(BC Ziegler Logo)
Quality Investments Since 1902
Cash Reserve Portfolio
Class X Common Stock
(Retail Shares)
------------
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 1999
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(PP LOGO)
Cash Reserve Portfolio
Class X Common Stock
(Retail Shares)
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SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 1999
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(PP LOGO)
Cash Reserve Portfolio
Class Y Common Stock
(Institutional Shares)
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SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 1999
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CASH RESERVE PORTFOLIO
CLASS X SHARES (RETAIL SHARES)
SEMIANNUAL REPORT TO SHAREHOLDERS
August 18, 1999
Dear Shareholder:
I am pleased to bring you the semiannual report for retail shares (Class X) of
Principal Preservation's Cash Reserve Portfolio for the period ended
June 30, 1999. Since December 31, 1998, the Cash Reserve Portfolio's net assets
fell from $167,300,000 to $150,070,000. However, total assets of the Principal
Preservation mutual fund family grew from $602,000,000 at December 31, 1998
to $730,358,000 at June 30, 1999. The focus of investors continues to be in
the broad base stock market and not on money market investments.
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 reacted 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.
For much of the first six months, the yield environment for short term
securities was fairly stable. In response, the manager increased the exposure
to A1/P1 paper from 74% at year end to approximately 82% at June 30, 1999. At
the same time, the manager reduced the investment in overnight repurchase
agreements from 13% at December 31, 1998 to 4% as of June 30, 1999. The
remaining 14% of the Prtfolio's net assets remained invested in U.S.
Government and Agency Obligations. The seven day annualized yield for Cash
Reserve Portfolio's retail shares was 4.06%, as compared to Donahue's first tier
money funds seven day yield of 4.26% and the All Taxable seven day annualized
yield of 4.35%.
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
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 SHARES)
SEMIANNUAL REPORT TO SHAREHOLDERS
August 18, 1999
Dear Shareholder:
I am pleased to bring you the semiannual report for institutional shares
(Class Y) of Principal Preservation's Cash Reserve Portfolio for the period
ended June 30, 1999. Since December 31, 1998, the Cash Reserve Portfolio's net
assets fell from $167,300,000 to $150,070,000. However, total assets of the
Principal Preservation mutual fund family grew from $602,000,000 at December 31,
1998 to $730,358,000 at June 30, 1999. The focus of investors continues to be
in the broad base stock market and not on money market investments.
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 reacted 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.
For much of the first six months, the yield environment for short term
securities was fairly stable. In response, the manager increased the exposure
to A1/P1 paper from 74% at year end to approximately 82% at June 30, 1999. At
the same time, the manager reduced the investment in overnight repurchase
agreements from 13% at December 31, 1998 to 4% as of June 30, 1999. The
remaining 14% of the Portfolio's net assets remained invested in U.S.
Government and Agency Obligations. The seven day annualized yield for Cash
Reserve Portfolio's institutional shares was 4.34% as compared to Donahue's
Institutional of 4.5% and the All Taxable seven day annualized yield of 4.35%.
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
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 SHARES)
FINANCIAL HIGHLIGHTS
<TABLE>
FOR THE
PERIOD ENDED
JUNE 30, 1999 FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
(Selected data for each retail share of the Fund
outstanding throughout the periods)
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 0.02 0.05 0.05 0.05 0.05 0.04
Less distributions:
Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Total investment return (a)<F1> 2.01% 4.77% 4.80% 4.78% 5.32% 3.64%
Ratios/Supplemental Data:
Net assets, end of period (nearest thousand) -- $147,995 $122,710 $89,946 $86,590 $52,593
Ratio of expenses to average net assets (b)<F2> 0.91% 0.89% 0.86% 0.78% 0.79% 1.05%
Capital contributions (c)<F3> -- -- 0.13% -- 0.06% --
Ratio of net investment income
to average net assets (b)<F2> 3.98% 4.65% 4.71% 4.73% 5.23% 3.62%
</TABLE>
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
and later periods reflect the new dual class structure.
(a)<F1> In 1997, 1995 and 1994, the advisers to Prime and their predecessors
made capital contributions to offset losses in securities. Without those capital
contributions, the adjusted total returns would have been 4.67%, 5.26% and 1.91%
for 1997, 1995 and 1994, respectively.
(b)<F2> 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, 1999 and the years ended December 31,
1998, 1997 and 1996, the Fund's adviser and administrator voluntarily waived a
portion of their fees. Without these voluntary waivers and expense
reimbursements, the ratios of net investment income and expenses to average net
assets would have been as follows:
FOR THE SIX
MONTHS ENDED
JUNE 30, 1999 FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
Ratio of expenses to
average net assets 0.97% 0.96% 0.94% 0.99% 1.16% 1.32%
Ratio of net investment income
to average net assets 3.92% 4.58% 4.63% 4.63% 4.86% 3.35%
(c)<F3> 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. Prior to that time, they were shown only
in Prime's financial statements.
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
CLASS Y SHARES (INSTITUTIONAL SHARES)
FINANCIAL HIGHLIGHTS
FOR THE FOR THE YEARS
PERIOD ENDED ENDED DECEMBER 31,
JUNE 30, 1999 -------------------------
(UNAUDITED) 1998 1997 1996
------------- ---- ---- ----
(Selected data for each institutional
share of the Fund outstanding
throughout the periods)
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- --------
Income from investment operations:
Net investment income 0.02 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.02) (0.05) (0.05) (0.05)
--------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- --------
--------- -------- -------- --------
Total investment return (b)<F5> 2.17% 5.15% 5.21% 5.20%
Ratios/Supplemental Data:
Net assets, end of period
(nearest thousand) $12,131 $19,889 $33,057 $35,120
Ratio of expenses to average
net assets (a)<F4> 0.58% 0.48% 0.45% 0.34%
Capital contribution -- -- 0.17% --
Ratio of net investment income
to average net assets (a)<F4> 4.30% 5.06% 5.10% 4.95%
(a)<F4> For the period ended June 30, 1999 and the years ended December 31,
1998, 1997 and 1996, respectively, 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 0.64% 0.55% 0.54% 0.54%
Ratio of net investment income to
average net assets 4.24% 4.99% 5.01% 4.75%
(b)<F5> During 1997, the adviser made capital contributions to offset losses
in securities. Had the adviser not made capital contributions, the adjusted
total return would have been 5.04%.
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
BALANCE SHEET
JUNE 30, 1999 (UNAUDITED)
ASSETS:
Investments in Securities, at amortized cost and value:
U.S. Government and Agency Obligations $ 20,735,572
Investments in Repurchase Agreements 5,951,945
Short-term investments 123,462,547
Interest receivable 182,555
Other assets 2,547
-------------
Total Assets 150,335,166
LIABILITIES:
Dividends payable (Institutional Class Y) $ 40,543
Management and Administrative Fees 46,406
Accrued expenses 178,176
--------
Total Liabilities 265,125
-------------
NET ASSETS $ 150,070,041
-------------
-------------
NET ASSETS CONSIST OF:
Capital stock $ 150,068,267
Undistributed net investment income 1,078
Undistributed accumulated net realized gain 696
-------------
Net Assets $ 150,070,041
-------------
-------------
INSTITUTIONAL CLASS Y
Net Assets (in 000's) $ 12,131
Shares Authorized 200,000
Shares Issued and Outstanding 12,134
Net asset value and redemption price per share $1.00
RETAIL CLASS X
Net Assets (in 000's) $ 137,939
Shares Authorized 200,000
Shares Issued and Outstanding 137,935
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, 1999 (UNAUDITED)
INVESTMENT INCOME:
Interest $4,076,481
----------
Total investment income 4,076,481
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EXPENSES:
Investment advisory fees 165,896
Administration fees 124,676
Shareholder servicing fees Class X 181,456
Distribution fees Class X 116,698
Professional fees 62,713
Depository fees 5,132
Proxy expenses 34,547
Directors fees 22,953
Registration fees 24,315
Transfer agent fees Class X 954
Transfer agent fees Class Y 954
Pricing 1,869
Printing and postage fees Class X 23,124
Printing and postage fees Class Y 4,794
Miscellaneous expenses 2,853
-------
Total expenses 772,934
Less: Waiver by the Adviser/Administrator (50,227)
-------
Net expenses 722,707
----------
NET INVESTMENT INCOME 3,353,774
NET REALIZED GAIN FROM PORTFOLIO SALES --
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,353,774
----------
----------
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, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------- -----------
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 3,353,774 $ 7,771,353
Net realized gain -- 696
Net increase (decrease) in net assets
resulting from operations 3,353,774 7,772,049
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 167,927,560 617,229,087
Net asset value of shares issued
in distributions 2,999,638 6,716,763
Cost of shares redeemed (188,741,142) (611,830,421)
-------------- --------------
Net increase in net assets from
capital share transactions (17,813,944) 12,115,429
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Class X Shares (2,977,523) (6,464,559)
Class Y Shares (376,553) (1,306,467)
-------------- --------------
Total distributions (3,354,076) (7,771,026)
CAPITAL CONTRIBUTIONS -- --
-------------- --------------
Total increase in net assets (17,814,246) 12,116,452
NET ASSETS:
Balance at beginning of period 167,884,287 155,767,835
-------------- --------------
Balance at end of period $150,070,041 $167,884,287
-------------- --------------
-------------- --------------
The accompanying notes are an integral part of the financial statements.
CASH RESERVE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
NOTE 1 - ORGANIZATION
Principal Preservation Portfolios, Inc. (the "Company"), registered under the
Investment Company Act of 1940 as an open-end management investment company, is
a series company with nine portfolios: Tax-Exempt Portfolio, 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 Cash Reserve Portfolio (the "Fund"). 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 Fund is a separate series of the Company, a Maryland corporation organized
in 1984. The Fund's investment objective is a high level of current income
consistent with stability of principal and the maintenance of liquidity. The
Fund commenced operations on April 5, 1993. Institutionalshares 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 common stock, which were subdivided into two separate
classes of 200 million shares each: Class X Common Stock (Retail Shares) and
Class Y Common Stock (Institutional Shares). All shares of the Fund outstanding
immediately prior to this restructuring were redesignated (without otherwise
affecting their rights and preferences) as Retail Shares. Financial highlights
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 Retail 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, 1998 the Fund has Federal income tax capital loss carryforwards of
$553,333 and $139,400 expiring in 2003 and 2002, respectively. Management does
not intend to make any distributions of future realized capital gains until its
Federal income tax capital loss carry forward is exhausted.
d) 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.
e) 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.
f) 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,
B.C. Ziegler and Company ("BCZ"), 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, BCZ 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, 1999, the Fund incurred administration fees of $124,676. BCZ
voluntarily waived $50,227 of its administrative fees during the year ended
December 31, 1998. This waiver may be discontinued at any time by BCZ.
b) INVESTMENT ADVISORY FEES - Ziegler Asset Management, Inc. ("ZAMI"), an
affiliate of BCZ, 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, 1999, the
Fund incurred total Advisory fees of $165,896.
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
Retail Shares to investors. Under the Plan, payments made by the Fund may not
exceed 0.15% of average daily net assets of Retail Shares. For the period ended
June 30, 1999, the Fund incurred distribution fees aggregating $116,898.
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 average
daily net assets attributable to Retail 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 Retail Shares which are not serviced
separately by a shareholder servicing agent and for all shareholder accounts
holding Institutional 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, 1999, the Fund incurred shareholder servicing fees aggregating
$181,456.
e) 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,
1999, the Fund incurred total fund accounting fees of $23,165.
NOTE 4 - CAPITAL CONTRIBUTION
During the year ended December 31, 1997, The Ziegler Companies, Inc. contributed
capital to the Cash Reserve Portfolio to offset 1996 realized losses of $53,333
and 1995 realized losses of $140,095. Neither The Ziegler Companies, Inc. 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 5 - CAPITAL SHARE TRANSACTIONS
(a) The Company has authorized capital of 1,000,000,000 shares at $.001 par
value per share. The Company'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 Company 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, 1998 and the
period ended June 30, 1999, respectively, were as follows:
CLASS X CLASS Y
------- -------
SHARES OUTSTANDING
AT DECEMBER 31, 1997 122,710 33,057
Shares sold 431,149 186,080
Shares reinvested 6,464 253
Shares redeemed (412,329) (199,501)
-------- --------
SHARES OUTSTANDING
AT DECEMBER 31, 1998 147,994 19,889
-------- --------
Shares sold 114,878 53,049
Shares reinvested 2,978 22
Shares redeemed (127,915) (60,826)
-------- --------
SHARES OUTSTANDING
at JUNE 30, 1999 137,935 12,134
-------- --------
-------- --------
CASH RESERVE PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL MATURITY INTEREST VALUE
AMOUNT DATE RATE (NOTE 2A)
- --------- -------- -------- -------------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS -- 13.8%
FEDERAL HOME LOAN BANK
("FHLB")
2,685,000 FHLB Note 5/11/00 5.100% $ 2,684,355
3,030,000 FHLB Note 2/4/00 4.790 3,027,222
---------------
Total Federal Home
Loan Bank 5,711,577
---------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION ("FHLMC")
5,000,000 FHLMC Note 7/14/99 4.700 4,991,521
725,000 FHLMC Pool #N93596 5/1/00 6.500 728,966
---------------
Total Federal Home
Loan Mortgage
Corporation 5,720,487
---------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")
2,300,000 FNMA Note 1/27/00 5.430 2,304,445
---------------
Total Federal National
Mortgage Association 2,304,445
---------------
STUDENT LOAN MARKETING
ASSOCIATION ("SLMA")
2,000,000 SLMA Note (a)<F6> 12/2/99 5.539 1,999,819
5,000,000 SLMA Note (b)<F7> 11/5/99 4.910 4,999,244
---------------
Total Student Loan
Marketing Association 6,999,063
---------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS 20,735,572
---------------
SHORT TERM -- 86.3%
COMMERCIAL PAPER
$4,000,000 American General
Finance Corporation 8/31/99 4.920% $ 3,966,654
4,000,000 American General
Finance Corporation 7/13/99 4.830 3,993,560
1,000,000 American Express
Credit Corporation 7/27/99 4.940 996,432
6,000,000 American Express
Credit Corporation 7/13/99 4.800 5,990,400
3,500,000 Associates Corporation 7/22/99 4.850 3,490,098
4,000,000 Associates Corporation 7/15/99 4.830 3,992,487
3,000,000 The CIT Group Holdings
Corporation 9/7/99 4.910 2,972,177
5,000,000 The CIT Group
Holdings Corporation 8/16/99 4.980 4,968,183
3,000,000 Citigroup, Inc. 7/28/99 5.120 2,988,480
4,000,000 Citigroup, Inc. 7/6/99 4.820 3,997,322
3,000,000 Commercial Credit
Corporation 8/2/99 5.050 2,986,533
7,000,000 Commercial Credit
Corporation 7/21/99 5.170 6,979,895
5,000,000 Ford Motor Credit
Corporation 7/26/99 4.870 4,983,090
2,000,000 Ford Motor Credit
Corporation 7/16/99 4.820 1,995,983
3,000,000 General Electric
Capital Corporation 8/30/99 4.900 2,975,500
4,000,000 General Electric
Capital Corporation 8/24/99 5.120 3,969,280
4,000,000 General Motors
Acceptance
Corporation 8/4/99 4.860 3,981,640
3,000,000 General Motors
Acceptance
Corporation 7/20/99 4.850 2,992,321
3,500,000 Household Finance
Corporation 8/5/99 4.910 3,483,292
4,500,000 Household Finance
Corporation 7/28/99 4.930 4,483,361
4,000,000 IBM Credit
Corporation 7/19/99 4.810 3,990,380
3,500,000 IBM Credit
Corporation 7/12/99 4.800 3,494,867
4,000,000 John Deere Capital
Corporation 9/2/99 4.990 3,965,070
3,000,000 John Deere Capital
Corporation 7/7/99 4.800 2,997,600
2,000,000 Marshall & Ilsley
Corporation 9/12/99 5.070 1,976,903
5,000,000 Marshall & Ilsley
Corporation 8/18/99 5.190 4,965,400
4,000,000 Merrill Lynch 8/9/99 5.040 3,978,160
4,000,000 Norwest Financial
Corporation 8/20/99 5.020 3,972,111
4,000,000 Norwest Financial
Corporation 7/29/99 4.920 3,984,693
3,000,000 Prudential Funding
Corporation 7/30/99 5.100 2,987,675
4,000,000 Prudential Funding
Corporation 7/8/99 4.840 3,996,236
3,500,000 Toyota Motor Credit
Corporation 8/31/99 4.980 3,470,466
3,500,000 Toyota Motor Credit
Corporation 7/9/99 4.760 3,496,298
---------------
Total Commercial Paper 123,462,547
REPURCHASE AGREEMENT
5,951,945 First Boston
Corporation 7/2/99 4.750 5,951,945
(Agreement dated 6/30/99, collateralized ---------------
by $5,379,000 U.S. Treasury Bonds, at
9.125%, due 5/15/09, $6,103,904.33 market
value)
TOTAL SHORT TERM 129,414,492
---------------
Total Investments, at Amortized Cost $ 150,150,064
---------------
---------------
NOTES TO SCHEDULE OF INVESTMENTS
(a)<F6> The security has a floating/variable rate coupon payment tied to the 3
month T-Bill rate.
(b)<F7> The security has a floating/variable rate coupon payment tied to the
Federal Funds rate.
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
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, ADMINISTRATOR, 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 who own Retail Shares of Principal
Preservation Portfolios, Inc.' s Cash Reserve Portfolio. It may not be used in
connection with the offering of securities unless preceded or accompanied by a
current Prospectus.
BCZ 161-8/99
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
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, ADMINISTRATOR, 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 who own Retail Shares of Principal
Preservation Portfolios, Inc.' s Cash Reserve Portfolio. It may not be used in
connection with the offering of securities unless preceded or accompanied by a
current Prospectus.
PP 865-8/99
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
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095
DISTRIBUTOR, ADMINISTRATOR, 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 who own Institutional Shares of
Principal Preservation Portfolios, Inc.' s Cash Reserve Portfolio. It may not be
used in connection with the offering of securities unless preceded or
accompanied by a current Prospectus.
PP 878-8/99
