(PRINCIPAL PRESERVATION LOGO)
WISCONSIN
TAX-EXEMPT
PORTFOLIO
ANNUAL REPORT
TO SHAREHOLDERS
DECEMBER 31, 1995
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
PRESIDENT'S LETTER/MANAGEMENT DISCUSSION AND ANALYSIS
ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1995
February 23, 1996
Dear Wisconsin Shareholder:
We are pleased to provide our annual report for the year ended December 31,
1995. The Wisconsin Tax-Exempt net assets, buoyed by increased sales and
improved bond prices, are currently $19,874,000 as of February 9, 1996, up from
$9,191,000 at this time a year ago.
The bond markets, through lowering of the overnight lending rate by the
Federal Reserve, witnessed a reduction of long-term interest rates, causing bond
prices to increase. The Wisconsin Tax-Exempt participated in this good
performance. A further discussion of the fund performance follows on the next
page.
It is with mixed emotion that I report that effective January 19, 1996,
Steven Roell tendered his resignation to the Principal Preservation Portfolios
Board of Directors. We wish him well in his pursuits. However, I am pleased to
report that Ralph Eckert has been appointed to fill his position. Ralph is the
retired Chief Executive Officer of Benefit Trust Life Insurance Company. More
recently, he served on The Prime Portfolios (a registered investment company)
Board of Trustees. Ralph, as was Steve, is a very competent and thorough
individual in whom we are confident will make a strong addition to the Board.
Sincerely,
/s/ R.D. Ziegler
R. D. Ziegler
President
MANAGEMENT DISCUSSION AND ANALYSIS
WISCONSIN TAX-EXEMPT PORTFOLIO
Shown below is a comparison of the change in value of a $10,000 investment in
Principal Preservation Wisconsin Tax-Exempt Portfolio and the Lehman 20-Year
Municipal Bond Index.
Date Principal Preservation Lehman 20-Year
Wisconsin Tax-Exempt Portfolio Municipal Bond Index
6/13/94*<F1> $9,750 $10,000
6/30/94 $9,452 $9,452
7/31/94 $9,543 $9,668
8/31/94 $9,543 $9,695
9/30/94 $9,446 $9,501
10/31/94 $9,179 $9,250
11/30/94 $8,862 $9,034
12/31/94 $9,112 $9,318
1/31/95 $9,403 $9,682
2/28/95 $9,687 $10,033
3/31/95 $9,780 $10,147
4/30/95 $9,803 $10,145
5/31/95 $10,081 $10,527
6/30/95 $9,992 $10,365
7/31/95 $10,026 $10,419
8/31/95 $10,112 $10,562
9/30/95 $10,166 $10,645
10/31/95 $10,303 $10,872
11/30/95 $10,493 $11,112
12/31/95 $10,599 $11,268
* June 13, 1994 inception date.
Past performance is not predictive of future performance.
LEHMAN 20-YEAR MUNICIPAL BOND INDEX
The Lehman 20-Year Municipal Bond Index is a broad based index containing
over 22,000 issues with maturities ranging from 2-30 years. The issues
comprising the index are generated from the issues completed within the last
five years with total issue size of $50,000,000 and larger. The average quality
rating is ''AA.'' The index performance shown above does not include sales
charges or other fees which would have been incurred had an investor attempted
to replicate the index.
WISCONSIN TAX-EXEMPT PORTFOLIO
The Wisconsin Tax-Exempt Portfolio's performance is presented from June 13,
1994, commencement of operations, through December 31, 1995. It is based upon a
$10,000 investment at the Portfolio's then offering price, which included a 2.5%
sales charge. It represents the actual total returns for each of the years ended
December 31, net of any fees and expenses charged during those periods.
DISCUSSION AND ANALYSIS
For much of 1995, Bond investors were concerned with the impact of proposed
federal legislation on municipal securities. Consequently, long-term municipal
securities did not fall nearly as much as the taxable bond sectors. However,
municipal securities posted a strong year, with an average return of
approximately 16.82%. The one year return of the Wisconsin Tax-Exempt Portfolio
was 16.32%.
The Portfolio Manager, Thomas Sancomb, continued focusing on the quality of
this portfolio and the avoidance of any bond in the portfolio that would
generate an AMT tax effect to the shareholders of the fund. As a result, over
70% of the Portfolio maintained a credit rating by an outside credit service of
AA or better.
Toward the end of the year and the beginning of 1996, Tom began to shed many
of the Public Housing Bonds in the Portfolio to invest in municipal securities
issued by Wisconsin municipalities and increase the overall representation in
the Wisconsin sector to greater than 40% at the end of January, 1996. Tom is
determined to keep the portfolio's exposure to nonrated credit low since the
increased yield is not worth the incremental risk. Tom has kept the average
maturity around 17 years with a duration of 6.9 years. These were the primary
factors the Portfolio had a slightly less total return than the average
municipal bond fund.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of
Principal Preservation Portfolios, Inc. Wisconsin Tax-Exempt Portfolio
outstanding for the following periods presented, which should be read in
conjunction with the financial statements and related notes:
WISCONSIN
TAX-EXEMPT PORTFOLIO
-----------------------------------------
For the period from
June 13, 1994
(commencement of
For the year ended operations)
December 31, 1995 to December 31, 1994
----------------- --------------------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $9.10 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.50 0.25
Net realized and unrealized gains
(losses) on investments 0.95 (0.90)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.45 (0.65)
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.50) (0.25)
------ ------
TOTAL DISTRIBUTIONS (0.50) (0.25)
------ ------
NET ASSET VALUE, END OF PERIOD $10.05 $9.10
------ -----
------ -----
TOTAL RETURN **<F2> 16.3% (6.5)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(to nearest thousand) $18,986 $8,116
Ratio of expenses to average net assets 0.4%+<F3> 0.2%*<F1>+<F3>
Ratio of net investment income to
average net assets 5.0%+<F3> 4.4%*<F1>+<F3>
Portfolio turnover rate 9.7% 23.4%
*<F1>Annualized.
**<F2>The Fund's sales charge is not reflected in total return as set forth in
the table.
+<F3>Reflects a voluntary reimbursement of fund expenses of 0.8% in 1995 and
1.4% in 1994.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
BALANCE SHEET
DECEMBER 31, 1995
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
ASSETS:
Investments:
Long-term investments in securities,
(See Schedule of Investments) $18,702,971
-----------
Total investments 18,702,971
Cash 212,228
Receivables:
Capital shares sold 113,006
Dividends and interest 333,594
---------
Total receivables 446,600
Other assets 10,527
----------
Total assets $19,372,326
----------
----------
LIABILITIES:
Payables:
Capital shares redeemed $126
Distributions to shareholders 21,381
Expenses 26,503
Investments purchased 338,070
---------
Total liabilities 386,080
---------
NET ASSETS:
Capital stock 18,201,664
Undistributed net investment income 2,201
Undistributed net realized losses on investments (59,156)
Net unrealized appreciation on investments 841,537
----------
Total net assets 18,986,246
----------
Total liabilities and net assets $19,372,326
----------
----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $10.05
----------
----------
MAXIMUM OFFERING PRICE PER SHARE $10.31
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
INVESTMENT INCOME:
Interest $766,593
--------
Total investment income 766,593
--------
EXPENSES:
Investment advisory fees 69,551
Custodian fees 6,570
Transfer agent fees 12,390
Broker service fees 35,207
Professional fees 27,010
Registration 1,730
Communication 2,784
Director fees 2,049
Pricing of investments 10,640
Deferred organization expense 2,599
Other 196
--------
Total expenses 170,726
Less expenses absorbed by advisor (119,057)
--------
Net expenses 51,669
--------
NET INVESTMENT INCOME 714,924
--------
NET REALIZED LOSSES ON INVESTMENTS (27,982)
CHANGE IN UNREALIZED APPRECIATION ON
INVESTMENTS FOR THE YEAR 1,218,259
---------
Net gains on investments 1,190,277
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,905,201
---------
---------
The accompanying notes to financial statements are an integral part of this
statement.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $714,924
Net realized (losses) on investments (27,982)
Change in unrealized appreciation on
investments for the year 1,218,259
---------
Net increase in net assets resulting
from operations 1,905,201
---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.50 per share) (715,944)
---------
Total distributions (715,944)
---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 9,786,055
Net asset value of shares issued in distributions 505,977
Cost of shares redeemed (610,880)
---------
Net Increase In Net Assets From Capital
Share Transactions 9,681,152
----------
Total increase 10,870,409
NET ASSETS:
Balance at beginning of year 8,115,837
----------
Balance at end of year $18,986,246
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JUNE 13, 1994 (Commencement of Operations)
THROUGH DECEMBER 31, 1994
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $141,517
Net realized (losses) on investments (31,174)
Change in unrealized appreciation on
investments for the year (376,722)
---------
Net (decrease) in net assets resulting
from operations (266,379)
---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.25 per share) (138,296)
---------
Total distributions (138,296)
---------
CAPTIAL SHARE TRANSACTIONS:
Proceeds from shares issued 8,863,512
Net asset value of shares issued in distributions 92,315
Cost of shares redeemed (435,315)
---------
Net increase in net assets from capital
share transactions 8,520,512
---------
Total increase 8,115,837
NET ASSETS:
Balance at beginning of period -
---------
Balance at end of period $8,115,837
---------
---------
The accompanying notes to financial statements are an integral part of this
statement.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES -
Principal Preservation Portfolios, Inc. (the ''Fund''), registered under the
Investment Company Act of 1940 as an open-end management investment company, is
a series company with nine portfolios: Tax-Exempt Portfolio, Insured Tax-Exempt
Portfolio, Government Portfolio, S&P100 Plus Portfolio, Dividend Achievers
Portfolio, Balanced Portfolio, Cash Reserve Portfolio, Wisconsin Tax-Exempt
Portfolio and the Select Value Portfolio. This report contains the information
for the Wisconsin Tax-Exempt Portfolio (''the Portfolio''). The other eight
portfolios are contained in two separate reports, one for the Cash Reserve
Portfolio and one for the remaining seven portfolios. The assets and liabilities
of each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which the shareholder owns shares.
The following is a summary of the significant accounting policies of the Fund:
(a) Long-Term Securities
The long-term tax-exempt securities are valued at market or fair value
using quotations by an independent pricing service (the ''Service''). When in
the judgment of the Service, quoted bid prices for securities are readily
available and are representative of the bid side of the market, these
investments are valued at the mean between quoted bid prices (as obtained by the
Service from dealers in such securities) and ask prices (as calculated by the
Service based upon its evaluation of the market for such securities). Securities
for which, in the judgment of the Service, there are no readily obtainable
market quotations (which may constitute a majority of the portfolio's
securities) are carried at fair value as determined by the Service, based on
methods which include consideration of yields or prices of municipal securities
of comparable quality, coupon, maturity, type, indications as to values from
dealers, and general market conditions.
Investment transactions are recorded on the trade date.
Premiums on long-term tax-exempt securities are amortized to the shorter of
call date or maturity. The Fund amortizes all discounts on original issue
discount tax-exempt securities.
(b) Net Realized Gains and Losses and Investment Income
Net realized gains and losses on securities sales are computed on the
identified cost basis. Interest income is recorded on an accrual basis.
(c) Federal Income Taxes
Provision has not been made for Federal income taxes since the Portfolio
has elected to be taxed as a `regulated investment company'' and intends to
distribute substantially all income to its shareholders and otherwise comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies. As of December 31, 1995, the Portfolio has Federal income
tax capital loss carryforwards of $31,174 expiring in 2002 and $27,982 expiring
in 2003. It is Management's intention to make no distribution of any future
realized capital gains until the Federal income tax capital loss carryforward is
exhausted.
(d) Expenses
Fund expenses associated with a specific portfolio are charged to that
portfolio as they are incurred. Common expenses incurred by the Fund are
allocated, as incurred, between the portfolios based upon the ratio of the net
assets of each portfolio to the combined net assets of the Fund.
(e) Distributions to Shareholders
Dividends to shareholders are recorded on the ex-dividend date.
(f) Deferred Organization Costs
Costs incurred with the organization, initial registration and public
offering of shares aggregating $13,000 for the Portfolio have been paid by the
Fund and are being amortized over a five year period.
(g) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH RELATED PARTIES -
The Fund has an Investment Advisory Agreement (the ''Agreements'') with B.C.
Ziegler and Company (''Ziegler''), (with whom certain officers and directors of
the Fund are affiliated) to serve as Investment Advisor (the ''Advisor'').
Pursuant to a SubAdvisory Agreement, Ziegler retains Ziegler Asset Management,
Inc. (''ZAMI''), an affiliate of Ziegler, to assist in the management of the
Portfolio. Under the Agreement, the Portfolio pays Ziegler a monthly fee based
upon the average daily net assets of the Portfolio at the rate of .50% of the
first $250,000,000 of the Portfolio's average daily net assets, reducing to .40%
of the Portfolio's average daily net assets in excess of $250,000,000. Ziegler
pays ZAMI 30% of the fee paid by the Portfolio, net of a pro rata amount of
expenses, if any, paid by Ziegler in the operation of the Portfolio.
The Agreement provides that the Advisor's fee will be reduced or the Advisor
will reimburse the Portfolio, by an amount necessary to prevent the total
expenses of the Portfolio from exceeding limits applicable to the Portfolio in
any state in which its shares are qualified for sale.
For the year ended December 31, 1995, the Advisor voluntarily reimbursed the
Portfolio $119,057. The Advisor is not obligated to continue the voluntary
reimbursement in the future.
On May 17, 1991, the Fund's shareholders approved a Distribution Agreement
under Rule 12b-1. According to this agreement, the Fund pays a distribution fee
of up to 0.25% to the distributor and is passed through to the broker/dealer as
a service fee. This fee is calculated on the average daily net assets and is
shown as broker service fees in the Statements of Operations.
Ziegler has an Accounting and Pricing Agreement with the Fund to perform
accounting and pricing services, a Depository Agreement with the Fund to be the
depository for all investment securities and cash, and a Transfer and Dividend
Disbursing and Shareholder Services Agency Agreement with the Fund to provide
Transfer Agent Services. In addition, the Portfolio pays Ziegler commissions on
sales of Portfolio shares. The transfer agent fees, commissions, accounting and
pricing fees and depository fees paid to Ziegler during the year ended December
31, 1995, were as follows for the Portfolio:
<TABLE>
<CAPTION>
ACCOUNTING
TRANSFER COMMISSIONS AND PRICING DEPOSITORY
AGENT FEES ON PORTFOLIO SHARES FEES FEES
---------- ------------------- ----------- ----------
<S> <C> <C> <C> <C>
Wisconsin Tax-Exempt Portfolio $13,106 $117,027 $19,000 $5,990
</TABLE>
3. INVESTMENT TRANSACTIONS -
Purchases and proceeds from sales of securities, excluding short-term
investments, for the year ended December 31, 1995 were $10,805,130 and
$1,322,629, respectively.
Net unrealized appreciation on investments as of December 31, 1995, included:
WISCONSIN
TAX-EXEMPT
----------
Gross unrealized appreciation $844,670
Gross unrealized (depreciation) (3,133)
--------
Net unrealized appreciation $841,537
--------
--------
4. LINE OF CREDIT -
The Fund has an available line of credit of $3,000,000. However, each
portfolio's borrowings, by investment restriction, cannot exceed 10% of the
total net assets not including the borrowings. Interest expense incurred in
connection with such borrowings was not material during the year. Borrowings
under this arrangement bear interest approximating the then current Prime Rate.
All borrowings under this line of credit are guaranteed by Ziegler. Each
portfolio's policies allow borrowings for temporary or emergency purposes.
5. CAPITAL SHARE TRANSACTIONS -
(a) The Fund has authorized capital of 1,000,000,000 shares at $.001 par value
per share. The Fund's shares are divided into nine separate portfolios:
Wisconsin Tax-Exempt Portfolio, Government Portfolio, Insured Tax-Exempt
Portfolio, Tax-Exempt Portfolio, S&P 100 Plus Portfolio, Dividend Achievers
Portfolio, Balanced Portfolio, Select Value Portfolio and Cash Reserve
Portfolio, consisting of 50 million shares in each of the first eight portfolios
and 300 million in the Cash Reserve Portfolio. The remaining 300,000,000 Fund
shares may be allocated to any of the above portfolios or to new portfolios as
determined by the Board of Directors. The shares of each portfolio have equal
rights and privileges with all other shares of that portfolio.
(b) Capital share activity during the year ended December 31, 1995, and the
period ended December 31, 1994, was as follows:
WISCONSIN
TAX-EXEMPT
----------
SHARES OUTSTANDING AT DECEMBER 31, 1993*<F4> -
Shares issued 926,698
Shares issued in distributions 9,961
Shares redeemed (45,173)
--------
SHARES OUTSTANDING AT DECEMBER 31, 1994 891,486
--------
--------
Shares issued 1,007,871
Shares issued in distributions 51,771
Shares redeemed (62,225)
---------
SHARES OUTSTANDING AT DECEMBER 31, 1995 1,888,903
---------
---------
*<F4>Amounts shown are the result of the Portfolio's operations from its
commencement on June 13, 1994.
(c) Maximum offering price per share is computed based on a maximum sales
charge of 2.5% of the offering price or 2.56% of the net asset value. For
purpose of this computation, the price per share is derived from multiplying the
net asset value and redemption price per share by 100 and then dividing the
product by 97.5.
6. SUBSEQUENT EVENTS -
(a) At the January 19, 1996 Board of Directors Meeting, the Directors approved
the assignment of the Advisory contract from B.C. Ziegler and Company to Ziegler
Asset Management, Inc. Both of the companies are wholly owned subsidiaries of
The Ziegler Companies, Inc. All of the expenses, personnel and terms of
agreements will be identical in all material respects and will not affect the
shareholders.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL S&P MOODY'S
AMOUNT DESCRIPTION RATING RATING VALUE
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM TAX-EXEMPT SECURITIES - 98.5%
ALABAMA - 4.9%
$450,000 Birmingham, Alabama, New Public Housing Authority, 5.00%, AAA Aaa $444,375
due 05-01-2012
70,000 Birmingham, Alabama, New Public Housing Authority, 5.00%, AAA Aaa 71,448
due 05-01-2009
200,000 Birmingham, Alabama, New Public Housing Authority, 5.125%, AAA Aaa 202,250
due 11-01-2009
100,000 Decatur, Alabama, New Public Housing Authority, 5.25%, AAA Aaa 101,782
due 03-01-2009
100,000 Prichard, Alabama, New Public Housing Authority, 5.00%, AAA Aaa 101,625
due 05-01-2008
ARKANSAS - 1.8%
130,000 Hot Springs, Arkansas, New Public Housing Authority, 5.00%, AAA Aaa 132,625
due 09-01-2006
100,000 Hot Springs, Arkansas, New Public Housing Authority, 5.125%, AAA Aaa 102,375
due 02-01-2014
105,000 Little Rock, Arkansas, New Public Housing Authority, 5.25%, AAA Aaa 108,019
due 08-01-2012
CALIFORNIA - 2.3%
160,000 Sacramento, California, New Public Housing Authority, 5.25%, AAA Aaa 164,400
due 12-01-2010
170,000 Sacramento, California, New Public Housing Authority, 5.25%, AAA Aaa 174,675
due 12-01-2011
100,000 San Francisco, California, New Public Housing Authority, 5.125%, AAA Aaa 101,875
due 08-01-2010
CONNECTICUT - 0.3%
60,000 Waterbury, Connecticut, New Public Housing Authority, 5.25%, AAA Aaa 61,913
due 05-01-2006
FLORIDA - 0.8%
150,000 Gainesville, Florida, New Public Housing Authority, 5.25%, AAA Aaa 153,087
due 02-01-2008
GEORGIA - 3.9%
325,000 Atlanta, Georgia, New Public Housing Authority, 5.00%, AAA Aaa 332,153
due 05-01-2007
250,000 Newnan, Georgia, New Public Housing Authority, 5.00%, AAA Aaa 255,073
due 04-01-2012
150,000 Newnan, Georgia, New Public Housing Authority, 5.25%, AAA Aaa 153,619
due 05-01-2007
GUAM - 5.0%
350,000 Guam Government Limited Obligation Highway Bonds, AAA Aaa 375,812
Series A, 6.30%, due 05-01-2012
515,000 Guam Power Authority Revenue Bonds, Series A, AAA Aaa 562,637
6.375%, due 10-01-2008
ILLINOIS - 5.0%
200,000 Cook County, Illinois, New Public Housing Authority, 5.25%, AAA Aaa 205,750
due 04-01-2010
100,000 Cook County, Illinois, New Public Housing Authority, 5.00%, AAA Aaa 100,250
due 04-01-2011
100,000 Cook County, Illinois, New Public Housing Authority, 5.00%, AAA Aaa 102,108
due 04-01-2005
125,000 Cook County, Illinois, New Public Housing Authority, 5.75%, AAA Aaa 127,780
due 04-01-2008
300,000 Peoria, Illinois, New Public Housing Authority, 5.00%, AAA Aaa 299,625
due 06-01-2012
100,000 Peoria, Illinois, New Public Housing Authority, 5.25%, AAA Aaa 103,437
due 12-01-2002
IOWA - 0.3%
50,000 Des Moines, Iowa, New Public Housing Authority, 6.000%, AAA Aaa 51,523
due 02-01-2011
KANSAS - 0.5%
100,000 Kansas City, Kansas, New Public Housing Authority, 5.125%, AAA Aaa 103,057
due 10-01-2008
LOUISIANA - 0.5%
100,000 Lake Charles, Louisiana, New Public Housing Authority, 5.125%, AAA Aaa 100,875
due 08-01-2013
MARYLAND - 0.5%
100,000 Hagerstown, Maryland, New Public Housing Authority, 5.00%, AAA Aaa 103,079
due 09-01-2007
MASSACHUSETTS - 2.4%
380,000 Massachusetts State Housing Finance Agency, Multi-Family Housing AAA A1 450,775
Bonds, First Issue, 1979 Series A, 7.00%, due 04-01-2021
MICHIGAN - 0.5%
100,000 Monroe, Michigan, New Public Housing Authority, 5.125%, AAA Aaa 102,960
due 09-01-2009
MISSISSIPPI - 0.7%
135,000 Biloxi, Mississippi, New Public Housing Authority, 5.25%, AAA Aaa 135,338
due 08-01-2011
NEVADA - 1.3%
255,000 Las Vegas, Nevada, New Public Housing Authority, 5.00%, AAA Aaa 253,406
due 01-01-2012
NEW JERSEY - 3.1%
435,000 Newark, New Jersey, New Public Housing Authority, 5.25%, AAA Aaa 443,891
due 04-01-2009
150,000 Newark, New Jersey, New Public Housing Authority, 5.25%, AAA Aaa 153,215
due 04-01-2006
NEW MEXICO - 0.4%
80,000 Albuquerque, New Mexico, New Public Housing Authority, 5.375%, AAA Aaa 81,100
due 05-01-2013
NEW YORK - 4.0%
200,000 New York, New York, New Public Housing Authority, 5.125%, AAA Aaa 204,048
due 01-01-2008
100,000 New York, New York, New Public Housing Authority, 5.125%, AAA Aaa 101,500
due 01-01-2009
200,000 New York, New York, New Public Housing Authority, 5.375%, AAA Aaa 207,000
due 01-01-2012
100,000 New York, New York, New Public Housing Authority, 5.00%, AAA Aaa 101,000
due 01-01-2012
135,000 New York, New York, New Public Housing Authority, 6.000%, AAA Aaa 138,280
due 01-01-2010
NORTH CAROLINA - 3.0%
165,000 Durham, North Carolina, New Public Housing Authority, 5.25%, AAA Aaa 170,102
due 12-01-2009
400,000 Durham, North Carolina, New Public Housing Authority, 5.00%, AAA Aaa 399,500
due 02-01-2012
NORTH DAKOTA - 2.3%
185,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 186,619
4.875%, due 01-01-2010
50,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 49,000
4.875%, due 01-01-2011
200,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 199,750
4.875%, due 01-01-2009
OHIO - 4.3%
500,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 503,125
due 05-01-2011
300,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 306,138
due 05-01-2012
OKLAHOMA - 1.1%
100,000 Oklahoma City, Oklahoma, New Public Housing Authority, 5.50%, AAA Aaa 102,112
due 05-01-2009
110,000 Oklahoma City, Oklahoma, New Public Housing Authority, 5.75%, AAA Aaa 112,903
due 05-01-2005
PENNSYLVANIA - 2.8%
60,000 Armstrong County, Pennsylvania, New Public Housing Authority, AAA Aaa 62,174
6.00%, due 11-01-2003
50,000 Chester County, Pennsylvania, New Public Housing Authority, 5.25%, AAA Aaa 51,591
due 11-01-2007
100,000 Johnstown, Pennsylvania, New Public Housing Authority, 5.125%, AAA Aaa 103,163
due 11-01-2007
100,000 Lackawanna County, Pennsylvania, New Public Housing Authority, 5.75%, AAA Aaa 102,208
due 05-01-2010
100,000 Pittsburgh, Pennsylvania, New Public Housing Authority, 5.125%, AAA Aaa 103,104
due 12-01-2007
100,000 Washington County, Pennsylvania, New Public Housing Authority, 4.25%, AAA Aaa 101,375
due 09-01-2001
PUERTO RICO - 13.6%
350,000 Puerto Rico Commonwealth Highway &Transportation Authority, A Baa1 375,375
Highway Revenue Unrefunded Balance, Series T, 6.625%,
due 07-01-2018
100,000 Puerto Rico Commonwealth Highway & Transportation, 6.625% A Baa1 107,750
due 07-01-2012
325,000 Puerto Rico Commonwealth, Refunding Bonds, Series A, 6.00%, A Baa1 334,344
due 07-01-2014
250,000 Puerto Rico Commonwealth General Obligation Bonds, 6.00%, A Baa1 254,688
due 07-01-2022
180,000 Puerto Rico Commonwealth Electric &Power Authority, Series R, AAA Aaa 189,900
6.25%, due 07-01-2017
800,000 Puerto Rico Public Buildings Authority, Guaranteed Public Education A Baa1 806,000
& Health Facilities, Refunding Series M, 5.75%, due 07-01-2015
350,000 Puerto Rico Telephone Authority, Series L, 6.125%, due 01-01-2022 A+ A2 362,250
150,000 Puerto Rico Telephone Authority, Series L, 5.75%, due 01-01-2011 A+ A2 153,562
SOUTH CAROLINA - 1.9%
100,000 Florence, South Carolina, New Public Housing Authority, 5.75%, AAA Aaa 102,074
due 08-01-2011
250,000 Florence, South Carolina, New Public Housing Authority, 5.75%, AAA Aaa 255,215
due 08-01-2005
TENNESSEE - 1.0%
190,000 Nashville, Tennessee, New Public Housing Authority, 5.00%, AAA Aaa 187,862
due 08-01-2010
TEXAS - 1.2%
120,000 Galveston, Texas, New Public Housing Authority, 5.25%, AAA Aaa 120,300
due 10-01-2012
100,000 Sherman, Texas, New Public Housing Authority, 6.00%, AAA Aaa 103,117
due 09-01-2012
WASHINGTON - 1.1%
155,000 Seattle, Washington, New Public Housing Authority, 5.00%, AAA Aaa 156,938
due 03-01-2009
50,000 Seattle, Washington, New Public Housing Authority, 4.25%, AAA Aaa 49,812
due 06-01-2008
WISCONSIN -28.0%
300,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 304,500
Multifamily Housing Revenue Bonds, Series 1995 (Dempsey Manor
Project), 6.65%, due 10-01-2025
500,000 Madison, Wisconsin, Community Development Authority, NR NR 516,875
Redevelopment Revenue Bonds, Series 1995, (Meriter Retirement
Project), 6.125%, due 12-01-2019
1,000,000Madison, Wisconsin, Community Development Authority, Lease NR AA2 1,083,750
Revenue Bonds, Monona Terrace Community &Convention Center
Project, 6.10%, due 03-01-2010
25,000 Madison, Wisconsin, New Public Housing Authority, 4.875%, AAA Aaa 25,490
due 03-01-2005
500,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 538,125
Development Revenue Bonds (Goodwill Industries of Southeastern
Wisconsin, Project), 6.35%, due 10-01-2009
25,000 Milwaukee, Wisconsin, New Public Housing Authority, 5.125%, AAA Aaa 25,514
due 09-01-2005
60,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, AAA Aaa 61,800
Development Revenue Refunding Bonds (2430 W. WisconsinAve. &
1600 N. Martin Luther King Jr. Dr. Project), 5.20%, due 09-01-2004
1,000,000Housing Authority of the City of Oak Creek, Wisconsin, Multifamily NR NR 1,043,750
Housing Refunding Revenue Bonds, Series 1994A, (Country Oaks II
Project), 6.30%, due 08-01-2028
25,000 Reedsville, Wisconsin, New Public Housing Authority, 5.75%, AAA Aaa 25,540
due 05-01-2010
25,000 Reedsville, Wisconsin, New Public Housing Authority, 5.25%, AAA Aaa 25,761
due 10-01-2010
600,000 Redevelopment Authority of the Village of Slinger, Wisconsin, NR NR 628,500
Redevelopment Lease Revenue Bonds, Series 1995-A, 6.25%,
due 09-01-2017
155,000 Redevelopment Authority of the City of Superior, Wisconsin, NR AA2 161,200
Revenue Bonds, Series 1994 (Superior Memorial Hospital, Inc.),
5.60%, due 05-01-2007
100,000 Redevelopment Authority of the City of Superior, Wisconsin, NR AA2 103,375
Revenue Bonds, Series 1994 (Superior Memorial Hospital, Inc.),
5.80%, due 05-01-2010
150,000 Redevelopment Authority of the City of Superior, Wisconsin, NR AA2 156,000
Revenue Bonds, Series 1994 (Superior Memorial Hospital, Inc.),
5.65%, due 11-01-2008
600,000 Community Development Authority of the Village of Sussex, NR NR 621,000
Wisconsin, Community Development Revenue Bonds, Series 1995, --------
6.10%, due 04-01-2015
Total Long-Term Tax-Exempt Securities (Cost $17,861,435) 18,702,971
----------
Total Investments $18,702,971
----------
----------
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
</TABLE>
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Principal Preservation Portfolios, Inc. and the
Shareholders of the Wisconsin Tax-Exempt Portfolio:
We have audited the accompanying balance sheet, including the schedule of
investments, of the PRINCIPAL PRESERVATION PORTFOLIOS, INC. (a Maryland
corporation) Wisconsin Tax-Exempt Portfolio as of December 31, 1995, and the
related statement of operations for the year then ended, and the statements of
changes in net assets and financial highlights for the year then ended and for
the period June 13, 1994 (commencement of operations) to December 31, 1994.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the depositories, banks and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Principal Preservation Portfolios, Inc. Wisconsin Tax-Exempt Portfolio as of
December 31, 1995, the results of its operations for the year then ended, and
the changes in its net assets and financial highlights for the year then ended
and for the period June 13, 1994 to December 31, 1994, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 19, 1996.
PRINCIPAL PRESERVATION
PORTFOLIOS, INC.
215 North Main Street
West Bend, Wisconsin 53095
OFFICERS AND DIRECTORS
R.D. Ziegler, President, Director
Richard H. Aster, M.D., Director
Augustine J. English, Director
Ralph J. Eckert, Director
Robert J. Tuszynski, Vice President, Director
Jay Ferrara, Treasurer
John Lauderdale, Vice President of Marketing
S. Charles O'Meara, Secretary
INVESTMENT ADVISOR
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, CUSTODIAN AND TRANSFER AND DIVIDEND
DISBURSING AGENT
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
CUSTODIAN
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
COUNSEL
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
AUDITOR
Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
This report has been prepared for the information of shareholders of Principal
Preservation Portfolios, Inc. Wisconsin Tax-Exempt Portfolio, and may not be
used in connection with the offering of securities unless preceded or
accompanied by a current Prospectus.
PP842-2/96
