To Principal Mutual Life Insurance Company Customers
This is the Semi-Annual Report for the Principal Funds. The Report contains
financial information resulting from the operation of the Funds for the six
months ended June 30, 1995. Purchase payments for a number of different
Principal Mutual variable annuity and variable life insurance contracts are
invested in one or more of these Funds. (See your contract prospectus for a
description of the Funds applicable to your contract).
Money allocated to the Aggressive Growth Division is invested in shares of
Principal Aggressive Growth Fund which has an investment objective of providing
long-term capital appreciation by investing primarily in growth-oriented common
stocks of medium and large capitalization U.S. corporations and, to a limited
extent, foreign corporations.
Money allocated to the Asset Allocation Division is invested in shares of
Principal Asset Allocation Fund. This Fund seeks to generate a total investment
return consistent with the preservation of capital. The Fund pursues a flexible
investment policy by investing in a variety of asset classes.
The money allocated to the Balanced Division is invested in shares of Principal
Balanced Fund which has an investment objective generating a total investment
return consisting of current income and capital appreciation while assuming
reasonable risks in furtherance of this objective. The Fund invests in common
stocks, corporate bonds and debentures and short-term money market instruments
using an asset allocation approach. This allows the Fund to select from various
types of investments in an effort to generate a positive total return. As of
June 30, 1995, the portfolio is invested 40% in common stock, 9% in preferred
stocks and bonds convertible to common stocks, 41% in treasury notes and
non-convertible bonds, and 10% in commercial paper.
Allocations to the Bond Division are invested in Principal Bond Fund. The
investment objective of the Fund is to provide as high a level of income as is
consistent with preservation of capital and prudent investment risk. The
portfolio of this Fund is invested primarily in marketable, fixed-income
securities of longer maturities.
Money allocated to the Capital Accumulation Division is invested in Principal
Capital Accumulation Fund. The Fund has an investment objective to achieve
primarily long-term capital appreciation and secondary growth of investment
income and pursues this objective by investing primarily in common stocks.
Money allocated to the Emerging Growth Division is invested in Principal
Emerging Growth Fund. The investment objective of the Fund is to achieve capital
appreciation by investing primarily in securities of emerging and other
growth-oriented companies.
Allocations to the Government Securities Division are invested in Principal
Government Securities Fund. This Fund's investment objective is to seek a high
level of current income, liquidity and safety of principal. The Fund invests in
obligations issued or guaranteed by the United States government or by its
agencies or instrumentalities and repurchase agreements collateralized by such
obligations. While the securities in which the Fund invests are issued or
guaranteed by the United States government or its agencies, the value of the
Fund's shares is not guaranteed but will fluctuate primarily in response to
changes in interest rates.
Money allocated to the Growth Division is invested in shares of Principal Growth
Fund. The objective of the Growth Fund is growth of capital. Realization of
current income is incidental to the objective of growth of capital. The Fund
invests primarily in common stocks, but it may invest in other equity
securities.
Allocations to the High Yield Division are invested in Principal High Yield Fund
which seeks high current income by investing primarily in high yield, lower or
non-rated fixed-income securities which are believed to not involve undue risk
to income or principal. Capital growth is a secondary objective when consistent
with the objective of high current income. The Fund invests in below investment
grade securities (commonly known as "junk bonds") which involve unique risks,
including an increased risk of default, as disclosed in the Fund's prospectus.
Money allocated to the Money Market Division is invested in Principal Money
Market Fund. The Fund seeks as high a level of current income available from
short-term securities as is considered consistent with the preservation of
principal and maintenance of liquidity by investing in a portfolio of money
market instruments.
Allocations to the World Division are invested in shares of Principal World
Fund. This Fund seeks long-term growth of capital by investing in the portfolio
of equity securities of companies domiciled in any of the nations of the world.
While investments may be made anywhere in the world, the Fund gives primary
consideration to investing in the securities issued by corporations of Western
Europe, North America and Australasia (Australia, Japan and Far East Asia) that
have developed economies. Changes in investments are made as prospects change
for particular countries, industries or companies. See the Fund's prospectus for
details regarding the risks associated with investing in foreign securities.
We are pleased that you have chosen a Principal Mutual insurance policy or
annuity contract. Please review this Report. If you have any questions or
comments, please let us know.
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CONTENTS
Page
Financial Statements and Financial Highlights
Statements of Assets and Liabilities................................. 2
Statements of Operations ............................................ 4
Statements of Changes in Net Assets.................................. 6
Notes to Financial Statements........................................ 10
Schedules of Investments
Principal Aggressive Growth Fund, Inc............................ 16
Principal Asset Allocation Fund, Inc............................. 17
Principal Balanced Fund, Inc..................................... 23
Principal Bond Fund, Inc......................................... 26
Principal Capital Accumulation Fund, Inc......................... 28
Principal Emerging Growth Fund, Inc.............................. 29
Principal Government Securities Fund, Inc........................ 32
Principal Growth Fund, Inc....................................... 33
Principal High Yield Fund, Inc................................... 34
Principal Money Market Fund, Inc................................. 36
Principal World Fund, Inc........................................ 37
Financial Highlights................................................. 42
<PAGE>
<TABLE>
<CAPTION>
June 30, 1995
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Principal Principal
Aggressive Asset Principal Principal
Growth Allocation Balanced Bond
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Assets
<S> <C> <C> <C> <C>
Investment in securities -- at value
(cost -- $18,253,755; $29,175,186; $29,745,310;
$21,816,820; $101,739,688; $31,781,355;
$38,193,555; $25,679,158; $10,409,979;
$27,751,378 and $22,818,837, respectively)
(Note 4)......................................... $20,968,372 $31,294,386 $33,741,244 $23,208,121
Cash ................................................. 1,105,709 2,724,138 3,297 143,430
Receivables:
Dividends and interest........................... 48,912 296,003 371,839 446,397
Investment securities sold....................... 342,599 157,560 75,820 -
Capital Stock sold............................... 3,613 - - 91,181
Total Assets 22,469,205 34,472,087 34,192,200 23,889,129
Liabilities
Accrued expenses...................................... 18,433 28,859 19,978 10,319
Payables:
Investment securities purchased.................. 117,590 56,428 94,028 -
Capital Stock reacquired......................... 337 1,332 49,679 857
Total Liabilities 136,360 86,619 163,685 11,176
Net Assets Applicable to Outstanding Shares ....... $22,332,845 $34,385,468 $34,028,515 $23,877,953
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 1,803,702 3,143,877 2,565,642 2,067,831
Net Asset Value Per Share .......................... $12.38 $10.94 $13.26 $11.55
Net Assets Consist of:
Capital Stock......................................... $ 18,037 $ 31,439 $ 25,656 $ 20,678
Additional paid-in capital............................ 18,539,704 31,454,506 29,211,652 21,810,080
Accumulated undistributed net investment income....... 119,627 669,534 633,873 771,911
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... 940,860 110,789 161,400 (116,017)
Foreign currency transactions.................... - - - -
Net unrealized appreciation of investments............ 2,714,617 2,119,200 3,995,934 1,391,301
Net unrealized appreciation on translation
of assets and liabilities in foreign currencies.. - - - -
Total Net Assets $22,332,845 $34,385,468 $34,028,515 $23,877,953
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, 1995
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Principal Principal Principal Principal
Capital Emerging Government Principal High
Accumulation Growth Securities Growth Yield
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Assets
<S> <C> <C> <C> <C> <C>
Investment in securities -- at value
(cost -- $18,253,755; $29,175,186; $29,745,310;
$21,816,820; $101,739,688; $31,781,355;
$38,193,555; $25,679,158; $10,409,979;
$27,751,378 and $22,818,837, respectively)
(Note 4)......................................... $118,501,229 $40,598,652 $39,144,586 $28,070,524 $10,467,610
Cash ................................................. 4,223 5,057 1,305 56,568 263,320
Receivables:
Dividends and interest........................... 260,573 46,616 661,459 43,886 251,617
Investment securities sold....................... 699,877 - - - -
Capital Stock sold............................... 55,772 39,408 129,707 65,570 424
Total Assets 119,521,674 40,689,733 39,937,057 28,236,548 10,982,971
Liabilities
Accrued expenses...................................... 54,146 22,330 19,582 11,696 5,737
Payables:
Investment securities purchased.................. 836,803 447,136 - 986,595 -
Capital Stock reacquired......................... 97,204 2,866 163,575 2,065 12
Total Liabilities 988,153 472,332 183,157 1,000,356 5,749
Net Assets Applicable to Outstanding Shares ....... $118,533,521 $40,217,401 $39,753,900 $27,236,192 $10,977,222
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 4,533,174 1,741,424 3,785,461 2,373,729 1,261,210
Net Asset Value Per Share .......................... $26.15 $23.09 $10.50 $11.47 $8.70
Net Assets Consist of:
Capital Stock......................................... $ 45,332 $ 17,414 $ 37,855 $ 23,737 $ 12,612
Additional paid-in capital............................ 97,375,994 31,279,406 38,229,560 24,510,181 11,548,473
Accumulated undistributed net investment income....... 1,352,423 199,392 1,251,292 249,984 489,872
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... 2,998,231 (96,108) (715,838) 60,924 (1,131,366)
Foreign currency transactions.................... - - - - -
Net unrealized appreciation of investments............ 16,761,541 8,817,297 951,031 2,391,366 57,631
Net unrealized appreciation on translation
of assets and liabilities in foreign currencies.. - - - - -
Total Net Assets $118,533,521 $40,217,401 $39,753,900 $27,236,192 $10,977,222
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, 1995
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Principal
Money Principal
Market World
Fund, Inc. Fund, Inc.
Assets
<S> <C> <C>
Investment in securities -- at value
(cost -- $18,253,755; $29,175,186; $29,745,310;
$21,816,820; $101,739,688; $31,781,355;
$38,193,555; $25,679,158; $10,409,979;
$27,751,378 and $22,818,837, respectively)
(Note 4)......................................... $27,751,378 $23,504,948
Cash ................................................. 37,113 231,750
Receivables:
Dividends and interest........................... - 70,315
Investment securities sold....................... - -
Capital Stock sold............................... 226,236 -
Total Assets 28,014,727 23,807,013
Liabilities
Accrued expenses...................................... 14,895 20,078
Payables:
Investment securities purchased.................. - 604,987
Capital Stock reacquired......................... 128,572 25,348
Total Liabilities 143,467 650,413
Net Assets Applicable to Outstanding Shares ....... $27,871,260 $23,156,600
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 500,000,000 100,000,000
Shares issued and outstanding......................... 27,871,260 2,267,921
Net Asset Value Per Share .......................... $1.000 $10.21
Net Assets Consist of:
Capital Stock......................................... $ 278,713 $ 22,679
Additional paid-in capital............................ 27,592,547 22,146,728
Accumulated undistributed net investment income....... - 349,691
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... - (44,196)
Foreign currency transactions.................... - (4,480)
Net unrealized appreciation of investments............ - 686,111
Net unrealized appreciation on translation
of assets and liabilities in foreign currencies.. - 67
Total Net Assets $27,871,260 $23,156,600
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF OPERATIONS
(unaudited)
Principal Principal
Aggressive Asset Principal Principal
Growth Allocation Balanced Bond
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C> <C>
Dividends........................................ $ 174,275 $ 257,137 $ 222,241 $ -
Withholding tax on foreign dividends............. - - - -
Interest......................................... 31,471 567,537 511,511 831,851
Total Income 205,746 824,674 733,752 831,851
Expenses:
Management and investment advisory
fees (Note 3)................................ 71,851 124,462 88,476 50,005
Custodian fees................................... 8,870 11,777 5,834 3,164
Directors' fees.................................. 4,120 4,120 3,907 3,906
Other............................................ 701 700 762 699
Total Expenses 85,542 141,059 98,979 57,774
Net Investment Income 120,204 683,615 634,773 774,077
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Net
realized gain (loss) from:
Investment transactions.......................... 981,167 289,015 164,742 1,847
Foreign currency transactions.................... - - - -
Net increase (decrease) in unrealized appreciation/
depreciation on:
Investments ..................................... 2,677,282 2,569,606 2,868,023 1,907,485
Translation of assets and liabilities in
foreign currencies.......................... - - - -
Net Realized and Unrealized Gain on
Investments and Foreign Currency 3,658,449 2,858,621 3,032,765 1,909,332
Net Increase in Net Assets
Resulting from Operations $3,778,653 $3,542,236 $3,667,538 $2,683,409
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF OPERATIONS
(unaudited)
Principal Principal Principal Principal
Capital Emerging Government Principal High
Accumulation Growth Securities Growth Yield
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C> <C> <C>
Dividends........................................ $ 1,474,349 $ 149,144 $ - $ 160,874 $ -
Withholding tax on foreign dividends............. - - - - -
Interest......................................... 175,697 165,940 1,376,352 151,264 527,526
Total Income 1,650,046 315,084 1,376,352 312,138 527,526
Expenses:
Management and investment advisory
fees (Note 3)................................ 280,712 104,504 91,044 50,544 30,515
Custodian fees................................... 12,743 6,366 6,121 6,365 2,796
Directors' fees.................................. 3,907 3,908 3,907 3,961 3,907
Other............................................ 671 765 1,514 696 701
Total Expenses 298,033 115,543 102,586 61,566 37,919
Net Investment Income 1,352,013 199,541 1,273,766 250,572 489,607
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Net realized gain (loss) from:
Investment transactions.......................... 3,047,584 (93,814) (41,117) 60,932 25,390
Foreign currency transactions.................... - - - - -
Net increase (decrease) in unrealized appreciation/
depreciation on:
Investments ..................................... 10,562,779 4,866,362 2,951,417 2,390,067 480,447
Translation of assets and liabilities in
foreign currencies.......................... - - - - -
Net Realized and Unrealized Gain on
Investments and Foreign Currency 13,610,363 4,772,548 2,910,300 2,450,999 505,837
Net Increase in Net Assets
Resulting from Operations $14,962,376 $4,972,089 $4,184,066 $2,701,571 $995,444
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF OPERATIONS
(unaudited)
Principal
Money Principal
Market World
Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C>
Dividends........................................ $ - $ 382,083
Withholding tax on foreign dividends............. - (63,263)
Interest......................................... 825,871 129,796
Total Income 825,871 448,616
Expenses:
Management and investment advisory
fees (Note 3)................................ 67,044 71,009
Custodian fees................................... 8,033 9,795
Directors' fees.................................. 3,829 3,996
Other............................................ 716 696
Total Expenses 79,622 85,496
Net Investment Income 746,249 363,120
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Net realized gain (loss) from:
Investment transactions.......................... - (34,823)
Foreign currency transactions.................... - (4,480)
Net increase (decrease) in unrealized appreciation/
depreciation on:
Investments ..................................... - 1,213,078
Translation of assets and liabilities in
foreign currencies.......................... - (108)
Net Realized and Unrealized Gain on
Investments and Foreign Currency - 1,173,667
Net Increase in Net Assets
Resulting from Operations $746,249 $1,536,787
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Principal Principal
Aggressive Growth Asset Allocation
Fund, Inc. Fund, Inc.
Six Months Period Six Months Period
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1995 1994(a) 1995 1994(a)
Operations
<S> <C> <C> <C> <C>
Net investment income....................... $ 120,204 $ 76,039 $ 683,615 $ 663,604
Net realized gain (loss) from investment
transactions........................... 981,167 91,717 289,015 (136,298)
Net increase (decrease) in unrealized
appreciation/depreciation on investments
and translation of assets and
liabilities in foreign currencies....... 2,677,282 37,335 2,569,606 (463,984)
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,778,653 205,091 3,542,236 63,322
Dividends and Distributions to Shareholders
From net investment income.................. (7,303) (69,313) (30,983) (633,124)
From net realized gain on investments and
foreign currency transactions......... (69,318) (62,706) - -
Excess distribution of net realized gain on
investments (Note 1)................... - - - (41,928)
(76,621) (132,019) (30,983) (675,052)
Capital Share Transactions (Note 5)
Shares sold................................. 5,280,487 13,605,360 2,914,856 27,985,523
Shares issued in reinvestment of dividends
and distributions...................... 76,620 132,019 30,983 675,052
Shares redeemed............................. (496,780) (39,965) (112,681) (7,788)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 4,860,327 13,697,414 2,833,158 28,652,787
Total Increase (Decrease) 8,562,359 13,770,486 6,344,411 28,041,057
Net Assets
Beginning of period......................... 13,770,486 - 28,041,057 -
End of period (including undistributed net
investment income as set forth below).. $22,332,845 $13,770,486 $34,385,468 $28,041,057
Undistributed Net Investment Income......... $ 119,627 $ 6,726 $ 669,534 $ 30,480
<FN>
(a)Period from May 23, 1994 (date operations commenced) through December 31,
1994.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Principal Principal Principal
Balanced Bond Capital Accumulation
Fund, Inc. Fund, Inc. Fund, Inc.
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
June 30, December 31, June 30, December 31, June 30, December 31,
1995 1994 1995 1994 1995 1994
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income....................... $ 634,773 $ 749,475 $ 774,077 $ 1,135,608 $ 1,352,013 $ 3,083,195
Net realized gain (loss) from investment
transactions........................... 164,742 754,708 1,847 (105,044) 3,047,584 3,704,610
Net increase (decrease) in unrealized
appreciation/depreciation on investments
and translation of assets and
liabilities in foreign currencies....... 2,868,023 (2,010,252) 1,907,485 (1,416,499) 10,562,779 (5,902,482)
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,667,538 (506,069) 2,683,409 (385,935) 14,962,376 885,323
Dividends and Distributions to Shareholders
From net investment income.................. (12,843) (742,989) (18,850) (1,129,640) (59,901) (3,039,878)
From net realized gain on investments and
foreign currency transactions......... (450,624) (359,204) - - (2,469,400) (3,606,801)
Excess distribution of net realized gain on
investments (Note 1)................... - - - - - -
(463,467) (1,102,193) (18,850) (1,129,640) (2,529,301) (6,646,679)
Capital Share Transactions (Note 5)
Shares sold................................. 6,929,534 4,652,236 5,073,890 3,317,198 19,000,958 33,765,050
Shares issued in reinvestment of dividends
and distributions...................... 463,467 1,102,194 18,850 1,129,640 2,506,423 6,592,055
Shares redeemed............................. (1,611,764) (501,945) (987,668) (209,853) (35,978,734) (42,538,618)
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 5,781,237 5,252,485 4,105,072 4,236,985 (14,471,353) (2,181,513)
Total Increase (Decrease) 8,985,308 3,644,223 6,769,631 2,721,410 (2,038,278) (7,942,869)
Net Assets
Beginning of period......................... 25,043,207 21,398,984 17,108,322 14,386,912 120,571,799 128,514,668
End of period (including undistributed net
investment income as set forth below).. $34,028,515 $25,043,207 $23,877,953 $17,108,322 $118,533,521 $120,571,799
Undistributed Net Investment Income......... $ 633,873 $ 11,943 $ 771,911 $ 16,684 $ 1,352,423 $ 60,311
<FN>
(a)Period from May 23, 1994 (date operations commenced) through December 31,
1994.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
(unaudited)
Principal Principal
Emerging Growth Government Securities
Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1995 1994 1995 1994
Operations
<S> <C> <C> <C> <C>
Net investment income........................................ $ 199,541 $ 166,792 $ 1,273,766 $ 2,755,820
Net realized gain (loss) from investment transactions........ (93,814) 677,550 (41,117) (674,721)
Net realized gain (loss) from foreign currency transactions.. - - - -
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of assets
and liabilities in foreign currencies................... 4,866,362 (716,715) 2,951,417 (3,960,440)
Net Increase (Decrease) in Net Assets Resulting from
Operations 4,972,089 127,627 4,184,066 (1,879,341)
Dividends and Distributions to Shareholders
From net investment income................................... (1,502) (165,538) (101,483) (2,694,877)
Excess distribution of net investment income (Note 1)........ - - - -
From net realized gain on investments and foreign currency
transactions............................................ (20,372) (824,006) - -
(21,874) (989,544) (101,483) (2,694,877)
Capital Share Transactions (Note 5)
Shares sold.................................................. 14,997,709 12,744,993 10,565,552 20,568,925
Shares issued in reinvestment of dividends
and distributions...................................... 21,874 989,544 99,543 2,626,308
Shares redeemed.............................................. (3,664,362) (1,148,919) (11,115,141) (19,158,954)
Net Increase (Decrease) in Net Assets from
Capital Shares Transactions 11,355,221 12,585,618 (450,046) 4,036,279
Total Increase (Decrease) 16,305,436 11,723,701 3,632,537 (537,939)
Net Assets
Beginning of period.......................................... 23,911,965 12,188,264 36,121,363 36,659,302
End of period (including undistributed (overdistributed) net
investment income as set forth below)................... $40,217,401 $23,911,965 $39,753,900 $36,121,363
Undistributed (overdistributed) Net Investment Income........ $ 199,392 $ 1,353 $ 1,251,292 $ 79,009
<FN>
(b)Period from March 23, 1994 (date operations commenced) through December 31,
1994.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
(unaudited)
Principal Principal
Growth High Yield
Fund, Inc. Fund, Inc.
Six Months Period Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1995 1994(b) 1995 1994
Operations
<S> <C> <C> <C> <C>
Net investment income........................................ $ 250,572 $ 107,760 $ 489,607 $ 862,613
Net realized gain (loss) from investment transactions........ 60,932 (8) 25,390 (113,805)
Net realized gain (loss) from foreign currency transactions.. - - - -
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of assets
and liabilities in foreign currencies................... 2,390,067 1,299 480,447 (691,913)
Net Increase (Decrease) in Net Assets Resulting from
Operations 2,701,571 109,051 995,444 56,895
Dividends and Distributions to Shareholders
From net investment income................................... (588) (107,760) (16,009) (854,622)
Excess distribution of net investment income (Note 1)........ - (199) - -
From net realized gain on investments and foreign currency
transactions............................................ - - - -
(588) (107,959) (16,009) (854,622)
Capital Share Transactions (Note 5)
Shares sold.................................................. 14,813,406 13,353,752 333,904 120,658
Shares issued in reinvestment of dividends
and distributions...................................... 588 107,959 16,008 854,623
Shares redeemed.............................................. (3,364,903) (376,685) (48,937) (56,349)
Net Increase (Decrease) in Net Assets from
Capital Shares Transactions 11,449,091 13,085,026 300,975 918,932
Total Increase (Decrease) 14,150,074 13,086,118 1,280,410 121,205
Net Assets
Beginning of period.......................................... 13,086,118 - 9,696,812 9,575,607
End of period (including undistributed (overdistributed) net
investment income as set forth below)................... $27,236,192 $13,086,118 $10,977,222 $9,696,812
Undistributed (overdistributed) Net Investment Income........ $ 249,984 $ - $ 489,872 $ 16,274
<FN>
(b)Period from March 23, 1994 (date operations commenced) through December 31,
1994.
</FN>
See accompanying notes.
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
Six Months Ended June 30, 1995
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
(unaudited)
Principal Principal
Money Market World
Fund, Inc. Fund, Inc.
Six Months Year Six Months Period
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1995 1994 1995 1994(b)
Operations
<S> <C> <C> <C> <C>
Net investment income........................................ $ 746,249 $ 958,162 $ 363,120 $ 74,661
Net realized gain (loss) from investment transactions........ - - (34,823) 8,912
Net realized gain (loss) from foreign currency transactions.. - - (4,480) 14,084
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of assets
and liabilities in foreign currencies................... - - 1,212,970 (526,792)
Net Increase (Decrease) in Net Assets Resulting from
Operations 746,249 958,162 1,536,787 (429,135)
Dividends and Distributions to Shareholders
From net investment income................................... (746,249) (958,162) (1,545) (74,661)
Excess distribution of net investment income (Note 1)........ - - - (25,968)
From net realized gain on investments and foreign currency
transactions............................................ - - (13,717) (4,568)
(746,249) (958,162) (15,262) (105,197)
Capital Share Transactions (Note 5)
Shares sold.................................................. 45,584,113 73,870,425 8,605,813 14,270,677
Shares issued in reinvestment of dividends
and distributions...................................... 556,285 706,556 15,262 105,196
Shares redeemed.............................................. (47,641,022) (67,958,011) (732,094) (95,447)
Net Increase (Decrease) in Net Assets from
Capital Shares Transactions (1,500,624) 6,618,970 7,888,981 14,280,426
Total Increase (Decrease) (1,500,624) 6,618,970 9,410,506 13,746,094
Net Assets
Beginning of period.......................................... 29,371,884 22,752,914 13,746,094 -
End of period (including undistributed (overdistributed) net
investment income as set forth below)................... $27,871,260 $29,371,884 $23,156,600 $13,746,094
Undistributed (overdistributed) Net Investment Income........ $ - $ - $ 349,691 $ (11,884)
<FN>
(b)Period from March 23, 1994 (date operations commenced) through December 31,
1994.
</FN>
See accompanying notes.
</TABLE>
<PAGE>
June 30, 1995
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Principal Aggressive Growth Fund, Inc.
Principal Asset Allocation Fund, Inc.
Principal Balanced Fund, Inc.
Principal Bond Fund, Inc.
Principal Capital Accumulation Fund, Inc.
Principal Emerging Growth Fund, Inc.
Principal Government Securities Fund, Inc.
Principal Growth Fund, Inc.
Principal High Yield Fund, Inc.
Principal Money Market Fund, Inc.
Principal World Fund, Inc.
Note 1 -- Significant Accounting Policies
Principal Aggressive Growth Fund, Inc., Principal Asset Allocation Fund, Inc.,
Principal Balanced Fund, Inc., Principal Bond Fund, Inc., Principal Capital
Accumulation Fund, Inc., Principal Emerging Growth Fund, Inc., Principal
Government Securities Fund, Inc., Principal Growth Fund, Inc., Principal High
Yield Fund, Inc., Principal Money Market Fund, Inc. and Principal World Fund,
Inc. (the "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 March 23, 1994, the initial purchases of 500,000 shares of Capital Stock of
the Principal Growth Fund, Inc. and 500,000 shares of Capital Stock of the
Principal World Fund, Inc. were made by Principal Mutual Life Insurance Company.
On May 23, 1994, the initial purchases of 1,000,000 shares of Capital Stock of
the Principal Aggressive Growth Fund, Inc. and 2,500,000 shares of Capital Stock
of the Principal Asset Allocation Fund, Inc. were made by Principal Mutual Life
Insurance Company (see Note 3).
Effective May 1, 1994, the name of Principal Managed Fund, Inc. was changed to
Principal Balanced Fund, Inc.
Principal Money Market Fund, Inc. values its securities at amortized cost, which
approximates market. Under the amortized cost method, a security is valued by
applying a constant amortization to maturity of the difference between the
principal amount due at maturity and the cost of the security to the fund.
The other 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.
With respect to Principal 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. 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 in the Principal World Fund,
Inc. 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. Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
The Funds record investment transactions generally one day after 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 of
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.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amount of dividends and foreign withholding taxes recorded on the fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
With respect to Principal Money Market Fund, Inc., all net investment income and
any realized gains and losses from investment transactions are declared as
dividends daily to shareholders of record as of that day. Dividends and
distributions to shareholders of the other funds are recorded on the ex-dividend
date.
Effective January 1, 1994, the Funds adopted Statement of Position 93-2,
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies." The
amount of dividends and distributions to shareholders from net investment income
and net realized gain on investments and foreign currency transactions is
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. To the extent these "book/tax"
differences are permanent in nature (i.e. that they result from other than
timing of recognition - "temporary"), such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. The reclassifications did not
materially impact the financial statements and did not affect net investment
income or net realized gain (loss) for the six months ended June 30, 1995 or net
assets at June 30, 1995.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) are recorded for
financial statement purposes by the fund. The differences between the income and
gains distributed on a book versus tax basis are shown as excess distributions
of net investment income and net realized gain on investments in the
accompanying Statements of Changes in Net Assets.
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 is
approximately the same for both federal income tax and financial reporting
purposes.
Note 3 -- Management Agreement and Transactions With Affiliates
The 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 Principal Bond Fund, Inc.,
Principal Capital Accumulation Fund, Inc., Principal Government Securities Fund,
Inc., Principal Growth Fund, Inc. and Principal Money Market Fund, Inc. is .50%
of the first $100 million of the fund's average daily net assets and .45% of the
next $100 million of the fund's average daily net assets. The annual rate used
in this calculation for Principal Asset Allocation Fund, Inc. and Principal
Aggressive Growth Fund, Inc. is .80% of the first $100 million of the fund's
average daily net assets. With respect to Principal Balanced Fund, Inc. and
Principal High Yield Fund, Inc., the annual rate used in this calculation is
.60% of the first $100 million of the fund's average daily net assets. With
respect to Principal Emerging Growth Fund, Inc. and Principal World Fund, Inc.,
the annual rate used in this calculation is .65% and .75%, respectively, of the
first $100 million of the fund's average daily net assets.
Brokerage commissions were paid to affiliates by certain of the funds, as
follows:
Six months ended Year ended
June 30, December 31,
1995 1994
Principal Balanced Fund, Inc. $ 219 $ 669
Principal Capital Accumulation
Fund, Inc. 1,140 8,243
Principal Emerging Growth
Fund, Inc. 660 357
Principal Growth Fund, Inc. 3,552 632
Principal World Fund, Inc. 1,241 --
All of the shares of Principal Aggressive Growth Fund, Inc., Principal Asset
Allocation Fund, Inc., Principal Growth Fund, Inc. and Principal World Fund,
Inc. are owned by Principal Mutual Life Insurance Company and Principal Mutual
Life Insurance Company's Separate Account B. All of the shares of Principal
Balanced Fund, Inc. Principal Bond Fund, Inc. and Principal Emerging Growth
Fund, Inc. are owned by Principal Mutual Life Insurance Company and Principal
Mutual Life Insurance Company's Separate Account B and Variable Life Separate
Account. All of the shares of Principal Capital Accumulation Fund, Inc. and
Principal Money Market Fund, Inc. are owned by Principal Mutual Life Insurance
Company and Principal Mutual Life Insurance Company's Separate Account B,
Separate Account C and Variable Life Separate Account. All of the shares of
Principal Government Securities Fund, Inc. are owned by Principal Mutual Life
Insurance Company and Principal Mutual Life Insurance Company's Separate Account
B and Separate Account C. All of the shares of Principal High Yield Fund, Inc.
are owned by Principal Mutual Life Insurance Company and Principal Mutual Life
Insurance Company's Variable Life Separate Account.
<PAGE>
<TABLE>
<CAPTION>
Note 4 -- Investment Transactions
For the six months ended June 30, 1995, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Funds were as follows:
Purchases Sales
<S> <C> <C>
Principal Aggressive Growth Fund, Inc. $16,878,706 $11,779,962
Principal Asset Allocation Fund, Inc. 7,339,532 6,074,193
Principal Balanced Fund, Inc. 3,282,377 3,242,064
Principal Bond Fund, Inc. 4,601,557 407,000
Principal Capital Accumulation Fund, Inc. 28,621,246 45,986,279
Principal Emerging Growth Fund, Inc. 15,349,886 654,763
Principal Government Securities Fund, Inc. 2,845,048 2,403,323
Principal Growth Fund, Inc. 13,981,769 577,052
Principal High Yield Fund, Inc. 2,970,688 2,035,376
Principal World Fund, Inc. 11,504,377 1,215,452
</TABLE>
<TABLE>
<CAPTION>
At June 30, 1995, net unrealized appreciation of investments held by the Funds
was composed of the following:
Net Unrealized
Gross Unrealized Appreciation
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Principal Aggressive Growth Fund, Inc. $ 2,842,502 $ (127,885) $ 2,714,617
Principal Asset Allocation Fund, Inc. 2,890,963 (771,763) 2,119,200
Principal Balanced Fund, Inc. 4,389,232 (393,298) 3,995,934
Principal Bond Fund, Inc. 1,462,478 (71,177) 1,391,301
Principal Capital Accumulation Fund, Inc. 19,104,777 (2,343,236) 16,761,541
Principal Emerging Growth Fund, Inc. 9,726,495 (909,198) 8,817,297
Principal Government Securities Fund, Inc. 1,269,117 (318,086) 951,031
Principal Growth Fund, Inc. 2,896,748 (505,382) 2,391,366
Principal High Yield Fund, Inc. 301,248 (243,617) 57,631
Principal World Fund, Inc. 1,792,423 (1,106,312) 686,111
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
At June 30, 1995, Principal Asset Allocation Fund, Inc., Principal Balanced
Fund, Inc., Principal Emerging Growth Fund, Inc., Principal High Yield Fund,
Inc. and Principal World Fund, Inc. held the following securities which may
require registration under the Securities Act of 1933 or an exemption therefrom
in order to effect a sale in the ordinary course of business.
Value at Value as a
Date of June 30, Percentage of
Fund Security Description Acquisition Cost 1995 Net Assets
<S> <C> <C> <C> <C> <C>
Principal Asset
Allocation Fund, Inc. Telebras GDR 9/14/94 $ 1,012 $ 614 .00%
United Stationer Supply;
Senior Subordinated Notes 4/27/95 202,500 202,000 .59%
Weirton Steel Corp.;
Senior Notes 6/5/95 197,000 188,500 .55%
391,114 1.14%
Principal Balanced Federal-Mogul Corp.; Series D
Fund, Inc. Convertible 10/15/92 248,325 239,187 .70%
Principal Emerging Ciba-Geigy Corp.; Exchangeable
Growth Fund, Inc. Subordinated Debentures 3/20/91 150,000 145,312 .36%
Metalclad Corp.; Convertible
Subordinated Debentures 6/2/92 75,000 35,906 .09%
Sierra On Line; Convertible
Subordinated Debentures 8/17/94 100,375 183,425 .46%
364,643 .91%
Principal High Yield Dominick's Finer Foods, Inc.;
Fund, Inc. Senior Subordinated Notes 4/27/95 300,000 303,750 2.77%
Weirton Steel Corp.
Senior Notes 6/5/95 295,500 282,750 2.58%
586,500 5.35%
Principal World
Fund, Inc. Koninklijke KNP BT NV 3/7/95 91,891 84,153 .36%
3/29/95 46,567 48,088 .21%
Royal Plastics Group 11/23/94 41,703 70,067 .30%
202,308 .87%
The Fund's investments are with various issuers in various industries. The
Schedules of Investments contained herein summarize concentrations of credit
risk by industry and issuer except for Principal World Fund, Inc. which is
summarized by country, industry and issuer.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Note 5 -- Capital Share Transactions
Transactions in shares of Capital Stock by fund were as follows:
Principal Aggressive Principal Asset Principal Balanced
Growth Fund, Inc. Allocation Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Six Months Ended June 30, 1995:
Shares sold..................................... 476,567 287,651 559,673
Shares issued in reinvestment of
dividends and distributions.................... 7,398 3,145 39,076
Shares redeemed................................. (41,831) (11,121) (129,361)
Net Increase 442,134 279,675 469,388
Period Ended December 31, 1994:(1)
Shares sold..................................... 1,352,371 2,796,023 368,768
Shares issued in reinvestment of
dividends and distributions.................... 13,058 68,953 91,841
Shares redeemed................................. (3,861) (774) (39,693)
Net Increase 1,361,568 2,864,202 420,916
<FN>
(1)Principal Aggressive Growth Fund, Inc. and Principal Asset Allocation Fund,
Inc., period from May 23, 1994 (date operations commenced) through December 31,
1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Principal Principal Capital Principal Emerging
Bond Fund, Inc. Accumulation Fund, Inc. Growth Fund, Inc.
<S> <C> <C> <C>
Six Months Ended June 30, 1995:
Shares sold..................................... 468,960 780,126 716,156
Shares issued in reinvestment of
dividends and distributions.................... 1,826 108,543 1,094
Shares redeemed................................. (93,226) (1,499,336) (173,501)
Net Increase (Decrease) 377,560 (610,667) 543,749
Year Ended December 31, 1994:
Shares sold..................................... 308,755 1,381,360 618,438
Shares issued in reinvestment of
dividends and distributions.................... 111,513 275,405 49,050
Shares redeemed................................. (19,236) (1,735,373) (56,074)
Net Increase (Decrease) 401,032 (78,608) 611,414
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Government Principal Growth Principal High
Securities Fund, Inc. Securities Fund, Inc. Fund, Inc. Yield Fund, Inc.
<S> <C> <C> <C>
Six Months Ended June 30, 1995:
Shares sold..................................... 1,066,231 1,393,073 39,194
Shares issued in reinvestment of
dividends and distributions.................... 10,424 58 2,003
Shares redeemed................................. (1,143,877) (315,320) (5,860)
Net Increase (Decrease) (67,222) 1,077,811 35,337
Year Ended December 31, 1994:(2)
Shares sold..................................... 1,999,929 1,322,072 14,057
Shares issued in reinvestment of
dividends and distributions.................... 279,684 10,689 107,934
Shares redeemed................................. (1,881,876) (36,843) (6,581)
Net Increase 397,737 1,295,918 115,410
<FN>
(2)Principal Growth Fund, Inc., period from March 23, 1994 (date operations
commenced) through December 31, 1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Principal Money Principal World
Market Fund, Inc. Fund, Inc.
<S> <C> <C>
Six Months Ended June 30, 1995:
Shares sold..................................... 45,584,113 903,071
Shares issued in reinvestment of
dividends and distributions.................... 556,285 1,642
Shares redeemed................................. (47,641,022) (75,153)
Net Increase (Decrease) (1,500,624) 829,560
Year Ended December 31, 1994:(3)
Shares sold..................................... 73,870,425 1,437,009
Shares issued in reinvestment of
dividends and distributions.................... 706,556 11,004
Shares redeemed................................. (67,958,011) (9,652)
Net Increase 6,618,970 1,438,361
<FN>
(3)Principal World Fund, Inc., period from March 23, 1994 (date operations
commenced) through December 31, 1994.
</FN>
</TABLE>
Note 6 -- Line of Credit
The 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 prime rate.
Additionally, a commitment fee is charged at the annual rate of .25% on the line
of credit. At June 30, 1995, the Funds had no outstanding borrowings under the
line of credit.
<PAGE>
SCHEDULES OF INVESTMENTS
PRINCIPAL AGGRESSIVE GROWTH FUND, INC.
Shares
Held Value
Common Stocks (93.89%)
Aerspace Industries (1.25%)
Rockwell International Corp. 6,100 $ 279,075
Air Transportation, Scheduled (0.57%)
AMR Corp. 1,700 126,863
Aircraft & Parts (6.62%)
Boeing Co. 1,200 75,150
Lockheed Martin Corp. 5,300 334,563
McDonnell Douglas Corp. 6,900 529,575
United Technologies Corp. 6,900 539,062
1,478,350
Auto & Home Supply Stores (1.02%)
Autozone, Inc. 9,100(a) 228,638
Beverages (3.49%)
Coca-Cola Co. 8,300 529,125
Pepsico, Inc. 5,500 250,938
780,063
Commercial Banks (4.71%)
Citicorp 6,600 381,975
J. P. Morgan & Co. 3,900 273,487
Wells Fargo & Co. 2,200 396,550
1,052,012
Computer & Data Processing
Services (0.65%)
Microsoft Corp. 1,600(a) 144,600
Computer & Office Equipment (3.78%)
Bell & Howell Holdings 2,700(a) 54,675
Cabletron Systems, Inc. 3,675(a) 195,694
Hewlett-Packard Co. 2,700 201,150
International Business
Machines Corp. 4,100 393,600
845,119
Concrete, Gypsum & Plaster
Products (0.61%)
USG Corp. 5,700(a) 135,375
Construction & Related
Machinery (0.83%)
Caterpillar, Inc. 2,900 186,325
Consumer Products (8.19%)
Phillip Morris Cos., Inc. 23,000 1,710,625
UST, Inc. 4,000 119,000
1,829,625
Crude Petroleum & Natural Gas (0.23%)
Occidental Petroleum Corp. 2,200 50,325
Department Stores (0.90%)
Global Direct Mail Co. 1,300(a) 25,675
Harcourt General, Inc. 4,100 174,250
199,925
Drugs (4.50%)
American Home Products Corp. 3,400 263,075
Merck & Co., Inc. 3,700 181,300
Pfizer, Inc. 3,500 323,313
Schering-Plough Corp. 5,400 238,275
1,005,963
Eating & Drinking Places (1.38%)
Boston Chicken, Inc. 5,750(a) 139,078
Cracker Barrel Old Country
Store, Inc. 8,200 169,125
308,203
Electric Components &
Acessories (2.57%)
Duracell International, Inc. 5,000 216,250
Logic Corp. 4,000(a) 156,500
Texas Instruments 1,500 200,813
573,563
Electronic Distribution
Equipment (0.88%)
General Electric Co. 3,500 197,313
Federal & Federally Sponsored
Credit (4.38%)
Federal Home Loan Mortgage Corp. 2,300 158,125
Federal National Mortgage
Association 8,700 821,063
979,188
Finance Services (0.65%)
The Travelers Group, Inc. 3,300 144,375
Fire, Marine, & Casualty
Insurance (0.48%)
Aetna Life & Casualty Co. 1,700 106,887
Grain Mill Products (2.95%)
Kellogg Co. 5,300 378,287
Ralston-Ralston Purina Group 5,500 280,500
658,787
Hospitals (1.36%)
Columbia/HCA Healthcare Corp. 7,000 302,750
Holels & Motels (0.35%)
Trump Hotels & Casinos 5,900(a) 78,913
Industrial Inorganic Chemicals (0.61%)
Monsanto Co. 1,500 135,188
Industrial Machinery, NEC (0.97%)
Applied Materials, Inc. 2,500(a) 216,562
Insurance Agents, Brokers,
& Services (1.93%)
Exel Ltd. 8,300 431,600
Lumber & Other Building
Materials (1.73%)
Home Depot, Inc. 6,800 276,250
Lowe's Cos., Inc. 3,700 110,538
386,788
Medical Service & Health
Insurance (1.90%)
Hospitality Franchise Systems, Inc. 6,900(a) 238,913
United Healthcare Corp. 4,500 186,187
425,100
Miscellaneous Amusement, Recreation
Service (0.12%)
National Gaming Corp. 3,220(a) 27,772
Miscellaneous Business Services (0.88%)
CUC International, Inc. 4,700(a) 197,400
Miscellaneous Converted Paper
Products (0.26%)
Playtex Products 5,900(a) 58,262
Miscellaneous Electrical Equipment
& Supplies (1.11%)
Motorola, Inc. 3,700 248,362
Miscellaneous Fabricated Metal
Products (1.11%)
Intel Corp. 3,900 246,919
Miscellaneous Food Stores (1.32%)
General Nutrition Cos. 8,400(a) 295,050
Mortgage Bankers & Brokers (0.55%)
Countrywide Credit 5,900 123,900
Motor Vehicles & Equipment (2.13%)
Chrysler Corp. 4,100 196,288
Ford Motor Co. 5,600 166,600
General Motors Corp. 2,400 112,500
475,388
Newspapers (1.36%)
Gannett Co. 5,600 303,800
Non-Classifiable Establishments (0.61%)
Partnerre Holdings 5,200 135,850
PaperBoard Mills (0.55%)
Stone Container Corp. 5,800(a) 123,250
Periodicals (0.68%)
Time Warner, Inc. 3,700 152,162
Personal Credit Institutions (0.44%)
Dean Witter, Discover & Co. 2,100 98,700
Petroleum Refining (2.75%)
Exxon Corp. 1,800 127,125
Mobil Corp. 2,400 230,400
Royal Dutch Petroleum Co. ADR 2,100 255,937
613,462
Photographic Equipment
& Supplies (1.62%)
Eastman Kodak Co. 4,950 300,094
Polaroid Corp. 1,500 61,125
361,219
Plastic Materials & Synthetics (1.16%)
Hercules, Inc. 5,300 258,375
Pulp Mills (1.55%)
Champion International Corp. 4,600 239,775
Mead Corp. 1,800 106,875
346,650
Radio & Television
Broadcasting (1.41%)
CBS, Inc. 1,600 107,200
New World Communications 9,900(a) 206,662
313,862
Railroads (0.77%)
Burlington Northern, Inc. 2,700 171,112
Savings Institution (0.99%)
Ahmanson (H.F.) & Co. 10,000 220,000
Search & Navigation Equipment (3.28%)
Litton Industries, Inc. 9,200(a) 339,250
Loral Corp. 3,800 196,650
Watkins Johnson Co. 4,400 195,800
731,700
Security & Commodity Services (1.00%)
Franklin Resources, Inc. 5,000 222,500
Security Brokers & Dealers (1.79%)
American Express Co. 11,400 400,425
Ship & Boat Building &
Repairing (1.14%)
Allied Signal, Inc. 5,700 253,650
Surety Insurance (1.25%)
Ace Ltd. 9,600 278,400
Telephone Communication (2.42%)
AT&T Corp. 6,500 345,312
Airtouch Communications, Inc. 6,900(a) 196,650
541,962
Tires & Inner Tubes (0.92%)
Goodyear Tire & Rubber Co. 5,000 206,250
Toys & Sporting Goods (0.28%)
Toy Biz, Inc. 3,500(a) 63,437
Video Tape Rental (0.95%)
Viacom Inc., Class B 4,351(a) 201,778
Viacom Inc., Rights Issue 6,200(a) 9,300
211,078
Total Portfolio Investments (93.89%) 20,968,372
Cash and receivables, net of liabilities (6.11%) 1,364,473
Total Net Assets (100.00%) $22,332,845
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
PRINCIPAL ASSET ALLOCATION FUND, INC.
Shares
Held Value
Common Stocks (52.47%)
Aerospace Industries (0.48%)
Gencorp, Inc. 3,600 $ 38,700
Rockwell International Corp. 1,100 50,325
Thiokol Corp. 2,500 75,625
164,650
Agricultural Chemicals (0.16%)
Sociedad Quimica Minera De
Chile SA ADR 1,200 56,700
Air Transportation, Scheduled (0.46%)
AMR Corp. 400(a) 29,850
Cathay Pacific Airways ADR 8,500 62,067
SkyWest Airlines, Inc. 3,000 67,875
159,792
Aircraft & Parts (0.95%)
Boeing Co. 100 6,262
Lockheed Martin Corp. 1,200 75,750
McDonnell Douglas Corp. 2,400 184,200
United Technologies Corp. 800 62,500
328,712
Auto & Home Supply Stores (0.19%)
Autozone, Inc. 2,600(a) 65,325
Automotive Rentals,
No Drivers (0.16%)
Ryder Systems, Inc. 2,300 54,913
Beverages (1.33%)
Anheuser Busch Cos., Inc. 1,000 56,875
Bass PLC ADR 3,800 71,725
Coca-Cola Co. 2,100 133,875
Coors (Adolph); Class B 4,200 68,775
Kirin Brewery 600 64,200
Pepsico, Inc. 1,400 63,875
459,325
Blankbooks & Bookbinding (0.17%)
Deluxe Corp. 1,750 57,969
Blast Furnace & Basic Steel
Products (0.59%)
Acesita-Cia Acos Especiais
Itabira ADR 2,260 30,511
Australian National Industries 8,960 30,993
British Steel PLC ADS 2,700 74,925
Carpenter Technology 1,000 68,125
204,554
Bowling Centers (0.15%)
Meija Seika Kaisha Ltd. ADR 900 52,474
Broadwoven Fabric Mills,
Cotton (0.16%)
Springs Industries, Inc. 1,500 55,875
Chemicals & Allied Products (0.44%)
Bayer AG Sponsored ADR 3,000 74,560
Ciba-Geigy Sponsored ADR 2,100 76,919
151,479
Cogeneration - Small Power
Producer (0.20%)
Zurn Industries 3,500 70,000
Combination Utility Services (0.89%)
Central Hudson Gas & Electric Corp. 2,400 64,800
Commonwealth Energy Systems 1,500 56,625
NIPSCO Industries, Inc. 1,850 62,900
Orange & Rockland Utilities, Inc. 1,700 57,375
Washington Water Power Co. 4,000 64,000
305,700
Commercial Banks (4.63%)
ABN-AMRO Holdings NV ADR 1,800 $ 69,422
Allied Irish Banks ADR 2,900 83,375
Banco Central ADR 6,500 69,063
Banco Fraces Del Rio De La Plata 2,500 45,000
BankAmerica Corp. 850 44,731
Banker's Trust 750 46,500
Brierly Investments Ltd. ADR 3,350 50,593
Chemical Banking Corp. 1,100 51,975
Citicorp 1,700 98,387
Commerzbank AG ADR 1,500 71,699
Finova Group, Inc. 1,900 66,500
First of America Bank Corp. 1,500 55,688
First Security Corp. 2,400 67,200
HSBC Holdings ADR 600 76,963
Mellon Bank Corp. 1,100 45,788
National Westminster ADR 1,200 62,700
Onbankcorp Inc. 2,800 79,450
Peoples Heritage Financial
Group, Inc. 4,500 67,500
Summit Bancorp. 3,570 75,862
Union Bank of San Francisco 1,900 80,275
Union Planter's Corp. 2,600 69,550
Wells Fargo & Co. 700 126,175
Westpac Banking ADR 4,900 90,037
1,594,433
Commercial Printing (0.17%)
Bowne & Co., Inc. 3,500 59,938
Communications Equipment (0.76%)
Alcatel Alsthom ADR 4,700 85,188
Hanson PLC ADR 3,050 53,756
Harris Corp. 1,050 54,206
Northern Telecom Ltd. 1,800 65,700
U.S. Industries, Inc. 137(a) 1,867
260,717
Communications Services,
NEC (0.21%)
Comsat Corp. 3,600 70,650
Computer & Data Processing
Services (0.08%)
Microsoft Corp. 300(a) 27,113
Computer & Office Equipment (1.15%)
Apple Computer, Inc. 1,200 55,725
Bell & Howell Holdings 500(a) 10,125
Cabletron Systems, Inc. 900(a) 47,925
Hewlett-Packard Co. 500 37,250
Hitachi Ltd. ADR 700 70,175
International Business
Machines Corp. 900 86,400
National Computer Systems, Inc. 4,200 87,150
394,750
Concrete, Gypsum & Plaster
Products (0.50%)
Ameron Inc. 1,900 68,875
Italcementi Fabriche S P A ADR 10,000 68,875
USG Corp. 1,500(a) 35,625
173,375
Concrete Work (0.18%)
Pioneer International Ltd. ADR 25,000 62,023
Construction & Related
Machinery (0.41%)
Cascade Corp. 4,400 70,400
Caterpillar, Inc. 1,100 70,675
141,075
Consumer Products (0.96%)
American Brands, Inc. 1,400 55,650
Philip Morris Cos., Inc. 3,700 275,187
330,837
Crude Petroleum &
Natural Gas (0.66%)
Broken Hill Proprietary Ltd. ADR 1,100 54,312
Petrofina SA ADR 1,700 51,315
Societe Generale ADR 3,200 74,859
Texaco, Inc. 700 45,938
226,424
Cutlery, Handtools &
Hardware (0.18%)
Starrett (L.S.); Class A 2,700 61,088
Deep Sea Foreign Transportation
of Freight (0.16%)
Overseas Shipholding Group, Inc. 2,700 56,025
Department Stores (0.43%)
Global Direct Mail Co. 300(a) 5,925
Harcourt General, Inc. 700 29,750
Marui Corp. ADR 1,800 57,244
Venture Stores, Inc. 5,500 54,312
147,231
Dimension Stone (0.23%)
English China Clays ADR 4,100 77,387
Drugs (1.38%)
Baxter International, Inc. 1,500 54,563
Bristol-Myers Squibb Co. 800 54,500
Hafslund Nycomed ADR 3,600 83,250
Novo Nordisk ADR 2,800 75,250
Pfizer, Inc. 1,000 92,375
Schering-Plough Corp. 1,200 52,950
Upjohn Co. 1,600 60,600
473,488
Drugs, Proprietaries &
Sundries (0.40%)
Amway Japan Lrd ADS 4,000 69,500
Bindley Western Industries, Inc. 4,300 68,262
137,762
Eating & Drinking Places (0.43%)
Boston Chicken, Inc. 1,550(a) 37,491
Cracker Barrel Old Country
Store, Inc. 2,100 43,312
Piccadilly Cafeterias 7,600 66,500
147,303
Electric Light & Wiring
Equipment (0.18%)
National Service Industries 2,100 60,638
Electric Services (1.33%)
EVN Energie-Vansorgung Nied ADR 2,400 67,115
Empresa Nacional De Electricidad
SA ADR 1,400 68,950
General Public Utilities Corp. 2,100 62,475
National Power ADR 2,500 74,062
Pinnacle West Capital Corp. 2,700 66,150
Shangdong Huaneng Power
Development Ltd. 8,000 $ 61,000
Texas Utilities Co. 1,700 58,438
458,190
Electrical Goods (0.20%)
Avnet, Inc. 1,400 67,725
Electrical Industrial Apparatus (0.18%)
Joslyn Corp. 2,300 60,375
Electronic Components &
Accessories (0.76%)
Aida Engineering Ltd. ADR 800(a) 54,370
Duracell International, Inc. 1,100 47,575
Logic Corp. 1,000(a) 39,125
Nintendo Ltd. ADR 9,600 68,834
Texas Instruments 400 53,550
263,454
Electronic Distribution
Equipment (0.39%)
General Electric Co. 1,000 56,375
Matsushita Electrical ADR 500 77,500
133,875
Engineering & Architectural
Services (0.36%)
Gilbert Associates Inc.; Class A 4,700 61,100
Mannesman AG ADR 200 61,049
122,149
Family Clothing Stores (0.19%)
Ross Stores, Inc. 5,500 64,625
Farm & Garden Machinery (0.15%)
Deere & Co. 600 51,375
Federal & Federally Sponsored
Credit (0.90%)
Federal Home Loan Mortgage Corp. 800 55,000
Federal National Mortgage
Association 2,100 198,187
Student Loan Marketing Association
(Non-Voting) 1,200 56,250
309,437
Finance Services (0.28%)
Greenpoint Financial Corp. 2,600 61,425
The Travelers Group, Inc. 800 35,000
96,425
Fire Marine & Casualty
Insurance (0.52%)
Argonaut Group, Inc. 1,700 53,975
St. Paul Cos., Inc. 1,000 49,250
Selective Insurance Group, Inc. 2,300 75,900
179,125
Gas Production & Distribution (0.42%)
Eastern Enterprises 2,400 71,700
Oneok Inc. 3,400 72,675
144,375
General Industrial Machinery (0.64%)
Amer Group Ltd. ADR 5,500 49,953
Binks Mfg. 3,100 78,662
SKF AB ADR 4,500 91,125
219,740
Glass & Glassware, Pressed or
Blown (0.10%)
Vitro Sociedad Anonima ADR 3,960 34,155
Grain Mill Products (0.42%)
Kellogg Co. 1,000 $ 71,375
Ralston-Ralston Purina Group 1,400 71,400
142,775
Groceries & Related Products (0.35%)
Fleming Cos., Inc. 2,150 56,975
Nash Finch Co. 4,000 65,000
121,975
Highway & Street Construction (0.08%)
Emprasas ICA Sociedad
Controladora SA ADR 2,700 27,675
Holding Offices (0.19%)
Jardine Strategic
Holdings Ltd.ADR 10,000 64,400
Hospitals (0.20%)
Columbia/HCA Healthcare Corp. 1,600 69,200
Hotels & Motels (0.23%)
Ladbroke Group ADR 23,000 61,838
Trump Hotels & Casinos 1,300(a) 17,387
79,225
Household Audio & Video
Equipment (0.21%)
Sony Corp. ADR 1,500 72,750
Industrial Inorganic
Chemicals (0.30%)
Aceto, Inc. 4,000 59,000
Monsanto Co. 500 45,062
104,062
Industrial Machinery, NEC (0.20%)
Applied Materials, Inc. 800(a) 69,300
Industrial Organic Chemicals (0.17%)
Nova Corp. ADR 6,700 56,950
Insurance Agents, Brokers,
& Services (0.27%)
Exel Ltd. 1,800 93,600
Iron Ores (0.18%)
Cleveland-Cliffs, Inc. 1,600 61,600
Jewelry, Silverware & Plated
Ware (0.19%)
Oneida Ltd. 4,400 64,900
Knitting Mills (0.20%)
Guilford Mills, Inc. 2,800 68,250
Life Insurance (0.48%)
Aegon NV ADR 3,000 104,625
American General Corp. 1,800 60,750
165,375
Lumber & Other Building
Materials (0.30%)
Home Depot, Inc. 1,600 65,000
Lowe's Cos., Inc. 1,300 38,837
103,837
Machinery, Equipment
& Supplies (0.46%)
AAR Corp. 4,700 $ 84,012
Kaman Corp.; Class A 5,800 73,950
157,962
Management & Public Relations (0.15%)
Ogden Corp. 2,300 50,313
Manifold Business Forms (0.38%)
New England Business Service 2,800 55,300
Wallace Computer Services 2,000 76,750
132,050
Measuring & Controlling Devices(0.74%)
Beckman Instruments, Inc. 2,200 61,325
Core Industries 5,200 55,900
Cubic Corp. 3,000 67,500
MTS Systems Corp. 2,600 70,200
254,925
Meat Products (0.21%)
Groupe Danone 2,100 70,700
Medical Service & Health
Insurance (0.98%)
Aon Corp. 1,350 50,287
Hospitality Franchise
Systems, Inc. 1,600(a) 55,400
Provident Life & Accident
Insurance Co.; Class B 2,500 58,125
United Healthcare Corp. 1,200 49,650
United Wisconsin Services 3,000 60,000
US Life Corp. 1,600 64,400
337,862
Men's & Boys' Clothing Stores (0.20%)
Dave & Busters, Inc. 840 16,695
Edison Brothers Stores, Inc. 4,200 50,400
67,095
Men's & Boys' Furnishings (0.14%)
V. F. Corp. 900 48,375
Metal Cans & Shipping
Containers (0.20%)
Ball Corp. 2,000 69,750
Metal Forgings & Stampings (0.20%)
Zero Corp. 4,500 67,500
Metalworking Machinery (0.12%)
Makita Corp. ADR 3,000 41,625
Miscellaneous Amusement, Recreation
Service (0.20%)
Jackpot Enterprises 6,000 60,750
National Gaming Corp. 860(a) 7,418
68,168
Miscellaneous Apparel &
Accessories (0.18%)
Angelica Corp. 2,500 62,500
Miscellaneous Business
Services (0.15%)
CUC International, Inc. 1,200(a) 50,400
Miscellaneous Chemical
Products (0.18%)
Learonal, Inc. 3,000 63,375
Miscellaneous Converted Paper
Products (0.22%)
P. T. Inti Indorayon Utama ADR 10,000(a) 61,966
Playtex Products 1,300(a) 12,837
74,803
Miscellaneous Durable Goods (0.17%)
Handleman Co. 5,900 56,788
Miscellaneous Electrical Equipment
& Supplies (0.58%)
Motorola, Inc. 1,000 67,125
TDK Corp. 1,400 63,700
United Industrial Corp. 9,500 67,687
198,512
Miscellaneous Fabricated Metal
Products (0.35%)
Barnes Group, Inc. 1,300 52,325
Intel Corp. 1,100 69,644
121,969
Miscellaneous Fabricated Textile
Products (0.11%)
Alpargatas SAIC ADR 10,000(a) 38,812
Miscellaneous Food Stores (0.25%)
General Nutrition Cos. 2,400(a) 84,300
Miscellaneous Furniture &
Fixtures (0.22%)
Kinetic Concepts, Inc. 10,700 76,237
Miscellaneous Investing (0.19%)
Manufactured Home Communities 4,200 64,575
Miscellaneous Petroleum & Coal
Products (0.18%)
Quaker Chemical Corp. 3,800 61,750
Miscellaneous Plastics Products,
NEC (0.16%)
Amer Filtrona Corp. 1,900 56,050
Miscellaneous Special Trade
Contractors (0.22%)
Hang Lung Development Co. ADR 9,400 74,713
Miscellaneous Transporation
Services (.02%)
Petro PSC Properties Warrants 200(a) 6,800
Mortgage Bankers & Brokers (0.07%)
Countrywide Credit 1,200 25,200
Motor Vehicles & Equipment (1.43%)
Arvin Industries, Inc. 3,400 76,075
Augat, Inc. 3,600 73,800
Fiat SPA ADR 4,000 71,000
Ford Motor Co. 1,600 47,600
General Motors Corp. 1,100 51,563
Honda Motor ADR 1,800 55,350
Toyota Motor Corp. ADR 1,500 59,625
Volkswagen AG ADR 1,000 57,726
492,739
Newspapers (0.45%)
Gannett Co. 1,400 $ 75,950
News Corp. Ltd. ADR 3,500 79,187
155,137
Non-Classifiable Establishments (0.30%)
PartnerRe Holdings Ltd. 1,300 33,963
Keppel Corp. Ltd. ADR 4,300(a) 70,153
104,116
Operative Builders (0.14%)
Fujita Corp. ADR 1,000(a) 46,996
Ophthalmic Goods (0.16%)
Bausch & Lomb 1,350 56,025
Paints & Allied Products (0.44%)
Dexter Corp. 2,900 68,513
Pratt & Lambert, Inc. 3,500 81,812
150,325
Paper Mills (0.18%)
Potlatch Corp. 1,500 62,625
Paperboard Containers & Boxes (0.16%)
Sealright Co. 3,300 55,275
Paperboard Mills (0.17%)
Groupo Industrial Durango ADR 3,800(a) 30,400
Stone Container Corp. 1,300(a) 27,625
58,025
Partitions & Fixtures (0.18%)
Knape & Vogt Mfg. 4,060 60,900
Pens, Pencils, Office & Art
Supplies (0.19%)
Cross (A.T.) Co.; Class A 4,300 63,963
Periodicals (0.16%)
Time Warner, Inc. 1,300 53,463
Personal Credit Institutions (0.14%)
Dean Witter, Discover & Co. 1,000 47,000
Petroleum Refining (1.40%)
Ashland, Inc. 1,600 56,200
Diamond Shamrock, Inc. 2,400 61,800
Mobil Corp. 400 38,400
Royal Dutch Petroleum Co. ADR 300 36,562
Shell Transport & Trading Co. ADR 1,000 72,375
Total SA IE Francaise ADR 2,500 75,625
Ultramar Corp. 2,700 68,175
YPF Sociedad Anonima ADR 3,800 71,725
480,862
Photographic Equipment
& Supplies (0.72%)
Eastman Chemical Co. 850 50,575
Eastman Kodak Co. 750 45,469
Fuji Photo Film 1,400 66,500
OCE Van Der Grinten NV ADR 1,400 78,400
Polaroid Corp. 200 8,150
249,094
Photographic Studios, Portrait (0.19%)
CPI Corp. 3,400 65,025
Plastic Materials & Synthetics(0.48%)
Hercules, Inc. 1,700 82,875
Shanghai Petrochemical
Co. Ltd. ADR 2,600 81,575
164,450
Preserved Fruits & Vegetables (0.40%)
CPC International, Inc. 400 24,700
H. J. Heinz Co. 800 35,500
International Multifoods Corp. 3,400 76,500
136,700
Primary Nonferrous Metals (0.16%)
Phelps Dodge Corp. 950 56,050
Pulp Mills (0.24%)
Champion International Corp. 1,000 52,125
Mead Corp. 500 29,687
81,812
Radio & Television
Broadcasting (0.22%)
CBS, Inc. 400 26,800
New World Communications 2,400(a) 50,100
76,900
Railroads (0.28%)
Burlington Northern Inc. 1,500 95,062
Rental of Railroad Cars (0.19%)
GATX Corp. 1,400 65,975
Retail Stores, NEC (0.25%)
Koninklijke Bijenkorf Beheer NV ADR 2,400 86,062
Savings Institutions (0.57%)
Ahmanson (H F) & Co. 2,200 48,400
Standard Federal Bancorp., Inc. 2,500 84,062
Washington Mutual Inc. 2,800 65,625
198,087
Search & Navigation
Equipment (0.60%)
Litton Industries, Inc. 2,200(a) 81,125
Loral Corp. 1,100 56,925
Watkins Johnson Co. 1,500 66,750
204,800
Security & Commodity Services (0.14%)
Franklin Resources, Inc. 1,100 48,950
Security Brokers & Dealers (0.27%)
American Express Co. 2,600 91,325
Services to Buildings (0.19%)
American Building Maintenance 2,800 64,750
Ship & Boat Building &
Repairing (0.22%)
Allied Signal, Inc. 1,700 75,650
Soap, Cleaners & Toilet Goods (0.50%)
Block Drug Co. 1,845 62,269
Kao Corp. ADR 500 60,070
Smithkline Beecham PLC ADR 1,100 49,775
172,114
Special Industry Machinery (0.40%)
Gerber Scientific Inc. 4,300 $ 72,025
Scitex Corp. 3,000 64,500
136,525
Subdividers & Developers (0.22%)
Singapore Land ADR 11,600 75,949
Sugar & Confectionary
Products (0.19%)
Perlis Plantations ADR 20,000 66,448
Surety Insurance (0.38%)
ACE Ltd. 2,000 58,000
Enhance Financial Services Group 3,700 71,687
129,687
Telephone Communication (1.55%)
AT&T Corp. 1,500 79,687
Airtouch Communications, Inc. 1,600(a) 45,600
Nynex Corp. 1,200 48,300
SBC Communications, Inc. 1,100 52,388
Sprint Corp. 1,700 57,163
Telecommunicacoes
Brasileiras SA ADR 1,600(a) 54,618
Telebras GDR 18(c) 614
Telefonica De Espana SA ADS 2,500 96,875
Telfonos De Mexico SA ADR 1,700 50,363
U.S. West, Inc. 1,200 49,950
535,558
Tires & Inner Tubes (0.28%)
Bridgestone ADR 300 44,170
Goodyear Tire & Rubber Co. 1,300 53,625
97,795
Toys & Sporting Goods (0.24%)
Russ Berrie & Co. 4,900 67,987
Toy Biz, Inc. 800(a) 14,500
82,487
Variety Stores (0.33%)
K Mart Corp. 4,000 58,500
Woolworth Corp. 3,550 53,694
112,194
Video Tape Rental (0.17%)
Viacom Inc.; Class B 1,212(a) 56,207
Viacom Inc.; Rights 1,800(a) 2,700
58,907
Water Supply (0.18%)
SJW Corp. 1,700 60,988
Water Transportation of Freight,
NEC (0.16%)
Penninsular & Oriental
Steamships ADR 2,900 53,426
Women's & Children's
Undergarments (0.16%)
Wacoal Corp. ADR 900(a) 55,013
Women's Clothing Stores (0.04%)
Deb Shops, Inc. 4,500 14,625
Total Common Stocks 18,043,592
Preferred Stocks (0.06%)
Newspapers (0.06%)
News Corp. Ltd. ADR; (Ltd.-Voting) 1,000 20,000
Bonds (12.35%)
Aerospace (0.60%)
Tracor, Inc.; 10.88%; 8/15/01 $ 200,000 $ 205,500
Agricultural Chemicals (0.60%)
IMC Fertilizer; 9.25%; 10/1/00 200,000 205,500
Blast Furanace & Basic Steel
Products (0.55%)
Weirton Steel Corp. Senior Notes;
10.75% ; 6/1/05 200,000(c) 188,500
Cable & Other Pay TV Services (0.61%)
Cablevision Systems;
9.88%; 2/15/13 200,000 209,500
Commercial Printing (0.59%)
United Stationer Supply
Senior Subordinated Notes;
12.75%; 5/1/05 200,000(c) 202,000
Communications Services, NEC (0.53%)
Helicon Group Senior Notes
Series B; 9.00%*; 11/1/03 200,000 183,500
Computer & Office Equipment (0.57%)
Corporate Express Senior
Subordinated Notes;
9.13%; 3/15/04 200,000 195,500
Engines & Turbines (0.61%)
Doehler Jarvis, Inc.;
11.88%; 6/1/02 200,000 211,000
Health & Allied Services, NEC (0.55%)
Nacolah Holding Corp.;
9.50%; 12/1/03 200,000 188,000
Industrial Machinery, NEC (0.57%)
Maxus Energy Corp.;
11.50%; 11/15/15 200,000 197,000
Meat Products (0.41%)
Pilgrim's Pride Corp.;
10.88%; 8/1/03 150,000 139,500
Miscellaneous Amusement, Recreation
Service (0.31%)
Six Flags Theme Park Inc.
Senior Subordinated Notes;
12.25%; 6/15/05 150,000 108,000
Miscellaneous Chemical
Products (0.44%)
Arcadian Partners; 10.75%; 5/1/05 150,000 150,750
Miscellaneous Publishing (0.58%)
Marvel Parent Holding;
Zero Coupon; 4/15/98 300,000(b) 201,000
Miscellaneous Shopping Goods
Stores (0.22%)
Southland Corp.;
5.00%; 12/15/03 100,000 76,125
Miscellaneous Textile Goods (1.58%)
Dominion Textile
Senior Notes; 8.88%; 11/1/03 200,000 198,250
PT Polysindo EKA; 13.00%; 6/15/01 150,000 151,500
West Point Stevens; 9.38%; 12/15/05 200,000 192,500
542,250
Paperboard Containers & Boxes (0.60%)
Owens Illinois Inc.;9.95%;10/15/04 200,000 206,000
Radio & Television
Broadcasting (2.01%)
Ackerly Communications Inc;
10.75%; 10/1/03 200,000 210,000
Heritage Media Senior Subordinated
Notes; 11.00%; 10/1/02 175,000 186,375
Plantronics, Inc.; 10.00%; 1/15/01 100,000 101,500
Viacom Subordinated Debentures ;
8.00%; 7/7/06 200,000 194,000
691,875
Telephone Communication (0.42%)
Telefonica De Argentina Notes;
11.88%; 11/1/04 150,000 144,750
Total Bonds 4,246,250
U.S. Government Treasury Notes (26.13%)
8.00%; 1/15/97 2,309,000 2,382,599
7.88%; 11/15/04 5,931,000 6,601,945
Total Treasury Notes 8,984,544
Total Portfolio Investments (91.01%) 31,294,386
Cash and receivables, net of liabilities (8.99%) 3,091,082
Total Net Assets (100.00%) $34,385,468
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Non-income producing security - zero-coupon bond.
(c) Restricted Security - See Note 4 to the financial statements.
* Variable Rate
<PAGE>
PRINCIPAL BALANCED FUND, INC.
Shares
Held Value
Common Stocks (39.67%)
Advertising (0.48%)
Interpublic Group of Cos., Inc. 4,400 $ 165,000
Air Transportation, Scheduled (0.20%)
Southwest Airlines Co. 2,900 69,237
Automotive Rentals, No Drivers (0.46%)
Ryder Systems, Inc. 6,500 155,187
Beverages (1.04%)
Pepsico, Inc. 6,400 292,000
Universal Foods Corp. 1,900 61,512
353,512
Combination Utility Services (0.52%)
Cinergy Corp. 4,900 128,625
Scana Corp. 2,200 49,225
177,850
Commercial Banks (6.62%)
AmSouth Bancorp. 4,750 154,969
Banc One Corp. (Ohio) 9,021 290,927
Boatmen's Bancshares, Inc. 5,082 179,140
Chase Manhattan Bank Corp. 3,400 159,800
Chemical Banking Corp. 4,200 198,450
Comerica, Inc. 4,200 134,925
First of America Bank Corp. 3,400 126,225
First Tennessee National Corp. 1,800 83,475
Firstar Corp. 3,300 110,963
Keycorp. 5,300 166,288
Marshall & Ilsley Corp. 9,000 203,625
Mercantile Bankshares Corp. 6,600 148,500
Meridian Bancorp., Inc. 4,700 161,563
Nationsbank Corp. 2,500 134,062
2,252,912
Communications Equipment (1.17%)
Allen Group, Inc. 1,800 53,325
DSC Communications Corp. 2,000(a) 93,000
General Instrument Corp. 2,800(a) 107,450
Newbridge Networks Corp. 2,600(a) 91,650
Northern Telecom Ltd. 1,400 51,100
396,525
Computer & Data Processing
Services (0.40%)
Microsoft Corp. 1,500(a) 135,562
Computer & Office Equipment (0.85%)
Cabletron Systems, Inc 1,500(a) 79,875
Hewlett-Packard Co. 1,000 74,500
International Business
Machines Corp. 1,400 134,400
288,775
Construction & Related
Machinery (0.53%)
Caterpillar, Inc. 2,800 179,900
Crude Petroleum & Natural
Gas (0.62%)
Texaco, Inc. 3,200 210,000
Dairy Products (0.25%)
Dean Foods Co. 3,000 84,000
Department Stores (0.91%)
Sears, Roebuck & Co. 5,200 311,350
Drugs (2.10%)
American Home Products Corp. 1,000 77,375
Bristol-Myers Squibb Co. 1,800 122,625
Lilly (Eli) & Co. 1,500 117,750
Merck & Co., Inc. 5,800 284,200
Warner-Lambert Co. 1,300 112,287
714,237
Eating & Drinking Places (0.44%)
McDonald's Corp. 3,800 148,675
Electric Light & Wiring
Equipment (0.14%)
Cooper Industries 1,200 47,400
Electric Services (2.05%)
American Electric Power Co., Inc. 5,600 196,700
Dominion Resources, Inc. (Virginia) 5,000 182,500
FPL Group, Inc. 3,500 135,187
Florida Progress Corp. 1,800 56,250
Potomac Electric Power Co. 5,900 126,850
697,487
Electrical Industrial Apparatus (0.15%)
Emerson Electric Co. 700 50,050
Electronic Components &
Accessories (0.38%)
Duracell International, Inc. 3,000 129,750
Electronic Distribution
Equipment (1.06%)
General Electric Co. 6,400 360,800
General Industrial Machinery (0.48%)
BW/IP Holdings, Inc.; Class A 2,600 48,100
Goulds Pumps, Inc. 1,800 39,150
Pall Corp. 3,400 75,650
162,900
Grain Mill Products (0.73%)
Ralston-Ralston Purina Group 4,900 249,900
Grocery Stores (0.68%)
American Stores Co. 3,600 101,250
Sysco Corp. 4,400 129,800
231,050
Household Furniture (0.37%)
Masco Corp. 4,700 126,900
Industrial Inorganic Chemicals (0.70%)
Dow Chemical Co. 3,300 237,187
Insurance Agents, Brokers &
Services (0.47%)
Equifax, Inc. 4,800 160,200
Jewelry, Silverware, & Plated
Ware (0.24%)
Jostens, Inc. 3,800 80,750
Medical Instruments &
Supplies (0.83%)
Becton, Dickinson & Co. 1,400 81,550
St. Jude Medical, Inc. 3,000 150,375
United States Surgical Corp. 2,500 52,188
284,113
Medical Service & Health
Insurance (1.43%)
Aon Corp. 2,050 76,363
Foundation Health Corp. 3,800(a) 102,600
Pacificare Health Systems, Inc.,
Class B 1,700(a) 86,700
Physicians Corp. of America 2,600(a) 35,425
U.S. Healthcare, Inc. 6,100 186,812
487,900
Metal Forgings & Stampings (0.39%)
Newell Co. 5,400 132,300
Metalworking Machinery (0.14%)
Giddings & Lewis 2,600 46,475
Miscellaneous Business Services (0.23%)
Safety-Kleen Corp. 4,900 79,013
Miscellaneous Converted Paper
Products (1.43%)
Avery Dennison Corp. 3,600 144,000
Minnesota Mining & Mfg. Co. 6,000 343,500
487,500
Miscellaneous Electrical Equipment
& Supplies (0.71%)
Motorola, Inc. 3,600 241,650
Miscellaneous Fabricated Metal
Products (0.18%)
Keystone International, Inc. 3,100 60,838
Miscellaneous Shopping
Goods Stores (0.52%)
Toys 'R' Us, Inc. 6,000(a) 175,500
Motor Vehicles & Equipment (0.58%)
Ford Motor Co. 6,600 196,350
Offices & Clinics of Medical
Doctors (0.26%)
FHP International Corp. 3,900(a) 89,700
Paper Mills (0.37%)
James River Corp. of Virginia 4,500 124,313
Personnel Supply Services (0.44%)
Olsten Corp. 4,561 149,373
Petroleum Refining (1.23%)
Atlantic Richfield Co. 1,500 164,625
Exxon Corp. 3,600 254,250
418,875
Photographic Equipment &
Supplies (0.61%)
Eastman Chemical Co. 1,450 86,275
Eastman Kodak Co. 2,000 121,250
207,525
Plastic Materials & Synthetics (0.21%)
Wellman, Inc. 2,600 71,175
Railroad Equipment (0.25%)
Trinity Industries, Inc. 2,550 84,788
Sanitary Services (1.53%)
Browning-Ferris Industries, Inc. 4,200 151,725
WMX Technologies, Inc. 13,000 368,875
520,600
Security Brokers & Dealers (0.28%)
Edwards (A.G.), Inc. 4,200 94,500
Soap, Cleaners & Toilet Goods (0.73%)
Avon Products 3,700 247,900
Telephone Communication (1.70%)
AT&T Corp. 6,800 361,250
MCI Communication Corp. 10,100 222,200
583,450
Variety Stores (1.49%)
Dayton-Hudson Corp. 4,200 301,350
Wal-Mart Stores, Inc. 7,800 208,650
510,000
Women's Clothing Stores (0.09%)
Charming Shoppes, Inc. 5,600 29,400
Total Common Stocks 13,500,334
Preferred Stocks (4.95%)
Blast Furnace & Basic Steel
Products (0.56%)
Quanex Corp.
Convertible Exchangeable 8,000 190,000
Meat Products (0.83%)
Conagra, Inc. Class E Convertible 8,000 283,000
Motor Vehicles & Equipment (3.56%)
Federal-Mogul Corp.
Series D Convertible 4,300(b) 239,187
Ford Motor Co.,
Series A Convertible 10,000 971,250
1,210,437
Total Preferred Stocks 1,683,437
Principal
Amount Value
Bonds (4.02%)
Electrical Lighting & Wiring
Equipment (0.64%)
Cooper Industries Inc. Convertible
Subordinated Debentures;
7.05%; 1/1/15 $208,000 $217,100
Electrical Industrial
Apparatus (0.61%)
Liebert Co. Convertible
Subordinated Debentures;
8.00%; 11/15/10 80,000 209,600
Engines & Turbines (0.60%)
Outboard Marine Corp. Convertible
Subordinated Debentures;
7.00%; 7/1/02 200,000 203,750
Lumber & Other Building
Materials (0.79%)
Hechinger Co. Convertible
Subordinated Debentures;
5.50%; 4/1/12 425,000 268,281
Petroleum Refining (0.70%)
Pennzoil Co. Senior Exchangeable
Debentures; 6.50%; 1/15/03 200,000 237,500
Trucking & Courier Services,
Ex., Air (0.68%)
Builders Transport, Inc.
Convertible Subordinated
Debentures;6.50%; 5/1/11 306,000 231,413
Total Bonds 1,367,644
U.S. Government Treasury Notes & Bonds (40.59%)
5.13%; 2/28/98 $1,000,000 $ 981,875
6.38%; 1/15/00 1,900,000 1,929,093
5.50%; 4/15/00 1,000,000 981,250
6.38%; 8/15/02 1,000,000 1,010,937
6.25%; 2/15/03 1,000,000 1,002,187
7.25%; 8/15/04 1,500,000 1,601,719
7.50%; 2/15/05 800,000 871,500
7.25%; 5/15/16 1,000,000 1,064,687
7.50%; 11/15/16 1,000,000 1,092,500
7.88%; 2/15/21 1,000,000 1,138,750
7.25%; 8/15/22 2,000,000 2,136,250
Total U. S. Government Treasury
Notes & Bonds 13,810,748
Commercial Paper (9.93%)
Life Insurance (6.26%)
American General Finance
Corp. Notes;
6.15%; 7/3/95 1,105,000 1,105,000
Prudential Funding
Corp. Notes;
5.95%; 7/6/95 1,025,000 1,024,492
2,129,492
Petroleum Refining (3.67%)
Chevron Oil Finance
Co. Notes;
5.92%; 7/5/95 1,250,000 1,249,589
Total Commercial Paper 3,379,081
Total Portfolio Investments (99.16%) 33,741,244
Cash and receivables, net
of liabilities (0.84%) 287,271
Total Net Assets (100.00%) $34,028,515
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Restricted Security - See Note 4 to the financial statements.
<PAGE>
PRINCIPAL BOND FUND, INC.
Principal
Amount Value
Bonds (93.00%)
Aircraft & Parts (1.42%)
Textron, Inc. Medium-Term Notes,
Series C; 9.55%; 3/19/01 $300,000 $ 340,218
Beverages (2.35%)
Joseph E. Seagram & Sons
Guaranteed Debentures;
8.88%; 9/15/11 500,000 562,323
Cash Grains (1.25%)
Dekalb Corp. Notes;
10.00%; 4/15/98 300,000 298,500
Combination Utility Services (1.15%)
Public Service Electric & Gas
Medium-Term Notes;
8.16%; 5/26/09 250,000 273,885
Computer & Office Equipment (2.00%)
Apple Computer, Inc. Notes;
6.50%; 2/15/04 500,000 478,516
Consumer Products (1.28%)
RJR Nabisco Capital Corp. Senior
Notes; 8.75%; 4/15/04 300,000 306,750
Copper Ores (1.29%)
Asarco, Inc. Notes;
7.38%; 2/1/03 300,000 307,294
Crude Petroleum & Natural Gas (1.19%)
Occidental Petroleum Corp.
Medium-Term Notes;
9.73%; 6/15/01 250,000 284,595
Department Stores (4.91%)
Dillard Investment Co. Notes;
9.25%; 5/1/97 200,000 210,677
Harcourt General, Inc.
Subordinated Notes;
9.50%; 3/15/00 350,000 389,335
Sears Roebuck Co. Medium-Term
Notes; 9.05%; 2/6/12 500,000 572,295
1,172,307
Drug Stores & Proprietary
Stores (1.95%)
Rite Aid Corp. Senior
Debentures;6.88%; 8/15/13 500,000 466,307
Eating & Drinking Places (0.82%)
Marriott International Notes;
6.75%; 12/15/03 200,000 195,580
Electric Services (1.61%)
Cleveland Electric Illuminating
Co. First Mortgage Bonds;
8.75%; 11/15/05 400,000 383,500
Fabricated Rubber Products,
NEC (1.20%)
M. A. Hanna Co. Senior Notes;
9.38%; 9/15/03 250,000 287,623
Gas Production &
Distribution (7.63%)
Enron Corp. Notes;
7.13%; 5/15/07 750,000 747,876
Panhandle Eastern Pipeline
Sinking Fund Debentures;
9.88%; 10/15/96 199,000 207,124
Tennessee Gas Pipeline Co.
Notes; 9.00%; 1/15/97 400,000 415,688
Transco Energy Co. Notes;
9.38%; 8/15/01 400,000 451,313
1,822,001
General Government, NEC (4.37%)
Ontario Hydro Debentures;
7.45%; 3/31/13 500,000 509,200
Province of Saskatchewan, Canada
Global Notes; 8.00%; 2/1/13 500,000 534,190
1,043,390
Gold & Silver Ores (3.09%)
Placer Dome, Inc. Notes;
7.13%; 6/15/07 750,000 738,935
Hospitals (2.36%)
Columbia/HCA Healthcare Corp.
Medium-Term Notes;
8.70%; 2/10/10 500,000 563,220
Household Appliances (2.33%)
Maytag Corp. Medium-Term Notes;
8.62%; 11/15/07 500,000 557,485
Household Furniture (2.01%)
Masco Corp. Debentures;
7.13%; 8/15/13 500,000 480,376
Industrial Inorganic
Chemicals (3.03%)
FMC Corp. Senior Notes;
6.38%; 9/1/03 200,000 192,925
Grace (W.R.) & Co. Guaranteed
Notes; 8.00%; 8/15/04 500,000 529,868
722,793
Iron Ores (1.72%)
Cyprus Minerals Co. Notes;
10.13%; 4/1/02 350,000 409,989
Metalworking Machinery (0.82%)
Black & Decker Corp. Notes;
7.00%; 2/1/06 200,000 195,865
Millwork, Plywood & Structural
Members (0.49%)
Georgia-Pacific Corp.
Debentures;9.50%; 12/1/11 100,000 116,849
Miscellaneous Chemical
Products (1.65%)
Ferro Corp. Senior Debentures;
7.63%; 5/1/13 400,000 395,436
Miscellaneous Metal Ores (1.70%)
Cyprus Amax Minerals Notes;
7.38%; 5/15/07 400,000 405,906
Motion Picture Production &
Services (1.58%)
Columbia Pictures
Entertainment, Inc.
Senior Subordinated Notes;
9.88%; 2/1/98 350,000 376,690
Motor Vehicles & Equipment (4.49%)
Arvin Overseas Finance B.V.
Medium-Term Notes;
9.62%; 8/9/96 250,000 256,997
TRW, Inc. Medium-Term Notes;
9.25%; 12/30/11 700,000 814,051
1,071,048
Paper Mills (6.20%)
Bowater, Inc. Debentures;
9.38%; 12/15/21 200,000 237,597
Champion International
Corp. Notes;9.88%; 6/1/00 250,000 282,932
Chesapeake Corp. Notes;
7.20%; 3/15/05 400,000 401,705
Potlatch Corp. Medium-Term
Notes; 8.75%; 1/14/22 500,000 558,955
1,481,189
Personal Credit
Institutions (2.25%)
General Motors Acceptance Corp.
Medium-Term Notes;
8.25%; 2/24/04 500,000 536,305
Petroleum Refining (7.63%)
Ashland Oil, Inc.
Medium-Term Notes;
7.73%; 7/15/13 250,000 253,155
Pennzoil Co. Debentures;
10.13%; 11/15/09 325,000 410,907
Phillips Petroleum Co. Notes;
9.38%; 2/15/11 500,000 582,844
Sun Co. Inc. Debentures;
9.00%; 11/1/24 500,000 576,055
1,822,961
Primary Nonferrous Metals (3.30%)
Amax, Inc. Notes;
9.88%; 6/13/01 100,000 112,521
Reynolds Metals Co.
Medium-Term Notes;
8.34%; 5/22/07 500,000 545,390
7.65%; 2/4/08 125,000 129,705
787,616
Pulp Mills (0.95%)
International Paper Co.
Medium-Term Notes;
9.70%; 8/15/00 200,000 225,822
Refrigeration & Service
Machinery (1.52%)
Westinghouse Electric Corp.
Debentures; 8.63%; 8/1/12 350,000 362,297
Rental of Railroad Cars (0.75%)
Signal Capital Corp.
Equipment Trust Certificates;
9.95%; 2/1/06 179,000 178,105
Sanitary Services (2.21%)
Laidlaw, Inc. Senior Notes;
7.88%; 4/15/05 500,000 527,587
Telephone Communication (2.25%)
Sprint Corp. Notes;
8.13%; 7/15/02 500,000 536,774
Variety Stores (6.25%)
Dayton-Hudson Corp. Debentures;
9.63%; 2/1/08 150,000 182,706
Dayton-Hudson Corp.
Sinking Fund Debentures;
9.50%; 10/15/16 250,000 263,437
K Mart Corp.
Medium-Term Notes;
7.55%; 7/27/04 500,000 497,740
Shopko Stores, Inc.
Senior Notes;
9.00%; 11/15/04 500,000 548,201
1,492,084
Total Bonds 22,208,121
Commercial Paper (4.19%)
Life Insurance (4.19%)
American General Finance Corp.
6.15%; 7/3/95 1,000,000 1,000,000
Total Portfolio Investments (97.19%) 23,208,121
Cash and receivables, net
of liabilities (2.81%) 669,832
Total Net Assets (100.00%) $23,877,953
<PAGE>
PRINCIPAL CAPITAL ACCUMULATION
FUND, INC.
Shares
Held Value
Common Stocks (95.75%)
Advertising (1.22%)
Interpublic Group of Cos., Inc. 38,600 $ 1,447,500
Air Transportation,
Scheduled (0.51%)
Southwest Airlines Co. 25,500 608,813
Automotive Rentals,
No Drivers (1.14%)
Ryder Systems, Inc. 56,800 1,356,100
Beverages (2.64%)
Pepsico, Inc. 56,300 2,568,687
Universal Foods Corp. 17,200 556,850
3,125,537
Combination Utility
Services (1.34%)
Cinergy Corp. 43,100 1,131,375
Scana Corp. 20,200 451,975
1,583,350
Commercial Banks (10.56%)
Banc One Corp. 35,100 1,131,975
Boatmen's Bancshares, Inc. 31,200 1,099,800
Chase Manhattan Bank Corp. 30,000 1,410,000
Chemical Banking Corp. 36,800 1,738,800
Comerica, Inc. 37,300 1,198,263
First of America Bank Corp. 28,700 1,065,487
First Security Corp. 16,550 463,400
First Tennessee National Corp. 15,950 739,681
Firststar Corp. 29,200 981,850
KeyCorp 47,200 1,480,900
Nationsbank Corp. 22,400 1,201,200
12,511,356
Communications Equipment(3.10%)
Allen Group, Inc. 16,000 474,000
DSC Communications Corp. 18,500(a) 860,250
General Instrument Corp. 25,300(a) 970,888
Newbridge Networks Corp. 23,500(a) 828,375
Northern Telecom Ltd. 14,800 540,200
3,673,713
Computer & Data Processing
Services (1.05%)
Microsoft Corp. 13,700(a) 1,238,137
Computer & Office Equipment (2.26%)
Cabletron Systems, Inc. 13,200(a) 702,900
Hewlett-Packard Co. 10,400 774,800
International Business
Machines Corp. 12,500 1,200,000
2,677,700
Construction & Related
Machinery (1.37%)
Caterpillar, Inc. 25,200 1,619,100
Crude Petroleum & Natural Gas (1.53%)
Texaco, Inc. 27,600 1,811,250
Dairy Products (0.62%)
Dean Foods Co. 26,200 733,600
Department Stores (2.32%)
Sears, Roebuck & Co. 46,000 2,754,250
Drugs (5.57%)
American Home Products Corp. 9,500 735,063
Bristol-Myers Squibb Co. 16,900 1,151,312
Lilly (Eli) & Co. 14,500 1,138,250
Merck & Co., Inc. 52,300 2,562,700
Warner-Lambert Co. 11,700 1,010,588
6,597,913
Eating & Drinking Places (1.12%)
McDonald's Corp. 34,000 1,330,250
Electric Light & Wiring
Equipment (0.35%)
Cooper Industries 10,600 418,700
Electric Services (5.23%)
American Electric Power Co., Inc. 50,300 1,766,787
Dominion Resources, Inc. 44,400 1,620,600
FPL Group, Inc. 30,500 1,178,063
Florida Progress Corp. 16,200 506,250
Potomac Electric Power Co. 52,400 1,126,600
6,198,300
Electrical Industrial Apparatus (1.91%)
Emerson Electric Co. 31,691 2,265,887
Electronic Components &
Accessories (0.97%)
Duracell International, Inc. 26,500 1,146,125
Electronic Distribution
Equipment (2.73%)
General Electric Co. 57,500 3,241,562
General Industrial Machinery (1.23%)
BW/IP Holdings , Inc.; Class A 23,000 425,500
Goulds Pumps, Inc. 16,900 367,575
Pall Corp. 30,100 669,725
1,462,800
Grain Mill Products (1.88%)
Ralston-Ralston Purina Group 43,700 2,228,700
Grocery Stores (1.71%)
American Stores Co. 30,900 869,063
Sysco Corp. 39,400 1,162,300
2,031,363
Household Furniture (0.95%)
Masco Corp. 41,500 1,120,500
Industrial Inorganic Chemicals(1.78%)
Dow Chemical Co. 29,300 2,105,937
Insurance Agents, Brokers &
Services (1.19%)
Equifax, Inc. 42,300 1,411,763
Jewelry, Silverware, & Plated
Ware (0.57%)
Jostens, Inc. 31,700 673,625
Medical Instruments & Supplies (2.16%)
Becton, Dickinson & Co. 13,500 786,375
St. Jude Medical, Inc. 26,200 1,313,275
United States Surgical Corp. 21,900 457,162
2,556,812
Medical Service & Health
Insurance (3.65%)
Aon Corp. 17,650$ 657,463
Foundation Health Corp. 33,400(a) 901,800
Pacificare Health Systems, Inc.;
Class B 15,700(a) 800,700
Physicians Corp. of America 22,900(a) 312,012
U.S. Healthcare, Inc. 54,100 1,656,813
4,328,788
Metal Forgings & Stampings (0.99%)
Newell Co. 48,100 1,178,450
Metalworking Machinery (0.35%)
Giddings & Lewis 23,000 411,125
Miscellaneous Business Services (0.59%)
Safety-Kleen Corp. 43,500 701,437
Miscellaneous Converted Paper
Products (3.70%)
Avery Dennison Corp. 32,100 1,284,000
Minnesota Mining & Mfg. Co. 54,200 3,102,950
4,386,950
Miscellaneous Electrical Equipment
& Supplies (1.82%)
Motorola, Inc. 32,200 2,161,425
Miscellaneous Fabricated Metal
Products (0.45%)
Keystone International, Inc. 27,300 535,763
Miscellaneous Shopping Goods
Stores (1.31%)
Toys 'R' Us, Inc. 53,000(a) 1,550,250
Motor Vehicles & Equipment (1.48%)
Ford Motor Co. 59,100 1,758,225
Offices & Clinics of Medical
Doctors (0.79%)
FHP International Corp. 40,800(a) 938,400
Paper Mills (0.91%)
James River Corp. of Virginia 38,900 1,074,612
Petroleum Refining (3.12%)
Atlantic Richfield Co. 12,900 1,415,775
Exxon Corp. 32,400 2,288,250
3,704,025
Photographic Equipment &
Supplies (1.56%)
Eastman Chemical Co. 12,500 743,750
Eastman Kodak Co. 18,300 1,109,438
1,853,188
Plastic Materials &
Synthetics (0.53%)
Wellman, Inc. 23,000 629,625
Railroad Equipment (0.63%)
Trinity Industries, Inc. 22,450 746,462
Sanitary Services (3.88%)
Browning-Ferris Industries, Inc. 37,100 1,340,238
WMX Technologies, Inc. 114,800 3,257,450
4,597,688
Security Brokers & Dealers (0.68%)
Edwards (A.G.), Inc. 36,015$ 810,337
Soap, Cleaners, & Toilet Goods (1.88%)
Avon Products 33,200 2,224,400
Telephone Communication (4.38%)
AT&T Corp. 60,500 3,214,063
MCI Communications Corp. 89,900 1,977,800
5,191,863
Variety Stores (3.82%)
Dayton-Hudson Corp. 37,500 2,690,625
Wal-Mart Stores, Inc. 68,700 1,837,725
4,528,350
Women's Clothing Stores (0.22%)
Charming Shoppes, Inc. 49,700 260,925
Total Common Stocks 113,502,931
Principal
Amount Value
Commercial Paper (4.22%)
Life Insurance (2.21%)
Prudential Funding Corp.
6.02%; 7/6/95 $2,620,000 $ 2,618,686
Personal Credit Institutions (1.01%)
Commercial Credit Co.
5.92%; 7/3/95 1,200,000 1,200,000
Petroleum Refining (1.00%)
Chevron Oil Finance Co.
5.92%; 7/5/95 1,180,000 1,179,612
Total Commercial Paper 4,998,298
Total Portfolio Investments (99.97%) 118,501,229
Cash and receivables, net
of liabilities (0.03%) 32,292
Total Net Assets (100.00%) $118,533,521
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
PRINCIPAL EMERGING GROWTH FUND, INC.
Shares
Held Value
Common Stocks (84.86%)
Blast Furnace & Basic Steel
Products (1.28%)
Lukens, Inc. 16,000 $ 516,000
Carpets & Rugs (2.11%)
Shaw Industries, Inc. 50,000 850,000
Chemicals & Allied Products (1.22%)
Sigma-Aldrich Corp. 10,000 491,250
Commercial Banks (6.49%)
Boatmen's Bancshares, Inc. 6,100 215,025
First Federal Capital Corp. 40,665 650,640
Hawkeye Bancorp. 6,000 132,000
Independent Bank
Corp. Michigan 24,000 630,000
Mercantile Bancorp., Inc. 5,373 241,113
Merchants Bancorp., Inc. 11,500 291,813
Peoples Heritage Financial
Group, Inc. 11,100 166,500
Princeton National Bancorp., Inc. 20,000 285,000
2,612,091
Commercial Printing (0.78%)
Bowne & Co., Inc. 4,000 68,500
Merrill Corp. 13,000 247,000
315,500
Communications Equipment (1.36%)
California Amplifier, Inc. 2,000(a) 20,500
Newbridge Networks Corp. 15,000(a) 528,750
549,250
Computer & Data Processing
Services (7.06%)
American Management Systems, Inc. 25,000(a) 628,125
Effective Management Systems 41,000(a) 271,625
HBO & Co. 7,000 381,500
Legent Corp. 15,000(a) 656,250
Microsoft Corp. 10,000(a) 903,750
2,841,250
Computer & Office Equipment (2.53%)
Digital Biometrics, Inc. 6,000(a) 64,500
EMC Corp. 20,000(a) 485,000
Sun Microsystems, Inc. 9,630(a) 467,055
1,016,555
Crude Petroleum & Natural
Gas (0.32%)
Devon Energy Corp. 6,000 129,000
Dairy Products (0.91%)
Dreyer's Grand Ice Cream, Inc. 10,000 366,250
Drugs (1.89%)
Alliance Pharmaceutical Corp. 27,000(a) 222,750
Forest Laboratories, Inc. 10,000(a) 443,750
Seragen, Inc. 12,000(a) 75,000
Syntro Corp. 10,000(a) 21,250
762,750
Eating & Drinking Places (0.98%)
Ryan's Family Steak Houses, Inc. 50,000(a) 393,750
Electronic Components &
Accessories (6.45%)
Linear Technology Corp. 10,000 660,000
Solectron Corp. 30,000(a) 1,023,750
Vishay Intertechnology, Inc. 25,200(a) 910,350
2,594,100
Engineering & Architectural
Services (1.35%)
Paychex, Inc. 15,000 543,750
Finance Services (1.14%)
First Financial Corp. 26,200 458,500
Fire, Marine, & Casualty
Insurance (2.39%)
Avemco Corp. 35,000 608,125
Berkley W. R. Corp. 10,000 355,000
963,125
Footwear, Except Rubber (1.00%)
Nine West Group, Inc. 11,000(a) 401,500
General Industrial Machinery (7.06%)
Flow International Corp. 55,000(a) 546,563
Kaydon Corp. 25,000 743,750
MFRI, Inc. 12,000(a) 64,500
Pentair, Inc. 10,000 435,000
Roper Industries, Inc. 30,000 1,050,000
2,839,813
Grocery Stores (1.12%)
Casey's General Stores, Inc. 25,000 450,000
Hardware Stores (1.09%)
Central Tractor Farm
& Country, Inc. 41,000(a) 440,750
Holding Offices (1.21%)
ISB Financial Corp. 20,000 300,000
Today's Bancorp., Inc. 11,000 187,000
487,000
Hose, Belting, Gaskets
& Packing (1.68%)
Mark IV Industries 31,500 677,250
Hospitals (2.65%)
Humana, Inc. 25,000(a) 440,625
Universal Health Services, Inc.;
Class B 21,502(a) 623,558
1,064,183
Industrial Inorganic
Chemicals (1.24%)
AMSCO International, Inc. 36,000(a) 499,500
Iron & Steel Foundries (1.02%)
Atchison Casting Corp. 25,000(a) 359,375
Intermet Corp. 5,400(a) 51,300
410,675
Laundry, Cleaning & Garment
Services (0.95%)
G & K Services, Inc.; Class A 19,525 380,738
Life Insurance (0.30%)
First Colony Corp. 5,000 120,000
Lumber & Other Building
Materials (0.16%)
Payless Cashways, Inc. 10,000(a) 63,750
Measuring & Controlling
Devices (0.23%)
ISCO, Inc. 8,613 92,584
Meat Products (0.82%)
Michael Foods, Inc. 30,000 $ 330,000
Medical Instruments
& Supplies (3.33%)
Andros Analyzers, Inc. 12,000(a) 210,000
Boston Scientific Corp. 17,417(a) 555,167
MDT Corp. 20,000(a) 122,500
Nellcor, Inc. 10,000(a) 450,000
1,337,667
Medical Service & Health
Insurance (3.22%)
Foundation Health Corp. 25,000(a) 675,000
United Healthcare Corp. 15,000 620,625
1,295,625
Metal Forgings & Stampings (0.97%)
Varlen Corp. 16,656 391,421
Metal Services, NEC (1.19%)
BMC Industries, Inc. 19,000 477,375
Miscellaneous Chemical
Products (4.55%)
Cytec Industries 10,000(a) 408,750
H.B. Fuller Co. 20,000 740,000
Loctite Corp. 15,000 682,500
1,831,250
Miscellaneous Fabricated Metal
Products (1.57%)
Intel Corp. 10,000 633,125
Miscellaneous Plastics Products,
NEC (0.28%)
Rubbermaid, Inc. 4,000 111,000
Nursing & Personal Care
Facilities (0.03%)
Continental Medical Systems, Inc. 1,167(a) 11,232
Office Furniture (1.21%)
Chromcraft Revington, Inc. 10,000(a) 212,500
Kimball International, Inc.;
Class B 10,000 272,500
485,000
Operative Builders (0.73%)
Pulte Corp. 10,421 291,788
Paints & Allied Products (0.99%)
RPM, Inc. 20,000 397,500
Pens, Pencils, Office & Art
Supplies (0.18%)
Hunt Mfg. Co. 4,750 72,438
Personnel Supply Services (0.55%)
Olsten Corp. 6,703 219,523
Plastic Materials &
Synthetics (1.43%)
A. Schulman, Inc. 20,000 575,000
Plumbing, Heating,
Air-Conditioning (1.40%)
Apogee Enterprises, Inc. 30,000 532,500
Metalclad Corp. 15,000(a) 30,937
563,437
Refrigeration & Service
Machinery (0.66%)
Tecumseh Products Co.; Class A 6,000 264,000
Sanitary Services (0.45%)
Browning-Ferris Industries, Inc. 5,000 180,625
Savings Institutions (0.40%)
Sterling Financial Corp. 12,000(a) 159,000
Security Brokers & Dealers (0.90%)
Jefferies Group, Inc. 10,000 360,000
Special Industry Machinery (0.18%)
Key Technology, Inc. 6,000(a) 70,500
Toys & Sporting Goods (0.68%)
Mattel, Inc. 10,468 272,168
Trucking & Courier Services,
Ex., Air (1.01%)
J. B. Hunt Transport
Services, Inc. 22,000 404,250
Women's Clothing Stores (0.16%)
Charming Shoppes, Inc. 12,000 63,000
Total Common Stocks 34,127,788
Preferred Stocks (1.61%)
Gas Production & Distribution (0.43%)
Kelley Oil & Gas Corp.
Convertible 7,189 172,536
Offices & Clinics of Medical
Doctors (1.18%)
FHP International Corp.
Series A Convertible 20,000 475,000
Total Preferred Stocks 647,536
Principal
Amount Value
Bonds (2.83%)
Combination Utility Services (0.00%)
Bonneville Pacific Corp. Convertible
Subordinated Debentures;
7.75%; 8/15/09 $100,000(b) $ 0
Computer & Data Processing
Services (0.45%)
Sierra On Line Convertible
Subordinated Debentures;
6.50%; 4/1/01 110,000(c) 183,425
Drugs (0.25%)
Genzyme Corp.
Convertible Notes;
6.75%; 10/1/01 100,000 99,375
Industrial Inorganic
Chemicals (1.09%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 150,000(c) 145,312
ICN Pharmaceuticals, Inc.
Convertible Subordinated
Debentures; 8.50%; 11/15/99 300,000 292,500
437,812
Nursing & Personal Care
Facilities (0.55%)
Greenery Rehabilitation Group, Inc.
Convertible Senior Subordinated
Notes; 8.75%; 4/1/15 250,000 222,500
Plumbing, Heating,
Air-Conditioning (0.09%)
Metalclad Corp. Convertible
Subordinated Debentures;
8.00%; 6/1/97 75,000(c) 35,906
Sanitary Services (0.40%)
Enclean, Inc. Convertible
Subordinated Debentures;
7.50%; 8/1/01 100,000 104,259
Sanifill, Inc. Convertible
Subordinated Debentures;
7.50%; 6/1/06 50,000 56,500
160,759
Total Bonds 1,139,777
Commercial Paper (11.65%)
Life Insurance (4.68%)
American General Finance Corp.;
6.15%; 7/3/95 880,000 880,000
Prudential Funding Corp.;
6.02%; 7/7/95 1,000,000 999,331
1,879,331
Motor Vehicles & Equipment (2.30%)
Ford Motor Credit Co.;
5.93%; 7/3/95 925,000 925,000
Personal Credit Institutions (2.26%)
Household Finance Corp.;
5.96%; 7/5/95 910,000 909,699
Petroleum Refining (2.41%)
Chevron Oil Finance Co.;
5.92%; 7/6/95 970,000 969,521
Total Commercial Paper 4,683,551
Total Portfolio Investments (100.95%) 40,598,652
Liabilities, net of cash
and receivables (-0.95%) (381,251)
Total Net Assets (100.00%) $40,217,401
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Non-income producing security - Security in default.
(c) Restricted Security - See Note 4 to the financial statements.
<PAGE>
PRINCIPAL GOVERNMENT SECURITIES
FUND, INC.
Description of Issue Principal
Type Rate Maturity Amount Value
Government National Mortgage Association (GNMA)
Certificates (18.97%)
GNMA I 7.00% 1/15/24 $ 965,677$ 950,758
GNMA I 8.00 10/15/16 454,962 470,167
GNMA I 8.00 1/15/17 609,722 629,325
GNMA I 8.00 4/15/17 614,602 633,525
GNMA I 8.00 6/15/17 658,647 678,926
GNMA I 8.50 2/15/17 384,737 402,597
GNMA I 8.50 2/15/17 306,308 320,526
GNMA I 8.50 2/15/17 310,613 325,032
GNMA I 8.50 3/15/17 371,710 388,965
GNMA I 8.50 4/15/17 263,115 275,678
GNMA I 8.50 4/15/17 493,732 517,307
GNMA I 8.50 6/15/17 501,393 524,668
GNMA I 8.50 6/15/17 47,601 49,811
GNMA I 8.50 8/15/17 353,793 370,686
GNMA I 8.50 3/15/20 176,478 184,207
GNMA I 8.50 5/15/21 788,276 818,814
Total GNMA Certificates 7,540,992
Federal National Mortgage Association (FNMA)
Certificates (17.91%)
FNMA 6.00 11/1/23 1,220,218 1,143,003
FNMA 6.50 11/1/23 883,172 849,090
FNMA 6.50 5/1/24 980,001 942,183
FNMA 7.00 8/1/23 868,127 853,481
FNMA 7.50 4/1/22 689,821 692,035
FNMA 8.00 6/1/17 121,236 124,330
FNMA 8.00 6/1/17 47,930 49,252
FNMA 8.00 10/1/21 290,316 296,859
FNMA 8.00 11/1/21 283,300 289,686
FNMA 8.01 2/16/99 900,000 912,158
FNMA Major 7.50 4/1/22 606,048 607,994
FNMA Major 8.00 10/1/21 354,753 361,408
Total FNMA Certificates 7,121,479
Federal Home Loan Mortgage Corporation
(FHLMC) Certificates (21.81%)
FHLMC 7.50 3/1/23 375,696 377,019
FHLMC Gold 5.50 3/1/24 582,928 538,287
FHLMC Gold 6.00 12/1/23 1,000,308 937,709
FHLMC Gold 6.50 4/1/24 939,300 903,710
FHLMC Gold 6.50 7/1/24 515,067 495,551
FHLMC Gold 7.00 9/1/23 952,702 936,926
FHLMC Gold 7.00 12/1/23 921,792 906,527
FHLMC Gold 7.00 1/1/24 919,766 904,534
FHLMC Gold 7.50 2/1/22 223,467 224,253
FHLMC Gold 7.50 3/1/22 546,101 548,023
FHLMC Gold 7.50 6/1/24 955,766 959,131
FHLMC Gold 8.00 11/1/21 919,220 936,823
Total FHLMC Certificates 8,668,493
Student Loan Marketing Association
(SLMA)Certificates (19.42%)
Student Loan Marketing Association
Debentures; 7.30%; 8/1/12 $6,500,000 $ 6,698,562
Student Loan Marketing Association
Notes; 7.82%; 10/14/99 1,000,000 1,020,984
Total SLMA Certificates 7,719,546
Private Export Funding Corporation (PEFCO)
Certificates (18.05%)
Private Export Funding Corp.
Secured Notes;9.45%; 12/31/99 4,500,000 5,053,320
Private Export Funding Corp. Series SS
Secured Notes;5.80%; 2/1/04 2,200,000 2,120,756
Total PEFCO Certificates 7,174,076
Federal Agency Short-Term Obligations (2.31%)
Federal Home Loan Mortgage Corp.;
6.10%; 7/3/95 920,000 920,000
Total Portfolio Investments (98.47%) 39,144,586
Cash and receivables, net
of liabilities (1.53%) 609,314
Total Net Assets (100.00%) $39,753,900
<PAGE>
PRINCIPAL GROWTH FUND, INC.
Shares
Held Value
Common Stocks (80.69%)
Blast Furnace & Basic Steel
Products (1.48%)
Lukens, Inc. 12,500$ 403,125
Carpets & Rugs (1.87%)
Shaw Industries, Inc. 30,000 510,000
Cash Grains (2.31%)
Pioneer International Hi-Bred 15,000 630,000
Commercial Banks (7.33%)
Banc One Corp. 15,000 483,750
Barnett Banks, Inc. 5,000 256,250
Baybanks, Inc. 5,000 396,250
Boatmen's Banschares, Inc. 6,000 211,500
Firstar Corp. 15,000 504,375
Princeton National Bancorp., Inc. 10,000 142,500
1,994,625
Communications Equipment (1.21%)
Northern Telecom Ltd. 9,000 328,500
Computer & Data Processing
Services (3.27%)
Legent Corp. 10,000(a) 437,500
Microsoft Corp. 5,000(a) 451,875
889,375
Computer & Office Equipment (0.65%)
Automatic Data Processing, Inc. 2,800 176,050
Consumer Products (2.73%)
Philip Morris Cos., Inc. 10,000 743,750
Department Stores (1.53%)
May Department Stores 10,000 416,250
Drugs (4.76%)
Bristol-Myers Squibb Co. 4,000 272,500
Johnson & Johnson 5,000 338,125
Lilly (Eli) & Co. 5,000 392,500
Merck & Co., Inc. 6,000 294,000
1,297,125
Eating & Drinking Places (1.01%)
McDonald's Corp. 7,000 273,875
Electronic Components
& Accessories (1.39%)
Vishay Intertechnology, Inc. 10,500(a) 379,312
Electronic Distribution
Equipment (1.03%)
General Electric Co. 5,000 281,875
Footwear, Except Rubber (1.14%)
Stride Rite Corp. 30,000 311,250
General Industrial Machinery (2.99%)
Ingersoll-Rand Co. 10,000 382,500
Tyco International Ltd. 8,000 432,000
814,500
Grain Mill Products (2.76%)
Ralcorp Holdings, Inc. 15,000(a) 343,125
Ralston-Ralston Purina Group 8,000 408,000
751,125
Hose, Belting, Gaskets &
Packing (1.58%)
Mark IV Industries 20,000 430,000
Hospitals (0.97%)
Humana, Inc. 15,000(a) 264,375
Household Furniture (1.49%)
Masco Corp. 15,000 405,000
Knitting Mills (1.06%)
Russell Corp. 10,000 287,500
Lumber & Other Building
Materials (1.79%)
Home Depot, Inc. 12,000 487,500
Medical Instruments & Supplies (2.48%)
Becton, Dickinson & Co. 6,000 349,500
Boston Scientific Corp. 10,245(a) 326,559
676,059
Medical Service & Health
Insurance (5.24%)
Aon Corp. 10,000 $ 372,500
Foundation Health Corp. 10,000(a) 270,000
Health System International, Inc. 2,500(a) 72,500
United Healthcare Corp. 7,500 310,313
Value Health, Inc. 12,500(a) 403,125
1,428,438
Miscellaneous Electrical Equipment
& Supplies (2.46%)
Motorola, Inc. 10,000 671,250
Miscellaneous Fabricated Metal
Products (1.39%)
Intel Corp. 6,000 379,875
Miscellaneous Plastics Products,
NEC (1.02%)
Rubbermaid, Inc. 10,000 277,500
Miscellaneous Shopping Goods
Stores (1.61%)
Toys 'R' Us, Inc. 15,000(a) 438,750
Motor Vehicles & Equipment (2.81%)
Chrysler Corp. 10,000 478,750
Dana Corp. 10,000 286,250
765,000
Offices & Clinics of Medical
Doctors (0.42%)
FHP International Corp. 5,000 115,000
Paints & Allied Products (1.09%)
RPM, Inc. 15,000 298,125
Petroleum Refining (1.99%)
Atlantic Richfield Co. 3,000 329,250
Exxon Corp. 3,000 211,875
541,125
Preserved Fruits & Vegetables (1.59%)
CPC International, Inc. 7,000 432,250
Refrigeration & Service
Machinery (0.81%)
Tecumseh Products Co.; Class A 5,000 220,000
Rubber & Plastics Footwear (1.23%)
Nike, Inc. 4,000 336,000
Sanitary Services (2.89%)
Browning-Ferris Industries, Inc. 10,000 361,250
WMX Technologies, Inc. 15,000 425,625
786,875
Security Brokers & Dealers (1.47%)
Salomon, Inc. 10,000 401,250
Soap, Cleaners & Toilet Goods (4.89%)
Colgate-Palmolive Co. 7,000 511,875
Ecolab, Inc. 15,000 367,500
Smithkline Beecham PLC ADR 10,000 452,500
1,331,875
Toys & Sporting Goods (1.34%)
Mattel, Inc. 14,000 364,000
Variety Stores (1.47%)
Wal-Mart Stores, Inc. 15,000 401,250
Women's Clothing Stores (0.14%)
Charming Shoppes, Inc. 7,300 38,325
Total Common Stock 21,978,059
Preferred Stocks (1.06%)
Offices & Clinics of Medical
Doctors (1.06%)
FHP International Corp.;
Series A Convertible 12,182 289,323
Principal
Amount Value
Commercial Paper (16.41%)
Life Insurance (4.40%)
Prudential Funding Corp.
6.02%; 7/7/95 $1,200,000 $ 1,199,197
Motor Vehicles & Equipment (4.41%)
Ford Motor Credit Co.;
5.93%; 7/3/95 1,200,000 1,200,000
Personal Credit Institutions (4.41%)
Household Finance Corp.;
5.96%; 7/5/95 1,200,000 1,199,603
Petroleum Refining (3.19%)
Chevron Oil Finance Co.;
5.92%; 7/3/95 870,000 870,000
Total Commercial Paper 4,468,800
Federal Agency Short-Term Obligation (4.90%)
Federal National Mortgage Association
5.92%; 7/6/95 1,335,000 1,334,342
Total Portfolio Investments (103.06%) 28,070,524
Liabilities net of cash
and receivables (-3.06%) (834,332)
Total Net Assets (100.00%) $27,236,192
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
PRINCIPAL HIGH YIELD FUND, INC.
Principal
Amount Value
Bonds (95.36%)
Agricultural Chemicals (2.76%)
IMC Fertilizer Group, Inc.
Senior Debentures;
9.45%; 12/15/11 $300,000 $ 303,000
Aircraft & Parts (2.48%)
Rohr Industries, Inc.
Subordinated Debentures;
9.25%; 3/1/17 300,000 273,000
Blast Furnace & Basic Steel
Products (2.58%)
Weirton Steel Corp.
Senior Notes;
10.75%; 6/1/05 300,000(a) 282,750
Broadwoven Fabric Mills,
Cotton (2.57%)
J.P. Stevens & Co. Inc.
Sinking Fund Debentures;
9.00%; 3/1/17 300,000 282,000
Cable & Other Pay TV
Services (2.85%)
Jones Intercable, Inc.
Senior Notes;9.63%; 3/15/02 300,000 312,750
Communication Equipment (2.82%)
Rogers Cantel Mobile, Inc.
Senior Secured Guaranteed
Notes;10.75%; 11/1/01 300,000 309,375
Computer & Office Equipment(4.01%)
Dell Computer Corp.
Senior Notes;11.00%; 8/15/00 400,000 440,000
Consumer Products (3.72%)
RJR Nabisco, Inc. Senior Notes;
8.75%; 8/15/05 400,000 408,500
Electric Services (3.67%)
Tucson Electric Power Co.
First Mortgage Bonds;
8.50%; 11/1/99 400,000 402,919
Engines & Turbines (2.57%)
Outboard Marine Debentures;
9.13%; 4/15/17 300,000 282,000
Ferroalloy Ores, Except
Vanadium (2.00%)
Geneva Steel Co. Senior Notes;
9.50%; 1/15/04 300,000 219,000
Forest Products (2.69%)
Doman Industries, Ltd. Senior
Notes; 8.75%; 3/15/04 300,000 295,191
Fuel Dealers (2.61%)
Petroleum Heat & Power, Inc.
Subordinated Notes;
10.13%; 4/1/03 300,000 286,500
General Government, NEC (2.00%)
Republic of Argentina Global
Bonds; 8.38%; 12/20/03 300,000 219,750
Groceries & Related Products (5.60%)
Fleming Cos., Inc. Senior Notes;
10.63%; 12/15/01 300,000 315,750
Rykoff-Sexton, Inc. Senior
Subordinated Notes;
8.88%; 11/1/03 300,000 298,500
614,250
Grocery Stores (7.70%)
Dominick's Finer Foods, Inc.
Senior Subordinated Notes;
10.88%; 5/1/05 300,000(a) 303,750
Ralph's Grocery Co.
Senior Subordinated Notes;
11.00%; 6/15/05 300,000 291,000
Stater Brothers Holdings, Inc.
Senior Notes;
11.00%; 3/1/01 250,000 250,000
844,750
Hotels & Motels (5.28%)
Bally's Grand, Inc. First Mortgage
Notes; 10.38%; 12/15/03 300,000 294,000
John Q. Hammons Hotels, L.P. &
Finance Corp. First Mortgage
Notes; 8.88%; 2/15/04 300,000 285,750
579,750
Knitting Mills (2.75%)
Tultex Corp. Senior Notes
10.63%; 3/15/05 300,000 301,875
Meat Products (2.79%)
Chiquita Brands International, Inc.
Subordinated Notes;
11.50%; 6/1/01 300,000 306,000
Miscellaneous Converted Paper
Products (2.76%)
Drypers Corp. Senior Notes;
12.50%; 11/1/02 300,000 303,000
Miscellaneous General Merchandise
Stores (2.16%)
Service Merchandise, Inc. Senior
Subordinated Notes;
9.00%; 12/15/04 300,000 237,000
Miscellaneous Plastics Products,
NEC (5.45%)
Congoleum Corp. Senior Notes;
9.00%; 2/1/01 300,000 292,500
Plastic Containers, Inc. Senior
Secured Notes; 10.75%; 4/1/01 300,000 306,000
598,500
Motor Vehicles & Equipment (2.58%)
Lear Seating Corp. Subordinated
Notes; 8.25%; 2/1/02 300,000 283,500
Paper Mills (2.75%)
Southwest Forest Industries, Inc.
Subordinated Debentures;
12.13%; 9/15/01 300,000 301,875
Petroleum Refining (2.86%)
Crown Central Petroleum Corp.
Senior Notes;10.88%; 2/1/05 300,000 313,500
Pulp Mills (3.36%)
Magnetek, Inc. Senior Subordinated
Debentures; 10.75%; 11/15/98 350,000 369,250
Refrigeration & Service
Machinery (2.40%)
Inter-City Products Corp. Senior
Secured Notes; 9.75%; 3/1/00 300,000 264,000
Soap, Cleaners & Toilet Goods (2.77%)
Coty, Inc. Senior Subordinated
Notes; 10.25%; 5/1/05 300,000 304,500
Telephone Communication (4.82%)
Paging Network, Inc. Senior
Debentures; 8.88%; 2/1/06 300,000 276,000
Roger's Cablesystems Ltd. Senior
Secured Second Priority Notes;
9.63%; 8/1/02 250,000 253,125
529,125
Total Portfolio Investments (95.36%) 10,467,610
Cash and receivables, net of liabilities (4.64%) 509,612
Total Net Assets (100.00%) $10,977,222
(a) Restricted Security - See Note 4 to the financial statements.
<PAGE>
PRINCIPAL MONEY MARKET FUND, INC.
Principal
Amount Value
Commercial Paper (99.57%)
Business Credit Institutions (10.25%)
CIT Group Holdings, Inc.;
6.02%; 8/29/95 $350,000 $346,664
Corporate Asset Funding Co., Inc.;
5.72%; 9/15/95 625,000 617,651
5.80%; 9/27/95 325,000 320,497
5.75%; 9/28/95 425,000 419,094
International Lease Finance Corp.;
6.04%; 7/31/95 191,000 190,103
5.72%; 9/13/95 175,000 172,998
5.85%; 9/18/95 175,000 172,810
5.78%; 9/25/95 375,000 369,943
5.78%; 10/02/95 250,000 246,347
2,856,107
Computer & Office Equipment (9.69%)
Xerox Corp.;
6.03%; 7/7/95 275,000 274,816
5.70%; 9/11/95 250,000 247,229
5.82%; 9/13/95 475,000 469,471
5.75%; 9/21/95 375,000 370,208
Xerox Credit Corp.;
5.93%; 8/15/95 500,000 496,458
5.93%; 8/21/95 300,000 297,579
5.93%; 8/22/95 300,000 297,529
5.68%; 9/11/95 250,000 247,239
2,700,529
Electric Services (5.11%)
CommEd Fuel Co., Inc.;
LOC Credit Suisse;
5.93%; 8/10/95 250,000 248,435
FPL Fuels, Inc.;
LOC Barclays Bank PLC;
5.94%; 8/8/95 275,000 273,367
Potomac Electric Power Co.;
5.97%; 8/11/95 425,000 422,251
5.97%; 8/16/95 185,000 183,650
5.98%; 8/22/95 300,000 297,508
1,425,211
Electronic Distribution
Equipment (7.67%)
General Electric Capital Corp.;
6.10%; 8/3/95 320,000 318,319
6.00%; 8/4/95 275,000 273,533
5.91%; 8/17/95 350,000 347,414
5.87%; 9/14/95 400,000 395,239
General Electric Co.;
5.97%; 7/6/95 210,000 209,896
6.00%; 8/23/95 300,000 297,450
5.77%; 9/29/95 300,000 295,769
2,137,620
Farm & Garden Machinery (4.92%)
Deere (John) Capital Corp.;
5.92%; 8/7/95 320,000 318,158
5.90%; 8/30/95 400,000 396,198
5.66%; 9/12/95 325,000 321,372
5.82%; 10/12/95 340,000 334,448
1,370,176
Life Insurance (13.95%)
American General Corp.;
5.88%; 7/3/95 325,000 325,000
5.98%; 7/26/95 225,000 224,140
5.87%; 8/28/95 260,000 257,626
5.87%; 9/22/95 375,000 370,047
5.73%; 10/20/95 200,000 196,530
American General Finance Corp.;
6.07%; 7/11/95 465,000 464,373
6.07%; 7/17/95 400,000 399,056
5.95%; 7/26/95 175,000 174,335
6.13%; 8/1/95 225,000 223,889
Prudential Funding Corp.;
5.84%; 9/19/95 395,000 390,002
5.78%; 9/21/95 350,000 345,504
5.76%; 9/25/95 175,000 172,648
5.78%; 9/26/95 350,000 345,224
3,888,374
Meat Products (2.58%)
Cargill, Inc.;
5.92%; 7/24/95 400,000 398,619
5.72%; 10/13/95 325,000 319,733
718,352
Motor Vehicles & Equipment (7.12%)
Ford Motor Credit Co.;
5.89%; 7/14 /95 200,000 199,640
6.08%; 7/18/95 220,000 219,443
6.07%; 7/19/95 250,000 249,326
Paccar Financial Corp.;
6.00%; 8/3/95 $ 465,000 $ 462,597
5.90%; 8/14/95 400,000 397,247
5.93%; 8/18/95 460,000 456,514
1,984,767
Non-Classifiable Establishments (4.46%)
Mitsubishi International Corp.
6.07%; 7/5/95 500,000 499,832
6.04%; 7/11/95 500,000 499,329
5.75%; 11/14/95 250,000 244,649
1,243,810
Personal Credit Institutions (15.84%)
American Express Credit Corp.;
6.10%; 7/21/95 345,000 343,948
6.08%; 7/25/95 350,000 348,699
6.08%; 8/8/95 275,000 273,328
6.02%; 8/25/95 400,000 396,455
Associates Corp. of North America;
5.80%; 9/27/95 170,000 167,645
Avco Financial Services, Inc.;
5.95%; 8/9/95 400,000 397,554
5.86%; 9/11/95 625,000 617,878
Household Finance Corp.;
6.01%; 7/20/95 600,000 598,297
Norwest Financial, Inc.;
6.05%; 7/10/95 500,000 499,412
6.05%; 7/13/95 150,000 149,748
6.00%; 7/24/95 375,000 373,688
5.94%; 8/24/95 250,000 247,855
4,414,507
Security Brokers & Dealers (10.23%)
Bear Stearns Cos., Inc.;
6.04%; 7/28/95 1,000,000 995,806
Goldman Sachs Group, L.P.;
5.90%; 9/6/95 175,000 173,136
5.90%; 9/7/95 425,000 420,403
6.90%; 9/18/95 250,000 246,310
6.96%; 9/20/95 150,000 147,709
5.88%; 10/3/95 300,000 295,492
Merrill Lynch & Co., Inc.;
6.02%; 8/2/95 575,000 572,115
2,850,971
Subdividers & Developers (7.75%)
Maguire/Thomas Partners
Westlake/Southlake Partnership;
LOC Sumitomo Bank Ltd.;
6.05%; 7/27/95 400,000 398,386
5.94%; 9/8/95 525,000 519,196
5.88%; 9/20/95 350,000 345,484
Towson Town Center, Inc.;
LOC Mitsubishi Bank Ltd.;
5.97%; 7/12/95 250,000 249,627
6.02%; 7/19/95 650,000 648,261
2,160,954
Total Portfolio Investments (99.57%) 27,751,378
Cash and receivables, net
of liabilities (0.43%) 119,882
Total Net Assets (100.00%) $27,871,260
<PAGE>
PRINCIPAL WORLD FUND, INC.
Shares
Held Value
Common Stocks (91.37%)
AUSTRALIA (4.63%)
Commercial Banks (2.42%)
National Australia Bank Ltd. 71,109 $560,495
Crude Petroleum & Natural
Gas (0.47%)
Ampolex Ltd. 48,100 109,103
Gas Production & Distribution (0.82%)
Australia Gas & Light 60,000 190,109
Miscellaneous Food &
Kindred Products (0.92%)
Burns, Philp & Co., Ltd. 101,631 211,795
1,071,502
AUSTRIA (1.38%)
Airports, Flying Fields
& Services (0.74%)
Flughafen Wien AG 3,230 171,891
Railroad Equipment (0.64%)
Vae AG 1,470 148,001
319,892
CANADA (3.04%)
Coal Mining Services (0.26%)
Morgan Hydrocarbons, Inc. 20,600(a) 59,976
Communications Equipment (1.32%)
Newbridge Networks Corp. 8,700(a) 306,675
Iron & Steel Foundries (1.16%)
DoFasco, Inc. 21,400 268,692
Miscellaneous Plastics
Products, NEC (0.30%)
Royal Plastics Group 5,100(a)(b) 70,067
705,410
CHILE (0.56%)
Telephone Communication (0.56%)
Compania De
Telecommunicaciones ADR 1,600 130,200
DENMARK (0.96%)
Telephone Communication (0.96%)
Tele Danmark B 4,000 222,550
FINLAND (3.86%)
Forest Products (0.61%)
Metsa-Serla 3,200 142,139
FINLAND (con't.)
Miscellaneous Wood Products (0.87%)
Enso-Gutzeit 22,300 201,755
Pulp Mills (1.36%)
Kymmene 10,100 314,037
Sugar & Confectionary
Products (1.02%)
Huhtamake I Free 7,200 235,651
893,582
FRANCE (1.55%)
Drugs (1.55%)
Roussel-Uclaf 2,300 359,174
GERMANY (4.51%)
Flat Glass (0.50%)
Weru AG 200 115,597
Industrial Inorganic Chemicals (1.60%)
Bayer AG 1,490 369,991
Miscellaneous Chemical
Products (2.41%)
Hoechst AG 2,590 558,560
1,044,148
HONG KONG (5.26%)
Communications Equipment (0.50%)
ABC Communications
Holdings Ltd. 420,000 116,704
Electric Services (0.67%)
CEP-A Consolidated Electric
Power-Asia 67,000 155,431
Electronic Components &
Accessories (0.48%)
Varitronix 63,000 110,326
Highway & Street
Construction (0.37%)
Wai Kee Holdings, Ltd. 446,000 84,733
Holding Offices (1.29%)
First Pacific Co. Ltd. 337,272 298,586
Office Furniture (0.14%)
Lamex Holdings 242,000 32,840
Personal Credit Institutions (0.71%)
Manhattan Card Co. 402,000 163,657
Security Brokers & Dealers (1.10%)
Peregrine Investment Holdings 180,000 255,897
1,218,174
INDONESIA (1.87%)
Miscellaneous Furniture
& Fixtures (0.23%)
Pt Surya Toto 29,000$ 54,041
Photographic Equipment
& Supplies (0.21%)
Pt Modern Photo Film Co. 9,000 48,900
Pulp Mills (1.43%)
Asia Pacific Resources 36,300(a) 331,238
434,179
ITALY (2.97%)
Metalworking Machinery (0.23%)
Danieli & Co.-DR 17,400 52,880
Telephone Communication (2.74%)
Telecom Italia-DI 300,200 634,510
687,390
JAPAN (0.86%)
Computer & Office Equipment (0.28%)
Canon, Inc. 4,000 65,018
Electronic Components
& Accessories (0.16%)
Murata Mfg. 1,000 37,809
Engines & Turbines (0.42%)
Mabuchi Motor 1,400 96,301
199,128
MALAYSIA (0.80%)
Holding Offices (0.61%)
C.I. Holdings 34,000 140,854
Non-Classifiable
Establishments (0.19%)
Malaysian Pacific Industries 18,000 45,037
185,891
MEXICO (1.12%)
Aircraft & Parts (0.09%)
Tolmex SA 5,100 19,907
Cement, Hydraulic (0.11%)
Apasco SA 6,320(a) 25,175
Concrete, Gypsum, & Plaster
Products (0.05%)
Cementos De Mexico SA 3,200 11,467
Department Stores (0.05%)
Sears Roebuck De Mexico SA 5,300(a) 12,718
Foreign Banks, Branches
& Agencies (0.30%)
Grupo Financiero Bancomer;
Series B 235,000(a) 67,669
Series L 8,703(a) 2,242
69,911
Telephone Communication (0.52%)
Telefonos De Mexico SA ADR 4,050 119,981
259,159
NETHERLANDS (16.37%)
Beer, Wine, & Distilled
Beverages (0.35%)
Heineken Holdings 520 72,105
Heineken Holdings 25% Bonus Issue 263(a) 9,058
81,163
Communications Services, NEC (2.51%)
KPN Royal PTT Nederland 16,189 581,570
Electronic Light & Wiring
Equipment (0.59%)
Otra 650 136,036
Electronic Distribution
Equipment (2.45%)
Phillips Electronics 13,400 566,937
Foreign Banks, Branches &
Agencies (1.99%)
ABN-AMRO Holdings NV 11,957 461,177
Grocery Stores (1.56%)
Koninklijke Ahold NV 10,064 360,239
Meat Products (2.49%)
Unilever NV 4,430 575,998
Miscellaneous Durable Goods (1.74%)
Hagemeyer NV 9,050 403,323
Miscellaneous Transportation
Services (0.70%)
Koninklijke Pakhoed NV 5,281 161,444
Paperboard Containers & Boxes (0.57%)
Koninklijke KNP BT NV 4,400(b) 132,241
Plastic Materials & Synthetics (0.48%)
DSM NV 1,300 111,931
Special Industry Machinery (0.94%)
IHC Caland NV 7,700 218,509
3,790,568
NORWAY (2.83%)
Commercial Banks (0.74%)
Christiana Bank 74,000 171,646
Drugs (0.19%)
Hafslund Nycomed 1,867 43,154
Meat Products (1.01%)
Orkla B 5,500 232,847
Ship & Boat Building &
Repairing (0.89%)
Unitor Ships Service 11,930 207,058
654,705
NEW ZEALAND (0.84%)
Miscellaneous Manufacturers (0.84%)
Carter Holt Harvey Ltd. 80,000 195,663
SINGAPORE (1.57%)
Air Transportation,
Scheduled (0.44%)
Singapore International Airlines 11,000 101,538
Electric Light & Wiring
Equipment (0.25%)
Clipsal Industries Holdings 25,000 57,750
Electronic Components &
Accessories (0.88%)
Amtek Engineering 139,500 203,633
362,921
SPAIN (6.16%)
Combination Utility
Services ( 1.15%)
Iberdrola 1 SA 35,300 265,865
Commercial Banks (1.36%)
Banco Popular 2,120 315,138
Oil & Gas Field Services (2.29%)
Repsol Petroleo, SA 16,860 530,486
Telephone Communication (1.36%)
Telefonica De Espana, SA 24,400 314,345
1,425,834
SWEDEN (7.28%)
Carpentry & Floor Work (0.25%)
Skane-Gripen AB 'B' Free 6,600 58,009
Foreign Banks, Branches
& Agencies (1.37%)
Svenska Handelsbanken AB Free 22,500 316,723
Household Audio & Video
Equipment (0.98%)
SKF 'B' Free 11,300 228,123
Miscellaneous Transportation
Equipment (0.50%)
Autoliv AB 2,150 114,858
Motor Vehicles & Equipment (1.35%)
Volvo AB 16,450 312,888
Plastic Materials & Synthetics (1.43%)
Astra AB 11,000 330,834
Water Transportation of
Freight, NEC (1.40%)
Argonaut AB 'B' Free 25,700(a) 42,353
ICB Shipping AB 'B' Free 32,000 281,257
323,610
1,685,045
SWITZERLAND (10.33%)
Combination Utility Services (1.27%)
BBC AG (Brown Boveri) 285 $294,866
Drugs (2.34%)
Galenica Holdings AG 480 168,733
Immuno International AG 120 56,453
Sandoz AG 460 317,017
542,203
Functions Closely Related to
Banking (1.47%)
Bil GT Group 605 339,753
Plumbing & Heating, Except
Electric (0.22%)
Elco Holdings 140 51,887
Pulp Mills (0.38%)
Attisholz AG 110 87,838
Special Industry Machinery (2.15%)
Bobst SA 205 311,384
Sulzer AG 290 187,525
498,909
Sugar & Confectionary
Products (2.50%)
Nestle 555 577,586
2,393,042
THAILAND (1.25%)
Commercial Banks (0.96%)
Bangkok Bank 20,100 221,478
Non-Classifiable Establishments (0.29%)
Thailand International Fund 2 67,000
288,478
UNITED KINGDOM (11.37%)
Commercial Banks (1.24%)
Bank of Ireland 50,000 286,362
Construction & Related
Machinery (1.72%)
Powerscreen International PLC 78,100 398,219
Crude Petroleum & Natural
Gas (0.96%)
Hardy Oil & Gas 86,200 221,474
Electric Services (1.57%)
Northern Ireland Electric 63,400 363,107
Miscellaneous Non-Durable
Goods (1.97%)
Grand Metropolitan PLC 74,500 456,902
Primary Nonferrous Metals (1.43%)
British Steel PLC 121,300 331,437
Pulp Mills (0.41%)
Babcock International Group 205,000 96,209
Sand & Gravel (0.16%)
Bardon Group PLC 75,900 36,225
Telephone Communication (1.21%)
Cable & Wireless PLC 41,000 280,476
Water Supply (0.70%)
Wessex Water PLC 34,316 161,596
2,632,007
Total Common Stocks 21,158,642
Preferred Stocks (0.63%)
AUSTRIA (0.63%)
Highway & Street Construction (0.63%)
BAU Holdings AG 3,030 146,306
Commercial Paper (9.50%)
Principal
Amount Value
UNITED STATES (9.50%)
Life Insurance (4.75%)
American General Corp.;
6.15%; 7/3/95 $1,100,000 $1,100,000
Personal Credit
Institutions (4.75%)
Associates Corp. of
North America
6.22%; 7/3/95 1,100,000 1,100,000
Total Commercial Paper 2,200,000
Total Portfolio Investments (101.50%) 23,504,948
Liabilities, net of cash
and receivables (-1.50%) (348,348)
Total Net Assets (100.00%) $23,156,600
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Restricted Security - See Note 4 to the financial statements.
<PAGE>
This page left blank intentionally.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
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
<S> <C> <C> <C> <C> <C> <C> <C>
Principal Aggressive
Growth Fund, Inc.
Six Months Ended June 30, 1995 $10.11 $.07 $2.25 $2.32 $-- $(.05) $(.05)
Period Ended December 31, 1994(d) 9.92 .05 .24 .29 (.05) (.05) (.10)
Principal Asset
Allocation Fund, Inc.
Six Months Ended June 30, 1995 9.79 .22 .94 1.16 (.01) -- (.01)
Period Ended December 31, 1994(d) 9.98 .23 (.18) .05 (.23) (.01) (.24)
Principal Balanced Fund, Inc.(g)
Six Months Ended June 30, 1995 11.95 .25 1.27 1.52 (.01) (.20) (.21)
Year Ended December 31,
1994 12.77 .37 (.64) (.27) (.37) (.18) (.55)
1993 12.58 .42 .95 1.37 (.42) (.76) (1.18)
Six Months Ended December 31, 1992(a) 12.93 .23 .75 .98 (.47) (.86) (1.33)
Year Ended June 30,
1992 11.33 .47 1.61 2.08 (.48) -- (.48)
1991 10.79 .54 .59 1.13 (.57) (.02) (.59)
1990 11.89 .60 (.48) .12 (.63) (.59) (1.22)
Principal Bond Fund, Inc.
Six Months Ended June 30, 1995 10.12 .37 1.07 1.44 (.01) -- (.01)
Year Ended December 31,
1994 11.16 .72 (1.04) (.32) (.72) -- (.72)
1993 10.77 .88 .38 1.26 (.87) -- (.87)
Six Months Ended December 31, 1992(a) 11.08 .45 .13 .58 (.89) -- (.89)
Year Ended June 30,
1992 10.64 .91 .46 1.37 (.93) -- (.93)
1991 10.72 .94 (.06) .88 (.96) -- (.96)
1990 10.92 .95 (.21) .74 (.94) -- (.94)
Principal Capital
Accumulation Fund, Inc.
Six Months Ended June 30, 1995 23.44 .30 2.95 3.25 (.01) (.53) (.54)
Year Ended December 31,
1994 24.61 .62 (.49) .13 (.61) (.69) (1.30)
1993 25.19 .61 1.32 1.93 (.60) (1.91) (2.51)
Six Months Ended December 31, 1992(a) 26.03 .31 1.84 2.15 (.64) (2.35) (2.99)
Year Ended June 30,
1992 23.35 .65 2.70 3.35 (.67) -- (.67)
1991 22.48 .74 1.22 1.96 (.79) (.30) (1.09)
1990 23.63 .79 .14 .93 (.81) (1.27) (2.08)
Principal Emerging
Growth Fund, Inc.(f)
Six Months Ended June 30, 1995 19.97 .11 3.02 3.13 -- (.01) (.01)
Year Ended December 31,
1994 20.79 .14 .03 .17 (.14) (.85) (.99)
1993 18.91 .17 3.47 3.64 (.17) (1.59) (1.76)
Six Months Ended December 31, 1992(a) 15.97 .10 3.09 3.19 (.21) (.04) (.25)
Year Ended June 30,
1992 13.93 .21 2.04 2.25 (.21) -- (.21)
1991 14.25 .20 .50 .70 (.23) (.79) (1.02)
1990 13.35 .24 .87 1.11 (.20) (.01) (.21)
<FN>
See accompanying notes.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio
End of Total End of Period Average Average Turnover
Period Return (in thousands) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C>
$12.38 30.31% $ 22,333 .95%(b) 1.33%(b) 145.7%(b)
10.11 2.59%(c) 13,770 1.03%(b) 1.06%(b) 105.6%(b)
10.94 13.58% 34,385 .91%(b) 4.39%(b) 42.9%(b)
9.79 .52%(c) 28,041 .95%(b) 4.27%(b) 60.7%(b)
13.26 13.92% 34,029 .67%(b) 4.30%(b) 25.2%(b)
11.95 (2.09)% 25,043 .69% 3.42% 31.5%
12.77 11.06% 21,399 .69% 3.30% 15.8%
12.58 8.00%(c) 18,842 .73%(b) 3.71%(b) 38.4%(b)
12.93 18.78% 17,344 .72% 3.80% 26.6%
11.33 11.36% 14,555 .73% 5.27% 27.1%
10.79 .87% 13,016 .74% 5.52% 33.1%
11.55 16.48% 23,878 .58(b) 7.73%(b) 4.3%(b)
10.12 (2.90)% 17,108 .58% 7.86% 18.2%
11.16 11.67% 14,387 .59% 7.57% 14.0%
10.77 5.33%(c) 12,790 .62%(b) 8.10%(b) 6.7%(b)
11.08 13.57% 12,024 .62% 8.47% 6.1%
10.64 8.94% 10,552 .63% 9.17% 2.7%
10.72 7.15% 9,658 .64% 9.09% 0.0%
26.15 18.41% 118,534 .52%(b) 2.38%(b) 52.7%(b)
23.44 .49% 120,572 .51% 2.36% 44.5%
24.61 7.79% 128,515 .51% 2.49% 25.8%
25.19 8.81%(c) 105,355 .55%(b) 2.56%(b) 39.7%(b)
26.03 14.53% 94,596 .54% 2.65% 34.8%
23.35 9.46% 76,537 .53% 3.53% 14.0%
22.48 3.94% 74,008 .56% 3.56% 30.2%
23.09 21.02% 40,217 .72%(b) 1.24%(b) 4.7%(b)
19.97 .78% 23,912 .74% 1.15% 12.0%
20.79 19.28% 12,188 .78% .89% 22.4%
18.91 20.12%(c) 9,693 .81%(b) 1.24%(b) 8.6%(b)
15.97 16.19% 7,829 .82% 1.33% 10.1%
13.93 5.72% 6,579 .89% 1.70% 11.1%
14.25 8.32% 6,067 .88% 1.74% 17.9%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
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
of Period Income Investments Operations Income Capital Gains
<S> <C> <C> <C> <C> <C> <C>
Principal Government Securities Fund, Inc.
Six Months Ended June 30, 1995
Year Ended December 31, $ 9.38 $ .33 $ .81 $1.14 $ (.02) $ --
1994 10.61 .76 (1.24) (.48) (.75) --
1993 10.28 .71 .33 1.04 (.71) --
Six Months Ended December 31, 1992(a) 10.93 .40 .04 .44 (.78) (.31)
Year Ended June 30,
1992 10.24 .80 .71 1.51 (.81) (.01)
1991 10.05 .80 .24 1.04 (.81) (.04)
1990 10.05 .78 -- .78 (.78) --
Principal Growth Fund, Inc.
Six Months Ended June 30, 1995 10.10 .11 1.26 1.37 -- --
Period Ended December 31, 1994(e) 9.60 .07 .51 .58 (.08) --
Principal High Yield Fund, Inc.
Six Months Ended June 30, 1995 7.91 .39 .41 .80 (.01) --
Year Ended December 31,
1994 8.62 .77 (.72) .05 (.76) --
1993 8.38 .80 .23 1.03 (.79) --
Six Months Ended December 31, 1992(a) 8.93 .45 (.10) .35 (.90) --
Year Ended June 30,
1992 8.28 .92 .66 1.58 (.93) --
1991 8.96 .99 (.53) .46 (1.14) --
1990 10.37 1.21 (1.35) (.14) (1.22) (.05)
Principal Money Market Fund, Inc.
Six Months Ended June 30, 1995 1.000 .028 -- .028 (.028) --
Year Ended December 31,
1994 1.000 .037 -- .037 (.037) --
1993 1.000 .027 -- .027 (.027) --
Six Months Ended December 31, 1992(a) 1.000 .016 -- .016 (.016) --
Year Ended June 30,
1992 1.000 .046 -- .046 (.046) --
1991 1.000 .070 -- .070 (.070) --
1990 1.000 .077 -- .077 (.077) --
Principal World Fund, Inc.
Six Months Ended June 30, 1995 9.56 .16 .50 .66 -- (.01)
Period Ended December 31, 1994(e) 9.94 .03 (.33) (.30) (.07) (.01)
<FN>
See accompanying notes.
</FN>
</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
Total End of Total End of Period Average Average Turnover
Distributions Period Return in thousands) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
$ (.02) $10.50 12.82% $39,754 .56%(b) 6.99%(b) 15.0%(b)
(.75) 9.38 (4.53)% 36,121 .56% 7.05% 23.2%
(.71) 10.61 10.07% 36,659 .55% 7.07% 20.4%
(1.09) 10.28 4.10%(c) 31,760 .59%(b) 7.35%(b) 34.5%(b)
(.82) 10.93 15.34% 33,022 .58% 7.84% 38.9%
(.85) 10.24 10.94% 26,021 .59% 8.31% 4.2%
(.78) 10.05 8.16% 21,488 .61% 8.48% 18.7%
-- 11.47 20.22% 27,236 .61%(b) 2.47%(b) 7.6%(b)
(.08) 10.10 5.42%(c) 13,086 .75%(b) 2.39%(b) 0.9%(b)
(.01) 8.70 12.99% 10,977 .75%(b) 9.62%(b) 42.1%(b)
(.76) 7.91 .62% 9,697 .73% 9.02% 30.6%
(.79) 8.62 12.31% 9,576 .74% 8.80% 28.7%
(.90) 8.38 4.06%(c) 8,924 .77%(b) 10.33%(b) 20.6%(b)
(.93) 8.93 20.70% 8,556 .77% 11.00% 31.3%
(1.14) 8.28 6.35% 7,085 .82% 12.58% 6.4%
(1.27) 8.96 (1.46)% 6,643 .83% 13.07% 24.2%
(.028) 1.000 2.82% 27,871 .59%(b) 5.56%(b) N/A
(.037) 1.000 3.76% 29,372 .60% 3.81% N/A
(.027) 1.000 2.69% 22,753 .60% 2.64% N/A
(.016) 1.000 1.54%(c) 27,680 .59%(b) 3.10%(b) N/A
(.046) 1.000 4.64% 25,194 .57% 4.54% N/A
(.070) 1.000 7.20% 26,509 .56% 6.94% N/A
(.077) 1.000 8.37% 26,588 .57% 8.05% N/A
(.01) 10.21 6.28% 23,157 .90%(b) 3.82%(b) 16.2%(b)
(.08) 9.56 (3.37)%(c) 13,746 1.24%(b) 1.31%(b) 14.4%(b)
<FN>
Notes to Financial Highlights
(a)Effective July 1, 1992 the fund changed its fiscal year end from
June 30 to December 31.
(b)Computed on an annualized basis.
(c)Total return amounts have not been annualized.
(d)Period from June 1, 1994, date shares first offered to public, through
December 31, 1994. Net investment income, aggregating $.01 per share for
Principal Aggressive Growth Fund, Inc. and $.01 per share for Principal Asset
Allocation Fund, Inc. for the period from the initial purchase of shares on
May 23, 1994 through May 31, 1994, was recognized, none of which was
distributed to the sole stockholder, Principal Mutual Life Insurance Company,
during the period. Additionally, Principal Aggressive Growth Fund, Inc. and
Principal Asset Allocation Fund, Inc. incurred unrealized losses on
investments of $.09 and $.03 per share, respectively, during the initial
interim period. This represented activities of each fund prior to the initial
public offering of fund shares.
(e)Period from May 1, 1994, date shares first offered to public, through
December 31, 1994. Net investment income, aggregating $.01 per share for
Principal Growth Fund, Inc. and $.04 per share for Principal World Fund, Inc.
for the period from the initial purchase of shares on March 23, 1994 through
May 31, 1994, was recognized, none of which was distributed to the sole
stockholder, Principal Mutual Life Insurance Company, during the period.
Additionally, Principal Growth Fund, Inc. and Principal World Fund, Inc.
incurred unrealized losses on investments of $.41 and $.10 per share,
respectively, during the initial interim period. This represented activities
of each fund prior to the initial public offering of fund shares.
(f)Effective May 1, 1992, the name of Principal Aggressive Growth Fund,
Inc. was changed to Principal Emerging Growth Fund, Inc.
(g)Effective May 1, 1994, the name of Principal Managed Fund, Inc. was
changed to Principal Balanced Fund, Inc.
</FN>
</TABLE>
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