PIPER GLOBAL FUNDS INC /MN, 485APOS, 1996-12-09

PIPER GLOBAL FUNDS INC /MN
485APOS, 1996-12-09

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<PAGE>

1933 Act Registration No.: 33-48299
1940 Act Registration No.: 811-06046

As filed with the Securities and Exchange Commission on December 9, 1996

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Registration No. 33-48299)
Pre-Effective Amendment No. _______
Post-Effective Amendment No. 8
--------
and/or

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
(Registration No. 811-06046)
Amendment No. 9
--------
(Check appropriate box or boxes)

PIPER GLOBAL FUNDS INC.
(Exact Name of Registrant as Specified in Charter)

Piper Jaffray Tower
222 South Ninth Street, Minneapolis, Minnesota 55402
(Address of Principal Executive Offices) (Zip Code)

(612) 342-6387
(Registrant's Telephone Number, including Area Code)

Paul A. Dow
222 South Ninth Street
Minneapolis, Minnesota 55402
(Name and Address of Agent for Service)

Copy to:
Kathleen L. Prudhomme, Esq.
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402-1498

__________ immediately upon filing pursuant to paragraph (b) of rule 485
__________ on (specify date) pursuant to paragraph (b) of rule 485
__________ 75 days after filing pursuant to paragraph (a) of rule 485
X 60 days after filing pursuant to paragraph (a) of rule 485
- ----------

The Registrant has registered an indefinite number or amount of common stock
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. A Rule 24f-2 Notice was filed by the Registrant on November
28, 1996.
<PAGE>

PIPER GLOBAL FUNDS INC.
Registration Statement on Form N-1A

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

Cross Reference Sheet
Pursuant to Rule 481(a)
---------------------------------------------
<TABLE>
<CAPTION>

Item No. Prospectus Heading
- -------- ------------------
<S> <C>

1. Cover Page........................... Cover Page (no caption)

2. Synopsis............................. Introduction; Fund Expenses

3. Condensed Financial Information...... Financial Highlights

4. General Description of Registrant.... Introduction; Investment Objectives
and Policies; Special Investment
Methods

5. Management of the Fund............... Management

6. Capital Stock and Other Securities... General Information; Introduction;
Dividends and Distributions; Tax
Status

7. Purchase of Securities Being Offered. Dividends and Distributions; How to
Purchase Shares/How to Invest; How
to Purchase Class A Shares/How to
Purchase Class B Shares; Reducing
Your Sales Charge; Valuation of
Shares

8. Redemption or Repurchase............. How to Redeem Shares

9. Pending Legal Proceedings............ General Information

Heading Statement of Additional Information
- ------- -----------------------------------

10. Cover Page........................... Cover Page (no caption)

11. Table of Contents.................... Table of Contents

12. General Information and History...... General Information; Pending
Litigation

13. Investment Objectives and Policies... Investment Objectives and Policies;
Investment Restrictions
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
14. Management of the Fund............ Directors and Executive Officers

15. Control Persons and Principal
Holders of Securities............. Capital Stock and Ownership of Shares

16. Investment Advisory and Other
Services.......................... Investment Advisory and Other Services

17. Brokerage Allocation and Other
Practices......................... Portfolio Transactions and Allocation
of Brokerage

18. Capital Stock and Other Securities Capital Stock and Ownership of Shares

19. Purchase, Redemption and Pricing
of Securities Being Offered....... Net Asset Value and Public Offering
Price; Redemption of Shares

20. Tax Status........................ Taxation

21. Underwriters...................... Investment Advisory and Other Services;
Portfolio Transactions and Allocation
of Brokerage

22. Calculations of Performance Data.. Performance Comparisons

23. Financial Statements.............. Financial Statements
</TABLE>
<PAGE>

PROSPECTUS DATED FEBRUARY 7, 1996

PACIFIC-EUROPEAN GROWTH FUND
EMERGING MARKETS GROWTH FUND
SERIES OF PIPER GLOBAL FUNDS INC.
PIPER JAFFRAY TOWER
222 SOUTH NINTH STREET, MINNEAPOLIS, MINNESOTA 55402-3804
(800) 866-7778 (TOLL FREE)

Pacific-European Growth Fund ("Pacific-European Fund") and Emerging Markets
Growth Fund ("Emerging Markets Fund") each has an investment objective of
long-term capital appreciation. Current income is incidental to this
objective. Pacific-European Fund seeks to achieve its investment objective
through investments primarily in Common Stock (as herein defined) of companies
in the Pacific Basin or in Europe (including Eastern Europe). Up to 25% of the
Fund's total assets may be invested in other areas of the world to the extent
significant opportunities for long-term capital appreciation outside of the
Pacific Basin and Europe become available. Emerging Markets Fund seeks to
achieve its investment objective through investments primarily in Common Stock
of issuers in the world's emerging securities markets. The Funds do not invest
in Common Stock of U.S. companies. No assurance can be given that the Funds'
investment objectives will be achieved.

PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THIS INVESTMENT. SAFETY OF
PRINCIPAL IS NOT GUARANTEED. Investment in the Funds involves certain risks
and requires consideration of factors not typically associated with investment
in securities of U.S. issuers. See "Risk Factors."

This Prospectus concisely describes the information about the Funds that you
should know before investing. Please read the Prospectus carefully before
investing and retain it for future reference.

A Statement of Additional Information about the Funds dated February ,
1997 is available free of charge. Write to the Funds at Piper Jaffray Tower,
222 South Ninth Street, Minneapolis, Minnesota 55402-3804 or telephone (800)
866-7778 (toll free). The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated in its
entirety by reference in this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>

INTRODUCTION

Pacific-European Growth Fund ("Pacific-European Fund") is a diversified
series and Emerging Markets Growth Fund ("Emerging Markets Fund") is a non-
diversified series of Piper Global Funds Inc. ("Piper Global"), an open-end
management investment company, or mutual fund, the shares of which can be
offered in more than one series. Each series in effect represents a separate
fund with its own investment objective and policies. The investment objective
of each Fund is long-term capital appreciation. Current income is incidental
to this objective.

THE INVESTMENT ADVISER

The Funds are managed by Piper Capital Management Incorporated (the
"Adviser"), a wholly owned subsidiary of Piper Jaffray Companies Inc.

Pacific-European Fund pays the Adviser a basic management fee calculated and
paid monthly at an annual rate of 1% on net assets up to $100 million, with
the fee scaled downward as assets increase in size (the "Basic Fee"). The
Basic Fee (as a percentage of net assets) is higher than that paid by most
other mutual funds. The Basic Fee may be increased or decreased by up to a
maximum, on an annual basis, of .25% of Pacific-European Fund's average daily
net assets depending upon the extent to which the Fund outperforms or
underperforms the Morgan Stanley Capital International European, Australian
and Far East Index (the "EAFESM Index").

Emerging Markets Fund pays the Adviser a monthly management fee at an annual
rate of 1% of the Fund's average daily net assets. This fee is higher than
that paid by most other mutual funds. See "Management--Investment Adviser."

THE SUB-ADVISER

Edinburgh Fund Managers plc acts as each Fund's sub-adviser (the "Sub-
Adviser") under agreements with the Adviser. The Sub-Adviser is a public
limited company that was incorporated in 1969. For its services to Pacific-
European Fund, the Sub-Adviser is paid a fee by the Adviser equal to 65% of
the Basic Fee plus or minus 90% of the performance fee adjustment. The Adviser
and Sub-Adviser also have entered into an Expense Reimbursement Agreement
pursuant to which the Sub-Adviser pays the Adviser a monthly fee equal to 10%
of the Basic Fee to reimburse the Adviser for certain expenses it bears in
connection with the administration of Pacific-European Fund. For its services
to Emerging Markets Fund, the Sub-Adviser is paid a fee by the Adviser equal,
on an annual basis, to .50% of the Fund's average daily net assets. See
"Management--Sub-Adviser."

THE DISTRIBUTOR

Piper Jaffray Inc. ("Piper Jaffray" or the "Distributor"), a wholly owned
subsidiary of Piper Jaffray Companies Inc. and an affiliate of the Adviser,
serves as Distributor of the Funds' shares.

CERTAIN RISK FACTORS TO CONSIDER

An investment in the Funds is subject to certain risks, as set forth in
detail under "Investment Objectives and Policies," "Special Investment
Methods" and "Risk Factors." As with other mutual funds, there can be no
assurance that either Fund will achieve its objective. Because the Funds
invest in foreign securities, an investment in either Fund requires
consideration of certain risk factors that are not typically associated with
investing in securities of U.S. companies. These factors include risks
relating to adverse currency fluctuations, potential political and economic
instability of certain countries, limited liquidity and volatile prices of
certain securities of non-U.S. companies, and foreign taxation. These risks
are particularly significant for the Emerging Markets Fund. Investing in
emerging markets involves exposure to economic structures that are generally
less diverse and mature than, and to political systems that can be expected to
have less stability than, those of developed countries. The Emerging Markets
Fund is a non-diversified fund, which means that it may invest a greater
portion of its assets in securities

2
<PAGE>

of individual issuers than a diversified fund. As a result, changes in the
market value of a single issuer could cause greater fluctuations in share
value than would occur in a more diversified fund. In addition, the Funds may
engage in the following investment practices which involve certain special
risks: entering into currency exchange transactions, forward foreign currency
exchange transactions and foreign currency futures and options, entering into
options transactions on securities in which the Funds may invest, the use of
repurchase agreements, the lending of portfolio securities, entering into
futures contracts and options on futures contracts, the purchase of securities
on a "when-issued" basis and the purchase or sale of securities on a "forward
commitment" basis. The use of these investment practices may increase the
volatility of a Fund's net asset value. Each Fund may invest in illiquid
securities which will involve greater risk than investments in other
securities and may increase Fund expenses.

CHOOSING A SHARE CLASS

You may purchase either Class A or Class B shares of a Fund. Each class has
its own cost structure, allowing you to choose the one that best meets your
requirements. Pacific-European Fund also offers Class Y shares, which have
their own expense structure and are available only to investors making an
initial investment of $2 million or more. To obtain more information about
Class Y shares, call the Funds at the telephone number that appears on the
cover of this Prospectus.

Class A shares have the following features:

. An initial sales charge of 4% on purchases of less than $100,000. The
sales charge is reduced for purchases of $100,000 or more. See "How to
Purchase Class A Shares."

. Lower annual expenses than Class B shares. Class A shares are subject to
Rule 12b-1 fees of up to 0.50%, on an annual basis, of the average daily
net assets of the Class A shares. The Distributor has voluntarily limited
these fees to 0.33% of average daily net assets during fiscal 1997. See
"Distribution of Fund Shares."

Class B shares have the following features:

. No initial sales charge; all your money goes to work for you right away.

. A contingent deferred sales charge ("CDSC") if you redeem your shares
during the calendar year in which they are purchased, or in any of the
next five full calendar years. The CDSC declines from 4% during the
calendar year in which you purchase the shares to 1% during the fifth
full calendar year following the year of purchase. See "How to Purchase
Class B Shares."

. Higher annual expenses than Class A shares. Class B shares are subject to
Rule 12b-1 fees equal, on an annual basis, to 1.00% of the average daily
net assets of the Class B shares. See "Distribution of Fund Shares."

. Automatic conversion to Class A shares at the beginning of the sixth full
calendar year following the year of purchase, thus reducing future annual
expenses.

MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS

The minimum initial investment for each Fund is $250. There is no minimum
for subsequent investments. See "How to Purchase Shares--Minimum Investments."

EXCHANGES

You may exchange your shares for shares of the same class of any other
mutual fund managed by the Adviser (a "Piper fund") that offers its shares in
multiple class. In addition, Class A shares may be exchanged for shares of any
Piper fund that offers only one class of shares. All exchanges are subject to
the minimum investment requirements and other applicable terms set forth in
the prospectus of the fund whose shares you acquire, and such shares must be
eligible for sale in your state of residence. See "Shareholder Services--
Exchange Privilege."

3
<PAGE>

REDEMPTION PRICE

Shares of the Funds may be redeemed at any time at their net asset value
next determined after a redemption request is received by your Piper Jaffray
Investment Executive or other broker-dealer, less any applicable contingent
deferred sales charge. See "How to Redeem Shares." Each Fund reserves the
right, upon 30 days written notice, to redeem an account if the net asset
value of the shares falls below $200. See "How to Redeem Shares--Involuntary
Redemption."

SHAREHOLDER INQUIRIES

Any questions or communications regarding a shareholder account should be
directed to your Piper Jaffray Investment Executive or, in the case of shares
held through another broker-dealer, to IFTC at (800) 874-6205. General
inquiries regarding the Funds should be directed to the Funds at the telephone
number set forth on the cover page of this Prospectus.

FUND EXPENSES

<TABLE>
<CAPTION>
PACIFIC- EMERGING
EUROPEAN FUND MARKETS FUND
--------------- ---------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)......... 4.00% None 4.00% None
Maximum Deferred Sales Charge (as a percent-
age of
original purchase price or redemption pro-
ceeds, as
applicable)................................. None* 4.00% None* 4.00%
ANNUAL FUND OPERATING EXPENSES (as a percentage
of average
net assets)
Management Fees.............................. .90% .90% 1.00% 1.00%
Rule 12b-1 Fees (after voluntary limitation
for Class A shares)**....................... .33% 1.00% .33% 1.00%
Other Expenses (after voluntary expense
reimbursement)**............................ .43% .43% .67% .67%
---- ----- ---- -----
Total Fund Operating Expenses (after
voluntary limitations and expense
reimbursements)............................. 1.66% 2.33% 2.00% 2.67%
</TABLE>
- --------

* A contingent deferred sales charge of 1.00% is imposed on certain
redemptions of Class A shares that were purchased without an initial sales
charge as part of an investment of $500,000 or more. See "How to Purchase
Class A Shares."

** See the discussion below for an explanation of voluntary Rule 12b-1 fee
limitations and expense reimbursements.

EXAMPLE

At the end of the periods shown, you would have paid the following expenses
on a $1,000 investment, assuming a 5% annual return:

<TABLE>
<CAPTION>
PACIFIC-EUROPEAN FUND EMERGING MARKETS FUND
----------------------------- -----------------------------
CLASS B CLASS B
--------------------- ---------------------
REDEMPTION REDEMPTION
AT END NO AT END NO
CLASS A OF PERIOD REDEMPTION CLASS A OF PERIOD REDEMPTION
------- ---------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
One year........... $ 56 $ $ $ 59 $ $
Three years........ $ 90 $ $ $100 $ $
Five years......... $127 $ $ $143 $ $
Ten years.......... $229 $ * $ * $263 $ * $ *
</TABLE>
- --------

* Assumes that Class B shares are purchased on January 1 and convert to Class
A shares at the beginning of the sixth full calendar year following the
year of purchase.

4
<PAGE>

The purpose of the above Fund Expenses table is to assist you in
understanding the various costs and expenses that investors in the Funds will
bear directly or indirectly. THE EXAMPLE CONTAINED IN THE TABLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.

The information set forth in the table for Pacific-European Fund, other than
Rule 12b-1 fees, is based on actual expenses incurred by the Class A shares of
the Fund during the fiscal period from March 1 through September 30, 1996.
Pacific-European Fund did not offer Class B shares during such fiscal period.
Class A share Rule 12b-1 fees set forth in the table reflect a voluntary
limitation by the Distributor of amounts payable to it under the Fund's Rule
12b-1 Plan to .33% of average daily net assets attributable to Class A shares
for the fiscal year ending September 30, 1997. For the fiscal period ended
September 30, 1996, the Distributor voluntarily limited Rule 12b-1 payments to
.31% of average daily net assets. Absent such limitation, Total Fund Operating
Expenses for Pacific-European Fund for the fiscal period ended September 30,
1996 would have been 1.83% of average daily net assets.

The information set forth for Emerging Markets Fund is based on the
Adviser's undertaking to reimburse Total Fund Operating Expenses in excess of
2.00% of the Fund's average daily net assets attributable to Class A shares
and 2.67% of the Fund's average daily net assets attributable to Class B
shares for the fiscal year ending September 30, 1997. The table also reflects
a voluntary limitation by the Distributor of the fee payable to it under the
Fund's Rule 12b-1 Plan to .33% of average daily net assets attributable to the
Fund's Class A shares. Without any expense reimbursements or fee limitations,
Other Expenses and Total Fund Operating Expenses for the fiscal period from
July 1 through September 30, 1996 would have been, on an annualized basis,
2.59% and 4.09%, respectively, of Emerging Markets Fund's average daily net
assets. The Fund did not offer Class B shares during such fiscal period.

Voluntary limitations and reimbursements for the Funds may be revised or
terminated at any time after September 30, 1997. The Adviser may or may not
assume additional expenses of the Funds from time to time, in its discretion,
while retaining the ability to be reimbursed by the Funds for expenses assumed
during a fiscal year prior to the end of such year. The foregoing policy will
have the effect of lowering a Fund's overall expense ratio and increasing
yield to investors when such amounts are assumed or the inverse when such
amounts are reimbursed.

Pacific-European Fund's management fees for fiscal 1997 may be more or less
than those set forth in the table to the extent that the Fund outperforms or
underperforms the EAFE Index. For the seven months ended September 30, 1996,
the performance fee adjustment resulted in a reduction of management fees for
Pacific-European Fund by 0.05% of average daily net assets. Absent such
reduction, management fees would have been 0.95% of average daily net assets.
See "Management--Investment Adviser."

A portion of the Rule 12b-1 fee paid with respect to both Class A and Class
B shares is considered an asset-based sales charge. As a result of the payment
of such asset-based sales charge, long-term shareholders of the Funds may pay
more than the economic equivalent of the maximum 6.25% front end sales charge
permitted under the rules of the National Association of Securities Dealers,
Inc. For additional information, including a more complete explanation of
management and Rule 12b-1 fees, see "Management--Investment Adviser" and
"Distribution of Fund Shares."

5
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights show certain per share data and selected
information for a Class A share of capital stock outstanding during the
indicated periods for each Fund. This information has been audited by KPMG
Peat Marwick LLP, independent auditors and should be read in conjunction with
the financial statements of each Fund contained in its annual report. No Class
B shares were outstanding during the indicated periods. An annual report of
each Fund is available without charge by contacting the Funds at 800-866-7778
(toll free). In addition to financial statements, the Funds' annual reports
contain further information about the performance of the Funds.

Effective with the close of business on June 21 1996, Emerging Markets Fund
acquired the assets and assumed all identified liabilities of Hercules Latin
American Value Fund, a series of Hercules Funds Inc., in a tax-free
reorganization by issuing new shares. Emerging Markets Fund had no assets or
liabilities prior to the acquisition. Consequently, the information presented
for Emerging Markets Fund prior to June 21, 1996 represents the financial
history of Hercules Latin American Value Fund. The information presented for
Pacific-European Fund relates to fiscal periods ended both before and after
the conversion of the Fund from a closed-end to an open-end fund on August 31,
1992.

PACIFIC-EUROPEAN FUND
<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED PERIOD FROM
3/1/96 TO --------------------------------------------- 4/27/90(A)
9/30/96 (F) 2/29/96 2/28/95 2/28/94 2/28/93(E) 2/29/92 TO 2/28/91
PER SHARE DATA ----------- ------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 13.86 12.73 15.44 10.81 10.53 10.18 10.97
------- ----- ------ ----- ----- ----- -----
Operations:
Net investment income (loss)......... 0.07 0.05 (0.03) (0.03) -- 0.06 0.20
Net realized and unrealized gains
(losses)............................ (0.28) 2.03 (1.63) 4.72 0.28 0.37 (0.79)
------- ----- ------ ----- ----- ----- -----
Total from operations............... (0.21) 2.08 (1.66) 4.69 0.28 0.43 (0.59)
------- ----- ------ ----- ----- ----- -----
Distributions to shareholders:
From net investment income........... -- (0.05) -- -- -- (0.06) (0.20)
Tax return of capital................ -- -- -- -- -- (0.02) --
From net realized gains on invest-
ments............................... (0.71) (0.90) (1.05) (0.06) -- -- --
------- ----- ------ ----- ----- ----- -----
Total distributions to shareholders. (0.71) (0.95) (1.05) (0.06) -- (0.08) (0.20)
------- ----- ------ ----- ----- ----- -----
Net asset value, end of period........ $12.94 13.86 12.73 15.44 10.81 10.53 10.18
======= ===== ====== ===== ===== ===== =====
SELECTED INFORMATION
Total return(c) ...................... (1.66)% 16.70% (11.09)% 43.45% 2.66% 4.44% (5.03)%
Net assets at end of period
(in millions)........................ $ 172 163 154 166 60 36 34
Ratio of expenses to average daily net
assets(d)............................ 1.64%(b) 1.55% 1.76% 1.81% 2.25% 1.92% 1.77%(b)
Ratio of net investment income (loss)
to average daily net assets(d)....... 0.29%(b) 0.36% (0.19)% (0.29)% 0.03% 0.60% 2.36%(b)
Average brokerage commission rate (g). $0.0173 n/a n/a n/a n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities)............... 49% 65% 57% 52% 59% 69% 10%
</TABLE>

(a) Commencement of operations.
(b) Adjusted to an annual basis.
(c) Total return is based on the change in net asset value during the period,
assumes reinvestment of all distributions and does not reflect a sales
charge.
(d) During the periods reflected above, the Adviser and Distributor
voluntarily waived fees and/or reimbursed expenses. Had the Fund paid all
expenses and the maximum distribution fee been in effect, the ratios of
expenses and net investment income (loss) to average daily net assets
would have been as follows: 1.83%/0.10% for the period from March 1, 1996
to September 30, 1996, 1.73%/0.18%, 1.98%/(0.41%), 2.01%/(0.49%) and
2.59%/(0.31%) in fiscal years 1996, 1995, 1994 and 1993, respectively.
Beginning in fiscal 1996, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior period expense ratios have not
been adjusted.
(e) The Fund converted from a closed-end investment company to an open-end
investment company on August 31, 1992. Information for periods prior to
conversion are based on the Fund's operations as a closed-end fund. Fiscal
1993 expenses include 0.32% related to the conversion.
(f) On June 21, 1996, the Fund acquired the net assets of Hercules European
Value Fund and Hercules Pacific Basin Value Fund via a tax-free
reorganization.
(g) Beginning in the seven month period ended September 30, 1996, the Fund is
required to disclose an average brokerage commission rate. The rate is
calculated by dividing total brokerage commissions paid on purchases and
sales of portfolio securities by the total number of related shares
purchased and sold. The comparability of this information may be affected
by the fact that commission rates per share vary significantly among
foreign countries.

6
<PAGE>

EMERGING MARKETS FUND

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED PERIOD FROM
7/1/96 TO ------------------ 11/9/93(B)
9/30/96 6/30/96(A) 6/30/95 TO 6/30/94
----------- ---------- ------- -----------
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of
period......................... $8.84 $7.20 $ 9.14 $10.00
------- ----- ------ ------
Operations:
Net investment income.......... -- 0.01 -- 0.01
Net realized and unrealized
gains (losses)................ 0.01 1.63 (1.94) (0.87)
------- ----- ------ ------
Total from operations......... 0.01 1.64 (1.94) (0.86)
------- ----- ------ ------
Net asset value, end of period.. $8.85 $8.84 $ 7.20 $ 9.14
======= ===== ====== ======
SELECTED INFORMATION
Total return (c) ............... 0.11% 22.8% (21.23)% (8.60)%
Net assets at end of period (in
millions)...................... $ 14 $ 14 $ 23 $ 28
Ratio of expenses to average
daily net assets (e)........... 2.00%(d) 2.00% 2.00% 2.00%(d)
Ratio of net investment income
(loss) to average daily net as-
sets (e)....................... 0.26%(d) 0.15% (0.03)% 0.14%(d)
Average brokerage commission
rate (f)....................... $0.0009 n/a n/a n/a
Portfolio turnover rate
(excluding
short-term securities)......... 0% 140% 161% 78%
</TABLE>

(a) Emerging Markets Growth Fund commenced operations and acquired the net
assets of Hercules Latin American Value Fund on June 21, 1996, via a tax-
free reorganization. Emerging Markets Growth Fund had no assets or
liabilities prior to the acquisition. Consequently, the information
presented for Emerging Markets Growth Fund prior to June 21, 1996
represents the financial history of Hercules Latin American Value Fund. As
a result of the reorganization, the Fund's sub-adviser changed from
Bankers Trust Company to Edinburgh Fund Managers plc. On July 18, 1995,
shareholders approved a change in the Fund's investment manager from
Hercules International Management LLC to the Adviser.
(b) Commencement of operations of Hercules Latin American Value Fund.
(c) Total return is based on the change in net asset value during the period,
assumes reinvestment of all distributions and does not reflect a sales
charge.
(d) Adjusted to an annual basis.
(e) During the periods reflected above, the Adviser and Distributor
voluntarily waived fees and/or reimbursed expenses. Had the Fund paid all
expenses, the annualized ratios of expenses and net investment income
(loss) to average daily net assets would have been 4.09%/(1.83)% for the
period from July 1, 1996 to September 30, 1996, 3.54%/(1.39%) for the
fiscal year ended June 30, 1996, 3.47%/(1.50%) for the fiscal year ended
June 30, 1995 and 3.10%/(0.96%) for the fiscal period ended June 30, 1994.
(f) Beginning in the three month period ended September 30, 1996, the Fund is
required to disclose an average brokerage commission rate. The rate is
calculated by dividing total brokerage commissions paid on purchases and
sales of portfolio securities by the total number of related shares
purchased and sold. The comparability of this information may be affected
by the fact that commission rates per share vary significantly among
foreign countries.

7
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

PACIFIC-EUROPEAN FUND

Pacific-European Fund's investment objective is long-term capital
appreciation. Current income is incidental to this objective. Pacific-European
Fund seeks to achieve its investment objective through investments primarily
(under normal circumstances, at least 65% of its total assets) in Common Stock
of companies in the Pacific Basin or in Europe (including Eastern Europe).
"Common Stock" means common stock and foreign equity securities which are
substantially similar to common stock in the U.S. and does not include
preferred stock or convertible debt securities (such foreign equity securities
may have voting and distribution rights which differ from those of common
stock in the U.S.). The Pacific Basin is generally defined as those countries
bordering the Pacific Ocean. Pacific-European Fund may invest in the following
countries within the region: Malaysia, Pakistan, Sri Lanka, the Philippines,
Singapore, South Korea, Thailand, India, Indonesia, Hong Kong, Japan, Taiwan,
Australia and New Zealand. In addition, to the extent that suitable investment
opportunities become available, the Fund may invest in any other country
within the region, including, but not limited to, China. For purposes of this
Prospectus, unless otherwise indicated, Europe consists of Austria, Belgium,
Denmark, Germany, Finland, France, Greece, the Republic of Ireland, Italy, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey and the
United Kingdom (together, "Western Europe"), plus Albania, Bulgaria, the Czech
and Slovak Republics, Hungary, Poland, Romania, the successor states to the
former Yugoslavia, and the Commonwealth of Independent States (formerly, the
Union of Soviet Socialist Republics) (together, "Eastern Europe"). As the
securities markets of additional continental European countries develop, such
countries may be considered part of the Fund's definition of Europe and
appropriate countries for investment by the Fund.

As of September 30, 1996, approximately 58% of Pacific-European Fund's
investments were in companies in the Pacific Basin (including Japan) and
approximately 35% were in companies in Europe. While the Fund has no specific
policy or restriction on the allocation of its funds between Europe and the
Pacific Basin, the Adviser and the Sub-Adviser (collectively, "Management")
believe that the opportunities for long-term capital appreciation in the
Pacific Basin are generally superior to those currently available in the
economically more mature areas of the world. The relative emphasis of the
Fund's investments between the Pacific Basin and Europe may change over time
to the extent Management identifies greater investment opportunities in Europe
as a result of more attractive values, recent developments in Eastern Europe,
the removal of most intra-European trade barriers as a result of the adoption
of the Single European Act in 1992 or other factors. In normal market
conditions, the Fund's investments will be allocated among at least three
different countries in the Pacific Basin and/or Europe. For additional
information regarding the allocation of Fund investments, see "Investment
Objectives and Policies--Allocation Among Countries" in the Statement of
Additional Information.

A company is considered to be in the Pacific Basin or in Europe, as the case
may be, if (a) it is organized under the laws of a country within the Pacific
Basin or in Europe (including the United Kingdom); (b) at least 50% of its
assets are located in the Pacific Basin or in Europe; (c) it derives at least
50% of its total revenues from goods produced, sales made, services performed
or investment in companies in the Pacific Basin or in Europe; or (d) its
securities are traded principally on stock exchanges in a Pacific Basin or
European country. The Fund's definition of companies in the Pacific Basin or
in Europe may include companies that reflect economic and market forces
applicable to other regions as well as the Pacific Basin or Europe.
Nevertheless, Management believes that investment in such companies is
appropriate in light of the Fund's investment objective because Management
selects among

8
<PAGE>

such companies those which, in its view, have sufficiently strong exposure to
economic and market forces in the Pacific Basin or in Europe, as the case may
be, such that the value of the securities of such companies will tend to
reflect Pacific Basin or European developments to a greater extent than
developments in other regions. With respect to the investment by the Fund in
companies that receive 50% or more of their revenues from investments in
companies located in the Pacific Basin or Europe (e.g., investment companies
and trusts), the Fund believes that securities of such companies will
similarly reflect the development of the region in which it invests and, in
addition, the purchase of such securities is currently one of the few
mechanisms through which the Fund may invest in securities of South Korean,
Taiwanese and Indian companies.

In selecting individual securities within a country, emphasis is placed on
identifying securities of companies believed to be undervalued in the
marketplace in relation to such factors as the company's assets, earnings and
growth potential or which are believed best positioned within a particular
industry to take advantage of specific economic and political factors likely
to result in growth for such industry. Pacific-European Fund does not,
however, concentrate its investments in companies of a particular asset size
or in a particular industry, but instead selects its investments based on the
characteristics of the particular markets and economies of the countries in
which it invests.

Up to 25% of Pacific-European Fund's total assets may be invested in other
areas of the world to the extent significant opportunities for long-term
capital appreciation outside of the Pacific Basin and Europe become available.
The Fund currently invests a portion of its assets in certain countries in
Latin America, including Mexico, Brazil, Argentina, Chile, Peru, Venezuela,
Colombia and Ecuador. The Fund may invest in other Latin American countries as
opportunities develop. As of September 30, 1996, approximately 5% of the
Fund's investments were in companies in Latin America. The Fund does not
invest in Common Stock of U.S. companies.

The investment objective of the Fund is not fundamental and may be changed
without shareholder approval. If there is a change in investment objective,
shareholders should consider whether the Fund remains an appropriate
investment in light of their then current financial position and needs. No
assurance can be given that the Fund's investment objective will be achieved.

EMERGING MARKETS FUND

Emerging Markets Fund's investment objective is long-term capital
appreciation. Current income is incidental to this objective. Emerging Markets
Fund seeks to achieve its investment objective through investments primarily
(under normal circumstances, at least 65% of its total assets) in Common Stock
(as defined above) of issuers in the world's emerging securities markets.
Emerging securities markets can be found in regions such as Latin America,
Asia, Eastern Europe, the Middle East, Southern Europe and Africa. The Fund's
investment objective is fundamental and cannot be changed without shareholder
approval.

In attempting to achieve the Fund's investment objective, Management will
focus primarily on asset allocation among selected emerging markets and,
secondarily, on issuer selection within those markets. Because the Emerging
Markets Fund is the successor to the Hercules Latin American Value Fund (see
"General Information") the Fund's portfolio consisted primarily of securities
of Latin American issuers as of the date of this Prospectus. This may cause
the Fund's performance to be more volatile than that of a more geographically
diversified fund. See "Risk Factors" for a discussion of the risks of
investments in Latin

9
<PAGE>

America. As investment opportunities arise, however, Management expects to
allocate new investments among emerging markets in other geographic areas of
the world.

The Fund's assets will be allocated among emerging markets in accordance
with Management's judgment as to where the best investment opportunities
exist. Criteria for determining the appropriate distribution of investments
among various countries and regions include the prospects for relative growth
among the countries, expected levels of inflation, government policies
influencing business conditions, the outlook for currency relationships and
the range of alternative opportunities available to international investors.
Criteria for selection of individual securities within an emerging market
include the issuer's competitive position, prospects for growth, managerial
strength, earnings quality, underlying asset value, relative market value and
overall marketability. The Fund may invest in securities of companies having
various levels of net worth, including smaller companies whose securities
generally are more volatile than securities offered by larger companies with
higher levels of net worth.

Countries with emerging markets include those that have an emerging stock
market as defined by the International Finance Corporation, those with low- to
middle-income economies according to the International Bank for Reconstruction
and Development (the World Bank), and those listed in World Bank publications
as developing. The Fund will emphasize countries with relatively low gross
national product per capita compared to the world's major economies, and with
the potential for rapid economic growth. An issuer in an emerging market is
defined as a company: (1) the principal securities trading market for which is
an emerging market; (2) which is organized under the laws of an emerging
market country; or (3) which derives a significant proportion (at least 50%)
of its revenues or profits from goods produced or sold, investments made, or
services performed in the emerging market country or which has at least 50% of
its assets situated in such a country.

The Fund currently intends to select its investments from the following
countries with emerging markets:

ASIA: China, India, Indonesia, Korea, Malaysia,
Pakistan, Phillipines, Sri Lanka, Taiwan,
Thailand

EUROPE: Czech Republic, Greece, Hungary, Poland,
Portugal

LATIN AMERICA: Argentina, Brazil, Chile, Colombia, Mexico,
Peru, Venezuela

AFRICA: Nigeria, South Africa, Zimbabwe

MIDDLE EAST: Jordan, Turkey

The foregoing list of emerging markets is not exhaustive; the Fund may
invest in countries other than those listed above when such investments are
consistent with the Fund's investment objective and policies. The Fund will at
all times, except during defensive periods, maintain investments in at least
three countries having emerging markets.

Developing or emerging markets tend to be in less economically developed
regions of the world. General characteristics of developing market countries
also include lower degrees of political stability, a high demand for capital
investment, a high dependence on export markets for their major industries, a
need to develop basic economic infrastructures, and rapid economic growth.
Management believes that investments in Common Stock of companies in emerging
markets offer the opportunity for significant long-term investment returns.
However, these investments involve certain risks. See "Risk Factors" below.

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<PAGE>

TYPES OF SECURITIES IN WHICH THE FUNDS MAY INVEST

The Funds invest primarily in Common Stock. In addition, up to 10% of each
Fund's assets may be invested in rights, options or warrants to purchase
Common Stock. In addition to investing directly in Common Stock, the Funds may
invest in American Depository Receipts ("ADRs") and European Depository
Receipts ("EDRs"). Generally, ADRs in registered form are U.S. dollar
denominated securities designed for use in the U.S. securities markets, which
represent and may be converted into the underlying foreign security. The Funds
do not currently intend to invest in ADRs sponsored by persons other than the
underlying issuers. EDRs are typically issued in bearer form and are designed
for use in the European securities markets. The Funds also may purchase shares
of investment companies or trusts which invest principally in securities in
which the Funds are authorized to invest. The purchase of investment company
stock currently is one of the few mechanisms through which the Funds may
invest in securities of companies located in a number of countries. For a
discussion of the risks of investing in investment companies, see "Risk
Factors--Investment and Repatriation Restrictions."

For temporary defensive purposes, the Funds may invest without limitation in
U.S. dollar denominated or foreign currency denominated cash or in high
quality debt securities with remaining maturities of one year or less. Such
securities may include commercial paper, certificates of deposit, bankers'
acceptances and securities issued by the U.S. or a foreign government, their
agencies or instrumentalities. All securities in which the Funds invest for
defensive purposes (other than securities issued or guaranteed by the U.S. or
a foreign government, their agencies or instrumentalities) must be rated AA or
better by Standard & Poor's Ratings Services or be of comparable quality as
determined by the Adviser. For an explanation of ratings, see Appendix A to
the Statement of Additional Information.

SPECIAL INVESTMENT METHODS

The following discussion describes some of the investment management
practices that the Funds may employ from time to time to facilitate portfolio
management and mitigate risk. Certain of these practices could be considered
"derivative" transactions. The term "derivatives" has been used to identify a
variety of financial instruments; there is no discrete class of instruments
that is covered by the term. A "derivative" is commonly defined as a financial
instrument whose value is based upon, or derived from, an underlying index,
reference rate (e.g., interest rates or currency exchange rates), security,
commodity or other asset. Forward currency transactions, options on
securities, futures contracts, options on futures contracts and when-issued
securities transactions are derivative contracts. These derivative contracts
involve varying degrees and types of risk as set forth below.

FOREIGN CURRENCY TRANSACTIONS

The Funds may engage in currency exchange transactions in connection with
the purchase and sale of their investments. Currency exchange transactions are
necessary to enable the Funds to purchase securities denominated in a foreign
currency and to convert interest and dividend payments or sales proceeds paid
in a foreign currency into U.S. dollars or into another currency. In addition,
the Funds may engage in forward foreign currency exchange transactions and
foreign currency futures and options transactions to protect against
uncertainty with respect to future currency exchange rates. Forward currency
exchange and futures and options transactions are used only for hedging and
not for speculation. The Funds conduct currency exchange transactions either
on a spot (cash) basis at the rate prevailing in the currency exchange market
or through entering into forward or futures contracts to purchase or sell
foreign currencies.

11
<PAGE>

The Funds may engage in "transaction hedging" to protect against a change in
the foreign currency exchange rate between the date on which a Fund contracts
to purchase or sell the security and the settlement date or to "lock in" the
U.S. dollar equivalent (or other foreign currency equivalent to the extent
needed for purposes of purchasing securities) of a dividend or interest
payment in a foreign currency. For that purpose, the Funds may purchase or
sell a foreign currency on a spot (or cash) basis at the prevailing spot rate
in connection with the settlement of transactions in portfolio securities
denominated in that foreign currency.

If conditions warrant, the Funds may also enter into contracts to purchase
or sell foreign currencies at a future date ("forward contracts") and purchase
or sell foreign currency futures contracts as a hedge against changes in
foreign currency exchange rates between the trade and settlement dates on
particular transactions and not for speculation. A foreign currency forward
contract is a negotiated agreement to exchange currency at a future time at a
rate or rates that may be higher or lower than the spot rate. Foreign currency
futures contracts are standardized exchange-traded contracts and have margin
requirements.

For transaction hedging purposes, the Funds may also purchase exchange-
listed and over-the-counter call and put options on foreign currency futures
contracts and on foreign currencies. A put option on a futures contract gives
a Fund the right to assume a short position in the futures contract until
expiration of the option. A put option on currency gives a Fund the right to
sell a currency at an exercise price until the expiration of the option. A
call option on a futures contract gives a Fund the right to assume a long
position in the futures contract until the expiration of the option. A call
option on currency gives a Fund the right to purchase a currency at the
exercise price until the expiration of the option.

The Funds may engage in "position hedging" to protect against a decline in
the value relative to the U.S. dollar of the currencies in which portfolio
securities are denominated or quoted (or an increase in the value of currency
for securities which a Fund intends to buy, when it holds cash reserves and
short-term investments). For position hedging purposes, the Funds may purchase
or sell foreign currency futures contracts and foreign currency forward
contracts, and may purchase put or call options on foreign currency futures
contracts and in foreign currencies on exchanges or over-the-counter markets.
In connection with position hedging, the Funds may also purchase or sell
foreign currency on a spot basis.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Funds own or intend to purchase
or sell. They simply establish a rate of exchange which one can achieve at
some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they tend to limit any potential gain which might result from the
increase in the value of such currency. In addition, hedging transactions
involve costs and may result in losses. The Funds may write covered call
options on foreign currencies to offset some of the costs of hedging those
currencies. The Funds will engage in over-the-counter transactions only when
appropriate exchange-traded transactions are unavailable and when, in the
opinion of the Adviser, the pricing mechanism and liquidity are satisfactory
and the participants are responsible parties likely to meet their contractual
obligations. Each Fund's ability to engage in hedging and related option
transactions may be limited by tax considerations. See "Taxation--Consequences
of Certain Fund Investments" in the Statement of Additional Information.

For additional information regarding foreign currency transactions, see
"Investment Objectives and Policies--Foreign Currency Transactions" in the
Statement of Additional Information.

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<PAGE>

HEDGING

The Funds may engage in various futures and put and call transactions
(collectively, "Hedging Transactions"). Hedging Transactions may be used to
attempt to protect against possible declines in the market value of a Fund's
portfolio, to protect a Fund's unrealized gains in the value of its portfolio
securities, to facilitate the sale of such securities for investment purposes
or to establish a position in the securities markets as a temporary substitute
for purchasing particular securities. Any or all of these techniques may be
used at any time. There is no overall limitation on the percentage of a Fund's
portfolio securities which may be subject to a hedge position. There is no
particular strategy that requires use of one technique rather than another.
Use of any Hedging Transaction is a function of market conditions. The Hedging
Transactions that the Funds may use are described below. Additional Hedging
Transactions may be used by the Funds in the future as they are developed to
the extent deemed appropriate by the Board of Directors of Piper Global.

Options on Securities. In seeking to reduce fluctuations in net asset value,
the Funds may write (i.e., sell), covered put and call options and purchase
put and call options on the securities in which they may invest. Such options
are traded on U.S. and foreign securities exchanges and in the over-the-
counter markets.

A put option gives the buyer of such option, upon payment of a premium, the
right to deliver a specified amount of a security to the writer of the option
on or before a fixed date at a predetermined price. A call option gives the
purchaser of the option, upon payment of a premium, the right to call upon the
writer to deliver a specified amount of a security on or before a fixed date,
at a predetermined price. A call option written by a Fund is "covered" if the
Fund owns the underlying security covered by the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or for additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if a Fund holds a call on the same
security and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the exercise
price of the call written or (b) is greater than the exercise price of the
call written if the difference is maintained by the Fund in cash and high
grade liquid debt securities in a segregated account with its custodian. A put
option written by a Fund is "covered" if the Fund maintains cash and high
grade liquid debt securities with a value equal to the exercise price in a
segregated account with its custodian, or else holds a put on the same
security and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price
of the put written. The Funds will not write puts if, as a result, more than
50% of a Fund's assets would be required to be segregated. The premium paid by
the purchaser of an option will reflect, among other things, the relationship
of the exercise price to the market price and volatility of the underlying
security, the remaining term of the option, supply and demand and interest
rates.

In purchasing a call option, a Fund would be in a position to realize a gain
if, during the option period, the price of the security increased above the
call option price by an amount in excess of the cost of the option. Otherwise,
it would realize a loss. In purchasing a put option, a Fund would be in a
position to realize a gain if, during the option period, the price of the
security declined below the put option price by an amount in excess of the
cost of the option. Otherwise, it would realize a loss. If a put or call
option purchased by a Fund were permitted to expire without being sold or
exercised, its premium would be lost by the Fund.

If a put option written by a Fund were exercised, the Fund would be
obligated to purchase the underlying security at the exercise price. If a call
option written by a Fund were exercised, the Fund

13
<PAGE>

would be obligated to sell the underlying security at the exercise price. The
risk involved in writing a put option is that there could be a decrease in the
market value of the underlying security caused by rising interest rates or
other factors. If this occurred, the option could be exercised and the
underlying security would then be sold to the Fund at a higher price than its
current value. The risk involved in writing a call option is that there could
be an increase in the market value of the underlying security caused by
declining interest rates or other factors. If this occurred, the option could
be exercised and the underlying security would then be sold by the Fund at a
lower price than its current market value. These risks could be reduced by
entering into a closing transaction as described in Appendix B to the
Statement of Additional Information. A Fund retains the premium received from
writing a put or call option whether or not the option is exercised. See
Appendix B to the Statement of Additional Information for a further discussion
of the use, risks and costs of option trading.

The exchanges have established position limits governing the maximum number
of options which may be written by an investor or group of investors acting in
concert. Similarly, the Commodities Futures Trading Commission and the Chicago
Board of Trade have established futures position limits for an investor or
group of investors acting in concert. (A discussion of the Funds' ability to
invest in futures contracts and options thereon is set forth below.) The
position limits may restrict a Fund's ability to purchase or write options on
a particular security or to enter into futures contracts. It is possible that
the Funds and other clients of the Adviser, including closed-end and other
open-end investment companies managed by the Adviser, may be considered to be
a group of investors acting in concert. Thus, the number of options or futures
transactions which a Fund may enter into may be affected by options or futures
transactions of other investment advisory clients of the Adviser.

Over-the-counter options are purchased or written by a Fund in privately
negotiated transactions. Such options are illiquid and it may not be possible
for a Fund to dispose of an option it has purchased or terminate its
obligations under an option it has written at a time when the Adviser believes
it would be advantageous to do so.

Futures Contracts and Options on Futures Contracts. The Funds may enter into
contracts for the purchase or sale for future delivery of securities or
contracts based on financial indices including any index of securities in
which the Funds may invest ("futures contracts") and may purchase and write
put and call options to buy or sell futures contracts ("options on futures
contracts"). A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at
a specified price on a specified date. The purchaser of a futures contract on
an index agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of the index on
the expiration date of the contract ("current contract value") and the price
at which the contract was originally struck. No physical delivery of the
securities underlying the index is made. Options on futures contracts to be
written or purchased by the Funds will be traded on exchanges or over-the-
counter. These investment techniques are used only to hedge against declines
in the value of a Fund's portfolio securities or increases in the prices of
securities which a Fund intends to purchase at a later date. The successful
use of such instruments relies upon Management's experience with respect to
such instruments. Should prices move in an unexpected manner, a Fund may not
achieve the anticipated benefits of futures contracts or options on futures
contracts or may realize losses and would thus be in a worse position than if
such strategies had not been used. In addition, the correlation between
movements in the price of futures contracts or options on futures contracts
and movements in the prices of the securities hedged or used for cover will
not be perfect. See Appendix B to the Statement of Additional Information for
further discussion of the use, risks and costs of futures contracts and
options on futures contracts.

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<PAGE>

Futures contracts and options on futures contracts are used only as a hedge
and not for speculation. In addition, the Funds do not enter into any futures
contracts or options on futures contracts if immediately thereafter the amount
of initial margin deposits on all the futures contracts of a Fund and premiums
paid on options on futures contracts would exceed 5% of the market value of
the total assets of such Fund. This restriction will not be changed by the
Board of Directors without considering the policies and concerns of the
various applicable federal and state regulatory agencies.

The Funds limit their activities in options and futures contracts to the
extent necessary to prevent disqualification of a Fund as a regulated
investment company under the Internal Revenue Code. For a discussion of the
tax treatment of futures contracts and options on futures contracts, see
"Taxation--Consequences of Certain Fund Investments" in the Statement of
Additional Information.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

Each Fund may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "forward commitment" basis. The Funds may make such
purchases in order to lock-in the purchase price of a security which
Management believes will appreciate in value. There is always the risk,
however, that the security will decrease in value prior to its delivery. When
such transactions are negotiated, the price is fixed at the time the
commitment is made, but delivery and payment for the securities take place at
a later date, which can be a month or more after the date of the transaction.
At the time a Fund makes the commitment to purchase securities on a when-
issued or forward commitment basis, it will record the transaction and
thereafter reflect the value of such securities in determining its net asset
value. At the time a Fund enters into a transaction on a when-issued or
forward commitment basis, a segregated account consisting of cash or liquid
securities equal to the value of the when-issued or forward commitment
securities will be established and maintained with the custodian and will be
marked to the market daily. On the delivery date, the Fund will meet its
obligations from securities that are then maturing or sale of the securities
held in the segregated asset account and/or from then available cash flow. If
a Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it can incur a gain or loss due to market fluctuation.

There is always a risk that the securities may not be delivered and that a
Fund may incur a loss or will have lost the opportunity to invest the amount
set aside for such transaction in the segregated asset account. The purchase
of securities on a when-issued or forward commitment basis can result in
increased volatility of a Fund's net asset value to the extent the Fund makes
such purchases while remaining substantially fully invested. Settlements in
the ordinary course, which may take substantially more than three business
days for non-U.S. securities, are not treated by the Funds as when-issued or
forward commitment transactions and, accordingly, are not subject to the
foregoing limitations even though some of the risks described above may be
present in such transactions.

REPURCHASE AGREEMENTS

Each Fund may enter, without limitation, into repurchase agreements
pertaining to the securities in which it may invest with securities dealers or
member banks of the Federal Reserve System. A repurchase agreement arises when
a buyer such as a Fund purchases a security and simultaneously agrees to
resell it to the vendor at an agreed-upon future date, normally one day or a
few days later. The resale price is greater than the purchase price,
reflecting an agreed upon interest rate which is effective for the period

15
<PAGE>

of time the buyer's money is invested in the security and which is related to
the current market rate rather than the coupon rate on the purchased security.
Such agreements permit a Fund to keep all of its assets at work while
retaining "overnight" flexibility in pursuit of investments of a longer-term
nature. A Fund requires continual maintenance by its custodian for its account
in the Federal Reserve/Treasury Book Entry System of collateral in an amount
equal to, or in excess of, the resale price. In the event a vendor defaults on
its repurchase obligation, a Fund might suffer a loss to the extent that the
proceeds from the sale of the collateral are less than the repurchase price.
In the event of a vendor's bankruptcy, a Fund might be delayed in, or
prevented from, selling the collateral for the Fund's benefit. The Board of
Directors has established procedures, which are periodically reviewed by the
Board, pursuant to which the Adviser will monitor the creditworthiness of the
dealers and banks with which the Funds enter into repurchase agreement
transactions.

LENDING OF SECURITIES

In order to facilitate achievement of their investment objectives, the Funds
may from time to time lend securities from their portfolios to brokers,
dealers and financial institutions and receive collateral in the form of cash
or U.S. government securities. Securities lending may be used to generate
income to cushion a Fund against declines in stock prices without requiring
the Fund to sell portfolio securities which it believes will appreciate in
value. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. However, a Fund will enter into loan arrangements
only with brokers, dealers or financial institutions which the Adviser has
determined are creditworthy under guidelines established by the Board of
Directors. In addition, collateral for such loans must be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities (including interest on the loaned securities). The interest
accruing on the loaned securities will be paid to the Fund and the Fund will
have the right, on demand, to call back the loaned securities. A Fund may pay
fees to arrange the loans. Each Fund will not lend portfolio securities in
excess of 30% of the value of its total assets (including such loans), nor
does a Fund lend its portfolio securities to any officer, director, employee
or affiliate of the Fund or the Adviser or Sub-Adviser.

ILLIQUID SECURITIES

Neither Fund will invest more than 15% of its net assets in illiquid
securities. For Pacific-European Fund, this a fundamental investment
restriction that may not be changed without the approval of a majority of the
Fund's shares. The restriction is non-fundamental for Emerging Markets Funds,
and thus may be changed without shareholder approval. A security is considered
illiquid if it cannot be sold in the ordinary course of business within seven
days at approximately the price at which it is valued. Illiquid securities may
offer a higher yield than securities which are more readily marketable, but
they may not always be marketable on advantageous terms.

The sale of illiquid securities often requires more time and results in
higher brokerage charges or dealer discounts and other selling expenses than
does the sale of securities eligible for trading on national securities
exchanges or in the over-the-counter markets. A Fund may be restricted in its
ability to sell such securities at a time when the Adviser or Sub-Adviser
deems it advisable to do so. In addition, in order to meet redemption
requests, a Fund may have to sell other assets, rather than such illiquid
securities, at a time which is not advantageous.

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<PAGE>

"Restricted securities" are securities which were originally sold in private
placements and which have not been registered under the Securities Act of 1933
(the "1933 Act"). Such securities generally have been considered illiquid,
since they may be resold only subject to statutory restrictions and delays or
if registered under the 1933 Act. In 1990, however, the Securities and
Exchange Commission adopted Rule 144A under the 1933 Act, which provides a
safe harbor exemption from the registration requirements of the 1933 Act for
resales of restricted securities to "qualified institutional buyers," as
defined in the rule. The result of this rule has been the development of a
more liquid and efficient institutional resale market for restricted
securities. Thus, restricted securities are no longer necessarily illiquid.
The Funds may therefore invest in Rule 144A securities and treat them as
liquid when they have been determined to be liquid by the Board of Directors
or by the Adviser or Sub-Adviser subject to the oversight of and pursuant to
procedures adopted by the Board of Directors. See "Investment Objectives and
Policies--Illiquid Securities" in the Statement of Additional Information.
Similar determinations may be made with respect to commercial paper issued in
reliance on the so-called "private placement" exemption from registration
under Section 4(2) of the 1933 Act.

BORROWING

Each Fund may borrow money only from banks for temporary or emergency
purposes in an amount up to 10% of the value of the Fund's total assets,
provided that reverse repurchase agreements entered into by the Fund are not
subject to such limitation. Reverse repurchase agreements are subject,
however, to the asset coverage requirements of the Investment Company Act of
1940 (the "1940 Act") and to certain segregated account requirements. The
Funds have not entered into reverse repurchase agreements in the past and have
no current intention of entering into such agreements in the future. See
"Investment Objectives and Policies--Reverse Repurchase Agreements" in the
Statement of Additional Information. Interest paid by a Fund on borrowed funds
will decrease the net earnings of that Fund. A Fund will not purchase
portfolio securities while outstanding borrowings (other than reverse
repurchase agreements) exceed 5% of the value of such Fund's total assets.
Each Fund may mortgage, pledge or hypothecate its assets only to secure such
temporary or emergency borrowing. The policies set forth in this paragraph are
fundamental and may not be changed without shareholder approval.

PORTFOLIO TURNOVER

The Funds intend to acquire and hold securities for long-term capital
appreciation and normally do not intend to trade in securities for short-term
gains; however, securities may be purchased and sold at such times as
Management deems to be in the best interests of a Fund and its shareholders. A
higher turnover rate may result in higher expenses for a Fund. The method of
calculating portfolio turnover rate is set forth in the Statement of
Additional Information under "Investment Objectives and Policies--Portfolio
Turnover." Portfolio turnover rates for the Funds are set forth in "Financial
Highlights."

INVESTMENT RESTRICTIONS

The Funds have adopted certain fundamental and nonfundamental investment
restrictions in addition to those set forth above. Fundamental investment
restrictions which may not be changed without shareholder approval include the
following: (1) With respect to 75% of its total assets, Pacific-European Fund
will not invest more than 5% of the value of its total assets in any one
issuer, or own more than 10% of the outstanding voting securities of any one
issuer. (These restrictions do not apply to securities issued or guaranteed by
the U.S. government or any agency or instrumentality thereof. For

17
<PAGE>

purposes of these restrictions, the government of any country (other than the
U.S.), including its governmental subdivisions, is each considered a single
issuer.) (2) The Funds will not invest 25% or more of the value of their total
assets in the same industry. (This restriction does not apply to securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities.) In addition, as nonfundamental investment restrictions
which may be changed at any time without shareholder approval, the Funds will
not invest more than 5% of their net assets in warrants or more than 5% of
their total assets in the securities of issuers which, with their
predecessors, have a record of less than three years' continuous operation. A
complete list of each Fund's fundamental and nonfundamental investment
restrictions is set forth in the Statement of Additional Information.

RISK FACTORS

Investment in foreign securities requires consideration of factors not
typically associated with investment in securities of U.S. issuers. Those
include the following:

Currency Fluctuations. The value of a Fund's portfolio securities computed
in U.S. dollars will vary with increases and decreases in the exchange rate
between the currencies in which the Fund has invested and the U.S. dollar. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of a Fund's holdings of securities
denominated in such currency and, therefore, will cause an overall decline in
the Fund's net asset value and net investment income and capital gains, if
any, to be distributed in U.S. dollars to shareholders by the Fund.

The rate of exchange between the U.S. dollar and other currencies is
determined by several factors, including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the
movement of interest rates, the price of oil, the pace of activity in the
industrial countries, including the United States, and other economic and
financial conditions affecting the world economy.

Political and Economic Risks. Investing in securities of non-U.S. companies
may entail additional risks. Nationalization, expropriation or confiscatory
taxation, currency blockage, political changes, government regulation, social
instability or diplomatic developments could affect adversely the economy of a
country or a Fund's investment in such country. The Funds may also be
adversely affected by exchange control regulations.

Corporate Disclosure Standards and Governmental Regulation. Non-U.S.
companies are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory requirements comparable
to those applicable to U.S. companies. Thus, there may be less available
information concerning non-U.S. issuers of securities held by a Fund than is
available concerning U.S. companies.

18
<PAGE>

international investors such as the Funds, some emerging markets companies may
submit to reviews of their financial condition conducted in accordance with
accounting standards employed in Western countries. Management believes that
such information, together with the application of other analytical
techniques, can provide an adequate basis on which to assess the financial
viability of such companies.

Market Characteristics. Securities of many non-U.S. companies may be less
liquid and their prices more volatile than securities of comparable U.S.
companies. In addition, securities of companies traded in many countries
outside the U.S., particularly those of emerging securities markets, may be
subject to further risks due to the inexperience of local brokers and
financial institutions in less developed markets, the possibility of permanent
or temporary termination of trading, and greater spreads between bid and asked
prices for securities. The typically small size of the markets for securities
issued by issuers located in emerging markets and the possibility of a low or
nonexistent volume of trading in those securities may also result in a lack of
liquidity and in price volatility of those securities. Non-U.S. stock
exchanges and brokers are subject to less governmental supervision and
regulation than in the U.S. and non-U.S. stock exchange transactions are
usually subject to fixed commissions, which are generally higher than
negotiated commissions on U.S. transactions. In addition, there may in certain
instances be delays in the settlement of non-U.S. stock exchange transactions.

Investment and Repatriation Restrictions. Some countries, particularly
emerging markets, restrict, to varying degrees, foreign investments in their
securities markets. Government and private restrictions take a variety of
forms, including (a) limitations on the amount of funds that may be introduced
into or repatriated from the country (including limitations on repatriation of
investment income and capital gains); (b) prohibitions or substantial
restrictions on foreign investment in certain industries or market sectors,
such as defense, energy and transportation; (c) restrictions (whether
contained in the charter of an individual company or mandated by the
government) on the percentage of securities of a single issuer which may be
owned by a foreign investor; (d) limitations on the types of securities which
a foreign investor may purchase; and (e) restrictions on a foreign investor's
right to invest in companies whose securities are not publicly traded. In some
circumstances, these restrictions may limit or preclude investment in certain
countries or may increase the cost of investing in securities of particular
companies.

The governments of some countries may require that a governmental or quasi-
governmental authority act as custodian of a Fund's assets invested in such
countries. These authorities may not be qualified to act as foreign custodians
under the 1940 Act and, as a result, the Funds will not be able to invest in
these countries in the absence of exemptive relief from the Securities and
Exchange Commission. In addition, the risk of loss through government
confiscation may be increased in such countries.

Foreign Taxes. Each Fund's interest and dividend income from foreign issuers
may be subject to non-U.S. withholding taxes. Each Fund also may be subject to
taxes on trading profits in some countries. In addition, some countries have a
transfer or stamp duties tax on certain securities transactions. The
imposition of these taxes will increase the cost to a Fund of investing in any
country imposing such taxes. For U.S. tax purposes, U.S. shareholders may be
entitled to a credit or deduction to the extent of any foreign income taxes
paid by a Fund. See "Tax Status."

19
<PAGE>

governing private and foreign investments and private property. The typically
small size of the markets for securities issued by issuers located in emerging
markets and the possibility of a low or nonexistent volume of trading in those
securities may also result in a lack of liquidity and in price volatility of
those securities. In addition, issuers in emerging markets typically are
subject to a greater degree of change in earnings and business prospects than
are companies in developed markets.

Included among the emerging markets in which both Funds may invest are the
formerly communist countries of Eastern Europe and the People's Republic of
China. Emerging Markets Fund may also invest in the Commonwealth of
Independent States (formerly the Soviet Union). (These countries are referred
to collectively as the "Communist Countries.") Upon the accession to power of
Communist regimes approximately 40 to 70 years ago, the governments of a
number of Communist Countries expropriated a large amount of property. The
claims of many property owners against those governments were never finally
settled. There can be no assurance that any Fund investments in Communist
Countries would not also be expropriated, nationalized or otherwise
confiscated. In the event of such expropriation, nationalization or other
confiscation, a Fund could lose its entire investment in the country involved.
In addition, any change in the leadership or policies of Communist Countries
may halt the expansion of or reverse the liberalization of foreign investment
policies now occurring and adversely affect existing investment opportunities.

Risks of Investments in Latin America. Because the Emerging Markets Fund is
the successor to the Hercules Latin American Value Fund (see "General
Information") the Fund's portfolio consisted primarily of securities of Latin
American issuers as of the date of this Prospectus. Many of the currencies of
Latin American and certain other emerging market countries have experienced
steady devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Devaluations in the currencies in
which Emerging Markets Fund's portfolio securities are denominated may have a
detrimental impact on the Fund.

Some Latin American countries also may have managed currencies which are not
free-floating against the U.S. dollar. In addition, there is a risk that
certain Latin American and other emerging market countries may restrict the
free conversion of their currencies into other currencies. Further, certain
currencies issued by Latin American countries may not be internationally
traded.

Most Latin American countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very
negative effects on the economies and securities markets of certain Latin
American countries.

Many Latin American governments have exercised and continue to exercise a
significant influence over many aspects of the private sector. Government
actions concerning the economy could have a significant effect on market
conditions and prices and/or yields of securities in which Emerging Markets
Fund invests. For more information on investment in Latin American and other
emerging market countries, see "Investment Objectives and Policies--Additional
Risks of Investments in Latin America" in the Statement of Additional
Information.

Other Investment Practices. The Funds may engage in investment practices
which involve certain special risks. These include foreign currency
transactions, purchasing and selling options on securities, entering into
futures contracts, purchasing and selling put and call options on futures
contracts, and the purchase and sale of securities on a "when-issued" or
"forward commitment" basis, all of which could

20
<PAGE>

be considered "derivative transactions," the use of repurchase agreements, the
lending of portfolio securities, investing in illiquid securities, and
borrowing from banks (but only for temporary or emergency purposes in an
amount up to 10% of the value of a Fund's total assets). The use of these
techniques may increase the volatility of a Fund's net asset value. See
"Special Investment Methods" for a discussion of the risks involved with these
investment practices.

DIVERSIFICATION STATUS

Pacific-European Fund operates as a "diversified" management investment
company, as defined in the 1940 Act, which means that with respect to at least
75% of its total assets, it will not invest more than 5% of the value of its
total assets in any one issuer or own more than 10% of the outstanding voting
securities of any one issuer. Emerging Markets Fund is "non-diversified" and,
accordingly, will be able to invest more than 5% of the value of its assets in
the obligations of a single issuer, subject to the diversification
requirements of subchapter M of the Internal Revenue Code of 1986, as amended.
To the extent that Emerging Markets Fund invests a relatively high percentage
of its assets in obligations of a limited number of issuers, the Fund may be
more susceptible than more widely diversified funds to any single economic,
political or regulatory occurrence or to changes in an issuer's financial
condition or in the market's assessment of the issuers.

MANAGEMENT
BOARD OF DIRECTORS

The Board of Directors of Piper Global has the primary responsibility for
overseeing the overall management of Piper Global and electing its officers.

INVESTMENT ADVISER

Piper Capital Management Incorporated (the "Adviser") has been retained
under an Investment Advisory and Management Agreement (the "Advisory
Agreement") with Piper Global to act as each Fund's investment adviser subject
to the authority of the Board of Directors.

In addition to acting as the investment adviser for the Funds, the Adviser
serves as investment adviser to a number of other open-end and closed-end
investment companies and to various other concerns, including pension and
profit sharing funds, corporate funds and individuals. As of September 30,
1996, the Adviser rendered investment advice regarding approximately $9
billion of assets. The Adviser is a wholly owned subsidiary of Piper Jaffray
Companies Inc., a publicly held corporation which is engaged through its
subsidiaries in various aspects of the financial services industry. The
address of the Adviser is Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota 55402-3804.

The Adviser supervises, directs and monitors the day to day operations of
the Funds in accordance with each Fund's investment objective, policies and
restrictions, as well as the implementation of investment programs formulated
by the Sub-Adviser. The Adviser reviews investment and allocation
determinations of the Sub-Adviser. In addition, the Sub-Adviser must obtain
the Adviser's approval prior to (a) any investment of the assets of Pacific-
European Fund in any country outside of the Pacific Basin or Europe and (b)
any investment by the Sub-Adviser which would result in reallocation of in
excess of 5% of Pacific-European Fund's total assets. The Adviser determines
the broker-dealers which are eligible to execute transactions on behalf of the
Funds. The Adviser furnishes at its own expense all necessary

21
<PAGE>

administrative services, office space, equipment and clerical personnel for
providing the foregoing services. In addition, the Adviser pays the salaries
and fees of all officers and directors of the Funds who are affiliated with
the Adviser. The Adviser is liable to the Funds for losses resulting from
willful misconduct, bad faith or gross negligence in the performance of its
duties or from its reckless disregard of its duties under the Advisory
Agreement.

Complaints have been brought against the Adviser relating to several other
investment companies for which the Adviser acts or has acted as investment
adviser or subadviser. These lawsuits do not involve the Funds. See "General
Information--Pending Legal Proceedings."

Pacific-European Fund. Under the Advisory Agreement, Pacific-European Fund
pays the Adviser a monthly management fee. The fee is paid at an annual rate
of 1% on average daily net assets up to $100 million, .875% on net assets over
$100 million and up to $200 million, and .75% on net assets over $200 million
(the "Basic Fee"), and is subject to adjustment as described below. The
adjustment is based upon the investment performance of the Fund in relation to
the investment record of the Morgan Stanley Capital International EAFESM Index
(the "EAFE Index"). The Basic Fee is higher than fees paid by most other
investment companies.

Adjustments to the Basic Fee are made by comparison of the Fund's investment
performance for the applicable period with the investment record of the EAFE
Index. The Basic Fee for each month may be increased or decreased by up to
.25% (on an annualized basis) of the Fund's average daily net assets depending
upon the extent (as set forth below) by which the Fund's performance varies
from the EAFE Index over the applicable performance period. For purposes of
calculation of the performance adjustment, average daily net assets are equal
to the Fund's average daily net assets during the month for which the
calculation is being made.

The following table illustrates the full range of permitted increases or
decreases to the Basic Fee on an annualized basis:

<TABLE>
<CAPTION>
ADJUSTMENT
TO BASIC FEE
PERFORMANCE OF FUND RELATIVE TO EAFE INDEX (ANNUALIZED)
------------------------------------------ ------------
<S> <C>
+5 Percentage Points or more................................. +.25
+4........................................................... +.20
+3........................................................... +.15
+2........................................................... +.10
+1........................................................... +.05
0.......................................................... 0
-1........................................................... -.05
-2........................................................... -.10
-3........................................................... -.15
-4........................................................... -.20
-5 Percentage Points or more................................. -.25
</TABLE>

The Basic Fee, plus or minus the performance adjustments calculated as
described herein, is paid monthly. The applicable performance period is a
rolling 12-month period consisting of the most recent calendar month plus the
immediately preceding 11 months.

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<PAGE>

In calculating the investment performance of Pacific-European Fund as
compared with the investment record of the EAFE Index, dividends and other
distributions of the Fund and dividends and other distributions made with
respect to component securities of the EAFE Index during the performance
period are treated as having been reinvested. The investment performance of
the Fund is calculated based upon the total return of the Fund for the
applicable period, which consists of the total net asset value of the Fund at
the end of the applicable period, including reinvestment of dividends and
distributions, less the net asset value of the Fund at the commencement of the
applicable period divided by the net asset value of the Fund at the
commencement of the applicable period. Fractions of a percentage point are
rounded to the nearest whole point (to the higher whole point if exactly one-
half).

The EAFE Index is a market capitalization weighted index containing (as of
September 30, 1996) 1,100 companies representing approximately 60% of the
market capitalization of each of the following 20 countries: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland,
Italy, Japan, The Netherlands, New Zealand, Norway, Singapore, Malaysia,
Spain, Sweden, Switzerland and the United Kingdom. The EAFE Index is an
unmanaged index of common stocks, whereas Pacific-European Fund, under normal
circumstances, may invest up to 35% of its assets in securities other than
common stock. Additionally, the largest percentages of the EAFE Index are
currently represented by the Japanese and United Kingdom markets, which
currently represent approximately 37% and 17.5%, respectively, of the EAFE
Index. Consequently, the extent to which the EAFE Index increases or decreases
in any one year will be affected significantly by the performance of these
markets. Pacific-European Fund had approximately 46% and 10%, respectively, of
its total assets invested in Japan and the United Kingdom as of September 30,
1996. Because the Fund's weighting in these two markets is not as significant
as that of the EAFE Index, the performance of the other markets in which the
Fund invests, as compared to that of the Japanese and United Kingdom markets,
will affect to a significant degree whether the Fund outperforms or
underperforms the EAFE Index.

Emerging Markets Fund. Emerging Markets Fund pays the Adviser a monthly
management fee at an annual rate of 1% of the Fund's average daily net assets.
This fee is higher than that paid by most other mutual funds.

SUB-ADVISER

Edinburgh Fund Managers plc, Donaldson House, 97 Haymarket Terrace,
Edinburgh, Scotland EH12, 5HD, is the Sub-Adviser for each Fund under an
agreement with the Adviser (the "Sub-Advisory Agreement"). The Sub-Adviser is
responsible for the investment and reinvestment of the Funds' assets and the
placement of brokerage transactions in connection therewith. For its services
to Pacific-European Fund, the Sub-Adviser is paid a fee by the Adviser equal
to 65% of the Basic Fee plus or minus 90% of the performance fee adjustment
described above. Such fee is paid over the same time periods and calculated in
the same manner as the investment advisory fee described above under "--
Investment Adviser." The Adviser and Sub-Adviser also have entered into an
Expense Reimbursement Agreement pursuant to which the Sub-Adviser pays the
Adviser a monthly fee equal to 10% of the Basic Fee to reimburse the Adviser
for certain expenses it bears in connection with the administration of
Pacific-European Fund. For its services to Emerging Markets Fund, the Sub-
Adviser is paid a fee by the Adviser equal, on an annual basis, to .50% of the
Fund's average daily net assets.

23
<PAGE>

investment adviser registered under the Investment Advisers Act of 1940,
currently furnishes investment management services, directly or through
subsidiaries, to 10 closed-end investment companies, 18 open-end investment
companies, 13 pension plans, 4 charitable organizations and 13 other
individual/corporate clients. As of September 30, 1996, the Sub-Adviser
managed approximately $12 billion of assets.

PORTFOLIO MANAGEMENT

Richard D. Muckart is primarily responsible for the day-to-day management of
each Fund's portfolio. Mr. Muckart has been primarily responsible for the
management of Pacific-European Fund since December 1996 and of Emerging
Markets Fund since June 1996, when the Sub-Adviser's management of the
Emerging Markets Fund commenced. Mr. Muckart is an investment director and the
head of emerging markets investing for the Sub-Adviser. He joined the Sub-
Adviser in March 1996 in connection with the Sub-Adviser's acquisition of
Dunedin Fund Managers Limited, where Mr. Muckart had been Investment Director
since August 1995. Prior to that, he had been with Ivory and Sime since 1983
and had served most recently as Global Investment Director. He has 24 years of
financial experience.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN

First Trust National Association, 180 East Fifth Street, St. Paul, Minnesota
55101, serves as Custodian for Pacific-European Fund's portfolio securities
and cash. Investors Fiduciary Trust Company ("IFTC"), 127 West Tenth Street,
Kansas City, Missouri 64105, serves as Custodian for Emerging Markets Fund and
serves as each Fund's Transfer Agent and Dividend Disbursing Agent.

Rules adopted under the 1940 Act permit the Funds to maintain securities and
cash in the custody of certain eligible banks and securities depositories. The
Funds' foreign securities are held by its sub-custodians who are approved by
the directors in accordance with such rules. Such determination is made
pursuant to such rules following a consideration of a number of factors
including, but not limited to, the reliability and financial stability of the
institution; the ability of the institution to perform custodial services for
the Funds; the reputation of the institution in its national market; the
political and economic stability of the country in which the institution is
located; and the risks of potential nationalization or expropriation of Fund
assets.

Piper Global has entered into Shareholder Account Servicing Agreements with
the Distributor and Piper Trust Company, an affiliate of the Distributor and
the Adviser. Under these agreements, the Distributor and Piper Trust Company
provide transfer agent and dividend disbursing agent services for certain
shareholder accounts. For more information, see "Investment Advisory and Other
Services--Transfer Agent and Dividend Disbursing Agent" in the Statement of
Additional Information.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

The Adviser and Sub-Adviser select brokers and futures commission merchants
to use for the Funds' portfolio transactions. In making its selection, the
Adviser may consider a number of factors, which are more fully discussed in
the Statement of Additional Information, including but not limited to,
research services, the reasonableness of commissions and quality of services
and execution. A broker's sales of shares of the Funds may also be considered
a factor if the Adviser or Sub-Adviser is satisfied that a Fund would receive
from that broker the most favorable price and execution then available for a
transaction.

24
<PAGE>

Portfolio transactions for a Fund may be effected through the Distributor on a
securities exchange in compliance with Section 17(e) of the 1940 Act. For more
information, see "Portfolio Transactions and Allocation of Brokerage" in the
Statement of Additional Information.

DISTRIBUTION OF FUND SHARES

Piper Jaffray acts as the principal distributor of each Fund's shares. Each
Fund has adopted a Distribution Plan (the "Plan") as required by Rule 12b-1
under the 1940 Act. Under each Fund's Plan, the Distributor is paid Rule 12b-1
fees for servicing the Fund's shareholder accounts and for providing
distribution related services to the Fund. With respect to the Class A shares
of Pacific-European Fund, the Distributor is reimbursed quarterly for its
actual expenses in an amount not to exceed, on an annualized basis, .50% of
the average daily net assets of the Fund attributable to the Class A shares.
With respect to the Class B shares of Pacific-European Fund, the Distributor
is paid a fee equal to 1.00%, on an annualized basis, of the Fund's average
daily net assets attributable to the Class B shares. With respect to Emerging
Markets Fund, the Distributer is paid a fee which is equal, on an annualized
basis, to .50% of the Fund's average daily net assets attributable to Class A
shares and 1.00% of the Fund's average daily net assets attributable to Class
B shares. The Distributor has voluntarily agreed to limit each Fund's Rule
12b-1 fees payable with respect to Class A shares to .33% of the Fund's
average daily net assets attributable to such shares. This limitation may be
revised or terminated at any time after fiscal 1997 year end. The Distributor
does not intend to limit Rule 12b-1 fees payable with respect to either Fund's
Class B shares. Rule 12b-1 fees are calculated daily and paid quarterly.

Rule 12b-1 fees paid by each Fund are categorized as either "distribution
fees" or "servicing fees." Distribution fees are intended to compensate the
Distributor for its expenses incurred in connection with the sale of Fund
shares, and servicing fees are intended to compensate the Distributor for
ongoing servicing and/or maintenance of shareholder accounts. The .50% Rule
12b-1 fee paid by each Fund with respect to its Class A shares is comprised of
(a) a servicing fee equal to .25% of the Fund's average daily net assets
attributable to Class A shares and (b) a distribution fee equal to .25% of the
Fund's average daily net assets attributable to Class A shares. The 1.00% Rule
12b-1 fee paid by each Fund with respect to its Class B shares is comprised of
(a) a servicing fee equal to .25% of the Fund's average daily net assets
attributable to Class B shares and, (b) a distribution fee equal to .75% of
the Fund's average daily net assets attributable to Class B shares.

Except with respect to Pacific-European Fund's Class A shares, payments
under the Plans are not tied exclusively to expenses actually incurred by the
Distributor and may exceed such expenses. The Adviser and the Distributor, out
of their own assets, may pay for certain expenses incurred in connection with
the distribution of shares of the Funds. In particular, the Adviser may make
payments out of its own assets to Piper Jaffray Investment Executives and
other broker dealers in connection with their sales of shares of the Funds.
See "How to Invest--Sales Compensation." Further information regarding the
Plans is contained in the Statement of Additional Information.

The Distributor uses a portion of its Rule 12b-1 fee to make payments to
Investment Executives of the Distributor and broker-dealers which have entered
into sales agreements with the Distributor. If shares of a Fund are sold by a
representative of a broker-dealer other than the Distributor, the broker-
dealer is paid .30% of the average daily net assets of such Fund attributable
to shares sold by the broker-dealer's representative. If shares of a Fund are
sold by an Investment Executive of the Distributor, compensation is paid to
the Investment Executive in the manner set forth in a written agreement, in an
amount not to exceed .30% of the average daily net assets of such Fund
attributable to shares sold by the Investment Executive.

25
<PAGE>

Shareholder Guide to Investing

HOW TO INVEST

GENERAL

The Funds' shares may be purchased at the public offering price from the
Distributor and from other broker-dealers who have sales agreements with the
Distributor. The address of the Distributor is that of the Funds. The
Distributor reserves the right to reject any purchase order. You should be
aware that, because the Funds do not issue stock certificates, Fund shares
must be kept in an account with the Distributor or with IFTC. All investments
must be arranged through your Piper Jaffray Investment Executive or other
broker-dealer.

CHOOSING A SHARE CLASS

If you purchase Class A shares, you will pay a sales charge at the time of
purchase. As a result, Class A shares are not subject to any charges when they
are redeemed (except for sales of $500,000 and over, which are not subject to
an initial sales charge, but are subject to a contingent deferred sales
charge). The initial sales charge may be reduced or waived for certain
purchases. Class A shares of each Fund are subject to Rule 12b-1 distribution
and servicing fees equal, on an annual basis, to 0.50% of the average daily
net assets of the Class A shares. The Distributor has voluntarily limited
these fees to 0.34% of average daily net assets during fiscal 1997. See "Fund
Expenses" and "Distribution of Fund Shares."

If you purchase Class B shares, you will not pay an initial sales charge,
but you will pay a contingent deferred sales charge of up to 4% if you redeem
your shares during the calendar year in which they are purchased, or in any of
the next five full calendar years. Class B shares are also subject to higher
Rule 12b-1 fees than Class A shares. For each Fund, Class B shares are subject
to Rule 12b-1 distribution and servicing fees equal, on an annual basis, to
1.00% of the average daily net assets of the Class B shares. Class B shares
automatically convert into Class A shares at the beginning of the sixth full
calendar year following the year of purchase. Class B shares put all of your
money to work for you right away. However, they will have higher annual
expense ratios due to their higher Rule 12b-1 fees and, as a result, generally
will pay lower ordinary income dividends than the Class A shares. See "Fund
Expenses" and "Distribution of Fund Shares."

The amount of your purchase and the length of time you expect to hold your
shares will be factors in determining which class of shares is best for you.
You should consider whether, over the time you expect to maintain your
investment, the accumulated Rule 12b-1 fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less
than the initial sales charge and accumulated Rule 12b-1 fees on Class A
shares purchased at the same time, and to what extent the differential would
be offset by the higher dividends on the Class A shares. If you are making an
investment that qualifies for a reduced sales charge as described below, an
investment in Class A shares will normally be more beneficial. Accordingly,
orders for Class B shares for $250,000 or more will be treated as orders for
Class A shares. For Pacific-European Growth Fund, orders for either Class A or
Class B shares for $2 million or more will be treated as orders for Class Y
shares.

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Shareholder Guide to Investing

MINIMUM INVESTMENTS

A minimum initial investment of $250 is required. There is no minimum for
subsequent investments. The Distributor, in its discretion, may waive the
minimum.

SALES COMPENSATION

The Distributor and other broker-dealers who sell Fund shares receive
compensation from different sources. A portion of this compensation is
typically passed along to your Piper Jaffray Investment Executive or other
sales representative. Compensation will differ for selling Class A and Class B
shares.

The Distributor receives the sales charge that you pay upon purchasing Class
A shares, and reallows a portion of this to other broker-dealers who sell Fund
shares. See "How to Purchase Class A Shares--Purchase Price" below. If the
Class A share purchase is not subject to an initial sales charge, the
Distributor may receive a fee from the Adviser in connection with the
purchase. The Distributor also receives any contingent deferred sales charges
that may be imposed on redemptions of certain Class A shares that were not
subject to an initial sales charge and on redemptions of Class B shares. The
Distributor pays a sales commission of up to 4% of the amount invested to its
Investment Executives and to other broker-dealers who sell Class B shares.

The Distributor also receives the Rule 12b-1 fees that are paid out of each
Fund's assets. As discussed above, the Rule 12b-1 fee rates vary by class. See
"Distribution of Fund Shares." The Distributor pays a portion of these fees to
broker-dealers who sell Fund shares.

In addition to the types of compensation discussed above, the Distributor or
the Adviser, at their own expense, provide promotional incentives to
Investment Executives of the Distributor and to broker-dealers who have sales
agreements with the Distributor in connection with sales of shares of the
Funds, other series of the Company and other mutual funds for which the
Adviser acts as investment adviser. In some instances, these incentives may be
made available only to certain Investment Executives or broker-dealers who
have sold or may sell significant amounts of such shares. The incentives may
include payment for travel expenses, including lodging at luxury resorts,
incurred in connection with sales seminars.

HOW TO PURCHASE CLASS A SHARES

PURCHASE PRICE

You may purchase Class A shares of the Funds at the net asset value per
share next calculated after receipt of your order by your Piper Jaffray
Investment Executive or other broker-dealer, plus a front-end sales charge as
follows:

<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER REALLOWANCE
AMOUNT OF TRANSACTION AT AS A PERCENTAGE OF AS A PERCENTAGE OF AS A PERCENTAGE OF
OFFERING PRICE OFFERING PRICE NET ASSET VALUE OFFERING PRICE
------------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C>
Less than $100,000...... 4.00% 4.17% %
$100,000 but less than
$250,000................ 3.25% 3.36% %
$250,000 but less than
$500,000................ 2.50% 2.56% %
$500,000 and over....... 0.00% 0.00% %
</TABLE>

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Shareholder Guide to Investing

CONTINGENT DEFERRED SALES CHARGE ON PURCHASES OF $500,000 OR MORE

If you make a purchase of $500,000 or more (including purchases made under a
Letter of Intent), a contingent deferred sales charge ("CDSC") will be
assessed in the event you redeem shares within 24 months following the
purchase. This charge will be equal to 1% of the lesser of the net asset value
of the shares at the time of purchase or at the time of redemption. The CDSC
does not apply to amounts representing an increase in the value of Fund shares
due to capital appreciation or to shares acquired through reinvestment of
dividend or capital gain distributions. In determining whether a CDSC is
payable, Class A shares that are not subject to any CDSC will be redeemed
first, and other Class A shares will then be redeemed starting with the shares
most recently purchased.

Letter of Intent. If you purchased your Class A shares under a Letter of
Intent, as described below under "Reducing Your Sales Charge--Letter of
Intent," the 24-month period begins on the date the Letter of Intent is
completed.

Waiver of Contingent Deferred Sales Charge. The CDSC on redemptions of Class
A shares will be waived under the same circumstances as will the CDSC on
redemptions of Class B shares. See "How to Purchase Class B Shares--Waiver of
Contingent Deferred Sales Charge" below.

Exchanges. If you exchange your shares, no CDSC will be imposed. However,
the charge will apply if you subsequently redeem the new shares within 24
months of the original purchase.

Reinstatement Privilege. If you elect to use the Reinstatement Privilege
(please see "Shareholder Services" below), any CDSC you paid will be credited
to your account (proportional to the amount reinvested). Please see
"Redemption of Shares" in the Statement of Additional Information for more
details.

REDUCING YOUR SALES CHARGE

You may qualify for a reduced sales charge on Class A shares through one or
more of several plans. You must notify your Piper Jaffray Investment Executive
or broker-dealer at the time of purchase to take advantage of these plans. For
purposes of determining whether your sales charge may be reduced through any
of the following plans, and for purposes of the reinstatement, exchange and
directed dividends privileges discussed below under "Shareholder Services,"
shares of a Piper fund that does not offer multiple classes of shares will be
considered Class A shares.

Aggregation. Initial sales charges on Class A shares may be reduced or
eliminated by aggregating your purchase with purchases of certain related
personal accounts. In addition, purchases made by members of certain organized
groups will be aggregated for purposes of determining sales charges on Class A
shares. Sales charges are calculated by adding the dollar amount of your
current purchase to the higher of the cost or current value of Class A shares
of any Piper fund sold with a sales charge that are currently held by you and
your related accounts or by other members of your group.

You may group purchases in the following personal accounts together:

. Your individual account.

. Your spouse's account.

. Your children's accounts.

. Your employee benefit plan accounts if they are exclusively for your
benefit. This includes accounts such as IRAs, individual 403(b) plans or
single-participant Keogh-type plans.

. A single trust estate or single fiduciary account if you are the trustee
or fiduciary.

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Shareholder Guide to Investing

Additionally, purchases of Class A shares made by members of any organized
group meeting the requirements listed below may be aggregated for purposes of
determining sales charges:

. The group has been in existence for more than six months.

. It is not organized for the purpose of buying redeemable securities of a
registered investment company.

. Purchases must be made through a central administration, or through a
single dealer, or by other means that result in economy of sales effort
or expense.

An organized group does not include a group of individuals whose sole
organizational connection is participation as credit card holders of a
company, policyholders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser.

Right of Accumulation. Sales charges for purchases of Class A shares into
Piper Jaffray accounts will be automatically calculated taking into account
the dollar amount of any new purchases along with the higher of current value
or cost of Class A shares previously purchased in any Piper fund that was sold
with a sales charge. For other broker-dealer accounts, you should notify your
Investment Executive at the time of purchase of additional Piper fund shares
you may own.

Letter of Intent. Your sales charge on Class A shares may be reduced by
signing a non-binding Letter of Intent. This Letter of Intent will state your
intention to invest $100,000 or more in Class A shares of any of the Piper
funds that are sold with a sales charge over a 13-month period, beginning not
earlier than 90 days prior to the date you sign the Letter. You will pay the
lower sales charge applicable to the total amount you plan to invest over the
13-month period. Part of your shares will be held in escrow to cover
additional sales charges that may be due if you do not invest the planned
amount. Please see "Purchase of Shares" in the Statement of Additional
Information for more details. You may contact your Piper Jaffray Investment
Executive or other broker-dealer for an application.

PURCHASES NOT SUBJECT TO A SALES CHARGE

If you fall within one of the categories summarized below, you may buy Class
A shares of the Funds without incurring an initial or contingent deferred
sales charge. For more information, contact your Piper Jaffray Investment
Executive or other broker-dealer.

Purchases by Piper Jaffray Companies Inc., Its Subsidiaries and Associated
Persons. Piper Jaffray Companies Inc. and its subsidiaries may buy Class A
shares of the Funds without incurring a sales charge. The following persons
associated with such entities also may buy Class A Fund shares without paying
a sales charge:

. Officers, directors and their spouses.

. Employees, retirees and their spouses.

. Investment Executives and their spouses.

. Children, grandchildren, parents or siblings of any of the above, or
spouses of any of these persons.

. Any trust, pension, profit-sharing or other benefit plan for any of the
above.

All persons in the first four groups set forth above may continue to add to
their accounts even after their company relationships have ended.

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<PAGE>

Shareholder Guide to Investing

Purchases by Broker-Dealers. Employees of broker-dealers who have entered
into sales agreements with the Distributor, and spouses and children under the
age of 21 of such employees, may buy Class A shares of the Funds without
incurring a sales charge.

Purchases by Other Individuals Without a Sales Charge. The following other
individuals and entities also may buy Class A shares of the Funds without
paying a sales charge:

. Clients of the Adviser buying shares of the Funds in their advisory
accounts.

. Discretionary accounts at Piper Trust Company and participants in
investment companies exempt from registration under the 1940 Act that are
managed by the Adviser.

. Trust companies and bank trust departments using funds over which they
exercise exclusive discretionary investment authority and which are held
in a fiduciary, agency, advisory, custodial or similar capacity.

. Investors purchasing shares through a Piper Jaffray Investment Executive
if the purchase of such shares is funded by the proceeds from the sale of
shares of any non-money market open-end mutual fund not managed by the
Adviser. This privilege is available for 30 days after the sale.

. Former shareholders of American Government Term Trust Inc. may invest the
distributions received by them in connection with the dissolution of such
fund in Class A shares of the Funds without payment of a sales charge.

Purchases by Employee Benefit Plans and Tax-Sheltered Annuities.

. Class A shares of the Funds will be sold at net asset value, without a
sales charge, to employee benefit plans containing an actively maintained
qualified cash or deferred arrangement under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code") (a "401(k) Plan").
In the event a 401(k) Plan of an employer has purchased Class A shares in
the Funds or any other series of the Company (other than a money market
fund) during any calendar quarter, any other employee benefit plan of
such employer that is a qualified plan under Section 401(a) of the Code
also may purchase Class A shares of the Funds during such quarter without
incurring a sales charge. For this purpose, shares of a series of the
Company that offers only one class of shares will be considered Class A
shares.

HOW TO PURCHASE CLASS B SHARES

PURCHASE PRICE

Class B shares are sold at net asset value without any initial sales charge.
However, if you redeem your shares during the calendar year in which they are
purchased, or in any of the next five full calendar years, you will have to
pay a CDSC according to the following schedule:

<TABLE>
<CAPTION>
IF REDEEMED DURING THE CDSC
---------------------- ----
<S> <C>
Calendar year of the purchase........................................ 4%
First calendar year after purchase................................... 4%
Second calendar year after purchase.................................. 3%
Third calendar year after purchase................................... 2%
Fourth calendar year after purchase.................................. 2%
Fifth calendar year after purchase................................... 1%
</TABLE>

30
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Shareholder Guide to Investing

It is important to note that your CDSC is based upon the calendar year in
which the purchase and redemption occur, rather than the number of years you
have held your shares. For example, if you buy shares on December 31, 1997 and
redeem them on January 2, 1999, a 3% CDSC will apply, even though you have
held the shares for just over one year.

The CDSC is based upon the lesser of the net asset value of the shares at
the time of purchase or at the time of redemption. There is no CDSC on shares
acquired through reinvestment of dividends or capital gains distributions. To
keep your CDSC as low as possible, Class B shares will be redeemed in the
order purchased, starting with the shares that you have held the longest. If
you exchange your Class B shares for Class B shares of another Piper fund and
later redeem the "new" Class B shares, the date you purchased your original
Class B shares will be used for determining your CDSC. (This date will also be
used for purposes of determining when your new Class B shares convert to Class
A shares. See "Conversion Feature.")

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

The CDSC on Class B shares will be waived in the event of:

. The death or disability (as defined in Section 72(m)(7) of the Code) of
the shareholder. (This waiver will be applied to shares held at the time
of death or the initial determination of disability of either an
individual shareholder or one who owns the shares as a joint tenant with
the right of survivorship or as a tenant in common.)

. Systematic withdrawals from any such plan or account if the shareholder
is at least 59 1/2 years old.

. A tax-free return of the excess contribution to an individual retirement
account under Section 408(a) of the Code.

. Involuntary redemptions effected pursuant to the right to liquidate
shareholder accounts having an aggregate net asset value of less than
$200.

CONVERSION FEATURE

Your Class B shares (except for shares purchased through the reinvestment of
distributions) will automatically convert to Class A shares on January 1 of
the sixth calendar year following the year in which you purchased the shares.
This conversion will be made on the basis of the relative net asset values of
the two classes. Whenever any of these Class B shares convert to Class A
shares, a proportionate number of your Class B shares purchased through the
reinvestment of distributions will also convert.

HOW TO REDEEM SHARES

NORMAL REDEMPTION

You may redeem all or a portion of your shares on any day that a Fund values
its shares. (Please refer to "Valuation of Shares" below for more
information.) Your shares will be redeemed at the net asset value next
calculated after the receipt of your instructions in good form by your Piper
Jaffray Investment Executive or other broker-dealer, less any applicable CDSC.

Piper Jaffray Inc. Accounts. To redeem your shares, please contact your
Piper Jaffray Investment Executive with an oral redemption request.

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<PAGE>

Shareholder Guide to Investing

Other Broker-Dealer Accounts. To redeem your shares, you may either contact
your broker-dealer with an oral request or send a written request directly to
the Funds' transfer agent, IFTC. This request should contain: the dollar
amount or number of shares to be redeemed, the class of shares, your Fund
account number and either a social security or tax identification number (as
applicable). You should sign your request in exactly the same way the account
is registered. If there is more than one owner of the shares, all owners must
sign. A signature guarantee is required for redemptions over $25,000. Please
contact IFTC or refer to "Redemption of Shares" in the Statement of Additional
Information for more details.

PAYMENT OF REDEMPTION PROCEEDS

After your shares have been redeemed, the cash proceeds will normally be
sent to you or your broker-dealer within three business days. In no event will
payment be made more than seven days after receipt of your order in good form,
except that payment may be postponed or the right of redemption suspended for
more than seven days under unusual circumstances, such as when trading is not
taking place on the New York Stock Exchange. Payment of redemption proceeds
may also be delayed if the shares to be redeemed were purchased by a check
drawn on a bank which is not a member of the Federal Reserve System, until
such checks have cleared the banking system (normally up to 15 days from the
purchase date).

INVOLUNTARY REDEMPTION

Each Fund reserves the right to redeem your account at any time the net
asset value of the account falls below $200 as the result of a redemption or
exchange request. You will be notified in writing prior to any such redemption
and will be allowed 30 days to make additional investments before the
redemption is processed.

SHAREHOLDER SERVICES

AUTOMATIC MONTHLY INVESTMENT PROGRAM

You may arrange to make additional automated purchases of shares of the
Funds or certain other Piper funds. You can automatically transfer $100 or
more per month from your bank, savings and loan or other financial institution
to purchase additional shares. In addition, if you hold your shares in a Piper
Jaffray account you may arrange to make such additional purchases by having
$25 or more automatically transferred each month from any of the money market
fund series of the Company. You should contact your Piper Jaffray Investment
Executive or IFTC to obtain authorization forms or for additional information.

REINSTATEMENT PRIVILEGE

If you have redeemed Class A shares of a Fund, you may be eligible to
reinvest in the Class A shares of any Piper fund without payment of an
additional sales charge. The reinvestment request must be made within 30 days
of the redemption. If you have redeemed Class B shares and elect within 30
days to

32
<PAGE>

Shareholder Guide to Investing

reinvest in Class B shares of a Piper fund, any CDSC you paid will be credited
to your account (proportional to the amount reinvested). The reinstatement
privilege is subject to the eligibility of share purchases in your state as
well as the minimum investment requirements and any other applicable terms in
the prospectus of the fund being acquired.

EXCHANGE PRIVILEGE

If your investment goals change, you may prefer a fund with a different
objective. If you are considering an exchange into another Piper fund, you
should carefully read the appropriate prospectus for additional information
about that fund. A prospectus may be obtained through your Piper Jaffray
Investment Executive, your broker-dealer or the Distributor. To exchange your
shares, please contact your Piper Jaffray Investment Executive, your broker-
dealer or IFTC.

You may exchange your Class A shares for Class A shares of any other Piper
fund. Similarly, you may exchange your Class B shares for Class B shares of
any Piper fund that offers such shares. However, not all Piper funds offer
Class B shares. Investors exchanging their Class B shares into Class B shares
of Money Market Fund (a series of Piper Funds Inc.) should be aware that these
Money Market Fund shares have higher expenses than are typical for a money
market fund. Exchanges are made on the basis of the net asset values of the
funds involved, except that investors exchanging their Class A shares into a
fund which has a higher sales charge must pay the difference.

All exchanges are subject to the eligibility of share purchases in your
state as well as the minimum investment requirements and any other applicable
terms in the prospectus of the fund being acquired. The Company reserves the
right to change or discontinue the exchange privilege, or any aspect of the
privilege, upon 60 days' written notice.

TELEPHONE TRANSACTION PRIVILEGES

Piper Jaffray Inc. Accounts. If you hold your shares in a Piper Jaffray
account, you may telephone your Investment Executive to execute any
transaction or to apply for many shareholder services. In some cases, you may
be required to complete a written application.

Other Broker-Dealer Accounts. If you hold your shares in an account with
your broker-dealer or at IFTC, you may authorize telephone privileges by
completing the Account Application and Services Form. Please contact your
broker-dealer or IFTC (800-874-6205) for an application or for more details.
The Funds will employ reasonable procedures to confirm that a telephonic
request is genuine, including requiring that payment be made only to the
address of record or the bank account designated on the Account Application
and Services Form and requiring certain means of telephonic identification. A
Fund employing such procedures will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine. If a Fund
does not employ such procedures, it may be liable for any losses due to
unauthorized or fraudulent telephone transactions. It may be difficult to
reach the Funds by telephone during periods when market or economic conditions
lead to an unusually large volume of telephone requests. If you cannot reach
the Funds by telephone, you should contact your broker-dealer or issue written
instructions to IFTC at the address set forth herein. See "Management--
Transfer Agent, Dividend Disbursing Agent and Custodian." The Funds reserve
the right to suspend or terminate their telephone services at any time without
notice.

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<PAGE>

Shareholder Guide to Investing

DIRECTED DIVIDENDS

You may direct income dividends and capital gains distributions to be
invested in the same class of shares of another Piper fund (other than a money
market fund) that is offered in your state. This investment will be made at
net asset value. It will not be subject to a minimum investment amount except
that you must hold shares in such fund (including the shares being acquired
with the dividend or distribution) with a value at least equal to such fund's
minimum initial investment amount.

SYSTEMATIC WITHDRAWAL PLAN

If your account has a value of $5,000 or more, you may establish a
Systematic Withdrawal Plan for either Fund. This plan will allow you to
receive regular periodic payments by redeeming as many shares from your
account as necessary. As with other redemptions, a redemption to make a
withdrawal is a sale for federal income tax purposes. Payments made under a
Systematic Withdrawal Plan cannot be considered as actual yield or income
since part of the payments may be a return of capital.

A request to establish a Systematic Withdrawal Plan must be submitted in
writing to your Piper Jaffray Investment Executive or other broker-dealer.
There are no service charges for maintenance; the minimum amount that you may
withdraw each period is $100. You will be required to have any income
dividends and any capital gains distributions reinvested. You may choose to
have withdrawals made monthly, quarterly or semiannually. Please contact your
Piper Jaffray Investment Executive, other broker-dealer or IFTC for more
information.

Establishing a Systematic Withdrawal Plan for Class B shares that are
subject to a CDSC may be inadvisable. Additional investments in an account
that has an active Systematic Withdrawal Plan also may be inadvisable due to
sales charges and tax liabilities. Please refer to "Redemption of Shares" in
the Statement of Additional Information for additional details.

ACCOUNT PROTECTION

If your Fund shares are held in a Piper Jaffray account, they are protected
in the unlikely event of Piper Jaffray's financial failure. Piper Jaffray is a
member of the Securities Investor Protection Corporation ("SIPC"), whose
primary purpose is to protect the customers of its members against losses of
up to $500,000 ($100,000 on claims for cash) in the event of a member's
liquidation.

In addition to the $500,000 SIPC protection, Piper Jaffray clients have
additional protection provided by Aetna Casualty and Surety Company. Your
investments in the Funds held in a Piper Jaffray PRIME or PAT Plus account are
protected up to $49.5 million beyond the coverage provided by SIPC, for total
account protection of $50 million. Investments held in all other Piper Jaffray
accounts are protected up to $24.5 million beyond the coverage provided by
SIPC, for total account protection of $25 million. This protection does not
cover any declines in the net asset value of Fund shares.

CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION

Each time there is a transaction involving your Fund shares, such as a
purchase, redemption or dividend reinvestment, you will receive a confirmation
statement describing that activity. This

34
<PAGE>

Shareholder Guide to Investing

information will be provided to you from either Piper Jaffray, your broker-
dealer or IFTC. In addition, you will receive various IRS forms after the
first of each year detailing important tax information and each Fund is
required to supply annual and semiannual reports that list securities held by
the Fund and include the current financial statements of the Fund.

Householding. If you have multiple accounts with Piper Jaffray, you may
receive some of the above information in combined mailings. This will not only
help to reduce Fund expenses, it will help the environment by saving paper.
Please contact your Piper Jaffray Investment Executive for more information.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income, if any, will be paid annually. Net
realized capital gains, if any, will be distributed at least once annually by
each Fund.

Dividends paid by the Funds, if any, with respect to Class A and Class B
shares will be calculated in the same manner, at the same time, on the same
day and will be in the same amount, prior to the deduction of expenses. The
Rule 12b-1 fees attributable to a class of shares will be borne exclusively by
that class. In addition, to the extent they can reasonably be identified as
relating to a particular class, transfer agent fees will be allocated to that
class. Class B shareholders generally will receive lower per share dividends
than Class A shareholders because of the higher expenses applicable to Class B
shares.

Buying a Dividend. On the ex-dividend date for a distribution, a Fund's
share price is reduced by the amount of the distribution. If you buy shares
just before the ex-dividend date ("buying a dividend"), you will pay the full
price for the shares and then receive a portion of the price back as a taxable
distribution.

Distribution Options. All net investment income dividends and net realized
capital gains distributions for a Fund generally will be payable in additional
shares of the same class of that Fund at net asset value ("Reinvestment
Option"). If you wish to receive your distributions in cash, you must notify
your Piper Jaffray Investment Executive or other broker-dealer. You may elect
either to receive income dividends in cash and capital gains distributions in
additional shares of the same class of the Fund at net asset value ("Split
Option"), or to receive both income dividends and capital gains distributions
in cash ("Cash Option"). You may also direct income dividends and capital
gains distributions to be invested in another mutual fund managed by the
Adviser. See "Shareholder Services--Directed Dividends" above. The taxable
status of income dividends and/or net capital gains distributions is not
affected by whether they are reinvested or paid in cash.

35
<PAGE>

VALUATION OF SHARES

The Funds compute their net asset value on each day the New York Stock
Exchange (the "Exchange") is open for business. The calculation is made as of
the regular close of the Exchange (currently 4:00 p.m. New York time) after
the Funds have declared any applicable dividends. In valuing each Fund's
assets, all securities for which market quotations are readily available are
valued under normal circumstances at the last sales price prior to the time of
determination, or if no sale is reported at that time, the mean between the
closing asked price and the closing bid price. If no bid and asked prices are
available, then the Adviser will use quotations obtained from broker-dealers
or a widely used quotation system. With respect to a security which is listed
or traded on more than one exchange, a Fund normally looks to the exchange on
which trading is more extensive. In instances where market quotations are not
readily available and in certain other circumstances, fair value is determined
according to methods selected in good faith by the Board of Directors. Short-
term investments having a maturity of 60 days or less are valued at cost with
any premium amortized or discount credited over the period remaining until
maturity. Options will be valued at market value or fair value, as determined
in good faith by or under the direction of the Board of Directors, if no
market exists. Futures contracts will be valued at the settlement price
established each day by the board of trade or exchange on which they are
traded. Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors.

Any assets or liabilities initially expressed in terms of foreign currencies
are translated into U.S. dollars by the pricing service retained by a Fund or,
to the extent that an exchange rate is not available through such pricing
service, at the mean of current bid and asked prices of such currencies
against the U.S. dollar last quoted by a major bank that is a regular
participant in the foreign exchange market. The Funds have been advised that
the pricing service translates foreign currencies into U.S. dollars on the
basis of the official exchange rate or by taking into account the quotes
provided by a number of major banks that are regular participants in the
foreign exchange market. Trading in securities on foreign securities exchanges
and in over-the-counter markets is normally completed well before the close of
business on each business day. In addition, foreign securities trading
generally or in a particular country or countries may not take place on all
business days in New York. Furthermore, trading takes place in various foreign
markets on days which are not business days of the Funds and on which the
Funds' net asset values are not calculated. Therefore, the net asset value of
a Fund might be significantly affected on days when the investor has no access
to the Fund. The Funds calculate net asset value per share as of the close of
the regular trading session on the Exchange. Such calculation does not take
place contemporaneously with the determination of the prices of the majority
of the portfolio securities used in such calculation. If events materially
affecting the value of such securities occur between the time when their price
is determined and the time when a Fund's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by or
under the direction of the Board of Directors.

Although the methodology and procedures for determining net asset value are
identical for all classes of shares, the net asset values per share of the
Class A and Class B shares of the same Fund may differ because of the
differing Rule 12b-1 fees and transfer agent fees charged to such classes.

TAX STATUS

Each Fund qualified as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended, during its last taxable year
and intends to qualify as a regulated investment company during the current
taxable year. If so qualified, a Fund will not be liable for federal income
taxes to the extent it distributes its taxable income to shareholders.

36
<PAGE>

Distributions by the Funds are generally taxable to the shareholders,
whether received in cash or additional shares of a Fund (or shares of another
mutual fund managed by the Adviser). Distributions of net capital gains
(designated as "capital gain dividends") are taxable to shareholders as long-
term capital gains, regardless of the length of time the shareholder has held
shares of the Fund.

A shareholder will recognize a capital gain or loss upon the sale or
exchange of shares in a Fund if, as is normally the case, the shares are
capital assets in the shareholder's hands. This capital gain or loss will be
long-term if the shares have been held for more than one year.

Each Fund's investments may be subject to taxes in foreign countries which
would reduce the total return on such investments. In addition, if a Fund is
deemed to be a resident of the United Kingdom for United Kingdom tax purposes
or if a Fund is treated as being engaged in a trading activity through an
agent in the United Kingdom, there is a risk that the United Kingdom will
attempt to tax all or a portion of such Fund's gains or income. In light of
the structure of the Funds and the terms and conditions of the Advisory and
Sub-Advisory Agreements, the Adviser believes that any such risk is minimal.

If a Fund has more than 50% of its assets invested in the stock or
securities of foreign corporations at the end of the Fund's taxable year, the
Fund may make an election to allow shareholders either to claim U.S. foreign
tax credits with respect to foreign taxes paid by the Fund or to deduct such
amounts as an itemized deduction on their tax return. In the event such an
election is made, shareholders would have to increase their taxable income by
the amount of such taxes and the Fund would not be able to deduct such taxes
in computing its taxable income.

The foregoing relates to federal income taxation as in effect as of the date
of this Prospectus. For a more detailed discussion of the federal income tax
consequences of investing in shares of the Funds, see "Taxation" in the
Statement of Additional Information. Before investing in the Funds, you should
check the consequences of your local and state tax laws.

PERFORMANCE COMPARISONS

Advertisements and other sales literature for the Funds may refer to a
Fund's "average annual total return" and "cumulative total return." Total
return will be computed separately for each class of shares of a Fund. All
such total return quotations are based upon historical earnings and are not
intended to indicate future performance. The return on and principal value of
an investment in either Fund will fluctuate, so that an investor's shares,
when redeemed, may be worth more or less than their original cost.

Average annual return is the average annual compounded rate of return on a
hypothetical $1,000 investment made at the beginning of the advertised period.
Cumulative total return is calculated by subtracting a hypothetical $1,000
payment to a Fund from the redeemable value of such payment at the end of the
advertised period, dividing such difference by $1,000 and multiplying the
quotient by 100. In calculating average annual and cumulative total return,
the maximum sales charge imposed on Class A shares or the contingent deferred
sales charge imposed on Class B shares is deducted from the hypothetical
investment and all dividends and distributions are assumed to be reinvested.
Such total return quotations may be accompanied by quotations which do not
reflect initial or contingent deferred sales charges, and which thus will be
higher.

Comparative performance information also may be used from time to time in
advertising the Funds' shares. For example, advertisements may compare the
Funds' performance to that of various unmanaged market indices, or may include
performance data from Lipper Analytical Services, Inc., Morningstar, Inc. or
other entities or organizations which track the performance of investment
companies.

37
<PAGE>

For additional information regarding the calculation of average annual total
return and cumulative total return, see "Performance Comparisons" in the
Statement of Additional Information.

GENERAL INFORMATION

Piper Global was organized under the laws of the State of Minnesota in 1990
as a closed-end investment company and converted into an open-end investment
company on August 31, 1992. At that time, Pacific-European Fund was the only
outstanding series of Piper Global. The Board of Directors designated a second
series of Piper Global, Emerging Markets Fund, in April 1996. Effective with
the close of business on June 21, 1996, Emerging Markets Fund acquired the
assets and assumed all identified liabilities of Hercules Latin American Value
Fund, a series of Hercules Funds Inc., in a tax-free exchange by issuing new
shares. Emerging Markets Fund had no assets or liabilities prior to the
acquisition.

The Board of Directors is empowered under the Company's Articles of
Incorporation to issue additional series of common stock without shareholder
approval. In addition, the Board of Directors may, without shareholder
approval, create and issue one or more additional classes of shares within
each Fund, as well as within any series of Piper Global created in the future.
See "Capital Stock and Ownership of Shares" in the Statement of Additional
Information.

All shares of the Funds, when issued, will be fully paid and nonassessable
and will be redeemable. They can be issued as full or fractional shares. A
fractional share has pro rata the same kind of rights and privileges as a full
share. The shares possess no preemptive or conversion rights.

The different classes of shares of a Fund have the same rights and are
identical in all respects except that (a) expenses related to the distribution
of each class of shares are borne solely by such class; (b) to the extent they
can reasonably be identified as relating to a particular class of shares,
transfer agent fees will be allocated to that class; (c) each class has
exclusive voting rights with respect to approvals of any Rule 12b-1
distribution plan related to that specific class (although Class B
shareholders will have the right to vote on any distribution fees imposed on
Class A shares as long as Class B shares convert into Class A shares); (d)
only Class B shares carry a conversion feature; and (e) each class has
different exchange privileges.

Each share of a series has one vote (with proportionate voting for
fractional shares) irrespective of the relative net asset values of the
series' shares. On some issues, such as the election of directors, all shares
of Piper Global vote together as one series. On an issue affecting only a
particular series or class, the shares of the affected series or class vote
separately. Cumulative voting is not authorized. This means that the holders
of more than 50% of the shares voting for the election of directors can elect
100% of the directors if they choose to do so, and, in such event, the holders
of the remaining shares will be unable to elect any directors.

The Bylaws of Piper Global provide that shareholder meetings need be held
only with such frequency as required under Minnesota law. Minnesota
corporation law requires only that the Board of Directors convene shareholders
meetings when it deems appropriate. In addition, Minnesota law provides that
if a regular meeting of shareholders has not been held during the immediately
preceding 15 months, a shareholder or shareholders holding 3% or more of the
voting shares of Piper Global may demand a regular meeting of shareholders by
written notice given to the chief executive officer or chief financial officer
of Piper Global. Within 30 days after receipt of the demand, the Board of
Directors shall cause a regular meeting of shareholders to be called, which
meeting shall be held no later than 90 days

38
<PAGE>

after receipt of the demand, all at the expense of Piper Global. In addition,
the 1940 Act requires a shareholder vote for all amendments to fundamental
investment policies and restrictions, for all amendments to investment
advisory contracts and for certain amendments to Rule 12b-1 distribution
plans.

PENDING LEGAL PROCEEDINGS

Complaints have been brought against the Adviser and the Distributor
relating to several other investment companies for which the Adviser acts or
has acted as investment adviser or subadviser. These lawsuits do not involve
the Funds.

A number of complaints have been brought in federal and state court against
the Institutional Government Income Portfolio ("PJIGX") series of Piper Funds
Inc., the Adviser, the Distributor, and certain individuals affiliated or
formerly affiliated with the Adviser and the Distributor. On February 13,
1996, a Settlement Agreement became effective for the consolidated class
action lawsuit, titled In Re: Piper Funds Inc. Institutional Government Income
Portfolio Litigation. The Amended Consolidated Class Action Complaint was
filed on October 5, 1994, in the United States District Court, District of
Minnesota, against PJIGX, the Adviser, the Distributor, William H. Ellis and
Edward J. Kohler, and had alleged the making of materially misleading
statements in the prospectus, common law negligent misrepresentation and
breach of fiduciary duty. The Settlement Agreement will provide approximately
$67.5 million, together with interest earned, less certain disbursements and
attorney fees, to class members in payments scheduled over approximately three
years. Such payments will be made by Piper Jaffray Companies Inc. and the
Adviser and will not be an obligation of Piper Funds Inc. A number of lawsuits
and arbitrations brought by some of the investors who requested exclusion from
the settlement class remain pending.

Complaints also have been filed in state and federal court relating to a
number of closed-end investment companies managed by the Adviser and two open-
end investment companies for which the Adviser has acted as sub-adviser. The
complaints, which ask for rescission of plaintiff shareholders' purchases or
compensatory damages, plus interest, costs and expenses, generally allege,
among other things, certain violations of federal and/or state securities
laws, including the making of materially misleading statements in prospectuses
concerning investment policies and risks. In addition to the Settlement
Agreement discussed above, a settlement agreement has been reached with
respect to a consolidated complaint relating to four closed-end investment
companies managed by the Adviser and agreements-in-principle have been reached
to settle certain other complaints. The Adviser and the Distributor also are
subject to regulatory inquiries related to various funds or assets managed by
the Adviser. See "Pending Litigation" in the Statement of Additional
Information.

The Adviser and the Distributor do not believe that the settlements
discussed above, any agreement-in-principle to settle, or any outstanding
complaint, action in arbitration or regulatory inquiry will have a material
adverse effect on their ability to perform under their agreements with Piper
Global or a material adverse effect on the Funds.

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS (AND/OR IN THE STATEMENT OF ADDITIONAL INFORMATION REFERRED TO
ON THE COVER PAGE OF THIS PROSPECTUS) AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUNDS OR PIPER JAFFRAY INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.

39
<PAGE>

Pacific-European Growth Fund
Emerging Markets Growth Fund
Series of Piper Global Funds Inc.

Investment Advisor
Piper Capital Management Incorporated

Sub-Adviser
Edinburgh Fund Managers plc

Distributor
Piper Jaffray Inc.

Custodian
First Trust National Association

Transfer Agent
Investors Fiduciary Trust Company

Legal Counsel
Dorsey & Whitney LLP

Table of Contents
page
Introduction.................................. 2
Fund Expenses................................. 4
Financial Highlights.......................... 6
Investment Objectives and Policies............ 8
Special Investment Methods.................... 11
Risk Factors.................................. 18
Management.................................... 21
Distribution of Fund Shares................... 25
SHAREHOLDER GUIDE TO
INVESTING
How to Invest............................ 26
How to Purchase Class A Shares........... 27
How to Purchase Class B Shares........... 30
How to Redeem Shares..................... 31
Shareholder Services..................... 32
Dividends and Distributions.............. 35
Valuation of Shares........................... 36
Tax Status.................................... 36
Performance Comparisons....................... 37
General Information........................... 38

30100

PROSPECTUS

[LOGO OF PIPER FUNDS]
- ---------------------------------------------------
INTERNATIONAL GROWTH FUNDS

Emerging Markets Growth Fund

Pacific-European Growth Fund

February , 1997
- ---------------------------------------------------

30100 021-97
<PAGE>

PROSPECTUS DATED FEBRUARY , 1997

PACIFIC-EUROPEAN GROWTH FUND

A SERIES OF PIPER GLOBAL FUNDS INC.
PIPER JAFFRAY TOWER
222 SOUTH NINTH STREET, MINNEAPOLIS, MINNESOTA 55402-3804
(800) 866-7778 (TOLL FREE)

Pacific-European Growth Fund has an investment objective of long-term
capital appreciation. Current income is incidental to this objective. The Fund
seeks to achieve its investment objective through investments primarily in
Common Stock (as herein defined) of companies in the Pacific Basin or in
Europe (including Eastern Europe). Up to 25% of the Fund's total assets may be
invested in other areas of the world to the extent significant opportunities
for long-term capital appreciation outside of the Pacific Basin and Europe
become available. The Fund does not invest in Common Stock of U.S. companies.
No assurance can be given that the Fund's investment objective will be
achieved.

PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THIS INVESTMENT. SAFETY OF
PRINCIPAL IS NOT GUARANTEED. Investment in the Fund involves certain risks and
requires consideration of factors not typically associated with investment in
securities of U.S. issuers. See "Risk Factors."

This Prospectus concisely describes the information about the Funds that you
should know before investing. Please read the Prospectus carefully before
investing and retain it for future reference.

INTRODUCTION

Pacific-European Growth Fund (the "Fund") is a diversified series of Piper
Global Funds Inc. ("Piper Global"), an open-end management investment company,
or mutual fund, the shares of which are currently offered in two series. This
Prospectus provides information regarding the Class Y shares of the Fund.
Class Y shares are available only to investors making an initial investment of
$2 million or more. The Fund also offers Class A and Class B shares through a
separate prospectus. To obtain more information on the Fund's Class A and
Class B shares, call the Fund at the telephone number that appears on the
cover of this Prospectus.

THE INVESTMENT ADVISER

The Fund is managed by Piper Capital Management Incorporated (the
"Adviser"), a wholly owned subsidiary of Piper Jaffray Companies Inc. The Fund
pays the Adviser a basic management fee calculated and paid monthly at an
annual rate of 1% on net assets up to $100 million, with the fee scaled
downward as assets increase in size (the "Basic Fee"). The Basic Fee (as a
percentage of net assets) is higher than that paid by most other mutual funds.
The Basic Fee may be increased or decreased by up to a maximum, on an annual
basis, of .25% of the Fund's average daily net assets depending upon the
extent to which the Fund outperforms or underperforms the Morgan Stanley
Capital International European, Australian and Far East Index (the "EAFESM
Index").

THE SUB-ADVISER

Edinburgh Fund Managers plc acts as the Fund's sub-adviser (the "Sub-
Adviser") under an agreement with the Adviser. The Sub-Adviser is a public
limited company that was incorporated in 1969. For its services to the Fund,
the Sub-Adviser is paid a fee by the Adviser equal to 65% of the Basic Fee
plus or minus 90% of the performance fee adjustment. The Adviser and Sub-
Adviser also have entered into an Expense Reimbursement Agreement pursuant to
which the Sub-Adviser pays the Adviser a monthly fee equal to 10% of the Basic
Fee to reimburse the Adviser for certain expenses it bears in connection with
the administration of the Fund. See "Management--Sub-Adviser."

THE DISTRIBUTOR

Piper Jaffray Inc. ("Piper Jaffray" or the "Distributor"), a wholly owned
subsidiary of Piper Jaffray Companies Inc. and an affiliate of the Adviser,
serves as Distributor of the Fund's shares.

CERTAIN RISK FACTORS TO CONSIDER

An investment in the Fund is subject to certain risks, as set forth in
detail under "Investment Objective and Policies," "Special Investment Methods"
and "Risk Factors." As with other mutual funds, there can be no assurance that
the Fund will achieve its objective. Because the Fund invests in foreign
securities, an investment in the Fund requires consideration of certain risk
factors that are not typically associated with investing in securities of U.S.
companies. These factors include risks relating to adverse currency
fluctuations, potential political and economic instability of certain
countries, limited liquidity and volatile prices of certain securities of non-
U.S. companies, and foreign taxation. In addition, the Fund may engage in the
following investment practices which involve certain special risks: entering
into currency exchange transactions, forward foreign currency exchange
transactions and foreign currency futures and options, entering into options
transactions on securities in which the Fund may invest, the use of repurchase
agreements, the lending of portfolio securities, entering into futures
contracts and options on futures contracts, the purchase of securities on a
"when-issued" basis and the purchase or sale of securities on a "forward
commitment" basis. The use of these investment practices may increase the
volatility of the Fund's net asset value. The Fund may invest in illiquid
securities which will involve greater risk than investments in other
securities and may increase Fund expenses.

2
<PAGE>

OFFERING PRICE

Class Y shares of the Fund are sold at net asset value without any initial
or deferred sales charges, and are not subject to any Rule 12b-1 fees. See
"How to Purchase Shares--Purchase Price."

MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS

The minimum initial investment is $2 million. There is no minimum for
subsequent investments. See "How to Purchase Shares--Minimum Investments."

EXCHANGES

You may exchange your shares for Class Y shares of any other mutual fund
managed by the Adviser that offers such shares and is eligible for sale in
your state of residence. All exchanges are subject to the minimum investment
requirements and other applicable terms set forth in the prospectus of the
fund whose shares you acquire. See "Shareholder Services--Exchange Privilege."

REDEMPTION PRICE

Shares of the Fund may be redeemed at any time at their net asset value next
determined after a redemption request is received by your Piper Jaffray
Investment Executive or other broker-dealer. The Fund reserves the right, upon
30 days written notice, to redeem your account if the net asset value of your
Class Y shares falls below $2 million as a result of a redemption or exchange
request. See "How to Redeem Shares."

SHAREHOLDER INQUIRIES

Any questions or communications regarding a shareholder account should be
directed to your Piper Jaffray Investment Executive or, in the case of shares
held through another broker-dealer, to IFTC at (800) 874-6205. General
inquiries regarding the Fund should be directed to the Fund at the telephone
number set forth on the cover page of this Prospectus.

3
<PAGE>

FUND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases............................... None
Maximum Deferred Sales Charge........................................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees......................................................... .90%
Rule 12b-1 Fees......................................................... None
Other Expenses.......................................................... .43%
----
Total Fund Operating Expenses........................................... 1.33%
</TABLE>

EXAMPLE

You would pay the following expenses on a $1,000 investment assuming a 5%
annual return and redemption at the end of each time period:

<TABLE>
<S> <C>
1 year.............................................................. $
3 years............................................................. $
5 years............................................................. $
10 years............................................................. $
</TABLE>

The purpose of the above Fund Expenses table is to assist you in
understanding the various costs and expenses that investors in the Fund will
bear directly or indirectly. The information set forth in the table is based
on actual expenses incurred by Class A shares of the Fund during the fiscal
period from March 1 through September 30, 1996, except that it reflects the
fact that Class Y shares will not pay any Rule 12b-1 fees. The Fund did not
offer Class Y shares during such fiscal period. THE EXAMPLE CONTAINED IN THE
TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

The Fund's management fees for fiscal 1997 may be more or less than those
set forth in the table to the extent that the Fund outperforms or
underperforms the EAFE Index. For the seven months ended September 30, 1996,
the performance fee adjustment resulted in a reduction of management fees for
Pacific-European Fund by 0.05% of average daily net assets. Absent such
reduction, management fees would have been 0.95% of average daily net assets.
See "Management--Investment Adviser."

4
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights show certain per share data and selected
information for a Class A share of capital stock outstanding during the
indicated periods. This information has been audited by KPMG Peat Marwick LLP,
independent auditors and should be read in conjunction with the financial
statements of the Fund contained in its annual report. No Class Y shares were
outstanding during the indicated periods. Class A shares are subject to sales
charges and fees that may differ from those applicable to Class Y shares. An
annual report of the Fund is available without charge by contacting the Funds
at 800-866-7778 (toll free). In addition to financial statements, the Fund's
annual report contains further information about the performance of the Fund.
The information presented below relates to fiscal periods ended both before
and after the conversion of the Fund from a closed-end to an open-end fund on
August 31, 1992.

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED PERIOD FROM
3/1/96 TO --------------------------------------------- 4/27/90(A)
9/30/96 (F) 2/29/96 2/28/95 2/28/94 2/28/93(E) 2/29/92 TO 2/28/91
PER SHARE DATA ----------- ------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. $ 13.86 12.73 15.44 10.81 10.53 10.18 10.97
------- ----- ------ ----- ----- ----- -----
Operations:
Net investment income (loss)........ 0.07 0.05 (0.03) (0.03) -- 0.06 0.20
Net realized and unrealized gains
(losses)........................... (0.28) 2.03 (1.63) 4.72 0.28 0.37 (0.79)
------- ----- ------ ----- ----- ----- -----
Total from operations.............. (0.21) 2.08 (1.66) 4.69 0.28 0.43 (0.59)
------- ----- ------ ----- ----- ----- -----
Distributions to shareholders:
From net investment income.......... -- (0.05) -- -- -- (0.06) (0.20)
Tax return of capital............... -- -- -- -- -- (0.02) --
From net realized gains on
investments........................ (0.71) (0.90) (1.05) (0.06) -- -- --
------- ----- ------ ----- ----- ----- -----
Total distributions to
shareholders...................... (0.71) (0.95) (1.05) (0.06) -- (0.08) (0.20)
------- ----- ------ ----- ----- ----- -----
Net asset value, end of period....... $ 12.94 13.86 12.73 15.44 10.81 10.53 10.18
======= ===== ====== ===== ===== ===== =====
SELECTED INFORMATION
Total return(c) ..................... (1.66)% 16.70% (11.09)% 43.45% 2.66% 4.44% (5.03)%
Net assets at end of period
(in millions)....................... $ 172 163 154 166 60 36 34
Ratio of expenses to average daily
net assets(d)....................... 1.64%(b) 1.55% 1.76% 1.81% 2.25% 1.92% 1.77%(b)
Ratio of net investment income (loss)
to average daily net assets(d)...... 0.29%(b) 0.36% (0.19)% (0.29)% 0.03% 0.60% 2.36%(b)
Average brokerage commission rate (g) $0.0173 n/a n/a n/a n/a n/a n/a
Portfolio turnover rate (excluding
short-term securities).............. 49% 65% 57% 52% 59% 69% 10%
</TABLE>

5
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is long-term capital appreciation. Current
income is incidental to this objective. The Fund seeks to achieve its
investment objective through investments primarily (under normal
circumstances, at least 65% of its total assets) in Common Stock of companies
in the Pacific Basin or in Europe (including Eastern Europe). "Common Stock"
means common stock and foreign equity securities which are substantially
similar to common stock in the U.S. and does not include preferred stock or
convertible debt securities (such foreign equity securities may have voting
and distribution rights which differ from those of common stock in the U.S.).
The Pacific Basin is generally defined as those countries bordering the
Pacific Ocean. Pacific-European Fund may invest in the following countries
within the region: Malaysia, Pakistan, Sri Lanka, the Philippines, Singapore,
South Korea, Thailand, India, Indonesia, Hong Kong, Japan, Taiwan, Australia
and New Zealand. In addition, to the extent that suitable investment
opportunities become available, the Fund may invest in any other country
within the region, including, but not limited to, China. For purposes of this
Prospectus, unless otherwise indicated, Europe consists of Austria, Belgium,
Denmark, Germany, Finland, France, Greece, the Republic of Ireland, Italy, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey and the
United Kingdom (together, "Western Europe"), plus Albania, Bulgaria, the Czech
and Slovak Republics, Hungary, Poland, Romania, the successor states to the
former Yugoslavia, and the Commonwealth of Independent States (formerly, the
Union of Soviet Socialist Republics) (together, "Eastern Europe"). As the
securities markets of additional continental European countries develop, such
countries may be considered part of the Fund's definition of Europe and
appropriate countries for investment by the Fund.

As of September 30, 1996, approximately 58% of the Fund's investments were
in companies in the Pacific Basin (including Japan) and approximately 35% were
in companies in Europe. While the Fund has no specific policy or restriction
on the allocation of its funds between Europe and the Pacific Basin, the
Adviser and the Sub-Adviser (collectively, "Management") believe that the
opportunities for long-term capital appreciation in the Pacific Basin are
generally superior to those currently available in the economically more
mature areas of the world. The relative emphasis of the Fund's investments
between the Pacific Basin and Europe may change over time to the extent
Management identifies greater investment opportunities in Europe as a result
of more attractive values, recent developments in Eastern Europe, the removal
of most intra-European trade barriers as a result of the adoption of the
Single European Act in 1992 or other factors. In normal market conditions, the
Fund's investments will be allocated among at least three different countries
in the Pacific Basin and/or Europe. For additional information regarding the
allocation of Fund investments, see "Investment Objectives and Policies--
Allocation Among Countries" in the Statement of Additional Information.

6
<PAGE>

in the Pacific Basin or in Europe, as the case may be, such that the value of
the securities of such companies will tend to reflect Pacific Basin or
European developments to a greater extent than developments in other regions.
With respect to the investment by the Fund in companies that receive 50% or
more of their revenues from investments in companies located in the Pacific
Basin or Europe (e.g., investment companies and trusts), the Fund believes
that securities of such companies will similarly reflect the development of
the region in which it invests and, in addition, the purchase of such
securities is currently one of the few mechanisms through which the Fund may
invest in securities of South Korean, Taiwanese and Indian companies.

In selecting individual securities within a country, emphasis is placed on
identifying securities of companies believed to be undervalued in the
marketplace in relation to such factors as the company's assets, earnings and
growth potential or which are believed best positioned within a particular
industry to take advantage of specific economic and political factors likely
to result in growth for such industry. The Fund does not, however, concentrate
its investments in companies of a particular asset size or in a particular
industry, but instead selects its investments based on the characteristics of
the particular markets and economies of the countries in which it invests.

Up to 25% of the Fund's total assets may be invested in other areas of the
world to the extent significant opportunities for long-term capital
appreciation outside of the Pacific Basin and Europe become available. The
Fund currently invests a portion of its assets in certain countries in Latin
America, including Mexico, Brazil, Argentina, Chile, Peru, Venezuela, Colombia
and Ecuador. The Fund may invest in other Latin American countries as
opportunities develop. As of September 30, 1996, approximately 5% of the
Fund's investments were in companies in Latin America. The Fund does not
invest in Common Stock of U.S. companies.

SPECIAL INVESTMENT METHODS

The following discussion describes some of the investment management
practices that the Fund may employ from time to time to facilitate portfolio
management and mitigate risk. Certain of these practices could be considered
"derivative" transactions. The term "derivatives" has been used to identify a
variety of financial instruments; there is no discrete class of instruments
that is covered by the term. A "derivative" is commonly defined as a financial
instrument whose value is based upon, or derived from, an underlying index,
reference rate (e.g., interest rates or currency exchange rates), security,
commodity or other asset. Forward currency transactions, options on
securities, futures contracts, options on futures contracts and when-issued
securities transactions are derivative contracts. These derivative contracts
involve varying degrees and types of risk as set forth below.

FOREIGN CURRENCY TRANSACTIONS

The Fund may engage in currency exchange transactions in connection with the
purchase and sale of their investments. Currency exchange transactions are
necessary to enable the Fund to purchase securities denominated in a foreign
currency and to convert interest and dividend payments or sales

7
<PAGE>

proceeds paid in a foreign currency into U.S. dollars or into another
currency. In addition, the Fund may engage in forward foreign currency
exchange transactions and foreign currency futures and options transactions to
protect against uncertainty with respect to future currency exchange rates.
Forward currency exchange and futures and options transactions are used only
for hedging and not for speculation. The Fund conducts currency exchange
transactions either on a spot (cash) basis at the rate prevailing in the
currency exchange market or through entering into forward or futures contracts
to purchase or sell foreign currencies.

The Fund may engage in "transaction hedging" to protect against a change in
the foreign currency exchange rate between the date on which the Fund
contracts to purchase or sell the security and the settlement date or to "lock
in" the U.S. dollar equivalent (or other foreign currency equivalent to the
extent needed for purposes of purchasing securities) of a dividend or interest
payment in a foreign currency. For that purpose, the Fund may purchase or sell
a foreign currency on a spot (or cash) basis at the prevailing spot rate in
connection with the settlement of transactions in portfolio securities
denominated in that foreign currency.

If conditions warrant, the Fund may also enter into contracts to purchase or
sell foreign currencies at a future date ("forward contracts") and purchase or
sell foreign currency futures contracts as a hedge against changes in foreign
currency exchange rates between the trade and settlement dates on particular
transactions and not for speculation. A foreign currency forward contract is a
negotiated agreement to exchange currency at a future time at a rate or rates
that may be higher or lower than the spot rate. Foreign currency futures
contracts are standardized exchange-traded contracts and have margin
requirements.

For transaction hedging purposes, the Fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures
contracts and on foreign currencies. A put option on a futures contract gives
the Fund the right to assume a short position in the futures contract until
expiration of the option. A put option on currency gives the Fund the right to
sell a currency at an exercise price until the expiration of the option. A
call option on a futures contract gives the Fund the right to assume a long
position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option.

The Fund may engage in "position hedging" to protect against a decline in
the value relative to the U.S. dollar of the currencies in which portfolio
securities are denominated or quoted (or an increase in the value of currency
for securities which the Fund intends to buy, when it holds cash reserves and
short-term investments). For position hedging purposes, the Fund may purchase
or sell foreign currency futures contracts and foreign currency forward
contracts, and may purchase put or call options on foreign currency futures
contracts and in foreign currencies on exchanges or over-the-counter markets.
In connection with position hedging, the Fund may also purchase or sell
foreign currency on a spot basis.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at
some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they tend to limit any potential gain which might result from the
increase in the value of such currency. In addition, hedging transactions
involve costs and may result in losses. The Fund may write covered call
options on foreign currencies to offset some of the costs of hedging those
currencies. The Fund will engage in over-the-

8
<PAGE>

counter transactions only when appropriate exchange-traded transactions are
unavailable and when, in the opinion of the Adviser, the pricing mechanism and
liquidity are satisfactory and the participants are responsible parties likely
to meet their contractual obligations. The Fund's ability to engage in hedging
and related option transactions may be limited by tax considerations. See
"Taxation--Consequences of Certain Fund Investments" in the Statement of
Additional Information.

For additional information regarding foreign currency transactions, see
"Investment Objectives and Policies--Foreign Currency Transactions" in the
Statement of Additional Information.

HEDGING

The Fund may engage in various futures and put and call transactions
(collectively, "Hedging Transactions"). Hedging Transactions may be used to
attempt to protect against possible declines in the market value of the Fund's
portfolio, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes or to establish a position in the securities markets as a temporary
substitute for purchasing particular securities. Any or all of these
techniques may be used at any time. There is no overall limitation on the
percentage of the Fund's portfolio securities which may be subject to a hedge
position. There is no particular strategy that requires use of one technique
rather than another. Use of any Hedging Transaction is a function of market
conditions. The Hedging Transactions that the Fund may use are described
below. Additional Hedging Transactions may be used by the Fund in the future
as they are developed to the extent deemed appropriate by the Board of
Directors of Piper Global.

Options on Securities. In seeking to reduce fluctuations in net asset value,
the Fund may write (i.e., sell), covered put and call options and purchase put
and call options on the securities in which it may invest. Such options are
traded on U.S. and foreign securities exchanges and in the over-the-counter
markets.

A put option gives the buyer of such option, upon payment of a premium, the
right to deliver a specified amount of a security to the writer of the option
on or before a fixed date at a predetermined price. A call option gives the
purchaser of the option, upon payment of a premium, the right to call upon the
writer to deliver a specified amount of a security on or before a fixed date,
at a predetermined price. A call option written by the Fund is "covered" if
the Fund owns the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a segregated
account by its custodian) upon conversion or exchange of other securities held
in its portfolio. A call option is also covered if the Fund holds a call on
the same security and in the same principal amount as the call written where
the exercise price of the call held (a) is equal to or less than the exercise
price of the call written or (b) is greater than the exercise price of the
call written if the difference is maintained by the Fund in cash and high
grade liquid debt securities in a segregated account with its custodian. A put
option written by the Fund is "covered" if the Fund maintains cash and high
grade liquid debt securities with a value equal to the exercise price in a
segregated account with its custodian, or else holds a put on the same
security and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price
of the put written. The Fund will not write puts if, as a result, more than
50% of its assets would be required to be segregated. The premium paid by the
purchaser of an option will reflect, among other things, the relationship of
the exercise price to the market price and volatility of the underlying
security, the remaining term of the option, supply and demand and interest
rates.

9
<PAGE>

In purchasing a call option, the Fund would be in a position to realize a
gain if, during the option period, the price of the security increased above
the call option price by an amount in excess of the cost of the option.
Otherwise, it would realize a loss. In purchasing a put option, the Fund would
be in a position to realize a gain if, during the option period, the price of
the security declined below the put option price by an amount in excess of the
cost of the option. Otherwise, it would realize a loss. If a put or call
option purchased by the Fund were permitted to expire without being sold or
exercised, its premium would be lost by the Fund.

If a put option written by the Fund were exercised, the Fund would be
obligated to purchase the underlying security at the exercise price. If a call
option written by the Fund were exercised, the Fund would be obligated to sell
the underlying security at the exercise price. The risk involved in writing a
put option is that there could be a decrease in the market value of the
underlying security caused by rising interest rates or other factors. If this
occurred, the option could be exercised and the underlying security would then
be sold to the Fund at a higher price than its current value. The risk
involved in writing a call option is that there could be an increase in the
market value of the underlying security caused by declining interest rates or
other factors. If this occurred, the option could be exercised and the
underlying security would then be sold by the Fund at a lower price than its
current market value. These risks could be reduced by entering into a closing
transaction as described in Appendix B to the Statement of Additional
Information. The Fund retains the premium received from writing a put or call
option whether or not the option is exercised. See Appendix B to the Statement
of Additional Information for a further discussion of the use, risks and costs
of option trading.

The exchanges have established position limits governing the maximum number
of options which may be written by an investor or group of investors acting in
concert. Similarly, the Commodities Futures Trading Commission and the Chicago
Board of Trade have established futures position limits for an investor or
group of investors acting in concert. (A discussion of the Fund's ability to
invest in futures contracts and options thereon is set forth below.) The
position limits may restrict the Fund's ability to purchase or write options
on a particular security or to enter into futures contracts. It is possible
that the Fund and other clients of the Adviser, including closed-end and other
open-end investment companies managed by the Adviser, may be considered to be
a group of investors acting in concert. Thus, the number of options or futures
transactions which the Fund may enter into may be affected by options or
futures transactions of other investment advisory clients of the Adviser.

Over-the-counter options are purchased or written by the Fund in privately
negotiated transactions. Such options are illiquid and it may not be possible
for the Fund to dispose of an option it has purchased or terminate its
obligations under an option it has written at a time when the Adviser believes
it would be advantageous to do so.

Futures Contracts and Options on Futures Contracts. The Fund may enter into
contracts for the purchase or sale for future delivery of securities or
contracts based on financial indices including any index of securities in
which the Fund may invest ("futures contracts") and may purchase and write put
and call options to buy or sell futures contracts ("options on futures
contracts"). A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at
a specified price on a specified date. The purchaser of a futures contract on
an index agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of the index on
the expiration date of the contract ("current contract value") and the price
at which the contract was originally struck. No physical delivery of the
securities underlying the index is

10
<PAGE>

made. Options on futures contracts to be written or purchased by the Fund will
be traded on exchanges or over-the-counter. These investment techniques are
used only to hedge against declines in the value of the Fund's portfolio
securities or increases in the prices of securities which the Fund intends to
purchase at a later date. The successful use of such instruments relies upon
Management's experience with respect to such instruments. Should prices move
in an unexpected manner, the Fund may not achieve the anticipated benefits of
futures contracts or options on futures contracts or may realize losses and
would thus be in a worse position than if such strategies had not been used.
In addition, the correlation between movements in the price of futures
contracts or options on futures contracts and movements in the prices of the
securities hedged or used for cover will not be perfect. See Appendix B to the
Statement of Additional Information for further discussion of the use, risks
and costs of futures contracts and options on futures contracts.

Futures contracts and options on futures contracts are used only as a hedge
and not for speculation. In addition, the Fund does not enter into any futures
contracts or options on futures contracts if immediately thereafter the amount
of initial margin deposits on all the futures contracts of the Fund and
premiums paid on options on futures contracts would exceed 5% of the market
value of the Fund's total assets. This restriction will not be changed by the
Board of Directors without considering the policies and concerns of the
various applicable federal and state regulatory agencies.

The Fund limits its activities in options and futures contracts to the
extent necessary to prevent disqualification of the Fund as a regulated
investment company under the Internal Revenue Code. For a discussion of the
tax treatment of futures contracts and options on futures contracts, see
"Taxation--Consequences of Certain Fund Investments" in the Statement of
Additional Information.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

The Fund may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "forward commitment" basis. The Fund may make such
purchases in order to lock-in the purchase price of a security which
Management believes will appreciate in value. There is always the risk,
however, that the security will decrease in value prior to its delivery. When
such transactions are negotiated, the price is fixed at the time the
commitment is made, but delivery and payment for the securities take place at
a later date, which can be a month or more after the date of the transaction.
At the time the Fund makes the commitment to purchase securities on a when-
issued or forward commitment basis, it will record the transaction and
thereafter reflect the value of such securities in determining its net asset
value. At the time the Fund enters into a transaction on a when-issued or
forward commitment basis, a segregated account consisting of cash or liquid
securities equal to the value of the when-issued or forward commitment
securities will be established and maintained with the custodian and will be
marked to the market daily. On the delivery date, the Fund will meet its
obligations from securities that are then maturing or sale of the securities
held in the segregated asset account and/or from then available cash flow. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it can incur a gain or loss due to market fluctuation.

There is always a risk that the securities may not be delivered and that the
Fund may incur a loss or will have lost the opportunity to invest the amount
set aside for such transaction in the segregated asset account. The purchase
of securities on a when-issued or forward commitment basis can result in
increased volatility of the Fund's net asset value to the extent the Fund
makes such purchases while remaining substantially fully invested. Settlements
in the ordinary course, which may take substantially

11
<PAGE>

more than three business days for non-U.S. securities, are not treated by the
Fund as when-issued or forward commitment transactions and, accordingly, are
not subject to the foregoing limitations even though some of the risks
described above may be present in such transactions.

REPURCHASE AGREEMENTS

The Fund may enter, without limitation, into repurchase agreements
pertaining to the securities in which it may invest with securities dealers or
member banks of the Federal Reserve System. A repurchase agreement arises when
a buyer such as the Fund purchases a security and simultaneously agrees to
resell it to the vendor at an agreed-upon future date, normally one day or a
few days later. The resale price is greater than the purchase price,
reflecting an agreed upon interest rate which is effective for the period of
time the buyer's money is invested in the security and which is related to the
current market rate rather than the coupon rate on the purchased security.
Such agreements permit the Fund to keep all of its assets at work while
retaining "overnight" flexibility in pursuit of investments of a longer-term
nature. The Fund requires continual maintenance by its custodian for its
account in the Federal Reserve/Treasury Book Entry System of collateral in an
amount equal to, or in excess of, the resale price. In the event a vendor
defaults on its repurchase obligation, the Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral are less than the
repurchase price. In the event of a vendor's bankruptcy, the Fund might be
delayed in, or prevented from, selling the collateral for the Fund's benefit.
The Board of Directors has established procedures, which are periodically
reviewed by the Board, pursuant to which the Adviser will monitor the
creditworthiness of the dealers and banks with which the Fund enters into
repurchase agreement transactions.

LENDING OF SECURITIES

In order to facilitate achievement of its investment objective, the Fund may
from time to time lend securities from its portfolio to brokers, dealers and
financial institutions and receive collateral in the form of cash or U.S.
government securities. Securities lending may be used to generate income to
cushion the Fund against declines in stock prices without requiring the Fund
to sell portfolio securities which it believes will appreciate in value. As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, the Fund will enter into loan arrangements only with
brokers, dealers or financial institutions which the Adviser has determined
are creditworthy under guidelines established by the Board of Directors. In
addition, collateral for such loans must be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities (including interest on the loaned securities). The interest
accruing on the loaned securities will be paid to the Fund and the Fund will
have the right, on demand, to call back the loaned securities. The Fund may
pay fees to arrange the loans. The Fund will not lend portfolio securities in
excess of 30% of the value of its total assets (including such loans), nor
does the Fund lend its portfolio securities to any officer, director, employee
or affiliate of the Fund or the Adviser or Sub-Adviser.

ILLIQUID SECURITIES

The Fund will not invest more than 15% of its net assets in illiquid
securities. This a fundamental investment restriction that may not be changed
without the approval of a majority of the Fund's shares. A security is
considered illiquid if it cannot be sold in the ordinary course of business
within seven days at approximately the price at which it is valued. Illiquid
securities may offer a higher yield than securities which are more readily
marketable, but they may not always be marketable on advantageous terms.

12
<PAGE>

The sale of illiquid securities often requires more time and results in
higher brokerage charges or dealer discounts and other selling expenses than
does the sale of securities eligible for trading on national securities
exchanges or in the over-the-counter markets. The Fund may be restricted in
its ability to sell such securities at a time when the Adviser or Sub-Adviser
deems it advisable to do so. In addition, in order to meet redemption
requests, the Fund may have to sell other assets, rather than such illiquid
securities, at a time which is not advantageous.

"Restricted securities" are securities which were originally sold in private
placements and which have not been registered under the Securities Act of 1933
(the "1933 Act"). Such securities generally have been considered illiquid,
since they may be resold only subject to statutory restrictions and delays or
if registered under the 1933 Act. In 1990, however, the Securities and
Exchange Commission adopted Rule 144A under the 1933 Act, which provides a
safe harbor exemption from the registration requirements of the 1933 Act for
resales of restricted securities to "qualified institutional buyers," as
defined in the rule. The result of this rule has been the development of a
more liquid and efficient institutional resale market for restricted
securities. Thus, restricted securities are no longer necessarily illiquid.
The Fund may therefore invest in Rule 144A securities and treat them as liquid
when they have been determined to be liquid by the Board of Directors or by
the Adviser or Sub-Adviser subject to the oversight of and pursuant to
procedures adopted by the Board of Directors. See "Investment Objectives and
Policies--Illiquid Securities" in the Statement of Additional Information.
Similar determinations may be made with respect to commercial paper issued in
reliance on the so-called "private placement" exemption from registration
under Section 4(2) of the 1933 Act.

BORROWING

The Fund may borrow money only from banks for temporary or emergency
purposes in an amount up to 10% of the value of its total assets, provided
that reverse repurchase agreements entered into by the Fund are not subject to
such limitation. Reverse repurchase agreements are subject, however, to the
asset coverage requirements of the Investment Company Act of 1940 (the "1940
Act") and to certain segregated account requirements. The Fund has not entered
into reverse repurchase agreements in the past and has no current intention of
entering into such agreements in the future. See "Investment Objectives and
Policies--Reverse Repurchase Agreements" in the Statement of Additional
Information. Interest paid by the Fund on borrowed funds will decrease the
Fund's net earnings. The Fund will not purchase portfolio securities while
outstanding borrowings (other than reverse repurchase agreements) exceed 5% of
the value of its total assets. The Fund may mortgage, pledge or hypothecate
its assets only to secure such temporary or emergency borrowing. The policies
set forth in this paragraph are fundamental and may not be changed without
shareholder approval.

PORTFOLIO TURNOVER

The Fund intends to acquire and hold securities for long-term capital
appreciation and normally does not intend to trade in securities for short-
term gains; however, securities may be purchased and sold at such times as
Management deems to be in the best interests of the Fund and its shareholders.
A higher turnover rate may result in higher expenses for the Fund. The method
of calculating portfolio turnover rate is set forth in the Statement of
Additional Information under "Investment Objectives and Policies--Portfolio
Turnover." Portfolio turnover rates for the Fund are set forth in "Financial
Highlights."

13
<PAGE>

INVESTMENT RESTRICTIONS

The Fund has adopted certain fundamental and nonfundamental investment
restrictions in addition to those set forth above. Fundamental investment
restrictions which may not be changed without shareholder approval include the
following: (1) With respect to 75% of its total assets, the Fund will not
invest more than 5% of the value of its total assets in any one issuer, or own
more than 10% of the outstanding voting securities of any one issuer. (These
restrictions do not apply to securities issued or guaranteed by the U.S.
government or any agency or instrumentality thereof. For purposes of these
restrictions, the government of any country (other than the U.S.), including
its governmental subdivisions, is each considered a single issuer.) (2) The
Fund will not invest 25% or more of the value of its total assets in the same
industry. (This restriction does not apply to securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities.) In addition, as
nonfundamental investment restrictions which may be changed at any time
without shareholder approval, the Fund will not invest more than 5% of its net
assets in warrants or more than 5% of its total assets in the securities of
issuers which, with their predecessors, have a record of less than three
years' continuous operation. A complete list of the Fund's fundamental and
nonfundamental investment restrictions is set forth in the Statement of
Additional Information.

RISK FACTORS

Investment in foreign securities requires consideration of factors not
typically associated with investment in securities of U.S. issuers. Those
include the following:

Currency Fluctuations. The value of the Fund's portfolio securities computed
in U.S. dollars will vary with increases and decreases in the exchange rate
between the currencies in which the Fund has invested and the U.S. dollar. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of the Fund's holdings of securities
denominated in such currency and, therefore, will cause an overall decline in
the Fund's net asset value and net investment income and capital gains, if
any, to be distributed in U.S. dollars to shareholders by the Fund.

Political and Economic Risks. Investing in securities of non-U.S. companies
may entail additional risks. Nationalization, expropriation or confiscatory
taxation, currency blockage, political changes, government regulation, social
instability or diplomatic developments could affect adversely the economy of a
country or the Fund's investment in such country. The Fund may also be
adversely affected by exchange control regulations.

Corporate Disclosure Standards and Governmental Regulation. Non-U.S.
companies are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory requirements comparable
to those applicable to U.S. companies. Thus, there may be less available
information concerning non-U.S. issuers of securities held by the Fund than is
available concerning U.S. companies.

14
<PAGE>

Applicable accounting and financial reporting standards in emerging markets
may be substantially different from U.S. accounting standards and, in certain
emerging markets, no reporting standards currently exist. Consequently,
substantially less information on emerging markets companies is available to
investors and the information that is available may not be conceptually
comparable to, or prepared on the same basis as that available in more
developed capital markets, which may make it difficult to assess the financial
status of particular companies. However, in order to become attractive to
Western international investors such as the Fund, some emerging markets
companies may submit to reviews of their financial condition conducted in
accordance with accounting standards employed in Western countries. Management
believes that such information, together with the application of other
analytical techniques, can provide an adequate basis on which to assess the
financial viability of such companies.

The governments of some countries may require that a governmental or quasi-
governmental authority act as custodian of the Fund's assets invested in such
countries. These authorities may not be qualified to act as foreign custodians
under the 1940 Act and, as a result, the Fund will not be able to invest in
these countries in the absence of exemptive relief from the Securities and
Exchange Commission. In addition, the risk of loss through government
confiscation may be increased in such countries.

Foreign Taxes. The Fund's interest and dividend income from foreign issuers
may be subject to non-U.S. withholding taxes. The Fund also may be subject to
taxes on trading profits in some countries. In addition, some countries have a
transfer or stamp duties tax on certain securities transactions. The
imposition of these taxes will increase the cost to the Fund of investing in
any country imposing such taxes. For U.S. tax purposes, U.S. shareholders may
be entitled to a credit or deduction to the extent of any foreign income taxes
paid by the Fund. See "Tax Status."

15
<PAGE>

Risks of Investments in Emerging Markets. Investing in securities of issuers
in emerging markets involves exposure to economic structures that are
generally less diverse and mature than, and to political systems that can be
expected to have less stability than, those of developed countries. Other
characteristics of emerging markets that may affect investment in their
markets include certain national policies that may restrict investment by
foreigners and the absence of developed legal structures governing private and
foreign investments and private property. The typically small size of the
markets for securities issued by issuers located in emerging markets and the
possibility of a low or nonexistent volume of trading in those securities may
also result in a lack of liquidity and in price volatility of those
securities. In addition, issuers in emerging markets typically are subject to
a greater degree of change in earnings and business prospects than are
companies in developed markets.

Included among the emerging markets in which the Fund may invest are the
formerly communist countries of Eastern Europe and the People's Republic of
China. (These countries are referred to collectively as the "Communist
Countries.") Upon the accession to power of Communist regimes approximately 40
to 70 years ago, the governments of a number of Communist Countries
expropriated a large amount of property. The claims of many property owners
against those governments were never finally settled. There can be no
assurance that any Fund investments in Communist Countries would not also be
expropriated, nationalized or otherwise confiscated. In the event of such
expropriation, nationalization or other confiscation, the Fund could lose its
entire investment in the country involved. In addition, any change in the
leadership or policies of Communist Countries may halt the expansion of or
reverse the liberalization of foreign investment policies now occurring and
adversely affect existing investment opportunities.

Other Investment Practices. The Fund may engage in investment practices
which involve certain special risks. These include foreign currency
transactions, purchasing and selling options on securities, entering into
futures contracts, purchasing and selling put and call options on futures
contracts, and the purchase and sale of securities on a "when-issued" or
"forward commitment" basis, all of which could be considered "derivative
transactions," the use of repurchase agreements, the lending of portfolio
securities, investing in illiquid securities, and borrowing from banks (but
only for temporary or emergency purposes in an amount up to 10% of the value
of the Fund's total assets). The use of these techniques may increase the
volatility of the Fund's net asset value. See "Special Investment Methods" for
a discussion of the risks involved with these investment practices.

MANAGEMENT
BOARD OF DIRECTORS

The Board of Directors of Piper Global has the primary responsibility for
overseeing the overall management of Piper Global and electing its officers.

INVESTMENT ADVISER

Piper Capital Management Incorporated (the "Adviser") has been retained
under an Investment Advisory and Management Agreement (the "Advisory
Agreement") with Piper Global to act as the Fund's investment adviser subject
to the authority of the Board of Directors.

In addition to acting as the investment adviser for the Fund, the Adviser
serves as investment adviser to a number of other open-end and closed-end
investment companies and to various other concerns, including pension and
profit sharing funds, corporate funds and individuals. As of September 30,
1996, the Adviser rendered investment advice regarding approximately $9
billion of assets. The Adviser is a

16
<PAGE>

wholly owned subsidiary of Piper Jaffray Companies Inc., a publicly held
corporation which is engaged through its subsidiaries in various aspects of
the financial services industry. The address of the Adviser is Piper Jaffray
Tower, 222 South Ninth Street, Minneapolis, Minnesota 55402-3804.

The Adviser supervises, directs and monitors the day to day operations of
the Fund in accordance with the Fund's investment objective, policies and
restrictions, as well as the implementation of investment programs formulated
by the Sub-Adviser. The Adviser reviews investment and allocation
determinations of the Sub-Adviser. In addition, the Sub-Adviser must obtain
the Adviser's approval prior to (a) any investment of the Fund's assets in any
country outside of the Pacific Basin or Europe and (b) any investment by the
Sub-Adviser which would result in reallocation of in excess of 5% of the
Fund's total assets. The Adviser determines the broker-dealers which are
eligible to execute transactions on behalf of the Fund. The Adviser furnishes
at its own expense all necessary administrative services, office space,
equipment and clerical personnel for providing the foregoing services. In
addition, the Adviser pays the salaries and fees of all officers and directors
of the Fund who are affiliated with the Adviser. The Adviser is liable to the
Fund for losses resulting from willful misconduct, bad faith or gross
negligence in the performance of its duties or from its reckless disregard of
its duties under the Advisory Agreement.

Under the Advisory Agreement, the Fund pays the Adviser a monthly management
fee. The fee is paid at an annual rate of 1% on average daily net assets up to
$100 million, .875% on net assets over $100 million and up to $200 million,
and .75% on net assets over $200 million (the "Basic Fee"), and is subject to
adjustment as described below. The adjustment is based upon the investment
performance of the Fund in relation to the investment record of the Morgan
Stanley Capital International EAFESM Index (the "EAFE Index"). The Basic Fee
is higher than fees paid by most other investment companies.

The following table illustrates the full range of permitted increases or
decreases to the Basic Fee on an annualized basis:

<TABLE>
<CAPTION>
ADJUSTMENT
TO BASIC FEE
PERFORMANCE OF FUND RELATIVE TO EAFE INDEX (ANNUALIZED)
------------------------------------------ ------------
<S> <C>
+5 Percentage Points or more................................. +.25
+4........................................................... +.20
+3........................................................... +.15
+2........................................................... +.10
+1........................................................... +.05
0........................................................... 0
-1........................................................... -.05
-2........................................................... -.10
-3........................................................... -.15
-4........................................................... -.20
-5 Percentage Points or more................................. -.25
</TABLE>

17
<PAGE>

In calculating the investment performance of the Fund as compared with the
investment record of the EAFE Index, dividends and other distributions of the
Fund and dividends and other distributions made with respect to component
securities of the EAFE Index during the performance period are treated as
having been reinvested. The investment performance of the Fund is calculated
based upon the total return of the Fund for the applicable period, which
consists of the total net asset value of the Fund at the end of the applicable
period, including reinvestment of dividends and distributions, less the net
asset value of the Fund at the commencement of the applicable period divided
by the net asset value of the Fund at the commencement of the applicable
period. Fractions of a percentage point are rounded to the nearest whole point
(to the higher whole point if exactly one-half).

The EAFE Index is a market capitalization weighted index containing (as of
September 30, 1996) 1,100 companies representing approximately 60% of the
market capitalization of each of the following 20 countries: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland,
Italy, Japan, The Netherlands, New Zealand, Norway, Singapore, Malaysia,
Spain, Sweden, Switzerland and the United Kingdom. The EAFE Index is an
unmanaged index of common stocks, whereas the Fund, under normal
circumstances, may invest up to 35% of its assets in securities other than
common stock. Additionally, the largest percentages of the EAFE Index are
currently represented by the Japanese and United Kingdom markets, which
currently represent approximately 37% and 17.5%, respectively, of the EAFE
Index. Consequently, the extent to which the EAFE Index increases or decreases
in any one year will be affected significantly by the performance of these
markets. The Fund had approximately 46% and 10%, respectively, of its total
assets invested in Japan and the United Kingdom as of September 30, 1996.
Because the Fund's weighting in these two markets is not as significant as
that of the EAFE Index, the performance of the other markets in which the Fund
invests, as compared to that of the Japanese and United Kingdom markets, will
affect to a significant degree whether the Fund outperforms or underperforms
the EAFE Index.

SUB-ADVISER

Edinburgh Fund Managers plc, Donaldson House, 97 Haymarket Terrace,
Edinburgh, Scotland EH12, 5HD, is the Sub-Adviser for the Fund under an
agreement with the Adviser (the "Sub-Advisory Agreement"). The Sub-Adviser is
responsible for the investment and reinvestment of the Fund's assets and the
placement of brokerage transactions in connection therewith. For its services
to the Fund, the Sub-Adviser is paid a fee by the Adviser equal to 65% of the
Basic Fee plus or minus 90% of the performance fee adjustment described above.
Such fee is paid over the same time periods and calculated in the same manner
as the investment advisory fee described above under "--Investment Adviser."
The Adviser and Sub-Adviser also have entered into an Expense Reimbursement
Agreement pursuant to which the Sub-Adviser pays the Adviser a monthly fee
equal to 10% of the Basic Fee to reimburse the Adviser for certain expenses it
bears in connection with the administration of the Fund.

The Sub-Adviser is a public limited company that was incorporated in 1969.
The British Investment Trust PLC, a Scottish closed-end investment company
founded in 1889 for which the Sub-Adviser serves as investment manager and
adviser, is a controlling shareholder of the Sub-Adviser. The Sub-Adviser, an
investment adviser registered under the Investment Advisers Act of 1940,
currently furnishes investment management services, directly or through
subsidiaries, to 10 closed-end investment companies, 18 open-

18
<PAGE>

end investment companies, 13 pension plans, 4 charitable organizations and 13
other individual/corporate clients. As of September 30, 1996, the Sub-Adviser
managed approximately $12 billion of assets.

PORTFOLIO MANAGEMENT

Richard D. Muckart has been primarily responsible for the day-to-day
management of the Fund since December 2, 1996. Mr. Muckart is an investment
director and the head of emerging markets investing for the Sub-Adviser. He
joined the Sub-Adviser in March 1996 in connection with the Sub-Adviser's
acquisition of Dunedin Fund Managers Limited, where Mr. Muckart had been
Investment Director since August 1995. Prior to that, he had been with Ivory
and Sime since 1983 and had served most recently as Global Investment
Director. He has 24 years of financial experience.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN

First Trust National Association, 180 East Fifth Street, St. Paul, Minnesota
55101, serves as Custodian for the Fund's portfolio securities and cash.
Investors Fiduciary Trust Company ("IFTC"), 127 West Tenth Street, Kansas
City, Missouri 64105, serves as the Fund's Transfer Agent and Dividend
Disbursing Agent.

Rules adopted under the 1940 Act permit the Fund to maintain securities and
cash in the custody of certain eligible banks and securities depositories. The
Fund's foreign securities are held by its sub-custodians who are approved by
the directors in accordance with such rules. Such determination is made
pursuant to such rules following a consideration of a number of factors
including, but not limited to, the reliability and financial stability of the
institution; the ability of the institution to perform custodial services for
the Fund; the reputation of the institution in its national market; the
political and economic stability of the country in which the institution is
located; and the risks of potential nationalization or expropriation of Fund
assets.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

The Adviser and Sub-Adviser select brokers and futures commission merchants
to use for the Fund's portfolio transactions. In making its selection, the
Adviser may consider a number of factors, which are more fully discussed in
the Statement of Additional Information, including but not limited to,
research services, the reasonableness of commissions and quality of services
and execution. A broker's sales of Fund shares may also be considered a factor
if the Adviser or Sub-Adviser is satisfied that the Fund would receive from
that broker the most favorable price and execution then available for a
transaction. Portfolio transactions for the Fund may be effected through the
Distributor on a securities exchange in compliance with Section 17(e) of the
1940 Act. For more information, see "Portfolio Transactions and Allocation of
Brokerage" in the Statement of Additional Information.

19
<PAGE>

Shareholder Guide to Investing

HOW TO PURCHASE SHARES

GENERAL

Class Y shares of the Fund may be purchased from the Distributor and from
other broker-dealers who have sales agreements with the Distributor. The
address of the Distributor is that of the Fund. The Distributor reserves the
right to reject any purchase order. You should be aware that, because the Fund
does not issue stock certificates, Fund shares must be kept in an account with
the Distributor or with IFTC. All investments must be arranged through your
Piper Jaffray Investment Executive or other broker-dealer.

PURCHASE PRICE

You may purchase Class Y shares of the Fund at net asset value without any
initial or deferred sales charge. The purchase price will be equal to the net
asset value per share next calculated after receipt of your order by your
Piper Jaffray Investment Executive or other broker-dealer.

The Adviser makes ongoing payments out of its own assets to Piper Jaffray
Investment Executives and other broker-dealers who have sold Class Y shares of
the Fund. In addition, the Distributor or the Adviser, at their own expense,
provide promotional incentives to investment executives of the Distributor and
to broker-dealers who have sales agreements with the Distributor in connection
with sales of shares of the Fund and other mutual funds for which the Adviser
acts as investment adviser. In some instances, these incentives may be made
available only to certain Investment Executives or broker-dealers who have
sold or may sell significant amounts of such shares. The incentives may
include payment for travel expenses, including lodging at luxury resorts,
incurred in connection with sales seminars.

MINIMUM INVESTMENTS

A minimum initial investment of $2 million is required to purchase Class Y
shares of the Fund. There is no minimum for subsequent investments. For
purposes of meeting the minimum initial investment amount, investments in
Class Y shares of Intermediate Bond Fund (another mutual fund managed by the
Adviser) will be aggregated with investments in Class Y shares of the Fund
(provided that the Class Y Intermediate Bond Fund shares have not already been
aggregated with investments in Class Y shares of another mutual fund managed
by the Adviser in order to meet such fund's minimum initial investment
amount).

HOW TO REDEEM SHARES

NORMAL REDEMPTION

You may redeem all or a portion of your Class Y shares on any day that the
Fund values its shares. (Please refer to "Valuation of Shares" below for more
information.) Your shares will be redeemed at the net asset value next
calculated after the receipt of your instructions in good form by your Piper
Jaffray Investment Executive or other broker-dealer as explained below.

20
<PAGE>

Shareholder Guide to Investing

Piper Jaffray Inc. Accounts. To redeem your shares, please contact your
Piper Jaffray Investment Executive with an oral redemption request.

Other Broker-Dealer Accounts. To redeem your shares, you may either contact
your broker-dealer with an oral request or send a written request directly to
the Fund's transfer agent, IFTC. This request should contain: the dollar
amount or number of Class Y shares to be redeemed, your Fund account number
and either a social security or tax identification number (as applicable). You
should sign your request in exactly the same way the account is registered. If
there is more than one owner of the shares, all owners must sign. A signature
guarantee is required for redemptions over $25,000. Please contact IFTC or
refer to "Redemption of Shares" in the Statement of Additional Information for
more details.

PAYMENT OF REDEMPTION PROCEEDS

After your shares have been redeemed, the cash proceeds will normally be
sent to you or your broker-dealer within three business days. In no event will
payment be made more than seven days after receipt of your order in good form,
except that payment may be postponed or the right of redemption suspended for
more than seven days under unusual circumstances, such as when trading is not
taking place on the New York Stock Exchange. Payment of redemption proceeds
may also be delayed if the shares to be redeemed were purchased by a check
drawn on a bank which is not a member of the Federal Reserve System, until
such check has cleared the banking system (normally up to 15 days from the
purchase date).

INVOLUNTARY REDEMPTION

The Fund reserves the right to redeem your Class Y share account at any time
if the net asset value of the account falls below $2 million as the result of
a redemption or exchange request. For purposes of determining the net asset
value of your account, your holdings of Class Y shares of the Fund will be
aggregated with your holdings of Class Y shares of Intermediate Bond Fund
(unless your Intermediate Bond Fund holdings have already been aggregated with
investments in Class Y shares of another mutual fund managed by the Adviser
for purposes of determining account size). You will be notified in writing
prior to any such redemption and will be allowed 30 days to make additional
investments before the redemption is processed.

SHAREHOLDER SERVICES

AUTOMATIC MONTHLY INVESTMENT PROGRAM

You may arrange to make additional automated purchases of Class Y shares of
the Fund. You can automatically transfer $100 or more per month from your
bank, savings and loan or other financial institution to purchase additional
shares. In addition, if you hold your shares in a Piper Jaffray account you
may arrange to make such additional purchases by having $25 or more
automatically transferred each month from any of the money market fund series
of Piper Funds. You should contact your Piper Jaffray Investment Executive or
IFTC to obtain authorization forms or for additional information.

21
<PAGE>

Shareholder Guide to Investing

EXCHANGE PRIVILEGE

If your investment goals change, you may prefer a fund with a different
objective. If you are considering an exchange into another mutual fund managed
by the Adviser, you should carefully read the appropriate prospectus for
additional information about that fund. A prospectus may be obtained through
your Piper Jaffray Investment Executive, your broker-dealer or the
Distributor. To exchange your shares, please contact your Piper Jaffray
Investment Executive, your broker-dealer or IFTC.

You may exchange your Class Y shares for Class Y shares of any other mutual
fund managed by the Adviser that offers such shares. All exchanges are subject
to the eligibility of share purchases in your state as well as the minimum
investment requirements and any other applicable terms in the prospectus of
the fund being acquired. Exchanges are made on the basis of net asset values
of the funds involved.

Piper Global reserves the right to change or discontinue the exchange
privilege, or any aspect of the privilege, upon 60 days' written notice.

TELEPHONE TRANSACTION PRIVILEGES

Other Broker-Dealer Accounts. If you hold your shares in an account with
your broker-dealer or at IFTC, you may authorize telephone privileges by
completing the Account Application and Services Form. Please contact your
broker-dealer or IFTC (800-874-6205) for an application or for more details.
The Fund will employ reasonable procedures to confirm that a telephonic
request is genuine, including requiring that payment be made only to the
address of record or the bank account designated on the Account Application
and Services Form and requiring certain means of telephonic identification. If
the Fund employs such procedures, it will not be liable for following
instructions communicated by telephone that it reasonably believes to be
genuine. If the Fund does not employ such procedures, it may be liable for any
losses due to unauthorized or fraudulent telephone instructions. It may be
difficult to reach the Fund by telephone during periods when market or
economic conditions lead to an unusually large volume of telephone requests.
If you cannot reach the Fund by telephone, you should contact your broker-
dealer or issue written instructions to IFTC at the address set forth herein.
See "Management--Transfer Agent, Dividend Disbursing Agent and Custodian." The
Fund reserves the right to suspend or terminate its telephone services at any
time without notice.

DIRECTED DIVIDENDS

You may direct income dividends and capital gains distributions to be
invested in Class Y shares of any other mutual fund managed by the Adviser
that offers such shares, provided such shares are eligible for purchase in
your state. This investment will be made at net asset value. It will not be
subject to a minimum investment amount except that you must hold shares in
such fund (including the shares being acquired with the dividend or
distribution) with a value at least equal to such fund's Class Y share minimum
initial investment amount.

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<PAGE>

Shareholder Guide to Investing

SYSTEMATIC WITHDRAWAL PLAN

You may establish a Systematic Withdrawal Plan that allows you to receive
regular periodic payments by redeeming as many shares from your account as
necessary, provided you maintain a minimum account balance of $2 million. Your
account balance will be determined in the manner described above under "How to
Redeem Shares--Involuntary Redemption." As with other redemptions, a
redemption to make a withdrawal is a sale for federal income tax purposes.
Payments made under a Systematic Withdrawal Plan cannot be considered as
actual yield or income since part of the payments may be a return of capital.

A request to establish a Systematic Withdrawal Plan must be submitted in
writing to your Piper Jaffray Investment Executive or other broker-dealer.
There are no service charges for maintenance; the minimum amount that you may
withdraw each period is $100. You will be required to have any income
dividends and any capital gains distributions reinvested. You may choose to
have withdrawals made monthly, quarterly or semi-annually. Please contact your
Piper Jaffray Investment Executive, other broker-dealer or IFTC for more
information.

You should be aware that additional investments in an account that has an
active Systematic Withdrawal Plan may be inadvisable due to tax liabilities.
Please refer to "Redemption of Shares" in the Statement of Additional
Information for additional details.

ACCOUNT PROTECTION

In addition to the $500,000 SIPC protection, Piper Jaffray clients have
additional protection provided by Aetna Casualty and Surety Company. Your
investments in the Fund held in a Piper Jaffray PRIME or PAT Plus account are
protected up to $49.5 million beyond the coverage provided by SIPC, for total
account protection of $50 million. Investments held in all other Piper Jaffray
accounts are protected up to $24.5 million beyond the coverage provided by
SIPC, for total account protection of $25 million. This protection does not
cover any declines in the net asset value of Fund shares.

CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION

Each time there is a transaction involving your Fund shares, such as a
purchase, redemption or dividend reinvestment, you will receive a confirmation
statement describing that activity. This information will be provided to you
from either Piper Jaffray, your broker-dealer or IFTC. In addition, you will
receive various IRS forms after the first of each year detailing important tax
information and the Fund is required to supply annual and semi-annual reports
that list securities held by the Fund and include the current financial
statements of the Fund.

23
<PAGE>

Shareholder Guide to Investing

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income and distributions of net realized
capital gains, if any, will be payable to Fund shareholders at least once
annually. Class Y shareholders generally will receive higher per share
dividends than Class A or Class B shareholders because Class Y shareholders
are not subject to Rule 12b-1 fees.

Buying a Dividend. On the ex-dividend date for a distribution, the Fund's
share price is reduced by the amount of the distribution. If you buy shares
just before the record date ("buying a dividend"), you will pay the full price
for the shares and then receive a portion of the price back as a taxable
distribution.

Distribution Options. All net investment income dividends and net realized
capital gains distributions for the Fund generally will be payable in
additional Class Y shares of the Fund at net asset value ("Reinvestment
Option"). If you wish to receive your distributions in cash, you must notify
your Piper Jaffray Investment Executive or other broker-dealer. You may elect
either to receive income dividends in cash and capital gains distributions in
additional Class Y shares of the Fund at net asset value ("Split Option"), or
to receive both income dividends and capital gains distributions in cash
("Cash Option"). You may also direct income dividends and capital gains
distributions to be invested in Class Y shares of another mutual fund managed
by the Adviser that offers such shares. See "Shareholder Services--Directed
Dividends" above. The taxable status of income dividends and/or net capital
gains distributions is not affected by whether they are reinvested or paid in
cash.

24
<PAGE>

VALUATION OF SHARES

The Fund computes its net asset value on each day the New York Stock
Exchange (the "Exchange") is open for business. The calculation is made as of
the regular close of the Exchange (currently 4:00 p.m. New York time) after
the Fund has declared any applicable dividends. In valuing the Fund's assets,
all securities for which market quotations are readily available are valued
under normal circumstances at the last sales price prior to the time of
determination, or if no sale is reported at that time, the mean between the
closing asked price and the closing bid price. If no bid and asked prices are
available, then the Adviser will use quotations obtained from broker-dealers
or a widely used quotation system. With respect to a security which is listed
or traded on more than one exchange, the Fund normally looks to the exchange
on which trading is more extensive. In instances where market quotations are
not readily available and in certain other circumstances, fair value is
determined according to methods selected in good faith by the Board of
Directors. Short-term investments having a maturity of 60 days or less are
valued at cost with any premium amortized or discount credited over the period
remaining until maturity. Options will be valued at market value or fair
value, as determined in good faith by or under the direction of the Board of
Directors, if no market exists. Futures contracts will be valued at the
settlement price established each day by the board of trade or exchange on
which they are traded. Securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith by
or under the direction of the Board of Directors.

Any assets or liabilities initially expressed in terms of foreign currencies
are translated into U.S. dollars by the pricing service retained by the Fund
or, to the extent that an exchange rate is not available through such pricing
service, at the mean of current bid and asked prices of such currencies
against the U.S. dollar last quoted by a major bank that is a regular
participant in the foreign exchange market. The Fund has been advised that the
pricing service translates foreign currencies into U.S. dollars on the basis
of the official exchange rate or by taking into account the quotes provided by
a number of major banks that are regular participants in the foreign exchange
market. Trading in securities on foreign securities exchanges and in over-the-
counter markets is normally completed well before the close of business on
each business day. In addition, foreign securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place in various foreign markets on days
which are not business days of the Fund and on which the Fund's net asset
value is not calculated. Therefore, the net asset value of the Fund might be
significantly affected on days when the investor has no access to the Fund.
The Fund calculates net asset value per share as of the close of the regular
trading session on the Exchange. Such calculation does not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Fund's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by or
under the direction of the Board of Directors.

Although the methodology and procedures for determining net asset value are
identical for all classes of shares, the net asset value per share of the
Class A, Class B and Class Y shares of the Fund may differ because of the
differing Rule 12b-1 fees and transfer agent fees charged to such classes.

TAX STATUS

The Fund qualified as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended, during its last taxable year
and intends to qualify as a regulated investment company during the current
taxable year. If so qualified, the Fund will not be liable for federal income
taxes to the extent it distributes its taxable income to shareholders.

25
<PAGE>

Distributions by the Fund are generally taxable to the shareholders, whether
received in cash or additional shares of the Fund (or shares of another mutual
fund managed by the Adviser). Distributions of net capital gains (designated
as "capital gain dividends") are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has held shares of the
Fund.

A shareholder will recognize a capital gain or loss upon the sale or
exchange of shares in the Fund if, as is normally the case, the shares are
capital assets in the shareholder's hands. This capital gain or loss will be
long-term if the shares have been held for more than one year.

The Fund's investments may be subject to taxes in foreign countries which
would reduce the total return on such investments. In addition, if the Fund is
deemed to be a resident of the United Kingdom for United Kingdom tax purposes
or if the Fund is treated as being engaged in a trading activity through an
agent in the United Kingdom, there is a risk that the United Kingdom will
attempt to tax all or a portion of the Fund's gains or income. In light of the
structure of the Fund and the terms and conditions of the Advisory and Sub-
Advisory Agreements, the Adviser believes that any such risk is minimal.

If the Fund has more than 50% of its assets invested in the stock or
securities of foreign corporations at the end of the Fund's taxable year, the
Fund may make an election to allow shareholders either to claim U.S. foreign
tax credits with respect to foreign taxes paid by the Fund or to deduct such
amounts as an itemized deduction on their tax return. In the event such an
election is made, shareholders would have to increase their taxable income by
the amount of such taxes and the Fund would not be able to deduct such taxes
in computing its taxable income.

The foregoing relates to federal income taxation as in effect as of the date
of this Prospectus. For a more detailed discussion of the federal income tax
consequences of investing in shares of the Fund, see "Taxation" in the
Statement of Additional Information. Before investing in the Fund, you should
check the consequences of your local and state tax laws.

PERFORMANCE COMPARISONS

Advertisements and other sales literature for the Fund may refer to the
Fund's "average annual total return" and "cumulative total return." Total
return will be computed separately for each class of the Fund's shares. All
such total return quotations are based upon historical earnings and are not
intended to indicate future performance. The return on and principal value of
an investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

Comparative performance information also may be used from time to time in
advertising the Fund's shares. For example, advertisements may compare the
Fund's performance to that of various unmanaged market indices, or may include
performance data from Lipper Analytical Services, Inc., Morningstar, Inc. or
other entities or organizations which track the performance of investment
companies.

26
<PAGE>

For additional information regarding comparative performance information and
the calculation of average annual total return and cumulative total return,
see "Performance Comparisons" in the Statement of Additional Information.

GENERAL INFORMATION

All shares of the Fund, when issued, will be fully paid and nonassessable
and will be redeemable. They can be issued as full or fractional shares. A
fractional share has pro rata the same kind of rights and privileges as a full
share. The shares possess no preemptive or conversion rights.

27
<PAGE>

PENDING LEGAL PROCEEDINGS

28
<PAGE>

Pacific-European Growth Fund
Emerging Markets Growth Fund
Series of Piper Global Funds Inc.

Investment Advisor
Piper Capital Management Incorporated

Sub-Adviser
Edinburgh Fund Managers plc

Distributor
Piper Jaffray Inc.

Custodian
First Trust National Association

Transfer Agent
Investors Fiduciary Trust Company

Legal Counsel
Dorsey & Whitney LLP

Table of Contents
page
<S> <C>
Introduction................................... 2
Fund Expenses.................................. 4
Financial Highlights........................... 6
Investment Objectives and Policies............. 8
Special Investment Methods..................... 11
Risk Factors................................... 18
Management..................................... 21
Distribution of Fund Shares.................... 25
SHAREHOLDER GUIDE TO INVESTING
How to Purchase Shares....................... 26
Reducing Your Sales Charge................... 27
Special Purchase Plans....................... 29
How to Redeem Shares......................... 30
Shareholder Services......................... 32
Dividends and Distributions.................. 34
Valuation of Shares............................ 35
Tax Status..................................... 35
Performance Comparisons........................ 36
General Information............................ 37
</TABLE>

Prospectus

[LOGO: PiperFunds]

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

Pacific-European Growth Fund

February , 1997

- ----------------------------------------
<PAGE>

PART B

PACIFIC-EUROPEAN GROWTH FUND
EMERGING MARKETS GROWTH FUND

Series of Piper Global Funds Inc.

STATEMENT OF ADDITIONAL INFORMATION

February ________ , 1997

Table of Contents
<TABLE>
<CAPTION>

Page
----
<S> <C>

Introduction........................................ 2
Investment Objectives and Policies.................. 2
Investment Restrictions............................. 7
Directors and Executive Officers.................... 10
Investment Advisory and Other Services.............. 14
Portfolio Transactions and Allocation of Brokerage.. 22
Capital Stock and Ownership of Shares............... 25
Net Asset Value and Public Offering Price........... 25
Performance Comparisons............................. 26
Purchase of Shares.................................. 28
Redemption of Shares................................ 29
Taxation............................................ 31
General Information................................. 34
Financial Statements................................ 34
Pending Litigation.................................. 35
Appendix A - Corporate Bond, Preferred Stock and
Commercial Paper Ratings.......................... A-1
Appendix B - General Characteristics and Risks of
Options and Futures............................... B-1
</TABLE>

This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to two Prospectuses, each dated
February ________ , 1997. One Prospectus relates to the Class A and Class B
shares of Pacific-European Growth Fund and Emerging Markets Growth Fund and the
other to the Class Y shares of Pacific-European Growth Fund. This Statement of
Additional Information should be read in conjunction with each applicable
Prospectus. Copies of these Prospectuses may be obtained from the Funds at Piper
Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota 55402-3804.
3010-1

1
<PAGE>

INTRODUCTION
------------

The shares of Piper Global Funds Inc. (the "Company") are currently offered
in two series: Pacific-European Growth Fund ("Pacific-European Fund") and
Emerging Markets Growth Fund ("Emerging Markets Fund") (sometimes referred to
herein as a "Fund" or, collectively, as the "Funds"). On June 21, 1996, Emerging
Markets Fund acquired the assets and assumed all identified liabilities of
Hercules Latin American Value Fund, a series of Hercules Funds Inc., in a tax-
free reorganization by issuing new shares. Emerging Markets Fund had no assets
or liabilities prior to the acquisition. Certain financial and performance
information for Emerging Markets Fund set forth herein represents historical
information of Hercules Latin American Value Fund.

INVESTMENT OBJECTIVES AND POLICIES
----------------------------------

The investment objectives and policies of the Funds are set forth in the
Prospectus. Certain additional investment information is set forth below.

ALLOCATION AMONG COUNTRIES.

For each Fund, investment is made in those countries where Management
believes that economic and political factors, including currency movements, are
likely to produce above average investment returns. There is no limitation on
the percentage of either Fund's assets that may be invested at any one time in
securities of companies in one or more of the countries in the Pacific Basin or
Europe (with respect to Pacific-European Fund) or in emerging markets (with
respect to Emerging Markets Fund), except insofar as each Fund is limited in its
ability to invest in other investment companies; provided, however, that in
normal market conditions each Fund's investments will be allocated among at
least three different countries in the Pacific Basin and/or Europe (with respect
to Pacific-European Fund) or having emerging markets (with respect to Emerging
Markets Fund). To the extent a Fund invests a significant portion of its assets
in any one country, it will be more susceptible to factors adversely affecting
issuers in such country than would a comparable fund having a lesser percentage
of its assets so invested.

ADDITIONAL RISKS OF INVESTMENTS IN EMERGING MARKETS

Investing in securities of issuers located in emerging market countries may
entail risks relating to the potential political and economic instability of
those countries and the risks of expropriation, nationalization, confiscation or
the imposition of restrictions on foreign investment and on repatriation of
capital invested. In the event of expropriation, nationalization or other
confiscation by any country, a Fund could lose its entire investment in any such
country.

The securities markets of emerging market countries are substantially
smaller, less developed, less liquid and more volatile than the major securities
markets in the United States. Disclosure and regulatory standards are in many

2
<PAGE>

respects less stringent than U.S. standards. Furthermore, there is a lower
level of monitoring and regulation of the markets and the activities of
investors in such markets.

The limited size of many emerging market securities markets and limited
trading volume in the securities of emerging market issuers compared to volume
of trading in the securities of U.S. issuers could cause prices to be erratic
for reasons apart from factors that affect the soundness and competitiveness of
the issuers. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on in-depth fundamental analysis,
may decrease the value and liquidity of portfolio securities.

ADDITIONAL RISKS OF INVESTMENTS IN LATIN AMERICA

Because the Emerging Markets Fund is the successor to the Hercules Latin
American Value Fund (see "General Information" in the Prospectus), the portfolio
consisted primarily of securities of Latin American issuers as of the date of
this Statement of Additional Information. In addition, the Pacific-European
Fund currently invests a portion of its assets in certain countries in Latin
America. The economies of individual countries in Latin America may differ
favorably or unfavorably from the U.S. economy in such respects as the rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments positions. Certain Latin
American countries have experienced high levels of inflation which can have a
debilitating effect on an economy. Furthermore, certain Latin American
countries may impose withholding taxes on dividends payable to the Fund at a
higher rate than those imposed by other foreign countries. This may reduce the
Fund's investment income available for distribution to shareholders.

Although a number of Latin American countries are currently experiencing
lower rates of inflation and higher rates of real growth in gross domestic
product than they have in the past, other such countries continue to experience
significant problems, including high inflation rates and high interest rates.
Capital flight has proven a persistent problem and external debt has been
forcibly rescheduled. Political turmoil, high inflation, capital repatriation
restrictions and nationalization have further exacerbated conditions.

Governments of many Latin American countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in
those countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. Political, economic or social instability or
other similar developments, such as military coups, have occurred in the past
and could also adversely affect the Fund's investments in these countries.

3
<PAGE>

Changes in political leadership, the implementation of market oriented
economic policies, such as privatization, trade reform and fiscal and monetary
reform are among the recent steps taken to renew economic growth in Latin
American countries. External debt is being restructured and flight capital
(domestic capital that has left home country) has begun to return. Inflation
control efforts have also been implemented. Free Trade Zones are being
discussed in various areas in Latin America, the most notable being a free zone
between Mexico and the U.S. Latin American equity markets can be extremely
volatile and in the past have shown little correlation with the U.S. market.
Currencies are typically weak, but most are now relatively free floating, and it
is not unusual for the currencies to undergo wide fluctuations in value over
short periods of time due to changes in the market.

FOREIGN CURRENCY TRANSACTIONS

As discussed in the prospectus, the Funds engage in currency exchange
transactions in connection with the purchase and sale of their investments. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract as agreed by the parties, at a price set at the
time of the contract. In the case of a cancelable forward contract, the holder
has the unilateral right to cancel the contract at maturity by paying a
specified fee. The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A foreign currency futures
contract is a standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at the time of the
contract. Foreign currency futures contracts traded in the United States are
designated by and traded on exchanges regulated by the Commodity Futures Trading
Commission ("CFTC"), such as the New York Mercantile Exchange. The Funds enter
into foreign currency futures contracts solely for hedging or other appropriate
risk management purposes as defined in CFTC regulations.

Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in any given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.

At the maturity of a forward or futures contract, a Fund may either accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing

4
<PAGE>

transactions with respect to futures contracts are effected on a commodities
exchange; a clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.

Positions in foreign currency futures contracts may be closed out only on
an exchange or board of trade which provides a secondary market in such
contracts. Although the Funds purchase or sell foreign currency futures
contracts only on exchanges or boards of trade where there appears to be an
active secondary market, there is no assurance that a secondary market on an
exchange or board of trade will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, a Fund would continue to
be required to make daily cash payments of variation margin.

Options on foreign currencies operate similarly to options on securities,
and are traded primarily in the over-the-counter market, although options on
foreign currencies have recently been listed on several exchanges. Options
traded in the over-the-counter market are illiquid and it may not be possible
for a Fund to dispose of an option it has purchased or terminate its obligations
under an option it has written at a time when the Adviser believes it would be
advantageous to do so. Options on foreign currencies are affected by all of
those factors which influence foreign exchange rates and investments generally.

The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign debt security. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the use of foreign currency options,
investors may be disadvantaged by having to deal in an odd-lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots. There is no
systematic reporting of last sale information for foreign currencies and there
is no regulatory requirement that quotations available through dealers or other
market sources be provided on a timely basis. Available quotation information
is generally representative of very large transactions in the interbank market
and thus may not reflect relatively smaller transactions (less than $1 million)
where rates may be less favorable. The interbank market in foreign currencies
is a global, around-the-clock market. To the extent that the U.S. options
markets are closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying markets
that cannot be reflected in the options markets.

Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based upon the difference between prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.

5
<PAGE>

REVERSE REPURCHASE AGREEMENTS

Each Fund may enter into reverse repurchase agreement transactions with the
same parties with whom it may enter into repurchase agreements. However, the
Funds do not currently enter into or intend to enter into such transactions
during the coming year. Under a reverse repurchase agreement, a Fund sells
securities and agrees to repurchase them at a mutually agreed date and price.
Because certain of the incidents of ownership of the security are retained by a
Fund, reverse repurchase agreements are considered a form of borrowing by the
Fund from the buyer, collateralized by the security. At the time a Fund enters
into a reverse repurchase agreement, it will establish and maintain a segregated
account with an approved custodian containing high-grade liquid debt securities
having a value not less than the repurchase price (including accrued interest).
Reverse repurchase agreements involve the risk that the market value of the
securities retained in lieu of sale by a Fund may decline below the price of the
securities a Fund has sold but is obligated to repurchase. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce a Fund's obligation to
repurchase the securities and a Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decisions.
Reverse repurchase agreements will be used as a means of borrowing for
investment purposes. This speculative technique is referred to as leveraging.
Leveraging may exaggerate the effect on net asset value of any increase or
decrease in the market value of a Fund's portfolio. Money borrowed for
leveraging will be subject to interest costs which may or may not be recovered
by income from or appreciation of the securities purchased. The Company's Board
of Directors has established procedures, which are periodically reviewed by the
Board, pursuant to which the Adviser and Sub-Adviser will monitor the
creditworthiness of the dealers and banks with which the Funds enter into
reverse repurchase agreement transactions.

The Securities and Exchange Commission views reverse repurchase agreement
transactions as collateralized borrowings by a Fund. Therefore, pursuant to the
Investment Company Act of 1940 (the "1940 Act"), each Fund must maintain
continuous asset coverage (that is, total assets including borrowings, less
liabilities exclusive of borrowings) of at least 300% of the amount borrowed.

ILLIQUID SECURITIES

As discussed in the prospectus, each Fund may invest no more than 15% of
its net assets in illiquid securities. "Restricted securities" are securities
which were originally sold in private placements and which have not been
registered under the Securities Act of 1933 (the "1933 Act"). Such securities
generally have been considered illiquid, since they may be resold only subject
to statutory restrictions and delays or if registered under the 1933 Act. In
1990, however, the Securities and Exchange Commission adopted Rule 144A under
the 1933 Act, which provides a safe harbor exemption from the registration
requirements of the 1933 Act for resales of

6
<PAGE>

restricted securities to "qualified institutional buyers," as defined in the
rule. The result of this rule has been the development of a more liquid and
efficient institutional resale market for restricted securities. Thus,
restricted securities are no longer necessarily illiquid. The Funds may
therefore invest in Rule 144A securities and treat them as liquid when they have
been determined to be liquid by the Board of Directors of the Company or by the
Adviser or Sub-Adviser subject to the oversight of and pursuant to procedures
adopted by the Board of Directors (as discussed below). Similar determinations
may be made with respect to securities issued in reliance on the so-called
"private placement" exemption from registration under Section 4(2) of the 1933
Act.

Under the procedures adopted by the Board of Directors, factors taken into
account in determining the liquidity of a security include (a) the frequency of
trades and quotes for the security; (b) the number of dealers willing to
purchase or sell the security and the number of other potential purchasers; (c)
dealer undertakings to make a market in the security; and (d) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
transfer). With respect to Rule 144A securities, investing in such securities
could have the effect of increasing the level of Fund illiquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these securities.

PORTFOLIO TURNOVER

Portfolio turnover is the ratio of the lesser of annual purchases or sales
of portfolio securities to the average monthly value of portfolio securities,
not including securities maturing in less than 12 months. A 100% portfolio
turnover rate would occur, for example, if the lesser of the value of purchases
or sales of portfolio securities for a particular year were equal to the average
monthly value of the portfolio securities owned during such year. Portfolio
turnover rates are set forth in "Financial Highlights" in the Prospectus.

INVESTMENT RESTRICTIONS
-----------------------

In addition to the investment objectives and policies set forth in the
Prospectus, each Fund is subject to certain fundamental and nonfundamental
investment restrictions, as set forth below. Fundamental investment
restrictions may not be changed without the approval of the holders of a
majority of a Fund's outstanding voting securities (defined in the 1940 Act as
the lesser of (a) more than 50% of the outstanding shares or (b) 67% or more of
the shares represented at a meeting where more than 50% of the outstanding
shares are represented). All other investment policies or practices are
considered by the Funds to be nonfundamental and, accordingly, may be changed
without shareholder approval. If a percentage restriction on investment or use
of assets set forth below is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing market values will not be
considered a deviation from policy.

7
<PAGE>

As fundamental investment restrictions:

(1) With respect to 75% of its total assets, Pacific-European Fund may not
invest more than 5% of the value of its total assets (taken at market value at
the time of purchase) in the outstanding securities of any one issuer, or own
more than 10% of the outstanding voting securities of any one issuer, in each
case other than securities issued or guaranteed by the United States government
or any agency or instrumentality thereof. For purposes of these restrictions,
the government of any country (other than the U.S.), including its governmental
subdivisions, is each considered a single issuer.

(2) No Fund may invest 25% or more of the value of its total assets in the
securities of issuers in the same industry, provided that this limitation does
not apply to securities issued or guaranteed by the United States government or
its agencies or instrumentalities.

(3) No Fund may borrow money (provided that the Funds may enter into
reverse repurchase agreements) except from banks for temporary or emergency
purposes. The amount of such borrowing may not exceed 10% of the value of a
Fund's total assets. A Fund will not purchase portfolio securities while
outstanding borrowing exceeds 5% of the value of the Fund's total assets. The
Funds will not borrow money for leverage purposes (provided that the Funds may
enter into reverse repurchase agreements for such purposes).

(4) No Fund may pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure issuances or borrowings permitted by restriction 3
above (collateral arrangements with respect to reverse repurchase agreements or
to margin for future contracts and options are not deemed to be pledges or other
encumbrances for purposes of this restriction).

(5) No Fund may make loans of money or property to any person, except
through loans of portfolio securities, the purchase of debt obligations in which
the Fund may invest consistently with the Fund's investment objective and
policies or the acquisition of securities subject to repurchase agreements.

(6) No Fund may underwrite the securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities or the
sale of its own shares a Fund may be deemed to be an underwriter.

(7) No Fund may invest for the purpose of exercising control over
management of any company.

(8) No Fund may purchase real estate or interests therein other than
securities backed by mortgages and similar instruments.

(9) No Fund may purchase or sell commodities or commodity contracts except
for hedging purposes.

8
<PAGE>

(10) No Fund may make any short sales of securities.

(11) No Fund may issue any senior securities (as defined in the 1940 Act),
other than as set forth in restriction number 3 above and except to the extent
that using options and futures contracts or purchasing or selling securities on
a when-issued or forward commitment basis may be deemed to constitute issuing a
senior security.

(12) Pacific-European Fund may not invest more than 15% of the value of its
net assets in illiquid securities.

In addition, the following are non-fundamental investment restrictions of
the Funds which may be changed without shareholder approval:

(a) Emerging Markets Fund will not invest more than 15% of the value of
its net assets in illiquid securities.

(b) The Funds will not purchase or sell interests in oil, gas or mineral
leases or interests in oil, gas or other mineral exploration or development
programs.

(c) Each Fund will not invest more than 5% of the value of its total
assets in the securities of any issuers which, with their predecessors, have a
record of less than three years' continuous operation. (Securities of such
issuers will not be deemed to fall within this limitation if they are guaranteed
by an entity in continuous operation for more than three years. The value of all
securities issued or guaranteed by such guarantor and owned by a Fund shall not
exceed 10% of the value of the total assets of such Fund.)

(d) The Funds will not purchase any securities on margin except to obtain
such short-term credits as may be necessary for the clearance of transactions
and except that the Funds may make margin deposits in connection with futures
contracts.

(e) The Funds will not purchase or retain the securities of any issuer if,
to a Fund's knowledge, those officers or directors of the Company or its
affiliates or of its investment adviser who individually own beneficially more
than 0.5% of the outstanding securities of such issuer, together own more than
5% of such outstanding securities.

(f) The Funds will not invest in real estate limited partnerships.

(g) The Funds will treat repurchase agreements with remaining maturities
in excess of seven days as illiquid securities.

(h) Each Fund will not invest more than 5% of its net assets in warrants,
valued at the lower of cost or market. Included within this amount, but not to
exceed 2% of the value of a Fund's net assets, may be warrants which are not
listed

9
<PAGE>

on the New York Stock Exchange or the American Stock Exchange.

(i) The Funds will not purchase put or call options on securities if
immediately thereafter the premiums paid on such options would exceed 5% of the
value of the total assets of the Fund. (This policy does not apply to put and
call options on futures contracts.)

DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------

The directors and officers of the Company and their principal occupations
during the past five years are set forth below. Unless otherwise indicated, all
positions have been held for more than five years. Each of the Company's
directors and officers, other than Mr. Watt and Mr. Balfour, also serves as a
director or officer of various closed-end and open-end investment companies
managed by the Adviser.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
POSITION WITH DURING THE PAST FIVE YEARS
NAME AND ADDRESS (AGE) THE COMPANY AND OTHER AFFILIATIONS
- ---------------------- ------------ --------------------------

<S> <C> <C>
William H. Ellis* (54) Chairman of President of Piper Jaffray Companies Inc.;
Piper Jaffray Tower the Board of Director and Chairman of the Board of Piper
222 South Ninth Street Directors Capital Management Incorporated (the
Minneapolis, MN 55402 "Adviser") and President of the Adviser since
1994; Director of Piper Jaffray Inc.

David T. Bennett (56) Director Of counsel to the law firm of Gray, Plant, Mooty,
3400 City Center Mooty & Bennett, P.A., located in Minneapolis.
33 South Sixth Street Mr. Bennett is chairman of a group of privately
Minneapolis, MN 55402 held companies and serves on the board of
directors of a number of nonprofit organizations.

Jaye F. Dyer (69) Director President of Dyer Management Company, a private
4670 Norwest Center management company, since 1991; prior thereto,
90 South Seventh Street Mr. Dyer was President and Chief Executive
Minneapolis, MN 55402 Officer of Dyco Petroleum Corporation, a Minneapolis
based oil and natural gas development company he
founded, from 1971 to March 1, 1989, and Chairman
of the Board until December 31, 1990. Mr. Dyer
serves on the board of directors of Northwestern
National Life Insurance Company, The ReliaStar
Financial Corp. (the holding company of Northwestern
National Life Insurance Company) and various privately
held and nonprofit corporations.

Karol D. Emmerich (47) Director President of The Paraclete Group, a consultant
7302 Claredon Drive to nonprofit organizations, since 1993; prior thereto,
Edina, MN 55439 Ms. Emmerich was Vice President, Chief Accounting Officer and
Treasurer of Dayton Hudson Corporation from 1980 to 1993.
Ms. Emmerich is an Executive Fellow at the University of
St. Thomas Graduate School of
</TABLE>

10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>

PRINCIPAL OCCUPATIONS
POSITION WITH DURING THE PAST FIVE YEARS
NAME AND ADDRESS (AGE) THE COMPANY AND OTHER AFFILIATIONS
- ---------------------- ------------- ----------------------------
Business and serves on the board of directors of
a number of privately held and nonprofit
corporations.

Luella G. Goldberg (59) Director Ms. Goldberg serves on the board of directors of
7019 Tupa Drive Northwestern National Life Insurance Company
Edina, MN 55435 (since 1976), The ReliaStar Financial Corp.
(since 1989), TCF Bank Savings fsb (since 1985),
TCF Financial Corporation (since 1988) and Hormel
Foods Corp. (since 1993). Ms. Goldberg also serves
as a Trustee of Wellesley College and as a director
of a number of other organizations, including the
University of Minnesota Foundation and the Minnesota
Orchestral Association. Ms.Goldberg was Chairman of
the Board of Trustees of Wellesley College from
1985 to 1993 and acting President from July 1, 1993
to October 1, 1993.

David A. Hughey (65) Director Trustee of Bentley College; formerly Executive Vice
134 Power Road President and Chief Administrative Officer of Dean Witter
Meredith, NH 03253 InterCapital Inc., Dean Witter Services Company Inc. and
Dean Witter Distributors Inc., Director, Executive Vice
President and Chief Administrative Officer of Dean Witter
Trust Company, Vice President of Dean Witter Family of
Funds and TCW/DW Family of Funds, and Director of
ICI Mutual Insurance Company.

George Latimer (61) Director Chief Executive Officer of National Equity
754 Linwood Fund, Chicago, Illinois since November 1995;
St.Paul, MN 55105 prior thereto, Mr. Latimer was Director, Special
Actions Officer, Office of the Secretary,
Department of Housing and Urban Development
since 1993, and prior thereof, he had been Dean
of Hamline Law School, Saint Paul, Minnesota,
from 1990 to 1993. Mr Latimer serves on the
board of directors of Digital Biometrics, Inc. and
Payless Cashways, Ins.

Iain A. Watt* (51) Director Executive Chairman of the Sub-Adviser since
Edinburgh Fund Managers plc 1995; prior thereto, Managing Director of the
Donaldson House Sub-Adviser since 1991. Mr. Watt is also a
97 Haymarket Terrace director of Edinburgh Dragon Trust plc,
Edinburgh, EH125HD Edinburgh New Tiger Trust, plc. Edinburgh Unit
Trust Managers Limited, Edinburgh Oil
Management Limited and Private Fund
Managers Limited.

</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>

PRINCIPAL OCCUPATIONS
POSITION WITH DURING THE PAST FIVE YEARS
NAME AND ADDRESS (AGE) THE COMPANY AND OTHER AFFILIATIONS
- ---------------------- ------------- ------------------------------

Michael W. Balfour* (36) Director Chief Investment Director since January 1995
Edinburgh Fund Managers plc and Joint Managing Director since July 1995 of
Donaldson House the Sub-Adviser; prior thereto, Director of
97 Haymarket Terrace Overseas Investments of the Sub-Adviser from
Edinburgh, EJ125HD 1992-1995 and assistant director and head of the
Pacific Department of the Sub-Adviser from 1988 to
1992. Mr. Balfour is also a director of Edinburgh
Inca Trust plc, Edinburgh Java Trust plc, DFM
Holdings Limited and Dunedin Fund Managers
Limited.

Paul A. Dow (45) President Chief Investment Officer and Senior Vice President
Piper Jaffray Tower of the Adviser.
222 South Ninth Street
Minneapolis, MN 55402

Robert H. Nelson (33) Vice President and Senior Vice President of the Adviser since 1993;
Piper Jaffray Tower Treasurer prior thereto he had been a Vice President of the
222 South Ninth Street Adviser from 1991 to 1993.
Minneapolis, MN 55402

Susan S. Miley (39) Secretary Senior Vice President and General Counsel of the
Piper Jaffray Tower Adviser since 1995 and Secretary of the Adviser
222 South Ninth Street since 1996; prior to which Ms. Miley was counsel
Minneapolis, MN 55402 for American Express Financial Advisors, Minneapolis,
from 1994 to 1995 and an attorney at Simpson
Thatcher & Bartlett, New York, New York from 1984
to 1992.

</TABLE>
- ------------------------------

* Directors who are "interested persons," as defined in the 1940 Act, of
Piper Capital and the Funds.

Two of the Fund's directors, Mr. Balfour and Mr. Watt, reside outside of
the United States and substantially all of the assets of such persons are
located outside of the United States. Neither Mr. Balfour nor Mr. Watt has
appointed an agent for service of process in the United States. It may not be
possible, therefore, for investors to effect service of process within the
United States upon such persons or to enforce against them, in the United States
courts or foreign courts, judgments obtained in the United States courts
predicated upon the civil liability provisions of the federal securities laws of
the United States. In addition, it is not certain that a foreign court would
enforce, in original actions, liabilities against such persons predicated solely
upon United States securities laws.

Ms. Emmerich, Ms. Goldberg and Mr. Hughey are members of the Audit
Committee of the Board of Directors. Ms. Emmerich acts as the chairperson of
such committee. The Audit Committee oversees the Company's financial reporting

12
<PAGE>

process, reviews audit results and recommends annually to the Company a firm of
independent certified public accountants.

The Board of Directors also has a Committee of the Independent Directors,
consisting of Mr. Bennett, who serves as chairperson, Messrs. Dyer, Hughey and
Latimer, Ms. Emmerich and Ms. Goldberg, and a Derivatives Subcommittee
consisting of Ms. Emmerich, who serves as chairperson, Ms. Goldberg and Mr.
Dyer.

The functions of the Committee of the Independent Directors are: (a)
recommendation to the full Board of approval of any management, advisory, sub-
advisory and/or administration agreements; (b) recommendation to the full Board
of approval of any underwriting and/or distribution agreements; (c) review of
the fidelity bond and premium allocation; (d) review of errors and omissions and
any other joint insurance policies and premium allocation; (e) review of, and
monitoring of compliance with, procedures adopted pursuant to certain rules
promulgated under the 1940 Act; and (f) such other duties as the independent
directors shall, from time to time, conclude are necessary or appropriate to
carry out their duties under the 1940 Act. The functions of the Derivatives
Subcommittee are: (a) to oversee practices, policies and procedures of the
Adviser in connection with the use of derivatives; (b) to receive periodic
reports from management and independent accountants; and (c) to report
periodically to the Committee of the Independent Directors and the Board of
Directors.

The directors of the Company who are officers or employees of the Adviser
or Sub-Adviser or any of their affiliates receive no remuneration from the
Company. Each of the other directors currently receives a quarterly retainer of
$3,625 that is allocated among the Funds and all other open-end funds managed by
the Adviser on the basis of the total assets of each such fund. In addition,
each director receives a fee from the Company for each regular quarterly and in-
person special meeting of the Board of Directors attended. Such fee is based on
the net asset value of the Company and ranges from $250 (net assets of less than
$200 million) to $1,500 (net assets of $5 billion or more). Members of the Audit
Committee who are not affiliated with the Adviser or Sub-Adviser receive $1,000
for each Audit Committee meeting attended ($2,000 for the chairperson of the
Committee), and the chairperson of the Committee of the Independent Directors
receives $1,000 for each meeting of such committee attended, with such fees
being allocated evenly between the Company and all other closed-end and open-end
investment companies managed by the Adviser. Members of the Committee of the
Independent Directors and the Derivatives Subcommittee (other than the
chairperson of the Committee of the Independent Directors) currently receive no
additional compensation. In addition, each Director who is not affiliated with
the Adviser is reimbursed for expenses incurred in connection with attending
meetings.

The following table sets forth the aggregate compensation received by each
director from the Funds for the indicated periods, as well as the total
compensation received by each director from the Company and all other registered
investment companies managed by the Adviser or affiliates of the Adviser during

13
<PAGE>

the calendar year ended December 31, 1995. Directors who are officers or
employees of the Adviser or Sub-Adviser or any of their affiliates did not
receive any such compensation and are not included in the table. No other
individuals received compensation from the Company during the indicated periods.
Mr. Bennett and Mr. Hughey became directors of the Company on August 9, 1996 and
September 3, 1996, respectively.

Compensation from Compensation from
Pacific-European Fund Emerging Markets Fund Total
------------------------------ -------------------------------- Compensation
Seven-Months Year Ended Three-Months Year Ended from Fund
Director Ended 09/30/96 02/29/96 Ended 09/30/96 06/30/96* Complex**
- ------------------ -------------- ----------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Jaye F. Dyer $906 $2,023 $125 $738 $67,700
Karol D. Emmerich 906 2,023 125 738 67,700
Luella G. Goldberg 938 2,046 125 761 70,700
George Latimer 875 2,000 125 714 64,700
David T. Bennett 0 0 0 714 61,700
David A. Hughey 0 0 0 0 0

- --------------------
* Includes compensation received from Hercules Latin American Value Fund.
** Currently consists of 20 open-end and closed-end investment companies managed by the Adviser, including the Company. During the
1995 calendar year, the Fund Complex consisted of up to 27 such investment companies, managed by the Adviser or an affiliate of
the Adviser, several of which were merged or consolidated during the year. Each director included in the table serves on the
board of each such open-end and closed-end investment company.
</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES
--------------------------------------

GENERAL

The investment adviser for the Funds is Piper Capital Management
Incorporated (the "Adviser"). Its affiliate, Piper Jaffray Inc. (the
"Distributor"), acts as the Funds' distributor. The Sub-Adviser for the Funds is
Edinburgh Fund Managers plc (the "Sub-Adviser"). Each of the Adviser and Sub-
Adviser acts as such pursuant to written agreements which are periodically
approved by the directors or the shareholders of the Funds. The address of both
the Adviser and the Distributor is Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota 55402-3804. The address of the Sub-Adviser is Donaldson
House, 97 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD.

CONTROL OF THE ADVISER, THE SUB-ADVISER AND THE DISTRIBUTOR

The Adviser and the Distributor are both wholly owned subsidiaries of Piper
Jaffray Companies Inc., a publicly held corporation which is engaged through its
subsidiaries in various aspects of the financial services industry. The Sub-
Adviser is a public limited company incorporated in 1969. The British
Investment Trust plc, a Scottish closed-end investment company, for which the
Sub-Adviser serves as investment manager and adviser, is a controlling
shareholder of the Sub-Adviser.

INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT

The Adviser acts as the investment adviser of the Funds under an Investment
Advisory and Management Agreement which has been approved by the Board of
Directors (including a majority of the directors who are not parties to the

14
<PAGE>

agreement, or interested persons of any such party, other than as directors of
the Company) and the shareholders of the Funds.

The Investment Advisory and Management Agreement will terminate
automatically in the event of its assignment. In addition, the agreement is
terminable at any time, without penalty, by the Board of Directors of the
Company or by vote of a majority of the Company's outstanding voting securities
on not more than 60 days' written notice to the Adviser, and by the Adviser on
60 days' written notice to the Company. The agreement may be terminated with
respect to a particular Fund at any time by a vote of the holders of a majority
of the outstanding voting securities of such Fund, upon 60 days' written notice
to the Adviser. Unless sooner terminated, the agreement shall continue in effect
for more than two years after its execution only so long as such continuance is
specifically approved at least annually by either the Board of Directors or by a
vote of a majority of the outstanding voting securities of the Company, provided
that in either event such continuance is also approved by a vote of a majority
of the directors who are not parties to such agreement, or interested persons of
such parties, cast in person at a meeting called for the purpose of voting on
such approval. If a majority of the outstanding voting securities of either Fund
approves the agreement, the agreement shall continue in effect with respect to
such approving Fund whether or not the shareholders of the other Fund approve
the agreement.

Pursuant to the Investment Advisory and Management Agreement, Pacific-
European Fund pays the Adviser monthly advisory fees as set forth in the
prospectus. Adjustments to the Basic Fee are made by comparison of Pacific-
European Fund's investment performance for the applicable period with the
investment record of the EAFE Index. The Basic Fee for each month may be
increased or decreased by up to .25% (on an annualized basis) of the Fund's
average daily net assets depending upon the extent by which the Fund's
performance varies from the EAFE Index over the applicable performance period.
For each percentage point by which the investment performance of the Fund
exceeds that of the EAFE Index for the applicable performance period, the Basic
Fee is increased by .05% (on an annualized basis) of the Fund's average daily
net assets, and for each percentage point amount by which the Fund underperforms
the EAFE Index, the Basic Fee is decreased by .05% (on an annualized basis) of
the Fund's average daily net assets. The maximum monthly increase for
performance is 1/12 of .25% of the Fund's average daily net assets and will be
payable if the investment performance of the Fund exceeds that of the EAFE Index
by five or more percentage points for the performance period, and the maximum
decrease for performance is 1/12 of .25% of the Fund's average daily net assets,
which will occur if the Fund underperforms the EAFE Index by five or more
percentage points for the performance period. For purposes of calculation of
the performance adjustment, average daily net assets are equal to the Fund's
average daily net assets during the month for which the calculation is being
made. The advisory fees paid by Pacific-European Fund for the fiscal years
ended February 28, 1994 and 1995 and February 29, 1996 and the seven-month
fiscal period ended September 30, 1996 were $1,068,330, $1,731,719, $1,216,305
and $898,235, respectively.

15
<PAGE>

Pursuant to the Investment Advisory and Management Agreement, Emerging
Markets Fund pays the Adviser a monthly advisory fee equal on an annual basis to
1.00% of average daily net assets. This fee is higher than fees paid by most
other investment companies. Emerging Market Fund commenced operations on June
21, 1996, on which date it acquired the assets of Hercules Latin American Value
Fund, which was also managed by the Adviser. The investment advisory fee paid
by Hercules Latin American Value Fund under its investment advisory agreement
with the Advisor was calculated at the same rate and in the same manner as the
fee for Emerging Markets Fund. Advisory fees paid under such agreement for the
fiscal period from November 9, 1993 (commencement of operations to June 30, 1994
(fiscal year end) and for the fiscal years ended June 30, 1995 and 1996 and the
three-month fiscal period ended September 30, 1996 were $133,200, $280,401,
$188,400, and $34,087, respectively.

The Adviser and Sub-Adviser intend, although not required under the
Investment Advisory and Management Agreement and Sub-Investment Advisory
Agreement (discussed below), to reimburse Emerging Markets Fund for the amount,
if any, by which the total operating and management expenses of such Fund
(including the Adviser's compensation and amounts paid pursuant to the Company's
Rule 12b-1 plan, but excluding interest, taxes, brokerage fees and commissions,
and extraordinary expenses) for the fiscal year exceed 2.00% of average daily
net assets. This arrangement may be modified or discontinued at any time after
the Fund's fiscal 1997 year end, at the Adviser's discretion.

Under the Investment Advisory and Management Agreement, the Adviser
provides each Fund with advice and assistance in the selection and disposition
of that Fund's investments. All investment decisions are subject to review by
the Board of Directors of the Company. The Adviser is obligated to pay the
salaries and fees of any affiliates of the Adviser serving as officers or
directors of the Funds.

The same security may be suitable for both Funds and/or other funds or
private accounts managed by the Adviser, the Sub-Adviser or their affiliates.
If and when two or more funds or accounts simultaneously purchase or sell the
same security, the transactions will be allocated as to price and amount in
accordance with arrangements equitable to each fund or account. The
simultaneous purchase or sale of the same securities by a Fund and other funds
or accounts may have a detrimental effect on the Fund, as this may affect the
price paid or received by that Fund or the size of the position obtainable or
able to be sold by that Fund.

SUB-ADVISORY AGREEMENT

The Adviser has entered into Sub-Investment Advisory Agreements with
respect to each Fund. Under such agreements, the Sub-Adviser is responsible for
the investment and reinvestment of the respective Fund's assets and the
placement of brokerage transactions in connection therewith. For its services
to Pacific-European Fund, the Sub-Adviser is paid a fee by the Adviser, payable
over the same time periods and calculated in the same manner as the Adviser's
fee, equal to 65% of

16
<PAGE>

the Adviser's Basic Fee plus or minus 90% of the performance fee adjustment. For
its services to Emerging Markets Fund, the Sub-Adviser is paid a monthly fee by
the Adviser equal to .50% of the Fund's average daily net assets. For each Fund,
the fee received by the Sub-Adviser will be reduced by a portion of the excess,
if any, of certain of such Fund's annual expenses over the expense limitations
set by California law, as described above, and any other applicable state
expense limitations. The Sub-Adviser's fee shall be reduced by an amount which
bears the same ratio to the fee reductions absorbed by the Adviser under the
Investment Advisory and Management Agreement as the sub-advisory fees which the
Sub-Adviser would otherwise be entitled to receive bear to the advisory fees
which the Adviser would be entitled to receive had such Fund not exceeded state
expense limitations.

The Adviser and Sub-Adviser also have entered into an Expense Reimbursement
Agreement pursuant to which the Sub-Adviser pays the Adviser a monthly fee equal
to 10% of the Basic Fee to reimburse the Adviser for certain expenses it bears
in connection with the administration of Pacific-European Fund.

The fees paid by the Adviser to the Sub-Adviser for Pacific-European Fund
(such amounts are payable out of the advisory fees received by the Adviser for
the same periods and are not in addition to such amounts) for the fiscal years
ended February 28, 1994 and 1995 and February 29, 1996 and the seven-month
fiscal period ended September 30, 1996 were $691,438, $1,149,751, $706,276 and
$570,444, respectively. In addition, for the fiscal year ended February 29,
1996 and the seven-month fiscal period ended September 30, 1996, the Sub-Adviser
paid $155,359 and $95,187, respectively, to the Adviser under the Expense
Reimbursement Agreement.

Bankers Trust ("Bankers Trust") Company, a New York banking corporation and
a wholly owned subsidiary of Bankers Trust New York Corporation, acted as the
Sub-Adviser to Hercules Latin American Value Fund prior to its acquisition by
Emerging Markets Fund. Bankers Trust was paid monthly compensation, over the
same time periods and calculated in the same manner as the investment advisory
fee, of .50% of net assets of such Fund. Fees paid by the Adviser to Bankers
Trust for the fiscal period from November 9, 1993 (commencement of operations)
to June 30, 1994 and the fiscal years ended June 30, 1995 and 1996 were $66,600,
$140,200 and $92,822.

From the commencement of operations of Emerging Markets Fund on June 22,
1996 through June 30, 1996, the Adviser paid the Sub-Adviser fees of $1,378.
For the three-month fiscal period ended September 30, 1996, fees paid by the
Adviser to the Sub-Adviser for Emerging Markets Fund were $17,044.

Each Sub-Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, each Sub-Investment Advisory Agreement is
terminable at any time, without penalty, by the Board of Directors on 60 days'
written notice to the Adviser and the Sub-Adviser or by a vote of the holders of
a majority of the outstanding shares of the respective Fund. Unless sooner

17
<PAGE>

terminated, each Sub-Investment Advisory Agreement shall continue in effect
until two years from the date of its execution and thereafter from year to year
provided it is specifically approved at least annually by either the Board of
Directors or by a vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the respective Fund, provided that, in either
event, such continuance is also approved by a vote of a majority of the
Directors who are not parties to such Sub-Investment Advisory Agreement, or
interested persons of such parties, cast in person at a meeting called for the
purpose of voting on such approval.

EXPENSES

The expenses of each Fund are deducted from their income before dividends
are paid. These expenses include, but are not limited to, organizational costs,
fees paid to the Adviser, fees and expenses of officers and directors who are
not affiliated with the Adviser, taxes, interest, legal fees, transfer agent,
dividend disbursing agent and custodian fees, audit fees, brokerage fees and
commissions, fees and expenses of registering and qualifying the Funds and their
shares for distribution under federal and state securities laws, expenses of
preparing prospectuses and statements of additional information and of printing
and distributing prospectuses and statements of additional information annually
to existing shareholders, the expenses of reports to shareholders, shareholders'
meetings and proxy solicitations, distribution expenses pursuant to the Fund's
Rule 12b-1 plan, and other expenses which are not expressly assumed by the
Adviser under the Investment Advisory and Management Agreement. Any general
expenses of the Company that are not readily identifiable as belonging to either
Fund will be allocated between each Fund based upon the relative net assets of
each Fund at the time such expenses were incurred.

DISTRIBUTION PLAN

Rule 12b-1(b) under the 1940 Act provides that any payments made by the
Funds in connection with financing the distribution of their shares may only be
made pursuant to a written plan describing all aspects of the proposed financing
of distribution, and also requires that all agreements with any person relating
to the implementation of the plan must be in writing.

Rule 12b-1(b)(1) requires that such plan be approved by a majority of a
Fund's outstanding shares, and Rule 12b-1(b)(2) requires that such plan,
together with any related agreements, be approved by a vote of the Board of
Directors and of the Directors who are not interested persons of the Company and
who have no direct or indirect interest in the operation of the plan or in the
agreements related to the plan, cast in person at a meeting called for the
purpose of voting on such plan or agreement. Rule 12b-1(b)(3) requires that the
plan or agreement provide, in substance:

(a) that it shall continue in effect for a period of more than one
year from the date of its execution or adoption only so long as such
continuance is
18
<PAGE>

specifically approved at least annually in the manner described in
paragraph (b)(2) of Rule 12b-1;

(b) that any person authorized to direct the disposition of moneys
paid or payable by the Company pursuant to the plan or any related
agreement shall provide to the Company's Board of Directors, and the
directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made; and

(c) in the case of a plan, that it may be terminated at any time by a
vote of a majority of the members of the Board of Directors of the Company
who are not interested persons of the Company and who have no direct or
indirect financial interest in the operation of the plan or in any
agreements related to the plan or by a vote of a majority of the
outstanding voting securities of a Fund.

Rule 12b-1(b)(4) requires that such a plan may not be amended to increase
materially the amount to be spent for distribution without shareholder approval
and that all material amendments of the plan must be approved in the manner
described in paragraph (b)(2) of Rule 12b-1.

Rule 12b-1(c) provides that the Company may rely upon Rule 12b-1(b) only if
the selection and nomination of the Company's disinterested directors are
committed to the discretion of such disinterested directors. Rule 12b-1(e)
provides that the Company may implement or continue a plan pursuant to Rule 12b-
1(b) only if the directors who vote to approve such implementation or
continuation conclude, in the exercise of reasonable business judgment and in
light of their fiduciary duties under state law, and under Sections 36(a) and
(b) of the 1940 Act, that there is a reasonable likelihood that the plan will
benefit the Company and its shareholders. The Board of Directors has concluded
that there is a reasonable likelihood that each Fund's Rule 12b-1 plan
("Distribution Plan") will benefit such Fund and its shareholders.

Pursuant to the provisions of their respective Distribution Plans, each
Fund pays a quarterly fee to the Distributor for servicing of the Fund's
shareholder accounts and providing distribution-related services to the Funds.
With respect to the Class A shares of Pacific-European Fund, the Distributor is
reimbursed quarterly for its actual expenses in an amount not to exceed, on an
annual basis, .50% of the average daily net attributable to Class A shares. In
the event expenses for the Class A shares of Pacific-European Fund for any one
year exceed the maximum reimbursable under the Plan, such expenses may not be
carried forward to the following year. With respect to the Class B shares of
Pacific-European Fund, the Distributor is paid a fee which is equal, on an
annual basis, to 1.00% of the average daily net assets attributable to Class B
shares. With respect to Emerging Markets Fund, the Fund pays a monthly fee to
the Distributor equal, on an annual basis, to .50% of the Fund's average daily
net assets attributable to Class A shares and 1.00% of the Fund's average daily
net assets attributable to Class B shares.
19
<PAGE>

As described in the relevant Prospectus, a portion of each Fund's total fee
is paid as a distribution fee and will be used by the Distributor to cover
expenses that are primarily intended to result in, or that are primarily
attributable to, the sale of shares of such Fund ("Distribution Expenses"), and
a portion of the fee is paid as a shareholder servicing fee and will be used by
the Distributor to provide compensation for ongoing servicing and/or maintenance
of shareholder accounts with respect to such Fund ("Shareholder Servicing
Costs"). Distribution Expenses under the Plan include, but are not limited to,
initial and ongoing sales compensation (in addition to sales charges) paid to
Investment Executives of the Distributor and to other broker-dealers; interest
expenses; expenses incurred in the printing of prospectuses, statements of
additional information and reports used for sales purposes; expenses of
preparation and distribution of sales literature; expenses of advertising of any
type; an allocation of the Distributor's overhead; and payments to and expenses
of persons who provide support services in connection with the distribution of
Fund shares. Shareholder Servicing Costs include all expenses of the
Distributor incurred in connection with providing administrative or accounting
services to shareholders, including, but not limited to, an allocation of the
Distributor's overhead and payments made to persons, including employees of the
Distributor, who respond to inquiries of shareholders of the Funds regarding
their ownership of shares or their accounts with the Funds, or who provide other
administrative services not otherwise required to be provided by the Funds'
Adviser or transfer agent.

Amounts paid by Pacific-European Fund under its Distribution Plan for the
fiscal years ended February 28, 1994 and 1995 and February 29, 1996 and for the
seven-month fiscal period ended September 30, 1996, were $323,166, $476,639,
$514,242 and $311,253, respectively. There were no Class B shares outstanding
during such periods. During these periods, the Distributor voluntarily agreed to
limit amounts paid under the Plan to annual rates of .30%, .28%, .32% and .31%
of average daily net assets for fiscal years 1994, 1995 and 1996 and the seven-
month fiscal period ended September 30, 1996, respectively. Of the Rule 12b-1
fees paid for the fiscal year ended February 29, 1996, the Distributor used
$489,784 for compensation to underwriters (fees to investment executives) and
$24,458 for advertising. Of the Rule 12b-1 fees paid for the seven-month fiscal
period ended September 30, 1996, the Distributor used $301,213 for compensation
to underwriters (fees to investment executives) and $10,040 for advertising.

The amount paid by Emerging Markets Fund under its Distribution Plan for
the three-month fiscal period ended September 30, 1996, was $10,567. There were
no Class B shares outstanding during such period. During this period, the
Distributor voluntarily agreed to limit amounts paid under the Plan to an annual
rate of .31% of average daily net assets. Of the Rule 12b-1 fees paid for the
three-month fiscal period ended September 30, 1996, the Distributor used $10,226
for

20
<PAGE>

compensation to underwriters (fees to investment executives) and $341 for
advertising, printing and mailing of prospectuses to other than current
shareholders.

Prior to its acquisition by Emerging Markets Fund on June 21, 1996,
Hercules Latin American Value Fund had a Rule 12b-1 Plan under which the Fund
paid a monthly fee to the Distributor at the annual rate of up to .70% of the
Fund's average daily net assets in order to reimburse the Distributor for actual
expenses incurred in the distribution and promotion of the Fund's shares. Rule
12b-1 fees incurred by Hercules Latin American Value Fund for the fiscal period
from November 9, 1993 (commencement of operations) to June 30, 1994 and the
fiscal years ended June 30, 1995 and 1996 were $93,240, $196,280 and $131,002,
respectively. However, the reimbursement was voluntarily limited to .50% per
annum of average daily net assets during each of these fiscal periods. The
amounts actually paid by the Fund were $66,600 for fiscal 1994, $140,200 for
fiscal 1995 and $93,573 for fiscal 1996. The Distributor used all of the Rule
12b-1 fees paid for the fiscal year ended June 30, 1996, for compensation to
underwriters (fees to investment executives).

UNDERWRITING AND DISTRIBUTION AGREEMENT

Pursuant to an Underwriting and Distribution Agreement, the Distributor has
agreed to act as the principal underwriter for the Funds in the sale and
distribution to the public of shares of the Funds, either through dealers or
otherwise. The Distributor has agreed to offer such shares for sale at all
times when such shares are available for sale and may lawfully be offered for
sale and sold. As compensation for its services, in addition to receiving fees
pursuant to the Distribution Plan discussed above, the Distributor receives the
initial sales charge on sales of Class A shares of the Funds and any contingent
deferred sales charge imposed on redemptions of Class B shares of the Funds and
redemption of certain Class A shares of the Funds that were not subject to an
initial sales charge, as set forth in the respective Prospectus. The total
underwriting commissions paid in connection with sales of Pacific-European Fund
shares during the fiscal years ended February 28, 1994 and 1995 and February 29,
1996 and the seven-month fiscal period ended September 30, 1996 were $556,904,
$459,632, $400,830 and $164,075, respectively, and the Distributor retained
underwriting commissions of $323,004, $459,632, $400,766 and $163,384,
respectively. Prior to its acquisition by Emerging Markets Fund on June 21,
1996, Hercules Latin American Value Fund did not charge an initial sales charge,
and therefore, no underwriting commissions were paid in prior fiscal periods.
The total underwriting commissions paid in connection with sales of Emerging
Markets Fund during the three-month fiscal period ended September 30, 1996 were
$23,154, all of which was retained by the Distributor.

21
<PAGE>

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Investors Fiduciary Trust Company ("IFTC"), the transfer agent for the
Company, maintains certain omnibus shareholder accounts for each Fund. Each such
omnibus account represents the accounts of a number of individual shareholders
of a Fund. The Company has entered into Shareholder Account Servicing Agreements
with the Distributor and Piper Trust Company ("Piper Trust"), pursuant to which
they provide certain transfer agent and dividend disbursing agent services for
the underlying individual shareholder accounts held at the Distributor or Piper
Trust, as applicable. Pursuant to such Agreements, the Distributor and Piper
Trust have agreed to perform the usual and ordinary services of transfer agent
and dividend disbursing agent not performed by IFTC with respect to the
respective underlying individual shareholder accounts, including, without
limitation, the following: maintaining all shareholder accounts, preparing
shareholder meeting lists, mailing shareholder reports and prospectuses,
tracking shareholder accounts for blue sky and Rule l2b-1 purposes, withholding
taxes on nonresident alien and foreign corporation accounts, preparing and
mailing checks for disbursement of income dividends and capital gains
distributions, preparing and filing U.S. Treasury Department Form 1099 for all
shareholders, preparing and mailing confirmation forms to shareholders and
dealers with respect to all purchases, exchanges and liquidations of series
shares and other transactions in shareholder accounts for which confirmations
are required, recording reinvestments of dividends and distributions in series
shares, recording redemptions of series shares, and preparing and mailing checks
for payments upon redemption and for disbursements to withdrawal plan holders.
As compensation for such services, the Distributor and Piper Trust are paid
annual fees of $6.00 per active shareholder account (defined as an account that
has a balance of shares) and $1.60 per closed account (defined as an account
that does not have a balance of shares, but has had activity within the past 12
months). Such fees are payable on a monthly basis at a rate of 1/12 of the
annual per-account charge. Such fees cover all services listed above, with the
exception of preparing shareholder meeting lists and mailing shareholder reports
and prospectuses. These services, along with proxy processing (if applicable)
and other special service requests, are billable as performed at a mutually
agreed upon fee in addition to the annual fee noted above, provided that such
mutually agreed upon fee shall be fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and quality.
Under such Agreements, Pacific-European Fund paid $120,739 and $57,518 to the
Distributor and $15,139 and $11,252 to Piper Trust for the fiscal year ended
February 29, 1996 and the seven-month fiscal period ended September 30, 1996 and
Emerging Markets Fund paid $6,431 to the Distributor and $0 to Piper Trust
during the three-month fiscal period ended September 30, 1996. Hercules Latin
American Value Fund was not a party to similar agreements with the Distributor
and Piper Trust.

PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
--------------------------------------------------

Transactions on stock exchanges involve the payment of brokerage
commissions. In transactions on stock exchanges in the United States,
commissions
22
<PAGE>

are negotiated whereas on many foreign stock exchanges, commissions are fixed,
often at levels higher than those available in the United States. In the case of
securities traded on the over-the-counter markets, there is generally no stated
commission but the price usually includes a commission paid by the issuer to the
underwriters. Commissions are paid with respect to the purchase of certain other
securities in which the Funds may invest, and with respect to options on
securities, futures contracts and options on futures contracts purchased by the
Funds. Subject to the general supervision of the Directors of the Company, the
Adviser and the Sub-Adviser are responsible for the investment decisions and the
placing of the orders for portfolio transactions for the Funds.

The Funds have no obligation to enter into transactions in portfolio
securities with any dealer, issuer, underwriter or other entity. The Funds do
not purchase securities from, or sell securities to, the Adviser, the Sub-
Adviser or their respective affiliates acting as principal. In placing orders,
it is the policy of the Funds to obtain the best price and execution for its
transactions. Where best price and execution may be obtained from more than one
broker-dealer, the Adviser or the Sub-Adviser may, in their discretion, purchase
and sell securities through broker-dealers who provide research, statistical and
other information to the Adviser or the Sub-Adviser, as the case may be. The
Funds will not purchase at a higher price or sell at a lower price in connection
with transactions effected with a dealer, acting as principal, who furnishes
research services to the Adviser or Sub-Adviser than would be the case if no
weight were given by the Adviser or Sub-Adviser, as the case may be, to the
dealer's furnishing of such services.

The supplemental information received from a broker-dealer is in addition
to the services required to be performed by the Adviser under the Advisory
Agreement, and by the Sub-Adviser under the respective Sub-Advisory Agreement,
and the expenses of the Adviser and/or the Sub-Adviser will not necessarily be
reduced as a result of the receipt of such information. Consistent with the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
and subject to seeking the best price and execution, the Funds may consider
sales of shares of the Funds as a factor in the selection of broker-dealers to
enter into portfolio transactions with the Funds.

The investment information provided to the Adviser or the Sub-Adviser, as
the case may be, is of the types described in Section 28(e)(3) of the Securities
Exchange Act of 1934 and is designed to augment the Adviser's or the Sub-
Adviser's own internal research and investment strategy capabilities. Research
and statistical services furnished by brokers through which the Funds effect
securities transactions are used by the Adviser or the Sub-Adviser in carrying
out its investment management responsibilities with respect to all its client
accounts, but not all such services may be used by the Adviser or the Sub-
Adviser in connection with the Funds.

Certain other clients of the Adviser and/or the Sub-Adviser may have
investment objectives and policies similar to those of the Funds. The Adviser

23
<PAGE>

and/or the Sub-Adviser may, from time to time, make recommendations that result
in the purchase or sale of a particular security by its other clients
simultaneously with a Fund. ("Security" is defined for these purposes to include
options, futures contracts and options on futures contracts.) If transactions on
behalf of more than one client during the same period increase the demand for
securities being purchased or the supply of securities being sold, there may be
an adverse affect on price or quantity. In addition, it is possible that the
number of options or futures transactions that a Fund may enter into may be
affected by options or futures transactions entered into by other investment
advisory clients of the Adviser. It is the policy of the Adviser and the Sub-
Adviser to allocate advisory recommendations and the placing of orders in a
manner that is deemed equitable by the Adviser or the Sub-Adviser to the
accounts involved, including the Funds. When two or more of the clients of the
Adviser or Sub-Adviser (including the Funds) are purchasing or selling the same
security on a given day from the same broker-dealer, such transactions may be
averaged as to price.

Transactions in securities, options on securities, futures contracts and
options on futures contracts may be effected through Piper Jaffray Inc. if the
commissions, fees or other remuneration received by Piper Jaffray Inc. are
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers or other futures commission merchants in connection with
comparable transactions involving similar securities or similar futures
contracts or options thereon being purchased or sold on an exchange or contract
market during a comparable period of time. In effecting portfolio transactions
through Piper Jaffray Inc., the Funds intend to comply with Section 17(e)(1) of
the 1940 Act.

Pacific-European Fund paid brokerage commissions for the fiscal years ended
February 28, 1994 and 1995 and February 29, 1996 and the seven-month fiscal
period ended September 30, 1996 of $735,400, $683,910, $940,635 and $557,103,
respectively. No commissions were paid to affiliates of the Fund, the Adviser or
the Sub-Adviser, or to affiliates of such affiliates during such periods.
Emerging Markets Fund paid brokerage commissions for the fiscal period from
November 9, 1993 (commencement of operations) to June 30, 1994 and the fiscal
years ended June 30, 1995 and 1996 and the three-month fiscal period ended
September 30, 1996 of $160,209, $217,281, $185,521 and $1,424, respectively. Of
such amounts, $4,208, $10,523, $0 and $0, respectively, were paid to affiliated
brokers which was equal to 3%, 4.84%, 0% and 0%, respectively, of total
brokerage commissions. The total dollar amount of transactions involving
commissions paid to an affiliate were $1,661,720 (3%), $3,105,766 (6.28%), $0
and $0, respectively.

From time to time the Funds may acquire the securities of their regular
brokers or dealers or affiliates of such brokers or dealers. During the fiscal
year ended June 30, 1996 and the three-month fiscal period ended September 30,
1996 no such securities were acquired by Emerging Markets Fund and during the
fiscal year ended February 29, 1996 and the seven-month fiscal period ended
September 30, 1996, no such securities were acquired by Pacific-European Fund,
respectively.

24
<PAGE>

OPTION TRADING LIMITS

The writing by the Funds of options on securities will be subject to
limitations established by each of the registered securities exchanges on which
such options are traded. Such limitations govern the maximum number of options
in each class which may be written by a single investor or group of investors
acting in concert, regardless of whether the options are written on the same or
different securities exchanges or are held or written in one or more accounts or
through one or more brokers. Thus, the number of options which the Funds may
write may be affected by options written by other investment companies managed
by and other investment advisory clients of the Adviser and the Sub-Adviser. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.

CAPITAL STOCK AND OWNERSHIP OF SHARES
-------------------------------------

Each Fund's shares constitute a separate series of the Company's common
stock. The assets received by the Company for the issue or sale of shares of
each series, and all income, earnings, profits and proceeds thereof, subject
only to the rights of creditors, are allocated to such series, and constitute
the underlying assets of such series. The underlying assets of each series are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such series and with a share of the general expenses
of the Company. Any general expenses of the Company not readily identifiable as
belonging to a particular series shall be allocated among the series based upon
the relative net assets of the series at the time such expenses were
accrued.

As of January ___________ , 1997, no shareholder owned of record or was
known by the Funds to own beneficially 5% or more of the outstanding shares of
either Fund except as follows: ________________________________________________.
The directors and officers of the Company as a group owned less than 1% of the
outstanding shares of each Fund as of such date. All of the foregoing ownership
information relates to the Class A shares of the Funds. There were no Class B or
Class Y shares outstanding as of such date.

NET ASSET VALUE AND PUBLIC OFFERING PRICE
-----------------------------------------

The method for determining the public offering price of Fund shares is
summarized in the prospectus in the text following the headings "How to Purchase
Shares -- Public Offering Price" and "Valuation of Shares." The net asset value
of each Fund's shares is determined on each day on which the New York Stock
Exchange is open, provided that the net asset value need not be determined on
days when no Fund shares are tendered for redemption and no order for Fund
shares is received. The New York Stock Exchange is not open for business on the
following holidays (or on the nearest Monday or Friday if the holiday falls on a
weekend): New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th,
Labor Day, Thanksgiving and Christmas.

25
<PAGE>

The portfolio securities in which the Funds invest fluctuate in value, and
hence the net asset value per share of the Funds also fluctuates. On September
30, 1996, the net asset values per Class A share of each Fund were calculated as
follows:

Pacific-European Fund
---------------------

Net Assets ($172,453,670) = Net Asset Value Per Share ($12.94)
-------------------------------
Shares Outstanding (13,329,471)

Emerging Markets Fund
---------------------

Net Assets ($13,771,898) = Net Asset Value Per Share ($8.85)
------------------------------
Shares Outstanding (1,555,403)

There were no Class B or Class Y shares outstanding as of September 30,
1996.

PERFORMANCE COMPARISONS
-----------------------

Advertisements and other sales literature for the Funds may refer to
"average annual total return" and "cumulative total return."

Average annual total return figures are computed by finding the average
annual compounded rates of return over the periods indicated in the
advertisement that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
<TABLE>
<CAPTION>
P(1+T)/n/ = ERV
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the period
of a hypothetical $1,000 payment made at the
beginning of such period.
</TABLE>

This calculation deducts the maximum sales charge from the initial hypothetical
$1,000 investment, assumes all dividends and capital gains distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the prospectus, and includes all recurring fees, such as investment advisory
and management fees, charged to all shareholder accounts.

The following table sets forth the average annual total returns for the
Class A shares of each Fund for various periods ended September 30, 1996. There
were no Class B or Class Y shares of the Funds outstanding during such
periods.

26
<PAGE>

Average Annual Total Returns
----------------------------
1 Year 5 Years Since Inception
------- -------- ----------------
<S> <C> <C> <C>

Pacific-European Fund 0.75% 9.05% 5.73% *
Emerging Markets Fund *** 16.52% N/A (5.44)% **
</TABLE>
- --------------------
* Inception date: 4/27/90
** Inception date: 11/9/93
*** Results are based on historical performance of Hercules Latin American Value
Fund, but deduct the 4% maximum sales charge applicable to Emerging Markets
Fund.

The Adviser has waived or paid certain expenses of the Funds, thereby
increasing total return and yield. These expenses may or may not waived or paid
in the future in the Adviser's discretion. Absent any voluntary expense
payments or waivers, the average annual total returns for the Class A shares of
the Funds for one year, five years and since inception for the period ended
September 30, 1996, for the Funds would have been:
<TABLE>
<CAPTION>

Average Annual Total Returns
----------------------------
(absent voluntary expense waivers)
1 Year 5 Years Since Inception
------- -------- ----------------
<S> <C> <C> <C>
Pacific-European Fund 0.59% 8.83% 5.56% *
Emerging Markets Fund *** 14.67% N/A (6.90)%**
</TABLE>
- --------------------
* Inception date: 4/27/90
** Inception date: 11/9/93
*** Results are based on historical performance of Hercules Latin American Value
Fund, but deduct the 4% maximum sales charge applicable to Emerging Markets
Fund.

Cumulative total return is computed by finding the cumulative compounded
rate of return over the period indicated in the advertisement that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
<TABLE>
<CAPTION>
CTR = (/ERV-P/) 100
-------
/ P /

<S> <C> <C>
Where: CTR Cumulative total return;
ERV ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period; and
P initial payment of $1,000.
</TABLE>

This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the

27
<PAGE>

Prospectus and includes all recurring fees, such as investment advisory and
management fees, charged to all shareholder accounts.

The following table sets forth the cumulative total returns for the Class A
shares of the Funds for the periods from inception to September 30, 1996. There
were no Class B or Class Y shares of the Funds outstanding during such
periods.
<TABLE>
<CAPTION>
Cumulative Total Returns
Cumulative (absent voluntary
Total Returns expense waivers)
------------- ------------------------
<S> <C> <C>
Pacific-European Fund 43.07% 41.63 %
(inception date: 4/27/90)
Emerging Markets Fund * (14.94)% (18.69)%
(inception date: 11/9/93)
</TABLE>
- --------------------
* Results are based on historical performance of Hercules Latin American
Value Fund, but deduct the 4% maximum sales charge applicable to Emerging
Markets Fund.

In addition to advertising total return, comparative performance
information may be used from time to time in advertising the Funds' shares,
including data from Lipper Analytical Services, Inc. ("Lipper"), Morningstar,
other industry publications and other entities or organizations which track the
performance of investment companies. Performance information for the Funds also
may be compared to various unmanaged indices. Unmanaged indices do not reflect
deductions for administrative and management costs and expenses. The Funds may
also include in advertisements and communications to Fund shareholders
evaluations of a Fund published by nationally recognized ranking services and by
financial publications that are nationally recognized, such as Barron's,
Business Week, Forbes, Institutional Investor, Investor's Daily, Money,
Kiplinger's Personal Finance Magazine, Morningstar Mutual Fund Values, The New
York Times, USA Today and The Wall Street Journal.

PURCHASE OF SHARES
------------------

An investor may qualify for a reduced sales charge on Class A shares by
signing a nonbinding Letter of Intent stating the investor's intention to invest
within a 13-month period, beginning not earlier than 90 days prior to the date
of execution of the Letter, a specified amount which, if made at one time, would
qualify for a reduced sales charge. Reinvested dividends will be treated as
purchases of additional Class A shares. Any redemptions made during the term of
the Letter of Intent will be subtracted from the amount of purchases in
determining whether the Letter of Intent has been completed. During the term of
a Letter of Intent, IFTC will hold shares representing 5% of the amount that the
investor intends to invest during the 13-month period in escrow for payment of a
higher sales charge if the full amount indicated in the Letter of Intent is not
purchased. Dividends on the

28
<PAGE>

escrowed shares will be paid to the shareholder. The escrowed shares will be
released when the full amount indicated has been purchased. If the full
indicated amount is not purchased within the 13-month period, the investor will
be required to pay, either in cash or by liquidating escrowed shares, an amount
equal to the difference in the dollar amount of sales charge actually paid and
the amount of sales charge the investor would have paid on his or her aggregate
purchases if the total of such purchases had been made at a single time.

REDEMPTION OF SHARES
--------------------

GENERAL

Redemption of shares, or payment, may be suspended at times (a) when the
New York Stock Exchange is closed for other than customary weekend or holiday
closings, (b) when trading on said Exchange is restricted, (c) when an emergency
exists, as a result of which disposal by the Fund of securities owned by it is
not reasonably practicable, or it is not reasonably practicable for a Fund
fairly to determine the value of its net assets, or (d) during any other period
when the Securities and Exchange Commission, by order, so permits, provided that
applicable rules and regulations of the Securities and Exchange Commission shall
govern as to whether the conditions prescribed in (b) or (c) exist.

Shareholders who purchased Fund shares through a broker-dealer other than
the Distributor may redeem such shares either by oral request to such broker-
dealer or by written request to IFTC at the address set forth in the Prospectus.
To be considered in proper form, written requests for redemption should indicate
the dollar amount or number of shares to be redeemed, refer to the shareholder's
Fund account number, and give either a social security or tax identification
number. The request should be signed in exactly the same way the account is
registered. If there is more than one owner of the shares, all owners must sign.
If shares to be redeemed have a value of $10,000 or more or redemption proceeds
are to be paid to someone other than the shareholder at the shareholder's
address of record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is a member of the Federal
Deposit Insurance Corporation, a trust company, a member firm of a domestic
stock exchange, a savings association or a credit union that is authorized by
its charter to provide a signature guarantee. IFTC may reject redemption
instructions if the guarantor is neither a member of nor a participant in a
signature guarantee program. Signature guarantees by notaries public are not
acceptable. The purpose of a signature guarantee is to protect shareholders
against the possibility of fraud. Further documentation will be requested from
corporations, administrators, executors, personal representatives, trustees and
custodians. Redemption requests given by facsimile will not be accepted. Unless
other instructions are given in proper form, a check for the proceeds of the
redemption will be sent to the shareholder's address of record.

29
<PAGE>

REINSTATEMENT PRIVILEGE

A shareholder who has redeemed Class A shares of a Fund may reinvest all or
part of the redemption proceeds in Class A shares of any fund managed by the
Adviser within 30 days without payment of an additional sales charge. If the
shareholder paid a contingent deferred sales charge ("CDSC") in connection with
such redemption of Class A shares, the Distributor will refund a proportional
amount of such CDSC. Similarly, a shareholder who has redeemed Class B shares of
a Fund may reinvest all or a part of the redemption proceeds in the Class B
shares of any fund managed by the Adviser within 30 days of such redemption and
the Distributor will refund a proportional amount of the CDSC paid on such
redemption. Such refund will be based upon the ratio of the net asset value of
shares purchased in the reinvestment to the net asset value of shares redeemed.
Reinvestments will be allowed at net asset value (without the payment of an
initial charge in the case of Class A shares), irrespective of the amounts of
the reinvestment, but shall be subject to the same pro rata CDSC that was
applicable to the earlier investment; however, the period during which the CDSC
shall apply on the newly issued shares shall be the period applicable to the
redeemed shares extended by the number of days between the redemption and the
reinvestment dates (inclusive).

SYSTEMATIC WITHDRAWAL PLAN

To establish a Systematic Withdrawal Plan for a Fund and receive regular
periodic payments, an account must have a value of $5,000 or more ($2 million or
more in the case of Class Y shares). A request to establish a Systematic
Withdrawal Plan must be submitted in writing to an investor's Piper Jaffray
Investment Executive or other broker-dealer. There are no service charges for
maintenance; the minimum amount that may be withdrawn each period is $100. (This
is merely the minimum amount allowed and should not be interpreted as a
recommended amount.) The holder of a Systematic Withdrawal Plan will have any
income dividends and any capital gains distributions reinvested in full and
fractional shares of the same Class at net asset value. To provide funds for
payment, the appropriate Fund will redeem as many full and fractional shares as
necessary at the redemption price, which is net asset value. Redemption of
shares may reduce or possibly exhaust the shares in your account, particularly
in the event of a market decline. As with other redemptions, a redemption to
make a withdrawal payment is a sale for federal income tax purposes. Payments
made pursuant to a Systematic Withdrawal Plan cannot be considered as actual
yield or income since part of such payments may be a return of capital.

A confirmation of each transaction showing the sources of the payment and
the share and cash balance remaining in the account will be sent. The plan may
be terminated on written notice by the shareholder or the Fund, and it will
terminate automatically if all shares are liquidated or withdrawn from the
account or upon the death or incapacity of the shareholder. The amount and
schedule of withdrawal payments may be changed or suspended by giving written
notice to your Piper

30
<PAGE>

Jaffray Investment Executive or other broker-dealer at least seven business days
prior to the end of the month preceding a scheduled payment.

TAXATION
--------
GENERAL

Each Fund qualified during its last taxable year and intends to qualify in
the future as a regulated investment company for federal income tax purposes.
In order to so qualify, a Fund must meet certain requirements imposed by the
Code as to the sources of the Fund's income and the diversification of the
Fund's assets. A Fund must, among other things, (a) derive in each taxable year
at least 90% of its gross income from dividends, interest, payments with respect
to loans of securities, gains from the sale or other disposition of securities
or other income derived with respect to its business of investing in such
securities (including, but not limited to, gains from options, futures or
forward contracts); (b) generally derive in each taxable year less than 30% of
its gross income from gains from the sale or other disposition of securities,
options, futures or forward contracts held for less than three months; and (c)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the value of the Fund's assets is represented by (A) cash, United States
government securities or securities of other regulated investment companies, and
(B) other securities that, with respect to any one issuer, do not represent more
than 5% of the value of the Fund's assets or more than 10% of the voting
securities of such issuer, and (ii) not more than 25% of the value of the Fund's
assets is invested in the securities of any issuer (other than United States
government securities or the securities of other regulated investment companies)
or two or more issuers controlled by the Fund and determined to be engaged in
the same trade or business.

If a Fund qualifies as a regulated investment company and satisfies a
minimum distribution requirement, the Fund will not be subject to federal income
tax on income and gains to the extent that it distributes such income and gains
to its shareholders. The minimum distribution requirement is satisfied if a
Fund distributes at least 90% of its net investment income (including tax-exempt
interest and net short-term capital gains) for the taxable year. Although each
Fund intends to satisfy the above minimum distribution requirement, it may elect
to retain its remaining net investment income. A Fund would be subject to
corporate tax (at rates up to 35%) on any undistributed income. In addition, a
Fund may in the future decide to retain all or a portion of its net capital
gain, as described under "Federal Tax Treatment of Shareholders -- Distributions
to Shareholders," below.

Each Fund will be subject to a nondeductible 4% excise tax to the extent
that it does not distribute by the end of each calendar year (or is not
subjected to regular corporate tax in such year on) an amount equal to the sum
of (a) 98% of the Fund's ordinary income for such calendar year; (b) 98% of the
excess of capital gains over capital losses for the one-year period ending on
October 31 of each year; and (c) the undistributed income and gains from the
preceding years (if any).

31
<PAGE>

FEDERAL TAX TREATMENT OF SHAREHOLDERS

Distributions to Shareholders. Distributions to shareholders attributable
to a Fund's net investment income (including interest income and net short-term
capital gains) are taxable as ordinary income whether paid in cash or reinvested
in additional shares of the Fund. It is not anticipated that any of the Funds'
distributions will qualify for the dividends received deduction for corporate
shareholders.

Distributions of any net capital gain (i.e., the excess of net long-term
capital gain over net short-term capital loss, if any) that are designated as
capital gain dividends are taxable as long-term capital gains, whether paid in
cash or additional shares of a Fund, regardless of how long the shares have been
held.

Each Fund may elect to retain all or a portion of its net capital gain and
be taxed at the corporate tax rate for such capital gains, which is currently
35%. In such event, the Fund would most likely make an election that would
require each shareholder of record on the last day of the Fund's taxable year to
include in income for tax purposes his proportionate share of the Fund's
undistributed net capital gain. If such an election is made, each shareholder
would be entitled to credit his proportionate share of the tax paid by a Fund
against his federal income tax liabilities and to claim refunds to the extent
that the credit exceeds such liabilities. In addition, the shareholder would be
entitled to increase the basis of his shares for federal tax purposes by an
amount equal to 65% of his proportionate share of the undistributed net capital
gain.

Dividends and distributions by each Fund are generally taxable to the
shareholders at the time the dividend or distribution is made (even if
reinvested in additional shares of the Fund). However, any dividend declared by
a Fund in October, November or December of any calendar year which is payable to
shareholders of record on a specified date in such a month will be treated as
received by the shareholders on December 31 of such year if the dividend is paid
during January of the following year. The realization by a Fund of original
issue or market discount will increase the investment income of such Fund and
the amount required to be distributed.

Foreign Tax Credit Election. Each Fund may be subject to taxes on its
income imposed by foreign countries. If at the end of a Fund's fiscal year more
than 50% of its total assets consist of securities of foreign corporations, such
Fund will be eligible to file an election with the Internal Revenue Service
pursuant to which shareholders of the Fund will be required to include their
respective pro rata portions of such foreign taxes as gross income, treat such
amounts as foreign taxes paid by them, and deduct such amounts in computing
their taxable incomes or, alternatively, use them as foreign tax credits against
their federal income taxes.

Sale of Shares. In general, if a share of common stock is sold or
exchanged, the seller will recognize gain or loss equal to the difference
between the amount

32
<PAGE>

realized in the sale or exchange and the seller's adjusted basis in the share of
common stock. Any gain or loss realized upon a sale or exchange of shares of
common stock will be treated as long-term capital gain or loss if the shares
have been held for more than one year, and otherwise as short-term capital gain
or loss. Further, if such shares are held for six months or less, loss realized
by a shareholder will be treated as long-term capital loss to the extent of the
total of any capital gain dividend received by the shareholder. In addition, any
loss realized on a sale or exchange of shares of common stock will be disallowed
to the extent the shares disposed of are replaced within a period of 61 days
beginning 30 days before and ending 30 days after disposition of the shares. In
such case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.

Backup Withholding. Each Fund may be required to withhold federal income
tax at the rate of 31% of all taxable distributions payable to shareholders who
fail to provide such Fund with their correct taxpayer identification number or
to make required certifications, or who have been notified by the Internal
Revenue Service that they are subject to backup withholding. Corporate
shareholders and certain other shareholders specified in the Code are generally
exempt from such backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.

Other Taxes. Distributions may also be subject to state, local and foreign
taxes depending on each shareholder's particular situation.

Foreign Shareholders. The foregoing discussion relates solely to United
States federal income tax law as applicable to "U.S. persons,"i.e., U.S.
citizens and residents and U.S. domestic corporations, partnerships, trusts and
estates. Shareholders who are not U.S. persons should consult their tax advisers
regarding the U.S. and non-U.S. tax consequences of ownership of shares of the
Funds, including the fact that such a shareholder may be subject to U.S.
withholding tax at a rate of 30% (or at a lower rate under an applicable U.S.
income tax treaty) on amounts constituting ordinary income from U.S. sources,
including ordinary dividends paid by the Funds.

CONSEQUENCES OF CERTAIN FUND INVESTMENTS

The Funds engage in various hedging transactions. Under various provisions
of the Code, the result of such transactions may be to change the character of
recognized gains and losses, accelerate the recognition of certain gains and
losses, and defer the recognition of certain losses. The extent to which a Fund
may be able to use such hedging techniques may be limited by the requirement
that generally less than 30% of a Fund's gross income consist of gains from the
sale or disposition of certain assets held for less than three months.

Under Section 988 of the Code, all or a portion of gains and losses from
certain transactions is treated as ordinary income or loss. These rules
generally apply to transactions in certain securities denominated in foreign
currencies,

33
<PAGE>

forward contracts in foreign currencies, futures contracts in foreign currencies
that are not "regulated futures contracts," certain unlisted options and foreign
currency swaps. The rules under Section 988 may also affect the timing of income
recognized by the Fund.

Each Fund may be subject to U.S. taxes resulting from holdings in a passive
foreign investment company ("PFIC"). A foreign corporation is a PFIC when 75%
or more of its gross income for the taxable year is passive income or 50% or
more of the average value of its assets consists of assets that produce or could
produce passive income. The Funds have no current intention to invest in PFICs.

GENERAL INFORMATION
-------------------

Minnesota has enacted legislation which authorizes corporations to
eliminate or limit the personal liability of a director to the corporation or
its shareholders for monetary damages for breach of the fiduciary duty of "care"
(the duty to act with the care an ordinarily prudent person in a like position
would exercise under similar circumstances). Minnesota law does not, however,
permit a corporation to eliminate or limit the liability of a director (a) for
any breach of the director's duty of "loyalty" to the corporation or its
shareholders (the duty to act in good faith and in a manner reasonably believed
to be in the best interest of the corporation), (b) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
(c) for authorizing a dividend, stock repurchase or redemption or other
distribution in violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws, or (d) for any transaction from which
the director derived an improper personal benefit. Minnesota law does not
permit elimination or limitation of a director's liability under the 1933 Act or
the Securities Exchange Act of 1934, and the 1940 Act prohibits elimination or
limitation of a director's liability for acts involving willful malfeasance, bad
faith, gross negligence or reckless disregard of the duties of a director. The
Articles of Incorporation of the Company limit the liability of directors to the
fullest extent permitted by Minnesota law and the 1940 Act.

FINANCIAL STATEMENTS
--------------------

The audited financial statements of Pacific-European Fund and Emerging
Markets Fund dated September 30, 1996, as set forth in the Funds' Annual Report,
are incorporated by reference into this Statement of Additional Information.
The audited financial statements are provided in reliance on the report of KPMG
Peat Marwick LLP, 4200 Norwest Center, Minneapolis, Minnesota 55402, independent
auditors of the Funds, given on the authority of such firm as experts in
accounting and auditing.

34
<PAGE>

PENDING LITIGATION
------------------

Complaints have been brought in federal and state court relating to one
open-end and twelve closed-end investment companies managed by the Adviser and
to two open-end funds for which the Adviser has acted as sub-adviser. On
February 13, 1996, a Settlement Agreement became effective for the consolidated
class action lawsuit, titled In Re: Piper Funds Inc. Institutional Government
Income Portfolio Litigation. The Amended Consolidated Class Action Complaint
was filed on October 5, 1994, in the United States District Court, District of
Minnesota, against Institutional Government Income Portfolio (a series of Piper
Funds Inc.), the Adviser, the Distributor, William H. Ellis and Edward J.
Kohler, and had alleged the making of materially misleading statements in the
prospectus, common law negligent misrepresentation and breach of fiduciary duty.
The Settlement Agreement will provide approximately $67.5 million, together with
interest earned, less certain disbursements and attorney fees, to class members
in payments scheduled over approximately three years. Such payments will be
made by Piper Jaffray Companies Inc. and the Adviser and will not be an
obligation of Piper Funds Inc.

Two additional complaints relating to the Institutional Government Income
Portfolio remain pending. These complaints were brought by investors who
requested exclusion from the settlement class and are based on claims similar to
those asserted in the consolidated Class Action complaint. The first pending
complaint was brought on April 11, 1995, and filed in the Minnesota State
District Court, Hennepin County. This action was removed to United States
District Court, District of Minnesota. The plaintiff, Frank R. Berman, Trustee
of Frank R. Berman Professional CP Pension Plan Trust, sued individually and not
on behalf of any putative class. Defendants are the Distributor, Piper Funds
Inc., Morton Silverman and Worth Bruntjen. A second pending complaint relating
to the Institutional Government Income Portfolio was filed on June 22, 1995 in
the Montana Thirteenth Judicial District Court, Yellowstone County by Beverly
Muth against the Distributor and Teresa L. Darnielle. In addition to the above
complaints, a number of actions have been commenced in arbitration by some of
individual investors who requested exclusion from the settlement class in the In
Re: Piper Funds Inc. action.

A complaint was filed by Herman D. Gordon on October 20, 1994, in the
United States District Court, District of Minnesota, against American Adjustable
Rate Term Trust Inc.--1998, American Adjustable Rate Term Trust Inc.--1999, the
Adviser, the Distributor, Piper Jaffray Companies Inc., Benjamin Rinkey, Jeffrey
Griffin, Charles N. Hayssen and Edward J. Kohler. A second complaint was filed
by Frank Donio, I.R.A. and other plaintiffs on April 14, 1995, in the United
States District Court, District of Minnesota, against American Adjustable Rate
Term Trust Inc.--1996, American Adjustable Rate Term Trust Inc.--1997, American
Adjustable Rate Term Trust Inc.--1998, American Adjustable Rate Term Trust Inc.-
- -1999, the Adviser, the Distributor, Piper Jaffray Companies Inc. and certain
associated individuals. Plaintiffs in both actions filed a Consolidated Amended
Class Action Complaint on May 23, 1995 and by Order dated June 8, 1995, the
Court consolidated

35
<PAGE>

the two putative class actions. The consolidated amended complaint, which
purports to be a class action, alleges certain violations of federal and state
securities laws, breach of fiduciary duty and negligent misrepresentation. On
August 23, 1996, the Court granted final approval to the parties' agreement to
settle all outstanding claims of the purported class action. The Effective Date
of the Settlement Agreement was September 23, 1996. The Settlement Agreement
provides for $14 million in principal payments consisting of $500,000 which was
paid upon the Court's preliminary approval, $1.5 million which was paid on the
Effective Date of the Settlement Agreement, and payments of $3 million on each
anniversary of the Effective Date for the next four years, with accrued interest
payments of up to $1.8 million.

Two additional complaints relating to the American Adjustable Rate Term
Trusts, which are based on claims similar to those asserted in the Gordon/Donio
Consolidated Complaint, remain pending. The first of these additional complaints
was filed against the Distributor on August 11, 1995 in Washington State
District Court, King County, by plaintiff Ernest Volinn. The second complaint
was filed against the Distributor on November 1, 1995 in the United States
District Court, District of Idaho, by plaintiff Ewing Company Profit Sharing
Plan. In addition to the above complaints, a number of actions have been
commenced in arbitration by individual investors in the American Adjustable Rate
Term Trusts.

A complaint was filed by Gary E. Nelson on June 28, 1995 in the United
States District Court for the Western District of Washington at Seattle against
American Strategic Income Portfolio Inc. -- II ("BSP"), the Adviser, the
Distributor, Piper Jaffray Companies Inc., Worth Bruntjen, Charles N. Hayssen,
Michael Jansen, William H. Ellis and Edward J. Kohler. A second complaint was
filed by the same individual in the same court on July 12, 1995 against American
Opportunity Income Fund Inc. ("OIF"), the Adviser, the Distributor, Piper
Jaffray Companies Inc., Worth Bruntjen, Charles N. Hayssen, Michael Jansen,
William H. Ellis and Edward J. Kohler. On September 7, 1995, Christian
Fellowship Foundation Peace United Church of Christ, Gary E. Nelson and Lloyd
Schmidt filed an amended complaint purporting to be a class action in the United
States District Court for the District of Washington. The complaint was filed
against American Government Income Portfolio, Inc. ("AAF"), American Government
Income Fund Inc. ("AGF"), American Government Term Trust, Inc., American
Strategic Income Portfolio Inc. ("ASP"), American Strategic Income Portfolio
Inc. -- II, American Strategic Income Portfolio Inc. -- III ("CSP"), American
Opportunity Income Fund Inc., American Select Portfolio Inc., Piper Jaffray
Companies Inc., the Distributor, the Adviser and certain associated individuals.
By Order filed October 5, 1995, the complaints were consolidated. Plaintiffs
filed a second amended complaint on February 5, 1996 and a third amended
complaint on June 4, 1996. The third amended third complaint alleges generally
that the prospectus and financial statements of each investment company were
false and misleading. Specific violations of various federal securities laws are
alleged with respect to each investment company. The complaint also alleges that
the defendants violated the Racketeer Influenced and Corrupt Organizations Act,
the Washington State Securities Act and the Washington

36
<PAGE>

Consumer Protection Act. The named plaintiffs and defendants have reached an
agreement-in-principle on a proposed settlement. If approved by the Court, a
settlement agreement consistent with the terms of the agreement-in-principle
would provide $15.5 million to class members in payments by Piper Jaffray
Companies Inc. and the Adviser over the next four years. The settlement also
includes an agreement that each of OIF, AAF, and AGF would offer to repurchase
up to 25% of their outstanding shares from current shareholders at net asset
value. If the discounts between net asset value and market price of these funds
do not decrease to 5% or less within approximately two years after the effective
date of the settlement, the fund boards may submit shareholder proposals to
convert these funds to an open-end format. Finally, the agreement stipulates
that each of ASP, BSP, CSP and SLA would offer to repurchase up to 10% of their
outstanding shares from current shareholders at net asset value.

Four additional complaints are pending which involve the funds named as
defendants in the Nelson/Christian Fellowship Consolidated Action and are based
on claims similar to that action. The first additional complaint was filed
against the Distributor and Richard Tallent in Montana State District Court,
Silver Bow County on November 1, 1995 by plaintiff John Darlington. The second
complaint was filed against the Distributor and Richard Tallent on April 11,
1996 in Montana State District Court, Silver Bow County by plaintiff Kenneth
Schneider. The third complaint was filed against the Distributor and Richard
Tallent on April 11, 1996 in Montana State District Court, Silver Bow County by
plaintiff Margaret Nagel. The fourth complaint was filed against the
Distributor on August 7, 1996 by plaintiff Kenneth Gennerman as Trustee of the
Nicole Bowlin Trust in Wisconsin Circuit Court, Waukesha County. In addition to
the above complaints, a number of arbitrations have been commenced by individual
investors in the funds named as defendants in the Nelson/Christian Fellowship
Consolidated Action.

Complaints have also been filed relating to two open-end funds for which
the Adviser has acted as sub-adviser, Managers Intermediate Mortgage Fund and
Managers Short Government Fund. A complaint was filed on September 26, 1994 in
the United States District Court, District of Connecticut, by Florence R. Hosea,
Bobby W. Hosea, Getrud B. Dale and Peter M. Dale, Andrew Poffel and Diane Poffel
as tenants by the Entireties, Myrone Sarone, Donna M. DiPalo, Bernard B. Geltner
and Gail Geltner and Paul Delman. The complaint was filed against The Managers
Funds, The Managers Funds, L.P., Robert P. Watson, the Adviser, the Distributor,
an individual associated with the Adviser, Evaluation Associates, Inc. and
Managers Intermediate Mortgage Fund. The complaint, which is a putative class
action, alleges certain violations of federal securities laws, including the
making of false and misleading statements in the prospectus, and alleges
negligent misrepresentation, breach of fiduciary duty and common law fraud. A
similar complaint was filed as a putative class action in the same court on
November 4, 1994. The complaint was filed by Karen E. Kopelman against The
Managers Fund, The Managers Funds, L.P., Robert P. Watson, the Adviser, the
Distributor, Worth Bruntjen, Evaluation Associates, Inc. and Managers
Intermediate Mortgage Fund. The two putative class actions were consolidated by
court order on December 13,

37
<PAGE>

1994. Plaintiffs filed an Amended and Restated Complaint on July 19, 1995. A
complaint relating to the Managers Short Government Fund was filed on November
18, 1994 in the United States District Court, District of Minnesota. The
complaint was filed by Robert Fleck as a putative class action against The
Managers Funds, The Managers Funds, L.P., the Adviser, the Distributor, Worth
Bruntjen, Evaluation Associates, Inc., Robert P. Watson, John E. Rosati, William
M. Graulty, Madeline H. McWhinney, Steven J. Pasggioli, Thomas R. Schneeweis and
Managers Short Government Fund, F/K/A/ Managers Short Government Income Fund.
The complaint alleges certain violations of federal securities laws, including
the making of false and misleading statements in the prospectus, and negligent
misrepresentation. The named plaintiff and defendants have reached an agreement-
in-principle on a proposed settlement. If approved by the Court and a
sufficiently large percentage of the putative class members, a settlement
agreement consistent with the terms of the agreement-in-principle would provide
to class members up to a total of $1.5 million collectively from The Managers
Funds, L.P. and the Adviser on the effective date of the settlement. A third
complaint relating to both the Managers Intermediate Mortgage Fund and the
Managers Short Government Fund was filed on October 26, 1995 in Connecticut
State Superior Court, Stamford/Norwalk District. The complaint was filed by
First Commercial Trust Company, N.A. against the Managers Funds, Managers Short
Government Fund, Managers Intermediate Mortgage Fund, Managers Short and
Intermediate Bond Fund, The Managers Funds, L.P., EAIMC Holdings Corporation,
Evaluation Associates Holding Corporation, EAI Partners, L.P., Evaluation
Associates, Inc., Robert P. Watson, William W. Graulty, Madeline H. McWhinney,
Steven J. Paggioli, Thomas R. Schneeweis, William J. Crerend, the Adviser, Piper
Jaffray Companies Inc., Worth Bruntjen, Standish, Ayer & Wood, Inc., TCW Funds
Managements, Inc., and TCW Management Company. The complaint alleges claims
under Connecticut common law and violation of the Connecticut Securities Act and
the Connecticut Unfair and Deceptive Trade Practices Act.

The Adviser and Distributor do not believe that the settlements described
above, or any of the above lawsuits and arbitrations, will have a material
adverse effect upon their ability to pe rform under their agreements with the
Company, and they intend to defend the remaining lawsuits vigorously.

38
<PAGE>

APPENDIX A
CORPORATE BOND, PREFERRED STOCK AND
COMMERCIAL PAPER RATINGS

Commercial Paper Ratings
- ------------------------

Standard & Poor's Ratings Services. Commercial paper ratings are graded
into four categories, ranging from "A" for the highest quality obligations to
"D" for the lowest. Issues assigned the A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are further
refined with designation 1, 2 and 3 to indicate the relative degree of safety.
The "A-1" designation indicates that the degree of safety regarding timely
payment is very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus sign designation.

Moody's Investors Service, Inc. Moody's commercial paper ratings are
opinions of the ability of the issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months. Moody's
makes no representation that such obligations are exempt from registration under
the Securities Act of 1933, nor does it represent that any specific note is a
valid obligation of a rated issuer or issued in conformity with any applicable
law. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:

Prime-1 Superior capacity for repayment of short-term
promissory obligations

Prime-2 Strong capacity for repayment of short-term promissory
obligations

Prime-3 Acceptable capacity for repayment of short-term
promissory obligations

Corporate Bond Ratings
- ----------------------

Standard & Poor's Ratings Services. Standard & Poor's ratings for
corporate bonds have the following definitions:

Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree.

Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

A-1
<PAGE>

Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Moody's Investors Service, Inc. Moody's ratings for corporate bonds
include the following:

Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.

Bonds which are rated "A" possess many favorable attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Preferred Stock Rating
- ----------------------

Standard & Poor's Ratings Services. Standard & Poor's ratings for
preferred stock have the following definitions:

An issue rated "AAA" has the highest rating that may be assigned by
Standard & Poor's to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.

A preferred stock issue rated "AA" also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated "AAA."

A-2
<PAGE>

An issue rated "A" is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.

An issue rated "BBB" is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the "A" category.

Moody's Investors Service, Inc. Moody's ratings for preferred stock
include the following:

An issue which is rated "aaa" is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.

An issue which is rated "aa" is considered a high grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.

An issue which is rate "a" is considered to be an upper medium grade
preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.

An issue which is rated "baa" is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length of
time.

A-3
<PAGE>

APPENDIX B
GENERAL CHARACTERISTICS AND RISKS
OF OPTIONS AND FUTURES

OPTIONS ON SECURITIES

The Funds may write covered put and call options and purchase put and call
options on the securities in which it may invest that are traded on U.S. and
foreign securities exchanges and in over-the-counter markets.

The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or purchased, in the case
of a put option; the writer may be assigned an exercise notice at any time prior
to the termination of the obligation. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This amount, of
course, may, in the case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period. If a call
option is exercised, the writer experiences a profit or loss from the sale of
the underlying security. If a put option is exercised, the writer must fulfill
the obligation to purchase the underlying security at the exercise price which
will usually exceed the then market value of the underlying security.

The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously purchased. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.

Effecting a closing transaction in the case of a written call option will
permit a Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a written put option will permit a Fund to write another put option to the
extent that the exercise price thereof is secured by deposited cash or short-
term securities. Also, effecting a closing transaction will permit the cash or
proceeds from the concurrent sale of any securities subject to the option to be
used for other Fund investments. If a Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.

A Fund will realize a profit from a closing transaction if the price of the
transaction is less than the premium received from writing the option or is more
than the premium paid to purchase the option; a Fund will realize a loss from a
closing transaction if the price of the transaction is more than the premium
received from writing the option or is less than the premium paid to purchase
the option.

B-1
<PAGE>

Because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security, any loss resulting
from the repurchase of a call option is likely to be offset in whole or in part
by appreciation of the underlying security owned by a Fund.

An option position may be closed out only where there exists a secondary
market for an option of the same series. If a secondary market does not exist,
it might not be possible to effect closing transactions in particular options
with the result that a Fund would have to exercise the options in order to
realize any profit. If a Fund is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market include the following: (i)
there may be insufficient trading interest in certain options, (ii) restrictions
may be imposed by a national securities exchange ("Exchange") on opening
transactions or closing transactions or both, (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities, (iv) unusual or unforeseen
circumstances may interrupt normal operations on an Exchange, (v) the facilities
of an Exchange or the Options Clearing Corporation may not at all times be
adequate to handle current trading volume, or (vi) one or more Exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or series of options),
in which event the secondary market on that Exchange (or in that class or series
of options) would cease to exist, although outstanding options on that Exchange
that had been issued by the Options Clearing Corporation as a result of trades
on that Exchange would continue to be exercisable in accordance with their
terms.

The Funds may purchase put options to hedge against a decline in the value
of its portfolio. By using put options in this way, a Fund will reduce any
profit it might otherwise have realized in the underlying security by the amount
of the premium paid for the put option and by transaction costs.

The Funds may purchase call options to hedge against an increase in the
price of securities that the Fund anticipates purchasing in the future. The
premium paid for the call option plus any transaction costs will reduce the
benefit, if any, realized by a Fund upon exercise of the option, and, unless the
price of the underlying security rises sufficiently, the option may expire
worthless to the Fund.

FUTURES CONTRACTS

The Funds may, for hedging purposes, enter into contracts for the purchase
or sale for future delivery of securities or foreign currencies, or contracts
based on securities or financial indices including any index of the types of
securities in which the Fund may invest. U.S. futures contracts have been
designed by exchanges which have been designated "contracts markets" by the
Commodity Futures Trading Commission and must be executed through a futures
commission merchant, or brokerage firm, which is a member of the relevant
contract market. Futures contracts trade on a number of exchange markets, and,
through their clearing

B-2
<PAGE>

corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.

At the same time a futures contract is purchased or sold, a Fund must
allocate cash or securities as a deposit payment ("initial deposit"). It is
expected that the initial deposit would be approximately 1-1/2% to 5% of a
contract's face value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day a Fund would
provide or receive cash that reflects any decline or increase in the contract's
value.

At the time of delivery of securities pursuant to such a contract,
adjustments are made to recognize differences in value arising from the delivery
of securities with a different interest rate from that specified in the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was written.

Although futures contracts by their terms call for the actual delivery or
acquisition of securities, in most cases the contractual obligation is fulfilled
before the date of the contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is accomplished by buying
(or selling, as the case may be) on a commodities exchange an identical futures
contract calling for delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation to make or take
delivery of the securities. Since all transactions in the futures market are
made, offset or fulfilled through a clearing house associated with the exchange
on which the contracts are traded, a Fund will incur brokerage fees when it
purchases or sells futures contracts.

The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of general interest rate trends by Management may still not
result in a successful transaction.

In addition, futures contracts entail risks. Although Management will only
enter into futures contracts if it believes that use of such contracts will
benefit a Fund, if Management's investment judgment about the general direction
of securities prices is incorrect, a Fund's overall performance would be poorer
than if it had not entered into any such contract. For example, if a Fund has
hedged against

B-3
<PAGE>

the possibility of a decrease in securities prices which would adversely affect
the price of securities held in its portfolio and securities prices increase
instead, a Fund will lose part or all of the benefit of the increased value of
its securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if a Fund has insufficient
cash, it may have to sell securities from its portfolio to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. A Fund may have to sell
securities at a time when it may be disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS

The Funds may purchase and write options on futures contracts for hedging
purposes. The purchase of a call option on a futures contract is similar in
some respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of the
futures contract upon which it is based or the price of the underlying debt
securities, it may or may not be less risky than ownership of the futures
contract or underlying debt securities. As with the purchase of futures
contracts, when a Fund is not fully invested it may purchase a call option on a
futures contract to hedge against an anticipated increase in securities prices.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security which is deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is below the exercise price, a Fund will retain the full amount of the
option premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. The writing of a put option on a
futures contract constitutes a partial hedge against increasing prices of the
security which is deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of securities which the Fund intends to
purchase. If a put or call option a Fund has written is exercised, the Fund
will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions, a
Fund's losses from existing options may to some extent be reduced or increased
by changes in the value of portfolio securities.

The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may purchase a put option on a futures contract to hedge the
Fund's portfolio against the risk of a decline in securities prices.

The amount of risk a Fund assumes when it purchases an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.

B-4
<PAGE>

The Funds' ability to engage in the options and futures strategies
described above will depend on the availability of liquid markets in such
instruments. Markets in options and futures with respect to many types of
securities in which the Funds invest are relatively new and still developing.
It is impossible to predict the amount of trading interest that may exist in
various types of options or futures. Therefore no assurance can be given that a
Fund will be able to utilize these instruments effectively for the purposes set
forth above. Furthermore, a Fund's ability to engage in options and futures
transactions may be limited by tax considerations. See "Taxation--Consequences
of Certain Fund Investments."

ADDITIONAL RISKS OF OPTIONS ON SECURITIES AND OPTIONS ON FUTURES CONTRACTS

Options on securities may be traded over-the-counter. In an over-the-
counter trading environment, much of the protection afforded to exchange
participants will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to an
unlimited extent over a period of time. Although the purchaser of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost. Moreover, the option writer could lose
amounts substantially in excess of its initial investment, due to the margin
requirements associated with such positions.

In addition, options on securities, futures contracts and options on
futures contracts may be traded on foreign exchanges. Such transactions are
subject to the risk of governmental actions affecting trading in or the prices
of foreign currencies or securities. The value of such positions also could be
adversely affected by (a) other complex foreign political and economic factors;
(b) lesser availability than in the United States of data on which to make
trading decisions; (c) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the United States; (d)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States; and (e) lesser trading volume.

FUTURE DEVELOPMENTS

The Funds may, following written notice thereof to its shareholders, take
advantage of opportunities in the area of options and futures contracts and
options on futures contracts which are not currently contemplated for use by the
Funds or which are not currently available but which may be developed, to the
extent such opportunities are both consistent with a Fund's investment objective
and legally permissible for a Fund. Such opportunities, if they arise, may
involve risks which exceed those involved in the options and futures activities
described above.

B-5
<PAGE>

PART C

PIPER GLOBAL FUNDS INC.

OTHER INFORMATION

Item 24. Financial Statements and Exhibits
- -------------------------------------------

(a) Audited financial statements are incorporated by reference to the
Registrant's Annual Report for the seven-months ended September 30, 1996
for Pacific-European Fund and the three-months ended September 30, 1996 for
Emerging Markets Growth Fund.

(b) Exhibits:

1.1 Articles of Incorporation (2)
1.2 Articles of Amendment to Articles of Incorporation (4)
1.3 Certificate of Designation of Series B (5)
1.4 Certificate of Designation of Class B of Series A and B and Class Y of
Series A (8)
2.1 Amended and Restated Bylaws (4)
2.2 Amendment to the Bylaws (7/6/95) (5)
2.3 Amendment to the Amended and Restated Bylaws (4/8/96) (5)
3. Not applicable
4. Not applicable
5.1 Investment Advisory and Management Agreement (4)
5.2 Supplement to Investment Advisory and Management Agreement (5)
5.3 Sub-Investment Advisory Agreement (Series A) (4)
5.4 Sub-Advisory Agreement (Series B) (5)
6.1 Underwriting and Distribution Agreement (8)
6.2 Distribution Agreement (8)
7. Not applicable
8.1 Custody and Investment Accounting Agreement (6)
9.1 Shareholder Account Servicing Agreement with Piper Trust Company (8)
9.2 Shareholder Account Servicing Agreement with Piper Jaffray Inc. (8)
10.1 Opinion and Consent of Dorsey & Whitney LLP with respect to
Series B (5)
10.2 Opinion and Consent of Dorsey & Whitney LLP with respect to Class B
and Class Y of Series A and Class B of Series B (8)
11. Consent of KPMG Peat Marwick LLP (7)
12. Not applicable
13. Not applicable
14. Not applicable
15.1 Plan of Distribution (Series A) (8)
15.2 Plan of Distribution (Series B) (8)
16. Computation of Performance Quotations (1)
17. Power of Attorney (8)

- ------------------------------
(1) Previously filed.

1
<PAGE>

(2) Incorporated by reference to the Registrant's Registration Statement on
Form N-2, filed February 16, 1990, File No. 33-33534.
(3) Incorporated by reference to Amendment No. 2 to the Registrant's
Registration Statement on Form N-2, filed April 19, 1990,
File No. 33-33534.
(4) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N-1A filed June 28, 1993.
(5) Incorporated by reference to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A filed July 1, 1996.
(6) Incorporated by reference to Registrant's Registration Statement on Form
N-14 filed April 6, 1996.
(7) Incorporated by reference to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A filed October 28, 1996.
(8) To be filed by amendment.

Item 25. Persons Controlled by or Under Common Control with Registrant
- -----------------------------------------------------------------------

No person is directly or indirectly controlled by or under common control
with the Registrant.

Item 26. Number of Holders of Securities
- -----------------------------------------

As of February ______________ , 1997, the following Class A Common Shares
were outstanding. There were no Class B shares or Class Y shares outstanding.

Number of
Title of Class Record Holders
-------------- --------------

Pacific-European Growth Fund Common Shares --------------
Emerging Markets Growth Fund Common Shares --------------

Item 27. Indemnification
- -------------------------

The Articles of Incorporation and Bylaws of the Registrant provide that the
Registrant shall indemnify such persons for such expenses and liabilities, in
such manner and under such circumstances, to the full extent permitted by
Section 302A.521, Minnesota Statutes, as now enacted or hereafter amended,
provided that no such indemnification may be made if it would be in violation of
Section 17(h) of the Investment Company Act of 1940, as now enacted or hereafter
amended. Section 302A.521 of the Minnesota Statutes, as now enacted, provides
that a corporation shall indemnify a person made or threatened to be made a
party to a proceeding of the person against judgments, penalties, fines,
settlements, and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding if, with
respect to the acts or omissions of the person complained of in the proceeding,
the person has not been indemnified by another organization for the same
judgments, penalties, fines, settlements, and reasonable expenses incurred by
the person in connection with the proceeding with respect to the same acts or
omissions; acted in good faith, received no improper personal benefit and the
Minnesota Statutes dealing

2
<PAGE>

with directors' conflicts of interest, if applicable, have been satisfied; in
the case of a criminal proceeding, had no reasonable cause to believe that the
conduct was unlawful; and reasonably believed that the conduct was in the best
interests of the corporation or, in certain circumstances, reasonably believed
that the conduct was not opposed to the best interests of the corporation.

Insofar as the indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The Registrant will comply with the indemnification requirements of
Investment Company Act Releases 7221 (June 9, 1972) and 11330 (September 2,
1980).

Item 28. Business and Other Connections of Investment Adviser
- --------------------------------------------------------------

Information on the business of the Adviser is described in the section of
the Prospectus, incorporated by reference in this Registration Statement,
entitled "Management -- Investment Adviser."

The officers and directors of the Adviser and their titles are as follow:

Name Title
---- -----

William H. Ellis President, Director and Chairman of
the Board
Charles N. Hayssen Director
Bruce C. Huber Director
David E. Rosedahl Director
Momchilo Vucenich Director
Paul A. Dow Senior Vice President and
Chief Investment Officer
Susan S. Miley Senior Vice President, General Counsel
and Secretary
Worth Bruntjen Senior Vice President
Michael C. Derck Senior Vice President
Richard W. Filippone Senior Vice President
John J. Gibas Senior Vice President

3
<PAGE>

Marijo A. Goldstein Senior Vice President
Mark R. Grotte Senior Vice President
Jerry F. Gudmundson Senior Vice President
Robert C. Hannah Senior Vice President
Lynne Harrington Senior Vice President
Kim Jenson Senior Vice President
Lisa A. Kenyon Senior Vice President
Mark S. Lee Senior Vice President
Thomas S. McGlinch Senior Vice President
Curt D. McLeod Senior Vice President
Steven V. Markusen Senior Vice President
Paula Meyer Senior Vice President
Robert H. Nelson Senior Vice President
Gary Norstrem Senior Vice President
Nancy S. Olsen Senior Vice President
Ronald R. Reuss Senior Vice President
Bruce D. Salvog Senior Vice President
John K. Schonberg Senior Vice President
Sandra K. Shrewsbury Senior Vice President
David M. Steele Senior Vice President
Robert H. Weidenhammer Senior Vice President
John G. Wenker Senior Vice President
Douglas J. White Senior Vice President
Cynthia K. Castle Vice President
Richard Daly Vice President
Molly Destro Vice President
Julie Deutz Vice President
Joyce A. K. Halbe Vice President
Joan L. Harrod Vice President
Mary M. Hoyme Vice President
Amy K. Johnson Vice President
Russell J. Kappenman Vice President
Kimberly F. Kaul Vice President
John D. Kightlinger Vice President
Wan-Chong Kung Vice President
Steven Meyer Vice President
Thomas Moore Vice President
Chris Neuharth Vice President
Paul D. Pearson Vice President
Eric L. Siedband Vice President
Catherine M. Stienstra Vice President
Shaista Tajamal Vice President
Jill A. Thompson Vice President
Jane K. Welter Vice President
Marcy K. Winson Vice President
Fong P. Woo Vice President

4
<PAGE>

Principal occupations of Messrs. Ellis, Dow, Nelson and Ms. Miley are set
forth in the Statement of Additional Information under the heading "Directors
and Officers." Mr. Hayssen is a Director of the Adviser and has been Chief
Information Officer of Piper Jaffray Companies Inc. since January 1996 and a
Managing Director of Piper Jaffray Inc. ("Piper Jaffray") since 1986, prior to
which he was a Managing Director of Piper Jaffray Companies Inc. from 1987 to
1995, Chief Financial Officer of Piper Jaffray from 1988 to 1995, Chief
Financial Officer of the Adviser from 1989 to 1995 and Chief Operating Officer
of the Adviser from 1994 to 1995. Mr. Huber has been a Director of the Adviser
since 1985 and a Managing Director of Piper Jaffray since 1986. Mr. Rosedahl is
a Director of the Adviser and Managing Director and Secretary for Piper Jaffray
and Managing Director, Secretary and General Counsel for Piper Jaffray Companies
Inc. Mr. Vucenich has been a Director of the Adviser since 1994 and a Managing
Director of Piper Jaffray Inc. since 1993.

Mr. Bruntjen has been a Senior Vice President of the Adviser since 1988.
Mr. Derck has been a Vice President of the Adviser since November 1992, prior to
which he had been a manager of Advisory Accounts Services with the Adviser since
April 1992 and, before that, an Assistant Vice President at First Trust since
1976. Mr. Filippone has been a Senior Vice President of the Adviser since 1991.
Mr. Gibas has been a Senior Vice President of the Adviser since 1992, prior to
which he had been a Vice President of the Adviser from 1987 to 1992. Ms.
Goldstein has been a Senior Vice President of the Adviser since 1993, prior to
which she was a Vice President of the Adviser from 1991 to 1993. Mr. Grotte has
been a Senior Vice President of the Adviser since 1992, prior to which he had
been a Vice President of the Adviser from 1988 to 1992. Mr. Gudmundson has been
a Senior Vice President of the Adviser since 1995, prior to which he was an
Executive Vice President at Resource Capital Advisers from 1991 to 1995. Mr.
Hannah has been a Senior Vice President of the Adviser since 1995, prior to
which he was manager of Craig and Associates in Seattle, Washington from 1993 to
1994, and prior thereto, he was manager of Exvere in Seattle from January 1993
to August 1993 and a registered representative at Geneva in Irvine, California
from 1991 to 1992. Ms. Harrington has been a Senior Vice President of the
Adviser since 1995, prior to which she was a Managing Director at Piper Jaffray
Inc. in the Public Finance Department. Ms. Kenyon has been a Senior Vice
President of the Adviser since 1992, prior to which she had been a financial
adviser for a private family in Los Angeles. Ms. Jenson has been a Senior Vice
President of the Adviser since 1996, prior to which she was a Managing Director
at Piper Trust since 1991. Mr. Lee has been a Senior Vice President of the
Adviser since 1995, prior to which he had been a Vice President of the Adviser
since 1990. Mr. McGlinch has been a Senior Vice President of the Adviser since
1995, prior to which he had been a Vice President of the Adviser since 1992 and,
prior thereto, he had been a specialty products trader at FBS Investment
Services from 1990 to 1992. Mr. McLeod has been a Senior Vice President of the
Adviser since 1995, prior to which he had been an analyst at the Adviser since
1988. Mr. Markusen has been a Senior Vice President of the Adviser since 1993,
prior to which had been a senior vice president of Investment Advisers, Inc., in
Minneapolis, Minnesota from 1989 to 1993. Ms. Meyer has been a Senior Vice
President of the Adviser since 1994, prior to which she had been a Vice
President of Secura Insurance, Appleton, Wisconsin from 1988 to 1994. Mr.
Norstrem has been a Senior Vice President of the Adviser since 1993, prior to
which he

5
<PAGE>

was Treasurer of the City of Saint Paul, Minnesota for twenty-eight years. Ms.
Olsen has been a Senior Vice President of the Adviser since 1991. Mr. Reuss has
been a Senior Vice President of the Adviser since 1989. Mr. Salvog has been a
Senior Vice President of the Adviser since 1992, prior to which he had been a
portfolio manager at Kennedy & Associates in Seattle, Washington from 1984 to
1992. Mr. Schonberg has been a Senior Vice President of the Adviser since 1995,
prior to which he was a Vice President of the Adviser from 1992 to 1995 and a
portfolio manager for the Adviser since 1989. Ms. Shrewsbury has been a Senior
Vice President of the Adviser since 1993, prior to which she had been a Managing
Director of Piper Jaffray since 1992, and a Vice President of Piper Jaffray
since 1990. Mr. Steele has been a Senior Vice President of the Adviser since
1992, prior to which he had been a portfolio manager at Kennedy & Associates in
Seattle, Washington from 1987 to 1992. Mr. Weidenhammer has been a Senior Vice
President of the Adviser since 1991. Mr. Wenker has been a Senior Vice President
of the Adviser since 1993, prior to which he had been a Managing Director of
Piper Jaffray from 1992 to 1993, and prior thereto, the Director of
Revitalization Resources of the Minneapolis Community Development Agency from
1990 to 1992. Mr. White has been a Senior Vice President of the Adviser since
1991.

Ms. Castle has been a Vice President of the Adviser since 1994, prior to
which she was a client service associate of the Adviser since 1990. Mr. Daly
has been a Vice President of the Adviser since 1992, prior to which he was an
Assistant Vice President of the Piper Jaffray since 1990 and a broker with Piper
Jaffray from 1987 to 1992. Ms. Destro has been a Vice President of the Adviser
since 1994, prior to which she was an Accounting Manager from 1993 to 1994 and
mutual fund accountant from 1991 to 1993 with the Adviser. Ms. Deutz has been a
Vice President of the Adviser since September 1995, prior to which she was an
Assistant Vice President at Daiwa Bank, Ltd. from 1992 to September 1995 and a
manager of financial reporting at The Churchill Companies from 1991 to 1992.
Ms. Halbe has been a Vice President of the Adviser since 1996, prior to which
she was a Vice President at First Asset Management since 1990. Ms. Harrod has
been a Vice President of the Adviser since 1992 and has been a trader for the
Adviser since 1989. Ms. Hoyme has been a Vice President of the Adviser since
1996, prior to which she had been a Vice President at First Asset Management
since 1989. Ms. Johnson has been a Vice President of the Adviser since 1994,
prior to which she was an Accounting Manager from 1993 to 1994 and mutual fund
accountant from 1991 to 1993 with the Adviser. Mr. Kappenman has been a Vice
President of the Adviser since 1991. Ms. Kaul has been a Vice President and
Director of Corporate Communications of the Adviser since 1991. Mr. Kightlinger
has been a Vice President of the Adviser since 1991. Ms. Kung has been a Vice
President of the Adviser since 1993, prior to which she had been a Senior
Consultant at Cytrol Inc. from 1989 to 1992. Mr. Meyer has been a Vice
President of the Adviser since 1994 and manager of Systems Integration for the
Adviser since 1991. Mr. Moore has been a Vice President of the Adviser since
1992, prior to which he was a Portfolio Manager at Alpine Capital Management
from 1990 to 1992 and a broker at Hanifen Capital Management from 1990 to 1992.
Mr. Neuharth has been a Vice President of the Adviser since 1996, prior to which
he had been a senior mortgage trader at FBS Mortgage since 1995, and prior
thereto, a fixed income portfolio manager at Fortis Financial since 1987. Mr.
Pearson has been a Vice President of the Adviser since 1995, prior to which he
was Mutual Funds Accounting Manager of the Adviser from

6
<PAGE>

1994 to 1995 and prior thereto, Director of Fund Operations at Norwest Bank,
Minneapolis from 1992 to 1994. Mr. Siedband has been a Vice President of the
Adviser since 1992. Ms. Stienstra has been a Vice President of the Adviser since
November 1995 and a municipal bond trader of the Adviser since June 1995, prior
to which she was an assistant analyst of the Adviser from 1991 to 1994. Ms.
Tajamal has been a Vice President of the Adviser since 1995 and a portfolio
manager of the Adviser since 1993, prior to which she was a money market analyst
of the Adviser from 1990 to 1993. Ms. Thompson has been a Vice President of the
Adviser since 1994, prior to which she had been a Vice President at First Asset
Management since 1991. Ms. Welter has been a Vice President of the Adviser since
1994, prior to which she was a client service associate of the Adviser since
1993 and a mutual fund accountant with the Adviser from 1990 to 1993. Ms. Winson
has been a Vice President of the Adviser since November 1993, prior to which she
was an Assistant Vice President of the Adviser since March 1993 and an educator
from 1990 to 1992. Mr. Woo has been a Vice President of the Adviser since 1994,
prior to which he was a municipal credit analyst of the Adviser since 1992 and a
credit specialist at a commercial trading firm from 1991 to 1992.

The officers and directors of the Sub-Adviser and their titles are as
follow:

Name Title
---- -----

Iain A. Watt Chairman
Peter A.K. Arthur Joint Managing Director
Michael W. Balfour Joint Managing Director
Lloyd A. Beat Executive Director
Graham M. Brock Executive Director
Graham C. Campbell Executive Director
Alistair M.T. Currie Executive Director
David W. Currie Executive Director
Alex J. Gowans Executive Director
William S. Johnstone Executive Director
David McCraw Executive Director
Robert G.H. McGeorge Executive Director
Ian E. Massie Executive Director
Ken McKenna Executive Director
Catherine C.J. Miller Executive Director
Richard D. Muckart Executive Director
Colin F. Peters Executive Director

Principal occupations of Mr. Watt and Mr. Balfour are set forth in the
Statement of Additional Information under the heading "Directors and Executive
Officers." Messrs. Beat, Brock, A. Currie, D. Currie and McKenna and Ms. Miller
have no other principal occupations other than as executive directors of the
Sub-Adviser. Mr. Arthur currently serves as a director of Edinburgh Fund
Managers plc, Edinburgh Oil Management Limited, Drayton Asia Finance Limited,
DFM Holdings Limited and Dunedin Fund Managers Limited. Mr. Johnstone currently
serves as a director of Edinburgh Fund Managers plc and Broadgate Marketing
Limited. Mr. Campbell currently serves as a

7
<PAGE>

director of Edinburgh Fund Managers plc and Scottish Judo Federation. Mr. Gowans
currently serves as a director of Edinburgh Fund Managers plc, Edinburgh Income
Trust plc and Edinburgh Small Companies Trust plc. Mr. Johnstone currently
serves as a director of Edinburgh Fund Managers plc and Broadgate Marketing
Limited. Mr. Massie currently serves as a director of Edinburgh Fund Managers
plc and Dunedin Fund Managers Limited. Mr. McCraw currently serves as a director
of Edinburgh Fund Managers plc, Dunedin Fund Managers Limited and DFM Holdings
Limited. Mr. McGeorge currently serves as a director of Edinburgh Fund Mangers
plc, Dunedin Fund Managers Limited, Dunedin Pension Fund Managers Limited,
Dunedin Financial Services Limited, Dunedin Portfolio Managers Limited and
Trustcto Finance plc. Mr. Muckart currently serves as a director of Edinburgh
Fund Managers plc, Dunedin Fund Managers Limited, DFM Holdings Limited and LTS
International Limited. Mr. Peters currently serves as a director of Edinburgh
Fund Managers plc, Dunedin Fund Managers Limited and Taytem Nominees Limited.

Item 29. Principal Underwriters
- --------------------------------

(a) Piper Jaffray Inc. acts as principal underwriter for the Registrant
and also for three other open-end investment companies, Piper Funds Inc., the
shares of which are currently offered in twelve series, Piper Funds Inc. -- II
the shares of which are currently offered in one series and Piper Institutional
Funds Inc., the shares of which are currently offered in one series. Piper
Jaffray has acted as principal underwriter in connection with the initial public
offering of shares of 23 closed-end investment companies.

(b) The name, positions and offices with Piper Jaffray Inc., and positions
and offices with the Registrant of each director and officer of Piper Jaffray
Inc. are as follow:
<TABLE>
<CAPTION>

Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
Addison L. Piper Chairman of the Board of None
Directors and Chief Executive
Officer

Ralph W. Burnet Member of the Board None
of Directors

William H. Ellis Member of the Board None
of Directors

John L. McElroy, Jr. Member of the Board None
of Directors

Kathy Halbreich Member of the Board None
of Directors

Robert S. Slifka Member of the Board None
of Directors
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>

Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
David Stanley Member of the Board None
of Directors

James J. Bellus Managing Director None

AnnDrea M. Benson Managing Director and None
General Counsel

Lloyd K. Benson Managing Director None

Gary J. Blauer Managing Director None

Karen M. Bohn Managing Director None

Sean K. Boyea Managing Director None

Ronald O. Braun Managing Director None

Jay A. Brunkhorst Managing Director None

Kenneth S. Cameranesi Managing Director None

Stephen M. Carnes Managing Director None

Joseph V. Caruso Managing Director None

Antonio J. Cecin Managing Director None

Joyce E. Chaney Managing Director None

Kenneth P. Clark Managing Director None

Linda A. Clark Managing Director None

Stephen B. Clark Managing Director None

David P. Crosby Managing Director None

Mark A. Curran Managing Director None

George S. Dahlman Managing Director None

Jack C. Dillingham Managing Director None
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
Mark T. Donahoe Managing Director None

Darci L. Doneff Managing Director None

Andrew S. Duff Managing Director None

Andrew W. Dunleavy Managing Director None

Richard A. Edstrom Managing Director None

Fred R. Eoff, Jr. Managing Director None

Richard D. Estenson Managing Director None

Francis E. Fairman IV Managing Director None

John R. Farrish Managing Director None

G. Richard Ferguson Managing Director None

Paul Ferry Managing Director None

Mark E. Fisler Managing Director None

Michael W. Follett Managing Director None

Daniel P. Gallaher Managing Director None

Peter M. Gill Managing Director None

Kevin D. Grahek Managing Director None

Paul D. Grangaard Managing Director None

James S. Harrington Managing Director None

Charles N. Hayssen Managing Director None

William P. Henderson Managing Director None

Allan F. Hickok Managing Director None

Richard L. Hines Managing Director None
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>

Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
David B. Holden Managing Director None

Charles E. Howell Managing Director None

Bruce C. Huber Managing Director None

Elizabeth A. Huey Managing Director None

John R. Jacobs Managing Director None

Earl L. Johnson Managing Director None

Richard L. Johnson Managing Director None

Nicholas P. Karos Managing Director None

Paul P. Karos Managing Director None

Richard G. Kiss Managing Director None

Gordon E. Knudsvig Managing Director None

Jerome P. Kohl Managing Director None

Eric W. Larson Managing Director None

Dan L. Lastavich Managing Director None

Robert J. Magnuson Managing Director None

Robert E. Mapes Managing Director None

Peter T. Mavroulis Managing Director None

Michael P. McMahon Managing Director None

G. Terry McNellis Managing Director None

Thomas A. Medlin Managing Director None

Darryl L. Meyers Managing Director None

Joseph E. Meyers Managing Director None
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
John V. Miller Managing Director None

Dennis V. Mitchell Managing Director None

Edward P. Nicoski Managing Director None

Barry J. Nordstrand Managing Director None

Benjamin S. Oehler Managing Director None

Brooks G. O'Neil Managing Director None

John P. O'Neill Managing Director None

John Otterlei Managing Director None

Robin C. Pfister Managing Director None

Laurence S. Podobinski Managing Director None

Steven J. Proeschel Managing Director None

Rex W. Ramsay Managing Director None

Brian J. Ranallo Managing Director None

Roger W. Redmond Managing Director None

Robert P. Rinek Managing Director None

Wesley L. Ringo Managing Director None

Jim M. Roane Managing Director None

Deborah K. Roesler Managing Director None

Russ E. Rogers Managing Director None

David E. Rosedahl Managing Director None
and Secretary

Terry D. Sandven Managing Director None

Thomas P. Schnettler Managing Director None
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>

Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
Steven R. Schroll Managing Director None

Joyce Nelson Schuette Managing Director None

Lawrence M. Schwartz, Jr. Managing Director None

Morton D. Silverman Managing Director None

Linda E. Singer Managing Director None

David P. Sirianni Managing Director None

Arch C. Smith Managing Director None

Robert L. Sonnek Managing Director None

Thomas E. Stanberry Managing Director None

DeLos V. Steenson Managing Director None

D. Greg Sundberg Managing Director None

Robert D. Swerdling Managing Director None

William H. Teeter Managing Director None

Ann C. Tillotson Managing Director None

Marie Uhrich Managing Director None

Momchilo Vucenich Managing Director None

Charles M. Webster, Jr. Managing Director None

Darrell L. Westby Managing Director None

David R. Westcott Managing Director None

Douglas R. Whitaker Managing Director None

James H. Wilford Managing Director None

Stephen W. Woodard Managing Director None
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- --------------------- ---------------------
<S> <C> <C>
Mark Wren Managing Director None

Saul Yaari Managing Director None

Beverly J. Zimmer Managing Director None
</TABLE>
The principal business address of each of the individuals listed above is Piper
Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota 55402-3804.

Item 30. Location of Accounts and Records
- ------------------------------------------

The physical possession of the accounts, books, and other documents
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and Rules 3la-1 to 3la-3 promulgated thereunder is maintained by the Registrant
at Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota 55402-
3804, except that the physical possession of certain accounts, books and other
documents related to the custody of the Pacific-European Fund's securities may
be maintained by it custodian, First Trust National Association, 180 East Fifth
Street, St. Paul, Minnesota 55101, and certain documents related the custody of
Emerging Markets Fund's securities may be maintained by its custodian, Investors
Fiduciary Trust Company, 127 West Tenth Street, Kansas City, Missouri 64105.
Investors Fiduciary Trust Company may also maintain documents for each Fund in
its capacity as Transfer and Dividend Disbursing Agent.

Item 31. Management Services
- -----------------------------

Not applicable.

Item 32. Undertakings
- ----------------------

(a) Not applicable.

(b) Not applicable.

(c) Each recipient of a prospectus of any series of the Registrant may
request the latest Annual Report and such Annual Report will be furnished by the
Registrant without charge.

14
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis and State of Minnesota on the 9th
day of December 1996.

PIPER GLOBAL FUNDS INC.
(Registrant)

By /s/ Paul A. Dow
----------------------------------
Paul A. Dow, President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>

<S> <C> <C>
/s/ Paul A. Dow President (principal December 9, 1996
- ----------------------------- executive officer)
Paul A. Dow

/s/ Robert H. Nelson Treasurer (principal December 9, 1996
- ------------------------------ financial and
Robert H. Nelson accounting officer)

Michael W. Balfour* Director

David T. Bennett* Director

Jaye F. Dyer* Director

William H. Ellis* Director

Karol D. Emmerich* Director

Luella G. Goldberg* Director

David A. Hughey* Director

George Latimer* Director

Iain A. Watt* Director

*By /s/ William H. Ellis December 9, 1996
--------------------------------
William H. Ellis, Attorney-in-Fact
</TABLE>