PIPER GLOBAL FUNDS INC /MN, N-30D, 1996-10-24

PIPER GLOBAL FUNDS INC /MN
N-30D, 1996-10-24

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<PAGE>

1996 ANNUAL REPORT

EMERGING MARKETS GROWTH FUND
-----------------------------------

PACIFIC-EUROPEAN GROWTH FUND
-----------------------------------

PIPER FUNDS INTERNATIONAL

GROWTH

FUNDS

[LOGO]

International Growth Funds - 1996 Annual Report

<PAGE>

PIPER FUNDS

INTERNATIONAL GROWTH FUNDS
- --------------------------------------------------------------------------------
Emerging Markets Growth Fund International investments offer geographic
Pacific-European Growth Fund diversification, often considered essential
for successful equity investing.

U.S. GROWTH FUNDS
- ----------------------------------------
Small Company Growth Fund
Emerging Growth Fund
Growth Fund

GROWTH AND INCOME FUNDS
- ----------------------------------------
Growth and Income Fund
Balanced Fund

INCOME FUNDS
- ----------------------------------------
Government Income Fund
Intermediate Bond Fund
Adjustable Rate Mortgage Securities Fund

TAX-EXEMPT INCOME FUNDS
- ----------------------------------------
National Tax-Exempt Fund
Minnesota Tax-Exempt Fund

CASH MANAGEMENT FUNDS
- ----------------------------------------
Money Market Fund
Tax-Exempt Money Market Fund
U.S. Government Money Market Fund
Institutional Money Market Fund

Piper Funds provide you with the flexibility to help you pursue your lifelong
goals. Among our funds, we offer a spectrum of investment objectives and
convenient shareholder services to meet the varied needs of today's investors.

Contact your Piper Jaffray Investment Executive for more information about the
Piper Funds, including prospectuses, or call Mutual Fund Services at 1 800 866-
7778.

International investments offer geographic diversification, often considered
essential for successful equity investing.

CONTENTS

Emerging Markets Growth Fund

Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . 8
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . 19
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 25
Federal Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . 26
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Pacific-European Growth Fund

Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . 8
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . 21
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 25
Federal Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . 26
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

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

<PAGE>

President's Letter
- --------------------------------------------------------------------------------

Oct. 21, 1996
- --------------------------------------------------------------------------------

DEAR SHAREHOLDERS:

Check out the best sellers' list at your local bookstore. You'll notice a number
of books about companies that have gone through dramatic changes in recent
years. Surprising? Not really. Every company experiences change periodically.
And we're no exception. At Piper Capital Management, we've recently made
significant changes to enhance our ability to achieve consistent, competitive
performance and provide a higher level of quality service.

We've restructured our fund family to offer you a broader range of mutual
funds - from small company to emerging markets. We've renamed certain funds so
it's easier to identify how they invest. Take a look at the names, and you'll
see what I mean.

We've upgraded our toll-free telephone system so you spend less time
listening to voice response and more time receiving information you can put to
use. When calling our toll-free number, you'll now have the option to listen to
our portfolio managers talk about their current investment strategy and market
outlook. Find out the many ways to reach us, including our toll-free number, on
the back page of this report.

Take a close look at the annual report in your hand. You'll see that the
format is simpler and more inviting. The report has less jargon and is easier to
read. We've even added a glossary of terms at the back of the book to help you
better understand commonly used financial terms. Whenever you see this symbol
[HAT SYMBOL], it indicates a term that is defined in the glossary. In addition,
we've developed more literature that clearly spells out each fund's investment
process with succinct content that you can easily grasp. Flip to the back page
for more information on how to order literature.

You'll hear the word "team" more often when we talk about our portfolio
managers. We've reorganized our investment management group so managers interact
more frequently, sharing their best ideas to improve the investment capabilities
of Piper Capital.

There is one thing that hasn't changed at Piper Capital, and that's the
value we place on your Investment Executive. He or she plays an integral part in
helping you build your wealth. Rely on your Piper Jaffray Investment Executive
to give you the support and guidance that you need in working toward your
financial goals.

The recent changes we have made represent a new way of doing business at
Piper Capital - an approach we believe will enable us to establish an
unparalleled reputation for prudent investing and high-quality service.

That said, we look forward to serving your future financial needs and
exceeding your expectations in every way we can.

Thank you for your investment.

Sincerely,

/s/ William H. Ellis

William H. Ellis

[PHOTO]

WILLIAM H. ELLIS

President

Piper Capital Management
- --------------------------------------------------------------------------------

1 1996 Annual Report - International Growth Funds

<PAGE>

EMERGING MARKETS GROWTH FUND
- --------------------------------------------------------------------------------

Oct. 21, 1996
- --------------------------------------------------------------------------------

DEAR SHAREHOLDERS:

EMERGING MARKETS GROWTH FUND RETURNED 21.37% FOR THE YEAR ENDED SEPT. 30, 1996,
which includes reinvested distributions but not the fund's sales charge.* This
compares to a 10.54% return for the IFC Latin America Investable Index** and
5.21% for the MSCI Emerging Markets Free Index+ over the same time period. The
fund's strong performance compared to the MSCI Index was primarily because all
of our assets were invested in Latin America, which performed well. The fund
also outperformed the IFC Index as the result of an overweighted position in
Venezuela and a heavy allocation to the telecommunications and utilities sectors
in Brazil.

DURING THE YEAR, BRAZIL WAS THE BEST PERFORMING MARKET IN LATIN AMERICA, WITH
ARGENTINA AND MEXICO DELIVERING MORE MODEST GAINS. Strong performance in the
telecommunications sector was largely responsible for Brazil's investment
results. The Argentine stock market benefited from increasing signs that the
country's economic recovery remains in relatively good shape. The passing of
Argentina's 1997 budget by Congress lifted a degree of short-term uncertainty
from the market. Corporations in Mexico received a boost by turning to export
markets for growth.

* PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. PLEASE REMEMBER, YOU COULD
LOSE MONEY WITH THIS INVESTMENT. THE RETURN AND PRINCIPAL VALUE OF YOUR
INVESTMENT WILL FLUCTUATE SO THAT FUND SHARES, WHEN SOLD, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.

** THE IFC LATIN AMERICA INVESTABLE INDEX IS AN UNMANAGED INDEX OF SECURITIES
FROM ARGENTINA, BRAZIL, CHILE, COLOMBIA, MEXICO, PERU AND VENEZUELA.

+ MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EMERGING MARKETS FREE INDEX IS AN
UNMANAGED INDEX OF SECURITIES FROM EMERGING MARKETS THAT ARE OPEN TO FOREIGN
INVESTORS.

++ THE LIPPER EMERGING MARKETS FREE AVERAGE IS THE AVERAGE TOTAL RETURN OF
EMERGING MARKET FUNDS AS CHARACTERIZED BY LIPPER ANALYTICAL SERVICES.

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

[PHOTO]

RICHARD MUCKART
is investment director and head of emerging markets investing at Edinburgh Fund
Managers plc and a co-manager of Emerging Markets Growth Fund. He has 24 years
of financial experience.
- --------------------------------------------------------------------------------

FUND PERFORMANCE THROUGH SEPT. 30, 1996*
- --------------------------------------------------------------------------------

[GRAPH]

Growth of $10,000 Invested Since Inception

Average Annualized Total Returns
Includes 4% maximum sales charge.

One Year . . . . . . . . . . . . . . . . . . . . . . . . . 16.52%
Five Years . . . . . . . . . . . . . . . . . . . . . . . . n/a
Since Inception (11/9/93). . . . . . . . . . . . . . . . . -5.44%

DURING SOME PERIODS, THE FUND'S ADVISER WAIVED OR PAID CERTAIN FUND EXPENSES
AND/OR THE FUND'S DISTRIBUTOR VOLUNTARILY LIMITED CERTAIN FUND 12b-1 FEES.
OTHERWISE, THE AVERAGE ANNUAL TOTAL RETURNS WOULD HAVE BEEN 14.67% ONE YEAR AND
- -6.90% SINCE INCEPTION.

THE FUND OPERATED AS HERCULES LATIN AMERICAN VALUE FUND UNTIL JUNE 21, 1996. THE
REASON THE FUND'S PERFORMANCE IS COMPARED TO BOTH THE MSCI INDEX AND THE IFC
INDEX IS THAT THE FUND NOW HAS THE FLEXIBILITY TO INVEST IN EMERGING MARKETS
OUTSIDE LATIN AMERICA. IN FUTURE REPORTS, THE FUND'S PERFORMANCE WILL BE
COMPARED SOLELY TO THE MSCI INDEX. ALL FUND AND BENCHMARK PERFORMANCE FIGURES
INCLUDE REINVESTED DISTRIBUTIONS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS.

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2 1996 Annual Report - International Growth Funds

<PAGE>

EMERGING MARKETS GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------

ECONOMIC RECOVERY IN MAJOR LATIN AMERICAN MARKETS ATTRACTED INVESTORS TO THE
REGION IN SEARCH OF UNDERVALUED [HAT SYMBOL] GROWTH OPPORTUNITIES. Economic
activity accelerated in Brazil, Mexico and Argentina with industrial
production clearly improving. Other economies in the region also showed
improvement following last year's recession caused by the currency crisis in
Mexico.

EARLIER IN THE YEAR, THE ECONOMIC RECOVERY IN LARGER MARKETS HAD A POSITIVE
IMPACT ON SMALLER MARKETS. This was particularly evident in Peru and Colombia.
However, Chile's market has yet to show signs of strength due to the
government's decision to raise interest rates to slow the pace of economic
recovery.

A CONFIRMED TREND OF ECONOMIC GROWTH IS NOW APPARENT IN LATIN AMERICA. Corporate
profit growth is expected to outpace the rate of gross domestic product [HAT
SYMBOL] growth over the next 12 months. Factors that should drive the increase
in earnings include lower interest rates in Mexico and Brazil, significant
tariffs in the Brazilian electricity and telecommunications sectors and a
decrease in the number of bad debts absorbed by Mexican banks. While the annual
rate of growth for the region will remain unimpressive for this year due to the
sluggish first quarter, we project an aggregate 4% increase for 1997.

THE REORGANIZATION OF THE FUND THIS PAST SUMMER ALLOWS US TO INVEST IN THE
WORLD'S EMERGING MARKETS, INCLUDING LATIN AMERICA, ASIA, EASTERN EUROPE, THE
MIDDLE EAST, SOUTHERN EUROPE AND AFRICA. In the coming months, we intend to
broaden the fund's exposure to take advantage of investment opportunities in
Asia, Eastern Europe and Africa. After Sept. 30, we began this process with
investments in India, Russia, South Africa and the Czech Republic. To expand
into these areas, we're using proceeds from

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

[PHOTO]

GAVIN GRANT
is head of the Latin American department at Edinburgh Fund Managers plc and a
co-manager of Emerging Markets Growth Fund. He has five years of financial
experience.
- --------------------------------------------------------------------------------

PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
As a percentage of total assets on Sept. 30, 1996.

[GRAPH]

TOP 10 HOLDINGS
- --------------------------------------------------------------------------------
As a percentage of total assets on Sept. 30, 1996.

Company Sector Country

1 Gruma Class B Food & Beverage Mexico 5%
- --------------------------------------------------------------------------------
2 Centrais Eletricas
Brasileiras Utilities Brazil 5%
- --------------------------------------------------------------------------------
3 Petroleo Brasileiro Oil & Gas Brazil 4%
- --------------------------------------------------------------------------------
4 Banco Bradesco Banking & Financial Brazil 4%
- --------------------------------------------------------------------------------
5 Grupo Financiero
Banorte Class B Financial Services Mexico 4%
- --------------------------------------------------------------------------------
6 Banco Itau Banking & Financial Brazil 3%
- --------------------------------------------------------------------------------
7 Corporacion GEO Class B Real Estate Mexico 3%
- --------------------------------------------------------------------------------
8 Mavesa 144A ADR Food & Beverage Venezuela 3%
- --------------------------------------------------------------------------------
9 Fomento Economico
Mexicano Class B Food & Beverage Mexico 3%
- --------------------------------------------------------------------------------
10 Cervejaria Brahma Food & Beverage Brazil 3%
- --------------------------------------------------------------------------------

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

3 1996 Annual Report - International Growth Funds

<PAGE>

EMERGING MARKETS GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------

the sale of some Latin American stocks in the portfolio that meet our target
prices. By mid-November, we hope to have approximately 25% of the fund in other
emerging markets outside of Latin America. Our desire to invest in different
markets is not due to the lack of solid emerging investments in Latin America,
but instead the myriad of growing opportunities in other emerging markets around
the world.

We appreciate your investment in the Emerging Markets Growth Fund and will do
our best to deliver consistent, long-term investment results.

Sincerely,

/s/ Richard Muckart

Richard Muckart
Portfolio Manager

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

4 1996 Annual Report - International Growth Funds

<PAGE>

PACIFIC-EUROPEAN GROWTH FUND
- --------------------------------------------------------------------------------

Oct. 21, 1996
- --------------------------------------------------------------------------------

DEAR SHAREHOLDERS:

FOR THE YEAR ENDED SEPT. 30, 1996, PACIFIC-EUROPEAN GROWTH FUND PROVIDED A
TOTAL RETURN OF 4.95%, which includes reinvested distributions but not the
fund's sales charge.* Over the same time frame, the MSCI European,
Australian, Far East (EAFE) Index,** the fund's benchmark, returned 8.94%.
During the period, the fund was overweighted in Japan, underweighted in
Europe and remained relatively neutral in the Pacific Basin compared to the
EAFE Index. Our underperformance was due largely to our underweighting in
Europe, which fared well during the year.

IN JAPAN, THE STOCK MARKET IMPROVED AS THE ECONOMY SHOWED SIGNS OF A SUSTAINABLE
REBOUND. Earlier in the year, the outlook was not as bright as disappointing
reports showed the economic recovery losing ground. But as industrial production
and housing picked up, confidence in the economy was restored. We expect growth
to expand because the Bank of Japan continues to inject massive amounts of
liquidity into the financial system and interest rates are low compared to other
industrialized nations. Moreover, we believe corporate profit forecasts are
unduly conservative. A sustained pickup in economic activity coupled with the
generally undervalued [HAT SYMBOL] status of most Japanese stocks could be
stimulus for a solid rally going forward.

** THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX IS AN UNMANAGED
INDEX OF SECURITIES LISTED ON THE STOCK EXCHANGES OF EUROPE, AUSTRALIA AND THE
FAR EAST.

+ THE LIPPER INTERNATIONAL FUNDS AVERAGE IS THE AVERAGE TOTAL RETURN OF
INTERNATIONAL FUNDS AS CHARACTERIZED BY LIPPER ANALYTICAL SERVICES.

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

[PHOTO]

MIKE BALFOUR
is chief investment director at Edinburgh Fund Managers plc and a co-manager of
Pacific-European Growth Fund. He has 11 years of financial experience.
- --------------------------------------------------------------------------------

FUND PERFORMANCE THROUGH SEPT. 30, 1996*
- --------------------------------------------------------------------------------

Growth of $10,000 Invested Since Inception

[GRAPH]

Average Annualized Total Returns
Includes 4% maximum sales charge.

One Year . . . . . . . . . . . . . . . . . . . . . . . . . 0.75%
Five Years . . . . . . . . . . . . . . . . . . . . . . . . 9.05%
Since Inception (4/27/90). . . . . . . . . . . . . . . . . 5.73%

ALL FUND PERFORMANCE FIGURES REFLECT THE 4% SALES CHARGE AS IF IT WAS APPLIED
SINCE THE FUND'S INCEPTION. THE FUND OPERATED AS A CLOSED-END FUND UNTIL AUG.
31, 1992. ALL FUND AND BENCHMARK PERFORMANCE FIGURES INCLUDE REINVESTED
DISTRIBUTIONS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.

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

5 1996 Annual Report - International Growth Funds

<PAGE>

PACIFIC-EUROPEAN GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------

CONTINENTAL EUROPEAN MARKETS RECORDED GOOD RESULTS, THOUGH AT TIMES THE STRENGTH
AND WEAKNESS OF CURRENCIES PLAYED AN IMPORTANT PART IN THE DIRECTION OF STOCK
PRICES. The economic environment in Germany improved, but this pickup was offset
by economic weakness in France. After analysts revised their earnings estimates
downward, corporate profits, for the most part, came in line with expectations.
Valuations [HAT SYMBOL] in Continental Europe moved from being inexpensive to
reasonable, but solid performance may still occur. Many investors have only
begun to diversify their portfolios with securities in this region. Still, our
near-term outlook for corporate profits on the Continent is mixed. As a result,
we intend to maintain a relatively cautious investment approach, both at the
country and stock level, favoring the defensive markets of Switzerland and the
Netherlands.

UNITED KINGDOM MARKETS REACHED RECORD LEVELS DUE LARGELY TO TAKEOVER ACTIVITY,
GOOD CORPORATE RESULTS, COMPANY BUY BACKS IN THE FINANCIAL SECTOR AND LOWER
INTEREST RATES. Inflation remains under control, consumer confidence continues
to improve and economic activity is accelerating. We have increased our holdings
in industrial companies, because we believe they should perform well in a
stronger economic environment. Believing interest rates could rise due to
stronger economic growth, we have reduced our exposure to the interest-rate-
sensitive financial and utility sectors.

HIGH LEVELS OF ECONOMIC GROWTH HELPED SUPPORT PACIFIC BASIN MARKETS. Interest
rate declines in China served to confirm the end of the government's austerity
program. This should boost confidence in Hong Kong and stimulate growth in the
rest of the region. (Late in the period, Hong Kong was already showing signs of
an economic upturn with retail sales recovering.) Generally, the Pacific Basin
markets should benefit from continuing above-average economic growth, improving
corporate profits and declining inflation.

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

[PHOTO]

LLOYD BEAT
is executive director at Edinburgh Fund Managers plc and head of Edinburgh's
investment strategy department. He has nine years of financial experience.
- --------------------------------------------------------------------------------

PORTFOLIO COMPOSITION BY REGION
- --------------------------------------------------------------------------------

As a percentage of total assets on Sept. 30, 1996.

[GRAPH]

** THE MSCI EAFE INDEX IS AN UNMANAGED INDEX OF SECURITIES LISTED ON THE STOCK
EXCHANGES OF EUROPE, AUSTRALIA AND THE FAR EAST.

TOP 10 HOLDINGS
- --------------------------------------------------------------------------------
As a percentage of total assets on Sept. 30, 1996.

Company Sector Country

1 Sumitomo Trust and
Banking Financial Services Japan 2%
- --------------------------------------------------------------------------------
2 DDI Telecommunications Japan 2%
- --------------------------------------------------------------------------------
3 Kobe Steel Metal Products Japan 2%
- --------------------------------------------------------------------------------
4 Mitsui & Company Diversified Industrial Japan 2%
- --------------------------------------------------------------------------------
5 Sumitomo Bank Financial Services Japan 2%
- --------------------------------------------------------------------------------
6 Mitsui Fudosan Real Estate Japan 2%
- --------------------------------------------------------------------------------
7 Sekisui Chemical Chemicals Japan 2%
- --------------------------------------------------------------------------------
8 Murata Manufacturing Electronics Japan 2%
- --------------------------------------------------------------------------------
9 Fortis Amev Insurance Netherlands 2%
- --------------------------------------------------------------------------------
10 Stet Societa' Finanziara
Telefonica Telecommunications Italy 2%
- --------------------------------------------------------------------------------

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

6 1996 Annual Report - International Growth Funds

<PAGE>

PACIFIC-EUROPEAN GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------

LATIN AMERICAN MARKETS RECORDED RELATIVELY GOOD INVESTMENT RESULTS. Economic
activity continued to accelerate in Mexico and Brazil with industrial production
clearly improving. Corporate profits were generally better than expected.
Despite the potential for higher interest rates and political uncertainties, our
outlook for the Latin American markets is positive. Valuations are attractive,
and growth prospects are strong.

GOING FORWARD, OUR OUTLOOK FOR THE GLOBAL MARKETS, IN GENERAL, IS ENCOURAGING
BUT HOW INVESTORS REACT TO HIGHER U.S. INTEREST RATES WILL BE CRUCIAL. Given our
economic and stock market forecasts for each country, we intend to maintain
overweighted positions in Japan and the Pacific Basin and continue to invest in
Latin America.

Thank you for your investment in Pacific-European Growth Fund. We consider it a
privilege to manage your money and remain dedicated to helping you pursue your
long-term financial goals.

Sincerely,

/s/ Michael Balfour

Michael Balfour
Portfolio Manager

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

PORTFOLIO COMPOSITION BY COUNTRY
- --------------------------------------------------------------------------------
As a percentage of total assets on Sept. 30, 1996.

[GRAPH]

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

7 1996 Annual Report - International Growth Funds

<PAGE>
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------

September 30, 1996
..................................................................

<TABLE>
<CAPTION>
EMERGING
MARKETS PACIFIC-EUROPEAN
GROWTH FUND GROWTH FUND
--------------- ---------------

<S> <C> <C>
ASSETS:
Investments in securities at market value* (including a
repurchase agreement of $0 and $2,594,000,
respectively)(note 2) ................................... $ 12,473,827 $ 172,592,775
Cash in bank on demand deposit ............................. 1,209,186 76,969
Foreign cash in bank on demand deposit ..................... 3,373 260,050
Receivable for fund shares sold ............................ 7,977 423,377
Organization costs ......................................... 41,831 --
Dividends and accrued interest receivable .................. 63,361 648,752
Other assets ............................................... 518 7,042
--------------- ---------------
Total assets ............................................. 13,800,073 174,008,965
--------------- ---------------

LIABILITIES:
Payable for fund shares redeemed ........................... 10,318 479,451
Accrued investment management fee .......................... 11,280 105,270
Accrued distribution fee ................................... 3,497 43,625
Payable for foreign capital gains taxes .................... -- 926,949
Other accrued expenses ..................................... 3,080 --
--------------- ---------------
Total liabilities .......................................... 28,175 1,555,295
--------------- ---------------
Net assets applicable to outstanding capital stock ....... $ 13,771,898 $ 172,453,670
--------------- ---------------
--------------- ---------------

REPRESENTED BY:
Capital stock - authorized 2 billion shares of $0.01 par
value for each fund; outstanding, 1,555,403 and 13,329,471
shares, respectively ..................................... $ 15,554 $ 133,295
Additional paid-in capital ................................. 19,922,263 164,544,048
Undistributed net investment income ........................ 7,531 191,694
Accumulated net realized gain (loss) on investments and
foreign currency transactions ............................ (6,855,591) 1,065,299
Unrealized appreciation of investments and on translation of
other assets and liabilities denominated in foreign
currencies ............................................... 682,141 6,519,334
--------------- ---------------

Total - representing net assets applicable to outstanding
common stock ........................................... $ 13,771,898 $ 172,453,670
--------------- ---------------
--------------- ---------------

Net asset value per share of outstanding capital stock .... $ 8.85 $ 12.94
--------------- ---------------
--------------- ---------------

* Investments in securities at identified cost ............. $ 11,790,901 $ 166,068,484
--------------- ---------------
--------------- ---------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

8 1996 Annual Report - International
Growth Funds
<PAGE>
Statements of Operations
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EMERGING
MARKETS PACIFIC-EUROPEAN
GROWTH FUND GROWTH FUND
--------------- ---------------
Three Months Seven Months
Ended Ended
9/30/96 9/30/96
--------------- ---------------
<S> <C> <C>
INCOME:
Dividends (net of foreign withholding taxes of $1,762 and $233,634,
respectively) ................................................................ $ 73,388 $ 1,795,760
Interest (net of foreign withholding taxes of $0 and $2,047, respectively) ..... 1,545 132,516
--------------- ---------------
Total investment income ...................................................... 74,933 1,928,276
--------------- ---------------

EXPENSES (NOTE 5):
Investment management fee ...................................................... 34,087 898,235
Distribution fee ............................................................... 17,043 502,031
Custodian, accounting and transfer agent fees .................................. 53,388 228,224
Shareholder account servicing fees ............................................. 6,431 68,770
Registration fees .............................................................. 18,447 24,668
Reports to shareholders ........................................................ -- 48,664
Amortization of organization costs ............................................. 4,512 --
Directors' fees ................................................................ 21 9,306
Audit and legal fees ........................................................... 4,165 36,969
Other expenses ................................................................. 1,237 12,138
--------------- ---------------
Total expenses ............................................................. 139,331 1,829,005
Less expenses waived by the distributor ........................................ (6,476) (190,778)
Less expenses waived by the adviser ............................................ (64,725) --
--------------- ---------------

Net expenses before expenses paid indirectly ................................. 68,130 1,638,227
Less expenses paid indirectly .................................................. (2,227) (2,397)
--------------- ---------------

Total net expenses ........................................................... 65,903 1,635,830
--------------- ---------------

Net investment income ........................................................ 9,030 292,446
--------------- ---------------

NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments (net of foreign withholding taxes of $0 and $35,304, respectively)
(note 3) ................................................................... (234,957) 4,291,924
Foreign currency transactions ................................................ (396) 5,003,528
--------------- ---------------

Net realized gain (loss) ................................................... (235,353) 9,295,452
Net change in unrealized appreciation or depreciation of investments and on
translation of other assets and liabilities denominated in foreign
currencies ................................................................... 256,946 (13,137,979)
--------------- ---------------

Net gain (loss) on investments and foreign currency ........................ 21,593 (3,842,527)
--------------- ---------------

Net increase (decrease) in net assets resulting from operations ............ $ 30,623 $ (3,550,081)
--------------- ---------------
--------------- ---------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

9 1996 Annual Report - International
Growth Funds
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EMERGING MARKETS PACIFIC-EUROPEAN
GROWTH FUND GROWTH FUND
--------------------------- ---------------------------
Three Months Seven Months
Ended Year Ended Ended Year Ended
9/30/96 6/30/96* 9/30/96 2/29/96
------------ ------------ ------------ ------------

<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 9,030 $ 28,691 $ 292,446 $ 593,324
Net realized gain (loss) on investments and foreign currency
transactions ............................................. (235,353) 1,703,865 9,295,452 10,814,732
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies ............ 256,946 1,774,245 (13,137,979) 13,491,482
------------ ------------ ------------ ------------

Net increase (decrease) in net assets resulting from
operations ............................................. 30,623 3,506,801 (3,550,081) 24,899,538
------------ ------------ ------------ ------------

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. -- -- -- (593,324)
From net realized gains .................................... -- -- (8,239,435) (10,077,791)
------------ ------------ ------------ ------------
Total distributions ...................................... -- -- (8,239,435) (10,671,115)
------------ ------------ ------------ ------------

CAPITAL SHARE TRANSACTIONS (NOTE 4):
Proceeds from sale of shares ............................... 4,970,884 8,309,695 13,832,617 29,496,476
Proceeds from shares issued for reinvestment of
distributions ............................................ -- -- 8,150,058 10,633,411
Payments for shares redeemed ............................... (5,165,803) (20,504,334) (29,624,360) (45,439,458)
Acquisition of Hercules European Value Fund and Hercules
Pacific Basin Value Fund (note 7) ........................ -- -- 28,573,167 --
------------ ------------ ------------ ------------
Increase (decrease) in net assets from capital share
transactions ........................................... (194,919) (12,194,639) 20,931,482 (5,309,571)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets .................. (164,296) (8,687,838) 9,141,966 8,918,852

Net assets at beginning of period (note 1) ................. 13,936,194 22,624,032 163,311,704 154,392,852
------------ ------------ ------------ ------------

Net assets at end of period ................................ $13,771,898 $ 13,936,194 $172,453,670 $163,311,704
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Undistributed net investment income ........................ $ 7,531 $ -- $ 191,694 $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

* REPRESENTS HISTORICAL FINANCIAL RESULTS OF HERCULES LATIN AMERICAN VALUE FUND PRIOR TO JUNE 21, 1996.
SEE NOTE 1 TO FINANCIAL STATEMENTS.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

10 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements
- --------------------------------------------------

(1) ORGANIZATION
...............................................................................
Piper Global Funds Inc. (the company) is registered under
the Investment Company Act of 1940 (as amended) as an
open-end management investment company. The company
currently has outstanding two series (the funds):
Pacific-European Growth Fund is a diversified series and
Emerging Markets Growth Fund is a non-diversified series.
The company's articles of incorporation permit the board
of directors to create additional series in the future.

Pacific-European Growth Fund invests primarily in common
stocks of companies in the Pacific Basin (for example,
Japan, Hong Kong, Malaysia, Singapore or Thailand) and
Europe (including Eastern Europe). Pacific-European Growth
Fund acquired the net assets of Hercules European Value
Fund and Hercules Pacific Basin Value Fund on June 21,
1996, via a tax-free reorganization.

Emerging Markets Growth Fund invests primarily in common
stocks of companies 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. Emerging Markets
Growth Fund commenced operations and acquired the net
assets of Hercules Latin American Value Fund, a series of
Hercules Funds Inc., 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 Fund prior to
June 21, 1996 represents the financial history of Hercules
Latin American Value Fund.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
...............................................................................
INVESTMENTS IN SECURITIES
Investments in securities traded on a U.S. or foreign
securities exchange or included in a national market
system are valued at the last quoted sales price.
Securities for which there were no sales reported are
valued at the mean between the bid and ask prices. 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 securities with
maturities of 60 days or less are valued at amortized
cost, which approximates market value.

Securities transactions are accounted for on the date the
securities are purchased or sold. Realized gains and
losses are calculated on the identified-cost basis.
Dividend income is recognized on the ex-dividend date or
upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income, including
amortization of bond discount and premium computed on a
level-yield basis, is accrued daily.

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

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

11 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

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

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

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

FEDERAL TAXES
Each fund is treated separately for federal income tax
purposes. Each fund intends to comply with the
requirements of the Internal Revenue Code applicable to
regulated investment companies and not be subject to
federal income tax. Therefore, no income tax provision is
required. In addition, on a calendar-year basis, the funds
will distribute substantially all of their taxable net
investment income and realized gains, if any, to avoid the
payment of any federal excise taxes.

Net investment income and net realized gains (losses) may
differ for financial statement and tax purposes primarily
because of the recognition of certain foreign currency
gains (losses) as ordinary income (loss) for tax purposes,
the "mark-to-market" of certain Passive Foreign Investment
Companies (PFICs) for tax purposes, the "mark-to-market"
of certain investments for tax purposes, losses deferred
due to "wash sale" transactions, and the non-deductibility
of amortization of organization costs.

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

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

<TABLE>
<CAPTION>
EMERGING
MARKETS PACIFIC-EUROPEAN
GROWTH GROWTH
FUND FUND
------- ---------
<S> <C> <C>
Decrease undistributed net investment
income .................................... $1,499 $100,752
Increase (Decrease) accumulated net realized
gain (loss) on investments ................ (372) 93,720
Increase additional paid in capital ......... 1,127 7,032
</TABLE>

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

12 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income
and net realized gains will be declared and paid at least
annually. Distributions are payable in cash or reinvested
in additional shares.

ORGANIZATION COSTS
Organization costs were incurred in connection with the
start up and initial registration of Emerging Markets
Growth Fund's predecessor. These costs are amortized over
60 months on a straight-line basis. If any or all of the
shares representing initial capital of the fund are
redeemed by any holder thereof prior to the end of the
amortization period, the proceeds will be reduced by the
unamortized organization cost balance in the same
proportion as the number of shares redeemed bears to the
number of initial shares outstanding preceding the
redemption.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the
closing rate of exchange. Foreign currency amounts related
to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the
transaction date. For financial reporting purposes the
realized and unrealized gain (loss) on investments
reflects changes in exchange rates as well as changes in
the market value of investments.

The funds also may enter into forward foreign currency
exchange contracts for hedging purposes. The net U.S.
dollar value of foreign currency underlying all
contractual commitments held by the funds, and the
resulting unrealized appreciation or depreciation, are
determined using foreign currency exchange rates from
independent pricing sources. The funds are subject to the
credit risk that the other party will not complete the
obligations of the contract.

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

CONCENTRATION OF RISK
Investments in countries with limited or developing
capital markets may involve greater risks than investments
in more developed markets and the prices of such
investments may be volatile. The consequences of
political, social or economic changes in these markets may
have disruptive effects on the market prices of the funds'
investments and the income they generate, as well as the
funds' ability to repatriate such amounts.

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

13 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts in the financial statements. Actual
results may differ from these estimates.

(3) INVESTMENT SECURITY TRANSACTIONS
...............................................................................
Cost of purchases and proceeds from sales of securities,
other than temporary investments in short-term securities
for the three months ended September 30, 1996 for Emerging
Markets Growth Fund and for the seven months ended
September 30, 1996 for the Pacific-European Growth Fund
were as follows:

<TABLE>
<CAPTION>
EMERGING
MARKETS
GROWTH PACIFIC-EUROPEAN
FUND GROWTH FUND
--------- ------------
<S> <C> <C>
Purchases ................................... $ 2,697 $81,839,100
Proceeds from sales ......................... $728,274 $91,515,462
</TABLE>

For the period ended September 30, 1996, no brokerage
commissions were paid to Piper Jaffray Inc., an affiliated
broker.

(4) CAPITAL SHARE
TRANSACTIONS
...............................................................................
Transactions in shares for the three months ended
September 30, 1996 and the year ended June 30, 1996 for
Emerging Markets Growth Fund and for the seven months
ended September 30, 1996 and the year ended February 29,
1996 for Pacific-European Growth Fund were as follows:
<TABLE>
<CAPTION>
EMERGING
MARKETS PACIFIC-EUROPEAN
GROWTH FUND GROWTH FUND
9/30/96 9/30/96
------------ -----------
<S> <C> <C>
Sold ........................................ 570,420 1,035,524
Issued for reinvested distributions ......... -- 610,491
Redeemed .................................... (590,645) (2,238,550)
Shares issued in connection with acquisition
(note 7) .................................. -- 2,139,125
------------ -----------
Increase (decrease) ....................... (20,225) 1,546,590
------------ -----------
------------ -----------

6/30/96 2/29/96
------------ -----------
<S> <C> <C>
Sold ........................................ 1,061,183 2,173,410
Issued for reinvested distributions ......... -- 795,210
Redeemed .................................... (2,625,903) (3,316,664)
------------ -----------
Decrease .................................. (1,564,720) (348,044)
------------ -----------
------------ -----------
</TABLE>

(5) EXPENSES
...............................................................................
The company has entered into an investment management
agreement with Piper Capital Management Incorporated
(Piper Capital) under which Piper Capital manages each
fund's assets and furnishes related office facilities,
equipment, research and personnel. The agreement requires
each fund to pay Piper Capital a monthly fee based on
average daily net assets. For Pacific European Growth
Fund, the basic fee is equal to an annual rate of 1% on
the first $100 million in net assets, 0.875% of the next
$100 million and 0.75% of the net assets in excess of $200
million. For Emerging Markets Growth Fund the fee is equal
to an annual rate of 1.00% of the average daily net
assets.

Since April 1991, the basic fee for Pacific European
Growth Fund has been subject to a performance adjustment.
The adjustment is computed monthly by comparing the
performance of the fund relative to the Morgan Stanley
Capital International EAFE Index, over the preceding 12
month period. For each percentage point the fund
outperforms or underperforms the EAFE Index the monthly
fee is

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

14 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
increased or decreased by 0.05% (on an annual basis) up to
a maximum of 0.25% (on an annual basis) of the fund's
average daily net assets. During the seven months ended
September 30, 1996, the performance adjustment decreased
the management fee by $53,635.

Edinburgh Fund Managers plc has been retained by Piper
Capital as the subadviser of Pacific-European Growth Fund
and is paid a fee equal to 65% of the basic investment
management fee plus or minus 90% of the performance
adjustment. Edinburgh Fund Managers plc has entered into
an expense reimbursement agreement with the adviser under
which it pays the adviser a monthly fee equal to 10% of
the basic investment management fee. This 10% fee is a
reimbursement to the adviser for certain expenses it bears
in connection with the administration of the fund.
Edinburgh Fund Managers plc has been retained by Piper
Capital as subadviser of Emerging Markets Growth Fund and
is paid a fee equal to 50% of the basic management fee.

The funds also pay Piper Jaffray Inc. (Piper Jaffray), the
funds' distributor, for expenses incurred in providing
shareholder services and distribution-related services.
The distribution fee is paid on a quarterly basis and is
limited to 0.50% of average daily net assets of each fund.
The 0.50% fee includes 0.25% payable as a servicing fee
and 0.25% payable as a distribution fee. For the three
months ended September 30, 1996 for Emerging Markets
Growth Fund and for the seven months ended September 30,
1996 for Pacific-European Growth Fund, Piper Jaffray
voluntarily agreed to limit each fund's fee to an annual
rate of 0.32% of each fund's average daily net assets.

The company has also entered into shareholder servicing
agreements under which Piper Jaffray and Piper Trust
Company perform various transfer and dividend disbursing
agent services. The fees, which are paid monthly to Piper
Jaffray and Piper Trust Company for providing these
services, are equal to an annual rate of $6.00 per active
shareholder account and $1.60 per closed account.

In addition to the investment management, distribution and
shareholder account servicing fees, the fund is
responsible for paying most other operating expenses,
including: outside directors' fees and expenses; custodian
fees; registration fees; printing and shareholder reports;
transfer agent fees and expenses; legal, auditing and
accounting services; insurance; interest; taxes and other
miscellaneous expenses.

Sales charges received by Piper Jaffray for distributing
the fund's shares for the three months ended September 30,
1996 for Emerging Markets Growth Fund and for the seven
months ended September 30, 1996 for Pacific-European
Growth Fund were $23,154 and $163,384, respectively.

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

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

15 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

(6) CAPITAL LOSS CARRYOVERS
...............................................................................
For federal income tax purposes, the funds had capital
loss carryovers at September 30, 1996, which, if not
offset by subsequent capital gains, will expire as noted.
Of the total capital loss carryover for Emerging Markets
Growth Fund, utilization of $6,562,064 is limited to
$820,258 per year. Due to limits on utilization of the
capital loss carryovers which Pacific-European Growth Fund
acquired in the acquisition described in note 7,
$2,190,585 of net realized gains could not be offset by
these capital loss carryovers during the seven months
ended September 30, 1996. The utilization of these capital
loss carryovers is limited to $1,065,056 per year.

<TABLE>
<CAPTION>
CAPITAL
LOSS EXPIRATION
CARRYOVERS DATE
----------- --------------
<S> <C> <C>
Emerging Markets Growth Fund ................ $6,797,045 2003 and 2004
Pacific-European Growth Fund ................ $2,190,585 2003
</TABLE>

(7) ACQUISITION
...............................................................................
On June 21, 1996, the Pacific-European Growth Fund
acquired all of the net assets of Hercules European Value
Fund and Hercules Pacific Basin Value Fund (Hercules
Funds) in a tax-free reorganization approved by the
Hercules Funds' shareholders on June 18, 1996. The fund
issued 759,622 shares in exchange for net assets of
$10,146,587 of Hercules European Value Fund and 1,379,503
shares for net assets of $18,426,580 of Hercules Pacific
Basin Value Fund. Included in the net assets acquired was
$1,106,240 in unrealized appreciation and $2,940,783 in
accumulated losses. The aggregate net assets of the
combined fund following the transaction totalled
$190,869,104.

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

16 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

(8) FINANCIAL HIGHLIGHTS
...............................................................................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each
period are as follows:

EMERGING MARKETS GROWTH FUND

<TABLE>
<CAPTION>
Three
Months Period
Ended Year Ended Year Ended Ended
9/30/96 6/30/96(d) 6/30/95 6/30/94(e)
--------- ---------- ----------- ----------
<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(a) ............................. 0.11% 22.78% (21.23%) (8.60%)
Net assets at end of period (in millions) ... $ 14 $ 14 $ 23 $ 28
Ratio of expenses to average daily net
assets(b) ................................. 2.00%(f) 2.00% 2.00% 2.00%(f)
Ratio of net investment income (loss) to
average daily net assets(b) ............... 0.26%(f) 0.15% (0.03%) 0.14%(f)
Average brokerage commission rate(c) ........ $0.0009 n/a n/a n/a
Portfolio turnover rate (excluding short-
term securities) .......................... 0.01% 140% 161% 78%
</TABLE>

(A) 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.
(B) DURING THE YEARS REFLECTED ABOVE, THE ADVISER AND DISTRIBUTOR VOLUNTARILY
WAIVED FEES AND 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:
4.09%/(1.83%), 3.54%/(1.39%), 3.47%/(1.50%) AND 3.10%/(0.96%) FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 1996, FISCAL 1996 AND 1995 AND FOR THE PERIOD
FROM NOVEMBER 9, 1993 TO JUNE 30, 1994, RESPECTIVELY. BEGINNING IN FISCAL
1996, THE EXPENSE RATIOS REFLECT THE EFFECT OF GROSS EXPENSES PAID
INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIOS HAVE NOT BEEN ADJUSTED.
(C) 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 EFFECTED
BY THE FACT THAT COMMISSION RATES PER SHARE VARY SIGNIFICANTLY AMONG
EMERGING MARKETS COUNTRIES.
(D) 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 SUBADVISER CHANGED FROM BANKERS
TRUST COMPANY TO EDINBURGH FUND MANAGERS PLC. ON JULY 18, 1995 SHAREHOLDERS
OF HERCULES LATIN AMERICAN VALUE FUND APPROVED A CHANGE IN THE FUND'S
ADVISER FROM HERCULES INTERNATIONAL MANAGEMENT LLC TO PIPER CAPITAL
MANAGEMENT INCORPORATED.
(E) COMMENCEMENT OF OPERATIONS OF HERCULES LATIN AMERICAN VALUE FUND WAS
NOVEMBER 9, 1993.
(F) ADJUSTED TO AN ANNUAL BASIS.

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

17 1996 Annual Report - International
Growth Funds
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

(8) FINANCIAL HIGHLIGHTS
(CONTINUED)
...............................................................................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each
period are as follows:

PACIFIC-EUROPEAN GROWTH FUND

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

(A) 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.
(B) DURING THE PERIODS REFLECTED ABOVE, THE ADVISER AND DISTRIBUTOR VOLUNTARILY
WAIVED FEES AND 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%, 1.73%/0.18%, 1.98%/(0.41%), 2.01%/(0.49%) AND 2.59%/(0.31%)
FOR THE SEVEN MONTHS ENDED SEPTEMBER 30, 1996, FISCAL 1996, 1995, 1994 AND
1993, RESPECTIVELY. BEGINNING IN FISCAL 1996, THE EXPENSE RATIOS REFLECT
THE EFFECT OF GROSS EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD
EXPENSE RATIOS HAVE NOT BEEN ADJUSTED.
(C) 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 IS BASED ON THE FUND'S OPERATIONS AS A CLOSED-END FUND. FISCAL
1993 EXPENSES INCLUDE 0.32% RELATED TO CONVERTING TO AN OPEN-END FUND.
(D) 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.
(E) 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 EFFECTED
BY THE FACT THAT COMMISSION RATES PER SHARE VARY SIGNIFICANTLY AMONG
FOREIGN COUNTRIES.
(F) ADJUSTED TO AN ANNUAL BASIS.

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

18 1996 Annual Report - International
Growth Funds
<PAGE>
Investments in Securities
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EMERGING MARKETS GROWTH FUND September 30, 1996
......................................................................................

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

COMMON STOCK (70.7%):
ARGENTINA (8.7%):
Banco Frances del Rio de la Plata ADR - banking and
financial services .............................. 5,828 $ 152,257
Bansud Class B - banking and financial services ... 21,600(b) 195,507
Inversiones y Representaciones (IRSA) GDR - real
estate .......................................... 6,600 195,525
Juan Minetti - construction and construction
materials ....................................... 86,184 239,624
Mirgor SACIFIA 144A ADR - automobiles ............. 45,516(c) 96,722
Perez Companc Class B - oil and gas ............... 34,421 216,883
Quilmes Industrial ADR brewers and distillers ..... 9,700 100,638
-----------
1,197,156
-----------

BRAZIL (9.9%):
Centrais Eletricas Brasileiras (Electrobras) -
utilities ....................................... 2,405,958 643,380
Compania Vale do Rio Doce - mining ................ 7,800 154,690
Telecomunicacoes Brasileiras (Telebras) -
telecommunications .............................. 3,248,300 212,067
Telecomunicacoes Brasileiras (Telebras) ADR -
telecommunications .............................. 4,400 345,400
-----------
1,355,537
-----------

CHILE (7.4%):
Chile Fund - investment companies ................. 6,500 149,500
Chilgener ADR - utilities ......................... 11,528 268,026
Compania de Telecommunicaciones de Chile ADR -
communications .................................. 1,391 134,405
Empresa Nacional Elec ADR - utilities . 11,733 221,460
Madeco - industrial machinery and manufacturing ... 11,200 259,000
-----------
1,032,391
-----------

COLOMBIA (4.6%):
Carulla 144A ADR - retail ......................... 33,204(c) 232,428
Cemetos Diamante 144A ADR - construction and
construction materials .......................... 19,392(c) 247,248
La Gran Cadena de Almacenes Colombianos (Cadenalco)
144A ADR - retail ............................... 14,523(c) 159,753
-----------
639,429
-----------

MEXICO (30.0%):
Carso Global Telecom - telecommunications ......... 23,179(b) 60,544
Cemex Class B - construction and construction
materials ....................................... 74,000 307,107
Corporacion GEO Class B - real estate 98,900(b) 462,897
Fomento Economico Mexicano (Femsa) Class B - food
and beverage 125,500(b) 385,219
</TABLE>

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ----------- -----------
<S> <C> <C>
Gruma Class B - food and beverage ................. 110,128(b) $ 691,401
Grupo Carso Class A1 - diversified holding
company ......................................... 23,179 107,566
Grupo Financiero Bancomer Class B - banking and
financial services .............................. 545,600(b) 266,217
Grupo Financiero Banorte Class B - financial
services ........................................ 455,625(b) 484,502
Grupo Financiero Serfin - financial services ...... 28,200(b) 133,950
Grupo Posadas Class L - hotels, leisure and
entertainment ................................... 325,000(b) 141,342
Grupo Televisa GDR - communications 7,100 205,013
Invercorporacion Class A-1 - insurance 23,179(b) 3,104
Sanluis corporation Class CPO - diversified
industrials and conglomerates ................... 57,900 330,111
Sigma Alimentos - tobacco products ................ 23,900 222,141
Telefonos de Mexico Class L (Telmex) -
telecommunications .............................. 200,000 320,339
-----------
4,121,453
-----------

PERU (7.0%):
Compania de Minas Buenaventura - Class A -
mining .......................................... 15,572 140,154
Compania de Minas Buenaventura - Class B -
mining .......................................... 2,360(b) 22,557
Compania de Minas Buenaventura ADR - mining ....... 9,000(b) 173,250
Consorcio Alim Fabril Pacifico - insurance ........ 180,000(b) 265,233
Credicorp Limited - financial services . 13,513 256,738
Minsur Class T - mining ........................... 3(b) 28
Telefonica del Peru Class B -
telecommunications .............................. 48,100 108,613
-----------
966,573
-----------

VENEZUELA (3.1%):
Mavesa 144A ADR - food and beverage ............... 66,336(c) 427,204
Siderugira Venezolana Sivensa ADR Class B - metal
products ........................................ 11,181(b) 2,697
-----------
429,901
-----------

Total Common Stock
(cost: $9,131,658) ........................... 9,742,440
-----------

PREFERRED STOCK (19.8%):
BRAZIL (19.5%):
Banco Bradesco - banking and financial services ... 63,109,032(b) 534,718
Banco Itau - banking and financial services ....... 1,131,216 465,384
Centrais Eletricas Brasileiras (Electrobras) Class
B - utilities ................................... 600 167
Cervejaria Brahma - food and beverage 607,730 376,818
Mesbla - retail ................................... 1,300,000(b) 6,367
Petroleo Brasileiro - oil and gas ................. 4,916,500 563,455
</TABLE>

SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.

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

19 1996 Annual Report - International
Growth Funds
<PAGE>
Investments in Securities (continued)
- --------------------------------------------------------------------------------

EMERGING MARKETS GROWTH FUND
(CONTINUED)

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ----------- -----------
<S> <C> <C>
Refrigeracao Parana (Refripar) - consumer goods ... 113,269,700(b) $ 278,487
Telecomunicacoes Brasileiras (Telebras) -
telecommunications .............................. 1,847,800 145,974
Usinas Siderurgica de Minas Gerais (Usiminas) -
metal products .................................. 312,731,474 309,392
-----------
2,680,762
-----------

COLOMBIA (0.3%):
Banco Ganadero ADR - banking and financial
services ........................................ 2,500 50,625
-----------

Total Preferred Stock
(cost: $2,659,243) ........................... 2,731,387
-----------

Total Investments in Securities
(cost: $11,790,901)(d) ....................... $12,473,827
-----------
-----------
</TABLE>

<TABLE>
<S> <C>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) CURRENTLY NON-INCOME PRODUCING.
(C) SECURITY SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER "ACCREDITED
INVESTORS". THIS SECURITY HAS BEEN DETERMINED TO BE LIQUID UNDER GUIDELINES
ESTABLISHED BY THE BOARD OF DIRECTORS.
(D) ON SEPTEMBER 30, 1996, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $11,849,448. THE AGGREGATE GROSS UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS
COST WERE AS FOLLOWS:
</TABLE>

<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 1,894,036
GROSS UNREALIZED DEPRECIATION ...... (1,269,657)
-----------
NET UNREALIZED APPRECIATION ...... $ 624,379
-----------
-----------
</TABLE>

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

20 1996 Annual Report - International
Growth Funds
<PAGE>
Investments in Securities
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PACIFIC-EUROPEAN GROWTH FUND September 30, 1996
........................................................................................

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

COMMON STOCK (95.6%):
ARGENTINA (0.6%):
Interamericana de Automo (CIADEA) - automobiles ... 82,000(b) $ 389,555
Inversiones y Representaciones (IRSA) GDR - real
estate .......................................... 24,006 711,177
------------
1,100,732
------------

AUSTRIA (0.0%):
Boehler Uddeholm - metal products . 510 40,789
------------

BELGIUM (0.1%):
Electrabel - utilities ............................ 510 113,877
UCB - chemicals ................................... 65(b) 126,296
------------
240,173
------------

BRAZIL (1.1%):
Cia de Acos Especiais Itabia Acesitas ADR - metal
products ........................................ 99,750 395,609
Refrigeracao Prana (Refripar) ADR - consumer
durable goods ................................... 122,000(b) 1,499,502
------------
1,895,111
------------

CHILE (0.3%):
Five Arrow Chile Fund - closed-end fund ........... 200,000 537,500
------------

COLOMBIA (0.1%):
Carulla 144A ADR - retail ......................... 36,936(c) 258,552
------------

CZECH REPUBLIC (0.2%):
Elektrarny Opatovice - utilities .................. 800(b) 136,023
Komercni Banka - banking and financial services ... 1,700(b) 148,150
------------
284,173
------------

DENMARK (0.1%):
Danisco - food and beverage ....................... 1,060 61,036
Olicom - computer software ........................ 4,000(b) 59,500
------------
120,536
------------

FRANCE (4.4%):
Accor - hotels, leisure and entertainment ......... 300 37,066
Alcatel Alsthom - telecommunications .............. 17,249 1,454,731
AXA - insurance ................................... 1,371 82,146
Eridania Berghim n-say - agribusiness ............. 6,880 1,061,885
Essilor International - pharmaceuticals ........... 575 152,107
Establissemonts Economiques du Casino
Guichard-Perrachon - retail ..................... 1,500 63,326
L'Air Liquide - chemicals ......................... 825 127,813
</TABLE>

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Lafarge - construction and construction
material ........................................ 1,125 $ 66,339
Legrand - electronics ............................. 525 89,266
Michelin Class B - automobiles .................... 2,600 132,674
Moet Hennessy Louis Vuitton (LVMH) - brewer and
distiller ....................................... 300 65,126
Pinault - Printemps edoute - retail ............... 4,980 1,832,371
Sanofi - pharmaceuticals .......................... 1,550 127,030
Schneider - electronics ........................... 2,400 112,940
Societe BIC - consumer goods ...................... 950 124,734
Total Class B - oil and gas ....................... 25,500 2,007,388
Union Financiere de France Banque - financial
services ........................................ 1,175 127,198
------------
7,664,140
------------

GERMANY (5.0%):
Adidas - consumer goods ........................... 1,650 150,398
Allianz Holding - insurance ....................... 50 88,298
Altana - pharmaceuticals .......................... 275 219,196
Bayer - diversified industrial and conglomerate ... 5,500 200,964
Bayerische Motoren Werke (BMW) - automobiles ...... 275 157,522
Continental - tire and rubber ..................... 6,450 118,049
Deutsche Bank - banking and financial services .... 35,200 1,656,185
Hoechst - chemicals ............................... 4,750 173,248
Linde - engineering ............................... 200 127,611
Mannesmann - industrial machinery manufacturing ... 4,135 1,550,472
SGL Carbon - chemicals ............................ 1,500 175,088
Siemens - electronic .............................. 29,900 1,573,870
Veba - diversified industrial and conglomerates ... 47,530 2,490,965
------------
8,681,866
------------

HONG KONG (5.4%):
Dao Heng Bank Group - banking and financial
services ........................................ 425,000 1,676,258
Dickson Concepts International - retail ........... 4,667(b) 15,057
Hutchison Whampoa - diversified holding company ... 275,000 1,849,218
New World Development - real estate ............... 150,000 787,534
Sun Hung Kai Properties - real estate ............. 124,000 1,318,893
Swire Pacific Class A - diversified holding
company ......................................... 250,000 2,238,780
Wharf Holdings - real estate ...................... 335,000 1,386,267
------------
9,272,007
------------

INDIA (0.3%):
Hindalco Industries GDR - metal products .......... 20,000 592,500
------------
</TABLE>

SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.

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

21 1996 Annual Report - International
Growth Funds
<PAGE>
Investments in Securities (continued)
- --------------------------------------------------------------------------------

PACIFIC-EUROPEAN GROWTH FUND
(CONTINUED)

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
INDONESIA (1.2%):
Bank Internasional Indonesia - banking and
financial services .............................. 364,400 $ 533,391
Bukaka Teknik Utama - industrial machinery and
manufacturing ................................... 200,000 161,443
Hanjaya Mandala Sampoerna - tobacco ............... 93,000 904,856
Indocement Tunggal Prakarsa - diversified
industrials and conglomerate .................... 320,000(b) 502,841
------------
2,102,531
------------

IRELAND (0.6%):
Irish Life - life insurance ....................... 250,000 1,006,196
------------

ITALY (2.7%):
Arnoldo Mondadori Editore - printing and
publishing ...................................... 10,000 72,547
Ente Nazionale Idrocarburi (ENI) - oil and gas .... 279,100 1,426,518
Pininfarina - automobiles ......................... 10,750 105,443
Pirelli - diversified industrial &
conglomerates ................................... 45,200 82,349
Stet Societa Finanziara Telefonica -
telecommunications .............................. 795,050 2,758,660
Telecom Italia - telecommunications ............... 41,900 93,118
Unicem - construction and construction
materials ....................................... 20,900(b) 140,784
------------
4,679,419
------------

JAPAN (44.3%):
Amada Metrecs - electronics ....................... 108,000 1,377,217
Bank of Tokyo - Mitsubishi - banking 107,000 2,334,965
Best Denki - retail ............................... 37,000 485,115
Circle K Japan - retail ........................... 26,000 1,155,763
Daifuku - industrial machinery and
manufacturing ................................... 128,000 1,758,700
Daiwa Securities - financial services ............. 150,000 1,724,215
DDI - telecommunications .......................... 482 3,899,978
Hankyu Department Stores - retail ................. 200,000 2,496,520
Hitachi - electronics ............................. 270,000 2,618,652
Ichiyoshi Securities - financial services ......... 225,000 1,200,216
Isetan - retail ................................... 184,000 2,528,131
Japan Tobacco - tobacco ........................... 25 184,545
Kobe Steel - metal products ....................... 1,425,000(b) 3,826,276
Kyocera - electronics ............................. 36,000 2,570,159
Maeda Road Construction - construction and
constructing material ........................... 120,000 1,896,637
Mitsubishi Materials - metal products ............. 271,000 1,299,573
Mitsui & Co. - diversified industrial and
conglomerates ................................... 398,000 3,463,356
</TABLE>

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Mitsui Fudosan - real estate ...................... 243,000 $ 3,229,671
Mori Seiki - industrial machinery and
manufacturing ................................... 147,000 2,270,576
Murata Manufacturing - electronics 83,000 2,966,548
Nihon Cement - construction and construction
materials ....................................... 344,000 2,403,413
Nippon Steel - metal products ..................... 750,000 2,330,385
Nippon Telephone and Telegraph -
telecommunications .............................. 290 2,135,513
Nissan Motor - automobiles ........................ 266,000 2,147,492
Nomura - financial services ....................... 118,000 2,172,332
Okuma - industrial machinery and manufacturing .... 40,000(b) 405,909
Sekisui Chemical - chemicals ...................... 270,000 3,200,573
Shikoku Electric Power - utilities ................ 71,000 1,517,489
Showa - automobile parts .......................... 150,000 1,387,455
Sony Music Entertainment - consumer goods ......... 15,900 643,967
Sumitomo Bank - financial services . 177,000 3,274,391
Sumitomo Trust and Banking - financial services ... 311,000 3,910,018
Terumo - pharmaceuticals .......................... 193,000 2,478,470
Tokyo Electronics - electronics ................... 80,000 2,320,506
Topre - automobiles ............................... 92,000 719,608
Tsudakoma - textile ............................... 251,000 1,575,583
------------
75,909,917
------------

MALAYSIA (0.5%):
Telekom Malaysia - telecommunications ............. 100,000 881,708
------------

MEXICO (1.9%):
Cementos de Mexico (Cemex) Class A - construction
and construction materials ...................... 385,000 1,454,853
Fomento Economico Mexicano (Femsa) Class B - food
and beverage .................................... 240,000 736,675
Telefonos de Mexico ADR - telecommunications ...... 35,000 1,124,374
------------
3,315,902
------------

NETHERLANDS (6.0%):
ABN Amro Holding - banking and financial
services ........................................ 1,370 76,018
ASM Lithography Holding - electronics ............. 1,500(b) 57,885
Elsevier - printing and publishing ................ 4,750 78,597
Fortis Amev - insurance ........................... 95,600 2,861,907
KLM-Royal Dutch Air Lines - transportation ........ 50,500 1,352,336
Koninklijke Ahold - retail ........................ 32,000 1,813,015
Royal Dutch Petroleum - oil and gas 810 126,688
Royal PTT Netherland - telecommunications and
cellular . 45,000 1,549,728
</TABLE>

SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.

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

22 1996 Annual Report - International
Growth Funds
<PAGE>
Investments in Securities (continued)
- --------------------------------------------------------------------------------

PACIFIC-EUROPEAN GROWTH FUND
(CONTINUED)

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit (VNU) - communications .................... 122,500 $ 2,399,433
------------
10,315,607
------------

NORWAY (0.1%):
Orkla - diversified industrials and
conglomerate .................................... 1,710 93,414
------------

SINGAPORE (2.2%):
City Developments - real estate ................... 180,400 1,537,500
Development Bank of Singapore - financial
services ........................................ 110,000 1,351,563
United Overseas Bank - banking and financial
services ........................................ 100,000 973,011
------------
3,862,074
------------

SOUTH KOREA (0.7%):
Pohang Iron and Steel - metal products ............ 9,000 650,016
Samsung Electronics - 144A GDR - electronics ...... 133(b)(c) 5,553
Samsung Electronics - 144A GDR 1/2 voting pfd -
electronics ..................................... 894(b)(c) 17,210
Samsung Electronics 144A GDR 1/2 non-voting shares
- electronics ................................... 968(b)(c) 23,958
Samsung Electronics 144A GDR 1/2 voting shares -
electronics ..................................... 443 22,150
Yukong - oil and gas .............................. 15,000(b)(c) 406,875
------------
1,125,762
------------

SPAIN (1.4%):
Empresa Nacional Hidroelectrica del Ribagorzara
Class B - utlities . 2,830 50,005
Repsol - oil and gas .............................. 60,000 1,970,888
Tabacalera Class A - tobacco ...................... 1,900 81,046
Telefonica de Espana - telecommunications ......... 10,100 187,503
Zardoya Otis - industrial machinery and
manufacturing ................................... 550 53,300
------------
2,342,742
------------

SWEDEN (1.8%):
Garphyttan Industrier - automobiles 11,900 161,564
Pharmacia & Upjohn - pharmaceuticals .............. 40,000 1,665,422
Stora Kopparbergs Bergslags Aktiebolag (STORA)
Class A - forest products ....................... 95,200 1,235,067
Telefonaktiebolaget LM Ericsson Class B -
telecommunications .............................. 2,934 73,915
------------
3,135,968
------------
</TABLE>

<TABLE>
<CAPTION>
Number Market
Description of Security of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>

SWITZERLAND (3.3%):
Brown Boveri - diversified holding company ........ 1,110 $ 1,357,847
Ciba-Geigy Registered - pharmaceuticals ........... 70 89,537
Nestle - food and beverages ....................... 820 914,163
Roche Holdings - pharmaceuticals .................. 225 1,656,998
Sandoz - pharmaceuticals .......................... 1,360 1,633,301
------------
5,651,846
------------

THAILAND (1.0%):
Bank of Ayudhya - banking ......................... 275,000 1,238,219
Electricity General - utilities ................... 305,000 929,165
Finance One - financial services .................. 50,000 289,608
------------
2,456,992
------------

UNITED KINGDOM (10.3%):
Abbott Mead Vickers - advertising ................. 57,000 525,669
Aegis - advertising ............................... 480,000(b) 490,393
Antofagasta Holdings - diversified industrials and
conglomerates ................................... 60,000 338,202
Bank of Scotland - banking ........................ 30,000 116,257
BBA - automobiles ................................. 190,000 1,005,525
Bluebird Toys - consumer goods .................... 90,500 199,089
British Aerospace - aerospace ..................... 20,000 330,843
British Petroleum - oil and gas ................... 147,000 1,525,996
Celltech - pharmaceuticals ........................ 9,500 76,232
Compass Group - food and beverage 115,600 1,011,794
General Electric - electronics .................... 10,000 61,925
Granada - entertainment ........................... 90,000 1,206,958
International Business Communications - printing
and publishing .................................. 22,000 107,990
Jupiter Split Trust - closed-end fund . 963,716(b) 973,265
Legal & General - insurance ....................... 7,500 94,591
Marks & Spencers - retail ......................... 141,400 1,099,236
National Westminster Bank - banking and financial
services ........................................ 13,000 138,209
Oxford Molecular - pharmaceuticals 10,000(b) 50,339
Rmc - construction and construction materials ..... 65,000 1,167,854
SeaPerfect - food and beverage .................... 90,497(b) --
Sheffield Insulation - construction and
construction materials .......................... 134,000 535,017
Siebe - diversified industrials and
conglomerates ................................... 81,900 1,291,967
SmithKline Beecham - pharmaceuticals .............. 81,000 989,875
Standard Chartered - banking and financial
services ........................................ 13,000 141,771
Storehouse - retail ............................... 236,000 1,114,094
Sun Alliance Group - property and casualty
insurance ....................................... 11,950 75,874
Telspec - telecommunications ...................... 45,000 132,110
Thorn Emi - hotel and leisure ..................... 52,000 1,086,944
Vendome Luxury - consumer goods . 22,000 202,373
Watmoughs - printing and publishing ............... 73,000 446,912
</TABLE>

SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.

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

23 1996 Annual Report - International
Growth Funds
<PAGE>
Investments in Securities (continued)
- --------------------------------------------------------------------------------

PACIFIC-EUROPEAN GROWTH FUND
(CONTINUED)

<TABLE>
<CAPTION>
Number
of Shares
or
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Yorkshire Chemicals - chemicals ................... 100,000 $ 399,266
Zeneca - pharmaceuticals .......................... 12,700 315,774
------------
17,252,344
------------

Total Common Stock
(cost: $159,108,740) ......................... 164,820,501
------------
PREFERRED STOCK (0.8%):
BRAZIL (0.7%):
Centrais Electricas Brasileiras (electrobras) -
utilities ....................................... 83,000 1,154,281
------------

GERMANY (0.1%):
Fresenius - health care ........................... 875 161,350
------------

Total Preferred Stock
(cost: $1,129,152) ........................... 1,315,631
------------
CORPORATE BONDS (1.1%):
TB Finance (Cayman) - foreign banks, 2.75%, 10/1/04
(cost: $1,768,195) .............................. 190,000,000(e) 1,863,020
------------
WARRANTS AND RIGHTS (0.1%):
Five Arrow Chile Fund Warrants - closed-end fund,
5/31/96 ......................................... 80,000 41,200
Gartmore Micro Index Trust Warrants - financial
services, 12/1/01 ............................... 10,000 3,523
Herald Investment Trust Warrants - financial
services, 4/30/03 ............................... 10,000 9,864
International Nederlanden Grope Warrants -
financial services, 3/15/01 ..................... 8,330 46,026
Yukong Rights - oil and gas, 10/28/96 ............. 940 --
------------

Total Warrants and Rights
(cost: $35,597) .............................. 100,613
------------
</TABLE>

<TABLE>
<CAPTION>
Number
of Shares
or
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
OPTIONS (1.1%):
Japanese Yen, 298,500 put contracts, exercise price
of $101.30, expire March 20, 1997 (cost:
$1,432,800) ..................................... 298,500 $ 1,899,010
------------
SHORT-TERM SECURITIES (1.5%):
Repurchase agreement with Goldman Sachs, acquired
on 9/30/96, interest of $418, 5.80%, 10/1/96
(cost: $2,594,000) .............................. $2,594,000(d) 2,594,000
------------

Total Investments in Securities
(cost: $166,068,484) (f) ..................... $172,592,775
------------
------------
</TABLE>

<TABLE>
<S> <C>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) CURRENTLY NON-INCOME PRODUCING.
(C) SECURITY SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER "ACCREDITED
INVESTORS". THIS SECURITY HAS BEEN DETERMINED TO BE LIQUID UNDER GUIDELINES
ESTABLISHED BY THE BOARD OF DIRECTORS.
(D) REPURCHASE AGREEMENT IN A JOINT TRADING ACCOUNT WHICH IS COLLATERALIZED BY
U.S. GOVERNMENT AGENCY SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS
INTEREST DUE AT MATURITY OF THE REPURCHASE AGREEMENT.
(E) PRINCIPAL AMOUNT IS STATED IN JAPANESE YEN.
(F) ON SEPTEMBER 30, 1996, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $165,590,020. THE AGGREGATE GROSS UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS
COST WERE AS FOLLOWS:
</TABLE>

<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $18,098,591
GROSS UNREALIZED DEPRECIATION ...... (11,095,836)
-----------
NET UNREALIZED APPRECIATION ...... $ 7,002,755
-----------
-----------
</TABLE>

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

24 1996 Annual Report - International
Growth Funds
<PAGE>
Independent Auditors' Report
- --------------------------------------------------

THE BOARD OF DIRECTORS AND SHAREHOLDERS
PIPER GLOBAL FUNDS INC.:

We have audited the accompanying statements of assets and
liabilities, including the schedules of investments in
securities, of Emerging Markets Growth Fund and
Pacific-European Growth Fund (funds within Piper Global
Funds Inc.) as of September 30, 1996, and the related
statements of operations for the three months ended
September 30, 1996 for Emerging Markets Growth Fund and
the seven months ended September 30, 1996 for
Pacific-European Growth Fund, the statements of changes in
net assets for the three months ended September 30, 1996
and the year ended June 30, 1996 for Emerging Markets
Growth Fund and the seven months ended September 30, 1996
and the year ended February 29, 1996 for Pacific-European
Growth Fund, and the financial highlights presented in
note 8 to the financial statements. These financial
statements and the financial highlights are the
responsibility of the funds' management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our
audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are
confirmed to us by the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and the financial
highlights referred to above present fairly, in all
material respects, the financial position of Emerging
Markets Growth Fund and Pacific-European Growth Fund as of
September 30, 1996, and the results of their operations,
the changes in their net assets and the financial
highlights for the periods specified in the first
paragraph above, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 18, 1996

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

25 1996 Annual Report - International
Growth Funds
<PAGE>
Federal Income Tax Information
- --------------------------------------------------

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

INCOME DISTRIBUTIONS (TAXABLE AS ORDINARY DIVIDENDS, 0%
QUALIFYING FOR DEDUCTION BY CORPORATIONS)

<TABLE>
<CAPTION>
EMERGING MARKETS PACIFIC-EUROPEAN
PAYABLE DATE GROWTH FUND GROWTH FUND
- ----------------------------------------------- ------------------ ----------------
<S> <C> <C>
June 17, 1996.................................. -- $ 0.3875
------- -------
------- -------
</TABLE>

SHORT-TERM GAINS (TAXABLE AS ORDINARY DIVIDENDS)

LONG-TERM GAINS (TAXABLE AS CAPITAL GAINS DISTRIBUTIONS)

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

26 1996 Annual Report - International
Growth Funds
<PAGE>
Directors and Officers
- --------------------------------------------------

DIRECTORS
David T. Bennett, CHAIRMAN, HIGHLAND HOMES, INC., USL
PRODUCTS, INC., KIEFER BUILT, INC., OF COUNSEL, GRAY,
PLANT, MOOTY, MOOTY & BENNETT, P.A.
Jaye F. Dyer, PRESIDENT, DYER MANAGEMENT COMPANY
William H. Ellis, PRESIDENT, PIPER JAFFRAY COMPANIES INC.,
PIPER CAPITAL MANAGEMENT INCORPORATED
Karol D. Emmerich, PRESIDENT, THE PARACLETE GROUP
Luella G. Goldberg, DIRECTOR, TCF FINANCIAL, RELIASTAR
FINANCIAL CORP., HORMEL FOODS CORP.
David A. Hughey, RETIRED EXECUTIVE VICE PRESIDENT AND
CHIEF ADMINISTRATIVE OFFICER OF DEAN WITTER
INTERNATIONAL INC. AND DEAN WITTER TRUST CO.
George Latimer, CHIEF EXECUTIVE OFFICER, NATIONAL EQUITY
FUNDS

OFFICERS
William H. Ellis, CHAIRMAN OF THE BOARD
Paul A. Dow, PRESIDENT
Robert H. Nelson, VICE PRESIDENT AND TREASURER
Susan Sharp Miley, SECRETARY

INVESTMENT ADVISER
Piper Capital Management Incorporated
222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402-3804

SUB ADVISER
Edinburgh Fund Managers plc
DONALDSON HOUSE, 97 HAYMARKET TERRACE,
EDINBURGH, SCOTLAND EH12 5HD

CUSTODIAN
Investors Fiduciary Trust Company (Emerging Markets Growth
Fund)
127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
First Trust National Association (Pacific-European Growth
Fund)
180 EAST FIFTH STREET, ST. PAUL, MN 55101

TRANSFER AGENT
Investors Fiduciary Trust Company
127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
4200 NORWEST CENTER, MINNEAPOLIS, MN 55402

LEGAL COUNSEL
Dorsey & Whitney LLP
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402

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

27 1996 Annual Report - International
Growth Funds
<PAGE>

SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

As a shareholder in Piper Funds, you have access to a full range of services and
benefits.

Check your prospectus for details about services and any limitations that might
apply to your fund.

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

LOW MINIMUM INVESTMENTS

You can open a Piper mutual fund account with a minimum investment of $250.

QUANTITY DISCOUNTS

If your initial investment exceeds a specified amount, if an investment combined
with the value of your existing Piper shares exceeds a specified amount, or if
your investments combined during a 13-month period exceed a specified amount,
you can reduce or even eliminate the front-end sales charge.

WAIVER OF SALES CHARGES

Money market funds carry no sales charges.* Sales charges on other Piper funds
are waived on purchases of $500,000 or more. However, a contingent deferred
sales charge may be imposed. See your prospectus for details.

AUTOMATIC REINVESTMENT OF DIVIDENDS

For maximum growth of your assets, you can reinvest dividends and capital gains
automatically in additional shares of your fund without a sales charge.

CROSS-REINVESTMENT OF DISTRIBUTIONS

Diversify your holdings by reinvesting dividends and capital gains from one
Piper fund to another.

CASH DISTRIBUTIONS

If you prefer, take your dividends and/or capital gains in cash.

AUTOMATIC MONTHLY INVESTMENT PROGRAM

You may automatically transfer $25 or more each month from any Piper money
market fund* into many other Piper funds.

AUTOMATIC MONTHLY MONEY TRANSFER PROGRAM

If you are starting a savings discipline or seeking a convenient way to invest,
you can transfer a minimum of $100 automatically from your bank, savings and
loan or other financial institution into many of the Piper funds.

EXCHANGE PRIVILEGES

Revise your investment plan without incurring a sales charge by moving assets
from one Piper fund to another with the same fee structure. See your prospectus
for restrictions involving exchanges between funds with different sales charges.

REINVESTMENT PRIVILEGES

If you buy a fund with a sales charge and later redeem your shares, you may
reinvest all or part of the proceeds in shares of that fund or another Piper
fund within 30 days and pay no additional sales charge, subject to each fund's
minimum investment requirements.

SYSTEMATIC WITHDRAWAL PLAN

If your account has a value of $5,000 or more, you can elect to receive periodic
payments of $100 or more, at no cost, excluding money market funds.

ACCOUNT STATEMENTS

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

CONFIRMATION OF TRANSACTIONS

You receive a confirmation statement following every transaction, except in the
money market funds. All transactions are reflected on your account statement.

$25 MILLION SHAREHOLDER PROTECTION

If you have a Piper Jaffray PRIME or PAT account, you are protected up to $25
million in the unlikely event that Piper Jaffray were to fail financially. This
is in addition to basic Securities Investor Protection Corporation (SIPC)
coverage, which protects up to $500,000 in cash and securities
($100,000 in cash only) per customer. This protection
does not cover market loss.

* AN INVESTMENT IN A PIPER MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE
TO MAINTAIN A STABLE NET ASSET VALUE OF $1 PER SHARE.

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

28 1996 Annual Report - International Growth Funds

<PAGE>

GLOSSARY OF TERMS [HAT SYMBOL]
- --------------------------------------------------------------------------------

GROSS DOMESTIC PRODUCT
GDP is the value of all produced goods and services during a particular time
interval. Until 1991, the main tool used to calculate economic growth was Gross
National Product (GNP), not GDP. The two terms differ only in their geographical
coverage. GDP covers goods and services produced within the geographical
constraints of a country, whereas GNP covers goods
and services produced by labor and capital supplied by the country's residents,
whether the actual production takes place within the borders of that country or
in a foreign country.

SECTOR
A particular group of stocks, usually found in one industry.

UNDERVALUED
An undervalued security is a security selling below its liquidation value or the
market value analysts believe it deserves. A company's stock may be undervalued
because the industry is out of favor, because the company is not well known or
has an erratic history of earnings, or for many other reasons. Fundamental
analysts try to spot companies that are undervalued so their clients can buy
before the stock becomes fully valued. Undervalued companies are also frequently
targets of takeover attempts, since acquirers can buy assets cheaply this way.

VALUATION
Perceived or estimated value or price of a stock
on the market.

FOR MORE INFORMATION

By Phone [PHONE SYMBOL]

1 800 866-7778

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

TO LISTEN TO MONTHLY FUND UPDATES
press 3, press 1, then press:

10 for Emerging Markets Growth Fund
11 for Pacific-European Growth Fund

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

BY MAIL [LETTER SYMBOL]

Piper Capital Management
Attn: Communications Department
222 South Ninth Street
Minneapolis, MN 55402-3804

In an effort to reduce costs to our shareholders, we have implemented a process
to reduce duplicate mailings of the fund's shareholder reports. This
householding process should allow us to mail one report to each address where
one or more registered shareholders with the same last name reside. If you would
like to have additional reports mailed to your address, please call our Mutual
Fund Services area at 1 800 866-7778, or mail a request to us.

ON-LINE [ON-LINE SYMBOL]

http://www.piperjaffray.com/
money_management/

<PAGE>

INTERNATIONAL GROWTH FUNDS

- --------------------------------------------------------------------------------
PIPERFUNDS PIPER FUNDS 222 South Ninth Street
Minneapolis, MN 55402-3804

PIPER JAFFRAY INC., FUND DISTRIBUTOR AND NASD MEMBER.

#10100 10/1996 232-96