<PAGE>
Institutional Money Market Fund -- 1998 Semiannual Report
1998 Semiannual Report
[LOGO]
INSTITUTIONAL
MONEY MARKET
FUND
<PAGE>
CONTENTS
- ----------------------------------------
Institutional Money Market Fund
- ----------------------------------------
Portfolio Managers' Letter . . . . . 1
Financial Statements and Notes . . . 3
Investments in Securities . . . . . 10
Glossary*** . . . . . . . . . . . . 12
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 terms
used in the portfolio managers' letter. 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
- ----------------------------------------
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
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,
including prospectuses, about the Piper Funds, or call Mutual Fund Services
at 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>
INSTITUTIONAL MONEY MARKET FUND
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[PHOTO]
NANCY S. OLSEN
is primarily responsible for the management of Institutional Money Market Fund.
She has 20 years of financial experience.
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May 7, 1998
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Dear Shareholders,
SINCE WE REPORTED TO YOU SIX MONTHS AGO THE SEVEN-DAY CURRENT YIELD FOR THE
INSTITUTIONAL MONEY MARKET FUND DECREASED FROM 5.42% ON SEPTEMBER 30, 1997,
TO 5.37% ON MARCH 31, 1998. SHORT-TERM INTEREST RATES FLUCTUATED DURING THE
PERIOD WITH CHANGING EXPECTATIONS ABOUT ECONOMIC GROWTH. In the fourth
quarter of 1997, the financial woes of economies in Asia and the potential
spillover effects on the U.S. economy dominated headlines and influenced U.S.
domestic bond and money markets. At the same time, reports on the U.S.
economic environment portrayed a strong economy as evidenced by continued
gains in manufacturing, employment, and consumption, but also lower than
expected inflation as indicated by declines in crude oil, industrial
commodity prices and gold. Yields on money market securities declined by 1%
to 1.5% in the first part of the fourth quarter. In the last part of the
fourth quarter, money market yields rose significantly due to year-end window
dressing*** by corporations. Early in 1998, bond and money market yields
declined as the window dressing effects went away. In addition, Federal
Reserve Board (Fed) Chairman Alan Greenspan hinted at the reduced need for
Fed restraint. Since then, the bond and money markets have continued to
grapple with the opposite effects of a vigorous, expanding economy and a
secular backdrop of low inflation, federal debt reduction and productivity
enhancing technological advances.
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 FUND. We lengthened the average weighted maturity of the fund as we
moved closer to year-end 1997 to take advantage of the higher rates available
at that time. We continued to position the fund long to its benchmark
throughout most of the first quarter of 1998. This strategy worked well given
the decline in money market yields since the end of the fourth quarter of
1997. We also continued to add securities in the one-year area, thereby
maintaining the barbell structure*** we put on in the third quarter of 1997. A
barbell structure clusters maturities at both the short end of the yield
curve*** (one to three months) and at
- -------------------------------------------------------------------------------
30-DAY EFFECTIVE YIELD*
4/97 5.32
5.35
6/97 5.38
5.54
5.56
9/97 5.54
5.38
5.42
12/97 5.50
5.44
5.46
3/98 5.51
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.
* 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 represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
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1 1998 Semiannual Report -- Institutional Money Market Fund
<PAGE>
Institutional Money Market Fund (continued)
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[PHOTO]
SHAISTA B. TAJAMAL
assists with the management of Institutional Money Market Fund. She has eight
years of financial experience.
- -------------------------------------------------------------------------------
the longer end (10 to 13 months). This structure works well when the
difference between yields on short- and longer-term securities decreases,
which is what happened during the fourth quarter of 1997 and the first
quarter of 1998.
GOING FORWARD, WE BELIEVE ECONOMIC GROWTH WILL MODERATE AND INFLATION WILL
REMAIN UNDER CONTROL. Any changes in Federal Reserve Board 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 THE FUND 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 the Institutional Money Market Fund. We
remain committed to providing investments that help you achieve your
investment goals.
Sincerely,
/s/ Nancy Shellenberger Olsen
Nancy Shellenberger Olsen
Portfolio Manager
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PORTFOLIO COMPOSITION
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As a percentage of total assets on March 31, 1998.
U.S. Treasury Securities 2%
Federal Home Loan Bank 7%
Repurchase Agreements 22%
Federal Agriculture Mortgage Corporation 3%
Student Loan Marketing Association 7%
Federal Farm Credit Bank 5%
Federal Home Loan Mortgage Corporation 31%
U.S. Government Agency-Backed Securities 3%
Federal National Mortgage Association 20%
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2 1998 Semiannual Report -- Institutional Money Market Fund
<PAGE>
Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES March 31, 1998
................................................................................
<TABLE>
<S> <C>
ASSETS:
Investments in securities at amortized cost which
approximates market value (note 2) (including repurchase
agreements of $82,649,000) ............................... $ 366,553,141
Cash in bank on demand deposit ............................. 20,685
Organization costs (note 2) ................................ 2,368
Accrued interest receivable ................................ 1,150,050
-----------------
Total assets ............................................. 367,726,244
-----------------
LIABILITIES:
Dividends payable to shareholders .......................... 1,509,604
Accrued investment management fee .......................... 43,590
-----------------
Total liabilities ........................................ 1,553,194
-----------------
Net assets applicable to outstanding capital stock ....... $ 366,173,050
-----------------
-----------------
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital ............... $ 366,173,050
-----------------
Total - representing net assets applicable to outstanding
common stock ........................................... $ 366,173,050
-----------------
-----------------
NET ASSET VALUE AND OFFERING PRICE:
Net assets ................................................. $ 366,173,050
Shares outstanding (authorized 100 billion shares of $0.01
par value) ............................................... 366,173,050
Net asset value and offering price per share ............... $ 1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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3 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Financial Statements (Unaudited) (continued)
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STATEMENT OF OPERATIONS For the Six Months Ended March
31, 1998
................................................................................
<TABLE>
<S> <C>
INCOME:
Interest ................................................... $ 8,434,690
-----------------
EXPENSES (NOTE 5):
Investment management fee .................................. 224,716
Custodian and accounting fees .............................. 94,865
Transfer agent and dividend disbursing agent fees .......... 11,895
Registration fees .......................................... 65,161
Reports to shareholders .................................... 1,946
Amortization of organization costs ......................... 7,063
Directors' fees ............................................ 4,036
Audit and legal fees ....................................... 20,494
Other expenses ............................................. 23,737
-----------------
Total expenses ........................................... 453,913
Less expenses paid indirectly .......................... (1,498)
-----------------
Total net expenses ....................................... 452,415
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Net investment income .................................... $ 7,982,275
-----------------
-----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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4 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Financial Statements (continued)
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STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
3/31/98 YEAR ENDED
(UNAUDITED) 9/30/97
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 7,982,275 $ 13,938,945
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (7,982,275) (13,938,945)
-------------- ------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Increase in net assets from capital share transactions ... 88,719,060 104,889,203
-------------- ------------
Total increase in net assets ............................. 88,719,060 104,889,203
Net assets at beginning of period .......................... 277,453,990 172,564,787
-------------- ------------
Net assets at end of period ................................ $366,173,050 $277,453,990
-------------- ------------
-------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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5 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (Unaudited)
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(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
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6 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
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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, 1998, aggregated
$3,822,096,541 and $3,736,302,957, respectively.
(4) CAPITAL SHARE
TRANSACTIONS
................................
Capital share transactions for the fund at net asset value
of $1 per share were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
----------------- -------------------
<S> <C> <C>
Sales of fund shares ................... $ 1,103,714,310 $ 1,521,304,518
Issued for reinvested distributions .... 7,300,474 12,954,196
Redemptions of fund shares ............. (1,022,295,724) (1,429,369,511)
----------------- -------------------
$ 88,719,060 $ 104,889,203
----------------- -------------------
----------------- -------------------
</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 $7.50 per active
shareholder account and $1.60 per closed account. For the
six months ended March 31, 1998, the fund paid $4,392 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, distribution 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; legal, auditing and
accounting services; insurance; interest; taxes and other
miscellaneous expenses.
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7 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
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Expenses paid indirectly represent a reduction of
custodian fees for earnings on miscellaneous cash balances
maintained by the fund.
(6) PENDING
ACQUISITION
................................
On December 15, 1997, Piper Jaffray Companies Inc., the
parent company of the fund's investment advisor, announced
that it had entered into an agreement to be acquired by
U.S. Bancorp. It is anticipated that this acquisition will
be completed in the second quarter of 1998, subject to
regulatory approval, the approval of Piper Jaffray
Companies shareholders and the satisfaction of customary
closing conditions.
U.S. Bancorp is a multi-state bank holding company
headquartered in Minneapolis, Minnesota with a geographic
service area spanning 17 states. As of December 31, 1997,
U.S. Bancorp was the 15th largest U.S. commercial bank
holding company, with assets of nearly $71.3 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 December 31, 1997, U.S. Bank, acting
through its First American Asset Management group, managed
more than $55 billion in assets, including approximately
$20.5 billion in assets of the First American Funds.
Effective as of the date of the acquisition, SEI
Investments Distribution Company will assume the role of
the principal distributor for the fund.
Under the Investment Company Act of 1940, as amended (the
"1940 Act"), consummation of the acquisition of Piper
Jaffray Companies by U.S. Bancorp will result in the
assignment and automatic termination of the fund's
investment advisory agreement with Piper Capital
Management Incorporated. The 1940 Act requires that any
new investment advisory agreement for the fund be approved
by the fund's board of directors and shareholders.
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8 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Notes to Financial Statements (continued)
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(7) 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>
Three Months
Six Months Ended Year Ended Ended Year Ended June 30,
March 31, 1998 September 30, September 30, --------------------------------
(Unaudited) 1997 1996 1996 1995 1994 1993(b)
----------------- -------------- ----------------- ----- ----- ----- --------
<S> <C> <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 $1.00
------- ------- ------- ----- ----- ----- --------
Operations:
Net investment income ...... 0.03 0.05 0.01 0.05 0.05 0.03 0.01
Distributions to shareholders:
From net investment
income ................... (0.03) (0.05) (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 $1.00
------- ------- ------- ----- ----- ----- --------
------- ------- ------- ----- ----- ----- --------
SELECTED INFORMATION
Total return (a) ............. 2.69% 5.32% 1.29% 5.42% 5.26% 3.23% 1.24%
Net assets at end of period
(in millions) .............. $ 366 $ 277 $ 173 $ 174 $ 52 $ 35 $ 40
Ratio of expenses to average
daily net assets ........... 0.30%(c) 0.31% 0.35%(c) 0.35% 0.35% 0.35% 0.35%(c)
Ratio of net investment income
to average daily net
assets ..................... 5.33%(c) 5.21% 5.06%(c) 5.22% 5.17% 3.26% 3.02%(c)
Ratios before waivers by the
advisor:
Ratio of expenses to average
daily net assets before
waivers .................. 0.30%(c) 0.31% 0.41%(c) 0.38% 0.49% 0.61% 0.35%(c)
Ratio of net investment
income to average daily
net assets before
waivers .................. 5.33%(c) 5.21% 5.00%(c) 5.19% 5.03% 3.00% 3.02%(c)
</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.
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9 1998 Semiannual Report - Institutional
Money Market Fund
<PAGE>
Investments in Securities (Unaudited)
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<TABLE>
<CAPTION>
INSTITUTIONAL MONEY MARKET FUND March 31, 1998
.......................................................................................
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 (74.2%):
FEDERAL AGRICULTURAL MORTGAGE CORPORATION DISCOUNT NOTES (3.4%):
5.46%, 4/17/98 ...................................... $12,384,000 $ 12,353,948
------------
FEDERAL FARM CREDIT BANK DISCOUNT NOTES (3.7%):
5.65%, 4/9/98 ....................................... 1,032,000 1,030,704
5.43%, 4/13/98 ...................................... 7,600,000 7,586,244
5.40%, 4/24/98 ...................................... 5,000,000 4,982,750
------------
13,599,698
------------
FEDERAL FARM CREDIT BANK FLOATING RATE NOTES (b) (0.8%):
5.51%, 11/2/98 ...................................... 3,000,000 2,998,289
------------
FEDERAL FARM CREDIT BANK MEDIUM TERM NOTES (0.3%):
5.70%, 12/1/98 ...................................... 1,000,000 999,358
------------
FEDERAL HOME LOAN BANK COUPON NOTES (4.4%):
5.80%, 6/12/98 ...................................... 2,155,000 2,154,753
5.78%, 10/30/98 ..................................... 2,000,000 1,999,756
5.69%, 9/24/98 ...................................... 2,000,000 1,999,209
5.50%, 3/26/99 ...................................... 5,000,000 4,992,722
5.56%, 3/25/99 ...................................... 5,000,000 4,997,883
------------
16,144,323
------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES (1.0%):
5.50%, 5/22/98 ...................................... 3,773,000 3,743,602
------------
FEDERAL HOME LOAN BANK FLOATING RATE NOTES (b) (1.4%):
5.54%, 2/26/99 ...................................... 5,000,000 4,997,778
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION COUPON NOTES (1.0%):
5.89%, 5/29/98 ...................................... 3,825,000 3,824,360
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION DISCOUNT NOTES (29.6%):
5.38%, 4/10/98 ...................................... 2,415,000 2,411,750
5.45%, 4/13/98 ...................................... 10,000,000 9,981,833
5.45%, 4/15/98 ...................................... 5,653,000 5,641,019
5.53%, 4/15/98 ...................................... 10,000,000 9,978,494
5.47%, 4/17/98 ...................................... 5,000,000 4,987,933
5.46%, 4/23/98 ...................................... 6,000,000 5,979,980
5.46%, 4/24/98 ...................................... 9,510,000 9,477,342
5.46%, 4/24/98 ...................................... 5,000,000 4,982,558
5.37%, 4/30/98 ...................................... 15,000,000 14,935,113
5.38%, 4/30/98 ...................................... 6,000,000 5,973,997
5.46%, 4/30/98 ...................................... 5,000,000 4,978,008
5.47%, 5/7/98 ....................................... 4,235,000 4,211,835
5.44%, 5/8/98 ....................................... 15,000,000 14,916,133
5.46%, 5/8/98 ....................................... 5,000,000 4,971,942
5.47%, 4/17/98 ...................................... 5,000,000 4,987,844
------------
108,415,781
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES (12.2%):
5.43%, 5/4/98 ....................................... 10,000,000 9,950,225
5.60%, 4/13/98 ...................................... 7,000,000 6,986,933
5.47%, 4/20/98 ...................................... 4,102,000 4,090,158
5.55%, 4/24/98 ...................................... 5,000,000 4,982,271
5.51%, 4/30/98 ...................................... 8,886,000 8,846,559
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
5.40%, 6/12/98 ...................................... $10,000,000 $ 9,892,000
------------
44,748,146
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION FLOATING RATE NOTES (b) (4.2%):
5.28%, 7/14/99 ...................................... 4,500,000 4,485,197
5.53%, 4/1/99 ....................................... 5,000,000 4,988,031
5.28%, 6/2/99 ....................................... 2,000,000 1,994,561
5.27%, 5/11/98 ...................................... 4,000,000 3,999,705
------------
15,467,494
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION MEDIUM TERM NOTES (4.1%):
5.71%, 9/9/98 ....................................... 8,900,000 8,903,559
6.08%, 5/6/98 ....................................... 3,000,000 2,999,697
5.33%, 2/12/99 ...................................... 3,000,000 2,995,753
------------
14,899,009
------------
STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE NOTES (b) (4.3%):
5.38%, 8/20/98 ...................................... 6,000,000 5,996,871
5.38%, 9/28/98 ...................................... 6,740,000 6,737,054
5.60%, 10/6/98 ...................................... 3,000,000 2,999,027
------------
15,732,952
------------
STUDENT LOAN MARKETING ASSOCIATION MEDIUM TERM NOTES (2.2%):
5.82%, 9/16/98 ...................................... 3,000,000 2,999,448
5.74%, 11/16/98 ..................................... 3,000,000 2,999,981
5.74%, 12/17/98 ..................................... 2,000,000 1,998,490
------------
7,997,919
------------
U.S. TREASURY NOTES AND BONDS (1.6%):
5.13%, 11/30/98 ..................................... 3,000,000 2,989,999
5.50%, 2/28/99 ...................................... 3,000,000 3,000,635
------------
5,990,634
------------
Total U.S. Government and Agency Securities
(cost: $271,913,291) ........................... 271,913,291
------------
U.S. GOVERNMENT AGENCY-BACKED SECURITIES (3.3%):
USA Group Secondary Market Services Inc., LOC Student
Loan Marketing Association, 5.49%, 4/6/98
(cost: $11,990,850) ............................... 12,000,000 11,990,850
------------
REPURCHASE AGREEMENTS (22.6%):
Repurchase agreement with ABN/AMRO, acquired on
3/26/98, interest of $26,193, 5.63%, 4/2/98 . 23,927,000(c) 23,927,000
Repurchase agreement with ABN/AMRO, acquired on
3/26/98, interest of $6,233, 5.61%, 4/3/98 ........ 5,000,000(c) 5,000,000
Repurchase agreement with ABN/AMRO, acquired on
3/31/98, interest of $2,469, 6.05%, 4/1/98 ........ 14,692,000(d) 14,692,000
Repurchase agreement with Goldman Sachs, acquired on
3/5/98, interest of $34,471, 5.54%, 4/2/98 ........ 8,000,000(e) 8,000,000
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
10 1998 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 agreement with Morgan Stanley, acquired on
1/5/98, interest of $135,911, 5.56%, 4/3/98 ....... $10,000,000(e) $ 10,000,000
Repurchase agreement with Morgan Stanley, acquired on
2/12/98, interest of $92,000, 5.52%, 4/3/98 . 12,000,000(e) 12,000,000
Repurchase agreement with Morgan Stanley, acquired on
3/27/98, interest of $9,885, 5.63%, 4/3/98 ........ 9,030,000(e) 9,030,000
------------
Total Repurchase Agreements
(cost: $82,649,000) ............................ 82,649,000
------------
Total Investments in Securities
(cost: $366,553,141) (f) ....................... $366,553,141
------------
------------
</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, 1998. 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 JOINT TRADING ACCOUNT WHICH IS COLLATERALIZED BY
U.S. GOVERNMENT AGENCY SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS
INTEREST DUE AT MATURITY OF THE REPURCHASE AGREEMENT.
(e) 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 AND THE COLLATERAL
PLEDGED BY THE COUNTERPARTY TO THE AGREEMENT IS HELD AT THE SAME
THIRD-PARTY CUSTODIAN FOR THE BENEFIT OF THE FUND.
(f) ALSO REPRESENTS COST FOR FEDERAL INCOME TAX PURPOSES.
- --------------------------------------------------------------------------------
11 1998 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 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: INSTITUTIONAL MONEY MARKET FUND
IBC's MONEY FUND REPORT AVERAGES-TM- -- Government-Only, Institutions-Only,
as reported by IBC's MONEY FUND REPORT-TM-, which is an average of
institutions-only funds investing in U.S. Treasury and government agency
securities.
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.
WINDOW DRESSING
Trading activity near the end of a quarter or fiscal year that is designed to
make a portfolio appear more favorable. For example, a fund manager sells
losing positions in a portfolio so only positions that have gained in value
will be displayed.
***This report includes a glossary to help you understand financial terms
used in the portfolio managers' letter. When you see this symbol, it
indicates a word that is defined in the glossary.
- -------------------------------------------------------------------------------
12 1998 Semiannual Report -- Institutional Money Market Fund
<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 Avenue, 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 Avenue, Kansas City, MO 64105-1307
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 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 800 866-7778, or mail a request to us.
On-Line [GRAPHIC]
- -------------------------------
http://www.piperjaffray.com/
- -------------------------------------------------------------------------------
13 1998 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 5/1998 085-98
