(PPP LOGO)
PRINCIPAL PRESERVATION
CASH RESERVE PORTFOLIO
CLASS X SHARES
(RETAIL CLASS)
------------
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 1997
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(PPP LOGO)
PRINCIPAL PRESERVATION
CASH RESERVE PORTFOLIO
CLASS Y SHARES
(INSTITUTIONAL CLASS)
------------
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 1997
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CASH RESERVE PORTFOLIO
CLASS X SHARES (RETAIL CLASS)
SEMIANNUAL REPORT TO SHAREHOLDERS
August 20, 1997
Dear Shareholder:
Strong demand in the stock markets marked the first six months of 1997,
fueled by a strong economy. The Federal Reserve moved the target Fed Funds Rate
up from 5.25% to 5.50% in mid March. Short term interest rates followed the move
and trading in the 90 day U.S. Treasury Bills witnessed yields beginning the
year at 5.66% moving to 6.01% on June 30, 1997. In anticipation of further Fed
intervention, the investment community has pushed up the short end of the yield
curve. A move that, as of the date of this report, has not yet occurred.
The portfolio manager followed a steady course with the portfolio and did not
make many changes in the composition or in the average maturity throughout the
period. The portfolio began the year with 52% in large company A1/P1 commercial
paper, 31% in U.S. Government agency discount notes and the remaining 17% in
overnight repurchase agreements. The portfolio at June 30, 1997 had the same 52%
in commercial paper, but due to a temporary shortage in overnight repurchase
agreements, boosted its U.S. Government and agency position to 48%. After June
30, 1997, the portfolio has returned to a similar allocation as December 31,
1996.
The fund began the year with approximately $125,100,000 in net assets and has
since increased its size to 137,000,000 at June 30, 1997. The seven day
annualized yield for the Retail Class of shares, net of absorption, was 4.78% as
of June 30, 1997 compared to 4.66% at December 31, 1996. The comparative average
seven day yields for the IBC Donoghue First Tier Money Market Fund category was
4.94% and 4.78%, respectively.
We look ahead to a stable second half of the year and do not expect, under
the current economic climate that the Fed will change its policy and raise the
target Fed Funds rate anytime soon.
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).
CASH RESERVE PORTFOLIO
CLASS Y SHARES (INSTITUTIONAL CLASS)
SEMIANNUAL REPORT TO SHAREHOLDERS
August 20, 1997
Dear Shareholder:
Strong demand in the stock markets marked the first six months of 1997,
fueled by a strong economy. The Federal Reserve moved the target Fed Funds Rate
up from 5.25% to 5.50% in mid March. Short term interest rates followed the move
and trading in the 90 day U.S. Treasury Bills witnessed yields beginning the
year at 5.66% moving to 6.01% on June 30, 1997. In anticipation of further Fed
intervention, the investment community has pushed up the short end of the yield
curve. A move that, as of the date of this report, has not yet occurred.
The portfolio manager followed a steady course with the portfolio and did not
make many changes in the composition or in the average maturity throughout the
period. The portfolio began the year with 52% in large company A1/P1 commercial
paper, 31% in U.S. Government agency discount notes and the remaining 17% in
overnight repurchase agreements. The portfolio at June 30, 1997 had the same 52%
in commercial paper, but due to a temporary shortage in overnight repurchase
agreements, boosted its U.S. Government and agency position to 48%. After June
30, 1997, the portfolio has returned to a similar allocation as December 31,
1996.
The fund began the year with approximately $125,100,000 in net assets and has
since increased its size to 137,000,000 at June 30, 1997. The seven day
annualized yield for the Institutional Class of shares, net of absorption, was
5.20% as of June 30, 1997 compared to 5.05% at December 31, 1996. The
comparative average seven day yields for the IBC Donoghue Institutional Money
Market Fund category was 5.18% and 5.04%, respectively.
We look ahead to a stable second half of the year and do not expect, under
the current economic climate that the Fed will change its policy and raise the
target Fed Funds rate anytime soon.
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).
CASH RESERVE PORTFOLIO
CLASS X SHARES (RETAIL CLASS)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 5, 1993
FOR THE SIX (COMMENCEMENT
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31, OF OPERATIONS)
JUNE 30, 1997 ---------------------------- TO DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993
------------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
(Selected data for each share of the Fund
outstanding throughout the periods)
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
-------- ------- ------- ------- -------
Net investment income 0.02 0.05 0.05 0.04 0.02
Less distributions:
Dividends from net investment income (0.02) (0.05) (0.05) (0.04) (0.02)
-------- ------- ------- ------- -------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======= ======= ========
Total investment return (b)<F2> 2.32% 4.78% 5.32% 3.64% 2.99% (a)<F1>
Ratios/Supplemental Data:
Net assets, end of period (nearest thousand) $93,920 $89,946 $86,590 $52,593 $47,768
Ratio of expenses to average net assets (c)<F3> 0.84% (a)<F1> 0.78% 0.79% 1.05% 1.03% (a)<F1>
Capital contributions (d)<F4> -- -- 0.06% -- --
Ratio of net investment income
to average net assets (c)<F3> 4.77% (a)<F1> 4.73% 5.23% 3.62% 2.73% (a)<F1>
Prior to 1996, the assets of the Cash Reserve Portfolio were invested in the
Prime Money Market Portfolio ("Prime") of The Prime Portfolios. At the opening
of business on January 1, 1996, the assets of Prime were liquidated and
transferred to the Principal Preservation Cash Reserve Portfolio ("Fund"). At
that time, Classes were established for the Cash Reserve Portfolio, Class X
(Retail) and Class Y (Institutional). Assets of Prime which previously were
attributed to the Fund were allocated to the Fund's Class X(Retail) shares.
Information as of and results for periods ended prior to January 1, 1996 reflect
the Fund's investments in Prime. Results for the year ended December 31, 1996
reflect the new dual class structure.
(a)<F1>Annualized.
(b)<F2>Prior to 1996, the advisers to Prime made capital contributions to offset
losses in securities. Had the advisers not made capital contributions, the
adjusted annualized total returns would have been 5.26% and 1.91% for 1995 and
1994, respectively.
(c)<F3>Prior to 1996, the ratio reflects the Fund's share of Prime's expenses as
well as voluntary waivers of fees and expense reimbursements by Prime's adviser.
For the period ended June 30, 1997 and year ended December 31, 1997, the Fund's
adviser and administrator voluntarily waived a portion of their fees. Without
these voluntary waivers and expense reimbursements, the annualized ratios of net
investment income and expenses to average net assets would have been as follows:
FOR THE PERIOD
APRIL 5, 1993
FOR THE SIX (COMMENCEMENT
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31, OF OPERATIONS)
JUNE 30, 1997 ---------------------------- TO DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993
------------- ------- ------- ------- ---------------
Ratio of expenses to average net assets 0.94% (a)<F1> 0.99% 1.16% 1.32% 1.32%
Ratio of net investment income
to average net assets 4.67% (a)<F1> 4.63% 4.86% 3.35% 2.44%
(d)<F4>For the year ended December 31, 1995, the manner in which capital
contributions are presented changed from the prior year as a result of a
Securities and Exchange Commission Division of Investment Management letter
clarifying the presentation of capital contributions. For the year ended
December 31, 1995, capital contributions were presented in the financial
statements of both the Fund and Prime, whereas in 1994 capital contributions
were presented only in Prime's financial statements.
The accompanying notes are an integral part of the financial statements.
</TABLE>
CASH RESERVE PORTFOLIO
CLASS Y SHARES (INSTITUTIONAL CLASS)
FINANCIAL HIGHLIGHTS
FOR THE SIX
MONTHS ENDED
JUNE 30, 1997 FOR THE YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
------------- ----------------
(Selected data for each share of the Fund
outstanding throughout the periods)
Net asset value, beginning of period $1.00 $1.00
------- -------
Income from investment operations:
Net investment income 0.03 0.05
Less distributions:
Dividends from net investment income (0.03) (0.05)
------- -------
Net asset value, end of period $1.00 $1.00
======= =======
Total investment return 2.52%*<F5> 5.20%
Ratios/Supplemental Data:
Net assets, end of period (nearest thousand) $41,683 $35,120
Ratio of expenses to average net assets (a)<F6> 0.42%*<F5> 0.34%
Ratio of net investment income to average
net assets (a)<F6> 5.02%*<F5> 4.95%
(a)<F6>For the period ended June 30, 1997 and year ended December 31, 1996, the
adviser and administrator voluntarily waived a portion of their fees. Without
these voluntary waivers, the annualized ratios would have been as follows:
Ratio of expenses to average net assets 0.52%*<F5> 0.54%
Ratio of net investment income to average
net assets 4.92%*<F5> 4.75%
*<F5>Annualized.
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
ASSETS:
Investments in Securities, at amortized cost and value:
U.S. Government and Agency Obligations $64,400,990
Short Term Investments 71,700,558
Investments Sold 397
Other Assets 13,857
-----------
Total Assets 136,115,802
LIABILITIES:
Dividends payable (Retail Class X) $0
Dividends payable (Institutional Class Y) 107,929
Accrued expenses 105,735
-------
Total Liabilities 213,664
-----------
NET ASSETS $135,902,138
===========
NET ASSETS CONSIST OF:
Capital Stock $136,091,508
Undistributed net investment income 1,220
Accumulated net realized loss (190,590)
-----------
Net Assets $135,902,138
===========
INSTITUTIONAL CLASS Y
Net Assets (in 000's) $41,683
Shares Authorized 200,000
Shares Issued and Outstanding 41,747
Net asset value and redemption price per share $1.00
RETAIL CLASS X
Net Assets (in 000's) $93,920
Shares Authorized 200,000
Shares Issued and Outstanding 94,160
Net asset value and redemption price per share $1.00
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INVESTMENT INCOME:
Interest income $3,586,497
---------
Total investment income 3,586,497
---------
EXPENSES:
Investment advisory fees 131,091
Administration fees 98,318
Shareholder service fees Class X 116,888
Distribution fees Class X 70,133
Professional fees 36,877
Depository fees 27,729
Directors fees 13,510
Registration fees 14,128
Transfer agent fees Class X 724
Transfer agent fees Class Y 1,448
Pricing 179
Printing and postage fees Class X 7,475
Printing and postage fees Class Y 565
Deferred organization expense 4,107
Miscellaneous expenses 6,529
-------
Total expenses 529,701
Less: Waiver by the Adviser/Administrator (68,643)
--------
Net expenses 461,058
---------
NET INVESTMENT INCOME 3,125,439
Net realized loss on investments (3)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,125,436
=========
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $3,125,439 $6,181,887
Net realized loss on investments (3) (53,333)
---------- ----------
Net increase in net assets resulting
from operations 3,125,436 6,128,554
CAPITAL TRANSACTIONS:
Proceeds from sales of shares 202,763,404 436,903,589
Reinvestment of dividends 2,455,982 4,890,666
Cost of shares redeemed (194,385,067) (403,263,856)
------------ ------------
Net increase in net assets resulting
from share transactions 10,834,319 38,530,399
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Class X Shares (2,175,386) (4,204,427)
Class Y Shares (950,731) (1,975,562)
----------- -----------
Total distributions (3,126,117) (6,179,989)
CAPITAL CONTRIBUTIONS -- --
---------- ----------
Total increase in net assets 10,833,638 38,478,964
NET ASSETS:
Beginning of period 125,068,500 86,589,536
----------- ----------
End of period (including undistributed
net investment income
of $1,220 and $1,898, respectively) $135,902,138 $125,068,500
=========== ===========
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (UNAUDITED)
NOTE 1 - ORGANIZATION
Principal Preservation Cash Reserve Portfolio (the "Fund") is a separate series
of Principal Preservation Portfolios, Inc., (the "Company"), a Maryland
corporation organized in 1984. The Fund's investment objective is to seek high
current income to the extent consistent with stability of principal and the
maintenance of liquidity. The Company is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
commenced operations on April 5, 1993. Class Yshares were first offered on
January 1, 1996.
Through December 31, 1995, the Fund sought to achieve its investment objective
by investing all the investable assets in the Prime Money Market Portfolio (the
"Portfolio") a separate series of The Prime Portfolios, an open-end, diversified
management investment company. Prime had the same investment objectives as the
Fund.
Effective January 1, 1996, pursuant to an Agreement and Plan of Reorganization
and Liquidation dated December 8, 1995, this master/feeder fund structure was
unwound, and the Fund withdrew its investment in the Portfolio. The Fund was
restructured to increase its authorized capital from 300 million to 400 million
shares of the Company's authorized common stock, which were subdivided into two
separate classes of 200 million shares each: Class X Common Stock (Retail
Class) and Class Y Common Stock (Institutional Class). All shares of the Fund
outstanding immediately prior to this restructuring were redesignated (without
otherwise affecting their rights and preferences) as shares of the Retail Class.
Financial statements and results of operations presented herein as of and for
periods ended prior to January 1, 1996 reflect the performance of the Fund's
investments through Prime.
Each class of shares has identical rights and privileges, except with respect to
service organization fees and distribution fees paid by Class X Shares, voting
rights on matters affecting a single Class of shares and the exchange privileges
of each Class of shares.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the Fund:
a) VALUATION OF INVESTMENTS - Money market instruments are valued at amortized
cost, which the Directors have determined in good faith constitutes fair value.
The Fund's use of amortized cost is subject to the Fund's compliance with
certain conditions as specified under Rule 2a-7 of the Investment Company Act of
1940.
b) INTEREST INCOME - Interest income consists of interest accrued and discount
earned (including both original issue and market discount) on the investments of
the Fund, accrued ratably to the date of expected maturity. Premiums are
amortized on the investments of the Fund, accrued ratably to the date of
expected maturity.
c) FEDERAL INCOME TAXES - The Fund intends to distribute substantially all of
its taxable income to its shareholders and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
Accordingly, no provision for federal income or excise taxes is necessary. As of
December 31, 1996, the Fund has Federal income tax capital loss carryforwards of
$53,333 and $140,095 expiring in 2003 and 2002, respectively. It is management's
intention to make no distribution of any future realized capital gains until its
Federal income tax capital loss carry forward is exhausted.
d) DEFERRED ORGANIZATION EXPENSES - Expenses incurred by Class X in connection
with its organization and the initial public offering of its shares are being
amortized by the Fund over the period of benefit, but not to exceed five years
from the commencement of operations. These expenses were advanced by B.C.
Ziegler and Company ("BCZ"), a wholly-owned subsidiary of The Ziegler Companies,
Inc., who was reimbursed by the Fund.
e) EXPENSE ALLOCATION - The Fund bears all costs of its operations other than
expenses specifically assumed by BCZ. Expenses incurred by the Company with
respect to any two or more funds in the series are allocated in proportion to
the average net assets of each fund, except where allocations of direct expenses
in each fund can otherwise be made fairly. Net investment income, including
expenses, other than class specific expenses and realized and unrealized gains
and losses are allocated daily to each class of shares based upon the relative
net asset value of outstanding shares of each class of shares at the beginning
of the day.
f) 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 reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
g) OTHER - Investment transactions are accounted for on the date the security
is purchased or sold. The Fund has investments in repurchase agreements, which
are securities purchased from another party who agrees to repurchase the
security within a specified time period at a specified price. It is the policy
of the Fund to require the custodian bank to have legally segregated within the
Federal Reserve/Treasury book-entry system, all securities held as collateral in
support of the repurchase agreements. Procedures have been established by the
Fund to monitor the market value of the collateral to ensure the existence of a
proper level of collateral.
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of the collateral securities.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
a) ADMINISTRATION FEES - Pursuant to an Administrative Services Agreement,
Ziegler Asset Management, Inc. ("ZAMI"), a wholly-owned subsidiary of The
Ziegler Companies, Inc., provides the Fund general office facilities and
supervises the overall administration of the Fund. For these services, ZAMI
receives a fee computed daily and payable monthly totalling 0.15% of average
daily net assets up to $200 million, and 0.10% of such assets over $200 million.
For the period ended June 30, 1997, the Fund incurred administration fees of
$98,318. ZAMI voluntarily waived $64,536 of its collective advisory and
administrative fees during the period ended June 30, 1997. This waiver may be
discontinued at any time by ZAMI.
b) INVESTMENT ADVISORY FEES - ZAMI is also the Investment Adviser to the Fund.
For its services under the Investment Advisory Agreement, the advisor receives
from the Fund a fee accrued daily and paid monthly at an annual rate equal to
0.20% of the Portfolio's average daily net assets. For the period ended June 30,
1997, the Fund incurred total Advisory fees of $131,092.
c) DISTRIBUTION FEES - The Class X Retail Shares of the Fund has adopted a
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The Plan authorizes the Fund to make payments to BCZ to
reimburse BCZ for expenditures incurred in connection with the distribution of
Class X shares to investors. Under the Plan, payments made by the Fund may not
exceed 0.15% of average daily net assets of Class X shares. For the period ended
June 30, 1997, the Fund incurred distribution fees aggregating $70,133.
d) SHAREHOLDER SERVICING FEES - BCZ and certain other brokers and financial
institutions serve as shareholder servicing agents for shareholder accounts
opened and maintained through them by their customers in the Class X Retail
Shares. Under this agreement, BCZ receives a fee of up to 0.25% of the Retail
Class's average daily net assets representing shares owned by BCZ's customers
and held in accounts serviced by BCZ. BCZ also serves as transfer and dividend
disbursing agent for all shareholder accounts holding Class X shares which are
not serviced separately by a shareholder servicing agent and for all shareholder
accounts holding Class Y shares. Fees currently charged by BCZ to each class of
shares for this service are $16 per shareholder account. For the period ended
June 30, 1997, the Fund incurred shareholder servicing fees aggregating
$116,888.
e) DEPOSITORY FEES - The Fund has entered into an agreement with BCZ to
provide the Fund with depository services. For these services, the Fund
currently pays BCZ a fee based on average daily net assets, computed monthly, at
an annual rate of 0.055% on the first $50 million of net assets, 0.035% on the
next $150 million of such assets, 0.030% on the next $300 million and 0.025% on
amounts over $500 million of such assets. For the period ended June 30, 1997,
the Fund incurred total depository fees of $27,729.
f) FUND ACCOUNTING FEES - The Fund has entered into an agreement with BCZ to
provide the Fund with Accounting/Pricing services. For these services, the Fund
currently pays BCZ a base fee of $15,000 and a fee based on average daily net
assets, computed monthly at an annual rate of 0.04% on net assets between $50
million and $100 million, 0.03% on the next $100 million of such assets, and
0.01% on amounts over $200 million of such assets. For the period ended June 30,
1997, the Fund incurred total fund accounting fees of $22,625.
NOTE 4 - INVESTMENT TRANSACTIONS
Purchases and sales (including maturities) of U.S. Government securities,
excluding all short-term securities, aggregated $6,059,077 and $4,000,000,
respectively.
NOTE 5 - CAPITAL CONTRIBUTION
During the year ended December 31, 1995, BCZ contributed capital to the Cash
Reserve Portfolio to offset 1995 realized losses of $14,488 and 1994 realized
losses of $25,204. Neither BCZ nor any of its affiliates received any shares of
common stock or any other consideration in exchange for this contribution which
further increased the assets of the Fund.
NOTE 6 - CAPITAL SHARE TRANSACTIONS
In connection with the restructuring described in Note 1, effective at the open
of business on January 1, 1996 all previously outstanding shares of Cash Reserve
Portfolio were reclassified as Class X Retail Shares. At the same time, Class Y
Institutional Shares were issued in exchange for outstanding shares of Prospect
Hill Prime Money Market Fund, a series of Prospect Hill Trust, which, like the
Fund, prior to that time had invested all of its investable assets in Prime.
Transactions in capital shares for the Fund, in thousands, were as follows:
CLASS X CLASS Y
------- -------
SHARES OUTSTANDING
AT DECEMBER 31, 1995 86,687 0
Shares sold 93,195 343,755
Shares reinvested 4,204 686
Shares redeemed (94,007) (309,257)
-------- --------
SHARES OUTSTANDING
AT DECEMBER 31, 1996 90,079 35,184
Shares sold 50,720 152,044
Shares reinvested 2,174 282
Shares redeemed (48,678) (145,707)
-------- --------
SHARES OUTSTANDING
AT JUNE 30, 1997 94,295 41,803
======== ========
CASH RESERVE PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
PRINCIPAL MATURITY INTEREST VALUE
AMOUNT DATE RATE (NOTE 2A)
--------- --------- -------- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 47.4%
$6,068,000 U.S. Treasury Bill 7/10/97 4.760% $6,060,779
----------
Total Treasuries 6,060,779
----------
FEDERAL FARM CREDIT BANK ("FFCB")
3,000,000 FFCB Discount Note 8/19/97 5.420 2,977,868
2,000,000 FFCB Discount Note 7/25/97 5.390 1,992,813
7,955,000 FFCB Discount Note 7/18/97 5.400 7,934,715
----------
Total Federal Farm Credit Bank 12,905,396
----------
FEDERAL HOME LOAN BANK ("FHLB")
3,000,000 FHLB Discount Note 9/5/97 5.420 2,970,190
3,000,000 FHLB Discount Note 9/3/97 5.430 2,971,040
2,000,000 FHLB Discount Note 8/12/97 5.400 1,987,400
5,000,000 FHLB Discount Note 7/2/97 5.370 4,999,254
----------
Total Federal Home Loan Bank 12,927,884
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC")
1,483,000 FHLMC Discount Note 8/12/97 5.460 1,473,553
1,000,000 FHLMC Discount Note 8/4/97 5.440 994,862
5,000,000 FHLMC Discount Note 8/1/97 5.440 4,976,578
980,000 FHLMC Discount Note 7/11/97 5.500 978,503
1,900,000 FHLMC Discount Note 7/9/97 5.420 1,897,712
4,500,000 FHLMC Discount Note 7/7/97 5.420 4,495,935
----------
Total Federal Home Loan Mortgage Corporation 14,817,143
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA")
3,000,000 FNMA Discount Note 9/8/97 5.420 2,968,835
3,000,000 FNMA Discount Note 8/18/97 5.420 2,978,320
1,745,000 FNMA Discount Note 7/10/97 5.450 1,742,633
10,000,000 FNMA Discount Note 7/1/97 5.380 10,000,000
----------
Total Federal National Mortgage Association 17,689,788
----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS 64,400,990
----------
SHORT TERM -- 52.7%
COMMERCIAL PAPER
$2,000,000 American General Finance
Corporation 7/24/97 5.550% $1,992,908
2,000,000 American General Finance
Corporation 7/16/97 5.610 1,995,325
2,000,000 American General Finance
Corporation 7/2/97 5.560 1,999,691
3,000,000 American Express Credit
Corporation 8/20/97 5.530 2,976,958
3,000,000 American Express Credit
Corporation 7/1/97 5.560 3,000,000
3,000,000 Associates Corporation 7/14/97 5.560 2,993,977
3,000,000 Associates Corporation 7/7/97 5.580 2,997,210
2,000,000 The CIT Group Holdings
Corporation 8/26/97 5.550 1,982,733
2,000,000 The CIT Group Holdings
Corporation 8/1/97 5.560 1,990,424
2,000,000 The CIT Group Holdings
Corporation 7/15/97 5.570 1,995,668
3,000,000 Commercial Credit
Corporation 8/19/97 5.520 2,977,460
3,000,000 Commercial Credit
Corporation 7/7/97 5.610 2,997,195
3,000,000 E.I. du Pont de Nemours
and Company 8/6/97 5.490 2,983,530
3,000,000 E.I. du Pont de Nemours
and Company 7/22/97 5.490 2,990,393
4,000,000 Ford Motor Credit
Corporation 8/22/97 5.540 3,967,991
2,000,000 Ford Motor Credit
Corporation 7/8/97 5.600 1,997,822
3,000,000 General Electric Capital
Corporation 8/15/97 5.540 2,979,225
3,000,000 General Electric Capital
Corporation 7/29/97 5.550 2,987,050
3,000,000 Household Finance
Corporation 8/5/97 5.570 2,983,754
3,000,000 Household Finance
Corporation 7/28/97 5.540 2,987,535
2,500,000 Marshall & Ilsley
Corporation 8/4/97 5.570 2,486,849
3,500,000 Marshall & Ilsley
Corporation 7/28/97 5.550 3,485,431
3,000,000 Norwest Financial
Corporation 8/25/97 5.550 2,974,563
3,000,000 Norwest Financial
Corporation 7/17/97 5.530 2,992,627
3,000,000 Rabobank Nederland 7/21/97 5.540 2,990,767
3,000,000 Rabobank Nederland 7/18/97 5.570 2,992,109
----------
Total Commercial Paper 71,699,195
----------
MONEY MARKET
1,363 Dreyfus Cash Management Plus 1,363
----------
Total Money Market 1,363
----------
TOTAL SHORT TERM 71,700,558
----------
Total Investments, at Amortized Cost $136,101,548
===========
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 AND ADMINISTRATOR
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, DEPOSITORY, TRANSFER AND DIVIDEND
DISBURSING AGENT, 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. Cash Reserve Portfolio, and may not be used in
connection with the offering of securities unless preceded or accompanied by a
current Prospectus.
PP 865-8/97
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 AND ADMINISTRATOR
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, DEPOSITORY, TRANSFER AND DIVIDEND
DISBURSING AGENT, 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. Cash Reserve Portfolio, and may not be used in
connection with the offering of securities unless preceded or accompanied by a
current Prospectus.
PP 878-8/97
