PIPER FUNDS INC, N-30D, 1997-11-26

PIPER FUNDS INC
N-30D, 1997-11-26

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<PAGE>
Growth and Income Funds - 1997 Annual Report

[LOGO]

GROWTH AND INCOME FUNDS

1997 Annual Report

GROWTH AND INCOME FUND

BALANCED FUND

INSIDE: ACTION OR REACTION --

Which Guides Your Approach to Investing?

[PICTURE]

<PAGE>

[LOGO]

CONTENTS

President's Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 25
Federal Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . 26
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Glossary***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

GROWTH AND INCOME FUND

Portfolio Managers' Letter . . . . . . . . . . . . . . . . . . . . . . . . .4
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . 10
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . 22

BALANCED FUND

Portfolio Managers' Letter . . . . . . . . . . . . . . . . . . . . . . . . .7
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . 10
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . 23

This report is intended for shareholders of Growth and Income Fund and Balanced
Fund, but may also be used as sales literature if preceded or accompanied by a
prospectus. The prospectus gives details about the charges, investment results,
risks and operating policies of the funds.

*** This report includes a glossary to help you understand financial terms used
in the portfolio managers' letters. When you see this symbol, it indicates a
word that is defined in the glossary.

ACTION
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WHICH GUIDES YOUR APPROACH TO INVESTING?
The market soars 150 points. The market plummets 150 points. One financial
commentator urges investors to sell stocks and buy bonds. Another promotes a
"can't miss" investment opportunity. One thing is for sure -- in today's
financial markets, it's easy to get the impression that investment experts
possess a secret formula for success. Yet many successful investors realize
there are no short-term secrets to investing. While others heed market
soothsayers and prophets, savvy investors work with investment professionals who
help them remain calm in the face of volatility. Guided by long-term investment
plans rather than by emotions, these investors stay the course while others
react to the latest trend. More important, successful investors employ several
time-tested investment strategies to help reach their goals, including
diversification and systematic investing.*

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WALL STREET'S WILD RIDE
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Dow Jones Industrial Average

[EDGAR REPRESENTATION OF GRAPH]

Dow Jones Industrial Average

8/1 8194
8/4 8198
8/5 8188
8/6 8259
High 8/6/97 8,259
8/7 8188
8/8 8031
8/11 8062
8/12 7961
8/13 7928
8/14 7942
8/15 7695
8/18 7803
8/19 7918
8/20 8021
8/21 7894
8/22 7888
8/25 7860
8/26 7782
8/27 7787
8/28 7694
8/29 7622
9/2 7880
9/3 7895
9/4 7867
9/5 7822
9/8 7835
9/9 7852
9/10 7719
9/11 7661
9/12 7743
9/15 7721
9/16 7896
9/17 7886
9/18 7923
9/19 7917
9/22 7997
9/23 7970
9/24 7907
9/25 7848
9/26 7922
9/29 7991
9/30 7945
10/1 8016
10/2 8028
10/3 8039
10/6 8100
10/7 8178
10/8 8095
10/9 8061
10/10 8045
10/13 8072
10/14 8096
10/15 8058
10/16 7939
10/17 7847
10/20 7921
10/21 8060
10/22 8035
10/23 7848
10/24 7715
10/27 7161
Low 10/27/97 7,161
10/28 7498
10/29 7507
10/30 7382
10/31 7442

Source: Bloomberg. The Dow Jones industrial average is a price-weighted average
of the 30 largest blue-chip stocks on the New York Stock Exchange.

DO YOUR EXPECTATIONS REFLECT MARKET REALITIES?
Investors' expectations have risen with the market -- and are in sharp contrast
to market realities. In the words of Federal Reserve Chairman Alan Greenspan,
there is an "irrational exuberance" based on unprecedented growth in recent
years. During the past few years, returns -- especially from stocks -- have been
much higher than at any other time in history. The chart below shows long-term
returns of various securities compared to the highly inflated results of the
past year.

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SHORT-TERM RETURNS VS. LONG-TERM RETURNS THROUGH SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
The past year has provided investors with unusually high returns

THE PAST YEAR PAST 71 YEARS
total return average annualized
total return, 1926-1997

Large-Company Stocks 40.49% 10.98%
Long-Term Corporate Bonds 12.67% 5.67%

Source: Ibbotson Associates. Past performance does not guarantee future
results. Stocks generally exhibit more volatility than bonds.

*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.

<PAGE>

OR REACTION:
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What actions do successful investors take to weather the market's normal ups
and downs? First, they realize that markets move in cycles. In addition, they
diversify their holdings among a mix of funds that mirror their investment
objectives and risk tolerance and continue to purchase fund shares
systematically. By investing regularly* -- consistently buying shares through
market fluctuations -- educated investors steadily increase the number of shares
they own, while evening out their average cost per share over time.

THE MISGUIDED REACTIVE INVESTOR
The reactive investor believes that a shortcut to success is to chase today's
best-performing funds. After all, what could go wrong when you invest in these
winners? Plenty. The lure of a quick profit could fade to the reality of poor
returns for reactive investors who buy in at the peak of a fund's rally. They
often buy when prospects look bright and sell when prices drop -- behavior that
can devastate an investor's returns even while the market makes solid gains.

In contrast, educated investors don't succumb to emotions that could undermine
rational decisions. They're aware that few, if any, mutual funds can
significantly outperform their peers year after year. They also realize that
long-term investing helps reduce volatility. A buy-and-hold philosophy protects
investors against wild swings triggered by short-term market fluctuations -- and
helps them sleep better at night, too.

IT'S A FACT: INVESTORS PROFIT FROM THEIR ACTIONS,
NOT THEIR REACTIONS
If you want to be successful in the financial marketplace, don't be swayed by
emotions or speculation. Keep in mind that markets change daily, yet your goals
may not change for years. Work with your Piper Jaffray Investment Executive to
develop an investment plan or to fine-tune your investment strategies as your
objectives change. A professional can help you ignore short-term volatility and
focus on long-term results. Your actions -- not your reactions -- ultimately
represent the difference between getting by ... and getting ahead.

*Keep in mind, investing regularly does not assure a profit and does not protect
against loss in declining markets.

TAKE THE GUESSWORK OUT OF INVESTING WITH THESE TRIED-AND-TRUE INVESTMENT
STRATEGIES
- --------------------------------------------------------------------------------

X GET AN INVESTMENT PLAN An investment plan maps out your goals and
identifies effective ways to pursue them.

X INVEST SYSTEMATICALLY* Systematic investing is an effective way to build
wealth over time and helps you avoid hitting only market peaks and valleys.

X DIVERSIFY Diversification helps reduce volatility within your portfolio
and may also give you better long-term results.

X REASSESS YOUR RISK TOLERANCE Life's events may affect the amount of risk
that's comfortable.

A "BUY-AND-HOLD" PHILOSOPHY HELPS REDUCE YOUR RISK
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Your chance of losing money decreases the longer you hold stocks

[EDGAR REPRESENTATION OF GRAPH]

HOLDING STOCKS FOR ONE YEAR 29%
HOLDING STOCKS FOR FIVE YEARS 11%
HOLDING STOCKS FOR 10 YEARS 3%

Source: Based on rolling annual returns of the S&P 500 Index through 1996. The
S&P 500 is an unmanaged index of large-capitalization stocks. Past performance
does not guarantee future results.

<PAGE>
PRESIDENT'S LETTER
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[PHOTO]
PAUL A. DOW, CFA
- --------------------------------------------------------------------------------
President
Piper Funds

Paul Dow, Chief Investment Officer, was named CEO of Piper Capital Management
effective October 1, 1997. He has therefore stepped down as one of the lead
portfolio managers for Growth and Income Fund and Balanced Fund.

November 17, 1997
- --------------------------------------------------------------------------------

DEAR SHAREHOLDERS:

An athlete is sometimes said to be "in the zone." That's the time when the
difficult seems easy, the fast seems slow; essentially, the time when everything
comes together and performance soars. For the past few years, the investment
environment has been in the zone. The economy has maintained a steady growth
rate without increasing inflationary pressures. In fact, economic
prognosticators have consistently underestimated growth and overestimated
inflation -- traditionally considered an impossible feat.

This robust economic environment, supplemented by company earnings that have
grown at even faster rates than the economy due to widening profit margins, has
provided extraordinary returns for equity investors. As you can see in the chart
below, the Dow Jones Industrial Average appreciation in recent years has been
far above the normal experience of the past 100 years. In fact, the past 15- and
20-year periods are in the top one percentile of all periods.

The most significant event for the stock market during the funds' fiscal year
was the shift in performance leadership from large stocks to small- and mid-cap
stocks. In the first six months of the fiscal year, small- and mid-cap stock
returns (as measured by S&P's SmallCap 600 and MidCap 400 indexes) were -0.18%
and 4.48%, compared to 11.23% for the S&P 500 Index. In the second half of the
fiscal year, small- and mid-cap stocks surged ahead with returns of 37.22% and
33.13%, compared to 26.25% for large-company stocks.** With this outstanding
performance, small- and midsize company stocks' fiscal year returns through
September 30 closed the gap with large-company stock returns, as shown below. It
appears the prolonged period of only the largest stocks providing the highest
returns has ended, and investors are focusing more on companies selling at
attractive relative values.

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THE DOW JONES INDUSTRIAL AVERAGE
CAPITAL APPRECIATION*
- --------------------------------------------------------------------------------
Median Annualized
Annualized Appreciation for
Appreciation Rolling Periods
as of 8/29/97 Since 1896

3 years 24.9% 5.8%
10 years 11.1% 3.9%
15 years 15.3% 4.1%
20 years 11.5% 3.5%

* The Dow Jones Industrial Average is a price-weighted average of the 30 largest
blue-chip stocks on the New York Stock Exchange. Performance does not include
reinvested dividends. Past performance does not guarantee future results.

Sources: Dow Jones & Company; Crandall, Pierce & Company

TOTAL RETURNS (INCLUDING REINVESTED DISTRIBUTIONS)**
- --------------------------------------------------------------------------------
For the fiscal year ended September 30, 1997

[EDGAR REPRESENTATION OF GRAPH]

S&P SmallCap 600 Index 36.98%
S&P MidCap 400 Index 39.09%
S&P 500 Index 40.45%

The S&P 600, 400 and 500 indexes are unmanaged indexes of small-, mid- and
large-capitalization stocks, respectively. Performance includes no expenses or
transaction charges.

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2 1997 Annual Report - Growth and Income Funds

<PAGE>

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Fixed income investors have also fared well, from a historical perspective, yet
not without setbacks. Fixed income returns have been helped by steadily
declining inflation expectations. Non-government issues have further benefited
from investors' increasing degree of comfort with credit risk. As a result, the
amount of additional yield required by investors to take on credit risk has
declined to levels not seen since the late 1960s. This is a normal occurrence
during a period of economic growth, but is not sustainable permanently.

At this time of high valuations and buoyant investor confidence, it is
particularly important to be watchful of significant changes that may alter the
markets. A negative event in the marketplace would likely bring on a period of
lower performance.

During the past few months, several events developed that could alter the
generally positive condition of the investment environment. The aftermath of the
UPS strike could have an effect on corporate profit margins, as the strength of
labor improves while the labor pool is shrinking. The recently publicized Boeing
and Union Pacific production and transportation backlogs could indicate an
economy that is reaching some stress points. Most significantly, the turmoil in
Asia recently has spread to U.S. markets, causing a high level of volatility.
The decline in Asian currencies and the high level of excess manufacturing
capacity could bring increasing competitive pressures on U.S. companies,
threatening their strong earnings growth. So far, none of these events appear
significant enough to change our overall view of continued slow inflation and a
growing economy. However, the Asian situation is the biggest challenge to "the
zone" yet.

When markets change, it is important to clearly understand, and be disciplined
in, your investment strategy. At Piper Funds, we believe that maintaining sound,
disciplined investment strategies is essential to achieving consistent,
competitive performance in an ever-changing environment. We also believe in
providing a higher level of quality service to shareholders. That means going
the extra step to make sure you understand your investments. Take a look at the
fund prospectus that accompanies this shareholder report. We've revised it to
make it simpler and easier to read. We hope the information in your new
prospectus, and in this shareholder report, is useful to you, and we look
forward to continuing to provide you with exceptional service. Thank you for
your continued confidence in the Piper Funds family.

Sincerely,

/s/ Paul A. Dow

Paul A. Dow
President, Piper Funds

** Past performance does not guarantee future results. Small- and
mid-capitalization stocks are more volatile than stocks of larger companies.
They often involve higher risks because they lack the management expertise,
operating history, financial resources, product diversification and
competitive strengths of larger companies.

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3 1997 Annual Report - Growth and Income Funds
<PAGE>

GROWTH AND INCOME FUND
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[PHOTO]
STEVE MARKUSEN, CFA
shares responsibility for the management of Growth and Income Fund. He has 13
years of financial experience.
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November 17, 1997
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DEAR SHAREHOLDERS:

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997, GROWTH AND INCOME FUND CLASS A
RETURNED 31.87%,* WITH ALL DISTRIBUTIONS REINVESTED, BUT NOT INCLUDING THE
SALES CHARGE. These results were below the 35.76% return for the Lipper
Growth and Income Funds Average.+ Although the fund's investments in the
energy, retail and financial sectors*** performed well, the fund lagged the
Lipper average during the second half of the fiscal year. This was primarily
due to the fund's underexposure to financial stocks, which performed well
during the second half of the fiscal year, and its higher average market
capitalization*** versus the average growth and income fund.

WHILE THE FUND'S RECENT PERFORMANCE IS BELOW OUR GOALS, WE ARE COMMITTED TO
GENERATING CONSISTENT, COMPETITIVE PERFORMANCE OVER A LONGER TERM. Our
investment process involves identifying large, attractively valued companies
that we believe offer above-average earnings and dividend growth potential or
are undervalued in the marketplace. During the past three years, the fund
returned an average annualized 26.61% to class A shareholders (with
distributions reinvested and not including sales charges), compared to a 25.46%
average annualized return for the Lipper average.

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PERFORMANCE THROUGH SEPTEMBER 30, 1997*
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Growth of $10,000 Invested Since Inception

[EDGAR REPRESENTATION OF GRAPH]

Growth and Income Fund S&P 500 Index** Lipper Growth and Income
Class A, reflects the fund's Funds Average+
maximum 4% sales charge
7/92 9,600 10,000 10,000
7/92 9,715 10,000 10,000
8/92 9,504 9,795 9,802
9/92 9,610 9,910 9,917
10/92 9,446 9,945 9,978
11/92 9,677 10,283 10,352
12/92 9,751 10,409 10,523
1/93 9,692 10,496 10,650
2/93 9,789 10,639 10,741
3/93 9,934 10,864 11,028
4/93 9,788 10,601 10,830
5/93 9,983 10,885 11,084
6/93 9,886 10,917 11,141
7/93 9,886 10,873 11,144
8/93 10,218 11,285 11,551
9/93 10,130 11,199 11,551
10/93 10,326 11,431 11,720
11/93 10,287 11,322 11,558
12/93 10,347 11,459 11,824
1/94 10,685 11,848 12,204
2/94 10,377 11,527 11,961
3/94 9,987 11,024 11,472
4/94 10,047 11,165 11,593
5/94 10,267 11,349 11,699
6/94 10,005 11,070 11,437
7/94 10,296 11,434 11,754
8/94 10,598 11,903 12,204
9/94 10,386 11,612 11,930
10/94 10,487 11,873 12,052
11/94 10,214 11,440 11,606
12/94 10,463 11,610 11,725
1/95 10,647 11,911 11,902
2/95 11,076 12,375 12,346
3/95 11,436 12,740 12,656
4/95 11,806 13,116 12,964
5/95 12,289 13,640 13,390
6/95 12,444 13,957 13,683
7/95 12,733 14,419 14,151
8/95 12,815 14,456 14,257
9/95 13,379 15,066 14,703
10/95 13,410 15,012 14,515
11/95 14,093 15,671 15,139
12/95 14,410 15,973 15,378
1/96 14,769 16,516 15,803
2/96 14,790 16,670 16,025
3/96 15,180 16,830 16,220
4/96 15,392 17,078 16,492
5/96 15,731 17,519 16,797
6/96 15,784 17,585 16,754
7/96 15,084 16,808 16,048
8/96 15,338 17,163 16,501
9/96 15,996 18,129 17,256
10/96 16,442 18,629 17,607
11/96 17,533 20,037 18,766
12/96 17,294 19,640 18,567
1/97 18,037 20,867 19,398
2/97 18,082 21,031 19,512
3/97 17,384 20,167 18,821
4/97 17,968 21,371 19,531
5/97 18,942 22,672 20,725
6/97 19,563 23,687 21,536
7/97 21,192 25,570 23,134
8/97 20,148 24,138 22,342
9/97 21,094 25,461 23,479

** An unmanaged index of large-capitalization stocks that includes no expenses
or transaction charges.

+ The average total return, not including sales charges, of similar funds as
characterized by Lipper Analytical Services.

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Class A Average Annualized Total Returns
Includes the fund's maximum 4% front-end sales charge

One Year 26.59%
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Five Year 16.07%
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Since Inception (7/27/92) 15.50%
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Class B and Y Cumulative Total Returns
Class B share returns include the fund's maximum 4% contingent deferred sales
charge. Sales charges do not apply to Class Y shares.

Class B Since Inception (2/18/97) 9.93%
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Class Y Since Inception (2/18/97) 14.51%
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* PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THIS INVESTMENT. PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of
your investment will fluctuate so that fund shares, when sold, may be worth more
or less than their original cost. Neither safety of principal nor stability of
income is guaranteed. During most periods, the fund's advisor waived or paid
certain expenses and/or the fund's distributor voluntarily waived certain 12b-1
fees. Without waivers, returns would have been lower.

All fund and benchmark returns include reinvested distributions.

*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.
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4 1997 Annual Report - Growth and Income Funds
<PAGE>

GROWTH AND INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------

[PHOTO]
BRENT MELLUM, CFA
shares responsibility for the management of Growth and Income Fund. He has three
years of financial experience.
- --------------------------------------------------------------------------------

DURING 1997, THE FUND BENEFITED FROM GOOD STOCK SELECTIONS AS SEVERAL
LARGE-COMPANY HOLDINGS GENERATED STRONG RETURNS. Ford Motor (3.3% of the
fund's total assets as of September 30, 1997) was a strong performer due to a
dramatic earnings increase related to cost cutting in its North American
automotive and international operations as well as investor's focus on the
value of Ford's non-automotive assets. AirTouch Communications (2.4%), a
wireless communications provider, was also a strong contributor as it
continued to grow its subscribers and improve profitability. The Limited
(2.0%), an apparel retailer, produced a strong return due to its growing
specialty concepts and low valuation*** of its core women's apparel division.

ALTHOUGH THE FUND WAS UNDERWEIGHTED*** IN TECHNOLOGY AND FINANCIAL STOCKS, THE
FUND'S ADDITIONS TO THESE SECTORS DURING 1997 ADDED TO THE FUND'S PERFORMANCE.
As we wrote in the semiannual report to shareholders, we began looking for
attractively priced stocks in the technology area following sharp price declines
as investors became concerned about near-term earnings growth. We purchased
Compaq Computer (1.9%), Hewlett Packard (2.2%) and International Business
Machines (2.6%). These companies were attractively valued and offered long-term
earnings and dividend growth potential. Compaq Computer, in particular,
generated excellent appreciation as earnings increased due to strong PC unit
growth and higher profit margins. We also added to financial stocks because they
offered above-average, long-term dividend growth potential and were selling at
relatively low valuations. Stocks that we purchased in this area included
Associates First Capital (1.3%), U.S. Bancorp (2.0%) and General Re Corp.
(1.4%).

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PORTFOLIO COMPOSITION BY SECTOR
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As a percentage of total assets on September 30, 1997
- --------------------------------------------------------------------------------

[EDGAR REPRESENTATION OF GRAPH]

Growth and Income Fund S&P 500 Index**

Basic Materials 8% 6%
Capital Goods & Services 9% 10%
Commercial Services 0% 1%
Consumer Durables 5% 3%
Consumer Non-Durables 8% 11%
Consumer Services 1% 4%
Energy 13% 9%
Financial Services 14% 16%
Health Care 8% 11%
Retail Trade 6% 5%
Short-Term 3% 0%
Technology 13% 14%
Transportation 2% 1%
Utilities 9% 9%
Other Assets 1% 0%

** An unmanaged index of large-capitalization stocks that includes no expenses
or transaction charges.

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TOP 10 EQUITY HOLDINGS
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As a percentage of total assets on September 30, 1997

1 Ford Motor 3.3%
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2 General Electric 2.8%
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3 Exxon 2.7%
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4 International Business Machines 2.6%
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5 Intel 2.5%
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6 BankAmerica 2.5%
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7 AirTouch Communications 2.4%
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8 Baker Hughes 2.4%
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9 Schlumberger Limited 2.3%
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10 Abbott Laboratories 2.3%
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*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.

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5 1997 Annual Report - Growth and Income Funds
<PAGE>

GROWTH AND INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------

WE BELIEVE THE FUND WILL CONTINUE TO BENEFIT FROM ITS OVERWEIGHTING*** IN THE
ENERGY SECTOR. We expect this sector to experience strong demand growth and
limited supply expansion during the next several years. These positive
supply/demand fundamentals should allow many of these companies to operate at
high utilization rates which would expand profit margins and generate
above-average earnings growth. Major energy companies, including Exxon (2.7%)
and Texaco (2.1%), are attractively valued given this outlook and provide
income to the fund due to above-average dividend yields. ***We also have a
good representation in the oil service sector by owning Schlumberger (2.3%)
and Baker Hughes (2.4%). Both companies should benefit from increased
exploration and production activity to meet rising energy demand.

LOOKING FORWARD, WE BELIEVE THE ECONOMY WILL EXPAND MODERATELY AND INFLATION
WILL REMAIN AT RELATIVELY LOW LEVELS. This is an ideal environment for
stocks; however, we are cautious about the near-term outlook for the market.
Our caution is due to high returns during the last several years along with
high valuations in certain sectors of the market and the increase in
volatility in recent months. We believe the fund is positioned appropriately
in this environment. Our investment process continues to focus on identifying
companies with above-average earnings and dividend growth potential that sell
at attractive valuations or companies that are undervalued in the
marketplace. We feel this process will deliver consistent, competitive
performance and fulfill the fund's investment objective of current income and
growth of capital and income.

Thank you for your investment in Growth and Income Fund. We appreciate the
opportunity to manage your assets and help you pursue your long-term investment
goals.

Sincerely,

/s/ Steve Markusen /s/ Brent Mellum

Steve Markusen Brent Mellum
Portfolio Manager Portfolio Manager

*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.

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6 1997 Annual Report - Growth and Income Funds
<PAGE>

BALANCED FUND
- --------------------------------------------------------------------------------

[PHOTO]
DAVID STEELE
shares responsibility for the management of the fixed income portion of Balanced
Fund. He has 18 years of financial experience.
- --------------------------------------------------------------------------------

November 17, 1997
- --------------------------------------------------------------------------------

DEAR SHAREHOLDERS:

FOR THE ONE-YEAR PERIOD ENDED SEPTEMBER 30, 1997, BALANCED FUND CLASS A
REGISTERED A 20.24%* TOTAL RETURN WITH ALL DISTRIBUTIONS REINVESTED, BUT NOT
INCLUDING THE SALES CHARGE. The fund underperformed the Lipper Balanced Funds
Average,++ which gained 24.03%, due to our decision to maintain a 50%/50% blend
of stocks and bonds during the period. We believe other balanced funds in the
group had as much as 60% in stocks. Our more conservative investment approach
was based on our assessment that bonds were attractively valued,*** relative to
stocks. This allocation helped protect the fund against risk when stocks came
under pressure in March and August due to fears of higher inflation. We continue
to believe this allocation strategy will benefit the fund in the prevailing
volatile stock market environment.

WHILE OUR CONSERVATIVE ALLOCATION STRATEGY DETRACTED FROM THIS YEAR'S
PERFORMANCE, SEVERAL LARGE-COMPANY HOLDINGS GENERATED STRONG RESULTS. General
Electric (1.2% of the fund's total assets at September 30, 1997) registered
strong returns due to rising earnings as the company benefited from global
economic strength and expanded profit margins. AirTouch Communications (1.5%), a
wireless communications provider, continued to increase its subscribers and
improve profitability, leading to

[EDGAR REPRESENTATION OF GRAPH]

Balanced Fund Lehman Brothers S&P 500 Index+ Lipper Balanced
Class A, reflects the Government Funds Average++
fund's maximum Corporate Index**
4% sales charge

** An unmanaged index of U.S. government
and Treasury securities and investment-grade corporate debt securities that
includes no expenses or transaction charges.

+ An unmanaged index of large-capitalization stocks that includes no expenses
or transaction charges.

++ The average total return, not including sales charges, of similar funds as
characterized by Lipper Analytical Services.

- --------------------------------------------------------------------------------
Class A Average Annualized Total Returns
Includes the fund's maximum 4% front-end sales charge

One Year 15.43%
- --------------------------------------------------------------------------------
Five Year 11.15%
- --------------------------------------------------------------------------------
Ten Year 10.00%
- --------------------------------------------------------------------------------
Since Inception (3/16/87) 9.46%
- --------------------------------------------------------------------------------

Class B Cumulative Total Returns
Includes the fund's maximum 4% contingent deferred
sales charge

Since Inception (2/18/97) 5.08%
- --------------------------------------------------------------------------------

All fund and benchmark returns include reinvested distributions.

- --------------------------------------------------------------------------------

7 1997 Annual Report - Growth and Income Funds
<PAGE>

BALANCED FUND (CONTINUED)
- --------------------------------------------------------------------------------

[PHOTO]
STEVE MARKUSEN, CFA
is primarily responsible for the management of the equity portion of Balanced
Fund. He has 13 years of financial experience.
- --------------------------------------------------------------------------------

excellent appreciation. Carnival (0.9%), the world's largest operator of
pleasure cruises, registered strong gains due to increased capacity and profit
margins that pushed earnings higher.

OUR DECISION TO OVERWEIGHT*** ENERGY STOCKS CONTRIBUTED FAVORABLY TO THE FUND'S
PERFORMANCE. Energy stocks fared well primarily because of increased demand and
limited supply expansion that pushed earnings higher. The fund enjoyed solid
investment results from some of its top holdings in this sector,*** most notably
Exxon (1.1%), the world's leading oil company, Transocean Offshore (1.0%), a
deep water exploration company, and Schlumberger (2.2%), the world's leading oil
services company. We believe the positive supply/demand scenario will continue
during the next 12 months. This should allow energy companies to increase
earnings, leading to enhanced stock performance.

THE FUND ALSO BENEFITED FROM ITS INCREASED EXPOSURE TO HOLDINGS IN THE FINANCIAL
AND TECHNOLOGY SECTORS DURING 1997. Purchases in the financial sector included
American International Group (0.8%) and U.S. Bancorp (0.8%). Both companies
continued to increase earnings as valuations*** remained attractive. U.S.
Bancorp, after its merger with First Bank Systems, has a bright outlook due to
cost reductions and revenue enhancements that we expect as a result of the
merger. Technology stocks experienced a substantial price correction*** during
the first part of 1997 that allowed us to buy at attractive prices. Stocks the
fund purchased included International Business Machines (1.1%), Compaq Computer
(0.9%) and Oracle (0.6%). These companies should benefit from rising technology
use.

THE PERFORMANCE OF THE BOND PORTION OF THE FUND BENEFITED FROM OUR STRATEGIC
DECISIONS THROUGHOUT THE FISCAL YEAR. Early in the period, we realized strong
performance due to our overweighted position in mortgage-backed securities,
which outperformed the bond market. Our decision to overweight the fund in
corporate bonds later in the fiscal year also helped performance, as these
securities recorded above-average investment results during the last three
months of the period. Also contributing to the

- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------

As a percentage of total assets on September 30, 1997

STOCKS 51% BONDS 48%

Basic Materials 4% U.S. Treasury Securities 14%

Capital Goods & Services 5% Corporate Bonds 14%

Consumer Durables 2% U.S. Agency Fixed Rate
Mortgage-Backed Securities 6%

Consumer Non-Durables 4% U.S. Agency Adjustable Rate
Mortgage-Backed Securities 1%

Consumer Services 1% Private Fixed Rate CMOs 3%

Energy 7% U.S. Agency CMOs 2%

Financial Services 8% Asset-Backed Securities 2%

Health Care 5% U.S. Agency Fixed Debentures 6%

Retail Trade 3% OTHER ASSETS 1%

Technology 7%

Transportation 1%

Utilities 4%

TOP 10 EQUITY HOLDINGS
- --------------------------------------------------------------------------------
As a percentage of total assets on September 30, 1997

1 Schlumberger Limited 2.2%
- --------------------------------------------------------------------------------
2 Norwest 2.1%
- --------------------------------------------------------------------------------
3 FNMA (Fannie Mae) 2.0%
- --------------------------------------------------------------------------------
4 Merck & Co. 1.8%
- --------------------------------------------------------------------------------
5 AirTouch Communications 1.5%
- --------------------------------------------------------------------------------
6 Sears, Roebuck and Co. 1.4%
- --------------------------------------------------------------------------------
7 AlliedSignal 1.4%
- --------------------------------------------------------------------------------
8 Burlington Northern Santa Fe 1.4%
- --------------------------------------------------------------------------------
9 Baker Hughes 1.3%
- --------------------------------------------------------------------------------
10 Procter & Gamble 1.3%
- --------------------------------------------------------------------------------

*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.

- --------------------------------------------------------------------------------

8 1997 Annual Report - Growth and Income Funds
<PAGE>

BALANCED FUND (CONTINUED)
- --------------------------------------------------------------------------------

[PHOTO]
BRUCE SALVOG
shares responsibility for the management of the fixed income portion of Balanced
Fund. He has 27 years of financial experience.
- --------------------------------------------------------------------------------

fund's performance was our decision to maintain a neutral-to-defensive effective
duration*** compared to our benchmark when interest rates rose in March. On
March 25, the Federal Reserve raised short-term interest rates for the first
time in two years in a pre-emptive strike against inflation. By late April, long
Treasury yields had risen above 7%, so we adopted a more aggressive duration
posture. That decision proved beneficial as rates declined during ensuing
months.

OUR OUTLOOK FOR THE STOCK AND BOND MARKETS IS CAUTIOUSLY OPTIMISTIC. The
economic and corporate environment for equities couldn't be better,
considering inflation is under control and corporate profits, on balance,
have been good. But stock market valuations are at historically high levels,
which could become a problem for stock prices should inflation exceed
analysts' expectations and corporate profits begin to weaken. As for bonds,
the continuing threat of another rate hike by the Federal Reserve may cause
yields to rise in the near-term. But we believe bonds, in general, are fairly
valued and should continue to perform well in the coming months. Given this
forecast, we expect to maintain our 50%/50% asset allocation,*** focusing
primarily on high-quality stocks that meet our strict investment criteria and
bonds that are attractively priced compared to other fixed income securities.
Since we believe inflation will remain under control, we intend to increase
the fund's duration compared to its benchmark if interest rates move
significantly higher in the near term.

Thank you for your investment in Balanced Fund. We remain committed to providing
you with quality service and look forward to helping you achieve your financial
goals.

Sincerely,

/s/ David Steele /s/ Steve Markusen /s/ Bruce Salvog

David Steele Steve Markusen Bruce Salvog
Portfolio Manager Portfolio Manager Portfolio Manager

*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.

- --------------------------------------------------------------------------------

9 1997 Annual Report - Growth and Income Funds

<PAGE>
Financial Statements

- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES September 30, 1997
................................................................................

<TABLE>
<CAPTION>
GROWTH AND
INCOME BALANCED
FUND FUND
------------- ------------
<S> <C> <C>
ASSETS:
Investments in securities at market value* (note 2)
(including repurchase agreements of $5,019,000 and
$142,000, respectively) .................................. $144,173,744 $48,663,406
Cash in bank on demand deposit ............................. 30,030 257,954
Receivable for investment securities sold .................. 619,704 --
Receivable for fund shares sold ............................ 338,944 33,485
Dividends and accrued interest receivable .................. 161,846 329,998
------------- ------------
Total assets ............................................. 145,324,268 49,284,843
------------- ------------

LIABILITIES:
Payable for investment securities purchased ................ 2,934,179 --
Payable for fund shares redeemed ........................... 371,848 332,272
Accrued investment management fee .......................... 83,312 30,158
Accrued distribution and service fees ...................... 35,898 13,692
Other accrued expenses ..................................... 5,053 --
------------- ------------
Total liabilities ........................................ 3,430,290 376,122
------------- ------------
Net assets applicable to outstanding capital stock ....... $141,893,978 $48,908,721
------------- ------------
------------- ------------

COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital ............... $ 83,026,903 $34,276,471
Undistributed net investment income ........................ 3,184 16,482
Accumulated net realized gain on investments ............... 12,178,065 3,100,699
Unrealized appreciation of investments ..................... 46,685,826 11,515,069
------------- ------------

Total - representing net assets applicable to outstanding
capital stock .......................................... $141,893,978 $48,908,721
------------- ------------
------------- ------------

* Investments in securities at identified cost ........... $ 97,487,918 $37,148,337
------------- ------------
------------- ------------

NET ASSET VALUE AND OFFERING PRICE:
CLASS A (NOTE 1):
Net assets ............................................... $127,063,830 $48,871,577
Shares outstanding (authorized four billion shares of
$0.01 par value): ...................................... 6,917,087 3,145,651
Net asset value .......................................... $ 18.37 $ 15.54
Maximum offering price per share (net asset value plus 4%
of offering price) ..................................... $ 19.14 $ 16.19
CLASS B:
Net assets ............................................... $ 904,550 $ 37,144
Shares outstanding (authorized two billion shares of $0.01
par value): ............................................ 49,355 2,395
Net asset value and offering price per share ............. $ 18.33 $ 15.51
CLASS Y:
Net assets ............................................... $ 13,925,598 --
Shares outstanding (authorized one billion shares of $0.01
par value): ............................................ 758,360 --
Net asset value and offering price per share ............. $ 18.36 --
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- --------------------------------------------------------------------------------

10 1997 Annual Report - Growth and Income
Funds
<PAGE>
Financial Statements (continued)
- --------------------------------------------------------------------------------

STATEMENTS OF OPERATIONS For the Year Ended September 30,
1997
................................................................................

<TABLE>
<CAPTION>
GROWTH AND
INCOME BALANCED
FUND FUND
------------ -------------
<S> <C> <C>
INCOME:
Dividends (net of foreign withholding taxes of $4,736 and
$740, respectively) ...................................... $ 2,368,529 $ 414,742
Interest ................................................... 383,536 1,631,148
------------ -------------

Total income ............................................. 2,752,065 2,045,890
------------ -------------

EXPENSES (NOTE 5):
Investment management fee .................................. 901,743 362,819
Distribution and service fees:
CLASS A .................................................. 582,629 241,820
CLASS B .................................................. 2,863 154
CLASS Y .................................................. -- --
Custodian and accounting fees .............................. 108,170 62,395
Transfer agent and dividend disbursing agent fees .......... 87,377 51,452
Registration fees .......................................... 52,697 36,653
Reports to shareholders .................................... 35,892 28,238
Amortization of organization costs ......................... 13,225 --
Directors' fees ............................................ 7,968 7,968
Audit and legal fees ....................................... 37,989 37,989
Other expenses ............................................. 13,348 9,126
------------ -------------
Total expenses ........................................... 1,843,901 838,614
Less Class A expenses waived by the distributor ........ (186,386) (77,389)
Less expenses waived by the adviser .................... (34,832) (110,881)
------------ -------------

Net expenses before expenses paid indirectly ............. 1,622,683 650,344
Less expenses paid indirectly .......................... (33) (187)
------------ -------------

Total net expenses ....................................... 1,622,650 650,157
------------ -------------

Net investment income .................................... 1,129,415 1,395,733
------------ -------------

NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain on investments (note 3) .................. 13,015,004 3,266,517
Net realized loss on closed or expired option contracts
written (note 2) ......................................... (181,637) --
------------ -------------

Net realized gain on investments ......................... 12,833,367 3,266,517
Net change in unrealized appreciation or depreciation of
investments .............................................. 19,936,662 4,157,249
------------ -------------

Net gain on investments .................................. 32,770,029 7,423,766
------------ -------------

Net increase in net assets resulting from operations ... $33,899,444 $ 8,819,499
------------ -------------
------------ -------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- --------------------------------------------------------------------------------

11 1997 Annual Report - Growth and Income
Funds
<PAGE>
Financial Statements (continued)
- --------------------------------------------------------------------------------

STATEMENTS OF CHANGES IN NET ASSETS
................................................................................

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND BALANCED FUND
---------------------------- ---------------------------
Year Ended Year Ended Year Ended Year Ended
9/30/97 9/30/96 9/30/97 9/30/96
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 1,129,415 $ 1,078,923 $ 1,395,733 $ 1,440,045
Net realized gain on investments ........................... 12,833,367 6,012,377 3,266,517 2,867,497
Net change in unrealized appreciation or depreciation of
investments .............................................. 19,936,662 7,464,585 4,157,249 28,858
------------- ------------ ------------ ------------

Net increase in net assets resulting from operations ..... 33,899,444 14,555,885 8,819,499 4,336,400
------------- ------------ ------------ ------------

DISTRIBUTIONS TO SHAREHOLDERS:
CLASS A:
From net investment income ............................... (1,123,538) (1,181,927) (1,402,111) (1,452,108)
From net realized gains .................................. (6,538,320) (996,506) (2,554,492) (1,746,546)
CLASS B:
From net investment income ............................... (1,110) -- (433) --
From net realized gains .................................. -- -- -- --
CLASS Y:
From net investment income ............................... (70,694) -- -- --
From net realized gains .................................. -- -- -- --
------------- ------------ ------------ ------------
Total distributions ...................................... (7,733,662) (2,178,433) (3,957,036) (3,198,654)
------------- ------------ ------------ ------------

CAPITAL SHARE TRANSACTIONS (NOTE 4):
CLASS A .................................................... 4,970,887 11,428,192 (1,431,461) 313,697
CLASS B .................................................... 827,747 -- 34,648 --
CLASS Y .................................................... 12,692,933 -- -- --
------------- ------------ ------------ ------------
Increase (decrease) in net assets from capital share
transactions ........................................... 18,491,567 11,428,192 (1,396,813) 313,697
------------- ------------ ------------ ------------
Total increase in net assets ............................. 44,657,349 23,805,644 3,465,650 1,451,443

Net assets at beginning of year ............................ 97,236,629 73,430,985 45,443,071 43,991,628
------------- ------------ ------------ ------------

Net assets at end of year .................................. $141,893,978 $ 97,236,629 $ 48,908,721 $ 45,443,071
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------

Undistributed net investment income ........................ $ 3,184 $ 61,629 $ 16,482 $ 24,113
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- --------------------------------------------------------------------------------

12 1997 Annual Report - Growth and Income
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 Growth and Income Fund
and Balanced Fund (the funds). Each fund is classified as
a diversified series. The company's articles of
incorporation permit the board of directors to create
additional series in the future.

The funds commenced offering Class B shares and Growth and
Income Fund commenced offering Class Y shares on February
18, 1997. All shares existing prior to that date were
classified as Class A shares. Key features of each class
are:

CLASS A:
- Subject to a front-end sales charge

- Lower distribution and service fees than Class B

CLASS B:
- No front-end sales charge

- Subject to a contingent deferred sales charge upon
redemption

- Higher distribution and service fees than Class A

- Automatic conversion to Class A shares at the beginning
of the sixth calendar year after issuance

CLASS Y:
- Requires a minimum initial investment of $1 million

- No front-end or contingent deferred sales charges

- No distribution and service fees

The classes of shares have the same rights and are
identical in all respects except that each class bears
different distribution expenses, has exclusive voting
rights with respect to matters affecting that class and
has different exchange privileges.

Growth and Income Fund invests primarily in stocks of
large, established companies that appear undervalued and
potentially offer long-term dividend and earnings growth.
The fund may also invest in debt securities including U.S.
government securities and nonconvertible preferred stock.

Balanced Fund invests in both common stocks and fixed
income securities that appear to have some potential for
capital appreciation.

(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
................................
INVESTMENTS IN SECURITIES
Portfolio securities for which market quotations are
readily available are valued at current market value. If
market quotations or valuations are not available, or if
such quotations or valuations are believed to be
inaccurate, unreliable or not reflective of market value,
portfolio securities are valued

- --------------------------------------------------------------------------------

13 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
according to procedures adopted by the funds' board of
directors in good faith at 'fair value', that is, a price
that the fund might reasonably expect to receive for the
security or other asset upon its current sale.

The current market value of certain fixed income
securities is provided by an independent pricing service.
Fixed income securities for which prices are not available
from an independent pricing service but where an active
market exists are valued using market quotations obtained
from one or more dealers that make markets in the
securities or from a widely-used quotation system.
Short-term securities with maturities of 60 days or less
are valued at amortized cost, which approximates market
value.

Exchange-traded options are valued at the last sales price
on the exchange prior to the time when assets are valued.
If no sales were reported that day, the options will be
valued at the mean between the current closing bid and
asked prices. Over-the-counter options are valued using
market quotations obtained from broker-dealers. Financial
futures are valued at the last settlement price
established each day by the board of trade or exchange on
which they are traded.

Pricing services value domestic and foreign equity
securities (and occasionally fixed-income securities)
traded on a securities exchange or Nasdaq at the last
reported sale price, up to the time of valuation. If there
are no reported sales of a security on the valuation date,
it is valued at the mean between the published bid and
asked prices reported by the exchange or Nasdaq. If there
are no sales and no published bid and asked quotations for
a security on the valuation date or the security is not
traded on an exchange or Nasdaq, the pricing service may
obtain market quotations directly from broker-dealers.

Securities transactions are accounted for on the date
securities are purchased or sold. Realized gains and
losses are calculated on the identified-cost basis.
Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond discount
and premium, is recorded on an accrual basis.

OPTIONS TRANSACTIONS
For hedging purposes, the funds may buy and sell put and
call options, write covered call options on portfolio
securities and write cash-secured puts. The risk in
writing a call option is that the funds give up the
opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the
funds may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying
an option is that the funds pay a premium whether or not
the option is exercised. The funds also have the
additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.

Option contracts are valued daily and unrealized
appreciation or depreciation is recorded. The funds will
realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the
proceeds on the sale of a written call option, the
purchase cost of a written put option, or the cost of a
security for purchased put and call options is adjusted by
the amount of premium received or paid.

- --------------------------------------------------------------------------------

14 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

The number of contracts and premium amounts associated
with call option contracts written during the year ended
September 30, 1997, for Growth and Income Fund were as
follows:

<TABLE>
<CAPTION>
CALL OPTIONS
----------------------
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ----------
<S> <C> <C>
Balance at September 30, 1996 .......... 230 $ 55,993
Opened ............................... -- --
Closed ............................... (230) (55,993)
--------- ----------
Balance at September 30, 1997 .......... -- $ --
--------- ----------
--------- ----------
</TABLE>

FUTURES TRANSACTIONS
For hedging purposes, the funds may buy and sell financial
futures contracts and related options. Risks of entering
into futures contracts and related options include the
possibility that there may be an illiquid market and that
a change in the value of the contract or option may not
correlate with changes in the value of the underlying
securities.

Upon entering into a futures contract, the funds are
required to deposit either cash or securities in an amount
(initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are
made or received by the funds each day. The variation
margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains and
losses. The funds recognize a realized gain or loss when
the contract is closed or expires.

SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have been
purchased by the funds on a when-issued or
forward-commitment basis can take place a month or more
after the transaction date. During this period, such
securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to
their delivery. The funds segregate, with their custodian,
assets with a market value equal to the amount of their
purchase commitments. The purchase of securities on a
when-issued or forward-commitment basis may increase the
volatility of the funds' net asset value if the funds make
such purchases while remaining substantially fully
invested. As of September 30, 1997, the funds had no
outstanding when-issued or forward-commitments.

FEDERAL TAXES
Each fund is treated separately for federal income tax
purposes. Each fund intends to comply with the
requirements of the Internal Revenue Code applicable to
regulated investment companies and not be subject to
federal income tax. Therefore, no income tax provision is
required. The funds also intend to distribute their
taxable net investment income and realized gains, if any,
to avoid the payment of any federal excise taxes.

Net investment income and net realized gains (losses) may
differ for financial statement and tax purposes primarily
because of losses deferred due to "wash sale" and
"straddle" transactions and the non-deductibility of
amortization of organization costs.

- --------------------------------------------------------------------------------

15 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

The character of distributions made during the year from
net investment income or net realized gains may differ
from its ultimate characterization for federal income tax
purposes. In addition, due to the timing of dividend
distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or
realized gains (losses) were recorded by the funds.

On the statements of assets and liabilities, as a result
of permanent book-to-tax differences, reclassification
adjustments have been made as follows:

<TABLE>
<CAPTION>
GROWTH AND
INCOME BALANCED
FUND FUND
----------- ---------
<S> <C> <C>
Undistributed Net Investment Income .... $ 7,482 $(820)
Accumulated Net Realized Gains ......... $ -- $ 820
Additional Paid-In Capital ............. $(7,482) $ --
</TABLE>

DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income
are declared separately for each class and paid quarterly.
Net realized gains distributions, if any, will be made at
least annually. Distributions are payable in cash or
reinvested in additional shares of the same class.

REPURCHASE AGREEMENTS
For repurchase agreements entered into with certain
broker-dealers, the funds, along with other affiliated
registered investment companies, may transfer uninvested
cash balances to a joint trading account, the daily
aggregate of which is invested in repurchase agreements
secured by U.S. government or agency obligations.
Securities pledged as collateral for all individual and
joint repurchase agreements are held by the funds'
custodian bank until maturity of the repurchase agreement.
Provisions for all agreements ensure that the daily market
value of the collateral is in excess of the repurchase
amount, including accrued interest, to protect the funds
in the event of a default.

ORGANIZATION COSTS
Organization costs were incurred in connection with the
start up and initial registration of the funds. 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 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.

ALLOCATION OF INCOME, EXPENSES AND GAINS(LOSSES)
Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Class-specific expenses, which include distribution and
service fees, are charged directly to such class.

- --------------------------------------------------------------------------------

16 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

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,
other than temporary investments in short-term securities,
for the year ended September 30, 1997, were as follows:

<TABLE>
<CAPTION>
GROWTH
AND INCOME BALANCED
FUND FUND
----------- -----------
<S> <C> <C>
Purchases .............................. $66,324,139 $19,789,668
Proceeds from sales .................... $53,278,300 $23,480,600
</TABLE>

(4) CAPITAL SHARE
TRANSACTIONS
................................
Capital share transactions for the funds were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997(A) SEPTEMBER 30, 1996
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
GROWTH AND INCOME FUND:
CLASS A
Sales of fund shares ................. 2,164,442 $ 33,710,309 1,318,710 $ 18,689,037
Issued for reinvested
distributions ...................... 483,550 7,152,088 156,296 2,178,416
Issued in connection with the merger
of Hercules ........................
North American Growth and Income Fund
(Note 6) ........................... -- -- 494,086 7,333,808
Redemptions of fund shares ........... (1,460,532) (23,640,495) (1,183,011) (16,773,069)
Redemptions in exchange for Class Y
shares ............................. (734,641) (12,251,015) -- --
---------- ------------ ---------- ------------
452,819 $ 4,970,887 786,081 $ 11,428,192
---------- ------------ ---------- ------------
CLASS B
Sales of fund shares ................. 51,933 $ 869,013
Issued for reinvested
distributions ...................... 66 1,105
Redemptions of fund shares ........... (2,644) (42,371)
---------- ------------
49,355 $ 827,747
---------- ------------
CLASS Y
Sales of fund shares ................. 149,097 $ 2,539,485
Sales in exchange from Class A
shares ............................. 734,994 12,251,015
Issued for reinvested
distributions ...................... 4,142 70,694
Redemptions of fund shares ........... (129,873) (2,168,261)
---------- ------------
758,360 $ 12,692,933
---------- ------------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997(A) SEPTEMBER 30, 1996
------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ -------- ------------
<S> <C> <C> <C> <C>
BALANCED FUND:
CLASS A
Sales of fund shares ................. 819,933 $ 11,658,196 671,093 $ 9,367,148
Issued for reinvested
distributions ...................... 269,167 3,740,957 231,008 3,199,026
Redemptions of fund shares ........... (1,170,542) (16,830,614) (877,520) (12,252,477)
---------- ------------ -------- ------------
(81,442) $ (1,431,461) 24,581 $ 313,697
---------- ------------ -------- ------------
CLASS B
Sales of fund shares ................. 2,366 $ 34,215
Issued for reinvested
distributions ...................... 29 433
---------- ------------
2,395 $ 34,648
---------- ------------
</TABLE>

(a) REPRESENTS PERIOD FROM FEBRUARY 18 (COMMENCEMENT OF OFFERING OF SHARES) TO
SEPTEMBER 30, 1997, FOR CLASS B AND CLASS Y.

- --------------------------------------------------------------------------------

17 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

Sales charges received by Piper Jaffray Inc. (Piper
Jaffray), the funds' distributor, for distributing the
funds' shares for the year ended September 30, 1997, were
as follows:

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND BALANCED FUND
---------------------------- ---------------------
CLASS A CLASS B CLASS Y CLASS A CLASS B
------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Front-end sales charges ................ $80,683 $-- $-- $ 10,581 $--
Contingent deferred sales charges ...... 10,720 -- -- 1,879 --
------- --- --- ---------- ---
$91,403 $-- $-- $ 12,460 $--
------- --- --- ---------- ---
------- --- --- ---------- ---
</TABLE>

(5) EXPENSES
................................
INVESTMENT MANAGEMENT FEE
The company has entered into an investment management
agreement with Piper Capital Management Incorporated
(Piper Capital) under which Piper Capital manages each
fund's assets and furnishes related office facilities,
equipment, research and personnel. The agreement requires
each fund to pay Piper Capital a monthly fee based on
average daily net assets. The fee for each fund is equal
to an annual rate of 0.75% of the first $100 million in
net assets, 0.65% of the next $200 million and decreasing
percentages thereafter to 0.50% of net assets in excess of
$500 million. For the year ended September 30, 1997, the
effective investment management fee paid by the funds was
0.73% and 0.75% on an annual basis for Growth and Income
Fund and Balanced Fund, respectively.

DISTRIBUTION AND SERVICE FEES
Each fund also pays Piper Jaffray fees accrued daily and
paid quarterly for providing shareholder services and
distribution-related services. The fees for each class,
which are being voluntarily limited for Class A for the
year ended September 30, 1997, are stated below as a
percent of average daily net assets attributable to such
shares.

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND BALANCED FUND
--------------------------- -----------------
CLASS A CLASS B CLASS Y CLASS A CLASS B
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Distribution fee ....................... 0.25% 0.75% -- 0.25% 0.75%
Service fee ............................ 0.25% 0.25% -- 0.25% 0.25%
--
------- ------- ------- -------
Total distribution and service fees .... 0.50% 1.00% -- 0.50% 1.00%
--
--
------- ------- ------- -------
------- ------- ------- -------
Total distribution and service fees
after voluntary limitation ........... 0.34% 1.00% -- 0.34% 1.00%
--
--
------- ------- ------- -------
------- ------- ------- -------
</TABLE>

SHAREHOLDER ACCOUNT SERVICING FEES
The company has also entered into shareholder account
servicing agreements under which Piper Jaffray and Piper
Trust Company (Piper Trust) perform various transfer and
dividend disbursing agent services for accounts held at
the respective company. The fees, which are paid monthly
to Piper Jaffray and Piper Trust for providing these
services, are equal to an annual rate of $6.00 per active
shareholder account and $1.60 per closed account. For the
year ended September 30, 1997, Piper Jaffray and Piper
Trust received the following amounts in connection with
the shareholder account servicing agreements:

<TABLE>
<CAPTION>
GROWTH AND
INCOME FUND BALANCED FUND
------------ --------------
<S> <C> <C>
Piper Jaffray .......................... $58,500 $16,141
Piper Trust ............................ 2,843 11,429
------------ --------------
$61,343 $27,570
------------ --------------
------------ --------------
</TABLE>

- --------------------------------------------------------------------------------

18 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

OTHER FEES AND EXPENSES
In addition to the investment management, distribution and
shareholder account servicing fees, each fund is
responsible for paying most other operating expenses
including: outside directors' fees and expenses; custodian
fees; registration fees; printing and shareholder reports;
transfer agent fees and expenses; legal, auditing and
accounting services; insurance; interest; taxes and other
miscellaneous expenses. For the year ended September 30,
1997, Piper Capital voluntarily limited total fees and
expenses for Growth and Income Fund to annual rates of
1.34%, 2.0% and 1.0% of average daily net assets
attributable to such shares for Class A, Class B and Class
Y, respectively, and for Balanced Fund to annual rates of
1.34% and 2.0% of average daily net assets attributable to
such shares for Class A and Class B, respectively.

Expenses paid indirectly represent a reduction of
custodian fees for earnings on miscellaneous cash balances
maintained by the funds.

(6) MERGER
................................
On June 21, 1996, the net assets of Hercules North
American Growth and Income Fund were acquired in a
tax-free merger. Growth and Income Fund issued 494,086
shares in exchange for net assets of $7,333,808 of
Hercules North American Growth and Income Fund. Included
in the net assets acquired was $1,114,581 in unrealized
appreciation. The aggregate net assets of the combined
fund following the transaction totaled $96,447,398.

- --------------------------------------------------------------------------------

19 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

(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:

GROWTH AND INCOME FUND

<TABLE>
<CAPTION>
CLASS A
----------------------------------------
Year Ended September 30,
----------------------------------------
1997 1996 1995 1994 1993
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 15.04 $ 12.93 $10.27 $10.30 $10.01
------- ------- ------ ------ ------
Operations:
Net investment income ................ 0.15 0.18 0.19 0.24 0.24
Net realized and unrealized gains on
investments ........................ 4.35 2.31 2.70 0.02 0.29
------- ------- ------ ------ ------
Total from operations .............. 4.50 2.49 2.89 0.26 0.53
------- ------- ------ ------ ------
Distributions to shareholders:
From net investment income ........... (0.16) (0.20) (0.19) (0.24) (0.24)
From net realized gains .............. (1.01) (0.18) (0.04) (0.05) --
------- ------- ------ ------ ------
Total distributions to
shareholders ..................... (1.17) (0.38) (0.23) (0.29) (0.24)
------- ------- ------ ------ ------
Net asset value, end of period ......... $ 18.37 $ 15.04 $12.93 $10.27 $10.30
------- ------- ------ ------ ------
------- ------- ------ ------ ------
SELECTED INFORMATION
Total return (a) ....................... 31.87% 19.56% 28.81% 2.53% 5.41%
Net assets at end of period (in
millions) ............................ $ 127 $ 97 $ 73 $ 73 $ 96
Ratio of expenses to average daily net
assets ............................... 1.34% 1.32% 1.32% 1.29% 1.32%
Ratio of net investment income to
average daily net assets ............. 0.90% 1.26% 1.93% 2.26% 2.51%
Average commission rate paid on
portfolio transactions (b) ........... $0.0600 $0.0600 n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities) ............... 46% 22% 14% 20% 26%
Ratios before waivers by the adviser and
distributor:
Ratio of expenses to average daily net
assets before waivers .............. 1.52% 1.56% 1.60% 1.62% 1.58%
Ratio of net investment income to
average daily net assets before
waivers ............................ 0.72% 1.02% 1.65% 1.93% 2.25%
</TABLE>

<TABLE>
<CAPTION>
CLASS B CLASS Y
------------------------- -------------------------
Period Ended Period Ended
September 30, 1997(c) September 30, 1997(c)
------------------------- -------------------------
<S> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 16.14 $ 16.14
---------- ----------
Operations:
Net investment income ................ 0.03 0.12
Net realized and unrealized gains on
investments ........................ 2.21 2.21
---------- ----------
Total from operations .............. 2.24 2.33
---------- ----------
Distributions to shareholders:
From net investment income ........... (0.05) (0.11)
---------- ----------
Net asset value, end of period ......... $ 18.33 $ 18.36
---------- ----------
---------- ----------
SELECTED INFORMATION
Total return (a) ....................... 13.93% 14.51%
Net assets at end of period (in
thousands and millions for Class B and
Class Y, respectively) ............... $ 905 $ 14
Ratio of expenses to average daily net
assets ............................... 1.98%(d) 0.99%(d)
Ratio of net investment income to
average daily net assets ............. 0.04%(d) 1.12%(d)
Average commission rate paid on
portfolio transactions (b) ........... $0.0600 $0.0600
Portfolio turnover rate (excluding
short-term securities) ............... 46% 46%
Ratios before waivers by the adviser:
Ratio of expenses to average daily net
assets before waivers .............. 1.98%(d) 1.00%(d)
Ratio of net investment income to
average daily net assets before
waivers ............................ 0.04%(d) 1.11%(d)
</TABLE>

(a) TOTAL RETURN ASSUMES REINVESTMENT OF DISTRIBUTIONS AND DOES NOT REFLECT A
SALES CHARGE.
(b) DISCLOSED IN ACCORDANCE WITH GUIDELINES ADOPTED IN 1996.
(c) COMMENCEMENT OF OFFERING OF CLASS B AND CLASS Y SHARES WAS FEBRUARY 18,
1997.
(d) ANNUALIZED.

- --------------------------------------------------------------------------------

20 1997 Annual Report - Growth and Income
Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

(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:

BALANCED FUND

<TABLE>
<CAPTION>
CLASS A
----------------------------------------
Year Ended September 30,
----------------------------------------
1997 1996 1995 1994 1993
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 14.08 $ 13.74 $11.81 $12.23 $11.88
------- ------- ------ ------ ------
Operations:
Net investment income ................ 0.42 0.44 0.47 0.38 0.34
Net realized and unrealized gains
(losses) on investments ............ 2.26 0.89 1.93 (0.26) 0.65
------- ------- ------ ------ ------
Total from operations .............. 2.68 1.33 2.40 0.12 0.99
------- ------- ------ ------ ------
Distributions to shareholders:
From net investment income ........... (0.42) (0.44) (0.35) (0.37) (0.34)
From net realized gains .............. (0.80) (0.55) (0.12) (0.17) (0.30)
------- ------- ------ ------ ------
Total distributions to
shareholders ..................... (1.22) (0.99) (0.47) (0.54) (0.64)
------- ------- ------ ------ ------
Net asset value, end of period ......... $ 15.54 $ 14.08 $13.74 $11.81 $12.23
------- ------- ------ ------ ------
------- ------- ------ ------ ------
SELECTED INFORMATION
Total return (a) ....................... 20.24% 10.16% 21.78% 1.00% 8.51%
Net assets at end of period (in
millions) ............................ $ 49 $ 45 $ 44 $ 46 $ 57
Ratio of expenses to average daily net
assets ............................... 1.34% 1.32% 1.32% 1.32% 1.32%
Ratio of net investment income to
average daily net assets ............. 2.89% 3.16% 3.54% 3.03% 3.13%
Average commission rate paid on
portfolio transactions (b) ........... $0.0600 $0.0600 n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities) ............... 42% 27% 39% 62% 41%
Ratios before waivers by the adviser and
distributor:
Ratio of expenses to average daily net
assets before waivers .............. 1.73% 1.69% 1.65% 1.60% 1.62%
Ratio of net investment income to
average daily net assets before
waivers ............................ 2.50% 2.79% 3.21% 2.75% 2.83%
</TABLE>

<TABLE>
<CAPTION>
CLASS B
-------------------------
Period Ended
September 30, 1997(c)
-------------------------
<S> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 14.46
----------
Operations:
Net investment income ................ 0.20
Net realized and unrealized gains on
investments ........................ 1.10
----------
Total from operations .............. 1.30
----------
Distributions to shareholders:
From net investment income ........... (0.25)
----------
Net asset value, end of period ......... $ 15.51
----------
----------
SELECTED INFORMATION
Total return (a) ....................... 9.08%
Net assets at end of period (in
thousands) ........................... $ 37
Ratio of expenses to average daily net
assets ............................... 1.99%(d)
Ratio of net investment income to
average daily net assets ............. 2.11%(d)
Average commission rate paid on
portfolio transactions (b) ........... $0.0600
Portfolio turnover rate (excluding
short-term securities) ............... 42%
Ratios before waivers by the adviser:
Ratio of expenses to average daily net
assets before waivers .............. 2.11%(d)
Ratio of net investment income to
average daily net assets before
waivers ............................ 1.99%(d)
</TABLE>

- --------------------------------------------------------------------------------

21 1997 Annual Report - Growth and Income
Funds
<PAGE>
Investments in Securities
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND September 30, 1997
.......................................................................................

Number of Market
Description of Security Shares Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)

COMMON STOCK (98.1%):
BASIC MATERIALS (8.0%):
Air Products & Chemicals ............................ 21,200 $ 1,758,275
Aluminum Company of America ......................... 20,000 1,640,000
duPont (E.I.) de Nemours & Co. ...................... 24,800 1,526,750
Morton International ................................ 42,400 1,505,200
Phelps Dodge ........................................ 25,000 1,940,625
USX - U.S. Steel Group .............................. 85,000 2,953,750
------------
11,324,600
------------
CAPITAL GOODS AND SERVICES (9.2%):
AlliedSignal Inc. ................................... 60,000 2,550,000
Boeing Co. .......................................... 43,000 2,340,812
General Electric .................................... 60,000 4,083,750
Minnesota Mining & Manufacturing Co. ................ 30,000 2,775,000
Thomas & Betts ...................................... 25,000 1,365,625
------------
13,115,187
------------
CONSUMER DURABLES (4.7%):
Chrysler Corp. ...................................... 50,000 1,840,625
Ford Motor .......................................... 106,900 4,837,225
------------
6,677,850
------------
CONSUMER NON-DURABLES (8.3%):
Colgate-Palmolive ................................... 38,000 2,648,125
General Mills ....................................... 33,000 2,274,937
Philip Morris Co. ................................... 50,000 2,078,125
Procter & Gamble .................................... 30,000 2,071,875
Reebok International ................................ 55,000(b) 2,677,812
------------
11,750,874
------------
CONSUMER SERVICES (1.3%):
Carnival Corp. - Class A ............................ 40,000 1,850,000
------------
ENERGY (13.0%):
Anadarko Petroleum .................................. 30,000 2,154,375
Baker Hughes Inc. ................................... 78,700 3,443,125
Exxon Corp. ......................................... 60,400 3,869,375
Mobil Corp. ......................................... 16,000 1,184,000
Schlumberger Ltd. ................................... 39,200 3,300,150
Texaco Inc. ......................................... 50,400 3,096,450
Transocean Offshore Inc. ............................ 30,000 1,438,125
------------
18,485,600
------------
FINANCIAL SERVICES (14.7%):
American Express .................................... 27,000 2,210,625
Associates First Capital 'A' ........................ 30,000 1,867,500
BankAmerica Corp. ................................... 50,000 3,665,625
Chubb Corp. ......................................... 40,000 2,842,500
Federal National Mortgage Association ............... 60,000 2,820,000
General Re Corp. .................................... 10,000 1,985,000
Norwest Corp. ....................................... 42,900 2,627,625
U.S. Bancorp ........................................ 30,000 2,895,000
------------
20,913,875
------------
HEALTH CARE (8.1%):
Abbott Laboratories ................................. 51,400 3,286,387
Johnson & Johnson ................................... 45,000 2,593,125
Medtronic, Inc. ..................................... 27,400 1,287,800
</TABLE>

<TABLE>
<CAPTION>
Number of
Shares or
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
Merck & Co., Inc. ................................... 30,800 $ 3,078,075
St. Jude Medical .................................... 35,000(b) 1,227,188
------------
11,472,575
------------
RETAIL TRADE (6.1%):
Dayton Hudson ....................................... 26,700 1,600,331
Home Depot .......................................... 24,900 1,297,913
Limited Inc. ........................................ 120,000 2,932,500
Sears, Roebuck ...................................... 50,000 2,846,875
------------
8,677,619
------------
TECHNOLOGY (13.0%):
Cisco Systems, Inc. ................................. 20,000(b) 1,461,250
Compaq Computer ..................................... 37,500(b) 2,803,125
EMC Corp. ........................................... 25,000(b) 1,459,375
Hewlett-Packard Co. ................................. 45,000 3,130,313
Intel Corp. ......................................... 40,000 3,692,500
International Business Machines Corp. ............... 35,000 3,707,813
Sensormatic Electronics ............................. 150,000 2,118,750
------------
18,373,126
------------
TRANSPORTATION (2.0%):
Burlington Northern Santa Fe ........................ 28,700 2,773,138
------------
UTILITIES (9.7%):
AirTouch Communications ............................. 100,000(b) 3,543,750
BellSouth Corp. ..................................... 47,000 2,173,750
Enron ............................................... 57,800 2,225,300
FPL Group ........................................... 60,000 3,075,000
GTE Corp. ........................................... 60,000 2,722,500
------------
13,740,300
------------

Total Common Stock
(cost: $92,468,918) ............................ 139,154,744
------------
SHORT-TERM SECURITIES (3.5%):
Repurchase agreement with Goldman Sachs, acquired on
9/30/97, interest of $857, 6.15%, 10/1/97
(cost: $5,019,000) ................................ $ 5,019,000(c) 5,019,000
------------

Total Investments in Securities (d)
(cost: $97,487,918) ............................ 144,173,744
------------
------------
</TABLE>

NOTES TO INVESTMENTS IN SECURITIES
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) CURRENTLY NON-INCOME PRODUCING.
(c) 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.
(d) ON SEPTEMBER 30, 1997, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $97,487,918. THE AGGREGATE GROSS UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS
COST WERE AS FOLLOWS:

<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 47,066,524
GROSS UNREALIZED DEPRECIATION ...... (380,698)
------------
NET UNREALIZED APPRECIATION ...... $ 46,685,824
------------
------------
</TABLE>

- --------------------------------------------------------------------------------

22 1997 Annual Report - Growth and Income
Funds
<PAGE>
Investments in Securities
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
BALANCED FUND September 30, 1997
.......................................................................................

COMMON STOCK (51.9%):
BASIC MATERIALS (4.4%):
Air Products & Chemicals .......................... 5,000 $ 414,687
Aluminum Company of America ....................... 6,000 492,000
duPont (E.I.) de Nemours & Co. .................... 4,000 246,250
Morton International .............................. 10,000 355,000
Phelps Dodge ...................................... 4,000 310,500
USX - U.S. Steel Group ............................ 10,000 347,500
------------
2,165,937
------------
CAPITAL GOODS AND SERVICES (5.0%):
AlliedSignal Inc. ................................. 16,000 680,000
Boeing Co. ........................................ 8,600 468,162
General Electric .................................. 9,000 612,562
Minnesota Mining & Manufacturing Co. 4,500 416,250
Thomas & Betts .................................... 5,000 273,125
------------
2,450,099
------------
CONSUMER DURABLES (1.9%):
Ford Motor ........................................ 11,400 515,850
General Motors .................................... 6,400 428,400
------------
944,250
------------
CONSUMER NON-DURABLES (3.9%):
Coca-Cola Co. ..................................... 4,100 249,844
Colgate-Palmolive ................................. 3,000 209,062
Philip Morris Co. ................................. 7,200 299,250
Procter & Gamble .................................. 9,400 649,187
Reebok International .............................. 10,000 486,875
------------
1,894,218
------------
CONSUMER SERVICES (0.9%):
Carnival Corp. - Class A .......................... 10,000 462,500
------------
ENERGY (7.3%):
Anadarko Petroleum ................................ 4,000 287,250
Baker Hughes Inc. ................................. 15,000 656,250
Exxon Corp. ....................................... 8,400 538,125
Schlumberger Ltd. ................................. 12,600 1,060,762
Texaco Inc. ....................................... 9,000 552,937
Transocean Offshore Inc. .......................... 10,000 479,375
------------
3,574,699
------------
FINANCIAL SERVICES (7.7%):
American International Group ...................... 3,750 386,953
Associates First Capital 'A' ...................... 6,300 392,175
BankAmerica Corp. ................................. 8,448 619,344
Federal National Mortgage Association 20,800 977,600
Norwest Corp. ..................................... 16,700 1,022,875
U.S. Bancorp ...................................... 4,000 386,000
------------
3,784,947
------------
HEALTH CARE (4.9%):
Johnson & Johnson ................................. 8,600 495,575
Medtronic, Inc. ................................... 13,600 639,200
Merck & Co., Inc. ................................. 9,000 899,438
</TABLE>

<TABLE>
<CAPTION>
Number of
Shares or
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
St. Jude Medical .................................. 10,000(b) $ 350,625
------------
2,384,838
------------
RETAIL TRADE (3.5%):
Gap Inc. .......................................... 11,800 590,738
Home Depot ........................................ 8,400 437,850
Sears, Roebuck .................................... 12,000 683,250
------------
1,711,838
------------
TECHNOLOGY (7.2%):
Cabletron Systems ................................. 7,500(b) 240,000
Cisco Systems, Inc. ............................... 3,600(b) 263,025
Compaq Computer ................................... 5,750(b) 429,813
EMC Corp. ......................................... 4,000(b) 233,500
Hewlett-Packard Co. ............................... 7,000 486,938
Intel Corp. ....................................... 5,600 516,950
International Business Machines Corp. . 5,000 529,688
Lucent Technologies ............................... 2,916 237,290
Oracle Corp. ...................................... 7,500(b) 273,281
Sensormatic Electronics ........................... 21,000 296,625
------------
3,507,110
------------
TRANSPORTATION (1.4%):
Burlington Northern Santa Fe ...................... 6,900 666,713
------------
UTILITIES (3.8%):
AirTouch Communications ........................... 21,500(b) 761,906
BellSouth Corp. ................................... 8,000 370,000
Enron ............................................. 9,100 350,350
GTE Corp. ......................................... 8,000 363,000
------------
1,845,256
------------

Total Common Stock
(cost: $14,739,131) .......................... 25,392,405
------------

CORPORATE BONDS (14.3%):
CONSUMER DURABLES (0.9%):
Ford Holdings, 9.25%, 3/1/00 ...................... $ 400,000 427,376
------------
CONSUMER SERVICES (2.2%):
MCI Communications, 7.13%, 6/15/27 500,000 528,100
Time Warner Inc., 8.88%, 10/1/12 .................. 500,000 569,460
------------
1,097,560
------------
FINANCIAL SERVICES (7.8%):
American Express Credit Corporation, 7.38%,
2/1/99 .......................................... 400,000 407,768
Aon Corp., 6.88%, 10/1/99 ......................... 450,000 455,971
BankAmerica Corp., 8.38%, 3/15/02 ................. 480,000 515,789
General Motors Acceptance Corp., 8.50%, 1/1/03 .... 500,000 545,215
Heller Financial, 9.13%, 8/1/99 ................... 300,000 315,420
Lehman Brothers, floating rate, 7.36%, 12/15/03 ... 650,000(d) 670,963
Morgan Stanley Group Inc., 8.10%, 6/24/02 ......... 500,000 533,145
NationsBank Corp., 5.38%, 4/15/00 ................. 400,000 392,752
------------
3,837,023
------------
</TABLE>

SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.

- --------------------------------------------------------------------------------

23 1997 Annual Report - Growth and Income
Funds
<PAGE>
Investments in Securities (continued)
- --------------------------------------------------------------------------------

BALANCED FUND
(CONTINUED)

<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
TRANSPORTATION (1.3%):
Boeing Co., 8.75%, 9/15/31 ........................ $ 500,000 $ 616,860
------------
UTILITIES (2.1%):
Korea Electric Power ADS, 6.38%, 12/1/03 .......... 500,000 480,685
Pennsylvania Power and Light, 7.70%, 10/1/09 ...... 500,000 542,405
------------
1,023,090
------------

Total Corporate Bonds
(cost: $6,691,750) ........................... 7,001,909
------------

U.S. GOVERNMENT AND AGENCY SECURITIES (28.8%):
GOVERNMENT TRUST CERTIFICATES (0.7%):
9.25%, Government Trust Certificate, 11/15/01 ..... 293,241 312,824
------------
U.S. AGENCY DEBENTURES (5.2%):
5.94%, FHLMC, 9/21/99 ............................. 1,000,000 1,001,480
7.40%, FNMA, 7/1/04 ............................... 500,000 530,395
6.63%, FNMA, 3/21/06 .............................. 1,000,000 1,017,000
------------
2,548,875
------------
U.S. AGENCY MORTGAGE-BACKED SECURITIES (8.6%):
ADJUSTABLE RATE (2.1%):
6.99%, FHLMC, Series 1435, Class FA, LIBOR,
12/15/22 ........................................ 586,622(d) 595,562
7.44%, FNMA, 4/1/18 ............................... 429,578(d) 445,678
------------
1,041,240
------------
FIXED RATE (6.5%):
6.50%, FHLMC, 9/1/25 .............................. 380,040 372,555
6.50%, FHLMC, 1/1/01 .............................. 471,211 478,425
8.00%, FHLMC, 11/1/24 ............................. 810,023 839,087
6.50%, FHLMC, Series 1056, Class KB, 3/15/01 ...... 366,436 368,041
6.00%, FNMA, 4/1/09 ............................... 736,214 724,479
6.00%, FNMA, 3/1/03 ............................... 352,472 349,388
10.00%, FNMA, Series 1989-15, Class D, 9/25/18 .... 31,339 31,943
------------
3,163,918
------------
U.S. GOVERNMENT SECURITIES (14.3%):
8.50%, U. S. Treasury Bond, 2/15/20 ............... 1,000,000 1,236,850
7.63%, U. S. Treasury Bond, 11/15/22 1,500,000 1,710,660
5.88%, U. S. Treasury Note, 2/15/04 ............... 1,000,000 989,550
6.25%, U. S. Treasury Note, 10/31/01 1,000,000 1,009,700
7.25%, U.S. Treasury Note, 8/15/04 ................ 1,000,000 1,063,580
5.88%, U.S. Treasury Note, 6/30/00 ................ 500,000 500,365
6.35%, U.S. Treasury Strip, 2/15/15 ............... 1,500,000(c) 488,265
------------
6,998,970
------------

Total U.S. Government and Agency Securities
(cost: $13,528,387) .......................... 14,065,827
------------
</TABLE>

<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>

PRIVATE MORTGAGE-BACKED SECURITIES (2.6%):
FIXED RATE (2.6%):
6.40%, Capstead Securities Corporation, Series
1993-D, Class D2, 7/25/23 ....................... $ 233,300 $ 230,456
8.50%, Residential Funding Mortgage Securities,
Series 1993-S26, Class A17, 6/25/09 ............. 900,000 936,261
9.30%, Security Pacific National Bank, Series
1989-A, Class 7, 8/25/19 ........................ 124,585 124,741
------------
1,291,458
------------

Total Private Mortgage-Backed Securities
(cost: $1,281,011) ........................... 1,291,458
------------

ASSET-BACKED SECURITIES (1.6%):
Citibank Credit Card Master Trust I, Series 1997-7,
Class A, 6.35%, 8/15/02 ......................... 500,000 502,700
General Motors Acceptance Corp., Series 1994-A,
Grantor Trust, 6.30%, 6/15/99 ................... 127,280 127,875
Premier Auto Trust, Series 1993-6, Class A2, 4.65%,
11/2/99 ......................................... 139,909 139,232
------------

Total Asset-Backed Securities
(cost: $766,058) ............................. 769,807
------------

SHORT-TERM SECURITIES (0.3%):
Repurchase agreement with Goldman Sachs, acquired
on 9/30/97, interest of $24, 6.15%, 10/1/97
(cost: $142,000) ................................ 142,000(e) 142,000
------------

Total Investments in Securities (f)
(cost: $37,148,337) .......................... $ 48,663,406
------------
------------
</TABLE>

NOTES TO INVESTMENTS IN SECURITIES:
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) CURRENTLY NON-INCOME PRODUCING.
(c) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(d) PORTFOLIO ABBREVIATIONS AND DEFINITIONS:
LIBOR - LONDON INTERBANK OFFERED RATE
ADJUSTABLE OR FLOATING RATE - REPRESENTS SECURITIES THAT PAY INTEREST
AT RATES THAT INCREASE (DECREASE) WITH AN INCREASE (DECREASE) IN THE
SPECIFIED INDEX. INTEREST RATES DISCLOSED ARE IN EFFECT ON SEPTEMBER
30, 1997.
(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) ON SEPTEMBER 30, 1997, THE COST OF INVESTMENTS IN SECURITIES, FOR FEDERAL
INCOME TAX PURPOSES WAS $37,151,515. THE AGGREGATE GROSS UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS
COST WERE AS FOLLOWS:

<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 11,720,369
GROSS UNREALIZED DEPRECIATION ...... (208,478)
------------
NET UNREALIZED APPRECIATION ...... $ 11,511,891
------------
------------
</TABLE>

- --------------------------------------------------------------------------------

24 1997 Annual Report - Growth and Income
Funds
<PAGE>
Independent Auditors' Report
- --------------------------------------------------------------------------------

THE BOARD OF DIRECTORS AND SHAREHOLDERS
PIPER FUNDS INC.:

We have audited the accompanying statements of assets and
liabilities, including the schedules of investments in
securities, of Growth and Income Fund and Balanced Fund
(funds within Piper Funds Inc.) as of September 30, 1997,
and the related statements of operations for the year then
ended, the statements of changes in net assets for each of
the years in the two-year period ended September 30, 1997,
and the financial highlights for each of the years in the
five-year period ended September 30, 1997. These financial
statements and the financial highlights are the
responsibility of the funds' management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our
audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities
purchased and sold but not received or delivered, we
request confirmations from brokers and, where replies are
not received, we carry out other appropriate auditing
procedures. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements and the financial
highlights referred to above present fairly, in all
material respects, the financial position of Growth and
Income Fund and Balanced Fund as of September 30, 1997,
and the results of their operations, the changes in their
net assets and the financial highlights for the periods
stated in the first paragraph above, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 7, 1997

- --------------------------------------------------------------------------------

25 1997 Annual Report - Growth and Income
Funds
<PAGE>
Federal Income Tax Information
- --------------------------------------------------------------------------------

The following per-share information describes the federal
tax treatment of distributions made during the fiscal
year. Distributions for the calendar year will be reported
to you on Form 1099-DIV. Please consult a tax adviser on
how to report these distributions at the state and local
levels.

INCOME DISTRIBUTIONS (TAXABLE AS ORDINARY DIVIDENDS, 100%
AND 29.42% QUALIFYING FOR DEDUCTION BY CORPORATIONS,
RESPECTIVELY)

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND BALANCED FUND
------------------------- ----------------
PAYABLE DATE CLASS A CLASS B CLASS Y CLASS A CLASS B
- ---------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
23-Dec-96 .............................. $0.0800 $ -- $ -- $0.1300 $ --
24-Mar-97 .............................. 0.0301 0.0284 0.0346 0.0886 0.0848
16-Jun-97 .............................. 0.0328 0.0237 0.0452 0.0932 0.0815
29-Sep-97 .............................. 0.0142 -- 0.0321 0.1080 0.0819
------- ------- ------- ------- -------
Total .................................. $0.1571 $0.0521 $0.1119 $0.4198 $0.2482
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

SHORT-TERM GAINS (TAXABLE AS ORDINARY DIVIDENDS)

LONG-TERM GAINS (TAXABLE AS CAPITAL GAINS DISTRIBUTIONS)

- --------------------------------------------------------------------------------

26 1997 Annual Report - Growth and Income
Funds
<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 may become a shareholder in Piper Funds class A shares or class B shares
with an initial investment of $250 or more. Class Y shares have a minimum
initial investment of $1 million. Add to your existing investment with any
amount, at any time.

AUTOMATIC MONTHLY INVESTMENT PROGRAMS
To purchase shares as part of a savings discipline, you may automatically
transfer $100 or more each month to any Piper fund from your bank, savings and
loan or other financial institution. Or, transfer $25 or more per month from any
of the Piper money market funds.*

RECEIVING DIVIDENDS AND OTHER DISTRIBUTIONS
Dividend and capital gains distributions may be reinvested in additional shares
of the fund you own, invested in shares of a different Piper fund offered in
your state, or distributed in cash. Any reinvestments must be in the same class
of shares.

REDUCING THE CLASS A FRONT-END SALES CHARGE
You may reduce, or even eliminate, the class A front-end sales charge if: your
initial investment exceeds a specified amount, your investment combined with the
value of your existing Piper Funds investments (or a related account's
investments) exceeds a specified amount or if your investments combined during a
13-month period exceed a specified amount. See your prospectus for details.

EXCHANGING SHARES
If your investment goals or your financial needs change, you may move from one
Piper fund to the same class of another Piper fund, if the shares of that fund
are legally available in your state. There is no fee to exchange shares.

Exchanges are generally made based on the net asset value per share of each fund
at the time of the exchange. However, if your new fund has a higher sales
charge, you must pay the difference.

TAKING SYSTEMATIC WITHDRAWALS
If your account has a value of $5,000 or more, you may make automatic
withdrawals from your account. You may withdraw $100 or more monthly, quarterly,
or semiannually by authorizing the sale of the appropriate number of shares on a
periodic basis.

REINVESTING AFTER A SALE
If you sell class A shares, you may reinvest in class A shares of that fund or
another Piper fund within 30 days without a sales charge. If you sell class B
shares (or other shares subject to a CDSC) and elect to reinvest within 30 days,
that charge will be credited to your account and the reinvested shares will
continue to be subject to the CDSC.

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.

ACCOUNT STATEMENTS
Whenever you add to or withdraw from your account, you will receive a monthly
statement from Piper Jaffray. Accounts with no activity receive a quarterly
statement instead. Periodic dividend and capital gains distributions, if any,
also appear on your 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.

- --------------------------------------------------------------------------------

27 1997 Annual Report - Growth and Income Funds
<PAGE>

GLOSSARY OF TERMS***

ASSET ALLOCATION
Asset allocation is the process of dividing investment funds among categories of
assets, such as cash equivalents, stocks, bonds, and such tangible assets as
real estate, precious metals and collectables. The term also applies to
subcategories such as government, municipal and corporate bonds, and industry
groupings of common stocks. Asset allocation affects both risk and return and is
a central concept in personal financial planning and investment management.

CORRECTION
Reverse movement, usually downward, in the price of a stock.

DIVIDEND YIELD
The annual percentage rate of return paid on a stock in the form of dividends.

EFFECTIVE DURATION
Effective duration estimates how much the value of a security is expected to
change with a given change in interest rates. Longer effective durations
indicate more sensitivity to changes in interest rates. For example, if interest
rates were to increase by 1%, the market value of a bond with an effective
duration of five years would decrease by about 5%, with all other factors being
constant. It is important to remember that effective duration is based on
certain assumptions and has several limitations. It is most effective as a
measure when interest rate changes are small, rapid and occur equally across all
points of the yield curve. In addition, effective duration is difficult to
calculate precisely for bonds with prepayment options, such as
mortgage-backed securities.

If a fund has an AGGRESSIVE EFFECTIVE DURATION, it means its managers have set a
longer duration posture in comparison to the fund's benchmark. A fund with a
long effective duration is more sensitive to changing interest rates.

If a fund has a DEFENSIVE EFFECTIVE DURATION, it means its managers have set a
shorter duration posture in comparison to the fund's benchmark, to make the fund
less sensitive to changing interest rates.

If a fund has a NEUTRAL EFFECTIVE DURATION, the duration is approximately the
same as its benchmark.

MARKET CAPITALIZATION
The value of a company determined by multiplying the number of outstanding
shares by the current market price of a share.

OVERWEIGHT OR OVERWEIGHTING
In portfolio management, overweighting means a fund's portfolio contains a
higher percentage of a certain sector than its benchmark.

SECTOR
Refers to a particular group of stocks, usually in one industry.

UNDERWEIGHT OR UNDERWEIGHTING
In portfolio management, underweighting means a fund's portfolio contains a
lower percentage of a certain sector than its benchmark.

VALUED OR VALUATION
The determined or estimated value of a particular stock.

*** - This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary.

- --------------------------------------------------------------------------------

28 1997 Annual Report - Growth and Income Funds
<PAGE>

DIRECTORS
- --------------------------------------------------------------------------------
DAVID T. BENNETT, Chairman, Highland Homes, Inc., USL Products, Inc., Kiefer
Built, Inc., of Counsel, Gray, Plant, Mooty, Mooty & Bennett, P.A.
JAYE F. DYER, President, Dyer Management Company
WILLIAM H. ELLIS, Retired President, Piper Jaffray Companies Inc., Piper Capital
Management Incorporated
KAROL D. EMMERICH, President, The Paraclete Group
LUELLA G. GOLDBERG, Director, TCF Financial, ReliaStar Financial Corp., Hormel
Foods Corp.
DAVID A. HUGHEY, Retired Executive Vice President and Chief Administrative
Officer of Dean Witter InterCapital Inc. and Dean Witter Trust Co.
GEORGE LATIMER, Chief Executive Officer, National Equity Funds

OFFICERS
- --------------------------------------------------------------------------------
WILLIAM H. ELLIS, Chairman of the Board
PAUL A. DOW, President
ROBERT H. NELSON, Vice President and Treasurer
SUSAN SHARP MILEY, Secretary

INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
PIPER CAPITAL MANAGEMENT INCORPORATED
222 South Ninth Street, Minneapolis, MN 55402-3804

TRANSFER AND DIVIDEND DISBURSING AGENTS
- --------------------------------------------------------------------------------
INVESTORS FIDUCIARY TRUST COMPANY
1004 Baltimore, Kansas City, MO 64105-1614
PIPER JAFFRAY INC.
222 South Ninth Street, Minneapolis, MN 55402-3804
PIPER TRUST COMPANY
222 South Ninth Street, Minneapolis, MN 55402-3804

CUSTODIAN AND ACCOUNTING AGENT
- --------------------------------------------------------------------------------
INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania, Kansas City, MO 64105-1307
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
KPMG PEAT MARWICK LLP
4200 Norwest Center, Minneapolis, MN 55402
LEGAL COUNSEL
- --------------------------------------------------------------------------------
DORSEY & WHITNEY LLP
220 South Sixth Street, Minneapolis, MN 55402

FOR MORE INFORMATION

BY PHONE [GRAPHIC]

800 866-7778

FOR GENERAL INFORMATION
press 5, our Mutual Fund Services representatives are ready to answer
your questions.

TO ORDER LITERATURE
press 5, ask a service representative to mail you additional literature,
including a Quarterly Update. You can also request to be put on a mailing list
to receive this information automatically each quarter.

BY MAIL [GRAPHIC]

Piper Capital Management
Attn: Mutual Fund Services
222 South Ninth Street
Minneapolis, MN 55402-3804

In an effort to reduce costs to our shareholders, we have implemented a process
to reduce duplicate mailings of the funds' shareholder reports. This
householding process should allow us to mail one report to each address where
one or more registered shareholders with the same last name reside. If you would
like to have additional reports mailed to your address, please call our Mutual
Fund Services area at 800 866-7778, or mail a request to us.

ON-LINE [GRAPHIC]

http://www.piperjaffray.com/

<PAGE>
GROWTH AND INCOME FUNDS
- --------------------------------------------------------------------------------

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

Portfolios composed of quality stocks and bonds offer the potential for both
investment income and capital appreciation, considered a valuable combination by
many investors.

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
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 or
sending money.

*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.

PIPER JAFFRAY INC., FUND DISTRIBUTOR AND NASD MEMBER.

#10300 11/1997 266-97

[LOGO]

222 SOUTH NINTH STREET
MINNEAPOLIS, MN 55402-3804

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