<PAGE>
PACIFIC
EUROPEAN
GROWTH
FUND
[Graphic]
1996
ANNUAL REPORT
<PAGE>
TABLE OF CONTENTS
Letter to Shareholders . . . . . . . . . . . . . 2
Investments in Securities. . . . . . . . . . . . 7
Financial Statements and Notes . . . . . . . . .10
Independent Auditors' Report . . . . . . . . . .18
Federal Tax Information. . . . . . . . . . . . .19
PACIFIC-EUROPEAN GROWTH FUND
Pacific-European Growth Fund is an open-end mutual fund seeking investment
opportunities primarily in the Pacific Basin and Europe. The fund's investment
objective is long-term capital appreciation; current income is incidental to
this objective. To reach its objective, the fund invests primarily in common
stocks of companies in the Pacific Basin (for example, Japan, Hong Kong,
Malaysia, Singapore, South Korea and Thailand) or Europe (including Eastern
Europe). Up to 25% of the fund's total assets may also be invested in other
areas of the world. The fund does not invest in common stocks of U.S. companies.
As with other mutual funds, there is no assurance that this fund will achieve
its objective. The fund's Nasdaq symbol is PGPEX.
MANAGEMENT EXPERIENCE
Piper Capital Management Incorporated has retained an experienced international
money manager, Edinburgh Fund Managers plc, to act as subadviser to the fund.
Edinburgh Fund Managers Group plc is a holding company with three wholly owned
operating subsidiaries. The main operating subsidiary is Edinburgh Fund Managers
plc, which provides investment services to institutional clients and investment
management services to closed- and open-end funds and discretionary funds,
including pension plans and charities. Edinburgh Fund Managers Group plc is a
publicly listed company established in 1969 and a majority-owned subsidiary of
the British Investment Trust plc, a Scottish closed-end investment company which
was founded in 1889.
THIS REPORT IS INTENDED FOR SHAREHOLDERS OF PACIFIC-EUROPEAN 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 FUND.
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SHAREHOLDER SERVICES
AS A SHAREHOLDER IN PIPER GLOBAL 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 most Piper mutual fund accounts 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.
1
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PACIFIC-EUROPEAN GROWTH FUND
[Photo]
FPO 73%
[Photo]
FPO 40%
IAIN WATT (ABOVE)
is group chief executive of Edinburgh Fund Managers plc and a co-manager of
Pacific-European Growth Fund. He has 26 years of financial experience.
MIKE BALFOUR (BELOW)
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.
March 15, 1996
Dear Shareholders:
FOR THE YEAR ENDED FEBRUARY 29, 1996, PACIFIC-EUROPEAN GROWTH FUND PROVIDED A
TOTAL RETURN OF 16.70%, WHICH INCLUDES REINVESTED DISTRIBUTIONS BUT NOT THE
FUND'S SALES CHARGE.* This performance is in line with the MSCI European,
Australian, Far East (EAFE) Index** return of 17.21% for the same period. Over
the last year, the fund's strategy has been to overweight the Pacific Basin,
underweight Europe and remain relatively neutral in Japan and Latin America
relative to the EAFE Index. The European markets were strong in the first half
of the fund's fiscal year while Japan and the Pacific Basin rallied in the
second half after weakness at the beginning of the year. As a result, the
performance of the Pacific-European Growth Fund was noticeably stronger in the
second half of the year.
IN JAPAN, LOWER INTEREST RATES ALONG WITH CONCERTED ACTION TO ADDRESS BAD DEBTS
IN THE FINANCIAL SECTOR PROMPTED THE SHARP RALLY IN THE MARKET. The Japanese
market rose a little over 15% for the fund's fiscal year in local currency
terms; however, this represents a rally of nearly 30% from the low point in
June. In U.S. dollar terms, the rise was a more muted 9.1% for the year.
Approximately 40% of the fund's exposure was hedged into the dollar to partially
protect against a decline in the yen. This strategy added significantly to the
fund's return.
AS THE JAPANESE AUTHORITIES CONTINUE TO INJECT LIQUIDITY INTO THE ECONOMY, THE
OUTLOOK CONTINUES TO IMPROVE. We believe stronger economic growth and a sharp
rebound in corporate earnings may allow the Japanese market to move
significantly higher over the next 12 months or so. In our opinion, the market
remains attractively valued and prices are reasonable given the potential for
growth.
* PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 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 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.
2
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PACIFIC-EUROPEAN GROWTH FUND
VALUE OF $10,000 INVESTED
FEBRUARY 29, 1996
[Line Graph]
Pacific-European Growth Fund, reflects the fund's 4% sales charge with
distributions reinvested.
Morgan Stanley Capital International (MSCI) EAFE Index, an unmanaged index of
securities listed on the stock exchange of Europe, Australia, and the Far East
Lipper International Funds Average, the average total return, with distributions
reinvested, of international funds as characterized by Lipper Analytical
Services
$10,000 INVESTED IN APRIL 1990 AND HELD THROUGH FEBRUARY 29, 1996, WOULD HAVE
GROWN TO $14,549. THE FUND'S PERFORMANCE REFLECTS THE MAXIMUM SALES CHARGE OF
4%, AS IF IT WAS APPLIED SINCE THE FUND'S INCEPTION, WHILE NO SUCH CHARGES ARE
REFLECTED IN THE INDEX OR AVERAGE. THE FUND OPERATED AS A CLOSED-END FUND UNTIL
AUGUST 31, 1992. ALL PERFORMANCE FIGURES INCLUDE REINVESTED DISTRIBUTIONS. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
AVERAGE ANNUAL TOTAL RETURNS
THROUGH 2/29/96
One Year . . . . . . . . . . . . . . . . . . . .12.03%
Five Year. . . . . . . . . . . . . . . . . . . . 8.90%
Since Inception (4/27/90). . . . . . . . . . . . 6.62%
DURING THESE PERIODS, THE FUND'S ADVISER WAIVED OR PAID CERTAIN FUND EXPENSES
AND/OR THE FUND'S DISTRIBUTOR VOLUNTARILY LIMITED 12b-1 FEES FOR THE FUND.
OTHERWISE, THE AVERAGE ANNUAL TOTAL RETURNS WOULD HAVE BEEN 11.79% ONE YEAR,
8.71% FIVE YEAR AND 6.46% SINCE INCEPTION. ALL RETURNS INCLUDE REINVESTED
DISTRIBUTIONS AND THE 4% SALES CHARGE. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS.
THE OUTLOOK FOR MANY MARKETS IN THE PACIFIC BASIN IS MUCH IMPROVED. Since the
beginning of November, the region has rallied by 15% as measured by the MSCI
Pacific Ex-Japan Index,+ thus reversing summer weakness and adding to earlier
gains to produce a return of nearly 22% for the fiscal year as a whole.
Inflation has largely been dealt with, reductions in U.S. interest rates have
aided government policies, and U.S. investors have returned to the Pacific
markets. All of these factors suggest strong markets in the Pacific Basin for
the next year. Earnings growth in many of these markets remains noticeably
stronger than in the West and, in the long run, we believe this will continue to
feed stronger stock market returns.
CONTINENTAL EUROPEAN MARKETS HAVE RECENTLY BEEN MORE FRAGILE AS SIGNS OF AN
ECONOMIC SLOWDOWN BECOME MORE EVIDENT. Interest rates have not continued to fall
as expected due to the uncertainty surrounding the timetable and criteria for
the monetary union. In addition, European unemployment has risen sharply and
both political and fiscal strains have become evident. To move ahead in the
longer term, Continental Europe needs to experience both political and corporate
restructuring.
THE UNITED KINGDOM APPEARS TO BE IN A LITTLE BETTER POSITION THAN ITS OTHER
EUROPEAN PARTNERS. Interest rates have fallen and are likely to fall further
while both the employment and fiscal situations are stronger. Still, the market
has been unsettled by the fact that the Socialists are likely to win a
convincing general election victory within the next year for the first time
since 1979.
THE LATIN AMERICAN MARKETS HAVE RECENTLY SHOWN SOME STRENGTH, WHICH HAS
CONTRIBUTED TO THE FUND'S RETURN. The MSCI Latin America Free Index++ returned
nearly 19% for the fund's fiscal year. While the long shadow of the Mexican peso
devaluation debacle is taking time to fade, there are signs that investor
interest is returning to markets which are supported by the prospect of economic
revival over the next year. As the re-emergence of growth becomes evident,
perhaps later in 1996, we expect several of these markets to post attractive
returns.
+ THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) PACIFIC EX-JAPAN INDEX IS
AN UNMANAGED INDEX OF SECURITIES LISTED ON THE STOCK EXCHANGES OF
AUSTRALIA, HONG KONG, MALAYSIA, NEW ZEALAND AND SINGAPORE.
++ THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) LATIN AMERICA FREE INDEX IS
AN UNMANAGED INDEX OF SECURITIES FROM ARGENTINA, BRAZIL, CHILE, COLOMBIA,
MEXICO, PERU AND VENEZUELA. THE INDEX IS LIMITED TO THOSE SECURITIES IN
WHICH FOREIGNERS MAY INVEST.
3
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PACIFIC-EUROPEAN GROWTH FUND
PORTFOLIO COMPOSITION
FEBRUARY 29, 1996
Pacific-European Growth Fund by Region
[Pie Chart]
Japan 34%
Other Pacific Basin 28%
Latin America 5%
Other Assets 3%
Europe 25%
Short-Term 5%
INVESTMENT CATEGORIES REFLECT PERCENTAGE OF TOTAL ASSETS. SEE MAP ON PAGE 5 FOR
PORTFOLIO COMPOSITION BY COUNTRY.
EAFE INDEX BY REGION
[Pie Chart]
Japan 39%
Europe 50%
Pacific/Other 11%
INVESTMENT CATEGORIES REFLECT PERCENTAGE OF TOTAL ASSETS.
THE FUND'S PRIMARY STRATEGY WILL BE TO MAINTAIN A HEAVY WEIGHTING IN THE
JAPANESE AND PACIFIC BASIN MARKETS FOR THE FORESEEABLE FUTURE. These markets are
expected to be noticeably stronger than either Europe or the United States over
the next year. We will also pay careful attention to European bond yields, as a
rally in the European bond markets would allow stock markets to make some
headway at least in the short term.
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/ Iain Watt
Iain Watt
Manager, Edinburgh Fund Managers
/s/ Mike Balfour
Mike Balfour
Manager, Edinburgh Fund Managers
/s/ William H. Ellis
William H. Ellis
President, Piper Capital Management
4
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PACIFIC-EUROPEAN GROWTH FUND
PORTFOLIO COMPOSITION
BY COUNTRY
FEBRUARY 29, 1996
(AS A PERCENTAGE OF TOTAL ASSETS)
[World Map]
EUROPE
United Kingdom 9%
Ireland 1%
Netherlands 2%
Switzerland 2%
France 4%
Spain 2%
Sweden 1%
Germany 3%
Italy 1%
PACIFIC BASIN
India 1%
Thailand 5%
Malaysia 2%
Singapore 5%
Japan 34%
South Korea 2%
Hong Kong 9%
Philippines 1%
Indonesia 3%
LATIN AMERICA
Mexico 1%
Chile 1%
Argentina 1%
Brazil 2%
5
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PACIFIC-EUROPEAN GROWTH FUND
TEN LARGEST HOLDINGS
FEBRUARY 29, 1996
(AS A PERCENTAGE OF NET ASSETS)
TOSHIBA
JAPAN, 1.7%
Toshiba, the #3 electronics firm in Japan, is the world leader in making large-
scale memory chips (DRAMs) and is also a top supplier of color flat-panel
displays for portable computers. The company is benefiting recently from cost
cutting measures and new product development.
MATSUSHITA ELECTRIC WORKS
JAPAN, 1.6%
The #2 electronics manufacturer from Japan, Matsushita has built its business on
providing low-cost, high-quality home electronics and appliances. Matsushita is
targeting multimedia as their premier area for growth.
HUTCHISON WHAMPOA
HONG KONG, 1.6%
Hutchison Whampoa, one of the oldest property companies in Hong Kong, has
recently benefited from its prime locations for high-rise rental properties.
Besides rental properties, the company is diversified in retailing,
telecommunications, energy, container terminals and finance.
MORI SEIKI
JAPAN, 1.5%
Mori Seiki - a major machine tool manufacturer with a strong global sales
network - is continuing to experience strong order growth as companies increase
their manufacturing related capital expenditures.
NOMURA
JAPAN, 1.5%
Japan's largest brokerage firm, Nomura is also a leading bond underwriter and a
major player in equity issues. The company's earnings are positioned to improve
significantly as the Japanese stock market recovers and trading volumes
increase. The company is also looking to expand into China and other Asian
countries.
DAINIPPON INK AND CHEMICALS
JAPAN, 1.5%
Dainippon Ink and Chemicals is one of Japan's main chemical companies. In recent
years, the company has diversified into synthetic resins and chemical products,
with approximately 50% of its sales in the graphic arts market. Also, over 50%
of its sales are exports.
UNITED OVERSEAS BANK
SINGAPORE, 1.4%
United Overseas Bank is part of a Singapore banking group with a market
capitalization totaling $10 billion. Besides United Overseas Bank, this group
also includes Chung Khiaw Bank, Lee Wah Bank, Far Eastern Bank and Industrial
and Commercial Bank.
SONY CORPORATION
JAPAN, 1.4%
Sony, the global leader in consumer electronics manufacturing, has recently been
merging its electronics manufacturing with the U.S. entertainment industry
including Columbia and Tri-Star pictures and Columbia and Epic records. The
company will benefit from strong product sales worldwide while continuing its
restructuring program.
ISETAN
JAPAN, 1.4%
Isetan is a Tokyo-based department store that targets the younger generation.
The company has one of the lowest exposures to corporate sales, the area hardest
hit by the recession. There are signs that consumption is improving, especially
in the clothing area where the company has a high exposure relative to most
competitors.
DAO HENG BANK GROUP UNLIMITED
HONG KONG, 1.4%
Dao Heng Bank Group is one of Hong Kong's major commercial banking groups, with
a market capitalization of $2.8 billion.
6
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FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value* (note 2)
(including a repurchase agreement of $7,701,000) ..... $ 159,543,727
Cash in bank on demand deposit ........................... 253,608
Foreign cash in bank on demand deposit ................... 518,197
Receivable for investment securities sold ................ 141,493
Receivable for fund shares sold .......................... 159,838
Net unrealized appreciation of forward foreign currency
contracts held (notes 2, 4) ............................ 5,078,658
Dividends and accrued interest receivable ................ 308,060
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Total assets ......................................... 166,003,581
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LIABILITIES:
Payable for investment securities purchased .............. 1,515,647
Payable for fund shares redeemed ......................... 100,535
Accrued investment management fee ........................ 118,372
Accrued distribution and shareholder account servicing
fees ................................................... 126,340
Payable for foreign capital gains taxes .................. 828,991
Other accrued expenses ................................... 1,992
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Total liabilities .................................... 2,691,877
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Net assets applicable to outstanding capital stock ....... $ 163,311,704
-----------------
-----------------
REPRESENTED BY:
Capital stock - authorized 2 billion shares of $0.01 par
value; outstanding, 11,782,881 shares ................ $ 117,829
Additional paid-in capital ............................... 141,786,457
Accumulated net realized gain on investments and foreign
currency transactions .................................. 2,856,345
Unrealized appreciation of investments and on translation
of other assets and liabilities denominated in foreign
currencies ............................................. 18,551,073
-----------------
Total - representing net assets applicable to
outstanding capital stock ........................ $ 163,311,704
-----------------
-----------------
Net asset value per share of outstanding capital stock ... $ 13.86
-----------------
-----------------
* Investments in securities at identified cost ........... $ 146,080,551
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</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
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FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 29, 1996
<TABLE>
<S> <C>
INCOME:
Dividends (net of foreign withholding taxes of
$336,776) ............................................ $ 2,869,826
Interest ................................................. 251,483
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Total investment income .............................. 3,121,309
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EXPENSES (NOTE 5):
Investment management fee ................................ 1,216,305
Distribution fees ........................................ 812,754
Custodian, accounting and transfer agent fees ............ 473,367
Shareholder account servicing fees ....................... 135,878
Reports to shareholders .................................. 66,645
Directors' fees .......................................... 15,434
Audit and legal fees ..................................... 55,634
Other expenses ........................................... 55,842
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Total expenses ....................................... 2,831,859
Less expenses waived by the distributor .................. (298,512)
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Net expenses before expenses paid indirectly ........... 2,533,347
Less expenses paid indirectly ............................ (5,362)
----------------
Total net expenses ................................... 2,527,985
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Net investment income ................................ 593,324
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NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments (net of foreign withholding taxes of
$321,197) (note 3) ................................... 11,219,771
Foreign currency transactions .......................... (405,039)
----------------
Net realized gain ................................ 10,814,732
----------------
Net change in unrealized appreciation or depreciation of:
Investments ............................................ 8,557,882
Translation of other assets and liabilities denominated
in foreign currencies ................................ 4,933,600
----------------
Net change in unrealized appreciation or
depreciation ......................................... 13,491,482
----------------
Net gain on investments ................................ 24,306,214
----------------
Net increase in net assets resulting from
operations ....................................... $ 24,899,538
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</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
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FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
2/29/96 2/28/95
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ........................... $ 593,324 (323,920)
Net realized gain on investments and foreign currency
transactions ........................................... 10,814,732 13,540,140
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies .......... 13,491,482 (32,565,743)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations ........................................... 24,899,538 (19,349,523)
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ............................... (593,324) --
From net realized gains .................................. (10,077,791) (11,890,084)
----------------- -----------------
Total distributions .................................... (10,671,115) (11,890,084)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 2,173,410 and 3,448,028 shares,
respectively ........................................... 29,496,476 50,722,931
Proceeds from issuance of 795,210 and 774,367 shares for
reinvestment of distributions, respectively ............ 10,633,411 10,384,329
Payments for 3,316,664 and 2,819,369 shares redeemed,
respectively ........................................... (45,439,458) (41,129,910)
----------------- -----------------
Increase (decrease) in net assets from capital share
transactions ......................................... (5,309,571) 19,977,350
----------------- -----------------
Total increase (decrease) in net assets .............. 8,918,852 (11,262,257)
Net assets at beginning of year ............................ 154,392,852 165,655,109
----------------- -----------------
Net assets at end of year ................................ $ 163,311,704 154,392,852
----------------- -----------------
----------------- -----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
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NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
The Pacific-European Growth Fund (the fund) is
a diversified series of Piper Global Funds
Inc. (Piper Global) which is registered under
the Investment Company Act of 1940 (as
amended) as an open-end management investment
company. The fund is the only series of Piper
Global currently outstanding. The fund pursues
its investment objective of long-term capital
appreciation by investing primarily in equity
securities of companies in the Pacific Basin
and Europe. Piper Global's articles of
incorporation permit the board of directors to
create additional series in the future.
(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
The significant accounting policies of the
fund are as follows:
INVESTMENTS IN SECURITIES
Securities traded on U.S. or foreign
securities exchanges 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; exchange
listed options are valued at the last sales
price and futures contracts are valued at the
last settlement price; bonds and other
securities for which market quotations are not
readily available are valued at fair value
according to methods selected in good faith by
the board of directors. Securities with
maturities of 60 days or less when acquired or
subsequently within 60 days of maturity 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 an
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 level-yield amortization of
premium and discount, is accrued daily.
OPTION TRANSACTIONS
For hedging purposes, the fund may buy and
sell put and call options, write covered-call
options on portfolio securities, write
cash-secured puts, and write call options that
are not covered for cross-hedging purposes.
The risk in writing a call option is that the
fund gives up the opportunity of profit if the
market price of the security increases. The
risk in writing a put option is that the fund
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 fund pay a premium whether or not the
option is exercised. The fund also has the
additional risk of not being able to enter
into a closing transaction if a liquid
secondary market does not exist.
Option contracts are valued daily and
unrealized appreciation or depreciation is
recorded. The fund 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 for 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
In order to gain exposure to or protect from
changes in the market, the fund may buy and
sell financial futures contracts and related
options. Risks of entering into futures
contracts and related options include the
possibility 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
fund is required to deposit either cash or
securities in an amount (initial margin) equal
to a certain percentage of the contract
10
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NOTES TO FINANCIAL STATEMENTS
value. Subsequent payments (variation margin)
are made or received by the fund 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
fund recognizes a realized gain or loss when
the contract is closed or expires.
FEDERAL TAXES
The fund's policy is to comply with the
requirements of the Internal Revenue Code
applicable to regulated investment companies
and to distribute all of its taxable income to
shareholders. Therefore, no income tax
provision is required. In addition, on a
calendar-year basis, the fund will distribute
substantially all of its 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) 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, and losses deferred due to
"wash sale" transactions. The character of
distributions made during the year from net
investment income or net realized gains may
differ from their ultimate characterization
for federal income tax purposes. Also, 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 were recorded by the fund.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net
investment income and realized capital gains,
if any, will be made on an annual basis.
Shareholders may elect to have distributions
paid in cash or reinvested in additional
shares at net asset value.
REPURCHASE AGREEMENTS
The fund, 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.
Procedures for all agreements ensure that the
daily market value of the collateral is in
excess of the repurchase amount in the event
of a default.
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. The
fund does not separately identify that portion
of realized and unrealized gain (loss) on
investments arising from changes in the
exchange rates from the portion arising from
changes in the market value of investments.
The fund 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 fund and the resulting
unrealized appreciation or depreciation are
determined using foreign currency exchange
rates from independent pricing sources. The
fund is subject to the credit risk that the
other party will not complete the obligations
of the contract.
11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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 of assets and liabilities,
the disclosure of contingent assets and
liabilities at the date of the financial
statements, and the results of operations
during the reporting period. Actual results
could differ from those estimates.
(3) INVESTMENT
SECURITY
TRANSACTIONS
Cost of purchases and proceeds from sales of
securities, other than temporary investments
in short-term securities, for the year ended
February 29, 1996, were $102,583,039 and
$115,679,442, respectively.
(4) FORWARD FOREIGN
CURRENCY CONTRACTS
On February 29, 1996, the fund had open
foreign currency exchange contracts which
obligate the fund to deliver and receive
currencies at specified future dates. The
unrealized appreciation (depreciation) on
these contracts is included in the
accompanying financial statements. The terms
of the open contracts are as follows:
<TABLE>
<CAPTION>
Settlement Currency to U.S. $ Value Currency to U.S. $ Value Appreciation
Date be Delivered as of 2/29/96 be Received as of 2/29/96 (Depreciation)
- -------- ------------------- --------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
3/01/96 1,006,174USD 1,006,174 630,593IEP 992,553 (13,621)
3/04/96 14,888,536JPY 141,492 142,310USD 142,310 818
5/22/96 1,085,825,000JPY 10,433,970 13,000,000USD 13,000,000 2,566,030
5/22/96 1,090,050,000JPY 10,474,569 13,000,000USD 13,000,000 2,525,431
--------------- --------------- -------------
$ 22,056,205 $ 27,134,863 $5,078,658
--------------- --------------- -------------
--------------- --------------- -------------
</TABLE>
IEP = IRISH PUNT
JPY = JAPANESE YEN
USD = U.S. DOLLAR
(5) FEES AND EXPENSES
The fund has entered into the following
agreement with Piper Capital Management
Incorporated (the adviser):
The investment advisory agreement provides the
adviser with a monthly investment management
fee calculated at the annualized rate of 1% of
the fund's average daily net assets up to $100
million, 0.875% on net assets of $100 million
to $200 million and 0.75% on net assets in
excess of $200 million.
Starting in April 1991, the basic fee has been
subject to a performance adjustment for the
applicable performance period, based on the
performance of the fund relative to the Morgan
Stanley Capital International EAFE Index. Such
performance period has consisted of a rolling
12-month period. For each percentage point the
fund outperforms or underperforms the EAFE
Index during the applicable performance
period, the monthly fee is increased or
decreased by 0.05% (on an annualized basis) up
to a maximum of 1/12 of 0.25% of the fund's
average daily net assets during the month for
which the calculation is made. During the year
ended February 29, 1996, the performance
adjustment decreased the management fee by
$337,288. Edinburgh Fund Managers plc has been
retained by the adviser as subadviser 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.
The fund pays Piper Jaffray Inc. (the
distributor) a fee in connection with the
servicing of each shareholder account and in
connection with distribution related services
provided to the fund. The fee is limited to a
maximum of 0.50% per
12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
annum of the average daily net assets of the
fund. The 0.50% reimbursement fee includes
0.25% payable as a servicing fee and 0.25%
payable as a distribution fee. For the year
ended February 29, 1996, Piper Jaffray Inc.
voluntarily agreed to limit the reimbursement
fee to an annual rate of 0.32% of average
daily net assets.
The fund has also entered into shareholder
account 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 such services, are equal to an
annual rate of $6.00 per active shareholder
account, and $1.60 per closed shareholder
account.
In addition to the investment management fee
and the distribution reimbursement fee, 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 and other miscellaneous expenses.
Sales charges received by Piper Jaffray Inc.
for distributing the fund's shares were
$400,766 for the year ended February 29, 1996.
Expenses paid indirectly represent a reduction
of custodian fees for earnings on cash
balances maintained with the custodian by the
fund.
(6) PROPOSED MERGER
The board of directors of Hercules Funds Inc.,
an affiliated open-end management investment
company, approved a plan to reorganize the
Hercules European Value Fund and Hercules
Pacific Basin Value Fund (the Hercules Funds)
subject to shareholder approval. In effect,
the reorganization would merge the Hercules
Funds into Pacific-European Growth Fund. It is
anticipated that the merger, if approved,
would occur in or around June 1996. However,
it is possible that shareholders of one or
both of the Hercules Funds will not approve
this merger. All costs associated with the
merger will be borne by the adviser.
13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(7) FINANCIAL
HIGHLIGHTS
Per-share data for a share of capital stock
outstanding throughout each period and
selected information for each period are as
follows:
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------
2/28/93
2/29/96 2/28/95 2/28/94 (c) 2/29/92
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ........... $ 12.73 15.44 10.81 10.53 10.18
----------- ---------- ---------- ---------- ----------
Operations
Net investment income (loss).................... 0.05 (0.03) (0.03) -- 0.06
Net realized and unrealized gains (losses)...... 2.03 (1.63) 4.72 0.28 0.37
----------- ---------- ---------- ---------- ----------
Total from operations......................... 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......................... (0.90) (1.05) (0.06) -- --
Return of capital............................... -- -- -- -- (0.02)
----------- ---------- ---------- ---------- ----------
Total distributions........................... (0.95) (1.05) (0.06) -- (0.08)
----------- ---------- ---------- ---------- ----------
Net asset value, end of period ................. $ 13.86 12.73 15.44 10.81 10.53
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
SELECTED INFORMATION
Total return (a).................................. 16.70% (11.09%) 43.45% 2.66% 4.44%
Net assets at end of period (in millions) ...... $ 163 154 166 60 36
Ratio of expenses to average daily net assets
(b)............................................. 1.55% 1.76% 1.81% 2.25% 1.92%
Ratio of net investment income (loss) to average
daily net assets (b)............................ 0.36% (0.19%) (0.29%) 0.03% 0.60%
Portfolio turnover rate (excluding short-term
securities)..................................... 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 TO AVERAGE DAILY NET ASSETS WOULD HAVE BEEN AS FOLLOWS: 1.73%/0.18%,
1.98%/(0.41%), 2.01%/(0.49%) AND 2.59%/(0.31%) IN FISCAL YEARS 1996, 1995,
1994 AND 1993, RESPECTIVELY. BEGINNING IN FISCAL 1996, THE EXPENSE RATIO
REFLECTS THE EFFECT OF GROSS EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR
PERIOD EXPENSE RATIOS HAVE NOT BEEN ADJUSTED.
(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 ARE BASED ON THE FUND'S OPERATIONS AS A CLOSED-END FUND. FISCAL
1993 EXPENSES INCLUDE 0.32% RELATED TO THE CONVERSION.
14
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
PACIFIC-EUROPEAN GROWTH FUND
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
Number Market
Name of Issuer of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
COMMON STOCKS (93.0%):
EUROPE (25.8%):
FRANCE (3.9%):
Alcatel Alsthom - telecommunications ................. 17,249 $ 1,526,907
Elf Aquitaine - oil company .......................... 22,694 1,562,733
Eridania Berghim Say - sugar company ................. 6,880 1,179,643
Pinault Printemps - retail stores .................... 8,880 2,100,995
------------
6,370,278
------------
GERMANY (3.1%):
Deutsche Bank - bank ................................. 35,200 1,771,950
Mannesmann - industrial machinery manufacturing ...... 2,370 844,819
Siemens - electronic capital goods ................... 2,740 1,565,900
Veba - electricity and chemicals ..................... 18,600 875,191
------------
5,057,860
------------
IRELAND (0.6%):
Irish Life PLC - life insurance ...................... 250,000 999,490
------------
ITALY (1.4%):
Italgas - utilities .................................. 319,800(b) 991,421
Stet-societa Finanz Telefon - telecommunications and
cellular ............................................ 421,050 1,286,392
------------
2,277,813
------------
NETHERLANDS (2.3%):
Fortis Amev NV - bank ................................ 18,000 1,198,545
Klondike Post Netherland NV - telecommunications and
cellular ............................................ 17,000 681,443
Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit - publishing .................................. 110,000 1,794,421
------------
3,674,409
------------
SPAIN (1.6%):
Iberdrola - utilities ................................ 138,000 1,358,454
Repsol SA - oil and gas .............................. 36,000 1,312,946
------------
2,671,400
------------
SWEDEN (1.0%):
Nordbanken AB - regional banks ....................... 97,000(b) 1,699,025
------------
SWITZERLAND (2.3%):
Brown Boveri - general engineering ................... 1,050 1,255,768
Nestle - food and beverages .......................... 820 896,011
Roche Holdings - pharmaceuticals ..................... 205 1,591,238
------------
3,743,017
------------
UNITED KINGDOM (9.6%):
Abbott Mead Vickers PLC - communications ............. 57,000 460,469
Antofagasta Holdings - diversified industrial
products ............................................ 60,000 344,250
Bluebird Toys PLC - toy manufacturer ................. 119,600 585,562
British Petroleum - oil and gas ...................... 124,000 1,023,539
British Telecom - telecommunications ................. 194,000 1,102,686
</TABLE>
<TABLE>
<CAPTION>
Number Market
Name of Issuer of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
BTR - conglomerate ................................... 193,700 $ 955,764
Cable & Wireless PLC- telecommunications ............. 120,000 816,102
Compass Group - contract catering .................... 115,600 861,347
Dixons Group PLC- department stores .................. 160,000 1,130,976
Jupiter Split Trust PLC - investment fund ............ 963,716(b) 1,216,451
Marks & Spencer - retail-general ..................... 141,400 906,473
Sheffield Insulation Group - building materials ...... 80,000 271,728
Siebe - industrial products and equipment ............ 102,900 1,272,091
SmithKline Beecham Class A - consumer health
products ............................................ 131,000 1,394,993
Sun Alliance Group - property and casualty
insurance ........................................... 210,000 1,240,218
Thorn Emi - hotel and leisure ........................ 52,000 1,288,872
Watmoughs - printing and publishing .................. 73,000 480,267
Yorkshire Chemicals - chemicals ...................... 82,500 325,660
------------
15,677,448
------------
Total Europe Common Stocks ......................... 42,170,740
------------
LATIN AMERICA (4.5%):
ARGENTINA (0.5%):
Inversiones Y Representaciones (IRSA) GDS - real
estate .............................................. 28,806(b) 788,564
------------
BRAZIL (2.1%):
Cia Acos Especia Itab ADR - steel manufacturer ....... 95,000 1,128,600
Refrigeracao Prana ADR - consumer durable goods ...... 122,000 1,653,832
Telecomunicacoes Brasileiras ADR - telecommunications
and cellular ........................................ 12,500 656,250
------------
3,438,682
------------
CHILE (0.4%):
Five Arrow Chile Fund - mutual fund .................. 200,000 537,500
Five Arrow Chile Fund Warrants - mutual fund ......... 80,000(b) 46,000
------------
583,500
------------
COLOMBIA (0.2%):
Carulla 144A ADS - retail stores ..................... 30,780(c) 284,715
------------
MEXICO (1.3%):
Cementos De Mexico A - cement manufacturer ........... 155,000 527,204
Telefonos De Mexico ADR - telecommunications and
cellular ............................................ 52,700 1,607,350
------------
2,134,554
------------
Total Latin America Common Stocks .................. 7,230,015
------------
PACIFIC BASIN (62.7%):
HONG KONG (9.6%):
China Light and Power Company - electric utilities ... 300,000 1,404,643
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
15
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
PACIFIC-EUROPEAN GROWTH FUND
(CONTINUED)
<TABLE>
<CAPTION>
Number Market
Name of Issuer of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Dao Heng Bank Group - bank ........................... 559,574 $ 2,294,315
Esprit Asia Holdings Ltd. - retail ................... 2,500,000 961,974
Hutchison Whampoa - diversified holding company ...... 400,000 2,535,084
Ka Wah Bank - commercial bank ........................ 3,000,000 1,096,165
Sun Hung Kai Properties - property ................... 230,000 2,052,642
Swire Pacific Limited - diversified holding
company ............................................. 250,000 2,182,630
Wharf Holdings - real estate services ................ 500,000 1,936,882
Yizheng Chemicals - chemicals and plastics ........... 4,490,000 1,248,592
------------
15,712,927
------------
INDIA (0.4%):
Hindalco Industries ADR - aluminum manufacturer ...... 20,000(b) 717,400
------------
INDONESIA (2.6%):
PT Andayani Megah - tire and rubber .................. 850,000 733,866
PT Bank International Indonesia - bank . 500,000 2,099,072
PT Hanjaya Mandala Sampoerna - tobacco ............... 75,000 818,314
PT Indocement - construction materials . 160,000 637,167
------------
4,288,419
------------
JAPAN (34.5%):
Amada Metrecs - electronic capital goods ............. 108,000 1,631,932
Circle K Japan Company - retail stores ............... 22,000(b) 932,478
Daifuku - machine tool manufacturer .................. 78,000 1,156,379
Dainippon Ink and Chemical - chemicals and
plastics ............................................ 530,000 2,407,603
Daiwa Securities - finance ........................... 150,000 2,109,765
DDI Corp - telecommunications ........................ 255 1,868,425
Denki Kagaku - chemicals and plastics ................ 300,000(b) 1,200,285
H.I.S. Company - leisure and entertainment ........... 22,000(b) 1,045,379
Honda Motor - motor vehicles ......................... 89,000 1,886,149
Ichiyoshi Securities - securities broker ............. 125,000 801,853
Isetan - retail stores ............................... 184,000 2,308,197
Kobe Steel - iron, steel and aluminum ................ 745,000(b) 2,159,420
Kumagai Gumi - building materials .................... 400,000 1,634,593
Maeda Road Construction - transportation ............. 90,000 1,565,217
Marubeni Corporation - wholesale distributor ......... 420,000 2,271,133
Matsushita Electric Works - electricals .............. 237,000 2,545,118
Mitsubishi Materials - metal mining company .......... 430,000 2,227,132
Mitsui Fudosan - real estate ......................... 190,000 2,220,955
Mori Seiki - machine tool manufacturer . 121,000 2,518,318
Nihon Cement Company - cement manufacturer ........... 344,000 2,288,430
Nippon Telephone and Telegraph -
telecommunications .................................. 291 2,210,121
Nippon Yusen - shipping .............................. 392,000 2,235,210
Nissha Printing - print, media publishing 75,000 1,104,775
Nomura - stock broker ................................ 118,000 2,422,238
Sony Corporation - electronics ....................... 40,000 2,341,649
</TABLE>
<TABLE>
<CAPTION>
Number Market
Name of Issuer of Shares Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Sumitomo Bank - commercial bank ...................... 76,000 $ 1,444,524
Sumitomo Trust & Banking - bank ...................... 128,000 1,593,538
Tokyo Steel Manufacturing - steel manufacturer ....... 84,000 1,540,699
Topy Industries - tires and auto parts ............... 279,000 1,206,415
Toshiba - electronics ................................ 350,000 2,704,205
Tsudakoma - machine tool manufacturer 101,000 662,294
------------
56,244,429
------------
MALAYSIA (1.7%):
Kim Hin Industries - ceramic tile manufacturer ....... 150,000 300,177
Telekom Malaysia - telecommunications 160,000 1,374,926
YTL Corporation - construction ....................... 240,000 1,130,077
------------
2,805,180
------------
PHILIPPINES (1.2%):
Philippine Long Distance Telephone -
telecommunications and cellular ..................... 15,990 944,544
Philippine National Bank - bank ...................... 75,000(b) 1,060,983
------------
2,005,527
------------
SINGAPORE (4.8%):
City Developments - real estate ...................... 250,000 2,036,119
Development Bank of Singapore - financial services ... 150,000 2,135,269
Genting Berhad - hotels and leisure .................. 150,000 1,341,966
United Overseas Bank - bank .......................... 219,200 2,344,136
------------
7,857,490
------------
SOUTH KOREA (2.4%):
Pohang Iron and Steel - steel manufacturer ........... 18,000 1,383,517
Shinhan Bank - commercial bank ....................... 44,977 1,110,415
Shinsegae Department Stores - retail stores .......... 14,770 1,007,024
Yukong - oil company ................................. 15,000(b) 465,785
------------
3,966,741
------------
THAILAND (5.5%):
Bank of Ayudhya - commercial bank .................... 260,000 1,746,265
Electricity General Public Company - electric
utility ............................................. 300,000 1,127,026
General Finance and Securities Company - financial
services ............................................ 300,000 1,285,204
Land and Houses - residential properties 75,200 1,490,251
Siam Cement - cement manufacturer .................... 21,400 1,106,724
Srithai Superware - consumer durable goods ........... 100,000 670,302
TelecomAsia Corporation - telecommunications ......... 500,000(b) 1,418,087
------------
8,843,859
------------
Total Pacific Basin Common Stocks .................. 102,441,972
------------
Total Common Stock
(cost: $138,379,551) .............................. 151,842,727
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
16
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
PACIFIC-EUROPEAN GROWTH FUND
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
SHORT-TERM SECURITIES (4.7%):
Repurchase agreement with Morgan Stanley in a joint
trading account, collateralized by U.S. government
agency securities, acquired on 2/29/96, accrued
interest at repurchase date of $1,112, 5.20%, 3/1/96
(cost: $7,701,000) ................................ $ 7,701,000 7,701,000
------------
Total Investments in Securities (97.7%)
(cost: $146,080,551) (d) .......................... 159,543,727
------------
Other assets in excess of liabilities (2.3%) ....... 3,767,977
------------
Net assets (100.0%) ............................... $ 163,311,704
------------
------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) PRESENTLY NON-INCOME PRODUCING.
(C) REPRESENTS SECURITY SOLD UNDER RULE 144A AND IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS SECURITY HAS BEEN
DETERMINED TO BE LIQUID UNDER GUIDELINES ESTABLISHED BY THE BOARD OF
DIRECTORS.
(D) AT FEBRUARY 29, 1996, THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX
PURPOSES WAS $146,363,187. THE AGGREGATE GROSS UNREALIZED APPRECIATION AND
DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS COST WERE AS
FOLLOWS:
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 21,596,119
GROSS UNREALIZED DEPRECIATION ...... (8,415,579)
------------
NET UNREALIZED APPRECIATION .... $ 13,180,540
------------
------------
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
PIPER GLOBAL FUNDS INC.:
We have audited the accompanying statement of
assets and liabilities, including the schedule
of investments in securities, of
Pacific-European Growth Fund (a series of
Piper Global Funds Inc.) as of February 29,
1996, and the related statement of operations
for the year then ended, the statements of
changes in net assets for each of the years in
the two-year period then ended and the
financial highlights for each of the years in
the five-year period then ended. These
financial statements and the financial
highlights are the responsibility of the
fund's management. Our responsibility is to
express an opinion on these financial
statements and the financial highlights based
on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and the
financial highlights are free of material
misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts
and disclosures in the financial statements.
Investment securities held in custody are
confirmed to us by the custodian. As to
securities purchased and sold but not received
or delivered, we request confirmations from
brokers, and where replies are not received,
we carry out other appropriate auditing
procedures. An audit also includes assessing
the accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and
the financial highlights referred to above
present fairly, in all material respects, the
financial position of Pacific-European Growth
Fund as of February 29, 1996, and the results
of its operations for the year then ended, the
changes in its net assets for each of the
years in the two-year period then ended and
the financial highlights for each of the years
in the five-year period then ended, in
conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 14, 1996
18
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION
Fiscal Year Ended February 29, 1996
Information for federal income tax purposes is
presented below to aid shareholders in
reporting taxable distributions made by the
fund during the fiscal year ended February 29,
1996. In early February 1996, you should have
received Form 1099-DIV which reported these
distributions. Shareholders should consult a
tax advisor on how to report these
distributions at the state and local levels.
<TABLE>
<CAPTION>
Payable Date Per Share
- ------------------------------------------------------------------------- -----------
<S> <C>
December 5, 1995 ...................................................... $ 0.8794*
December 22, 1995........................................................ 0.0680
-----------
Total distributions ............................................... $ 0.9474
-----------
-----------
</TABLE>
* THIS DISTRIBUTION INCLUDES $0.0684 OF NET
SHORT-TERM CAPITAL GAINS AND $0.8110 OF NET
LONG-TERM CAPITAL GAINS.
19
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
DIRECTORS 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.
George Latimer, CHIEF EXECUTIVE OFFICER, NATIONAL EQUITY FUNDS
Iain Watt, MANAGING DIRECTOR, EDINBURGH FUND MANAGERS PLC
Michael Balfour, DIRECTOR, EDINBURGH FUND MANAGERS PLC
OFFICERS William H. Ellis, CHAIRMAN OF THE BOARD
Paul A. Dow, PRESIDENT
Robert H. Nelson, SENIOR VICE PRESIDENT AND TREASURER
Nancy S. Olsen, SENIOR VICE PRESIDENT
Susan Sharp Miley, SECRETARY
INVESTMENT ADVISER Piper Capital Management Incorporated
222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402-3804
INVESTMENT SUBADVISER Edinburgh Fund Managers plc
DONALDSON HOUSE, 97 HAYMARKET TERRACE,
EDINBURGH, SCOTLAND EH12 5HD
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
4200 NORWEST CENTER, MINNEAPOLIS, MN 55402
CUSTODIAN First Trust
180 EAST FIFTH STREET, ST. PAUL, MN 55101
TRANSFER AGENT Investors Fiduciary Trust Company
127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
LEGAL COUNSEL Dorsey & Whitney LLP
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
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[PIPER CAPITAL MANAGEMENT LOGO] Bulk Rate
U.S. Postage
PIPER CAPITAL MANAGEMENT INCORPORATED PAID
222 SOUTH NINTH STREET Permit No. 3008
MINNEAPOLIS, MN 55402-3804 Mpls., MN
PIPER JAFFRAY INC., FUND DISTRIBUTOR AND NASD MEMBER.
[LOGO] THIS DOCUMENT IS PRINTED ON PAPER MADE FROM
100% TOTAL RECOVERED FIBER, INCLUDING 15% POST-CONSUMER WASTE.
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 Shareholder
Services area at 1 800 866-7778, or mail your request to:
Corporate Communications
Piper Capital Management
222 South Ninth Street
Minneapolis, MN 55402-3804
