<PAGE>
1997 Semiannual Report
[LOGO] INSTITUTIONAL
MONEY
MARKET
FUND
<PAGE>
CONTENTS
............................................
Institutional Money Market Fund
............................................
Letter to Shareholders.....................2
Financial Statements and Notes.............4
Investments in Securities.................11
Directors and Officers....................13
Shareholder Services......................14
Glossary***...............................15
This report is intended for shareholders of Institutional 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 fund.
*An investment in a Piper 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 report includes a glossary to help you understand financial words
used in the portfolio manager's letter. When you see this symbol, it
indicates a word that is defined in the glossary.
[LOGO]
INTERNATIONAL GROWTH FUNDS
............................................
Emerging Markets Growth Fund
Pacific-European Growth Fund
U.S. GROWTH FUNDS
............................................
Small Company Growth Fund
Emerging Growth Fund
Growth Fund
GROWTH AND INCOME FUNDS
............................................
Growth and Income Fund
Balanced Fund
INCOME FUNDS
............................................
Government Income Fund
Intermediate Bond Fund
Adjustable Rate Mortgage Securities Fund
TAX-EXEMPT INCOME FUNDS
............................................
National Tax-Exempt Fund
Minnesota Tax-Exempt Fund
CASH MANAGEMENT FUNDS*
............................................
Money Market Fund
Tax-Exempt Money Market Fund
U.S. Government Money Market Fund
Institutional Money Market Fund
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 Mutual Fund Services at 1
800 866-7778. Please read the prospectuses carefully before investing.
An investment staple, cash management funds can help you organize your
finances and build your assets.
<PAGE>
PRESIDENT'S LETTER
May 15, 1997
[PHOTO]
WILLIAM H. ELLIS
President
Piper Capital Management
.................................
INVESTOR EXPECTATIONS
.................................
What investors expect from the stock market over the next 10 years.
[EDGAR REPRESENTATION OF PIE CHART]
56% Expect a 14% return
29% Expect more than a 14% return
14% Expect less than a 14% return
Source: Louis Harris and
Associates, 1996
*Past performance does not guarantee future results. Keep in mind that stocks
are more volatile than bonds, and long-term government bonds are guaranteed
by the U.S. government or its agencies as to payment of principal and
interest.
DEAR SHAREHOLDERS:
What are you expecting from the markets this year? There's no denying that
the stock market's been on a bit of a roller coaster ride of late. The past
six months alone have seen record Dow highs, followed by quick downturns and
rebounds that are higher still. In fact, stock and bond prices have seen
unprecedented growth for almost 15 years. And, fortunately, more of you than
ever are sharing in these gains.
Word has it that investors' EXPECTATIONS have soared right along with
these phenomenal returns, and that's troubling. Don't get me wrong -- we're
happy about the gains investors have enjoyed. But it's important that we all
understand the markets' potential for volatility and balance that with a good
dose of reality.
Here's what I mean. According to Ibbotson Associates, the markets have, on
average, returned 11% in large-company stocks and 5% in long-term government
bonds per year since 1926.* Yet today's investors expect much more. I
recently read the results of a national survey by Louis Harris and Associates
that found a wide majority of investors expect at least a 14% stock market
return over the next 10 years (which is the average annual return from the
last decade). Some predict even greater returns.
No matter what the markets bring this year, I believe it's important to
maintain a long-term perspective. History shows that it's common for
investors to bail out at the first signs of a market downturn. But if I've
learned one thing from my 30 years in the financial services industry, it's
this: you can gain only if you stay in the game for the long term. Remember
that market and interest rate volatility (like we saw in March) are normal
parts of investing. I've never met anyone who can always time the market to
their advantage. Here's an adage to keep in mind: focus on "TIME IN the
market," not "TIMING the market."
My other advice for weathering the bumpy markets? Stay in touch with your
Investment Executive. Together, you have probably already set your financial
goals and formulated a plan to help you reach them. Stick to that plan.
During this uncertain time, your Investment Executive can help you sort
through the clutter and tune out the market noise. Best of all, your broker
can lend you the perspective gained from years of experience and help you
focus on long-term results.
Thank you for your investment and best wishes for the balance of 1997.
Sincerely,
/s/ William H. Ellis
William H. Ellis
1 1997 Semiannual Report -- Institutional Money Market Fund
<PAGE>
INSTITUTIONAL MONEY MARKET FUND
May 15, 1997
[PHOTO]
NANCY S. OLSEN
is primarily responsible for the management of Institutional Money Market
Fund. She has 19 years of financial experience.
.........................................................
DEAR SHAREHOLDERS:
INSTITUTIONAL MONEY MARKET FUND'S SEVEN-DAY CURRENT YIELD INCREASED SINCE WE
REPORTED TO YOU SIX MONTHS AGO FROM 5.12% ON SEPTEMBER 30, 1996, TO 5.18%* ON
MARCH 31, 1997. This is also an increase from a year ago on March 31, 1996,
when the fund's seven-day current yield was 5.03%.
SHORT-TERM INTEREST RATES REMAINED VOLATILE DURING THE PERIOD, AS THE ECONOMY
APPEARED TO WEAKEN AND THEN PICK UP STRENGTH. During fourth quarter 1996,
slow growth and benign inflation numbers led the markets to trade based on
expectations that the Federal Reserve Board (Fed) would not change the
federal funds rate.*** However, by late February economic reports began to
portray an economy that was picking up steam. On March 25, the Fed announced
a 0.25% increase in the federal funds rate, citing the potential for
inflation from stronger than desired economic conditions. Economic reports
since the rate increase have been strong, raising the possibility of an
additional Fed rate hike in the next few weeks.
WE PROVIDED YOU WITH A COMPETITIVE RATE OF RETURN DURING THE PAST SIX MONTHS
BY MANAGING THE FUND'S AVERAGE MATURITY AND MAKING SOME CHANGES TO THE FUND'S
COMPOSITION. The fund's average weighted maturity*** was shorter at the
beginning of the period; we gradually lengthened it toward year end to take
advantage of higher short-term interest rates. We shortened the average
weighted maturity again in the first part of 1997 and then lengthened it
toward the end of the period to capture attractive yields. We also added some
government agency floating-rate securities*** to the fund. These securities
have adjustable interest rates and have performed well in a rising interest
rate environment.
30-DAY EFFECTIVE YIELD*
[EDGAR REPRESENTATION OF LINE GRAPH]
4/96 5.11%
5/96 5.11%
6/96 5.14%
7/96 5.17%
8/96 5.16%
9/96 5.18%
10/96 5.12%
11/96 5.18%
12/96 5.18%
1/97 5.17%
2/97 5.18%
3/97 5.20%
This chart shows Institutional Money Market Fund's 30-day effective yield as
of the end of each month. 30-day effective yield is the income generated by
the fund over a 30-day period. This income is annualized and assumed to be
reinvested.
Since the fund's inception, the fund's adviser voluntarily waived fees and
expenses. Had fees and expenses not been waived, Institutional Money Market
Fund's 30-day effective yield and seven-day current yield would have been
5.15% and 5.13%, respectively, on March 31, 1997.
* 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.
*** This symbol indicates a word that is defined in the glossary.
2 1997 Semiannual Report -- Institutional Money Market Fund
<PAGE>
Institutional Money Market Fund (continued)
[PHOTO]
SHAISTA B. TAJAMAL
assists with the management of Institutional Money Market Fund. She has seven
years of financial experience.
LOOKING AHEAD, WE ARE POSITIONING THE FUND'S AVERAGE WEIGHTED MATURITY SO IT
IS NEUTRAL COMPARED TO THE FUND'S BENCHMARK. The fund's average weighted
maturity was 52 days as of March 31, 1997. In addition, we are positioning
the fund in somewhat of a barbell structure.*** We are focusing on securities
with shorter maturities (seven to 90 days) and longer maturities (10 to 13
months), while de-emphasizing securities in between. This strategy allows us
to capture higher yields available from longer maturities; and if rates
increase, the securities with shorter maturities can be reinvested at higher
rates more quickly. Going forward, we believe we will see more volatility in
short-term markets in response to new economic data. We will continue to
watch these reports for clues on the economy's direction and formulate our
strategy accordingly.
OUR PRIMARY CONCERN IN MANAGING THE FUND IS THE SAFETY OF YOUR PRINCIPAL. We
continue to use a fundamental approach to identify high-quality, government
and agency money market securities that provide competitive yields. Our
strategy is designed to add value by actively positioning the portfolio on
the short end (13 months or less) of the yield curve*** and by managing the
fund's average weighted maturity based on our interest rate forecast.
Thank you for your investment in Institutional Money Market Fund. We are
committed to providing you with high-quality investments and will continue
working to help you achieve your financial goals.
Sincerely,
/s/ Nancy Shellenberger Olsen
Nancy Shellenberger Olsen
Portfolio Manager
PORTFOLIO COMPOSITION
As a percentage of total assets on March 31, 1997.
[EDGAR REPRESENTATION OF PIE CHART]
Federal Home Loan Mortgage Corporation 13%
Other Government-Backed Securities 2%
Federal National Mortgage Association 9%
Tennessee Valley Authority 2%
Student Loan Marketing Association 7%
Repurchase Agreements 29%
Federal Agricultural Mortgage Corporation 6%
Federal Home Loan Bank 11%
Other Assets 2%
U.S. Treasury Securities 6%
Federal Farm Credit Bank 13%
3 1997 Semiannual Report -- Institutional Money Market Fund
<PAGE>
Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES March 31, 1997
..................................................................
<TABLE>
<S> <C>
ASSETS:
Investments in securities at amortized cost which
approximates market value (note 2) (including repurchase
agreements of $91,398,000) ............................... $314,097,686
Cash in bank on demand deposit ............................. 25,531
Organization costs (note 2) ................................ 16,533
Accrued interest receivable ................................ 560,820
-----------------
Total assets ............................................. 314,700,570
-----------------
LIABILITIES:
Dividends payable to shareholders .......................... 1,190,215
Accrued investment management fee .......................... 36,276
Other accrued expenses ..................................... 47,164
-----------------
Total liabilities ........................................ 1,273,655
-----------------
Net assets applicable to outstanding capital stock ....... $313,426,915
-----------------
-----------------
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital ............... $313,426,915
-----------------
Total - representing net assets applicable to outstanding
common stock ........................................... $313,426,915
-----------------
-----------------
NET ASSET VALUE AND OFFERING PRICE:
Net assets ................................................. $313,426,915
Shares outstanding ......................................... 313,426,915
Net asset value and offering price per share ............... $ 1.00
-----------------
-----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
4 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended March
31, 1997
..................................................................
<TABLE>
<S> <C>
INCOME:
Interest ................................................... $ 6,461,894
-----------------
EXPENSES (NOTE 5):
Investment management fee .................................. 178,696
Custodian and accounting fees .............................. 125,861
Transfer agent and dividend disbursing agent fees .......... 17,770
Registration fees .......................................... 66,376
Reports to shareholders .................................... 24,931
Amortization of organization costs ......................... 7,064
Directors' fees ............................................ 5,150
Audit and legal fees ....................................... 42,469
Other expenses ............................................. 18,633
-----------------
Total expenses ........................................... 486,950
Less expenses waived by the adviser .................... (63,043)
-----------------
Net expenses before expenses paid indirectly ............. 423,907
Less expenses paid indirectly .......................... (513)
-----------------
Total net expenses ....................................... 423,394
-----------------
Net investment income .................................... $ 6,038,500
-----------------
-----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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5 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Financial Statements (continued)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
..................................................................
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS
3/31/97 ENDED YEAR ENDED
(UNAUDITED) 9/30/96 6/30/96
------------------ ------------------ ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 6,038,500 $ 2,199,636 $ 5,386,499
------------------ ------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (6,038,500) (2,199,636) (5,386,499)
------------------ ------------------ ------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Increase (decrease) in net assets from capital share
transactions ........................................... 140,862,128 (1,250,844) 121,326,769
------------------ ------------------ ------------------
Total increase (decrease) in net assets .................. 140,862,128 (1,250,844) 121,326,769
Net assets at beginning of period .......................... 172,564,787 173,815,631 52,488,862
------------------ ------------------ ------------------
Net assets at end of period ................................ $ 313,426,915 $172,564,787 $ 173,815,631
------------------ ------------------ ------------------
------------------ ------------------ ------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
................................
Piper Institutional 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 includes one diversified series,
Institutional Money Market Fund (the fund). The company's
articles of incorporation permit the board of directors to
create additional series in the future.
Institutional Money Market Fund invests in short-term
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.
There is no assurance that the fund 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
The 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 fund
also intends to distribute its taxable net investment
income and realized gains, if any, to avoid the payment of
any federal excise taxes.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income
are declared daily and reinvested in additional shares of
the fund monthly.
REPURCHASE AGREEMENTS
For repurchase agreements entered into with certain
broker-dealers, the fund, 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 fund's 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 fund in
the event of a default.
ORGANIZATION COSTS
Organization costs were incurred in connection with the
start up and initial registration of the fund. These costs
are amortized over 60 months on a straight-line basis. If
any or all of the shares representing initial capital of
the fund are redeemed by any holder thereof prior to the
end of the
- --------------------------------------------------------------------------------
7 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
amortization period, the proceeds will be reduced by the
unamortized organization cost balance in the same
proportion as the number of shares redeemed bears to the
number of initial shares outstanding preceding the
redemption.
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.
(3) INVESTMENT
SECURITY
TRANSACTIONS
................................
Cost of purchases and proceeds from sales of securities,
for the six months ended March 31, 1997, aggregated
$3,042,393,506 and $2,900,836,585 respectively.
For the six months ended March 31, 1997, no brokerage
commissions were paid to Piper Jaffray Inc. (Piper
Jaffray), an affiliated broker.
(4) CAPITAL SHARE
TRANSACTIONS
................................
Capital share transactions for the fund at net asset value
of $1 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS
SIX MONTHS ENDED
ENDED SEPTEMBER 30, YEAR ENDED
MARCH 31, 1997 1997 JUNE 30, 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Authorized 100 billion shares of $0.01 par
value
Purchases of fund shares .................... $ 608,871,292 $ 228,681,381 $ 590,483,864
Issued for reinvested distributions ......... 5,390,639 2,077,811 4,730,393
Redemptions of fund shares .................. (473,399,803) (232,010,036) (473,887,488)
-------------- -------------- --------------
$ 140,862,128 $ (1,250,844) $ 121,326,769
-------------- -------------- --------------
-------------- -------------- --------------
</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 the
fund's assets and furnishes related office facilities,
equipment, research and personnel. The agreement requires
the fund to pay Piper Capital a monthly fee based on
average daily net assets. The fee is equal to an annual
rate of 0.15% of the fund's average daily net assets.
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 closed account. For the
six months ended March 31, 1997, the fund paid $2,770 and
$0 to Piper Jaffray and Piper Trust, respectively, in
connection with the shareholder account servicing
agreements.
OTHER FEES AND EXPENSES
In addition to the investment management and shareholder
account servicing fees, the 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;
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8 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
legal, auditing and accounting services; insurance;
interest; taxes and other miscellaneous expenses. For the
year ending September 30, 1997, Piper Capital voluntarily
limited total fees and expenses to an annual rate of 0.35%
of the fund's average daily net assets.
Expenses paid indirectly represent a reduction of
custodian fees for earnings on miscellaneous cash balances
maintained by the fund.
- --------------------------------------------------------------------------------
9 1997 Semiannual Report - Institutional
Money Market Fund
<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:
INSTITUTIONAL MONEY MARKET FUND
<TABLE>
<CAPTION>
Six Months
Ended Three Months
March 31, Ended Year Ended June 30,
1997 September 30, --------------------------------------
(Unaudited) 1996 1996 1995 1994 1993(b)
------------ ------------- ------ ------ ------ --------
<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 ................ 0.03 0.01 0.05 0.05 0.03 0.01
Distributions to shareholders:
From net investment income ........... (0.03) (0.01) (0.05) (0.05) (0.03) (0.01)
------------ ------------- ------ ------ ------ --------
Net asset value, end of period ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------- ------ ------ ------ --------
------------ ------------- ------ ------ ------ --------
SELECTED INFORMATION
Total return (a) ....................... 2.55% 1.29% 5.42% 5.26% 3.23% 1.24%
Net assets at end of period (in
millions) ............................ $ 313 $ 173 $ 174 $ 52 $ 35 $ 40
Ratio of expenses to average daily net
assets ............................... 0.35%(c) 0.35%(c) 0.35% 0.35% 0.35% 0.35%(c)
Ratio of net investment income to
average daily net assets ............. 5.07%(c) 5.06%(c) 5.22% 5.17% 3.26% 3.02%(c)
Ratios before waivers by the adviser:
Ratio of expenses to average daily net
assets before waivers ................ 0.41%(c) 0.41%(c) 0.38% 0.49% 0.61% --
Ratio of net investment income to
average daily net assets before
waivers 5.01%(c) 5.00%(c) 5.19% 5.03% 3.00% --
</TABLE>
(A) TOTAL RETURN ASSUMES REINVESTMENT OF DISTRIBUTIONS AND DOES NOT REFLECT A
SALES CHARGE.
(B) COMMENCEMENT OF OPERATIONS WAS FEBRUARY 2, 1993.
(C) ANNUALIZED.
- --------------------------------------------------------------------------------
10 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Investments in Securities (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL MONEY MARKET FUND March 31, 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 (62.5%):
FEDERAL AGRICULTURAL MORTGAGE CORPORATION DISCOUNT NOTES (6.4%):
5.32%, 4/15/97 ...................................... $ 10,000,000 $ 9,979,311
5.45%, 4/21/97 ...................................... 10,000,000 9,969,722
-------------
19,949,033
-------------
FEDERAL FARM CREDIT BANK DISCOUNT NOTES (10.0%):
5.24%, 4/1/97 ....................................... 10,000,000 10,000,000
5.21%, 4/7/97 ....................................... 2,400,000 2,397,916
5.18%, 4/11/97 ...................................... 4,000,000 3,994,245
5.44%, 5/5/97 ....................................... 5,755,000 5,725,432
5.26%, 5/5/97 ....................................... 4,295,000 4,273,663
5.47%, 6/5/97 ....................................... 5,000,000 4,950,618
-------------
31,341,874
-------------
FEDERAL FARM CREDIT BANK FLOATING RATE NOTES (B) (2.9%):
5.25%, 12/17/97 ..................................... 3,000,000 2,998,108
5.50%, 3/19/98 ...................................... 6,000,000 5,995,248
-------------
8,993,356
-------------
FEDERAL HOME LOAN BANK COUPON NOTES (1.0%):
5.88%, 2/5/98 ....................................... 3,000,000 2,999,745
-------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES (8.7%):
5.26%, 4/3/97 ....................................... 5,000,000 4,998,539
5.48%, 4/17/97 ...................................... 1,000,000 997,564
5.44%, 4/21/97 ...................................... 2,025,000 2,018,880
5.25%, 4/21/97 ...................................... 4,005,000 3,993,319
5.48%, 4/24/97 ...................................... 5,000,000 4,982,463
5.49%, 6/25/97 ...................................... 4,605,000 4,545,308
5.49%, 6/30/97 ...................................... 5,985,000 5,902,855
-------------
27,438,928
-------------
FEDERAL HOME LOAN BANK FLOATING RATE NOTES (B) (1.6%):
5.39%, 3/19/98 ...................................... 4,000,000 3,997,187
5.55%, 9/2/97 ....................................... 1,000,000 998,960
-------------
4,996,147
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION DISCOUNT NOTES (12.2%):
5.24%, 4/2/97 ....................................... 5,000,000 4,999,272
5.24%, 4/2/97 ....................................... 4,110,000 4,109,402
5.21%, 4/4/97 ....................................... 5,000,000 4,997,829
5.26%, 4/8/97 ....................................... 5,000,000 4,994,886
5.48%, 4/10/97 ...................................... 1,000,000 998,630
5.47%, 4/10/97 ...................................... 3,410,000 3,405,337
5.27%, 4/14/97 ...................................... 5,000,000 4,990,485
5.46%, 4/18/97 ...................................... 1,500,000 1,496,133
5.18%, 5/6/97 ....................................... 8,350,000 8,307,948
-------------
38,299,922
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES (4.5%):
5.50%, 4/9/97 ....................................... 1,540,000 1,538,118
5.48%, 4/10/97 ...................................... 1,235,000 1,233,308
5.24%, 4/10/97 ...................................... 2,000,000 1,997,380
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ -------------
<S> <C> <C>
5.50%, 4/17/97 ...................................... $ 1,000,000 $ 997,556
5.48%, 4/18/97 ...................................... 1,650,000 1,645,730
5.50%, 4/21/97 ...................................... 2,700,000 2,691,750
5.24%, 5/2/97 ....................................... 4,000,000 3,981,951
-------------
14,085,793
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION FLOATING RATE NOTES (B) (4.5%):
5.65%, 6/11/97 ...................................... 7,000,000 6,999,750
5.61%, 5/1/97 ....................................... 3,000,000 2,999,876
5.55%, 6/2/99 ....................................... 2,000,000 1,989,912
5.52%, 6/20/97 ...................................... 2,000,000 1,999,567
-------------
13,989,105
-------------
STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE NOTES (B) (3.2%):
5.60%, 9/28/98 ...................................... 6,740,000 6,731,080
5.76%, 10/30/97 ..................................... 2,360,000 2,360,000
5.87%, 6/30/97 ...................................... 1,000,000 999,897
-------------
10,090,977
-------------
U.S. TREASURY NOTES AND BONDS (6.3%):
5.13%, 2/28/98 ...................................... 7,000,000 6,958,246
6.00%, 11/30/97 ..................................... 3,000,000 3,010,649
5.13%, 3/31/98 ...................................... 10,000,000 9,941,979
-------------
19,910,874
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (1.2%):
6.50%, 2/1/98 ....................................... 3,883,232(f) 3,899,133
-------------
Total U.S. Government and Agency Securities
(cost: $195,994,887) ........................... 195,994,887
-------------
OTHER U.S. GOVERNMENT AGENCY SECURITIES (1.9%):
Tennessee Valley Authority, 5.48%, 4/9/97
(cost: $5,992,693) .............................. 6,000,000 5,992,693
-------------
U.S. GOVERNMENT AGENCY-BACKED SECURITIES (6.6%):
Downey Savings & Loan Association, LOC Federal Home
Loan Bank of San Francisco, 5.50%, 12/5/97 ........ 7,000,000 6,734,778
USA Group Secondary Market Services Inc., LOC Student
Loan Marketing Association, 5.40%, 4/3/97 ......... 7,000,000 6,997,900
USA Group Secondary Market Services Inc., LOC Student
Loan Marketing Association, 5.29%, 4/21/97 ........ 7,000,000 6,979,428
-------------
Total U.S. Government Agency-Backed Securities
(cost: $20,712,106) ............................ 20,712,106
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
11 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Investments in Securities (Unaudited) (continued)
- --------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ------------ -------------
<S> <C> <C>
REPURCHASE AGREEMENTS (29.2%):
Repurchase agreement with Goldman Sachs, acquired on
2/14/97, interest of $130,838, 5.33%, 5/15/97 ..... $ 9,819,000(c)(d) $ 9,819,000
Repurchase agreement with Goldman Sachs, acquired on
2/25/97, interest of $174,821, 5.32%, 5/27/97 ..... 13,000,000(c)(d) 13,000,000
Repurchase agreement with Goldman Sachs, acquired on
3/31/97, interest of $7,179, 6.53%, 4/1/97
(cost: $39,579,000) ............................. 39,579,000(e) 39,579,000
Repurchase Agreement with Morgan Stanley, acquired on
3/24/97, interest of $8,540, 5.49%, 4/7/97 ........ 4,000,000(c) 4,000,000
Repurchase agreement with Morgan Stanley, acquired on
3/25/97, interest of $10,831, 5.57%, 4/1/97 . 10,000,000(c) 10,000,000
Repurchase agreement with Morgan Stanley, acquired on
3/27/97, interest of $16,479, 5.65%, 4/3/97 . 15,000,000(c) 15,000,000
-------------
Total Repurchase Agreements
(cost: $91,398,000) ............................ 91,398,000
-------------
Total Investments in Securities
(cost: $314,097,686) (g) ....................... $ 314,097,686
-------------
-------------
</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 MARCH 31, 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 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.
(D) REPURCHASE AGREEMENTS WITH GREATER THAN SEVEN DAYS TO MATURITY ARE
CONSIDERED ILLIQUID. THE AGGREGATE VALUE OF SUCH REPURCHASE AGREEMENTS
REPRESENTS 7.3% 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) FIXED RATE MORTGAGE-BACKED PASS-THROUGH SECURITY.
(G) ALSO REPRESENTS COST FOR FEDERAL INCOME TAX PURPOSES.
- --------------------------------------------------------------------------------
12 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Directors and Officers
- --------------------------------------------------
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, 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 ADVISER
Piper Capital Management Incorporated
222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402-3804
TRANSFER AND DIVIDEND DISBURSING AGENTS
Investors Fiduciary Trust Company
127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
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
127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
LEGAL COUNSEL
Dorsey & Whitney LLP
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
- --------------------------------------------------------------------------------
13 1997 Semiannual Report - Institutional
Money Market Fund
<PAGE>
SHAREHOLDER SERVICES
As a shareholder in Piper Funds, you have access to a full range of services
and benefits.
Check your prospectus for details about services and any limitations that
might apply to your fund.
LOW MINIMUM INVESTMENTS
You can open a Piper Fund account with a minimum investment of $250.
QUANTITY DISCOUNTS
If your initial investment exceeds a specified amount, if an investment
combined with the value of your existing Piper shares exceeds a specified
amount, or if your investments combined during a 13-month period exceed a
specified amount, you can reduce or even eliminate the front-end sales charge.
WAIVER OF SALES CHARGES
Money market funds carry no sales charges.* Sales charges on other Piper
Funds are waived on purchases of $500,000 or more. However, a contingent
deferred sales charge may be imposed. See your prospectus for details.
AUTOMATIC REINVESTMENT OF DISTRIBUTIONS
For maximum growth of your assets, you can reinvest dividends and capital
gains automatically in additional shares of your fund without a sales charge.
CROSS-REINVESTMENT OF DISTRIBUTIONS
Diversify your holdings by reinvesting dividends and capital gains from one
Piper Fund to another.
CASH DISTRIBUTIONS
If you prefer, take your dividends and/or capital gains in cash.
AUTOMATIC MONTHLY INVESTMENT PROGRAM
You may automatically transfer $25 or more each month from any Piper money
market fund* into many other Piper Funds.
AUTOMATIC MONTHLY MONEY TRANSFER PROGRAM
If you are starting a savings discipline or seeking a convenient way to
invest, you can transfer a minimum of $100 automatically from your bank,
savings and loan or other financial institution into many of the Piper Funds.
EXCHANGE PRIVILEGES
Revise your investment plan without incurring a sales charge by moving assets
from one Piper Fund to another with the same fee structure. See your
prospectus for restrictions involving exchanges between funds with different
sales charges.
REINVESTMENT PRIVILEGES
If you buy a fund with a sales charge and later redeem your shares, you may
reinvest all or part of the proceeds in shares of that fund or another Piper
Fund within 30 days and pay no additional sales charge, subject to each
fund's minimum investment requirements.
SYSTEMATIC WITHDRAWAL PLAN
If your account has a value of $5,000 or more, you can elect to receive
periodic payments of $100 or more, at no cost, excluding money market funds.
ACCOUNT STATEMENTS
Whenever you add to or withdraw money from your account, you'll receive a
monthly statement from Piper Jaffray. Accounts with no activity receive a
quarterly statement instead. Periodic dividend and capital gain
distributions, if any, also appear on your statement.
CONFIRMATION OF TRANSACTIONS
You receive a confirmation statement following every transaction, except in
the money market funds. All transactions are reflected on your account
statement.
* An investment in a Piper 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.
14 1997 Semiannual Report -- Institutional Money Market Fund
<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 maturities on the
long- and short-term ends of the yield curve 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.
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. The federal funds rate is the most sensitive
indicator of the direction of interest rates, since it is set daily by the
market, unlike the prime rate and the discount rate, which are periodically
changed by banks and by the Federal Reserve Board, respectively.
FLOATERS/FLOATING RATE SECURITIES
Floaters are debt instruments that have an adjustable interest rate tied to
another interest rate -- for example, the rate paid by Treasury bills. A
floating rate security, for instance, provides a holder with additional
interest if the applicable interest rate rises and less interest if the rate
falls. It is generally best to buy floaters if it appears that interest rates
will rise. If the outlook is for falling rates, investors typically
concentrate on fixed-rate instruments.
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.
FOR MORE INFORMATION
....................................................
By Phone [SYMBOL]
....................................................
1 800 866-7778
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 [SYMBOL]
....................................................
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 fund's 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 1 800 866-7778, or mail a request to us.
On-Line [SYMBOL]
....................................................
http://www.piperjaffray.com/
*** This symbol indicates a word that is defined in the glossary.
15 1997 Semiannual Report -- Institutional Money Market Fund
<PAGE>
Institutional Money Market Fund
[LOGO] PIPER FUNDS 222 South Ninth Street
Minneapolis, MN 55402-3804
PIPER JAFFRAY INC., FUND DISTRIBUTOR AND NASD MEMBER.
#20640 5/1997 157-97
16 1997 Semiannual Report -- Institutional Money Market Fund
