A Message from the President
Dear Shareholder
Equity markets began 1997 as strongly as they finished 1996. A robust economy
and few inflationary indicators led to large gains early in the year. However,
this trend changed when the Federal Reserve met in March and decided to raise
rates by one-quarter of one percent. Rising stock prices came to a screeching
halt, and bond prices retreated as well. Nevertheless, year-to-date through
March 31, 1997, the Dow Jones Industrial Average climbed 2.63% while the
Standard & Poor's 500 Composite Index increased 2.26%.
While the stock market has rewarded investors greatly over the last two years,
you should continue to remind yourself that the positive double-digit returns
will not continue indefinitely. Stocks will experience reversals and sell offs.
The key is to maintain a long-term investment perspective and to invest in funds
which match your objectives and risk tolerance.
Internationally, European markets did not follow the U.S. lead. Instead, they
turned in very strong performances during the first quarter with Germany leading
the way. Pacific Rim countries experienced some market difficulties as concerns
about economic weakness appeared. The Japanese market fell while Latin American
and other emerging markets continued to improve.
Princor fund assets under management continue to grow. We now manage more than
$4 billion in our public and variable contract funds combined. A strong
shareholder base is a major contributor to our continued asset growth. This
solid foundation allows us to continue to introduce new products and services in
an effort to increase our share of the mutual fund marketplace.
At their meeting on March 10 the Board of Directors of each Princor fund
established June 23, 1997 as the record date for a shareholder meeting to be
held September 16. A proxy statement and ballot for voting on several issues
will reach you by mail within the next few weeks. We encourage your review of
the issues and early return of your ballot.
Princor has other exciting projects in the works, some of which you will be
hearing about very soon. We look forward to serving your future investment
needs.
Sincerely,
/s/ STEPHAN L. JONES
Stephan L. Jones
President
Princor Funds Performance
<PAGE>
Average Annual Total Returns
As of March 31, 1997
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
with without with without with without
sales sales sales sales sales sales
A Shares of: charge charge charge charge charge charge
<S> <C> <C> <C> <C> <C> <C>
Balanced 6.08% 11.31% 8.74% 9.79% 10.08%a 10.65%a
Blue Chip 10.35 15.79 11.89 12.97 11.66b 12.54b
Bond -0.40 4.51 6.87 7.91 8.55a 9.12a
Capital Accumulation 12.92 18.49 12.92 14.02 9.86 10.39
Emerging Growth 6.15 11.38 14.07 15.18 16.43a 17.03a
Government Securities
Income -0.21 4.71 5.69 6.72 7.32 7.84
Growth 5.86 11.08 12.19 13.27 11.56 12.09
High Yield 6.50 11.76 8.39 9.44 7.91a 8.47a
Limited Term Bond 3.48 5.06 3.84c 4.41c
Tax-Exempt Bond 1.52 6.53 6.04 7.07 6.64 7.15
Utilities -1.60 3.25 6.19d 7.39d
World 12.51 18.06 13.55 14.65 7.96 8.48
</TABLE>
1 Year 5 Years e
with without with without
B Shares of: CDSC* CDSC* CDSC* CDSC*
Balanced 6.46% 10.41% 14.49% 15.58%
Blue Chip 10.70 14.70 21.34 22.35
Bond -0.25 3.64 7.74 8.91
Capital Accumulation 13.29 17.29 23.52 24.51
Emerging Growth 6.64 10.64 22.76 23.75
Government Securities Income -0.03 3.88 7.55 8.72
Growth 6.34 10.34 20.67 21.68
High Yield 6.60 10.60 10.51 11.64
Limited Term Bond 3.35 4.58 2.84c 3.97c
Tax-Exempt Bond 1.75 5.75 9.30 10.45
Utilities -1.53 2.43 13.27 14.36
World 13.00 17.00 15.24 16.31
* Contingent Deferred Sales Charge
R Shares of: 1 Year 5 Years c
Balanced 10.55% 10.05%
Blue Chip 15.46 13.51
Bond 4.05 2.90
Capital Accumulation 17.70 17.86
Emerging Growth 11.13 9.52
Government Securities Income 4.15 2.77
Growth 10.66 9.37
High Yield 10.74 9.07
Limited Term Bond 4.32 3.73
Utilities 2.63 1.94
World 17.76 18.72
a Partial period, from effective date 12/18/87
b Partial period, from effective date 3/1/91
c Partial period, from effective date 2/29/96
d Partial period, from effective date 12/16/92
e Partial period, from effective date 12/9/94
Total return represents the overall performance of an investment for a specific
period of time, assuming the reinvestment of dividends and capital gains and
after applicable expenses. Average annual total returns for A shares are with
and without maximum 4.75% sales charge. Average annual total returns for B
shares are with and without maximum 4.0% contingent deferred sales charge.
Total returns reflect past performance. Past performance does not predict future
performance. The investment return and principal value of an investment will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
Contents
Page
Comments from the Funds'
Portfolio Managers.......................3
Investing for Your Retirement Dreams......10
The Princor Growth-Oriented Funds
Financial Statements and Highlights
Statements of Assets and Liabilities....12
Statements of Operations................14
Statements of Changes in Net Assets.....16
Notes to Financial Statements...........18
Schedules of Portfolio Investments
Balanced Fund..........................26
Blue Chip Fund.........................28
Capital Accumulation Fund..............29
Emerging Growth Fund...................30
Growth Fund............................33
Utilities Fund.........................35
World Fund.............................36
Financial Highlights....................40
The Princor Income-Oriented Funds
Financial Statements and Highlights
Statements of Assets and Liabilities....48
Statements of Operations................50
Statements of Changes in Net Assets.....52
Notes to Financial Statements...........54
Schedules of Portfolio Investments
Bond Fund..............................62
Government Securities Income Fund......64
High Yield Fund........................65
Limited Term Bond Fund.................67
Tax-Exempt Bond Fund...................68
Financial Highlights....................72
The Princor Money Market Funds
Financial Statements and Highlights
Statements of Assets and Liabilities....78
Statements of Operations................79
Statements of Changes in Net Assets.....80
Notes to Financial Statements...........82
Schedules of Portfolio Investments
Cash Management Fund...................86
Tax-Exempt Cash Management Fund........88
Financial Highlights....................92
The Princor Family of Mutual Funds........94
MANAGER'S COMMENTS
Princor Management Corporation, the adviser to the Princor funds, is staffed
with investment professionals who manage each individual fund. Comments by these
individuals in the following paragraphs summarize in capsule form the general
strategy and recent results of each fund over the past six months. We believe
any Princor fund should, under normal circumstances, represent only a portion of
an investor's total investments. For most investors a portfolio should be
balanced among stocks, bonds, and cash reserves to fit their own needs and risk
tolerance. Those who maintain this balanced approach should be aware of the
short-term results, but focus on the long term. Past performance is no guarantee
of future results. Fund values will fluctuate so that the shares, upon
redemption, may be worth more or less than their original cost.
Growth-Oriented Funds
Princor Balanced Fund
Judi Vogel
Surprisingly strong economic growth and higher interest rates caused
fixed income returns to falter over the last six months. The Federal
Reserve Board's decision in March to increase short-term rates seemed
to confirm investors' fears that inflation was becoming a problem.
However, even with essentially full resource utilization, price
increases at both the producer and consumer levels have been modest.
The stock market was divided between the haves and the have-nots with
size, stature, liquidity and quality being the factors determining
performance success. Aided by continued profit growth, large liquid
stocks (such as those comprising the S&P 500 and Dow Industrial
Indices) have performed exceedingly well. Smaller, less visible names
and the broader market indices in general have disappointed investors
over the period.
The Princor Balanced Fund participates in both the equity and fixed
income markets, providing a diversified portfolio of stocks and bonds
for shareholders. The Fund's equity portfolio is currently
concentrated in companies whose earnings are less sensitive to the
direction of the economy. In the fixed income area the Fund is
maintaining a quality bias.
Princor Blue Chip Fund
Mark Williams
Economic news for the past six months continued to be ideal. Inflation
remained tame and the economy experienced significant growth during
the fourth quarter of 1996 and the first quarter of 1997. Companies
continued to report excellent profits and earnings growth. The stock
market, however, did not reward all companies equally. Large cap
companies, such as those held in the Princor Blue Chip Fund,
outdistanced their small cap brethren for this reporting period. Two
reasons for this have been given. First, increased volatility during
the past three months has caused investors to prefer larger more
stable companies. This "liquidity preference" should remain in effect
as long as the markets remain volatile. Second, larger companies have
experienced better year over year earnings growth than small companies
in general. This is true despite the dollar's continued strength.
The Fund's strategy continues to reflect a preference for companies
that offer consistent earning and dividend increases. Historically,
these companies have traded at premiums to their less consistent
counterparts, but the current environment puts less weight on
consistency. Management believes the performance premium will return
in a period of economic uncertainty.
Princor Capital Accumulation Fund
David White
Catherine Green
The market has continued to have a narrow focus regarding stock market
leadership during the past six months. Larger growth stocks have been
rewarded with higher prices relative to their earnings, while the
broader market has failed to keep pace. At some point, the market will
have to look at the underlying prospects of these companies to
determine when this strong relative performance should end. In the
interim, the average stock has not enjoyed returns as strong as the
leaders.
With the Fund's value bias, it is difficult for the portfolio to own
several of these market leaders based on the price relative to their
future earnings potential. The goal of the Princor Capital
Accumulation Fund is to look for companies that are priced at a
discount to their future potential and relative to where the stock has
sold historically. Many of these market leaders do not fit our
criteria of valuation. Fund management continues to look for companies
where it feels the market has underpriced the potential. This is a
solid way to understand the values of the companies as the market
increases in its short term volatility.
Princor Emerging Growth Fund
Mike Hamilton
The stock market has favored large capitalization companies for the
past several quarters. The first quarter 1997 saw the market concerned
with whether the Federal Reserve would commit to raising the level of
interest rates in anticipation of continued strong economic growth. As
a consequence, the market sold off in the first part of the year only
to recover recently.
The Fund continues to invest in companies with good perceived earnings
growth whose prices do not yet reflect this growth. Areas such as
healthcare, financials and technology have these characteristics. The
economy continues to perform well with little perceived inflation; a
condition which investors like and which could continue to increase
valuations.
Investing in small company stock funds involves more abrupt or erratic
market movement and may involve greater risk than other stock funds.
Princor Growth Fund
Mike Hamilton
The Princor Growth Fund recovered nicely during the first quarter of
1997. The market has continued to produce the very positive returns on
stocks that began in 1996. This advance has been fueled by the
positive earnings announcements by companies coupled with benign
inflation reports and positive money flows into mutual funds.
The Fund's focus has been on companies that have concentrated on
reducing cost and becoming more productive. Also, companies that have
brand identity and other barriers limiting competition are companies
the Fund favors. Major areas of interest are financials, consumer
staples and healthcare. As long as the economy continues to grow at a
moderate rate without triggering inflation, the outlook for the
financial markets, and particularly stocks, is very favorable.
Princor Utilities Fund
Catherine Green
The utilities industry has been experiencing major changes as it moves
from a regulated environment to open competition. Natural gas is the
sector with the most experience with these changes, but the electric
and telephone companies are also experiencing a new business
environment. With these changes, stock prices have experienced greater
volatility. As the market continues to determine how to invest in a
changing industry, the focus will shift as the Fund moves forward.
The goal of the Fund is to determine which companies will be
successful in preparing themselves for the move to a more competitive
environment. Companies are taking different paths to move to
competition, and there may be more than one way to be successful.
Being a low cost provider can be an advantage. Diversifying overseas
is another way some companies are trying to grow. Adding additional
energy service products is yet another way a company can add to its
revenue base.
For the past six months, any disappointing news has been tough on
stock prices. With the Fund's focus more on the higher quality end of
the spectrum, many of the stocks in the portfolio experienced lower
volatility and stronger performance in the quarter. The Fund
outperformed the Dow Jones Utility Index as this focus on quality
aided relative performance. However, utilities stocks did underperform
the market during the first calendar quarter, and comparable funds
that have a broader list of holdings outside of the utilities universe
tended to outperform this Fund.
Management will continue to make quality a focus of this portfolio and
monitor this changing environment to determine factors that will help
these companies succeed.
Fund share values are subject to market changes directly related to
the utilities industry.
Princor World Fund
Scott Opsal
The Princor World Fund has outperformed other international equity
funds and the EAFE Index over the past six months. The Fund produced
above average returns primarily due to its overweighting in European
companies combined with minor exposures to Japan and weak Asian
markets. Results have been influenced by foreign exchange
developments. The strong dollar produced substantial market gains
across Europe as these export driven economies stand to gain from a
strong dollar. On the other hand, the Fund lost a fair portion of this
gain as the strong dollar reduced the effective return to U.S.
dollar-based investors. The currency translation effect reduced
returns by an estimated 5.5% for the Fund, compared with a 6% currency
loss for EAFE.
The year long strategy of switching from cyclicals to stable growth
worked well in the last six months as the portfolio's less cyclical
growth names came through with broad based gains. Financial stocks
have also done particularly well in this period of lower interest
rates and low inflation. The Fund has also added value due to a higher
than average exposure to small cap holdings. The portfolio's strategy
focuses on finding companies offering consistent earnings growth at
reasonable prices. Fund management sees significant strength in global
economies and industrial production, but the valuation of industrial
and cyclical stocks creates the need to be very selective in that
sector. European valuations continue to climb, meaning the best
hunting grounds remain outside Europe and Japan. Developed
non-European markets, Latin America, small cap issues and a handful of
Asian markets represent the best opportunities today.
Fund shares are subject to volatility caused by foreign economies,
exchange rates and foreign taxation.
Important Notes for Growth-Oriented Funds
Standard & Poor's 500 Stock Index: An unmanaged index of 500 widely held common
stocks representing industrial, financial, utility and transportation companies
listed on the New York Stock Exchange, American Stock Exchange and the
Over-the-Counter market.
Dow Jones Industrial Index: This average is a price-weighted average of 30
actively traded blue chip stocks.
Dow Jones Utilities Index with Income: This average is a price-weighted average
of 15 utility companies that are listed on the New York Stock Exchange and are
involved in the production of electrical energy.
Morgan Stanley Capital International EAFE (Europe, Australia and Far East)
Index: This average reflects an arithmetic, market value weighted average of
performance of 1,920 listed securities which are listed on the stock exchanges
of the following countries: Australia, Austria, Belgium, Denmark, Netherlands,
New Zealand, Norway, Singapore/Malaysia, Spain, Sweden, Switzerland, and the
United Kingdom.
Income-Oriented Funds
Princor Bond Fund
Scott Bennett
Rising interest rates during the six months ended April 30 have held
down absolute returns for fixed income investments. Interest rates
rose on strong economic data and a Federal Reserve rate increase,
although actual inflation remained at very low levels. The Princor
Bond Fund underperformed the Lehman Brothers, BAA Corporate Index
during this time period due to the somewhat longer duration of the
Fund and the lack of expenses in the index.
BBB rated bonds continued to be an attractive asset class within the
investment grade bond market. Price increases have resulted from
continued strong investor demand for higher yields and continued
general economic strength. The Fund's strategy remains to be fully
invested and concentrate in BBB bonds which are well diversified by
credit. High yield bonds outperformed investment grade issues during
the period but we have resisted increasing the risk level of the Fund
with our average credit rating of BBB+.
Princor Government Securities Income Fund
Marty Schafer
The Federal Reserve preemptive rate hike hurt six month returns for
the period ended April 30. The Federal Reserve raised the Fed Funds
rate* from 5.25% to 5.50% in the midst of stronger than expected
economic growth. However, all signs of current inflation are benign.
Thus, the Fed is raising rates to prevent future inflation. For
long-term investors this is a good sign. In a sense the Fed is
regulating financial asset returns, temporarily putting a floor on
rates and a cap on stocks until moderate growth numbers return.
Short-term investor expectations must become more realistic; flat to
negative returns. However, this should be a good time to accumulate
fixed income assets as growth slows (the Fed will make sure growth
slows to a reasonable level) and inflation remains benign.
With the Fed putting lower rates on hold, the Fund is taking
additional call risk by purchasing securities priced around par.
Management feels this to be of little risk, as the Fed is now
preventing any near term refinancing opportunities. Low income
producing bonds are being eliminated from the portfolio by selling
high book value bonds and replacing them with current market value
bonds.
The current portfolio is well positioned for the period ahead. It has
a number of securities that are "seasoned" (e.g., original 30 year
loans that have been outstanding for three years or more) and
therefore valued more highly in the marketplace. There are few
securities priced above par, so prepayment risk is negligible. If the
future continues to be an era of economic prosperity there should
continue to be strong housing markets and housing turnover that will
cause prepayments on the Fund's securities to exceed market
expectations. These repayments are welcomed, as the portfolio is
priced at a discount and the Fund will be repaid at par.
While the underlying securities of the Fund are guaranteed by the U.S.
Government as to the timely payment of principal and interest, fund
shares are not.
Princor High Yield Fund
Ken Hovey
The Princor High Yield Fund, and the high yield bond market in
general, performed well until mid-March when the high yield bond
market retreated in value. The price decline lasted until mid-April
when a rally began. Returns were negative for March, but positive for
all other months. Return performance of the Fund was close to that of
the Lehman Brothers High Yield Index and the Lipper High Current Yield
Fund Average for each month individually and for the six month period.
The greatest divergences the Fund had occurred with higher return in
November and lower return in April. Price movements on several
securities caused these differences and management feels they are
insignificant.
Price weakness in March was caused by a combination of events
including a weak stock market, increasing interest rates, and a
perception that the high yield bond market was slightly overvalued.
While saying that, remember that the high yield bond market is not
highly correlated in price movement with either the stock market or
with other types of bonds. High yield bonds have proven to be a unique
asset class that provides diversification from other types of assets.
In addition, the Fund has over fifty securities in its portfolio
providing adequate diversification. It is important to note, however,
that like the stock market there are significant differences in
returns within different high yield sectors. Sectors mean not only
industry groups, but also credit quality and more subtle
characteristics such as liquidity of issues.
While the high yield bond market recovered some of its March losses in
the later half of April, it was still considered slightly undervalued.
The key variables for high yield bond market performance have proven
to be credit quality, market liquidity and monetary policy. With the
combination of default rates on high yield bonds remaining low, cash
coming into the market and plenty of credit availability from the
banking industry, it is expected the high yield bond market will
continue to provide good returns relative to other income generating
assets into the foreseeable future.
Greater credit risks are inherent in a fund which invests primarily in
high yield bonds.
Princor Limited Term Bond Fund
Marty Schafer
The economy has been growing at a strong clip through both the fourth
quarter of 1996 and the first quarter of 1997. Through most of this
period the surge in growth has pushed interest rates higher due to
fears of inflation. In late March the Federal Reserve expressed its
concern over potential wage inflation by increasing the Fed Funds
rate* by 0.25% to 5.50%, and the market sent overall rates higher as
well. The Fed's action was an attempt to prevent future inflation even
though there are few signs of inflation currently visible on the
horizon. Government measures of inflation continue to present a benign
situation, which prompted a decrease in market interest rates in
April. The interest rate environment is expected to remain choppy
until the markets are convinced that recent growth will not lead to an
upswing in inflation.
The Limited Term Bond Fund is well positioned for the conservative
investor who either has a short investment horizon or cannot tolerate
the market's volatility. The bulk of the Fund's interest rate risk is
concentrated in the three to five year maturity range. The portfolio
has less price volatility compared to its Lipper Short-Intermediate
Investment Grade Debt Fund Average, a characteristic which serves
shareholders well when interest rates rise. The credit risk premium
earned on the Fund's corporate bond holdings has tightened during the
period, which provides capital appreciation yet makes new purchases
appear fully valued. Fund managers continue to search for the best
value among and within the asset classes represented in the portfolio.
Princor Tax-Exempt Bond Fund
Dan Garrett
Princor Tax-Exempt Bond Fund continued to provide excellent results
for shareholders for the six months ended April 30. The Fund's focus
on value priced issues within the industrial, hospital and utility
sectors provides a competitive advantage over funds which emphasize
insured or general obligation debt.
The Fund's management takes a disciplined approach to exposure to
interest rate risk by maintaining a fairly constant mix of diversified
maturities and prepayment risks. Duration, measuring the sensitivity
of the value of bonds to changes in interest rates, is maintained
around 7.5 to 8.5 years. The Fund has performed well for the past two
years despite various periods of rising and falling interest rates.
The Fund's objective is to provide attractive tax-exempt income while
preserving value over the long term. Princor Tax-Exempt Bond Fund
continues to meet this objective using a long-term disciplined focus
on credit risk, while prudently managing interest rate and prepayment
risk.
Fund dividends are exempt from federal taxation, but may not be exempt
from state and local taxes. The alternative minimum tax applies to
some investors. Possibly, any capital gains resulting from the growth
of principal are not tax-exempt.
Important Notes for Income-Oriented Funds
* The Fed Funds rate is the rate at which banks lend to each other on an
overnight basis.
Lehman Brothers, Baa Corporate Index: An unmanaged index of all publicly issued,
fixed-rate, nonconvertible, dollar-denominated, SEC-registered corporate debt
rated Baa or BBB by Moody's or Standard & Poor's.
Lehman Brothers, High Yield Index: An unmanaged index of all publicly issued
fixed, dollar-denominated, SEC-registered corporate debt rated Ba1 or lower with
at least $100 million outstanding and one year or more to maturity.
Lipper High Current Yield Fund Average: This average consists of funds which aim
at high (relative) current yield from fixed income securities. No quality or
maturity restrictions. They tend to invest in lower grade debt issues. The
one-year average currently contains 158 funds.
Lipper Short-Intermediate Investment Grade Debt Fund Average: This average
consists of funds which invest at least 65% of their assets in investment-grade
debt issues rated in the top four grades with dollar-weighted average maturities
of one to five years. The one year average currently contains 78 funds.
Money Market Funds
Princor Cash Management Fund
Princor Tax-Exempt Cash Management Fund
Mike Johnson
Steve Schneider
The Federal Reserve Board maintained the targeted Fed Funds rate* at
5.25% through the March 25 Federal Open Market Committee ("FOMC")
meeting. At that time they raised the targeted level by .25% to 5.50%.
Because Chairman Greenspan had gone out of his way to warn investors
of an imminent increase, the hike did not come as any real surprise.
For the most part it had already been factored into rates. The
decision for the raise was attributed to "persisting strength in
demand . . . which was progressively increasing the risk of
inflationary imbalances." The Fund's average maturity target increased
to the high 50s during the latter part of 1996 after the chances of
any Fed action before year-end diminished. This target increased again
to the 60+ day range following the early February FOMC meeting where
no action was taken. However, once a March 1997 move was anticipated,
the average maturity moved back down to the upper 50s level. Fund
management continues to target and actively monitor the industry
averages to keep both yields and average maturities in line. Both
portfolios continue to invest from a list of the highest credit
quality issues that are actively managed by the investment securities
analytical staff. Princor's assets, as well as those industrywide for
both the taxable and tax-exempt sides, reached record levels the first
week of April and have declined somewhat since the April 15 tax date.
Investment in the money market funds is neither insured nor guaranteed
by the U.S. Government. While the Funds strive to maintain a $1.00 per
share net asset value, there can be no guarantee they will do so.
Fund dividends are exempt from federal taxation, but may not be exempt
from state and local taxes. The alternative minimum tax applies to
some investors. Possibly, any capital gains resulting from the growth
of principal are not tax-exempt.
* The Fed Funds rate is the rate at which banks lend to each other on an
overnight basis.
Investing for Your Retirement Dreams
Though most people dream about the day they will retire, many fail to plan
adequately. Retirement dreams, such as traveling to foreign countries,
membership to the local golf club or fishing a bass-filled lake do not come
cheap! How can you make your retirement dreams come true? One good way may be to
begin investing for them as soon as possible.
Start Your Retirement Investment Program Today
Procrastinating on your retirement program is an easy thing to do. However, what
you may not realize is that time plays a major role in the success of any
investment program. History has shown the earlier you start investing, the
greater your potential for return. Consider the Early Saver and the
Procrastinator.
Early Saver begins investing at age 35. For the next ten years, Early Saver
contributes $2000 per year for a total of $20,000. At the end of ten years,
Early Saver stops contributing but leaves the investment to grow until age 65.
Early Saver's investment grows at a rate of 10% per year and compounds annually.
Over the thirty-year period, the Early Saver's investment grows to more than
$259,000.
Procrastinator waits until age 45 before starting a retirement investment
program. The Procrastinator contributes $2000 per year for the next twenty
years. The Procrastinator contributes a total of $40,000. Procrastinator's
investment also grows at a rate of 10% per year/compounded annually. However at
age 65, Procrastinator's investment is worth just $138,000. The Procrastinator
did not take advantage of the power of time. As a result, the Procrastinator's
ending investment is little more than half that of the Early Saver.
Investing early adds up; start today!
Early Saver Procrastinator
====== ------------- -------------- ------ -------------- ================
Age Cumulative Account Value Age Cumulative Account Value
Investment Investment
====== ------------- -------------- ------ -------------- ================
35 $ 2,000 $2,200 35 $ 0 $ 0
====== ------------- -------------- ------ -------------- ================
40 $12,000 $16,974 40 $ 0 $ 0
====== ------------- -------------- ------ -------------- ================
45 $20,000 $38,569 45 $2,000 $2,200
====== ------------- -------------- ------ -------------- ================
50 $20,000 $62,115 50 $12,000 $16,974
====== ------------- -------------- ------ -------------- ================
55 $20,000 $100,037 55 $22,000 $40,769
====== ------------- -------------- ------ -------------- ================
60 $20,000 $161,110 60 $32,000 $79,089
====== ============= ============== ====== ============== ================
65 $20,000 $259,470 65 $40,000 $138,605
====== ============= ============== ====== ============== ================
This example is for illustrative purposes only and does not represent the
performance of any Princor fund. The impact of taxes is not considered.
There is a Retirement Investment Program for Every Size Budget
Don't let a limited budget stop you from pursuing your retirement dreams. Even
those individuals with smaller amounts to invest can take advantage of time and
compounding. An example of a relatively small monthly investment of $100
compounded monthly at an annualized rate of 10% is shown above right. Give time
and compounding a chance to help make your retirement dreams come true!
$100 Per Month Compounded at 10%
Bar Chart Showing:
10 Years $ 20,484
20 Years 75,937
30 Years 226,049
40 Years 632,408
This example is for illustrative purposes only and does not represent the
performance of any Princor fund. Mutual fund values will fluctuate and, when
redeemed, may be worth more or less than the original cost.
You Can't Afford Not to Invest for Retirement
Most experts agree that you will need at least 75% of your current income to
maintain your standard of living in retirement. Also, the fact that people are
living longer and retiring earlier, makes a retirement investment program even
more important. Although we like to think Social Security will take care of us
when we retire, this just is not so. This chart shows sources of retirement
income. Will you be financially prepared when the time to retire arrives?
Pie Chart showing: Social Security - 44%
Pension and Annuities - 18%
Income from Assets - 18%
Earnings - 18%
Other - 2%
Source: Employee Benefit Research Institute
Remember, the percentage of your income from Social Security and pension depends
on your total income and your age at retirement. Each situation varies. Due to
future regulations, these percentages are subject to change. This chart provides
a picture of the average distribution sources for those over age 65.
Princor has many ways you can start investing to make your retirement dreams a
reality! Fund your future with Princor. For more information on investing for
your retirement, call your registered representative or contact Princor Customer
Service at (800) 247-4123.
<PAGE>
<TABLE>
<CAPTION>
April 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Princor Princor Princor Capital
Balanced Blue Chip Accumulation
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Investment in securities -- at cost....... $81,632,786 $58,311,165 $404,935,612
Assets
Investment in securities -- at value (Note 4) $89,220,758 $79,056,595 $488,900,703
Cash...................................... 2,000 89,451 2,000
Receivables:
Dividends and interest................. 441,867 92,570 740,490
Investment securities sold.............. -- -- --
Capital Stock sold...................... 194,788 205,752 556,233
Other assets............................... 4,681 1,063 29,638
Total Assets 89,864,094 79,445,431 490,229,064
Liabilities
Accrued expenses.......................... 74,295 28,664 258,325
Capital Stock reacquired................... 57,191 39,934 54,588
Total Liabilities 131,486 68,598 312,913
Net Assets Applicable to
Outstanding Shares ........................ $89,732,608 $79,376,833 $489,916,151
Net Assets Consist of:
Capital Stock.............................. $ 64,238 $ 42,430 $ 187,329
Additional paid-in capital................. 79,173,797 58,387,477 374,813,478
Accumulated undistributed net
investment income....................... 100,388 36,647 2,863,988
Accumulated undistributed net realized
gain (loss) from:
Investment transactions................. 2,806,213 164,849 28,086,265
Foreign currency transactions........... -- -- --
Net unrealized appreciation of investments. 7,587,972 20,745,430 83,965,091
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies -- -- --
Total Net Assets $89,732,608 $79,376,833 $489,916,151
Capital Stock (par value: $.01 a share)
Shares authorized.......................... 100,000,000 100,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $75,739,388 $60,015,084 $463,344,604
Shares issued and outstanding. 5,417,680 3,205,077 17,710,860
Net asset value per share...... $13.98 $18.73 $26.16
Maximum offering price per share(a) $14.68 $19.66 $27.46
Class B: Net Assets....................... $8,567,516 $11,680,610 $17,213,560
Shares issued and outstanding. 615,039 626,609 661,609
Net asset value per share(b)... $13.93 $18.64 $26.02
Class R: Net Assets....................... $5,425,704 $7,681,139 $9,357,987
Shares issued and outstanding. 391,046 411,288 360,408
Net asset value per share...... $13.87 $18.68 $25.96
<FN>
(a) Maximum offering price is equal to net asset value plus a front-end sales
charge of 4.75% of the offering price. (b) Redemption price per share is
equal to net asset value less any applicable contingent deferred sales
charge.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Princor Princor Princor Princor
Emerging Growth Growth Utilities World
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C> <C>
Investment in securities -- at cost....... $232,946,120 $208,430,864 $65,295,435 $199,683,562
Assets
Investment in securities -- at value (Note 4) $309,812,862 $307,515,331 $69,176,317 $249,561,761
Cash...................................... 5,251 2,001 2,000 59,898
Receivables:
Dividends and interest................. 323,459 280,891 353,566 1,014,516
Investment securities sold.............. -- -- -- 1,007,416
Capital Stock sold...................... 581,879 507,679 53,220 466,054
Other assets............................... 4,872 11,573 1,440 3,509
Total Assets 310,728,323 308,317,475 69,586,543 252,113,154
Liabilities
Accrued expenses.......................... 254,222 254,997 84,829 60,593
Capital Stock reacquired................... 183,578 97,629 92,142 253,457
Total Liabilities 437,800 352,626 176,971 314,050
Net Assets Applicable to
Outstanding Shares ........................ $310,290,523 $307,964,849 $69,409,572 $251,799,104
Net Assets Consist of:
Capital Stock.............................. $ 84,864 $ 70,428 $ 60,428 $ 294,508
Additional paid-in capital................. 230,684,359 206,785,020 64,958,944 200,675,978
Accumulated undistributed net
investment income....................... 403,356 518,968 420,884 1,294,902
Accumulated undistributed net realized
gain (loss) from:
Investment transactions................. 2,251,202 1,505,966 88,434 (281,031)
Foreign currency transactions........... -- -- -- (38,214)
Net unrealized appreciation of investments. 76,866,742 99,084,467 3,880,882 49,878,199
Net unrealized depreciation on translation of
assets and liabilities in foreign currencie -- -- -- (25,238)
Total Net Assets $310,290,523 $307,964,849 $69,409,572 $251,799,104
Capital Stock (par value: $.01 a share)
Shares authorized.......................... 100,000,000 100,000,000 1,000,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $263,304,695 $267,275,965 $62,580,287 $223,275,155
Shares issued and outstanding. 7,192,152 6,109,723 5,447,315 26,103,266
Net asset value per share...... $36.61 $43.75 $11.49 $8.55
Maximum offering price per share(a) $38.44 $45.93 $12.06 $8.98
Class B: Net Assets....................... $38,769,473 $31,440,620 $5,900,707 $22,827,355
Shares issued and outstanding. 1,069,211 720,649 514,219 2,679,453
Net asset value per share(b)... $36.26 $43.63 $11.48 $8.52
Class R: Net Assets....................... $8,216,355 $9,248,264 $928,578 $5,696,594
Shares issued and outstanding. 225,075 212,388 81,303 668,122
Net asset value per share...... $36.50 $43.54 $11.42 $8.53
<FN>
(a) Maximum offering price is equal to net asset value plus a front-end sales
charge of 4.75% of the offering price. (b) Redemption price per share is
equal to net asset value less any applicable contingent deferred sales
charge.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Princor Princor Princor Capital
Balanced Blue Chip Accumulation
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C>
Dividends............................. $ 533,979 $ 709,677 $ 5,920,978
Less: Withholding tax on
foreign dividends................. -- -- --
Interest............................... 1,055,888 62,354 331,723
Total Income 1,589,867 772,031 6,252,701
Expenses:
Management and investment advisory
fees (Note 3)....................... 245,008 161,531 963,131
Distribution and shareholder servicing
fees (Note 1 and 3)................. 142,129 122,036 355,292
Transfer and administrative services
(Note 1 and 3)...................... 134,322 121,195 326,451
Registration fees (Note 1)............. 20,673 20,029 25,922
Custodian fees ........................ 3,913 2,573 3,520
Auditing and legal fees ............... 2,932 2,903 4,202
Directors' fees ....................... 3,690 3,635 3,772
Other ................................. 2,903 3,204 13,352
Total Gross Expenses 555,570 437,106 1,695,642
Less: Management and investment
advisory fees waived............. -- -- --
Total Net Expenses 555,570 437,106 1,695,642
Net Investment Income 1,034,297 334,925 4,557,059
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions................ 2,814,700 165,597 28,089,676
Foreign currency transactions.......... -- -- --
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments............................ 870,243 7,015,666 10,370,941
Translation of assets and liabilities in
foreign curencies...................... -- -- --
Net Realized and Unrealized Gain
on Investments and Foreign Currency 3,684,943 7,181,263 38,460,617
Net Increase in Net Assets
Resulting from Operations $4,719,240 $7,516,188 $43,017,676
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Princor Princor Princor Princor
Emerging Growth Growth Utilities World
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C> <C>
Dividends............................. $ 1,154,244 $ 1,791,298 $1,838,261 $ 3,059,115
Less: Withholding tax on
foreign dividends................. -- -- -- 402,413
Interest............................... 1,206,630 656,417 16,617 500,172
Total Income 2,360,874 2,447,715 1,854,878 3,156,874
Expenses:
Management and investment advisory
fees (Note 3)....................... 868,479 645,804 216,286 781,583
Distribution and shareholder servicing
fees (Note 1 and 3)................. 511,430 436,864 110,096 296,039
Transfer and administrative services
(Note 1 and 3)...................... 527,034 472,204 114,277 336,864
Registration fees (Note 1)............. 40,869 37,372 22,176 30,535
Custodian fees ........................ 4,283 3,068 2,353 103,126
Auditing and legal fees ............... 3,866 4,037 2,742 4,198
Directors' fees ....................... 3,725 3,792 3,692 3,720
Other ................................. 8,113 8,386 3,470 6,594
Total Gross Expenses 1,967,799 1,611,527 475,092 1,562,659
Less: Management and investment
advisory fees waived............. -- -- 36,993 --
Total Net Expenses 1,967,799 1,611,527 438,099 1,562,659
Net Investment Income 393,075 836,188 1,416,779 1,594,215
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions................ 2,255,012 1,506,049 1,427,251 (338,525)
Foreign currency transactions.......... -- -- -- (38,214)
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments............................ 12,513,059 28,686,117 (867,049) 19,382,999
Translation of assets and liabilities in
foreign curencies...................... -- -- -- (26,140)
Net Realized and Unrealized Gain
on Investments and Foreign Currency 14,768,071 30,192,166 560,202 18,980,120
Net Increase in Net Assets
Resulting from Operations $15,161,146 $31,028,354 $1,976,981 $20,574,335
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Princor
Balanced Blue Chip
GROWTH FUNDS Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, October 31, April 30, October 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................. $ 1,034,297 $ 1,869,747 $ 334,925 $ 562,602
Net realized gain (loss) from:
Investment transactions....................... 2,814,700 6,825,321 165,597 1,456,128
Foreign currency transactions................. -- -- -- --
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 870,243 751,917 7,015,666 4,958,684
Net Increase in Net Assets
Resulting from Operations 4,719,240 9,446,985 7,516,188 6,977,414
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (986,529) (1,977,960) (308,208) (597,121)
Class B ...................................... (71,421) (80,727) (11,848) (28,747)
Class R ...................................... (34,084) (3,345)(a) (16,660) (3,612)(a)
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (6,130,546) (2,798,187) (1,212,178) (811,021)
Class B ...................................... (567,091) (71,791) (187,947) (46,234)
Class R....................................... (112,915) -- (55,267) --
Total Distributions (7,902,586) (4,932,010) (1,792,108) (1,486,735)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 10,483,300 14,014,587 15,056,938 16,456,171
Class B ...................................... 2,678,263 4,729,247 4,570,396 4,623,404
Class R....................................... 4,737,176 894,478(a) 6,006,109 1,584,827(a)
Shares issued in reinvestment of dividends
and distributions:
Class A....................................... 6,441,822 3,967,925 1,452,664 1,107,738
Class B ...................................... 633,327 151,751 197,847 74,660
Class R....................................... 146,943 3,345(a) 71,924 3,610(a)
Shares redeemed:
Class A ...................................... (9,136,444) (8,463,657) (5,535,357) (13,383,349)
Class B ...................................... (434,956) (499,765) (374,377) (370,763)
Class R ...................................... (291,870) (42,847)(a) (283,792) (40,315)(a)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 15,257,561 14,755,064 21,162,352 10,055,983
Total Increase (Decrease) 12,074,215 19,270,039 26,886,432 15,546,662
Net Assets
Beginning of period............................... 77,658,393 58,388,354 52,490,401 36,943,739
End of period (including undistributed net
investment income as set forth below)......... $89,732,608 $77,658,393 $79,376,833 $ 52,490,401
Undistributed Net Investment Income ............ $ 100,388 $ 158,125 $ 36,647 $ 38,438
<FN>
(a) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Capital Princor
Accumulation Emerging Growth
GROWTH FUNDS Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, October 31, April 30, October 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................. $ 4,557,059 $ 7,096,846 $ 393,075 $ 824,482
Net realized gain (loss) from:
Investment transactions....................... 28,089,676 62,796,872 2,255,012 8,797,569
Foreign currency transactions................. -- -- -- --
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 10,370,941 21,196,743 12,513,059 21,625,120
Net Increase in Net Assets
Resulting from Operations 43,017,676 91,090,461 15,161,146 31,247,171
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (4,376,310) (6,575,207) (357,865) (769,946)
Class B ...................................... (51,881) (40,153) (4,781) (5,762)
Class R ...................................... (25,041) (377)(a) (592) (100)(a)
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (60,900,189) (20,944,284) (7,708,219) (3,664,659)
Class B ...................................... (1,471,953) (159,788) (989,930) (234,733)
Class R....................................... (338,789) -- (95,053) --
Total Distributions (67,164,163) (27,719,809) (9,156,440) (4,675,200)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 29,425,089 38,526,395 37,957,206 73,310,489
Class B ...................................... 7,106,093 6,857,184 11,165,593 18,956,446
Class R....................................... 7,741,991 1,747,855(a) 6,582,260 2,007,738(a)
Shares issued in reinvestment of dividends
and distributions:
Class A....................................... 64,154,373 27,060,108 7,872,828 4,310,643
Class B ...................................... 1,505,380 199,814 982,074 236,262
Class R....................................... 363,795 377(a) 95,628 100(a)
Shares redeemed:
Class A ...................................... (42,252,091) (31,940,130) (17,391,864) (23,052,083)
Class B ...................................... (729,193) (468,502) (2,438,506) (1,969,387)
Class R ...................................... (453,922) (57,097)(a) (500,303) (19,892)(a)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 66,861,515 41,926,004 44,324,916 73,780,316
Total Increase (Decrease) 42,715,028 105,296,656 50,329,622 100,352,287
Net Assets
Beginning of period............................... 447,201,123 341,904,467 259,960,901 159,608,614
End of period (including undistributed net
investment income as set forth below)......... $489,916,151 $447,201,123 $310,290,523 $259,960,901
Undistributed Net Investment Income ............ $ 2,863,988 $ 2,760,161 $ 403,356 $ 373,519
<FN>
(a) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Princor
Growth Utilities
GROWTH FUNDS Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, October 31, April 30, October 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................. $ 836,188 $ 1,998,350 $ 1,416,779 $ 2,763,362
Net realized gain (loss) from:
Investment transactions....................... 1,506,049 2,443,260 1,427,251 1,903,036
Foreign currency transactions................. -- -- -- --
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 28,686,117 15,785,039 (867,049) 907,722
Net Increase in Net Assets
Resulting from Operations 31,028,354 20,226,649 1,976,981 5,574,120
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (976,257) (1,861,151) (1,225,443) (2,523,991)
Class B ...................................... (14,920) (18,683) (85,379) (158,855)
Class R ...................................... (8,729) (57)(a) (10,434) (1,864)(a)
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (2,178,611) (5,595,988) -- --
Class B ...................................... (232,703) (291,406) -- --
Class R....................................... (27,484) -- -- --
Total Distributions (3,438,704) (7,767,285) (1,321,256) (2,684,710)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 28,429,351 57,801,956 2,859,644 11,274,737
Class B ...................................... 6,640,724 16,237,487 1,020,336 3,349,548
Class R....................................... 7,146,734 2,064,878(a) 701,579 308,620(a)
Shares issued in reinvestment of dividends
and distributions:
Class A....................................... 3,067,970 7,227,308 1,083,776 2,196,843
Class B ...................................... 244,709 308,579 76,415 146,631
Class R....................................... 36,200 57(a) 10,434 1,864(a)
Shares redeemed:
Class A ...................................... (17,175,130) (22,732,322) (8,315,597) (15,770,532)
Class B ...................................... (2,107,549) (1,567,488) (812,741) (2,007,039)
Class R ...................................... (301,105) (13,380)(a) (82,557) (2,894)(a)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 25,981,904 59,327,075 (3,458,711) (502,222)
Total Increase (Decrease) 53,571,554 71,786,439 (2,802,986) 2,387,188
Net Assets
Beginning of period............................... 254,393,295 182,606,856 72,212,558 69,825,370
End of period (including undistributed net
investment income as set forth below)......... $307,964,849 $254,393,295 $ 69,409,572 $ 72,212,558
Undistributed Net Investment Income ............ $ 518,968 $ 682,686 $ 420,884 $ 325,361
<FN>
(a) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor
GROWTH FUNDS World
Fund, Inc.
Six Months Year
Ended Ended
April 30, October 31,
1997 1996
Operations
<S> <C> <C>
Net investment income............................. $ 1,594,215 $ 2,201,363
Net realized gain (loss) from:
Investment transactions....................... (338,525) 7,946,241
Foreign currency transactions................. (38,214) (20,659)
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 907,722 19,356,859
Net Increase in Net Assets
Resulting from Operations 20,574,335 25,984,357
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (2,378,558) (1,382,783)
Class B ...................................... (79,095) (15,481)
Class R ...................................... (19,985) --
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (6,657,131) (5,735,484)
Class B ...................................... (636,001) (196,110)
Class R....................................... (55,824) --
Total Distributions (9,826,594) (7,329,858)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 46,085,285 38,822,208
Class B ...................................... 8,235,016 11,226,931
Class R....................................... 4,715,890 1,038,560(a)
Shares issued in reinvestment of dividends
and distributions:
Class A....................................... 8,871,915 7,075,336
Class B ...................................... 697,509 209,953
Class R....................................... 75,789 --
Shares redeemed:
Class A ...................................... (13,572,604) (17,658,243)
Class B ...................................... (2,857,030) (746,863)
Class R ...................................... (278,845) (6,119)(a)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 51,972,925 39,961,763
Total Increase (Decrease) 62,720,666 58,616,262
Net Assets
Beginning of period............................... 189,078,438 130,462,176
End of period (including undistributed net
investment income as set forth below)......... $251,799,104 $189,078,438
Undistributed Net Investment Income ............ $ 1,294,902 $ 1,601,065
<FN>
(a) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
April 30, 1997
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Princor Balanced Fund, Inc. Princor Emerging Growth Fund, Inc.
Princor Blue Chip Fund, Inc. Princor Growth Fund, Inc.
Princor Capital Accumulation Fund, Inc. Princor Utilities Fund, Inc.
Princor World Fund, Inc.
Note 1 -- Significant Accounting Policies
Princor Balanced Fund, Inc., Princor Blue Chip Fund, Inc., Princor Capital
Accumulation Fund, Inc., Princor Emerging Growth Fund, Inc., Princor Growth
Fund, Inc., Princor Utilities Fund, Inc. and Princor World Fund, Inc. (the
"Growth Funds") are registered under the Investment Company Act of 1940, as
amended, as open-end diversified management investment companies and operate in
the mutual fund industry.
On February 27, 1996, the initial purchases of Class R shares of the Growth
Funds were made by Princor Management Corporation (See Note 3). Effective
February 29, 1996, the Growth Funds began offering Class R shares to eligible
purchasers.
Class A shares generally are sold with an initial sales charge based on
declining rates; certain purchases may be subject to a contingent deferred sales
charge ("CDSC"). Class B shares are sold without an initial sales charge, but
are subject to a declining CDSC on certain redemptions redeemed within six years
of purchase. Class R shares are sold without an initial sales charge and are not
subject to a CDSC. Class B shares and Class R shares bear a higher ongoing
distribution fee than Class A shares. Class B shares automatically convert into
Class A shares, based on relative net asset value (without a sales charge) after
seven years. Class R shares automatically convert into Class A shares, based on
relative net asset value (without a sales charge) after four years. All classes
of shares for each fund represent interests in the same portfolio of
investments, and will vote together as a single class except where otherwise
required by law or as determined by the funds' respective Board of Directors.
The Board of Directors of each fund declare separate dividends on each class of
shares.
The Growth Funds allocate all income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses daily to each class of
shares based upon the relative proportion of the value of shares outstanding of
each class. Expenses specifically attributable to a particular class are charged
directly to such class. Class-specific expenses charged to each class during the
six months ended April 30, 1997, which are included in the corresponding
captions of the Statement of Operations, were as follows:
Distribution and
Shareholder Servicing Fees
Class A Class B Class R
Princor Balanced Fund, Inc. $100,435 $ 31,789 $ 9,905
Princor Blue Chip Fund, Inc. 64,880 41,818 15,338
Princor Capital Accumulation Fund, Inc. 276,162 60,236 18,894
Princor Emerging Growth Fund, Inc. 343,193 149,989 18,248
Princor Growth Fund, Inc. 301,274 116,333 19,257
Princor Utilities Fund, Inc. 82,078 25,615 2,403
Princor World Fund, Inc. 192,609 92,631 10,799
Transfer and
Administrative Services
Class A Class B Class R
Princor Balanced Fund, Inc. $ 42,373 $ 5,126 $ 703
Princor Blue Chip Fund, Inc. 28,398 6,106 949
Princor Capital Accumulation Fund, Inc. 113,733 7,657 1,411
Princor Emerging Growth Fund, Inc. 164,248 24,412 1,418
Princor Growth Fund, Inc. 160,687 21,252 927
Princor Utilities Fund, Inc. 43,332 3,864 220
Princor World Fund, Inc. 114,848 10,792 639
Registration Fees
Class A Class B Class R
Princor Balanced Fund, Inc. $ 4,320 $3,655 $1,940
Princor Blue Chip Fund, Inc. 3,823 3,650 2,024
Princor Capital Accumulation Fund, Inc. 6,607 4,327 2,480
Princor Emerging Growth Fund, Inc. 11,150 6,209 1,953
Princor Growth Fund, Inc. 6,996 6,560 4,280
Princor Utilities Fund, Inc. 8,016 3,896 2,678
Princor World Fund, Inc. 7,724 6,381 2,132
The Growth Funds value securities for which market quotations are readily
available at market value, which is determined using the last reported sale
price or, if no sales are reported, as is regularly the case for some securities
traded over-the-counter, the last reported bid price. When reliable market
quotations are not considered to be readily available, which may be the case,
for example, with respect to certain debt securities, preferred stocks and
foreign securities, the investments are valued by using market quotations,
prices provided by market makers or estimates of market values obtained from
yield data and other factors relating to instruments or securities with similar
characteristics in accordance with procedures established in good faith by each
fund's Board of Directors. Securities with remaining maturities of 60 days or
less are valued at amortized cost, which approximates market.
With respect to Princor World Fund, Inc., the value of foreign securities in
foreign currency amounts is expressed in U.S. dollars at the closing daily rate
of exchange. Shares listed on the Korean Stock Exchange (KSE) which are traded
by foreign investors in foreign over-the-counter transactions generally are
valued at prices at which it is expected such shares may be sold, as determined
by or under the direction of the fund's Board of Directors, provided that the
Board determines that such valuations are accurate; otherwise such KSE shares
will be valued using the procedures for listed securities. The identified cost
of the portfolio holdings is translated at approximate rates prevailing when
acquired. Income and expense amounts are translated at approximate rates
prevailing when received or paid, with daily accruals of such amounts reported
at approximate rates prevailing at the date of valuation.
Since the carrying amount of the foreign securities of the fund is determined
based on the exchange rate and market values at the close of the period, it is
not practicable to isolate that portion of the results of operations arising as
a result of changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities during the period.
The Growth Funds may, pursuant to an exemptive order issued by the Securities
and Exchange Commission, transfer uninvested funds into a joint trading acount.
The order permits the Growth Funds' cash balances to be deposited into a single
joint account along with the cash of other registered investment companies
managed by Princor Management Corporation. These balances may be invested in one
or more short-term instruments.
The Growth Funds record investment transactions generally one day after the
trade date, except for short-term investment transactions which are recorded
generally on the trade date. The identified cost basis has been used in
determining the net realized gain or loss from investment transactions and
unrealized appreciation or depreciation on investments. The Growth Funds record
dividend income on the ex-dividend date, except dividend income from foreign
securities whereby the ex-dividend date has passed; such dividends are recorded
as soon as the Growth Funds are informed of the ex-dividend date. Interest
income is recognized on an accrual basis.
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments and foreign currency transactions are determined
in accordance with federal income tax regulations, which may differ from
generally accepted accounting principles. Permanent book and tax basis
differences are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Reclassifications made for the year ended October 31, 1996 were not material.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each fund
is qualified as a "regulated investment company" under the Internal Revenue Code
and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments for
federal income tax reporting purposes is approximately the same as that for
financial reporting purposes.
Note 3 -- Management Agreement and Transactions With Affiliates
The Growth Funds have agreed to pay investment advisory and management fees to
Princor Management Corporation (wholly owned by Princor Financial Services
Corporation, a subsidiary of Principal Mutual Life Insurance Company)(the
"Manager") computed at an annual percentage rate of each fund's average daily
net assets. The annual rate used in this calculation for the Growth Funds is as
follows:
Net Asset Value of Funds
(in millions)
First Next Next Next Over
Fund $100 $100 $100 $100 $400
Princor Balanced Fund, Inc. 0.60% 0.55% 0.50% 0.45% 0.40%
Princor Blue Chip Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Capital Accumulation Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Emerging Growth Fund, Inc. 0.65% 0.60% 0.55% 0.50% 0.45%
Princor Growth Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Utilities Fund, Inc. 0.60% 0.55% 0.50% 0.45% 0.40%
Princor World Fund, Inc. 0.75% 0.70% 0.65% 0.60% 0.55%
The Growth Funds also reimburse the Manager for transfer and administrative
services, including the cost of accounting, data processing, supplies and other
services rendered.
The Manager voluntarily waives a portion of its fee for the Princor Utilities
Fund, Inc. The waivers are in amounts that maintain total operating expenses
within certain limits. The limits are expressed as a percentage of average net
assets attributable to each class on an annualized basis during the reporting
period. The amount waived and the operating limits, which were maintained at or
below those shown, are as follows:
Amount
Waived
Six Months Ended Year Ended Expense
April 30, 1997 October 31, 1996 Limit
Princor Utilities Fund, Inc.
Class A $31,568 $54,932 1.15%
Class B 2,673 6,690 1.90%
Class R 2,752 -- (a) 1.65%
(a) Period from February 29, 1996, date Class R shares first offered to the
eligible purchasers, through October 31, 1996.
The Manager intends to continue its voluntary waiver and, if necessary, pay
expenses normally payable by Princor Utilities Fund, Inc. through February 28,
1998.
Princor Financial Services Corporation, as principal underwriter, receives
proceeds of any CDSC on certain Class A and Class B share redemptions. The
charge is based on declining rates which for Class A shares, begin at .75% and
for Class B shares at 4.00% of the lesser of the current market value or the
cost of shares being redeemed. Princor Financial Services Corporation also
retains sales charges on sales of Class A shares based on declining rates which
begin at 4.75% of the offering price. The aggregate amount of these charges
retained, by fund, for the period ended April 30, 1997 were as follows:
Class A Class B
Princor Balanced Fund, Inc. $ 245,594 $10,375
Princor Blue Chip Fund, Inc. 326,828 7,832
Princor Capital Accumulation Fund, Inc. 669,703 10,519
Princor Emerging Growth Fund, Inc. 1,036,743 41,663
Princor Growth Fund, Inc. 758,905 47,825
Princor Utilities Fund, Inc. 83,160 16,257
Princor World Fund, Inc. 641,803 57,723
No brokerage commissions were paid by the Growth Funds to Princor Financial
Services Corporation during the periods. Brokerage commissions were paid to
other affiliates by the following funds:
April 30, October 31,
1997 1996
Princor Balanced Fund, Inc. $ 9,696 $ 555
Princor Blue Chip Fund, Inc. 1,481 420
Princor Capital Accumulation Fund, Inc. 8,101 25,993
Princor Emerging Growth Fund, Inc. -- 500
Princor Growth Fund, Inc. -- --
Princor Utilities Fund, Inc. 1,974 2,217
Princor World Fund, Inc. 13,052 4,038
The Growth Funds bear distribution and shareholder servicing fees with respect
to Class A shares computed at an annual rate of up to 0.25% of the average daily
net assets attributable to Class A shares of each fund. Each of the Growth Funds
adopted a distribution plan with respect to Class B shares that provides for
distribution and shareholder servicing fees computed at an annual rate of up to
1.00% of the average daily net assets attributable to Class B shares of each
fund. Effective February 1996, each of the Growth Funds adopted a distribution
plan with respect to Class R shares that provides for distribution and
shareholder servicing fees computed at an annual rate of up to .75% of the
average daily net assets attributable to Class R shares of each fund.
Distribution and shareholder servicing fees are paid to Princor Financial
Services Corporation; a portion of the fees are subsequently remitted to retail
dealers. Pursuant to the distribution agreements, fees unused by the principal
underwriter at the end of the fiscal year are returned to the Growth Funds.
At April 30, 1997, Principal Mutual Life Insurance Company, subsidiaries of
Principal Mutual Life Insurance Company and benefit plans sponsored on behalf of
Principal Mutual Life Insurance Company owned shares of the Growth Funds as
follows:
Class A Class B Class R
Princor Balanced Fund, Inc. 254,239 101 2,416
Princor Blue Chip Fund, Inc. 64,477 89 64
Princor Capital Accumulation Fund, Inc. 6,880,691 64 47
Princor Emerging Growth Fund, Inc. 46,739 44 31
Princor Growth Fund, Inc. 37,577 36 26
Princor Utilities Fund, Inc. 85,553 119 89
Princor World Fund, Inc. 6,185,276 162 140
Note 4 -- Investment Transactions
For the six months ended April 30, 1997, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Growth Funds were as follows:
Purchases Sales
Princor Balanced Fund, Inc. $ 11,880,520 $ 9,559,245
Princor Blue Chip Fund, Inc. 17,225,743 1,698,256
Princor Capital Accumulation Fund, Inc. 100,421,145 91,834,737
Princor Emerging Growth Fund, Inc. 30,326,294 11,958,942
Princor Growth Fund, Inc. 5,620,784 3,575,819
Princor Utilities Fund, Inc. 13,472,660 16,383,302
Princor World Fund, Inc. 72,832,370 25,717,292
At April 30, 1997, net unrealized appreciation of investments by the Growth
Funds was composed of the following:
<TABLE>
<CAPTION>
Net Unrealized
Gross Unrealized Appreciation
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Princor Balanced Fund, Inc. $ 10,179,596 $ (2,591,624) $ 7,587,972
Princor Blue Chip Fund, Inc. 21,501,401 (755,971) 20,745,430
Princor Capital Accumulation Fund, Inc. 97,307,066 (13,341,975) 83,965,091
Princor Emerging Growth Fund, Inc. 94,950,018 (18,083,276) 76,866,742
Princor Growth Fund, Inc. 118,713,331 (19,628,864) 99,084,467
Princor Utilities Fund, Inc. 7,313,553 (3,432,671) 3,880,882
Princor World Fund, Inc. 56,425,338 (6,547,139) 49,878,199
</TABLE>
At April 30, 1997, Princor Balanced Fund, Inc., Princor Emerging Growth Fund,
Inc., Princor Growth Fund, Inc. and Princor World Fund, Inc. held the following
securities which were purchased in a private placement transaction and may
require registration in order to effect a sale in the ordinary course of
business.
<TABLE>
<CAPTION>
Value at Value as a
Date of April 30, Percentage of
Fund Security Description Acquisition Cost 1997 Net Assets
<S> <C> <C> <C> <C> <C>
Princor Balanced Federal-Mogul Corp.; Series D
Fund, Inc. Convertible Preferred Stock 10/15/92 $ 450,450 $ 603,525 .67%
Princor Emerging Ciba-Geigy Corp.; Exchangeable
Growth Fund, Inc. Subordinated Debentures 3/20/91 350,000 362,688 .11
Sierra On Line;
Convertible Subordinated Debentures 8/15/94 458,750 1,404,374 .45
8/17/94 447,125 1,376,288 .44
3,143,350 1.00
Princor Growth Ciba-Geigy Corp.; Exchangeable
Fund, Inc. Subordinated Debentures 3/20/91 500,000 518,125 .17
Princor World Alfa SA; Convertible
Fund, Inc. Subordinated Debentures 9/25/95 1,293,600 1,612,000 .64
11/20/96 779,234 880,400 .35
Fokus Bank 10/9/95 557,692 1,171,218 .47
12/17/96 797,392 1,171,218 .47
Hyundai Motor Co. Ltd. 8/23/96 318,750 210,000 .08
8/28/96 312,500 210,000 .08
9/3/96 159,997 109,200 .04
Kemira Oy 12/13/96 610,584 463,139 .18
12/20/96 1,478,458 1,083,745 .44
2/26/97 1,162,586 935,540 .37
4/8/97 615,051 555,767 .22
4/9/97 41,573 37,051 .01
Royal Group Technologies Ltd. 11/23/94 114,479 315,019 .13
6/26/96 75,889 112,507 .04
6/27/96 159,181 236,264 .09
6/28/96 262,191 384,773 .15
7/2/96 53,382 78,754 .03
7/3/96 149,540 222,763 .09
7/5/96 150,837 225,013 .09
Voest-Alpine Stahl 10/27/95 913,965 1,183,996 .48
1/11/96 414,525 513,065 .20
6/26/96 585,672 678,825 .27
6/27/96 298,647 347,306 .14
12,737,563 5.06
</TABLE>
The Growth Funds' investments are with various issuers in various industries.
The Schedules of Investments contained herein summarize concentrations of credit
risk by issuer and industry.
Note 5 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
<TABLE>
<CAPTION>
Princor Princor Blue Princor Capital
Balanced Fund, Inc. Chip Fund, Inc. Accumulation Fund, Inc.
Six Months Ended April 30, 1997:
Shares sold:
<S> <C> <C> <C>
Class A ......................................... 751,300 831,424 1,126,248
Class B ......................................... 190,954 252,915 274,298
Class R ......................................... 340,671 330,581 300,294
Shares issued in reinvestment of dividends and
distributions:
Class A ........................................... 461,196 81,127 2,498,106
Class B ........................................... 45,505 11,110 58,977
Class R ......................................... 10,608 4,021 14,265
Shares redeemed:
Class A ......................................... (641,397) (302,751) (1,625,990)
Class B ......................................... (30,946) (20,655) (28,225)
Class R ......................................... (20,454) (15,559) (17,692)
Net Increase 1,107,437 1,172,213 2,600,281
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 1,006,927 1,010,928 1,522,381
Class B ......................................... 342,259 285,616 271,398
Class R* ........................................ 62,977 94,417 65,641
Shares issued in reinvestment of dividends and
distributions:
Class A ........................................... 289,049 69,998 1,127,785
Class B ........................................... 11,027 4,760 8,361
Class R* ........................................ 234 214 15
Shares redeemed:
Class A ......................................... (606,332) (828,161) (1,274,731)
Class B ......................................... (35,859) (22,683) (18,454)
Class R* ........................................ (2,990) (2,386) (2,115)
Net Increase 1,067,292 612,703 1,700,281
<FN>
* Period from February 27, 1996 (date operations commenced) through October
31, 1996.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Princor Princor Princor Princor
Emerging Growth Growth Utilities World
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Six Months Ended April 30, 1997:
Shares sold:
<S> <C> <C> <C> <C>
Class A ......................................... 1,033,035 662,086 244,415 5,478,094
Class B ......................................... 306,495 154,755 86,733 985,106
Class R .......................................... 179,549 167,414 60,075 561,786
Shares issued in reinvestment of dividends and
distributions:
Class A ........................................... 214,870 72,629 92,694 1,074,991
Class B ........................................... 27,016 5,783 6,539 85,343
Class R............................................ 2,616 859 898 9,207
Shares redeemed:
Class A ......................................... (474,594) (400,465) (709,124) (1,611,915)
Class B ......................................... (67,050) (49,095) (69,346) (341,056)
Class R ......................................... (13,610) (6,997) (7,110) (33,050)
Net Increase (Decrease) 1,208,327 606,969 (294,226) 6,208,506
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 2,182,164 1,486,767 985,437 5,112,891
Class B ......................................... 566,438 418,002 292,572 1,476,354
Class R* ......................................... 57,072 51,440 27,529 130,933
Shares issued in reinvestment of dividends and
distributions:
Class A ........................................... 136,102 191,988 190,416 1,013,112
Class B ........................................... 7,537 8,274 12,720 30,387
Class R*........................................... 3 2 167 --
Shares redeemed:
Class A ......................................... (688,302) (587,050) (1,377,265) (2,342,950)
Class B ......................................... (58,563) (40,235) (176,703) (96,808)
Class R * ........................................ (555) (330) (256) (754)
Net Increase (Decrease) 2,201,896 1,528,858 (45,383) 5,323,165
<FN>
* Period from February 27, 1996 (date operations commenced) through October
31, 1996.
</FN>
</TABLE>
Note 6 -- Line of Credit
The Growth Funds have an unsecured line of credit with a bank which allows each
fund to borrow up to $500,000. Borrowings are made solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each fund, based on its borrowings, at a rate equal to the bank's
Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee
is charged at the annual rate of .25% of the line of credit. At April 30, 1997,
the Growth Funds had no outstanding borrowings under the line of credit.
April 30, 1997
SCHEDULES OF INVESTMENTS
GROWTH FUNDS
PRINCOR BALANCED FUND, INC.
Shares
Held Value
Common Stocks (54.67%)
Auto & Home Supply Stores (0.56%)
AutoZone, Inc. 20,600(a) $ 504,700
Bakery Products (0.79%)
Sara Lee Corp. 16,800 705,600
Beverages (1.19%)
Pepsico, Inc. 26,600 927,675
Universal Foods Corp. 4,000 141,000
1,068,675
Commercial Banks (4.63%)
Banc One Corp. 17,900 758,512
Bankboston Corp. 10,100 734,775
CoreStates Financial Corp. 13,000 658,125
First of America Bank Corp. 5,300 352,450
Fleet Financial Group, Inc. 13,200 805,200
Nationsbank Corp. 14,000 845,250
4,154,312
Commercial Printing (0.53%)
R. R. Donnelley & Sons Co. 13,900 476,075
Communications Equipment (0.95%)
Allen Telecom, Inc. 4,100(a) 70,725
DSC Communications Corp. 12,400(a) 252,650
General Instrument Corp. 22,700(a) 530,613
853,988
Computer & Data Processing
Services (2.26%)
Computer Associates International, Inc.12,200 634,400
Electronic Data Systems Corp. 23,600 787,650
First Data Corp. 17,400 600,300
2,022,350
Computer & Office Equipment (1.52%)
Hewlett-Packard Co. 10,300 540,750
International Business Machines Corp. 5,100 819,825
1,360,575
Consumer Products (0.51%)
Philip Morris Cos., Inc. 11,700 460,688
Crude Petroleum & Natural Gas (1.34%)
Texaco, Inc. 11,400 1,202,700
Department Stores (0.82%)
Dillard Department Stores, Inc.,
Class A 23,900 737,912
Drug Stores & Proprietary Stores (0.96%)
Rite Aid Corp. 18,700 860,200
Drugs (5.50%)
Abbott Labs 15,600 951,600
American Home Products Corp. 13,500 894,375
Johnson & Johnson 10,300 630,875
Merck & Co., Inc. 8,900 805,450
Pharmacia & Upjohn, Inc. 20,800 616,200
Schering-Plough Corp. 9,300 744,000
Warner-Lambert Co. 3,000 294,000
4,936,500
Electric Light & Wiring
Equipment (0.23%)
Cooper Industries, Inc. 4,433 203,918
Electric Services (2.95%)
Central & Southwest Corp. 26,800 539,350
Dominion Resources, Inc. 11,900 409,062
FPL Group, Inc. 10,300 459,638
Houston Industries, Inc. 26,700 534,000
Potomac Electric Power Co. 12,000 270,000
Southern Co. 21,300 433,988
2,646,038
Electrical Industrial Apparatus (1.01%)
Emerson Electric Co. 17,800 903,350
Electronic Distribution Equipment (0.78%)
General Electric Co. 6,300 698,512
Fats & Oils (0.95%)
Archer Daniels Midland Co. 46,165 848,282
General Industrial Machinery (0.72%)
BW/IP Holdings, Inc., Class A 5,500 89,375
Pall Corp. 24,000 555,000
644,375
Grain Mill Products (0.93%)
Ralston-Ralston Purina Group 10,100 831,988
Greeting Cards (0.75%)
American Greetings Corp. 21,100 675,200
Grocery Stores (3.51%)
Albertson's, Inc. 28,600 943,800
American Stores Co. 21,600 982,800
Sysco Corp. 34,400 1,221,200
3,147,800
Household Furniture (0.96%)
Masco Corp. 22,800 860,700
Industrial Inorganic Chemicals (0.71%)
Dow Chemical Co. 5,600 475,300
Eastman Chemical Co. 3,250 165,750
641,050
Jewelry, Silverware &
Plated Ware (0.22%)
Jostens, Inc. 8,400 200,550
Management & Public Relations (1.26%)
Cognizant Corp. 17,800 580,725
Dun & Bradstreet Corp. 22,500 554,062
1,134,787
Meat Products (0.83%)
Tyson Foods, Inc. 37,150 743,000
Medical Instruments & Supplies (0.79%)
St. Jude Medical, Inc. 21,850(a) 710,125
Medical Service & Health
Insurance (1.12%)
AON Corp. 7,600 505,400
Foundation Health Systems, Inc.,
Class A 17,550(a) 473,850
Physicians Corp. of America 5,700(a) 27,788
1,007,038
Metal Forgings & Stampings (0.51%)
Newell Co. 13,200 462,000
Metalworking Machinery (0.12%)
Giddings & Lewis 5,500 111,375
Miscellaneous Business Services (0.19%)
Safety-Kleen Corp. 11,200 166,600
Miscellaneous Electrical Equipment &
Supplies (0.64%)
Motorola, Inc. 10,000 572,500
Miscellaneous Fabricated Metal
Products (0.14%)
Keystone International, Inc. 6,300 124,425
Miscellaneous Shopping Goods
Stores (1.07%)
Toys 'R' Us, Inc. 33,600(a) 957,600
Motor Vehicles, Parts & Supplies (0.89%)
Grainger (W. W.), Inc. 10,600 798,975
Paper Mills (1.06%)
Kimberly Clark Corp. 18,600 953,250
Petroleum Refining (3.09%)
Atlantic Richfield Co. 9,900 1,347,637
Exxon Corp. 25,200 1,426,950
2,774,587
Plastic Materials & Synthetics (0.10%)
Wellman, Inc. 5,900 92,925
Sanitary Services (1.92%)
Browning-Ferris Industries, Inc. 26,800 760,450
WMX Technologies, Inc. 32,700 960,563
1,721,013
Soap, Cleaners & Toilet Goods (1.80%)
Avon Products 13,400 825,775
Colgate-Palmolive Co. 7,100 788,100
1,613,875
Telephone Communication (1.73%)
AT&T Corp. 24,500 820,750
MCI Communications Corp. 19,300 735,812
1,556,562
Variety Stores (2.13%)
Dayton-Hudson Corp. 21,800 981,000
Wal-Mart Stores, Inc. 33,000 932,250
1,913,250
Total Common Stocks 49,059,925
Preferred Stocks (1.98%)
Motor Vehicles & Equipment (1.92%)
Federal-Mogul Corp.
Series D Convertible 7,800(b) 603,525
Ford Motor Co.
Series A Convertible 10,000 1,120,000
1,723,525
Paper Mills (0.06%)
James River Corp. of Virginia
Series L Convertible Exchangeable 1,000 50,000
Total Preferred Stocks 1,773,525
Principal
Amount Value
Bonds (2.15%)
Aircraft & Parts (0.26%)
Rohr Industries, Inc.
Convertible Subordinated
Debentures; 7.00%; 10/1/12 $ 260,000 $ 231,400
Blast Furnace & Basic
Steel Products (0.39%)
Quanex Corp. Convertible
Subordinated Debentures;
6.88%; 6/30/07 350,000 355,250
Electric Lighting & Wiring
Equipment (0.07%)
Cooper Industries, Inc. Convertible
Subordinated Debentures;
7.05%; 1/1/15 62,000 68,820
Engines & Turbines (0.51%)
Outboard Marine Corp. Convertible
Subordinated Debentures;
7.00%; 7/1/02 500,000 454,375
Lumber & Other Building
Materials (0.21%)
Hechinger Co. Convertible
Subordinated Debentures;
5.50%; 4/1/12 600,000 186,750
Petroleum Refining (0.54%)
Pennzoil Co. Senior Exchangeable
Debentures; 6.50%; 1/15/03 300,000 480,375
Trucking & Courier Services,
Ex., Air (0.17%)
Builders Transport, Inc. Convertible
Subordinated Debentures;
6.50%; 5/1/11 306,000 155,677
Total Bonds 1,932,647
U.S. Government Treasury Notes & Bonds (36.09%)
Treasury Notes & Bonds (36.09%)
5.13%; 2/28/98 4,000,000 3,973,752
5.13%; 11/30/98 1,000,000 984,063
6.00%; 10/15/99 2,150,000 2,133,875
5.50%; 4/15/00 5,800,000 5,656,815
6.25%; 4/30/01 2,000,000 1,980,000
6.38%; 8/15/02 3,300,000 3,270,095
5.75%; 8/15/03 3,800,000 3,625,439
5.88%; 2/15/04 4,000,000 3,827,500
7.50%; 2/15/05 1,000,000 1,046,875
8.25%; 5/15/05 750,000 781,875
5.63%; 2/15/06 2,600,000 2,407,439
7.25%; 5/15/16 575,000 587,399
7.50%; 11/15/16 575,000 601,953
7.25%; 8/15/22 500,000 510,157
6.25%; 8/15/23 1,100,000 994,469
32,381,706
Commercial Paper (4.54%)
Personal Credit Institutions (4.54%)
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 $4,072,955 $4,072,955
Total Portfolio Investments (99.43%) 89,220,758
Cash, receivables and other assets,
net of liabilities (0.57%) 511,850
Total Net Assets (100.00%) $89,732,608
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCOR BLUE CHIP FUND, INC.
Shares
Held Value
Common Stocks (91.43%)
Beverages (5.90%)
Coca-Cola Co. 36,200 $2,303,225
Pepsico, Inc. 68,300 2,381,962
4,685,187
Commercial Banks (6.60%)
Banc One Corp. 41,645 1,764,707
J. P. Morgan & Co., Inc. 17,000 1,731,875
KeyCorp 33,500 1,746,187
5,242,769
Commercial Printing (2.11%)
R. R. Donnelley & Sons Co. 48,900 1,674,825
Communications Equipment (0.70%)
Lucent Technologies 9,366 553,765
Computer & Office Equipment (2.61%)
Hewlett-Packard Co. 39,500 2,073,750
Department Stores (2.31%)
May Department Stores 39,700 1,836,125
Drug Stores & Proprietary Stores (2.54%)
Walgreen Co. 43,800 2,014,800
Drugs (10.54%)
Bristol-Myers Squibb Co. 32,200 2,109,100
Johnson & Johnson 38,100 2,333,625
Merck & Co., Inc. 23,900 2,162,950
Warner-Lambert Co. 18,000 1,764,000
8,369,675
Eating & Drinking Places (3.11%)
McDonald's Corp. 46,100 $2,472,112
Electric Services (4.65%)
Dominion Resources, Inc. 49,300 1,694,688
KU Energy Corp. 65,800 1,998,675
3,693,363
Electrical Industrial Apparatus (2.83%)
Emerson Electric Co. 44,300 2,248,225
Electronic Distribution
Equipment (2.95%)
General Electric Co. 21,100 2,339,463
Fire, Marine & Casualty
Insurance (2.85%)
American International Group 17,600 2,261,600
General Industrial Machinery (2.64%)
Pall Corp. 90,600 2,095,125
Grain Mill Products (2.84%)
Kellogg Co. 32,300 2,252,925
Industrial Inorganic Chemicals (2.69%)
Dow Chemical Co. 25,200 2,138,850
Insurance Agents, Brokers &
Services (2.51%)
Equifax, Inc. 69,200 1,989,500
Medical Instruments & Supplies (2.85%)
Baxter International, Inc. 47,200 2,259,700
Metal Cans & Shipping
Containers (2.70%)
Crown Cork & Seal Co., Inc. 39,200 2,146,200
Miscellaneous Converted Paper
Products (2.71%)
Minnesota Mining & Mfg. Co. 24,700 2,148,900
Miscellaneous Electrical Equipment &
Supplies (2.88%)
Motorola, Inc. 39,900 2,284,275
Petroleum Refining (5.66%)
Exxon Corp. 41,400 2,344,275
Royal Dutch Petroleum Co. ADR 11,900 2,144,975
4,489,250
Preserved Fruits & Vegetables (2.73%)
H. J. Heinz Co. 52,200 2,166,300
Sanitary Services (1.11%)
WMX Technologies, Inc. 30,000 881,250
Soap, Cleaners & Toilet Goods (2.84%)
Procter & Gamble Co. 17,900 2,250,925
Sugar & Confectionary Products (2.72%)
Wrigley Wm. Jr. Co. 37,000 2,155,250
Telephone Communication (4.85%)
AT&T Corp. 58,500 1,959,750
Bellsouth Corp. 42,500 1,891,250
3,851,000
Total Common Stocks 72,575,109
Principal
Amount Value
Commercial Paper (8.17%)
Miscellaneous Electrical Equipment &
Supplies (0.98%)
General Electric Co.;
5.45%; 5/5/97 $ 775,000 $ 774,531
Personal Credit Institutions (5.74%)
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 3,937,407 3,937,407
Ford Motor Credit;
5.48%; 5/2/97 220,000 219,967
5.48%; 5/5/97 400,000 399,756
4,557,130
Securities Brokers & Dealers (1.45%)
Merrill Lynch & Co.
5.47%; 5/2/97 1,150,000 1,149,825
Total Commercial Paper 6,481,486
Total Portfolio Investments (99.60%) 79,056,595
Cash, receivables and other assets,
net of liabilities (0.40%) 320,238
Total Net Assets (100.00%) $79,376,833
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Shares
Held Value
Common Stocks (97.75%)
Beverages (3.69%)
Anheuser Busch Cos., Inc. 285,000 $12,219,375
Pepsico, Inc. 119,700 4,174,538
Universal Foods Corp. 48,300 1,702,575
18,096,488
Combination Utility Services (1.08%)
Cinergy Corp. 158,800 5,280,100
Commercial Banks (15.79%)
Banc One Corp. 295,240 12,510,795
Bankboston Corp. 100,700 7,325,925
Comerica, Inc. 180,000 10,530,000
CoreStates Financial Corp. 248,000 12,555,000
First of America Bank Corp. 80,200 5,333,300
KeyCorp 229,500 11,962,688
Nationsbank Corp. 86,000 5,192,250
Summit Bancorp 257,000 11,950,500
77,360,458
Commercial Printing (1.99%)
R. R. Donnelley & Sons Co. 285,000 9,761,250
Communications Equipment (1.84%)
Allen Telecom, Inc. 44,700(a) 771,075
DSC Communications Corp. 136,300(a) 2,777,112
General Instrument Corp. 232,400(a) 5,432,350
8,980,537
Computer & Office Equipment (2.45%)
Hewlett-Packard Co. 82,000 $ 4,305,000
International Business
Machines Corp. 48,000 7,716,000
12,021,000
Crude Petroleum & Natural Gas (2.05%)
Texaco, Inc. 95,300 10,054,150
Drugs (6.84%)
Abbott Labs 150,000 9,150,000
American Home Products Corp. 103,000 6,823,750
Merck & Co., Inc. 85,000 7,692,500
Pharmacia & Upjohn, Inc. 333,000 9,865,125
33,531,375
Electric Services (4.13%)
Dominion Resources, Inc. 98,200 3,375,625
FPL Group, Inc. 85,100 3,797,588
Houston Industries, Inc. 530,000 10,600,000
Potomac Electric Power Co. 110,000 2,475,000
20,248,213
Electrical Industrial Apparatus (1.26%)
Emerson Electric Co. 121,394 6,160,745
Electronic Distribution Equipment (1.49%)
General Electric Co. 66,000 7,317,750
Farm & Garden Machinery (2.30%)
Tenneco, Inc. 282,000 11,244,750
Fats & Oils (1.58%)
Archer Daniels Midland Co. 420,000 7,717,500
General Industrial Machinery (0.61%)
BW/IP Holdings, Inc., Class A 64,100 1,041,625
Pall Corp. 84,000 1,942,500
2,984,125
Grain Mill Products (1.09%)
Ralston-Ralston Purina Group 65,000 5,354,375
Greeting Cards (2.64%)
American Greetings Corp. 404,100 12,931,200
Grocery Stores (3.49%)
Albertson's, Inc. 98,000 3,234,000
American Stores Co. 140,000 6,370,000
Sysco Corp. 210,500 7,472,750
17,076,750
Household Furniture (2.48%)
Masco Corp. 321,500 12,136,625
Industrial Inorganic Chemicals (1.19%)
Dow Chemical Co. 47,700 4,048,538
Eastman Chemical Co. 35,400 1,805,400
5,853,938
Industrial Organic Chemicals (0.37%)
Ethyl Corp. 200,000 1,825,000
Jewelry, Silverware & Plated
Ware (0.43%)
Jostens, Inc. 88,200 2,105,775
Life Insurance (2.60%)
American General Corp. 292,000 12,738,500
Management & Public Relations (2.10%)
Cognizant Corp. 110,600 $ 3,608,325
Dun & Bradstreet Corp. 270,600 6,663,525
10,271,850
Meat Products (1.35%)
Tyson Foods, Inc. 329,550 6,591,000
Medical Instruments & Supplies (0.87%)
St. Jude Medical, Inc. 131,450(a) 4,272,125
Medical Service & Health
Insurance (1.68%)
AON Corp. 74,600 4,960,900
Foundation Health Systems, Class A 121,160(a) 3,271,320
8,232,220
Metal Forgings & Stampings (1.07%)
Newell Co. 150,000 5,250,000
Miscellaneous Business Services (0.37%)
Safety-Kleen Corp. 121,200 1,802,850
Miscellaneous Electrical Equipment
& Supplies (0.90%)
Motorola, Inc. 77,300 4,425,425
Miscellaneous Fabricated Metal
Products (0.31%)
Keystone International, Inc. 76,200 1,504,950
Miscellaneous Shopping Goods
Stores (1.57%)
Toys 'R' Us, Inc. 270,100(a) 7,697,850
Motor Vehicles, Parts & Supplies (1.39%)
Grainger (W. W.), Inc. 90,300 6,806,362
Newspapers (1.28%)
Dow Jones & Co., Inc. 155,000 6,277,500
Paper Mills (1.55%)
Kimberly Clark Corp. 147,800 7,574,750
Petroleum Refining (4.58%)
Atlantic Richfield Co. 89,800 12,224,025
Exxon Corp. 180,800 10,237,800
22,461,825
Plastic Materials & Synthetics (0.21%)
Wellman, Inc. 64,200 1,011,150
Rental of Railroad Cars (1.12%)
GATX Corp. 100,000 5,475,000
Sanitary Services (3.94%)
Browning-Ferris Industries, Inc. 395,000 11,208,125
WMX Technologies, Inc. 276,000 8,107,500
19,315,625
Soap, Cleaners & Toilet Goods (3.18%)
Avon Products 145,000 8,935,625
Colgate-Palmolive Co. 60,000 6,660,000
15,595,625
Telephone Communication (5.46%)
AT&T Corp. 128,300 $ 4,298,050
MCI Communications Corp. 137,800 5,253,625
Southern New England Telecom 125,000 4,562,500
US West Communications Group 360,000 12,645,000
26,759,175
Variety Stores (3.43%)
Dayton-Hudson Corp. 195,000 8,775,000
Wal-Mart Stores, Inc. 284,000 8,023,000
16,798,000
Total Common Stocks 478,903,886
Principal
Amount Value
Commercial Paper (2.04%)
Personal Credit Institutions (2.04%)
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 $9,996,817 $ 9,996,817
Total Portfolio Investments (99.79%) 488,900,703
Cash, receivables and other assets,
net of liabilities (0.21%) 1,015,448
Total Net Assets (100.00%) $489,916,151
(a) Non-Income producing security - No dividend paid during the period.
PRINCOR EMERGING GROWTH FUND, INC.
Shares
Held Value
Common Stocks (82.44%)
Blast Furnace & Basic Steel
Products (0.89%)
Lukens, Inc. 144,000 $ 2,754,000
Carpets & Rugs (0.77%)
Shaw Industries, Inc. 196,800 2,386,200
Chemicals & Allied Products (0.39%)
Sigma-Aldrich Corp. 40,000 1,200,000
Commercial Banks (9.35%)
First Commerce Corp. 35,000 1,430,625
First Federal Capital Corp. 108,532 2,876,098
Independent Bank Corp. Michigan 41,632 1,634,056
Mercantile Bancorp., Inc. 129,153 7,490,874
Merchants Bancorp., Inc. 57,500 2,098,750
National City Corp. 32,000 1,560,000
Nationsbank Corp. 13,310 803,591
North Fork Bancorp., Inc. 119,579 4,738,318
Peoples Heritage Financial Group, Inc. 98,000 3,074,750
Princeton National Bancorp., Inc. 100,000 1,850,000
Summit Bancorp. 31,000 1,441,500
28,998,562
Commercial Printing (0.33%)
Merrill Corp. 43,200 1,004,400
Computer & Data Processing
Services (6.97%)
American Management Systems, Inc. 220,000(a) 5,445,000
Bitstream 198,000(a) 594,000
Cerner Corp. 236,600(a) 3,815,175
HBO & Co. 69,000 3,691,500
Microsoft Corp. 50,000(a) 6,075,000
National Processing, Inc. 41,000(a) 287,000
Sunquest Information Systems, Inc. 167,700(a) 1,718,925
21,626,600
Computer & Office Equipment (3.00%)
EMC Corp. 176,100(a) 6,405,637
Optika Imaging Systems 140,500(a) 702,500
Seagate Technology 9,410(a) 431,684
SystemSoft Corp. 230,000(a) 1,753,750
9,293,571
Construction & Related
Machinery (3.39%)
Energy Ventures, Inc. 157,400(a) 10,526,125
Crude Petroleum & Natural Gas (1.06%)
Devon Energy Corp. 100,000 3,300,000
Dairy Products (0.33%)
Dreyer's Grand Ice Cream, Inc. 32,400 1,016,044
Drugs (1.84%)
Alliance Pharmaceutical Corp. 48,600(a) 370,575
Forest Laboratories, Inc. 33,700(a) 1,150,013
Genzyme Corp. - General Division 15,130(a) 349,881
Genzyme Corp. - Tissue Repair 1,021(a) 8,934
Merck & Co., Inc. 16,970 1,535,785
Pharmacia & Upjohn, Inc. 75,000 2,221,875
Seragen, Inc. 60,000(a) 75,000
5,712,063
Electronic Components &
Accessories (7.10%)
Intel Corp. 74,000 11,331,250
Linear Technology Corp. 99,000 4,974,750
Solectron Corp. 100,000(a) 5,737,500
22,043,500
Engineering & Architectural
Services (1.20%)
Paychex, Inc. 79,375 3,715,742
Finance Services (1.47%)
First Financial Corp. 173,500 4,576,062
Fire, Marine & Casualty
Insurance (2.20%)
Avemco Corp. 104,200 2,513,825
Berkley W. R. Corp. 87,700 4,319,225
6,833,050
Footwear, Except Rubber (0.75%)
Nine West Group, Inc. 58,600(a) 2,322,025
General Industrial Machinery (4.62%)
Flow International Corp. 187,200(a) 1,661,400
Kaydon Corp. 89,900 3,978,075
Pentair, Inc. 136,200 4,068,975
Roper Industries, Inc. 112,900 4,614,788
14,323,238
Grocery Stores (0.86%)
Casey's General Stores, Inc. 141,400 2,668,925
Holding Offices (0.78%)
ISB Financial Corp. 108,100 2,432,250
Hose, Belting, Gaskets & Packing (0.98%)
Mark IV Industries 130,368 3,031,056
Hospitals (2.05%)
Humana, Inc. 118,700(a) 2,581,725
Universal Health Services, Inc.,
Class B 100,000(a) 3,787,500
6,369,225
Insurance Agents, Brokers &
Services (1.46%)
Equifax, Inc. 157,400 4,525,250
Investment Offices (1.22%)
AMVESCO PLC Sponsored ADR 68,760 3,773,205
Iron & Steel Foundries (0.63%)
Atchison Casting Corp. 110,000(a) 1,952,500
Laundry, Cleaning & Garment
Services (0.78%)
G&K Services, Inc., Class A 83,800 2,430,200
Management & Public Relations (0.39%)
Complete Management, Inc. 108,000(a) 1,201,500
Measuring & Controlling Devices (1.54%)
ISCO, Inc. 30,935 239,742
Millipore Corp. 101,200 3,820,300
Photon Dynamics 129,300(a) 711,150
4,771,192
Meat Products (0.63%)
Michael Foods, Inc. 186,700 1,960,350
Medical Instruments & Supplies (3.40%)
Boston Scientific Corp. 68,100(a) 3,285,825
Nellcor Puritan Bennett 170,500(a) 2,898,500
Steris Corp. 133,000(a) 4,355,750
10,540,075
Medical Service & Health
Insurance (4.58%)
Alternative Living Services 232,000(a) 3,828,000
Foundation Health Systems, Inc.,
Class A 200,440(a) 5,411,880
Orthofix International NV 156,200(a) 1,249,600
Pacificare Health Systems, Inc.,
Class A 188(a) 14,428
Pacificare Health Systems, Inc.,
Class B 591(a) 47,428
Patient Infosystems, Inc. 125,000(a) 750,000
United Healthcare Corp. 60,000 2,917,500
14,218,836
Metal Services, NEC (1.58%)
BMC Industries, Inc. 169,400 4,912,600
Miscellaneous Apparel &
Accessories (0.59%)
Designer Holdings, Ltd. 225,000(a) 1,828,125
Miscellaneous Chemical Products (1.68%)
Cytec Industries 71,900(a) 2,705,238
H. B. Fuller Co. 47,000 2,520,375
5,225,613
Mortgage Bankers & Brokers (1.05%)
Money Store, Inc. 150,000 3,243,750
Office Furniture (1.04%)
Chromcraft Revington, Inc. 70,700(a) 1,953,088
Kimball International, Inc., Class B 36,300 1,279,575
3,232,663
Offices & Clinics of Medical
Doctors (0.02%)
Talbert Medical Management Holdings
Rights 4,389(a) 76,807
Oil & Gas Field Services (1.54%)
Diamond Offshore Drilling 74,300(a) 4,783,063
Operative Builders (1.15%)
D. R. Horton, Inc. 292,500 2,851,875
Pulte Corp. 25,000 712,500
3,564,375
Paints & Allied Products (0.86%)
RPM, Inc. 158,900 2,661,575
Plastic Materials & Synthetics (0.65%)
A. Schulman, Inc. 106,800 2,029,200
Plumbing, Heating &
Air-Conditioning (1.72%)
Apogee Enterprises, Inc. 340,400 5,106,000
Metalclad Corp. 228,400(a) 235,538
5,341,538
Refrigeration & Service
Machinery (0.44%)
Tecumseh Products Co. Class A 25,000 1,350,000
Sanitary Services (0.87%)
Browning-Ferris Industries, Inc. 85,400 2,423,225
USA Waste Services, Inc. 8,846(a) 289,706
2,712,931
Savings Institutions (0.42%)
Sterling Financial Corp. 82,333(a) 1,296,745
Screw Machine Products, Bolts,
Etc. (0.89%)
Trimas Corp. 112,400 2,767,850
Security Brokers & Dealers (0.80%)
Jefferies Group, Inc. 53,200 2,467,150
Telephone Communication (1.00%)
McLeod, Inc. 169,700(a) 3,118,238
Toys & Sporting Goods (0.69%)
Mattel, Inc. 77,350 2,156,131
Trucking & Courier Services,
Ex., Air (0.49%)
J. B. Hunt Transport Services, Inc. 108,900 1,510,987
Total Common Stocks 255,785,087
Preferred Stock (0.56%)
Medical Service & Health
Insurance (0.56%)
Pacificare Health Systems, Inc.
Series A Convertible 55,600 $ 1,737,500
Principal
Amount Value
Bonds (1.93%)
Computer & Data Processing
Services (0.89%)
Sierra On Line Convertible
Subordinated Debentures;
6.50%; 4/1/01 $ 990,000(b) $2,780,662
Industrial Inorganic Chemicals (0.47%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 350,000(b) 362,688
ICN Pharmaceuticals, Inc.
Convertible Subordinated
Debentures; 8.50%; 11/15/99 1,000,000 1,102,500
1,465,188
Management & Public Relations (0.43%)
Complete Management Inc.
Convertible Debentures;
8.00%; 12/15/03 1,500,000 1,342,500
Nursing & Personal Care Facilities (0.07%)
Greenery Rehabilitation Group, Inc.
Convertible Senior Subordinated
Notes; 8.75%; 4/1/15 250,000 204,688
Sanitary Services (0.07%)
Enclean, Inc. Convertible
Subordinated Debentures;
7.50%; 8/1/01 200,000 203,656
Total Bonds 5,996,694
Commercial Paper (14.92%)
Business Credit Institutions (4.19%)
American Express Credit Corp.;
5.47%; 5/8/97 7,025,000 7,017,528
5.45%; 5/9/97 6,000,000 5,992,733
13,010,261
Personal Credit Institutions (9.75%)
American General Finance Corp.;
5.48%; 5/1/97 5,885,000 5,885,000
5.49%; 5/9/97 1,775,000 1,772,834
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 15,337,821 15,337,821
Ford Motor Credit Co.;
5.40%; 5/2/97 2,000,000 1,999,700
5.46%; 5/12/97 5,275,000 5,266,200
30,261,555
Security Brokers & Dealers (0.98%)
Merrill Lynch & Co., Inc.;
5.50%; 5/8/97 3,025,000 $ 3,021,765
Total Commercial Paper 46,293,581
Total Portfolio Investments (99.85%) 309,812,862
Cash, receivables and other assets,
net of liabilities (0.15%) 477,661
Total Net Assets (100.00%) $310,290,523
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCOR GROWTH FUND, INC.
Shares
Held Value
Common Stocks (86.73%)
Advertising (1.10%)
Interpublic Group of Cos., Inc. 60,000 $ 3,397,500
Beverages (2.37%)
Coca-Cola Co. 60,000 3,817,500
Pepsico, Inc. 100,000 3,487,500
7,305,000
Blast Furnace & Basic Steel
Products (0.70%)
Lukens, Inc. 80,000 1,530,000
Quanex Corp. 24,142 609,586
2,139,586
Carpets & Rugs (0.79%)
Shaw Industries, Inc. 200,000 2,425,000
Cash Grains (2.29%)
Pioneer Hi-Bred International 100,000 7,062,500
Commercial Banks (5.96%)
Banc One Corp. 55,000 2,330,625
CoreStates Financial Corp. 12,250 620,156
First of America Bank Corp. 40,000 2,660,000
Firstar Corp. 150,000 4,406,250
FirstMerit Corp. 50,000 2,137,500
Mercantile Bancorp., Inc. 13,050 756,900
Nationsbank Corp. 71,644 4,325,506
Princeton National Bancorp., Inc. 60,000 1,110,000
18,346,937
Communications Equipment (4.23%)
General Instrument Corp. 175,000(a) 4,090,625
Northern Telecom Ltd. 75,000 5,446,875
Octel Communications Corp. 213,700(a) 3,472,625
13,010,125
Computer & Data Processing
Services (4.71%)
GTECH Holdings Corp. 139,300(a) 4,283,475
Microsoft Corp. 84,000(a) 10,206,000
14,489,475
Computer & Office Equipment (3.73%)
Bay Networks 113,800(a) 2,019,950
Ceridian Corp. 106,200(a) 3,544,425
Digital Equipment Corp. 71,500(a) 2,136,063
Hewlett-Packard Co. 60,000 3,150,000
Pitney Bowes, Inc. 10,000 640,000
11,490,438
Department Stores (0.98%)
May Department Stores 65,000 3,006,250
Drugs (8.97%)
Alliance Pharmaceutical Corp. 20,000(a) 152,500
Bristol-Myers Squibb Co. 50,000 3,275,000
Forest Laboratories, Inc. 66,300(a) 2,262,487
Genzyme Corp. - General Division 9,456(a) 218,670
Genzyme Corp. - Tissue Repair 638(a) 5,583
Johnson & Johnson 80,000 4,900,000
Lilly (Eli) & Co. 50,000 4,393,750
Merck & Co., Inc. 50,000 4,525,000
Pharmacia & Upjohn, Inc. 100,000 2,962,500
Seragen, Inc. 70,500(a) 88,125
Smithkline Beecham PLC ADR. 60,000 4,837,500
27,621,115
Electric Light & Wiring
Equipment (0.17%)
Raychem Corp. 8,100 522,450
Electrical Goods (0.59%)
Avnet, Inc. 30,000 1,826,250
Electronic Components &
Accessories (4.60%)
Intel Corp. 63,000 9,646,875
Linear Technology Corp. 90,000 4,522,500
14,169,375
Electronic Distribution Equipment (0.72%)
General Electric Co. 20,000 2,217,500
Federal & Federally Sponsored
Credit (0.53%)
Federal National Mortgage Association 40,000 1,645,000
Footwear, Except Rubber (1.90%)
Stride Rite Corp. 425,000 5,843,750
General Industrial Machinery (3.48%)
Flow International Corp. 100,000(a) 887,500
Ingersoll-Rand Co. 70,000 3,438,750
Tyco International Ltd. 104,700 6,386,700
10,712,950
Grain Mill Products (1.41%)
General Mills, Inc. 1,765 109,430
Ralcorp Holdings, Inc. 10,833 111,038
Ralston-Ralston Purina Group 50,000 4,118,750
4,339,218
Grocery Stores (0.13%)
Casey's General Stores, Inc. 21,052 397,357
Hose, Belting, Gaskets & Packing (1.02%)
Mark IV Industries 134,564 3,128,608
Hospitals (2.78%)
Columbia/HCA Healthcare Corp. 70,800 2,478,000
Humana, Inc. 105,000(a) 2,283,750
Universal Health Services, Inc.,
Class B 100,000(a) 3,787,500
8,549,250
Household Furniture (0.98%)
Masco Corp. 80,000 $ 3,020,000
Investment Offices (1.07%)
AMVESCO PLC Sponsored ADS 60,000 3,292,500
Lumber & Other Building
Materials (1.88%)
Home Depot, Inc. 100,000 5,800,000
Management & Public Relations (1.09%)
ACNielson Corp. 3,333(a) 49,995
Cognizant Corp. 10,000 326,250
Dun & Bradstreet Corp. 10,000 246,250
Medaphis Corp. 527,000(a) 2,733,813
3,356,308
Medical Instruments & Supplies (4.32%)
Becton, Dickinson & Co. 70,000 3,220,000
Boston Scientific Corp. 150,000(a) 7,237,500
Nellcor Puritan Bennett 166,600(a) 2,832,200
13,289,700
Medical Service & Health
Insurance (3.69%)
AON Corp. 40,000 2,660,000
Foundation Health Systems, Inc.,
Class A 147,500(a) 3,982,500
Pacificare Health Systems, Inc.,
Class A 840 64,470
Pacificare Health Systems, Inc.,
Class B 2,640 211,860
United Healthcare Corp. 60,000 2,917,500
Value Health, Inc. 75,000(a) 1,509,375
11,345,705
Millwork, Plywood & Structural
Members (0.51%)
Georgia-Pacific Corp. 20,000 1,560,000
Miscellaneous Converted Paper
Products (0.40%)
Minnesota Mining & Mfg. Co. 14,000 1,218,000
Miscellaneous Electrical Equipment
& Supplies (1.12%)
Motorola, Inc. 60,000 3,435,000
Miscellaneous Fabricated Metal
Products (1.11%)
Parker-Hannifin Corp. 68,900 3,427,775
Miscellaneous Shopping Goods
Stores (0.32%)
Toys 'R' Us, Inc. 35,000(a) 997,500
Motor Vehicles & Equipment (1.99%)
Chrysler Corp. 100,000 3,000,000
Dana Corp. 98,000 3,123,750
6,123,750
Office Furniture (0.13%)
Chromcraft Revington, Inc. 15,000(a) 414,375
Offices & Clinics of Medical
Doctors (0.03%)
Talbert Medical Management Holdings,
Rights 5,425(a) 94,937
Operative Builders (0.39%)
Pulte Corp. 42,105 1,199,992
Petroleum Refining (2.17%)
Atlantic Richfield Co. 20,000 2,722,500
Exxon Corp. 70,000 3,963,750
6,686,250
Photographic Equipment &
Supplies (0.01%)
Imation Corp. 1,400(a) 33,075
Plastic Materials & Synthetics (0.49%)
A. Schulman, Inc. 80,000 1,520,000
Plumbing, Heating &
Air-Conditioning (0.09%)
Metalclad Corp. 264,500(a) 272,766
Preserved Fruits & Vegetables (0.67%)
CPC International, Inc. 25,000 2,065,625
Radio, Television & Computer
Stores (0.17%)
Tandy Corp. 10,000 523,750
Radio & Television Broadcasting (0.75%)
Sinclair Broadcast Group 100,000(a) 2,325,000
Refrigeration & Service
Machinery (0.70%)
Tecumseh Products Co., Class A 40,000 2,160,000
Rubber & Plastics Footwear (0.62%)
Reebok International Ltd. 50,000 1,912,500
Sanitary Services (1.35%)
Browning-Ferris Industries, Inc. 80,000 2,270,000
USA Waste Services, Inc. 17,695(a) 579,511
WMX Technologies, Inc. 45,000 1,321,875
4,171,386
Security Brokers & Dealers (1.14%)
Salomon, Inc. 70,000 3,500,000
Shoe Stores (0.14%)
Payless ShoeSource, Inc. 10,400(a) 442,000
Soap, Cleaners & Toilet Goods (3.23%)
Colgate-Palmolive Co. 40,000 4,440,000
Ecolab, Inc. 120,000 4,890,000
International Flavors &
Fragrances, Inc. 15,000 631,875
9,961,875
Toys & Sporting Goods (1.11%)
Mattel, Inc. 123,046 3,429,907
Trucking & Courier Services,
Ex., Air (0.19%)
Caliber System, Inc. 15,000 446,250
Roadway Express 7,500 131,250
577,500
Women's & Children's
Undergarments (1.71%)
Warnaco Group, Class A 185,200 5,278,200
Total Common Stocks 267,081,010
Preferred Stocks (0.99%)
Medical Service & Health
Insurance (0.63%)
Pacificare Health Systems, Inc.
Series A Convertible 62,000 $ 1,937,500
Motor Vehicles & Equipment (0.36%)
Ford Motor Co.
Series A Convertible 10,000 1,120,000
Total Preferred Stocks 3,057,500
Principal
Amount Value
Bonds (1.15%)
Electrical Industrial Apparatus (0.62%)
Liebert Co. Convertible
Subordinated Debentures;
8.00%; 11/15/10 $ 500,000 $ 1,909,375
Industrial Inorganic Chemicals (0.17%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 500,000(b) 518,125
Nursing & Personal Care Facilities (0.26%)
Greenery Rehabilitation Group, Inc.
Convertible Senior Subordinated
Notes; 8.75%; 4/1/15 1,000,000 818,750
Sanitary Services (0.10%)
Enclean, Inc. Convertible
Subordinated Debentures;
7.50%; 8/1/01 300,000 305,484
Total Bonds 3,551,734
Commercial Paper (10.98%)
Crude Petroleum & Natural Gas (1.95%)
Chevron Oil Finance;
5.42%; 5/5/97 6,020,000 6,016,375
Personal Credit Institutions (7.22%)
American General Finance;
5.48%%; 5/1/97 7,485,000 7,485,000
Investment in Joint Trade Account;
Associates Corp;
5.65%; 5/1/97 14,748,712 14,748,712
22,233,712
Securities Brokers & Dealers (1.81%)
Merrill Lynch & Co.;
5.47%; 5/1/97 5,575,000 5,575,000
Total Commercial Paper 33,825,087
Total Portfolio Investments (99.85%) 307,515,331
Cash, receivables and other assets,
net of liabilities (0.15%) 449,518
Total Net Assets (100.00%) $307,964,849
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCOR UTILITIES FUND, INC.
Shares
Held Value
Common Stocks (98.97%)
Combination Utility Services (33.84%)
Baltimore Gas & Electric Co. 82,500 $2,103,750
Cilcorp, Inc. 60,800 2,348,400
Cinergy Corp. 65,799 2,187,816
Commonwealth Energy Systems 48,000 1,050,000
LG&E Energy Corp. 45,400 1,095,275
Montana Power Co. 97,800 2,163,825
Nipsco Industries, Inc. 46,600 1,840,700
Pacificorp 107,600 2,138,550
Scana Corp. 55,600 1,341,350
Utilicorp United, Inc. 69,000 1,794,000
Washington Water Power Co. 40,500 723,938
Western Resources, Inc. 69,700 2,099,712
Wisconsin Energy Corp. 79,300 1,982,500
WPS Resources Corp. 25,000 615,625
23,485,441
Electric Services (33.25%)
Carolina Power & Light Co. 60,300 2,050,200
Central & Southwest 84,800 1,706,600
Dominion Resources, Inc. 56,300 1,935,313
Duke Power Co. 48,400 2,123,550
FPL Group, Inc. 47,600 2,124,150
GPU, Inc. 32,400 1,044,900
Houston Industries, Inc. 94,900 1,898,000
Mid American Energy Holdings Co. 106,800 1,788,900
Pinnacle West Capital Corp. 59,700 1,701,450
Portland General Corp. 35,400 1,292,100
Southern Co. 100,800 2,053,800
Teco Energy, Inc. 90,500 2,160,687
Texas Utilities Co. 35,600 1,201,500
23,081,150
Gas Production & Distribution (4.25%)
AGL Res., Inc. 54,400 1,047,200
New Jersey Resources Corp. 38,700 1,117,463
Peoples Energy Corp. 23,300 786,375
2,951,038
Telephone Communication (27.63%)
AT&T Corp. 46,900 1,571,150
Ameritech Corp. 41,300 2,524,462
Bell Atlantic Corp. 36,800 2,493,200
Bellsouth Corp. 59,500 2,647,750
GTE Corp. 52,900 2,426,788
MCI Communications Corp. 65,700 2,504,813
Sprint Corp. 53,400 2,342,925
US West Communications Group 76,000 2,669,500
19,180,588
Total Common Stocks 68,698,217
Principal
Amount Value
Commercial Paper (0.69%)
Personal Credit Institutions (0.69%)
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 $ 478,100 $ 478,100
Total Portfolio Investments (99.66%) 69,176,317
Cash, receivables and other assets, net of
liabilities (0.34%) 233,255
Total Net Assets (100.00%) $69,409,572
PRINCOR WORLD FUND, INC.
Shares
Held Value
Common Stocks (93.34%)
Advertising (0.94%)
WPP Group PLC 580,000 $ 2,376,301
Beverages (1.61%)
Lion Nathan 1,102,000 2,651,706
PanAmerican Beverages 46,000 1,334,000
Quilmes Industrial Quins SA ADR 5,700 63,413
4,049,119
Blast Furnace & Basic Steel
Products (1.74%)
British Steel PLC 712,000 1,646,292
Voest-Alpine Stahl 69,000(b) 2,723,192
4,369,484
Central Reserve Depositories (3.76%)
Banco Totta & Acores 145,000 2,027,971
Dao Heng Bank Group Ltd. 310,000 1,472,662
Ergo Bank 5,334 351,566
National Westminster Bank 215,800 2,556,150
Union Bank of Norway 36,700 1,056,554
Wing Hang Bank 549,600 2,007,829
9,472,732
Chewing & Smoking Tobacco (0.69%)
Imperial Tobacco Group PLC 264,000(a) 1,734,886
Combination Utility Services (2.03%)
ABB AG 3,240 3,925,108
Iberdrola 1 SA 105,000 1,186,035
5,111,143
Commercial Banks (10.97%)
ABN-AMRO Holdings NV 56,218 3,864,054
Bangkok Bank 79,000 731,788
Bank of Ireland 429,239 4,471,428
Barclays PLC 285,594 5,319,895
Fokus Bank 240,000(b) 2,342,436
Istituto Mobiliare Italiano 413,000 $ 3,518,717
National Australia Bank Ltd. 287,715 3,946,802
Svenska Handelsbanken AB Free 130,750 3,416,451
27,611,571
Communications Equipment (0.89%)
ECI Telecommunications Ltd. 103,000 2,253,125
Communications Services, NEC (1.10%)
KPN Royal PTT Nederland 77,786 2,763,088
Computer & Office Equipment (0.33%)
Canon, Inc. 35,000 830,116
Construction & Related
Machinery (0.71%)
Powerscreen International PLC 182,000 1,794,030
Consumer Products (1.83%)
Imasco Ltd. 169,000 4,600,753
Crude Petroleum & Natural Gas (1.04%)
Hardy Oil & Gas 520,000 2,619,854
Deep Sea Foreign Transportation of
Freight (1.00%)
Van Ommeren NV 64,841 2,526,264
Department Stores (0.68%)
Vendex International 36,292 1,723,216
Drugs (6.21%)
Elan Corp. PLC ADR 103,000(a) 3,502,000
Galencia Holdings AG 2,890 1,223,914
Novartis AG 4,423 5,829,544
Pharmacia & Upjohn, Inc. 65,000 1,925,625
Teva Pharmaceutical ADR 62,000 3,146,500
15,627,583
Electric Light & Wiring
Equipment (0.51%)
Clipsal Industries Holdings 149,000 584,080
Otra NV 44,300 704,941
1,289,021
Electric Services (0.47%)
Korea Electric Power Corp. 39,500 1,177,914
Electronic Components &
Accessories (1.81%)
Amtek Engineering 675,000 1,166,754
Elec & Eltek International 454,000 2,587,800
Murata Mfg. 9,000 331,889
Varitronix 340,000 474,019
4,560,462
Electronic Distribution Equipment (1.70%)
Phillips Electronics 82,100 4,285,991
Engines & Turbines (1.93%)
Mabuchi Motor 4,000 202,663
Radex-Heraklith 47,000 1,874,209
Scapa Group PLC 838,000 2,780,670
4,857,542
Farm & Garden Machinery (1.36%)
New Holland NV 155,000(a) 3,429,375
Finance Services (1.08%)
MBF Capital Berhad 1,829,000 2,710,728
Forest Products (0.28%)
Metsa-Serla 94,000 704,509
Functions Closely Related to
Banking (0.65%)
Liechtenstein Global Trust AG 3,000 1,649,205
Gas Production & Distribution (1.33%)
OMV AG 30,600 3,339,313
General Industrial Machinery (0.92%)
SKF AB 'B' Free 106,700 2,312,028
Holding Offices (1.21%)
First Pacific Co., Ltd. 2,557,302 3,053,637
Household Appliances (0.61%)
Fisher & Paykel 430,665 1,546,979
Industrial Inorganic Chemicals (3.43%)
Bayer AG 90,550 3,601,785
Kemira Oy 332,000(b) 3,075,242
Rhone Poulenc 58,000 1,950,766
8,627,793
Investment Offices (1.40%)
AMVESCO PLC 651,400 3,530,257
Life Insurance (1.08%)
QBE Insurance Group Ltd. 473,000 2,710,006
Lumber & Other Building
Materials (0.13%)
Wickes PLC 125,800 338,845
Meat Products (5.87%)
Danisco AS 89,000 5,158,081
Orkla B Ordinary Shares 70,400 5,447,483
Unilever NV 21,500 4,181,675
14,787,239
Miscellaneous Chemical Products (1.57%)
Hoechst AG 101,000 3,963,209
Miscellaneous Durable Goods (0.92%)
Hagemeyer NV 26,495 2,305,265
Miscellaneous Food &
Kindred Products (0.65%)
Burns, Philp & Co., Ltd. 989,938 1,648,135
Miscellaneous Manufacturers (0.26%)
Carter Holt Harvey Ltd. 297,300 659,719
Miscellaneous Non-Durable
Goods (2.14%)
Grand Metropolitan PLC 643,726 5,389,678
Miscellaneous Plastics
Products, NEC (0.63%)
Royal Group Technologies Ltd. 70,000(a)(b) 1,575,093
Miscellaneous Textile Goods (1.03%)
Esprit Asia 5,666,000 2,596,560
Miscellaneous Transportation
Equipment (0.80%)
Autoliv AB 55,000 2,001,467
Miscellaneous Wood Products (0.47%)
Enso Oy 142,000 1,173,413
Motor Vehicles, Parts & Supplies (0.47%)
Dahl International AB 57,000 1,184,247
Motor Vehicles & Equipment (1.78%)
Hyundai Motor Co. Ltd. 63,000(b) 529,200
UMW Holdings Berhad 337,000 1,772,283
Volvo AB 87,000 2,190,111
4,491,594
Newspapers (1.49%)
Publishing & Broadcasting Ltd. 710,000 3,757,095
Petroleum Refining (1.91%)
Repsol Petroleo, SA 114,400 4,800,767
Plastic Materials & Synthetics (0.74%)
Astra AB 47,050 1,868,088
Pulp Mills (1.23%)
UPM-Kymmene Oy 134,980 3,086,815
Security & Commodity Services (1.28%)
Corporacion Bancaria de Espania SA 72,000 3,213,692
Security Brokers & Dealers (0.92%)
Peregrine Investment Holdings 1,496,000 2,298,117
Peregrine Investment - Warrants 127,000(a) 19,017
2,317,134
Soap, Cleaners & Toilet Goods (1.61%)
Reckitt & Colman PLC 298,797 4,060,440
Special Industry Machinery (0.97%)
Bobst SA 835 1,216,143
IHC Caland NV 23,300 1,150,584
Rauma Group 3,758 77,274
2,444,001
Sugar & Confectionary Products (3.12%)
Nestle 4,704 5,714,639
Tate & Lyle 286,000 2,132,375
7,847,014
Telephone Communication (7.22%)
Cable & Wireless PLC 216,000 1,666,542
Nokia Corp. Class A ADR 71,000 4,588,375
Tele Danmark B 34,800 1,673,683
Telecom Corp of New Zealand Ltd. 547,000 2,454,177
Telecom Italia-DI 1,440,000 3,103,965
Telefonica de Espana, SA 183,400 4,701,920
18,188,662
Water Transportation of
Freight, NEC (0.83%)
ICB Shipping AB 'B' Free 213,733 2,097,693
Total Common Stocks 235,043,890
Preferred Stocks (0.55%)
Commercial Banks (0.55%)
National Australia Bank
Convertible 52,000 1,378,000
Principal
Amount Value
Bonds (0.99%)
Fire, Marine & Casualty
Insurance (0.99%)
Alfa SA Convertible Subordinated
Debentures; 8.00%; 9/15/00 $2,010,000(b) $2,492,400
Commercial Paper (4.23%)
Miscellaneous Electrical
Equipment & Supplies (0.73%)
General Electric Co.;
5.42%; 5/2/97 1,840,000 1,839,723
Personal Credit Institutions (2.04%)
Associates Corp.;
5.65%; 5/1/97 5,125,000 5,125,000
Securities Brokers & Dealers (1.46%)
Merrill Lynch & Co.;
5.50%; 5/5/97 3,685,000 3,682,748
Total Commercial Paper 10,647,471
Total Portfolio Investments (99.11%) 249,561,761
Cash, receivables and other assets,
net of liabilities (0.89%) 2,237,343
Total Net Assets (100.00%) $251,799,104
(a) Non-Income producing security - No dividend paid during the period.
(b) Restricted security - See Notes 4 to the financial statements.
Princor World Fund, Inc. Investments by Country
Total Market Percentage of Total
Country Value Market Value
Argentina $ 63,413 0.03%
Australia 13,440,039 5.39
Austria 7,936,714 3.18
Canada 6,175,847 2.47
Denmark 6,831,764 2.74
Finland 12,705,628 5.09
France 1,950,766 0.78
Germany 7,564,993 3.03
Greece 351,566 0.14
Hong Kong 11,921,842 4.78
Israel 5,399,625 2.16
Italy 6,622,682 2.65
Japan 1,364,668 0.55
Korea 1,707,114 0.68
Malaysia 4,483,010 1.80
Mexico 2,492,400 1.00
Netherlands 26,934,452 10.79
New Zealand 7,312,581 2.93
Norway 8,846,473 3.54
Portugal 2,027,972 0.81
Singapore 4,338,634 1.74
Spain 13,902,413 5.57
Sweden 15,070,086 6.04
Switzerland 19,558,553 7.84
Thailand 731,788 0.29
United Kingdom 45,919,642 18.41
United States 13,907,096 5.57
Total Market Value $249,561,761 100.00%
<PAGE>
FINANCIAL HIGHLIGHTS
(unaudited)
Selected data for a share of Capital Stock outstanding throughout each period:
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR BALANCED FUND, INC.(b)
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $14.61 $.18 $ .68 $ .86 $(.19) $(1.30) $(1.49)
Year Ended October 31,
1996 13.74 .38 1.59 1.97 (.43) (.67) (1.10)
1995 12.43 .41 1.31 1.72 (.36) (.05) (.41)
1994 13.26 .32 (.20) .12 (.40) (.55) (.95)
1993 12.78 .35 1.14 1.49 (.37) (.64) (1.01)
1992 11.81 .41 .98 1.39 (.42) -- (.42)
Class B:
Six Months Ended April 30, 1997 14.56 .13 .67 .80 (.13) (1.30) (1.43)
Year Ended October 31, 1996 13.71 .29 1.55 1.84 (.32) (.67) (.99)
Period Ended October 31, 1995(c) 11.80 .31 1.90 2.21 (.30) -- (.30)
Class R:
Six Months Ended April 30, 1997 14.52 .16 .65 .81 (.16) (1.30) (1.46)
Period Ended October 31, 1996(f) 13.81 .24 .73 .97 (.26) -- (.26)
PRINCOR BLUE CHIP FUND, INC.
Class A:
Six Months Ended April 30, 1997 17.10 .10 2.09 2.19 (.10) (.46) (.56)
Year Ended October 31,
1996 15.03 .23 2.45 2.68 (.26) (.35) (.61)
1995 12.45 .24 2.55 2.79 (.21) -- (.21)
1994 11.94 .20 .57 .77 (.26) -- (.26)
1993 11.51 .21 .43 .64 (.18) (.03) (.21)
1992 10.61 .17 .88 1.05 (.15) -- (.15)
Class B:
Six Months Ended April 30, 1997 17.03 .04 2.05 2.09 (.02) (.46) (.48)
Year Ended October 31, 1996 14.99 .11 2.41 2.52 (.13) (.35) (.48)
Period Ended October 31, 1995(c) 11.89 .15 3.10 3.25 (.15) -- (.15)
Class R:
Six Months Ended April 30, 1997 17.08 .08 2.05 2.13 (.07) (.46) (.53)
Period Ended October 31, 1996(f) 16.21 .12 .90 1.02 (.15) -- (.15)
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Class A:
Six Months Ended April 30, 1997 27.72 .22 2.31 2.53 (.24) (3.85) (4.09)
Year Ended October 31,
1996 23.69 .45 5.48 5.93 (.43) (1.47) (1.90)
1995 20.83 .45 3.15 3.60 (.39) (.35) (.74)
1994 21.41 .39 .93 1.32 (.41) (1.49) (1.90)
1993 21.34 .43 1.67 2.10 (.43) (1.60) (2.03)
1992 19.53 .45 1.82 2.27 (.46) -- (.46)
Class B:
Six Months Ended April 30, 1997 27.58 .12 2.28 2.40 (.11) (3.85) (3.96)
Year Ended October 31, 1996 23.61 .21 5.45 5.66 (.22) (1.47) (1.69)
Period Ended October 31, 1995(c) 19.12 .33 4.46 4.79 (.30) -- (.30)
Class R:
Six Months Ended April 30, 1997 27.57 .15 2.27 2.42 (.18) (3.85) (4.03)
Period Ended October 31, 1996(f) 24.73 .19 2.81 3.00 (.16) -- (.16)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio Average
End Total End of Period Average Average Turnover Commission
of Period Return(a) (in thousands) Net Assets Net Assets Rate Rate Paid
PRINCOR BALANCED FUND, INC.(b)
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $13.98 5.99%(d) $ 75,739 1.28%(e) 2.61%(e) 24.3%(e) $.0358
Year Ended October 31,
1996 14.61 15.10% 70,820 1.28% 2.82% 32.6% .0421
1995 13.74 14.18% 57,125 1.37% 3.21% 35.8% N/A
1994 12.43 0.94% 53,366 1.51% 2.70% 14.4% N/A
1993 13.26 12.24% 39,952 1.35% 2.78% 27.5% N/A
1992 12.78 11.86% 31,339 1.29% 3.39% 30.6% N/A
Class B:
Six Months Ended April 30, 1997 13.93 5.60%(d) 8,568 2.00%(e) 1.87%(e) 24.3%(e) .0358
Year Ended October 31, 1996 14.56 14.10% 5,964 2.13% 1.93% 32.6% .0421
Period Ended October 31, 1995(c) 13.71 18.72%(d) 1,263 1.91%(e) 2.53%(e) 35.8%(e) N/A
Class R:
Six Months Ended April 30, 1997 13.87 5.71%(d) 5,426 1.80%(e) 2.02%(e) 24.3%(e) .0358
Period Ended October 31, 1996(f) 14.52 7.52%(d) 875 1.49%(e) 2.26%(e) 32.6%(e) .0421(e)
PRINCOR BLUE CHIP FUND, INC.
Class A:
Six Months Ended April 30, 1997 18.73 13.00%(d) 60,015 1.21%(e) 1.19%(e) 5.4%(e) .0324
Year Ended October 31,
1996 17.10 18.20% 44,389 1.33% 1.41% 13.3% .0456
1995 15.03 22.65% 35,212 1.38% 1.83% 26.1% N/A
1994 12.45 6.58% 27,246 1.46% 1.72% 5.5% N/A
1993 11.94 5.65% 23,759 1.25% 1.87% 11.2% N/A
1992 11.51 9.92% 19,926 1.56% 1.49% 13.5% N/A
Class B:
Six Months Ended April 30, 1997 18.64 12.43%(d) 11,681 2.02%(e) .35%(e) 5.4%(e) .0324
Year Ended October 31, 1996 17.03 17.18% 6,527 2.19% .49% 13.3% .0456
Period Ended October 31, 1995(c) 14.99 26.20%(d) 1,732 1.90%(e) .97%(e) 26.1%(e) N/A
Class R:
Six Months Ended April 30, 1997 18.68 12.64%(d) 7,681 1.72%(e) .55%(e) 5.4%(e) .0324
Period Ended October 31, 1996(f) 17.08 7.02%(d) 1,575 1.48%(e) .68%(e) 13.3%(e) .0456(e)
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Class A:
Six Months Ended April 30, 1997 26.16 9.55%(d) 463,345 .68%(e) 1.94%(e) 39.5%(e) .0447
Year Ended October 31,
1996 27.72 26.41% 435,617 .69% 1.82% 50.2% .0421
1995 23.69 17.94% 339,656 .75% 2.08% 46.0% N/A
1994 20.83 6.67% 285,965 .83% 2.02% 31.7% N/A
1993 21.41 10.42% 240,016 .82% 2.16% 24.8% N/A
1992 21.34 11.67% 190,301 .93% 2.17% 38.3% N/A
Class B:
Six Months Ended April 30, 1997 26.02 9.04%(d) 17,213 1.58%(e) .99%(e) 39.5%(e) .0447
Year Ended October 31, 1996 27.58 25.19% 9,832 1.70% .80% 50.2% .0421
Period Ended October 31, 1995(c) 23.61 25.06%(d) 2,248 1.50%(e) 1.07%(e) 46.0%(e) N/A
Class R:
Six Months Ended April 30, 1997 25.96 9.12%(d) 9,358 1.40%(e) 1.06%(e) 39.5%(e) .0447
Period Ended October 31, 1996(f) 27.57 12.74%(d) 1,752 1.16%(e) 1.18%(e) 50.2%(e) .0421(e)
See accompanying notes.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(unaudited)
Selected data for a share of Capital Stock outstanding throughout each period:
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR EMERGING GROWTH FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $35.75 $.06 $2.04 $2.10 $(.05) $(1.19) $(1.24)
Year Ended October 31,
1996 31.45 .14 5.05 5.19 (.14) (.75) (.89)
1995 25.08 .12 6.45 6.57 (.06) (.14) (.20)
1994 23.56 -- 1.61 1.61 -- (.09) (.09)
1993 19.79 .06 3.82 3.88 (.11) -- (.11)
1992 18.33 .14 1.92 2.06 (.15) (.45) (.60)
Class B:
Six Months Ended April 30, 1997 35.48 (.03) 2.01 1.98 (.01) (1.19) (1.20)
Year Ended October 31, 1996 31.31 (.04) 4.97 4.93 (.01) (.75) (.76)
Period Ended October 31, 1995(c) 23.15 -- 8.18 8.18 (.02) -- (.02)
Class R:
Six Months Ended April 30, 1997 35.67 (.01) 2.04 2.03 (.01) (1.19) (1.20)
Period Ended October 31, 1996(f) 33.77 .04 1.88 1.92 (.02) -- (.02)
PRINCOR GROWTH FUND, INC.
Class A:
Six Months Ended April 30, 1997 39.54 .14 4.61 4.75 (.17) (.37) (.54)
Year Ended October 31,
1996 37.22 .35 3.50 3.85 (.35) (1.18) (1.53)
1995 31.14 .35 6.67 7.02 (.31) (.63) (.94)
1994 30.41 .26 2.56 2.82 (.28) (1.81) (2.09)
1993 28.63 .40 2.36 2.76 (.42) (.56) (.98)
1992 25.92 .39 3.32 3.71 (.40) (.60) (1.00)
Class B:
Six Months Ended April 30, 1997 39.43 -- 4.60 4.60 (.02) (.38) (.40)
Year Ended October 31, 1996 37.10 .08 3.48 3.56 (.05) (1.18) (1.23)
Period Ended October 31, 1995(c) 28.33 .21 8.76 8.97 (.20) -- (.20)
Class R:
Six Months Ended April 30, 1997 39.40 .06 4.55 4.61 (.09) (.38) (.47)
Period Ended October 31, 1996(f) 39.27 .10 .13 .23 (.10) -- (.10)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio Average
End Total End of Period Average Average Turnover Commission
of Period Return(a) (in thousands) Net Assets Net Assets Rate Rate Paid
PRINCOR EMERGING GROWTH FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $36.61 5.87%(d) $263,305 1.28%(e) .35%(e) 9.5%(e) $.0387
Year Ended October 31,
1996 35.75 16.89% 229,465 1.32% .46% 12.3% .0391
1995 31.45 26.89% 150,611 1.47% .47% 13.5% N/A
1994 25.08 6.86% 92,965 1.74% .02% 8.1% N/A
1993 23.56 19.66% 48,668 1.66% .26% 7.0% N/A
1992 19.79 11.63% 29,055 1.74% .80% 5.8% N/A
Class B:
Six Months Ended April 30, 1997 36.26 5.55%(d) 38,769 1.93%(e) (.29)%(e) 9.5%(e) .0387
Year Ended October 31, 1996 35.48 16.07% 28,480 2.01% (.24)% 12.3% .0391
Period Ended October 31, 1995(c) 31.31 35.65%(d) 8,997 2.04%(e) (.17)%(e) 13.5%(e) N/A
Class R:
Six Months Ended April 30, 1997 36.50 5.66%(d) 8,216 1.74%(e) (.05)%(e) 9.5%(e) .0387
Period Ended October 31, 1996(f) 35.67 6.20%(d) 2,016 1.53%(e) .29%(e) 12.3%(e) .0391(e)
PRINCOR GROWTH FUND, INC.
Class A:
Six Months Ended April 30, 1997 43.75 12.06%(d) 267,276 1.05%(e) .66%(e) 2.7%(e) .0500
Year Ended October 31,
1996 39.54 10.60% 228,361 1.08% .95% 1.8% .0443
1995 37.22 23.29% 174,328 1.16% 1.12% 12.2% N/A
1994 31.14 9.82% 116,363 1.30% .95% 13.6% N/A
1993 30.41 9.83% 80,051 1.26% 1.40% 16.4% N/A
1992 28.63 14.76% 63,405 1.19% 1.46% 15.6% N/A
Class B:
Six Months Ended April 30, 1997 43.63 11.69%(d) 31,441 1.71%(e) .01%(e) 2.7%(e) .0500
Year Ended October 31, 1996 39.43 9.80% 24,019 1.79% .22% 1.8% .0443
Period Ended October 31, 1995(c) 37.10 31.48%(d) 8,279 1.80%(e) .31%(e) 12.2%(e) N/A
Class R:
Six Months Ended April 30, 1997 43.54 11.73%(d) 9,248 1.61%(e) .07%(e) 2.7%(e) .0500
Period Ended October 31, 1996(f) 39.40 1.12%(d) 2,014 1.42%(e) .14%(e) 1.8%(e) .0443(e)
See accompanying notes.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR UTILITIES FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $11.40 $.24(g) $ .07 $ .31 $(.22) $-- $(.22)
Year Ended October 31,
1996 10.94 .44(g) .45 .89 (.43) -- (.43)
1995 9.25 .48(g) 1.70 2.18 (.49) -- (.49)
1994 11.45 .46(g) (2.19) (1.73) (.45) (.02) (.47)
Period Ended October 31, 1993(h) 10.18 .35(g) 1.27 1.62 (.35) -- (.35)
Class B:
Six Months Ended April 30, 1997 11.38 .19(g) .08 .27 (.17) -- (.17)
Year Ended October 31, 1996 10.93 .36(g) .43 .79 (.34) -- (.34)
Period Ended October 31, 1995(c) 9.20 .40(g) 1.77 2.17 (.44) -- (.44)
Class R:
Six Months Ended April 30, 1997 14.56 .20(g) .08 .28 (.19) -- (.19)
Period Ended October 31, 1996(f) 11.75 .28 (.41) (.13) (.29) -- (.29)
PRINCOR WORLD FUND, INC.
Class A:
Six Months Ended April 30, 1997 8.14 .05 .78 .83 (.11) (.31) (.42)
Year Ended October 31,
1996 7.28 .10 1.17 1.27 (.08) (.33) (.41)
1995 7.44 .08 (.02) .06 (.03) (.19) (.22)
1994 6.85 .01 .64 .65 (.02) (.04) (.06)
1993 5.02 .03 1.98 2.01 (.05) (.13) (.18)
1992 5.24 .06 (.14) (.08) (.06) (.08) (.14)
Class B:
Six Months Ended April 30, 1997 8.07 .03 .77 .80 (.04) (.31) (.35)
Year Ended October 31, 1996 7.24 .03 1.15 1.18 (.02) (.33) (.35)
Period Ended October 31, 1995(c) 6.71 .05 .51 .56 (.03) -- (.03)
Class R:
Six Months Ended April 30, 1997 8.12 .07 .73 .80 (.08) (.31) (.39)
Period Ended October 31, 1996(f) 7.48 .01 .63 .64 -- -- --
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio Average
End Total End of Period Average Average Turnover Commission
of Period Return(a) (in thousands) Net Assets Net Assets Rate Rate Paid
PRINCOR UTILITIES FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $11.49 2.68%(d) $ 62,580 1.15%(e)(g) 3.99%(e) 37.6%(e) $.0473
Year Ended October 31,
1996 11.40 8.13% 66,322 1.17%(g) 3.85% 34.2% .0410
1995 10.94 24.36% 65,873 1.04%(g) 4.95% 13.0% --
1994 9.25 (15.20)% 56,747 1.00%(g) 4.89% 13.8% --
Period Ended October 31, 1993(h) 11.45 15.92%(d) 50,372 1.00%(e)(g) 4.48%(e) 4.3%(e) --
Class B:
Six Months Ended April 30, 1997 11.48 2.35%(d) 5,901 1.90%(e)(g) 3.24%(e) 37.6%(e) .0473
Year Ended October 31, 1996 11.38 7.23% 5,579 1.93%(g) 3.07% 34.2% .0410
Period Ended October 31, 1995(c) 10.93 24.18%(d) 3,952 1.72%(e)(g) 3.84%(e) 13.0%(e) --
Class R:
Six Months Ended April 30, 1997 11.42 2.42%(d) 929 1.64%(e)(g) 3.50%(e) 37.6%(e) .0473
Period Ended October 31, 1996(f) 11.33 (.31)%(d) 311 1.47%(e) 3.77%(e) 34.2%(e) .0410(e)
PRINCOR WORLD FUND, INC.
Class A:
Six Months Ended April 30, 1997 8.55 10.39%(d) 223,275 1.35%(e) 1.53%(e) 24.9%(e) .0147
Year Ended October 31,
1996 8.14 18.36% 172,276 1.45% 1.43% 23.8% .0147(i)
1995 7.28 1.03% 126,554 1.63% 1.10% 35.4% N/A
1994 7.44 9.60% 115,812 1.74% .10% 13.2% N/A
1993 6.85 41.39% 63,718 1.61% .59% 19.5% N/A
1992 5.02 (1.57)% 35,048 1.69% 1.23% 19.9% N/A
Class B:
Six Months Ended April 30, 1997 8.52 10.06%(d) 22,827 2.15%(e) .75%(e) 24.9%(e) .0147
Year Ended October 31, 1996 8.07 17.16% 15,745 2.28% .64% 23.8% .0197(i)
Period Ended October 31, 1995(c) 7.24 9.77%(d) 3,908 2.19%(e) .58%(e) 35.4%(e) N/A
Class R:
Six Months Ended April 30, 1997 8.53 10.09%(d) 5,697 1.96%(e) 1.41%(e) 24.9%(e) .0147
Period Ended October 31, 1996(f) 8.12 9.29%(d) 1,057 1.59%(e) .78%(e) 23.8%(e) .0197(e)(i)
See accompanying notes.
</TABLE>
Notes to Financial Highlights
(a) Total return is calculated without the front-end sales charge or contingent
deferred sales charge.
(b) Effective December 5, 1994, the name of Princor Managed Fund, Inc. was
changed to Princor Balanced Fund, Inc.
(c) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995. The Growth Funds Class B shares
recognized net investment income as follows for the period from the initial
purchase of Class B shares on December 5, 1994 through December 8, 1994,
none of which was distributed to the sole shareholder, Princor Management
Corporation. The Growth Funds Class B shares incurred unrealized losses on
investments during the initial interim period as follows. This represents
Class B share activities of each fund prior to the initial public offering
of Class B shares:
Per Share
Net Investment Per Share
Fund Income Unrealized (Loss)
Princor Balanced Fund, Inc. -- $(.19)
Princor Blue Chip Fund, Inc. -- (.15)
Princor Capital Accumulation Fund, Inc. -- (.46)
Princor Emerging Growth Fund, Inc. -- (.77)
Princor Growth Fund, Inc. -- (.86)
Princor Utilities Fund, Inc. $.01 (.01)
Princor World Fund, Inc. -- (.07)
(d) Total return amounts have not been annualized.
(e) Computed on an annualized basis.
(f) Period from February 29, 1996, date Class R shares first offered to
eligible purchasers, through October 31, 1996. Certain of the Growth Funds
Class R shares recognized net investment income for the period from the
initial purchase of Class R shares on February 27, 1996 through February
28, 1996 as follows, none of which was distributed to the sole shareholder,
Princor Management Corporation. Additionally, the Growth Funds incurred
unrealized gains (losses) on investments during the initial interim period
as follows. This represents Class R share activities of each fund prior to
the initial offering of Class R shares:
Per Share Per Share
Net Investment Unrealized
Fund Income Gain(Loss)
Princor Balanced Fund, Inc. $ -- $(.03)
Princor Blue Chip Fund, Inc. .01 (.02)
Princor Capital Accumulation Fund, Inc. .01 (.11)
Princor Emerging Growth Fund, Inc. -- .19
Princor Growth Fund, Inc. .01 .10
Princor World Fund, Inc. -- .02
(g) Without the Manager's voluntary waiver of a portion of certain of its
expenses (see Note 3 to the financial statements) for the periods indicated,
Princor Utilities Fund, Inc. would have had per share net investment income
and the ratios of expenses to average net assets as shown:
Year, Per Share Ratio of Expenses
Except Net Investment to Average Net Amount
as Noted Income Assets Waived
Class A 1997* $.23 1.25%(e) $ 31,568
1996 .43 1.25% 54,932
1995 .46 1.30% 151,145
1994 .41 1.50% 284,836
1993(h) .32 1.54%(e) 139,439
Class B 1997* .18 1.99%(e) 2,673
1996 .34 2.06% 6,690
1995(c) .40 1.81%(e) 1,338
Class R 1997* .16 2.51%(e) 2,752
1996 .17(e) 1.47%(e) --
* Six months ended April 30, 1997
(h) Period from December 16, 1992, date shares first offered to public, through
October 31, 1993. Net investment income, aggregating $.05 per share for the
period from the initial purchase of shares on November 16, 1992 through
December 15, 1992, was recognized, none of which was distributed to its sole
stockholder, Principal Mutual Life Insurance Company, during the period.
Additionally, the fund incurred unrealized gains on investments of $.13 per
share during the initial interim period. This represents activities of the
fund prior to the initial public offering of fund shares.
(i) Princor World Fund identified the cost of commissions paid on purchases and
sales of portfolio securities charged to the fund in the local currency of
the respective country involved. The value of the commissions is translated
into U.S. dollars at approximate rates when acquired or sold. This
translation can give the appearance that the Princor World Fund average
commission rate is substantially different from the other Growth Funds.
<PAGE>
<TABLE>
<CAPTION>
April 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Princor Princor Government
Bond Securities Income
INCOME FUNDS Fund, Inc. Fund, Inc.
<S> <C> <C>
Investment in securities -- at cost.............................. $ 122,529,268 $ 269,427,751
Assets
Investment in securities -- at value (Note 4).................... $ 123,780,301 $ 265,217,384
Cash ............................................................ 2,001 2,517
Receivables:
Dividends and interest........................................ 2,611,618 1,536,984
Investment securities sold.................................... -- --
Capital Stock sold............................................ 158,627 190,103
Other assets..................................................... 4,975 20,317
Total Assets 126,557,522 266,967,305
Liabilities
Accrued expenses................................................. 99,899 204,772
Payables:
Investment securities purchased............................... -- 1,967,109
Capital Stock reacquired...................................... 69,942 279,375
Line of Credit (Note 6)....................................... -- --
Total Liabilities 169,841 2,451,256
Net Assets Applicable to Outstanding Shares...................... $ 126,387,681 $ 264,516,049
Net Assets Consist of:
Capital Stock.................................................... $ 116,277 $ 239,824
Additional paid-in capital....................................... 125,434,181 270,593,171
Accumulated undistributed net investment income.................. 64,896 75,314
Accumulated net realized loss on investment transactions ........ (478,706) (2,181,893)
Net unrealized appreciation (depreciation) of investments........ 1,251,033 (4,210,367)
Total Net Assets $ 126,387,681 $ 264,516,049
Capital Stock (par value: $.01 a share)
Shares authorized................................................ 100,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets.............................................. $ 113,116,379 $ 248,448,018
Shares issued and outstanding........................... 10,405,287 22,521,915
Net asset value per share............................... $10.87 $11.03
Maximum offering price per share(a)..................... $11.41 $11.58
Class B: Net Assets ............................................. $10,033,351 $13,554,186
Shares issued and outstanding........................... 924,193 1,231,267
Net asset value per share(b)............................ $10.86 $11.01
Class R: Net Assets.............................................. $3,237,951 $2,513,845
Shares issued and outstanding........................... 298,273 229,246
Net asset value per share............................... $10.86 $10.97
<FN>
(a)Maximum offering price is equal to net asset value plus a front-end sales
charge of 4.75% (1.50% with respect to Princor Limited Term Bond Fund,
Inc.) of the offering price.
(b)Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
April 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Princor Princor Princor
High Yield Limited Term Bond Tax-Exempt Bond
INCOME FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Investment in securities -- at cost.............................. $35,888,273 $19,091,298 $185,001,491
Assets
Investment in securities -- at value (Note 4).................... $36,306,744 $18,791,931 $190,886,229
Cash ............................................................ 135,507 2,001 2,126
Receivables:
Dividends and interest........................................ 872,617 291,214 3,908,750
Investment securities sold.................................... -- 19,693 --
Capital Stock sold............................................ 79,405 36,326 97,465
Other assets..................................................... 2,318 -- 9,709
Total Assets 37,396,591 19,141,165 194,904,279
Liabilities
Accrued expenses................................................. 21,036 644 136,472
Payables:
Investment securities purchased............................... -- -- --
Capital Stock reacquired...................................... 4,325 2,520 59,544
Line of Credit (Note 6)....................................... -- -- 482,000
Total Liabilities 25,361 3,164 678,016
Net Assets Applicable to Outstanding Shares .................. $37,371,230 $19,138,001 $194,226,263
Net Assets Consist of:
Capital Stock.................................................... $ 45,206 $ 19,667 $ 162,061
Additional paid-in capital....................................... 39,353,737 19,431,539 189,217,423
Accumulated undistributed net investment income.................. 44,963 18,710 29,572
Accumulated net realized loss on investment transactions ........ (2,491,147) (32,548) (1,067,531)
Net unrealized appreciation (depreciation) of investments........ 418,471 (299,367) 5,884,738
Total Net Assets $37,371,230 $19,138,001 $194,226,263
Capital Stock (par value: $.01 a share)
Shares authorized................................................ 100,000,000 100,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets.............................................. $32,600,014 $18,372,886 $187,584,617
Shares issued and outstanding........................... 3,940,175 1,888,072 15,651,864
Net asset value per share............................... $8.27 $9.73 $11.98
Maximum offering price per share(a)..................... $8.68 $9.88 $12.58
Class B: Net Assets ............................................. $3,822,811 $221,807 $6,641,646
Shares issued and outstanding........................... 464,510 22,762 554,224
Net asset value per share(b)............................ $8.23 $9.74 $11.98
Class R: Net Assets.............................................. $948,405 $543,308 N/A
Shares issued and outstanding........................... 115,869 55,906 N/A
Net asset value per share............................... $8.19 $9.72 N/A
<FN>
(a)Maximum offering price is equal to net asset value plus a front-end sales
charge of 4.75% (1.50% with respect to Princor Limited Term Bond Fund,
Inc.) of the offering price.
(b)Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Princor Princor Government
Bond Securities Income
INCOME FUNDS Fund, Inc. Fund, Inc.
Net Investment Income
<S> <C> <C>
Interest Income.................................................... $4,813,808 $9,481,875
Expenses:
Management and investment advisory fees (Note 3) ............. 301,461 607,799
Distribution and shareholder servicing fees (Note 1 and 3)...... 185,280 339,103
Transfer and administrative services (Note 1 and 3)............. 115,747 198,557
Registration fees (Note 1)...................................... 23,102 29,082
Custodian fees ................................................. 2,839
Auditing and legal fees ........................................ 3,417 4,201
Directors' fees ................................................ 3,696
Other .......................................................... 4,369
Total Gross Expenses 639,911 1,203,260
Less: Management and investment
advisory fees waived..................................... 20,922 --
Total Net Expenses 618,989 1,203,260
Net Investment Income 4,194,819 8,278,615
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from investment transactions.............. 515,442 (707,102)
Net decrease in unrealized appreciation/depreciation
on investments ................................................ (3,246,685) (3,417,599)
Net Realized and Unrealized
Gain (Loss) on Investments (2,731,243) (4,124,701)
Net Increase in Net Assets
Resulting from Operations $1,463,576 $4,153,914
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Princor Princor Princor
High Yield Limited Term Bond Tax-Exempt Bond
INCOME FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
<S> <C> <C> <C>
Interest Income.................................................... $1,587,918 $646,617 $5,845,007
Expenses:
Management and investment advisory fees (Note 3)................ 100,808 45,030 458,372
Distribution and shareholder servicing fees (Note 1 and 3)...... 52,609 19,458 258,285
Transfer and administrative services (Note 1 and 3)............. 35,957 21,073 74,877
Registration fees (Note 1)...................................... 17,474 17,226 26,352
Custodian fees ................................................. 2,597 1,737 1,534
Auditing and legal fees ........................................ 2,747 2,965 3,742
Directors' fees ................................................ 3,635 3,756 3,690
Other .......................................................... 1,517 3,232 8,562
Total Gross Expenses 217,344 114,477 835,414
Less: Management and investment
advisory fees waived..................................... -- 32,164 --
Total Net Expenses 217,344 82,313 835,414
Net Investment Income 1,370,574 564,304 5,009,593
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from investment transactions.............. 485,226 (28,914) 585,219
Net decrease in unrealized appreciation/depreciation
on investments ................................................. (350,321) (188,682) (481,633)
Net Realized and Unrealized
Gain (Loss) on Investments 134,905 (217,596) 103,586
Net Increase in Net Assets
Resulting from Operations $1,505,479 $346,708 $5,113,179
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Princor Government
Bond Securities Income
INCOME FUNDS Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, October 31, April 30, October 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................................ $ 4,194,819 $ 7,759,173 $ 8,278,615 $ 16,881,312
Net realized gain (loss) from investment transactions............ 515,442 (608,660) (707,102) 434,186
Net increase (decrease) in unrealized appreciation/depreciation..
on investments................................................ (3,246,685) (1,814,840) (3,417,599) (1,721,443)
Net Increase in Net Assets
Resulting from Operations 1,463,576 5,335,673 4,153,914 15,594,055
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................................... (4,491,970) (7,395,304) (9,280,429) (16,420,667
Class B....................................................... (309,245) (336,861) (415,263) (470,574)
Class R....................................................... (57,606) (3,457)(b) (43,088) (2,908)(b)
Total Distributions (4,858,821) (7,735,622) (9,738,780) (16,894,149)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................................... 12,494,488 21,969,069 18,765,621 37,110,671
Class B....................................................... 2,961,465 5,830,264 3,452,473 8,060,500
Class R....................................................... 2,789,752 517,933(b) 2,142,240 469,159(b)
Shares issued in reinvestment of dividends and distributions:
Class A....................................................... 3,115,082 4,977,027 7,384,343 12,945,447
Class B....................................................... 247,612 270,581 335,268 375,343
Class R....................................................... 57,477 3,457(b) 42,976 2,905(b)
Shares redeemed:
Class A....................................................... (12,809,277) (18,116,844) (31,438,419) (50,822,999)
Class B....................................................... (918,092) (773,259) (1,554,975) (1,570,936)
Class R....................................................... (94,550) (8,814)(b) (124,408) (1,707)(b)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 7,843,957 14,669,414 (994,881) 6,568,383
Total Increase (Decrease) 4,448,712 12,269,465 (6,579,747) 5,268,289
Net Assets
Beginning of period.............................................. 121,938,969 109,669,504 271,095,796 265,827,507
End of period (including undistributed net investment
income as set forth below).................................... $126,387,681 $121,938,969 $264,516,049 $271,095,796
Undistributed Net Investment Income ............................ $ 64,896 $ 728,898 $ 75,314 $ 1,535,479
<FN>
(a)Period from February 13, 1996 (date operations commenced) through
October 31, 1996. (b) Period from February 27, 1996 (date operations
commenced) through October 31, 1996.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Princor
High Yield Limited Term Bond
INCOME FUNDS Fund, Inc. Fund, Inc.
Six Months Year Six Months Period
Ended Ended Ended Ended
April 30, October 31, April 30, October 31,
1997 1996 1997 1996(a)
Operations
<S> <C> <C> <C> <C>
Net investment income............................................ $ 1,370,574 $ 2,246,839 $ 564,304 $ 535,922
Net realized gain (loss) from investment transactions............ 485,226 26,628 (28,914) (3,634)
Net increase (decrease) in unrealized appreciation/depreciation..
on investments................................................ (350,321) 765,331 (188,682) (110,685)
Net Increase in Net Assets
Resulting from Operations 1,505,479 3,038,798 346,708 421,603
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................................... (1,435,538) (2,164,495) (629,819) (434,063)
Class B....................................................... (116,502) (100,795) (5,220) (1,401)(b)
Class R....................................................... (20,389) (1,126)(b) (10,491) (522)(b)
Total Distributions (1,572,429) (2,266,416) (645,530) (435,986)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................................... 5,496,695 6,203,975 2,706,893 17,452,369
Class B....................................................... 1,977,330 1,663,572 119,953 108,544(b)
Class R....................................................... 853,587 120,413(b) 552,418 81,911(b)
Shares issued in reinvestment of dividends and distributions:
Class A....................................................... 566,733 975,918 595,061 419,436
Class B....................................................... 66,745 56,034 3,119 1,352(b)
Class R....................................................... 20,373 1,126(b) 10,491 522(b)
Shares redeemed:
Class A....................................................... (1,867,999) (2,864,299) (1,887,719) (605,448)
Class B....................................................... (309,963) (288,473) (10,055) (139)(b)
Class R....................................................... (34,782) -- (97,502) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 6,768,719 5,868,266 1,992,659 17,458,547
Total Increase (Decrease) 6,701,769 6,640,648 1,693,837 17,444,164
Net Assets
Beginning of period.............................................. 30,669,461 24,028,813 17,444,164 --
End of period (including undistributed net investment
income as set forth below).................................... $37,371,230 $30,669,461 $19,138,001 $17,444,164
Undistributed Net Investment Income ............................ $ 44,963 $ 246,818 $ 18,710 $ 99,936
<FN>
(a)Period from February 13, 1996 (date operations commenced) through
October 31, 1996. (b) Period from February 27, 1996 (date operations
commenced) through October 31, 1996
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor
Tax-Exempt Bond
INCOME FUNDS Fund, Inc.
Six Months Year
Ended Ended
April 30, October 31,
1997 1996
Operations
<S> <C> <C>
Net investment income............................................ $ 5,009,593 $ 9,923,693
Net realized gain (loss) from investment transactions............ 585,219 674,906
Net increase (decrease) in unrealized appreciation/depreciation..
on investments................................................ (481,633) 362,726
Net Increase in Net Assets
Resulting from Operations 5,113,179 10,961,325
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................................... (5,771,744) (9,811,318)
Class B....................................................... (156,142) (209,899)
Class R....................................................... -- --
Total Distributions (5,927,886) (10,021,217)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................................... 11,608,695 23,815,010
Class B....................................................... 1,179,893 2,684,628
Class R....................................................... -- --
Shares issued in reinvestment of dividends and distributions:
Class A....................................................... 3,917,615 6,720,668
Class B....................................................... 106,703 155,939
Class R....................................................... -- --
Shares redeemed:
Class A....................................................... (14,323,225) (23,971,299)
Class B....................................................... (422,366) (572,822)
Class R....................................................... -- --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 2,067,315 8,832,124
Total Increase (Decrease) 1,252,608 9,772,232
Net Assets
Beginning of period.............................................. 192,973,655 183,201,423
End of period (including undistributed net investment
income as set forth below).................................... $194,226,263 $192,973,655
Undistributed Net Investment Income ............................ $ 29,572 $ 947,865
<FN>
(a)Period from February 13, 1996 (date operations commenced) through
October 31, 1996. (b) Period from February 27, 1996 (date operations
commenced) through October 31, 1996.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Princor Bond Fund, Inc.
Princor Government Securities Income Fund, Inc.
Princor High Yield Fund, Inc.
Princor Limited Term Bond Fund, Inc.
Princor Tax-Exempt Bond Fund, Inc.
Note 1 -- Significant Accounting Policies
Princor Bond Fund, Inc., Princor Government Securities Income Fund, Inc.,
Princor High Yield Fund, Inc., Princor Limited Term Bond Fund, Inc. and Princor
Tax-Exempt Bond Fund, Inc. (the "Income Funds") are registered under the
Investment Company Act of 1940, as amended, as open-end diversified management
investment companies and operate in the mutual fund industry.
On February 13, 1996, the initial purchase of 1,000,000 shares of Class A
Capital Stock of Princor Limited Term Bond Fund, Inc. was made by Principal
Mutual Life Insurance Company (see Note 3). On February 27, 1996, the initial
purchase of Class B shares of the fund was made by Princor Management
Corporation (see Note 3); effective February 29, 1996, the fund began offering
Class B shares to the public.
On February 27, 1996, the initial purchases of Class R shares of the Income
Funds (except for Princor Tax-Exempt Bond Fund, Inc.) were made by Princor
Management Corporation (see Note 3). Effective February 29, 1996, the Income
Funds (except for Princor Tax-Exempt Bond Fund, Inc.) began offering Class R
shares to eligible purchasers.
Class A shares generally are sold with an initial sales charge based on
declining rates; certain purchases may be subject to a contingent deferred sales
charge ("CDSC"). Class B shares are sold without an initial sales charge, but
are subject to a declining CDSC on certain redemptions redeemed within six years
of purchase. Class R shares are sold without an initial sales charge and are not
subject to a CDSC. Class B shares and Class R shares bear a higher ongoing
distribution fee than Class A shares. Class B shares automatically convert into
Class A shares, based on relative net asset value (without a sales charge) after
seven years. Class R shares automatically convert into Class A shares, based on
relative net asset value (without a sales charge) after four years. All classes
of shares for each fund represent interests in the same portfolio of
investments, and will vote together as a single class except where otherwise
required by law or as determined by the funds' respective Board of Directors.
The Board of Directors of each fund declare separate dividends on each class of
shares.
The Income Funds allocate all income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses daily to each class of
shares based upon the relative proportion of the value of shares outstanding of
each class. Expenses specifically attributable to a particular class are charged
directly to such class. Class-specific expenses charged to each class during the
six months ended April 30, 1997, which are included in the corresponding
captions of the Statement of Operations, were as follows:
<TABLE>
<CAPTION>
Distribution and Transfer and
Shareholder Servicing Fees Administrative Services Registration Fees
Class A Class B Class R Class A Class B Class R Class A Class B Class R
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Princor Bond Fund, Inc. $138,628 $40,602 $6,050 $37,379 $4,306 $494 $7,676 $3,671 $2,401
Princor Government Securities Income Fund, Inc. 281,192 52,788 5,123 85,091 5,323 294 6,937 4,781 2,588
Princor High Yield Fund, Inc. 37,924 12,878 1,807 7,574 1,017 111 4,026 3,701 2,049
Princor Limited Term Bond Fund, Inc. 18,388 442 628 828 60 48 4,335 2,309 2,248
Princor Tax-Exempt Bond Fund, Inc. 233,263 25,022 N/A 29,442 959 N/A 10,928 4,884 N/A
</TABLE>
The Income Funds value securities for which market quotations are readily
available at market value, which is determined using the last reported sale
price or, if no sales are reported, as is regularly the case for some securities
traded over-the-counter, the last reported bid price. When reliable market
quotations are not considered to be readily available, which may be the case,
for example, with respect to certain debt securities and preferred stocks, the
investments are valued by using market quotations, prices provided by market
makers or estimates of market values obtained from yield data and other factors
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by each fund's Board of Directors.
Securities with remaining maturities of 60 days or less are valued at amortized
cost, which approximates market.
The Income Funds may, pursuant to an exemptive order issued by the Securities
and Exchange Commission, transfer uninvested funds into a joint trading account.
The order permits the Income Funds' cash balances to be deposited into a single
joint account along with the cash of other registered investment companies
managed by Princor Management Corporation. These balances may be invested in one
or more short-term instruments.
The Income Funds record investment transactions generally one day after the
trade date, except for short-term investment transactions which are recorded
generally on the trade date. The identified cost basis has been used in
determining the net realized gain or loss from investment transactions and
unrealized appreciation or depreciation on investments. Dividends are taken into
income on an accrual basis as of the ex-dividend date and interest income is
recognized on an accrual basis.
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting principles.
Permanent book and tax basis differences are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification.Reclassifications made for the year ended October
31, 1996 were not material.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each fund
is qualified as a "regulated investment company" under the Internal Revenue Code
and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments for
federal income tax reporting purposes is approximately the same as that for
financial reporting purposes.
Note 3 -- Management Agreement and Transactions With Affiliates
The Income Funds have agreed to pay investment advisory and management fees to
Princor Management Corporation (wholly owned by Princor Financial Services
Corporation, a subsidiary of Principal Mutual Life Insurance Company) (the
"Manager") computed at an annual percentage rate of each fund's average daily
net assets. The annual rate used in this calculation for the Income Funds is as
follows:
<TABLE>
<CAPTION>
Net Asset Value of Funds
(in millions)
First Next Next Next Over
Fund $100 $100 $100 $100 $400
<S> <C> <C> <C> <C> <C>
Princor Bond Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Government Securities
Income Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor High Yield Fund, Inc. 0.60% 0.55% 0.50% 0.45% 0.40%
Princor Limited Term Bond Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Tax-Exempt Bond Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
</TABLE>
The Income Funds also reimburse the Manager for transfer and administrative
services, including the cost of accounting, data processing, supplies and other
services rendered.
The Manager voluntarily waives a portion of its fee for some of the Income
Funds. The waivers are in amounts that maintain total operating expenses for
each fund within certain limits. The limits are expressed as a percentage of
average daily net assets attributable to each class on an annualized basis
during the reporting period. The amounts waived and the operating expense
limits, which were maintained at or below those shown, are as follows:
Amount
Waived
Six Months
Ended Period Ended Expense
April 30, 1997 October 31, 1996 Limit
Princor Bond
Fund, Inc.
Class A $16,146 $22,536 0.95%
Class B 2,226 5,874 1.70
Class R 2,550 3(b) 1.45
Princor Limited Term
Bond Fund, Inc.
Class A 27,474 25,651(a) 0.90
Class B 2,592 259(b) 1.25
Class R 2,098 60(b) 1.50
(a)Period from February 13, 1996, date Class A shares operation commenced,
through October 31, 1996.
(b)Period from February 27, 1996, date Class B and Class R shares operations
commenced, through October 31, 1996.
The Manager intends to continue its voluntary waiver and, if necessary, pay
expenses normally payable by each of the funds through February 28, 1998.
Princor Financial Services Corporation, as principal underwriter, receives
proceeds of any CDSC on certain Class A and Class B share redemptions. The
charge is based on declining rates, which for Class A shares begin at .75% and
for Class B shares at 4.00% (.25% and 1.25% for Princor Limited Term Bond Fund,
respectively) of the lesser of the current market value or the cost of shares
being redeemed. Princor Financial Services Corporation also retains sales
charges on sales of Class A shares based on declining rates which begin at 4.75%
of the offering price (1.50% for Princor Limited Term Bond Fund, Inc.). The
aggregate amount of these charges retained, by fund, for the period ended April
30, 1997 were as follows:
Class A Class B
Princor Bond Fund, Inc. $256,464 $20,209
Princor Government Securities Income Fund, Inc. 389,685 20,879
Princor High Yield Fund, Inc. 142,399 7,240
Princor Limited Term Bond Fund, Inc. 22,417 1
Princor Tax-Exempt Bond Fund, Inc. 278,962 10,920
No brokerage commissions were paid by the Income Funds to Princor Financial
Services Corporation during the periods.
The Income Funds bear distribution and shareholder servicing fees with respect
to Class A shares computed at an annual rate of up to .25% (.15% for the Princor
Limited Term Bond Fund, Inc.) of the average daily net assets attributable to
Class A shares of each fund. Each of the Income Funds adopted a distribution
plan with respect to Class B shares that provides for distribution and
shareholder servicing fees computed at an annual rate of up to 1.00% of the
average daily net assets attributable to Class B shares of each fund (.50% for
the Princor Limited Term Bond Fund, Inc.). Effective February 1996, each of the
Income Funds, with the exception of Princor Tax-Exempt Bond Fund, Inc., adopted
a distribution plan with respect to Class R shares that provides for
distribution and shareholder servicing fees computed at an annual rate of up to
.75% of the average daily net assets attributable to Class R shares of each
fund. Distribution and shareholder servicing fees are paid to Princor Financial
Services Corporation; a portion of the fees are subsequently remitted to retail
dealers. Pursuant to the distribution agreements, fees unused by the principal
underwriter at the end of the fiscal year are returned to the Income Funds.
At April 30, 1997, Principal Mutual Life Insurance Company and subsidiaries of
Principal Mutual Life Insurance Company owned shares of the Income Funds as
follows:
Class A Class B Class R
Princor Bond Fund, Inc. 178,252 114 96
Princor Government Securities Income Fund, Inc. 94,035 112 95
Princor High Yield Fund, Inc. 1,116,209 157 4,534
Princor Limited Term Bond Fund, Inc. 1,073,939 107 4,369
Princor Tax-Exempt Bond Fund, Inc. 92,517 106 N/A
Note 4 -- Investment Transactions
For the six months ended April 30, 1997, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U. S. government securities) by the Income Funds were as
follows:
Purchases Sales
Princor Bond Fund, Inc. $15,064,570 $7,197,415
Princor High Yield Fund, Inc. 13,400,745 7,473,644
Princor Limited Term Bond Fund, Inc. 4,021,817 2,401,295
Princor Tax-Exempt Bond Fund, Inc. 13,977,732 9,758,558
At April 30, 1997, net unrealized appreciation (depreciation) of investments by
the Income Funds was composed of the following:
<TABLE>
<CAPTION>
Net Unrealized
Gross Unrealized Appreciation (Depreciation)
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Princor Bond Fund, Inc. $3,209,371 $(1,958,338) $1,251,033
Princor Government Securities Income Fund, Inc. 1,649,480 (5,859,847) (4,210,367)
Princor High Yield Fund, Inc. 850,201 (431,730) 418,471
Princor Limited Term Bond Fund, Inc. 13,135 (312,502) (299,367)
Princor Tax-Exempt Bond Fund, Inc. 6,825,753 (941,015) 5,884,738
</TABLE>
The Income Funds may trade U.S. Government securities on a "to-be-announced"
(TBA) basis. In a TBA transaction, the fund commits to purchase or sell
securities for which all specific information is not known at the time of the
trade. Securities purchased on a TBA basis are not settled until they are
delivered to the fund, normally 15 to 30 days later. These transactions are
subject to market fluctuations and their current value is determined in the same
manner as for other portfolio securities. As of April 30, 1997, Princor
Government Securities Income Fund, Inc. had TBA purchase commitments involving
securities with a face amount of $2,000,000, cost of $1,967,109 and market value
of $1,993,520. The fund has set aside investment securities and other assets in
excess of the commitments to serve as collateral.
Note 4 -- Investment Transactions (Con't.)
At April 30, 1997, Princor Bond Fund, Inc., Princor High Yield Fund, Inc.,
Princor Limited Term Bond Fund, Inc. and Princor Tax-Exempt Bond Fund, Inc. held
the following securities which were purchased in a private placement transaction
and may require registration in order to effect a sale in the ordinary course of
business.
<TABLE>
<CAPTION>
Value at Value as a
Date of April 30, Percentage of
Fund Security Description Acquisition Cost 1997 Net Assets
<S> <C> <C> <C> <C> <C>
Princor Bond Fund, Inc. John Hancock Mutual Life
Insurance Co. Surplus Notes 1/8/97 $2,396,100 $2,315,252 1.83%
Princor High Yield Fund, Inc. Chesapeake Energy Corp.
Senior Notes 3/12/97 795,312 748,000 2.00
Fage Dairy Industry S.A.
Senior Notes 2/6/97 686,000 647,500 1.73
Fairchild Semiconductor Corp.
Senior Subordinated Notes 3/6/97 757,500 755,625 2.02
Motor & Gears, Inc.
Senior Notes 11/1/96 800,000 796,000 2.13
Pen-Tab Industries, Inc.
Senior Subordinated Notes 1/30/97 200,000 198,500 .53
Quality Food Centers
Senior Subordinated Notes 3/13/97 800,000 793,000 2.12
Rio Hotel & Casino, Inc.
Senior Subordinated Notes 2/7/97 713,125 686,000 1.84
Sun Media Corp
Senior Subordinated Notes 2/13/97 200,000 195,000 .52
4,819,625 12.89
Princor Limited Term Bond Fund, Inc. B.A.T. Capital Corp.
Medium-Term Notes 7/24/96 583,584 589,156 3.08
Orix Credit Alliance, Inc.
Medium-Term Notes 11/8/96 850,000 843,446 4.41
1,432,602 7.49
Princor Tax-Exempt Bond Fund, Inc. Eddyville, Iowa, IDR Ref. Bonds;
Cargill Inc. Project 1/11/95 859,910 991,250 .51
</TABLE>
The Income Funds' investments are with various issuers in various industries.
The Schedules of Investments contained herein summarize concentration of credit
risk by issuer and industry.
Note 5 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
<TABLE>
<CAPTION>
Princor Princor Princor
Bond Government Securities High Yield
Fund, Inc. Income Fund, Inc. Fund, Inc.
Six Months Ended April 30, 1997:
Shares sold:
<S> <C> <C> <C>
Class A ......................................... 1,133,242 1,685,350 656,903
Class B ......................................... 269,632 309,608 236,890
Class R............................................ 254,536 193,746 102,509
Shares issued in reinvestment of dividends and
distributions:
Class A ........................................... 282,617 662,911 67,806
Class B ........................................... 22,515 30,167 8,032
Class R............................................ 5,254 3,899 2,460
Shares redeemed:
Class A ......................................... (1,162,040) (2,826,157) (222,938)
Class B ......................................... (83,265) (139,797) (37,366)
Class R............................................ (8,611) (11,321) (4,217)
Net Increase 713,880 91,594 810,079
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 1,970,454 3,321,877 768,505
Class B ......................................... 523,960 722,764 207,062
Class R*........................................... 47,584 42,812 14,977
Shares issued in reinvestment of dividends and
distributions:
Class A ........................................... 448,289 1,164,488 121,239
Class B ........................................... 24,582 33,968 6,991
Class R*........................................... 318 266 140
Shares redeemed:
Class A ......................................... (1,629,399) (4,575,851) (354,640)
Class B ......................................... (70,602) (141,657) (35,769)
Class R*........................................... (808) (156) --
Net Increase 1,314,378 568,511 728,505
<FN>
* Period from February 27, 1996 (date operations commenced) through October 31, 1996.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Princor Princor
Limited Term Bond Tax-Exempt Bond
Fund, Inc. Fund, Inc.
Six Months Ended April 30, 1997:
Shares sold:
<S> <C> <C>
Class A ......................................... 275,644 964,417
Class B ......................................... 12,184 98,369
Class R............................................ 56,421 N/A
Shares issued in reinvestment of dividends and distributions:
Class A ......................................... 60,733 325,653
Class B ......................................... 319 8,873
Class R............................................ 1,075 N/A
Shares redeemed:
Class A ......................................... (191,849) (1,190,968)
Class B ......................................... (1,023) (35,090)
Class R............................................ (10,031) N/A
Net Increase 203,473 171,254
Year Ended October 31, 1996, Except as Noted:
Shares sold:
Class A ......................................... 1,762,547(a) 1,994,928
Class B ......................................... 11,158(a) 225,823
Class R............................................ 8,387(a) N/A
Shares issued in reinvestment of dividends and distributions:
Class A ......................................... 43,053(a) 563,980
Class B ......................................... 139(a) 13,120
Class R............................................ 54(a) N/A
Shares redeemed:
Class A ......................................... (62,056)(a) (2,011,737)
Class B ......................................... (15)(a) (48,315)
Net Increase 1,763,267 737,799
<FN>
(a) Period from February 13, 1996 (February 27, 1996 -- Princor Limited Term Bond Fund, Inc. Class B and Class R) date operations
commenced through October 31, 1996.
</FN>
</TABLE>
Note 6 -- Line of Credit
The Income Funds have an unsecured line of credit with a bank which allows each
fund to borrow up to $500,000. Borrowings are made solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each fund, based on its borrowings, at a rate equal to the bank's
Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee
is charged at the annual rate of .25% of the line of credit. At April 30, 1997,
the Princor Tax-Exempt Bond Fund, Inc. had an outstanding borrowing of $482,000.
All other Income Funds had no outstanding borrowings under the line of credit.
SCHEDULES OF INVESTMENTS
INCOME FUNDS
PRINCOR BOND FUND, INC.
Principal
Amount Value
Bonds (96.77%)
Air Transportation, Scheduled (2.02%)
Federal Express Corp. 1994 Pass
Through Cert., Series A310-A3;
8.40%; 3/23/10 $1,500,000 $ 1,603,612
Federal Express Corp. Pass Through
Cert.; 7.58%; 7/2/19 1,000,000 954,070
2,557,682
Aircraft & Parts (0.86%)
Textron, Inc. Medium-Term
Notes, Series C;
9.80%; 1/10/00 500,000 536,317
9.55%; 3/19/01 500,000 542,987
1,079,304
Auto & Home Supply Stores (1.17%)
Pep Boys-Manny, Moe & Jack Notes;
7.00%; 6/1/05 1,500,000 1,472,661
Beverages (1.73%)
Joseph E. Seagram & Sons
Guaranteed Debentures;
8.38%; 2/15/07 1,000,000 1,067,041
8.88%; 9/15/11 1,000,000 1,116,500
2,183,541
Cable & Other Pay TV Services (1.88%)
Tele-Communications, Inc. Notes;
7.25%; 8/1/05 2,000,000 1,896,316
Tele-Communications, Inc. Senior
Debentures; 7.88%; 8/1/13 500,000 474,368
2,370,684
Cash Grains (1.98%)
Aktiebolaget SKF Senior Notes;
7.63%; 7/15/03 2,500,000 2,503,840
Combination Utility Services (1.46%)
PG Energy, Inc. First Mortgage
Bonds; 8.38%; 12/1/02 500,000 519,840
Public Service Electric & Gas
Medium-Term Notes;
8.16%; 5/26/09 1,250,000 1,322,205
1,842,045
Computer & Office Equipment (1.02%)
Seagate Technology, Inc. Senior Notes;
7.37%; 3/1/07 1,300,000 1,287,678
Construction & Related
Machinery (0.93%)
Caterpillar, Inc. Global Debentures;
9.38%; 8/15/11 1,000,000 1,176,126
Consumer Products (1.16%)
Philip Morris Cos. Notes;
6.80%; 12/1/03 500,000 483,738
RJR Nabisco Capital Corp. Senior
Notes; 8.75%; 4/15/04 1,000,000 985,000
1,468,738
Copper Ores (2.51%)
Asarco, Inc. Debentures;
7.88%; 4/15/13 $2,000,000 $ 1,959,984
Asarco, Inc. Notes; 7.38%; 2/1/03 1,200,000 1,210,051
3,170,035
Crude Petroleum & Natural Gas (0.44%)
Occidental Petroleum Corp.
Medium-Term Notes;
9.73%; 6/15/01 500,000 547,903
Department Stores (2.58%)
Dillard Investment Co. Notes;
9.25%; 5/1/97 200,000 200,000
Harcourt General, Inc. Subordinated
Notes; 9.50%; 3/15/00 400,000 424,634
J.C. Penney Co., Inc. Debentures;
7.13%; 11/15/23 1,000,000 913,250
Sears Roebuck Co.
Medium-Term Notes;
9.05%; 2/6/12 500,000 571,693
9.12%; 2/13/12 1,000,000 1,149,701
3,259,278
Drug Stores & Proprietary Stores (1.40%)
Rite Aid Corp. Senior Debentures;
6.88%; 8/15/13 2,000,000 1,773,836
Eating & Drinking Places (1.80%)
Marriott International, Inc. Notes;
6.75%; 12/15/03 1,300,000 1,258,237
Marriott International, Inc. Senior
Notes; 7.88%; 4/15/05 1,000,000 1,019,086
2,277,323
Electric Services (3.15%)
Ohio Edison Co. First Mortgage
Bonds; 8.25%; 4/1/02 2,000,000 2,052,756
Southern California Edison Co. Notes;
6.38%; 1/15/06 1,000,000 941,250
Toledo Edison Co. Debentures;
8.70%; 9/1/02 1,000,000 982,375
3,976,381
Engines & Turbines (0.74%)
Brunswick Corp. Debentures;
7.38%; 9/1/23 1,000,000 935,720
Fabricated Rubber Products,
NEC (1.30%)
M. A. Hanna Co. Senior Notes;
9.38%; 9/15/03 1,500,000 1,648,938
Farm & Garden Machinery (1.99%)
Case Corp. Notes; 7.25%; 1/15/16 1,000,000 924,760
Tenneco, Inc. Notes;
10.08%; 2/1/01 500,000 549,291
8.08%; 10/1/02 1,000,000 1,041,463
2,515,514
Gas Production & Distribution (0.94%)
Transco Energy Co. Notes;
9.38%; 8/15/01 1,100,000 1,190,668
General Government, NEC (3.24%)
Ontario Hydro Debentures;
7.45%; 3/31/13 2,000,000 2,005,160
Province of Saskatchewan, Canada
Global Notes; 8.00%; 2/1/13 $2,000,000 $ 2,089,040
4,094,200
Gold & Silver Ores (0.96%)
Placer Dome, Inc. Notes;
7.13%; 6/15/07 1,250,000 1,212,752
Grain Mill Products (0.78%)
Ralston Purina Co. Debentures;
7.75%; 10/1/15 1,000,000 985,821
Grocery Stores (1.66%)
Food Lion, Inc. Medium-Term
Notes; 8.67%; 8/28/06 1,000,000 1,091,109
Food Lion, Inc. Notes;
7.55%; 4/15/07 1,000,000 1,006,910
2,098,019
Highway & Street Construction (1.89%)
Foster Wheeler Corp. Notes;
6.75%; 11/15/05 2,500,000 2,387,455
Household Furniture (1.51%)
Masco Corp. Debentures;
7.13%; 8/15/13 2,000,000 1,906,256
Industrial Inorganic Chemicals (4.17%)
Dow Chemical Co. Debentures;
7.38%; 3/1/23 1,000,000 950,677
Dow Chemical Co. Medium-Term
Notes; 7.75%; 9/15/20 1,000,000 1,007,762
FMC Corp. Senior Notes;
6.38%; 9/1/03 750,000 719,957
Grace, (W.R.) & Co. Guaranteed
Notes; 8.00%; 8/15/04 2,500,000 2,592,522
5,270,918
Life Insurance (1.83%)
John Hancock Mutual Life Insurance
Co. Surplus Notes; 7.38%; 2/15/24 2,500,000(a) 2,315,252
Machinery, Equipment,
& Supplies (0.19%)
AAR Corp. Notes; 7.25%; 10/15/03 250,000 241,046
Millwork, Plywood & Structural
Members (1.31%)
Georgia-Pacific Corp. Debentures;
9.50%; 12/1/11 600,000 694,193
Georgia-Pacific Corp. Senior
Debentures; 7.70%; 6/15/15 1,000,000 966,870
1,661,063
Miscellaneous Amusement,
Recreation Service (1.47%)
Circus Circus Enterprises Senior
Notes; 6.45%; 2/1/06 2,000,000 1,859,180
Miscellaneous Chemical
Products (1.17%)
Cabot Corp. Notes;
10.25%; 12/15/97 400,000 409,394
Ferro Corp. Senior Debentures;
7.63%; 5/1/13 $1,100,000 $ 1,065,337
1,474,731
Miscellaneous Equipment Rental
& Leasing (0.82%)
McDonnell Douglas Finance Corp.
Medium-Term Notes, Series 9;
9.94%; 6/11/98 1,000,000 1,037,520
Miscellaneous Investing (0.99%)
Weingarten Realty Investors
Medium-Term Notes;
7.29%; 5/23/05 1,250,000 1,249,764
Miscellaneous Metal Ores (2.22%)
Amax, Inc. Notes; 9.88%; 6/13/01 900,000 986,350
Cyprus Amax Minerals Notes;
7.38%; 5/15/07 1,100,000 1,092,157
Cyprus Minerals Co. Notes;
10.13%; 4/1/02 650,000 728,617
2,807,124
Motion Picture Production
& Services (0.32%)
Columbia Pictures Entertainment, Inc.
Senior Subordinated Notes;
9.88%; 2/1/98 400,000 410,112
Motor Vehicles & Equipment (2.50%)
Ford Motor Co. Debentures;
8.88%; 1/15/22 1,000,000 1,110,147
7.50%; 8/1/26 1,000,000 965,000
General Motors Corp. Global
Medium-Term Notes;
8.88%; 5/15/03 1,000,000 1,085,062
3,160,209
Newspapers (1.89%)
News America Holdings, Inc.
Guaranteed Senior Notes;
8.50%; 2/15/05 2,250,000 2,386,631
Oil & Gas Field Services (0.79%)
Petroleum Geo-Services Notes;
7.50%; 3/31/07 1,000,000 994,389
Operative Builders (1.18%)
Pulte Corp. Senior Notes;
8.38%; 8/15/04 500,000 518,482
7.30%; 10/24/05 1,000,000 969,622
1,488,104
Paper Mills (5.05%)
Bowater, Inc. Debentures;
9.50%; 10/15/12 1,000,000 1,163,898
9.38%; 12/15/21 1,500,000 1,721,914
Champion International Corp.
Notes; 9.88%; 6/1/00 750,000 810,965
Chesapeake Corp. Notes;
9.88%; 5/1/03 1,000,000 1,125,121
7.20%; 3/15/05 600,000 592,193
James River Corp. Notes;
6.70%; 11/15/03 1,000,000 972,004
6,386,095
Paperboard Mills (1.33%)
Federal Paper Board Co., Inc.
Debentures; 8.88%; 7/1/12 $1,500,000 $ 1,686,257
Personal Credit Institutions (2.11%)
General Motors Acceptance Corp.
Global Notes; 8.50%; 1/1/03 2,000,000 2,133,196
Household Finance Corp. Senior
Subordinated Notes;
9.63%; 7/15/00 500,000 539,092
2,672,288
Petroleum Refining (7.03%)
Ashland, Inc. Medium-Term Notes;
7.71%; 5/11/07 500,000 510,909
7.72%; 7/15/13 1,000,000 1,002,227
7.73%; 7/15/13 750,000 752,372
Mapco, Inc. Medium-Term Notes;
8.48%; 8/5/13 1,000,000 1,055,432
Pennzoil Co. Debentures;
10.13%; 11/15/09 1,675,000 2,012,300
Sun Co., Inc. Debentures;
9.00%; 11/1/24 2,000,000 2,195,710
Sun Co., Inc. Notes; 7.13%; 3/15/04 300,000 296,501
Ultramar Credit Corp. Guaranteed
Notes; 8.63%; 7/1/02 1,000,000 1,062,601
8,888,052
Photographic Equipment
& Supplies (0.80%)
Xerox Corp. Notes; 9.63%; 9/1/97 1,000,000 1,010,989
Plastic Materials & Synthetics (0.38%)
Geon Co. Notes; 6.88%; 12/15/05 500,000 477,684
Primary Nonferrous Metals (2.37%)
Reynolds Metals Co.
Medium-Term Notes;
8.22%; 5/30/07 2,000,000 2,111,524
7.65%; 2/4/08 875,000 888,304
2,999,828
Pulp Mills (2.19%)
ITT Rayonier, Inc. Notes;
7.50%; 10/15/02 1,875,000 1,903,076
International Paper Co.
Medium-Term Notes;
9.70%; 8/15/00 800,000 866,184
2,769,260
Refrigeration & Service
Machinery (2.05%)
Westinghouse Electric Corp.
Debentures; 8.63%; 8/1/12 1,000,000 1,028,736
Westinghouse Electric Corp.
Global Notes; 8.88%; 6/1/01 1,500,000 1,564,875
2,593,611
Rental of Railroad Cars (2.39%)
Gatx Capital Corp. Medium-Term Notes;
Series B; 9.50%; 1/10/02 1,500,000 1,643,016
Series C; 6.86%; 10/13/05 1,000,000 968,208
General American Transportation
Corp. Medium-Term Notes;
10.65%; 11/14/97 $ 400,000 $ 409,406
3,020,630
Sanitary Services (1.42%)
Laidlaw, Inc. Notes;
7.70%; 8/15/02 1,000,000 1,021,029
Laidlaw, Inc. Senior Notes;
7.88%; 4/15/05 750,000 769,254
1,790,283
Security Brokers & Dealers (1.55%)
Lehman Brothers, Inc. Senior
Subordinated Notes;
7.38%; 1/15/07 2,000,000 1,962,468
Telephone Communication (3.17%)
Sprint Corp. Notes; 8.13%; 7/15/02 1,500,000 1,569,177
U.S. West Capital Funding, Inc. Notes;
7.30%; 1/15/07 1,500,000 1,475,289
6.80%; 11/23/07 1,000,000 955,954
4,000,420
Variety Stores (2.98%)
Dayton-Hudson Corp. Debentures;
9.25%; 8/15/11 1,000,000 1,137,526
Dayton-Hudson Corp.
Sinking Fund Debentures;
9.50%; 10/15/16 179,000 183,322
Shopko Stores, Inc. Senior
Notes; 9.00%; 11/15/04 2,500,000 2,447,782
3,768,630
Total Bonds 122,304,936
Commercial Paper (1.17%)
Personal Credit Institutions (1.17%)
Investment In Joint Trade Account;
Associates Corp.; 5.65%; 5/1/97 1,475,365 1,475,365
Total Portfolio Investments (97.94%) 123,780,301
Cash, receivables and other assets, net of
liabilities (2.06%) 2,607,380
Total Net Assets (100.00%) $126,387,681
(a) Restricted security - See Note 4 to the financial statements.
PRINCOR GOVERNMENT SECURITIES INCOME
FUND, INC.
Description of Issue Principal
Type Rate Maturity Amount Value
Government National Mortgage Association (GNMA)
Certificates (99.76%)
GNMA I 6.00% 10/15/23-4/15/26 $26,385,424 $ 24,183,343
GNMA I 6.50 9/15/23-2/15/27 51,004,704 48,302,327
GNMA I 7.00 10/15/22-3/15/27 63,767,131 62,121,774
GNMA I 7.25 9/15/25-10/15/25 5,764,275 5,658,327
GNMA I 7.50% 4/15/17-5/15/27 $48,419,718 $ 48,360,837
GNMA I 8.00 8/15/16-2/15/22 13,032,887 13,376,060
GNMA II 6.00 1/20/24-10/20/26 52,294,303 47,400,623
GNMA II 6.50 3/20/24-3/20/27 15,415,473 14,468,659
Total GNMA Certificates 263,871,950
Principal
Amount Value
Federal Agency Short-Term Obligations (0.51%)
Investment in Joint Trade Account;
Federal Home Loan Mortgage
Corporation; 5.28%; 5/1/97 $1,345,434 $ 1,345,434
Total Portfolio Investments (100.27%) 265,217,384
Liabilities, net of cash, receivables and other
assets (-0.27%) (701,335)
Total Net Assets (100.00%) $264,516,049
PRINCOR HIGH YIELD FUND, INC.
Principal
Amount Value
Bonds (92.40%)
Advertising (2.13%)
Lamar Advertising Company
Senior Subordinated Notes;
9.63%; 12/1/06 $ 800,000 $ 796,000
Aircraft & Parts (1.76%)
Rohr Industries, Inc. Subordinated
Debentures; 9.25%; 3/1/17 700,000 656,250
Blast Furnace & Basic Steel
Products (3.89%)
Ivaco Senior Notes;
11.50%; 9/15/05 350,000 357,000
Titan Wheel International Senior
Subordinated Notes;
8.75%; 4/1/07 700,000 696,461
Weirton Steel Corp. Senior Notes;
10.75%; 6/1/05 400,000 399,000
1,452,461
Broadwoven Fabric Mills, Cotton (1.83%)
J.P. Stevens & Co., Inc. Sinking
Fund Debentures; 9.00%; 3/1/17 700,000 684,250
Cable & Other Pay TV Services (4.05%)
Jones Intercable, Inc. Senior Notes;
9.63%; 3/15/02 700,000 722,750
TCI Communications, Inc. Debentures;
8.75%; 8/1/15 800,000 793,738
1,516,488
Cogeneration - Small Power
Producer (2.98%)
AES Corporation Senior Subordinated
Notes; 10.25%; 7/15/06 $ 700,000 $ 749,000
California Energy Co., Inc. Limited
Resource Senior Secured Notes;
9.88%; 6/30/03 350,000 366,625
1,115,625
Consumer Products (1.57%)
RJR Nabisco, Inc. Senior Notes;
8.75%; 8/15/05 600,000 588,000
Crude Petroleum & Natural Gas (3.65%)
Chesapeake Energy Corp. Senior Notes;
8.50%; 3/15/12 800,000(a) 748,000
Nuevo Energy Co. Senior Subordinated
Notes; 9.50%; 4/15/06 600,000 615,000
1,363,000
Dairy Farms (1.73%)
Fage Dairy Industry S.A. Senior Notes;
9.00%; 2/1/07 700,000(a) 647,500
Electrical Industrial Appratus (2.13%)
Motors and Gears, Inc. Senior Notes,
Series A; 10.75%; 11/15/06 800,000(a) 796,000
Electric Components
& Accessories (4.05%)
Advanced Micro Devices, Inc.
Senior Secured Notes;
11.00%; 8/1/03 700,000 759,500
Fairchild Semiconductor Corp.
Senior Subordinated Notes;
10.13%; 3/15/07 750,000(a) 755,625
1,515,125
Engines & Turbines (1.76%)
Outboard Marine Corp. Debentures;
9.13%; 4/15/17 700,000 658,000
Finance Services (2.11%)
DVI, Inc. Senior Notes;
9.88%; 2/1/04 800,000 790,000
Footwear, Except Rubber (1.21%)
Brown Group, Inc. Senior Notes;
9.50%; 10/15/06 450,000 452,250
Forest Products (1.74%)
Doman Industries Ltd. Senior Notes;
8.75%; 3/15/04 700,000 649,250
Fuel Dealers (1.76%)
Petroleum Heat & Power Co., Inc.
Subordinated Notes;
10.13%; 4/1/03 700,000 658,000
General Government, NEC (0.93%)
Republic of Argentina Global Bonds;
8.38%; 12/20/03 350,000 346,500
Groceries & Related Products (1.78%)
Rykoff-Sexton, Inc. Senior
Subordinated Notes;
8.88%; 11/1/03 $ 700,000 $ 665,000
Grocery Stores (3.14%)
Dominick's Finer Foods, Inc.
Senior Subordinated Notes;
10.88%; 5/1/05 350,000 382,375
Quality Food Centers Senior
Subordinated Notes;
8.70%; 3/15/07 800,000(a) 793,000
1,175,375
Hotels & Motels (1.84%)
John Q. Hammons Hotels, L.P. &
Finance Corp. First Mortgage
Notes; 8.88%; 2/15/04 700,000 686,000
Industrial Inorganic Chemicals (2.12%)
PT. Tri Polyta Indonesia TBK
Guaranteed Secured Notes;
11.38%; 12/1/03 800,000 792,000
Knitting Mills (2.02%)
Tultex Corp. Senior Notes;
10.63%; 3/15/05 700,000 753,375
Lumber & Other Building
Materials (0.48%)
Central Tractor Farm & Country, Inc.
Senior Notes; 10.63%; 4/1/07 175,000 177,625
Miscellaneous Amusement, Recreation
Service (3.92%)
Rio Hotel & Casino, Inc. Senior
Subordinated Notes;
9.50%; 4/15/07 700,000(a) 686,000
Station Casinos, Inc. Senior
Subordinated Notes, Series B;
9.63%; 6/1/03 800,000 780,000
1,466,000
Miscellaneous Plastics Products,
NEC (1.87%)
Congoleum Corp. Senior Notes;
9.00%; 2/1/01 700,000 700,000
Motor Vehicles & Equipment (0.56%)
Blue Bird Body Co. Senior
Subordinated Notes;
10.75%; 11/15/06 200,000 208,500
Newspapers (2.64%)
Hollinger International Publishing, Inc.
Senior Notes; 8.63%; 3/15/05 800,000 794,000
Sun Media Corp. Senior
Subordinated Notes;
9.50%; 2/15/07 $ 200,000(a) $ 195,000
989,000
Nursing & Personal Care Facilities (1.84%)
Mariner Health Group, Inc. Senior
Subordinated Notes; 9.50%; 4/1/06 700,000 686,000
Oil & Gas Field Services (2.93%)
Dawson Production Services
Senior Notes; 9.38%; 2/1/07 700,000 686,000
Parker Drilling Co. Senior Notes,
Series B; 9.75%; 11/15/06 400,000 410,000
1,096,000
Petroleum Refining (1.92%)
Crown Central Petroleum Corp.
Senior Notes; 10.88%; 2/1/05 700,000 719,250
Primary Nonferrous Metals (0.56%)
Euramax International PLC Senior
Subordinated Notes; 11.25%; 10/1/06 200,000 208,250
Pulp Mills (2.35%)
Magnetek, Inc. Senior Subordinated
Debentures; 10.75%; 11/15/98 650,000 678,438
Pen-Tab Industries, Inc. Senior
Subordinated Notes; 10.88%; 2/1/07 200,000(a) 198,500
876,938
Radio, Television, & Computer
Stores (1.92%)
CompUSA, Inc. Senior Subordinated
Notes; 9.50%; 6/15/00 700,000 717,500
Radio & Television Broadcasting (2.78%)
American Radio Systems Senior
Subordinated Notes; 9.00%; 2/1/06 700,000 693,000
Sullivan Broadcasting, Inc. Senior
Subordinated Notes;
10.25%; 12/15/05 350,000 346,500
1,039,500
Retail Stores, NEC (2.20%)
Cole National Group, Inc.
Senior Subordinated Notes;
9.88%; 12/31/06 800,000 822,000
Search & Navigation Equipment (1.85%)
AMRESCO, Inc. Senior Subordinated
Notes; 10.00%; 3/15/04 700,000 689,500
Soap, Cleaners, & Toilet Goods (1.99%)
Coty, Inc. Senior Subordinated
Notes; 10.25%; 5/1/05 700,000 743,750
Telephone Communication (8.48%)
Paging Network, Inc. Senior Debentures;
8.88%; 2/1/06 700,000 589,750
Rogers Cablesystems Ltd. Senior
Secured Second Priority Notes;
9.63%; 8/1/02 750,000 768,750
Rogers Cantel, Inc. Senior Secured
Debentures; 9.75%; 6/1/16 700,000 721,000
Telecom Argentina Stet-France Telecom
SA Senior Notes; 12.00%; 11/15/02 $ 350,000 $ 401,187
Vanguard Cellular Systems, Inc. Senior
Debentures; 9.38%; 4/15/06 700,000 687,750
3,168,437
Textile Finishing, Except Wool (1.90%)
Dominion Textile (USA), Inc. Guaranteed
Senior Notes; 9.25%; 4/1/06 700,000 710,500
Water Supply (2.03%)
California Energy Casecnan Water &
Energy Co., Inc. Senior Secured,
Series B Bonds; 11.95%; 11/15/10 700,000 757,750
Total Bonds 34,532,949
Commercial Paper (4.75%)
Personal Credit Institutions (4.75%)
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 1,773,795 1,773,795
Total Portfolio Investments (97.15%) 36,306,744
Cash, receivables and other assets, net of
liabilities (2.85%) 1,064,486
Total Net Assets (100.00%) $37,371,230
(a) Restricted security - See Note 4 to the financial statements.
PRINCOR LIMITED TERM BOND FUND, INC.
Principal
Amount Value
Bonds (63.13%)
Business Credit Institutions (4.41%)
Orix Credit Alliance, Inc.
Medium-Term Notes;
6.46%; 5/17/99 $850,000(a) $ 843,446
Combination Utility Services (5.66%)
Consolidated Edison Co. Debentures,
Series 92-D; 6.50%; 9/1/99 100,000 99,545
Series 93-B; 6.50%; 2/1/01 730,000 719,515
Pacificorp First Mortgage Medium-Term
Notes; 9.50%; 5/20/99 250,000 263,662
1,082,722
Consumer Products (7.54%)
B.A.T. Capital Corp. Medium-Term
Notes; 5.32%; 10/28/98 600,000(a) 589,156
Philip Morris Cos. Notes;
7.13%; 12/1/99 850,000 853,146
1,442,302
Department Stores (8.49%)
J. C. Penney Co., Inc. Notes;
9.05%; 3/1/01 770,000 823,955
Sears Roebuck Acceptance Corp.
Medium-Term Notes, Series II;
6.69%; 8/13/01 $ 450,000 $ 445,175
Sears Roebuck Co. Medium-Term
Notes; 6.46%; 5/12/00 100,000 99,095
Sears Roebuck Co. Notes;
8.20%; 4/15/99 250,000 255,801
1,624,026
Miscellaneous Investing (1.57%)
United Dominion Realty Trust Notes;
7.25%; 4/1/99 300,000 301,008
Mortgage Bankers & Brokers (4.35%)
Countrywide Funding Corp.
Medium-Term Notes;
6.05%; 3/1/01 860,000 833,648
Motor Vehicles & Equipment (2.82%)
General Motors Corp. Medium-Term
Notes; 9.20%; 7/2/01 500,000 539,672
Paper Mills (4.18%)
International Paper Co. Notes;
7.00%; 6/1/01 800,000 800,163
Paperboard Mills (4.21%)
Temple-Inland, Inc. Notes;
9.00%; 5/1/01 750,000 804,985
Personal Credit Institutions (7.23%)
American General Finance Corp.
Medium-Term Notes, Series D;
7.46%; 3/28/00 350,000 356,142
American General Finance Corp. Notes;
7.25%; 4/15/00 500,000 506,722
Chrysler Financial Corp.
Medium-Term Notes;
8.45%; 1/28/00 500,000 521,760
1,384,624
Security Brokers & Dealers (4.28%)
Lehman Brothers, Inc. Senior
Subordinated Notes;
5.75%; 11/15/98 830,000 819,946
Telephone Communication (8.39%)
Nynex Capital Funding Medium-Term
Notes, Series A; 9.40%; 6/1/00 670,000 718,262
U. S. West Capital Funding, Inc.
Medium-Term Notes;
6/13%; 11/30/99 900,000 887,048
1,605,310
Total Bonds 12,081,852
Federal Home Loan Mortgage Corporation (FHLMC)
Certificates (17.26%)
Description of Issue Principal
Type Rate Maturity Amount Value
FHLMC 7.25% 12/1/07 $ 736,119 $ 733,822
FHLMC 8.00 12/1/11 379,411 388,775
FHLMC 8.25% 1/1/12 144,327 147,166
FHLMC Gold 8.00 10/1/22 316,164 324,356
FHLMC Gold 8.50 1/1/00 482,415 500,052
FHLMC Gold 8.50 3/1/00 333,227 345,410
FHLMC Gold 8.50 4/1/00 213,827 221,644
FHLMC Gold 9.00 9/1/09 611,986 641,055
Total FHLMC Certificates 3,302,280
Federal National Mortgage Association (FNMA)
Certificates (9.49%)
FNMA 8.00 10/1/06 164,242 167,463
FNMA 8.50 5/1/22 776,716 800,973
FNMA 9.00 2/1/25 807,114 847,372
Total FNMA Certificates 1,815,808
Government National Mortgage Association (GNMA)
Certificates (2.99%)
GNMA 8.00 1/20/16 399,705 410,006
GNMA 9.00 7/15/17 152,911 163,022
Total GNMA Certificates 573,028
Principal
Amount Value
Asset-Backed Securities (3.75%)
Personal Credit Institutions (3.75%)
Union Acceptance Corp. 1996-B Auto Trust
Pass-Through Certificates, Class A;
6.45%; 7/8/03 $ 717,319 $ 717,477
Commercial Paper (1.57%)
Personal Credit Institutions (1.57%)
Investment in Joint Trade Account;
Associates Corp.;
5.65%; 5/1/97 301,486 301,486
Total Portfolio Investments (98.19%) 18,791,931
Cash, receivables and other assets, net of
liabilities (1.81%) 346,070
Total Net Assets (100.00%) $19,138,001
(a) Restricted security - See Note 4 to the financial statements.
PRINCOR TAX-EXEMPT BOND FUND, INC.
Principal
Amount Value
Long-Term Tax-Exempt Bonds (98.28%)
Alabama (2.12%)
Courtland, Alabama IDB IDR Series A
Bonds for Champion International;
7.20%; 12/1/13 $3,815,000 $ 4,115,431
Arizona (3.34%)
Navajo County, Arizona Pollution Control
Corp. Rev. Ref. Bonds, Arizona Public
Service Co., Series 1993A;
5.88%; 8/15/28 4,100,000 4,028,250
Pinal County, Arizona Industrial Dev.
Authority Browning-Ferris
Industries, Inc. Proj., Series 1996;
5.00%; 2/1/06 2,530,000 2,466,750
6,495,000
Arkansas (2.51%)
City of Blytheville, Arkansas Solid Waste
Recycling & Sewer Treatment Rev.
Bonds, Series 1992, Nucor Corp.
Project; 6.90%; 12/1/21 4,610,000 4,875,075
California (4.67%)
ABAG Finance Authority for Nonprofit
Corp., Cert. of Participation,
Stanford University Hospital;
5.00%; 11/1/04 750,000 738,750
5.50%; 11/1/13 1,250,000 1,207,813
5.25%; 11/1/20 1,750,000 1,581,562
California Pollution Control Funding
Authority Pollution Control Rev. Ref.
Bonds for San Diego Gas & Electric,
Series A; 5.90%; 6/1/14 1,000,000 1,018,750
California Pollution Control Funding
Authority Rev. Bonds, Atlantic
Richfield Co. Project; 5.00%; 4/1/08 2,500,000 2,443,750
City of Upland, California San Antonio
Comm. Hospital Cert. of Participation;
5.25%; 1/1/04 2,080,000 2,072,200
9,062,825
Colorado (2.71%)
City & County of Denver, Colorado, Airport
System Rev. Bonds, Series 1991D;
7.75%; 11/15/13 3,185,000 3,829,963
Colorado Health Fac. Authority Rev. Bonds
for Sisters of Charity Healthcare
Systems, Series 1994; 5.25%; 5/15/14 1,500,000 1,426,875
5,256,838
Florida (1.22%)
Nassau County, Florida Pollution Control
Rev. Ref. Bonds; ITT Rayonier, Inc.
Project;
6.10%; 6/1/05 1,000,000 1,031,250
7.65%; 6/1/06 1,265,000 1,337,737
2,368,987
Georgia (3.09%)
Coweta County, Georgia Dev. Authority
Pollution Control Rev. Bonds,
Georgia Power Co., Yates Project;
6.00%; 3/1/18 $2,500,000 $ 2,512,500
Fulco, Georgia, Hospital Authority Rev.
Anticipation Cert. for St. Joseph's
Hospital of Atlanta, Inc.;
5.50%; 10/1/14 2,000,000 1,912,500
Municipal Electric Authority of Georgia
Power Rev. Bonds, Series R;
7.30%; 1/1/09 1,505,000 1,584,012
6,009,012
Illinois (15.49%)
Chicago, Illinois Midway Airport Rev.
Bonds, Series A, MBIA Insured;
5.50%; 1/1/11 1,500,000 1,485,000
5.50%; 1/1/13 500,000 489,375
Chicago, Illinois O'Hare International
Airport Special Fac. Rev. Bonds for
American Airlines, Inc. Project-A;
7.88%; 11/1/25 6,010,000 6,475,775
City of Chicago, Illinois Adj. Rate Gas
Supply Rev. Bonds, Series 1985A,
Peoples Gas Light & Coke Project;
6.88%; 3/1/15 2,800,000 3,024,000
Illinois Dev. Financial Authority
Pollution Control Rev. Bonds for
Illinois Power Co.; 7.63%; 12/1/16 2,050,000 2,114,534
Illinois Health Fac. Authority Ref. Rev.
Bonds for OSF Healthcare System;
5.75%; 11/15/07 1,000,000 995,000
6.00%; 11/15/10 500,000 497,500
6.00%; 11/15/13 500,000 497,500
Illinois Health Fac. Authority Rev. Bonds
for Sarah Bush Lincoln Health Center;
Series 1992; 7.25%; 5/15/02 2,950,000 3,300,312
Series 1996B; 6.00%; 2/15/11 1,000,000 988,750
Series 1996B; 5.50%; 2/15/16 1,000,000 920,000
Illinois Health Fac. Authority Rev. Bonds
for South Suburban Hospital,
Series 1992;
7.00%; 2/15/02 725,000 799,313
7.00%; 2/15/09 305,000 348,081
7.00%; 2/15/18 720,000 827,100
Illinois Health Fac. Authority Rev. Bonds,
Northwestern Memorial Hospital,
Series 1994A;
5.60%; 8/15/06 500,000 509,375
5.75%; 8/15/08 615,000 624,225
5.80%; 8/15/09 840,000 846,300
6.10%; 8/15/14 1,000,000 1,015,000
Illinois Health Fac. Authority Rev. Ref.
Bonds for Advocate Healthcare,
Series A;
6.75%; 4/15/12 2,000,000 2,228,750
Regional Transportation Authority,
Illinois General Obligation Bonds,
Series 1994A; 6.25%; 6/1/15 2,000,000 2,092,500
30,078,390
Indiana (7.40%)
City of Mount Vernon, Indiana, Pollution
Control Rev. Bonds for Southern
Indiana Gas & Electric Co. Project;
7.25%; 3/1/14 $ 700,000 $ 757,750
City of Petersburg, Indiana, Pollution
Control Rev. Bonds, for Indianapolis
Power & Light Co. Project,
Series 1993A; 6.10%; 1/1/16 4,000,000 4,085,000
Indiana Health Fac. Financial Authority
Hospital Rev. Bonds, Clarian Health
Partners, Inc.; 5.50%; 2/15/09 2,520,000 2,463,300
Indiana Health Fac. Financing Authority
Hospital Rev. Ref. Bonds, Welborn
Memorial Baptist Hospital, Series 1993;
5.63%; 7/1/23 1,860,000 1,711,200
Lawrenceburg, Indiana Pollution Control
Rev. Ref. Bonds, Indiana Michigan
Power Co. Project,
Series D; 7.00%; 4/1/15 1,000,000 1,056,250
Series E; 5.90%; 11/1/19 3,220,000 3,103,275
Warrick County, Indiana Environmental
Improvement Rev. Bonds, Southern
Indiana Gas & Electric, Series 1993B;
6.00%; 5/1/23 1,190,000 1,203,387
14,380,162
Iowa (4.37%)
City of Muscatine, Iowa, Electric Rev.
Ref. Bonds, Series 1986;
6.00%; 1/1/06 160,000 160,064
5.00%; 1/1/07 1,665,000 1,563,019
Eddyville, Iowa, IDR Ref. Bonds,
Cargill, Inc. Project; 5.63%; 12/1/13 1,000,000(a) 991,250
Iowa Finance Authority Hospital Fac.
Ref. Rev. Bonds for Jennie
Edmundson Memorial Hospital;
7.40%; 11/1/06 550,000 583,000
7.65%; 11/1/16 4,900,000 5,187,875
8,485,208
Kentucky (0.96%)
City of Ashland, Kentucky, Sewage and
Solid Waste Rev. Bonds for Ashland,
Inc. Project, Series 1995; 7.13%; 2/1/22 750,000 797,813
City of Ashland, Kentucky, Solid Waste
Rev. Bonds for Ashland Oil, Inc.
Project, Series 1991; 7.20%; 10/1/20 1,000,000 1,057,500
1,855,313
Louisiana (1.06%)
St. Charles Parish, Louisiana Pollution
Control Rev. Bonds for Louisiana
Power & Light Co. Project;
7.50%; 6/1/21 1,950,000 2,067,000
Maine (1.03%)
Skowhegan, Maine, Pollution Control
Rev. Ref. Bonds for Scott Paper
Co. Project, Series 1993;
5.90%; 11/1/13 2,000,000 2,002,500
Michigan (2.26%)
Michigan State Hospital Financing
Authority Hospital Rev. Bonds for
Detroit Medical Center, Series 1993B;
5.75%; 8/15/13 $ 600,000 $ 588,750
5.50%; 8/15/23 2,000,000 1,837,500
Michigan State Hospital Financing
Authority Rev. Ref. Bonds, Daughters
of Charity Hospital; 5.25%; 11/1/15 1,000,000 943,750
Michigan State Hospital Financing
Authority Rev. Ref. Bonds, Daughters
of Charity Natl. Health System;
5.50%; 11/1/05 1,000,000 1,026,250
4,396,250
Minnesota (1.54%)
City of Bass Brook, Minnesota Pollution
Control Rev. Ref. Bonds for Minnesota
Power & Light Project; 6.00%; 7/1/22 3,000,000 2,991,960
Missouri (1.16%)
Missouri State Health & Educational
Fac. Authority Health Fac. Rev. Bonds,
BJC Health System, Series 1994A;
6.75%; 5/15/12 2,000,000 2,250,000
Montana (1.03%)
Forsyth, Montana Pollution Control Rev.
Ref. Bonds, Montana Power Co.,
Colstrip Project, Series 1993A;
6.13%; 5/1/23 2,000,000 1,997,500
Nebraska (1.84%)
Nebraska Public Power Dist. Power
Supply System Rev. Bonds;
5.30%; 1/1/02 1,000,000 1,017,500
5.40%; 1/1/03 1,500,000 1,535,625
5.50%; 1/1/04 1,000,000 1,027,500
3,580,625
Nevada (1.95%)
Clark County, Nevada, IDR Ref. Bonds,
Nevada Power Co. Project,
Series 1992C; 7.20%; 10/1/22 3,600,000 3,793,500
New Mexico (1.08%)
City of Lordsburg, New Mexico
Pollution Control Rev. Bonds
for Phelps Dodge Corp. Project;
6.50%; 4/1/13 2,000,000 2,096,660
North Carolina (2.71%)
Martin County, North Carolina Industrial
Fac. & Pollution Control Finance
Authority Solid Waste Rev. Bonds,
Weyerhaeuser;
5.65%; 12/1/23 1,500,000 1,395,000
6.80%; 5/1/24 2,000,000 2,145,000
North Carolina Medical Care Hospital
Rev. Bonds for Rex Hospital Project;
6.13%; 6/1/10 $1,700,000 $ 1,731,875
5,271,875
North Dakota (1.07%)
Mercer County, North Dakota, Pollution
Control Rev. Bonds, Ottertail Power
Co. Project, Series 1991; 6.90%; 2/1/19 1,950,000 2,078,193
Ohio (5.05%)
Cuyahoga County, Ohio, Hospital Rev.
Bonds for Meridia Health Systems,
Series 1991;
7.25%; 8/15/19 1,445,000 1,526,281
Lorain County, Ohio Hospital Ref. Bonds,
Humility Mary Health Care, Series A;
5.90%; 12/15/08 3,270,000 3,359,925
Ohio Air Quality Dev. Rev. Bonds,
Columbus Southern Power Co. Project,
Series 1985B; 6.25%; 12/1/20 4,900,000 4,930,625
9,816,831
Oklahoma (1.21%)
Tulsa Industrial Authority Rev. Bonds,
St. John Medical Center Project,
Series 1994;
6.25%; 2/15/14 1,280,000 1,316,800
6.25%; 2/15/17 1,000,000 1,025,000
2,341,800
Rhode Island (1.53%)
Rhode Island State Industrial Facilities
Corp. Marine Term Rev. Bonds,
Mobile Oil Refining; 6.00%; 11/1/14 2,900,000 2,965,250
South Carolina (4.34%)
Darlington County, South Carolina
Pollution Control Rev. Bonds for
Carolina Power & Light;
6.60%; 11/1/10 1,000,000 1,070,000
Greenville Hospital System, South Carolina
Hospital Fac. Rev. Ref. Bonds, Series C;
5.50%; 5/1/16 1,500,000 1,453,125
Oconee County, South Carolina Pollution
Control Rev. Ref. Bonds, Duke Power
Co. Project, Series 1993;
5.80%; 4/1/14 2,000,000 2,030,000
York County, South Carolina Exempt Fac.
Industrial Rev. Bonds for Hoechst
Celanese Project, Series 1994;
5.70%; 1/1/24 2,000,000 1,957,500
York County, South Carolina Pollution
Control Rev. Bonds, Bowater, Inc.
Project; 7.63%; 3/1/06 1,700,000 1,918,875
8,429,500
South Dakota (0.55%)
Pennington County, South Dakota
Pollution Control Rev. Ref. Bonds
for Black Hills Power & Light Co.
Project; 6.70%; 6/1/10 1,000,000 1,065,000
Texas (6.07%)
Brazos River Authority, Texas, Pollution
Control Rev. Bonds for Houston
Lighting & Power;
8.25%; 5/1/15 $ 820,000 $ 862,312
7.75%; 10/1/15 855,000 904,162
8.25%; 5/1/19 500,000 525,800
Guadalupe-Blanco River Authority,
Texas, Industrial Dev. Corp.
Pollution Control Rev. E I Du Pont
1982 Series A; 6.35%; 7/1/22 2,500,000 2,631,250
Matagorda County, Texas, Navigational
District No. 1 Pollution Control Rev.
Bonds for Central Power & Light Co.;
7.50%; 12/15/14 2,585,000 2,814,419
6.00%; 7/1/28 1,000,000 1,003,750
Milam County, Texas Industrial Dev. Corp.
Pollution Control Rev. Ref. Bonds,
Alcoa Project; 5.65%; 12/1/12 2,000,000 2,010,000
Tarrant County, Texas, Health Fac. Dev.
Corp., Harris Methodist Health System
Rev. Bonds; 5.90%; 9/1/06 1,000,000 1,037,500
11,789,193
Utah (1.64%)
Intermountain Power Agency, Utah
Power Supply, Rev. Ref. Bonds,
Series 1993A; 5.50%; 7/1/20 1,500,000 1,406,250
Series 1996D; 5.00%; 7/1/21 2,000,000 1,770,000
3,176,250
Virginia (1.68%)
Albemarle County, Virginia IDA Hospital
Rev. Ref. Bonds, Martha Jefferson
Hospital; 5.50%; 10/1/15 1,900,000 1,833,500
Chesapeake, Virginia IDA Rev. Ref.
Bond for Cargill, Inc. Project;
5.88%; 3/1/13 1,410,000 1,432,913
3,266,413
Washington (2.56%)
City of Seattle, Washington Municipal
Light and Power Rev. Bonds;
1993; 5.10%; 11/1/05 1,950,000 1,950,000
1994; 6.63%; 7/1/16 1,000,000 1,065,000
Washington Health Care Fac. Authority
Rev. Bonds; Series 1989, Sisters of
Providence; 7.88%; 10/1/99 1,800,000 1,957,500
4,972,500
West Virginia (6.13%)
Marshall County, West Virginia,
Pollution Control Rev. Bonds
for Ohio Power Co. Project;
Series C; 6.85%; 6/1/22 1,200,000 1,272,000
Series D; 5.90%; 4/1/22 4,500,000 4,533,750
Pleasants County, West Virgina
Pollution Control Rev. Bonds
for Potomac Edison Co.;
6.15%; 5/1/15 2,000,000 2,040,000
Putnam County, West Virginia,
Pollution Control Rev. Bonds for
Appalachian Power Co. Project,
Series C; 6.60%; 7/1/19 3,875,000 4,049,375
11,895,125
Wisconsin (2.91%)
Kaukauna, Wisconsin Pollution Control
Rev. Ref. Bonds for Intl. Paper Co.
Project, Series A; 5.40%; 5/1/04 $3,610,000 $ 3,632,563
Wisconsin Health & Educational Fac.
Authority Rev. Bonds; Series 1995;
Franciscan Skemp Medical Center, Inc.;
5.88%; 11/15/10 1,000,000 1,011,250
6.13%; 11/15/15 1,000,000 1,016,250
5,660,063
Total Portfolio Investments (98.28%) 190,886,229
Cash, receivables and other assets, net of
liabilities (1.72%) 3,340,034
Total Net Assets (100.00%) $194,226,263
(a) Restricted security - See Note 4 to the financial statements.
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(unaudited)
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR BOND FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $11.17 $.38(b) $(.24) $ .14 $(.44) $ - $(.44)
Year Ended October 31,
1996 11.42 .76(b) (.25) .51 (.76) - (.76)
1995 10.27 .78(b) 1.16 1.94 (.78) (.01) (.79)
1994 11.75 .78(b) (1.47) (.69) (.78) (.01) (.79)
1993 10.97 .81(b) .79 1.60 (.81) (.01) (.82)
1992 10.65 .85(b) .32 1.17 (.85) - (.85)
Class B:
Six Months Ended April 30, 1997 11.15 .34(b) (.24) .10 (.39) - (.39)
Year Ended October 31, 1996 11.41 .67(b) (.25) .42 (.68) - (.68)
Period Ended October 31, 1995(c) 10.19 .63(b) 1.19 1.82 (.60) - (.60)
Class R:
Six Months Ended April 30, 1997 11.16 .37(b) (.26) .11 (.41) - (.41)
Period Ended October 31, 1996(f) 11.27 .51(b) (.13) .38 (.49) - (.49)
PRINCOR GOVERNMENT
SECURITIES INCOME FUND, INC.
Class A:
Six Months Ended April 30, 1997 11.26 .35 (.17) .18 (.41) - (.41)
Year Ended October 31,
1996 11.31 .70 (.05) .65 (.70) - (.70)
1995 10.28 .71 1.02 1.73 (.70) - (.70)
1994 11.79 .69 (1.40) (.71) (.68) (.12) (.80)
1993 11.44 .74 .55 1.29 (.74) (.20) (.94)
1992 11.36 .81 .12 .93 (.81) (.04) (.85)
Class B:
Six Months Ended April 30, 1997 11.23 .31 (.17) .14 (.36) - (.36)
Year Ended October 31, 1996 11.29 .61 (.05) .56 (.62) - (.62)
Period Ended October 31, 1995(c) 10.20 .56 1.07 1.63 (.54) - (.54)
Class R:
Six Months Ended April 30, 1997 11.21 .33 (.20) .13 (.37) - (.37)
Period Ended October 31, 1996(f) 11.27 .47 (.08) .39 (.45) - (.45)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio
End Total End of Period Average Average Turnover
of Period Return(a) (in thousands) Net Assets Net Assets Rate
PRINCOR BOND FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $10.87 1.24%(d) $113,116 .95%(b)(e) 6.87%(e) 12.0%(e)
Year Ended October 31,
1996 11.17 4.74% 113,437 .95%(b) 6.85% 3.4%
1995 11.42 19.73% 106,962 .94%(b) 7.26% 5.1%
1994 10.27 (6.01)% 88,801 .95%(b) 7.27% 8.9%
1993 11.75 15.22% 85,015 .92%(b) 7.19% 9.3%
1992 10.97 11.45% 62,534 .88%(b) 7.95% 8.4%
Class B:
Six Months Ended April 30, 1997 10.86 .86%(d) 10,033 1.70%(b)(e) 6.13%(e) 12.0%(e)
Year Ended October 31, 1996 11.15 3.91% 7,976 1.69%(b) 6.14% 3.4%
Period Ended October 31, 1995(c) 11.41 17.98%(d) 2,708 1.59%(b)(e) 6.30%(e) 5.1%(e)
Class R:
Six Months Ended April 30, 1997 10.86 .97%(d) 3,238 1.43%(b)(e) 6.44%(e) 12.0%(e)
Period Ended October 31, 1996(f) 11.16 3.75%(d) 525 1.28%(b)(e) 6.51%(e) 3.4%(e)
PRINCOR GOVERNMENT
SECURITIES INCOME FUND, INC.
Class A:
Six Months Ended April 30, 1997 11.03 1.59%(d) 248,448 .86%(e) 6.24%(e) 13.0%(e)
Year Ended October 31,
1996 11.26 6.06% 259,029 .81% 6.31% 25.9%
1995 11.31 17.46% 261,128 .87% 6.57% 10.1%
1994 10.28 (6.26)% 249,438 .95% 6.35% 24.8%
1993 11.79 11.80% 236,718 .93% 6.38% 52.6%
1992 11.44 8.49% 161,565 .95% 7.04% 54.3%
Class B:
Six Months Ended April 30, 1997 11.01 1.29%(d) 13,554 1.56%(e) 5.55%(e) 13.0%(e)
Year Ended October 31, 1996 11.23 5.17% 11,586 1.60% 5.53% 25.9%
Period Ended October 31, 1995(c) 11.29 16.07%(d) 4,699 1.53%(e) 5.68%(e) 10.1%(e)
Class R:
Six Months Ended April 30, 1997 10.97 1.22%(d) 2,514 1.74%(e) 5.43%(e) 13.0%(e)
Period Ended October 31, 1996(f) 11.21 3.76%(d) 481 1.18%(e) 5.84%(e) 25.9%(e)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(unaudited)
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR HIGH YIELD FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $ 8.27 $.34 $ .05 $ .39 $(.39) $ - $(.39)
Year Ended October 31,
1996 8.06 .68 .23 .91 (.70) - (.70)
1995 7.83 .68 .20 .88 (.65) - (.65)
1994 8.36 .63 (.51) .12 (.65) - (.65)
1993 8.15 .71 .21 .92 (.71) - (.71)
1992 7.86 .79 .29 1.08 (.79) - (.79)
Class B:
Six Months Ended April 30, 1997 8.22 .32 .04 .36 (.35) - (.35)
Year Ended October 31, 1996 8.05 .60 .20 .80 (.63) - (.63)
Period Ended October 31, 1995(c) 7.64 .53 .38 .91 (.50) - (.50)
Class R:
Six Months Ended April 30, 1997 8.20 .32 .04 .36 (.37) - (.37)
Period Ended October 31, 1996(f) 8.21 .46 (.03) .43 (.44) - (.44)
PRINCOR LIMITED TERM
BOND FUND, INC.
Class A:
Six Months Ended April 30, 1997 9.89 .30(b) (.11) .19 (.35) - (.35)
Period Ended October 31, 1996(g) 9.90 .38(b) (.04) .34 (.35) - (.35)
Class B:
Six Months Ended April 30, 1997 9.89 .29(b) (.12) .17 (.32) - (.32)
Period Ended October 31, 1996(g) 9.90 .36(b) (.05) .31 (.32) - (.32)
Class R:
Six Months Ended April 30, 1997 9.88 .27(b) (.10) .17 (.33) - (.33)
Period Ended October 31, 1996(f) 9.90 .36(b) (.06) .30 (.32) - (.32)
PRINCOR TAX-EXEMPT BOND
FUND, INC.
Class A:
Six Months Ended April 30, 1997 12.04 .31 - .31 (.37) - (.37)
Year Ended October 31,
1996 11.98 .64 .07 .71 (.65) - (.65)
1995 10.93 .65 1.05 1.70 (.65) - (.65)
1994 12.62 .64 (1.54) (.90) (.63) (.16) (.79)
1993 11.62 .66 1.11 1.77 (.66) (.11) (.77)
1992 11.47 .68 .19 .87 (.69) (.03) (.72)
Class B:
Six Months Ended April 30, 1997 12.02 .27 - .27 (.31) - (.31)
Year Ended October 31, 1996 11.96 .55 .06 .61 (.55) - (.55)
Period Ended October 31, 1995(c) 10.56 .50 1.38 1.88 (.48) - (.48)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio
End Total End of Period Average Average Turnover
of Period Return(a) (in thousands) Net Assets Net Assets Rate
PRINCOR HIGH YIELD FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $ 8.27 4.81%(d) $32,600 1.20%(e) 8.24%(e) 47.1%(e)
Year Ended October 31,
1996 8.27 11.88% 28,432 1.26% 8.49% 18.8%
1995 8.06 11.73% 23,396 1.45% 8.71% 40.3%
1994 7.83 1.45% 19,802 1.46% 7.82% 27.2%
1993 8.36 11.66% 19,154 1.35% 8.57% 23.4%
1992 8.15 14.35% 16,359 1.41% 9.69% 28.2%
Class B:
Six Months Ended April 30, 1997 8.23 4.41%(d) 3,823 2.12%(e) 7.31%(e) 47.1%(e)
Year Ended October 31, 1996 8.22 10.46% 2,113 2.38% 7.39% 18.8%
Period Ended October 31, 1995(c) 8.05 12.20%(d) 633 2.10%(e) 7.78%(e) 40.3%(e)
Class R:
Six Months Ended April 30, 1997 8.19 4.45% 948 2.48%(e) 6.97%(e) 47.1%(e)
Period Ended October 31, 1996(f) 8.20 5.60%(d) 124 1.59%(e) 7.84%(e) 18.8%(e)
PRINCOR LIMITED TERM
BOND FUND, INC.
Class A:
Six Months Ended April 30, 1997 9.73 1.96%(d) 18,373 .90%(b)(e) 6.27%(e) 27.1%(e)
Period Ended October 31, 1996(g) 9.89 3.62%(d) 17,249 .89%(b)(e) 6.01%(e) 16.5%(e)
Class B:
Six Months Ended April 30, 1997 9.74 1.75%(d) 222 1.21%(b)(e) 5.96%(e) 27.1%(e)
Period Ended October 31, 1996(g) 9.89 3.32%(d) 112 1.15%(b)(e) 5.75%(e) 16.5%(e)
Class R:
Six Months Ended April 30, 1997 9.72 1.70%(d) 543 1.45%(b)(e) 5.72%(e) 27.1%(e)
Period Ended October 31, 1996(f) 9.88 3.24%(d) 83 1.40%(b)(e) 5.64%(e) 16.5%(e)
PRINCOR TAX-EXEMPT BOND
FUND, INC.
Class A:
Six Months Ended April 30, 1997 11.98 2.60%(d) 187,585 .84%(e) 5.21%(e) 10.3%(e)
Year Ended October 31,
1996 12.04 6.08% 187,180 .78% 5.34% 9.8%
1995 11.98 16.03% 179,715 .83% 5.67% 17.6%
1994 10.93 (7.41)% 171,425 .91% 5.49% 20.6%
1993 12.62 15.70% 177,480 .89% 5.45% 20.3%
1992 11.62 7.76% 106,661 .99% 5.96% 22.9%
Class B:
Six Months Ended April 30, 1997 11.98 2.26%(d) 6,642 1.58%(e) 4.48%(e) 10.3%(e)
Year Ended October 31, 1996 12.02 5.23% 5,794 1.52% 4.59% 9.8%
Period Ended October 31, 1995(c) 11.96 17.97%(d) 3,486 1.51%(e) 4.78%(e) 17.6%(e)
See accompanying notes.
</TABLE>
<PAGE>
Notes to Financial Highlights
(unaudited)
(a) Total return is calculated without the front-end sales charge or contingent
deferred sales charge.
(b) Without the Manager's voluntary waiver of a portion of certain of its
expenses (see Note 3 to the financial statements) for the periods indicated,
the following funds would have had per share net investment income and the
ratios of expenses to average net assets as shown:
Year, Per Share Ratio of Expenses
Except Net Investment to Average Net Amount
Fund as Noted Income Assets Waived
Princor Bond Fund, Inc.
Class A 1997* $.37 .97%(e) $ 16,146
1996 .76 .97% 22,536
1995 .77 1.02% 86,018
1994 .77 1.09% 120,999
1993 .79 1.07% 111,162
1992 .82 1.11% 110,868
Class B 1997* .33 1.75%(e) 2,226
1996 .67 1.79% 5,874
1995(c) .62 1.62%(e) 300
Class R 1997* .36 1.74%(e) 2,550
1996(f) .51 1.28%(e) 3
Princor Limited Term
Bond Fund, Inc.
Class A 1997* .29 1.21%(e) 27,474
1996(g) .37 1.16%(e) 22,716
Class B 1997* .17 4.36%(e) 2,592
1996(g) .34 1.94%(e) 259
Class R 1997* .23 2.75% 2,098
1996(f) .35 1.79%(e) 60
*Six Months Ended April 30, 1997.
(c) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995. Certain of the Income Funds Class B shares
recognized net investment income as follows, for the period from the initial
purchase of Class B shares on December 5, 1994 through December 8, 1994,
none of which was distributed to the sole shareholder, Princor Management
Corporation. Additionally, the Income Funds Class B shares incurred
unrealized losses on investments during the initial interim period as
follows. This represents Class B share activities of each fund prior to the
initial public offering of Class B shares:
Princor Bond Fund, Inc. $.01 $ --
Princor Government Securities
Income Fund, Inc. .01 (.02)
Princor High Yield Fund, Inc. .01 (.03)
Princor Tax-Exempt Bond Fund, Inc. -- (.05)
(d) Total return amounts have not been annualized.
(e) Computed on an annualized basis.
(f) Period from February 29, 1996, date Class R shares first offered to eligible
purchasers, through October 31, 1996. The Income Funds Class R shares
recognized no net investment income for the period from the initial purchase
by Princor Management Corporation of Class R shares on February 27, 1996
through February 28, 1996. Certain of the Income Funds Class R shares
incurred unrealized losses on investments during the initial interim period
as follows. This represents Class R share activities of each fund prior to
the initial public offering of Class R shares:
Per Share
Fund Unrealized (Loss)
Princor Bond Fund, Inc. $(.03)
Princor Government Securities
Income Fund, Inc. (.03)
Princor Limited Term Bond Fund, Inc. (.02)
(g) Period from February 29, 1996, date shares first offered to the public,
through October 31, 1996. With respect to Class A shares, net investment
income, aggregating $.02 per share for the period from the initial purchase
of shares on February 13, 1996 through February 28, 1996, was recognized,
none of which was distributed to its sole stockholder, Principal Mutual Life
Insurance Company during the period. Additionally, Class A shares incurred
unrealized losses on investments of $.12 per share during the initial
interim period. With respect to Class B shares, no net investment income was
recognized for the period from initial purchase of shares on February 27,
1996 through February 28, 1996. Additionally, Class B shares incurred
unrealized losses on investments of $.02 per share during the initial
interim period. This represents Class A share and Class B share activities
of the fund prior to the initial public offering of both classes of shares.
<PAGE>
April 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Princor Cash Princor Tax-Exempt
Management Cash Management
MONEY MARKET FUNDS Fund, Inc. Fund, Inc.
Assets
Investment in securities -- at value
(approximates cost) (Note 1)........... $753,052,318 $91,217,347
Cash...................................... 33,311 164,935
Receivables:
Dividends and interest ................ 2,607,430 751,191
Capital Stock sold..................... 4,053,708 26,526
Other assets.............................. 29,445 4,482
Total Assets 759,776,212 92,164,481
Liabilities
Accrued expenses.......................... 542,499 78,848
Capital Stock reacquired.................. 456,943 --
Total Liabilities 999,442 78,848
Net Assets Applicable to
Outstanding Shares ..................... $758,776,770 $92,085,633
Net Assets Consist of:
Capital Stock............................. $ 7,587,768 $ 920,856
Additional paid-in capital................ 751,189,002 91,164,777
Total Net Assets $758,776,770 $92,085,633
Capital Stock (par value: $.01 a share)
Shares authorized......................... 2,000,000,000 1,000,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $754,100,911 $92,058,285
Shares issued and outstanding.... 754,100,911 92,058,285
Net asset value per share........ $1.000 $1.000
Class B: Net Assets....................... $1,607,433 $27,348
Shares issued and outstanding.... 1,607,433 27,348
Net asset value per share(a)..... $1.000 $1.000
Class R: Net Assets....................... $3,068,426 N/A
Shares issued and outstanding.... 3,068,426 N/A
Net asset value per share........ $1.000 N/A
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
<PAGE>
Six Months Ended April 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Princor Cash Princor Tax-Exempt
Management Cash Management
MONEY MARKET FUNDS Fund, Inc. Fund, Inc.
Net Investment Income
Interest Income......................... $21,031,146 $1,800,397
Expenses:
Management and investment
advisory fees (Note 3)............ 1,387,017 254,202
Distribution and shareholder
servicing fees (Note 3)........... 5,803 93
Transfer and administrative
services (Note 3)................. 911,765 91,945
Registration fees.................... 94,027 29,428
Custodian fees....................... 9,475 4,609
Auditing and legal fees.............. 4,140 3,714
Directors' fees...................... 3,634 3,634
Other................................ 27,005 4,489
Total Gross Expenses 2,442,866 392,114
Less: Management and investment
advisory fees waived.............. 3,507 26,029
Total Net Expenses 2,439,359 366,085
Net Investment Income $18,591,787 $1,434,312
See accompanying notes.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Cash
Management
MONEY MARKET FUNDS Fund, Inc.
Six Months Year
Ended Ended
April 30, October 31,
1997 1996
Operations
Net investment income .................. $ 18,591,787 $ 33,617,063
Dividends to Shareholders from net
investment income:
Class A.............................. (18,534,901) (33,599,980)
Class B.............................. (12,614) (10,263)
Class R .................... (44,272) (6,820)(a)
Total Dividends (18,591,787) (33,617,063)
Capital Share Transactions (Note 4)
Shares sold:
Class A.............................. 1,635,365,436 3,094,164,602
Class B.............................. 1,628,921 913,414
Class R ..................... 2,673,245 1,820,278(a)
Shares issued in reinvestment of dividends:
Class A.............................. 18,407,457 33,369,259
Class B.............................. 12,249 9,815
Class R .................... 42,480 6,800(a)
Shares redeemed:
Class A.............................. (1,594,633,995) (3,056,436,126)
Class B.............................. (553,463) (611,240)
Class R ............................. (1,286,641) (187,736)(a)
Net Increase (Decrease) in Net Assets
from Capital Share Transactions 61,655,689 73,049,066
Total Increase (Decrease) 61,655,689 73,049,066
Net Assets
Beginning of year....................... 697,121,081 624,072,015
End of year ............................ $ 758,776,770 $ 697,121,081
(a) Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
See accompanying notes.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Princor Tax-Exempt
Cash Management
MONEY MARKET FUNDS Fund, Inc.
Six Months Year
Ended Ended
April 30, October 31,
1997 1996
Operations
Net investment income .................. $ 1,434,312 $ 3,083,273
Dividends to Shareholders from net
investment income:
Class A.............................. (1,434,034) (3,082,691)
Class B.............................. (278) (582)
Class R .................... N/A N/A
Total Dividends (1,434,312) (3,083,273)
Capital Share Transactions (Note 4)
Shares sold:
Class A.............................. 178,170,563 396,446,652
Class B.............................. -- 41,568
Class R ..................... N/A N/A
Shares issued in reinvestment of dividends:
Class A.............................. 1,411,778 3,032,398
Class B.............................. 278 564
Class R .................... N/A N/A
Shares redeemed:
Class A.............................. (186,005,828) (400,884,456)
Class B.............................. -- (41,568)
Class R ............................. N/A N/A
Net Increase (Decrease) in Net Assets
from Capital Share Transactions (6,423,209) (1,404,842)
Total Increase (Decrease) (6,423,209) (1,404,842)
Net Assets
Beginning of year....................... 98,508,842 99,913,684
End of year ............................ $ 92,085,633 $ 98,508,842
(a) Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Princor Cash Management Fund, Inc.
Princor Tax-Exempt Cash Management Fund, Inc.
Note 1 -- Significant Accounting Policies
Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund,
Inc. (the "Money Market Funds") are registered under the Investment Company Act
of 1940, as amended, as open-end diversified management investment companies and
operate in the mutual fund industry.
Shares of the Money Market Funds are sold to the public at net asset value; no
sales charge applies to purchases of the money market funds. Class B shares are
sold without an initial sales charge, but bear a higher ongoing distribution fee
and are subject to a declining contingent deferred sales charge ("CDSC") of up
to 4.00% on certain redemptions redeemed within six years of purchase. Class B
shares automatically convert into Class A shares, based on relative net asset
value (without a sales charge) after seven years.
On February 27, 1996, the initial purchase of Class R shares of Princor Cash
Management Fund, Inc. was made by Princor Management Corporation (see Note 3).
Effective February 29, 1996, Princor Cash Management Fund, Inc. began offering
Class R shares to eligible purchasers. Class R shares are sold without an
initial sales charge or a CDSC. Class R shares bear a higher ongoing
distribution fee than Class A shares. Class R shares automatically convert to
Class A shares, based on relative net asset value (without a sales charge) after
four years.
All classes of shares for each fund represent interests in the same portfolio of
investments, and will vote together as a single class except where otherwise
required by law or as determined by the funds' respective Boards of Directors.
The Board of Directors of each fund declare separate dividends on each class of
shares.
The Money Market Funds allocate all income, expenses (other than class-specific
expenses), and realized gains or losses daily to each class of shares based upon
the relative proportion of the number of traded shares outstanding of each
class. Expenses specifically attributable to a particular class are charged
directly to such class. Class-specific expenses charged to each class during the
six months ended April 30, 1997, which are included in the corresponding
captions of the Statement of Operations, were as follows:
Distribution and
Shareholder Servicing Fees
Fund Class A Class B Class R
Princor Cash Management Fund, Inc. N/A $1,175 $4,628
Princor Tax-Exempt Cash Management Fund, Inc. N/A 93 N/A
Transfer and
Administrative Services
Fund Class A Class B Class R
Princor Cash Management Fund, Inc. $378,985 $181 $233
Princor Tax-Exempt Cash Management Fund, Inc. 25,419 8 N/A
Registration Fees
Fund Class A Class B Class R
Princor Cash Management Fund, Inc. $15,659 $3,437 $5,017
Princor Tax-Exempt Cash Management Fund, Inc. 16,045 3,256 N/A
The Money Market Funds value their securities at amortized cost, which
approximates market. Under the amortized cost method, a security is valued by
applying a constant yield to maturity of the difference between the principal
amount due at maturity and the cost of the security to the fund.
The Money Market Funds record investment transactions generally on the trade
date. The identified cost basis has been used in determining the net realized
gain or loss from investment transactions. Dividends are taken into income on an
accrual basis as of the ex-dividend date and interest income is recognized on an
accrual basis.
The Money Market Funds may, pursuant to an exemptive order issued by the
Securities and Exchange Commission, transfer uninvested funds into a joint
trading acount. The order permits the fund's cash balances to be deposited into
a single joint account along with the cash of other registered investment
companies managed by Princor Management Corporation. These balances may be
invested in one or more short-term instruments.
The Money Market Funds declare all net investment income and any realized gains
and losses from investment transactions as dividends daily to shareholders of
record as of that day.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting principles.
Permanent book and tax basis differences are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification. There were no reclassifications made for the year
ended October 31, 1996.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Money Market Funds' investments are with various issuers in various
industries. The Schedules of Investments contained herein summarize
concentration of credit risk by issuer and industry.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each fund
is qualified as a "regulated investment company" under the Internal Revenue Code
and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments for
federal income tax reporting purposes is approximately the same as that for
financial reporting purposes.
Note 3 -- Management Agreement and Transactions With Affiliates
The Money Market Funds have agreed to pay investment advisory and management
fees to Princor Management Corporation (wholly owned by Princor Financial
Services Corporation, a subsidiary of Principal Mutual Life Insurance Company)
(the "Manager") computed at an annual percentage rate of each fund's average
daily net assets. The annual rate used in this calculation for the Money market
Funds is as follows:
<TABLE>
<CAPTION>
Net Asset Value of Funds
(in millions)
First Next Next Next Over
Fund $100,000 $100,000 $100,000 $100,000 $400,000
<S> <C> <C> <C> <C> <C>
Princor Cash Management Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Tax-Exempt Cash Management Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
</TABLE>
The Money Market Funds also reimburse the Manager for transfer and
administrative services, including the cost of accounting, data processing,
supplies and other services rendered.
The Manager voluntarily waives a portion of its fee for the Princor Cash
Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc. The
waivers are in amounts that maintain total operating expenses for each fund
within certain limits. The limits are expressed as a percentage of average net
assets attributable to each class on an annualized basis during the reporting
period. The amounts waived and the operating expense limits are as follows:
<TABLE>
<CAPTION>
Amount
Waived
Six Months Ended Year Ended Expense
April 30, 1997 October 31, 1996 Limit
Princor Cash Management Fund, Inc.
<S> <C> <C> <C>
Class A $ -- $ 7,102 0.75%
Class B 1,801 6,140 1.50%
Class R 1,706 -- 1.25%(a)
Princor Tax-Exempt Cash Management Fund, Inc.
Class A $21,317 $69,107 0.75%
Class B 3,249 7,160 1.50%
<FN>
(a) For the period March 1, 1996 through March 2, 1997 the expense limit was
1.50%.
</FN>
</TABLE>
The manager intends to continue its voluntary waiver and, if necessary, pay
expenses normally payable by each of the Funds through February 28, 1998.
Princor Financial Services Corporation, as principal underwriter, receives
proceeds of any CDSC on certain Class A and Class B share redemptions. The
charge is based on declining rates, which for Class A shares begin at .75% and
for Class B shares at 4.00% of the lessor of the current market value or the
cost of shares being redeemed. The aggregate amount of these charges retained by
Princor Financial Services Corporation for the six months ended April 30, 1997,
was $1,152 and $1,009 for the Princor Cash Management Fund, Inc., for Class A
and B shares, respectively. There were no charges retained by Princor Financial
Services Corporation for the Princor Tax-Exempt Cash Management Fund, Inc.
No brokerage commissions were paid by the Money Market Funds to affiliated
broker dealers during the period.
Each of the Money Market Funds adopted a distribution plan with respect to Class
B shares that provides for distribution and shareholder servicing fees computed
at an annual rate of up to 1.00% of the average daily net assets attributable to
Class B shares of each fund. Effective February 1996, Princor Cash Management
Fund, Inc., adopted a distribution plan with respect to Class R shares that
provides for distribution and shareholder servicing fees computed at an annual
rate of up to .75% of the average daily net assets attributable to Class R
shares of the fund. Distribution and shareholder servicing fees are paid to
Princor Financial Services Corporation; a portion of the fees are subsequently
remitted to retail dealers. Pursuant to the distribution agreements, fees unused
by the principal underwriter at the end of the fiscal year are returned to the
Money Market Funds. There are no distribution or shareholder servicing fees with
respect to Class A shares.
At April 30, 1997, Principal Mutual Life Insurance Company, subsidiaries of
Principal Mutual Life Insurance Company, benefit plans sponsored on behalf of
Principal Mutual Life Insurance Company and several joint ventures (in each of
which a subsidiary of Principal Mutual Life Insurance Company is a participant)
owned shares of the Money Market Funds as follows:
Class A Class B Class R
Princor Cash Management Fund, Inc. 10,450,230 28,604 26,278
Princor Tax-Exempt Cash Management Fund, Inc. 1,000,055 27,329 N/A
Note 4 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
Princor Cash
Management Fund, Inc.
Six Months Ended April 30, 1997:
Shares sold:
Class A ......................................... 1,635,365,436
Class B ......................................... 1,628,921
Class R .......................................... 2,673,245
Shares issued in reinvestment of dividends:
Class A ........................................... 18,407,457
Class B ........................................... 12,249
Class R .......................................... 42,480
Shares redeemed:
Class A ......................................... (1,594,633,995)
Class B ......................................... (553,463)
Class R .......................................... (1,286,641)
Net Increase (Decrease) 61,655,689
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 3,094,164,602
Class B ........................................ 913,414
Class R* ......................................... 1,820,278
Shares issued in reinvestment of dividends:
Class A ........................................... 33,369,259
Class B ........................................... 9,815
Class R* ........................................ 6,800
Shares redeemed:
Class A ......................................... (3,056,436,126)
Class B ......................................... (611,240)
Class R* ........................................ (187,736)
Net Increase (Decrease) 73,049,066
Princor Tax-Exempt
Cash Management
Fund, Inc.
Six Months Ended April 30, 1997:
Shares sold:
Class A ......................................... 178,170,562
Class B ......................................... --
Class R .......................................... N/A
Shares issued in reinvestment of dividends:
Class A ........................................... 1,411,778
Class B ........................................... 279
Class R .......................................... N/A
Shares redeemed:
Class A ......................................... (186,005,828)
Class B ......................................... --
Class R .......................................... N/A
Net Increase (Decrease) (6,423,209)
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 396,446,652
Class B ........................................ 41,568
Class R* ......................................... N/A
Shares issued in reinvestment of dividends:
Class A ........................................... 3,032,398
Class B ........................................... 564
Class R* ........................................ N/A
Shares redeemed:
Class A ......................................... (400,884,456)
Class B ......................................... ( 41,568)
Class R* ........................................ N/A
Net Increase (Decrease) (1,404,842)
* Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
Note 5 -- Line of Credit
The Money Market Funds have an unsecured line of credit with a bank which allows
each fund to borrow up to $500,000. Borrowings are made solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each fund, based on its borrowings, at a rate equal to the bank's
Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee
is charged at the annual rate of .25% of the line of credit. At April 30, 1997,
the Money Market Funds had no outstanding borrowings under the line of credit.
SCHEDULES OF INVESTMENTS
MONEY MARKET FUNDS
PRINCOR CASH MANAGEMENT FUND, INC.
Principal
Amount Value
Commercial Paper (79.24%)
Asset Backed Securities (7.67%)
Corporate Receivables Corp.;
5.33%; 5/5/97 $ 7,000,000 $ 6,995,854
5.33%; 5/6/97 7,350,000 7,344,559
5.42%; 5/7/97 5,000,000 4,995,483
CXC Inc.;
5.34%; 5/2/97 7,500,000 7,498,888
Retailer Funding Corp.;
5.38%; 5/8/97 5,665,000 5,659,074
5.54%; 5/22/97 8,242,000 8,215,365
Sheffield Receivables Corp.;
5.67%; 5/1/97 5,000,000 5,000,000
5.52%; 5/22/97 6,500,000 6,479,070
5.52%; 5/27/97 6,000,000 5,976,080
58,164,373
Business Credit Institutions (6.31%)
American Express Credit Corp.;
5.49%; 5/2/97 5,000,000 4,999,238
5.49%; 5/5/97 3,100,000 3,098,109
5.47%; 5/6/97 8,000,000 7,993,922
CIT Group Holdings, Inc.;
5.28%; 6/2/97 5,500,000 5,474,187
General Electric Capital Corp.;
5.29%; 6/3/97 5,000,000 4,975,754
5.85%; 1/23/98 5,000,000 4,783,062
Golden Gate Management, Inc.;
LOC Sumitomo Bank;
5.60%; 5/12/97 9,000,000 8,984,600
5.63%; 5/14/97 4,240,000 4,231,380
5.63%; 5/21/97 3,374,000 3,363,447
47,903,699
Computer & Office Equipment (0.26%)
Xerox Credit Corp.;
5.42%; 5/8/97 2,000,000 1,997,892
Cutlery, Handtools & Hardware (0.99%)
Stanley Works; 5.33%; 5/12/97 7,500,000 7,487,785
Department Stores (3.79%)
Sears Roebuck Acceptance Corp.;
5.40%; 5/1/97 2,775,000 2,775,000
5.56%; 5/5/97 8,000,000 7,995,058
5.48%; 5/8/97 6,800,000 6,792,754
5.56%; 5/9/97 6,175,000 6,167,370
5.39%; 5/13/97 5,000,000 4,991,017
28,721,199
Electric Services (6.23%)
AES Shady Point, Inc.; LOC Bank of
Tokyo-Mitsubishi, Ltd.;
5.60%; 5/28/97 7,500,000 7,468,500
CommEd Fuel Co., Inc.; LOC Canadian
Imperial Bank of Commerce;
5.52%; 5/29/97 3,385,000 3,370,467
CommEd Fuel Co., Inc. ;
LOC Credit Suisse;
5.54%; 5/21/97 $ 2,000,000 $ 1,993,844
FPL Fuels, Inc.; LOC Barclays Bank PLC;
5.34%; 5/8/97 4,000,000 3,995,847
5.55%; 5/15/97 5,000,000 4,989,208
FPL Fuels, Inc; LOC Sumitomo Bank;
5.48%; 5/8/97 4,000,000 3,995,738
5.60%; 5/22/97 1,000,000 996,733
5.60%; 6/5/97 9,500,000 9,448,278
Wisconsin Power & Light Co.;
5.50%; 5/6/97 4,500,000 4,496,562
5.49%; 5/19/97 6,500,000 6,482,158
47,237,335
Finance Services (3.84%)
Mitsubishi International Corp.;
5.65%; 5/5/97 9,500,000 9,494,036
5.51%; 5/14/97 900,000 898,209
5.55%; 5/14/97 5,650,000 5,638,676
5.55%; 5/23/97 2,825,000 2,815,419
PHH Corp.;
5.51%; 5/13/97 650,000 648,806
5.52%; 5/27/97 3,000,000 2,988,040
5.52%; 5/28/97 6,675,000 6,647,366
29,130,552
Gas Production & Distribution (0.96%)
Washington Gas Light Co.;
5.52%; 5/2/97 1,300,000 1,299,801
5.65%; 5/2/97 6,000,000 5,999,058
7,298,859
Investment Offices (1.05%)
Morgan Stanley Group, Inc.;
5.36%; 5/14/97 8,000,000 7,984,516
Measuring & Controlling
Devices (0.46%)
Johnson Controls, Inc.;
5.50%; 5/8/97 3,500,000 3,496,257
Miscellaneous Electrical Equipment &
Supplies (1.35%)
General Electric Co.; 5.65%; 5/1/97 10,225,000 10,225,000
Miscellaneous Food & Kindred
Products (1.31%)
Cargill, Inc.; 5.55%; 5/16/97 10,000,000 9,976,875
Miscellaneous Investing (1.12%)
Delaware Funding Corp.;
5.52%; 5/15/97 3,531,000 3,523,420
5.60%; 5/19/97 2,000,000 1,994,400
5.35%; 5/27/97 3,000,000 2,988,408
8,506,228
Miscellaneous Manufacturers (2.62%)
Dover Corp.;
5.54%; 5/12/97 11,000,000 10,981,380
5.52%; 5/13/97 7,000,000 6,987,120
5.53%; 5/21/97 1,950,000 1,944,009
19,912,509
Mortgage Bankers & Brokers (2.99%)
Countrywide Home Loan, Inc.;
5.55%; 5/21/97 $10,000,000 $ 9,969,167
5.56%; 5/29/97 12,800,000 12,744,647
22,713,814
Motor Vehicles & Equipment (4.92%)
Echlin Inc.;
5.38%; 5/2/97 2,500,000 2,499,626
5.59%; 5/12/97 2,750,000 2,745,303
5.58%; 5/15/97 1,665,000 1,661,387
5.40%; 5/20/97 1,400,000 1,396,010
5.55%; 5/20/97 4,650,000 4,636,380
5.31%; 5/21/97 4,500,000 4,486,725
5.31%; 6/4/97 5,000,000 4,974,925
5.40%; 6/10/97 4,000,000 3,976,000
5.45%; 6/12/97 5,500,000 5,465,029
5.48%; 6/18/97 5,550,000 5,509,448
37,350,833
Ordanance & Accessories, NEC (0.66%)
Harsco Corp.; 5.65%; 5/28/97 5,000,000 4,978,813
Personal Credit Institutions (9.77%)
Comoloco, Inc.;
5.40%; 5/9/97 6,000,000 5,992,800
5.50%; 5/23/97 2,500,000 2,491,597
5.30%; 6/6/97 3,100,000 3,083,570
5.38%; 7/24/97 7,500,000 7,405,850
5.43%; 11/24/97 5,300,000 5,134,521
5.47%; 12/5/97 2,000,000 1,933,752
5.72%; 12/12/97 4,000,000 3,857,000
Ford Motor Credit Co.;
5.27%; 11/18/97 5,000,000 4,852,879
General Motors Acceptance Corp.;
5.77%; 12/3/97 5,600,000 5,406,128
Transamerica Finance Corp.;
5.57%; 5/6/97 3,000,000 2,997,679
5.57%; 5/13/97 10,000,000 9,981,434
5.54%; 5/15/97 6,000,000 5,987,073
5.57%; 5/15/97 10,000,000 9,978,339
5.52%; 5/28/97 5,000,000 4,979,300
74,081,922
Railroads (4.18%)
Norfolk Southern Corp.;
5.57%; 5/12/97 5,000,000 4,991,490
5.55%; 5/13/97 2,860,000 2,854,709
5.55%; 5/20/97 5,000,000 4,985,354
5.53%; 5/30/97 7,330,000 7,297,347
5.53%; 6/3/97 3,375,000 3,357,892
5.55%; 6/5/97 8,250,000 8,205,484
31,692,276
Real Estate Operators & Lessors (3.53%)
Towson Town Center, Inc.;
LOC Bank of Tokyo-Mitsubishi, Ltd.;
5.63%; 5/7/97 15,500,000 15,485,460
5.63%; 5/8/97 7,556,000 7,547,736
5.60%; 5/20/97 3,800,000 3,788,769
26,821,965
Security Brokers & Dealers (11.40%)
Bear Stearns Cos., Inc.;
5.58%; 5/6/97 10,000,000 9,992,250
5.47%; 5/9/97 10,000,000 9,987,844
5.58%; 5/9/97 9,000,000 8,988,840
Goldman Sachs Group L.P.;
5.57%; 5/7/97 7,000,000 6,993,502
5.58%; 5/7/97 6,625,000 6,618,839
5.52%; 5/14/97 10,000,000 9,980,067
5.52%; 5/16/97 10,000,000 9,977,000
5.88%; 1/20/98 4,000,000 3,827,667
Merrill Lynch & Co, Inc.;
5.52%; 5/1/97 7,500,000 7,500,000
5.55%; 5/13/97 4,250,000 4,242,137
5.55%; 5/14/97 2,000,000 1,995,992
5.50%; 5/16/97 2,250,000 2,244,844
5.57%; 5/19/97 1,700,000 1,695,265
5.29%; 11/18/97 2,500,000 2,426,160
86,470,407
Subdividers & Developers (1.01%)
Hartz 667 Commercial Paper Corp.;
LOC Bank of Tokyo-Mitsubishi, Ltd.;
5.68%; 5/2/97 7,675,000 7,673,789
Tires & Inner Tubes (2.82%)
Bridgestone/Firestone, Inc.;
LOC DAI-ICHI Kangyo Bank Ltd.;
5.63%; 5/22/97 4,000,000 3,986,863
5.60%; 5/23/97 7,500,000 7,474,333
Bridgestone/Firestone, Inc.;
LOC Sumitomo Bank, Ltd.;
5.60%; 5/23/97 10,000,000 9,965,778
21,426,974
Total Commercial Paper 601,253,872
Bank Notes (2.70%)
Commercial Banks (2.70%)
Lasalle National Bank;
5.99%; 6/25/97 1,500,000 1,500,000
6.04%; 7/24/97 4,000,000 4,000,000
6.20%; 8/21/97 5,000,000 5,000,000
5.85%; 9/18/97 5,000,000 5,000,000
5.74%; 9/22/97 5,000,000 5,000,000
Total Bank Notes 20,500,000
Bonds (15.14%)
Beverages (0.59%)
Pepsico, Inc. Notes;
6.13%; 1/15/98 4,500,000 4,506,199
Business Credit Institutions (3.47%)
CIT Group Holdings, Inc.
Medium-Term Notes;
6.20%; 4/15/98 5,000,000 4,998,654
CIT Group Holdings, Inc. Notes;
8.75%; 7/1/97 1,360,000 1,366,598
CIT Group Holdings, Inc. Senior Notes;
5.85%; 3/16/98 7,500,000 7,512,392
International Lease Finance Corp. Notes;
5.63%; 3/1/98 3,000,000 2,993,269
5.75%; 3/15/98 410,000 409,785
Business Credit Institutions (Con't)
John Deere Capital Corp.
Medium-Term Notes, Series C;
5.95%; 6/30/97 $ 9,000,000 $ 8,998,323
26,279,021
Electric Services (0.54%)
Duke Power Co. 1st Ref. Mortgage;
5.63%; 8/12/97 600,000 600,071
Soutern California Edison Co.
1st Ref. Mortgage;
6.13%; 7/15/97 3,000,000 3,003,097
5.88%; 2/1/98 500,000 500,072
4,103,240
Investment Offices (1.10%)
Morgan Stanley Group, Inc. Notes;
9.25%; 3/1/98 8,140,000 8,351,186
Personal Credit Institutions (8.52%)
American General Finance Corp.Notes;
7.70%; 11/15/97 8,500,000 8,587,024
Associates Corp. of North America
Senior Notes;
8.63%; 6/15/97 4,000,000 4,013,209
6.75%; 7/15/97 6,805,000 6,817,959
5.88%; 8/15/97 3,800,000 3,800,593
7.75%; 11/1/97 2,400,000 2,422,656
8.13%; 1/15/98 1,000,000 1,015,738
8.38%; 1/15/98 6,000,000 6,103,991
Avco Financial Services, Inc.
Senior Notes; 5.88%; 10/15/97 4,680,000 4,682,687
Beneficial Corp. Debentures;
9.13%; 2/15/98 1,595,000 1,630,441
General Motors Acceptance Corp.
Medium-Term Notes;
5.63%; 10/30/97 5,000,000 4,996,734
7.50%; 11/4/97 10,700,000 10,789,158
7.85%; 11/17/97 1,250,000 1,264,162
Household Finance Corp. Notes;
6.25%; 10/15/97 4,500,000 4,509,978
Norwest Financial, Inc. Medium-Term
Senior Notes; 6.50%; 5/15/97 2,000,000 2,000,558
Norwest Financial, Inc. Senior Notes;
6.50%; 11/15/97 2,000,000 2,007,757
64,642,645
Photographic Equipment &
Supplies (0.92%)
Xerox Corp. Notes;
9.63%; 9/1/97 6,880,000 6,966,765
Total Bonds 114,849,056
U.S. Government Treasury Bills & Notes (2.17%)
Treasury Bills (1.18%)
U.S. Government Treasury Bills;
5.34%; 5/1/97 $ 4,000,000 $ 4,000,000
5.33%; 5/29/97 5,000,000 4,979,291
8,979,291
Treasury Notes (0.99%)
U.S. Government Treasury Note;
5.13%; 2/28/98 7,500,000 7,470,099
Total U.S. Government Treasury Bills & Notes 16,449,390
Total Portfolio Investments (99.25%) 753,052,318
Cash, receivables and other assets, net of
liabilities (0.75%) 5,724,452
Total Net Assets (100.00%) $758,776,770
PRINCOR TAX-EXEMPT CASH MANAGEMENT
FUND, INC.
Principal
Amount Value
Short-Term Tax-Exempt Bonds (99.06%)
Alaska (5.30%)
Alaska Industrial Dev. & Export
Authority, IDB Current Ref. Bonds,
Series 1988A; LOC Security Pacific
Bank Washington;
Lot #2; 4.10%; 5/7/97*; 7/1/97 $ 40,000 $ 40,000
Lot #3; 4.10%; 5/7/97*; 7/1/97 365,000 365,000
Lot #5; 4.10%; 5/7/97*; 7/1/98 1,455,000 1,455,000
Lot #6; 4.10%; 5/7/97*; 7/1/01 1,445,000 1,445,000
Lot #7; 4.10%; 5/7/97*; 7/1/01 150,000 150,000
Lot #8; 4.10%; 5/7/97*; 7/1/05 175,000 175,000
Lot #9; 4.10%; 5/7/97*; 7/1/05 235,000 235,000
Lot #12; 4.10%; 5/7/97*; 7/1/12 1,020,000 1,020,000
4,885,000
Arizona (1.41%)
Chandler County, Arizona, IDA, F/R
Monthly IDR, Parsons Municipal
Services, Series 1983; LOC
National Westminster;
3.75%; 5/15/97*; 12/15/09 1,300,000 1,300,000
California (2.17%)
County of Los Angeles, California,
1996-1997 Tax & Rev. Anticipation
Notes; 4.50%; 6/30/97 2,000,000 2,002,057
Colorado (5.21%)
Adams County, Colorado, IDR Bonds,
City View Park Project, Series
1985; LOC Barclays Bank;
4.05%; 5/7/97*; 12/1/15 $ 300,000 $ 300,000
Arapahoe County, Colorado, F/R
Monthly IDR, Beckett
Aviation, Inc., Series 1983;
LOC Barclays Bank;
3.66%; 5/15/97*; 5/15/13 600,000 600,000
City of Thornton, Colorado, F/R
Monthly IDR, Service Merchandise
Co., Inc., Series 1984; LOC CIBC;
3.65%; 5/15/97*; 12/15/99 100,000 100,000
South Denver Metropolis District,
City & County of Denver, Colorado,
General Obligation Bonds, Series 1985;
LOC Barclays Bank;
3.50%; 5/31/97**; 12/1/05 3,800,000 3,800,000
4,800,000
Florida (1.74%)
Florida Housing Finance Agency,
F/R Monthly MF Rev's., Water
Apt. Project, Series 1984A;
LOC Wells Fargo;
3.75%; 5/1/97*; 4/1/07 1,600,000 1,600,000
Georgia (1.96%)
Burke County, Georgia, Dev. Authority,
Adj. Tender Pollution Control Rev.
Bonds, Ogelthorpe Power Corp.,
Vogtle Project, Series 1992A;
LOC Credit Suisse;
3.35%; 5/9/97**; 1/1/25 300,000 300,000
3.40%; 5/14/97**; 1/1/25 500,000 500,000
3.45%; 5/22/97**; 1/1/25 500,000 500,000
Burke County, Georgia, Dev. Authority
Pollution Control Note, Oglethorpe
Vogtle Project, Series 1997A;
LOC AMBAC Insurance Policy;
3.60%; 12/1/97 500,000 500,000
1,800,000
Idaho (2.17%)
State of Idaho Tax Anticipation
Notes, Series 1996;
4.50%; 6/30/97; 2,000,000 2,001,898
Illinois (8.91%)
Chicago, Illinois, Cook County CSX
Beckett Aviation, Inc., F/R Monthly
Airport Rev. Bonds; LOC Barclays
Bank; 3.66%; 5/15/97*; 12/15/14 1,000,000 1,000,000
City of Burbank, Illinois, F/R Monthly
IDR, Service Merchandise Co., Inc.,
Series 1984; LOC CIBC;
3.65%; 5/15/97*; 9/15/24 2,100,000 2,100,000
City of Galesburg, Illinois, Knox College
Project, Series 1996; LOC LaSalle
National Bank;
4.60%; 5/8/97*; 3/1/31 3,700,000 3,700,000
City of Naperville, Illinois, Economic
Dev. Rev. Bonds, Service Merchandise
Co., Inc.; LOC CIBC;
3.65%; 5/15/97*; 11/30/24 1,400,000 1,400,000
8,200,000
Indiana (8.75%)
Metro School District of Washington
Township, Marion County, 1997
First Series; 4.00%; 6/30/97 3,050,000 3,052,216
Tippecanoe School Corp., Temporary
Loan Warrants of 1997;
3.78%; 12/30/97 5,000,000 5,000,943
8,053,159
Iowa (5.00%)
City of Storm Lake, Iowa, Private College
Rev. Bonds, Buena Vista College,
Series 1993; LOC Norwest Bank
Minnesota, N. A.;
4.70%; 5/8/97*; 12/1/03 400,000 400,000
Iowa Higher Education Loan Authority
Fac., Rev. Bonds, Series 1995;
LOC Norwest Bank Minnesota, N.A.;
4.70%; 5/8/97*; 2/1/05 1,200,000 1,200,000
Woodbury County, Iowa, Education Fac.
Rev. Bonds (Siouxland), Series 1996;
LOC Firstar Bank Milwaukee, N.A.;
4.80%; 5/8/97*; 11/1/16 3,000,000 3,000,000
4,600,000
Louisiana (10.93%)
Jefferson Parish, Louisiana, Hospital Rev.
Bonds, Jefferson Parish Hospital
Service, District #2, Customized
Purchase Program, Series 1985;
Insured by FGIC;
4.00%; 5/7/97*; 12/1/15 3,300,000 3,300,000
Jefferson Parish, Louisiana, IDB Rev. Ref.
Bonds, George J. Achel, Sr. Project,
Series 1986; LOC Barclays Bank;
4.05%; 5/7/97*; 12/1/04 1,400,000 1,400,000
Louisiana Public Fac. Authority, CP
Program Hospital Equip. Rev.
Bonds, Series 1985A, Pooled Project;
LOC Sumitomo Bank;
4.30%; 5/7/97*; 12/1/15 5,365,000 5,365,000
10,065,000
Maine (2.72%)
State of Maine General Obligation Tax
Anticipation Notes;
4.50%; 6/27/97 2,500,000 2,502,915
Maryland (0.58%)
Montgomery County, Maryland, F/R
Monthly IDA, Information Systems &
Networks; LOC PNC Bank;
3.70%; 5/1/97*; 4/1/14 530,000 530,000
Massachusetts (0.22%)
Commonwealth of Massachusetts,
Dedicated Income Tax Bonds, Series B;
LOC National Westminster;
3.85%; 5/1/97*; 12/1/97 200,000 200,000
Minnesota (6.68%)
City of Coon Rapids, Minnesota
Rev. Bonds for Health Central
System, Series 1985; LOC Norwest
Bank Minnesota, N.A.;
4.40%; 5/7/97*; 8/1/15 2,100,000 2,100,000
City of Rochester, Minnesota, Health Care
Fac. Rev. Bonds, Mayo Foundation/
Mayo Medical Center, Adj. Tender,
Series 1992C;
3.45%; 5/1/97**; 11/15/21 500,000 500,000
3.45%; 5/5/97**; 11/15/21 500,000 500,000
3.45%; 5/7/97**; 11/15/21 400,000 400,000
3.40%; 5/12/97**; 11/15/21 500,000 500,000
3.40%; 5/19/97**; 11/15/21 500,000 500,000
3.40%; 5/21/97**; 11/15/21 400,000 400,000
3.40%; 6/2/97**; 11/15/21 500,000 500,000
3.60%; 6/4/97**; 11/15/21 350,000 350,000
3.40%; 6/5/97**; 11/15/21 400,000 400,000
6,150,000
Mississippi (0.54%)
Jackson County, Mississippi,
Pollution Control Ref. Rev. Bonds
Series 1993; Guaranteed by
Chevron Corp.;
3.90%; 5/1/97*; 6/1/23 500,000 500,000
Missouri (2.18%)
Health & Education Fac. Authority of
Missouri School Dist. Program
Notes, Series 1996A;
4.50%; 9/8/97 2,000,000 2,004,118
Montana (5.32%)
City of Forsyth, Montana, Portland
General Electric Co.; LOC Swiss
Bank Corp.;
Series B; 4.50%; 5/7/97*; 6/1/13 2,400,000 2,400,000
Series D; 4.50%; 5/7/97*; 6/1/13 1,500,000 1,500,000
Series 1984; 4.50%; 5/7/97*; 8/1/14 1,000,000 1,000,000
4,900,000
Nebraska (0.54%)
Lincoln Electric System
Commercial Paper Notes;
3.45%; 6/10/97 500,000 500,000
New Hampshire (1.95%)
New Hampshire IDA, F/R Monthly 1983
Hudson, Oerlikon-Buhrle USA/Balzers;
LOC Union Bank of Switzerland;
3.65%; 5/1/97*; 7/1/13 1,800,000 1,800,000
New York (5.43%)
New York State Energy Research & Dev.
Authority Pollution Control Rev. Bonds,
Long Island Lighting Co.; Series 1985B;
LOC Deutsche Bank;
3.60%; 3/1/98**; 3/1/16 4,000,000 4,000,000
New York State Energy Research &
Dev. Authority, Series 1985 D,
For New York State Electric & Gas Corp.;
LOC Union Bank of Switzerland;
3.60%; 12/1/97**; 12/1/15 1,000,000 1,000,000
5,000,000
North Carolina (3.26%)
North Carolina Eastern Municipal Power
Agency, Series 1988B; LOC Morgan
Guaranty Trust Co.; LOC Union
Bank of Switzerland;
3.60%; 6/12/97**; 1/1/26 500,000 500,000
University of North Carolina
Foundation, Inc., Series 1989;
LOC Credit Suisse;
3.95%; 5/7/97*; 10/1/09 2,500,000 2,500,000
3,000,000
Ohio (1.63%)
Toledo-Lucas County, Ohio, Port
Fac. Ref. Rev. Bonds, CSX
Transport Project, Series 1992;
LOC Bank of Nova Scotia;
3.35%; 6/3/97**; 12/15/21 500,000 500,000
Village of Evendale, Ohio, SHV Real
Estate Income Project;
LOC ABN-AMRO;
4.30%; 5/7/97*; 9/1/15 1,000,000 1,000,000
1,500,000
Pennsylvania (8.91%)
Bucks County, Pennsylvania, IDA SHV
Real Estate, Inc. Project, Series 1985;
LOC ABN-AMRO Bank;
4.40%; 5/7/97*; 7/1/15 2,300,000 2,300,000
Commonwealth of Pennsylvania
Tax Anticipation Notes, First
Series of 1994-1995;
4.50%; 6/30/97 2,500,000 2,503,200
Delaware County, Pennsylvania, Fac. Rev.
Tax & Rev. Anticipation Notes,
Series 1985; Guaranteed by
United Parcel Service;
3.85%; 5/1/97*; 12/1/15 3,400,000 3,400,000
8,203,200
Tennessee (1.41%)
County of Sullivan, Tennessee, IDB
PCR Ref. Bonds, Series 1986, Mead
Project; LOC Union Bank of
Switzerland; 3.95%; 5/1/97*; 10/1/16 800,000 800,000
Knox, Tennessee, IDB F/R Monthly IDR
1983, Service Merchandise Co., Inc.;
LOC CIBC;
3.65%; 5/15/97*; 12/15/08 500,000 500,000
1,300,000
Texas (1.65%)
Cedar Hill, Texas, Industrial Dev. Corp.
F/R Monthly IDR 1985, Minyard
Properties Project; LOC Citibank;
3.65%; 5/1/97*; 5/1/02 300,000 300,000
Coppell, Texas, Industrial Dev.
Corp., IDA 1984, Minyard
Properties Project; LOC Citibank;
3.65%; 5/1/97*; 12/1/01 1,070,000 1,070,000
Montgomery County, Texas, Industrial
Dev. Corp. Ref. Bonds,
Series 1986A; Dal-Tile Corp.
Project; LOC Credit Suisse;
4.05%; 5/7/97*; 12/1/03 150,000 150,000
1,520,000
West Virginia (1.95%)
Putnam County, West Virginia, F/R
Monthly IDR 1981, FMC Corp.
Project; LOC UBS;
3.65%; 5/1/97*; 10/1/11 1,800,000 1,800,000
Wyoming (0.54%)
Lincoln County, Wyoming, Pollution
Control Ref. Bonds, Pacificorp
Project, Series 1991; LOC
Union Bank of Switzerland;
3.40%; 5/20/97**; 1/1/16 500,000 500,000
Total Portfolio Investments (99.06%) 91,217,347
Cash, receivables and other assets
net of liabilities (0.94%) 868,286
Total Net Assets (100.00%) $92,085,633
* Demand Date
** Put Date
See accompanying notes.
<PAGE>
FINANCIAL HIGHLIGHTS
(unaudited)
Selected data for a share of Capital Stock outstanding throughout each period:
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends Net Asset
Value at Invest- Gain from from Net Distributions Value at
Beginning ment (Loss) on Investment Investment from Total End
of Period Income(a) Investments Operations Income Capital Gains Distributions of Period
PRINCOR CASH MANAGEMENT FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 $1.000 $.024 -- $.024 $(.024) -- $(.024) $1.000
Year Ended October 31,
1996 1.000 .049 -- .049 (.049) -- (.049) 1.000
1995 1.000 .052 -- .052 (.052) -- (.052) 1.000
1994 1.000 .033 -- .033 (.033) -- (.033) 1.000
1993 1.000 .026 -- .026 (.026) -- (.026) 1.000
1992 1.000 .036 -- .036 (.036) -- (.036) 1.000
Class B:
Six Months Ended April 30, 1997 1.000 .020 -- .020 (.020) -- (.020) 1.000
Year Ended October 31, 1996 1.000 .041 -- .041 (.041) -- (.041) 1.000
Period Ended October 31, 1995(c) 1.000 .041 -- .041 (.041) -- (.041) 1.000
Class R:
Six Months Ended April 30, 1997 1.000 .021 -- .021 (.021) -- (.021) 1.000
Period Ended October 31, 1996(f) 1.000 .030 -- .030 (.030) -- (.030) 1.000
PRINCOR TAX-EXEMPT CASH MANAGEMENT
FUND, INC.
Class A:
Six Months Ended April 30, 1997 1.000 .014 -- .014 (.014) -- (.014) 1.000
Year Ended October 31,
1996 1.000 .029 -- .029 (.029) -- (.029) 1.000
1995 1.000 .032 -- .032 (.032) -- (.032) 1.000
1994 1.000 .021 -- .021 (.021) -- (.021) 1.000
1993 1.000 .020 -- .020 (.020) -- (.020) 1.000
1992 1.000 .028 -- .028 (.028) -- (.028) 1.000
Class B:
Six Months Ended April 30, 1997 1.000 .010 -- .010 (.010) -- (.010) 1.000
Year Ended October 31, 1996 1.000 .021 -- .021 (.021) -- (.021) 1.000
Period Ended October 31, 1995(c) 1.000 .021 -- .021 (.021) -- (.021) 1.000
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Ratio of Investment
Net Assets at Expenses to Income to Portfolio
Total End of Period Average Average Turnover
Return(b) (in thousands) Net Assets(a) Net Assets Rate
PRINCOR CASH MANAGEMENT FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1997 2.45%(d) $754,101 .64%(e) 4.89%(e) N/A
Year Ended October 31,
1996 5.00% 694,962 .66% 4.88% N/A
1995 5.36% 623,864 .72% 5.24% N/A
1994 3.40% 332,346 .70% 3.27% N/A
1993 2.67% 284,739 .67% 2.63% N/A
1992 3.71% 247,189 .65% 3.66% N/A
Class B:
Six Months Ended April 30, 1997 2.02%(d) 1,607 1.47%(e) 3.96%(e) N/A
Year Ended October 31, 1996 4.13% 520 1.50% 4.08% N/A
Period Ended October 31, 1995(c) 4.19%(d) 208 1.42%(e) 4.50%(e) N/A
Class R:
Six Months Ended April 30, 1997 2.11%(d) 3,068 1.31%(e) 4.19%(e) N/A
Period Ended October 31, 1996(f) 2.97%(d) 1,639 .99%(e) 4.41%(e) N/A
PRINCOR TAX-EXEMPT CASH MANAGEMENT
FUND, INC.
Class A:
Six Months Ended April 30, 1997 1.40%(d) 92,059 .72%(e) 2.81%(e) N/A
Year Ended October 31,
1996 2.92% 98,482 .71% 2.87% N/A
1995 3.24% 99,887 .69% 3.19% N/A
1994 2.11% 79,736 .67% 2.08% N/A
1993 1.99% 79,223 .66% 1.96% N/A
1992 2.86% 69,224 .65% 2.84% N/A
Class B:
Six Months Ended April 30, 1997 1.03%(d) 27 1.47%(e) 2.06%(e) N/A
Year Ended October 31, 1996 2.13% 27 1.47% 2.11% N/A
Period Ended October 31, 1995(c) 2.19%(d) 27 1.42%(e) 2.40%(e) N/A
See accompanying notes.
</TABLE>
Notes to Financial Highlights
(a) Without the Manager's voluntary waiver of a portion of certain of its
expenses (see Note 3 to the financial statements) for the periods indicated,
the Money Market Funds would have had per share net investment income (loss)
and the ratios of expenses to average net assets as shown:
Per Share Ratio of
Year, Net Expenses
Except Investment to Average Amount
Fund as Noted Income (Loss) Net Assets Waived
Princor Cash Management
Fund, Inc.
Class A 1997* $ .024 .64%(e) $ --
1996 .049 .67% 7,102
1995 .052 .78% 296,255
1994 .031 .90% 595,343
1993 .025 .84% 468,387
1992 .035 .80% 385,328
Class B 1997* .019 2.04%(e) 1,801
1996 .029 3.94% 6,140
1995(c) .041 1.63%(e) 104
Class R 1997* .020 1.47%(e) 1,706
Princor Tax-Exempt Cash
Management Fund, Inc.
Class A 1997* .014 .76%(e) 21,317
1996 .028 .77% 69,107
1995 .031 .84% 138,574
1994 .019 .85% 150,515
1993 .018 .83% 131,442
1992 .026 .82% 134,497
Class B 1997* (.109) 25.55%(e) 3,249
1996 (.243) 27.43% 7,160
1995(c) .018 1.89%(e) 99
*Six months ended April 30, 1997.
(b) Total return is calculated without the front-end sales charge or contingent
deferred sales charge.
(c) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995.
(d) Total return amounts have not been annualized.
(e) Computed on an annualized basis.
(f) Period from February 29, 1996, date Class R shares first offered to
eligible purchasers, through October 31, 1996.
THE PRINCOR FAMILY OF MUTUAL FUNDS
Principal Mutual Life Insurance Company has sponsored the development of a
number of mutual funds. The funds which make up the Princor family of mutual
funds and a brief description of their respective investment objectives are
provided below. For more complete information about any of the funds, including
charges and expenses, obtain a prospectus from Princor Financial Services
Corporation, The Principal Financial Group, Des Moines, Iowa 50392-0200
(telephone 1-800-247-4123). Please read it carefully before you invest or send
money.
GROWTH FUNDS INVESTMENT OBJECTIVE
Princor Balanced Fund To seek the generation of a total return consisting of
current income and capital appreciation while assuming reasonable risks in
furtherance of this objective.
Princor Blue Chip Fund To seek growth of capital and growth of income by
investing primarily in common stocks of well capitalized, established
companies.
Princor Capital Accumulation Fund To seek long-term capital appreciation and a
secondary objective of growth of investment income.
Princor Emerging Growth Fund To seek capital appreciation by investing primarily
in securities of emerging and other growth- oriented companies.
Princor Growth Fund To seek growth of capital with realization of current income
incidental to the objective of growth of capital.
Princor Utilities Fund To seek current income and long-term growth of income and
capital by investing primarily in equity and fixed income securities of
companies in the public utilities industry.
Princor World Fund To seek long-term growth of capital by investing in a
portfolio of equity securities of companies domiciled in any of the nations
of the world.
INCOME FUNDS
Princor Bond Fund To seek as high a level of income as is consistent with
preservation of capital and prudent investment risk.
Princor Government Securities Income Fund To seek a high level of current
income, liquidity and safety of principal.
Princor High Yield Fund To seek high current income. Capital growth is a
secondary objective when consistent with seeking high current income.
Princor Limited Term Bond Fund To seek a high level of current income consistent
with a relatively high level of principal stability by investing in a
portfolio of securities with a dollar weighted average maturity of five
years or less.
Princor Tax-Exempt Bond Fund To seek as high a level of current income exempt
from federal taxation as is consistent with preservation of capital.
MONEY MARKET FUNDS
Princor Cash Management Fund To seek as high a level of current income available
from short-term securities as is considered consistent with preservation of
principal and maintenance of liquidity by investing in a portfolio of money
market instruments.
Princor Tax-Exempt Cash Management Fund To seek, through investment in a
professionally-managed portfolio of high quality short-term Municipal
Obligations, as high a level of current interest income exempt from federal
income tax as is consistent with stability of principal and maintenance of
liquidity.
