(WISCONSIN TAX-EXEMPT PORTFOLIO LOGO)
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
JUNE 30, 2000
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
PRESIDENT'S LETTER
SEMIANNUAL REPORT TO SHAREHOLDERS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
August 29, 2000
Dear Wisconsin Shareholder:
During the six months ending June 30, 2000, we continued our tremendous
growth in assets as we went from $1,042,000,000 on December 31, 1999 to
$1,302,000,000 on June 30, 2000. Contributing to our growth has been the sales
inflows to our PSE Tech 100 Index Portfolio. Our participation in the
technology market has been better on the upside while providing protection on
the downside, through this diversified approach to a volatile market segment.
Recently, articles have been written discussing the benefits of the price-
weighted PSE Index vs. the more concentrated Nasdaq 100 and the widely accepted
technology laden Nasdaq composite indices. We continue to see growing interest
as well as substantial inflows into this fund.
Our Wisconsin Tax-Exempt Portfolio continues to be the only one of the four
double tax-exempt funds in Wisconsin to avoid investments in bonds that would
cause investors to be subjected to the Alternative Minimum Tax. A tax that
continues to catch more and more taxpayers each year.
Thomas Sancomb, Fixed Income Portfolio Manager, retired on June 30, 2000.
Craig Vanucci, Senior Vice President for Ziegler Asset Management, replaced Tom
as manager for the Wisconsin Tax Exempt Portfolio. Craig is a Chartered
Financial Analysts (CFA) and has been in the investment industry specializing in
fixed income investments for over ten years. Craig has the ability, drive and
expertise to ensure that our fixed income portfolios will continue to perform
for our shareholders.
Finally, to better leverage our opportunities in the marketplace and position
the mutual fund group to compete effectively into the new millennium, I have
stepped away from the Board. I retain the titles of President and CEO. The Board
of Directors elected Peter Ziegler as Chairman and a director of the fund
family. Peter has been involved in the financial services industry for over 20
years. I look forward to his contribution to the fund family as a fiduciary on
behalf of the fund shareholders.
On the following pages, we discuss in further detail, the investment
performance for the Wisconsin Tax-Exempt Portfolio and look forward to your
continued trust with us.
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.
WISCONSIN TAX-EXEMPT PORTFOLIO
PORTFOLIO REVIEW
JUNE 30, 2000 (UNAUDITED)
The first quarter total return for the fund was 2.52% and an SEC yield for
the fund of 4.69% as of March 31, 2000. While the SEC yield is slightly lower
than the average yield for Wisconsin funds, it is important to recognize that
our Wisconsin Fund does not contain any bonds subject to alternative minimum tax
(AMT). As of June 30, 2000, the average annualized total returns, including the
effect of the sales charge, for the one-year, five-year and since inception were
(0.21%), 4.44% and 4.09%, respectively.
For the second quarter of 2000, a continued decrease in new issue supply in
the tax-exempt municipal market, coupled with a tightening of interest rates
across the maturity spectrum, resulted in tax-exempt municipals outperforming
taxable fixed income investments. This out-performance was especially evident
in the short and intermediate range for municipals.
There was a 22.4% decrease in new issuance during the quarter when compared
to the same time period for 1999. Higher borrowing costs contributed to the
decline, however, the largest area this is affecting is the refunding sector of
the municipal market. With issuance running at an annualized pace of roughly
$175 billion, it is one of the lowest years of issuance in the past decade.
Municipals now have the opportunity to fare very well in the environment
ahead. The continuation of strong retail demand despite yields falling below
6%, the lack of new issuance, and the prospect of some reallocation from
equities into bonds could enable municipals to outperform other fixed income
markets. The lack of a refunding calendar until longer yields fall below 5.25%
create opportunities for the supply side while demand is expected to increase
even further. This type of an environment would allow municipal funds to start
receiving net inflows, for a change, as spot municipal yields fall below fund
yields increasing their competitiveness.
On a year-to-date basis the fund provided a total rate of return of 2.69%,
compared to its peer single state municipal bond funds average of 3.21%.
However, the peer group return was skewed upward by the performance of one
individual fund which maintains a duration more than 40% longer than the rest of
the group. The fund continues to be well diversified and maintains nearly 40%
of its holdings in securities with a stated "AAA" rating. The current yield of
the fund is also very high with a 7.63% tax-equivalent yield for investors in
the 40% bracket.
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 six
months ended For the years ended December 31,
June 30, 2000 ---------------------------------------------------
(Unaudited) 1999 1998 1997 1996
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.45 $10.27 $10.21 $ 9.87 $10.05
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .22 .45 .48 .49 .49
Net realized and unrealized gains
(losses) on investments .06 (.82) .06 .34 (.18)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .28 (.37) .54 .83 .31
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.45) (.48) (.49) (.49)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.22) (.45) (.48) (.49) (.49)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.51 $ 9.45 $10.27 $10.21 $ 9.87
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN **<F2> 3.0% (3.8%) 5.4% 8.7% 3.3%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (to nearest thousand) $49,484 $52,320 $45,693 $32,852 $25,750
Ratio of expenses to average net assets 1.1%*<F1>+<F3> 0.9%+<F3> 0.6%+<F3> 0.5%+<F3> 0.5%+<F3>
Ratio of net investment income to average net assets 4.7%*<F1>+<F3> 4.5%+<F3> 4.6%+<F3> 4.9%+<F3> 4.9%+<F3>
Portfolio turnover rate 5.9% 15.2% 12.5% 16.9% 16.0%
</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 0.1% in the six
months endedJune 30, 2000, 0.1% in 1999, 0.4% in 1998, 0.6% in 1997
and 0.6% in 1996, respectively.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
WISCONSIN TAX-EXEMPT PORTFOLIO
BALANCE SHEET
JUNE 30, 2000 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
ASSETS:
Investments:
Cost basis of investments $50,797,932
-----------
-----------
Long-term investments in securities $49,112,224
Cash 791
Receivables:
Capital shares sold 20,426
Interest 587,961
-----------
Total receivables 608,387
Other assets 959
-----------
Total assets $49,722,361
-----------
-----------
LIABILITIES:
Payables:
Capital shares redeemed $ 23,729
Distributions to shareholders 55,953
Management fees 20,085
Other accrued expenses 72,292
Other liabilities 66,291
-----------
Total liabilities 238,350
-----------
NET ASSETS:
Capital stock 51,960,118
Undistributed net investment income 8,829
Undistributed net realized losses on investments (799,228)
Net unrealized depreciation on investments (1,685,708)
-----------
Total net assets 49,484,011
-----------
Total liabilities and net assets $49,722,361
-----------
-----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 9.51
-----------
-----------
MAXIMUM OFFERING PRICE PER SHARE $ 9.75
-----------
-----------
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, 2000 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
INVESTMENT INCOME:
Interest $1,436,378
----------
Total investment income 1,436,378
----------
EXPENSES:
Investment advisory fees 125,138
Administrative services fee 8,059
Custodian fees 7,540
Transfer agent fees 13,412
Broker service fees 63,166
Professional fees 23,229
Registration 10,048
Communication 3,089
Director fees 2,494
Pricing of investments 10,597
Other 9,951
----------
Total expenses 276,723
Less expenses absorbed by advisor (12,467)
----------
Net expenses 264,256
----------
NET INVESTMENT INCOME 1,172,122
----------
NET REALIZED (LOSSES) ON INVESTMENTS (268,227)
CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS FOR THE YEAR 553,341
----------
Net gain on investments 285,114
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,457,236
----------
----------
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, 2000 (UNAUDITED)
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $ 1,172,122
Net realized (losses) on investments (268,227)
Change in unrealized appreciation on investments for the year 553,341
-----------
Net increase in net assets resulting from operations 1,457,236
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.22 per share) (1,172,281)
-----------
Total distributions (1,172,281)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 3,727,082
Net asset value of shares issued in distributions 851,294
Cost of shares redeemed (7,699,384)
-----------
Net decrease in net assets from capital
share transactions (3,121,008)
-----------
Total decrease (2,836,053)
NET ASSETS:
Balance at beginning of period 52,320,064
-----------
Balance at end of period $49,484,011
-----------
-----------
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, 1999
WISCONSIN
TAX-EXEMPT PORTFOLIO
--------------------
OPERATIONS:
Net investment income $ 2,333,676
Net realized losses on investments (495,751)
Change in unrealized appreciation on investments for the year (4,041,529)
-----------
Net decrease in net assets resulting from operations (2,203,604)
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ($0.45 per share) (2,333,895)
-----------
Total distributions (2,333,895)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 21,530,243
Net asset value of shares issued in distributions 1,654,328
Cost of shares redeemed (12,019,713)
-----------
Net increase in net assets from
capital share transactions 11,164,858
-----------
Total increase 6,627,359
NET ASSETS:
Balance at beginning of period 45,692,705
-----------
Balance at end of period $52,320,064
-----------
-----------
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, 2000 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES --
Principal Preservation Portfolios, Inc. (the "Fund"), registered under the
Investment Company Act of 1940 as an open-end management investment company,
is a series company with 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,
1999, the Portfolio had Federal income tax capital loss carryforwards
of $3,176 expiring in 2003, $3,012 expiring in 2004, $29,062 expiring
in 2006 and $495,751 expiring in 2007. 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. Accordingly at
December 31, 1999 reclassifications were made to decrease undistributed
net investment income and increase capital stock by $811.
(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) 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 year ended December 31, 1999, the Portfolio incurred total advisory
fees of $260,395. BCZ voluntarily reimbursed expenses to the Portfolio
totaling $65,498. 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 BCZ, 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.
On May 1, 2000, the Board approved the Administrative Services Agreement.
Under this agreement, the Fund pays 0.10% to B.C. Ziegler to perform
administrative tasks on behalf of the Fund.
BCZ has an Accounting and Pricing Agreement with the Fund to perform
accounting and pricing services. In addition, the Portfolio pays BCZ
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 BCZ by the Portfolio for the six months ended June
30, 2000 were as follows:
<TABLE>
ACCOUNTING
COMMISSIONS AND PRICING
ON PORTFOLIO SHARES FEES 12B-1 FEES ADMINISTRATIVE
------------------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Wisconsin Tax-Exempt Portfolio $11,483 $12,625 $35,141 $4,188
</TABLE>
3. INVESTMENT TRANSACTIONS --
Purchases and proceeds from sales of securities, excluding short-term
investments, for the six months ended June 30, 2000, consisted of $2,949,260
and $6,260,728, respectively.
Net tax basis unrealized appreciation (depreciation) on investments as of
June 30, 2000, included:
WISCONSIN
TAX-EXEMPT
----------
Gross unrealized appreciation $ 759,360
Gross unrealized depreciation (2,445,068)
-----------
Net unrealized depreciation $(1,685,708)
-----------
-----------
The tax basis cost of investments at June 30, 2000 was $50,797,932.
4. LINE OF CREDIT --
The Fund has an available line of credit of $7,500,000. 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 BCZ. 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 450,000,000 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 also have designated Class B (contingent
deferred sales charge) shares. Each of the aforementioned portfolios
and the Government Portfolio have designated Class C shares. The shares
of the Cash Reserve Portfolio have Class X (Retail Shares) and Class Y
(Institutional Shares) and Class B shares. The remaining 150,000,000
authorized shares of common stock of the Fund may be allocated to any
of the above portfolios or to new portfolios as determined by the Board
of Directors. The shares of each portfolio have equal rights and
privileges with all other shares of that portfolio.
(b) Capital share activity during the year ended December 31, 1999 and the
six months ended June 30, 2000, respectively, were as follows:
WISCONSIN
TAX-EXEMPT
----------
SHARES OUTSTANDING AT DECEMBER 31, 1998 4,447,828
---------
---------
Shares issued 2,160,989
Shares issued in distributions 150,612
Shares redeemed (1,236,225)
---------
SHARES OUTSTANDING AT DECEMBER 31, 1999 5,523,204
---------
---------
Shares issued 394,087
Shares issued in distributions 106,592
Shares redeemed (821,293)
---------
SHARES OUTSTANDING AT JUNE 30, 2000 5,202,590
---------
---------
(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.
WISCONSIN TAX-EXEMPT PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 2000 (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 -- 1.2%
$ 325,000 Atlanta, Georgia, New Public Housing Authority, 5.00%, AAA Aaa $ 327,438
due 05-01-2007
250,000 Newnan, Georgia, New Public Housing Authority, 5.00%, AAA Aaa 247,500
due 04-01-2012
GUAM -- 2.5%
650,000 Guam Government Limited Obligation Highway Bonds, AAA Aaa 679,250
Series A, 6.30%, due 05-01-2012
515,000 Guam Power Authority Revenue Bonds, Series A, 6.375%, AAA Aaa 545,900
due 10-01-2008
ILLINOIS -- 0.6%
300,000 Peoria, Illinois, New Public Housing Authority, 5.00%, AAA Aaa 295,500
due 06-01-2012
MASSACHUSETTS -- 2.0%
860,000 Massachusetts State Housing Finance Agency, Multi-Family Housing AAA A1 979,325
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 251,494
due 01-01-2012
NEW JERSEY -- 1.0%
285,000 Newark, New Jersey, New Public Housing Authority, 5.25%, AAA Aaa 287,137
due 04-01-2009
250,000 Newark, New Jersey, New Public Housing Authority, 4.50%, AAA Aaa 238,438
due 04-01-2008
NEW YORK -- 0.8%
200,000 New York, New York, New Public Housing Authority, 5.375%, AAA Aaa 203,500
due 01-01-2012
200,000 New York, New York, New Public Housing Authority, 5.00%, AAA Aaa 199,000
due 01-01-2012
NORTH CAROLINA -- 0.8%
400,000 Durham, North Carolina, New Public Housing Authority, 5.00%, AAA Aaa 396,500
due 02-01-2012
NORTH DAKOTA -- 0.8%
185,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 182,456
4.875%, due 01-01-2010
200,000 Burleigh County, North Dakota, New Public Housing Authority, AAA Aaa 198,250
4.875%, due 01-01-2009
N MARIANA ISLANDS -- 0.2%
100,000 Commonwealth of the Northern Mariana Islands General Obligation AAA Aaa 101,000
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 496,250
due 05-01-2011
250,000 Youngstown, Ohio, New Public Housing Authority, 4.875%, AAA Aaa 247,500
due 05-01-2009
200,000 Youngstown, Ohio, New Public Housing Authority, 4.875%, AAA Aaa 197,250
due 05-01-2010
300,000 Youngstown, Ohio, New Public Housing Authority, 5.00%, AAA Aaa 295,875
due 05-01-2012
PENNSYLVANIA -- 0.9%
270,000 Allentown, Pennsylvania, New Public Housing Authority, 4.875%, AAA Aaa 266,287
due 05-01-2011
200,000 Clinton County, Pennsylvania, New Public Housing Authority, AAA Aaa 204,130
5.25%, due 11-01-2007
PUERTO RICO -- 3.0%
100,000 Puerto Rico Commonwealth Highway &Transportation, 6.625%, A Baa1 105,500
due 07-01-2012
350,000 Puerto Rico Commonwealth Highway & Transportation Authority, A Aaa 369,688
Highway Revenue Unrefunded Balance, Series T, 6.625%,
due 07-01-2018
300,000 Puerto Rico Commonwealth General Obligation Bonds, 6.00%, A Aaa 313,125
Prefunded 07-01-2002
180,000 Puerto Rico Commonwealth Electric &Power Authority, Series R, AAA Aaa 188,775
6.25%, due 07-01-2017
350,000 Puerto Rico Telephone Authority, Series L, 6.125%, due 01-01-2022 A+ A2 361,812
150,000 Puerto Rico Telephone Authority, Series L, 5.75%, due 01-01-2011 A+ A2 154,313
SOUTH CAROLINA -- 0.4%
200,000 Marion, South Carolina, New Public Housing Authority, 4.875%, AAA Aaa 197,750
due 09-01-2010
TENNESSEE -- 0.4%
190,000 Nashville, Tennessee, New Public Housing Authority, 5.00%, AAA Aaa 189,050
due 08-01-2010
TEXAS -- 1.1%
340,000 Waco, Texas, New Public Housing Authority, 4.875%, AAA Aaa 337,025
due 12-01-2009
200,000 Waco, Texas, New Public Housing Authority, 4.875%, AAA Aaa 194,250
due 12-01-2012
VIRGIN ISLANDS -- 0.5%
255,000 Virgin Islands Water and Power Authority Revenue Bonds, AAA Aaa 258,187
5.25%, due 07-01-2012
WISCONSIN -- 80.0%
500,000 Housing Authority of the City of Ashland, Wisconsin, Student NR Aa3 438,750
Housing Revenue Bonds, Series 1998, (Northland College Project),
5.10%, due 04-01-2018
1,000,000 Ashwaubenon, Wisconsin, Community Development Authority NR Aa2 986,250
Lease Revenue, Arena Project, Series A, 5.80%, due 06-01-2029
200,000 Brown County (Wisconsin) Housing Authority, Student Housing NR NR 179,750
Revenue Bonds, Series 1997B, (University Village Housing, Inc.
Project), 5.400%, due 04-01-2017
500,000 Community Development Authority of the City of Cudahy NR Aa3 462,500
(Wisconsin) Redevelopment Lease Revenue Bonds,
Series 1999, 5.10%, due 06-01-2017
600,000 Community Development Authority of the City of Franklin, NR NR 559,500
(Wisconsin), Redevelopment Lease Revenue Refunding Bonds,
Series 1998-B, 4.80%, due 04-01-2009
1,000,000 Community Development Authority of the City of Glendale, Wisconsin, NR NR 961,250
Community Development Lease Revenue Bonds, Series 1998A,
(Tax Increment District No. 7), 5.50%, due 09-01-2017
2,200,000 Community Development Authority of the City of Glendale, NR NR 2,043,250
Wisconsin, Lease Revenue Bonds, Series 1998A,
(Tax Increment District No. 7), 5.40%, due 09-01-2018
1,000,000 Housing Authority of the County of Grant, Wisconsin, Housing NR A3 911,250
Refunding Revenue Bonds, Series 1998, (Orchard Manor), 5.35%,
due 07-01-2026
500,000 Housing Authority of the County of Grant, Wisconsin, Housing NR A3 461,875
Refunding Revenue Bonds, Series 1998, (Orchard Manor), 5.25%,
due 07-01-2018
150,000 Housing Authority of the City of Green Bay, Wisconsin, Student NR NR 146,250
Housing Refunding Revenue Bonds, Series 1997, (University Village
Housing, Inc.), 6.00%, due 04-01-2017
1,000,000 Redevelopment Authority of the City of Green Bay (Wisconsin), NR Aa2 878,750
Lease Revenue Bonds, Series 1999A, (Convention Center
Project), 5.10%, due 06-01-2029
200,000 City of Hartford Community Development Authority, Dodge and NR NR 208,500
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 542,250
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 93,250
Wisconsin, Community Development Refunding Revenue Bonds,
Series 1999, 4.90%, due 12-01-2013
1,000,000 Housing Authority of the City of Kenosha, Wisconsin, GNMA NR NR 953,750
Collateralized Multifamily Housing Revenue Bonds, Series 2000A,
(Villa Ciera, Inc. Project), 6.00%, due 11-20-2041
500,000 Community Development Authority of the Village of Little Chute, NR NR 487,500
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 2,638,250
Fixed Rate Development Revenue Bonds, Series 1998A, (Fluno
Center Project), 5.00%, due 11-01-2020
300,000 Community Development Authority of the City of Madison,Wisconsin, NR NR 281,625
Multifamily Housing Revenue Bonds, Series 1995, (Dempsey Manor
Project), 6.65%, due 10-01-2025
1,000,000 Madison, Wisconsin, Community Development Authority Lease NR Aa2 1,040,000
Revenue Bonds, Monona Terrace Community & Convention Center
Project, 6.10%, due 3-01-2010
500,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 448,125
Redevelopment Revenue Bonds, Series 1995,(Meriter Retirement
Services, Inc.), 6.125%, due 12-01-2019
260,000 Community Development Authority of the City of Madison, Wisconsin, NR NR 249,275
Project Revenue Bonds, (Series 1986), 5.875%, due 07-01-2016
500,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 511,250
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 101,500
Refunding Bonds-Blatz Apartments Project, 7.50%, due 12-01-2028
215,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 196,725
Redevelopment Revenue Bonds, Series 1999A, (Young Women's
Christian Association of Greater Milwaukee), 5.25%, due 6-01-2019
1,000,000 Redevelopment Authority of the City of Milwaukee (Wisconsin), NR NR 885,000
Development Revenue Bonds, Series 1998, (YMCA of Metropolitan
Milwaukee, Inc. Project), 5.10%, due 12-01-2023
750,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR A1 695,625
Redevelopment Revenue Bonds, Series 1999A, (Young Women's
Christian Association of Greater Milwaukee), 5.30%, due 6-01-2029
180,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, NR Aaa 162,000
Redevelopment Revenue Bonds, Series 1999B, (Young Women's
Christian Association of Greater Milwaukee), 5.20%, due 06-01-2029
1,000,000 Housing Authority of the City of Oak Creek, Wisconsin, Multifamily NR NR 1,015,000
Housing Refunding Revenue Bonds, Series 1994A, (Country Oaks II
Project), 6.30%, due 08-01-2028
75,000 Housing Authority of the City of Oak Creek, Wisconsin, Multifamily AAA NR 71,625
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, NR NR 204,750
Wisconsin, Redevelopment Lease Revenue Refunding Bonds,
5.30%, due 06-01-2015
1,260,000 Housing Authority of the City of Oshkosh, Wisconsin, GNMA NR Aaa 1,201,725
Collateralized Multifamily Housing Revenue Bonds, Series 1997,
(VNA Assisted Living, Inc. Project), 5.75%, due 09-20-2038
125,000 Housing Authority of the City of Oshkosh, Wisconsin, GNMA NR Aaa 121,875
Collateralized Multifamily Housing Revenue Bonds, Series 1997,
(VNA Assisted Living, Inc. Project), 5.45%, due 09-20-2017
2,260,000 Southeast Wisconsin Professional Baseball Park District Sales AAA Aaa 2,384,300
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 900,000
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 371,000
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 610,500
Redevelopment Lease Revenue Bonds, Series 1995-A, 6.25%,
prerefunded 09-01-2001
2,000,000 Waterfront Redevelopment Authority of the City of Sturgeon Bay, NR NR 1,770,000
Wisconsin, Redevelopment Lease Revenue Bonds, Series 1998A,
5.20%, due 10-01-2021
1,360,000 Waterfront Redevelopment Authority of the City of Sturgeon Bay, A NR 1,210,400
Wisconsin, Redevelopment Lease Revenue Bonds, Series 1998B,
5.00%, due 10-01-2017
100,000 Redevelopment Authority of the City of Superior, Wisconsin, NR Aa2 103,750
Revenue Bonds, Series 1994, (Superior Memorial Hospital, Inc.),
5.80%, prerefunded 05-01-2002 @ 102
150,000 Redevelopment Authority of the City of Superior, Wisconsin, NR Aa2 155,250
Revenue Bonds, Series 1994, (Superior Memorial Hospital, Inc.),
5.65%, prerefunded 5-01-2002 @ 102
155,000 Redevelopment Authority of the City of Superior, Wisconsin, NR Aa2 160,231
Revenue Bonds, Series 1994, (Superior Memorial Hospital, Inc.),
5.60%, prerefunded 05-01-2002 @ 102
600,000 Community Development Authority of the Village of Sussex, NR NR 630,000
Wisconsin, Community Development Revenue Bonds, Series 1995,
6.10%, due 04-01-2015
445,000 Community Development Lease Revenue Bonds, Series 1997A, NR NR 438,325
Community Development Authority of the City of Verona, Wisconsin,
5.50%, due 06-01-2017
1,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Refunding A NR 947,500
Bonds, Series 1999, 5.25%, due 12-15-2023
3,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Refunding A NR 3,161,250
Bonds, Series 1996B, 5.75%, prerefunded 12-15-2006 @ 101
1,235,000 Wisconsin Housing Finance Authority Revenue Bonds, Prerefunded NR NR 1,276,681
12-01-2017 at Par, Escrowed by U.S. Government Security, 6.10%,
prerefunded 12-01-2017
1,395,000 Wisconsin Housing Finance Authority Revenue Bonds, Prerefunded AAA Aaa 1,408,950
12-01-2017 at Par, Escrowed by U.S. Government Security, (MBIA
Insured), 6.10%, prerefunded 12-01-2017
460,000 Walworth County (Wisconsin) Housing Authority Housing Revenue NR NR 434,700
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 900,000
(Wisconsin), Redevelopment Lease Revenue Bonds, Series 1998A,
5.00%, due 05-01-2018
500,000 Housing Authority City of Waukesha, Wisconsin, Multifamily NR NR 455,625
Housing Refunding Revenue Bonds, Series 1998A, (FHA Insured
Mortgage Loan-Oak Hills Terrace Project), 5.45%, due 06-01-2027
750,000 Wauwatosa, Wisconsin, Redevelopment Authority, Milwaukee County, AAA Aaa 752,813
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 644,394
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 748,125
Housing Refunding Revenue Bonds, (Neenah-Menasha Ecumenical -----------
Retirement Community, Inc. Project), 5.60%, due 10-01-2020
Total Long-Term Tax-Exempt Securities (Cost $50,797,932) $49,112,224
-----------
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</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
Peter D. Ziegler, Chairman, Director
Richard H. Aster, M.D., Director
Augustine J. English, Director
Ralph J. Eckert, Director
Robert J. Tuszynski, President
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, ACCOUNTING/PRICING
AGENT AND ADMINISTRATOR
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC Global Fund Services
P.O. Box 60504
King of Prussia, Pennsylvania 19406
CUSTODIAN
Firstar Trust Company
777 East Wisconsin Avenue
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.
PP861-8/00
