(PP Logo)
Wisconsin
Tax-Exempt
Portfolio
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 1997
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
PRESIDENT'S LETTER/MANAGEMENT DISCUSSION AND ANALYSIS
SEMIANNUAL REPORT TO SHAREHOLDERS
JUNE 30, 1997
August 25, 1997
Dear Shareholder:
We are pleased to report the semiannual report to shareholders of the
Wisconsin Tax-Exempt Portfolio. The assets of the portfolio continued to
increase from approximately $25,800,000 at December 31, 1996 to $27,870,000 as
of June 30, 1997. The overall long term assets of the fund family grew from
$255,800,000 to $290,000,000. The Wisconsin Tax-Exempt Portfolio continued to
capture the largest percentage asset growth of any of the double tax-free funds
in the state.
During the first six months of 1997, we witnessed a strong stock market, with
the major indices continuing to break through new record highs. We can best
describe the bond market as lackluster in comparison. While we discuss double
digit returns in every stock fund that we offer, the average of General
Municipal Bond Fund as measured by Lipper Analytical increased only 2.71%.
We are proud of our growth in this fund, because of the soft demand by
investors for municipal securities. We still see a stable environment in
municipal bond market and interest rates generally. The following pages discuss
more in depth the factors that contributed or detracted from the performance.
Sincerely,
/s/ Robert J. Tuszynski
Robert J. Tuszynski
President and CEO
The accompanying report is intended for the existing shareholders of Principal
Preservation. It does not constitute an offer to sell. Any investor wishing to
receive more information about the portfolios should obtain a prospectus which
includes a discussion of each investment objective and all sales charges and
expenses of the relevant portfolio(s).
MANAGEMENT DISCUSSION AND ANALYSIS
As often happened in 1996, the center of conversation for the first six
months of 1997 was whether the economy could continue to grow without any
increased inflation. As a result, much of the first quarter reflected the affect
an increase in the Fed Funds rate had on yields and prices of fixed income
securities. The increase appeared in March when the Federal Reserve Board moved
the target Fed Funds rate from 5.25% to 5.50%. Since that time, the rate has
remained unchanged. The spillover on the general bond market and more
specifically on municipal bond markets caused only a moderate increase in yields
and decline in prices.
The Wisconsin Tax-Exempt Portfolio's net asset value total return for the six
months ended June 30, 1997 was 3.15% compared to the Lipper General Municipal
Bond Fund Average of 2.71%. The comparative net asset value total returns for
the twelve month period ended June 30, 1997 were 7.87% and 7.81%, respectively.
During the first quarter, due to the move by the Federal Reserve, interest
rates rose and therefore the performance of the Wisconsin Tax-Exempt Portfolio
was (0.41%) as compared with the average municipal bond fund return of (0.59%).
The portfolio manager increased the portfolio's sector weighting in Wisconsin
securities with the purchase of $2,200,000 of the Southeast Wisconsin
Professional Baseball Park District Sales Tax Revenue Bonds. MBIA insurance has
backed the bonds and therefore the bond carries an AAA rating from Standard and
Poors. To balance the portfolio, the manager eliminated eight housing agency
positions. The security sales coupled with new cash flows paid for the security.
This move put the percentage of Wisconsin securities to more than 50% and
reduced the pricing expense of the portfolio as well.
The second quarter enjoyed a rally, as interest rates stabilized and demand
for municipal securities increased slightly. The total return for the second
quarter of the Portfolio was 3.55%. This compared favorably to the Lipper
General Municipal Bond Fund average return of 3.41%. The portfolio manager added
another AAA rated MBIA preinsured Wisconsin issue to bring the total invested in
Wisconsin issues to 53.6% at June 30, 1997.
The outlook for the remainder of the year is that there does not appear to be
significant movement in the municipal bond market. Therefore, yields may remain
relatively constant. The portfolio manager intends to possibly increase the
portfolio's ownership of securities issued by municipalities in Wisconsin during
the last half of the year.
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 period presented, which should be read in
conjunction with the financial statements and related notes:
WISCONSIN
TAX-EXEMPT PORTFOLIO
-----------------------------------------------
For the
period from
For the six For the June 13, 1994
months ended years ended (commencement
June 30, 1997 December 31, of operations) to
(Unaudited) 1996 1995 December 31, 1994
-------------- ---- ---- -----------------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING
OF PERIOD $9.87 $10.05 $9.10 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .25 .49 .50 .25
Net realized and unrealized gains
(losses) on investments .06 (.18) .95 (.90)
------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS .31 .31 1.45 (.65)
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.25) (.49) (.50) (.25)
------- ------- ------- -------
TOTAL DISTRIBUTIONS (.25) (.49) (.50) (.25)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 9.93 $ 9.87 $10.05 $ 9.10
======= ======= ======= =======
TOTAL RETURN **<F2> 3.2% 3.3% 16.3% (6.5)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(to nearest thousand) $27,872 $25,750 $18,986 $8,116
Ratio of expenses to average
net assets 0.5%*+ 0.5%+ 0.4%+ 0.2%*+
<F1><F3> <F3> <F3> <F1><F3>
Ratio of net investment income
to average net assets 5.0%*+ 4.9%+ 5.0%+ 4.4%*+
<F1><F3> <F3> <F3> <F1><F3>
Portfolio turnover rate 11.6% 16.0% 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 0.6% in 1997, 0.6%
in 1996, 0.8% in 1995 and 1.4% in 1994, respectively.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
BALANCE SHEET
JUNE 30, 1997 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
---------------------
ASSETS:
Investments:
Cost basis of investments $26,660,237
===========
Long-term investments in securities $26,751,509
Short-term investments 572,000
-----------
Total investments (See Schedule of Investments) 27,323,509
Cash 478
Receivables:
Capital shares sold 230,125
Interest 383,596
-----------
Total receivables 613,721
Other assets 5,723
-----------
Total assets $27,943,431
===========
LIABILITIES:
Payables:
Distributions to shareholders $34,862
Expenses 36,886
-----------
Total liabilities 71,748
-----------
NET ASSETS:
Capital stock 27,191,687
Undistributed net investment income 5,267
Undistributed net realized gains (losses) on investments 11,457
Net unrealized appreciation on investments 663,272
-----------
Total net assets 27,871,683
-----------
Total liabilities and net assets $27,943,431
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $9.93
======
MAXIMUM OFFERING PRICE PER SHARE $10.18
======
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 SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
----------------------
INVESTMENT INCOME:
Interest $727,779
Market discount recognized at sale 3,190
--------
Total investment income 730,969
--------
EXPENSES:
Investment advisory fees 65,276
Custodian fees 6,018
Transfer agent fees 13,496
Broker service fees 33,114
Professional fees 19,499
Registration 1,452
Communication 2,016
Director fees 2,873
Pricing of investments 2,700
Deferred organization expense 1,289
Other 639
--------
Total expenses 148,372
Less expenses absorbed by advisor (83,200)
--------
Net expenses 65,172
--------
NET INVESTMENT INCOME 665,797
--------
NET REALIZED GAINS ON INVESTMENTS 14,633
CHANGE IN UNREALIZED APPRECIATION ON
INVESTMENTS FOR THE YEAR 143,846
--------
Net gain on investments 158,479
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $824,276
========
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 SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $665,797
Net realized gains on investments 14,633
Change in unrealized appreciation
on investments for the year 143,846
-----------
Net increase in net assets resulting from operations 824,276
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.246 per share) (657,700)
-----------
Total distributions (657,700)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 3,121,101
Net asset value of shares issued in distributions 452,352
Cost of shares redeemed (1,617,944)
-----------
Net increase in net assets from
capital share transactions 1,955,509
-----------
Total increase 2,122,085
NET ASSETS:
Balance at beginning of period 25,749,598
-----------
Balance at end of period $27,871,683
===========
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, 1996
WISCONSIN
TAX-EXEMPT PORTFOLIO
---------------------
OPERATIONS:
Net investment income $1,123,311
Net realized gains on investments 55,980
Change in unrealized appreciation on
investments for the year (322,111)
-----------
Net increase in net assets
resulting from operations 857,180
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.49 per share) (1,124,700)
Distributions in excess of net investment
income ($0.0014 per share) (3,642)
-----------
Total distributions (1,128,342)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 8,406,005
Net asset value of shares issued in distributions 781,624
Cost of shares redeemed (2,153,115)
-----------
Net increase in net assets from
capital share transactions 7,034,514
-----------
Total increase 6,763,352
NET ASSETS:
Balance at beginning of year 18,986,246
-----------
Balance at end of year $25,749,598
===========
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
JUNE 30, 1997 (UNAUDITED)
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 eight portfolios: Tax-Exempt Portfolio, Government
Portfolio, S&P100 Plus Portfolio, Dividend Achievers Portfolio, PSE Tech 100
Index Portfolio, Cash Reserve Portfolio, Wisconsin Tax-Exempt Portfolio and the
Select Value Portfolio. This report presents information only for the Wisconsin
Tax-Exempt Portfolio (the "Portfolio"). Information regarding the other
portfolios is presented in separate reports. 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 in accordance with procedures approved by the
Fund's Board of Directors. Among other factors, these procedures 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 does not amortize premiums on taxable
long-term securities. The fund amortizes all discounts on taxable
securities and 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. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on an accrual basis.
(c) Federal Income Taxes
Provision has not been made for Federal income taxes, because the
Portfolio has elected to be taxed as a "regulated investment company" and
intends to distribute substantially all income to its shareholders and
otherwise to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. As of December 31, 1996,
the Portfolio had Federal income tax capital loss carryforwards of $3,176
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.
Distributions in excess of net investment income in the Wisconsin Tax-
Exempt Portfolio of $3,642 for the year ended December 31, 1996, are the
result of different accounting treatment of market discount on
investments for book and tax purposes. This distribution does not
represent a return of capital for tax purposes.
(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-
On January 31, 1996 the Fund's Investment Advisory Agreement (the "Agreement")
with B.C. Ziegler and Company ("Ziegler") (with whom certain officers and
directors of the Fund are affiliated), was assigned to Ziegler Asset Management,
Inc. ("ZAMI"). Both Ziegler and ZAMI are wholly owned subsidiaries of The
Ziegler Companies, Inc., therefore the assignment did not constitute a change in
control. Under the Agreement, the Portfolio pays ZAMI 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.
For the period ended June 30, 1997, ZAMI voluntarily reimbursed expenses to
the Portfolio totaling $83,201. ZAMI 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 Ziegler, as the distributor, which 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 Statement 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 serve
as depository for all investment securities and cash, and a Transfer and
Dividend Disbursing and Shareholder Servicing Agreement with the Fund to provide
Transfer Agent Services. In addition, the Portfolio pays Ziegler commissions on
sales of Portfolio shares and 12b-1 distribution fees. The transfer agent fees,
commissions, accounting and pricing fees, depository and 12b-1 fees paid to
Ziegler by the Portfolio for the period ended June 30, 1997 were as follows:
ACCOUNTING
TRANSFER COMMISSIONS AND PRICING DEPOSITORY
AGENT FEES ON PORTFOLIO SHARES FEES FEES 12B-1 FEES
---------- ------------------- ----------- ---------- ----------
Wisconsin
Tax-Exempt
Portfolio $11,853 $34,067 $9,500 $5,403 $20,202
3. INVESTMENT TRANSACTIONS --
Purchases and proceeds from sales of securities, excluding short-term
investments, for the period ended June 30, 1997, consisted of purchases of
$4,267,205 and $3,013,139 in proceeds from the sale of securities.
Net tax basis unrealized appreciation (depreciation) on investments as of June
30, 1997, included:
WISCONSIN
TAX-EXEMPT
------------
Gross unrealized appreciation $ 670,063
Gross unrealized (depreciation) (6,791)
---------
Net unrealized appreciation $ 663,272
=========
The tax basis cost of investments at June 30, 1997 was $26,088,237.
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 eight separate
portfolios: Wisconsin Tax-Exempt Portfolio, Government Portfolio, Tax-
Exempt Portfolio, S&P 100 Plus Portfolio, Dividend Achievers Portfolio,
Select Value Portfolio, PSE Tech 100 Index Portfolio and Cash Reserve
Portfolio, consisting of 50,000,000 shares in each of the first seven
portfolios and 400,000,000 in the Cash Reserve Portfolio. The shares of
the Cash Reserve Portfolio have been subdivided into 200,000,000 shares
of Class X (Retail Shares) and 200,000,000 shares of Class Y
(Institutional Shares). The remaining 250,000,000 authorized shares of
common stock of the Fund 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, 1996 and period
ended June 30, 1997, were as follows:
WISCONSIN
TAX-EXEMPT
-----------
SHARES OUTSTANDING AT DECEMBER 31, 1995 1,888,903
=========
Shares issued 860,313
Shares issued in distributions 79,825
Shares redeemed (219,263)
---------
SHARES OUTSTANDING AT DECEMBER 31, 1996 2,609,778
=========
Shares issued 317,299
Shares issued in distributions 46,009
Shares redeemed (165,282)
---------
SHARES OUTSTANDING AT JUNE 30, 1997 2,807,805
=========
(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.
<TABLE>
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
<CAPTION>
Principal S&P Moody's
Amount Description Rating Rating Value
--------- ----------- ------ ------- -----
<S> <C> <C> <C> <C>
LONG-TERM TAX-EXEMPT SECURITIES -- 96.0%
GEORGIA -- 2.1%
$325,000 Atlanta, Georgia, New Public Housing Authority, 5.00%, AAA Aaa $331,975
due 05-01-2007
250,000 Newnan, Georgia, New Public Housing Authority, 5.00%, AAA Aaa 251,562
due 04-01-2012
GUAM -- 4.5%
650,000 Guam Government Limited Obligation Highway Bonds, Series A, AAA Aaa 692,250
6.30%, due 05-01-2012
515,000 Guam Power Authority Revenue Bonds, Series A, 6.375%, AAA Aaa 554,269
due 10-01-2008
ILLINOIS -- 1.8%
200,000 Cook County, Illinois, New Public Housing Authority, 5.25%, AAA Aaa 201,750
due 04-01-2010
300,000 Peoria, Illinois, New Public Housing Authority, 5.00%, due 06-01-2012 AAA Aaa 292,875
MASSACHUSETTS -- 3.7%
600,000 Massachusetts State Housing Finance Agency, Multi-Family Housing AAA A1 693,750
Bonds, First Issue, 1979 Series A, 7.00%, due 04-01-2021
315,000 Worcester, Massachusetts, New Public Housing Authority, 5.25%, AAA Aaa 325,631
due 08-01-2006
NEVADA -- 0.9%
255,000 Las Vegas, Nevada, New Public Housing Authority, 5.00%, AAA Aaa 249,669
due 01-01-2012
NEW JERSEY -- 2.4%
250,000 Newark, New Jersey, New Public Housing Authority, 4.50%, AAA Aaa 244,063
due 04-01-2008
435,000 Newark, New Jersey, New Public Housing Authority, 5.25%, AAA Aaa 438,806
due 04-01-2009
NEW YORK -- 2.1%
200,000 New York, New York, New Public Housing Authority, 5.00%, AAA Aaa 193,250
due 01-01-2012
200,000 New York, New York, New Public Housing Authority, 5.375%, AAA Aaa 202,750
due 01-01-2012
200,000 New York, New York, New Public Housing Authority, 5.125%, AAA Aaa 201,750
due 01-01-2008
NORTH CAROLINA -- 2.0%
165,000 Durham, North Carolina, New Public Housing Authority, 5.25%, AAA Aaa 167,681
due 12-01-2009
400,000 Durham, North Carolina, New Public Housing Authority, 5.00%, AAA Aaa 390,500
due 02-01-2012
NORTH DAKOTA -- 1.4%
200,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 195,750
4.875%, due 01-01-2009
185,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 183,150
4.875%, due 01-01-2010
OHIO -- 4.4%
500,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 493,750
due 05-01-2011
250,000 Youngstown, Ohio, New Public Housing Authority, 4.875%, AAA Aaa 247,500
due 05-01-2009
200,000 Youngstown, Ohio, New Public Housing Authority, 4.875%, AAA Aaa 194,250
due 05-01-2010
300,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 301,875
due 05-01-2012
PENNSYLVANIA -- 0.7%
200,000 Clinton County, Pennsylvania, New Public Housing Authority, AAA Aaa 204,220
5.25%, due 11-01-2007
PUERTO RICO -- 12.8%
200,000 University of Puerto Rico University Revenue Bonds, Series M, AAA Aaa 193,500
5.25%, due 06-01-2025
100,000 Puerto Rico Commonwealth Highway & Transportation Authority, A Baa1 110,625
6.625%, due 07-01-2012
350,000 Puerto Rico Commonwealth Highway & Transportation Authority, A Aaa 388,500
Highway Revenue Unrefunded Balance, Series T, 6.625%,
due 07-01-2018
500,000 Puerto Rico Commonwealth Highway & Transportation Authority, A Baa1 484,375
Revenue Bonds, Series Y, 5.50%, due 07-01-2026
325,000 Puerto Rico Commonwealth, Refunding Bonds, Series A, 6.00%, A Baa1 333,125
due 07-01-2014
350,000 Puerto Rico Commonwealth, General Obligation Bonds, 6.00%, A Baal 354,813
due 07-01-2022
180,000 Puerto Rico Commonwealth Electric &Power Authority, Series R, AAA Aaa 188,775
6.25%, due 07-01-2017
200,000 Puerto Rico Municipal Finance Agency, 1997 Series A Bonds, AAA Aaa 199,250
5.50%, due 07-01-2017
800,000 Puerto Rico Public Buildings Authority, Guaranteed Public A Baa1 803,000
Education &Health Facilities, Refunding Series M, 5.75%,
due 07-01-2015
150,000 Puerto Rico Telephone Authority, Series L, 5.75%, due 01-01-2011 A+ A2 152,437
350,000 Puerto Rico Telephone Authority, Series L, 6.125%, due 01-01-2022 A+ A2 357,000
SOUTH CAROLINA -- 0.7%
200,000 Marion, South Carolina, New Public Housing Authority, 4.875%, AAA Aaa 202,000
due 09-01-2010
TENNESSEE -- 0.7%
190,000 Nashville, Tennessee, New Public Housing Authority, 5.00%, AAA Aaa 186,675
due 08-01-2010
TEXAS -- 4.3%
300,000 El Paso, Texas, New Public Housing Authority, 5.00%, AAA Aaa 305,250
due 07-01-2005
160,000 Galveston, Texas, New Public Housing Authority, 5.25%, AAA Aaa 163,483
due 10-01-2008
180,000 Sherman, Texas, New Public Housing Authority, 5.25%, AAA Aaa 182,700
due 07-01-2009
200,000 Waco, Texas, New Public Housing Authority, 4.875%, AAA Aaa 194,500
due 12-01-2012
340,000 Waco, Texas, New Public Housing Authority, 4.875%, AAA Aaa 339,575
due 12-01-2009
WISCONSIN -- 51.5%
150,000 Housing Authority of the City of Green Bay, Wisconsin, Student NR NR 151,688
Housing Refunding Revenue Bonds, Series 1997, (University Village
Housing, Inc.), 6.00%, due 04-01-2017
500,000 Community Development Authority of the Village of Little Chute, NR NR 503,125
Wisconsin, Community Development Lease Revenue
Bonds, 5.625%, due 03-01-2019
300,000 Community Development Authority of the City of Madison, NR NR 301,500
Wisconsin, Multifamily Housing Revenue Bonds, Series 1995,
(Dempsey Manor Project), 6.65%, due 10-01-2025
275,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 281,530
Project Revenue Bonds, (Series 1986), 5.875%, due 07-01-2016
1,000,000 Madison, Wisconsin, Community Development Authority, Lease NR Aa2 1,057,500
Revenue Bonds, Monona Terrace Community &Convention Center
Project, 6.10%, due 03-01-2010
500,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 526,875
Redevelopment Revenue Bonds, Series 1995, (Meriter Retirement
Services, Inc.), 6.125%, due 12-01-2019
500,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 518,750
Development Revenue Bonds, (Goodwill Industries of Southeastern
Wisconsin Project), 6.35%, due 10-01-2009
1,000,000 Housing Authority of the City of Oak Creek, Wisconsin, Multifamily NR NR 1,035,000
Housing Refunding Revenue Bonds,Series 1994A, (Country Oaks II
Project), 6.30%, due 08-01-2028
75,000 Housing Authority of the City of Oak Creek, Wisconsin, Multifamily AAA NR 73,313
Housing Refunding Revenue Bonds, Series 1993, (Wood Creek Project),
5.625%, due 07-20-2029
2,260,000 Southeast Wisconsin Professional Baseball Park District Sales Tax AAA Aaa 2,282,600
Revenue Bonds, Series 1996, 5.750%, due 12-15-2021
600,000 Redevelopment Authority of the Village of Slinger, Wisconsin, NR NR 611,250
Redevelopment Lease Revenue Bonds, Series 1995-A, 6.25%,
due 09-01-2017
100,000 Redevelopment Authority of the City of Superior, Wisconsin, Revenue NR Aa2 102,750
Bonds, Series 1994, (Superior Memorial Hospital, Inc.), 5.80%,
due 05-01-2010
155,000 Redevelopment Authority of the City of Superior, Wisconsin, Revenue NR Aa2 159,650
Bonds, Series 1994, (Superior Memorial Hospital, Inc.), 5.60%,
due 05-01-2007
150,000 Redevelopment Authority of the City of Superior, Wisconsin, Revenue NR Aa2 154,500
Bonds, Series 1994, (Superior Memorial Hospital, Inc.), 5.65%,
due 11-01-2008
600,000 Housing Authority of the City of Superior, Wisconsin, Housing NR NR 609,000
Revenue Refunding Bonds, Series 1996, (GNMA Collateralized-St.
Francis Home, Inc. Project) 6.15%, due 07-20-2031
600,000 Community Development Authority of the Village of Sussex, NR NR 609,750
Wisconsin, Community Development Revenue Bonds, Series 1995,
6.10%, due 04-01-2015
3,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Bonds, A NR 2,996,250
Series 1996B, 5.75%, due 12-15-2027
485,000 Wisconsin Housing Finance Authority Revenue Bonds, Prerefunded AAA Aaa 520,163
12-01-2017 at Par, Escrowed by U.S. Government Sec., 6.10%,
due 06-01-2021
1,000,000 Wauwatosa, Wisconsin, Redevelopment Authority, Milwaukee County, AAA Aaa 1,007,500
Wisconsin, Redevelopment Authority Lease Revenue Bonds, Series
1997, 5.65%, due 10-01-2015
855,000 Housing Authority of Winnebago County, Wisconsin, Multifamily NR NR 858,206
Housing Refunding Revenue Bonds, (Neenah-Menasha Ecumenical -----------
Retirement Community, Inc. Project), 5.60%, due 10-01-2020
Total Long-Term Tax-Exempt Securities (Cost $26,088,237) 26,751,509
-----------
Total Investments $27,323,509
===========
SHORT-TERM INVESTMENTS -- 2.1%
MONEY MARKET
$ 572,000 Federated Tax-Free Trust $ 572,000
===========
</TABLE>
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
PRINCIPAL PRESERVATION
PORTFOLIOS, INC.
215 North Main Street
West Bend, Wisconsin 53095
OFFICERS AND DIRECTORS
R.D. Ziegler, Chairman, Director
Richard H. Aster, M.D., Director
Augustine J. English, Director
Ralph J. Eckert, Director
Robert J. Tuszynski, President, Director
Frank Ciano, Chief Financial Officer and Treasurer
John Lauderdale, Vice President of Marketing
S. Charles O'Meara, Secretary
Marc Dion, Vice President
INVESTMENT ADVISOR
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, DEPOSITORY, TRANSFER AND DIVIDEND
DISBURSING ACCOUNTING/PRICING AGENT
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
COUNSEL
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INDEPENDENT PUBLIC ACCOUNTANTS
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.
PP861-8/97
