<PAGE>
Cash Management Funds - 1997 Annual Report
1997
[LOGO]
CASH MANAGEMENT FUNDS
1997 Annual Report
MONEY MARKET FUND
U.S. GOVERNMENT
MONEY MARKET FUND
TAX-EXEMPT
MONEY MARKET FUND
<PAGE>
CONTENTS
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . .39
Federal Tax Information. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Glossary***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
MONEY MARKET FUND
Portfolio Managers' Letter . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . . 8
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . .23
U.S. GOVERNMENT MONEY MARKET FUND
Portfolio Managers' Letter . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . . 8
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . .31
TAX-EXEMPT MONEY MARKET FUND
Portfolio Managers' Letter . . . . . . . . . . . . . . . . . . . . . . . . . 5
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . . 8
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . .35
This report is intended for shareholders of Money Market Fund, U.S. Government
Money Market Fund and Tax-Exempt Money Market Fund, but may also be used as
sales literature if preceded or accompanied by a prospectus. The prospectus
gives details about the charges, investment results, risks and operating
policies of the funds.
***This report includes a glossary to help you understand financial terms used
in the portfolio managers' letters. When you see this symbol, it indicates a
word that is defined in the glossary.
[LOGO]
INTERNATIONAL GROWTH FUNDS
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Emerging Markets Growth Fund
Pacific-European Growth Fund
U.S. GROWTH FUNDS
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Small Company Growth Fund
Emerging Growth Fund
Growth Fund
GROWTH AND INCOME FUNDS
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Growth and Income Fund
Balanced Fund
INCOME FUNDS
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Government Income Fund
Intermediate Bond Fund
Adjustable Rate Mortgage Securities Fund
TAX-EXEMPT INCOME FUNDS
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National Tax-Exempt Fund
Minnesota Tax-Exempt Fund
CASH MANAGEMENT FUNDS*
- --------------------------------------------------------------------------------
MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
Institutional Money Market Fund
An investment staple, cash management funds can help you organize your finances
and build your assets.
Piper Funds provide you with the flexibility to help you pursue your financial
goals. Among our funds, we offer a spectrum of investment objectives and
convenient shareholder services to meet the varied needs of today's investors.
Contact your Piper Jaffray Investment Executive for more information about the
Piper Funds, including prospectuses, or call Piper Capital Mutual Fund Services
at 800 866-7778. Please read the prospectuses carefully before investing.
*An investment in a money market fund is neither insured nor guaranteed by the
U.S. government, and there can be no assurance that the fund will be able to
maintain a stable net asset value of $1 per share.
*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
<PAGE>
30-DAY EFFECTIVE YIELDS
- --------------------------------------------------------------------------------
[EDGAR PRESENTATION OF GRAPH]
Money Market U.S. Government Money Tax-Exempt Money
Fund Class A Market Fund Market Fund
Sep-96 4.71% 4.63% 2.73%
Oct-96 4.71% 4.61% 2.67%
Nov-96 4.71% 4.61% 2.74%
Dec-96 4.75% 4.60% 2.79%
Jan-97 4.76% 4.61% 2.61%
Feb-97 4.76% 4.62% 2.62%
Mar-97 4.78% 4.64% 2.49%
Apr-97 4.91% 4.74% 2.90%
May-97 4.96% 4.77% 3.10%
Jun-97 4.98% 4.79% 3.00%
Jul-97 5.01% 4.79% 2.81%
Aug-97 5.00% 4.81% 2.70%
Sep-97 5.00% 4.85% 2.89%
This chart shows the 30-day effective yields as of the end of each month for
Money Market Fund Class A, U.S. Government Money Market Fund and Tax-Exempt
Money Market Fund. 30-day effective yield refers to the income generated by the
fund over a 30-day period. This income is annualized and assumed to be
reinvested.
Past performance does not guarantee future results. The return of your
investment will fluctuate. An investment in the fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1 per share.
Since the funds' inceptions, the funds' distributor voluntarily waived certain
12b-1 fees. Without waivers, 30-day effective yields for Money Market Fund Class
A, U.S. Government Money Market Fund and Tax-Exempt Money Market Fund would have
been 4.90%, 4.75% and 2.79%, respectively, on September 30, 1997.
As of September 30, 1997, the 30-day effective yield for Money Market Fund
Class B was 4.15%.
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1997 Annual Report 1 Cash Management Funds
<PAGE>
MONEY MARKET FUND &
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
[PHOTO]
NANCY S. OLSEN
is primarily responsible for the management of Money Market
Fund and U.S. Government Money Market Fund. She has 19 years of financial
experience.
November 3, 1997
- --------------------------------------------------------------------------------
DEAR SHAREHOLDERS:
THE SEVEN-DAY CURRENT YIELDS FOR BOTH MONEY MARKET FUND CLASS A AND U.S.
GOVERNMENT MONEY MARKET FUND INCREASED SINCE WE REPORTED TO YOU SIX MONTHS AGO.
Money Market Fund's Class A seven-day current yield increased from 4.72% on
March 31, 1997, to 4.88%* on September 30, 1997. The yield also increased since
September 30, 1996, when the seven-day current yield was 4.63%. U.S. Government
Money Market Fund's seven-day current yield increased from 4.63% on March 31,
1997, to 4.87%* on September 30, 1997. The fund's seven-day current yield was
4.55% on September 30, 1996.
* Past performance does not guarantee future results. The return of your
investment will fluctuate. An investment in the fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1 per share. Since the
funds' inceptions, the funds' distributor voluntarily waived certain 12b-1 fees.
Without waivers, seven-day current yields for Money Market Fund Class A and U.S.
Government Money Market Fund would have been 4.78% And 4.77%, respectively, on
September 30, 1997. As of September 30, 1997, the seven-day current yield for
Money Market Fund Class B was 4.07%.
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MONEY MARKET FUND PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
As a percentage of total assets on September 30, 1997
[CHART]
Commercial Paper A1/P1 77%
Bankers Acceptances 1%
Certificates of Deposit 11%
U.S. Government Agency Securities 6%
U.S. Government Agency-Backed Securities 1%
Bank Notes 3%
Other Assets 1%
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1997 Annual Report 2 Cash Management Funds
<PAGE>
MONEY MARKET FUND &
U.S. GOVERNMENT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
[PHOTO]
SHAISTA B. TAJAMAL
assists with the management of Money Market Fund and U.S. Government Money
Market Fund. She has seven years of financial experience.
- --------------------------------------------------------------------------------
SHORT-TERM INTEREST RATES FLUCTUATED DURING THE PERIOD WITH CHANGING
EXPECTATIONS ABOUT ECONOMIC GROWTH. During fourth quarter 1996, slower growth
led the markets to expect the Federal Reserve Board (Fed) to keep the federal
funds rate*** unchanged. But by late February, the economy was perceived to be
picking up steam - and on March 25 the Fed raised the fed funds rate by 0.25%.
The markets turned around again in the second quarter, reflecting decelerating
inflation and signs that the economy was slowing. In the third quarter,
expectations of weaker economic growth, combined with continued good news about
inflation, resulted in lower bond and money market yields.
WE PROVIDED YOU WITH A COMPETITIVE RETURN DURING THE YEAR BY MANAGING THE FUNDS'
AVERAGE WEIGHTED MATURITY*** AND MAKING SOME CHANGES TO THE STRUCTURE OF THE
FUNDS. We lengthened the average weighted maturity of the funds as we moved
closer to year end 1996 to take advantage of the higher rates available then. We
shortened the maturities in the first part of 1997 as rates began to increase,
and then lengthened again by the end of the first quarter in time for the
decline in short-term rates during the second quarter. Throughout the summer, we
continued to position the funds with longer average weighted maturities than
their respective benchmarks,*** which worked well given the decrease in rates
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
As a percentage of total assets on September 30, 1997
[CHART]
U.S. Government Agency-Backed Securities 12%
Federal Home Loan Bank 12%
Federal Home Loan Mortgage Corporation 15%
Federal Farm Credit Bank 9%
U.S. Treasury Securities 4%
Federal National Mortgage Association 22%
Student Loan Marketing Association 11%
Repurchase Agreements 15%
- --------------------------------------------------------------------------------
*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
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1997 Annual Report 3 Cash Management Funds
<PAGE>
MONEY MARKET FUND &
U.S. GOVERNMENT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
during the period. Late in the second quarter and early in the third, we added
some one-year securities, thereby positioning the funds in more of a barbell
structure.*** A barbell structure clusters maturities at both the short end of
the yield curve*** (one to three months) and at the longer end (10 to 13
months). The structure works well when the difference between yields on short-
and longer-term securities decreases, which is what happened during the third
quarter of this year.
GOING FORWARD, WE BELIEVE THE PATTERN OF STRONG AND WEAK PERIODS OF ECONOMIC
GROWTH, ALTERNATING WITHOUT EXCESSES IN EITHER DIRECTION, WILL CONTINUE. While
economic indicators are sending mixed signals, it appears the economy is fairly
well balanced. Any changes in Fed policy will depend on economic releases in the
coming months. We will continue to monitor those releases carefully and
formulate our strategy accordingly.
OUR PRIMARY CONCERN IN MANAGING BOTH FUNDS IS THE SAFETY OF YOUR PRINCIPAL. We
continue to use a fundamental approach to identify high-quality, liquid money
market securities that provide competitive yields. Our strategy is designed to
add value by actively positioning the portfolios on the yield curve (13 months
or less), investing in high-quality securities and managing the funds' average
weighted maturity based on our interest rate forecast.
Thank you for your investment in Money Market Fund and/or U.S. Government Money
Market Fund. We remain committed to providing investments that help you achieve
your financial goals.
Sincerely,
/s/ Nancy Shellenberger Olsen
Nancy Shellenberger Olsen
Portfolio Manager
- --------------------------------------------------------------------------------
*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
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1997 Annual Report 4 Cash Management Funds
<PAGE>
TAX-EXEMPT MONEY MARKET FUND
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[PHOTO]
DOUGLAS J. WHITE, CFA
shares responsibility for the management of Tax-Exempt Money Market Fund. He has
14 years of financial experience.
- --------------------------------------------------------------------------------
November 3, 1997
DEAR SHAREHOLDERS:
TAX-EXEMPT MONEY MARKET FUND'S YIELD INCREASED SINCE WE REPORTED TO YOU SIX
MONTHS AGO. The fund's seven-day current yield rose from 2.63% on March 31,
1997, to 3.01%* on September 30, 1997. That compares to a yield of 2.81% on
September 30, 1996. Yields fluctuated from month to month as a result of
changing expectations of Federal Reserve Board (Fed) activity and seasonal
technical imbalances. We'll discuss these factors - and how they affected the
fund -- below.
SHORT-TERM INTEREST RATES FLUCTUATED DURING THE PERIOD AS EXPECTATIONS FOR
ECONOMIC GROWTH CHANGED. During fourth quarter 1996, slower growth led the
markets to expect that the Fed would not change the federal funds rate.*** But
by late February, the economy was perceived to be picking up steam - and on
March 25 the Fed
* Past performance does not guarantee future results. The return of your
investment will fluctuate. An investment in the fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1 per share. Since the
fund's inception, the fund's distributor voluntarily waived certain 12b-1 fees.
Without waivers, the fund's seven-day current yield would have been 2.91% on
September 30, 1997.
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TAX-EXEMPT MONEY MARKET FUND PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
As a percentage of total assets on September 30, 1997
[CHART]
Other Assets 1%
Housing Revenue 3%
Industrial Development Revenue 13%
Electric Revenue 2%
Health Services Revenue 5%
Water/Sewer/Pollution Control Revenue 8%
Sales/Excise Tax Revenue 7%
General Obligations 20%
Health Services Revenue 6%
Repurchase Agreements 1%
Leasing Revenue 5%
Education Revenue 3%
Other Revenue 5%
Hospital Revenue 21%
*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
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1997 Annual Report 5 Cash Management Funds
<PAGE>
TAX-EXEMPT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
[PHOTO]
CATHERINE STIENSTRA
shares responsibility for the management of Tax-Exempt Money Market Fund. She
has six years of financial experience.
- --------------------------------------------------------------------------------
raised the fed funds rate by 0.25%. The markets turned around again in the
second quarter, reflecting decelerating inflation and signs that the economy was
slowing. In the third quarter, expectations of weaker economic growth, combined
with continued good news about inflation, resulted in reduced bond yields.
THE MUNICIPAL NOTE SUPPLY SEASON BEGAN IN EARLY JUNE AND ENDED IN THE LATTER
PART OF SEPTEMBER. During this supply glut, the average weighted maturity*** of
our benchmark*** rose from 32 days to 51 days, a year-to-date high. Your fund
followed a similar pattern, rising from 40 days to 57 days during the same
period.
WE TOOK ADVANTAGE OF THE SUPPLY OPPORTUNITY AND PURCHASED A SUBSTANTIAL POSITION
IN HIGH-QUALITY NOTES, AS THEIR YIELDS REPRESENTED CONSIDERABLE VALUE. We also
added some new tax-exempt commercial paper to the fund in the second quarter,
since this group of securities was attractively valued. Purchasing these notes
and commercial paper helped us maintain our allocation of fixed-rate securities
at approximately 35%. Meanwhile, yields on daily and weekly tax-exempt variable
rate securities fluctuated dramatically during the past quarter, ranging from
40% to 100% of their taxable counterparts. However, the trend in these ratios
has been downward as tax-exempt money market fund assets (and demand for the
securities) have risen.
WE INTEND TO CONTINUE MANAGING THE FUND WITH 35% TO 45% FIXED RATE SECURITIES
AND 55% TO 65% VARIABLE RATE SECURITIES. Keeping a significant portion of
variable rate securities allows the fund to take advantage of any increase in
short-term interest rates caused by technical imbalances or an increase in
interest rates caused by the Fed.
- --------------------------------------------------------------------------------
*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
- --------------------------------------------------------------------------------
1997 Annual Report 6 Cash Management Funds
<PAGE>
TAX-EXEMPT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
THE FUND'S TOTAL ASSETS INCREASED 12% DURING THE PAST YEAR, MOST LIKELY DUE, IN
PART, TO NERVOUSNESS ABOUT STOCK MARKET VOLATILITY AND POSSIBLE INTEREST RATE
MOVES BY THE FED. While the fund's asset level rose during the year, it
fluctuated month to month. Another factor that may have caused asset
fluctuations in the fund, and tax-exempt money market funds in general, was a
proposal to eliminate favorable tax treatment of municipal income allowed to
corporations. While this proposal was not adopted, it may have prompted
corporations to sell their holdings of tax-exempt money market funds.
WE BELIEVE THE FED WILL DECIDE TO KEEP INTEREST RATES UNCHANGED AT ITS NEXT
MEETING IN NOVEMBER. We will remain cautious in managing your fund's average
maturity until we have a clearer picture of how the economy will unfold.
Thank you for investing in Tax-Exempt Money Market Fund. We remain dedicated to
providing management services and investments that help you achieve your
financial goals.
Sincerely,
/s/ Douglas J. White
Douglas J. White
Portfolio Manager
/s/ Catherine M. Stienstra
Catherine M. Stienstra
Portfolio Manager
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1997 Annual Report 7 Cash Management Funds
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES September 30, 1997
................................................................................
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments in securities at amortized cost which
approximates market value (note 2) (including repurchase
agreements of $0; $42,436,000 and $3,250,000,
respectively) ............................................ $2,275,641,747 $ 287,891,314 $ 233,576,156
Cash in bank on demand deposit ............................. 1,033,573 43,767 29,540
Accrued interest receivable ................................ 9,883,331 1,415,989 1,240,393
--------------- --------------- ---------------
Total assets ............................................. 2,286,558,651 289,351,070 234,846,089
--------------- --------------- ---------------
LIABILITIES:
Dividends payable to shareholders .......................... 2,648,240 374,597 188,934
Payable for investment securities purchased ................ 16,989,290 3,997,480 --
Accrued investment management fee .......................... 715,132 117,888 96,947
Accrued distribution and service fees ...................... 374,022 47,155 38,779
--------------- --------------- ---------------
Total liabilities ........................................ 20,726,684 4,537,120 324,660
--------------- --------------- ---------------
Net assets applicable to outstanding capital stock ....... $2,265,831,967 $ 284,813,950 $ 234,521,429
--------------- --------------- ---------------
--------------- --------------- ---------------
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital ............... $2,265,831,967 $ 284,813,950 $ 234,521,429
--------------- --------------- ---------------
Total - representing net assets applicable to outstanding
capital stock .......................................... $2,265,831,967 $ 284,813,950 $ 234,521,429
--------------- --------------- ---------------
--------------- --------------- ---------------
NET ASSET VALUE AND OFFERING PRICE:
CLASS A (NOTE 1):
Net assets ................................................. $2,265,821,728 $ 284,813,950 $ 234,521,429
Shares outstanding (authorized 80 billion, 100 billion and
100 billion shares, respectively, of $0.01 par value) .... 2,265,821,728 284,813,950 234,521,429
Net asset value and offering price per share ............... $ 1.00 $ 1.00 $ 1.00
CLASS B:
Net assets ................................................. $ 10,239 -- --
Shares outstanding (authorized 10 billion shares of $0.01
par value) ............................................... 10,239 -- --
Net asset value and offering price per share ............... $ 1.00 -- --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 8 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF OPERATIONS For The Year Ended September 30, 1997
................................................................................
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND
------------- ------------------ -------------
<S> <C> <C> <C>
INCOME:
Interest ................................................... $117,602,043 $ 16,096,745 $ 8,124,633
------------- ------------------ -------------
EXPENSES (NOTE 5):
Investment management fee .................................. 8,205,374 1,460,611 1,113,781
Distribution and service fees:
Class A .................................................. 6,330,924 876,366 668,268
Class B .................................................. 63 -- --
Custodian and accounting fees .............................. 759,736 201,992 159,181
Transfer agent and dividend disbursing agent fees .......... 3,469,744 224,279 140,364
Registration fees .......................................... 262,563 39,830 42,581
Reports to shareholders .................................... 128,579 38,960 34,925
Directors' fees ............................................ 7,968 7,968 7,968
Audit and legal fees ....................................... 45,166 40,166 40,166
Other expenses ............................................. 164,913 28,177 23,077
------------- ------------------ -------------
Total expenses ........................................... 19,375,030 2,918,349 2,230,311
Less Class A expenses waived by the distributor ........ (2,117,729) (295,089) (224,639)
------------- ------------------ -------------
Net expenses before expenses paid indirectly ............. 17,257,301 2,623,260 2,005,672
Less expenses paid indirectly .......................... (4,298) (2,816) (7,788)
------------- ------------------ -------------
Total net expenses ....................................... 17,253,003 2,620,444 1,997,884
------------- ------------------ -------------
Net investment income .................................... $100,349,040 $ 13,476,301 $ 6,126,749
------------- ------------------ -------------
------------- ------------------ -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 9 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------
Year Ended Year Ended
9/30/97 9/30/96
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 100,349,040 $ 89,634,259
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
CLASS A:
From net investment income ............................... (100,348,789) (89,498,180)
CLASS B:
From net investment income ............................... (251) --
--------------- ---------------
Total distributions ...................................... (100,349,040) (89,498,180)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
CLASS A .................................................... 300,021,720 262,951,258
CLASS B .................................................... 10,239 --
--------------- ---------------
Increase in net assets from capital share transactions ... 300,031,959 262,951,258
--------------- ---------------
Total increase in net assets ............................. 300,031,959 263,087,337
Net assets at beginning of year ............................ 1,965,800,008 1,702,712,671
--------------- ---------------
Net assets at end of year .................................. $ 2,265,831,967 $ 1,965,800,008
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 10 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET FUND
---------------------------------
Year Ended Year Ended
9/30/97 9/30/96
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 13,476,301 $ 13,649,679
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (13,476,301) (13,649,679)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Increase (decrease) in net assets from capital share
transactions ............................................. (6,207,861) 34,574,664
--------------- ---------------
Total increase (decrease) in net assets .................. (6,207,861) 34,574,664
Net assets at beginning of year ............................ 291,021,811 256,447,147
--------------- ---------------
Net assets at end of year .................................. $ 284,813,950 $ 291,021,811
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 11 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
TAX-EXEMPT
MONEY MARKET FUND
---------------------------------
Year Ended Year Ended
9/30/97 9/30/96
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 6,126,749 $ 6,199,461
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (6,126,749) (6,199,461)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Increase in net assets from capital share transactions ..... 24,582,439 3,727,356
--------------- ---------------
Total increase in net assets ............................. 24,582,439 3,727,356
Net assets at beginning of year ............................ 209,938,990 206,211,634
--------------- ---------------
Net assets at end of year .................................. $ 234,521,429 $ 209,938,990
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1997 Annual Report 12 Cash Management Funds
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) ORGANIZATION
................................
Piper Funds Inc. (the company) is registered under the Investment
Company Act of 1940 (as amended) as a single open-end management
investment company. The company currently has 12 series,
including Money Market Fund, U.S. Government Money Market Fund
and Tax-Exempt Money Market Fund (the funds). Each fund is
classified as a diversified series. The company's articles of
incorporation permit the board of directors to create additional
series in the future.
Money Market Fund commenced offering Class B shares on February
18, 1997. All shares existing prior to that date were classified
as Class A shares. Key features of each class are:
CLASS A:
- Lower distribution fees than Class B
CLASS B:
- Subject to a contingent deferred sales charge upon redemption
- Higher distribution fees than Class A
- Automatic conversion to Class A shares at the beginning of the
sixth calendar year after issuance
- Available for purchase only in exchange for Class B shares of
another fund managed by the adviser
The classes of shares of Money Market Fund have the same rights
and are identical in all respects except that each class bears
different distribution expenses, has exclusive voting rights with
respect to matters affecting that class and has different
exchange privileges. U.S. Government Money Market Fund and
Tax-Exempt Money Market Fund each have a single class of shares,
which are shown as Class A in the financial statements.
Money Market Fund invests in a variety of high-quality money
market instruments such as high-grade domestic and U.S. dollar
denominated foreign commercial paper, repurchase agreements,
- ---------------------------------------------------------------------
1997 Annual Report 13 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
obligations of domestic and foreign banks (time deposits,
certificates of deposit and bankers' acceptances), U.S.
government securities and short-term corporate obligations.
U.S. Government Money Market Fund invests in securities that are
issued or guaranteed as to payment of principal and interest by
the U.S. government, its agencies or instrumentalities and
repurchase agreements backed by such securities.
Tax-Exempt Money Market Fund invests primarily in high-quality,
tax-exempt securities with short-term maturities, including
municipal bonds, notes and commercial paper.
There is no assurance that the funds will be able to maintain a
stable net asset value of $1.00 per share.
(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
................................
INVESTMENTS IN SECURITIES
Pursuant to Rule 2a-7 of the Investment Company Act of 1940 (as
amended), securities are valued on the basis of amortized cost,
which approximates market value.
Security transactions are accounted for on the date the
securities are purchased or sold. Interest income, including
amortization of discount and premium computed on a straight line
basis, is accrued daily.
FEDERAL TAXES
Each fund is treated separately for federal income tax purposes.
Each fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and not
be subject to federal income tax. Therefore, no income tax
provision is required. The funds also intend to distribute their
taxable net investment income and realized gains, if any, to
avoid the payment of any federal excise taxes.
- ---------------------------------------------------------------------
1997 Annual Report 14 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income for
Money Market Fund are declared separately for each class daily
and reinvested in additional shares of the same class monthly.
Distributions to shareholders from net investment income for U.S.
Government Money Market Fund and Tax-Exempt Money Market Fund are
declared daily and reinvested in additional shares of the funds
monthly.
REPURCHASE AGREEMENTS
For repurchase agreements entered into with certain
broker-dealers, the funds, along with other affiliated registered
investment companies, may transfer uninvested cash balances into
an individual, joint or tri-party trading account, the daily
aggregate of which is invested in repurchase agreements secured
by U.S. government or agency obligations. Securities pledged as
collateral for all individual and joint repurchase agreements are
held by the funds' custodian bank until maturity of the
repurchase agreement. Securities pledged as collateral for all
tri-party repurchase agreements are held by a third-party
custodian until maturity of the repurchase agreement. Provisions
for all agreements ensure that the daily market value of the
collateral is in excess of the repurchase amount, including
accrued interest, to protect the funds in the event of a default.
ALLOCATION OF INCOME, EXPENSES AND GAINS(LOSSES)
Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses for Money Market Fund
are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class.
Class-specific expenses, which include distribution and service
fees, are charged directly to such class.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
- ---------------------------------------------------------------------
1997 Annual Report 15 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
make estimates and assumptions that affect the reported amounts
in the financial statements. Actual results could differ from
these estimates.
(3) INVESTMENT
SECURITY
TRANSACTIONS
................................
Cost of purchases and proceeds from sales of securities for the
year ended September 30, 1997, were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
--------------- ---------------- ---------------
<S> <C> <C> <C>
Purchases .............................. $17,848,151,969 $ 5,910,709,711 $ 1,128,071,553
Proceeds from sales .................... $17,536,379,799 $ 5,912,471,778 $ 1,102,909,615
</TABLE>
(4) CAPITAL SHARE
TRANSACTIONS
................................
Capital share transactions for the funds at net asset value of $1
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED (a) YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
---------------------- --------------------
<S> <C> <C>
MONEY MARKET FUND:
CLASS A
Sales of fund shares ................. $ 16,997,576,820 $ 8,148,803,714
Issued for reinvested
distributions ...................... 97,113,763 86,341,691
Redemptions of fund shares ........... (16,794,668,863) (7,972,194,147)
---------------------- --------------------
$ 300,021,720 $ 262,951,258
---------------------- --------------------
---------------------- --------------------
CLASS B
Sales of fund shares ................. $ 11,044 $ --
Issued for reinvested
distributions ...................... 240 --
Redemptions of fund shares ........... ) (1,045 --
---------------------- --------------------
$ 10,239 $ --
---------------------- --------------------
---------------------- --------------------
</TABLE>
(a) Period from February 18, 1997 (commencement of offering)
to September 30, 1997 for Class B shares.
- ---------------------------------------------------------------------
1997 Annual Report 16 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
----------------- -----------------
<S> <C> <C>
U.S. GOVERNMENT MONEY MARKET FUND:
Sales of fund shares ................. $ 1,179,382,187 $ 1,241,641,588
Issued for reinvested
distributions ...................... 13,081,170 13,290,413
Redemptions of fund shares ........... (1,198,671,218) (1,220,357,337)
----------------- -----------------
$ (6,207,861) $ 34,574,664
----------------- -----------------
----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
----------------- -----------------
<S> <C> <C>
TAX-EXEMPT MONEY MARKET FUND:
Sales of fund shares ................. $ 1,905,106,004 $ 1,478,505,358
Issued for reinvested
distributions ...................... 5,907,226 6,041,943
Redemptions of fund shares ........... (1,886,430,791) (1,480,819,945)
----------------- -----------------
$ 24,582,439 $ 3,727,356
----------------- -----------------
----------------- -----------------
</TABLE>
(5) EXPENSES
................................
INVESTMENT MANAGEMENT FEE
The company has entered into an investment management agreement
with Piper Capital Management Incorporated (Piper Capital) under
which Piper Capital manages each fund's assets and furnishes
related office facilities, equipment, research and personnel. The
agreement requires each fund to pay Piper Capital a monthly fee
based on average daily net assets. The fee for each fund is equal
to an annual rate of 0.50% of the first $500 million in net
assets, 0.425% of the next $250 million, 0.375% of the next $250
million, 0.35% of the next $500 million and then decreasing in
reduced percentages to 0.275% of net assets in excess of $2.5
billion. For the year ended September 30, 1997, the effective
investment management fee paid by the funds was 0.39%, 0.50% and
0.50% on an annual basis for Money Market Fund, U.S. Government
Money Market Fund and Tax-Exempt Money Market Fund, respectively.
DISTRIBUTION AND SERVICE FEES
Each fund also pays Piper Jaffray Inc. (Piper Jaffray), the
funds' distributor, fees accrued daily and paid quarterly for
providing
- ---------------------------------------------------------------------
1997 Annual Report 17 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
shareholder services and distribution-related services. The fees
for each class, which were being voluntarily limited for U.S.
Government Money Market Fund, Tax-Exempt Money Market Fund and
Class A of Money Market Fund for the year ended September 30,
1997, are stated below as a percent of average daily net assets
attributable to such shares.
<TABLE>
<CAPTION>
MONEY MARKET FUND
U.S. GOVERNMENT TAX-EXEMPT
----------------- MONEY MARKET MONEY MARKET
CLASS A CLASS B FUND FUND
------- ------- --------------- ------------
<S> <C> <C> <C> <C>
Distribution fee ....................... 0.05% 0.75% 0.05% 0.05%
Service fee ............................ 0.25% 0.25% 0.25% 0.25%
------- ------- ----- -----
Total distribution and service fees 0.30% 1.00% 0.30% 0.30%
------- ------- ----- -----
------- ------- ----- -----
Total distribution and service fees
after voluntary limitation ......... 0.20% 1.00% 0.20% 0.20%
------- ------- ----- -----
------- ------- ----- -----
</TABLE>
SHAREHOLDER ACCOUNT SERVICING FEES
The company has also entered into shareholder account servicing
agreements under which Piper Jaffray and Piper Trust Company
(Piper Trust) perform various transfer and dividend disbursing
agent services for accounts held at the respective company. The
fees, which are paid monthly to Piper Jaffray and Piper Trust for
providing these services, are equal to an annual rate of $9.00
per active shareholder account and $6.00 per inactive account.
For the year ended September 30, 1997, Piper Jaffray and Piper
Trust received the following amounts in connection with the
shareholder account servicing agreements:
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------- ---------------- -------------
<S> <C> <C> <C>
Piper Jaffray .......................... $3,436,119 $207,768 $123,864
Piper Trust ............................ 11,852 6 --
------------- ---------------- -------------
$3,447,971 $207,774 $123,864
------------- ---------------- -------------
------------- ---------------- -------------
</TABLE>
- ---------------------------------------------------------------------
1997 Annual Report 18 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
OTHER FEES AND EXPENSES
In addition to the investment management, distribution and
shareholder account servicing fees, each fund is responsible for
paying most other operating expenses including: outside
directors' fees and expenses; custodian fees; registration fees;
printing and shareholder reports; transfer agent fees and
expenses; legal, auditing and accounting services; insurance;
interest; taxes and other miscellaneous expenses.
Expenses paid indirectly represent a reduction of custodian fees
for earnings on miscellaneous cash balances maintained by the
funds.
- ---------------------------------------------------------------------
1997 Annual Report 19 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL
HIGHLIGHTS
................................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
MONEY MARKET FUND
<TABLE>
<CAPTION>
CLASS A
--------------------------------------
Year Ended September 30,
--------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Operations:
Net investment income ................ 0.05 0.05 0.05 0.03 0.02
Distributions to shareholders:
From net investment income ........... (0.05) (0.05) (0.05) (0.03) (0.02)
------ ------ ------ ------ ------
Net asset value, end of period ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
SELECTED INFORMATION
Total return (a) ....................... 4.84% 4.79% 5.05% 2.98% 2.45%
Net assets at end of period (in
millions) ............................ $2,266 $1,966 $1,703 $1,185 $1,106
Ratio of expenses to average daily net
assets ............................... 0.82% 0.84% 0.92% 0.93% 0.96%
Ratio of net investment income to
average daily net assets ............. 4.76% 4.73% 4.94% 2.90% 2.42%
Ratios before waivers by the
distributor:
Ratio of expenses to average daily net
assets before waivers .............. 0.92% 0.94% 1.02% 1.03% 1.06%
Ratio of net investment income to
average daily net assets before
waivers ............................ 4.66% 4.63% 4.84% 2.80% 2.32%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------
Period Ended
September 30,
1997(b)
-------------
<S> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 1.00
-------------
Operations:
Net investment income ................ 0.02
Distributions to shareholders:
From net investment income ........... (0.02)
-------------
Net asset value, end of period ......... $ 1.00
-------------
-------------
SELECTED INFORMATION
Total return (a) ....................... 2.39%
Net assets at end of period (in
thousands) ........................... $ 10
Ratio of expenses to average daily net
assets ............................... 1.63%(c)
Ratio of net investment income to
average daily net assets ............. 4.00%(c)
</TABLE>
(a) TOTAL RETURN ASSUMES REINVESTMENT OF DISTRIBUTIONS AND DOES NOT REFLECT A
SALES CHARGE.
(b) COMMENCEMENT OF OFFERING OF CLASS B SHARES WAS FEBRUARY 18, 1997.
(c) ANNUALIZED.
- ---------------------------------------------------------------------
1997 Annual Report 20 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL
HIGHLIGHTS
................................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
U.S. GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Operations:
Net investment income ................ 0.05 0.05 0.05 0.03 0.02
Distributions to shareholders:
From net investment income ........... (0.05) (0.05) (0.05) (0.03) (0.02)
------ ------ ------ ------ ------
Net asset value, end of period ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
SELECTED INFORMATION
Total return (a) ....................... 4.71% 4.72% 4.99% 2.98% 2.51%
Net assets at end of period (in
millions) ............................ $ 285 $ 291 $ 256 $ 185 $ 195
Ratio of expenses to average daily net
assets ............................... 0.90% 0.90% 0.91% 0.92% 0.93%
Ratio of net investment income to
average daily
net assets ........................... 4.61% 4.62% 4.90% 2.88% 2.41%
Ratios before waivers by the
distributor:
Ratio of expenses to average daily net
assets before waivers .............. 1.00% 1.00% 1.01% 1.02% 1.03%
Ratio of net investment income to
average daily net assets before
waivers ............................ 4.51% 4.52% 4.80% 2.78% 2.31%
</TABLE>
(a) TOTAL RETURN ASSUMES REINVESTMENT OF DISTRIBUTIONS AND DOES NOT REFLECT A
SALES CHARGE.
- ---------------------------------------------------------------------
1997 Annual Report 21 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL
HIGHLIGHTS
................................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Operations:
Net investment income ................ 0.03 0.03 0.03 0.02 0.02
Distributions to shareholders:
From net investment income (a) ....... (0.03) (0.03) (0.03) (0.02) (0.02)
------ ------ ------ ------ ------
Net asset value, end of period ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
SELECTED INFORMATION
Total return (b) ....................... 2.77% 2.80% 3.02% 1.82% 1.87%
Net assets at end of period (in
millions) ............................ $ 235 $ 210 $ 206 $ 178 $ 169
Ratio of expenses to average daily net
assets ............................... 0.90% 0.90% 0.91% 0.90% 0.92%
Ratio of net investment income to
average daily net assets ............. 2.75% 2.76% 2.97% 1.80% 1.83%
Ratios before waivers by the
distributor:
Ratio of expenses to average daily net
assets before waivers .............. 1.00% 1.00% 1.01% 1.00% 1.02%
Ratio of net investment income to
average daily net assets before
waivers ............................ 2.65% 2.66% 2.87% 1.70% 1.73%
</TABLE>
(a) INCLUDES DISTRIBUTIONS WHICH ARE TAXABLE FOR FEDERAL AND STATE INCOME TAX
PURPOSES OF $0.0001 AND $0.0001 PER SHARE FOR FISCAL 1997 AND 1995,
RESPECTIVELY.
(b) TOTAL RETURN ASSUMES REINVESTMENT OF DISTRIBUTIONS AND DOES NOT REFLECT A
SALES CHARGE.
- ---------------------------------------------------------------------
1997 Annual Report 22 Cash Management Funds
<PAGE>
Investments in Securities
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET FUND September 30, 1997
............................................................................................
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
U.S. GOVERNMENT AND AGENCY SECURITIES (5.9%):
FEDERAL FARM CREDIT BANK FLOATING RATE NOTES (b) (1.7%):
5.55%, 2/20/98 ...................................... $ 22,000,000 $ 21,994,979
5.58%, 11/3/97 ...................................... 17,000,000 16,999,375
---------------
38,994,354
---------------
FEDERAL HOME LOAN BANK FLOATING RATE NOTES (b) (0.5%):
5.85%, 1/29/98 ...................................... 10,000,000 10,003,992
---------------
FEDERAL HOME LOAN MORTGAGE CORPORATION COUPON NOTES (0.3%):
5.89%, 5/29/98 ...................................... 6,000,000 5,995,993
---------------
FEDERAL HOME LOAN MORTGAGE CORPORATION DISCOUNT NOTES (0.4%):
5.43%, 10/21/97 ..................................... 10,000,000 9,969,833
---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION FLOATING RATE NOTES (b) (1.6%):
5.51%, 4/1/99 ....................................... 10,375,000 10,337,780
5.29%, 6/2/99 ....................................... 18,000,000 17,916,094
5.28%, 5/11/98 ...................................... 8,500,000 8,496,515
---------------
36,750,389
---------------
STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE NOTES (b) (1.4%):
5.55%, 10/6/98 ...................................... 17,000,000 16,989,290
5.41%, 11/20/97 ..................................... 14,375,000 14,375,606
---------------
31,364,896
---------------
Total U.S. Government and Agency Securities
(cost: $133,079,457) ........................... 133,079,457
---------------
U.S. GOVERNMENT AGENCY-BACKED SECURITIES (1.6%):
Downey Savings & Loan Association, LOC Federal Home
Loan Bank of San Francisco, 5.50%, 12/5/97 ........ 3,000,000 2,970,208
Nebraska Higher Education Loan Program Inc., LOC
Student Loan Marketing Association, 5.51%,
10/10/97 .......................................... 6,650,000 6,640,840
Nebraska Higher Education Loan Program Inc., LOC
Student Loan Marketing Association, 5.54%,
10/27/97 .......................................... 4,550,000 4,531,795
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 23 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Nebraska Higher Education Loan Program Inc., LOC
Student Loan Marketing Association, 5.52%,
10/30/97 .......................................... $ 21,735,000 $ 21,638,352
---------------
Total U.S. Government Agency-Backed Securities
(cost: $35,781,195) ............................ 35,781,195
---------------
BANK NOTES (3.3%):
Bank One Columbus N.A., 5.69%, 10/28/97 ............. 21,000,000 20,999,099
First National Bank of Chicago, 6.00%, 3/24/98 ...... 30,000,000 29,994,607
LaSalle National Corp., 6.27%, 4/27/98 .............. 25,000,000 24,997,285
---------------
Total Bank Notes
(cost: $75,990,991) ............................ 75,990,991
---------------
BANKERS ACCEPTANCES (0.4%):
First Bank N.A., 5.49%, 10/21/97 .................... 5,000,000 4,984,750
First Bank N.A., 5.49%, 10/27/97 .................... 5,000,000 4,980,175
---------------
Total Bankers Acceptances
(cost: $9,964,925) ............................. 9,964,925
---------------
CERTIFICATES OF DEPOSIT (2.8%):
Northern Trust Corp., 5.99%, 12/29/97 ............... 23,445,000 23,445,000
Regions Bank, 5.57%, 10/24/97 ....................... 20,000,000 20,000,000
SouthTrust Bank, Birmingham, 5.54%, 10/1/97 ......... 20,000,000 20,000,000
---------------
Total Certificates Of Deposit
(cost: $63,445,000) ............................ 63,445,000
---------------
CERTIFICATES OF DEPOSIT - YANKEE (c) (8.2%):
Bank of Nova Scotia, 5.95%, 6/29/98 ................. 29,000,000 28,989,700
Canadian Imperial Bank of Commerce, 5.69%, 3/2/98 ... 15,000,000 14,995,892
Generale Bank Inc., 5.96%, 6/18/98 .................. 17,000,000 16,996,528
Landesbank Hessen-Thueringen Girozentrale, 5.80%,
1/13/98 ........................................... 25,000,000 24,996,589
National Westminster Bank PLC, 5.66%, 2/11/98 ....... 20,000,000 19,993,454
Royal Bank of Canada, 5.88%, 9/17/98 ................ 17,000,000 17,007,085
Royal Bank of Canada, 5.80%, 3/3/98 ................. 15,000,000 14,998,797
Societe Generale, 5.87%, 3/4/98 ..................... 15,000,000 14,998,184
Societe Generale, 6.00%, 6/16/98 .................... 21,000,000 20,994,184
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 24 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Swiss Bank Corp., 6.05%, 5/22/98 .................... $ 12,400,000 $ 12,412,068
---------------
Total Certificates Of Deposit - Yankee (c)
(cost: $186,382,481) ........................... 186,382,481
---------------
COMMERCIAL PAPER (78.2%):
BUSINESS CREDIT INSTITUTIONS (11.7%):
American Express Credit Corp., 5.50%, 10/27/97 ...... 17,000,000 16,932,472
American Express Credit Corp., 5.50%, 10/31/97 ...... 15,000,000 14,931,250
BellSouth Capital Funding Corp., 5.49%, 10/6/97 ..... 20,000,000 19,984,750
BTR Dunlop Finance Inc., 5.51%, 11/7/97 ............. 19,140,000(d) 19,031,609
BTR Dunlop Finance Inc., 5.52%, 11/18/97 ............ 5,000,000(d) 4,963,200
BTR Dunlop Finance Inc., 5.57%, 2/4/98 .............. 6,255,000(d) 6,133,059
Caterpillar Financial Services Corp., 5.72%,
11/3/97 ........................................... 5,000,000 4,973,783
Caterpillar Financial Services Corp., 5.70%,
11/3/97 ........................................... 20,500,000 20,392,888
Deere (John) Capital Corp., 5.70%, 10/17/97 ......... 20,000,000 19,951,111
Ford Motor Credit Co., 5.50%, 10/23/97 .............. 15,000,000 14,949,583
General Electric Capital Corp., 5.51%, 11/17/97 ..... 25,000,000 24,820,160
General Electric Capital Corp., 5.58%, 4/30/98 ...... 15,000,000 14,509,425
Motorola Credit Corp., 5.55%, 10/23/97 .............. 4,975,000 4,958,126
Novartis Finance Corp., 6.35%, 10/1/97 .............. 602,000(d) 602,000
Pitney Bowes Credit Corp., 5.49%, 10/23/97 .......... 14,855,000 14,805,161
St. Michael Finance PLC, 5.55%, 10/6/97 ............. 4,920,000(c) 4,916,208
St. Michael Finance PLC, 5.50%, 11/13/97 ............ 15,000,000(c) 14,901,458
St. Michael Finance PLC, 5.50%, 11/5/97 ............. 11,418,000(c) 11,356,945
TECO Finance Inc., 5.54%, 10/27/97 .................. 3,942,000(d) 3,926,228
TECO Finance Inc., 5.51%, 11/4/97 ................... 19,200,000(d) 19,100,085
Toyota Motor Credit Corp., 5.49%, 10/9/97 ........... 10,000,000 9,987,800
---------------
266,127,301
---------------
CONSUMER HEALTH (0.3%):
Becton Dickinson & Co., 5.70%, 10/6/97 .............. 5,750,000 5,745,448
---------------
CONSUMER NON-DURABLES (2.2%):
Clorox Co., 5.50%, 10/30/97 ......................... 16,980,000 16,904,769
Toys 'R' Us Inc., 5.50%, 10/10/97 ................... 32,000,000 31,956,000
---------------
48,860,769
---------------
DIVERSIFIED CHEMICALS (3.9%):
Akzo Nobel Inc., 5.65%, 10/6/97 ..................... 13,717,000 13,706,236
Akzo Nobel Inc., 5.52%, 10/15/97 .................... 9,540,000 9,519,521
Bayer Corp., 5.51%, 10/7/97 ......................... 20,000,000(d) 19,981,633
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 25 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Bayer Corp., 5.50%, 10/14/97 ........................ $ 12,500,000(d) $ 12,475,174
BOC Group Inc. (DE), 5.50%, 10/1/97 ................. 10,000,000 10,000,000
DuPont (E.I.) de Nemours & Co., 5.50%, 10/6/97 ...... 9,650,000(d) 9,642,628
DuPont (E.I.) de Nemours & Co., 5.48%, 10/24/97 ..... 12,265,000(d) 12,222,059
---------------
87,547,251
---------------
DIVERSIFIED TECHNOLOGY (1.2%):
EDS Finance PLC, 5.51%, 11/7/97 ..................... 10,000,000(c)(d) 9,943,369
Electronic Data Systems Corp., 5.54%, 11/19/97 ...... 18,645,000 18,504,406
---------------
28,447,775
---------------
ELECTRIC UTILITIES (3.0%):
Electricity Corp. of New Zealand Ltd., 5.54%,
2/11/98 ........................................... 22,000,000(c) 21,549,721
Electricity Corp. of New Zealand Ltd., 5.55%,
10/21/97 .......................................... 7,576,000(c) 7,552,641
National Cooperative Services Corp., 5.54%,
10/9/97 ........................................... 14,528,000(d) 14,510,114
National Rural Utilities Cooperative Finance Corp.,
5.48%, 10/20/97 ................................... 19,000,000 18,945,048
Wisconsin Electric Power Co., 5.49%, 10/23/97 ....... 5,000,000 4,983,225
---------------
67,540,749
---------------
ELECTRIC AND GAS UTILITIES (0.9%):
Citizens Utilities Co., 5.50%, 10/8/97 .............. 20,000,000(d) 19,978,611
---------------
ELECTRICAL EQUIPMENT (0.9%):
Hitachi America Ltd., 5.52%, 10/28/97 ............... 5,000,000 4,979,300
Hitachi America Ltd., 5.52%, 12/22/97 ............... 16,000,000 15,798,827
---------------
20,778,127
---------------
FINANCIAL AND REAL ESTATE INSTITUTIONS (5.0%):
Bass Finance (C.I.) Ltd., 5.55%, 11/5/97 ............ 22,039,000(c) 21,920,081
Caisse des Depots et Consignations, 5.52%,
10/2/97 ........................................... 15,000,000(c)(d) 14,997,700
Caisse des Depots et Consignations, 5.56%,
10/15/97 .......................................... 15,000,000(c)(d) 14,967,567
Eksportfinans A/S, 5.49%, 10/27/97 .................. 10,000,000(c) 9,960,350
Eksportfinans A/S, 5.50%, 11/10/97 .................. 7,000,000(c) 6,957,222
Eksportfinans A/S, 5.52%, 11/21/97 .................. 14,500,000(c) 14,386,610
Fletcher Challenge Finance USA Inc., LOC National
Westminster Bank PLC, 5.52%, 11/19/97 ............. 15,000,000 14,887,300
Hahn Issuing Corp., LOC Canadian Imperial Bank of
Commerce, 5.53%, 10/3/97 .......................... 6,941,000 6,938,868
U.S. Prime Property Inc., LOC ABN-AMRO Bank N.V.,
5.55%, 10/02/97, 5.55%, 10/2/97 ................... 1,000,000 999,846
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 26 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
U.S. Prime Property Inc., LOC Westpac Banking Corp.,
5.53%, 10/15/97 ................................... $ 7,000,000 $ 6,984,946
---------------
113,000,490
---------------
FOOD AND BEVERAGE PRODUCTS (2.5%):
Allied Domecq North America Corp., 5.55%,
10/16/97 .......................................... 5,760,000 5,746,680
Campbell Soup Co., 5.28%, 11/14/97 .................. 16,100,000(d) 15,996,101
Heinz (H.J) Co., 5.49%, 10/10/97 .................... 10,574,000 10,559,487
Heinz (H.J) Co., 5.50%, 10/8/97 ..................... 4,500,000 4,495,188
Heinz (H.J) Co., 5.50%, 10/21/97 .................... 5,000,000 4,984,722
Heinz (H.J) Co., 5.50%, 10/22/97 .................... 5,424,000 5,406,598
Sysco Corp., 5.50%, 10/14/97 ........................ 10,000,000(d) 9,980,139
---------------
57,168,915
---------------
FULL LINE INSURANCE (2.1%):
Associates Corp. of North America, 5.49%, 10/8/97 ... 25,000,000 24,973,313
St. Paul Cos. Inc., 5.50%, 10/8/97 .................. 3,000,000(d) 2,996,792
St. Paul Cos. Inc., 5.48%, 10/22/97 ................. 10,000,000(d) 9,968,033
St. Paul Cos. Inc., 5.51%, 10/2/97 .................. 10,000,000(d) 9,998,469
---------------
47,936,607
---------------
GAS UTILITIES (0.9%):
Questar Corp., 5.50%, 10/17/97 ...................... 4,940,000 4,927,924
Questar Corp., 5.52%, 10/21/97 ...................... 5,000,000 4,984,667
Questar Corp., 5.55%, 10/31/97 ...................... 5,800,000 5,773,175
Questar Corp., 5.55%, 11/4/97 ....................... 4,500,000 4,476,413
---------------
20,162,179
---------------
INDUSTRIAL CONGLOMERATE (2.7%):
Minnesota Mining & Manufacturing Co., 5.55%,
10/20/97 .......................................... 11,855,000 11,820,275
Minnesota Mining & Manufacturing Co., 5.47%,
10/22/97 .......................................... 7,765,000 7,740,223
Saint-Gobain (Compagnie DE) S.A., 5.71%, 11/6/97 .... 16,935,000(c) 16,838,301
Walt Disney Co., 5.52%, 10/10/97 .................... 24,038,000 24,004,828
---------------
60,403,627
---------------
INDUSTRIAL EQUIPMENT (2.7%):
Dover Corp., 5.52%, 10/16/97 ........................ 10,000,000(d) 9,977,000
Dover Corp., 5.53%, 10/21/97 ........................ 9,169,000(d) 9,140,831
Dover Corp., 5.53%, 10/23/97 ........................ 9,758,000(d) 9,725,023
Vermont American Corp., 5.48%, 10/15/97 ............. 31,631,000(d) 31,563,591
---------------
60,406,445
---------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 27 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
INSURANCE COMPANIES (2.9%):
Allianz of America Finance Corp., 5.54%, 10/14/97 ... $ 22,935,000(d) $ 22,889,117
Allianz of America Finance Corp., 5.50%, 10/16/97 ... 5,000,000(d) 4,988,542
Allianz of America Finance Corp., 5.55%, 11/10/97 ... 6,500,000(d) 6,459,917
USAA Capital Corp., 5.54%, 11/6/97 .................. 16,000,000 15,911,360
USAA Capital Corp., 5.49%, 11/18/97 ................. 16,609,000 16,487,422
---------------
66,736,358
---------------
MINING AND MINERAL RELATED (0.2%):
U.S. Borax Inc., 5.53%, 10/27/97 .................... 5,000,000(d) 4,980,031
---------------
MONEY CENTER BANKS (14.8%):
Abbey National North America, 5.64%, 10/1/97 ........ 15,000,000 15,000,000
ABN-AMRO North America Finance Inc., 5.50%,
10/16/97 .......................................... 20,000,000 19,954,167
ABN-AMRO North America Finance Inc., 5.51%,
12/29/97 .......................................... 6,000,000 5,918,268
Banc One Corp., 5.50%, 10/6/97 ...................... 10,000,000(d) 9,992,361
Bank of New York Co, Inc., 5.52%, 10/2/97 ........... 22,000,000 21,996,627
Bank of New York Co. Inc., 5.54%, 10/6/97 ........... 13,515,000 13,504,601
Commerzbank U.S. Finance Inc., 5.50%, 10/22/97 ...... 18,875,000 18,814,443
Commonwealth Bank of Australia, 5.72%, 11/6/97 ...... 10,826,000(c) 10,764,075
Den Danske Corp. Inc., 5.50%, 10/6/97 ............... 10,000,000 9,992,361
Den Danske Corp. Inc., 5.68%, 11/19/97 .............. 22,500,000 22,326,050
Deutsche Bank Financial Inc., 5.50%, 10/29/97 ....... 29,000,000 28,875,944
Generale Bank Inc., 5.50%, 4/24/98 .................. 16,000,000 15,498,889
Morgan (J.P.) & Co. Inc., 5.50%, 10/6/97 ............ 14,000,000 13,989,306
Morgan (J.P.) & Co. Inc., 5.50%, 10/17/97 ........... 14,530,000 14,494,482
National Australia Funding (DE) Inc., 5.49%,
10/3/97 ........................................... 25,000,000 24,992,375
Toronto-Dominion Holdings USA Inc., 5.50%,
11/13/97 .......................................... 30,000,000 29,802,917
UBS Finance (DE) Inc., 5.53%, 10/6/97 ............... 5,800,000 5,795,545
UBS Finance (DE) Inc., 5.50%, 10/9/97 ............... 28,394,000 28,359,296
Westpac Capital Corp., 5.58%, 1/12/98 ............... 24,980,000 24,581,194
---------------
334,652,901
---------------
OFFICE AND INDUSTRIAL SERVICES (1.3%):
First Data Corp., 5.51%, 10/14/97 ................... 25,000,000 24,950,257
First Data Corp., 5.51%, 12/9/97 .................... 5,000,000 4,947,196
---------------
29,897,453
---------------
OIL INTEGRATED INTERNATIONAL (3.0%):
Petrofina (DE) Inc., 5.52%, 10/1/97 ................. 5,000,000 5,000,000
Petrofina (DE) Inc., 5.51%, 10/3/97 ................. 10,000,000 9,996,939
Petrofina (DE) Inc., 5.51%, 11/12/97 ................ 15,000,000 14,903,575
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 28 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Repsol International Finance B.V., 5.57%, 10/2/97 ... $ 8,940,000(c) $ 8,938,617
TOTAL, 5.54%, 10/9/97 ............................... 20,000,000(c) 19,975,378
TOTAL, 5.54%, 10/20/97 .............................. 10,000,000(c) 9,970,761
---------------
68,785,270
---------------
OIL REFINING AND EXPLORATION (1.5%):
Koch Industries Inc., 5.48%, 10/1/97 ................ 20,000,000(d) 20,000,000
Koch Industries Inc., 5.51%, 10/2/97 ................ 14,375,000(d) 14,372,800
---------------
34,372,800
---------------
PAPER (1.5%):
Sonoco Products Co., 5.51%, 10/7/97 ................. 23,615,000 23,593,314
Sonoco Products Co., 5.53%, 10/22/97 ................ 10,795,000 10,760,177
---------------
34,353,491
---------------
PHARMACEUTICALS (1.4%):
Abbott Laboratories, 5.48%, 10/17/97 ................ 6,294,000 6,278,671
Pfizer Inc., 5.49%, 10/24/97 ........................ 24,487,000(d) 24,401,111
---------------
30,679,782
---------------
PRINT MEDIA/PUBLISHING (1.0%):
Gannett Co., 5.48%, 10/10/97 ........................ 23,844,000(d) 23,811,334
---------------
REGIONAL BANKS (1.1%):
Norwest Corp., 5.49%, 10/31/97 ...................... 25,000,000 24,885,625
---------------
SECURITIES BROKER (4.3%):
Goldman Sachs Group L.P., 5.65%, 10/3/97 ............ 30,000,000 29,990,583
Merrill Lynch & Co. Inc., 5.52%, 12/1/97 ............ 12,000,000 11,887,760
Merrill Lynch & Co. Inc., 5.52%, 11/12/97 ........... 15,000,000 14,903,400
Merrill Lynch & Co. Inc., 5.60%, 4/6/98 ............. 10,000,000 9,709,111
Morgan Stanley Group Inc., 5.62%, 1/30/98 ........... 30,000,000 30,000,000
---------------
96,490,854
---------------
SOVEREIGN CREDITS (0.9%):
Quebec (Province of), 5.72%, 11/13/97 ............... 20,505,000(c) 20,364,905
---------------
STAPLE CONGLOMERATES (0.9%):
Grand Metropolitan Capital Corp., 5.53%, 11/25/97 ... 10,198,000 10,111,841
Grand Metropolitan Capital Corp., 5.51%, 11/25/97 ... 10,549,000 10,460,198
---------------
20,572,039
---------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 29 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ ---------------
<S> <C> <C>
TELECOMMUNICATIONS (3.0%):
Ameritech Capital Funding Corp., 5.50%, 10/17/97 .... $ 7,000,000(d) $ 6,982,889
Ameritech Capital Funding Corp., 5.50%, 10/24/97 .... 5,405,000(d) 5,386,007
Ameritech Corp., 5.50%, 10/27/97 .................... 20,000,000 19,920,556
BellSouth Telecommunications Inc., 5.55%, 10/7/97 ... 7,145,000 7,138,391
BellSouth Telecommunications Inc., 5.50%,
10/30/97 .......................................... 5,561,000 5,536,362
SBC Communications Inc., 5.50%, 10/8/97 ............. 19,506,000(d) 19,485,139
SBC Communications Inc., 5.59%, 10/17/97 ............ 3,105,000(d) 3,097,286
---------------
67,546,630
---------------
TIRES/AUTO PARTS (0.4%):
Denso International America Inc., 5.54%, 11/10/97 ... 5,000,000 4,969,222
Denso International America Inc., 5.57%, 10/10/97 ... 3,800,000 3,794,709
---------------
8,763,931
---------------
Total Commercial Paper
(cost: $1,770,997,698) ......................... 1,770,997,698
---------------
Total Investments in Securities
(cost: $2,275,641,747)(e) ...................... $ 2,275,641,747
---------------
---------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) INTEREST RATE VARIES TO REFLECT CURRENT MARKET CONDITIONS; RATE SHOWN IS
THE EFFECTIVE RATE ON SEPTEMBER 30, 1997. THE MATURITY DATE REPRESENTS
FINAL MATURITY. HOWEVER, FOR PURPOSES OF RULE 2a-7, MATURITY DATE IS THE
NEXT INTEREST RATE RESET DATE.
(c) SECURITIES OF FOREIGN ISSUERS ARE DENOMINATED IN U.S. DOLLARS. THE
AGGREGATE VALUE OF THESE SECURITIES AT SEPTEMBER 30, 1997, IS $426,644,390,
WHICH REPRESENTS 18.8% OF NET ASSETS.
(d) SECURITIES SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER SECTION 4(2) AND UNDER RULE 144A OF THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR
OTHER QUALIFIED INSTITUTIONAL BUYERS. SUBJECT TO THE OVERSIGHT OF THE BOARD
OF DIRECTORS, THESE SECURITIES ARE TREATED AS LIQUID AFTER HAVING BEEN
DETERMINED TO BE LIQUID BY THE ADVISER. THE AGGREGATE VALUE OF THESE
SECURITIES AT SEPTEMBER 30, 1997, IS $458,667,549, WHICH REPRESENTS 20.2%
OF NET ASSETS.
(e) ALSO REPRESENTS COST FOR FEDERAL INCOME TAX PURPOSES.
- ---------------------------------------------------------------------
1997 Annual Report 30 Cash Management Funds
<PAGE>
Investments in Securities
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND September 30, 1997
.............................................................................................
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------- -------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
U.S. GOVERNMENT AND AGENCY SECURITIES (73.7%):
FEDERAL FARM CREDIT BANK DISCOUNT NOTES (1.6%):
5.41%, 12/4/97 ...................................... $ 4,698,000 $ 4,652,816
-------------
FEDERAL FARM CREDIT BANK FLOATING RATE NOTES (b) (5.6%):
5.56%, 11/2/98 ...................................... 5,000,000 4,994,735
5.47%, 12/17/97 ..................................... 7,000,000 6,998,692
5.50%, 3/19/98 ...................................... 4,000,000 3,998,479
-------------
15,991,906
-------------
FEDERAL FARM CREDIT MEDIUM TERM NOTES (1.8%):
5.80%, 8/21/98 ...................................... 5,000,000 5,000,000
-------------
FEDERAL HOME LOAN BANK COUPON NOTES (5.4%):
5.88%, 2/5/98 ....................................... 5,000,000 4,999,826
5.80%, 6/12/98 ...................................... 3,475,000 3,473,594
5.72%, 7/21/98 ...................................... 5,200,000 5,198,581
5.69%, 9/24/98 ...................................... 1,670,000 1,668,656
-------------
15,340,657
-------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES (5.0%):
5.43%, 10/10/97 ..................................... 8,000,000 7,989,150
5.48%, 10/22/97 ..................................... 4,780,000 4,764,720
5.44%, 12/2/97 ...................................... 1,400,000 1,386,883
-------------
14,140,753
-------------
FEDERAL HOME LOAN BANK FLOATING RATE NOTES (b) (1.8%):
5.51%, 3/19/98 ...................................... 5,000,000 4,998,312
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION COUPON NOTES (2.5%):
5.89%, 5/29/98 ...................................... 7,000,000 6,995,325
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION DISCOUNT NOTES (12.6%):
5.43%, 10/3/97 ...................................... 7,000,000 6,997,889
5.43%, 10/10/97 ..................................... 5,000,000 4,993,213
5.40%, 10/14/97 ..................................... 7,000,000 6,986,350
5.43%, 10/21/97 ..................................... 10,000,000 9,969,833
5.41%, 11/14/97 ..................................... 7,000,000 6,953,714
-------------
35,900,999
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 31 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------- -------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES (13.3%):
5.42%, 12/3/97 ...................................... $ 9,000,000 $ 8,914,636
5.42%, 12/4/97 ...................................... 7,865,000 7,789,216
5.43%, 10/20/97 ..................................... 7,462,000 7,440,615
5.40%, 10/9/97 ...................................... 2,050,000 2,047,540
5.49%, 10/27/97 ..................................... 2,765,000 2,754,037
5.44%, 12/22/97 ..................................... 5,000,000 4,938,044
5.43%, 12/29/97 ..................................... 4,258,000 4,200,840
-------------
38,084,928
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION FLOATING RATE NOTES (b) (4.2%):
5.51%, 4/1/99 ....................................... 5,000,000 4,982,063
5.29%, 6/2/99 ....................................... 3,000,000 2,988,365
5.28%, 5/11/98 ...................................... 4,000,000 3,998,360
-------------
11,968,788
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION MEDIUM TERM NOTES (4.7%):
6.08%, 5/6/98 ....................................... 4,000,000 3,997,265
5.50%, 2/18/98 ...................................... 9,355,000 9,345,016
-------------
13,342,281
-------------
STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE NOTES (b) (11.0%):
5.23%, 10/14/97 ..................................... 15,000,000 14,998,443
5.23%, 11/24/97 ..................................... 7,400,000 7,400,000
5.55%, 10/6/98 ...................................... 4,000,000 3,997,480
5.41%, 11/20/97 ..................................... 5,000,000 5,000,000
-------------
31,395,923
-------------
U.S. TREASURY NOTES AND BONDS (4.2%):
5.13%, 2/28/98 ...................................... 7,000,000 6,981,192
6.00%, 11/30/97 ..................................... 5,000,000 5,004,382
-------------
11,985,574
-------------
Total U.S. Government and Agency Securities
(cost: $209,798,262) ........................... 209,798,262
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 32 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------- -------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY-BACKED SECURITIES (12.5%):
Downey Savings & Loan Association, LOC Federal Home
Loan Bank of San Francisco, 5.50%, 12/5/97 ........ $ 10,000,000 $ 9,900,695
Nebraska Higher Education Loan Program Inc., LOC
Student Loan Marketing Association, 5.50%,
10/15/97 .......................................... 10,000,000 9,978,611
Nebraska Higher Education Loan Program Inc., LOC
Student Loan Marketing Association, 5.52%,
10/30/97 .......................................... 2,890,000 2,877,149
USA Group Secondary Market Services Inc., LOC Student
Loan Marketing Association, 5.48%, 10/17/97 ....... 1,139,000 1,136,226
USA Group Secondary Market Services Inc., LOC Student
Loan Marketing Association, 5.47%, 10/22/97 ....... 6,000,000 5,980,855
USA Group Secondary Market Services Inc., LOC Student
Loan Marketing Association, 5.47%, 10/31/97 ....... 5,810,000 5,783,516
-------------
Total U.S. Government Agency-Backed Securities
(cost: $35,657,052) ............................ 35,657,052
-------------
REPURCHASE AGREEMENTS (14.9%):
Repurchase agreement with Credit Suisse First Boston,
acquired on 9/12/97, interest of $21,428, 5.51%,
10/2/97 . 7,000,000(c) 7,000,000
Repurchase agreement with Goldman Sachs, acquired on
9/4/97, interest of $25,020, 5.56%, 10/1/97 ....... 6,000,000(d) 6,000,000
Repurchase agreement with Goldman Sachs, acquired on
9/4/97, interest of $64,867, 5.56%, 10/16/97 ...... 10,000,000(d)(e) 10,000,000
Repurchase agreement with Morgan Stanley, acquired on
9/17/97, interest of $14,490, 5.52%, 10/8/97 ...... 4,500,000(d)(e) 4,500,000
Repurchase agreement with Morgan Stanley, acquired on
9/25/97, interest of $7,636, 5.61%, 10/2/97 ....... 7,000,000(d) 7,000,000
Repurchase agreement with Morgan Stanley, acquired on
9/26/97, interest of $8,657, 5.61%, 10/3/97 ....... 7,936,000(d) 7,936,000
-------------
Total Repurchase Agreements
(cost: $42,436,000) ............................ 42,436,000
-------------
Total Investments in Securities
(cost: $287,891,314) (f) ....................... $ 287,891,314
-------------
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 33 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES:
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) INTEREST RATE VARIES TO REFLECT CURRENT MARKET CONDITIONS; RATE SHOWN IS
THE EFFECTIVE RATE ON SEPTEMBER 30, 1997. THE MATURITY DATE REPRESENTS
FINAL MATURITY. HOWEVER, FOR PURPOSES OF RULE 2a-7, MATURITY DATE IS THE
NEXT INTEREST RATE RESET DATE.
(c) REPURCHASE AGREEMENT WHICH IS COLLATERALIZED BY U.S. GOVERNMENT AGENCY
SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS INTEREST DUE AT MATURITY OF
THE REPURCHASE AGREEMENT.
(d) REPURCHASE AGREEMENT IN A TRI-PARTY ACCOUNT WHICH IS COLLATERALIZED BY U.S.
GOVERNMENT AGENCY SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS INTEREST
DUE AT MATURITY OF THE REPURCHASE AGREEMENT. TRI-PARTY REPURCHASE
AGREEMENTS REPRESENT AGREEMENTS WHERE UNINVESTED CASH BALANCES ARE
TRANSFERRED TO AN INDEPENDENT THIRD-PARTY CUSTODIAN (BANK OF NEW YORK) AND
THE COLLATERAL PLEDGED BY THE COUNTERPARTY TO THE AGREEMENT IS HELD AT THE
SAME THIRD-PARTY CUSTODIAN FOR THE BENEFIT OF THE FUND.
(e) REPURCHASE AGREEMENTS WITH GREATER THAN SEVEN DAYS TO MATURITY ARE
CONSIDERED ILLIQUID. THE AGGREGATE VALUE OF SUCH REPURCHASE AGREEMENTS
REPRESENTS $14,500,000 OR 5.1% OF NET ASSETS.
(f) ALSO REPRESENTS COST FOR FEDERAL INCOME TAX PURPOSES.
- ---------------------------------------------------------------------
1997 Annual Report 34 Cash Management Funds
<PAGE>
Investments in Securities
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND September 30, 1997
.............................................................................................
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- --------------- -------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
TAX-EXEMPT SECURITIES (b) (98.2%):
EDUCATION REVENUE (3.2%):
Illinois Development and Finance Authority, VRDN,
4.15%, 8/1/26 ..................................... $ 4,000,000(c) $ 4,000,000
Minnesota State Higher Education Facilities
Authority, VRDN, 4.10%, 3/1/24 .................... 3,430,000(c) 3,430,000
-------------
7,430,000
-------------
ELECTRIC REVENUE (2.2%):
Putnam County, FL, Pollution Control, 3.60%,
12/15/97 .......................................... 2,000,000 2,000,000
York County, SC, Pollution Control Revenue, 3.65%,
2/15/98 . 3,120,000 3,119,420
-------------
5,119,420
-------------
GENERAL OBLIGATIONS (20.3%):
District of Columbia Refunding, Series B, 6.63%,
6/1/98 ............................................ 1,000,000 1,017,241
Hammond, IN, Advance Funding Program Note, 4.20%,
1/8/98 ............................................ 6,000,000 6,007,833
Mankato, MN, VRDN, 4.10%, 2/1/18 .................... 3,400,000(c) 3,400,000
Massachusetts State, 5.70%, 3/1/98 .................. 5,620,000 5,666,338
Metropolitan Council, Minneapolis & St. Paul, MN,
Area
Transit, 4.25%, 2/1/98 ............................ 2,655,000 2,661,060
Milwaukee County, WI, 5.13%, 12/1/97 ................ 1,475,000 1,478,776
New York City, NY, Series C, VRDN, 4.00%, 10/1/23 ... 1,700,000(c) 1,700,000
New York City, NY, Subseries A-10, VRDN, 4.00%,
8/1/16 ............................................ 3,000,000(c) 3,000,000
New York City, NY, Subseries A-10, VRDN, 4.00%,
8/15/17 ........................................... 1,500,000(c) 1,500,000
New York City, NY, Subseries B-2, VRDN, 4.00%,
8/15/20 ........................................... 3,300,000(c) 3,300,000
New York City, NY, Subseries B-3, VRDN, 4.00%,
8/15/18 ........................................... 700,000(c) 700,000
New York City, NY, Subseries B-4, VRDN, 4.00%,
8/15/22 ........................................... 2,000,000(c) 2,000,000
New York City, NY, Subseries B-4, VRDN, 4.00%,
8/15/23 ........................................... 5,100,000(c) 5,100,000
New York City, NY, Subseries B-4, VRDN, 4.00%,
8/15/21 ........................................... 900,000(c) 900,000
Olathe, KS, Temporary Notes, Series A, 4.50%,
6/1/98 ............................................ 2,000,000 2,009,034
Omaha, NE, 5.00%, 12/1/97 ........................... 1,080,000 1,082,365
Richfield, MN, Independent School District, VRDN,
4.25%, 2/1/10 ..................................... 1,200,000(c)(d) 1,200,000
Santa Cruz County, CA, 4.50%, 7/30/98 ............... 5,000,000 5,025,915
-------------
47,748,562
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 35 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- --------------- -------------
<S> <C> <C>
HEALTH/HOSPITAL/NURSING HOME (31.7%):
Alaska Industrial Development Authority, VRDN,
3.50%, 6/1/10 ..................................... $ 3,540,000(c) $ 3,540,000
Colorado Health Facilities Authority, Boulder
Hospital, VRDN, 4.05%, 10/1/14 .................... 5,500,000(c) 5,500,000
Grand Forks, ND, Health Care, United Hospital, VRDN,
3.85%, 12/1/16 .................................... 3,510,000(c) 3,510,000
Grand Forks, ND, Health Care, United Hospital, VRDN,
3.85%, 12/1/25 .................................... 6,550,000(c) 6,550,000
Idaho Health Facilities Authority, VRDN, 3.85%,
5/1/22 ............................................ 7,565,000(c) 7,565,000
Illinois Development and Finance Authority, VRDN,
4.05%, 3/1/15 ..................................... 1,100,000(c) 1,100,000
Illinois Health Facilities Authority, VRDN, 4.10%,
1/1/16 ............................................ 7,000,000(c) 7,000,000
Illinois Health Facilities Authority, VRDN, 4.10%,
12/1/15 ........................................... 750,000(c) 750,000
Illinois Health Facilities Authority, VRDN, 3.85%,
11/1/20 ........................................... 8,475,000(c) 8,475,000
Indiana Health Facilities Authority, VRDN, 4.05%,
11/1/09 ........................................... 900,000(c) 900,000
Indiana Health Facilities Authority, VRDN, 4.05%,
12/1/10 ........................................... 1,870,000(c) 1,870,000
Indiana Hospital Equipment Finance Authority, VRDN,
4.05%, 12/1/15 .................................... 8,000,000(c) 8,000,000
Minnesota Agriculture and Economic Development Board,
VRDN, 4.10%, 9/1/20 ............................... 2,000,000(c) 2,000,000
Wisconsin Health and Education Facilities Authority,
VRDN, 4.10%, 6/1/19 ............................... 7,815,000(c) 7,815,000
Wisconsin Health and Education Facilities Authority,
VRDN, 3.95%, 8/15/16 .............................. 3,350,000(c) 3,350,000
Wisconsin State Health Facilities, VRDN, 3.95%,
1/1/16 ............................................ 6,370,000(c) 6,370,000
-------------
74,295,000
-------------
HOUSING REVENUE (3.2%):
Iowa HFA, VRDN, 4.25%, 1/1/15 ....................... 1,435,000(c) 1,435,000
New Hampshire State HFA, AMT, VRDN, 4.10%, 5/1/25 ... 1,000,000(c)(d) 1,000,000
Virginia State Housing Authority, 3.80%, 6/10/98 .... 5,000,000 5,000,000
-------------
7,435,000
-------------
INDUSTRIAL DEVELOPMENT REVENUE (12.8%):
Delaware State Economic Development Authority, Series
C,
AMT, VRDN, 4.20%, 8/1/29 .......................... 8,000,000(c) 8,000,000
Evansville, IN, VRDN, 4.20%, 9/1/04 ................. 2,500,000(c) 2,500,000
Gillette, WY, 3.60%, 10/15/97 ....................... 2,000,000 2,000,000
Henderson, NV, Public Improvement, AMT, VRDN,
4.50%, 4/1/07...................................... 1,300,000(c)(d) 1,300,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 36 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- --------------- -------------
<S> <C> <C>
Illinois Development and Finance Authority, AMT,
VRDN, 4.30%, 10/1/06 .............................. $ 780,000(c)(d) $ 780,000
Illinois Development and Finance Authority, AMT,
VRDN, 4.45%, 4/1/15 ............................... 2,125,000(c)(d) 2,125,000
Illinois Development and Finance Authority, VRDN,
4.10%, 11/1/28 .................................... 2,400,000(c) 2,400,000
Minneapolis Commercial Development Revenue,
International Centre, VRDN, 4.10%, 9/1/13 ......... 2,200,000(c) 2,200,000
Tremonton, UT, AMT, VRDN, 4.50%, 6/1/00 ............. 1,100,000(c)(d) 1,100,000
Warren County, OH, VRDN, 4.35%, 9/1/15 .............. 7,650,000(c) 7,650,000
-------------
30,055,000
-------------
LEASING REVENUE (4.9%):
Metro Government Nashville and Davidson Counties, TN,
VRDN, 3.70%, 12/1/14 .............................. 2,500,000(c) 2,500,000
Pendleton County, KY, Multi-County Lease Revenue,
3.85%, 11/7/97 .................................... 2,390,000 2,390,000
Pendleton County, KY, Multi-County Lease Revenue,
3.70%, 10/9/97 .................................... 6,500,000 6,500,000
-------------
11,390,000
-------------
OTHER REVENUE (5.1%):
California State, 4.50%, 6/30/98 .................... 3,000,000 3,014,738
Milwaukee, WI, Revenue Anticipation Notes, Series A,
4.25%, 2/19/98 .................................... 1,000,000 1,001,201
Texas State TRANS, Series A, 4.75%, 8/31/98 ......... 5,000,000 5,040,521
Wisconsin State Operating Notes, 4.50%, 6/15/98 ..... 3,000,000 3,013,313
-------------
12,069,773
-------------
SALES TAX REVENUE (6.8%):
Bloomington, MN, Port Authority, VRDN, 4.15%,
2/1/09 ............................................ 900,000(c) 900,000
Bloomington, MN, Port Authority, VRDN, 4.15%,
2/1/09 ............................................ 1,800,000(c) 1,800,000
Bloomington, MN, Port Authority, VRDN, 4.15%,
2/1/13 ............................................ 4,800,000(c) 4,800,000
Wyoming State General Fund TRANS, 4.25%, 6/26/98 .... 5,000,000 5,015,977
Wyoming State General Fund TRANS, 4.50%, 6/26/98 .... 3,500,000 3,517,424
-------------
16,033,401
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 37 Cash Management Funds
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- --------------- -------------
<S> <C> <C>
WATER/POLLUTION CONTROL REVENUE (8.0%):
Allegheny County , PA, 3.65%, 10/8/97 ............... $ 3,900,000 $ 3,900,000
Clark County, KY, 3.75%, 10/15/97 ................... 2,000,000 2,000,000
Converse County, WY, 3.55%, 10/15/97 ................ 1,000,000 1,000,000
East Baton Rouge Parish, LA, VRDN, 4.05%, 10/1/99 ... 1,000,000(c) 1,000,000
New York City, NY, Municipal Water Authority, VRDN,
4.10%, 6/15/25 .................................... 5,850,000(c) 5,850,000
New York City, NY, Water Finance Authority Water and
Sewer System Revenue, 3.75%, 12/18/97 ............. 5,000,000 5,000,000
-------------
18,750,000
-------------
Total Tax-Exempt Securities (b)
(cost: $230,326,156) ........................... 230,326,156
-------------
REPURCHASE AGREEMENTS (1.4%):
Repurchase agreement with Goldman Sachs, acquired on
9/30/97, interest of $555, 6.15%, 10/1/97
(cost: $3,250,000) ................................ 3,250,000(e) 3,250,000
-------------
Total Investments in Securities
(cost: $233,576,156)(f) ........................ $ 233,576,156
-------------
-------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) PORTFOLIO ABBREVIATIONS AND DEFINITIONS:
AMT - ALTERNATIVE MINIMUM TAX. AS OF SEPTEMBER 30, 1997, THE AGGREGATE
MARKET VALUE OF SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX IS
$14,305,000, WHICH REPRESENTS 6.1% OF NET ASSETS.
HFA - HOUSING FINANCE AUTHORITY
TRANS - TAX AND REVENUE ANTICIPATION NOTE
VRDN - VARIABLE RATE DEMAND NOTE
(c) INTEREST RATE VARIES TO REFLECT CURRENT MARKET CONDITIONS; RATE SHOWN IS
THE EFFECTIVE RATE ON SEPTEMBER 30, 1997. THE MATURITY DATE REPRESENTS
FINAL MATURITY. HOWEVER, FOR PURPOSES OF RULE 2a-7, MATURITY DATE IS THE
NEXT INTEREST RATE RESET DATE OR THE PERIOD REMAINING UNTIL THE PRINCIPAL
AMOUNT CAN BE RECOVERED THROUGH DEMAND.
(d) SECURITIES SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER SECTION 4(2) AND UNDER RULE 144A OF THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR
OTHER QUALIFIED INSTITUTIONAL BUYERS. SUBJECT TO THE OVERSIGHT OF THE BOARD
OF DIRECTORS, THESE SECURITIES ARE TREATED AS LIQUID AFTER HAVING BEEN
DETERMINED TO BE LIQUID BY THE ADVISER. THE AGGREGATE VALUE OF THESE
SECURITIES AT SEPTEMBER 30, 1997, IS $7,505,000, WHICH REPRESENTS 3.2% OF
NET ASSETS.
(e) REPURCHASE AGREEMENT IN A JOINT TRADING ACCOUNT WHICH IS COLLATERALIZED BY
U.S. GOVERNMENT AGENCY SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS
INTEREST DUE AT MATURITY OF THE REPURCHASE AGREEMENT.
(f) ALSO REPRESENTS COST FOR FEDERAL INCOME TAX PURPOSES.
- ---------------------------------------------------------------------
1997 Annual Report 38 Cash Management Funds
<PAGE>
Independent Auditors' Report
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS
PIPER FUNDS INC.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Money Market Fund, U.S.
Government Money Market Fund and Tax-Exempt Money Market Fund (funds within
Piper Funds Inc.) as of September 30, 1997, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended September 30, 1997, and the
financial highlights for each of the years in the five-year period ended
September 30, 1997. These financial statements and the financial highlights are
the responsibility of the funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased but not received, we request confirmations
from brokers and, where replies are not received, we carry out other appropriate
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Money Market Fund, U.S. Government Money Market Fund and Tax-Exempt Money Market
Fund at September 30, 1997, and the results of their operations, the changes in
their net assets and the financial highlights for the periods stated in the
paragraph above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 24, 1997
- ---------------------------------------------------------------------
1997 Annual Report 39 Cash Management Funds
<PAGE>
Federal Income Tax Information
- --------------------------------------------------------------------------------
The following per-share information describes the federal tax
treatment of distributions made during the fiscal year.
Distributions for the calendar year will be reported to you on
Form 1099-DIV. Please consult a tax adviser on how to report
these distributions at the state and local levels.
INCOME DISTRIBUTIONS
<TABLE>
<CAPTION>
U.S.
GOVERNMENT TAX-EXEMPT
MONEY MARKET FUND MONEY MONEY
--------------------------- MARKET MARKET
PAYABLE DATE CLASS A (a) CLASS B (a)(b) FUND (a) FUND (c)
- ---------------------------------------- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
October 21, 1996 ....................... $ 0.0038 $ -- $ 0.0037 $ 0.0025
November 21, 1996 ...................... 0.0039 -- 0.0039 0.0024
December 21, 1996 ...................... 0.0038 -- 0.0037 0.0024
January 2, 1997 ........................ 0.0014 -- 0.0014 0.0010
January 21, 1997 ....................... 0.0026 -- 0.0025 0.0016
February 21, 1997 ...................... 0.0040 0.0003 0.0038 0.0022
March 21, 1997 ......................... 0.0036 0.0029 0.0035 0.0020
April 21, 1997 ......................... 0.0040 0.0033 0.0039 0.0022
May 21, 1997 ........................... 0.0038 0.0033 0.0038 0.0024
June 23, 1997 .......................... 0.0041 0.0034 0.0040 0.0023
July 21, 1997 .......................... 0.0040 0.0034 0.0039 0.0020
August 21, 1997 ........................ 0.0042 0.0035 0.0040 0.0023
September 22, 1997 ..................... 0.0041 0.0035 0.0040 0.0023
----------- -------------- ------------- -------------
Total .............................. $ 0.0473 $ 0.0236 $ 0.0461 $ 0.0276
----------- -------------- ------------- -------------
----------- -------------- ------------- -------------
</TABLE>
(a) Taxable as ordinary dividends, none qualifying for deduction by
corporations.
(b) Commencement of offering of Class B shares was February 18, 1997.
(c) Income from tax-exempt securities, 99.49% qualifying as exempt-interest
dividends.
- ---------------------------------------------------------------------
1997 Annual Report 40 Cash Management Funds
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
- --------------------------------------------------------------------------------
1997 Annual Report 41 Cash Management Funds
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
- --------------------------------------------------------------------------------
1997 Annual Report 42 Cash Management Funds
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
- --------------------------------------------------------------------------------
1997 Annual Report 43 Cash Management Funds
<PAGE>
GLOSSARY OF TERMS ***
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY
The average maturity is the mean of the maturity dates of a group of securities.
The term is used to describe the average time before the securities in a fund
mature. Average weighted maturity takes into account the size of each holding
represented.
BARBELL STRUCTURE
A barbell investment structure emphasizes securities with long- and short-term
maturities and de-emphasizes securities with intermediate-range maturities. This
enables a manager to take advantage of the high yields associated with long-term
maturities, while still providing liquidity with short-term maturities.
BENCHMARK: MONEY MARKET FUND
IBC's MONEY FUND REPORT AVERAGES-TM- -- First Tier, as reported by IBC's
MONEY FUND REPORT-TM-, which is an average of money market funds investing
exclusively in first tier securities (securities in the highest rating category
for short-term debt obligations).
BENCHMARK: U.S. GOVERNMENT MONEY MARKET FUND
IBC's MONEY FUND REPORT AVERAGES-TM- -- U.S. Government & Agencies, as reported
by IBC's MONEY FUND REPORT-TM-, which is an average of money market funds
investing in U.S. Treasury securities and government agency obligations.
BENCHMARK: TAX-EXEMPT MONEY MARKET FUND
IBC's MONEY FUND REPORT AVERAGES-TM- -- All Tax-Free, as reported by IBC's MONEY
FUND REPORT-TM-, which is an average of tax-free money funds that are tax-free
at the federal level for the majority of investors.
FEDERAL FUNDS RATE
The federal funds rate is the interest rate charged by banks with excess
reserves at a Federal Reserve district bank to banks needing overnight loans to
meet reserve requirements. Although the Federal Reserve Board sets the target
federal funds rate, the actual federal funds rate is set daily by the market.
Since the rate is determined by market forces, unlike the prime rate and the
discount rate, which are periodically changed by banks and by the Federal
Reserve Board, respectively, it is the most sensitive indicator of the direction
of interest rates.
YIELD CURVE
A graph that shows the relationship between the interest rates paid on bonds and
their maturities, ranging from the shortest maturities to the longest available
(assuming the bonds are all of the same quality). The resulting curve indicates
whether short-term interest rates are higher or lower than long-term rates.
*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
- --------------------------------------------------------------------------------
1997 Annual Report 44 Cash Management Funds
<PAGE>
DIRECTORS
- --------------------------------------------------------------------------------
DAVID T. BENNETT, Chairman, Highland Homes, Inc., USL Products, Inc., Kiefer
Built, Inc., of Counsel, Gray, Plant, Mooty, Mooty & Bennett, P.A.
JAYE F. DYER, President, Dyer Management Company
WILLIAM H. ELLIS, Retired President, Piper Jaffray Companies Inc., Piper Capital
Management Incorporated
KAROL D. EMMERICH, President, The Paraclete Group
LUELLA G. GOLDBERG, Director, TCF Financial, ReliaStar Financial Corp., Hormel
Foods Corp.
DAVID A. HUGHEY, Retired Executive Vice President and Chief Administrative
Officer of Dean Witter InterCapital Inc. and Dean Witter Trust Co.
GEORGE LATIMER, Chief Executive Officer, National Equity Funds
OFFICERS
- --------------------------------------------------------------------------------
WILLIAM H. ELLIS, Chairman of the Board
PAUL A. DOW, President
ROBERT H. NELSON, Vice President and Treasurer
SUSAN SHARP MILEY, Secretary
INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
PIPER CAPITAL MANAGEMENT INCORPORATED
222 South Ninth Street, Minneapolis, MN 55402-3804
TRANSFER AND DIVIDEND DISBURSING AGENTS
- --------------------------------------------------------------------------------
INVESTORS FIDUCIARY TRUST COMPANY
1004 Baltimore, Kansas City, MO 64105-1614
PIPER JAFFRAY INC.
222 South Ninth Street, Minneapolis, MN 55402-3804
PIPER TRUST COMPANY
222 South Ninth Street, Minneapolis, MN 55402-3804
CUSTODIAN AND ACCOUNTING AGENT
- --------------------------------------------------------------------------------
INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania, Kansas City, MO 64105-1307
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
KPMG PEAT MARWICK LLP
4200 Norwest Center, Minneapolis, MN 55402
LEGAL COUNSEL
- --------------------------------------------------------------------------------
DORSEY & WHITNEY LLP
220 South Sixth Street, Minneapolis, MN 55402
FOR MORE INFORMATION
By Phone [GRAPHIC]
800 866-7778
FOR GENERAL INFORMATION
press 5, our Mutual Fund Services representatives are ready to answer your
questions.
TO ORDER LITERATURE
press 5, ask a service
representative to mail you additional literature, including a Quarterly Update.
You can also request to be put on a mailing
list to receive this information automatically each quarter.
By Mail [GRAPHIC]
Piper Capital Management
Attn: Mutual Fund Services
222 South Ninth Street
Minneapolis, MN 55402-3804
In an effort to reduce costs to our shareholders, we have implemented a process
to reduce duplicate mailings of the funds' shareholder reports. This
householding process should allow us to mail one report to each address where
one or more registered shareholders with the same last name reside. If you would
like to have additional reports mailed to your address, please call our Mutual
Fund Services area at 800 866-7778, or mail a request to us.
On-Line [GRAPHIC]
http://www.piperjaffray.com/
<PAGE>
- --------------------------------------------------------------------------------
CASH MANAGEMENT FUNDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO]
PIPER FUNDS
222 South Ninth Street
Minneapoilis, MN 55402-3804
PIPER JAFFRAY INC., FUND DISTRIBUTOR AND NASD MEMBER.
#10600 11/1997 269-97
