<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS For the period from October 1, 1997 to July 21, 1998*
................................................................................
<TABLE>
<CAPTION>
U.S.
GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND
------------ ------------- -----------
<S> <C> <C> <C>
INCOME:
Interest ................................................... $112,352,724 $ 13,693,029 $6,857,260
------------ ------------- -----------
EXPENSES (NOTE 5):
Investment management fee .................................. 7,416,330 1,217,912 932,357
Distribution and service fees:
CLASS A .................................................. 5,880,796 725,410 554,774
CLASS B .................................................. 59 -- --
Custodian and accounting fees .............................. 684,926 169,018 137,263
Transfer agent and dividend disbursing agent fees .......... 3,298,126 200,226 125,977
Registration fees .......................................... 297,389 55,966 63,019
Reports to shareholders .................................... 288,968 54,768 46,712
Directors' fees ............................................ 7,937 7,937 7,937
Audit and legal fees ....................................... 47,132 37,832 37,832
Other expenses ............................................. 53,381 8,895 8,616
------------ ------------- -----------
Total expenses ........................................... 17,975,044 2,477,964 1,914,487
Less Class A expenses waived by the distributor ........ (1,975,005) (243,582) (186,471)
------------ ------------- -----------
Net expenses before expenses paid indirectly ............. 16,000,039 2,234,382 1,728,016
Less expenses paid indirectly .......................... (3,623) (6,417) (2,905)
------------ ------------- -----------
Total net expenses ....................................... 15,996,416 2,227,965 1,725,111
------------ ------------- -----------
Net investment income .................................... $96,356,308 $ 11,465,064 $5,132,149
------------ ------------- -----------
------------ ------------- -----------
* DATE FUNDS DISCONTINUED OPERATIONS. SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1998 Annual Report 1 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------
Period Ended Year Ended
7/21/98* 9/30/97
---------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 96,356,308 $ 100,349,040
---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
CLASS A:
From net investment income ............................... (96,385,409) (100,348,789)
CLASS B:
From net investment income ............................... (246) (251)
---------------- ---------------
Total distributions ...................................... (96,385,655) (100,349,040)
---------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
CLASS A .................................................... (2,265,792,999) 300,021,720
CLASS B .................................................... (9,621) 10,239
---------------- ---------------
Increase (decrease) in net assets from capital share
transactions ........................................... (2,265,802,620) 300,031,959
---------------- ---------------
Total increase (decrease) in net assets .................. (2,265,831,967) 300,031,959
Net assets at beginning of period .......................... 2,265,831,967 1,965,800,008
---------------- ---------------
Net assets at end of period ................................ $ -- $ 2,265,831,967
---------------- ---------------
---------------- ---------------
* DATE FUND DISCONTINUED OPERATIONS. SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1998 Annual Report 2 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET FUND
------------------------------
Period Ended Year Ended
7/21/98* 9/30/97
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 11,465,064 $ 13,476,301
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (11,496,723) (13,476,301)
-------------- --------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Decrease in net assets from capital share transactions ..... (284,782,291) (6,207,861)
-------------- --------------
Total decrease in net assets ............................. (284,813,950) (6,207,861)
Net assets at beginning of period .......................... 284,813,950 291,021,811
-------------- --------------
Net assets at end of period ................................ $ -- $ 284,813,950
-------------- --------------
-------------- --------------
* DATE FUND DISCONTINUED OPERATIONS. SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1998 Annual Report 3 Cash Management Funds
<PAGE>
Financial Statements (continued)
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
TAX-EXEMPT
MONEY MARKET FUND
------------------------------
Period Ended Year Ended
7/21/98* 9/30/97
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 5,132,149 $ 6,126,749
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (5,164,317) (6,126,749)
-------------- --------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Increase (decrease) in net assets from capital share
transactions ............................................. (234,489,261) 24,582,439
-------------- --------------
Total increase (decrease) in net assets .................. (234,521,429) 24,582,439
Net assets at beginning of period .......................... 234,521,429 209,938,990
-------------- --------------
Net assets at end of period ................................ $ -- $ 234,521,429
-------------- --------------
-------------- --------------
* DATE FUND DISCONTINUED OPERATIONS. SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1998 Annual Report 4 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. It is anticipated that the
company will be dissolved under Minnesota law before the end of
1998.
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. Effective April 21, 1998, the Money Market
Fund no longer offered Class B shares. Any outstanding Class B
shares were automatically converted to Class A shares as of the
close of business on April 27, 1998. Key features of each class
were:
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 had the same rights
and were identical in all respects except that each class bore
different distribution expenses, had exclusive voting rights with
respect to matters affecting that class and had different
exchange privileges. U.S. Government Money Market Fund and
Tax-Exempt Money Market Fund each had a single class of shares,
which are shown as Class A in the financial statements.
- ---------------------------------------------------------------------
1998 Annual Report 5 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Money Market Fund invested in a variety of high-quality money
market instruments such as high-grade domestic and U.S. dollar
denominated foreign commercial paper, repurchase agreements,
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 invested in securities 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 invested primarily in high-quality,
tax-exempt securities with short-term maturities, including
municipal bonds, notes and commercial paper.
On May 1, 1998, Piper Jaffray Companies Inc., the parent company
of the funds' investment advisor, was acquired by U.S. Bancorp.
U.S. Bancorp is a multi-state bank holding company headquartered
in Minneapolis, Minnesota with a geographic service area spanning
17 states. As of June 30, 1998, U.S. Bancorp was the 14th largest
U.S. commercial bank holding company, with assets of nearly $73.8
billion. U.S. Bank National Association ("U.S. Bank"), a wholly
owned subsidiary of U.S. Bancorp, currently acts as the
investment advisor to 32 mutual funds (the "First American
Funds"). As of June 30, 1998, U.S. Bank, acting through its First
American Asset Management group, managed more than $77.5 billion
in assets, including approximately $28.4 billion in assets of the
First American Funds.
In connection with the acquisition of Piper Jaffray Companies
Inc. by U.S. Bancorp, the sweep vehicles used by Piper Jaffray
Inc. in its brokerage accounts were changed from the funds to
corresponding First American money market funds as follows: Money
Market Fund to Prime Obligations Fund; U.S. Government Money
Market Fund to Government Obligations Fund; Tax-Exempt
- ---------------------------------------------------------------------
1998 Annual Report 6 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Money Market Fund to Tax Free Obligations Fund. As a result, all
outstanding shares of each Piper fund were redeemed and on July
21, 1998 the funds discontinued operations.
(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
................................
INVESTMENTS IN SECURITIES
Pursuant to Rule 2a-7 of the Investment Company Act of 1940 (as
amended), securities were valued on the basis of amortized cost,
which approximated market value.
Security transactions were accounted for on the date the
securities were purchased or sold. Interest income, including
amortization of discount and premium computed on a straight line
basis, was accrued daily.
FEDERAL TAXES
Each fund is treated separately for federal income tax purposes.
Prior to discontinuing operations, each fund complied with the
requirements of the Internal Revenue Code applicable to regulated
investment companies in order to avoid the payment of federal
income tax. The funds distributed their taxable net investment
income and realized gains to avoid the payment of any federal
excise taxes.
As a result of permanent book-to-tax differences, a
reclassification adjustment was made to increase undistributed
net investment income and decrease additional paid-in-capital by
$29,347 for Money Market Fund, $31,659 for U.S. Government Money
Market Fund, and $32,168 for Tax-Exempt Money Market Fund prior
to the closing of the funds.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income for
Money Market Fund were 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.
- ---------------------------------------------------------------------
1998 Annual Report 7 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Government Money Market Fund and Tax-Exempt Money Market Fund
were 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, transferred uninvested cash balances into
an individual, joint or tri-party trading account, the daily
aggregate of which was invested in repurchase agreements secured
by U.S. government or agency obligations. Securities pledged as
collateral for all individual and joint repurchase agreements
were held by the funds' custodian bank until maturity of the
repurchase agreement. Securities pledged as collateral for all
tri-party repurchase agreements were held by a third-party
custodian until maturity of the repurchase agreement. Provisions
for all agreements ensured that the daily market value of the
collateral was 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
were allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class.
Class-specific expenses, which included distribution and service
fees, were charged directly to such class.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
in the financial statements. Actual results could differ from
these estimates.
- ---------------------------------------------------------------------
1998 Annual Report 8 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
(3) INVESTMENT
SECURITY
TRANSACTIONS
................................
Cost of purchases and proceeds from sales of securities for the
period from October 1, 1997 to July 21, 1998 (date funds
discontinued operations) were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND
--------------- ---------------- ---------------
<S> <C> <C> <C>
Purchases............................... $14,953,088,319 $ 4,427,996,237 $ 1,202,717,293
Proceeds from sales..................... $17,228,730,066 $ 4,715,887,551 $ 1,436,293,449
</TABLE>
(4) CAPITAL SHARE
TRANSACTIONS
................................
Capital share transactions for the funds at net asset value of $1
per share were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1997 YEAR ENDED
TO JULY 21, 1998(a) SEPTEMBER 30, 1997(c)
--------------------------- -----------------------------
<S> <C> <C>
MONEY MARKET FUND:
CLASS A
Sales of fund shares.................. $ 16,923,306,648 $ 16,997,576,820
Issued for reinvested distributions... 85,792,063 97,113,763
Redemptions of fund shares............ (19,274,891,710) (16,794,668,863)
--------------------------- -----------------------------
$ (2,265,792,999) $ 300,021,720
--------------------------- -----------------------------
--------------------------- -----------------------------
CLASS B (b)
Sales of fund shares.................. $ 4,572 $ 11,044
Issued for reinvested distributions... 248 240
Redemptions of fund shares............ (14,441) (1,045)
--------------------------- -----------------------------
$ (9,621) $ 10,239
--------------------------- -----------------------------
--------------------------- -----------------------------
</TABLE>
(a) DATE FUNDS DISCONTINUED OPERATIONS. SEE NOTE 1.
(b) CLASS B SHARES WERE AUTOMATICALLY CONVERTED TO CLASS A
SHARES AS OF THE CLOSE OF BUSINESS ON APRIL 27, 1998.
(c) PERIOD FROM FEBRUARY 18, 1997 (COMMENCEMENT OF OFFERING)
TO SEPTEMBER 30, 1997 FOR CLASS B SHARES.
- ---------------------------------------------------------------------
1998 Annual Report 9 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1997 YEAR ENDED
TO JULY 21, 1998(a) SEPTEMBER 30, 1997
--------------------------- -------------------
<S> <C> <C>
U.S. GOVERNMENT MONEY MARKET FUND:
Sales of fund shares.................. $ 1,089,236,093 $ 1,179,382,187
Issued for reinvested distributions... 10,373,609 13,081,170
Redemptions of fund shares............ (1,384,391,993) (1,198,671,218)
--------------------------- -------------------
$ (284,782,291) $ (6,207,861)
--------------------------- -------------------
--------------------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1997 YEAR ENDED
TO JULY 21, 1998(a) SEPTEMBER 30, 1997
--------------------------- -------------------
<S> <C> <C>
TAX-EXEMPT MONEY MARKET FUND:
Sales of fund shares.................. $ 1,692,552,144 $ 1,905,106,004
Issued for reinvested distributions... 4,718,383 5,907,226
Redemptions of fund shares............ (1,931,759,788) (1,886,430,791)
--------------------------- -------------------
$ (234,489,261) $ 24,582,439
--------------------------- -------------------
--------------------------- -------------------
</TABLE>
(a) DATE FUNDS DISCONTINUED OPERATIONS. SEE NOTE 1.
(5) EXPENSES
................................
INVESTMENT MANAGEMENT FEE
The company had entered into an investment management agreement
with Piper Capital Management Incorporated (Piper Capital) under
which Piper Capital managed each fund's assets and furnished
related office facilities, equipment, research and personnel. The
agreement required each fund to pay Piper Capital a monthly fee
based on average daily net assets. The fee for each fund was
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 period from October 1, 1997 to July 21, 1998,
the effective investment management fee paid by the funds was
0.38%, 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.
- ---------------------------------------------------------------------
1998 Annual Report 10 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE FEES
Each fund also paid the funds' distributor fees accrued daily and
paid quarterly for providing shareholder services and
distribution-related services. The distributor until April 30,
1998 was Piper Jaffray Inc. (Piper Jaffray) and from May 1, 1998
to July 21, 1998 the distributor was SEI Investments Distribution
Company. 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 period from
October 1, 1997 to July 21, 1998 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 MONEY
CLASS A CLASS B MARKET FUND MARKET 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 had also entered into shareholder account servicing
agreements under which Piper Jaffray and Piper Trust Company
(Piper Trust) performed various transfer and dividend disbursing
agent services for accounts held at the respective company. The
fees, which were paid monthly were equal 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
- ---------------------------------------------------------------------
1998 Annual Report 11 Cash Management Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
account. For the period from October 1, 1997 to July 21, 1998,
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 MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND
------------ ---------------- ------------
<S> <C> <C> <C>
Piper Jaffray........................... $3,268,139 $185,206 $110,977
Piper Trust............................. 9,975 20 --
------------ ---------------- ------------
$3,278,114 $185,226 $110,977
------------ ---------------- ------------
------------ ---------------- ------------
</TABLE>
OTHER FEES AND EXPENSES
In addition to the investment management, distribution and
shareholder account servicing fees, each fund was 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.
- ---------------------------------------------------------------------
1998 Annual Report 12 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,
Period Ended -----------------------------------------------
July 21, 1998(d) 1997 1996 1995 1994 1993
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Operations:
Net investment income ..................... 0.04 0.05 0.05 0.05 0.03 0.02
Distributions to shareholders:
From net investment income ................ (0.04) (0.05) (0.05) (0.05) (0.03) (0.02)
Redemption of fund shares ................... (1.00) -- -- -- -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $ 0.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
SELECTED INFORMATION
Total return (a) ............................ 4.12% 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 .................................... 0.81%(c) 0.82% 0.84% 0.92% 0.93% 0.96%
Ratio of net investment income to average
daily net assets .......................... 4.88%(c) 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 ................... 0.91%(c) 0.92% 0.94% 1.02% 1.03% 1.06%
Ratio of net investment income to average
daily net assets before waivers ......... 4.78%(c) 4.66% 4.63% 4.84% 2.80% 2.32%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------
Period Ended Period Ended
April 27, 1998(e) September 30, 1997(b)
--------------------- -------------------------
<S> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 1.00 $ 1.00
------- -------
Operations:
Net investment income ................ 0.02 0.02
Distributions to shareholders:
From net investment income ........... (0.02) (0.02)
Redemption of fund shares .............. (1.00)
------- -------
Net asset value, end of period ..... $ 0.00 $ 1.00
------- -------
------- -------
SELECTED INFORMATION
Total return (a) ....................... 2.40% 2.39%
Net assets at end of period (in
thousands) ........................... -- $ 10
Ratio of expenses to average daily net
assets ............................... 1.62%(c) 1.63%(c)
Ratio of net investment income to
average daily net assets ............. 4.17%(c) 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.
(d) PERIOD FROM OCTOBER 1, 1997 TO JULY 21, 1998 (DATE FUND DISCONTINUED
OPERATIONS). SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
(e) PERIOD FROM OCTOBER 1, 1997 TO APRIL 27, 1998 (CONVERSION TO CLASS A
SHARES). SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1998 Annual Report 13 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,
Period Ended -----------------------------------------------
July 21, 1998(c) 1997 1996 1995 1994 1993
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Operations:
Net investment income ..................... 0.04 0.05 0.05 0.05 0.03 0.02
Distributions to shareholders:
From net investment income ................ (0.04) (0.05) (0.05) (0.05) (0.03) (0.02)
Redemption of fund shares ................... (1.00) -- -- -- -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $ 0.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
SELECTED INFORMATION
Total return (a) ............................ 3.98% 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 .................................... 0.92%(b) 0.90% 0.90% 0.91% 0.92% 0.93%
Ratio of net investment income to average
daily net assets .......................... 4.71%(b) 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 ................... 1.02%(b) 1.00% 1.00% 1.01% 1.02% 1.03%
Ratio of net investment income to average
daily net assets before waivers ......... 4.61%(b) 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.
(b) ANNUALIZED.
(c) PERIOD FROM OCTOBER 1, 1997 TO JULY 21, 1998 (DATE FUND DISCONTINUED
OPERATIONS). SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
- ---------------------------------------------------------------------
1998 Annual Report 14 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,
Period Ended -----------------------------------------------
July 21, 1998(d) 1997 1996 1995 1994 1993
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Operations:
Net investment income ..................... 0.02 0.03 0.03 0.03 0.02 0.02
Distributions to shareholders:
From net investment income (a) ............ (0.02) (0.03) (0.03) (0.03) (0.02) (0.02)
Redemption of fund shares ................... (1.00) -- -- -- -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $ 0.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
SELECTED INFORMATION
Total return (b) ............................ 2.32% 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 .................................... 0.93%(c) 0.90% 0.90% 0.91% 0.90% 0.92%
Ratio of net investment income to average
daily net assets .......................... 2.75%(c) 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 ................... 1.03%(c) 1.00% 1.00% 1.01% 1.00% 1.02%
Ratio of net investment income to average
daily net assets before waivers ......... 2.65%(c) 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 $0.0005, $0.0001 AND $0.0001 PER SHARE FOR FISCAL 1998, 1997
AND 1995, RESPECTIVELY.
(b) TOTAL RETURN ASSUMES REINVESTMENT OF DISTRIBUTIONS AND DOES NOT REFLECT A
SALES CHARGE.
(c) ANNUALIZED.
(d) PERIOD FROM OCTOBER 1, 1997 TO JULY 21, 1998 (DATE FUND DISCONTINUED
OPERATIONS). SEE NOTE 1 IN THE NOTES TO FINANCIAL STATEMENTS.
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1998 Annual Report 15 Cash Management Funds
<PAGE>
Independent Auditors' Report
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS
PIPER FUNDS INC.:
We have audited the statements of operations of Money Market Fund, U.S.
Government Money Market Fund and Tax-Exempt Money Market Fund (funds within
Piper Funds Inc.) for the period from October 1, 1997 to July 21, 1998 (date the
funds discontinued operations), the statements of changes in net assets for the
period from October 1, 1997 to July 21, 1998 and the year ended September 30,
1997, and the financial highlights for the period from October 1, 1997 to July
21, 1998 and 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. 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 present fairly, in all material
respects, for Money Market Fund, U.S. Government Money Market Fund and
Tax-Exempt Money Market Fund, the results of their operations, the changes in
their net assets and the financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted accounting
principles.
As described in note 1 to the financial statements, all the shares of Money
Market Fund, U.S. Government Money Market Fund and Tax-Exempt Money Market Fund
were redeemed and the funds discontinued operations on July 21, 1998.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 28, 1998
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1998 Annual Report 16 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 on Form
1099-DIV. Please consult a tax advisor on how to report these
distributions at the state and local levels.
INCOME DISTRIBUTIONS
<TABLE>
<CAPTION>
MONEY MARKET FUND U.S. GOVERNMENT TAX-EXEMPT
------------------------------ MONEY MONEY
PAYABLE DATE CLASS A (A) CLASS B (A)(C) MARKET FUND (A) MARKET FUND (B)
- ---------------------------------------- ------------ --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
October 21, 1997........................ $0.0040 $0.0033 $0.0039 $0.0024
November 21, 1997....................... 0.0042 0.0034 0.0040 0.0024
December 22, 1997....................... 0.0041 0.0034 0.0039 0.0024
January 2, 1998......................... 0.0015 0.0013 0.0015 0.0009
January 21, 1998........................ 0.0028 0.0022 0.0026 0.0015
February 23, 1998....................... 0.0042 0.0035 0.0040 0.0022
March 23, 1998.......................... 0.0038 0.0032 0.0036 0.0019
April 21, 1998.......................... 0.0041 0.0034 0.0040 0.0024
May 21, 1998............................ 0.0040 -- 0.0038 0.0024
June 22, 1998........................... 0.0041 -- 0.0040 0.0024
July 20, 1998........................... 0.0037 -- 0.0036 0.0020
------------ --------------- ---------------- ----------------
Total .............................. $0.0405 $0.0237 $0.0389 $0.0229
------------ --------------- ---------------- ----------------
------------ --------------- ---------------- ----------------
</TABLE>
(A) TAXABLE AS ORDINARY DIVIDENDS, NONE QUALIFYING FOR DEDUCTION BY
CORPORATIONS.
(B) INCOME FROM TAX-EXEMPT SECURITIES, 97.68% QUALIFYING AS EXEMPT-INTEREST
DIVIDENDS.
(C) EFFECTIVE APRIL 21, 1998, THE MONEY MARKET FUND NO LONGER OFFERED CLASS B
SHARES.
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1998 Annual Report 17 Cash Management Funds
