -- 14,775 Pfizer (A) 1,001,090 58,900 232,275 1,292,265 Pharmacia 336,330 17,067 103,000 456,397 Pharmaceutical Product Development* (A) -- 10,600 -- 10,600 Priority Healthcare, Cl B -- 8,700 -- 8,700 Province Healthcare* -- 9,400 -- 9,400 Quest Diagnostics* (A) -- 3,000 -- 3,000 Schering-Plough 78,000 -- -- 78,000 Select Medical* -- 14,475 -- 14,475 Triad Hospitals* (A) -- 8,600 -- 8,600 Universal Health Services* (A) -- 7,000 -- 7,000 Varian Medical Systems* -- 4,500 -- 4,500 Wellpoint Health Networks* (A) 46,570 1,800 -- 48,370 Wyeth (A) 300,310 33,600 47,200 381,110 Zimmer Holdings* 63,879 6,770 41,090 111,739 Industrials -9.3% 3M 41,290 -- 16,900 58,190 Automatic Data Processing 42,000 -- -- 42,000 Boeing 148,710 -- 64,400 213,110 Cendant* (A) 107,200 -- -- 107,200 Concord EFS* (A) 84,910 -- -- 84,910 General Dynamics 20,300 -- 22,100 42,400 General Electric 1,170,960 -- 222,800 1,393,760 Honeywell International 71,570 -- 28,100 99,670 Illinois Tool Works (A) 18,464 -- 15,400 33,864 Molex, Cl A -- -- 85,037 85,037 Robert Half International* (A) -- -- 36,600 36,600 Sabre Holdings* -- -- 24,000 24,000 Southwest Airlines (A) 198,600 -- 124,750 323,350 SPX* 27,800 -- -- 27,800 Union Pacific (A) -- -- 30,500 30,500 United Parcel Service, CI B (A) 53,300 -- -- 53,300 United Technologies (A) 51,630 -- 38,200 89,830 Information Technology - 16.8% Accenture* (A) -- -- 64,100 64,100 Adobe Systems 49,500 -- 22,700 72,200 Agilent Technologies* (A) 62,100 -- -- 62,100 Analog Devices* (A) 47,740 -- 67,900 115,640 Applied Materials* (A) 122,480 -- 82,200 204,680 BEA Systems* (A) 198,050 -- -- 198,050 Cisco Systems* 1,028,288 -- 221,500 1,249,788 Dell Computer* (A) 421,150 -- 123,900 545,050 Electronic Data Systems (A) 50,930 -- 16,800 67,730 EMC* (A) 141,170 -- -- 141,170 First Data 45,800 -- 119,200 165,000 Fiserv* -- -- 36,000 36,000 Hewlett-Packard (A) -- -- 170,656 170,656 Intel (A) 930,770 -- 164,000 1,094,770 International Business Machines 127,540 -- -- 127,540 JDS Uniphase* (A) -- -- 117,120 117,120 KLA-Tencor* (A) 13,800 -- 26,600 40,400 Lexmark International Group* (A) 33,580 -- -- 33,580 Linear Technology -- -- 37,600 37,600 Maxim Integrated Products* 49,960 -- -- 49,960 Mercury Interactive* (A) 34,760 -- 18,500 53,260 Micron Technology* (A) 117,700 -- 55,100 172,800 Microsoft* (A) 619,770 -- 218,200 837,970 Network Appliance* (A) -- -- 56,200 56,200 Novellus Systems* (A) 22,820 -- 31,300 54,120 Oracle Systems* 811,620 -- 95,300 906,920 Qlogic* (A) -- -- 21,500 21,500 QUALCOMM* (A) 181,410 -- 51,400 232,810 Rational Software* 129,520 -- 73,500 203,020 SunGard Data Systems* (A) -- -- 46,600 46,600 Teradyne* (A) -- -- 26,800 26,800 Texas Instruments 388,250 -- 111,600 499,850 USA Networks* 136,800 -- 66,700 203,500 VERITAS Software* (A) 117,390 -- -- 117,390 Xilinx* (A) 73,460 -- 40,700 114,160 PRO FORMA COMBINED FIRST AMERICAN LARGE FIRST AMERICAN FIRST AMERICAN FIRST AMERICAN CAP GROWTH LARGE CAP HEALTH SCIENCES LARGE CAP CORE OPPORTUNITIES GROWTH FUND FUND MARKET FUND MARKET FUND MARKET MARKET VALUE VALUE VALUE VALUE -------------- --------------- -------------- -------------- Health Care - 23.9% Abbott Laboratories 9,917 1,281 3,212 14,410 Advance PCS* (A) -- 277 -- 277 AmerisourceBergen (A) -- 362 -- 362 Amgen* (A) 11,610 845 3,044 15,499 Andrx Group* (A) 1,229 146 -- 1,375 Anthem* -- 0 715 715 Apria Healthcare Group* -- 349 -- 349 Baxter International 4,399 596 4,051 9,046 Biogen* 2,456 211 506 3,173 Biomet (A) 2,507 98 1,052 3,657 Cardinal Health (A) 8,077 341 2,536 10,954 Caremark Rx* (A) -- 184 -- 184 Community Health Systems* (A) -- 282 -- 282 Covance* -- 239 -- 239 CTI Molecular Imaging* -- 175 -- 175 Eli Lilly (A) 3,191 0 -- 3,191 First Health Group* (A) -- 141 -- 141 First Horizon Pharmaceutical* -- 289 -- 289 Forest Laboratories, Cl A* (A) 3,641 303 1,607 5,551 Gilead Sciences* (A) 3,837 687 1,348 5,872 HCA - Healthcare (A) 7,908 286 2,109 10,303 HealthSouth* -- 122 559 681 IDEC Pharmaceuticals* (A) 1,710 602 1,520 3,832 Johnson & Johnson 15,080 784 4,359 20,223 King Pharmaceuticals* (A) 750 681 1,081 2,512 Laboratory Corporation of America* (A) -- 290 -- 290 Lifecore Biomedical* -- 102 -- 102 Lincare Holdings* -- 152 -- 152 Manor Care* (A) -- 133 -- 133 McKesson HBOC -- 286 -- 286 Medtronic (A) 15,926 628 2,877 19,431 Omnicare (A) -- 312 -- 312 Pfizer (A) 29,052 1,709 6,741 37,502 Pharmacia 13,077 664 4,005 17,746 Pharmaceutical Product Development* (A) -- 205 -- 205 Priority Healthcare, Cl B -- 219 -- 219 Province Healthcare* -- 161 -- 161 Quest Diagnostics* (A) -- 185 -- 185 Schering-Plough 1,663 -- -- 1,663 Select Medical* -- 207 -- 207 Triad Hospitals* (A) -- 326 -- 326 Universal Health Services* (A) -- 358 -- 358 Varian Medical Systems* -- 193 -- 193 Wellpoint Health Networks* (A) 3,414 132 -- 3,546 Wyeth (A) 9,550 1,068 1,501 12,119 Zimmer Holdings* 2,449 260 1,575 4,284 -------------- --------------- -------------- -------------- 151,443 16,871 44,398 212,712 -------------- --------------- -------------- -------------- Industrials -9.3% 3M 4,541 -- 1,859 6,400 Automatic Data Processing 1,460 -- -- 1,460 Boeing 5,075 -- 2,198 7,273 Cendant* (A) 1,153 -- -- 1,153 Concord EFS* (A) 1,348 -- -- 1,348 General Dynamics 1,651 -- 1,797 3,448 General Electric 28,864 -- 5,492 34,356 Honeywell International 1,550 -- 609 2,159 Illinois Tool Works (A) 1,077 -- 898 1,975 Molex, Cl A -- -- 1,786 1,786 Robert Half International* (A) -- -- 581 581 Sabre Holdings* -- -- 464 464 Southwest Airlines (A) 2,594 -- 1,629 4,223 SPX* 2,805 -- -- 2,805 Union Pacific (A) -- -- 1,765 1,765 United Parcel Service, CI B (A) 3,333 -- -- 3,333 United Technologies (A) 2,917 -- 2,158 5,075 -------------- --------------- -------------- -------------- 58,368 -- 21,236 79,604 -------------- --------------- -------------- -------------- Information Technology - 16.8% Accenture* (A) -- -- 915 915 Adobe Systems 945 -- 434 1,379 Agilent Technologies* (A) 811 -- -- 811 Analog Devices* (A) 940 -- 1,338 2,278 Applied Materials* (A) 1,415 -- 949 2,364 BEA Systems* (A) 1,026 -- -- 1,026 Cisco Systems* 10,776 -- 2,321 13,097 Dell Computer* (A) 9,901 -- 2,913 12,814 Electronic Data Systems (A) 712 -- 235 947 EMC* (A) 645 -- -- 645 First Data 1,280 -- 3,332 4,612 Fiserv* -- -- 1,011 1,011 Hewlett-Packard (A) -- -- 1,992 1,992 Intel (A) 12,928 -- 2,278 15,206 International Business Machines 7,447 -- -- 7,447 JDS Uniphase* (A) -- -- 228 228 KLA-Tencor* (A) 386 -- 743 1,129 Lexmark International Group* (A) 1,578 -- -- 1,578 Linear Technology -- -- 779 779 Maxim Integrated Products* 1,237 -- -- 1,237 Mercury Interactive* (A) 596 -- 317 913 Micron Technology* (A) 1,456 -- 682 2,138 Microsoft* (A) 27,109 -- 9,544 36,653 Network Appliance* (A) -- -- 412 412 Novellus Systems* (A) 475 -- 651 1,126 Oracle Systems* 6,379 -- 749 7,128 Qlogic* (A) -- -- 560 560 QUALCOMM* (A) 5,011 -- 1,420 6,431 Rational Software* 560 -- 318 878 SunGard Data Systems* (A) -- -- 906 906 Teradyne* (A) -- -- 257 257 Texas Instruments 5,734 -- 1,648 7,382 USA Networks* 2,651 -- 1,293 3,944 VERITAS Software* (A) 1,722 -- -- 1,722 Xilinx* (A) 1,163 -- 645 1,808 -------------- --------------- -------------- --------------
31 FIRST AMERICAN LARGE CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets)
PRO FORMA FIRST FIRST FIRST COMBINED FIRST AMERICAN AMERICAN AMERICAN AMERICAN LARGE LARGE CAP HEALTH LARGE CAP CAP GROWTH GROWTH FUND SCIENCES CORE FUND OPPORTUNITIES SHARES FUND SHARES SHARES FUND SHARES ----------- ----------- ---------- -------------- Materials - 2.0% Air Products and Chemicals 32,960 -- -- 32,960 Alcoa (A) 75,270 -- 63,900 139,170 E.I. DuPont de Nemours 37,100 -- 54,900 92,000 Ecolab (A) 81,145 -- -- 81,145 International Paper (A) -- -- 30,000 30,000 Nucor -- -- 17,300 17,300 Praxair -- -- 52,300 52,300 Vulcan Materials (A) -- -- 27,400 27,400 Weyerhaeuser (A) -- -- 15,100 15,100 Pharmaceuticals & Biotechnology - 1.7% Amylin Pharmaceuticals* (A) -- 10,000 -- 10,000 Array Biopharma* -- 27,800 -- 27,800 BioMarin Pharmaceutical* -- 24,100 -- 24,100 Celgene* (A) -- 33,900 -- 33,900 Cephalon* (A) -- 10,600 -- 10,600 Charles River Labaratories International* (A) -- 11,660 -- 11,660 CV Therapeutics* -- 6,400 -- 6,400 Exact Sciences* -- 12,700 -- 12,700 Harvard Bioscience* -- 11,900 -- 11,900 ICOS* -- 5,800 -- 5,800 Invitrogen* (A) -- 12,415 -- 12,415 Medicis, Cl A* (A) -- 6,300 -- 6,300 Neurocrine Biosciences* (A) -- 4,100 -- 4,100 Novartis, ADR -- 3,300 -- 3,300 Noven Pharmaceuticals* -- 10,005 -- 10,005 NPS Pharmaceuticals* (A) -- 11,000 -- 11,000 Pharmaceutical Resources* -- 5,200 -- 5,200 POZEN* -- 13,015 -- 13,015 Regeneration Technologies* -- 35,200 -- 35,200 Sanofi-Synthelabo, ADR* -- 4,700 -- 4,700 Techne* (A) -- 14,070 -- 14,070 Telik * -- 28,520 -- 28,520 Teva Pharmaceutical Industries, ADR -- 7,700 -- 7,700 Third Wave Technologies* -- 105,500 -- 105,500 Software & Services - 0.0% Cerner* -- 5,100 -- 5,100 TriZetto Group* -- 41,520 -- 41,520 Technology Hardware & Equipment - 0.0% Waters* -- 4,800 -- 4,800 Telecommunication Services - 0.8% ALLTEL (A) -- -- 40,000 40,000 AT&T (A) -- -- 75,100 75,100 Sprint PCS Group* (A) 173,630 -- -- 173,630 Verizon Communications (A) 35,142 -- 109,100 144,242 Utilities - 0.4% Constellation Energy (A) -- -- 50,700 50,700 Exelon -- -- 41,000 41,000 Mirant* (A) 81,710 -- -- 81,710 Total Common Stocks Related Party Money Market Fund - 4.9% First American Prime Obligations Fund (B) 16,775,728 1,077,744 23,883,028 41,736,500 Total Related Party Money Market Fund Total Investments - 99.8% (Cost $665,862, $28,249, 309,398, and $1,003,509 respectively) PRO FORMA COMBINED FIRST AMERICAN LARGE FIRST AMERICAN FIRST AMERICAN FIRST AMERICAN CAP GROWTH LARGE CAP HEALTH SCIENCES LARGE CAP CORE OPPORTUNITIES GROWTH FUND FUND MARKET FUND MARKET FUND MARKET MARKET VALUE VALUE VALUE VALUE -------------- --------------- -------------- -------------- 104,883 -- 38,870 143,753 -------------- --------------- -------------- -------------- Materials - 2.0% Air Products and Chemicals 1,385 -- -- 1,385 Alcoa (A) 1,453 -- 1,233 2,686 E.I. DuPont de Nemours 1,338 -- 1,980 3,318 Ecolab (A) 3,386 -- -- 3,386 International Paper (A) -- -- 1,002 1,002 Nucor -- -- 656 656 Praxair -- -- 2,673 2,673 Vulcan Materials (A) -- -- 991 991 Weyerhaeuser (A) -- -- 661 661 -------------- --------------- -------------- -------------- 7,562 -- 9,196 16,758 -------------- --------------- -------------- -------------- Pharmaceuticals & Biotechnology - 1.7% Amylin Pharmaceuticals* (A) -- 166 -- 166 Array Biopharma* -- 217 -- 217 BioMarin Pharmaceutical* -- 140 -- 140 Celgene* (A) -- 571 -- 571 Cephalon* (A) -- 433 -- 433 Charles River Labaratories International* (A) -- 458 -- 458 CV Therapeutics* -- 134 -- 134 Exact Sciences* -- 170 -- 170 Harvard Bioscience* -- 36 -- 36 ICOS* -- 122 -- 122 Invitrogen* (A) -- 423 -- 423 Medicis, Cl A* (A) -- 257 -- 257 Neurocrine Biosciences* (A) -- 168 -- 168 Novartis, ADR -- 131 -- 131 Noven Pharmaceuticals* -- 122 -- 122 NPS Pharmaceuticals* (A) -- 226 -- 226 Pharmaceutical Resources* -- 145 -- 145 POZEN* -- 66 -- 66 Regeneration Technologies* -- 282 -- 282 Sanofi-Synthelabo, ADR* -- 134 -- 134 Techne* (A) -- 461 -- 461 Telik * -- 353 -- 353 Teva Pharmaceutical Industries, ADR -- 516 -- 516 Third Wave Technologies* -- 142 -- 142 -------------- --------------- -------------- -------------- -- 5,873 -- 5,873 -------------- --------------- -------------- -------------- Software & Services - 0.0% Cerner* -- 180 -- 180 TriZetto Group* -- 207 -- 207 -------------- --------------- -------------- -------------- -- 387 -- 387 -------------- --------------- -------------- -------------- Technology Hardware & Equipment - 0.0% Waters* -- 116 -- 116 -------------- --------------- -------------- -------------- Telecommunication Services - 0.8% ALLTEL (A) -- -- 1,605 1,605 AT&T (A) -- -- 902 902 Sprint PCS Group* (A) 340 -- -- 340 Verizon Communications (A) 964 -- 2,994 3,958 -------------- --------------- -------------- -------------- 1,304 -- 5,501 6,805 -------------- --------------- -------------- -------------- Utilities - 0.4% Constellation Energy (A) -- -- 1,257 1,257 Exelon -- -- 1,948 1,948 Mirant* (A) 181 -- -- 181 -------------- --------------- -------------- -------------- 181 -- 3,205 3,386 -------------- --------------- -------------- -------------- Total Common Stocks 525,472 23,431 262,159 811,062 -------------- --------------- -------------- -------------- Related Party Money Market Fund - 4.9% First American Prime Obligations Fund (B) 16,776 1,078 23,883 41,737 -------------- --------------- -------------- -------------- Total Related Party Money Market Fund 16,776 1,078 23,883 41,737 -------------- --------------- -------------- -------------- Total Investments - 99.8% (Cost $665,862, $28,249, 309,398, and $1,003,509 respectively) $ 542,248 $ 24,509 $ 286,042 $ 852,799 ===================================================================
* Non-income producing security (A) This security or a portion of this security is out on loan at September 20, 2002. (B) This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as the advisor for this Fund. Cl - Class 32 FIRST AMERICAN MID CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST AMERICAN FIRST FIRST AMERICAN FIRST FIRST MID CAP AMERICAN AMERICAN MID CAP AMERICAN AMERICAN GROWTH MID CAP MID CAP GROWTH MID CAP MID CAP OPPORTUNITIES GROWTH FUND CORE FUND OPPORTUNITIES GROWTH FUND CORE FUND FUND MARKET SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE VALUE ----------- ------------ ------------- ------------ ------------ ------------- Common Stocks - 95.5% Consumer Discretionary - 19.4% 25,050 -- 25,050 99 Cents Only Stores* $ 519 $ -- $ 519 42,300 134,125 176,425 Abercrombie & Fitch* (A) 832 2,638 3,470 13,850 68,900 82,750 Advanced Auto Parts* (A) 730 3,634 4,364 22,900 -- 22,900 Autozone* (A) 1,806 -- 1,806 66,900 -- 66,900 Bed Bath & Beyond* (A) 2,179 -- 2,179 -- 181,500 181,500 Belo Cl, A -- 3,971 3,971 33,650 -- 33,650 Best Buy* (A) 751 -- 751 77,550 -- 77,550 Big Lots* (A) 1,228 -- 1,228 29,350 -- 29,350 BJ's Wholesale Club* (A) 558 -- 558 45,750 -- 45,750 Blockbuster (A) 1,135 -- 1,135 21,100 111,800 132,900 Brinker International* (A) 547 2,896 3,443 -- 193,900 193,900 Catalina Marketing, Cl C -- 5,445 5,445 -- 147,430 147,430 CDW Computer Centers* (A) -- 6,245 6,245 25,300 -- 25,300 Centex 1,122 -- 1,122 31,300 -- 31,300 Cheesecake Factory* 934 -- 934 -- 131,800 131,800 Claire's Stores (A) -- 2,873 2,873 32,400 -- 32,400 Coach* (A) 829 -- 829 36,600 -- 36,600 Cumulus Media* 646 -- 646 45,600 -- 45,600 Darden Restaurants (A) 1,105 -- 1,105 100,650 604,060 704,710 Dollar General 1,351 8,106 9,457 36,600 158,200 194,800 Dollar Tree Stores* 807 3,487 4,294 8,500 -- 8,500 E.W. Scripps (A) 589 -- 589 13,600 -- 13,600 Entercom Communications* (A) 644 -- 644 -- 123,200 123,200 Fairmont Hotels & Resorts -- 2,932 2,932 52,450 -- 52,450 Family Dollar Stores 1,410 -- 1,410 -- 343,400 343,400 Fox Entertainment Group* (A) -- 7,565 7,565 20,800 -- 20,800 Gentex* (A) 566 -- 566 19,950 -- 19,950 Harman International (A) 1,032 -- 1,032 30,150 -- 30,150 Harrah's Entertainment* 1,454 -- 1,454 116,550 240,700 357,250 Hilton Hotels (A) 1,326 2,739 4,065 31,650 -- 31,650 International Game Technology* (A) 2,188 -- 2,188 -- 40,100 40,100 International Speedway, Cl A -- 1,593 1,593 23,400 -- 23,400 Jones Apparel Group* (A) 718 -- 718 48,050 76,500 124,550 Mandalay Resort Group* (A) 1,612 2,567 4,179 116,000 -- 116,000 Mattel 2,089 -- 2,089 -- 114,000 114,000 Maytag -- 2,643 2,643 27,050 -- 27,050 MGM MIRAGE* (A) 1,009 -- 1,009 19,050 67,000 86,050 Michaels Stores* (A) 871 3,062 3,933 10,950 88,000 98,950 Mohawk Industries* (A) 544 4,369 4,913 25,350 -- 25,350 New York Times, Cl A (A) 1,152 -- 1,152 19,000 -- 19,000 Newell Rubbermaid (A) 587 -- 587 -- 399,110 399,110 Park Place Entertainment* (A) -- 3,173 3,173 50,150 -- 50,150 PETCO Animal Supplies* 1,088 -- 1,088 49,750 -- 49,750 PETsMART* 886 -- 886 33,100 -- 33,100 RadioShack (A) 664 -- 664 15,300 -- 15,300 Rent-A-Center* 795 -- 795 -- 141,425 141,425 Regal Entertainment Group, Cl A* (A) -- 2,517 2,517 14,900 31,400 46,300 Ross Stores 531 1,119 1,650 55,550 383,500 439,050 Ruby Tuesday (A) 1,043 7,202 8,245 -- 171,435 171,435 Scholastic* (A) -- 7,660 7,660 60,700 -- 60,700 Staples* 776 -- 776 87,550 -- 87,550 Starbucks* (A) 1,807 -- 1,807 28,950 -- 28,950 Starwood Hotels & Resorts Worldwide 646 -- 646 19,900 -- 19,900 Tiffany & Company (A) 426 -- 426 49,750 -- 49,750 Univision Communications, Cl A* (A) 1,134 -- 1,134 -- 11,010 11,010 Washington Post, Cl B -- 7,145 7,145 12,500 -- 12,500 Wendy's International (A) 414 -- 414 17,800 249,800 267,600 Westwood One* 636 8,930 9,566 42,000 -- 42,000 Williams-Sonoma* (A) 992 -- 992 54,550 -- 54,550 Yum Brands* (A) 1,512 -- 1,512 ------------ ------------ ------------- 48,220 104,511 152,731 ------------ ------------ ------------- Consumer Staples - 3.1% -- 212,515 212,515 Bunge Limited -- 5,143 5,143 13,200 -- 13,200 Clorox 530 -- 530 73,400 -- 73,400 Coca-Cola Enterprises (A) 1,559 -- 1,559 -- 119,900 119,900 Dial (A) -- 2,573 2,573 -- 46,400 46,400 Dreyer's Grand Ice Cream (A) -- 3,242 3,242 -- 104,900 104,900 Hormel Foods (A) -- 2,295 2,295 29,900 -- 29,900 McCormick & Company (A) 682 -- 682 60,100 56,000 116,100 Pepsi Bottling 1,406 1,310 2,716 -- 24,200 24,200 Performance Food Group* (A) -- 822 822 -- 88,200 88,200 Smithfield Foods* (A) -- 1,385 1,385 -- 265,775 265,775 Tyson Foods, Cl A -- 3,091 3,091 15,450 15,450 Whole Foods Market* (A) 662 -- 662 ------------ ------------ ------------- 4,839 19,861 24,700 ------------ ------------ ------------- Energy - 8.0% 56,450 -- 56,450 BJ Services (A) 1,468 -- 1,468 -- 184,220 184,220 Cal Dive International* (A) -- 3,715 3,715 20,100 -- 20,100 Cooper Cameron* (A) 839 -- 839 -- 138,040 138,040 Enbridge Energy Partners -- 6,046 6,046 43,800 59,000 102,800 ENSCO International (A) 1,097 1,477 2,574 -- 158,290 158,290 Equitable Resources -- 5,469 5,469 -- 317,200 317,200 FMC Technologies* -- 5,316 5,316 122,750 62,000 184,750 Grant Prideco* 1,048 529 1,577 9,150 -- 9,150 Murphy Oil (A) 751 -- 751 26,650 -- 26,650 Nabors Industries* (A) 873 -- 873 51,000 -- 51,000 National-Oilwell* 988 -- 988 35,400 230,080 265,480 Noble* (A) 1,097 7,132 8,229 -- 48,000 48,000 Noble Energy (A) -- 1,631 1,631 47,350 60,000 107,350 Ocean Energy 945 1,197 2,142 33,050 71,200 104,250 Patterson-UTI Energy* (A) 843 1,816 2,659 28,100 -- 28,100 Pioneer Natural Resources* (A) 681 -- 681 69,850 87,775 157,625 Pride International* (A) 908 1,141 2,049 38,050 46,200 84,250 Smith International* (A) 1,115 1,354 2,469 -- 133,460 133,460 Talisman Energy -- 5,352 5,352 -- 122,400 122,400 Valero Energy (A) -- 3,240 3,240 24,500 73,785 98,285 Weatherford International* (A) 910 2,740 3,650 -- 18,000 18,000 Western Gas Resources (A) -- 563 563 39,300 -- 39,300 XTO Energy (A) 810 -- 810 ------------ ------------ ------------- 14,373 48,718 63,091 ------------ ------------ -------------
33 FIRST AMERICAN MID CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST AMERICAN FIRST FIRST AMERICAN FIRST FIRST MID CAP AMERICAN AMERICAN MID CAP AMERICAN AMERICAN GROWTH MID CAP MID CAP GROWTH MID CAP MID CAP OPPORTUNITIES GROWTH FUND CORE FUND OPPORTUNITIES GROWTH FUND CORE FUND FUND MARKET SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE VALUE ----------- ------------ ------------- ------------ ------------ ------------- Financials - 15.0% - 12,450 -- 12,450 Affiliated Managers Group* 555 -- 555 -- 24,627 24,627 Ambac Financial Group (A) -- 1,327 1,327 -- 190,385 190,385 American Financial Group -- 4,383 4,383 -- 387,365 387,365 Arthur J. Gallagher -- 9,549 9,549 -- 27,000 27,000 Associated Banc-Corp -- 857 857 -- 170,470 170,470 Banknorth Group (A) -- 4,049 4,049 40,950 -- 40,950 Brown & Brown 1,229 -- 1,229 -- 268,000 268,000 Charles Schwab (A) -- 2,332 2,332 -- 146,869 146,869 Charter One Financial -- 4,365 4,365 19,100 49,370 68,470 City National (A) 893 2,309 3,202 -- 107,150 107,150 Colonial BancGroup -- 1,329 1,329 18,850 -- 18,850 Commerce Bancorp (A) 782 -- 782 27,100 104,500 131,600 Compass Bancshares 799 3,082 3,881 226,300 -- 226,300 Dime Bancorp* 20 -- 20 23,625 -- 23,625 Doral Financial 570 -- 570 -- 292,225 292,225 E*TRADE Group* (A) -- 1,300 1,300 -- 76,400 76,400 Edwards A.G. (A) -- 2,443 2,443 -- 142,850 142,850 Everest Re Group (A) -- 7,837 7,837 32,500 -- 32,500 Federated Investors 877 -- 877 -- 103,000 103,000 Golden State Bancorp -- 3,329 3,329 -- 69,000 69,000 GreenPoint Financial -- 2,880 2,880 -- 51,000 51,000 HCC Insurance Holdings (A) -- 1,225 1,225 29,350 240,400 269,750 Hibernia, Cl A 587 4,806 5,393 -- 44,550 44,550 Independence Community Bank -- 1,118 1,118 31,050 303,220 334,270 Investors Financial Services (A) 841 8,208 9,049 -- 72,000 72,000 LaBranche* (A) -- 1,458 1,458 28,350 45,700 74,050 Legg Mason (A) 1,207 1,945 3,152 -- 77,900 77,900 M & T Bank (A) -- 6,139 6,139 44,200 -- 44,200 Moody's (A) 2,144 -- 2,144 -- 204,100 204,100 National Commerce Financial -- 5,113 5,113 -- 107,255 107,255 Neuberger Berman (A) -- 2,891 2,891 37,050 85,500 122,550 New York Community Bancorp 1,044 2,409 3,453 19,250 79,330 98,580 North Fork Bancorp (A) 728 3,002 3,730 -- 51,655 51,655 Ohio Casualty* -- 841 841 -- 37,500 37,500 PMI Group -- 1,020 1,020 -- 70,295 70,295 Protective Life (A) -- 2,163 2,163 -- 62,775 62,775 Radian Group (A) -- 2,050 2,050 -- 80,000 80,000 SEI Investments -- 1,910 1,910 48,250 -- 48,250 Synovus Financial 995 -- 995 17,460 33,000 50,460 TCF Financial (A) 739 1,397 2,136 -- 82,000 82,000 W.R. Berkely -- 2,788 2,788 -- 31,000 31,000 Westamerica Bancorporation -- 1,249 1,249 21,400 -- 21,400 Willis Group Holdings* 717 -- 717 ------------ ------------ ------------- 14,727 103,103 117,830 ------------ ------------ ------------- Health Care - 18.1% 26,750 78,600 105,350 AdvancePCS* (A) 603 1,771 2,374 40,400 -- 40,400 Allergan (A) 2,198 -- 2,198 24,550 -- 24,550 AmerisourceBergen (A) 1,753 -- 1,753 39,550 -- 39,550 AMN Healthcare Services* 732 -- 732 38,900 -- 38,900 Andrx Group* (A) 862 -- 862 35,100 -- 35,100 Anthem* (A) 2,282 -- 2,282 53,900 -- 53,900 Applera - Applied Biosystems Group 986 -- 986 -- 73,800 73,800 Apria Healthcare Group* (A) -- 1,739 1,739 17,600 -- 17,600 Barr Laboratories* (A) 1,096 -- 1,096 23,200 -- 23,200 Beckman Coulter (A) 898 -- 898 43,150 -- 43,150 Biogen* 1,263 -- 1,263 93,200 60,550 153,750 Biomet 2,482 1,612 4,094 23,900 -- 23,900 Boston Scientific* 754 -- 754 92,350 -- 92,350 Caremark Rx* (A) 1,570 -- 1,570 49,800 96,800 146,600 Celgene* (A) 839 1,630 2,469 25,350 -- 25,350 Cephalon* (A) 1,035 -- 1,035 Charles River Labaratories International* 33,150 39,500 72,650 (A) 1,301 1,550 2,851 21,450 -- 21,450 Chiron* (A) 749 -- 749 -- 47,300 47,300 Covance* -- 926 926 26,550 -- 26,550 DENTSPLY International 1,067 -- 1,067 14,400 -- 14,400 Diagnostic Products 662 -- 662 -- 51,400 51,400 Edwards Lifesciences* (A) -- 1,315 1,315 26,100 122,245 148,345 Express Scripts* (A) 1,423 6,665 8,088 47,200 58,000 105,200 First Health Group* 1,280 1,573 2,853 -- 19,000 19,000 Forest Laboratories, Cl A* (A) -- 1,558 1,558 73,900 187,900 261,800 Gilead Sciences* (A) 2,478 6,300 8,778 102,750 -- 102,750 Health Management Associates, Cl A 2,078 -- 2,078 -- 105,000 105,000 Health Net* -- 2,252 2,252 -- 514,900 514,900 HealthSouth* -- 2,137 2,137 20,700 34,410 55,110 Henry Schein* 1,092 1,815 2,907 34,600 93,100 127,700 IDEC Pharmaceuticals* (A) 1,437 3,866 5,303 29,550 -- 29,550 IMS Health 442 -- 442 31,100 -- 31,100 Invitrogen* (A) 1,060 -- 1,060 -- 112,000 112,000 IVAX* -- 1,374 1,374 106,848 513,949 620,797 King Pharmaceuticals* 1,941 9,338 11,279 Laboratory Corporation of America 42,300 173,000 215,300 Holdings* (A) 1,429 5,844 7,273 41,150 -- 41,150 Lincare Holdings* (A) 1,277 -- 1,277 78,250 -- 78,250 McKesson HBOC 2,217 -- 2,217 64,000 -- 64,000 MedImmune* 1,339 -- 1,339 19,100 -- 19,100 Mid-Atlantic Medical Services * 691 -- 691 49,800 216,900 266,700 Millennium Pharmaceuticals* (A) 464 2,022 2,486 38,600 103,700 142,300 Mylan Laboratories 1,264 3,395 4,659 -- 264,250 264,250 Omnicare (A) -- 5,581 5,581 23,400 38,425 61,825 Oxford Health Plans* (A) 911 1,496 2,407 -- 60,705 60,705 Priority Healthcare, Cl B* (A) -- 1,530 1,530 28,800 75,400 104,200 Quest Diagnostics* (A) 1,772 4,639 6,411 36,250 -- 36,250 SICOR* 551 -- 551 51,750 -- 51,750 St. Jude Medical* 1,848 -- 1,848 21,350 -- 21,350 STERIS* 532 -- 532 43,950 -- 43,950 Stryker (A) 2,532 -- 2,532 -- 21,270 21,270 Teva Pharmaceutical Industries ADR -- 1,425 1,425 -- 18,000 18,000 Transkaryotic Therapies* (A) -- 583 583 25,450 104,800 130,250 Triad Hospitals * (A) 966 3,977 4,943 13,850 55,400 69,250 Universal Health Services* (A) 708 2,834 3,542 36,850 -- 36,850 Varian Medical Systems* 1,584 -- 1,584 35,350 -- 35,350 Wellpoint Health Networks* (A) 2,591 -- 2,591 55,600 -- 55,600 Zimmer Holdings* 2,132 -- 2,132 ------------ ------------ -------------
34 FIRST AMERICAN MID CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST AMERICAN FIRST FIRST AMERICAN FIRST FIRST MID CAP AMERICAN AMERICAN MID CAP AMERICAN AMERICAN GROWTH MID CAP MID CAP GROWTH MID CAP MID CAP OPPORTUNITIES GROWTH FUND CORE FUND OPPORTUNITIES GROWTH FUND CORE FUND FUND MARKET SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE VALUE ----------- ------------ ------------- ------------ ------------ ------------- 61,171 80,747 141,918 ------------ ------------ ------------- Industrials - 11.7% 36,250 54,600 90,850 AGCO* (A) 841 1,267 2,108 -- 65,450 65,450 Albany International, Cl A -- 1,242 1,242 -- 225,235 225,235 ARAMARK, Cl B -- 4,730 4,730 10,900 -- 10,900 Alliant Techsystems* 755 -- 755 12,000 -- 12,000 American Standard 763 -- 763 35,700 -- 35,700 Apollo Group, Cl A* (A) 1,550 -- 1,550 21,300 -- 21,300 Avery Dennison (A) 1,214 -- 1,214 37,150 291,400 328,550 Bisys Group* (A) 621 4,869 5,490 33,600 45,000 78,600 C. H. Robinson Worldwide 908 1,216 2,124 26,250 41,060 67,310 Career Education* (A) 1,260 1,971 3,231 28,116 15,000 43,116 ChoicePoint* (A) 1,002 534 1,536 29,050 -- 29,050 Cintas Group (A) 1,218 -- 1,218 -- 39,000 39,000 CNF (A) -- 1,224 1,224 40,750 102,000 142,750 Concord EFS* (A) 647 1,620 2,267 28,350 -- 28,350 Cooper Tire & Rubber 458 -- 458 -- 41,125 41,125 Corinthian Colleges* -- 1,552 1,552 14,700 -- 14,700 Danaher 836 -- 836 14,450 -- 14,450 Deluxe 651 -- 651 -- 192,395 192,395 Dun & Bradstreet* (A) -- 6,466 6,466 16,500 -- 16,500 Education Management* 730 -- 730 67,400 -- 67,400 Equifax 1,465 -- 1,465 23,250 82,650 105,900 Expeditors International of Washington 650 2,309 2,959 -- 232,070 232,070 FactSet Research Systems (A) -- 6,161 6,161 17,050 -- 17,050 Fastenal (A) 538 -- 538 53,950 -- 53,950 Flowserve* (A) 540 -- 540 43,900 -- 43,900 H & R Block (A) 1,844 -- 1,844 -- 332,960 332,960 Iron Mountain* (A) -- 8,321 8,321 -- 52,475 52,475 Kaydon -- 1,052 1,052 -- 49,505 49,505 Kennametal -- 1,590 1,590 30,600 -- 30,600 L-3 Communications Holdings* (A) 1,613 -- 1,613 21,350 59,800 81,150 Manpower (A) 626 1,755 2,381 52,400 -- 52,400 Molex, Cl A (A) 1,232 -- 1,232 -- 36,395 36,395 Nordson -- 864 864 -- 85,100 85,100 Norfolk Southern -- 1,718 1,718 -- 43,000 43,000 Paccar (A) -- 1,453 1,453 -- 40,045 40,045 Pentair -- 1,488 1,488 22,250 -- 22,250 Pitney Bowes 678 -- 678 -- 406,400 406,400 Republic Services* -- 7,640 7,640 -- 70,700 70,700 Robert Half International* (A) -- 1,122 1,122 -- 33,400 33,400 SPX* (A) -- 3,370 3,370 48,300 -- 48,300 Swift Transportation* (A) 754 -- 754 15,000 -- 15,000 University of Pheonix Online* 482 -- 482 21,100 -- 21,100 Weight Watchers International 915 -- 915 -- 88,715 88,715 Werner Enterprises* -- 1,631 1,631 ------------ ------------ ------------- 24,791 67,165 91,956 ------------ ------------ ------------- Information Technology - 15.3% 25,500 67,500 93,000 Activision* (A) 610 1,615 2,225 -- 232,300 232,300 Acxiom* (A) -- 3,294 3,294 34,300 -- 34,300 Adobe Systems 655 -- 655 26,400 101,480 127,880 Affiliated Computer Services, Cl A* (A) 1,123 4,318 5,441 87,300 -- 87,300 Altera* 757 -- 757 70,400 -- 70,400 Amazon.com* (A) 1,122 -- 1,122 129,500 -- 129,500 ATI Technologies* 646 -- 646 492,750 -- 492,750 Atmel* 522 -- 522 106,650 -- 106,650 BEA Systems* 552 -- 552 -- 105,000 105,000 BMC Software* -- 1,372 1,372 27,600 -- 27,600 Broadcom, Cl A* (A) 295 -- 295 51,850 -- 51,850 Brocade Communications Systems* (A) 390 -- 390 37,950 277,600 315,550 Cadence Design Systems* (A) 386 2,823 3,209 152,300 -- 152,300 Citrix Systems* 918 -- 918 36,050 -- 36,050 Cognos* 606 -- 606 14,964 -- 14,964 Cymer* (A) 279 -- 279 -- 64,500 64,500 Diebold (A) -- 2,123 2,123 -- 272,525 272,525 DoubleClick* -- 1,401 1,401 31,250 -- 31,250 Electronic Arts* (A) 2,061 -- 2,061 53,400 -- 53,400 Emulex* (A) 601 -- 601 -- 86,105 86,105 Exar* -- 995 995 17,350 -- 17,350 Fair Isaac & Company, Cl A* (A) 567 -- 567 61,400 186,900 248,300 Jabil Circuit* (A) 582 1,770 2,352 44,750 295,385 340,135 Fiserv* 1,257 8,294 9,551 34,250 207,740 241,990 Integrated Circuit Systems* (A) 538 3,262 3,800 -- 549,150 549,150 Integrated Device Technology* (A) -- 5,733 5,733 -- 77,000 77,000 International Rectifier* (A) -- 1,203 1,203 70,350 112,300 182,650 Intersil, Cl A* (A) 912 1,455 2,367 56,700 -- 56,700 Intuit* 2,582 -- 2,582 33,850 -- 33,850 Jabil Circuit* (A) 500 -- 500 30,800 -- 30,800 KLA-Tencor* (A) 861 -- 861 -- 122,500 122,500 Kronos* -- 3,017 3,017 40,600 -- 40,600 Lam Research* (A) 361 -- 361 -- 66,455 66,455 Lawson Software* -- 235 235 17,800 -- 17,800 Lexmark International Group, Cl A* (A) 837 -- 837 -- 47,000 47,000 Linear Technology -- 974 974 33,900 -- 33,900 Marvell Technology Group* (A) 537 -- 537 72,350 228,050 300,400 Microchip Technology* (A) 1,480 4,664 6,144 37,950 -- 37,950 MKS Instruments* 414 -- 414 -- 110,600 110,600 NetIQ* (A) -- 1,604 1,604 94,000 -- 94,000 Network Appliance* (A) 689 -- 689 77,400 136,600 214,000 Network Associates* (A) 823 1,452 2,275 19,850 -- 19,850 Novellus Systems* (A) 413 -- 413 83,400 -- 83,400 PeopleSoft* 1,032 -- 1,032 18,600 -- 18,600 PMC-Sierra* (A) 72 -- 72 -- 287,210 287,210 Polycom* -- 1,950 1,950 19,900 -- 19,900 Qlogic* (A) 518 -- 518 82,950 278,800 361,750 Rational Software* 358 1,204 1,562 115,900 121,800 237,700 RF Micro Devices* (A) 695 731 1,426 67,550 76,775 144,325 Semtech* 655 745 1,400 114,250 -- 114,250 Siebel Systems* 657 -- 657 -- 84,560 84,560 Storage Technology* -- 889 889 97,500 178,950 276,450 SunGard Data Systems* 1,896 3,481 5,377 32,600 48,500 81,100 Symantec* (A) 1,096 1,631 2,727 11,550 49,600 61,150 Synopsys* (A) 441 1,892 2,333
35 FIRST AMERICAN MID CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST AMERICAN FIRST FIRST AMERICAN FIRST FIRST MID CAP AMERICAN AMERICAN MID CAP AMERICAN AMERICAN GROWTH MID CAP MID CAP GROWTH MID CAP MID CAP OPPORTUNITIES GROWTH FUND CORE FUND OPPORTUNITIES GROWTH FUND CORE FUND FUND MARKET SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE VALUE ----------- ------------ ------------- ------------ ------------ ------------- -- 272,800 272,800 Tech Data* (A) -- 7,202 7,202 25,100 -- 25,100 Teradyne* (A) 241 -- 241 32,750 354,700 387,450 USA Interactive* 635 6,874 7,509 99,800 -- 99,800 VERITAS Software* (A) 1,464 -- 1,464 50,950 329,060 380,010 Vishay Intertechnology* (A) 448 2,896 3,344 -- 113,000 113,000 Waters* (A) -- 2,740 2,740 125,500 -- 125,500 Yahoo!* (A) 1,201 -- 1,201 ------------ ------------ ------------- 36,285 83,839 120,124 ------------ ------------ ------------- Materials - 2.0% -- 63,360 63,360 Airgas* -- 832 832 -- 108,425 108,425 AK Steel Holdings* -- 793 793 -- 81,300 81,300 Arch Coal (A) -- 1,346 1,346 11,500 -- 11,500 Ball 580 -- 580 -- 42,805 42,805 Bowater (A) -- 1,511 1,511 -- 154,190 154,190 Domtar -- 1,360 1,360 51,950 -- 51,950 Ecolab (A) 2,168 -- 2,168 80,000 -- 80,000 Newmont Mining (A) 2,201 -- 2,201 -- 68,100 68,100 Pactiv* -- 1,120 1,120 13,200 -- 13,200 PPG Industries 590 -- 590 -- 29,000 29,000 RPM -- 408 408 14,450 -- 14,450 Sigma-Aldrich (A) 712 -- 712 -- 70,225 70,225 Sonoco Products -- 1,497 1,497 ------------ ------------ ------------- 6,251 8,867 15,118 ------------ ------------ ------------- Telecommunication Services - 0.6% -- 111,100 111,100 CenturyTel (A) -- 2,492 2,492 99,100 -- 99,100 Citizens Communications* (A) 672 -- 672 206,050 -- 206,050 Nextel Communications, Cl A* (A) 1,556 -- 1,556 ------------ ------------ ------------- 2,228 2,492 4,720 ------------ ------------ ------------- Utilities - 2.7% -- 74,000 74,000 ALLETE -- 1,598 1,598 -- 85,985 85,985 Alliant Energy (A) -- 1,655 1,655 -- 265,860 265,860 Energy East -- 5,267 5,267 -- 36,273 36,273 Kinder Morgan -- 1,286 1,286 -- 76,640 -- Kinder Morgan Fractional Shares, (C) -- -- - -- 202,944 202,944 Kinder Morgan Management* (A) -- 6,038 6,038 -- 72,345 72,345 Pepco Holdings -- 1,443 1,443 -- 186,900 186,900 Questar (A) -- 4,269 4,269 ------------ ------------ ------------- -- 21,556 21,556 ------------ ------------ ------------- ------------ ------------ ------------- Total Common Stocks 212,885 540,859 753,744 ------------ ------------ ------------- Related Party Money Market Fund - 4.4% 13,872,208 20,954,309 34,826,517 First American Prime Obligations Fund (B) 13,872 20,954 34,826 ------------ ------------ ------------- 13,872 20,954 34,826 ------------ ------------ ------------- Total Investments - 100.3% (Cost $252,655, $606,497, and $859,152 respectively) $ 226,757 $ 561,813 $ 788,570 ============ ============ =============
* Non-income producing security (A) This security or a portion of this security is out on loan at September 30, 2002. (B) This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as the advisor for this Fund. (C) Security is valued at fair value under guidelines established and approved by the board of directors. ADR - American Depositary Receipt Cl - Class 36 FIRST AMERICAN SMALL CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP CORE FUND CORE FUND SELECT CORE FUND CORE FUND SELECT FUND SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE MARKET VALUE ---------- ---------- ----------- ------------ ------------ ------------ Common Stocks - 94.1% Consumer Discretionary - 22.5% 33,700 331,760 365,460 4Kids Entertainment* (A) $ 800 $ 7,873 $ 8,673 14,350 -- 14,350 Action Performance* 369 -- 369 -- 145,800 145,800 Advanced Auto Parts* (A) -- 7,689 7,689 19,000 -- 19,000 ADVO* 603 -- 603 25,650 -- 25,650 Aeropostale* 395 -- 395 -- 479,856 479,856 Alliance Atlantis Communications, Cl B* -- 4,759 4,759 76,100 -- 76,100 Alliance Gaming* 1,176 -- 1,176 32,000 -- 32,000 Ameristar Casinos* 607 -- 607 -- 55,300 55,300 Beazer Homes USA* (A) -- 3,376 3,376 80,250 -- 80,250 Boyd Gaming* 1,498 -- 1,498 53,800 -- 53,800 California Pizza Kitchen* (A) 1,238 -- 1,238 -- 51,300 51,300 Cato, CL A -- 974 974 -- 206,900 206,900 CBRL Group (A) -- 4,721 4,721 16,650 -- 16,650 Christopher & Banks* (A) 418 -- 418 40,200 -- 40,200 Cost Plus* 1,079 -- 1,079 91,850 247,800 339,650 CSK Auto* 1,146 3,092 4,238 -- 103,300 103,300 Cumulus Media, CL A* -- 1,823 1,823 36,500 203,291 239,791 Electronics Boutique & Holdings* (A) 1,002 5,580 6,582 -- 171,400 171,400 Fairmont Hotels & Resorts -- 4,079 4,079 -- 210,300 210,300 Finish Line, Cl A* -- 1,897 1,897 28,250 -- 28,250 Fred's, Cl A 843 -- 843 53,500 -- 53,500 GameStop* 1,094 -- 1,094 -- 237,000 237,000 Gaylord Entertainment* -- 4,484 4,484 -- 106,168 106,168 GTECH Holdings* (A) -- 2,635 2,635 35,650 34,850 70,500 Gymboree* (A) 581 568 1,149 93,550 -- 93,550 Hollywood Entertainment* 1,358 -- 1,358 50,450 263,087 313,537 Hot Topic* (A) 910 4,743 5,653 122,800 -- 122,800 Insight Enterprises* 1,246 -- 1,246 33,350 -- 33,350 Isle of Capri Casinos* 556 -- 556 49,150 -- 49,150 Kenneth Cole Productions* 998 -- 998 61,200 236,300 297,500 Kirkland's* 1,047 4,041 5,088 49,050 -- 49,050 Landry's Restaurants 1,108 -- 1,108 15,800 -- 15,800 Lee Enterprises 519 -- 519 -- 88,200 88,200 Lin TV, Cl A* (A) -- 2,183 2,183 29,900 -- 29,900 Linens 'N Things* 549 -- 549 -- 91,200 91,200 Maytag -- 2,114 2,114 117,000 -- 117,000 Movie Gallery* (A) 1,756 -- 1,756 41,550 -- 41,550 Nautilus Group* (A) 810 -- 810 24,650 210,798 235,448 O'Reilly Automotive* 705 6,033 6,738 -- 271,202 271,202 Orient Express Hotels* (A) -- 3,707 3,707 25,850 -- 25,850 P F Chang's China Bistro* 750 -- 750 45,300 -- 45,300 Pacific Sunwear of California* (A) 922 -- 922 31,600 241,800 273,400 Panera Bread, Cl A* (A) 853 6,529 7,382 59,300 -- 59,300 Penn National Gaming* 1,120 -- 1,120 -- 130,900 130,900 Pinnacle Entertainment* -- 956 956 58,150 -- 58,150 Quicksilver* 1,314 -- 1,314 35,600 -- 35,600 Racing Champions* (A) 582 -- 582 34,400 -- 34,400 RARE Hospitality International* 806 -- 806 -- 299,300 299,300 Ruby Tuesday (A) -- 5,621 5,621 -- 204,140 204,140 Scholastic* -- 9,121 9,121 32,150 -- 32,150 SCP Pool* (A) 881 -- 881 36,100 -- 36,100 Sharper Image* 690 -- 690 41,750 -- 41,750 Sonic* 964 -- 964 130,950 -- 130,950 Spanish Broadcasting System* 858 -- 858 81,350 -- 81,350 Station Casinos* (A) 1,384 -- 1,384 26,500 -- 26,500 Superior Industries 1,248 -- 1,248 -- 380,300 380,300 The Wet Seal, Cl A* -- 3,803 3,803 -- 145,700 145,700 Toll Brothers* (A) -- 3,167 3,167 35,900 168,500 204,400 Too* 836 3,923 4,759 52,350 -- 52,350 Tropical Sportswear International* 679 -- 679 27,000 -- 27,000 Tupperware 449 -- 449 50,200 209,640 259,840 Ultimate Electronics* (A) 640 2,673 3,313 3,100 -- 3,100 Urban Outfitters* 75 -- 75 -- 186,500 186,500 ValueVision International* -- 2,193 2,193 65,100 -- 65,100 Yankee Candle* 1,118 -- 1,118 ------------ ------------ ------------ 40,580 114,357 154,937 ------------ ------------ ------------ Consumer Staples - 2.2% 13,900 -- 13,900 American Italian Pasta, Cl A* 496 -- 496 36,750 -- 36,750 Delta & Pine Land 689 -- 689 27,600 -- 27,600 Interstate Bakeries 733 -- 733 26,050 -- 26,050 J.M. Smucker 956 -- 956 83,100 -- 83,100 NBTY* 1,079 -- 1,079 -- 279,729 279,729 Performance Food Group * (A) -- 9,500 9,500 78,500 -- 78,500 United Natural Foods* 1,808 -- 1,808 ------------ ------------ ------------ 5,761 9,500 15,261 ------------ ------------ ------------ Energy - 10.2% -- 71,300 71,300 Atwood Oceanics* -- 2,085 2,085 87,500 135,600 223,100 Cal Dive International* (A) 1,765 2,735 4,500 235,250 -- 235,250 Chesapeake Energy (A) 1,553 -- 1,553 48,600 -- 48,600 Dril-Quip* 819 -- 819 22,750 -- 22,750 Evergreen Resources (A) 932 -- 932 46,150 -- 46,150 FMC Technologies* 773 -- 773 -- 57,400 57,400 Frontier Oil -- 712 712 559,700 -- 559,700 Grey Wolf* 2,015 -- 2,015 -- 143,350 143,350 Helmerich & Payne -- 4,907 4,907 319,300 -- 319,300 Horizon Offshore* 1,344 -- 1,344 170,250 -- 170,250 Key Energy Services* 1,342 -- 1,342 -- 42,500 42,500 Knightsbridge Tankers (A) -- 504 504 100,200 710,200 810,400 Lone Star Technologies* 1,187 8,416 9,603 119,950 -- 119,950 Maverick Tube* 1,064 -- 1,064 -- 316,496 316,496 National-Oilwell* (A) -- 6,134 6,134 64,750 -- 64,750 Offshore Logistics* (A) 1,163 -- 1,163 -- 247,900 247,900 Patterson-UTI Energy* (A) -- 6,324 6,324 -- 132,715 132,715 Pioneer Natural Resources* (A) -- 3,218 3,218 -- 303,700 303,700 Pride International* (A) -- 3,948 3,948 61,000 -- 61,000 Remington Oil & Gas* 860 -- 860 49,250 -- 49,250 Spinnaker Exploration* 1,413 -- 1,413 -- 130,900 130,900 Teekay Shipping (A) -- 3,731 3,731 421,950 -- 421,950 Trico Marine Services* 1,072 -- 1,072 142,900 496,900 639,800 Ultra Petroleum* 1,193 4,149 5,342 90,050 -- 90,050 Universal Compression Holdings* 1,459 -- 1,459
37 FIRST AMERICAN SMALL CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP CORE FUND CORE FUND SELECT CORE FUND CORE FUND SELECT FUND SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE MARKET VALUE ---------- ---------- ----------- ------------ ------------ ------------ -- 152,100 152,100 Varco International* (A) -- 2,573 2,573 27,750 -- 27,750 Western Gas Resources (A) 867 -- 867 ------------ ------------ ------------ 20,821 49,436 70,257 ------------ ------------ ------------ Financials - 10.3% 19,500 -- 19,500 Alexandria Real Estate Equities (REIT) 828 -- 828 42,650 -- 42,650 Arch Cap Group* 1,190 -- 1,190 -- 176,030 176,030 Arthur J. Gallagher -- 4,339 4,339 30,500 -- 30,500 Boston Private Financial Holdings 650 -- 650 72,050 -- 72,050 Brookline Bancorp 847 -- 847 16,900 -- 16,900 Camden Property Trust 560 -- 560 24,550 -- 24,550 Chateau Communities (REIT) 648 -- 648 32,500 -- 32,500 Chelsea Property Group (REIT) 1,097 -- 1,097 49,950 -- 49,950 Chittenden 1,479 -- 1,479 26,300 -- 26,300 Commercial Federal 573 -- 573 43,650 -- 43,650 Community First Bankshares 1,217 -- 1,217 40,950 97,280 138,230 Cullen/Frost Bankers 1,398 3,322 4,720 32,400 -- 32,400 Dime Community Bancshares 694 -- 694 70,550 216,715 287,265 East West Bancorp 2,382 7,316 9,698 -- 40,200 40,200 Everest Re Group -- 2,205 2,205 -- 36,900 36,900 Federal Agricultural Mortgage, Cl C* (A) -- 1,089 1,089 38,700 -- 38,700 Federal Realty Investment Trust (REIT) 1,045 -- 1,045 25,550 -- 25,550 First Bank - Puerto Rico 974 -- 974 20,900 -- 20,900 First Community Bancorp 605 -- 605 31,050 -- 31,050 Healthcare (REIT) 849 -- 849 33,950 -- 33,950 Hilb, Rogal & Hamilton 1,400 -- 1,400 27,650 -- 27,650 Hudson United Bancorp 735 -- 735 27,050 -- 27,050 Independence Community Bank 679 -- 679 27,550 -- 27,550 IndyMac Bancorp* 531 -- 531 12,050 201,744 213,794 Jefferies Group (A) 460 7,699 8,159 38,150 -- 38,150 Macerich (REIT) 1,182 -- 1,182 37,300 -- 37,300 Mills (REIT) 1,106 -- 1,106 86,050 -- 86,050 NetBank* 896 -- 896 23,250 -- 23,250 New Century Financial (A) 544 -- 544 66,300 -- 66,300 Ohio Casualty* (A) 1,079 -- 1,079 38,350 -- 38,350 Pacific Capital Bancorp 1,042 -- 1,042 49,000 -- 49,000 R&G Financial 1,069 -- 1,069 -- 95,600 95,600 RenaissanceRe Holdings (A) -- 3,613 3,613 18,450 -- 18,450 Shurgard Storage Centers (REIT) 583 -- 583 32,600 -- 32,600 Sky Financial Group 649 -- 649 21,450 -- 21,450 SL Green Realty (REIT) 659 -- 659 16,750 -- 16,750 Southwest Bancorp of Texas* (A) 610 -- 610 59,050 -- 59,050 Staten Island Bancorp 1,027 -- 1,027 122,400 -- 122,400 Sterling Bancshares 1,600 -- 1,600 27,325 -- 27,325 Texas Regional Bancshares, Cl A 915 -- 915 54,950 -- 54,950 TrustCo Bank Corporation of New York 581 -- 581 29,100 -- 29,100 UCBH Holdings 1,143 -- 1,143 42,150 -- 42,150 United Bankshares (A) 1,223 -- 1,223 109,200 -- 109,200 W Holding 1,780 -- 1,780 40,900 -- 40,900 Washington Real Estate Investment Trust 1,038 -- 1,038 24,200 -- 24,200 Webster Financial 813 -- 813 38,400 -- 38,400 Wintrust Financial 1,100 -- 1,100 ------------ ------------ ------------ 41,480 29,583 71,063 ------------ ------------ ------------ Health Care-14.3% 26,950 -- 26,950 Accredo Health* (A) 1,285 -- 1,285 28,200 -- 28,200 American Pharmaceutical Partners* 461 -- 461 32,200 -- 32,200 AMERIGROUP* 1,080 -- 1,080 38,150 -- 38,150 Amsurg, Cl A* 1,151 -- 1,151 65,400 -- 65,400 Amylin Pharmaceuticals* (A) 1,087 -- 1,087 50,850 -- 50,850 Apria Healthcare Group* 1,198 -- 1,198 18,750 8,350 27,100 Bio-Rad Laboratories, Cl A* 706 314 1,020 22,550 -- 22,550 Biosite* (A) 654 -- 654 -- 249,700 249,700 Celgene* (A) -- 4,205 4,205 -- 87,940 87,940 Cephalon* (A) -- 3,590 3,590 20,450 -- 20,450 CIMA Labs* 514 -- 514 -- 279,126 279,126 Community Health Systems* (A) -- 7,433 7,433 14,300 -- 14,300 Cooper (A) 751 -- 751 52,550 226,200 278,750 Covance* (A) 1,028 4,427 5,455 38,300 -- 38,300 CV Therapeutics* 801 -- 801 31,300 -- 31,300 Cyberonics* 539 -- 539 20,150 -- 20,150 Diagnostic Products 927 -- 927 13,800 -- 13,800 DIANON Systems* 653 -- 653 58,800 -- 58,800 Enzon* (A) 1,131 -- 1,131 155,050 -- 155,050 First Horizon Pharmaceutical* 837 -- 837 45,100 -- 45,100 Hanger Orthopedic Group* 717 -- 717 43,450 -- 43,450 IDEXX Laboratories* (A) 1,345 -- 1,345 28,050 -- 28,050 INAMED* 645 -- 645 -- 230,500 230,500 Integra LifeSciences* -- 3,663 3,663 7,550 -- 7,550 InterMune* 248 -- 248 22,450 -- 22,450 Invacare 769 -- 769 56,400 -- 56,400 K V Pharmaceutical, Cl A* 1,066 -- 1,066 62,100 -- 62,100 MedCath* (A) 702 -- 702 40,300 -- 40,300 Medical Staffing Network Holdings* 611 -- 611 -- 55,507 55,507 Medicis, Cl A* (A) -- 2,269 2,269 26,850 -- 26,850 Neurocrine Biosciences* 1,101 -- 1,101 51,100 52,100 103,200 NPS Pharmaceuticals* (A) 1,051 1,072 2,123 21,250 -- 21,250 Ocular Sciences* 496 -- 496 -- 210,400 210,400 Omnicare (A) -- 4,444 4,444 27,100 -- 27,100 OSI Pharmaceuticals* 460 -- 460 22,750 -- 22,750 Pediatrix Medical Group* 705 -- 705 -- 163,500 163,500 Pharmaceutical Product Development* (A) -- 3,162 3,162 42,250 -- 42,250 Pharmaceutical Resources* 1,182 -- 1,182 -- 383,500 383,500 Priority Healthcare, Cl B* (A) -- 9,664 9,664 130,500 -- 130,500 Protein Design Labs* 1,083 -- 1,083 86,250 116,200 202,450 Province Healthcare* 1,479 1,993 3,472 36,150 -- 36,150 RehabCare Group* (A) 836 -- 836 40,550 88,669 129,219 Respironics* 1,298 2,838 4,136 56,700 -- 56,700 SangStat Medical* (A) 1,183 -- 1,183 50,650 -- 50,650 Scios* (A) 1,289 -- 1,289 41,900 -- 41,900 Sierra Health Services* 752 -- 752 27,600 -- 27,600 Stericycle* (A) 936 -- 936 52,600 -- 52,600 STERIS* 1,310 -- 1,310 17,850 -- 17,850 SuriModics* 567 -- 567 41,250 -- 41,250 Techne* (A) 1,353 -- 1,353 82,950 -- 82,950 Telik* 1,027 -- 1,027
38 FIRST AMERICAN SMALL CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP CORE FUND CORE FUND SELECT CORE FUND CORE FUND SELECT FUND SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE MARKET VALUE ---------- ---------- ----------- ------------ ------------ ------------ 73,350 -- 73,350 TheraSense* (A) 1,024 -- 1,024 33,500 14,200 47,700 Transkaryotic Therapies* (A) 1,086 460 1,546 -- 32,900 32,900 Triad Hospitals* (A) -- 1,249 1,249 21,750 -- 21,750 Trimeris* (A) 971 -- 971 33,550 -- 33,550 Wilson Greatbatch Technologies* 933 -- 933 -- 44,800 44,800 Universal Health Services* (A) -- 2,292 2,292 78,050 -- 78,050 Wright Medical Group* 1,485 -- 1,485 26,300 -- 26,300 Zoll Medical* 800 -- 800 ------------ ------------ ------------ 45,313 53,075 98,388 ------------ ------------ ------------ Industrials - 12.3% 15,500 -- 15,500 A.O. Smith 441 -- 441 -- 83,600 83,600 AGCO* (A) -- 1,939 1,939 30,900 -- 30,900 AMETEK 900 -- 900 50,500 -- 50,500 Apogee Enterprises 552 -- 552 71,650 -- 71,650 Armor Holdings* (A) 1,074 -- 1,074 -- 438,351 438,351 Atlantic Coast Airline Holdings* -- 4,055 4,055 30,300 -- 30,300 Baldor Electric 579 -- 579 31,650 -- 31,650 Black Box* 1,051 -- 1,051 18,700 -- 18,700 Career Education* (A) 898 -- 898 14,550 -- 14,550 Carlisle Companies 534 -- 534 -- 141,800 141,800 Chicago Bridge & Iron -- 3,403 3,403 23,750 -- 23,750 CLARCOR 729 -- 729 56,900 224,200 281,100 Coinstar* 1,467 5,780 7,247 52,250 -- 52,250 Corinthian Colleges* (A) 1,972 -- 1,972 40,100 -- 40,100 Corporate Executive Board* (A) 1,145 -- 1,145 19,250 -- 19,250 DRS Technologies* 716 -- 716 -- 93,590 93,590 EDO (A) -- 2,097 2,097 -- 419,900 419,900 ExpressJet Holdings* -- 3,863 3,863 30,950 -- 30,950 FTI Consulting* (A) 1,231 -- 1,231 -- 75,094 75,094 Global Payments -- 1,922 1,922 109,000 -- 109,000 Headwaters* 1,506 -- 1,506 -- 122,950 122,950 Imagistics International* -- 2,133 2,133 55,200 -- 55,200 InterCept* 546 -- 546 25,600 -- 25,600 ITT Educational Services* 481 -- 481 44,050 -- 44,050 J.B. Hunt Transport Services* (A) 1,037 -- 1,037 -- 284,800 284,800 Knight Transportation* -- 4,415 4,415 37,850 119,000 156,850 Kroll* (A) 751 2,360 3,111 16,700 -- 16,700 Landstar* 819 -- 819 23,650 -- 23,650 Manitowoc 647 -- 647 -- 237,200 237,200 Mesa Air Group* -- 866 866 57,550 -- 57,550 Moore* 564 -- 564 22,200 -- 22,200 MTC Technologies* 481 -- 481 -- 156,800 156,800 Navistar International* -- 3,399 3,399 -- 100,150 100,150 Nordson -- 2,378 2,378 87,650 -- 87,650 Pacer International * 995 -- 995 -- 130,100 130,100 Pall (A) -- 2,054 2,054 35,450 -- 35,450 Paxar 515 -- 515 64,750 -- 64,750 PRG-Schultz International* (A) 802 -- 802 43,950 -- 43,950 Regis 1,243 -- 1,243 -- 74,400 74,400 Roadway -- 2,729 2,729 27,350 -- 27,350 Roper Industries (A) 944 -- 944 -- 175,600 175,600 SkyWest -- 2,300 2,300 8,200 -- 8,200 Strayer Education* 488 -- 488 -- 74,100 74,100 Swift Transportation* -- 1,156 1,156 -- 141,300 141,300 Triumph Group* -- 3,956 3,956 26,300 -- 26,300 Veridian* 657 -- 657 19,300 130,300 149,600 Waste Connections* (A) 671 4,533 5,204 -- 93,700 93,700 Yellow* (A) -- 2,765 2,765 ------------ ------------ ------------ 26,436 58,103 84,539 ------------ ------------ ------------ Information Technology - 19.5% 111,400 -- 111,400 02Micro International* (A) 878 -- 878 83,050 -- 83,050 Advanced Energy Industries* 740 -- 740 247,920 362,254 610,174 Aeroflex* 1,250 1,826 3,076 -- 232,225 232,225 Anaren Microwave* (A) -- 1,909 1,909 97,400 -- 97,400 Asyst Technologies* (A) 588 -- 588 62,950 513,834 576,784 ATMI* (A) 887 7,245 8,132 124,600 -- 124,600 Axcelis Technologies* 608 -- 608 24,400 -- 24,400 BARRA* 667 -- 667 115,450 -- 115,450 Borland Software* 899 -- 899 46,350 -- 46,350 Business Objects, ADR* 492 -- 492 23,700 -- 23,700 Cabot Microelectronics* (A) 883 -- 883 38,600 -- 38,600 CACI International, Cl A* 1,368 -- 1,368 126,050 -- 126,050 Carreker* 773 -- 773 242,400 -- 242,400 Centillium Communications* 291 -- 291 -- 26,800 26,800 Cerner* (A) -- 944 944 430,250 -- 430,250 ChipPAC* 920 -- 920 168,450 -- 168,450 Citrix Systems* 1,016 -- 1,016 -- 297,860 297,860 Cognex* (A) -- 4,143 4,143 5,800 -- 5,800 Cognizant Technology Solutions* (A) 333 -- 333 64,300 -- 64,300 CoorsTek* 965 -- 965 82,900 -- 82,900 Cree* (A) 1,036 -- 1,036 -- 184,500 184,500 Cymer* (A) -- 3,439 3,439 41,350 -- 41,350 Digital Insight* (A) 650 -- 650 54,300 -- 54,300 Documentum* (A) 627 -- 627 -- 329,600 329,600 DoubleClick* -- 1,694 1,694 116,900 956,710 1,073,610 Entegris* 909 7,434 8,343 -- 198,239 198,239 Exar* -- 2,290 2,290 118,150 -- 118,150 Extreme Networks* 497 -- 497 23,833 -- 23,833 Fair Isaac & Company (A) 779 -- 779 26,950 -- 26,950 Fidelity National Information Solutions* 412 -- 412 59,900 -- 59,900 FileNET* 620 -- 620 -- 166,087 166,087 Fisher Scientific International* (A) -- 5,041 5,041 105,750 -- 105,750 Foundry Networks* 580 -- 580 32,100 -- 32,100 Global Imaging Systems* 606 -- 606 42,450 -- 42,450 Hyperion Solutions* 779 -- 779 -- 455,475 455,475 Inforte* (A) -- 2,332 2,332 -- 145,900 145,900 Integrated Circuit Systems* -- 2,291 2,291 -- 533,600 533,600 Integrated Device Technology* (A) -- 5,571 5,571 70,800 -- 70,800 Intergraph* 1,210 -- 1,210 27,350 -- 27,350 Internet Security Systems* (A) 337 -- 337 -- 339,493 339,493 IXYS* (A) -- 1,708 1,708 29,050 101,400 130,450 Kronos* 716 2,497 3,213 185,850 -- 185,850 Legato Systems* 513 -- 513 238,750 -- 238,750 MatrixOne* 1,036 -- 1,036
39 FIRST AMERICAN SMALL CAP CORE FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP SMALL CAP CORE FUND CORE FUND SELECT CORE FUND CORE FUND SELECT FUND SHARES SHARES FUND SHARES MARKET VALUE MARKET VALUE MARKET VALUE ---------- ---------- ----------- ------------ ------------ ------------ 76,200 -- 76,200 McDATA, Cl A* 414 -- 414 -- 142,576 142,576 Mettler-Toledo International* (A) -- 3,707 3,707 -- 802,671 802,671 Mykrolis* -- 4,937 4,937 37,550 -- 37,550 NetIQ* (A) 544 -- 544 36,050 -- 36,050 NetScreen Technologies* (A) 391 -- 391 218,520 -- 218,520 Oak Technology* (A) 695 -- 695 48,900 -- 48,900 Overture Services* 1,153 -- 1,153 -- 151,400 151,400 Photon Dynamics* (A) -- 2,821 2,821 -- 314,060 314,060 Photronics* (A) -- 3,159 3,159 35,000 -- 35,000 Plantronics* 570 -- 570 -- 200,300 200,300 Power Integrations* (A) -- 2,442 2,442 26,400 -- 26,400 Progress Software* 319 -- 319 24,400 105,700 130,100 ProQuest* (A) 741 3,208 3,949 62,950 -- 62,950 Quest Software* 592 -- 592 50,800 -- 50,800 SanDisk* (A) 666 -- 666 153,050 -- 153,050 ScanSoft* (A) 505 -- 505 39,000 -- 39,000 Silicon Laboratories* (A) 715 -- 715 132,300 -- 132,300 Silicon Storage Technology* (A) 517 -- 517 102,650 879,200 981,850 Skyworks Solutions* 465 3,983 4,448 32,500 265,521 298,021 Take-Two Interactive Software* (A) 942 7,700 8,642 41,300 380,000 421,300 Tekelec (A) 356 3,279 3,635 39,000 336,266 375,266 THQ* (A) 811 6,994 7,805 131,300 -- 131,300 TriQuint Semiconductor* 463 -- 463 -- 247,500 247,500 TriZetto Group* -- 1,233 1,233 41,100 109,100 150,200 Varian Semiconductor Equipment Associates* 676 1,794 2,470 -- 386,589 386,589 Vastera* -- 831 831 44,600 -- 44,600 WebEx Communications* (A) 499 -- 499 -- 46,835 46,835 Zoran* (A) -- 515 515 ------------ ------------ ------------ 36,899 96,967 133,866 ------------ ------------ ------------ Materials - 1.8% 60,550 -- 60,550 Airgas* 795 -- 795 -- 30,500 30,500 Bowater -- 1,076 1,076 -- 49,010 49,010 Georgia Gulf -- 1,121 1,121 32,350 -- 32,350 Jarden* 878 -- 878 50,900 -- 50,900 Olin (A) 834 -- 834 -- 141,900 141,900 OM Group (A) -- 6,073 6,073 33,500 -- 33,500 Spartech 709 -- 709 16,550 -- 16,550 Steel Dynamics* 217 -- 217 35,000 -- 35,000 Worthington Industries 654 -- 654 ------------ ------------ ------------ 4,087 8,270 12,357 ------------ ------------ ------------ Telecommunication Services - 0.6% 18,200 -- 18,200 Commonwealth Telephone Enterprises* 633 -- 633 -- 637,640 637,640 General Communication, Cl A* -- 2,397 2,397 27,950 -- -- Inter-Tel 569 -- 569 149,200 -- 149,200 Nextel Partners, Cl A* 803 -- 803 ------------ ------------ ------------ 2,005 2,397 4,402 ------------ ------------ ------------ Utilities - 0.4% ------------ ------------ ------------ -- 120,400 -- Philadelphia Suburban (A) -- 2,444 2,444 ------------ ------------ ------------ ------------ ------------ ------------ Total Common Stocks 223,382 424,132 647,514 ------------ ------------ ------------ Related Party Money Market Fund - 6.0% ------------ ------------ ------------ 18,693,635 22,793,630 41,487,265 First American Prime Obligations Fund (B) 18,694 22,794 41,488 ------------ ------------ ------------ Total Investments - 100.1% (Cost $267,148, $500,857, and $768,005 respectively) $ 242,076 $ 446,926 $ 689,002 ============ ============ ============
* Non-income producing security (A) This security or a portion of this security is out on loan at September 30, 2002. (B) This money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as the advisor for this Fund. ADR - American Depositary Receipt Cl - Class REIT - Real Estate Investment Trust 40 FIRST AMERICAN INTERNATIONAL FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA COMBINED FIRST PRO FORMA FIRST FIRST FIRST AMERICAN FIRST COMBINED FIRST AMERICAN AMERICAN AMERICAN EMERGING AMERICAN AMERICAN EMERGING INTERNATIONAL INTERNATIONAL MARKETS FUND INTERNATIONAL INTERNATIONAL MARKETS FUND FUND MARKET FUND MARKET SHARES FUND SHARES FUND SHARES MARKET VALUE VALUE VALUE ------------ ------------- -------------- -------------- ------------- ------------- Foreign Common Stock - 96.4% Australia - 2.4% -- 2,487,800 2,487,800 Aristocrat Leisure $ -- $ 6,530 $ 6,530 -- 346,800 346,800 Macquarie Bank -- 4,176 4,176 -- 336,400 336,400 Wesfarmers -- 4,945 4,945 -------------- ------------- ------------- -- 15,651 15,651 -------------- ------------- ------------- Brazil - 0.1% -------------- ------------- ------------- 49,600 -- 49,600 Aracruz Celulose, ADR* 727 -- 727 -------------- ------------- ------------- China - 2.5% 1,278,000 -- 1,278,000 Beijing Datang Power Generation* 479 -- 479 90,000 -- 90,000 BYD* 183 -- 183 1,138,000 -- 1,138,000 China Eastern Airlines 133 -- 133 471,000 -- 471,000 China Merchants 332 -- 332 1,524,000 -- 1,524,000 China Southern Airlines 379 -- 379 1,414,000 6,377,500 7,791,500 CNOOC 1,976 8,913 10,889 932,000 -- 932,000 Cofco International 242 -- 242 1,456,000 -- 1,456,000 Cosco Pacific 1,018 -- 1,018 1,278,000 -- 1,278,000 Denway Motors 401 -- 401 1,836,000 -- 1,836,000 Huaneng Power International 1,436 -- 1,436 2,222,000 -- 2,222,000 Wah Sang Gas Holding 296 -- 296 1,416,000 -- 1,416,000 Zhejiang Expressway* 472 -- 472 -------------- ------------- ------------- 7,347 8,913 16,260 -------------- ------------- ------------- Croatia - 0.1% -------------- ------------- ------------- 51,700 -- 51,700 Pliva, GDR* 634 -- 634 -------------- ------------- ------------- Czech Republic - 0.2% 24,500 -- 24,500 Cesky Telecom* 192 -- 192 23,600 -- 23,600 Komercni Banka 1,336 -- 1,336 -------------- ------------- ------------- 1,528 -- 1,528 -------------- ------------- ------------- Finland - 1.3% -------------- ------------- ------------- -- 659,600 659,600 Nokia Oyj -- 8,768 8,768 -------------- ------------- ------------- France - 13.5% -- 129,100 129,100 Atos Origin* -- 3,228 3,228 -- 171,090 171,090 Aventis* -- 8,962 8,962 -- 241,500 241,500 BNP Paribas* -- 7,872 7,872 -- 281,200 281,200 Compagnie de Saint-Gobain -- 6,209 6,209 -- 68,150 68,150 Danone -- 8,217 8,217 -- 131,400 131,400 Lafarge* -- 10,493 10,493 -- 114,657 114,657 Sanofi-Synthelabo* -- 6,465 6,465 -- 140,800 140,800 Schneider Electric* -- 6,245 6,245 -- 361,800 361,800 Thomson Multimedia* -- 5,700 5,700 -- 122,350 122,350 TotalFinaElf, Cl B -- 16,107 16,107 -- 150,200 150,200 Vinci -- 9,100 9,100 -------------- ------------- ------------- -- 88,598 88,598 -------------- ------------- ------------- Germany - 0.9% -------------- ------------- ------------- -- 183,200 183,200 Deutsche Boerse AG* -- 5,993 5,993 -------------- ------------- ------------- Great Britain - 18.7% -- 1,222,000 1,222,000 Amvescap* -- 5,785 5,785 -- 881,000 881,000 Aviva -- 4,954 4,954 -- 1,562,000 1,562,000 BAE Systems -- 4,717 4,717 -- 2,104,000 2,104,000 BP -- 14,064 14,064 -- 1,300,200 1,300,200 Compass Group -- 5,419 5,419 -- 4,053,000 4,053,000 Dixons Group* -- 10,996 10,996 -- 1,034,444 1,034,444 Electrocomponents -- 4,100 4,100 -- 1,618,000 1,618,000 EMI Group -- 4,326 4,326 -- 1,093,400 1,093,400 Lloyds TSB Group* -- 8,074 8,074 -- 435,264 435,264 Next* -- 6,360 6,360 -- 512,830 512,830 Reckitt Benckiser* -- 9,679 9,679 -- 510,400 510,400 Royal Bank of Scotland* -- 9,633 9,633 -- 750,400 750,400 Scottish & Southern Energy -- 8,085 8,085 -- 600,000 600,000 Standard Chartered -- 6,181 6,181 -- 2,898,490 2,898,490 Tesco* -- 9,380 9,380 -- 8,513,250 8,513,250 Vodafone Group -- 10,913 10,913 -------------- ------------- ------------- -- 122,666 122,666 -------------- ------------- ------------- Hong Kong - 2.9% -- 692,800 692,800 Hang Seng Bank* -- 7,261 7,261 -- 1,056,500 1,056,500 Hutchison Whampoa -- 6,096 6,096 -- 142,000 142,000 Peregrine Investment Holdings* (A) -- -- - -- 928,000 928,000 Sun Hung Kai Properties -- 5,449 5,449 -------------- ------------- ------------- -- 18,806 18,806 -------------- ------------- ------------- Hungary - 0.3% 797 -- 797 EGIS 34 -- 34 225,100 -- 225,100 OTP Bank 1,846 -- 1,846 -------------- ------------- ------------- 1,880 -- 1,880 -------------- ------------- ------------- India - 0.2% -------------- ------------- ------------- 53,500 -- 53,500 Ranbaxy Laboratories, GDR 1,014 -- 1,014 -------------- ------------- ------------- Indonesia - 0.2% 1,174,500 -- 1,174,500 PT Astra International* 349 -- 349 3,339,000 -- 3,339,000 PT Indofood Sukses Makmur 278 -- 278 1,409,500 -- 1,409,500 PT Telekomunikasi Industries 584 -- 584 -------------- ------------- ------------- 1,211 -- 1,211 -------------- ------------- ------------- Ireland - 2.1% -- 534,960 534,960 CRH -- 5,964 5,964 -- 698,300 698,300 Irish Life & Permanent -- 7,937 7,937 -------------- ------------- ------------- -- 13,901 13,901 -------------- ------------- ------------- Israel - 0.2% -------------- ------------- ------------- 16,000 -- 16,000 Teva Pharmaceutical 1,072 -- 1,072 -------------- ------------- ------------- Italy - 6.9% -- 447,600 447,600 Assicurazioni Generali* -- 6,565 6,565
41 FIRST AMERICAN INTERNATIONAL FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA COMBINED FIRST PRO FORMA FIRST FIRST FIRST AMERICAN FIRST COMBINED FIRST AMERICAN AMERICAN AMERICAN EMERGING AMERICAN AMERICAN EMERGING INTERNATIONAL INTERNATIONAL MARKETS FUND INTERNATIONAL INTERNATIONAL MARKETS FUND FUND MARKET FUND MARKET SHARES FUND SHARES FUND SHARES MARKET VALUE VALUE VALUE ------------ ------------- -------------- -------------- ------------- ------------- -- 828,400 828,400 Autogrill* -- 6,542 6,542 -- 803,000 803,000 Banco Popolare di Verona -- 9,166 9,166 -- 1,188,800 1,188,800 ENI* -- 16,308 16,308 -- 4,118,000 4,118,000 IntesaBci -- 6,919 6,919 -------------- ------------- ------------- -- 45,500 45,500 -------------- ------------- ------------- Japan - 24.8% -- 201,700 201,700 Avex -- 2,720 2,720 -- 783,000 783,000 Brother Industries -- 5,544 5,544 -- 163,000 163,000 Canon* -- 5,329 5,329 -- 81,300 81,300 Fanuc* -- 3,633 3,633 -- 154,200 154,200 Fast Retailing -- 3,977 3,977 -- 747 747 Fuji Television -- 3,283 3,283 -- 142,800 142,800 Honda Motor -- 5,783 5,783 -- 103,000 103,000 Ito-Yokado* -- 4,044 4,044 -- 3,342,000 3,342,000 Kanematsu* -- 4,310 4,310 -- 41,700 41,700 Keyence -- 7,001 7,001 -- 619,000 619,000 Mitsubishi -- 4,159 4,159 -- 40,600 40,600 Murata Manufacturing. -- 2,068 2,068 -- 671,000 671,000 NGK Insulators -- 4,520 4,520 -- 66,500 66,500 Nidec -- 3,412 3,412 -- 368,000 368,000 Nikon* -- 2,808 2,808 -- 45,300 45,300 Nintendo* -- 5,277 5,277 -- 925 925 Nippon Mitsubishi Oil* -- 4 4 -- 588 588 Nippon Telegraph & Telephone -- 1,956 1,956 -- 803,000 803,000 Nissan Motor* -- 5,963 5,963 -- 215,500 215,500 Nitto Denko -- 5,470 5,470 -- 367,000 367,000 Nomura Holdings* -- 4,823 4,823 -- 2,290 2,290 NTT Mobile Communications* -- 3,913 3,913 -- 364,000 364,000 Olympus Optical* -- 5,331 5,331 -- 52,700 52,700 Rohm -- 6,186 6,186 -- 232,600 232,600 Sankyo -- 6,420 6,420 -- 132,000 132,000 Seven-Eleven Japan* -- 4,467 4,467 -- 436,000 436,000 Shiseido -- 5,204 5,204 -- 124,900 124,900 Sony* -- 5,243 5,243 -- 1,770,000 1,770,000 Sumitomo Chemical -- 6,790 6,790 -- 800,000 800,000 Sumitomo Metal Mining* -- 3,299 3,299 -- 1,682,000 1,682,000 Sumitomo Trust and Banking* -- 8,829 8,829 -- 128,800 128,800 Takeda Chemical Industries* -- 5,195 5,195 -- 47,300 47,300 Tohoku Pioneer -- 627 627 -- 100,000 100,000 Tokyo Electron* -- 3,828 3,828 -- 1,721,000 1,721,000 Tokyo Gas* -- 5,033 5,033 -- 211,700 211,700 Toys "R" Us-Japan -- 3,374 3,374 -- 956 956 UMC Japan* -- 927 927 -- 85,500 85,500 Yamada Denki -- 2,184 2,184 -------------- ------------- ------------- -- 162,934 162,934 -------------- ------------- ------------- Malaysia - 0.4% 309,000 -- 309,000 AMMB Holdings 330 -- 330 185,600 -- 185,600 Genting 635 -- 635 339,000 -- 339,000 Hong Leong Bank 435 -- 435 67,000 -- 67,000 Malayan Banking 141 -- 141 197,000 -- 197,000 Public Bank 133 -- 133 299,000 -- 299,000 Resorts World 708 -- 708 -- 3,325 3,325 Siverstone* (A) -- -- - -------------- ------------- ------------- 2,382 -- 2,382 -------------- ------------- ------------- Mexico - 0.9% 81,600 -- 81,600 Cemex* 340 -- 340 22,000 -- 22,000 Grupo Modelo 55 -- 55 -- 174,900 174,900 Grupo Televisa* -- 4,458 4,458 448,800 -- 448,800 Wal-Mart De Mexico, Cl U 1,086 -- 1,086 -------------- ------------- ------------- 1,481 4,458 5,939 -------------- ------------- ------------- Netherlands - 2.8% -- 423,200 423,200 Elsevier -- 5,057 5,057 -- 111,330 111,330 Jomed* -- 1,141 1,141 -- 1,233,000 1,233,000 Koninklijke KPN* -- 6,398 6,398 -- 148,600 148,600 Royal Dutch Petroleum -- 6,000 6,000 -------------- ------------- ------------- -- 18,596 18,596 -------------- ------------- ------------- Russian Federation - 1.0% 34,600 -- 34,600 Lukoil Holding, ADR 2,105 -- 2,105 30,100 -- 30,100 Sibneft, ADR* 581 -- 581 39,300 -- 39,300 Surgutneftegaz, ADR* 648 -- 648 45,200 -- 45,200 VimpelCom, ADR* 1,071 -- 1,071 13,700 -- 13,700 Wimm-Bill-Dann Foods, ADR* 234 -- 234 13,900 -- 13,900 Yukos, ADR 1,871 -- 1,871 -------------- ------------- ------------- 6,510 -- 6,510 -------------- ------------- ------------- Singapore - 2.4% -- 873,000 873,000 DBS Group Holdings -- 5,501 5,501 -- 954,000 954,000 Singapore Airlines* -- 5,153 5,153 -- 433,000 433,000 Singapore Press Holdings -- 4,629 4,629 61,000 -- 61,000 Venture Manufacturing 364 -- 364 -------------- ------------- ------------- 364 15,283 15,647 -------------- ------------- ------------- South Africa - 0.4% 8,400 -- 8,400 AngloGold* 454 -- 454 37,800 -- 37,800 Gold Fields 488 -- 488 98,000 -- 98,000 SABMiller 653 -- 653 79,800 -- 79,800 Sasol 900 -- 900 -------------- ------------- ------------- 2,495 -- 2,495 -------------- ------------- ------------- South Korea - 2.7% 39,100 -- 39,100 Hanaro Telecom* 108 -- 108 12,500 -- 12,500 Hite Brewery 601 -- 601 37,000 -- 37,000 Hyundai Motor 841 -- 841 40,341 -- 40,341 Kookmin Bank 1,470 -- 1,470 29,950 -- 29,950 LG Electronics Investment* 814 -- 814 6,380 -- 6,380 Pacific 613 -- 613 13,700 -- 13,700 Pohang Iron & Steel 1,188 -- 1,188 9,400 -- 9,400 S1 152 -- 152 7,700 69,500 77,200 Samsung Electronics 1,872 8,218 10,090 21,560 -- 21,560 Samsung Fire & Marine Insurance 1,254 -- 1,254
42 FIRST AMERICAN INTERNATIONAL FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA COMBINED FIRST PRO FORMA FIRST FIRST FIRST AMERICAN FIRST COMBINED FIRST AMERICAN AMERICAN AMERICAN EMERGING AMERICAN AMERICAN EMERGING INTERNATIONAL INTERNATIONAL MARKETS FUND INTERNATIONAL INTERNATIONAL MARKETS FUND FUND MARKET FUND MARKET SHARES FUND SHARES FUND SHARES MARKET VALUE VALUE VALUE ------------ ------------- -------------- -------------- ------------- ------------- 3,200 -- 3,200 Shinsegae 482 -- 482 -------------- ------------- ------------- 9,395 8,218 17,613 -------------- ------------- ------------- Spain - 2.9% -- 389,200 389,200 Altadis* -- 8,693 8,693 -- 1,121,600 1,121,600 Amadeus Global Travel* -- 4,700 4,700 -- 632,600 632,600 NH Hoteles* -- 5,564 5,564 -------------- ------------- ------------- -- 18,957 18,957 -------------- ------------- ------------- Sweden - 2.0% -------------- ------------- ------------- -- 1,557,000 1,557,000 Skandinaviska Enskilda* -- 13,265 13,265 -------------- ------------- ------------- Switzerland - 2.4% -- 238,300 238,300 Adecco -- 8,064 8,064 -- 385,100 385,100 Credit Suisse* -- 7,555 7,555 -------------- ------------- ------------- -- 15,619 15,619 -------------- ------------- ------------- Taiwan - 0.5% 136,480 -- 136,480 Benq 172 -- 172 2,160,000 -- 2,160,000 Chinatrust Financial* 1,514 -- 1,514 1,943,000 -- 1,943,000 EVA Airways* 687 -- 687 180,000 -- 180,000 Formosa Plastic 172 -- 172 857,170 -- 857,170 Nan Ya Plastic 662 -- 662 874,000 -- 874,000 Taishin Financial* 350 -- 350 -------------- ------------- ------------- 3,557 -- 3,557 -------------- ------------- ------------- Thailand - 0.7% 1,244,500 -- 1,244,500 Bangkok Bank* 1,525 -- 1,525 371,000 -- 371,000 Kiatnakin Finance 268 -- 268 265,000 -- 265,000 Land & Houses* 404 -- 404 1,217,000 -- 1,217,000 National Finance* 397 -- 397 226,000 -- 226,000 PTT 214 -- 214 23,000 -- 23,000 Siam Cement 451 -- 451 804,000 -- 804,000 Siam Commercial Bank* 431 -- 431 1,320,000 -- 1,320,000 Thai Farmers Bank* 778 -- 778 -------------- ------------- ------------- 4,468 -- 4,468 -------------- ------------- ------------- -------------- ------------- ------------- Total Foreign Common Stocks 46,065 586,126 632,191 -------------- ------------- ------------- Investment Company - 3.2% 2,707,775 18,551,437 21,259,212 Deutsche Liquid Assets Fund 2,708 18,551 21,259 -------------- ------------- ------------- Total Investment Company 2,708 18,551 21,259 -------------- ------------- ------------- Total Investments - 99.6% (Cost $50,515, $757,008, and $807,523) $ 48,773 $ 604,677 $ 653,450 ============== ============= =============
* Non-income producing security ADR - American Depositary Receipt Cl - Class REIT - Real Estate Investment Trust GDR - Global Depositary Receipt At September 30, 2002, sector diversification of the Funds was as follows:
% of Net % of Net Total % of Total Value Assets Assets Net Assets Value (000) Value (000) (000) ------------ ------------- -------------- -------------- ------------- ------------- Foreign Common Stock 20.30 13.40 13.93 Banking $ 9,959 $ 81,427 $ 91,386 17.00 10.00 10.63 Energy 8,296 61,396 69,692 9.20 5.30 5.56 Materials 4,482 32,016 36,498 5.50 0.80 1.20 Transportation 2,688 5,153 7,841 4.90 9.00 8.71 Technology Hardware & Equipment 2,408 54,716 57,124 4.50 2.20 2.34 Utilities 2,211 13,118 15,329 4.20 2.80 2.89 Food, Beverages & Tobacco 2,063 16,910 18,973 4.00 3.80 3.83 Telecommunication Services 1,955 23,180 25,135 3.60 3.40 3.41 Pharmaceuticals & Biotechnology 1,740 20,622 22,362 3.30 1.90 2.03 Automobiles 1,591 11,746 13,337 3.20 5.10 4.96 Retailing 1,568 30,935 32,503 2.70 5.00 4.84 Hotels, Restaurants & Leisure 1,343 30,475 31,818 2.60 3.20 2.16 Insurance 1,254 19,456 20,710 2.50 2.70 2.66 Consumer Durables & Apparel 1,218 16,220 17,438 2.10 1.10 1.14 Health Care Equipment & Services 1,014 6,472 7,486 2.00 4.90 4.67 Diversified Financials 995 29,606 30,601 1.30 2.50 2.06 Household & Personal Products 613 14,883 15,496 1.10 9.60 8.43 Capital Goods 515 58,034 58,549 0.30 2.10 1.97 Commercial Services & Supplies 152 12,764 12,916 -- 4.00 3.73 Media -- 24,473 24,473 -- 2.30 2.11 Food & Drug Retailing -- 13,847 13,847 -- 0.90 0.83 Real Estate -- 5,449 5,449 -- 0.50 0.49 Software & Services -- 3,228 3,228 94.30 96.50 96.39 Total Foreign Common Stocks 46,065 586,126 632,191 5.50 3.10 3.24 Total Short-Term Investments 2,708 18,551 21,259 ------------ ------------- -------------- -------------- ------------- ------------- 99.80 99.60 99.63 Total Investments 48,773 604,677 653,450 0.20 0.40 0.37 Other Assets and Liabilities, Net 73 2,353 2,426 ------------ ------------- -------------- -------------- ------------- ------------- 100.00 100.00 100.00 Net Assets $ 48,846 $607,030 $655,876 ============ ============= ============== ============== ============= =============
43 FIRST AMERICAN FIXED INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED FIRST COMBINED FIRST FIRST FIRST FIRST AMERICAN FIRST AMERICAN AMERICAN AMERICAN AMERICAN FIXED AMERICAN BOND IMMDEX FIXED INCOME CORE BOND BOND IMMDEX INCOME CORE BOND FUND MARKET FUND MARKET FUND MARKET FUND PAR FUND PAR FUND PAR VALUE VALUE VALUE ----------- ---------- ---------- ------------ ------------ ------------ Corporate Bonds - 35.0% Consumer Goods - 0.9% Bristol-Myers Squibb $ 5,000 $ -- $ 5,000 5.750%, 10/01/11 $ 5,391 $ -- $ 5,391 Conagra Foods -- 7,000 7,000 6.750%, 09/15/11 (A) -- 7,992 7,992 Pepsico 1,500 -- 1,500 4.500%, 09/15/04 1,565 -- 1,565 U.S. Tobacco -- 5,000 5,000 6.625%, 07/15/12 (B) -- 5,435 5,435 ------------ ------------ ------------ 6,956 13,427 20,383 ------------ ------------ ------------ Energy - 1.4% Burlington Resources 1,500 -- 1,500 7.400%, 12/01/31 1,749 -- 1,749 Consolidated Natural Gas -- 13,000 13,000 7.250%, 10/01/04 -- 13,921 13,921 Schlumberger Technology 4,000 7,000 11,000 6.500%, 04/15/12 (A) (B) 4,514 7,899 12,413 Sunoco, Callable 06/01/06 @ 100 2,802 -- 2,802 9.375%, 06/01/16 3,436 -- 3,436 ------------ ------------ ------------ 9,699 21,820 31,519 ------------ ------------ ------------ Finance - 16.0% ABN AMRO -- 7,000 7,000 7.550%, 06/28/06 -- 7,992 7,992 Aetna Services 1,800 -- 1,800 6.750%, 09/15/13 2,000 -- 2,000 Allstate 2,530 -- 2,530 6.125%, 02/15/12 2,734 -- 2,734 Associated P&C Holdings 4,895 -- 4,895 6.750%, 07/15/03 (A) 5,038 -- 5,038 Bank of America 3,539 -- 3,539 10.000%, 02/01/03 3,634 -- 3,634 5,155 -- 5,155 10.200% 07/15/15 7,423 -- 7,423 -- 7,000 7,000 7.125%, 09/15/06 -- 8,062 8,062 Bank of Boston 2,500 4,000 6,500 6.375%, 04/15/08 2,721 4,354 7,075 Bear Stearns -- 3,000 3,000 5.700%, 01/15/07 -- 3,199 3,199 Boeing Capital 2,400 -- 2,400 5.800%, 01/15/13 (B) 2,421 -- 2,421 Cigna -- 10,726 10,726 7.400%, 01/15/03 -- 10,862 10,862 Countrywide Home Loan -- 7,000 7,000 5.500%, 08/01/06 -- 7,353 7,353 Credit Suisse First Boston -- 7,000 7,000 5.875%, 08/01/06 -- 7,505 7,505 Dresdner Bank 3,500 -- 3,500 7.250%, 09/15/15 4,254 -- 4,254 ERAC USA Finance -- 7,000 7,000 7.350%, 06/15/08 (B) -- 7,729 7,729 First National Bank of Chicago 1,500 -- 1,500 8.080%, 01/05/18 1,883 -- 1,883 First National Bank of Omaha 2,700 -- 2,700 7.320%, 12/01/10 2,883 -- 2,883 Ford Motor Credit 5,000 -- 5,000 7.250%, 10/25/11 (B) 4,638 -- 4,638 5,000 -- 5,000 6.875%, 02/01/06 4,904 -- 4,904 GE Global Insurance -- 15,000 15,000 7.750%, 06/15/30 -- 16,961 16,961 General Electric Capital 5,000 -- 5,000 6.875%, 11/15/10 5,656 -- 5,656 General Electric Capital, Series A 5,000 -- 5,000 5.000%, 06/15/07 (B) 5,284 -- 5,284 General Motors Acceptance 3,000 -- 3,000 8.750%, 07/15/05 3,242 -- 3,242 2,000 -- 2,000 6.875%, 09/15/11 1,957 -- 1,957 -- 12,000 12,000 6.150%, 04/05/07 -- 12,065 12,065 Goldman Sachs -- 3,000 3,000 6.650%, 05/15/09 -- 3,318 3,318 10,000 -- 10,000 6.250%, 02/01/03 (A) 10,143 -- 10,143 5,000 -- 5,000 6.600%, 01/15/12 5,500 -- 5,500 Heller Financial 1,285 -- 1,285 8.000%, 06/15/05 1,430 -- 1,430 Household Finance -- 10,000 10,000 7.200%, 07/15/06 -- 10,257 10,257 3,000 -- 3,000 8.000%, 07/15/10 3,097 -- 3,097 Household Netherlands 10,000 -- 10,000 6.200%, 12/01/03 10,377 -- 10,377 International Lease Finance -- 5,000 5,000 5.750%, 10/15/06 -- 5,157 5,157 -- 4,940 4,940 5.750%, 02/15/07 -- 5,097 5,097 Key Bank -- 7,000 7,000 7.000%, 02/01/11 -- 7,820 7,820 Lehman Brothers Holdings -- 7,000 7,000 7.875%, 08/15/10 -- 8,233 8,233 2,620 -- 2,620 11.625%, 05/15/05 3,165 -- 3,165 Lehman Brothers Holdings, Series F 5,000 -- 5,000 7.500%, 09/01/06 5,678 -- 5,678 MBNA America Bank -- 4,500 4,500 6.875%, 07/15/04 (B) -- 4,747 4,747 2,000 7,000 9,000 6.625%, 06/15/12 (A) (B) 1,995 6,984 8,979 Merrill Lynch 5,000 -- 5,000 5.880%, 01/15/04 5,199 -- 5,199 Money Store -- 26,795 26,795 7.300%, 12/01/02 -- 27,003 27,003 Morgan Stanley Dean Witter -- 5,000 5,000 5.800%, 04/01/07 -- 5,362 5,362 2,725 -- 2,725 6.100%, 04/15/06 2,942 -- 2,942 8,000 -- 8,000 6.750%, 04/15/11 8,756 -- 8,756 National Rural Utilities -- 10,000 10,000 7.250%, 03/01/12 -- 11,151 11,151 3,300 -- 3,300 5.750%, 08/28/09 3,369 -- 3,369
44 FIRST AMERICAN FIXED INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED FIRST COMBINED FIRST FIRST FIRST FIRST AMERICAN FIRST AMERICAN AMERICAN AMERICAN AMERICAN FIXED AMERICAN BOND IMMDEX FIXED INCOME CORE BOND BOND IMMDEX INCOME CORE BOND FUND MARKET FUND MARKET FUND MARKET FUND PAR FUND PAR FUND PAR VALUE VALUE VALUE ----------- ---------- ---------- ------------ ------------ ------------ Newcourt Credit Group, Series B 3,490 7,000 10,490 6.875%, 02/16/05 3,573 7,166 10,739 Norwest -- 5,000 5,000 6.550%, 12/01/06 -- 5,641 5,641 Paine Webber 2,500 -- 2,500 6.450%, 12/01/03 2,627 -- 2,627 2,450 -- 2,450 6.730%, 01/20/04 2,587 -- 2,587 1,540 -- 1,540 8.875%, 03/15/05 1,736 -- 1,736 Principal Financial 7,000 -- 7,000 8.200%, 08/15/09 (A) 8,040 -- 8,040 Salomon Smith Barney Holdings 2,100 -- 2,100 6.750%, 02/15/03 2,134 -- 2,134 5,375 5,000 10,375 6.500%, 02/15/08 (A) 5,925 5,512 11,437 Sanwa Bank 2,500 -- 2,500 8.350%, 07/15/09 (A) 2,742 -- 2,742 Travelers Group 3,450 -- 3,450 7.000%, 06/15/03 3,560 -- 3,560 Unitedhealth Group 10,000 -- 10,000 6.600%, 12/01/03 10,457 -- 10,457 Western National 2,456 -- 2,456 7.125%, 02/15/04 2,587 -- 2,587 ------------ ------------ ------------ 168,291 199,530 367,821 ------------ ------------ ------------ Manufacturing - 4.3% Alcoa -- 7,150 7,150 5.375%, 01/15/13 -- 7,591 7,591 Boeing -- 10,000 10,000 7.250%, 06/15/25 -- 10,679 10,679 Bombardier -- 4,750 4,750 6.750%, 05/01/12 (A) (B) -- 3,939 3,939 DaimlerChrysler 5,000 -- 5,000 7.200%, 09/01/09 5,367 -- 5,367 Delphi Auto Systems 3,500 -- 3,500 6.550%, 06/15/06 3,750 -- 3,750 Dow Chemical 3,000 5,200 8,200 6.000%, 10/01/12 3,124 5,416 8,540 Ford Motor -- 10,000 10,000 7.450%, 07/16/31 (A) -- 8,142 8,142 2,934 -- 2,934 9.215%, 09/15/21 2,832 -- 2,832 Ford Motor, Callable 11/15/02 @ 104.15 1,000 -- 1,000 8.875%, 11/15/22 899 -- 899 General Motors -- 2,000 2,000 8.875%, 05/15/03 -- 2,052 2,052 5,000 -- 5,000 6.750%, 05/01/28 4,341 -- 4,341 Georgia-Pacific, Callable 10/01/02 @ 104.70 4,605 -- 4,605 9.875%, 11/01/21 3,684 -- 3,684 Honeywell International -- 5,000 5,000 7.000%, 03/15/07 -- 5,643 5,643 IBM 5,000 -- 5,000 6.500%, 01/15/28 (B) 5,279 -- 5,279 Motorola -- 7,000 7,000 6.750%, 02/01/06 (A) -- 6,825 6,825 Pactiv 2,150 -- 2,150 7.950%, 12/15/25 2,452 -- 2,452 Toll Road Investors 5,800 -- 5,800 0.000%, 02/15/04 (A) (C) 5,583 -- 5,583 1,000 -- 1,000 0.000%, 02/15/05 (A) (C) 923 -- 923 TRW 3,360 -- 3,360 6.625%, 06/01/04 3,510 -- 3,510 2,000 -- 2,000 7.625%, 03/15/06 2,201 -- 2,201 Visteon 2,500 -- 2,500 8.250%, 08/01/10 2,708 -- 2,708 ------------ ------------ ------------ 46,653 50,287 96,940 ------------ ------------ ------------ Real Estate - 1.1% Eop Operating -- 5,000 5,000 7.750%, 11/15/07 -- 5,745 5,745 Equity Residential Properties 2,750 -- 2,750 6.625%, 03/15/12 2,958 -- 2,958 Security Capital Group 2,850 -- 2,850 7.750%, 11/15/03 3,018 -- 3,018 Simon Property Group -- 10,000 10,000 7.750%, 01/20/11 -- 11,421 11,421 ------------ ------------ ------------ 5,976 17,166 23,142 ------------ ------------ ------------ Services - 2.5% American Home Products 5,250 -- 5,250 6.700%, 03/15/11 5,743 -- 5,743 AOL Time Warner -- 3,500 3,500 6.875%, 05/01/12 (A) -- 3,185 3,185 British Sky Broadcasting 2,500 -- 2,500 6.875%, 02/23/09 2,512 -- 2,512 Cendant 4,500 -- 4,500 7.750%, 12/01/03 (B) 4,500 -- 4,500 Comcast Cable Communications -- 5,000 5,000 7.125%, 06/15/13 -- 4,625 4,625 Continental Cablevision, Callable 08/01/05 @ 104.75 7,500 -- 7,500 9.500%, 08/01/13 6,975 -- 6,975 Duty Free International 6,450 -- 6,450 7.000%, 01/15/04 (D) 3,161 -- 3,161 Hertz 2,500 -- 2,500 7.625%, 08/15/07 2,464 -- 2,464 J.C. Penney, Callable 10/01/02 @ 104.12 2,758 -- 2,758 9.750%, 06/15/21 2,593 -- 2,593 Kroger -- 7,650 7,650 6.750%, 04/15/12 (A) -- 8,379 8,379 Safeway -- 7,150 7,150 4.800%, 07/16/07 -- 7,418 7,418 Time Warner 2,200 -- 2,200 9.125%, 01/15/13 2,145 -- 2,145 Walt Disney 2,500 -- 2,500 6.375%, 03/01/12 (B) 2,654 -- 2,654 ------------ ------------ ------------ 32,747 23,607 56,354 ------------ ------------ ------------
45 FIRST AMERICAN FIXED INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED FIRST COMBINED FIRST FIRST FIRST FIRST AMERICAN FIRST AMERICAN AMERICAN AMERICAN AMERICAN FIXED AMERICAN BOND IMMDEX FIXED INCOME CORE BOND BOND IMMDEX INCOME CORE BOND FUND MARKET FUND MARKET FUND MARKET FUND PAR FUND PAR FUND PAR VALUE VALUE VALUE ----------- ---------- ---------- ------------ ------------ ------------ Transportation - 1.8% Air 2 US 5,000 -- 5,000 8.627%, 10/01/20 (A) 2,250 -- 2,250 1,000 -- 1,000 10.127%, 10/01/20 (A) 350 -- 350 America West Airlines 1,779 -- 1,779 8.540%, 01/02/06 1,581 -- 1,581 2,758 -- 2,758 7.930%, 01/02/19 2,827 -- 2,827 American Airlines 1,500 -- 1,500 10.210%, 01/01/10 1,508 -- 1,508 Burlington Northern Santa Fe -- 11,825 11,825 6.375%, 12/15/05 -- 13,034 13,034 Continental Airlines, Series 99-2 -- 5,365 5,365 7.056%, 03/15/11 -- 5,003 5,003 Continental Airlines, Series 974C 2,141 -- 2,141 6.800%, 07/02/07 1,728 -- 1,728 CSX 3,000 -- 3,000 5.850%, 12/01/03 3,120 -- 3,120 Federal Express 4,400 -- 4,400 9.650%, 06/15/12 5,827 -- 5,827 Northwest Airlines, Series 991A -- 4,095 4,095 6.810%, 08/01/21 -- 3,693 3,693 ------------ ------------ ------------ 19,191 21,730 40,921 ------------ ------------ ------------ Utilities - 4.5% Alltel -- 10,000 10,000 6.750%, 09/15/05 -- 10,808 10,808 Appalachian Power, Series E -- 5,000 5,000 4.800%, 06/15/05 -- 5,111 5,111 AT&T 2,000 7,000 9,000 6.500%, 11/15/06 (A) 1,653 6,860 8,513 AT&T Wireless 2,000 -- 2,000 7.875%, 03/01/11 1,530 -- 1,530 1,000 -- 1,000 8.125%, 05/01/12 770 -- 770 British Telecom 2,000 -- 2,000 8.375%, 12/15/10 2,346 -- 2,346 Conectiv 2,256 -- 2,256 6.730%, 06/01/06 2,381 -- 2,381 Deutsche Telecom 500 -- 500 7.750%, 06/15/05 531 -- 531 3,000 -- 3,000 8.250%, 06/15/30 3,226 -- 3,226 FPL Group Capital -- 5,000 5,000 7.625%, 09/15/06 -- 5,631 5,631 France Telecom 2,300 -- 2,300 8.250%, 03/01/11 (E) 2,509 -- 2,509 2,000 -- 2,000 8.500%, 03/01/31 (E) 2,201 -- 2,201 GTE North, Series A, Callable 10/01/02 @ 104.00 1,100 -- 1,100 9.600%, 01/01/21 1,151 -- 1,151 Nortel Networks -- 1,000 1,000 6.875%, 10/01/02 -- 985 985 Northern State Power-Minnesota -- 5,480 5,480 8.000%, 08/28/12 (B) -- 5,804 5,804 Ohio Valley Electric -- 4,000 4,000 5.940%, 02/12/06 (B) -- 4,246 4,246 Old Dominion Electric Co-op First Mortgage, Callable 12/01/02 @ 108.76 6,850 -- 6,850 8.760%, 12/01/22 7,651 -- 7,651 PSEG Power 2,500 5,000 7,500 6.950%, 06/01/12 (A) (B) 2,431 4,861 7,292 PSI Energy 3,100 -- 3,100 7.850%, 10/15/07 3,449 -- 3,449 Qwest 2,000 -- 2,000 7.250%, 09/15/25 1,380 -- 1,380 Sprint 1,750 -- 1,750 9.000%, 10/15/19 1,260 -- 1,260 Sprint Capital 3,250 -- 3,250 5.700%, 11/15/03 2,893 -- 2,893 Utilicorp United 3,000 -- 3,000 7.625%, 11/15/09 2,220 -- 2,220 Verizon Global Funding 7,000 -- 7,000 7.250%, 12/01/10 (B) 7,348 -- 7,348 -- 5,000 5,000 7.750%, 12/01/30 -- 4,963 4,963 Verizon Wireless -- 6,560 6,560 5.375%, 12/15/06 (B) -- 6,170 6,170 ------------ ------------ ------------ 46,930 55,439 102,369 ------------ ------------ ------------ Yankee - 2.5% AT&T Canada, Callable 11/01/03 @ 105.31 1,000 -- 1,000 10.625%, 11/01/08 90 -- 90 Banco Santander 4,925 -- 4,925 6.500%, 11/01/05 5,376 -- 5,376 Ford Capital 1,400 -- 1,400 9.500%, 06/01/10 1,709 -- 1,709 Hydro-Quebec 3,500 -- 3,500 11.750%, 02/01/12 5,452 -- 5,452 Hydro-Quebec, Callable 01/15/03 @ 100 750 -- 750 9.750%, 01/15/18 765 -- 765 Korea Electric Power, Putable 08/01/04 @ 100 1,400 -- 1,400 6.750%, 08/01/27 1,477 -- 1,477 National Bank of Hungary 2,490 -- 2,490 8.875%, 11/01/13 3,365 -- 3,365 National Westminster Bancorp 1,000 -- 1,000 9.375%, 11/15/03 1,078 -- 1,078 Newfoundland (Province of) Canada 1,975 -- 1,975 10.000%, 12/01/20 2,989 -- 2,989 Norsk Hydro 2,900 -- 2,900 9.000%, 04/15/12 3,791 -- 3,791 Pemex Project 3,000 7,295 10,295 9.125%, 10/13/10 3,199 7,778 10,977 Quebec Province -- 3,000 3,000 7.500%, 09/15/29 (A) -- 3,861 3,861 Stagecoach Holdings 2,500 -- 2,500 8.625%, 11/15/09 2,228 -- 2,228 Sweden (Kingdom of) 1,100 -- 1,100 11.125%, 06/01/15 1,761 -- 1,761 Tyco International 1,100 -- 1,100 6.750%, 02/15/11 (B) 924 -- 924
46 FIRST AMERICAN FIXED INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED FIRST COMBINED FIRST FIRST FIRST FIRST AMERICAN FIRST AMERICAN AMERICAN AMERICAN AMERICAN FIXED AMERICAN BOND IMMDEX FIXED INCOME CORE BOND BOND IMMDEX INCOME CORE BOND FUND MARKET FUND MARKET FUND MARKET FUND PAR FUND PAR FUND PAR VALUE VALUE VALUE ----------- ---------- ---------- ------------ ------------ ------------ Wharf Capital International 2,700 -- 2,700 8.875%, 11/01/04 3,011 -- 3,011 2,675 -- 2,675 7.625%, 03/13/07 3,046 -- 3,046 ------------ ------------ ------------ 40,261 11,639 51,900 ------------ ------------ ------------ ------------ ------------ ------------ Total Corporate Bonds 376,704 414,645 791,349 ------------ ------------ ------------ U.S. Government & Agency Securities - 29.8% U. S. Agency Debentures - 11.1% FHLB 6,000 -- 6,000 5.785%, 02/09/05 6,488 -- 6,488 1,500 -- 1,500 6.365%, 11/05/07 1,716 -- 1,716 7,500 -- 7,500 5.750%, 05/15/08 8,362 -- 8,362 3,000 -- 3,000 6.625%, 11/15/10 3,515 -- 3,515 -- 12,000 12,000 6.090%, 06/02/06 -- 13,353 13,353 FHLMC 15,000 -- 15,000 5.950%, 01/19/06 16,574 -- 16,574 15,000 -- 15,000 5.500%, 07/15/06 16,428 -- 16,428 10,000 -- 10,000 5.125%, 10/15/08 10,843 -- 10,843 7,500 -- 7,500 6.625%, 09/15/09 8,763 -- 8,763 5,000 -- 5,000 7.000%, 03/15/10 5,976 -- 5,976 -- 20,500 20,500 3.750%, 04/15/04 -- 21,095 21,095 -- 23,000 23,000 5.000%, 05/15/04 -- 24,156 24,156 -- 13,000 13,000 5.250%, 01/15/06 -- 14,074 14,074 -- 14,000 14,000 2.875%, 09/26/05 -- 14,056 14,056 -- 15,000 15,000 3.500%, 09/15/07 -- 15,162 15,162 FNMA 5,000 -- 5,000 5.250%, 06/15/06 5,422 -- 5,422 20,000 -- 20,000 7.125%, 03/15/07 23,379 -- 23,379 7,500 -- 7,500 4.250%, 07/15/07 7,863 -- 7,863 2,090 -- 2,090 6.210%, 11/07/07 2,376 -- 2,376 6,300 -- 6,300 5.250%, 01/15/09 6,854 -- 6,854 2,600 -- 2,600 7.250%, 01/15/10 3,142 -- 3,142 16,200 -- 16,200 5.000%, 11/17/11 16,305 -- 16,305 -- 20,000 20,000 6.625%, 11/15/30 -- 23,443 23,443 -- 3,000 3,000 6.625%, 09/15/09 -- 3,505 3,505 -- 16,000 16,000 6.250%, 02/01/11 -- 17,909 17,909 ------------ ------------ ------------ 144,006 146,753 290,759 ------------ ------------ ------------ U.S. Treasuries - 18.7% U.S. Treasury Bonds 34,080 -- 34,080 9.250%, 02/15/16 51,302 -- 51,302 30,673 -- 30,673 8.000%, 11/15/21 43,376 -- 43,376 38,400 -- 38,400 6.000%, 02/15/26 44,771 -- 44,771 -- 38,000 38,000 5.375%, 02/15/31 -- 42,224 42,224 -- 2,865 2,865 8.875%, 08/15/17 -- 4,247 4,247 -- 6,150 6,150 8.875%, 02/15/19 -- 9,211 9,211 -- 4,183 4,183 8.750%, 08/15/20 -- 6,265 6,265 -- 25,000 25,000 6.250%, 08/15/23 -- 29,820 29,820 U.S. Treasury Notes 10,000 -- 10,000 3.000%, 02/29/04 10,200 -- 10,200 20,000 -- 20,000 4.375%, 05/15/07 21,590 -- 21,590 10,000 -- 10,000 4.750%, 11/15/08 10,990 -- 10,990 19,500 -- 19,500 6.000%, 08/15/09 22,844 -- 22,844 10,100 -- 10,100 5.000%, 02/15/11 11,223 -- 11,223 10,000 -- 10,000 4.875%, 02/15/12 11,022 -- 11,022 -- 7,350 7,350 5.875%, 11/15/04 -- 7,982 7,982 -- 38,145 38,145 3.250%, 08/15/07 -- 39,306 39,306 -- 1,000 1,000 5.500%, 05/15/09 -- 1,142 1,142 -- 2,340 2,340 4.375%, 08/15/12 -- 2,489 2,489 U.S. Treasury Notes (TIPS) -- 22,295 22,295 3.625%, 01/15/08 -- 24,596 24,596 -- 16,433 16,433 3.875%, 04/15/29 -- 20,196 20,196 ------------ ------------ ------------ 227,318 187,478 414,796 ------------ ------------ ------------ Total U.S. Government & Agency Securities 371,324 334,231 705,555 ------------ ------------ ------------ U.S. Government Agency Mortgage-Backed Securities - 17.1% Adjustable Rate - 0.0% GNMA Pool -- 9 9 7.750%, 08/20/23, #8259 -- 9 9 Fixed Rate - 17.1% FHLMC Gold Pool -- 8,446 8,446 6.500%, 01/01/30, #C55738 -- 8,789 8,789 -- 15,074 15,074 6.500%, 01/01/28, #G00876 -- 15,767 15,767 -- 10,142 10,142 6.500%, 04/01/29, #C00742 -- 10,560 10,560 FNMA Pool -- 12,403 12,403 6.000%, 04/01/31, #535822 -- 12,756 12,756 -- 10,452 10,452 6.000%, 05/01/31, #511797 -- 10,750 10,750 -- 28,716 28,716 7.000%, 07/01/32, #254379 -- 29,999 29,999 -- 30,000 30,000 6.500%, 09/01/32, #656918 -- 31,078 31,078 -- 6,500 6,500 6.255%, 09/01/13, #360500 -- 7,372 7,372 -- 18,303 18,303 5.500%, 02/01/14, #440780 -- 19,001 19,001 -- 4,949 4,949 7.000%, 02/01/15, #535206 -- 5,258 5,258 -- 12,936 12,936 7.000%, 08/01/16, #591038 -- 13,680 13,680 -- 4,343 4,343 7.000%, 04/01/26, #340798 -- 4,560 4,560 -- 4,463 4,463 7.000%, 05/01/26, #250551 -- 4,692 4,692 -- 10,706 10,706 6.000%, 12/01/28, #456276 -- 11,077 11,077 -- 18,183 18,183 6.500%, 02/01/29, #252255 -- 18,904 18,904 -- 14,898 14,898 6.000%, 05/01/29, #323715 -- 15,415 15,415 -- 11,282 11,282 6.500%, 07/01/29, #252570 -- 11,730 11,730 FNMA Pool TBA -- 12,650 12,650 6.000%, 10/01/32, #661581 -- 12,994 12,994 FNMA TBA -- 43,000 43,000 6.500%, 06/01/30 -- 44,559 44,559 -- 23,500 23,500 6.500%, 06/01/15 -- 24,631 24,631 GNMA Pool -- 11,442 11,442 7.500%, 11/15/30, #537699 -- 12,153 12,153 -- 12,324 12,324 6.500%, 05/15/32, #587673 -- 12,863 12,863 -- 13,212 13,212 6.500%, 04/15/29, #487110 -- 13,831 13,831 FHLMC Gold Pool 1,117 -- 1,117 6.500%, 02/01/31, #C47895 1,160 -- 1,160 9,684 -- 9,684 6.500%, 05/01/31, #C51020 10,057 -- 10,057 FHLMC Pool 21 -- 21 7.500%, 04/01/07, #140151 22 -- 22
47 FIRST AMERICAN FIXED INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED FIRST COMBINED FIRST FIRST FIRST FIRST AMERICAN FIRST AMERICAN AMERICAN AMERICAN AMERICAN FIXED AMERICAN BOND IMMDEX FIXED INCOME CORE BOND BOND IMMDEX INCOME CORE BOND FUND MARKET FUND MARKET FUND MARKET FUND PAR FUND PAR FUND PAR VALUE VALUE VALUE ----------- ---------- ---------- ------------ ------------ ------------ FNMA Pool 38 -- 38 7.750%, 06/01/08, #001464 40 -- 40 83 -- 83 6.500%, 08/01/29, #252645 86 -- 86 8,416 -- 8,416 6.500%, 05/01/30, #535300 8,745 -- 8,745 GNMA Pool 2,929 -- 2,929 6.000%, 03/15/31, #541302 3,044 -- 3,044 4,212 -- 4,212 6.000%, 03/15/31, #554675 4,383 -- 4,383 ------------ ------------ ------------ 27,537 352,428 379,965 ------------ ------------ ------------ Total U.S. Government Agency Mortgage-Backed Securities 27,537 352,428 379,965 ------------ ------------ ------------ Asset-Backed Securities - 6.4% Automobiles - 1.9% Capital One Auto Finance Trust Series 2001-A Class A4 -- 10,000 10,000 5.400%, 05/15/08 -- 10,642 10,642 Chase Manhattan Auto Owner Trust Series 2002-B, Class A4 -- 10,000 10,000 4.210%, 01/15/09 -- 10,432 10,432 Daimler Chrysler Auto Trust Series 2000-C, Class A3 -- 6,777 6,777 6.820%, 09/06/04 -- 6,874 6,874 World Omni Auto Receivables Trust Series 2001-B, Class A4 -- 13,000 13,000 4.490%, 08/20/08 -- 13,621 13,621 ------------ ------------ ------------ -- 41,569 41,569 ------------ ------------ ------------ Commercial - 2.3% Asset Securitization Series 1996-MD6, Class A1B -- 18,600 18,600 6.880%, 11/13/29 -- 19,565 19,565 Bank of America - First Union NB Commercial Mortgage Series 2001-3, Class A1 -- 9,657 9,657 4.890%, 04/11/37 -- 10,099 10,099 Merrill Lynch Mortgage Investors Series 1995-C3, Class A3 -- 10,585 10,585 6.540%, 12/26/25 -- 10,786 10,786 Morgan Stanley Capital Investments Series 1999-FNV1, Class A1 -- 9,032 9,032 6.120%, 03/15/31 -- 9,772 9,772 ------------ ------------ ------------ -- 50,222 50,222 ------------ ------------ ------------ Credit Cards - 1.6% Discover Card Master Trust I Series 2001-5, Class A -- 7,000 7,000 5.300%, 11/16/06 -- 7,360 7,360 Sears Credit Account Master Trust Series 1999-2 Class A -- 8,333 8,333 6.350%, 02/16/07 -- 8,409 8,409 Sears Credit Account Master Trust Series 2000-1, Class A -- 15,000 15,000 7.250%, 11/15/07 -- 15,520 15,520 Citibank Credit Card Master Trust Series 1997-6, Class A 5,000 -- 5,000 0.000%, 08/15/06 4,810 -- 4,810 ------------ ------------ ------------ 4,810 31,289 36,099 ------------ ------------ ------------ Home Equity - 0.4% Amresco Residential Security Mortgage Series 1997-3, Class A9 3,572 -- 3,572 6.960%, 03/25/27 3,664 -- 3,664 Contimortgage Home Equity Loan Trust Series 1998-1, Class A6 1,050 -- 1,050 6.580%, 12/15/18 1,075 -- 1,075 Series 1997-3, Class A8 3,000 -- 3,000 7.580%, 08/15/28 3,128 -- 3,128 Delta Home Equity Loan Trust Series 1997-3 Class A6F 1,152 -- 1,152 6.860%, 10/25/28 1,228 -- 1,228 ------------ ------------ ------------ 9,095 -- 9,095 ------------ ------------ ------------ Manufactured Housing - 0.2% Green Tree Financial Series 1993-4, Class A4 ------------ ------------ ------------ -- 4,578 4,578 6.600%, 01/15/19 -- 4,688 4,688 ------------ ------------ ------------ Total Asset-Backed Securities 13,905 127,768 141,673 ------------ ------------ ------------ CMO - U.S. Government Agency Mortgage-Backed Securities - 4.3% Fixed Rate - 2.9% FDIC REMIC Trust Series 1996-C1, Class 1A 835 -- 835 6.750%, 05/25/26 835 -- 835 FHLMC Series 6, Class C 148 -- 148 9.050%, 06/15/19 169 -- 169 Series 1022 Class J 205 -- 205 6.000%, 12/15/20 209 -- 209 Series 162, Class F 627 -- 627 7.000%, 05/15/21 653 -- 653 Series 188, Class H 494 -- 494 7.000%, 09/15/21 513 -- 513 Series 1201, Class E 101 -- 101 7.400%, 12/15/21 102 -- 102 Series 1790, Class A 557 -- 557 7.000%, 04/15/22 582 -- 582 Series 1699, Class TD -- 10,000 10,000 6.000%, 03/15/24 -- 10,668 10,668 Series 1723, Class PJ -- 7,133 7,133 7.000%, 02/15/24 -- 8,089 8,089 FHLMC REMIC Series T-47, Class PJ -- 15,000 15,000 1.650%, 08/27/05 -- 14,908 14,908 Series 1998-M1, Class A2 -- 7,500 7,500 6.250%, 01/25/08 -- 8,185 8,185 FNMA Series 1988-24, Class G 295 -- 295 7.000%, 10/25/18 314 -- 314 Series 1989-44, Class H 255 -- 255 9.000%, 07/25/19 278 -- 278 Series 1989-90, Class E 55 -- 55 8.700%, 12/25/19 60 -- 60 Series 1990-30, Class E 263 -- 263 6.500%, 03/25/20 276 -- 276 Series 1990-61, Class H 235 -- 235 7.000%, 06/25/20 250 -- 250 Series 1990-72, Class B 163 -- 163 9.000%, 07/25/20 178 -- 178 Series 1990-102, Class J
48 FIRST AMERICAN FIXED INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED FIRST COMBINED FIRST FIRST FIRST FIRST AMERICAN FIRST AMERICAN AMERICAN AMERICAN AMERICAN FIXED AMERICAN BOND IMMDEX FIXED INCOME CORE BOND BOND IMMDEX INCOME CORE BOND FUND MARKET FUND MARKET FUND MARKET FUND PAR FUND PAR FUND PAR VALUE VALUE VALUE ----------- ---------- ---------- ------------ ------------ ------------ 215 -- 215 6.500%, 08/25/20 226 -- 226 Series 1990-105, Class J 923 -- 923 6.500%, 09/25/20 975 -- 975 Series 1991-1, Class PG -- 15,343 15,343 6.500%, 04/25/28 -- 16,331 16,331 Series 1991-56, Class M 843 -- 843 6.750%, 06/25/21 891 -- 891 Series 1992-120, Class C 354 -- 354 6.500%, 07/25/22 373 -- 373 ------------ ------------ ------------ 6,884 58,181 65,065 ------------ ------------ ------------ Z-Bonds ( F ) - 1.4% FHLMC Series 1118, Class Z 431 -- 431 8.250%, 07/15/21 457 -- 457 FHLMC Series 1677, Class Z -- 5,699 5,699 7.500%, 07/15/23 -- 6,635 6,635 Series 1665, Class KZ -- 10,146 10,146 6.500%, 01/15/24 -- 11,562 11,562 FNMA Series 1996-35, Class Z -- 9,227 9,227 7.000%, 07/25/26 -- 9,908 9,908 FNMA Series 1991-134, Class Z 1,619 -- 1,619 7.000%, 10/25/21 1,716 -- 1,716 ------------ ------------ ------------ 2,173 28,105 30,278 ------------ ------------ ------------ Total CMO - U.S. Government Agency Mortgage-Backed Securities 9,057 86,286 95,343 ------------ ------------ ------------ CMO - Private Mortgage-Backed Securities - 2.6% Fixed Rate - 2.2% GE Capital Mortgage Services Series 1994-17, Class A6 -- 7,000 7,000 7.000%, 05/25/24 -- 7,317 7,317 GE Capital Mortgage Services Series 1994-17, Class A7 -- 5,179 5,179 7.000%, 05/25/24 -- 5,399 5,399 Washington Mutual Series 1999-WM2, Class 2A -- 4,218 4,218 7.000%, 11/19/14 -- 4,400 4,400 Washington Mutual Series 2001-AR6, Class A5 -- 16,500 16,500 5.603%, 01/26/32 -- 16,822 16,822 Washington Mutual Series 2002-AR4, Class A7 -- 15,000 15,000 5.598%, 04/25/32 -- 15,501 15,501 ------------ ------------ ------------ -- 49,439 49,439 ------------ ------------ ------------ Z-Bonds - 0.4% GE Capital Mortgage Services Series 1994-6, Class A9 ------------ ------------ ------------ -- 7,238 7,238 6.500%, 09/25/22 -- 7,375 7,375 ------------ ------------ ------------ ------------ ------------ ------------ Total CMO - Private Mortgage-Backed Securities -- 56,814 56,814 ------------ ------------ ------------ Foreign Government Bonds - 0.0% Mexico - 0.0% United Mexican States, Series A ------------ ------------ ------------ 1,500 -- 1,500 8.000%, 09/24/22 1,426 -- 1,426 ------------ ------------ ------------ Poland - 0.0% Republic of Poland ------------ ------------ ------------ 2,000 -- 2,000 6.250%, 07/03/12 2,175 -- 2,175 ------------ ------------ ------------ ------------ ------------ ------------ Total Foreign Government Bonds 3,601 -- 3,601 ------------ ------------ ------------ Related Party Money Market Fund - Shares Shares Shares 4.1% ---------- ---------- ---------- ------------ ------------ ------------ 18,689,056 71,590,914 90,279,969 First American Prime Obligations Fund (F) 18,689 71,591 90,280 ------------ ------------ ------------ ------------ ------------ ------------ Total Related Party Money Market Fund 18,689 71,591 90,280 ------------ ------------ ------------ Total Investments - 90.9% (Cost $773,613, $1,380,053, and $2,306,006) $ 820,817 $1,443,763 $2,264,580 ============ ============ ============
* Non-income producing security (A) This security or a portion of this security is out on loan at September 30, 2002. (B) Security sold within the terms of a private placement memorandum, exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "qualified institutional buyers." These securities have been determined to be liquid under the guidelines established by the Funds' board of directors. (C) Z-Bonds - Represents securities that pay no inters or principal during their accural periods, but accrue additional principal at specified rates. Interest rate shown represents current yield based upon the cost basis and estimated future cash flows. (D) Variable Rate Security - The rate shown is the rate in effect as of September 30, 2002. (E) On September 20, 2002, the total cost of investment purchased on a when-issued basis was $82,183,641. (F) This money market fund is advised by U.S. Bancorp Asset Management, Inc. which also serves as advisor for this Fund. CMO - Collateralized Mortgage Obligation FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal national Mortgage Association GNMA - Government National Mortgage Association REMIC - Real Estate Mortgage Investment Conduit TBA - To Be Announced TIPS - Treasury Inflation Proteciton Security 49 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME STRATEGIC HIGH YIELD HIGH INCOME INCOME BOND FUND BOND FUND INCOME BOND FUND BOND FUND FUND PAR PAR PAR FUND PAR MARKET VALUE MARKET VALUE --------- ---------- ----------- ------------ ------------ ------------ High Yield Corporate Bonds - 51.5% Consumer Goods - 4.5% Agrilink Foods, Callable 11/01/03 @ 105.94 $ $ 500 $ 500 11.875%, 11/01/08 $ -- $ 527 $ 527 Canandaigua Brands, Callable 03/01/04 @ 104.250 500 250 500 8.500%, 03/01/09 522 -- 522 Constellation Brands, Series B, Callable 01/15/07 @ 104.06 -- 250 250 8.125%, 01/15/12 -- 256 256 Corn Products International 1,000 500 1500 8.250%, 07/15/07 970 485 1455 Corporacion Durango 600 -- 600 13.125%, 08/01/06 (A) (B) 493 -- 493 1,000 -- 1,000 13.750%, 07/15/09 (A) (B) 770 -- 770 Fleming, Series B, Callable 10/01/02 @ 105.313 500 -- 500 10.625%, 07/31/07 295 -- 295 Fleming Companies, Series D, Callable 10/01/02 @ 105.31 -- 500 500 10.625%, 07/31/07 -- 295 295 Ingles Markets, Callable 12/01/06 @ 104.44 500 500 1,000 8.875%, 12/01/11 455 455 910 Playtex Family Products, Callable 06/01/06 @ 104.69 500 500 1,000 9.375%, 06/01/11 537 537 1,074 Roundy's, Callable 06/15/07 @ 104.44 500 500 1,000 8.875%, 06/15/12 (A) (B) 492 492 984 Sealy Mattress, Series B, Callable 12/15/02 @ 105.437 500 -- 500 10.875%, 12/15/07 (C) 402 -- 402 Simmons, Callable 03/15/04 @ 105.12 500 500 1,000 10.250%, 03/15/09 530 530 1,060 Swift & Co., Callable 10/01/06 @ 105.06 250 500 750 10.125%, 10/01/09 (A) (B) 229 457 686 ------------ ------------ ------------ 5,695 4,034 9,729 ------------ ------------ ------------ Energy - 4.7% Newfield Exploration, Callable 08/15/07 @ 104.19 500 500 1,000 8.375%, 08/15/12 512 512 1,024 Parker Drilling, Series AI, Callable 11/15/04 @ 105.06 1,000 1,000 2,000 10.125%, 11/15/09 (D) 960 960 1,920 Petroplus Funding, Callable 10/15/05 @ 105.250 2,750 -- 2,750 10.500%, 10/15/10 (A) 1,712 -- 1,712 Pogo Producing, Series B, Callable 10/01/02 @ 104.375 500 -- 500 8.750%, 05/15/07 515 -- 515 Pride International, Callable 06/01/04 @ 105.00 500 500 1,000 10.000%, 06/01/09 540 540 1,080 Swift Energy, Callable 08/01/04 @ 105.12 500 500 1,000 10.250%, 08/01/09 495 495 990 Tesoro Petroleum, Series B, Callable 11/01/05 @ 104.81 -- 500 500 9.625%, 11/01/08 -- 285 285 Vintage Petroleum, Callable 10/01/02 @ 104.313 500 -- 500 8.625%, 02/01/09 490 -- 490 Western Oil Sands 500 500 1,000 8.375%, 05/01/12 (A) (B) 506 506 1,012 Williams 1,000 1,000 2,000 7.750%, 06/15/31 580 580 1,160 ------------ ------------ ------------ 6,310 3,878 10,188 ------------ ------------ ------------ Finance - 2.8% Bluewater Finance, Callable 02/15/08 @ 105.120 1,300 -- 1,300 10.250%, 02/15/12 (B) 1,222 -- 1,222 Golden State Holdings 1,000 500 1,500 7.125%, 08/01/05 1,071 536 1,607 Sovereign Bancorp 1,000 1,000 2,000 10.500%, 11/15/06 1,110 1,110 2,220 Yell Finance, Callable 08/01/06 @ 105.370 1,000 -- 1,000 10.750%, 08/01/11 (A) 1,002 -- 1,002 ------------ ------------ ------------ 4,405 1,646 6,051 ------------ ------------ ------------ Manufacturing - 7.3% American Axle & Manufacturing, Callable 03/01/04 @ 104.88 -- 500 500 9.750%, 03/01/09 -- 532 532 American Standard 1,000 -- 1,000 7.375%, 02/01/08 1,025 -- 1,025 Appleton Papers, Series B, Callable 12/15/05 @ 106.25 -- 500 500 12.500%, 12/15/08 -- 527 527 Applied Extrusion Technologies, Series B, Callable 07/01/06 @ 105.37 500 500 1,000 10.750%, 07/01/11 342 342 684 Avaya, Callable 04/01/06 @ 105.56 -- 500 500 11.125%, 04/01/09 -- 325 325 B E Aerospace, Callable 11/01/03 @ 104.75 -- 500 500 9.500%, 11/01/08 -- 375 375 Beazer Homes USA, Callable 04/15/07 @ 104.19 500 500 1,000 8.375%, 04/15/12 502 502 1,004 Buckeye Technologies, Callable 10/01/02 @ 103.080 1,000 -- 1,000 9.250%, 09/15/08 830 -- 830 Collins & Aikman Products, Callable 10/01/02 @ 103.833 425 -- 425 11.500%, 04/15/06 408 -- 408 Diamond Brands Operating, Callable 04/15/03 @ 105.063 50 -- 50 10.125%, 04/15/08 (D) (E) 1 -- 1 Glenoit, Callable 10/01/02 @ 105.500 100 -- 100 11.000%, 04/15/07 (D) (E) -- -- -- Georgia-Pacific 500 500 1,000 8.875%, 05/15/31 365 365 730 Greif Brothers, Callable 08/01/07 @ 104.44 300 400 700 8.875%, 08/01/12 (B) 304 406 710 Lear, Series B 1,000 500 1,500 8.110%, 05/15/09 1,040 520 1,560 Lyondell Chemical, Callable 05/01/04 @ 105.44 1,000 500 1,500 10.875%, 05/01/09 830 415 1,245 Oregon Steel Mills, Callable 07/15/06 @ 105.00 -- 250 250 10.000%, 07/15/09 -- 249 249 Owens-Brockway Glass Container, Callable 02/15/06 @ 104.44 500 500 1,000 8.875%, 02/15/09 502 502 1,004 Schuler Homes, Callable 07/15/05 @ 104.69 500 500 1,000 9.375%, 07/15/09 500 500 1,000
50 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME STRATEGIC HIGH YIELD HIGH INCOME INCOME BOND FUND BOND FUND INCOME BOND FUND BOND FUND FUND PAR PAR PAR FUND PAR MARKET VALUE MARKET VALUE --------- ---------- ----------- ------------ ------------ ------------ Sequa 1,000 500 1,500 9.000%, 08/01/09 890 445 1,335 Solectron, Callable 02/15/06 @ 104.81 -- 500 500 9.625%, 02/15/09 -- 412 412 Technical Olympic USA, Callable 07/01/06 @ 104.50 500 500 1,000 9.000%, 07/01/10 (B) 470 470 940 WCI Communities, Callable 05/01/07 @ 104.56 500 500 1,000 9.125%, 05/01/12 463 463 926 ------------ ------------ ------------ 8,472 7,350 15,822 ------------ ------------ ------------ Real Estate - 0.6% Meristar Hospitality 500 500 1,000 9.125%, 01/15/11 443 443 886 Ventas Realty -- 500 500 9.000%, 05/01/12 -- 513 513 ------------ ------------ ------------ 443 956 1,399 ------------ ------------ ------------ Services - 19.8% Acme Television, Series B, Callable 10/01/02 @ 102.719 500 -- 500 10.875%, 09/30/04 (C) 493 -- 493 Allied Waste North America, Series B, Callable 08/01/04 @ 105.00 1,000 1,000 2,000 10.000%, 08/01/09 920 920 1,840 Asbury Automotive Group, Callable 06/15/07 @ 104.50 500 500 1,000 9.000%, 06/15/12 450 450 900 Autonation 1,000 500 1,500 9.000%, 08/01/08 1,020 510 1,530 Bally Total Fitness Holdings, Series D, Callable 10/01/02 @ 104.94 -- 500 500 9.875%, 10/15/07 -- 460 460 Boca Resorts, Callable 04/15/04 @ 104.94 500 500 1,000 9.875%, 04/15/09 518 518 1,036 Buffets, Callable 07/15/06 @ 105.62 -- 500 500 11.250%, 07/15/10 (A) -- 505 505 Charter Communications Holdings, Callable 01/15/05 @ 105.88 2,000 1,500 3,500 11.750%, 01/15/10 (C) 820 615 1,435 Corus Entertainment, Callable 03/01/07 @ 104.38 -- 500 500 8.750%, 03/01/12 (B) -- 508 508 Coventry Health Care, Callable 02/15/07 @ 104.06 -- 750 750 8.125%, 02/15/12 -- 776 776 Crown Castle, Callable 08/01/05 @ 105.37 -- 1,000 1,000 10.750%, 08/01/11 -- 695 695 CSC Holdings, Callable 02/15/03 @ 104.800 750 -- 750 9.875%, 02/15/13 585 -- 585 CSC Holdings, Series B 500 500 1,000 7.625%, 04/01/11 405 405 810 Dominos, Series B, Callable 01/15/04 @ 105.19 600 500 1,100 10.375%, 01/15/09 645 538 1,183 Echostar DBS, Callable 01/15/06 @ 104.56 500 500 1,000 9.125%, 01/15/09 (A) (B) 475 475 950 Extendicare Health Services, Callable 07/01/06 @ 104.75 -- 500 500 9.500%, 07/01/10(A) -- 508 508 Fisher Scientific International, Callable 02/01/03 @ 104.50 1,000 1,000 2,000 9.000%, 02/01/08 1,031 1,031 2,061 Hanger Orthopedic, Callable 02/15/06 @ 105.19 -- 350 350 10.375%, 02/15/09 -- 369 369 HCA Columbia Healthcare -- 500 500 8.750%, 09/01/10 -- 570 570 Healthsouth, Callable 10/01/04 @ 105.38 500 500 1,000 10.750%, 10/01/08 345 345 690 HMH Properties, Series B, Callable 08/01/03 @ 103.99 525 500 1,025 7.875%, 08/01/08 509 485 994 Hollinger International Publishing, Callable 10/01/02 @ 103.090 700 -- 700 9.250%, 02/01/06 707 -- 707 IASIS Healthcare, Callable 10/15/04 @ 106.50 500 500 1,000 13.000%, 10/15/09 510 510 1,020 Isle of Capri Casinos, Callable 04/15/04 @ 104.38 -- 500 500 8.750%, 04/15/09 -- 505 505 Isle of Capri Casinos, Callable 04/15/04 @ 104.375 1,000 -- 1,000 8.750%, 04/15/09 1,010 -- 1,010 J.C. Penney 500 500 1,000 7.950%, 04/01/07 420 420 840 Johnsondiversey, Callable 05/15/07 @ 104.81 -- 500 500 9.625%, 05/15/12 (A) -- 500 500 Lamar Media, Callable 10/01/02 @ 104.313 500 -- 500 8.625%, 09/15/07 520 -- 520 Mandalay Resort Group, Series B 1,000 500 1,500 10.250%, 08/01/07 1,080 540 1,620 MGM Mirage -- 500 500 8.375%, 02/01/11 -- 516 516 Mohegan Tribal Gaming 1,000 500 1,500 8.875%, 09/15/08 -- 520 520 Paxson Communications, Callable 01/15/06 @ 106.12 -- 750 750 12.250%, 01/15/09 -- 330 330 Pegasus Communications, Series B, Callable 12/01/02 @ 104.875 300 -- 300 9.750%, 12/01/06 138 -- 138 Penn National Gaming, Callable 03/15/06 @ 104.44 500 500 1,000 8.875%, 03/15/10 500 500 1,000 Premier Parks, Callable 04/01/03 @ 105.000 1,000 -- 1,000 10.000%, 04/01/08 (C) 820 -- 820 Resort International Hotel & Casino, Callable 03/15/07 @ 106.00 750 750 1,500 11.500%, 03/15/09 649 649 1,298 Rite Aid -- 1,000 1,000 7.125%, 01/15/07 -- 675 675 Rotech Healthcare, Callable 04/01/07 @ 104.75 -- 750 750 9.500%, 04/01/12 (A) -- 679 679 Royal Caribbean Cruises 500 500 1,000 8.250%, 04/01/05 (B) 463 450 923 Russell, Callable 05/01/06 @ 104.62 -- 500 500 9.250%, 05/01/10 (A) -- 520 520 Sbarro, Callable 09/15/04 @ 105.50 500 500 1,000 11.000%, 09/15/09 460 460 920 Service Corporate International 1,000 1,000 2,000 7.700%, 04/15/09 (A) (B) 835 835 1,670 Sinclair Broadcast Group, Callable 12/15/02 @ 104.38 500 500 1,000 8.750%, 12/15/07 512 512 1,024
51 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME STRATEGIC HIGH YIELD HIGH INCOME INCOME BOND FUND BOND FUND INCOME BOND FUND BOND FUND FUND PAR PAR PAR FUND PAR MARKET VALUE MARKET VALUE --------- ---------- ----------- ------------ ------------ ------------ Six Flags, Callable 02/01/06 @ 104.44 -- 500 500 8.875%, 02/01/10 -- 409 409 Starwood Hotels & Resorts -- 500 500 6.750%, 11/15/05 -- 481 481 Triad Hospital Holdings, Series B, Callable 05/15/04 @ 105.500 500 -- 500 11.000%, 05/15/09 548 -- 548 Tricon Global Restaurant 1,000 1,000 2,000 8.875%, 04/15/11 1,020 1,070 2,090 United Rentals, Series B, Callable 04/15/05 @ 105.37 1,000 500 1,500 10.750%, 04/15/08 855 495 1,350 ------------ ------------ ------------ 20,293 22,783 43,076 ------------ ------------ ------------ Transportation -1.4% CHC Helicopter, Callable 07/15/04 @ 105.875 1,300 -- 1,300 11.750%, 07/15/07, EU 1,420 -- 1,420 Continental Airlines, Series 2001-1, Class C -- 985 985 7.033%, 06/15/11 -- 751 751 CP Ships, Callable 07/15/07 @ 105.19 -- 500 500 10.375%, 07/15/12 (A) (B) -- 518 518 Northwest Airlines -- 500 500 9.875%, 03/15/07 -- 250 250 ------------ ------------ ------------ 1,420 1,519 2,939 ------------ ------------ ------------ Utilities - 4.7% AES 500 500 1,000 9.375%, 09/15/10 260 260 520 Calpine 500 -- 500 7.625%, 04/15/06 240 -- 240 -- 500 500 8.500%, 02/15/11 -- 203 203 CMS Energy 500 -- 500 7.500%, 01/15/09 370 -- 370 -- 500 500 8.500%, 04/15/11 -- 375 375 Crown Castle International, Callable 05/15/04 @ 105.187 625 -- 625 10.375%, 05/15/11 (C) 281 -- 281 Crown Castle International, Callable 08/01/04 @ 105.625 700 -- 700 11.250%, 08/01/11 (C) 308 -- 308 Grupo Iusacell 1,500 -- 1,500 14.250%, 12/01/06 (A) (B) 510 -- 510 Jazztel, Callable 04/01/04 @ 107.000 2,000 -- 2,000 14.000%, 04/01/09 (A) (E) EU 198 -- 198 Mirant Americas Generation 500 500 1,000 8.300%, 05/01/11 250 250 500 Mission Energy Holdings -- 500 500 13.500%, 07/15/08 -- 160 160 Mobile Telesystems 1,000 -- 1,000 10.950%, 12/21/04 (A) EU 1,020 -- 1,020 Nextel Communications, Callable 11/15/04 @ 104.69 500 500 1,000 9.375%, 11/15/09 390 390 780 Nextel International, Callable 04/15/03 @ 106.063 75 -- 75 12.125%, 04/15/08 (C) (E) 3 -- 3 Panamsat, Callable 02/01/07 @ 104.25 500 -- 500 8.500%, 02/01/12 (A) (B) 413 413 826 PG&E National Energy Group 1,000 1,000 2,000 10.375%, 05/16/11 135 -- 135 Qwest Capital Funding 1,000 1,000 2,000 7.750%, 08/15/06 540 540 1,080 Satelites Mexicanos, Series B, Callable 10/01/02 @ 105.063 2,500 -- 2,500 10.125%, 11/01/04 (A) 975 -- 975 Triton PCS, Callable 11/15/06 @ 104.38 -- 500 500 8.750%, 11/15/11 -- 330 330 Viatel, Callable 04/15/03 @ 105.625 75 -- 75 11.250%, 04/15/08 -- -- -- Voicestream Wireless, Callable 11/15/04 @ 105.938 650 -- 650 10.875%, 11/15/09 (C) 507 -- 507 Western Resources 500 500 1,000 9.750%, 05/01/07 460 460 920 ------------ ------------ ------------ 6,860 3,381 10,241 ------------ ------------ ------------ Yankee - 5.7% 500 1,000 Biovail, Callable 04/01/06 @ 103.94 7.875%, 04/01/10 (A) (B) 502 502 1,004 Cellco Finance, Callable 10/01/02 @ 900 500 900 107.500 15.000%, 08/01/05 (A) 860 -- 860 Central European Media, Callable 1,200 -- 1,200 10/01/02 @ 102.344 9.375%, 08/15/04 (A) 900 -- 900 Grupo Elektra, Callable 04/01/04 @ 2,500 -- 2,500 106.000 12.000%, 04/01/08 2,263 -- 2,263 2,100 -- 2,100 Innova, Callable 10/01/02 @ 106.438 12.875%, 04/01/07 (A) 1,659 -- 1,659 Netia Holdings, Series B, Callable 2,600 -- 2,600 10/01/02 @ 105.625 11.250%, 11/01/07 (A) (E) 416 -- 416 Partner Communications, Series DTC, 2,100 -- 2,100 Callable 08/15/05 @ 106.500 150 -- 150 13.000%, 08/15/10 (A) 2,142 -- 2,142 Stena, Callable 10/01/02 @ 102.625 525 -- 525 10.500%, 12/15/05 (A) 155 -- 155 Stena, Callable 10/01/02 @ 104.375 1,000 -- 1,000 8.750%, 06/15/07 (A) 501 -- 501 TFM, Callable 10/01/02 @ 105.875 1,000 -- 1,000 11.750%, 06/15/09 (A) (C) 955 -- 955 TV Azteca, Series B, Callable 10/01/02 @ 105.250 1,300 -- 1,300 10.500%, 02/15/07 (A) 1,209 -- 1,209 Tyco International 500 -- 500 6.750%, 02/15/11 (A) 420 -- 420 ------------ ------------ ------------ 11,982 502 12,484 ------------ ------------ ------------ ------------ ------------ ------------ Total High Yield Corporate Bonds 65,880 46,049 111,929 ------------ ------------ ------------ Corporate Bonds - 0.9% Manufacturing - 0.3% Nortel Networks 500 500 1,000 6.125%, 02/15/06 -- 175 175 Phelps Dodge 500 500 1,000 8.750%, 06/01/11 -- 509 509 ------------ ------------ ------------
52 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME STRATEGIC HIGH YIELD HIGH INCOME INCOME BOND FUND BOND FUND INCOME BOND FUND BOND FUND FUND PAR PAR PAR FUND PAR MARKET VALUE MARKET VALUE --------- ---------- ----------- ------------ ------------ ------------ -- 684 684 ------------ ------------ ------------ Utilities - 0.4% AT&T Wireless Services 500 500 1,000 7.875%, 03/01/11 -- 382 382 XCEL Energy 500 500 1,000 7.000%, 12/01/10 -- 398 398 ------------ ------------ ------------ -- 780 780 ------------ ------------ ------------ Yankee - 0.2% Tyco International ------------ ------------ ------------ 500 500 1,000 6.750%, 02/15/11 420 420 ------------ ------------ ------------ Total Corporate Bonds -- 1,844 1,884 ------------ ------------ ------------ Foreign Government Bonds - 12.1% Brazil - 2.4% Republic of Brazil (A) 3,850 -- 3,850 12.250%, 03/06/30 1,761 -- 1,761 3,950 -- 3,950 12.000%, 04/15/10 1,955 -- 1,955 Republic of Brazil, Callable 08/17/15 @ 100 3,625 -- 3,625 11.000%, 08/17/40 1,595 -- 1,595 ------------ ------------ ------------ 5,311 -- 5,311 ------------ ------------ ------------ Bulgaria - 0.4% Republic of Bulgaria 850 -- 850 8.250%, 01/15/15 867 -- 867 ------------ ------------ ------------ Colombia - 0.7% Republic of Colombia 1,850 -- 1,850 11.750%, 02/25/20 1,517 -- 1,517 ------------ ------------ ------------ Ecuador - 0.5% Republic of Ecuador, Callable 05/15/03 @ 100 1,850 -- 1,850 12.000%, 11/15/12 980 -- 980 ------------ ------------ ------------ El Salvador - 0.5% Republic of El Salvador 1,000 -- 1,000 8.250%, 04/10/32 940 -- 940 ------------ ------------ ------------ Panama - 0.2% Republic of Panama 500 -- 500 8.875%, 09/30/27 462 -- 462 ------------ ------------ ------------ Philippines - 0.9% Republic of Philippines 2,000 -- 2,000 8.375%, 03/12/09 2,023 -- 2,023 ------------ ------------ ------------ Russian Federation - 4.5% Russian Federation 4,000 -- 4,000 5.000%, 03/31/30 2,814 -- 2,814 3,200 -- 3,200 8.250%, 03/31/10 3,192 -- 3,192 3,050 -- 3,050 12.750%, 06/24/28 3,703 -- 3,703 ------------ ------------ ------------ 9,709 -- 9,709 ------------ ------------ ------------ South Africa - 0.6% Republic of South Africa 600 -- 600 7.375%, 04/25/12 627 -- 627 650 -- 650 8.500%, 06/23/17 696 -- 696 ------------ ------------ ------------ 1,323 -- 1,323 ------------ ------------ ------------ Turkey - 0.5% Republic of Turkey 1,200 -- 1,200 11.875%, 01/15/30 1,008 -- 1,008 ------------ ------------ ------------ Ukraine - 0.2% Government of Ukraine 490 -- 490 11.000%, 03/15/07 509 -- 509 ------------ ------------ ------------ Venezuela - 0.7% Republic of Venezuela 2,400 -- 2,400 9.250%, 09/15/27 1,608 -- 1,608 ------------ ------------ ------------ Total Foreign Government Bonds 26,257 -- 26,257 ------------ ------------ ------------ U.S. Government Agency Mortgage-Backed Securities - 8.1% Fixed Rate - 8.1% FHLMC Gold Pool 293 -- 293 7.500%, 08/01/11, #E65045 313 -- 313 723 -- 723 5.500%, 04/01/13, #E69977 751 -- 751 447 -- 447 7.500%, 11/01/28, #C18204 474 -- 474 FNMA Pool 331 -- 331 7.500%, 02/01/30, #535143 350 -- 350 985 -- 985 6.500%, 08/01/32, #649874 1,020 -- 1,020 232 -- 232 6.500%, 02/01/04, #367977 236 -- 236 1,944 -- 1,944 6.695%, 08/01/05, #109031 2,115 -- 2,115 1,500 -- 1,500 5.950%, 04/01/07, #381517 1,649 -- 1,649 255 -- 255 8.000%, 03/01/08, #326580 272 -- 272 1,159 -- 1,159 5.805%, 10/01/08, #380781 1,278 -- 1,278 952 -- 952 5.850%, 10/01/08, #380791 1,053 -- 1,053 956 -- 956 6.095%, 12/01/08, #380859 1,071 -- 1,071 258 -- 258 6.000%, 03/01/11, #329569 269 -- 269 597 -- 597 7.000%, 03/01/12, #313386 635 -- 635 1,234 -- 1,234 6.000%, 12/01/13, #535256 1,291 -- 1,291 905 -- 905 7.000%, 11/01/14, #535006 959 -- 959 470 -- 470 6.000%, 03/01/26, #339839 489 -- 489 1,036 -- 1,036 6.500%, 02/01/29, #252334 1,075 -- 1,075 998 -- 998 7.000%, 04/01/29, #323681 1,044 -- 1,044 1,153 -- 1,153 6.000%, 05/01/29, #323702 1,193 -- 1,193 GNMA Pool 28 -- 28 9.000%, 06/15/16, #160376 31 -- 31 ------------ ------------ ------------ Total U.S. Government Agency 17,568 -- 17,568 Mortgage-Backed Securities ------------ ------------ ------------
53 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME STRATEGIC HIGH YIELD HIGH INCOME INCOME BOND FUND BOND FUND INCOME BOND FUND BOND FUND FUND PAR PAR PAR FUND PAR MARKET VALUE MARKET VALUE --------- ---------- ----------- ------------ ------------ ------------ U.S. Government & Agency Securities - 6.0% U. S. Agency Debentures - 1.8% FHLMC 500 -- 500 2.875%, 09/26/05 502 -- 502 FNMA 1,000 -- 1,000 7.000%, 07/15/05 1,123 -- 1,123 2,000 -- 2,000 6.250%, 05/15/29 2,228 -- 2,228 ------------ ------------ ------------ 3,853 -- 3,853 ------------ ------------ ------------ U.S. Treasuries - 4.2% U.S. Treasury Bonds 500 -- 500 8.500%, 02/15/20 731 -- 731 U.S. Treasury Notes 2,750 -- 2,750 4.250%, 05/31/03 2,801 -- 2,801 225 -- 225 5.750%, 08/15/03 233 -- 233 1,250 -- 1,250 5.875%, 11/15/04 1,357 -- 1,357 500 -- 500 5.000%, 02/15/11 556 -- 556 550 -- 550 4.375%, 08/15/12 585 -- 585 1,500 -- 1,500 7.250%, 08/15/22 1,982 -- 1,982 U.S. Treasury Note -- 1,000 1,000 3.375%, 04/30/04 -- 1,027 1,027 ------------ ------------ ------------ Total U.S. Government & Agency 8,245 1,027 9,272 Securities ------------ ------------ ------------ ------------ ------------ ------------ Total U.S. Government & Agency Securities 12,098 1,027 13,125 ------------ ------------ ------------ Asset-Backed Securities - 3.3% Automobiles - 1.0% Capital One Auto Finance Trust Series 2001-A Class A4 1,000 -- 1,000 5.400%, 05/15/08 1,064 -- 1,064 GMAC Commercial Mortgage Securities Series 1998-C2, Class A2 1,000 -- 1,000 6.420%, 05/15/35 1,123 -- 1,123 ------------ ------------ ------------ 2,187 -- 2,187 ------------ ------------ ------------ Commercial - 0.5% Morgan Stanley Capital Investments Series 1999-RMI, Class A2 ------------ ------------ ------------ 1,000 -- 1,000 6.710%, 12/15/31 1,140 -- 1,140 ------------ ------------ ------------ Credit Cards - 0.5% MBNA Master Credit Card Trust Series 1999-G, Class A ------------ ------------ ------------ 1,000 -- 1,000 6.350%, 12/15/06 1,072 -- 1,072 ------------ ------------ ------------ Home Equity - 0.8% Advanta Mortgage Loan Trust Series 1998-2 Class A12 330 -- 330 6.330%, 08/25/19 332 -- 332 Mellon Residential Funding Series 2001-HEIL, Class A3 1,000 -- 1,000 5.945%, 02/25/11 1,032 -- 1,032 Money Store Home Equity Trust Series 1994-A Class A4 418 -- 418 6.275%, 12/15/22 434 -- 434 ------------ ------------ ------------ 1,798 -- 1,798 ------------ ------------ ------------ Manufactured Housing - 0.1% Green Tree Financial Series 1998-1, Class A1 277 -- 277 6.040%, 11/01/29 280 -- 280 ------------ ------------ ------------ Other - 0.4% Aircraft Finance Trust Series 1999-1A, Class C 901 -- 901 8.000%, 05/15/24 819 -- 819 ------------ ------------ ------------ Total Asset-Backed Securities 7,296 -- 7,296 ------------ ------------ ------------ Corporate Bonds - 3.0% Finance - 1.7% -- Capital One Bank 500 500 6.700%, 05/15/08 446 -- 446 -- Ford Motor Credit 500 500 5.800%, 01/12/09 441 -- 441 -- GATX Capital 750 750 8.250%, 09/01/03 747 -- 747 -- General Motors Acceptance 500 500 6.125%, 02/01/07 504 -- 504 -- Household Finance 500 500 7.875%, 03/01/07 526 -- 526 -- International Lease Finance 500 500 5.750%, 02/15/07 516 -- 516 -- MBNA America Bank 500 500 7.750%, 09/15/05 550 -- 550 ------------ ------------ ------------ 3,730 -- 3,730 ------------ ------------ ------------ Manufacturing -0.6% Boeing 500 -- 500 8.100%, 11/15/06 567 -- 567 Petronas Capital 650 -- 650 7.875%, 05/22/22 713 -- 713 ------------ ------------ ------------ 1,280 -- 1,280 ------------ ------------ ------------ Service - 0.2%s Comcast Cable Communications 500 -- 500 7.125%, 06/15/13 462 -- 462 ------------ ------------ ------------ 462 -- 462 ------------ ------------ ------------ Transportation - 0.2% Continental Airlines, Series 99-2 175 -- 175 7.056%, 03/15/11 163 -- 163 Northwest Airlines, Series 991A 173 -- 173 6.810%, 08/01/21 156 -- 156 ------------ ------------ ------------ 319 -- 319 ------------ ------------ ------------ Utilities - 0.2% XCEL Energy 500 -- 500 7.000%, 12/01/10 397 -- 397 ------------ ------------ ------------ 397 -- 397 ------------ ------------ ------------
54 FIRST AMERICAN STRATEGIC INCOME FUND PRO FORMA SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2002 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED) (Percentages of each investment category relate to pro forma combined total net assets
PRO FORMA PRO FORMA COMBINED COMBINED FIRST FIRST FIRST FIRST FIRST FIRST AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN AMERICAN STRATEGIC HIGH YIELD HIGH INCOME STRATEGIC HIGH YIELD HIGH INCOME INCOME BOND FUND BOND FUND INCOME BOND FUND BOND FUND FUND PAR PAR PAR FUND PAR MARKET VALUE MARKET VALUE --------- ---------- ----------- ------------ ------------ ------------ Yankee - 0.1% Newcourt Credit Group, Series B 1,200 -- 250 6.875%, 02/16/05 256 -- 256 ------------ ------------ ------------ 256 -- 256 ------------ ------------ ------------ Total Corporate Bonds 6,444 -- 6,444 ------------ ------------ ------------ CMO - U.S. Government Agency Mortgage-Backed Securities -- 2.1% Adjustable Rate - 0.2% FNMA Series 1993-22, Class FD ------------ ------------ ------------ 528 -- 528 2.344%, 11/25/13 528 -- 528 ------------ ------------ ------------ Fixed Rate -1.9% FNMA Series 1993-50, Class PY 2,000 -- 2,000 5.500%, 10/25/22 2,098 -- 2,098 FNMA Series 1999-11, Class C 2,000 -- 2,000 5.500%, 10/25/12 2,094 -- 2,094 ------------ ------------ ------------ 4,192 -- 4,192 ------------ ------------ ------------ ------------ ------------ ------------ Total CMO - U.S. Government Agency Mortgage-Backed Securities 4,720 -- 4,720 ------------ ------------ ------------ CMO - Private Mortgage-Backed Securities -- 1.9% Fixed Rate - 1.6% Citicorp Mortgage Securities Series 2001-6, Class M 750 -- 750 6.500%, 05/25/29 823 -- 823 HSBC Mortgage Loan Trust Series 2000-HSB1, Class A3, Callable 07/15/04 @ 100 268 -- 268 7.110%, 12/16/30 268 -- 268 Washington Mutual Series 2001-AR6, Class A5 1,000 -- 1,000 5.603%, 01/26/32 1,020 -- 1,020 Washington Mutual Series 2002-AR4, Class A7 1,000 -- 1,000 5.593%, 04/25/32 1,033 -- 1,033 Wells Fargo Series 2000-1, Class 2A1, Callable 07/25/12 @ 100 224 -- 224 7.000%, 05/25/30 234 -- 234 ------------ ------------ ------------ 3,378 -- - 3,378 ------------ ------------ ------------ Z-Bonds - 0.3% GE Capital Mortgage Services Series 1994-6, Class A9 619 619 6 6.500%, 09/25/22***** 630 -- 630 ------------ ------------ ------------ Total CMO - Private Mortgage-Backed Securities 4,008 -- 4,008 ------------ ------------ ------------ Preferred Stocks - 0.1% United States - 0.1% 300 -- 300 Nebco Evans Holdings PIK -- -- -- 80 80 Nextel Communications PIK, Series D 55 55 172 -- 172 Pegasus Communications PIK, Series A 32 -- 32 750 -- 750 Sinclair Capital 78 -- 78 ------------ ------------ ------------ Total Preferred Stocks 165 -- 165 ------------ ------------ ------------ Warrants - 00% Canada - 0.0% AT&T Canada, Expires 08/15/07 100 100 0.000% 11 -- 11 ------------ ------------ ------------ Norway - 0.0% Enitel Asa, Expires 04/03/05 1,000 -- 1,000 0.000%, 11/22/04 -- -- -- ------------ ------------ ------------ United States - 0.0% Electronic Retailing Systems International, Expires 02/01 75 75 0.000%, 02/01/04 -- -- -- Sterling Chemical Holdings, Expires 08/15/08 100 100 0.000%, 01/01/00 -- -- -- UIH Australia Pacific, Expires 05/15/06 -- -- -- ------------ ------------ ------------ 150 150 0.000%, 05/15/06 -- -- -- ------------ ------------ ------------ Total Warrants 11 -- 11 ------------ ------------ ------------ Mutual Funds - 0.4% Open End Funds - 0.4% -- 67,818 67,818 Goldman Sachs High Yield Fund -- 447 447 -- 62,500 62,500 Northeast Investors Trust -- 440 440 ------------ ------------ ------------ Total Mutual Funds -- 887 887 ------------ ------------ ------------ Related Party Money Market Fund - Shares Shares Shares 1.7% --------- ---------- ----------- ------------ ------------ ------------ 1,395,408 2,396,554 3,791,962 First American Prime Obligations 1,396 2,397 3,793 Fund (J) ------------ ------------ ------------ ------------ ------------ ------------ Total Related Party Money Market Fund 1,396 2,397 3,793 ------------ ------------ ------------ Total Investments - 91.2% (Cost $57,691, $214,999, and $157,308) $ 145,843 $ 52,244 $ 198,087 ============ ============ ============
(A) Represents a foreign high yield (non-investment grade) bond. (B) Security sold within the terms of a private placement memorandum, exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "qualified institutional buyers." These securities have been determined to be liquid under the guidelines established by the Funds' board of directors. 55 (C) Delayed interest (Step-Bonds) - Represents securities that remain zero coupon securities until a predetermined date at which time the stated coupon rate becomes effective and interest becomes payable at regular intervals. Interest rate shown represents current yield at September 30, 2002, based upon the estimated timing and amount of future interest and principal payments. (D) Securities considered illiquid or restricted. (E) Security currently in default. (F) Non-income producing security. (G) Z-Bonds - Represents securities that pay no interest or principal during their accrual periods, but accrue additional principal at specified rates. Interest rate shown represents current yield based upon the cost basis and estimated future cash flows. (H) Variable Rate Security - The rate shown is the rate in effect as of September 30, 2002. (I) In U.S. dollars unless otherwise indicated. (J) The money market fund is advised by U.S. Bancorp Asset Management, Inc., which also serves as advisor for this Fund. CMO - Collateralized Mortgage Obligation EU - Euro FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association PIK - Payment-in-kind interest is generally paid by issuing additional par of the security rather than paying cash. 56 FIRST AMERICAN INVESTMENT FUNDS, INC. NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited) 1. Basis of Combination The unaudited pro forma statements of assets and liabilities, statements of operations, and schedules of investments reflect the accounts of 13 investment portfolios offered by First American Investment Funds, Inc. (the "Funds") as if the proposed reorganizations occurred as of and for the year ended September 30, 2002. These statements have been derived from books and records utilized in calculating daily net asset values at September 30, 2002. Below are the Funds included in the proposed reorganizations.
--------------------------------------------------------------------------------------- ACQUIRING FUND NAME ACQUIRED FUND ACQUIRING FUND (effective 1/31/03) --------------------------------------------------------------------------------------- Large Cap Growth Fund Large Cap Core Fund* Large Cap Growth Opportunities Fund Health Sciences Fund --------------------------------------------------------------------------------------- Mid Cap Growth Fund Mid Cap Core Fund* Mid Cap Growth Opportunities Fund --------------------------------------------------------------------------------------- Small Cap Growth Fund Small Cap Core Fund* Small Cap Select Fund --------------------------------------------------------------------------------------- Emerging Markets Fund International Fund* International Fund --------------------------------------------------------------------------------------- Bond IMMDEX Fund Fixed Income Fund* Core Bond Fund --------------------------------------------------------------------------------------- High Yield Bond Fund* Strategic Income Fund High Income Bond Fund ---------------------------------------------------------------------------------------
* Accounting survivor The Plan of Reorganization provides that at the time the reorganization becomes effective (the "Effective Time of the Reorganization"), substantially all of the assets and liabilities of the acquired funds will be transferred such that at and after the Effective Time of Reorganization, substantially all of the assets and liabilities of the acquired funds will become assets and liabilities of the acquiring funds. In exchange for the transfer of assets and liabilities, the acquiring funds will issue to the acquired funds full and fractional shares of the designated classes of the acquiring funds, and the acquired funds will make a liquidating distribution of such shares to its shareholders. The number of shares of the acquiring funds so issued will be in equal value to the full and fractional shares of the acquired funds that are outstanding immediately prior to the Effective Time of Reorganization. At and after the Effective Time of Reorganization, all debts, liabilities and obligations of the acquired funds will attach to the acquiring funds and may thereafter be enforced against the acquiring funds to the same extent as if they had been incurred by them. The pro forma statements give effect to the proposed transfer described above. 57 The pro forma statements reflect the combined results of operations of the acquired and acquiring funds. However, should such reorganization be effected, the statements of operations of the acquiring funds will not be restated for precombination period results of the corresponding acquired funds. The pro forma statements of assets and liabilities, statements of operations, and schedules of investments should be read in conjunction with the historical financial statements of the First American Investment Funds, Inc. incorporated by reference in the Statement of Additional Information. 2. Service Providers U.S. Bancorp Asset Management, Inc. (the "Advisor"), a subsidiary of U.S. Bank National Association ("U.S. Bank"), will serve as the combined Funds' investment advisor. U.S. Bancorp Asset Management, Inc. and U.S. Bancorp Fund Services, LLC (the "Co-administrators") will serve as the co-administrators to the Funds. U.S. Bancorp Fund Services, LLC will serve as the transfer agent and U.S. Bank will serve as the custodian to the Funds. 3. Share Classes and Fees The Funds have multiple classes of shares which have identical rights and privileges except with respect to fees paid under shareholder servicing and/or distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters affecting a single class of shares, and the exchange privilege of each class of shares. Class A shares are subject to a front-end sales charge. Class B shares are subject to a CDSC. Class C shares are subject to a front-end sales charge and a CDSC. Class S shares are offered only through banks and other financial institutions that have entered into sales agreements with the funds' distributor. Class Y shares are offered only to qualifying institutional investors and are not subject to a front-end sales charge or CDSC. More information on the classes of shares offered can be found in the Combined Proxy Statement/Prospectus. Under the terms of the investment advisory agreement, the advisor is entitled to receive the following fees computed at an annual rate on the average daily net assets of each of the respective Funds: FUND MANAGEMENT FEE ---------------------------------------------------------- Large Cap Growth Fund 0.65% Large Cap Core Fund 0.65 Health Sciences Fund 0.70 Mid Cap Growth Fund 0.70 Mid Cap Core Fund 0.70 Small Cap Growth Fund 0.70 Small Cap Core Fund 0.70 Emerging Markets Fund 1.15 International Fund 1.10 Bond IMMDEX Fund 0.30 Fixed Income Fund 0.50 High Yield Bond Fund 0.70 Strategic Income Fund 0.70 58 Under the terms of the administration agreement, the co-administrators are entitled to receive for each Fund an administration fee computed at an annual rate of up to 0.25% of the average daily net assets, plus out of pocket expenses. 4. Pro Forma Adjustments and Pro Forma Combined Columns The pro forma adjustments and pro forma combined columns of the statements of operations reflect the adjustments necessary to show expenses and waivers at the rates which would have been in effect as if the reorganizations occurred on October 1, 2001. The pro forma statements of assets and liabilities and schedules of investments give effect to the proposed combination as if the reorganizations had occurred at September 30, 2002. 5. Portfolio Valuation, Securities Transactions and Related Income Securities are valued at market value. Short-term investments maturing in 60 days or less are valued at amortized cost, which approximates market value. Security transactions are accounted for on a trade date basis. Net realized gains or losses from sales of securities are determined by comparing the net sale proceeds to an identified cost basis. Interest income and expenses are recognized on the accrual basis. Dividends are recorded on the ex-dividend date or as soon as information is available to the Funds. Discounts are accreted and premiums are amortized on fixed income securities. 6. Capital Shares The pro forma net asset values per share assume the issuance of shares of the Surviving Funds, which would have occurred at September 30, 2002, in connection with the proposed reorganization. 7. Merger Costs All costs associated with the Reorganization will be paid by U.S. Bancorp Asset Management, Inc. 59 PART C OTHER INFORMATION ITEM 15. INDEMNIFICATION The first four paragraphs of Item 27 of Part C of Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A, dated November 27, 1987, are incorporated herein by reference. On February 18, 1988 the indemnification provisions of the Maryland General Corporation Law (the "Law") were amended to permit, among other things, corporations to indemnify directors and officers unless it is proved that the individual (1) acted in bad faith or with active and deliberate dishonesty, (2) actually received an improper personal benefit in money, property or services, or (3) in the case of a criminal proceeding, had reasonable cause to believe that his act or omission was unlawful. The Law was also amended to permit corporations to indemnify directors and officers for amounts paid in settlement of stockholders' derivative suits. The Registrant undertakes that no indemnification or advance will be made unless it is consistent with Sections 17(h) or 17(i) of the Investment Company Act of 1940, as now enacted or hereafter amended, and Securities and Exchange Commission rules, regulations, and releases (including, without limitation, Investment Company Act of 1940 Release No. 11330, September 2, 1980). Insofar as the indemnification for liability arising under the Securities Act of 1933, as amended, (the "1933 Act") may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act, as amended, and will be governed by the final adjudication of such issue. The Registrant maintains officers' and directors' liability insurance providing coverage, with certain exceptions, for acts and omissions in the course of the covered persons' duties as officers and directors. ITEM 16. EXHIBITS (1)(a) Amended and Restated Articles of Incorporation, as amended through April 2, 1998 (Incorporated by reference to Exhibit (1) to Post-Effective Amendment No. 36, Filed on April 15, 1998 (File Nos. 33-16905, 811-05309)). (1)(b) Articles Supplementary, designating new series and new share classes (Incorporated by reference to Exhibit (a)(2) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)). (1)(c) Articles Supplementary, designating new Series (Incorporated by reference to Exhibit (a)(3) to Post-Effective Amendment No. 61, Filed on April 30, 2002 (File Nos. 33-16905, 811-05309)). (1)(d) Articles Supplementary designating new Series (Incorporated by reference to Exhibit (a)(4) to Post-Effective Amendment No. 64, Filed on October 24, 2002 (File Nos. 33-16905, 811-05309)). **(2) Bylaws, as amended through December 4, 2002. (3) Not applicable. *(4) Form of Plan of Reorganization and Termination. (5) Not applicable. (6)(a) Investment Advisory Agreement dated April 2, 1991, between the Registrant and First Bank National Association, as amended and supplemented through August 1994, and assigned to U.S. Bancorp Piper Jaffray Asset Management, Inc. on May 2, 2001 (Incorporated by reference to Exhibit (5)(a) to Post-Effective Amendment No. 21, Filed on May 15, 1995 (File Nos. 33-16905, 811-05309)). (6)(b) Exhibit A to Investment Advisory Agreement (series and advisory fees) (Incorporated by reference to Exhibit (d)(2) to Post-Effective Amendment No. 64, Filed on October 24, 2002 (File Nos. 33-16905, 811-05309)). (6)(c) Supplement to Advisory Agreement Relating to International Fund dated December 31, 1993 (Incorporated by reference to Exhibit (d)(3) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)). (6)(d) Supplement to Advisory Agreement Relating to Emerging Markets Fund dated July 23, 1998 (Incorporated by reference to Exhibit (d)(4) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)). (6)(e) Supplement to Advisory Agreement Relating to Strategic Income Fund dated July 24, 1998 (Incorporated by reference to Exhibit (d)(5) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)). (6)(f) Sub-Advisory Agreement dated July 1, 2001, between U.S. Bancorp Piper Jaffray Asset Management, Inc. and Clay Finlay Inc. with respect to International Fund (Incorporated by reference to Exhibit (d)(6) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)). (6)(g) Sub-Advisory Agreement dated July 23, 1998, between U.S. Bank National Association, as assigned to U.S. Bancorp Piper Jaffray Asset Management, Inc. on May 2, 2001, and Marvin & Palmer Associates, Inc., with respect to Emerging Markets Fund (Incorporated by reference to Exhibit 5(f) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)). 2 (6)(h) Sub-Advisory Agreement dated July 24, 1998, between U.S. Bank National Association, as assigned to U.S. Bancorp Piper Jaffray Asset Management, Inc. on May 2, 2001, and Federated Global Investment Management Corp., with respect to Strategic Income Fund (Incorporated by reference to Exhibit 5(g) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)). (7)(a) Distribution Agreement [Class A and Class Y Shares,] between the Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(1) to Post-Effective Amendment No. 58, filed on September 21, 2001 (File Nos. 33-16905, 811-05309)). (7)(b) Distribution and Service Agreement [Class B] between the Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(2) to Post-Effective Amendment No. 58, filed on September 21, 2001 (File Nos. 33-16905, 811-05309)). (7)(c) Distribution and Service Agreement [Class C] between the Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(3) to Post-Effective Amendment No. 58, filed on September 21, 2001 (File Nos. 33-16905, 811-05309)). (7)(d) Shareholder Service Plan and Agreement [Class S] between Registrant and Quasar Distributors, LLC (Incorporated by reference to Exhibit e(4) to Post-Effective Amendment No. 58, filed on September 21, 2001 (File Nos. 33-16905, 811-05309)). (7)(e) Dealer Agreement (Incorporated by reference to Exhibit e(5) to Post-Effective Amendment No. 58, filed on September 21, 2001 (File Nos. 33-16905, 811-05309)). (8) Deferred Compensation Plan for Directors Trust Agreement dated January 1, 2000 (Incorporated by reference to Exhibit (f) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)). (9)(a) Custodian Agreement dated September 20, 1993, between the Registrant and First Trust National Association, as supplemented through August 1994 (Incorporated by reference to Exhibit (8) to Post-Effective Amendment No. 18 (File Nos. 33-16905, 811-05309)). (9)(b) Supplement dated March 15, 1994, to Custodian Agreement dated September 20, 1993 (File Nos. 33-16905, 811-05309). (9)(c) Further Supplement dated November 21, 1997, with respect to International Index Fund, and July 23, 1998, with respect to Strategic Income Fund and Emerging Markets Fund, to Custodian Agreement dated September 20, 1993 (Incorporated by reference to Exhibit 8(c) to Post-Effective Amendment No. 39, Filed on July 31, 1998 (File Nos. 33-16905, 811-05309)). 3 (9)(d) Compensation Agreement pursuant to Custodian Agreement dated September 20, 1993, as amended (Incorporated by reference to Exhibit (g)(4) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)). (9)(e) Assignment of Custodian Agreements and Security Lending Agency Agreement to U.S. Bank National Association, dated May 1, 1998 (Incorporated by reference to Exhibit (g)(5) to Post-Effective Amendment No. 41, Filed on December 2, 1998 (File Nos. 33-16905, 811-05309)). (9)(f) Further Supplement to Custodian Agreement dated December 8, 1999 (Incorporated by reference to Exhibit (g)(6) to Post-Effective Amendment No. 44, Filed on January 28, 2000 (File Nos. 33-16905, 811-05309)). (9)(g) Compensation Agreement dated as of February 21, 2002, pursuant to Custodian Agreement dated September 20, 1993, as amended (Incorporated by reference to Exhibit (g)(8) to Post-Effective Amendment No. 64, Filed on October 24, 2002 (File Nos. 33-16905, 811-05309)). (10)(a) Distribution Plan [Class A], Retail Class (Incorporated by reference to Exhibit (m)(1) to Post-Effective Amendment No. 46, Filed on December 28, 2000 (File Nos. 33-16905, 811-05309)). (10)(b) Distribution Plan [Class B] Contingent Deferred Sales Change Class. (Incorporated by reference to Exhibit 15(b) to Post-Effective Amendment No. 21, Filed on May 15, 1995 (File Nos. 33-16905, 811-05309)). (10)(c) Service Plan [Class B] (Incorporated by reference to Exhibit (15)(c) to Post-Effective Amendment No. 21, Filed on May 15, 1995 (File Nos. 33-16905, 811-05309)). (10)(d) Distribution Plan [Class C] Level-Load Class (Incorporated by reference to Exhibit (m)(4) to Post-Effective Amendment No. 42, Filed on February 1, 1999 (File Nos. 33-16905, 811-05309)). (10)(e) Service Plan [Class C] (Incorporated by reference to Exhibit (m)(5) to Post-Effective Amendment No. 42, Filed on February 1, 1999 (File Nos. 33-16905, 811-05309)). (10)(f) Multiple Class Plan Pursuant to Rule 18f-3, dated June 1, 2001 (Incorporated by reference to Exhibit (n)(1) to Post-Effective Amendment No. 54, Filed on June 27, 2001 (File Nos. 33-16905, 811-05309)). **(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding the issuance of shares. ***(12) Opinion and consent of Kirkpatrick & Lockhart LLP regarding tax matters. 4 (13) Not applicable. **(14) Consent of Ernst & Young LLP. (15) None. **(16) Powers of Attorney. **(17)(a) Form of Large Cap Growth Fund Proxy Card. **(17)(b) Form of Health Sciences Fund Proxy Card. **(17)(c) Form of Mid Cap Growth Fund Proxy Card. **(17)(d) Form of Small Cap Growth Fund Proxy Card. **(17)(e) Form of Emerging Markets Fund Proxy Card. **(17)(f) Form of Bond IMMDEXTM Fund Proxy Card. **(17)(g) Form of High Yield Bond Fund Proxy Card. **(17)(h) Forms of Voting Instructions ----------------------------- * Filed herewith as Appendix A to the Prospectus/Proxy Statement included in Part A to this Registration Statement. ** Filed herewith. *** To be filed in a Post-Effective Amendment within a reasonable time after closing of the Reorganizations. ITEM 17. UNDERTAKINGS (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the 1933 Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial BONA FIDE offering of them. (3) The undersigned Registrant agrees to file an amendment to the Registration Statement, pursuant to Rule 485(b) of Regulation C of the 1933 Act, for the purpose of including Exhibit 12, Opinion and consent of Kirkpatrick & Lockhart LLP regarding tax matters, within a reasonable time after closing of the Reorganizations. 6 SIGNATURES As required by the Securities Act of 1933, this registration statement has been signed on behalf of the registrant in the City of Minneapolis and State of Minnesota, on the 20th day of December, 2002. FIRST AMERICAN INVESTMENT FUNDS, INC. Registrant By: /s/ James D. Alt ------------------------------------- James D. Alt Secretary As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ Jeffery M. Wilson Senior Vice President December 20, 2002 --------------------------- Jeffery M. Wilson *Roger A. Gibson Director --------------------------- (Roger A. Gibson) *Andrew M. Hunter III Director --------------------------- (Andrew M. Hunter III) *Leonard W. Kedrowski Director --------------------------- (Leonard W. Kedrowski) *John M. Murphy, Jr. Director --------------------------- (John M. Murphy, Jr.) *Richard K. Riederer Director --------------------------- (Richard K. Riederer) *Joseph D. Strauss Director --------------------------- (Joseph D. Strauss) *Virginia L. Stringer Director --------------------------- (Virginia L. Stringer) *James M. Wade Director --------------------------- (James M. Wade) *By: /s/ James D. Alt Attorney-in-fact December 20, 2002 --------------------------- James D. Alt