(WISCONSIN TAX-EXEMPT PORTFOLIO LOGO)
------------
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
June 30, 1999
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SEMIANNUAL REPORT TO SHAREHOLDERS
August 23, 1999
Dear Wisconsin Shareholder:
I am pleased to provide you with the Wisconsin Tax-Exempt Portfolio
semiannual report for the period ended June 30, 1999. Since December 31, 1998,
the Wisconsin Tax Exempt Portfolio's net assets increased from $45,580,000 to
$51,591,000. Additionally, total assets of the Principal Preservation mutual
fund family grew from $602,000,000 at December 31, 1998 to $730,358,000 as of
June 30, 1999. Investors continue to focus on the broad base stock market,
rather than the tax-exempt bond markets.
The domestic economy continued to grow at a healthy pace during the first six
months of 1999. Higher income levels combined with a robust real estate market
and increasing stock prices fueled the consumer sector, which was the primary
driver of domestic growth. The federal reserve, concerned about inflation in
light of the strong economy, finally made good on its warnings with a 0.25%
increase in the overnight lending rate. As a result, the first six months for
the bond market responded with higher yields and lower prices, causing negative
returns on investments. Short term interest rates, as measured by the 90 day
U.S. Treasury rose from 4.5% as of December 31, 1998 to 4.78% as of
June 30, 1999. Tax-Exempt Securities, while experiencing market declines,
performed slightly better than the general taxable bond market.
On the following pages, we describe in further detail the factors affecting
the performance of your Portfolio. We thank you for your continued support and
trust with us at Principal Preservation.
Sincerely,
/s/Robert J. Tuszynski
Robert J. Tuszynski
President and CEO
This report was prepared for shareholders of Principal Preservation's Wisconsin
Tax-Exempt Portfolio. It does not constitute an offer to sell shares of the
Portfolio. Any investor who wishes to receive more information about the
Wisconsin Tax-Exempt Portfolio or any of the other portfolios in the Principal
Preservation Fund Family should obtain a prospectus, which includes a discussion
of the investment objective, all sales charges and expenses and the investment
risks associated with each portfolio.
MANAGEMENT DISCUSSION AND ANALYSIS
MARKET OVERVIEW:
The Wisconsin Tax-Exempt Portfolio's return on net assets was (0.66)% for the
six month period ended June 30, 1999. This compared to the return of (5.03)%
for the 20 year municipal bond buyer index. Yields on tax exempt securities
rose during the six months, partly in reaction to the federal reserve's 0.25%
increase in short term interest rates. The yield on the 30 year AAA bond began
the period at 4.96% and rose during the period to 5.35%. Similarly, the A bond
yield rose from 5.07% to 5.48% and BBB yields rose from 5.16% to 5.64%. In
comparison, the taxable bond market as measured by the 30 year U.S. Treasury
Bond yield began the year at 5.12% and finished the June 30, 1999 period at
6.02%. A fairly low level of new municipal bonds issued slowed the increase in
municipal bond yields.
Most of the yield increase in Treasury securities occurred during the first
quarter, when long term Treasury yields exceeded increases in yields on
municipal securities by more than 40 basis points. While issuance of new
municipal bonds in the first quarter was slightly higher than the first quarter
of 1998, the new issue volume of $57.6 billion during the second quarter was
down almost 30% from the same period in 1998. This decline in new issue volume
slowed the increase of municipal yields. As a result, the municipal bond yield
returned to a more normal 90% of Treasury bond yields.
PORTFOLIO REVIEW:
During the first six months, the portfolio manager invested approximately
$5,000,000 of net proceeds in issues from the State of Wisconsin such as the AA
rated Madison, Wisconsin Fluno Center bonds maturing November 1, 2020 and the AA
rated Sturgeon Bay, Wisconsin bonds maturing October 1, 2017. The Wisconsin
based issues represent approximately 74% of the Portfolio's total net assets at
June 30, 1999 compared to 72% as of December 31, 1998. The Wisconsin Tax-Exempt
Portfolio return was helped by the pre-refunding of the Wisconsin Center
District bonds. The pre-refunding resulted in an escrowing of U.S. Treasury
bonds that mature in 2006. This pre-refunding automatically increased the
valuation of those securities by six points. As a result, the duration of the
fund declined slightly. The portfolio manager sees future opportunity to obtain
high quality double exempt bonds which should be free from any alternative
minimum tax issues.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
FINANCIAL HIGHLIGHTS
The table below presents information for a share of capital stock of
Principal Preservation Portfolios, Inc.' s. Wisconsin Tax-Exempt Portfolio
outstanding for the periods indicated. You should read this information in
conjunction with the financial statements and related notes.
<TABLE>
WISCONSIN
TAX-EXEMPT PORTFOLIO
-----------------------------------------------------------------
For the
period ended
June 30, 1999 For the years ended December 31,
----------------------------------------------
(Unaudited) 1998 1997 1996 1995
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $10.27 $10.21 $9.87 $10.05 $9.10
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .22 .48 .49 .49 .50
Net realized and unrealized gains
(losses) on investments (.29) .06 .34 (.18) .95
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (.07) .54 .83 .31 1.45
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (.23) (.48) (.49) (.49) (.50)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.23) (.48) (.49) (.49) (.50)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $9.98 $10.27 $10.21 $9.87 $10.05
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN **<F2> (0.7%) 5.4% 8.7% 3.3% 16.3%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (to nearest thousand) $51,730 $45,693 $32,852 $25,750 $18,986
Ratio of expenses to average net assets 0.8%*<F1>+<F3> 0.6%+<F3> 0.5%+<F3> 0.5%+<F3> 0.4%+<F3>
Ratio of net investment income to average net assets 4.4%*<F1>+<F3> 4.6%+<F3> 4.9%+<F3> 4.9%+<F3> 5.0%+<F3>
Portfolio turnover rate 1.0% 12.5% 16.9% 16.0% 9.7%
</TABLE>
*<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 0.2% in 1999,
0.4% in 1998, 0.6% in 1997, 0.6% in 1996 and 0.8% in 1995, respectively.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
BALANCE SHEET
JUNE 30, 1999 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
ASSETS:
Investments:
Cost basis of investments $50,991,467
-----------
-----------
Long-term investments in securities $51,300,363
Cash 970
Receivables:
Capital shares sold 21,219
Interest 632,796
-----------
Total receivables 654,015
Other assets 966
-----------
Total assets $51,956,314
-----------
-----------
LIABILITIES:
Payables:
Capital shares redeemed $ --
Distributions to shareholders 56,099
Management fees 20,545
Other accrued expenses 45,311
Other liabilities 104,683
-----------
Total liabilities 226,638
-----------
NET ASSETS:
Capital stock 51,455,950
Undistributed net investment income 10,667
Undistributed net realized gains (losses) on investments (45,837)
Net unrealized appreciation on investments 308,896
-----------
Total net assets 51,729,676
-----------
Total liabilities and net assets $51,956,314
-----------
-----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 9.98
-----------
-----------
MAXIMUM OFFERING PRICE PER SHARE $ 10.24
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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, 1999 (Unaudited)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
INVESTMENT INCOME:
Interest $1,315,418
-----------
Total investment income 1,315,418
-----------
EXPENSES:
Investment advisory fees 124,574
Custodian fees 5,332
Transfer agent fees 15,270
Broker service fees 65,215
Professional fees 17,251
Registration 1,796
Communication 9,191
Director fees 1,866
Pricing of investments 4,346
Deferred organization expense 1,160
Other 3,151
-----------
Total expenses 249,152
Less expenses absorbed by advisor (39,814)
-----------
Net expenses 209,338
-----------
NET INVESTMENT INCOME 1,106,080
-----------
NET REALIZED GAINS (LOSSES) ON INVESTMENTS (10,587)
CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS FOR THE YEAR
(1,493,584)
-----------
Net gain on investments (1,504,171)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (398,091)
-----------
-----------
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, 1999 (Unaudited)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $ 1,106,080
Net realized gains (losses) on investments (10,587)
Change in unrealized appreciation on investments for the year (1,493,584)
-----------
Net increase (decrease) in net assets
resulting from operations (398,091)
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.228 per share) (1,105,431)
-----------
Total distributions (1,105,431)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 8,690,211
Net asset value of shares issued in distributions 773,723
Cost of shares redeemed (1,923,441)
-----------
Net increase in net assets from
capital share transactions 7,540,493
-----------
Total increase 6,036,971
NET ASSETS:
Balance at beginning of period 45,692,705
-----------
Balance at end of period $51,729,676
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-----------
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, 1998
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $ 1,800,897
Net realized losses on investments (29,062)
Change in unrealized appreciation on investments for the year 268,450
-----------
Net increase in net assets resulting from operations 2,040,285
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.48 per share) (1,792,682)
-----------
Total distributions (1,792,682)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 14,532,615
Net asset value of shares issued in distributions 1,251,011
Cost of shares redeemed (3,190,205)
-----------
Net increase in net assets from capital
share transactions 12,593,421
-----------
Total increase 12,841,024
NET ASSETS:
Balance at beginning of period 32,851,681
-----------
Balance at end of period $45,692,705
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-----------
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, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES --
Principal Preservation Portfolios, Inc. (the "Fund"), registered under the
Investment Company Act of 1940 is an open-end management investment company, is
a series company with nine 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, Select
Value Portfolio and Managed Growth 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 day after trade date. However,
the financial statement information reflects an adjustment to reflect trade
date activity.
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, 1998, the Portfolio had
Federal income tax capital loss carryforwards of $3,176 expiring in 2003,
$3,012 expiring in 2004 and $29,061 expiring in 2005. 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.
The character of distributions made during the year from net investment
income or net realized gains may differ from the characterization for
federal income tax purposes due to differences in the recognition of income,
expense or gain items for financial statement and tax purposes. Where
appropriate, reclassifications between net asset accounts are made for such
differences that are permanent in nature.
(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, by the
ratio of accounts maintained in each portfolio or some other fair allocation
process.
(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 "Agreement") with B.C.
Ziegler and Company ("BCZ") (with whom certain officers and directors of the
Fund are affiliated), to serve as the Investment Advisor. BCZ is a wholly owned
subsidiary of The Ziegler Companies, Inc. Under the Agreement, the Portfolio
pays BCZ 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, 1999, BCZ voluntarily reimbursed expenses to the
Portfolio totaling $39,814. BCZ 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 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, 1999 were as follows:
ACCOUNTING
TRANSFER COMMISSIONS AND PRICING
AGENT FEES ON PORTFOLIO SHARES FEES 12B-1 FEES
---------- ------------------- ----------- --------------
Wisconsin
Tax-Exempt
Portfolio $11,947 $65,484 $12,375 $36,575
3. INVESTMENT TRANSACTIONS --
Purchases and proceeds from sales of securities, excluding short-term
investments, for the period ended June 30, 1999, consisted of purchases of
$8,344,129 and $506,626 in proceeds from the sale of securities.
Net tax basis unrealized appreciation (depreciation) on investments as of June
30, 1999, included:
WISCONSIN
TAX-EXEMPT
-----------
Gross unrealized appreciation $1,293,239
Gross unrealized depreciation (984,343)
-----------
Net unrealized appreciation $ 308,896
-----------
-----------
The tax basis cost of investments at June 30, 1999 was $50,991,467.
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, Tax-Exempt Portfolio,
S&P 100 Plus Portfolio, Dividend Achievers Portfolio, Select Value
Portfolio, PSE Tech 100 Index Portfolio, Managed Growth Portfolio and Cash
Reserve Portfolio, consisting of 50,000,000 shares in each of the first
eight portfolios and 400,000,000 in the Cash Reserve Portfolio. Each
portfolio (other than the Cash Reserve Portfolio) has designated Class A
(front-end load) shares. In addition, the S&P 100 Plus, Dividend Achievers,
Select Value, PSE Tech 100 Index and Managed Growth Portfolio also have
designated Class B (contingent deferred sales charge) shares. 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 200,000,000 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 years ended December 31, 1998 and the
period ended June 30, 1999, respectively, were as follows:
WISCONSIN
TAX-EXEMPT
-----------
SHARES OUTSTANDING AT DECEMBER 31, 1997 3,218,708
-----------
-----------
Shares issued 1,419,230
Shares issued in distributions 122,119
Shares redeemed (312,229)
-----------
SHARES OUTSTANDING AT DECEMBER 31, 1998 4,447,828
-----------
-----------
Shares issued 848,022
Shares issued in distributions 75,778
Shares redeemed (189,010)
-----------
SHARES OUTSTANDING AT JUNE 30, 1999 5,182,618
-----------
-----------
(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.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
PRINCIPAL S&P MOODY'S
AMOUNT DESCRIPTION RATING RATING VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM TAX-EXEMPT SECURITIES -- 99.2%
GEORGIA -- 1.1%
$325,000 Atlanta, Georgia, New Public Housing Authority, 5.00%, AAA Aaa $332,026
due 05-01-2007
250,000 Newnan, Georgia, New Public Housing Authority, 5.00%, AAA Aaa 255,163
due 04-01-2012
GUAM -- 6.2%
650,000 Guam Government Limited Obligation Highway Bonds, AAA Aaa 689,813
Series A, 6.30%, due 05-01-2012
1,035,000 Government of Guam, Limited Obligation Infrastructure AAA Aaa 1,000,069
Improvement Bonds, 1997 Series A, 5.00%, due 11-01-2017
515,000 Guam Power Authority Revenue Bonds, Series A, 6.375%, AAA Aaa 558,131
due 10-01-2008
1,000,000 Guam Power Authority Revenue Bonds, 1999 Series A, AAA Aaa 951,250
5.00%, due 10-01-2024
ILLINOIS -- 1.0%
200,000 Cook County, Illinois, New Public Housing
Authority, 5.25%, AAA Aaa 204,256
due 04-01-2010
300,000 Peoria, Illinois, New Public Housing Authority, 5.00%, AAA Aaa 304,125
due 06-01-2012
MASSACHUSETTS -- 1.6%
695,000 Massachusetts State Housing Finance Agency, AAA Al 810,544
Multi-Family Housing
Bonds, First Issue, 1979 Series A, 7.00%, due 04-01-2021
NEVADA -- 0.5%
255,000 Las Vegas, Nevada, New Public Housing Authority, 5.00%, AAA Aaa 259,462
due 01-01-2012
NEW JERSEY -- 1.3%
250,000 Newark, New Jersey, New Public Housing Authority, 4.50%, AAA Aaa 245,625
due 04-01-2008
435,000 Newark, New Jersey, New Public Housing Authority, 5.25%, AAA Aaa 440,016
due 04-01-2009
NEW YORK -- 0.8%
200,000 New York, New York, New Public Housing Authority, 5.375%, AAA Aaa 204,626
due 01-01-2012
200,000 New York, New York, New Public Housing Authority, 5.00%, AAA Aaa 204,000
due 01-01-2012
due 05-01-2007
NORTH CAROLINA -- 0.8%
400,000 Durham, North Carolina, New Public Housing Authority, 5.00%, AAA Aaa 408,068
due 02-01-2012
NORTH DAKOTA -- 0.8%
200,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 204,278
4.875%, due 01-01-2009
185,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 188,948
4.875%, due 01-01-2010
N MARIANA ISLANDS -- 0.2%
100,000 Commonwealth of the Northern Mariana Islands General Obligation AAA Aaa 102,000
Bonds, Series 1999A, (Public School System Projects), 5.125%,
due 10-01-2008
OHIO -- 2.5%
500,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 510,985
due 05-01-2011
250,000 Youngstown, Ohio, New Public Housing Authority, 4.875%, AAA Aaa 255,203
due 05-01-2009
200,000 Youngstown, Ohio, New Public Housing Authority, 4.875%, AAA Aaa 203,750
due 05-01-2010
300,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 306,603
due 05-01-2012
PENNSYLVANIA -- 0.9%
270,000 Allentown, Pennsylvania, New Public Housing Authority, 4.875%, AAA Aaa 272,025
due 05-01-2011
200,000 Clinton County, Pennsylvania, New Public Housing Authority, AAA Aaa 204,284
5.25%, due 11-01-2007
PUERTO RICO -- 5.5%
100,000 Puerto Rico Commonwealth Highway &Transportation, 6.625%, A Baa1 107,875
due 07-01-2012
350,000 Puerto Rico Commonwealth Highway & Transportation Authority, A Aaa 378,437
Highway Revenue Unrefunded Balance, Series T, 6.625%,
due 07-01-2018
325,000 Puerto Rico Commonwealth, Refunding Bonds, Series A, 6.00%, A Baal 341,250
due 07-01-2014
350,000 Puerto Rico Commonwealth General Obligation Bonds, 6.00%, A Aaa 372,313
Prefunded 07-01-2002
180,000 Puerto Rico Commonwealth Electric &Power Authority, Series R, AAA Aaa 192,825
6.25%, due 07-01-2017
200,000 Puerto Rico New Public Housing Authority, 5.00%, AAA Aaa 201,000
due 06-01-2010
700,000 Puerto Rico Public Buildings Authority, Public Education A Baa1 720,125
& Health Facilities, Refunding Bonds, Series M, 5.75%,
due 07-01-2015
150,000 Puerto Rico Telephone Authority, Series L, 5.75%, due 01-01-2011 A+ A2 155,062
350,000 Puerto Rico Telephone Authority, Series L, 6.125%, due 01-01-2022 A+ A2 368,813
SOUTH CAROLINA -- 0.4%
200,000 Marion, South Carolina, New Public Housing Authority, 4.875%, AAA Aaa 202,250
due 09-01-2010
TENNESSEE -- 0.4%
190,000 Nashville, Tennessee, New Public Housing Authority, 5.00%, AAA Aaa 188,100
due 08-01-2010
TEXAS -- 1.6%
300,000 El Paso, Texas, New Public Housing Authority, 5.00%, AAA Aaa 305,250
due 07-01-2005
340,000 Waco, Texas, New Public Housing Authority, 4.875%, AAA Aaa 347,596
due 12-01-2009
200,000 Waco, Texas, New Public Housing Authority, 4.875%, AAA Aaa 203,000
due 12-01-2012
WISCONSIN -- 73.6%
500,000 Housing Authority of the City of Ashland, Wisconsin, Student NR Aa3 481,875
Housing Revenue Bonds, Series 1998, (Northland College Project),
5.10%, due 04-01-2018
200,000 Brown County (Wisconsin) Housing Authority, Student Housing NR NR 198,750
Revenue Bonds, Series 1997B, (University Village Housing, Inc.,
Project), 5.400%, due 04-01-2017
600,000 Community Development Authority of the City of Franklin, NR NR 568,500
(Wisconsin), Redevelopment Lease Revenue Refunding Bonds,
Series 1998-B, 4.80%, due 04-01-2009
3,000,000 Community Development Authority of the City of Glendale, Wisconsin, NR NR 2,891,250
Lease Revenue Bonds, Series 1998A
(Tax Increment District No. 7),
5.40%, due 09-01-2018
500,000 Housing Authority of the County of Grant, Wisconsin, Housing NR A3 485,000
Refunding Revenue Bonds, Series 1998, (Orchard Manor), 5.25%,
due 07-01-2018
1,000,000 Housing Authority of the County of Grant, Wisconsin, Housing, NR A3 963,750
Refunding Revenue Bonds, Series 1998, (Orchard Manor), 5.35%,
due 07-01-2026
150,000 Housing Authority of the City of Green Bay, Wisconsin, Student NR NR 153,750
Housing Refunding Revenue Bonds, Series 1997, (University Village
Housing, Inc.), 6.00%, due 04-01-2017
200,000 City of Hartford Community Development Authority, Dodge and NR NR 211,250
Washington Counties, Wisconsin, Community Development Lease
Revenue Bonds, 5.90%, due 12-01-2006
600,000 Community Development Authority of the Village of Jackson, NR NR 584,250
Wisconsin, Community Development Refunding Revenue Bonds,
Series 1999, 5.10%, due 12-01-2017
100,000 Community Development Authority of the Village of Jackson, NR NR 95,875
Wisconsin, Community Development Refunding Revenue Bonds,
Series 1999, 4.90%, due 12-01-2013
500,000 Community Development Authority of the Village of Little Chute, NR NR 505,000
Wisconsin, community Development Lease Revenue Bonds, 5.625%,
due 03-01-2019
3,050,000 Community Development Authority of the City of Madison,Wisconsin, AA- NR 2,870,812
Fixed Rate Development Revenue Bonds, Series 1998A, (Fluno
Center Project), 5.00%, due 11-01-2020
1,000,000 Madison, Wisconsin, Community Development Authority Lease NR Aa2 1,063,750
Revenue Bonds, Monona Terrace Community & Convention Center
Project, 6.10%, due 3-01-2010
300,000 Community Development Authority of the City of Madison,Wisconsin, NR NR 303,000
Multifamily Housing Revenue Bonds, Series 1995, (Dempsey Manor
Project), 6.65%, due 10-01-2025
500,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 529,375
Redevelopment Revenue Bonds, Series 1995
(Meriter Retirement Services, Inc.), 6.125%, due 12-01-2019
265,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 273,944
Project Revenue Bonds, (Series 1986), 5.875%, due 07-01-2016
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
100,000 Milwaukee, Wisconsin, Housing Authority Multifamily Revenue NR Aa2 102,625
Refunding Bonds-Blatz Apartments Project, 7.50%, due 12-01-2028
1,000,000 Redevelopment Authority of the City of Milwaukee (Wisconsin), NR NR 942,500
Development Revenue Bonds, Series 1998, (YMCA of Metropolitan
Milwaukee, Inc. Project), 5.10%, due 12-01-2023
180,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR Aaa 176,625
Redevelopment Revenue Bonds, Series 1999B, (Young Women's
Christian Association of Greater Milwaukee), 5.20%, due 06-01-2029
215,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 210,700
Redevelopment Revenue Bonds, Series 1999A, (Young Women's
Christian Association of Greater Milwaukee), 5.25%, due 6-01-2019
750,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 735,937
Redevelopment Revenue Bonds, Series 1999A, (Young Women's
Christian Association of Greater Milwaukee), 5.30%, due 6-01-2029
1,000,000 Housing Authority of the City of Oak Creek, Wisconsin, Multifamily NR NR 1,046,250
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 75,469
Housing Refunding Revenue Bonds, Series 1993, (Wood Creek
Project), 5.625%, due 07-20-2029
210,000 Community Development Authority of the City of Onalaska,
Wisconsin, Redevelopment Lease Revenue Refunding Bonds, 5.30%, NR NR 206,325
due 06-01-2015
125,000 Housing Authority of the City of Oshkosh, Wisconsin, GNMA NR Aaa 125,625
Collateralized Multifamily Housing Revenue Bonds,
Series 1997, (VNA Assisted Living, Inc. Project),
5.45%, due 09-20-2017
1,275,000 Housing Authority of the City of Oshkosh, Wisconsin, GNMA NR Aaa 1,278,187
Collateralized Multifamily Housing Revenue Bonds, Series 1997,
(VNA Assisted Living, Inc. Project), 5.75%, due 09-20-2038
230,000 Southeast Wisconsin Professional Baseball Park District Sales AAA Aaa 233,162
Tax Revenue Refunding Bonds, Series 1998A, 5.50%, 12-15-2018
2,260,000 Southeast Wisconsin Professional Baseball Park District Sales AAA Aaa 2,412,550
Tax Revenue Bonds, Series 1996, 5.750%, prerefunded 03-13-2007
1,000,000 Housing Authority of the City of Sheboygan, Wisconsin, Multifamily AAA NR 966,250
Housing Refunding Revenue bonds, Series 1998A (GNMA Collat-
Lake Shore Apartments), 5.10%, due 11-20-2026
400,000 Redevelopment Lease Revenue Refunding Bonds, Redevelopment NR NR 379,500
Authority of the Village of Slinger, Wisconsin, 4.70%,
due 09-01-2012
600,000 Redevelopment Authority of the Village of Slinger, Wisconsin, NR NR 624,750
Redevelopment Lease Revenue Bonds, Series 1995-A, 6.25%,
prerefunded 09-01-2001
1,360,000 Waterfront Redevelopment Authority of the City of Sturgeon Bay, A NR 1,259,700
Wisconsin, Redevelopment Lease Revenue Bonds, Series 1998B,
5.00%, due 10-01-2017
2,000,000 Waterfront Redevelopment Authority of the City of Sturgeon Bay, NR NR 1,860,000
Wisconsin, Redevelopment Lease Revenue Bonds, Series 1998A,
5.20%, due 10-01-2021
150,000 Redevelopment Authority of the City of Superior, Wisconsin, NR Aa2 157,875
Revenue Bonds, Series 1994, (Superior Memorial Hospital, Inc.),
5.65%, prerefunded 05-01-2002 @ 102
100,000 Redevelopment Authority of the City of Superior, Wisconsin, NR Aa2 105,625
Revenue Bonds, Series 1994, (Superior Memorial Hospital, Inc.),
5.80%, prerefunded 05-01-2002 @ 102
155,000 Redevelopment Authority of the City of Superior, Wisconsin, NR Aa2 162,944
Revenue Bonds, Series 1994, (Superior Memorial Hospital, Inc.),
5.60%, prerefunded 5-01-2002 @ 102
600,000 Housing Authority of the City of Superior, Wisconsin, Housing NR NR 611,250
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 642,000
Wisconsin, Community Development Revenue Bonds, Series 1995,
6.10%, due 04-01-2015
445,000 Community Development Lease Revenue Bonds, Series 1997A, NR NR 450,006
Community Development Authority of the City of Verona, Wisconsin,
5.50%, due 06-01-2017
3,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Bonds, A NR 3,206,250
Series 1996B, 5.75%, Prerefunded 12-15-2006 @ 101
1,600,000 Wisconsin Center District, Junior Dedicated Tax Revenue Refunding A NR 1,568,000
Bonds, Series 1999, 5.25%, due 12-15-2023
1,265,000 Wisconsin Housing Finance Authority Revenue Bonds, Prerefunded NR NR 1,348,806
12-01-2017 at Par, Escrowed by U.S. Government Security, 6.10%,
prerefunded 12-01-2017
460,000 Walworth County (Wisconsin) Housing Authority Housing Revenue NR NR 460,575
Bonds, Series 1997, (FHA Insured Mortgage Loan-Kiwanis Herigage,
Inc. Senior Apartment Project), 5.70%, due 03-01-2039
1,000,000 Community Development Authority of the City of Watertown, NR NR 950,000
(Wisconsin), Redevelopment Lease Revenue Bonds,
Series 1998A, 5.00%, due 05-01-2018
500,000 Housing Authority of the City of Waukesha, Wisconsin, Multifamily NR NR 491,250
Housing Refunding Revenue Bonds, Series 1998A, (FHA Insured
Mortgage Loan-Oak Hills Terrace Project), 5.45%, due 06-01-2027
1,000,000 Wauwatosa, Wisconsin, Redevelopment Authority, Milwaukee County, AAA Aaa 1,030,000
Wisconsin, Redevelopment Authority Lease Revenue Bonds,
Series 1997, 5.65%, due 10-01-2015
715,000 Housing Authority of Winnebago County, Wisconsin, Multifamily NR NR 721,256
Housing Refunding Revenue Bonds, (Neenah-Menasha Ecumenical
Retirement Community, Inc. Project), 5.50%, due 10-01-2015
855,000 Housing Authority of Winnebago County, Wisconsin, Multifamily NR NR 860,344
Housing Refunding Revenue Bonds, (Neenah-Menasha Ecumenical -----------
Retirement Community, Inc. Project), 5.60%, due 10-01-2020
Total Long-Term Tax-Exempt Securities (Cost $50,991,467) $51,300,363
-----------
-----------
</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
Richard H. Aster, M.D., Director
Augustine J. English, Director
Ralph J. Eckert, Director
Richard J. Glaisner, Director
Robert J. Tuszynski, President, Director
Frank Ciano, Chief Financial Officer and Treasurer
James Brendemuehl, Senior Vice President of Sales
John Lauderdale, Senior Vice President of Marketing
Kathleen Cain, Secretary
INVESTMENT ADVISOR
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, TRANSFER AND DIVIDEND
DISBURSING AGENT, ACCOUNTING/PRICING AGENT
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
CUSTODIAN
Firstar Bank Milwaukee, N.A.
615 East Michigan Street
Milwaukee, Wisconsin 53202
COUNSEL
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
This report was prepared for shareholders of Principal Preservation Portfolios,
Inc.' s Wisconsin Tax-Exempt Portfolio. It may not be used in connection with
the offering of shares of the Wisconsin Tax-Exempt Portfolio unless preceded or
accompanied by a current Prospectus.
PP861-8/99
