THE PORTFOLIOS
PSE TECH 100 INDEX
S&P 100 PLUS
DIVIDEND ACHIEVERS
MANAGED GROWTH
SELECT VALUE
GOVERNMENT
TAX-EXEMPT
SEMIANNUAL REPORT
TO SHAREHOLDERS
(UNAUDITED)
APRIL 30, 2000
(PRINCIPAL PRESERVATION LOGO)
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
PRESIDENT'S LETTER
SEMIANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 2000
June 27, 2000
Dear Shareholder:
During the six months ending April 30, 2000, we continued our tremendous
growth in assets as we went from $831,373,300 on October 31, 1999 to
$1,263,336,700 on April 30, 2000. Our PSE Tech 100 Index Portfolio, by
mirroring the Pacific Exchange index, continues to outperform the other
technology benchmarks as we believed it would. 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.
At the end of this month, we say goodbye to a friend and someone who has been
with our fund family since 1984. Thomas Sancomb, Fixed Income Portfolio
Manager, retires on June 30, 2000. Craig Vanucci, Senior Vice President for
Ziegler Asset Management, will be taking over the reigns as Manager for the Tax-
Exempt Portfolio. Brian Andrew, Chief Investment Officer for Ziegler Asset
Management, will assume the Portfolio Manager duties for the Government
Portfolio. Each of the individuals are Chartered Financial Analysts (CFA) and
have been in the investment industry specializing in fixed income investments
for over ten years. Both of these individuals have the ability, drive and
expertise to ensure that our fixed income portfolios will continue to perform
for our shareholders.
On the following pages, we discuss in further detail, the investment
performances for each portfolio and look forward to your continued trust with
us.
Sincerely,
/s/ Robert J. Tuszynski
Robert J. Tuszynski
President and CEO
This report contains information for existing shareholders of Principal
Preservation. It does not constitute an offer to sell. If an investor wishes to
receive more information about the portfolios, the investor should obtain a
prospectus, which includes a discussion of each investment objective and all
sales charges and expenses of the relevant portfolio(s).
TAX-EXEMPT PORTFOLIO
For the six months that ended April 30, 2000, the Tax-Exempt Portfolio
returned 2.24%, compared to the Lehman 20-year Municipal Bond Index which
returned 3.73%.
In mid-January, the U.S. Treasury market started a rally and yield-curve
inversion (short term rates higher than longer term rates) precipitated by the
Treasury department's new policy of repurchasing longer-term, higher coupon
bonds. The municipal bond market lagged in January and February but then staged
its own rally and outperformed Treasuries in March. This marked the beginning of
a rebound from 1999 -- the worst bond market in 30 years.
Municipal new-issues outperformed the secondary market in municipals. The 20
to 25 basis point spread between primary and secondary 20-year bonds in January
and February eliminated the opportunity to economically swap securities -- a
condition that persisted until the end of March.
The fund, and the municipal bond market in general, was hampered by investors
turning away from the lackluster performance of bonds to capture some of the
high-flying performance potential in stocks.
Changes to the Portfolio included a swap of a Louisiana bond for one in
Massachusetts -- an increase in yield as well as a move to a much better trading
state, and the sale of a Michigan bond for one in Virginia -- again a richer
trading state and another pickup in yield.
Looking ahead, we are very positive. Signs are that the Fed is just about
finished with its rate hikes, as economic indicators seem to point toward a
slowing of the economy. The perception now is that the Fed won't have to raise
rates much in the future -- perhaps not at all. If that's the case, we believe
the stock and bond markets will heave a sigh of relief and we could see a rally
begin.
GOVERNMENT PORTFOLIO
For the six months that ended April 30, 2000, the Government Portfolio
returned 0.81% compared to its benchmark, the Lehman Intermediate Government
Index, which returned 1.35%.
Over the last three months we adjusted the Government Portfolio to better
reflect the aggregate Treasury market. Earlier in 2000 we sold the mortgage-
backed security positions (GNMAs) due to considerable tightening in mortgage
spreads. Proceeds of these sales were reinvested in Treasuries.
Significantly affecting the fund's performance was the Fed's tight monetary
policy over the last nine months. The Fed continued to believe that the
economy's growth rate was unsustainable without creating an inflationary
environment. As of this writing, the most recent interest rate hike of one-half
of one percent occurred in May.
Interest rates rose by 50 to 75 basis points during the last six months.
Rates on the short-maturity end of the yield curve rose the most as the Federal
Reserve moved several times to raise the Fed Funds rate. Six-month Treasury
Bills rose from 5.31% to 6.14% during the six months ending April 30, 2000.
Five-year Treasuries rose by 0.62% while the ten-year was up nearly 25 basis
points at 0.23%. As evidenced by the declining increases in interest rates, the
yield curve inverted (short-term interest rates higher than longer-term rates)
during the first quarter of 2000. As of the end of April the two-year yield was
6.72% while the thirty-year yield was 5.99%. An inversion of the yield curve is
generally viewed as a strong indication that a bear market for bonds is nearing
an end.
The Government Portfolio took advantage of the first quarter's higher rates
by purchasing bonds with maturities between 10 and 30 years, lengthening the
fund's average maturity by two years. Subsequently, rates in this part of the
curve fell dramatically as the Treasury department announced a buyback of debt.
With the Federal government running a budget surplus, the Treasury decided to
reduce the amount of outstanding debt by repurchasing longer-term securities.
As a result, market participants, afraid of a shortage of long-term Treasuries,
bid up prices as they bought up the remaining outstanding long maturities.
In the future we will actively manage the portfolio to take advantage of the
changing shape of the yield curve. The high credit quality of a full faith and
credit portfolio will, however, not be diminished.
S&P 100 PLUS PORTFOLIO
For the six months that ended April 30, 2000, the S&P 100 Plus Portfolio
returned 9.97%, topping the 9.55% return of the Standard & Poor's 100 Index.
The domestic equity markets, especially the large market-capitalization
sector, demonstrated strong performance in both the fourth quarter of 1999 and
the first quarter of 2000. These larger companies continued to execute their
business plans superbly, resulting in accelerated revenue and profit growth as
evidenced by robust April earnings reports.
During the first six months of the fiscal year, an over/under-weighting
strategy added approximately 75 basis points to the portfolio's return. Over
weightings in Cisco Systems, Oracle Corp, and Nortel Networks added value as did
reduced positions in Bristol-Myers Squibb, Coca-Cola and McDonald's.
Assessing macroeconomic conditions, as of the end of April the domestic
economy appears to be accelerating at levels higher than the Federal Reserve's
preferred target. Fueled by robust consumer spending on automobiles, clothing,
computers and housing, recent statistical data appears to affirm the economy's
ongoing strength. In addition, subtle, but thus far inconclusive, hints of
accelerating inflation are emerging. Outside of the housing, energy, tobacco
and healthcare sectors, pricing pressures remain relatively benign. The Federal
Reserve decided to take pre-emptive action against any potential onset of
inflation by imposing a series of interest rate hikes. We believe that some
increases were warranted to diffuse the runaway strength of the domestic
economy. But we are concerned that the Fed may become too restrictive and
curtail the economy's true level of sustainable growth.
Although the U.S. economy continues its longest economic expansion on record,
many on Wall Street believe we are beginning to see a reversal of fortune.
Volatility levels, especially in the technology sector, are significantly
higher. In April, many of the highflying, speculative stocks within the Internet
sector experienced gut-wrenching pullbacks from extreme valuations. This
upheaval mirrors other periods of volatility the past few years. During these
market swings, many pundits strongly recommended that investors move to cash to
avoid a significant, imminent market correction. In retrospect, investors who
stayed the course with exposure to domestic large-cap stocks during market
turmoil were rewarded. In fact, trying to time the stock market continues to be
one of the toughest gambles around.
Long-term investing, with a core position in the S&P 100 Plus Portfolio,
appears to be a solid strategy in times of turbulence.
DIVIDEND ACHIEVERS PORTFOLIO
For the six months ended April 30, 2000, the Dividend Achievers Portfolio
returned 10.28% exceeding the 7.19% return for the S&P 500 Index.
Jay Ferrara assumed lead management responsibility for the fund on October 1,
1999 and in the fourth quarter enacted several position changes designed to
enhance the portfolio's growth characteristics. While the core strategy of
Dividend Achievers remains unchanged, the manager shifted to sector-neutral
weightings as compared to the SPX Index while focusing on stock selection to
provide added value. Technology positions like Nokia, Linear Technology, Texas
Instruments and Hewlett-Packard performed well during the period, as did other
diversified holdings such as Cardinal Health, Johnson & Johnson and McGraw-Hill.
Throughout the first few months of 2000, inflation fears contributed to
increased volatility within the domestic equity markets. Although first quarter
earnings reports were extremely positive for the vast majority of large-cap
companies, in April investors interpreted assorted economic data as negative.
Inventories, PPI, CPI and Employment Cost Index information all pointed to a
stronger economy than Federal Reserve Chairman Alan Greenspan deemed acceptable.
As a result, the Fed continued to raise interest rates hoping to pre-empt any
extensive resurgence in inflation -- a resurgence that might derail the
economy's overall positive characteristics.
Looking ahead, the heightened volatility should continue for the remainder of
the fiscal year. Even so, until actual examples of inflation are evident,
whether through wages or prices, the competitive position of successful large-
cap companies should enable them to overcome any gyrations.
A theme for the rest of 2000 and beyond may well be that, "the strong will
get stronger." When looking at management talent, financial infrastructure,
internal R&D capabilities, competitive products and the ability to use equity
currency in executing deals, large companies compare very favorably. Indeed,
part of the recent out-performance of large-caps over the past three-to-five
years versus small and mid-caps is that these companies have continued to grow
as fast, if not faster, than their smaller brethren. Historically, to find
outsized growth potential in the equity markets investors had to matriculate to
the small and mid-cap area. Today, many large telecommunications, biotechnology
and technology companies are among the fastest revenue and earnings growers.
Recognizing this, investors should continue to be rewarded by investing in these
companies.
SELECT VALUE PORTFOLIO
For the six-months ended April 30, 2000, the Select Value Portfolio returned
19.30%, exceeding the 8.20% return of the Russell 2000 Value Index.
On March 1, 2000, Leon Dodge, CFA and Vice President of Ziegler Asset
Management, Inc., was named manager of the fund.
With its small cap emphasis, the Portfolio benefited from the relative out-
performance of small cap stocks versus large cap issues. The small cap Russell
2000 Index, for example, returned 18.86% for the period compared to 7.19% for
the S&P 500 Stock Index.
Strong earnings growth coupled with higher interest rates resulted in extreme
market volatility in recent months. The Federal Reserve Board responded to
fears of increased inflation and robust growth in the domestic economy by
repeatedly increasing interest rates over the past nine months. Higher interest
rates, however, have yet to dampen the solid growth in corporate profits. In
fact, reported earnings per share have consistently exceeded analysts'
expectations in recent quarters.
Value-oriented strategies generated strong relative performance during March
and April. Uncertainty, created by the Federal Reserve Board's tighter monetary
policy, prompted investors to increase the value exposure in their equity
portfolios. The fund benefited from this portfolio realignment as value-based
strategies outperformed more growth-oriented strategies during the latter part
of the quarter.
The portfolio's energy and technology holdings were largely responsible for
the fund's superior relative performance the first six months. The energy sector
benefited from much higher oil prices, increasing activity in oil exploration.
The technology sector is benefiting from customers' continued strong demand for
products to increase productivity.
The Select Value Portfolio continues its focus on undervalued securities.
The portfolio's price/earnings ratio was 17.1 at the end of April, a substantial
discount to the 28.5 price/earnings ratio of the Standard and Poor's 500 Index.
The current valuation level of small cap issues remains attractive relative to
the valuation of the overall market.
PSE TECH 100 INDEX PORTFOLIO
For the six months ended April 30, 2000, the return for the PSE Tech 100
Index Portfolio was 62.28%, compared to the PSE Tech Index return of 63.84%.
During the period, the technology sector turned in a stellar performance,
gaining momentum during the fourth quarter of 1999, and continuing to surge
during the first few months of 2000. Clearly, we are experiencing a period of
monumental transition as technology redefines -- both in terms of productivity
and communication -- many of our tools and processes. Today's technological
revolution is often compared to prior periods of rapid change and advancement --
particularly the agricultural and industrial revolutions. We believe that we are
still in the early stages of the current transition and that technology's full
societal impact will be unclear for many years.
At the time of this writing, investors appear to be growing somewhat more
cautious about the future. Specifically, valuation levels and the associated
profit levels of some high-flying Internet companies are coming under the
microscope. From a microeconomic basis, top-tier technology companies continue
to generate impressive growth in both sales and earnings.
We believe the technology sector's ability to sustain elevated growth levels
is superior to that of any other economic sector. Although some sub-sectors and
companies within the sector have indeed risen to unsustainable levels of
valuation, the components of the PSE Tech 100 Index Portfolio represent the
"Blue Chips" of technology and deserve a premium market valuation.
MANAGED GROWTH PORTFOLIO
For the six months ended April 30, 2000, the Managed Growth Portfolio
returned 12.04% versus the S&P 400 Mid-Cap index return of 21.26%.
During this time period, performance of the S&P 400 Mid-Cap index was driven
primarily by three sectors - technology in 1999 and first quarter 2000, and
energy and utilities in the first four months of 2000. Technology suffered a
steep decline in mid April while energy and utilities continued to outperform.
Geneva Capital Management's long-term investment strategy focuses on growth
companies and industries, particularly, those growing faster than the U.S. gross
domestic product. This bias precludes us from investing in most cyclical
sectors, including energy and utilities. As a result, the portfolio was not
able to benefit from strength in these groups. Since we believe the out-
performance in the energy and utility sectors will be short-lived, we feel
comfortable with our stance. We continue to be very positive on the technology
sector over the long term, but its high valuation caused us to maintain a market
weighting during this time period. With the forty percent decline (peak to
trough) in technology stocks in April, this decision appears to have been
prudent.
Interest rate hikes, inflation trends, and potential economic slowing are
restraining our typical optimism. We believe equity markets will struggle in the
next few months before we begin a new phase of this long-term secular bull
market. Technology stocks in particular still sport high P/E multiples and
recent technical/chart damage could be difficult to repair in the face of
possible lower earnings estimates. We are also reducing equity positions that
have increased, due to significant price appreciation, beyond our average 3% to
5% weighting. We expect this effort to minimize specific security risk in the
portfolio. We added new positions in Advent Software, Diamond Technology
Partners and Qualcomm to diversify our technology holdings. Finally, Minimed,
Guidant Corp. and United Healthgroup were added to increase our exposure to the
health care industry, an area we believe will outperform since multiples are
relatively low. These companies should continue to grow despite a slowing
economy.
While the rest of the year could be difficult, we are confident the portfolio
is well-diversified in strong, well-managed companies that will quickly begin to
participate in the next leg of this bull market. Looking ahead, we continue to
be very bullish on the long-term outlook for the market and the U.S. economy.
We strongly believe our philosophy of buying and holding high-quality, mid-cap
growth companies will reward investors.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
FINANCIAL HIGHLIGHTS
The table below presents information for a share of capital stock of each of
seven portfolios of Principal Preservation Portfolios, Inc. outstanding for the
periods indicated. This information should be read in conjunction with the
financial statements and related notes:
<TABLE>
TAX-EXEMPT PORTFOLIO
-----------------------------------------------------------------------------
For the six
months ended For the ten For the years ended December 31,
April 30, 2000 months ended ------------------------------------
(Unaudited) October 31, 1999 1998 1997 1996
-------------- ---------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.23 $ 9.24 $ 9.52 $ 9.30 $ 9.39
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .17 .29 .37 .41 .43
Net realized and unrealized gains
(losses) on investments .01 (1.01) .03 .44 (.09)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .18 (.72) .40 .85 .34
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (.17) (.29) (.37) (.41) (.43)
Distributions from net realized
gains on investments -- -- (.31) (.22) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.17) (.29) (.68) (.63) (.43)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 8.24 $ 8.23 $ 9.24 $ 9.52 $ 9.30
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN**<F2> 2.2%++<F4> (7.8)%++<F4> 4.3% 9.4% 3.8%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (to nearest thousand) $38,356 $42,954 $54,914 $60,252 $66,310
Ratio of net expenses to average net assets 1.3%*<F1> 1.2%*<F1> 1.1% 1.1% 1.1%+<F3>
Ratio of net investment income
to average net assets 4.2%*<F1> 4.0%*<F1> 3.9% 4.4% 4.7%+<F3>
Portfolio turnover rate 35.4% 39.1%++<F4> 236.7% 209.2% 163.1%
</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 1996.
++<F4> Not annualized.
<TABLE>
GOVERNMENT PORTFOLIO
-----------------------------------------------------------------------------
For the six
months ended For the ten For the years ended December 31,
April 30, 2000 months ended ------------------------------------
(Unaudited) October 31, 1999 1998 1997 1996
-------------- ---------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.92 $ 9.55 $ 9.28 $ 9.20 $ 9.64
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .27 .47 .55 .63 .64
Net realized and unrealized gains
(losses) on investments (.20) (.63) .27 .08 (.44)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .07 (.16) .82 .71 .20
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (.27) (.47) (.55) (.63) (.64)
Distributions from net realized
gains on investments -- -- -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.27) (.47) (.55) (.63) (.64)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 8.72 $ 8.92 $ 9.55 $ 9.28 $ 9.20
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN**<F6> 0.8%++<F8> (1.7)%++<F8> 9.1% 8.1% 2.3%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (to nearest thousand) $33,676 $37,379 $40,088 $40,683 $44,920
Ratio of net expenses to average net assets 1.2%*<F5> 1.2%*<F5> 1.2% 1.1%+<F7> 1.1%+<F7>
Ratio of net investment income
to average net assets 6.1%*<F5> 6.2%*<F5> 5.9% 7.0%+<F7> 7.0%+<F7>
Portfolio turnover rate 146.8%++<F8> 30.3%++<F8> 87.7% 78.6% 36.9%
</TABLE>
*<F5> Annualized.
**<F6> The Fund's sales charge is not reflected in total return as set forth
in the table.
+<F7> Reflects a voluntary reimbursement of fund expenses of 0.04% in 1997
and 0.04% in 1996.
++<F8> Not annualized.
<TABLE>
S&P 100 PLUS PORTFOLIO
------------------------------------------------------------------------------------------------
For the
period from
For the six July 27, 1998 For the years ended
months ended For the ten (commencement December 31,
April 30, 2000 months ended of operations) to ------------------------------
(Unaudited) October 31, 1999 December 31, 1998 1998 1997 1996
------------------- ----------------- ------------------- ------ ------ ------
Class B Class A Class B Class A Class B Class A
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD $41.35 $41.49 $34.91 $34.90 $33.13 $27.04 $22.08 $19.53
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (.11) .05 (.13) .10 .01 .20 .26 .29
Net realized and unrealized
gains on investments 4.04 4.05 6.57 6.57 2.43 8.51 5.63 4.07
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 3.93 4.10 6.44 6.67 2.44 8.71 5.89 4.36
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income -- (.06) -- (.08) (.01) (.20) (.26) (.29)
Distributions from net
realized gains
on investments (.49) (.49) -- -- (.59) (.59) (.65) (1.52)
Distributions in excess of
net realized gains -- -- -- -- (.06) (.06) (.02) --
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.49) (.55) -- (.08) (.66) (.85) (.93) (1.81)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $44.79 $45.04 $41.35 $41.49 $34.91 $34.90 $27.04 $22.08
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN**<F10> 9.6%++ 9.9%++ 18.4%++ 19.1%++ 7.4%++ 32.3% 26.8% 22.4%
<F12> <F12> <F12> <F12> <F12>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(to nearest thousand) $59,007 $254,435 $37,160 $214,358 $6,123 $160,190 $105,738 $77,517
Ratio of net expenses to
Average net assets 1.5%* 0.8%* 1.5%* 0.8%* 1.3%*+ 0.9%+ 0.9%+ 1.0%+
<F9> <F9> <F9> <F9> <F9><F11> <F11> <F11> <F11>
Ratio of net investment
income (loss) to
average net assets (0.4)%* 0.1%* (0.4)%* 0.3%* --*+ 0.6%+ 1.0%+ 1.4%+
<F9> <F9> <F9> <F9> <F9><F11> <F11> <F11> <F11>
Portfolio turnover rate 3.5%++ 3.5%++ 4.9%++ 4.9%++ 10.2%++ 10.2% 17.0% 8.0%
<F12> <F12> <F12> <F12> <F12>
</TABLE>
*<F9> Annualized.
**<F10> The Fund's sales charge is not reflected in total return as set forth
in the table.
+<F11> Reflects a voluntary reimbursement of fund expenses of 0.03% in Class
B Shares and 0.07% in Class A Shares in 1998, 0.11% in 1997 and 0.01%
in 1996.
++<F12> Not annualized.
<TABLE>
DIVIDEND ACHIEVERS PORTFOLIO
------------------------------------------------------------------------------------------------
For the
period from
For the six July 27, 1998 For the years ended
months ended For the ten (commencement December 31,
April 30, 2000 months ended of operations) to ------------------------------
(Unaudited) October 31, 1999 December 31, 1998 1998 1997 1996
------------------- ----------------- ------------------- ------ ------ ------
Class B Class A Class B Class A Class B Class A
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD $30.12 $30.32 $27.86 $27.92 $28.48 $25.13 $20.01 $16.97
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.8) .02 (.16) .02 .01 .07 .13 .14
Net realized and unrealized
gains on investments 2.83 2.83 2.42 2.39 1.39 4.80 5.43 3.54
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 2.75 2.85 2.26 2.41 1.40 4.87 5.56 3.68
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income -- (.01) -- (.01) (.01) (.07) (.13) (.14)
Distributions from net
Realized gains
on investments (4.41) (4.41) -- -- (2.01) (2.01) (.31) (.50)
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (4.41) (4.42) -- (.01) (2.02) (2.08) (.44) (.64)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $28.46 $28.75 $30.12 $30.32 $27.86 $27.92 $25.13 $20.01
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN**<F14> 10.0%++ 10.3%++ 8.1%++ 8.6%++ 4.9%++ 19.4% 27.9% 21.8%
<F16> <F16> <F16> <F16> <F16>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(to nearest thousand) $2,472 $47,440 $1,138 $45,071 $338 $44,219 $39,565 $30,504
Ratio of net expenses to
average net assets 2.0%* 1.3%* 2.0%*+ 1.3%*+ 1.7%*+ 1.3%+ 1.2%+ 1.2%+
<F13> <F13> <F13><F15> <F13><F15> <F13><F15> <F15> <F15> <F15>
Ratio of net investment
income (loss) to
average net assets (0.9)%* (0.2)%* (0.7)%*+ 0.1%*+ --*+ 0.2%+ 0.6%+ 0.8%+
<F13> <F13> <F13><F15> <F13><F15> <F13><F15> <F15> <F15> <F15>
Portfolio turnover rate 23.8%++ 23.8%++ 18.1%++ 18.1%++ 11.9%++ 11.9% 11.9% 13.1%
<F16> <F16> <F16> <F16> <F16>
</TABLE>
*<F13> Annualized.
**<F14> The Fund's sales charge is not reflected in total return as set forth
in the table.
+<F15> Reflects a voluntary reimbursement of fund expenses of 0.02% in Class
B and Class A Shares in 1999, 0.06% in Class B Shares and 0.02% in
Class A Shares in 1998, 0.1% in 1997 and 0.1% in 1996.
++<F16> Not annualized.
<TABLE>
SELECT VALUE PORTFOLIO
------------------------------------------------------------------------------------------------
For the
period from
For the six July 27, 1998 For the years ended
months ended For the ten (commencement December 31,
April 30, 2000 months ended of operations) to -------------------------------
(Unaudited) October 31, 1999 December 31, 1998 1998 1997 1996
------------------- ----------------- ------------------- ------ ------ ------
Class B Class A Class B Class A Class B Class A
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD $10.60 $10.68 $11.27 $11.30 $12.32 $12.07 $10.97 $10.21
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income (loss) (.05) (.06) (.09) (.03) -- -- .01 .04
Net realized and unrealized
gains (losses) on
investments 2.06 2.12 (.58) (.59) (1.05) (.77) 2.93 2.68
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 2.01 2.06 (.67) (.62) (1.05) (.77) 2.94 2.72
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income -- -- -- -- -- -- (.01) (.04)
Distributions from
net realized
gains on investments -- -- -- -- -- -- (1.83) (1.92)
Distributions in excess
of net realized gains
on investments -- -- -- -- -- -- -- --
Book return of capital -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS -- -- -- -- -- -- (1.84) (1.96)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $12.61 $12.74 $10.60 $10.68 $11.27 $11.30 $12.07 $10.97
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN**<F18> 19.0%++ 19.3%++ (5.9)%++ (5.5)%++ (8.5)%++ (6.4)% 27.2% 26.7%
<F20> <F20> <F20> <F20> <F20>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(to nearest thousand) $1,206 $8,664 $1,234 $9,219 $1,012 $10,520 $8,497 $4,829
Ratio of net expenses to
average net assets 2.1%*+ 1.4%*+ 2.0%*+ 1.4%*+ 1.7%*+ 1.3%+ 1.1%+ 1.0%+
<F17><F19> <F17><F19><F17><F19> <F17><F19> <F17><F19> <F19> <F19> <F19>
Ratio of net investment
income (loss) to
average net assets (0.8)%*+ (0.1)%*+ (1.0)%*+ (0.3)%*+ --*+ --+ 0.1%+ 0.3%+
<F17><F19> <F17><F19><F17><F19> <F17><F19> <F17><F19> <F19> <F19> <F19>
Portfolio turnover rate 18.1%++ 18.1%++ 91.2%++ 91.2%++ 110.0%++ 110.0% 82.5% 122.2%
<F20> <F20> <F20> <F20> <F20>
</TABLE>
*<F17> Annualized.
**<F18> The Fund's sales charge is not reflected in total return as set forth
in the table.
+<F19> Reflects a voluntary reimbursement of fund expenses of 0.7% in Class B
Shares and 0.7% in Class A Shares in 2000, 0.6% in Class B Shares and
0.6% in Class A Shares in 1999, 0.5% in Class B Shares and 0.5% in
Class A Shares in 1998, 1.0% in 1997 and 1.4% in 1996.
++<F20> Not annualized.
<TABLE>
PSE TECH 100 INDEX PORTFOLIO
---------------------------------------------------------------------------------------------------
For the period from For the period from
For the six July 27, 1998 June 10, 1996
months ended For the ten (commencement For the years ended (commencement
April 30, 2000 months ended of operations) to ------------------- of operations) to
(Unaudited) October 31, 1999 December 31, 1998 1998 1997 December 31, 1996
------------------ ------------------- ----------------- ------ ------ -----------------
Class B Class A Class B Class A Class B Class A
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD $26.90 $27.13 $18.39 $18.45 $14.94 $12.39 $10.76 $10.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income (loss) (.22) (.09) (.22) (.08) .01 .01 .04 .03
Net realized and unrealized
gains on investments 16.05 16.23 8.73 8.76 4.07 6.68 2.04 1.03
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 15.83 16.14 8.51 8.68 4.08 6.69 2.08 1.06
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income -- -- -- -- (.01) (.01) (.04) (.03)
Distributions from net
realized gains on
investments (1.98) (1.98) -- -- (.60) (.60) (.38) (.24)
Distributions in excess
of net realized gains -- -- -- -- (.02) (.02) (.03) (.03)
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.98) (1.98) -- -- (.63) (.63) (.45) (.30)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $40.75 $41.29 $26.90 $27.13 $18.39 $18.45 $12.39 $10.76
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN**<F22> 61.6%++ 62.3%++ 46.3%++ 47.0%++ 27.2%++ 54.0% 19.4% 10.7%++
<F24> <F24> <F24> <F24> <F24> <F24>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(to nearest thousand) $197,789 $406,713 $60,038 $169,247 $6,559 $72,724 $27,144 $6,004
Ratio of net expenses to
average net assets 1.3%* 0.7%* 1.4%*+ 0.7%*+ 1.2%*+ 0.6%+ 0.2%+ --*+
<F21> <F21> <F21><F23> <F21><F23> <F21><F23> <F23> <F23> <F21><F23>
Ratio of net investment
income (loss) to average
net assets (1.1)%* (0.5)%* (1.1)%*+ (0.4)%*+ --*+ --+ 0.3%+ 0.7%*+
<F21> <F21> <F21><F23> <F21><F23> <F21><F23> <F23> <F23> <F21><F23>
Portfolio turnover rate 22.6% 22.6% 33.0%++ 33.0%++ 25.4%++ 25.4% 22.0% 3.0%++
<F24> <F24> <F24> <F24>
</TABLE>
*<F21> Annualized.
**<F22> The Fund's sales charge is not reflected in total return as set forth
in the table.
+<F23> Reflects a voluntary reimbursement of fund expenses of 0.13% in Class
B Shares and 0.13% in Class A Shares in 1999, 0.3% in Class B Shares
and 0.5% in Class A Shares in 1998, 1.1% in 1997 and 3.3% in 1996.
++<F24> Not annualized.
<TABLE>
MANAGED GROWTH PORTFOLIO
---------------------------------------------------------------------------
For the six months ended For the period from January 1, 1999
April 30, 2000 (commencement of operations)
(Unaudited) to October 31, 1999
------------------------------------ ------------------------------------
Class B Class A Class B Class A
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD $10.01 $10.05 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.08) (.04) (.07) (.01)
Net realized and unrealized gains on investments 1.25 1.25 .08 .06
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.17 1.21 .01 .05
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- --
Distributions from net realized gains on investments -- -- -- --
Distributions in excess of net realized gains -- -- -- --
------ ------ ------ ------
TOTAL DISTRIBUTIONS -- -- -- --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.18 $11.26 $10.01 $10.05
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN**<F26> 11.7%++ 12.0%++ 0.1%++ 0.5%++
<F28> <F28> <F28> <F28>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (to nearest thousand) $3,642 $8,935 $1,701 $5,913
Ratio of net expenses to average net assets 1.9%*+ 1.2%*+ 1.2%*+ 0.6%*+
<F25><F27> <F25><F27> <F25><F27> <F25><F27>
Ratio of net investment income (loss) to
average net assets (1.5)%*+ (0.8)%*+ (0.8)%*+ (0.1)%*+
<F25><F27> <F25><F27> <F25><F27> <F25><F27>
Portfolio turnover rate 19.8%++ 19.8%++ 27.5%++ 27.5%++
<F28> <F28> <F28> <F28>
</TABLE>
*<F25> Annualized.
**<F26> The Fund's sales charge is not reflected in total return as set forth
in the table.
+<F27> Reflects a voluntary reimbursement of fund expenses of 0.5% in Class B
Shares and 0.5% in Class A Shares in 2000, 2.3% in Class B Shares and
2.3% in Class A Shares in 1999.
++<F28> Not annualized.
BALANCE SHEETS
APRIL 30, 2000 (UNAUDITED)
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH
----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Cost basis
of investments $39,936,852 $33,456,640 $179,857,155 $25,938,283 $8,134,446 $462,099,132 $10,686,254
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
Long-term investments
in securities $37,809,250 $33,102,805 $311,242,552 $48,799,201 $8,632,597 $596,325,429 $12,521,282
Short-term investments -- -- 1,583,000 1,132,000 1,248,000 6,462,000 212,000
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total investments
(See Schedule of
Investments) 37,809,250 33,102,805 312,825,552 49,931,201 9,880,597 602,787,429 12,733,282
Cash 503 214 681 759 163 546 636
Receivables:
Capital shares sold -- -- 1,212,467 45,476 1,310 3,215,651 11,430
Dividends and interest 737,301 702,016 213,801 22,958 8,222 41,798 1,815
Investments sold 104,922 -- -- -- -- -- --
Margin variation -- -- (11,900) -- -- 117,000 --
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total receivables 842,223 702,016 1,414,368 68,434 9,532 3,374,449 13,245
Other assets 2,546 1,417 6,489 1,546 362 7,741 64
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total assets $38,654,522 $33,806,452 $314,247,090 $50,001,940 $9,890,654 $606,170,165 $12,747,227
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
LIABILITIES:
Payables:
Capital shares
redeemed $ 39,784 $ -- $ 94,175 $ 6,357 $ -- $ 189,710 $ --
Distributions to
shareholders 51,513 65,848 -- -- -- -- --
Management fees 19,657 16,506 95,678 29,473 5,906 128,976 7,017
Other accrued expenses 62,190 35,261 114,951 53,960 13,478 166,909 19,953
Investments purchased -- -- -- -- -- 1,182,375 143,610
Other liabilities 125,813 13,041 -- -- -- -- --
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total liabilities 298,957 130,656 304,804 89,790 19,384 1,667,970 170,580
----------- ----------- ------------ ----------- ---------- ------------ -----------
NET ASSETS:
Capital stock 43,854,354 38,548,360 177,113,526 23,867,100 8,497,724 387,553,304 11,328,801
Undistributed net
investment income (loss) 9,038 5,343 (87,507) (62,162) (10,427) (1,641,061) (54,797)
Undistributed net realized
gains (losses) on
investments (3,380,225) (4,524,072) 3,947,870 2,114,294 (362,178) 77,901,655 (744,385)
Net unrealized appreciation
(depreciation) on
investments (2,127,602) (353,835) 132,968,397 23,992,918 1,746,151 140,688,297 2,047,028
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total net assets 38,355,565 33,675,796 313,942,286 49,912,150 9,871,270 604,502,195 12,576,647
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total liabilities and
net assets $38,654,522 $33,806,452 $314,247,090 $50,001,940 $9,890,654 $606,170,165 $12,747,227
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
NET ASSET VALUE AND
REDEMPTION PRICE
PER SHARE $ 8.24 $ 8.72
----------- -----------
----------- -----------
MAXIMUM OFFERING
PRICE PER SHARE $ 8.54 $ 9.04
----------- -----------
----------- -----------
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE
PER SHARE
Class A:
Net asset value $254,935,193 $47,440,058 $8,664,975 $406,712,817 $ 8,934,546
Shares outstanding 5,658,389 1,650,683 680,241 9,850,644 793,818
Redemption price per share $ 45.05 $ 28.74 $ 12.74 $ 41.29 $ 11.26
------------ ----------- ---------- ------------ -----------
------------ ----------- ---------- ------------ -----------
Maximum offering price per share $ 47.55 $ 30.33 $ 13.45 $ 43.58 $ 11.88
------------ ----------- ---------- ------------ -----------
------------ ----------- ---------- ------------ -----------
Class B:
Net asset value $ 59,007,093 $ 2,472,092 $1,206,295 $197,789,378 $ 3,642,101
Shares outstanding 1,317,421 86,863 95,697 4,853,802 325,835
Offering and redemption price per share $ 44.79 $ 28.46 $ 12.61 $ 40.75 $ 11.18
------------ ----------- ---------- ------------ -----------
------------ ----------- ---------- ------------ -----------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH
----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ -- $ 1,468,266 $ 222,349 $ 36,224 $ 259,497 $ 13,230
Interest 1,101,939 1,279,692 54,511 46,028 28,883 185,052 7,281
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total investment
income 1,101,939 1,279,692 1,522,777 268,377 65,107 444,549 20,511
----------- ----------- ------------ ----------- ---------- ------------ -----------
EXPENSES:
Investment advisory fees 120,323 104,929 555,238 179,126 37,692 669,270 39,338
Custodian fees 7,955 6,029 45,531 6,431 3,504 55,437 2,829
Transfer agent fees 7,464 14,071 50,840 12,283 11,889 110,146 2,191
Broker service fees 50,184 43,715 484,030 64,848 15,769 911,128 20,195
Distribution Fees - Class B -- -- 61,741 2,484 1,477 173,581 3,529
Professional fees 30,793 19,515 61,175 30,253 16,729 71,334 17,148
Registration 15,430 13,743 36,792 18,557 12,140 46,597 14,164
Communication 17,159 2,867 27,233 2,775 3,595 18,369 1,773
Director fees 2,855 2,296 10,815 2,620 1,574 17,080 837
Pricing of investments 3,052 2,582 9,084 4,144 2,856 3,355 2,296
Deferred organization
expense -- -- -- -- -- 1,685 --
Other (income) expense 4,908 2,318 11,288 1,875 991 7,989 883
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total expenses 260,123 212,065 1,353,767 325,396 108,216 2,085,971 105,183
Less expenses absorbed
by advisor -- -- -- -- (33,599) (361) (29,875)
----------- ----------- ------------ ----------- ---------- ------------ -----------
Net expenses 260,123 212,065 1,353,767 325,396 74,617 2,085,610 75,308
----------- ----------- ------------ ----------- ---------- ------------ -----------
NET INVESTMENT
INCOME (LOSS) 841,816 1,067,627 169,010 (57,019) (9,510) (1,641,061) (54,797)
----------- ----------- ------------ ----------- ---------- ------------ -----------
NET REALIZED GAINS (LOSSES)
ON INVESTMENTS (2,444,293) (1,398,930) 3,974,157 2,114,306 258,338 78,001,494 (481,612)
NET UNREALIZED APPRECIATION
(DEPRECIATION) ON
INVESTMENTS 2,513,528 621,657 20,927,052 2,648,068 1,535,376 86,333,615 1,532,609
----------- ----------- ------------ ----------- ---------- ------------ -----------
Net gains (losses)
on investments 69,235 (777,273) 24,901,209 4,762,374 1,793,714 164,335,109 1,050,997
----------- ----------- ------------ ----------- ---------- ------------ -----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $ 911,051 $ 290,354 $ 25,070,219 $ 4,705,355 $1,784,204 $162,694,048 $ 996,200
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH
----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss) $ 841,816 $ 1,067,627 $ 169,010 $ (57,019) $ (9,510) $(1,641,061) $ (54,797)
Net realized gains (losses)
on investments (2,444,293) (1,398,930) 3,974,157 2,114,306 258,338 78,001,494 (481,612)
Change in unrealized
appreciation
on investments
for the year 2,513,528 621,657 20,927,052 2,648,068 1,535,376 86,333,615 1,532,609
----------- ----------- ------------ ----------- ---------- ------------ -----------
Net increase (decrease)
in net assets resulting
from operations 911,051 290,354 25,070,219 4,705,355 1,784,204 162,694,048 996,200
----------- ----------- ------------ ----------- ---------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (845,466) (1,079,164) (298,645) (14,835) (917) -- --
Net realized gains
on investments -- -- (3,037,938) (6,720,646) -- (17,585,572) --
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total distributions (845,466) (1,079,164) (3,336,583) (6,735,481) (917) (17,585,572) --
----------- ----------- ------------ ----------- ---------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from
shares issued 238,555 1,169,561 67,445,079 3,165,940 920,102 275,669,729 4,312,008
Net asset value of shares
issued in distributions 517,386 607,386 3,065,169 6,134,531 897 15,936,189 --
Cost of shares redeemed (5,419,830) (4,691,049) (29,819,302) (3,567,560) (3,286,189) (61,497,481) (346,426)
----------- ----------- ------------ ----------- ---------- ------------ -----------
Net increase (decrease)
in net assets from
capital share
transactions (4,663,889) (2,914,102) 40,690,946 5,732,911 (2,365,190) 230,108,437 3,965,582
----------- ----------- ------------ ----------- ---------- ------------ -----------
Total increase
(decrease) (4,598,304) (3,702,912) 62,424,582 3,702,785 (581,903) 375,216,913 4,961,782
NET ASSETS:
Balance at beginning
of period 42,953,869 37,378,708 251,517,704 46,209,365 10,453,173 229,285,282 7,614,865
----------- ----------- ------------ ----------- ---------- ------------ -----------
Balance at end of period $38,355,565 $33,675,796 $313,942,286 $49,912,150 $9,871,270 $604,502,195 $12,576,647
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1999
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH*<F29>
----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss) $ 1,660,699 $ 1,995,419 $ 424,436 $ 24,345 $ (32,275) $ (693,556) $ (11,383)
Net realized gains (losses)
on investments (936,361) (999,954) 3,363,466 6,720,588 (186,769) 18,387,897 (262,773)
Change in unrealized
appreciation (depreciation)
on investments
for the year (4,675,154) (1,722,840) 31,625,617 (3,033,691) (456,173) 35,036,837 514,419
----------- ----------- ------------ ----------- ----------- ------------ -----------
Net increase (decrease)
in net assets resulting
from operations (3,950,816) (727,375) 35,413,519 3,711,242 (675,217) 52,731,178 240,263
----------- ----------- ------------ ----------- ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,655,072) (1,980,343) (388,855) (15,045) -- -- --
Net realized gains
on investments (4,647) -- -- -- -- -- --
----------- ----------- ------------ ----------- ----------- ------------ -----------
Total distributions (1,659,719) (1,980,343) (388,855) (15,045) -- -- --
----------- ----------- ------------ ----------- ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from
shares issued 734,230 2,679,791 63,805,712 3,200,433 2,667,230 118,207,229 7,517,403
Net asset value of shares
issued in distributions 1,058,496 1,249,962 355,785 14,155 -- 931 --
Cost of shares redeemed (8,142,535) (3,931,011) (13,981,568) (5,258,236) (3,070,703) (14,377,969) (142,801)
----------- ----------- ------------ ----------- ----------- ------------ -----------
Net increase (decrease)
in net assets from
capital share
transactions (6,349,809) (1,258) 50,179,929 (2,043,648) (403,473) 103,830,191 7,374,602
----------- ----------- ------------ ----------- ----------- ------------ -----------
Total increase
(decrease) (11,960,344) (2,708,976) 85,204,593 1,652,549 (1,078,690) 156,561,369 7,614,865
NET ASSETS:
Balance at beginning
of period 54,914,213 40,087,684 166,313,111 44,556,816 11,531,863 72,723,913 --
----------- ----------- ------------ ----------- ----------- ------------ -----------
Balance at end of period $42,953,869 $37,378,708 $251,517,704 $46,209,365 $10,453,173 $229,285,282 $7,614,865
----------- ----------- ------------ ----------- ----------- ------------ -----------
----------- ----------- ------------ ----------- ----------- ------------ -----------
</TABLE>
*<F29> The Managed Growth Portfolio is from January 1, 1999, the commencement
of its operations, through October 31, 1999.
The accompanying notes to financial statements are an integral part of these
statements.
NOTES TO FINANCIAL STATEMENTS
APRIL 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&P 100 Plus Portfolio, Dividend Achievers Portfolio, Select Value
Portfolio, PSE Tech 100 Index Portfolio, Wisconsin Tax-Exempt Portfolio,
Cash Reserve Portfolio and the Managed Growth Portfolio. This report
contains the information of all portfolios, except for the Cash Reserve
Portfolio and the Wisconsin Tax-Exempt Portfolio which information is
contained 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.
In 1999 the Board of Directors elected to change the fiscal year end of all
of the Portfolios except for the Cash Reserve and Wisconsin Tax-Exempt
Portfolios to October 31. The S&P 100 Plus Portfolio, Dividend Achievers
Portfolio, Select Value Portfolio, PSE Tech 100 Index Portfolio and Managed
Growth Portfolio each offer two classes of shares - Class A Shares and Class
B Shares. Both classes represent interests in the same portfolio of
investments of each Portfolio and are substantially the same in all respects
except that the classes are subject to different sales load structures and
12b-1 fees.
The following is a summary of the significant accounting policies of the
Fund.
(a) Long-Term Securities and Short-Term Investments
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 Tax-Exempt portfolio's
securities) are carried at fair value as determined by the Service,
based on methods which 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.
Long-term taxable fixed income securities are valued at market using
quotations provided by an independent pricing service.
Common and preferred stocks are valued at the last sales price reported
by the New York Stock Exchange, other appropriate exchanges, or NASDAQ,
on the date of valuation. Common and preferred stocks not traded on
that date are valued at the last bid price.
Short-term investments are valued at amortized cost, which approximates
market value.
Through the year, investment transactions are recorded on the next date
after trade date. However, the fiscal year-end financial statements are
adjusted to reflect trade date, which adjustment does not materially
impact the Fund's financial results.
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) Option Transactions
For hedging purposes, the S&P 100 Plus Portfolio and the PSE Tech 100
Index Portfolio may buy and sell put and call options, write covered
call options on portfolio securities, write cash-secured puts, and
write call options that are not covered for cross-hedging purposes. The
risk in writing a call option is that a Portfolio gives up the
opportunity for profit if the market price of the security increases.
The risk in writing a put option is that a Portfolio may incur a loss
if the market price of the security decreases and the option is
exercised. The risk in buying an option is that a Portfolio pays a
premium whether or not the option is exercised. A Portfolio also has
the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist. The S&P 100
Plus Portfolio also may write over-the-counter options where the
completion of the obligation is dependent upon the credit standing of
another party.
Option contracts are valued daily, and unrealized appreciation or
depreciation is recorded. A Portfolio will realize a gain or loss upon
expiration or closing of the option transaction. When an option is
exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option, or the cost of a security for a
purchased put or call option is adjusted by the amount of premium
received or paid.
(c) Futures Contracts
The S&P 100 Plus and PSE Tech 100 Index Portfolios may utilize futures
contracts to a limited extent. The primary risks associated with the
use of futures contracts include an imperfect correlation between the
change in market value of the securities held by the Portfolio and the
prices of futures contracts and the possibility of an illiquid market.
Futures contracts are based upon their quoted daily settlement prices.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal
to a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Portfolio each day. The
variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized appreciation
(depreciation) until the contracts are terminated at which time
realized gains and losses are recognized.
(d) Net Realized Gains and Losses and Investment Income
Net realized gains and losses on securities sales (including options)
are computed on the identified cost basis. Dividend income is recorded
on the ex-dividend date. Interest income is recorded on an accrual
basis. Total net realized gains (losses) on investments for the period
ended April 30, 2000, were comprised of the following:
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH
----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net realized gains (losses)
on investments $(2,444,293) $(1,398,930) $3,920,769 $2,114,306 $258,338 $74,109,231 $(481,612)
Net realized gains
on options and futures -- -- 53,388 -- -- 3,892,263 --
----------- ----------- ---------- ---------- -------- ----------- ----------
Total net realized gains
(losses) on investments $(2,444,293) $(1,398,930) $3,974,157 $2,114,306 $258,338 $78,001,494 $(481,612)
----------- ----------- ---------- ---------- -------- ----------- ----------
----------- ----------- ---------- ---------- -------- ----------- ----------
</TABLE>
(e) Federal Income Taxes
Provision has not been made for Federal income taxes since each
portfolio has elected to be taxed as a "regulated investment company"
and intends to distribute substantially all income to its shareholders
and otherwise comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. As of October 31, 1999,
the Government Portfolio has capital loss carry forwards of $1,963,517,
$151,408 and $1,001,047 expiring in 2002, 2005 and 2007 respectively.
As of October 31, 1999, the Tax-Exempt Portfolio has capital loss carry
forwards of $935,932 expiring in 2007. As of October 31, 1999, the
Select Value Portfolio has capital loss carry forwards of $413,487 and
$182,281 expiring in 2006 and 2007, respectively. As of October 31,
1999, the Managed Growth Portfolio has capital loss carry forwards of
$262,773 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 carry forwards are exhausted.
Distributions in excess of net realized gains on investments in the PSE
Tech 100 Index Portfolio of $89,874 for the year ended December 31,
1998, are the result of losses on wash sales which are currently
recognized for book purposes but are deferred for tax purposes and the
reversal of Section 1256 mark to market losses utilized in 1998. This
distribution does not represent a tax return of capital. Distributions
in excess of net realized gains on investments in the S&P 100 Plus
Portfolio of $281,681 for the year ended December 31, 1998 are as a
result of current year Section 1256 market to market gains and the
reversal of Section 1256 mark to market losses utilized in 1998. This
distribution does not represent a tax return of capital.
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 October 31, 1999, reclassifications were recorded to increase
(decrease) undistributed net investment income by $7,061, ($2,525),
($2,905), $32,275, $693,556 and $11,383 in the Tax-Exempt, Government,
S&P 100 Plus, Select Value, PSE Tech 100 and Managed Growth Portfolios;
increase (decrease) capital stock by $775, $6,969, ($12,312), ($32,275)
$31,270 and ($11,383) in the Tax-Exempt, Government, S&P 100 Plus,
Select Value, PSE Tech 100 Index and Managed Growth Portfolios;
increase (decrease) undistributed net realized gains by ($7,836),
($4,444), $15,217, ($724,826) in the Tax-Exempt, Government, S&P 100
Plus and PSE Tech 100 Index Portfolios. There were no
reclassifications in the Dividend Achievers Portfolio.
The portfolios designate approximately the following long term capital
gains for purposes of the dividend paid deduction:
S&P 100 Plus Portfolio $2,300,000
Dividend Achievers Portfolio $6,721,000
PSE Tech 100 Portfolio $7,648,000
These gains were declared and distributed on November 19, 1999.
(f) 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.
(g) Distributions to Shareholders
Dividends to shareholders are recorded on the ex-dividend date.
(h) Deferred Organization Costs
Costs incurred with the organization, initial registration and public
offering of shares aggregating $16,900 for the PSETech 100 Index
Portfolio have been paid by the Fund and are being amortized over a
five year period.
(i) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH RELATED PARTIES --
On May 1, 1999, the separate investment advisory functions of B.C. Ziegler
and Company ("BCZ") and Ziegler Asset Management, Inc. ("ZAMI") were
consolidated in BCZ, and BCZ became investment advisor for all of the
portfolios covered in this report pursuant to an Investment Advisory
Agreement of that date. BCZ and ZAMI are wholly owned subsidiaries of The
Ziegler Companies, Inc. Certain officers and directors of the Fund are
affiliated with BCZ. Under the Agreement, the Tax-Exempt and Government
Portfolios pay BCZ a monthly fee based upon the average daily net assets of
each portfolio at the rate of .60% of the first $50,000,000 of each
portfolio's average daily net assets, reducing to .50% on the next
$200,000,000 of each portfolio's average daily net assets and .40% of each
portfolio's average daily net assets in excess of $250,000,000.
Pursuant to the Agreement, the S&P 100 Plus Portfolio pays BCZ a monthly fee
based upon the S&P 100 Plus average daily net assets at the rate of 0.575%
of the first $20,000,000, .45% of the next $30,000,000, .40% of the next
$50,000,000, .35% of the next $400,000,000 and .30% of assets over
$500,000,000.
Pursuant to the Agreement, the Dividend Achievers Portfolio pays BCZ a
monthly fee based upon the Dividend Achievers average daily net assets at
the rate of .75% of the first $250,000,000 of average daily net assets,
reducing to .70% on the next $250,000,000 and .65% on the average daily net
assets of over $500,000,000.
Under its Agreement, the PSETech 100 Index Portfolio pays BCZ a monthly fee
based upon the PSE Tech 100 average daily net assets at the rate of .50% of
the first $50,000,000 of average daily net assets, .30% of the next
$200,000,000 of average daily net assets, .25% of the next $250,000,000 of
average daily net assets and .20% of average daily net assets in excess of
$500,000,000.
Under the Agreement, the Select Value Portfolio pays BCZ a monthly fee based
on the average daily net assets of the Portfolio at the rate of .75% of the
first $250,000,000 of the Portfolio's average daily net assets, and .65% on
average daily net assets exceeding $250,000,000.
Pursuant to the Agreement, BCZ has retained Geneva Capital Management
("Geneva") to manage the Managed Growth Portfolio. Under the Agreement, the
Managed Growth Portfolio pays BCZ a monthly fee based on the average daily
net assets of the Portfolio at the rate of .75% of the first $250,000,000 of
the Portfolio's average daily assets, and .65% on the average daily net
assets exceeding $250,000,000. BCZ pays Geneva 50% of the fee paid by the
Managed Growth Portfolio.
The Advisor voluntarily reimbursed the S&P 100 Plus Portfolio $10,732, the
Dividend Achievers Portfolio $3,994, the Select Value Portfolio $52,577, the
PSE Tech 100 Index Portfolio $184,234 and the Managed Growth Portfolio
$106,790 in 1999. The Advisor is not obligated to continue the voluntary
reimbursement in the future.
BCZ has an Accounting and Pricing Agreement with the Fund to perform
accounting and pricing services. In addition, each Portfolio pays BCZ
commissions on sales of Portfolio shares. The commissions and accounting and
pricing fees paid to BCZ for the period ended April 30, 2000, were as
follows for each Portfolio:
ACCOUNTING
COMMISSIONS AND PRICING 12B-1
ON PORTFOLIO SHARES FEES FEES
------------------- ----------- --------
Tax-Exempt Portfolio $ 2,191 $ 11,160 $ 18,237
Government Portfolio 1,197 10,347 26,852
S&P 100 Plus Portfolio 452,670 36,270 134,052
Dividend Achievers Portfolio 12,923 12,083 64,612
Select Value Portfolio 7,129 9,500 4,861
PSE Tech 100 Index Portfolio 1,311,147 41,972 64,612
Managed Growth Portfolio 18,215 9,500 2,989
---------- -------- --------
TOTAL $1,805,472 $130,832 $316,215
---------- -------- --------
---------- -------- --------
During the period ended April 30, 2000, BCZ received $5,535, $5,788, $11,955
and $1,280 representing commissions from the purchases and sales of
investments of the S&P 100 Plus Portfolio, Dividend Achievers Portfolio, PSE
Tech 100 Portfolio and Managed Growth Portfolio, respectively.
3. INVESTMENT TRANSACTIONS --
Purchases and proceeds from sales of securities, excluding short-term
investments, for the period ended April 30, 2000 aggregated:
PURCHASES PROCEEDS FROM SALES
------------- -------------------
Tax-Exempt Portfolio $14,102,422 $21,177,034
Government Portfolio 50,899,850 54,947,309
S&P 100 Plus Portfolio 51,120,068 9,876,785
Dividend Achievers Portfolio 13,663,514 11,073,853
Select Value Portfolio 1,658,973 4,219,444
PSE Tech 100 Index Portfolio 382,565,454 100,244,456
Managed Growth Portfolio 5,537,364 2,047,333
Net tax basis unrealized appreciation (depreciation) on investments as of
April 30, 2000, included:
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH
----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross unrealized
appreciation $ 32,413 $ 75,061 $138,094,907 $24,333,600 $2,247,268 $159,289,423 $ 2,457,895
Gross unrealized
(depreciation) (2,160,016) (428,896) (5,116,510) (340,682) (501,118) (18,601,125) (410,867)
----------- ----------- ------------ ----------- ---------- ------------ -----------
Net unrealized appreciation
(depreciation) $(2,127,602) $ (353,835) $132,968,397 $23,992,918 $1,746,151 $140,688,298 $ 2,047,028
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
Tax basis cost
of investments $39,936,852 $33,456,640 $180,866,781 $24,806,283 $6,886,446 $465,492,131 $10,474,254
----------- ----------- ------------ ----------- ---------- ------------ -----------
----------- ----------- ------------ ----------- ---------- ------------ -----------
</TABLE>
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 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 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 ten months ended October 31, 1999 and
six months ended April 30, 2000, were as follows:
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
CLASS A SHARES TAX-EXEMPT GOVERNMENT PLUS ACHIEVERS VALUE INDEX GROWTH
--------------- ----------- ----------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHARES OUTSTANDING
AT DECEMBER 31, 1998 5,940,969 4,196,154 4,589,364 1,583,829 931,156 3,586,552 --
Shares issued 80,908 289,467 906,985 79,241 194,286 3,125,619 599,783
Shares issued
in distributions 119,300 136,833 9,222 473 -- 41 --
Shares redeemed (919,228) (430,122) (339,320) (177,226) (261,992) (473,777) (11,359)
--------- --------- --------- --------- -------- ---------- --------
SHARES OUTSTANDING
AT OCTOBER 31, 1999 5,221,949 4,192,332 5,166,251 1,486,317 863,450 6,238,435 588,424
Shares issued 29,092 132,320 982,303 57,974 66,426 4,659,942 223,812
Shares issued
in distributions 63,029 69,537 60,627 219,375 77 377,737 --
Shares redeemed (658,085) (534,354) (550,792) (112,983) (249,712) (1,425,471) (18,418)
--------- --------- --------- --------- -------- ---------- --------
SHARES OUTSTANDING
AT APRIL 30, 2000 4,655,985 3,859,836 5,658,389 1,650,683 680,241 9,850,644 793,818
--------- --------- --------- --------- -------- ---------- --------
--------- --------- --------- --------- -------- ---------- --------
</TABLE>
<TABLE>
S&P 100 DIVIDEND SELECT PSE TECH 100 MANAGED
CLASS B SHARES PLUS ACHIEVERS VALUE INDEX GROWTH
--------------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
SHARES OUTSTANDING
AT DECEMBER31, 1998 175,393 12,145 89,822 356,643 --
Shares issued 744,928 28,472 53,591 2,017,439 173,279
Shares issued in distributions -- -- -- 9 --
Shares redeemed (21,648) (2,824) (27,044) (142,028) (3,345)
--------- ------- ------- --------- -------
SHARES OUTSTANDING
AT OCTOBER 31, 1999 898,673 37,793 116,369 2,232,063 169,934
Shares issued 541,325 57,308 11,508 2,652,253 168,855
Shares issued in distributions 10,336 7,289 -- 157,670 --
Shares redeemed (132,914) (15,529) 32,180 (188,184) (12,954)
--------- ------- ------- --------- -------
SHARES OUTSTANDING
AT APRIL 30, 2000 1,317,421 86,863 95,697 4,853,802 325,835
--------- ------- ------- --------- -------
--------- ------- ------- --------- -------
</TABLE>
* Amounts shown for the Class B Shares are from its commencement of operations.
(c) For the S&P 100 Plus Portfolio, the Dividend Achievers Portfolio, the
Select Value Portfolio, the PSE Tech 100 Index Portfolio, and the
Managed Growth Portfolio, the maximum offering price per Class A Share
is computed based on a maximum sales charge of 5.25% of the offering
price or 5.54% of the net asset value. For the 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 94.75.
For the Tax-Exempt and Government Portfolios, the maximum offering
price per share is computed based on a maximum sales charge of 3.5% of
the offering price or 3.62% of the net asset value. For these
portfolios 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 96.5.
6. FUTURES CONTRACTS WRITTEN --
An analysis of the futures contracts written for the six months ended April
30, 2000, in the S&P 100 Plus and PSE Tech 100 Index Portfolios,
respectively, were as follows:
AGGREGATE FACE
NUMBER OF CONTRACTS VALUE OF CONTRACTS
------------------- ------------------
S&P 100 PLUS PORTFOLIO:
Outstanding at October 31, 1999 6 $ 2,064,048
Contracts opened 8 2,877,939
Contracts closed (7) (2,410,556)
--- -----------
Outstanding at April 30, 2000 7 $ 2,531,431
--- -----------
--- -----------
AGGREGATE FACE
NUMBER OF CONTRACTS VALUE OF CONTRACTS
------------------- ------------------
PSE TECH 100 INDEX PORTFOLIO:
Outstanding at October 31, 1999 60 $ 4,006,979
Contracts opened 170 17,877,608
Contracts closed (140) (10,526,619)
--- -----------
Outstanding at April 30, 2000 90 $11,357,969
--- -----------
--- -----------
The number of financial futures contracts and the gross unrealized
appreciation, as of April 30, 2000, for each Portfolio were as follows:
UNREALIZED
NUMBER OF CONTRACTS APPRECIATION
------------------- ------------
S&P 100 PLUS PORTFOLIO:
S&P 500 Index Futures Contract
expiration date September 2000 7 $ 61,194
PSE TECH 100 INDEX PORTFOLIO:
PSE Technology 100 Index Futures
Contract expiration date June 2000 90 $(1,502,969)
TAX-EXEMPT PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
<TABLE>
PRINCIPAL S&P MOODY'S MARKET
AMOUNT DESCRIPTION RATING RATING VALUE
--------- ----------- ------ ------- ------
<S> <C> <C> <C> <C>
LONG-TERM TAX-EXEMPT SECURITIES -- 98.6%
ALABAMA -- 4.9%
$1,000,000 The Board of Trustees of Alabama Agricultural and Mechanical
University Revenue Bonds, Series 1998, 5.00%, due 11-01-2016 AAA Aaa $ 913,750
1,000,000 Tuscaloosa, Alabama, General Obligation Bonds, Unlimited Tax,
5.75%, due 01-01-2020 AA- Aa3 983,750
ARIZONA -- 2.7%
1,000,000 Arizona State Transportation Board Highway Revenue Bonds,
Series A, 6.35%, due 07-01-2005 AA Aaa 1,035,000
COLORADO -- 8.6%
2,000,000 City of Colorado Springs, Colorado, Revenue Bonds (The Colorado
College Project), Series 1999, 5.25%, due 06-01-2024 AA- Aa3 1,822,500
1,500,000 Westminster, Colorado, Sales and Use Tax Refunding Revenue Bonds,
Street Project, Series A, 5.60%, due 12-01-2016 AA- NR 1,475,625
ILLINOIS -- 10.0%
1,500,000 Chicago, Illinois, Board of Education Chicago School Reform
General Obligation Unlimited Tax, 6.00%, due 12-01-2026 AAA Aaa 1,597,500
1,000,000 Public Building Commission of Chicago Building Revenue Bonds,
Series A of 1990, (Board of Education of the City of Chicago),
7.00%, due 01-01-2020 AAA Aaa 1,151,250
1,000,000 Community Unit School District #220 (Barrington) Lake, Cook,
Kane and McHenry Counties, Illinois, General Obligation School
Bonds, Series 1998, 6.30%, due 12-01-2017 AAA Aaa 1,073,750
INDIANA -- 17.0%
1,500,000 Indiana State Office Building Commission Capitol Complex Revenue
Bonds, Series 1990A, (Senate Avenue Parking Facility), 7.40%,
due 07-01-2015 AAA Aaa 1,779,375
2,000,000 Indiana Transportation Finance Authority Airport Facilities Lease
Revenue Bonds, 6.25%, Prerefunded 11-01-02 at $102 A+ Aaa 2,097,500
1,500,000 The Indianapolis Local Public Improvement Bond Bank,
Series 1992D Bonds, 6.750%, due 02-01-2014 AA NR 1,646,250
1,000,000 Porter County Jail Building Corporation First Mortgage Bonds,
Series 1999, Porter County, Indiana, 5.875%, due 07-15-2019 AAA Aaa 996,250
MAINE -- 2.3%
1,000,000 Maine Turnpike Authority Special Obligation Refunding Bonds,
Series 1998, 5.00%, due 07-01-2018 AAA Aaa 893,750
MASSACHUSETTS -- 5.0%
1,000,000 City of Springfield, Massachusetts, General Obligation State
Qualified Municipal Purpose Loan of 1998 Bonds, 5.00%,
due 11-15-2018 AAA Aaa 903,750
1,000,000 Town of Sterling, Massachusetts General Obligation School
Construction Bonds Unlimited Tax, 6.00%, due 02-15-2020 AAA Aaa 1,015,000
MICHIGAN -- 4.8%
1,000,000 Dexter Community Schools, Counties of Washtenaw and Livingston,
State of Michigan, 1998 School Building and Site Bonds,
(Unlimited Tax General Obligation), 5.10%, due 05-01-2018 AAA Aaa 926,250
1,000,000 Board of Control of Northern Michigan University, General Revenue
Bonds, Series 1997, 5.125%, due 12-01-2020 AAA Aaa 905,000
MINNESOTA -- 2.3%
1,000,000 Minnesota Public Facilities Authority Water Pollution Control
Revenue Bonds, Series 1998A, 4.750%, due 03-01-2019 AAA Aaa 871,250
MISSISSIPPI -- 4.8%
1,000,000 Certificates of Participation (East Mississippi Correctional
Facility Project), Series 1997, Payments under Lease/Purchase
Agreement, 5.0%, due 01-01-2018 AAA Aaa 891,250
1,000,000 Mississippi State University Educational Building Corporation
Revenue Bonds, Series 1998, 5.25%, due 08-01-2017 NR Aaa 941,250
NEW MEXICO -- 2.4%
1,000,000 Bernalillo County, New Mexico, Gross Receipts Tax Refunding
Revenue Bonds, Series 1998, 5.25%, due 04-01-2027 AA Aa3 915,000
NEW YORK -- 2.7%
1,000,000 County of Monroe, New York General Obligation Bonds Public
Improvement Refunding Bonds-1996, Series A, 6.00%, due 03-01-2019 AA Aa2 1,032,500
OKLAHOMA -- 2.7%
1,000,000 Tulsa Industrial Authority Revenue and Refunding Bonds, (The
University of Tulsa), Series 1996A, 6.00%, due 10-01-2016 AAA Aaa 1,047,500
PENNSYLVANIA -- 6.9%
1,700,000 Lewisburg Area School District, Union County, Pennsylvania,
General Obligation Bonds, Series of 1992, 6.20%,
Prerefunded 06-01-2002 at 100 AAA Aaa 1,746,750
1,000,000 Public Auditorium Authority of Pittsburgh and Allegheny County,
(Allegheny County, Pennsylvania), Hotel Room Excise Tax Revenue
Bonds, Series of 1999, 5.00%, due 02-01-2017 AAA Aaa 905,000
SOUTH CAROLINA -- 2.3%
1,000,000 City of Spartanburg, South Carolina, Water System Refunding Revenue
Bonds, Series 1997, 5.00%, due 06-01-2019 AAA Aaa 892,500
TENNESSEE -- 4.5%
1,000,000 Harpeth Valley Utilities District of Davidson and Williamson Counties,
Tennessee, Utilities Improvement Revenue Bonds, Series 1998, 5.05%,
due 09-01-2020 AAA Aaa 882,500
1,000,000 Knox County, Tennessee General Obligation Public Improvement Bonds,
Series 1998, 4.75%, due 04-10-2018 AA Aa2 862,500
TEXAS -- 2.5%
1,000,000 Brownsville Independent School District (Cameron County, Texas),
Unlimited Tax School Building Bonds, Series 1999, 5.50%,
due 08-15-2019 AAA Aaa 961,250
VIRGINIA -- 2.7%
1,000,000 City of Norfolk, Virginia, Water Revenue Bonds, Series 1995,
5.875%, due 11-01-2020 AAA Aaa 1,002,500
WISCONSIN -- 7.0%
1,000,000 School District of Waupun, Dodge and Fond du Lac Counties,
Wisconsin, General Obligation Refunding Bonds, 4.75%,
due 04-01-2018 AAA Aaa 865,000
1,000,000 Wisconsin State Transportation Revenue Refunding Bonds,
Series B, 4.75%, due 07-01-2019 NR Aaa 846,250
1,000,000 State of Wisconsin, Clean Water Revenue Bonds, 1999 Series 1,
5.50%, due 06-01-2018 AA+ Aa2 972,500
WYOMING -- 2.5%
1,000,000 The Trustees of the University of Wyoming Facilities Improvement
and Refunding Revenue Bonds, Series 1999, 5.50%, due 06-01-2019 AAA Aaa 957,500
-----------
Total Municipal Bonds (Cost $39,936,852) $37,809,250
-----------
-----------
</TABLE>
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
PRINCIPAL INTEREST MARKET
AMOUNT DESCRIPTION RATE MATURITY VALUE
--------- ----------- -------- -------- ------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 98.3%
U.S. GOVERNMENT OBLIGATIONS -- 98.3%
$4,400,000 U.S. Treasury Note 6.375% 01-31-2002 $ 4,376,623
4,200,000 U.S. Treasury Note 6.500% 02-28-2002 4,185,560
3,200,000 U.S. Treasury Note 6.000% 08-15-2009 3,124,000
2,200,000 U.S. Treasury Bond 10.750% 08-15-2005 2,604,250
2,300,000 U.S. Treasury Note 7.875% 11-15-2004 2,415,000
2,000,000 U.S. Treasury Bond 7.875% 02-15-2021 2,363,124
2,300,000 U.S. Treasury Note 7.500% 11-15-2001 2,327,313
2,000,000 U.S. Treasury Bond 7.250% 05-15-2016 2,186,874
2,200,000 U.S. Treasury Note 5.750% 04-30-2003 2,149,125
2,000,000 U.S. Treasury Bond 6.250% 05-15-2030 2,079,374
2,000,000 U.S. Treasury Note 6.250% 08-15-2023 2,001,250
2,000,000 U.S. Treasury Note 6.625% 06-30-2001 2,000,000
1,000,000 U.S. Treasury Bond 9.000% 11-15-2018 1,290,312
-----------
Total U.S. Government Obligations (Cost $33,456,640) $33,102,805
-----------
-----------
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
S&P 100 PLUS PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
NUMBER MARKET
OF SHARES VALUE
--------- ------
COMMON STOCKS -- 99.1%
BASIC INDUSTRIES -- 2.1%
Alcoa Inc. 17,270 $ 1,120,391
Allegheny Technologies Inc. 3,856 93,267
*<F30> Bethlehem Steel Corporation 5,690 30,584
Boise Cascade Corporation 2,606 84,858
Champion International 4,570 300,477
Dow Chemical Company 10,410 1,176,330
Homestake Mining Company 12,780 76,680
International Paper Company 19,900 731,325
International Flavors &
Fragrances Inc. 5,030 173,221
Weyerhaeuser Company 11,070 591,553
DuPont (E.I.) de Nemours
and Company 50,270 2,384,683
------------
6,763,369
------------
COMMUNICATION SERVICES -- 3.7%
AT&T Corp. 154,098 7,194,450
Bell Atlantic Corporation 74,732 4,427,871
------------
11,622,321
------------
CONSUMER CYCLICALS -- 8.6%
Black & Decker Corporation 4,060 170,774
Brunswick Corporation 3,660 70,226
Ford Motor Company 58,800 3,215,625
General Motors Corporation 30,670 2,871,479
*<F30> Harrah's Entertainment, Inc. 5,840 120,085
The Home Depot, Inc. 110,710 6,206,679
*<F30> Kmart Corporation 23,860 193,862
Limited (The), Inc. 9,689 437,822
May Department Stores Company 16,200 445,500
Sears, Roebuck and Co. 18,270 669,139
Tandy Corporation 8,530 486,210
*<F30> Toys "R" Us, Inc. 11,405 173,926
Wal-Mart Stores, Inc. 214,200 11,861,325
------------
26,922,652
------------
CONSUMER STAPLES -- 7.9%
Avon Products, Inc. 11,780 488,870
*<F30> CBS Corporation 37,070 2,177,863
Campbell Soup Company 19,910 517,660
Coca-Cola Company 117,000 5,506,312
Colgate-Palmolive Company 27,520 1,572,080
Walt Disney Company 99,540 4,311,326
Heinz (H.J.) Company 16,960 576,640
McDonald's Corporation 63,090 2,405,306
PepsiCo, Inc. 70,890 2,600,777
Procter & Gamble Company 60,720 3,620,430
Ralston Purina Group 14,730 260,537
Sara Lee Corporation 43,670 655,050
------------
24,692,851
------------
CAPITAL GOODS -- 9.8%
The Boeing Company 41,852 1,661,001
Fluor Corporation 2,740 91,961
General Dynamics Corporation 9,140 534,690
General Electric Company 158,740 24,961,865
Minnesota Mining &
Manufacturing Company 18,690 1,616,685
Rockwell International Corporation 8,630 339,807
United Technologies Corporation 23,050 1,433,422
------------
30,639,431
------------
ENERGY -- 5.3%
Baker Hughes Incorporated 15,090 480,052
Exxon Mobil Corporation 166,703 12,950,739
Halliburton Company 21,020 928,821
Occidental Petroleum Corporation 17,370 372,369
Schlumberger Limited 25,590 1,959,234
------------
16,691,215
------------
FINANCIAL -- 12.3%
American International Group, Inc. 74,645 8,187,623
American Express Company 21,430 3,215,839
American General Corporation 11,680 654,080
Bank One Corporation 55,394 1,689,517
Bank of America Corporation 82,560 4,045,440
CIGNA Corporation 8,230 656,343
Citigroup Inc. 163,175 9,698,714
Hartford Financial Services Group 10,150 529,703
Merrill Lynch & Co., Inc. 17,770 1,811,429
Morgan Stanley Dean Witter & Co. 54,640 4,193,620
U.S. Bancorp 35,640 723,938
Wells Fargo Company 79,720 3,273,503
------------
38,679,749
------------
HEALTH CARE -- 6.4%
Baxter International Inc. 13,910 905,889
Bristol-Myers Squibb Company 93,480 4,901,858
Columbia/HCA Healthcare
Corporation 26,810 762,409
Johnson &Johnson 67,330 5,554,725
Mallinckrodt, Inc. 2,440 65,575
Merck &Co., Inc. 112,540 7,821,530
------------
20,011,986
------------
TECHNOLOGY -- 41.5%
*<F30> Amgen, Inc. 49,760 2,786,560
*<F30> Ceridian Corporation 6,990 151,596
*<F30> Cisco Systems, Inc. 331,020 22,948,988
*<F30> Computer Sciences Corporation 7,410 604,378
*<F30> EMC Corporation 48,300 6,710,681
Eastman Kodak Company 15,340 858,081
Hewlett-Packard Company 48,750 6,581,250
Honeywell International Inc. 38,142 2,135,952
International Business Machines
Corporation 86,540 9,660,027
Intel Corporation 161,580 20,490,364
Lucent Technologies, Inc. 153,350 9,536,453
*<F30> Microsoft Corporation 250,430 17,467,492
*<F30> National Semiconductor Corporation 7,620 462,915
Nortel Networks Corp. 70,530 7,987,523
*<F30> Oracle Corporation 136,714 10,928,575
Pharmacia Corporation 60,089 3,000,694
Polaroid Corporation 1,520 30,685
Raytheon Company, Class B Shares 15,950 353,891
Tektronix, Inc. 1,620 93,758
Texas Instruments Inc. 39,800 6,482,425
*<F30> Unisys Corporation 14,520 336,683
Xerox Corporation 31,262 826,489
------------
130,435,460
------------
TRANSPORTATION -- 0.5%
Burlington Northern
Santa Fe Corporation 21,530 519,411
Delta Air Lines, Inc. 6,190 326,523
*<F30> FedEx Corporation 14,120 532,147
Norfolk Southern Corporation 18,180 320,423
------------
1,698,504
------------
UTILITIES -- 1.0%
American Electric Power
Company, Inc. 9,040 331,090
Coastal Corporation 9,850 494,347
Entergy Corporation 11,580 294,566
Southern Company 32,090 800,244
Unicom Corporation 10,050 399,488
Williams Companies, Inc. 20,510 765,279
------------
3,085,014
------------
Total Common Stocks
(Cost $178,335,349) 311,242,552
------------
SHORT-TERM INVESTMENTS -- 0.5%
MONEY MARKET
Firstar Institutional Money
Market Fund $1,583,000 1,583,000
------------
Total Short-Term Investments 1,583,000
------------
Total Investments $312,825,552
------------
------------
FUTURES CONTRACTS -- 0.8%
FUTURES
S&P 500 Index Futures expiring
September, 2000 7 2,592,625
------------
Total Futures Contracts
(cost $2,531,431) $ 2,592,625
------------
------------
*<F30> Non-income producing
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
DIVIDEND ACHIEVERS PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
NUMBER
OF SHARES MARKET
OR PAR VALUE VALUE
------------ ------
COMMON STOCKS -- 97.8%
COMMUNICATIONS SERVICES -- 6.1%
SBC Communications, Inc. 21,600 $ 946,350
Sprint Corporation 15,000 922,500
Vodafone AirTouch PLC-ADR 25,000 1,175,000
-----------
3,043,850
-----------
CONSUMER CYCLICALS -- 8.2%
The Home Depot, Inc. 22,500 1,261,406
McGraw-Hill Companies, Inc. 17,000 892,500
Target Corporation 17,000 1,131,563
Wal-Mart Stores, Inc. 15,000 830,625
-----------
4,116,094
-----------
CONSUMER STAPLES -- 8.0%
Cardinal Health, Inc. 10,000 550,625
Kimberly-Clark Corporation 16,600 963,837
McDonald's Corporation 23,200 884,500
PepsiCo, Inc. 25,000 917,188
Walgreen Co. 25,000 703,125
-----------
4,019,275
-----------
CAPITAL GOODS -- 7.7%
Avery-Dennison Corporation 20,000 1,312,500
General Electric Company 16,000 2,516,000
-----------
3,828,500
-----------
ENERGY -- 4.7%
Chevron Corporation 10,000 851,250
Exxon Mobil Corporation 19,010 1,476,839
-----------
2,328,089
-----------
FINANCIAL -- 13.2%
American International Group, Inc. 13,000 1,425,937
Bank of America Corporation 22,632 1,108,968
Chase Manhattan Corporation 13,000 936,813
Citigroup Inc. 20,000 1,188,750
Merrill Lynch &Co., Inc. 10,000 1,019,375
Wells Fargo Company 22,000 903,375
-----------
6,583,218
-----------
HEALTH CARE -- 9.0%
Johnson & Johnson 19,000 1,567,500
Merck &Co., Inc. 24,000 1,668,000
Pfizer,Inc. 30,000 1,263,750
-----------
4,499,250
-----------
TECHNOLOGY -- 36.9%
Automatic Data Processing, Inc. 15,000 807,188
Hewlett-Packard Company 20,000 2,700,000
Intel Corporation 21,000 2,663,062
Linear Technology Corporation 38,000 2,170,750
Motorola, Inc. 8,000 952,500
Nokia Corp - ADR 68,000 3,867,500
Nortel Networks Corp. 25,000 2,831,250
Texas Instruments Inc. 14,800 2,410,550
-----------
18,402,800
-----------
UTILITIES -- 4.0%
Enron Corp. 15,000 1,045,312
Williams Companies, Inc. 25,000 932,813
-----------
1,978,125
-----------
Total Common Stocks
(Cost $24,806,283) 48,799,201
-----------
SHORT-TERM INVESTMENTS -- 2.3%
MONEY MARKET
Firstar Institutional Money
Market Fund $1,132,000 1,132,000
-----------
Total Short-Term Investments 1,132,000
-----------
Total Investments $49,931,201
-----------
-----------
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
SELECT VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
NUMBER MARKET
OF SHARES VALUE
--------- ------
COMMON STOCKS -- 87.5%
AUTOS & TRANSPORTATION -- 3.2%
*<F31> CSK Auto Corporation 7,900 $ 82,950
*<F31> Covenant Transport, Inc., Class A 17,900 236,056
----------
319,006
----------
BUSINESS SERVICES -- 1.2%
*<F31> Interim Services Inc. 6,600 113,025
----------
113,025
----------
CONSUMERS DISCRETIONARY -- 22.9%
G&K Services, Inc. 2,200 53,900
*<F31> Gadzooks, Inc. 24,000 529,500
*<F31> Gildan Activeware, Inc. Class A
Subordinate Voting Shares 12,300 422,044
*<F31> MSC Indust Direct Co. 11,000 154,000
Regis Corporation 12,500 146,094
*<F31> RemedyTemp, Inc. 15,900 315,019
Ruby Tuesday, Inc. 6,800 142,375
*<F31> United Stationers 10,500 350,437
*<F31> Whitehall Jewellers, Inc. 8,650 148,672
----------
2,262,041
----------
CONSUMER STAPLES -- 4.8%
*<F31> Brinker International, Inc. 400 12,750
*<F31> Del Monte Foods Company 18,900 167,737
*<F31> IHOP Corp. 6,300 102,375
*<F31> International Home Foods, Inc. 13,200 192,225
----------
475,087
----------
ENERGY -- 4.5%
*<F31> Newfield Exploration Company 7,100 288,438
Tidewater, Inc. 5,100 151,725
----------
440,163
----------
FINANCIAL -- 11.7%
American Capital Strategies, Ltd. 9,500 230,375
Arthur J. Gallagher & Co. 5,200 193,700
CNASurety Corporation 4,300 63,425
*<F31> Gabelli Asset Management, Inc. 9,800 194,775
Heller Financial, Inc. 12,000 233,250
Radian Group Inc. 4,700 239,406
----------
1,154,931
----------
HEALTH CARE -- 9.7%
Arrow International, Inc. 7,100 242,287
Cooper Companies, Inc. 5,500 184,938
DENTSPLY International, Inc. 7,500 217,969
*<F31> Wesley Jessen VisionCare, Inc. 7,900 311,062
----------
956,256
----------
PRODUCER DURABLES -- 10.6%
Applied Power, Inc. Class A 8,600 246,175
Belden Inc. 12,500 371,094
IDEX Corporation 1,200 37,500
Pentair Inc. 5,800 221,850
Snap-on Incorporated 6,400 169,200
----------
1,045,819
----------
TECHNOLOGY -- 18.9%
*<F31> American Management
Systems, Incorporated 2,900 107,300
*<F31> Arrow Electronics, Inc. 7,600 332,975
*<F31> Artesyn Technologies, Inc. 12,900 312,825
C&D Technologies, Inc. 5,900 380,181
*<F31> CACI International, Inc. 10,100 236,719
Cohu, Inc. 6,700 255,019
Primex Technologies, Inc. 8,300 182,600
*<F31> ScanSource, Inc. 1,700 58,650
----------
1,866,269
----------
Total Common Stocks
(cost $6,886,446) 8,632,597
----------
SHORT-TERM INVESTMENTS -- 12.6%
DEMAND NOTE -- 11.1%
American Family Financial
Services, Inc. Demand Note $300,000 300,000
General Mills Variable
Demand Note 400,000 400,000
Warner Lambert Daily Demand 400,000 400,000
----------
1,100,000
----------
MONEY MARKET -- 1.5%
Firstar Institutional Money
Market Fund 148,000 148,000
----------
148,000
----------
Total Short-Term Investments 1,248,000
----------
Total Investments $9,880,597
----------
----------
*<F31> Non-income producing
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
PSE TECH 100 INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
NUMBER MARKET
OF SHARES VALUE
--------- ------
COMMON STOCKS -- 98.6%
BIOTECHNOLOGY --6.0%
*<F32> Amgen, Inc. 99,600 $ 5,577,600
*<F32> Biogen, Inc. 99,600 5,857,725
*<F32> Chiron Corporation 99,600 4,506,900
*<F32> Genentech, Inc. 99,600 11,653,200
*<F32> Immunex Corporation 99,600 3,921,750
Pharmacia Corporation 99,600 4,973,775
------------
36,490,950
------------
CAD/CAM -- 1.5%
Autodesk, Inc. 99,600 3,822,150
*<F32> Mentor Graphics Corporation 99,600 1,307,250
*<F32> Synopsys, Inc. 99,600 4,183,200
------------
9,312,600
------------
DATA COMMUNICATIONS -- 15.5%
*<F32> 3Com Corporation 99,600 3,927,975
*<F32> Adaptec, Inc. 99,600 2,689,200
*<F32> ADC Telecommunications, Inc. 99,600 6,050,700
*<F32> Cabletron Systems, Inc. 99,600 2,278,350
*<F32> Cisco Systems, Inc. 99,600 6,905,079
*<F32> JDS Uniphase Corporation 99,600 10,333,500
Lucent Technologies 99,600 6,193,875
*<F32> Newbridge Networks Corporation 99,600 3,566,925
*<F32> Nextel Communications, Inc. 99,600 10,899,975
Nortel Networks Corporation 99,600 11,279,700
*<F32> QUALCOMM Inc. 99,600 10,800,375
Scientific - Atlanta, Inc. 99,600 6,480,225
*<F32> Standard Microsystems Corporation 99,600 1,294,800
Symbol Technologies, Inc. 99,600 5,552,700
*<F32> Tellabs, Inc. 99,600 5,459,325
------------
93,712,704
------------
DATA STORAGE AND PROCESSING -- 1.2%
*<F32> Quantum Corporation - DLT &
Storage Systems 99,600 1,170,300
*<F32> Seagate Technology, Inc. 99,600 5,060,925
*<F32> Storage Technology Corporation 99,600 1,294,800
------------
7,526,025
------------
ELECTRONIC EQUIPMENT -- 4.8%
*<F32> American Power
Conversion Corporation 99,600 3,517,125
Linear Technologies 99,600 5,689,650
*<F32> Maxim Integrated Products, Inc. 99,600 6,455,325
*<F32> Sensormatic Electronics Corporation 99,600 1,662,075
*<F32> Solectron Corporation 99,600 4,662,525
*<F32> Vitesse Semiconductors 99,600 6,779,025
------------
28,765,725
------------
INFORMATION PROCESSING -- 9.9%
*<F32> America Online, Inc. 99,600 5,957,325
Automatic Data Processing, Inc. 99,600 5,359,725
*<F32> Ceridian Corporation 99,600 2,160,075
*<F32> Computer Sciences Corporation 99,600 8,123,625
Comsat Corporation 99,600 2,433,975
*<F32> DST System, Inc. 99,600 7,389,075
Electronic Data Systems 99,600 6,847,500
First Data Corporation 99,600 4,849,275
*<F32> SunGard Data Systems, Inc. 99,600 3,442,425
*<F32> Yahoo!, Inc. 99,600 12,972,900
------------
59,535,900
------------
LARGE DIVERSIFIED COMPUTER
MANUFACTURING -- 2.2%
+<F33> International Business
Machines Corporation 99,600 11,117,850
*<F32> Unisys Corporation 99,600 2,309,475
------------
13,427,325
------------
MEDICAL TECHNOLOGY -- 5.0%
*<F32> Acuson Corporation 99,600 1,226,325
Biomet, Inc. 99,600 3,554,475
*<F32> Boston Scientific Corporation 99,600 2,639,400
*<F32> Coherent, Inc. 99,600 5,758,125
*<F32> Genzyme Corporation 99,600 4,861,725
Medtronic, Inc. 99,600 5,172,975
Shared Medical Systems Corporation 99,600 4,127,175
*<F32> St. Jude Medical, Inc. 99,600 3,106,275
------------
30,446,475
------------
MICRO COMPUTER MANUFACTURERS -- 6.6%
*<F32> Apple Computer, Inc. 99,600 12,356,625
Compaq Computer Corporation 99,600 2,913,300
*<F32> Dell Computer Corporation 99,600 4,992,450
*<F32> Gateway, Inc. 99,600 5,502,900
*<F32> Micron Electronics, Inc. 99,600 1,064,475
*<F32> NCR Corporation 99,600 3,847,050
*<F32> Sun Microsystems, Inc. 99,600 9,156,975
------------
39,833,775
------------
MINI AND MAINFRAME COMPUTER
MANUFACTURERS -- 4.6%
*<F32> EMC Corporation 99,600 13,838,175
Hewlett-Packard Company 99,600 13,446,000
*<F32> Silicon Graphics, Inc. 99,600 715,875
------------
28,000,050
------------
OFFICE AUTOMATION EQUIPMENT -- 1.0%
Harris Corporation 99,600 3,218,325
Xerox Corporation 99,600 2,633,175
------------
5,851,500
------------
SEMICONDUCTOR CAPITAL EQUIPMENT
MANUFACTURERS -- 7.3%
*<F32> Analog Devices, Inc. 99,600 7,650,525
*<F32> Applied Materials, Inc. 99,600 10,140,525
*<F32> KLA-Tencor Corporation 99,600 7,457,550
*<F32> Kulicke &Soffa Industries, Inc. 99,600 7,799,925
*<F32> Lam Research Corporation 99,600 4,569,150
*<F32> Novellus Systems, Inc. 99,600 6,642,075
------------
44,259,750
------------
SEMICONDUCTOR MANUFACTURERS -- 14.6%
*<F32> Advanced Micro Devices, Inc. 99,600 8,739,900
*<F32> Cypress Semiconductor Corporation 99,600 5,172,975
Intel Corporation 99,600 12,630,525
*<F32> LSI Logic Corporation 99,600 6,225,000
*<F32> Micron Technology, Inc. 99,600 13,869,300
Motorola, Inc. 99,600 11,858,625
*<F32> National Semiconductor Corporation 99,600 6,050,700
Texas Instruments Inc. 99,600 16,222,350
*<F32> Xilinx, Inc. 99,600 7,295,700
------------
88,065,075
------------
SOFTWARE PRODUCTS -- 12.0%
Adobe Systems, Inc. 99,600 12,045,375
*<F32> BMC Software, Inc. 99,600 4,662,525
*<F32> Cadence Design Systems, Inc. 99,600 1,674,525
Computer Associates
International, Inc. 99,600 5,558,925
*<F32> Compuware Corp. 99,600 1,251,225
*<F32> Informix Corporation 99,600 1,095,600
*<F32> Microsoft Corporation 99,600 6,947,100
*<F32> Network Associates 99,600 2,533,575
*<F32> Novell, Inc. 99,600 1,954,650
*<F32> Oracle Corporation 99,600 7,961,775
*<F32> PeopleSoft, Inc. 99,600 1,388,175
SAP AG 99,600 4,892,850
*<F32> Siebel Systems, Inc. 99,600 12,238,350
*<F32> Sybase, Inc. 99,600 2,010,675
*<F32> Symantec Corporation 99,600 6,218,775
------------
72,434,100
------------
TEST, ANALYSIS, AND INSTRUMENTATION
EQUIPMENT -- 6.4%
*<F32> Agilent Technologies, Inc. 99,600 8,827,050
Millipore Corporation 99,600 7,140,075
PE Biosystems Group 99,600 5,976,000
Tektronix, Inc. 99,600 5,764,350
*<F32> Teradyne, Inc. 99,600 10,956,000
------------
38,663,475
------------
Total Common Stocks
(Cost $454,134,163) 596,325,429
------------
SHORT-TERM INVESTMENTS -- 1.1%
MONEY MARKET
Firstar Institutional Money
Market Fund $9,855,000 6,462,000
------------
Total Short-Term Investments 6,462,000
------------
Total Investments $602,787,429
------------
------------
FUTURES CONTRACTS -- 1.6%
FUTURES
PSE Technology 100 Index,
expiring June, 2000 90 9,855,000
------------
Total Futures Contracts
(Cost $11,357,969) $ 9,855,000
------------
------------
*<F32> Non-income producing
+<F33> Segregated as collateral against futures
Percentages shown are a percent of net assets.
The accompanying notes to financial statements are an integral part of this
schedule.
MANAGED GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
NUMBER
OF SHARES MARKET
OR PAR VALUE VALUE
------------ ------
COMMON STOCKS -- 98.6%
BUSINESS SERVICES --18.8%
*<F34> Acxiom Corporation 10,140 $ 273,780
Cintas Corporation 4,790 189,804
Fastenal Company 5,620 328,419
*<F34> Fiserv, Inc. 10,200 468,563
*<F34> Interim Services Inc. 4,115 70,469
Omnicom Group Inc. 4,110 374,267
Paychex, Inc. 8,175 430,209
*<F34> Zebra Technologies Corporation 4,100 233,700
-----------
2,369,211
-----------
CONSUMER CYCLICALS -- 13.4%
Harley-Davidson, Inc. 11,550 459,834
The Home Depot, Inc. 7,560 423,832
*<F34> Kohl's Corporation 8,980 431,040
*<F34> O'Reilly Automotive, Inc. 9,840 132,840
*<F34> Starbucks Corporation 7,840 237,037
-----------
1,684,583
-----------
CONSUMER STAPLES -- 2.2%
Walgreen Co. 9,800 275,625
-----------
275,625
-----------
CONSUMER NONDURABLES -- 1.9%
Valspar Corporation 6,450 232,200
-----------
232,200
-----------
CONSUMER SERVICE -- 5.8%
*<F34> Catalina Marketing Corporation 3,100 313,875
*<F34> Scholastic Corporation 5,300 247,444
Tribune Company 4,200 163,275
-----------
724,594
-----------
EDUCATION -- 2.2%
*<F34> DeVry, Inc. 11,650 277,416
-----------
277,416
-----------
FINANCIAL -- 5.9%
*<F34> Concord EFS, Inc. 12,960 289,980
Fifth Third Bancorp 4,080 257,550
Marshall & Ilsley Corporation 4,140 192,251
-----------
739,781
-----------
HEALTH CARE -- 10.5%
*<F34> Biogen, Inc. 2,440 143,503
Cardinal Health, Inc. 3,300 181,706
*<F34> Guidant Corporation 3,300 189,337
*<F34> MedImmune, Inc. 1,000 159,938
*<F34> MiniMed Inc. 2,300 282,756
*<F34> Patterson Dental Company 7,620 366,712
-----------
1,323,952
-----------
PRODUCER DURABLES -- 0.9%
*<F34> Dionex Corporation 3,210 116,764
-----------
116,764
-----------
TECHNOLOGY -- 32.7%
*<F34> Cisco Systems, Inc. 8,430 584,436
*<F34> Citrix Systems, Inc. 7,800 476,288
*<F34> Comverse Technology, Inc. 7,040 627,880
*<F34> Diamond Technology Partners
Incorporated 2,800 221,550
*<F34> Electronic Arts Inc. 4,150 251,075
Intel Corporation 3,850 488,228
*<F34> Keane, Inc. 3,510 101,351
Linear Technology Corporation 8,200 468,425
*<F34> Microsoft Corporation 1,260 87,885
*<F34> QUALCOMM Incorporated 1,725 187,055
*<F34> Sanmina Corporation 4,100 246,256
*<F34> SunGard Data Systems, Inc. 10,615 366,881
-----------
4,107,310
-----------
TRANSPORTATION -- 5.3%
Expeditors International
of Washington, Inc. 8,700 371,925
Southwest Airlines Co. 13,737 297,921
-----------
669,846
-----------
Total Common Stocks
(Cost $10,474,254) 12,521,282
-----------
SHORT-TERM INVESTMENTS -- 1.7%
MONEY MARKET
Firstar Institutional Money
Market Fund $212,000 212,000
-----------
Total Short-Term Investments 212,000
-----------
Total Investments $12,733,282
-----------
-----------
*<F34> Non-income producing
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
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 ADVISORS
B.C. Ziegler and Company
215 North Main Street
West Bend, Wisconsin 53095
Ziegler Asset Management, Inc.
(Sub-Advisor to S&P 100 Plus, Dividend Achievers,
PSE Tech 100 Index and Select Value Portfolios)
215 North Main Street
West Bend, Wisconsin 53095
Geneva Capital Management, Ltd.
(Sub-Advisor to Managed Growth Portfolio)
250 East Wisconsin Avenue
Suite 1050
Milwaukee, Wisconsin 53202
DISTRIBUTOR AND ACCOUNTING/PRICING AGENT
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
AUDITOR
Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
"Standard & Poor's," "S&P 100," "Standard & Poor's 100," and "S&P" are
trademarks of McGraw-Hill, Inc. and PSE is the service mark of the Pacific
Exchange Incorporated. These marks have been licensed for use by B.C. Ziegler
and Company.
This report was prepared for the information of shareholders of Principal
Preservation Portfolios, Inc., and may not be used in connection with the
offering of securities unless preceded or accompanied by a current Prospectus.
PP344-6/00
