A Message From the President
Dear Shareholder:
Through the first nine months of the year, U.S. stock markets turned in positive
results. However, there were some bumps along the way. In July, equity and
fixed-income investors experienced a rather precipitous decline fueled by mixed
economic data and concerns about rising interest rates. Patient investors were
rewarded when the Federal Reserve met in September. At that meeting, the Fed
chose to leave interest rates unchanged and, as a result, financial markets have
rebounded.
Through September 30, 1996, the Dow Jones Industrial Average returned 16.88% and
the Standard & Poor's 500 Index returned 13.50%. Markets outside the U.S. showed
mixed results. Included among the regions which posted strongest returns were
Europe, Asia (excluding Japan) and Latin America. During this same period, all
of the Princor growth-oriented funds, with the exception of Princor Utilities
Fund, turned in positive returns. Interest rates, both foreign and domestic,
continued their trend of stable to declining rates. This trend was reflected in
the returns of the Princor income-oriented funds which posted moderately
positive to slightly negative returns year-to-date through 9/30/96. It is not
expected that inflation rates will elevate in 1997 which should contribute to a
stable market environment. For more information on Princor fund performance, see
next page.
Many shareholders invest in the Princor Mutual Funds for retirement. Currently,
IRAs, 403(b)s and other retirement plans are available. Princor will expand its
retirement plan offerings in early 1997 to include the Princor SIMPLE-IRA and
the Princor Qualified Retirement Plan Program. SIMPLE-IRAs are brand-new for
1997. These employer-sponsored retirement plans include salary deferral,
employer matching or nonelective contributions and reduced plan administration.
Princor will also announce a comprehensive Qualified Retirement Plan Program.
This program will include a Princor 401(k), profit sharing and money purchase
plans. The program features the Princor funds as investment options, a choice of
plan administrators, two fund share classes, competitive administrative fees,
flexible plan design and much more.
Princor recently introduced an exciting new asset allocation program--Princor
PATH. PATH helps investors find a suitable mix of Princor funds based on their
investment objectives and risk tolerance. Potential investors complete a
questionnaire and using their resulting score, choose the model portfolio which
may be best suited for them. Princor PATH provides investors with another useful
tool in pursuing their long-term financial goals. For more information regarding
the new Princor 401(k) or PATH, please contact your registered representative.
In other fund news, Congress has passed the National Securities Markets
Improvement Act of 1996. The Act prevents states from imposing investment
restrictions on mutual funds, permitting funds to comply only with the
requirements of federal statutes. The elimination of redundant regulation is
viewed as a positive change by the mutual fund industry. While this change has
no immediate impact on the day-to-day management of the Princor Mutual Funds,
the Funds have removed the state-imposed investment restrictions from their
registration statements.
Princor continues to seek to provide our shareholders top-level customer service
and a high quality, well-managed family of mutual funds. We are pleased to have
you as a shareholder, and look forward to a successful 1997.
Sincerely,
Stephan L. Jones
President
Princor Funds Performance
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Returns
As of October 31, 1996
1 Year 5 Years 10 Years
with without with without with without
sales sales sales sales sales sales
A Shares of: charge charge charge charge charge charge
<S> <C> <C> <C> <C> <C> <C>
Balanced 9.69% 15.10% 9.68% 10.74% 10.15%a 10.75%a
Blue Chip 12.64 18.20 11.33 12.40 11.13b 12.08b
Bond -0.18 4.74 7.60 8.64 9.00a 9.59a
Capital Accumulation 20.47 26.41 13.32 14.42 11.38 11.91
Emerging Growth 11.40 16.89 14.98 16.10 16.73a 17.36a
Government Securities Income 1.08 6.06 6.18 7.21 7.94 8.46
Growth 5.40 10.60 12.46 13.55 13.19 13.74
High Yield 6.63 11.88 9.06 10.12 7.77a 8.36a
Limited Term Bond 2.07c 3.62c
Tax-Exempt Bond 1.10 6.08 6.25 7.28 6.95 7.47
Utilities 3.05 8.13 6.14d 7.47d
World 12.80 18.36 11.69 12.77 8.53 9.06
</TABLE>
<TABLE>
<CAPTION>
1 Year 5 Years(e)
with without with without
B Shares of: CDSC* CDSC* CDSC* CDSC*
<S> <C> <C> <C> <C>
Balanced 10.10% 14.10% 15.54% 17.38%
Blue Chip 13.18 17.18 21.57 23.34
Bond 0.00 3.91 9.42 11.36
Capital Accumulation 21.19 25.19 25.00 26.72
Emerging Growth 12.07 16.07 25.39 27.10
Government Securities Income 1.19 5.17 9.17 11.11
Growth 5.80 9.80 19.61 21.40
High Yield 6.46 10.46 10.08 12.00
Limited Term Bond 2.07c 3.32c
Tax-Exempt Bond 1.23 5.23 10.18 12.10
Utilities 3.23 7.23 14.47 16.33
World 13.16 17.16 12.32 14.21
<FN>
* Contingent Deferred Sales Charge
</FN>
</TABLE>
<TABLE>
<CAPTION>
R Shares of: 1 Year(c)
<S> <C>
Balanced 7.52%
Blue Chip 7.02
Bond 3.75
Capital Accumulation 12.74
Emerging Growth 6.20
Government Securities Income 3.76
Growth 1.12
High Yield 5.60
Limited Term Bond 3.24
Utilities -0.31
World 9.29
<FN>
a Partial period, from effective date 12/18/87
b Partial period, from effective date 3/1/91
c Partial period, from effective date 2/29/96
d Partial period, from effective date 12/16/92
e Partial period, from effective date 12/9/94
</FN>
</TABLE>
Total return represents the overall performance of an investment for a specific
period of time, assuming the reinvestment of dividends and capital gains and
after applicable expenses. Average annual total returns for A shares are with
and without maximum 4.75% sales charge. Average annual total returns for B
shares are with and without maximum 4.0% contingent deferred sales charge.
Total returns reflect past performance. Past performance does not predict future
performance. The investment return and principal value of an investment will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
Contents
Page
Comments from the Funds'
Portfolio Managers.......................................1
Asset Allocation - An Important
Ingredient to Successful Investing......................10
The Princor Growth-Oriented Funds
Financial Statements and Highlights
Statements of Assets and Liabilities....................12
Statements of Operations................................14
Statements of Changes in Net Assets.....................16
Notes to Financial Statements...........................18
Schedules of Portfolio Investments
Balanced Fund.........................................26
Blue Chip Fund........................................28
Capital Accumulation Fund.............................29
Emerging Growth Fund..................................30
Growth Fund, Inc......................................33
Utilities Fund, Inc...................................35
World Fund, Inc.......................................35
Financial Highlights....................................40
The Princor Income-Oriented Funds
Financial Statements and Highlights
Statements of Assets and Liabilities....................48
Statements of Operations................................50
Statements of Changes in Net Assets.....................52
Notes to Financial Statements...........................54
Schedules of Portfolio Investments
Bond Fund.............................................62
Government Securities Income Fund.....................64
High Yield Fund.......................................65
Limited Term Bond Fund................................66
Tax-Exempt Bond Fund..................................68
Financial Highlights....................................72
The Princor Money Market Funds
Financial Statements and Highlights
Statements of Assets and Liabilities....................78
Statements of Operations................................79
Statements of Changes in Net Assets.....................80
Notes to Financial Statements...........................82
Schedules of Portfolio Investments
Cash Management Fund..................................86
Tax-Exempt Cash Management
Fund................................................88
Financial Highlights....................................92
Report of Independent Auditors............................94
Federal Tax Information...................................96
The Princor Family of Mutual Funds.......................100
<PAGE>
MANAGER'S COMMENTS
Princor Management Corporation, the adviser to the Princor funds, is staffed
with investment professionals who manage each individual fund. Comments by these
individuals in the following paragraphs summarize in capsule form the general
strategy and recent results of each fund over the past year. We believe any
Princor fund should, under normal circumstances, represent only a portion of an
investor's total investments. For most investors a portfolio should be balanced
among stocks, bonds, and cash reserves to fit their own needs and risk
tolerance. Those who maintain this balanced approach should be aware of the
short-term results, but focus on the long term. Past performance is no guarantee
of future results. Fund values will fluctuate so that the shares, upon
redemption, may be worth more or less than their original cost.
Growth-Oriented Funds
Princor Balanced Fund
Judi Vogel
The year ended October 31, 1996, was characterized by volatility - in the
economy, interest rates and market results. Fixed-income returns were negatively
impacted as interest rates moved higher on fears that inflation would pick up
with strength in the economy. Much attention was focused on employment reports
throughout the year as gains in payroll employment, together with wage
increases, caused wage inflation concerns to surface. On balance, however,
conditions were good for investors, especially those participating in the equity
market. Economic activity was moderately strong yet noninflationary. Corporate
earnings continued to climb, though at a slower rate of growth than in 1995. And
investors poured record amounts of cash into the equity markets during the year.
The Balanced Fund benefited from strong common stock results, while the effects
of higher interest rates and lower fixed income valuations moderated total
returns. Our emphasis on companies capable of growing earnings regardless of the
state of the economy served the fund well. Now six years into this economic
expansion, we anticipate economic growth as well as earnings growth will slow
going forward. Our strategy is to remain relatively insensitive to the economic
cycle, keeping credit risk to a minimum. There is no independent market index
against which to measure returns of balanced portfolios, however, we show the
Standard & Poor's 500 Stock Index for your information.
Comparison of Change in Value of $10,000 Investment in the
Balanced Fund Class A, S&P 500 and Lipper Balanced Fund Average
Lipper
Balanced S&P 500 Balanced
Year Ended October 31, Fund Index Average
9,525 10,000 10,000
1988 10,714 11,627 11,233
1989 11,896 14,696 13,152
1990 10,554 13,595 12,465
1991 14,152 18,151 16,015
1992 15,830 19,959 17,413
1993 17,768 22,938 19,994
1994 17,935 23,823 19,852
1995 20,480 30,112 23,300
1996 23,573 37,355 26,758
Note:Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
9.69% 9.68% 10.15%* Class A
10.10% 15.54% ** Class B
7.52%*** Class R
* - Since Inception Date 12/18/87
** - Since Inception Date 12/9/94
*** - Since Inception Date 2/29/96
Princor Blue Chip Fund
Mark Williams
This Fund's investment strategy is to concentrate on those companies with a
significant operating history, a well-capitalized balance sheet, and a history
of consistent increases in earnings and dividends. We place special importance
on the consistency of dividend increases. This is true for two reasons. One, by
increasing the dividend, management sends a signal of confidence to investors.
Management generally increases the dividend when they are confident of future
business conditions. Two, companies that consistently increase the dividend
provide investors the benefit of a rising income stream. This differs from bond
investors who receive a fixed income stream.
Historically, investors have been rewarded with a performance premium for those
companies consistently increasing dividends. Recently, this premium has fallen.
The high profit environment in combination with the uninterrupted economic
growth has made investors less concerned with disposition of corporate cash flow
than growth of corporate cash flow. Stated another way, if earnings are growing
rapidly, investors are not as concerned about increasing dividends. We expect
increasing dividends to return to their historic importance when economic
conditions are more negative and corporate profits are lower.
During the year just ended, conditions remained close to ideal for stock market
investors. Economic growth was moderate, inflation remained in check, and the
Federal Reserve expertly guided monetary policy. This Fund's performance trailed
market averages partially for the reasons previously discussed. Additionally,
after strong economic numbers were released in February and March, investors
rotated to those companies that benefit from a strengthening economy. Due to the
structure and goals of this account, we hold very few cyclical companies. This
underweighting in cyclicals penalized the Fund's relative performance. Later in
the year, our technology holdings were adversely impacted by negative earnings
comparisons. Because we had overweighted these companies, relative to the
benchmark, performance was adversely affected.
Going forward, we see a slowing economy and corporate profit margin erosion.
With this in mind, our position is that consistent earnings growth companies
should position the Fund well.
Comparison of Change in Value of $10,000 Investment in the Blue Chip Fund
Class A, S&P 500 and Lipper Growth & Income Fund Average
Blue S&P 500 Lipper
Chip Stock Growth & Income
Year Ended October 31, Fund Index Fund Average
9,525 10,000 10,000
1991 10,137 10,911 10,544
1992 11,142 11,998 11,499
1993 11,771 13,789 13,424
1994 12,546 14,321 13,763
1995 15,388 18,100 16,510
1996 18,188 22,455 20,011
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
12.64% 11.33% 11.13%* Class A
13.18% 21.57% ** Class B
7.02%*** Class R
* - Since Inception Date 3/1/91
** - Since Inception Date 12/9/94
*** - Since Inception Date 2/29/96
Princor Capital Accumulation Fund
David White
Catherine Green
The Fund outperformed both the Standard & Poor's 500 and the Lipper Average
Growth & Income Fund for the past year. Our relative strength has come from
several factors. First, our exposure to the more cyclical sectors of the market
has been fairly low. This has been positive because these areas have not
performed as well as the rest of the market. Financial stocks have continued to
help us throughout the year, as well as consumer staple stocks. We have had a
strong exposure to these types of companies during the year. We feel that their
steady earnings growth is a positive in these markets, and the prices have moved
in accordance with our thinking. The market is now paying a premium for
companies that exhibit steady earnings progression.
We look for companies we feel will provide investors with above-average rates of
return over the long term. We do this through a "bottoms up analysis" that
focuses on the price relative to the company's earnings and dividend yield. We
also monitor historical relationships to find opportunities where a stock looks
attractive compared to its historical pricing. We then overlay this with a "top
down" strategy. We look at the big picture: the economy, international trade
secular industry trends, earnings and the stock market.
For some time we have been concerned about continued strong gains in the
economy. We have been careful to watch our investments in the more sensitive
sectors of the economy and have tried to focus on companies with the ability to
continue growth of earnings.
Comparison of Change in Value of $10,000 Investment in the Capital Accumulation
Fund Class A, S&P 500 and Lipper Growth & Income Fund Average
S&P 500 Lipper
Capital Stock Growth & Income
Year Ended October 31, Accumulation Index Fund Average
9,525 10,000 10,000
1987 9,954 10,646 10,105
1988 11,388 12,223 11,756
1989 12,962 15,449 14,163
1990 10,652 14,292 12,772
1991 14,980 19,081 17,050
1992 16,728 20,982 18,595
1993 18,471 24,114 21,708
1994 19,702 25,044 22,255
1995 23,238 31,655 26,697
1996 29,374 39,250 32,360
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
20.47% 13.32% 11.38% Class A
21.19% 25.00%* Class B
12.74%** Class R
* - Since Inception Date 12/9/94
** - Since Inception Date 2/29/96
Princor Emerging Growth Fund
Mike Hamilton
Small stocks performed best year to date on a price basis as shown by the NASDAQ
new high in the third quarter. The stock markets were all extremely strong for
the year however. During the period, the stock market has favored different
sectors depending on the most recent economic news. The Princor Emerging Growth
Fund has closely tracked its benchmark for the year. The Fund is light on energy
stocks and that is the main reason for the difference. The strongest of the
sectors in the Fund have been financials, mainly regional bank stocks, and the
technology sector.
The portfolio is structured for a continued economic cycle of slow but steady
growth with inflation controlled at its current pace. There will be ups and
downs as momentum investors are clearly in control of the current market. We
chose to focus on higher quality companies with more dependable growth to limit
business risk in the portfolio. Both healthcare and financials continue to be
the focus in the portfolio.
Comparison of Change in Value of $10,000 Investment in the
Emerging Growth Fund Class A, S&P 500 and Lipper Mid Cap Fund Average
S&P 500 Lipper
Emerging Stock MID CAP
Year Ended October 31, Growth Index Fund Average
9,525 10,000 10,000
1988 11,409 11,627 11,344
1989 13,651 14,696 14,346
1990 11,357 13,595 12,349
1991 18,689 18,151 19,744
1992 20,862 19,959 21,136
1993 24,964 22,938 26,260
1994 26,676 23,823 26,816
1995 33,721 30,112 33,389
1996 39,418 37,355 39,489
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
11.40% 14.98% 16.73%* Class A
12.07% 25.39% ** Class B
6.20%*** Class R
* - Since Inception Date 12/18/87
** - Since Inception Date 12/9/94
*** - Since Inception Date 2/29/96
Princor Growth Fund
Mike Hamilton
With the year-to-date increase in the stock market, momentum investing has been
the clear winner to date. This style of investing requires portfolio managers to
concentrate on stocks that have current price momentum based on current earnings
momentum without regard for long-term fundamentals of companies or their
products. We chose to not join the crowd and focused instead on companies with
real long term earning expectations. This has been the cause of the divergence
between the Fund's performance and the outperformance of the benchmarks
year-to-date. Also, we have been light on the energy and consumer retail sector
which have had great momentum recently. Our overweighting in financial stocks
has helped us to somewhat offset not joining the momentum crowd.
We continue to see slow economic growth with few current imbalances. That is why
we continue to focus on healthcare, financials and some growth cyclicals. We
don't want to subject the portfolio to excessive market and business risk. We
concentrate on good companies with earnings growth sustainable into the future.
Comparison of Change in Value of $10,000 Investment in the
Growth Fund Class A, S&P 500 and Lipper Growth Fund Average
S&P 500 Lipper
Growth Stock Growth
Year Ended October 31, Fund Index Fund Average
9,525 10,000 10,000
1987 9,782 10,646 9,957
1988 10,713 12,223 11,536
1989 12,647 15,449 14,341
1990 11,483 14,292 12,670
1991 18,293 19,081 17,906
1992 20,992 20,982 19,314
1993 23,056 24,114 22,611
1994 25,321 25,044 22,959
1995 31,218 31,655 28,465
1996 34,528 39,250 33,722
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
5.40% 12.46% 13.19% Class A
5.80% 19.61%* Class B
1.12%** Class R
* - Since Inception Date 12/9/94
** - Since Inception Date 2/29/96
Princor Utilities Fund
Catherine Green
The Utilities Fund has underperformed the Dow Jones Utility Index and its peer
group during the year for three basic reasons. First, the peer group surpassed
us due to the strength of non-utility stocks. The market in general had
performance more than twice that of utility stocks. Those funds also holding
non-utility stocks in their portfolios had a tendency to outperform the utility
stock indexes and other "pure play" vehicles. Second, the index was stronger
than our Fund due to stocks in the Fund. Our Fund tends to own stocks of the
stronger utility companies with lower costs that have opportunities to compete
in a more competitive environment. The index stocks include companies that have
had more difficulty in changing to the upcoming competitive environment.
However, some of those stocks have been strong performers in the past year as
they moved up from low bases. We still prefer to invest in companies with
stronger competitive positions, and like their return opportunities longer term.
The third reason for underperformance is due to new legislation in
telecommunications stocks. In February, rules were announced relating to
legislation in August and these stocks became more volatile. Although several
communications companies still have higher growth potential than many electric
utility stocks, the stocks dealt with a tough year at times.
Utility stocks experienced a turbulent year but the final result was a positive
return. Throughout the year, utility stocks were impacted by several events.
First, interest rates edged back up in early 1996 and hurt the price of electric
utility stocks. Telephone stocks were negatively impacted by Federal legislation
passed in February, 1996. Later in August, rules based on the February bill were
announced by the Federal Communications Commission. The rules seemed unfair to
regional Bell operating companies and they were hurt further in their stock
price. Electric companies have been planning how their states might adapt to
changes which paves the way to open competition. As events move in a positive or
negative fashion, it impacts the price of a stock. We maintain our focus on the
higher-quality end of the spectrum and try to determine which companies we feel
will have success in a competitive environment.
Comparison of Change in Value of $10,000 Investment in the Utilities
Fund Class A, S&P 500, Lipper Utilities Fund Average and the
Dow Jones Utilities Index with Income
Lipper Dow Jones
Utilities S&P 500 Utilities Fund Utilities
Year Ended October 31, Fund Index Average With Income
9,525 10,000 10,000 10,000
1993 11,047 10,980 11,575 11,658
1994 9,368 11,403 10,475 9,349
1995 11,651 14,413 12,325 11,810
1996 12,598 17,880 13,733 13,216
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
3.05% 6.14% * -- Class A
3.23% 14.47%** -- Class B
-0.31%*** -- -- Class R
* Since Inception Date 12/16/92
** - Since Inception Date 12/9/94
*** - Since Inception Date 2/29/96
Princor World Fund
Scott Opsal
The Fund's strong performance this year has been driven by broad-based market
rallies across Europe. Several European markets have climbed more than 20% this
year, with Japan and Italy being the only major markets not reflecting strong
gains. The Fund's investment strategy of holding stocks in smaller European
economies produced good performance as interest rate moves have been favorable
this year. Long bond yields in secondary European markets fell while rates in
the stronger core countries have inched up. The Fund's overexposure to the
falling rate markets and underexposure to the rising rate markets were
significant positive factors producing returns that exceeded the EAFE Index and
the average international fund this year.
The Fund has also benefited from noncyclical stockholdings in Europe. Food,
drug, technology, and stable growth cyclicals have outperformed the heavier
cyclical industries. The Fund's move into noncyclical growth stocks early in the
year proved timely. The Fund remains underweighted in Japan due to poor
valuations and a weak economic outlook. Japan has been the worst performing
major market, and the Fund's lack of exposure to this market also boosted
relative returns.
Adverse currency changes have diminished the Fund's returns as measured in U.S.
dollars by an estimated 2%. We believe the EAFE Index has suffered a currency
loss exceeding 4%, and the average manager has lost an estimated 3%. Thus, the
Fund's investment strategy placed it in markets suffering relatively small
foreign exchange losses, thereby aiding relative return performance.
The World Fund is subject to specific risks associated with foreign currency
rates, foreign taxation and foreign economies.
Comparison of Change in Value of $10,000 Investment in the
World Fund Class A, EAFE and Lipper International Fund Average
Lipper
World EAFE International
Year Ended October 31 Fund Index Average
9,525 10,000 10,000
1988 9,529 10,594 10,854
1989 10,055 11,457 12,475
1990 10,149 9,995 12,380
1991 11,552 10,689 13,434
1992 11,371 9,276 12,776
1993 16,077 12,751 17,045
1994 17,620 14,036 18,848
1995 17,801 13,986 18,733
1996 21,071 15,441 20,743
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
12.80% 11.69% 8.53% Class A
13.16% 12.32%* Class B
9.29%** Class R
* - Since Inception Date 12/9/94
** - Since Inception Date 2/29/96
*** Previous periods during which the fund was advised by another investment
advisor are not shown.
Important Notes of the Growth-Oriented Funds:
Standard & Poor's 500 Stock Index: An unmanaged index of 500 widely held common
stocks representing industrial, financial, utility and transportation companies
listed on the New York Stock Exchange, American Stock Exchange and the
Over-the-Counter market.
Lipper Growth & Income Fund Average: This average consists of funds which
combine a growth of earnings orientation and an income requirement for level
and/or rising dividends. The one year average currently contains 516 funds.
Lipper Mid Cap Fund Average: This average consists of funds which, by prospectus
or portfolio practice, limit their investments to companies with average market
capitalizations and/or revenues between $800 million and the average market
capitalization of the Wilshire 4500 Index (as captured by the Vanguard Index
Extended Market Fund). The one year average currently contains 146 funds.
Lipper Growth Fund Average: This average consists of funds which normally invest
in companies whose long-term earnings are expected to grow significantly faster
than the earnings of the stocks represented in the major unmanaged stock
indices. The one year average currently contains 642 funds.
Lipper Balanced Fund Average: This average consists of funds whose primary
objective is to conserve principal by maintaining at all times a balanced
portfolio of both stocks and bonds. Typically, the stock/bond ration ranges
around 60%/40%. The one year average currently contains 267 funds.
Lipper Utilities Fund Average: This average consists of funds which invest 65%
of its equity portfolio in utility shares. The one year average currently
contains 90 funds.
Dow Jones Utilities Index with Income: This average is a price-weighted average
of 15 utility companies that are listed on the New York Stock Exchange and are
involved in the production of electrical energy.
Morgan Stanley EAFE (Europe, Australia and Far East) Index: This average
reflects an arithmetic, market value weighted average of performance of more
than 900 listed securities which are listed on the stock exchanges of the
following countries: Australia, Austria, Belgium, Denmark, Netherlands, New
Zealand, Norway, Singapore/Malaysia, Spain, Sweden, Switzerland, and the United
Kingdom.
Lipper International Fund Average: This average consists of funds which invest
in securities primarily traded in markets outside of the United States. The one
year average currently contains 324 funds.
Note: Mutual fund data from Lipper Analytical Services, Inc.
Income-Oriented Funds
Princor Bond Fund
Don Brattebo
Scott Bennett
The Bond Fund's performance in 1996 was off as compared to 1995 which was a
banner year mainly because of dramatically declining interest rates. During
1996, interest rates increased throughout most of the year and only recently
have been on their way down as inflation fears ease. This hurt the Fund's
relative performance as our duration target of seven years is longer than the
average BBB-rated bond fund and the BAA Lehman Corporate Index. Over a long-term
perspective we continue to outperform the Lipper Corporate Debt BBB Average,
which we attribute to remaining fully invested and not trying to guess interest
rates. Underperformance relative to Lehman Brothers BAA Corporate Index in the
past year has mainly been because our duration is longer than the index and from
a long-term perspective because of operating expenses. Duration measures the
price change of a bond given a change in interest rates. In general, if interest
rates change one percentage point, the value will change in the opposite
direction by a percentage which equals the duration.
In addition to above average, long-term performance within our peer group,
BBB-rated corporate securities continue to be attractive by outperforming all
other investment-grade quality levels. The yield difference between treasuries
and BBB-rated corporates have continued to narrow during the year with defaults
low and a large amount of funds chasing the available bonds.
Comparison of Change in Value of $10,000 Investment in the Bond
Fund Class A, Lehman Brothers BAA Corporate Index and Lipper
Corporate Debt BBB Rated Fund Average
Lehman Lipper
Bond Baa BBB Corp.
Year Ended October 31, Fund Index Average
9,525 10,000 10,000
1988 10,634 11,207 10,947
1989 11,862 12,598 11,980
1990 12,227 13,135 12,295
1991 14,189 15,451 14,397
1992 15,814 17,167 15,952
1993 18,220 19,771 18,362
1994 17,125 18,564 17,376
1995 20,504 22,156 19,873
1996 21,476 23,669 20,974
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
-0.18% 7.60% 9.00%* Class A
0.00% 9.42%** Class B
3.75%*** Class R
* - Since Inception Date 12/18/87
** - Since Inception Date 12/9/94
*** - Since Inception Date 2/29/96
Princor Government Securities Income Fund
Marty Schafer
As interest rates rose in the second quarter, we continued to purchase
mortgage-backed securities selling at a discount and sold those selling at a
premium. This positions us for either unchanged or lower interest rates. We view
the economy as not too hot or too cold but "just about right." In that case, our
portfolio is structured very nicely for the future. The Princor Government
Securities Income Fund compared favorably against the Lipper GNMA Fund Average,
while it lagged the Lehman GNMA Index, which does not include expenses and, for
the last twelve months, has a shorter average maturity. The Fund's favorable
comparison to the Lipper GNMA average was derived by the Fund's longer maturity
and, we believe, by not market timing interest rates.
Our disciplined approach of running a portfolio priced at or below par continues
to protect our shareholders from a drop in rates. The reason this strategy works
is because borrowers are becoming more and more efficient in their ability to
prepay (call) their home loans. With technology continuing to improve and
competition among mortgage bankers becoming more intense, we feel this
efficiency will only increase. We avoid most of the callability of staying in
low coupon mortgage-backed securities.
We also add value by selecting undervalued sectors of mortgage-backed securities
for a portion of the portfolio. The sector we have focused on in the last year
has now become very popular with Wall Street and other investors, resulting in
our bonds increasing in value.
Comparison of Change in Value of $10,000 Investment in the Government Securities
Income Fund Class A, Lehman Brothers GNMA Index and the Lipper GNMA Fund Average
Government Lehman Lipper
Securities GNMA GNMA
Year Ended October 31, Income Fund Index Average
9,525 10,000 10,000
1987 9,677 10,402 10,171
1988 11,030 11,836 11,387
1989 12,230 13,187 12,499
1990 12,985 14,281 13,411
1991 15,164 16,721 15,414
1992 16,450 18,192 16,694
1993 18,391 19,569 18,050
1994 17,241 19,267 17,494
1995 20,250 22,194 19,880
1996 21,478 23,781 20,984
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
1.08% 6.18% 7.94% Class A
1.19% 9.17% * Class B
3.76% ** Class R
* - Since Inception Date 12/9/94
** - Since Inception Date 2/29/96
Princor High Yield Fund
Ken Hovey
The fiscal year ended October 31 was successful for the High Yield Fund. Return
levels of high yield funds in general were significantly higher than for other
fixed- income securities and exemplify the return characteristics that differ
between high yield and other forms of bonds. The improved performance also
demonstrates why high yield securities add much to portfolio diversification.
The better performance of our Fund and the high yield market compared to other
forms of bonds during this period was caused by two factors. First, the
risk-free U.S. Treasury market declined in market value over the year for
maturities of two years and longer. Investment-grade bonds generally track the
Treasury market fairly closely, much closer than do high yield bonds.
Investment-grade bonds still had positive total returns due to interest income.
Secondly, the risk premium above Treasuries for high yield bonds declined over
the year. In other words, the difference in expected returns between high yield
bonds and Treasuries was smaller at the end of the fiscal year than at the
beginning. One of the key questions looking forward is whether the risk premium
for high yield bonds is appropriate, too much or too little. Most observers,
including us, think that it is about right given the current economic outlook
for continued growth coupled with a nonrestrictive monetary policy. Another key
variable to the risk premium and valuation of high yield bonds is the default
experience investors realize. Defaults are lower currently for the trailing
twelve months than for a year earlier, and are at relatively low rates by
historical measure. Our Fund experienced an interest payment default on Drypers
bonds that was detailed in the last report. That payment was subsequently
received and the bonds continue to be current.
Our Fund's return was higher than the Lehman Index, and lower than the Lipper
Average. Difference in return are caused by several factors. Default experience
is still important but more relevant over the past year has been sector
distribution by industry and by credit quality. Return performance by industry
sector was very different as industries go in and out of favor. Our Fund is
sufficiently diversified with 51 different bonds. In general, but with
exceptions, we own bonds that should perform well in the current economy, but
would not fare too badly in a weak economy. In respect to credit quality, we own
a mix of BB and B quality bonds which is in line with the market (i.e. Lehman),
but we think higher in quality than most competing mutual funds (i.e. Lipper).
The higher quality BB-rated bonds have performed closer to investment-grade
bonds and therefore did not return as well as B-rated bonds overall. Going
forward, we do not expect B-rated bonds to continue to outperform BB-rated bonds
as the additional income they provide should be lost in additional defaults. We
think our mix of credit quality and industry diversification is appropriate and
expect future returns to be similar to both Lehman and Lipper, as they were for
the past year.
Comparison of Change in Value of $10,000 Investment in the High
Yield Fund Class A, Lehman Brothers High Yield Index and Lipper
High Current Yield Fund Average
Lehman Lipper
High High Yield High Yield
Year Ended October 31, Yield Fund Index Average
9,525 10,000 10,000
1988 10,879 11,403 11,230
1989 11,171 11,625 11,355
1990 9,550 10,131 9,967
1991 11,998 15,050 13,589
1992 13,719 17,345 15,816
1993 15,319 20,450 18,991
1994 15,540 20,702 18,913
1995 17,363 23,958 21,409
1996 19,426 26,618 24,118
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
6.63% 9.06% 7.77%* Class A
6.46% 10.08% ** Class B
5.60%*** Class R
* - Since Inception Date 12/18/87
** - Since Inception Date 12/9/94
*** - Since Inception Date 2/29/96
Princor Limited Term Bond Fund
Marty Schafer
The Limited Term Bond Fund continues to be an investment well suited for those
investors looking to improve on lower yielding money market funds and similar
investments, but unwilling to take on the investment risk of longer term bonds
or stocks. In recent periods the vast majority of our new investments have been
focused in corporate bonds in the two to five year maturity range. As a result,
our portfolio mix has become more heavily weighted in corporate bonds (70%) ,
with the remainder of the portfolio comprised of mortgage- backed securities
(25%), asset-backed securities (4%) and commercial paper (1%). We continue to
maintain a very high credit quality within the portfolio as the average credit
quality is AA-/Aa3. Our strategy continues to be to stay fully invested, find
the best value among various short-term, fixed-income securities, maintain high
credit quality standards and manage duration within our target range. The return
for the Princor Limited Term Bond Fund mirrored both the Lehman Brothers
Government Corporate Intermediate Index and the Lipper Short-Intermediate
Investment Grade Bond Fund Average.
The U.S. economy is nearing the end of a prolonged expansion and the outlook for
domestic demand is questionable given the rising level of consumer debt and
related increase in consumer delinquencies. Any near-term increase in economic
activity should have only a temporary and modest effect on interest rates.
However, the recent volatility in the market cannot be overlooked. Although
economic growth did pick up earlier in the year, fueling the rising interest
rate environment, the shorter duration of the Limited Term Bond Fund softened
this volatility and generated a positive return for investors during this period
of turbulent market conditions.
Comparison of Change in Value of $10,000 Investment in the Limited
Term Bond Fund, Lehman Brothers Government Corporate Intermediate
Index and Lipper Short-Intermediate Investment Grade Bond Fund Average
Lehman
Brothers
Government Lipper
Limited Term Bond Fund Corporate Intermediate
Year Ended --------------------------- Intermediate Investment Grade
October 31, Class A Class B Class R Index Bond Fund Avg.
9,850 10,000 10,000 10,000 10,000
1996 10,207 10,207 10,324 10,369 10,357
Note: Past performance is not predictive of future performance. The performance
of Class B and Class R Shares will vary from the performance of Class A Shares
based on the differences in loads and fees.
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
2.07% * -- -- Class A
2.07% * -- -- Class B
3.24% * -- -- Class R
* - Since Inception Date 2/29/96
Princor Tax-Exempt Bond Fund
Dan Garrett
The municipal bond market has done well over the past year relative to taxable
fixed-income securities. Interest rates rose slightly early in the year as
markets anticipated confirmation that growth would not increase inflation. Since
May, markets recognized low inflation and growth are compatible, and rates are
slightly lower than a year ago. Especially comforting for municipal markets was
the reduced concern over radical tax reform. While the chance of losing the tax
advantage was small, the market did factor some risk into municipal yields which
resulted in lower prices early in the year. Over the summer, tax reform dropped
off the list of top election issues, the risk was reduced and prices rose.
Our disciplined approach to credit analysis and targeted duration has provided
our shareholders with strong performance. The Fund has outperformed the broader
Lehman Municipal Bond Index and has been about even with the Lehman Revenue Bond
Index. The Fund's average quality of A outperformed the municipal index of AA+
and the revenue index of AA-. The Fund also benefited because of its weightings
in revenue bonds and overall yield differences tightened between revenue bonds
and the risk-free municipal curve. The Lehman Brothers Municipal Bond Index has
been added because it is a broader index which may be a more appropriate
reflection of our Lipper peer group. Our duration as of October 31, 1996 was
7.51 years. This was about the same as the municipal and revenue indices during
the past year. Duration measures the price change of a bond given a change in
interest rates. In general, if interest rates change one percentage point, the
value will change in the opposite direction by a percentage which equals the
duration.
Investors of the Tax-Exempt Bond Fund may be subject to the Alternative Minimum
Tax.
Comparison of Change in Value of $10,000 Investment in the Tax-Exempt
Bond Fund Class A, Lehman Brothers Revenue Bond Index, Lehman Brothers
Municipal Bond Index and the Lipper General Municipal Fund Average
Lehman Lehman Lipper
Year Ended Tax-Exempt Revenue Municipal General
October 31, Bond Fund Bond Index Bond Index Muni. Debt
9,525 10,000 10,000 10,000
1987 8,924 9,923 9,915 9,641
1988 10,730 11,652 11,359 11,166
1989 11,710 12,705 12,278 12,036
1990 12,185 13,650 13,190 12,703
1991 13,780 15,431 14,795 14,265
1992 14,850 16,774 16,038 15,320
1993 17,181 19,332 18,294 17,686
1994 15,907 18,305 17,497 16,650
1995 18,457 21,221 20,095 18,931
1996 19,579 22,526 21,240 19,898
Note: Past performance is not predictive of future performance. The performance
of Class B Shares will vary from the performance of Class A Shares based on the
difference in loads and fees
Total Returns
As of October 31, 1996
1 Year 5 Year 10 Year
1.10% 6.25% 6.95% Class A
1.23% 10.18%* Class B
* - Since Inception Date 12/9/94
Princor Cash Management Fund
Princor Tax-Exempt Cash Management Fund
Mike Johnson
Steve Schneider
During the past twelve months, the Federal Reserve lowered short-term interest
rates by 25 basis points twice, once in December and then again in January to
its current targeted level of 5.25%. Periodically, after the release of various
economic numbers there was some market speculation that the Fed would raise
rates. However, the 5.25% level has remained in place since January 31 with the
Fed continuing to indicate they have no reason to make a change without an
acceleration in the growth or inflation rate. The average maturity of our own
portfolio, as well as that of the industry, reached its peak during February
when investors were still anticipating lower rates. However, following the
release of strong economic data led by the February employment report, average
maturities declined somewhat and subsequently leveled off. We continue to target
and actively monitor the industry averages to keep both our yields and average
maturities in line. Both portfolios continue to invest from a list of the
highest credit quality issues that are actively managed by our investment
securities analytical staff. Throughout most of fiscal 1996, assets for both the
Princor taxable and tax-exempt portfolios, as well as those industry wide, were
at or near new record high levels.
Investment in the money market funds is neither insured nor guaranteed by the U.
S. Government. While the fund strives to maintain a $1.00 per share NAV, there
can be no guarantee it will do so.
Important Notes of the Income-Oriented Funds:
Lehman Brothers, Baa Index: An unmanaged index of all publicly issued,
fixed-rate, nonconvertible, dollar-denominated, SEC-registered corporate debt
rated Baa or BBB by Moody's or Standard & Poor's.
Lipper Corporate Debt BBB Rated Fund Average: This average consists of funds
which invest at least 65% of their assets in corporate and government debt
issues rated in the top four grades. The one year average currently contains 78
funds.
Lehman Brothers, GNMA Index: An unmanaged index of 15- and 30-year fixed-rate
securities backed by mortgage pools of the Government National Mortgage
Association (GNMA) and Graduated Payment Mortgages (GPMs) with at least $100
million outstanding and one year or more to maturity.
Lipper GNMA Fund Average: This average consists of funds which invest a least
65% of their assets in Government National Mortgage Association securities. The
one year average currently contains 49 funds.
Lehman Brothers, High Yield Index: An unmanaged index of all publicly issued
fixed, dollar-denominated, SEC-registered corporate debt rated Ba1 or lower with
at least $100 million outstanding and one year or more to maturity.
Lipper High Current Yield Fund Average: This average consists of funds which aim
at high (relative) current yield from fixed-income securities. No quality or
maturity restrictions. They tend to invest in lower grade debt issues. The one
year average currently contains 114 funds.
Lehman Brothers, Government Corporate Intermediate Index: An unmanaged index of
U. S. Government agency and Treasury securities and investment-grade corporate
debt securities with maturities of five to ten years.
Lehman Brothers, Municipal Bond Index: An unmanaged index of investment-grade
tax-exempt bonds which have been issued within the last five years and at least
one year or more to maturity. This index is classified into four main sectors:
General Obligation, Revenue, Insured and Prerefunded.
Lehman Brothers, Revenue Bond Index: An unmanaged index of investment-grade
tax-exempt revenue bonds which have been issued within the last five years and
at least one year or more to maturity.
Lipper Short-Intermediate Investment Grade Debt Fund Average: This average
consists of funds which invest at least 65% of their assets in investment-grade
debt issues rated in the top four grades with dollar-weighted average maturities
of one to five years. The one year average currently contains 70 funds.
Lipper General Municipal Debt Fund Average: This average consists of funds which
invest at least 65% of their assets in municipal debt issues in the top four
credit ratings. The one year average currently contains 228 funds.
Note: Mutual fund data from Lipper Analytical Services, Inc.
<PAGE>
Asset Allocation: An Important Ingredient to Successful Investing
Allocation is the act of selecting the best mix of asset classes for your
investment, as decided by your financial objectives and risk tolerance. An asset
allocation program works to find the best mix of stock and bond investments to
achieve the highest possible returns for a certain risk level. To the right is a
hypothetical an asset allocation program.
Impact of Various Factors on Your Investment Results
pie chart showing a mix as follows: Asset Allocation - 91.5%,
Stock Selection - 4.6%, Market Timing - 1.7%, Other - 2.1%
Source: Financial Analysts Journal
Studies have shown that allocating among a variety of asset classes can
dramatically affect investment results. The studies further suggest that asset
allocation can be more important to the success of an investment program than
either market timing or stock selection. Below is a chart demonstrating the
impact of various factors on your investment results.
Hypothetical Asset Allocation Program
pie chart showing a mix as follows: U.S. Stocks - 35%, Corporate Bonds - 30%,
Government Bonds - 15%, International Stocks - 20%
Though no asset allocation plan can guarantee a profit, it is a way for most
investors to increase potential returns while reducing risk. However, many
individual investors do not have the time or skills to allocate their investment
effectively. This is where the financial expertise of an investment professional
becomes invaluable.
The investment professional begins the asset allocation process by asking a
series of questions. These questions are designed to help find out the
investor's financial goals, investment time horizon and risk tolerance. Here are
some examples of the kinds of questions an investment professional might ask:
How much time exists before you will need to begin taking withdrawals
from your investment?
How much cash do you have set aside for emergencies?
How would you react if you made an investment and its value declined
significantly in the first six months of ownership?
How do you feel about the long-term outlook for growth of the U.S.
economy and the global economy?
After the investor responds to the questions, the investment professional makes
an asset allocation recommendation based on the answers. For example, Investor A
foresees a need to use the investment funds within five years and has little
cash reserved for an emergency. This relatively short time horizon and low
liquidity suggests to the investment professional that Investor A should
consider a more conservative asset allocation. Investor B has adequate cash
reserves and no need for the funds for seven years, but is uncomfortable with
volatility. Based on this information, the investment professional recommends a
moderate asset allocation. Investor C does not need access to the investment for
at least ten years. In addition, Investor C is comfortable with fluctuating
portfolio values. As a result, the investment professional proposes that
Investor C choose a dynamic asset allocation.
<PAGE>
However, the investment process does not stop with the initial allocation of
assets. Though most asset allocation programs don't change frequently, there are
times when they may need adjustment. This can result from changes in the
investor's lifestyle (retirement, birth of a child) or from changes in the
securities markets (dramatic increase or decrease in interest rates, extended
change in economic outlook). At such times, the investment professional will
help the investor reevaluate the allocation and make the necessary changes.
Effective asset allocation is an important ingredient of successful investing.
With the help of an investment professional, you too can find the asset
allocation best suited to helping you achieve your long-term financial goals. To
learn more about asset allocation and how it might help you investment more
successfully, contact your investment professional today.
<PAGE>
<TABLE>
<CAPTION>
October 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
Princor Princor Princor Capital Princor
Balanced Blue Chip Accumulation Emerging Growth
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C> <C>
Investment in securities -- at cost....... $70,608,681 $38,666,049 $372,834,472 $196,175,476
Assets
Investment in securities -- at value (Note 4) $77,326,410 $52,395,813 $446,428,622 $260,529,159
Cash .................................... 3,891 1,465 7,814 6,749
Receivables:
Dividends and interest................. 396,865 63,477 790,667 262,393
Investment securities sold.............. -- -- -- --
Capital Stock sold...................... 51,418 112,430 299,622 318,992
Other assets............................... 3,796 545 24,411 2,129
Total Assets 77,782,380 52,573,730 447,551,136 261,119,422
Liabilities
Accrued expenses 92,846 60,482 279,456 294,393
Payables:
Investment securities purchased......... -- -- -- 792,000
Capital Stock reacquired................ 31,141 22,847 70,557 72,128
Total Liabilities 123,987 83,329 350,013 1,158,521
Net Assets Applicable to
Outstanding Shares ...................... $77,658,393 $52,490,401 $447,201,123 $259,960,901
Net Assets Consist of:
Capital Stock.............................. $ 53,163 $ 30,708 $ 161,326 $ 72,781
Additional paid-in capital................. 63,927,311 37,236,847 307,977,966 186,371,526
Accumulated undistributed net
investment income....................... 158,125 38,438 2,760,161 373,519
Accumulated undistributed net realized
gain (loss) from:
Investment transactions................. 6,802,065 1,454,644 62,707,520 8,789,392
Foreign currency transactions........... -- -- -- --
Net unrealized appreciation of investments 6,717,729 13,729,764 73,594,150 64,353,683
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies -- -- -- --
Total Net Assets $77,658,393 $52,490,401 $447,201,123 $259,960,901
Capital Stock (par value: $.01 a share)
Shares authorized.......................... 100,000,000 100,000,000 100,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $70,819,630 $44,388,507 $435,616,809 $229,464,619
Shares issued and outstanding. 4,846,581 2,595,277 15,712,496 6,418,841
Net asset value per share...... $14.61 $17.10 $27.72 $35.75
Maximum offering price per share(a) $15.34 $17.95 $29.10 $37.53
Class B: Net Assets....................... $5,964,217 $6,526,767 $9,832,401 $28,479,979
Shares issued and outstanding. 409,526 383,239 356,559 802,750
Net asset value per share(b)... $14.56 $17.03 $27.58 $35.48
Class R: Net Assets....................... $874,546 $1,575,127 $1,751,913 $2,016,303
Shares issued and outstanding. 60,221 92,245 63,541 56,520
Net asset value per share...... $14.52 $17.08 $27.57 $35.67
<FN>
(a) Maximum offering price is equal to net asset value plus a front-end
sales charge of 4.75% of the offering price. (b) Redemption price per share
is equal to net asset value less any applicable contingent deferred sales
charge.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
October 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
Princor Princor Princor
Growth Utilities World
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Investment in securities -- at cost....... $183,818,625 $67,160,726 $157,851,814
Assets
Investment in securities -- at value (Note 4) $254,216,975 $71,908,657 $188,347,013
Cash .................................... 4,246 3,880 45,664
Receivables:
Dividends and interest................. 236,309 391,862 198,880
Investment securities sold.............. -- -- 655,097
Capital Stock sold...................... 218,890 37,355 149,345
Other assets............................... 8,638 432 1,617
Total Assets 254,685,058 72,342,186 189,397,616
Liabilities
Accrued expenses 257,782 86,948 221,698
Payables:
Investment securities purchased......... -- -- --
Capital Stock reacquired................ 33,981 42,680 97,480
Total Liabilities 291,763 129,628 319,178
Net Assets Applicable to
Outstanding Shares ...................... $254,393,295 $72,212,558 $189,078,438
Net Assets Consist of:
Capital Stock.............................. $ 64,358 $ 63,371 $ 232,423
Additional paid-in capital................. 180,809,186 68,414,712 148,765,138
Accumulated undistributed net
investment income....................... 682,686 325,361 1,601,065
Accumulated undistributed net realized
gain (loss) from:
Investment transactions................. 2,438,715 (1,338,817) 8,004,369
Foreign currency transactions........... -- -- (20,659)
Net unrealized appreciation of investments 70,398,350 4,747,931 30,495,199
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies -- -- 903
Total Net Assets $254,393,295 $72,212,558 $189,078,438
Capital Stock (par value: $.01 a share)
Shares authorized.......................... 100,000,000 1,000,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $228,360,537 $66,322,317 $172,276,338
Shares issued and outstanding. 5,775,473 5,819,330 21,162,096
Net asset value per share...... $39.54 $11.40 $8.14
Maximum offering price per share(a) $41.51 $11.97 $8.55
Class B: Net Assets....................... $24,018,956 $5,579,437 $15,745,141
Shares issued and outstanding. 609,206 490,293 1,950,060
Net asset value per share(b)... $39.43 $11.38 $8.07
Class R: Net Assets....................... $2,013,802 $310,804 $1,056,959
Shares issued and outstanding. 51,112 27,440 130,179
Net asset value per share...... $39.40 $11.33 $8.12
<FN>
(a) Maximum offering price is equal to net asset value plus a front-end
sales charge of 4.75% of the offering price. (b) Redemption price per share
is equal to net asset value less any applicable contingent deferred sales
charge.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 31, 1996
STATEMENTS OF OPERATIONS
Princor Princor Princor Capital Princor
Balanced Blue Chip Accumulation Emerging Growth
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C> <C>
Net Investment Income
Income:
Dividends............................. $ 879,659 $1,017,673 $ 9,391,309 $ 1,730,782
Less: Withholding tax on
foreign dividends................... -- -- -- --
Interest............................... 1,884,731 147,728 489,900 1,990,047
Total Income 2,764,390 1,165,401 9,881,209 3,720,829
Expenses:
Management and investment advisory
fees (Note 3)....................... 404,461 212,845 1,671,502 1,293,848
Distribution and shareholder servicing
fees (Note 1 and 3)................. 183,234 133,279 457,625 559,125
Transfer and administrative services
(Note 1 and 3)...................... 251,542 206,942 567,786 942,986
Registration fees (Note 1)............. 25,357 25,320 35,081 60,801
Custodian fees ........................ 8,137 4,526 6,748 8,002
Auditing and legal fees ............... 7,325 7,222 8,797 9,668
Directors' fees ....................... 8,706 8,705 8,932 8,857
Other ................................. 5,881 3,960 27,892 13,060
Total Gross Expenses 894,643 602,799 2,784,363 2,896,347
Less: Management and investment
advisory fees waived................ -- -- -- --
Total Net Expenses 894,643 602,799 2,784,363 2,896,347
Net Investment Income 1,869,747 562,602 7,096,846 824,482
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions................ 6,825,321 1,456,128 62,796,872 8,797,569
Foreign currency transactions.......... -- -- -- --
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments............................ 751,917 4,958,684 21,196,743 21,625,120
Translation of assets and liabilities in
foreign curencies...................... -- -- -- --
Net Realized and Unrealized Gain
on Investments and Foreign Currency 7,577,238 6,414,812 83,993,615 30,422,689
Net Increase in Net Assets
Resulting from Operations $9,446,985 $6,977,414 $91,090,461 $31,247,171
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 31, 1996
STATEMENTS OF OPERATIONS
Princor Princor Princor
Growth Utilities World
GROWTH FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Net Investment Income
Income:
Dividends............................. $ 3,258,063 $3,568,650 $ 4,650,004
Less: Withholding tax on
foreign dividends................... -- -- (566,331)
Interest............................... 1,270,513 84,808 484,311
Total Income 4,528,576 3,653,458 4,567,984
Expenses:
Management and investment advisory
fees (Note 3)....................... 1,040,897 437,402 1,154,783
Distribution and shareholder servicing
fees (Note 1 and 3)................. 556,203 213,855 353,313
Transfer and administrative services
(Note 1 and 3)...................... 837,917 228,489 598,305
Registration fees (Note 1)............. 55,403 44,799 41,352
Custodian fees ........................ 5,866 4,746 187,001
Auditing and legal fees ............... 10,303 7,181 11,546
Directors' fees ....................... 8,932 8,706 8,856
Other ................................. 14,705 6,540 11,465
Total Gross Expenses 2,530,226 951,718 2,366,621
Less: Management and investment
advisory fees waived................ -- 61,622 --
Total Net Expenses 2,530,226 890,096 2,366,621
Net Investment Income 1,998,350 2,763,362 2,201,363
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions................ 2,443,260 1,903,036 7,946,241
Foreign currency transactions.......... -- -- (20,659)
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments............................ 15,785,039 907,722 15,859,986
Translation of assets and liabilities in
foreign curencies...................... -- -- (2,574)
Net Realized and Unrealized Gain
on Investments and Foreign Currency 18,228,299 2,810,758 23,782,994
Net Increase in Net Assets
Resulting from Operations $20,226,649 $5,574,120 $25,984,357
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Princor
Balanced Blue Chip
GROWTH FUNDS Fund, Inc. Fund, Inc.
1996 1995 1996 1995
Operations
<S> <C> <C> <C> <C>
Net investment income............................. $ 1,869,747 $ 1,764,386 $ 562,602 $ 561,604
Net realized gain (loss) from:
Investment transactions....................... 6,825,321 2,846,701 1,456,128 1,227,208
Foreign currency transactions................. -- -- -- --
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 751,917 2,809,432 4,958,684 4,662,787
Net Increase in Net Assets
Resulting from Operations 9,446,985 7,420,519 6,977,414 6,451,599
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (1,977,960) (1,526,106) (597,121) (487,675)
Class B ...................................... (80,727) (10,560)(a) (28,747) (6,240)(a)
Class R(b) ................................... (3,345) -- (3,612) --
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (2,798,187) (234,514) (811,021) --
Class B ...................................... (71,791) -- (46,234) --
Class R(b).................................... -- -- -- --
Total Distributions (4,932,010) (1,771,180) (1,486,735) (493,915)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 14,014,587 7,935,949 16,456,171 6,239,894
Class B ...................................... 4,729,247 1,269,648(a) 4,623,404 1,632,045(a)
Class R(b).................................... 894,478 -- 1,584,827 --
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 3,967,925 1,395,703 1,107,738 366,550
Class B ...................................... 151,751 10,489(a) 74,660 6,184(a)
Class R(b).................................... 3,345 -- 3,610 --
Shares redeemed:
Class A ...................................... (8,463,657) (11,165,026) (13,383,349) (4,463,004)
Class B ...................................... (499,765) (73,722)(a) (370,763) (41,750)(a)
Class R(b) ................................... (42,847) -- (40,315) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 14,755,064 (626,959) 10,055,983 3,739,919
Total Increase 19,270,039 5,022,380 15,546,662 9,697,603
Net Assets
Beginning of year................................. 58,388,354 53,365,974 36,943,739 27,246,136
End of year (including undistributed net
investment income as set forth below)......... $77,658,393 $ 58,388,354 $ 52,490,401 $36,943,739
Undistributed Net Investment Income ............ $ 158,125 $ 350,410 $ 38,438 $ 105,316
<FN>
(a) Period from December 5, 1994 (date operations commenced) through October 31, 1995.
(b) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Capital
Accumulation
GROWTH FUNDS Fund, Inc.
1996 1995
Operations
<S> <C> <C>
Net investment income............................. $ 7,096,846 $ 6,438,683
Net realized gain (loss) from:
Investment transactions....................... 62,796,872 21,096,912
Foreign currency transactions................. -- --
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 21,196,743 24,916,772
Net Increase in Net Assets
Resulting from Operations 91,090,461 52,452,367
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (6,575,207) (5,617,183)
Class B ...................................... (40,153) (6,731)(a)
Class R(b) ................................... (377) --
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (20,944,284) (4,755,174)
Class B ...................................... (159,788) --
Class R(b).................................... -- --
Total Distributions (27,719,809) (10,379,088)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 38,526,395 28,287,310
Class B ...................................... 6,857,184 2,179,812(a)
Class R(b).................................... 1,747,855 --
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 27,060,108 10,162,185
Class B ...................................... 199,814 6,731(a)
Class R(b).................................... 377 --
Shares redeemed:
Class A ...................................... (31,940,130) (26,662,663)
Class B ...................................... (468,502) (107,211)(a)
Class R(b) ................................... (57,097) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 41,926,004 13,866,164
Total Increase 105,296,656 55,939,443
Net Assets
Beginning of year................................. 341,904,467 285,965,024
End of year (including undistributed net
investment income as set forth below)......... $447,201,123 $341,904,467
Undistributed Net Investment Income ............ $ 2,760,161 $ 2,279,052
<FN>
(a) Period from December 5, 1994 (date operations commenced) through October 31, 1995.
(b) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Princor
Emerging Growth Growth
GROWTH FUNDS Fund, Inc. Fund, Inc.
1996 1995 1996 1995
Operations
<S> <C> <C> <C> <C>
Net investment income............................. $ 824,482 $ 549,975 $ 1,998,350 $ 1,593,835
Net realized gain (loss) from:
Investment transactions....................... 8,797,569 3,897,774 2,443,260 5,884,252
Foreign currency transactions................. -- -- -- --
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 21,625,120 25,019,957 15,785,039 24,040,842
Net Increase in Net Assets
Resulting from Operations 31,247,171 29,467,706 20,226,649 31,518,929
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... (769,946) (236,412) (1,861,151) (1,314,723)
Class B ...................................... (5,762) (992)(a) (18,683) (7,563)(a)
Class R(b) ................................... (100) -- (57) --
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... (3,664,659) (544,422) (5,595,988) (2,370,009)
Class B ...................................... (234,733) -- (291,406) --
Class R(b).................................... -- -- -- --
Total Distributions (4,675,200) (781,826) (7,767,285) (3,692,295)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 73,310,489 46,003,051 57,801,956 42,675,725
Class B ...................................... 18,956,446 8,944,401(a) 16,237,487 7,815,161(a)
Class R(b).................................... 2,007,738 -- 2,064,878 --
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 4,310,643 763,370 7,227,308 3,557,579
Class B ...................................... 236,262 992(a) 308,579 7,560(a)
Class R(b).................................... 100 -- 57 --
Shares redeemed:
Class A ...................................... (23,052,083) (16,885,879) (22,732,322) (15,426,370)
Class B ...................................... (1,969,387) (867,829)(a) (1,567,488) (212,100)(a)
Class R(b) ................................... (19,892) -- (13,380) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 73,780,316 37,958,106 59,327,075 38,417,555
Total Increase 100,352,287 66,643,986 71,786,439 66,244,189
Net Assets
Beginning of year................................. 159,608,614 92,964,628 182,606,856 116,362,667
End of year (including undistributed net
investment income as set forth below)......... $259,960,901 $159,608,614 $254,393,295 $182,606,856
Undistributed Net Investment Income ............ $ 373,519 $ 324,845 $ 682,686 $ 564,227
<FN>
(a) Period from December 5, 1994 (date operations commenced) through October 31, 1995.
(b) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Princor
Utilities World
GROWTH FUNDS Fund, Inc. Fund, Inc.
1996 1995 1996 1995
Operations
<S> <C> <C> <C> <C>
Net investment income............................. $ 2,763,362 $ 3,019,757 $ 2,201,363 $ 1,294,94
Net realized gain (loss) from:
Investment transactions....................... 1,903,036 (393,414) 7,946,241 5,921,120
Foreign currency transactions................. -- -- (20,659) 97,847
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies.. 907,722 11,053,532 15,857,412 (5,208,159)
Net Increase in Net Assets
Resulting from Operations 5,574,120 13,679,875 25,984,357 2,105,752
Dividends and Distributions to Shareholders
From net investment income:
Class A....................................... ( 2,523,991) (3,003,083) (1,382,783) (571,155)
Class B ...................................... (158,855) (66,295)(a) (15,481) (1,106)
Class R(b) ................................... (1,864) -- -- --
From net realized gain on investments and
foreign currency transactions:
Class A ...................................... -- -- (5,735,484) (2,940,766)
Class B ...................................... -- -- (196,110) --
Class R(b).................................... -- -- -- --
Total Distributions (2,684,710) (3,069,378) (7,329,858) (3,513,027)
Capital Share Transactions (Note 5)
Shares sold:
Class A....................................... 11,274,737 9,551,504 38,822,208 28,751,013
Class B ...................................... 3,349,548 3,732,230(a) 11,226,931 3,799,760
Class R(b).................................... 308,620 -- 1,038,560 --
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 2,196,843 2,502,797 7,075,336 3,389,757
Class B ...................................... 146,631 61,981(a) 209,953 1,106
Class R(b).................................... 1,864 -- -- --
Shares redeemed:
Class A ...................................... (15,770,532) (13,188,883) (17,658,243) (19,795,122)
Class B ...................................... (2,007,039) (191,972)(a) (746,863) (88,847)
Class R(b) ................................... (2,894) -- (6,119) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (502,222) 2,467,657 39,961,763 16,057,667
Total Increase 2,387,188 13,078,154 58,616,262 14,650,392
Net Assets
Beginning of year................................. 69,825,370 56,747,216 130,462,176 115,811,784
End of year (including undistributed net
investment income as set forth below)......... $ 72,212,558 $ 69,825,370 $189,078,438 $130,462,176
Undistributed Net Investment Income ............ $ 325,361 $ 246,709 $ 1,601,065 $ 776,759
<FN>
(a) Period from December 5, 1994 (date operations commenced) through October 31, 1995.
(b) Period from February 27, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
October 31, 1996
NOTES TO FINANCIAL STATEMENTS
Princor Balanced Fund, Inc.
Princor Blue Chip Fund, Inc.
Princor Capital Accumulation Fund, Inc.
Princor Emerging Growth Fund, Inc.
Princor Growth Fund, Inc.
Princor Utilities Fund, Inc.
Princor World Fund, Inc.
Note 1 -- Significant Accounting Policies
Princor Balanced Fund, Inc., Princor Blue Chip Fund, Inc., Princor Capital
Accumulation Fund, Inc., Princor Emerging Growth Fund, Inc., Princor Growth
Fund, Inc., Princor Utilities Fund, Inc. and Princor World Fund, Inc. (the
"Growth Funds") are registered under the Investment Company Act of 1940, as
amended, as open-end diversified management investment companies and operate in
the mutual fund industry.
On December 5, 1994, the initial purchases of Class B shares of the Growth Funds
were made by Princor Management Corporation (See Note 3). All shares outstanding
prior to the initial Class B share purchases have been classified as Class A
shares. Effective December 9, 1994, the Growth Funds also began offering Class B
shares to the public. On February 27, 1996, the initial purchases of Class R
shares of the Growth Funds were made by Princor Management Corporation (See Note
3). Effective February 29, 1996, the Growth Funds began offering Class R shares
to eligible purchasers.
Class A shares generally are sold with an initial sales charge based on
declining rates and certain purchases may be subject to a contingent deferred
sales charge ("CDSC"). Class B shares are sold without an initial sales charge,
but are subject to a declining CDSC on certain redemptions redeemed within six
years of purchase. Class R shares are sold without an initial sales charge and
are not subject to a CDSC. Class B shares and Class R shares bear a higher
ongoing distribution fee than Class A shares. Class B shares automatically
convert into Class A shares, based on relative net asset value (without a sales
charge) after seven years. Class R shares automatically convert into Class A
shares, based on relative net asset value (without a sales charge) after four
years. All classes of shares for each fund represent interests in the same
portfolio of investments, and will vote together as a single class except where
otherwise required by law or as determined by the Fund's respective Board of
Directors. In addition, the Board of Directors of each fund declare separate
dividends on each class of shares.
The Growth Funds allocate daily all income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses to each class of shares
based upon the relative proportion of the value of shares outstanding of each
class. Expenses specifically attributable to a particular class are charged
directly to such class. Class-specific expenses charged to each class during the
period ended October 31, 1996, which are included in the corresponding captions
of the Statement of Operations, were as follows:
Distribution and
Shareholder Servicing Fees
Class A Class B Class R
Princor Balanced Fund, Inc. $149,193 $33,433 $ 608
Princor Blue Chip Fund, Inc. 95,828 36,181 1,270
Princor Capital Accumulation Fund, Inc. 405,158 51,148 1,319
Princor Emerging Growth Fund, Inc. 405,151 152,515 1,459
Princor Growth Fund, Inc. 423,459 131,333 1,411
Princor Utilities Fund, Inc. 167,170 46,409 276
Princor World Fund, Inc. 266,025 86,326 962
Transfer and
Administrative Services
Class A Class B Class R
Princor Balanced Fund, Inc. $ 59,754 $ 5,420 $ 4
Princor Blue Chip Fund, Inc. 36,415 6,853 11
Princor Capital Accumulation Fund, Inc. 164,118 8,869 9
Princor Emerging Growth Fund, Inc. 216,658 28,138 10
Princor Growth Fund, Inc. 205,260 24,096 7
Princor Utilities Fund, Inc. 63,132 5,124 6
Princor World Fund, Inc. 153,210 13,055 11
Registration Fees
Class A Class B Class R
Princor Balanced Fund, Inc. $ 7,766 $ 6,224 $34
Princor Blue Chip Fund, Inc. 5,685 6,930 50
Princor Capital Accumulation Fund, Inc. 6,994 6,052 44
Princor Emerging Growth Fund, Inc. 13,719 12,354 34
Princor Growth Fund, Inc. 9,820 13,472 34
Princor Utilities Fund, Inc. 19,539 10,099 34
Princor World Fund, Inc. 12,667 9,747 44
The Growth Funds value securities for which market quotations are readily
available at market value, which is determined using the last reported sale
price or, if no sales are reported, as is regularly the case for some securities
traded over-the-counter, the last reported bid price. When reliable market
quotations are not considered to be readily available, which may be the case,
for example, with respect to certain debt securities, preferred stocks and
foreign securities, the investments are valued by using market quotations,
prices provided by market makers or estimates of market values obtained from
yield data and other factors relating to instruments or securities with similar
characteristics in accordance with procedures established in good faith by each
fund's Board of Directors. Securities with remaining maturities of 60 days or
less are valued at amortized cost, which approximates market.
With respect to Princor World Fund, Inc., the value of foreign securities in
foreign currency amounts is expressed in U.S. dollars at the closing daily rate
of exchange. The identified cost of the portfolio holdings is translated at
approximate rates prevailing when acquired. Income and expense amounts are
translated at approximate rates prevailing when received or paid, with daily
accruals of such amounts reported at approximate rates prevailing at the date of
valuation.
Since the carrying amount of the foreign securities of the fund is determined
based on the exchange rate and market values at the close of the period, it is
not practicable to isolate that portion of the results of operations arising as
a result of changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities during the period.
The Growth Funds record investment transactions generally one day after the
trade date, except for short-term investment transactions which are recorded
generally on the trade date. The identified cost basis has been used in
determining the net realized gain or loss from investment transactions and
unrealized appreciation or depreciation on investments. The Growth Funds record
dividend income on the ex-dividend date, except dividend income from foreign
securities whereby the ex-dividend date has passed; such dividends are recorded
as soon as the Growth Funds are informed of the ex-dividend date. Interest
Income is recognized on an accrual basis.
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments and foreign currency transactions are determined
in accordance with federal income tax regulations, which may differ from
generally accepted accounting principles. To the extent these "book/tax"
differences are permanent in nature (i.e. that they result from other than
timing of recognition - "temporary"), such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Reclassifications made for the
years ended October 31, 1996 and 1995 were not material.
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.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each fund
is qualified as a "regulated investment company" under the Internal Revenue Code
and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments for
federal income tax reporting purposes is approximately the same as that for
financial reporting purposes.
At October 31, 1996, the following Growth fund had net capital loss carryforward
as follows:
Princor
Utilities
Net Capital Loss Carryforward Expires in: Fund, Inc.
2002 $ 945,000
2003 394,000
----------
$1,339,000
Note 3 -- Management Agreement and Transactions With Affiliates
The Growth Funds have agreed to pay investment advisory and management fees to
Princor Management Corporation (wholly owned by Princor Financial Services
Corporation, a subsidiary of Principal Mutual Life Insurance Company)(the
"Manager") computed at an annual percentage rate of each fund's average daily
net assets. The annual rate used in this calculation for the Growth Funds is as
follows:
Net Asset Value of Funds
(in millions)
First Next Next Next Over
Fund $100 $100 $100 $100 $400
Princor Balanced Fund, Inc. 0.60% 0.55% 0.50% 0.45% 0.40%
Princor Blue Chip Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Capital Accumulation Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Emerging Growth Fund, Inc. 0.65% 0.60% 0.55% 0.50% 0.45%
Princor Growth Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Utilities Fund, Inc. 0.60% 0.55% 0.50% 0.45% 0.40%
Princor World Fund, Inc. 0.75% 0.70% 0.65% 0.60% 0.55%
The Manager has agreed to reimburse the Growth Funds annually for their total
expenses (excluding brokerage commissions, interest and taxes) in excess of
limits prescribed by any state in which the Growth Funds' shares are offered for
sale (currently 2 1/2% of the first $30 million of each fund's average annual
net assets, 2% of the next $70 million of such assets and 1 1/2% of such assets
in excess thereof).
Note 3 -- Management Agreement and Transactions With Affiliates (Continued)
The Manager voluntarily waives a portion of its fee for the Princor Utilities
Fund, Inc. The waivers are in amounts that maintain total operating expenses
within certain limits. The limits are expressed as a percentage of average net
assets attributable to each class on an annualized basis during the reporting
period. The amount waived and the operating limits, which were maintained at or
below those shown, are as follows:
Amount
Waived
YearEnded Year Ended Expense
October 31, 1996 October 31, 1995 Limit
Princor Utilities Fund, Inc.
Class A $54,932 $151,145 1.15%
Class B 6,690 1,338(a) 1.90%
Class R -- (b) -- 1.65%
(a) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995. (b) Period from February 29, 1996, date
Class R shares first offered to the eligible purchasers, through October
31, 1996.
The Manager intends to continue its voluntary waiver and, if necessary, pay
expenses normally payable by Princor Utilities Fund, Inc. through February 28,
1998.
Princor Financial Services Corporation, as principal underwriter, receives
proceeds of any CDSC on certain Class A and Class B share redemptions. The
charge is based on declining rates which for Class A shares, begin at .75% and
for Class B shares at 4.00% of the lesser of the current market value or the
cost of shares being redeemed. Princor Financial Services Corporation also
retains sales charges on sales of Class A shares based on declining rates which
begin at 4.75% of the offering price. The aggregate amount of these charges
retained, by fund, for the period ended October 31, 1996 were as follows:
Class A Class B
Princor Balanced Fund, Inc. $ 440,145 $ 8,439
Princor Blue Chip Fund, Inc. 460,854 8,534
Princor Capital Accumulation Fund, Inc. 977,583 11,097
Princor Emerging Growth Fund, Inc. 2,070,533 41,947
Princor Growth Fund, Inc. 1,779,966 33,473
Princor Utilities Fund, Inc. 342,124 28,800
Princor World Fund, Inc. 934,534 17,019
No brokerage commissions were paid by the Growth Funds to Princor Financial
Services Corporation during the periods. Brokerage commissions were paid to
other affiliates by the following funds:
October 31, October 31,
1996 1995
Princor Balanced Fund, Inc. $ 555 $ 1,162
Princor Blue Chip Fund, Inc. 420 --
Princor Capital Accumulation Fund, Inc. 25,993 17,491
Princor Emerging Growth Fund, Inc. 500 1,200
Princor Growth Fund, Inc. -- 5,894
Princor Utilities Fund, Inc. 2,217 3,446
Princor World Fund, Inc. 4,038 21,577
The Growth Funds bear distribution and shareholder servicing fees with respect
to Class A shares computed at an annual rate of up to 0.25% of the average daily
net assets attributable to Class A shares of each fund. Effective December 1994,
each of the Growth Funds adopted a distribution plan with respect to Class B
shares that provides for distribution and shareholder servicing fees computed at
an annual rate of up to 1.00% of the average daily net assets attributable to
Class B shares of each fund. Effective February 1996, each of the Growth Funds
adopted a distribution plan with respect to Class R shares that provides for
distribution and shareholder servicing fees computed at an annual rate of up to
.75% of the average daily net assets attributable to Class R shares of each
fund. Distribution and shareholder servicing fees are paid to Princor Financial
Services Corporation; a portion of the fees are subsequently remitted to retail
dealers. Pursuant to the distribution agreements, fees unused by the principal
underwriter at the end of the fiscal year are returned to the Growth Funds.
At October 31, 1996, Principal Mutual Life Insurance Company, subsidiaries of
Principal Mutual Life Insurance Company and benefit plans sponsored on behalf of
Principal Mutual Life Insurance Company owned shares of the Growth Funds as
follows:
Class A Class B Class R
Princor Balanced Fund, Inc. 530,696 92 2,183
Princor Blue Chip Fund, Inc. 64,477 87 62
Princor Capital Accumulation Fund, Inc. 6,816,334 56 41
Princor Emerging Growth Fund, Inc. 46,739 43 30
Princor Growth Fund, Inc. 37,577 36 26
Princor Utilities Fund, Inc. 85,553 117 87
Princor World Fund, Inc. 4,166,956 156 134
Note 4 -- Investment Transactions
For the year ended October 31, 1996, the cost of investment securities purchased
and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Growth Funds were as follows:
Purchases Sales
Princor Balanced Fund, Inc. $ 27,451,481 $ 19,379,892
Princor Blue Chip Fund, Inc. 14,828,707 5,341,648
Princor Capital Accumulation Fund, Inc. 203,491,564 191,922,597
Princor Emerging Growth Fund, Inc. 84,621,211 22,419,845
Princor Growth Fund, Inc. 59,216,610 3,728,693
Princor Utilities Fund, Inc. 25,474,851 24,280,223
Princor World Fund, Inc. 56,176,479 35,965,723
At October 31, 1996, net unrealized appreciation of investments by the Growth
Funds was composed of the following:
<TABLE>
<CAPTION>
Gross Unrealized Net Unrealized
---------------------------- Appreciation
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Princor Balanced Fund, Inc. $ 8,390,003 $ (1,672,274) $ 6,717,729
Princor Blue Chip Fund, Inc. 14,422,785 (693,021) 13,729,764
Princor Capital Accumulation Fund, Inc. 86,264,055 (12,669,905) 73,594,150
Princor Emerging Growth Fund, Inc. 77,463,635 (13,109,952) 64,353,683
Princor Growth Fund, Inc. 87,031,774 (16,633,424) 70,398,350
Princor Utilities Fund, Inc. 7,518,511 (2,770,580) 4,747,931
Princor World Fund, Inc. 39,538,523 (9,043,324) 30,495,199
</TABLE>
At October 31, 1996, Princor Balanced Fund, Inc., Princor Emerging Growth Fund,
Inc., Princor Growth Fund, Inc. and Princor World Fund, Inc. held the following
securities which may require registration under the Securities Act of 1933, or
an exemption therefrom, in order to effect a sale in the ordinary course of
business.
<TABLE>
<CAPTION>
Value at Value as a
Date of October 31, Percentage of
Fund Security Description Acquisition Cost 1996 Net Assets
<S> <C> <C> <C> <C> <C>
Princor Balanced Federal-Mogul Corp.; Series D
Fund, Inc. Convertible Preferred Stock 10/15/92 $ 450,450 $ 491,400 .63%
Princor Emerging Ciba-Geigy Corp.; Exchangeable
Growth Fund, Inc. Subordinated Debentures 3/20/91 350,000 358,750 .14
Sierra On Line;
Convertible Subordinated Debentures 8/15/94 458,750 1,651,250 .64
8/17/94 447,125 1,618,225 .62
3,628,225 1.40
Princor Growth Ciba-Geigy Corp.; Exchangeable
Fund, Inc. Subordinated Debentures 3/20/91 500,000 512,500 .20
Princor World Alfa SA; Convertible
Fund, Inc. Subordinated Debentures 9/25/95 1,293,600 1,339,000 .71
Fokus Bank 10/9/95 557,692 700,212 .37
Hyundai Motor Co. 8/23/96 318,750 266,875 .14
8/28/96 312,500 266,875 .14
9/3/96 159,997 138,775 .08
Royal Plastics Group 11/23/94 441,561 1,006,658 .53
6/26/96 75,889 93,209 .05
6/27/96 159,181 195,739 .10
6/28/96 262,191 318,776 .17
7/2/96 53,382 65,246 .03
7/3/96 149,540 184,554 .10
7/5/96 150,837 186,418 .10
Voest-Alpine Stahl 10/27/95 913,965 996,137 .53
1/11/96 414,525 431,659 .23
6/26/96 585,672 571,119 .30
6/27/96 298,647 292,200 .15
7,053,452 3.73
</TABLE>
The Growth Funds' investments are with various issuers in various industries.
The Schedules of Investments contained herein summarize concentrations of credit
risk by issuer and industry.
Note 5 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
<TABLE>
Princor Princor Blue Princor Capital
Balanced Fund, Inc. Chip Fund, Inc. Accumulation Fund, Inc.
Year Ended October 31, 1996:
Shares sold:
<S> <C> <C> <C>
Class A ................................................ 1,006,927 1,010,928 1,522,381
Class B ................................................ 342,259 285,616 271,398
Class R* ............................................... 62,977 94,417 65,641
Shares issued in reinvestment of dividends and distributions:
Class A .................................................. 289,049 69,998 1,127,785
Class B .................................................. 11,027 4,760 8,361
Class R* ............................................... 234 214 15
Shares redeemed:
Class A ................................................ (606,332) (828,161) (1,274,731)
Class B ................................................ (35,859) (22,683) (18,454)
Class R* ............................................... (2,990) (2,386) (2,115)
Net Increase 1,067,292 612,703 1,700,281
Year Ended October 31, 1995:
Shares sold:
Class A .................................................... 621,291 459,446 1,337,962
Class B** .................................................. 96,737 118,048 99,674
Shares issued in reinvestment of dividends and distributions:
Class A ...................................................... 109,764 27,369 504,425
Class B** .................................................... 785 428 303
Shares redeemed:
Class A .................................................... (868,199) (332,080) (1,230,978)
Class B** .................................................. (5,423) (2,930) (4,723)
Net Increase (Decrease) (45,045) 270,281 706,663
<FN>
* Period from February 27, 1996 (date operations commenced) through October 31, 1996.
** Period from December 5, 1994 (date operations commenced through October 31, 1995.
</FN>
</TABLE>
Note 5 -- Capital Share Transactions (Continued)
<TABLE>
<CAPTION>
Princor Princor Princor Princor
Emerging Growth Growth Utilities World
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Year Ended October 31, 1996:
Shares sold:
<S> <C> <C> <C> <C>
Class A ................................................... 2,182,164 1,486,767 985,437 5,112,891
Class B ................................................... 566,438 418,002 292,572 1,476,354
Class R* ................................................... 57,072 51,440 27,529 130,933
Shares issued in reinvestment of dividends and distributions:
Class A ..................................................... 136,102 191,988 190,416 1,013,112
Class B ..................................................... 7,537 8,274 12,720 30,387
Class R*..................................................... 3 2 167 --
Shares redeemed:
Class A ................................................... (688,302) (587,050) (1,377,265) (2,342,950)
Class B ................................................... (58,563) (40,235) (176,703) (96,808)
Class R * .................................................. (555) (330) (256) (754)
Net Increase (Decrease) 2,201,896 1,528,858 (45,383) 5,323,165
Year Ended October 31, 1995:
Shares sold:
Class A ................................................... 1,672,153 1,298,559 985,916 4,196,714
Class B** ................................................... 315,641 228,863 374,706 552,636
Shares issued in reinvestment of dividends and distributions:
Class A ................................................... 30,633 118,018 257,037 500,571
Class B** ................................................... 35 220 6,082 166
Shares redeemed:
Class A ................................................... (620,722) (469,161) (1,355,492) (2,887,555)
Class B** ................................................... (28,338) (5,918) (19,084) (12,675)
Net Increase 1,369,402 1,170,581 249,165 2,349,857
<FN>
* Period from February 27, 1996 (date operations commenced) through October 31, 1996.
** Period from December 5, 1994 (date operations commenced) through October 31, 1995.
</FN>
</TABLE>
Note 6 -- Line of Credit
The Growth Funds have an unsecured line of credit with a bank which allows each
fund to borrow up to $500,000. Borrowings are made solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each fund, based on its borrowings, at a rate equal to the bank's
Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee
is charged at the annual rate of .25% of the line of credit. At October 31,
1996, the Growth Funds had no outstanding borrowings under the line of credit.
<PAGE>
October 31, 1996
SCHEDULES OF INVESTMENTS
PRINCOR BALANCED FUND, INC.
Shares
Held Value
Common Stocks (54.21%)
Advertising (0.18%)
Interpublic Group of Cos., Inc. 2,900 $ 140,650
Bakery Products (0.85%)
Sara Lee Corp. 18,500 656,750
Beverages (0.83%)
Pepsico, Inc. 17,100 506,588
Universal Foods Corp. 4,000 141,500
648,088
Combination Utility Services (0.57%)
Cinergy Corp. 13,300 440,563
Commercial Banks (5.66%)
Banc One Corp. 17,900 758,512
Bank of Boston Corp. 11,600 742,400
CoreStates Financial Corp. 19,200 933,600
First of America Bank Corp. 5,300 288,188
Fleet Financial Group, Inc. 9,900 493,763
KeyCorp. 14,300 666,737
Nationsbank Corp. 5,500 518,375
4,401,575
Commercial Printing (0.64%)
R. R. Donnelley & Sons Co. 16,300 495,113
Communications Equipment (0.89%)
Allen Group, Inc. 4,100(a) 65,088
DSC Communications Corp. 12,400(a) 172,050
General Instrument Corp. 22,700(a) 456,837
693,975
Computer & Office Equipment (1.58%)
Hewlett-Packard Co. 8,300 366,237
International Business Machines Corp. 6,700 864,300
1,230,537
Consumer Products (0.47%)
Philip Morris Cos., Inc. 3,900 361,238
Crude Petroleum & Natural Gas (1.28%)
Texaco, Inc. 9,800 995,925
Dairy Products (0.30%)
Dean Foods Co. 8,000 232,000
Drug Stores & Proprietary Stores (0.53%)
Rite Aid Corp. 12,100 411,400
Drugs (6.04%)
Abbott Labs 14,500 734,063
American Home Products Corp. 9,800 600,250
Bristol-Myers Squibb Co. 4,200 444,150
Merck & Co., Inc. 10,500 778,312
Pharmacia & Upjohn, Inc. 23,000 828,000
Schering-Plough Corp. 12,200 780,800
Warner-Lambert Co. 8,300 528,087
4,693,662
Electric Services (2.40%)
Dominion Resources, Inc. 11,900 449,225
FPL Group, Inc. 7,900 363,400
Houston Industries, Inc. 32,600 745,725
Potomac Electric Power Co. 12,000 307,500
1,865,850
Electrical Industrial Apparatus (0.50%)
Emerson Electric Co. 4,400 $ 391,600
Electronic Distribution Equipment (1.03%)
General Electric Co. 8,300 803,025
Fats & Oils (1.26%)
Archer Daniels Midland Co. 44,965 977,988
General Industrial Machinery (0.62%)
BW/IP Holdings, Inc.; Class A 5,500 74,250
Pall Corp. 15,900 407,438
481,688
Grain Mill Products (0.66%)
Ralston-Ralston Purina Group 7,700 509,163
Greeting Cards (0.73%)
American Greetings Corp. 19,300 565,731
Grocery Stores (2.61%)
Albertson's, Inc. 14,300 491,562
American Stores Co. 13,600 562,700
Sysco Corp. 28,600 972,400
2,026,662
Household Furniture (1.42%)
Masco Corp. 35,100 1,101,262
Industrial Inorganic Chemicals (0.68%)
Dow Chemical Co. 4,600 357,650
Eastman Chemical Co. 3,250 171,438
529,088
Jewelry, Silverware &
Plated Ware (0.23%)
Jostens, Inc. 8,400 180,600
Management & Public Relations (1.33%)
Dun & Bradstreet Corp. 17,800 1,030,175
Meat Products (0.96%)
Tyson Foods, Inc. 25,200 743,400
Medical Instruments & Supplies (0.63%)
St. Jude Medical, Inc. 12,350(a) 487,825
Medical Service & Health
Insurance (1.17%)
AON Corp. 7,600 438,900
Foundation Health Corp. 13,500(a) 403,313
Physicians Corp. of America 5,700(a) 63,056
905,269
Metal Forgings & Stampings (0.55%)
Newell Co. 15,000 425,625
Metalworking Machinery (0.08%)
Giddings & Lewis 5,500 64,625
Miscellaneous Business Services (0.23%)
Safety-Kleen Corp. 11,200 175,000
Miscellaneous Converted Paper
Products (1.05%)
Minnesota Mining & Mfg. Co. 10,600 812,225
Miscellaneous Electrical Equipment
& Supplies (0.59%)
Motorola, Inc. 10,000 460,000
Miscellaneous Fabricated Metal
Products (0.15%)
Keystone International, Inc. 6,300 $ 113,400
Miscellaneous Plastics Products,
NEC (0.21%)
Rubbermaid, Inc. 7,100 165,075
Miscellaneous Shopping Goods
Stores (1.47%)
Toys 'R' Us, Inc. 33,600(a) 1,138,200
Motor Vehicles, Parts & Supplies (0.92%)
Grainger (W. W.), Inc. 9,600 711,600
Paper Mills (1.10%)
Kimberly Clark Corp. 9,200 857,900
Petroleum Refining (2.79%)
Atlantic Richfield Co. 9,300 1,232,250
Exxon Corp. 10,600 939,425
2,171,675
Plastic Materials & Synthetics (0.13%)
Wellman, Inc. 5,900 104,725
Sanitary Services (2.62%)
Browning-Ferris Industries, Inc. 37,100 973,875
WMX Technologies, Inc. 30,800 1,058,750
2,032,625
Security Brokers & Dealers (0.33%)
Edwards (A.G.), Inc. 8,475 253,191
Soap, Cleaners & Toilet Goods (2.03%)
Avon Products 17,000 922,250
Colgate-Palmolive Co. 7,100 653,200
1,575,450
Telephone Communication (2.01%)
AT&T Corp. 20,000 697,500
MCI Communications Corp. 34,300 861,787
1,559,287
Variety Stores (1.90%)
Dayton-Hudson Corp. 21,800 754,825
Wal-Mart Stores, Inc. 27,100 721,537
1,476,362
Total Common Stocks 42,097,767
Preferred Stocks (2.01%)
Motor Vehicles & Equipment (1.95%)
Federal-Mogul Corp.
Series D Convertible 7,800(b) 491,400
Ford Motor Co.
Series A Convertible 10,000 1,022,500
1,513,900
Paper Mills (0.06%)
James River Corp. of Virginia
Series L Convertible
Exchangeable 1,000 50,125
Total Preferred Stocks 1,564,025
Principal
Amount Value
Bonds (3.37%)
Aircraft & Parts (0.29%)
Rohr Industries, Inc.
Convertible Subordinated
Debentures; 7.00%; 10/1/12 $ 260,000 $ 223,600
Blast Furnace & Basic
Steel Products (0.47%)
Quanex Corp. Convertible
Subordinated Debentures;
6.88%; 6/30/07 350,000 361,375
Electric Lighting & Wiring
Equipment (0.33%)
Cooper Industries, Inc. Convertible
Subordinated Debentures;
7.05%; 1/1/15 245,000 259,700
Electrical Industrial Apparatus (0.47%)
Liebert Co. Convertible
Subordinated Debentures;
8.00%; 11/15/10 110,000 362,587
Engines & Turbines (0.61%)
Outboard Marine Corp. Convertible
Subordinated Debentures;
7.00%; 7/1/02 500,000 475,625
Lumber & Other Building
Materials (0.31%)
Hechinger Co. Convertible
Subordinated Debentures;
5.50%; 4/1/12 600,000 243,000
Petroleum Refining (0.61%)
Pennzoil Co. Senior Exchangeable
Debentures; 6.50%; 1/15/03 300,000 473,250
Trucking & Courier Services,
Ex., Air (0.28%)
Builders Transport, Inc. Convertible
Subordinated Debentures;
6.50%; 5/1/11 306,000 220,320
Total Bonds 2,619,457
U.S. Government Treasury Notes & Bonds (34.57%)
Treasury Notes & Bonds (34.57%)
5.13%; 2/28/98 4,000,000 3,972,967
5.13%; 11/30/98 1,000,000 987,421
6.00%; 10/15/99 2,150,000 2,156,719
5.50%; 4/15/00 5,800,000 5,708,464
6.25%; 4/30/01 1,000,000 1,006,914
6.38%; 8/15/02 3,300,000 3,335,705
5.75%; 8/15/03 3,000,000 2,921,367
5.88%; 2/15/04 3,200,000 3,124,998
7.50%; 2/15/05 1,000,000 1,074,257
8.25%; 5/15/05 750,000 794,531
7.25%; 5/15/16 575,000 606,625
7.50%; 11/15/16 575,000 621,898
7.25%; 8/15/22 500,000 529,063
26,840,929
Commercial Paper (5.41%)
Business Credit Institutions (3.17%)
General Electric Capital Corp.;
5.75%; 11/1/96 $ 2,465,000 $ 2,465,000
Securities Brokers & Dealers (2.24%)
Merrill Lynch & Co., Inc.;
5.30%; 11/4/96 1,740,000 1,739,232
Total Commercial Paper 4,204,232
Total Portfolio Investments (99.57%) 77,326,410
Cash, receivables and other assets,
net of liabilities (0.43%) 331,983
Total Net Assets (100.00%) $77,658,393
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCOR BLUE CHIP FUND, INC.
Shares
Held Value
Common Stocks (95.00%)
Beverages (5.48%)
Coca-Cola Co. 26,700 $ 1,348,350
Pepsico, Inc. 51,400 1,522,725
2,871,075
Commercial Banks (8.66%)
Banc One Corp. 35,745 1,514,694
J. P. Morgan & Co. Inc. 17,000 1,468,375
KeyCorp 33,500 1,561,938
4,545,007
Commercial Printing (2.25%)
R. R. Donnelley & Sons Co. 38,900 1,181,587
Communications Equipment (0.84%)
Lucent Technologies 9,365 440,202
Computer & Office Equipment (2.55%)
Hewlett-Packard Co. 30,300 1,336,987
Department Stores (2.57%)
May Department Stores 28,500 1,350,188
Drug Stores & Proprietary Stores (2.75%)
Walgreen Co. 38,300 1,445,825
Drugs (10.61%)
Bristol-Myers Squibb Co. 14,500 1,533,376
Johnson & Johnson 28,400 1,398,700
Merck & Co., Inc. 20,100 1,489,912
Warner-Lambert Co. 18,000 1,145,250
5,567,238
Eating & Drinking Places (2.32%)
McDonald's Corp. 27,400 $ 1,215,875
Electric Services (4.07%)
Dominion Resources, Inc. 27,500 1,038,125
KU Energy Corp. 37,000 1,096,125
2,134,250
Electrical Industrial Apparatus (2.51%)
Emerson Electric Co. 14,800 1,317,200
Electronic Distribution
Equipment (3.15%)
General Electric Co. 17,100 1,654,425
Fire, Marine & Casualty
Insurance (3.00%)
American International Group 14,500 1,575,062
General Industrial Machinery (2.73%)
Pall Corp. 56,000 1,435,000
Grain Mill Products (2.54%)
Kellogg Co. 21,000 1,333,500
Industrial Inorganic Chemicals (1.66%)
Dow Chemical Co. 11,200 870,800
Insurance Agents, Brokers &
Services (2.88%)
Equifax, Inc. 50,800 1,511,300
Management & Public Relations (2.68%)
Dun & Bradstreet Corp. 24,300 1,406,363
Medical Instruments & Supplies (2.35%)
Allegiance Corp. 5,440(a) 102,000
Baxter International, Inc. 27,200 1,132,200
1,234,200
Metal Cans & Shipping
Containers (2.60%)
Crown Cork & Seal Co., Inc. 28,400 1,363,200
Miscellaneous Converted Paper
Products (3.12%)
Minnesota Mining & Mfg. Co. 21,400 1,639,775
Miscellaneous Electrical Equipment &
Supplies (2.46%)
Motorola, Inc. 28,100 1,292,600
Petroleum Refining (6.00%)
Exxon Corp. 17,800 1,577,526
Royal Dutch Petroleum Co. ADR 9,500 1,571,062
3,148,588
Preserved Fruits & Vegetables (2.87%)
H. J. Heinz Co. 42,500 1,508,750
Sanitary Services (1.31%)
WMX Technologies, Inc. 20,000 687,500
Soap, Cleaners & Toilet Goods (2.90%)
Procter & Gamble Co. 15,400 1,524,600
Sugar & Confectionary Products (3.04%)
Wrigley Wm. Jr. Co. 26,500 1,596,625
Telephone Communication (5.10%)
AT&T Corp. 28,900 $ 1,007,887
Bellsouth Corp. 41,000 1,670,750
2,678,637
Total Common Stocks 49,866,359
Principal
Amount Value
Commercial Paper (4.82%)
Business Credit Institutions (2.47%)
General Electric Capital Corp.;
5.75%; 11/1/96 $ 1,295,000 1,295,000
Securities Brokers & Dealers (2.35%)
Merrill Lynch & Co.;
5.30%; 11/4/96 1,235,000 1,234,454
Total Commercial Paper 2,529,454
Total Portfolio Investments (99.82%) 52,395,813
Cash, receivables and other assets,
net of liabilities (0.18%) 94,588
Total Net Assets (100.00%) $52,490,401
(a) Non-income producing security - No dividend paid during the period.
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Shares
Held Value
Common Stocks (96.57%)
Beverages (1.17%)
Pepsico, Inc. 119,700 $ 3,546,113
Universal Foods Corp. 48,300 1,708,612
5,254,725
Combination Utility Services (1.17%)
Cinergy Corp. 158,800 5,260,250
Commercial Banks (10.48%)
Banc One Corp. 295,240 12,510,795
Bank of Boston Corp. 100,700 6,444,800
CoreStates Financial Corp. 248,000 12,059,000
First of America Bank Corp. 80,200 4,360,875
KeyCorp 159,500 7,436,688
Nationsbank Corp. 43,000 4,052,750
46,864,908
Communications Equipment (1.85%)
Allen Group, Inc. 44,700(a) 709,613
DSC Communications Corp. 136,300(a) 1,891,162
General Instrument Corp. 232,400(a) 4,677,050
Lucent Technologies 21,579 1,014,213
8,292,038
Computer & Office Equipment (2.86%)
Hewlett-Packard Co. 82,000 3,618,250
International Business
Machines Corp. 71,000 9,159,000
12,777,250
Crude Petroleum & Natural Gas (2.16%)
Texaco, Inc. 95,300 $ 9,684,862
Dairy Products (0.61%)
Dean Foods Co. 95,100 2,757,900
Drugs (9.72%)
Abbott Labs 178,000 9,011,250
American Home Products Corp. 116,000 7,105,000
Bristol-Myers Squibb Co. 119,800 12,668,850
Merck & Co., Inc. 109,000 8,079,625
Warner-Lambert Co. 104,000 6,617,000
43,481,725
Electric Services (4.94%)
Dominion Resources, Inc. 98,200 3,707,050
FPL Group, Inc. 85,100 3,914,600
Houston Industries, Inc. 488,000 11,163,000
Potomac Electric Power Co. 130,000 3,331,250
22,115,900
Electrical Industrial Apparatus (1.37%)
Emerson Electric Co. 68,697 6,114,033
Electronic Distribution Equipment (1.84%)
General Electric Co. 85,000 8,223,750
Farm & Garden Machinery (2.21%)
Tenneco, Inc. 200,000 9,900,000
Fats & Oils (2.35%)
Archer Daniels Midland Co. 483,000 10,505,250
Fire, Marine & Casualty
Insurance (1.51%)
Allstate Corp. 120,051 6,737,862
General Industrial Machinery (0.67%)
BW/IP Holdings, Inc.; Class A 64,100 865,350
Pall Corp. 84,000 2,152,500
3,017,850
Grain Mill Products (0.96%)
Ralston-Ralston Purina Group 65,000 4,298,125
Greeting Cards (1.70%)
American Greetings Corp. 259,100 7,594,869
Grocery Stores (3.65%)
Albertson's, Inc. 98,000 3,368,750
American Stores Co. 140,000 5,792,500
Sysco Corp. 210,500 7,157,000
16,318,250
Household Furniture (2.47%)
Masco Corp. 351,500 11,028,313
Industrial Inorganic Chemicals (1.25%)
Dow Chemical Co. 47,700 3,708,675
Eastman Chemical Co. 35,400 1,867,350
5,576,025
Industrial Organic Chemicals (0.37%)
Ethyl Corp. 200,000 1,650,000
Jewelry, Silverware & Plated
Ware (0.42%)
Jostens, Inc. 88,200 1,896,300
Life Insurance (1.96%)
American General Corp. 235,000 8,753,750
Management & Public Relations (1.43%)
Dun & Bradstreet Corp. 110,600 6,400,975
Meat Products (1.45%)
Tyson Foods, Inc. 219,700 6,481,150
Medical Instruments & Supplies (1.16%)
St. Jude Medical, Inc. 131,450(a) 5,192,275
Medical Service & Health
Insurance (1.75%)
AON Corp. 74,600 4,308,150
Foundation Health Corp. 93,200(a) 2,784,350
Physicians Corp. of America 64,300(a) 711,319
7,803,819
Metal Forgings & Stampings (0.95%)
Newell Co. 150,000 4,256,250
Metalworking Machinery (0.17%)
Giddings & Lewis 64,200 754,350
Miscellaneous Business Services (0.42%)
Safety-Kleen Corp. 121,200 1,893,750
Miscellaneous Converted Paper
Products (1.82%)
Minnesota Mining & Mfg. Co. 106,000 8,122,250
Miscellaneous Electrical Equipment
& Supplies (0.80%)
Motorola, Inc. 77,300 3,555,800
Miscellaneous Fabricated Metal
Products (0.31%)
Keystone International, Inc. 76,200 1,371,600
Miscellaneous Shopping Goods
Stores (2.05%)
Toys 'R' Us, Inc. 270,100(a) 9,149,637
Motor Vehicles, Parts & Supplies (1.50%)
Grainger (W. W.), Inc. 90,300 6,693,488
Paper Mills (1.75%)
Kimberly Clark Corp. 83,900 7,823,675
Petroleum Refining (4.45%)
Atlantic Richfield Co. 89,800 11,898,500
Exxon Corp. 90,400 8,011,700
19,910,200
Plastic Materials & Synthetics (0.25%)
Wellman, Inc. 64,200 1,139,550
Sanitary Services (4.62%)
Browning-Ferris Industries, Inc. 425,000 11,156,250
WMX Technologies, Inc. 276,000 9,487,500
20,643,750
Security Brokers & Dealers (0.67%)
Edwards (A.G.), Inc. 100,322 2,997,120
Soap, Cleaners & Toilet Goods (3.80%)
Avon Products 186,000 10,090,500
Colgate-Palmolive Co. 74,800 6,881,600
16,972,100
Telephone Communication (6.16%)
AT&T Corp. 128,300 $ 4,474,462
MCI Communications Corp. 252,800 6,351,600
US West Communications Group 550,000 16,706,250
27,532,312
Variety Stores (3.37%)
Dayton-Hudson Corp. 195,000 6,751,875
Wal-Mart Stores, Inc. 312,000 8,307,000
15,058,875
Total Common Stocks 431,856,861
Principal
Amount Value
Commercial Paper (3.26%)
Personal Credit Institutions (2.41%)
Ford Motor Credit;
5.25%; 11/5/96 $ 4,220,000 $ 4,217,538
5.30%; 11/7/96 6,540,000 6,534,223
10,751,761
Security Brokers & Dealers (0.85%)
Merrill Lynch & Co., Inc.;
5.25%/ 11/1/96 3,820,000 3,820,000
Total Commercial Paper 14,571,761
Total Portfolio Investments (99.83%) 446,428,622
Cash, receivables and other assets,
net of liabilities (0.17%) 772,501
Total Net Assets (100.00%) $447,201,123
(a) Non-Income producing security - No dividend paid during the period.
PRINCOR EMERGING GROWTH FUND, INC.
Shares
Held Value
Common Stocks (85.42%)
Blast Furnace & Basic Steel
Products (0.76%)
Lukens, Inc. 144,000 $ 1,980,000
Carpets & Rugs (0.89%)
Shaw Industries, Inc. 196,800 2,312,400
Chemicals & Allied Products (0.45%)
Sigma-Aldrich Corp. 20,000 1,175,000
Commercial Banks (7.18%)
Boatmen's Bancshares, Inc. 10,200 619,650
First Commerce Corp. 15,000 532,500
First Federal Capital Corp. 108,532 2,550,502
Independent Bank Corp. Michigan 41,633 1,248,975
Mercantile Bancorp., Inc. 100,443 4,984,484
Merchants Bancorp., Inc. 57,500 1,739,375
National City Corp. 20,000 867,500
North Fork Bancorp., Inc. 56,300 1,780,487
Peoples Heritage Financial Group, Inc. 78,800 1,812,400
Princeton National Bancorp., Inc. 100,000 $ 1,875,000
Summit Bancorp. 15,840 647,460
18,658,333
Commercial Printing (0.37%)
Merrill Corp. 43,200 961,200
Computer & Data Processing
Services (7.44%)
American Management Systems, Inc. 185,500(a) 5,866,438
Bitstream 132,000(a) 792,000
Cerner Corp. 236,600(a) 2,868,775
HBO & Co. 54,000 3,246,750
Microsoft Corp. 25,000(a) 3,431,250
National Processing, Inc. 41,000(a) 779,000
Sunquest Information Systems, Inc. 167,700(a) 2,347,800
19,332,013
Computer & Office Equipment (2.27%)
EMC Corp. 176,100(a) 4,622,625
Optika Imaging Systems 140,500(a) 948,375
Seagate Technology 4,705 314,059
5,885,059
Construction & Related
Machinery (2.67%)
Energy Ventures, Inc. 157,400(a) 6,925,600
Crude Petroleum & Natural Gas (1.15%)
Devon Energy Corp. 85,300 2,974,837
Dairy Products (0.32%)
Dreyer's Grand Ice Cream, Inc. 32,400 834,300
Drugs (2.47%)
Alliance Pharmaceutical Corp. 48,600(a) 680,400
Forest Laboratories, Inc. 33,700(a) 1,297,450
Genzyme Corp. - General Division 15,130 347,990
Genzyme Corp. - Tissue Repair 1,021 7,658
Merck & Co., Inc. 16,970 1,257,901
Pharmacia & Upjohn, Inc. 75,000 2,700,000
Seragen, Inc. 60,000(a) 121,875
6,413,274
Electronic Components &
Accessories (6.46%)
Intel Corp. 74,000 8,130,750
Linear Technology Corp. 99,000 3,316,500
Solectron Corp. 100,000(a) 5,350,000
16,797,250
Engineering & Architectural
Services (1.74%)
Paychex, Inc. 79,375 4,524,375
Finance Services (1.17%)
First Financial Corp. 112,400 3,048,850
Fire, Marine & Casualty
Insurance (2.37%)
Avemco Corp. 104,200 1,589,050
Berkley W. R. Corp. 87,700 4,560,400
6,149,450
Footwear, Except Rubber (0.93%)
Nine West Group, Inc. 48,600(a) 2,423,925
General Industrial Machinery (5.05%)
Flow International Corp. 187,200(a) 1,474,200
Kaydon Corp. 89,900 3,663,425
Pentair, Inc. 136,200 3,439,050
Roper Industries, Inc. 107,900 4,558,775
13,135,450
Grocery Stores (0.98%)
Casey's General Stores, Inc. 141,400 $ 2,545,200
Hardware Stores (0.75%)
Central Tractor Farm & Country, Inc. 170,200(a) 1,957,300
Holding Offices (1.23%)
ISB Financial Corp. 73,100 1,201,581
Today's Bancorp., Inc. 66,000 2,004,750
3,206,331
Hose, Belting, Gaskets & Packing (1.03%)
Mark IV Industries 124,160 2,684,960
Hospitals (1.80%)
Humana, Inc. 118,700(a) 2,166,275
Universal Health Services, Inc.; Class B 100,000(a) 2,500,000
4,666,275
Insurance Agents, Brokers &
Services (1.80%)
Equifax, Inc. 157,400 4,682,650
Investment Offices (0.82%)
INVESCO PLC ADS 57,300 2,141,588
Iron & Steel Foundries (0.68%)
Atchison Casting Corp. 110,000(a) 1,760,000
Laundry, Cleaning & Garment
Services (0.93%)
G&K Services, Inc.; Class A 83,800 2,430,200
Life Insurance (0.96%)
First Colony Corp. 70,000 2,502,500
Measuring & Controlling Devices (1.47%)
ISCO, Inc. 30,935 301,612
Millipore Corp. 76,200 2,667,000
Photon Dynamics 129,300(a) 848,531
3,817,143
Meat Products (0.90%)
Michael Foods, Inc. 186,700 2,333,750
Medical Instruments & Supplies (4.63%)
Boston Scientific Corp. 68,100(a) 3,702,937
Nellcor Puritan Bennett 170,500(a) 3,324,750
Steris Corp. 133,000(a) 5,020,750
12,048,437
Medical Service & Health
Insurance (4.46%)
Alternative Living Services 232,000(a) 3,335,000
Foundation Health Corp. 78,800(a) 2,354,150
Health System International, Inc. 98,000(a) 2,339,750
Orthofix International NV 156,200(a) 1,288,650
United Healthcare Corp. 60,000 2,272,500
11,590,050
Metal Services, NEC (1.79%)
BMC Industries, Inc. 157,400 4,662,975
Miscellaneous Chemical Products (3.17%)
Cytec Industries 71,900(a) 2,570,425
H. B. Fuller Co. 40,000 1,670,000
Loctite Corp. 68,100 3,992,362
8,232,787
Office Furniture (1.04%)
Chromcraft Revington, Inc. 54,000(a) 1,390,500
Kimball International, Inc.; Class B 36,300 1,306,800
2,697,300
Offices & Clinics of Medical
Doctors (0.04%)
FHP International Corp. 3,360(a) $ 114,660
Oil & Gas Field Services (1.32%)
Diamond Offshore Drilling 56,300(a) 3,427,262
Operative Builders (1.00%)
D. R. Horton, Inc. 212,500(a) 1,939,063
Pulte Corp. 25,000 662,500
2,601,563
Paints & Allied Products (1.02%)
RPM, Inc. 158,900 2,661,575
Plastic Materials & Synthetics (0.87%)
A. Schulman, Inc. 106,800 2,256,150
Plumbing, Heating &
Air-Conditioning (2.68%)
Apogee Enterprises, Inc. 170,200 6,552,700
Metalclad Corp. 228,400(a) 413,975
6,966,675
Refrigeration & Service
Machinery (0.54%)
Tecumseh Products Co.; Class A 25,000 1,406,250
Sanitary Services (0.97%)
Browning-Ferris Industries, Inc. 85,400 2,241,750
USA Waste Services, Inc. 8,846 283,072
2,524,822
Savings Institutions (0.89%)
North Side Savings Bank (NY) 29,100 1,404,075
Sterling Financial Corp. 64,333(a) 900,662
2,304,737
Screw Machine Products, Bolts,
Etc. (1.00%)
Trimas Corp. 112,400 2,585,200
Security Brokers & Dealers (0.59%)
Jefferies Group, Inc. 43,200 1,544,400
Telephone Communication (1.04%)
McLeod, Inc. 83,200(a) 2,704,000
Toys & Sporting Goods (0.86%)
Mattel, Inc. 77,350 2,233,481
Trucking & Courier Services,
Ex., Air (0.47%)
J. B. Hunt Transport Services, Inc. 83,900 1,227,038
Total Common Stocks 222,048,575
Preferred Stock (1.23%)
Offices & Clinics of Medical Doctors (1.23%)
FHP International Corp.
Series A Convertible 111,200 3,197,000
Principal
Amount Value
Bonds (1.98%)
Computer & Data Processing
Services (1.26%)
Sierra On Line Convertible
Subordinated Debentures;
6.50%; 4/1/01 $ 990,000(b) $ 3,269,475
Industrial Inorganic Chemicals (0.56%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 350,000(b) 358,750
ICN Pharmaceuticals, Inc.
Convertible Subordinated
Debentures; 8.50%; 11/15/99 1,000,000 1,092,500
1,451,250
Nursing & Personal Care Facilities (0.08%)
Greenery Rehabilitation Group, Inc.
Convertible Senior Subordinated
Notes; 8.75%; 4/1/15 250,000 211,250
Sanitary Services (0.08%)
Enclean, Inc.Convertible
Subordinated Debentures;
7.50%; 8/1/01 200,000 206,308
Total Bonds 5,138,283
Commercial Paper (11.59%)
Miscellaneous Electrical Equipment &
Supplies (1.98%)
General Electric Co.;
5.25%; 11/5/96 5,155,000 5,151,993
Personal Credit Institutions (6.57%)
Ford Motor Credit;
5.25%; 11/6/96 6,380,000 6,375,348
5.30%; 11/8/96 5,130,000 5,124,713
Household Finance Corp.;
5.25%; 11/7/96 5,595,000 5,590,104
17,090,165
Securities Brokers & Dealers (3.04%)
Merrill Lynch & Co., Inc.;
5.25%; 11/1/96 3,660,000 3,660,000
5.25%; 11/4/96 4,245,000 4,243,143
7,903,143
Total Commercial Paper 30,145,301
Total Portfolio Investments (100.22%) 260,529,159
Liabilities, net of cash, receivables
and other assets (-0.22%) (568,258)
Net Assets (100.00%) $259,960,901
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCOR GROWTH FUND, INC.
Shares
Held Value
Common Stocks (91.81%)
Advertising (1.14%)
Interpublic Group of Cos., Inc. 60,000 $ 2,910,000
Beverages (2.36%)
Coca-Cola Co. 60,000 3,030,000
Pepsico, Inc. 100,000 2,962,500
5,992,500
Blast Furnace & Basic Steel
Products (0.70%)
Lukens, Inc. 80,000 1,100,000
Quanex Corp. 24,142 688,047
1,788,047
Carpets & Rugs (0.92%)
Shaw Industries, Inc. 200,000 2,350,000
Cash Grains (2.64%)
Pioneer Hi-Bred International 100,000 6,712,500
Commercial Banks (5.84%)
Banc One Corp. 55,000 2,330,625
Boatmen's Bancshares, Inc. 54,900 3,335,175
CoreStates Financial Corp. 12,250 595,656
First of America Bank Corp. 40,000 2,175,000
Firstar Corp. 75,000 3,675,000
FirstMerit Corp. 50,000 1,625,000
Princeton National Bancorp., Inc. 60,000 1,125,000
14,861,456
Communications Equipment (4.64%)
General Instrument Corp. 175,000 3,521,875
Northern Telecom Ltd. 75,000 4,884,375
Octel Communications Corp. 213,700(a) 3,392,487
11,798,737
Computer & Data Processing
Services (3.88%)
GTECH Holdings Corp. 139,300(a) 4,109,350
Microsoft Corp. 42,000(a) 5,764,500
9,873,850
Computer & Office Equipment (5.07%)
Bay Networks 113,800(a) 2,304,450
Ceridian Corp. 106,200(a) 5,270,175
Digital Equipment Corp. 71,500(a) 2,109,250
Hewlett-Packard Co. 60,000 2,647,500
Pitney Bowes, Inc. 10,000 558,750
12,890,125
Department Stores (1.21%)
May Department Stores 65,000 3,079,375
Drugs (8.57%)
Alliance Pharmaceutical Corp. 20,000(a) 280,000
Bristol-Myers Squibb Co. 25,000 2,643,750
Genzyme Corp. - General Division 9,456(a) 217,488
Genzyme Corp. - Tissue Repair 638(a) 4,785
Johnson & Johnson 80,000 3,940,000
Lilly (Eli) & Co. 50,000 3,525,000
Merck & Co., Inc. 50,000 3,706,250
Pharmacia & Upjohn, Inc. 100,000 3,600,000
Seragen, Inc. 70,500(a) 143,203
Smithkline Beecham PLC ADR. 60,000 3,757,500
21,817,976
Electric Light & Wiring
Equipment (0.25%)
Raychem Corp. 8,100 $ 632,813
Electrical Goods (0.59%)
Avnet, Inc. 30,000 1,511,250
Electronic Components &
Accessories (3.91%)
Intel Corp. 63,000 6,922,125
Linear Technology Corp. 90,000 3,015,000
9,937,125
Electronic Distribution Equipment (0.76%)
General Electric Co. 20,000 1,935,000
Federal & Federally Sponsored
Credit (0.62%)
Federal National Mortgage
Association 40,000 1,565,000
Footwear, Except Rubber (1.38%)
Stride Rite Corp. 425,000 3,506,250
General Industrial Machinery (3.41%)
Flow International Corp. 100,000(a) 787,500
Ingersoll-Rand Co. 70,000 2,913,750
Tyco International Ltd. 100,000 4,962,500
8,663,750
Grain Mill Products (1.39%)
Ralcorp Holdings, Inc. 10,833(a) 227,493
Ralston-Ralston Purina Group 50,000 3,306,250
3,533,743
Grocery Stores (0.15%)
Casey's General Stores, Inc. 21,052 378,936
Holding Offices (0.36%)
Today's Bancorp., Inc. 30,000 911,250
Hose, Belting, Gaskets & Packing (1.09%)
Mark IV Industries 128,156 2,771,373
Hospitals (2.73%)
Columbia/HCA Healthcare Corp. 70,800 2,531,100
Humana, Inc. 105,000(a) 1,916,250
Universal Health Services, Inc.
Class B 100,000(a) 2,500,000
6,947,350
Household Furniture (0.99%)
Masco Corp. 80,000 2,510,000
Investment Offices (0.73%)
INVESCO PLC ADR 50,000 1,868,750
Lumber & Other Building
Materials (2.15%)
Home Depot, Inc. 100,000 5,475,000
Management & Public Relations (2.07%)
Dun & Bradstreet Corp. 10,000 578,750
Medaphis Corp. 527,000(a) 4,677,125
5,255,875
Medical Instruments & Supplies (5.68%)
Becton, Dickinson & Co. 70,000 3,045,000
Boston Scientific Corp. 150,000(a) 8,156,250
Nellcor Puritan Bennett 166,600(a) 3,248,700
14,449,950
Medical Service & Health
Insurance (3.66%)
AON Corp. 40,000 $ 2,310,000
Foundation Health Corp. 75,000(a) 2,240,625
Health System International, Inc. 50,000(a) 1,193,750
United Healthcare Corp. 60,000 2,272,500
Value Health, Inc. 75,000(a) 1,303,125
9,320,000
Millwork, Plywood & Structural
Members (0.59%)
Georgia-Pacific Corp. 20,000 1,500,000
Miscellaneous Chemical Products (0.46%)
Loctite Corp. 20,000 1,172,500
Miscellaneous Converted Paper
Products (0.42%)
Minnesota Mining & Mfg. Co. 14,000 1,072,750
Miscellaneous Electrical Equipment
& Supplies (1.08%)
Motorola, Inc. 60,000 2,760,000
Miscellaneous Shopping Goods
Stores (0.47%)
Toys 'R' Us, Inc. 35,000(a) 1,185,625
Motor Vehicles & Equipment (2.46%)
Chrysler Corp. 100,000 3,362,500
Dana Corp. 98,000 2,903,250
6,265,750
Office Furniture (0.15%)
Chromcraft Revington, Inc. 15,000(a) 386,250
Offices & Clinics of Medical
Doctors (0.20%)
FHP International Corp. 15,000(a) 511,875
Operative Builders (0.44%)
Pulte Corp. 42,105 1,115,783
Petroleum Refining (2.26%)
Atlantic Richfield Co. 20,000 2,650,000
Exxon Corp. 35,000 3,101,875
5,751,875
Photographic Equipment
& Supplies (0.02%)
Imation Corp. 1,400(a) 38,325
Plastic Materials & Synthetics (0.66%)
A. Schulman, Inc. 80,000 1,690,000
Plumbing, Heating & Air-
Conditioning (0.19%)
Metalclad Corp. 264,500(a) 479,406
Preserved Fruits & Vegetables (0.78%)
CPC International, Inc. 25,000 1,971,875
Radio, Television & Computer
Stores (0.15%)
Tandy Corp. 10,000 376,250
Radio & Television Broadcasting (1.20%)
Sinclair Broadcast Group 100,000(a) $ 3,050,000
Refrigeration & Service
Machinery (0.88%)
Tecumseh Products Co.; Class A 40,000 2,250,000
Rubber & Plastics Footwear (0.70%)
Reebok International Ltd. 50,000 1,787,500
Sanitary Services (1.66%)
Browning-Ferris Industries, Inc. 80,000 2,100,000
USA Waste Services, Inc. 17,695(a) 566,240
WMX Technologies, Inc. 45,000 1,546,875
4,213,115
Security Brokers & Dealers (1.24%)
Salomon, Inc. 70,000 3,158,750
Shoe Stores (0.14%)
Payless Shoesource, Inc. 10,400(a) 352,300
Soap, Cleaners & Toilet Goods (3.41%)
Colgate-Palmolive Co. 40,000 3,680,000
Ecolab, Inc. 120,000 4,380,000
International Flavors & Fragrances, Inc. 15,000 620,625
8,680,625
Toys & Sporting Goods (1.40%)
Mattel, Inc. 123,046 3,552,953
Trucking & Courier Services,
Ex., Air (0.15%)
Caliber System Inc. 15,000 253,125
Roadway Express 7,500 119,063
372,188
Women's & Children's
Undergarments (1.81%)
Warnaco Group, Class A 185,200 4,606,850
Total Common Stocks 233,550,526
Preferred Stocks (1.80%)
Motor Vehicles & Equipment (0.40%)
Ford Motor Co.
Series A Convertible 10,000 1,022,500
Offices & Clinics of Medical
Doctors (1.40%)
FHP International Corp.
Series A Convertible 124,000 3,565,000
Total Preferred Stocks 4,587,500
Principal
Amount Value
Bonds (1.30%)
Electrical Industrial Apparatus (0.65%)
Liebert Co. Convertible
Subordinated Debentures;
8.00%; 11/15/10 $ 500,000 $ 1,648,125
Industrial Inorganic Chemicals (0.20%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 $ 500,000(b) $ 512,500
Nursing & Personal Care Facilities (0.33%)
Greenery Rehabilitation Group, Inc.
Convertible Senior Subordinated
Notes; 8.75%; 4/1/15 1,000,000 845,000
Sanitary Services (0.12%)
Enclean, Inc. Convertible
Subordinated Debentures;
7.50%; 8/1/01 300,000 309,462
Total Bonds 3,315,087
Commercial Paper (5.02%)
Personal Credit Institutions (1.76%)
Ford Motor Credit Co.;
5.35%; 11/5/96 4,485,000 4,482,334
Security Brokers & Dealers (3.26%)
Merill Lynch & Co.;
5.25%; 11/1/96 2,545,000 2,545,000
5.28%; 11/4/96 2,545,000 2,543,880
5.30%; 11/6/96 3,195,000 3,192,648
8,281,528
Total Commercial Paper 12,763,862
Total Portfolio Investments (99.93%) 254,216,975
Cash, receivables and other assets,
net of liabilities (0.07%) 176,320
Total Net Assets (100.00%) $254,393,295
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCOR UTILITIES FUND, INC.
Shares
Held Value
Common Stocks (98.39%)
Combination Utility Services (32.76%)
Baltimore Gas & Electric Co. 79,300 $ 2,160,925
Cilcorp, Inc. 52,000 1,898,000
Cinergy Corp. 70,099 2,322,029
LG&E Energy Corp. 92,300 2,134,437
Montana Power Co. 97,800 2,078,250
Pacificorp 100,100 2,114,613
Public Service Co. of Colorado 59,600 2,205,200
Utilicorp United Inc. 79,000 2,142,875
Washington Water Power Co. 117,700 2,251,012
Western Resources, Inc. 73,400 2,202,000
Wisconsin Energy Corp. 79,300 2,151,013
23,660,354
Communications Equipment (0.99%)
Lucent Technologies 15,199 $ 714,353
Electric Services (32.38%)
Central & Southwest 79,000 2,093,500
Duke Power Co. 44,600 2,179,825
FPL Group, Inc. 47,600 2,189,600
Houston Industries, Inc. 99,200 2,269,200
Mid American Energy Co. 137,400 2,129,700
New England Electric System 44,000 1,485,000
Portland General Corp. 58,000 2,537,500
Puget Sound Power & Light Co. 91,500 2,024,437
Southern Co. 93,300 2,064,263
Teco Energy, Inc. 90,500 2,228,563
Texas Utilities Co. 53,800 2,178,900
23,380,488
Gas Production & Distribution (5.35%)
AGL Res Inc. 54,400 1,142,400
British Gas PLC 26,600 831,250
New Jersey Resources Corp. 38,700 1,069,087
Peoples Energy Corp. 23,300 821,325
3,864,062
Telephone Communication (26.91%)
AT&T Corp. 46,900 1,635,638
Ameritech Corp. 47,100 2,578,725
Bell Atlantic Corp. 41,200 2,482,300
Bellsouth Corp. 64,500 2,628,375
GTE Corp. 63,200 2,662,300
MCI Communications Corp. 99,300 2,494,912
Sprint Corp. 61,500 2,413,875
US West Communications Group 83,400 2,533,275
19,429,400
Total Common Stocks 71,048,657
Principal
Amount Value
Commercial Paper (1.19%)
Business Credit Institutions (1.19%)
General Electric Capital Corp.;
5.75%; 11/1/96 $ 860,000 $ 860,000
Total Portfolio Investments (99.58%) 71,908,657
Cash, receivables and other assets, net of
liabilities (0.42%) 303,901
Total Net Assets (100.00%) $ 72,212,558
PRINCOR WORLD FUND, INC.
Shares
Held Value
Common Stocks (89.91%)
Aircraft & Parts (0.11%)
Cemex SA 62,560 $ 208,016
Beverages (1.51%)
Lion Nathan 1,102,000 $ 2,845,191
Blast Furnace & Basic Steel
Products (1.21%)
Voest-Alpine Stahl 69,000(b) 2,291,115
Cement, Hydraulic (0.29%)
Apasco SA 90,000 542,680
Central Reserve Depositories (3.76%)
Barclays PLC 205,594 3,229,041
Ergo Bank 17,000 998,759
Union Bank of Norway 36,700 1,047,714
Wing Hang Bank 458,000 1,842,113
7,117,627
Combination Utility Services (2.39%)
ABB AG 2,740 3,400,184
Iberdrola 1 SA 105,000 1,116,101
4,516,285
Commercial Banks (8.74%)
ABN-AMRO Holdings NV 56,218 3,179,027
Bangkok Bank 79,000 842,500
Bank of Ireland 333,277 2,759,670
Fokus Bank 120,000(b) 700,212
Grupo Financiero Bancomer Series B 1,030,000(a) 425,546
National Australia Bank Ltd. 374,715 4,115,655
Siam City Bank 1,205,000 1,381,933
Svenska Handelsbanken AB Free 130,750 3,127,065
16,531,608
Communications Equipment (0.25%)
ABC Communications Holdings Ltd. 1,946,000 478,175
Communications Services, NEC (1.49%)
KPN Royal PTT Nederland 77,786 2,816,243
Computer & Office Equipment (0.36%)
Canon, Inc. 35,000 670,828
Concrete, Gypsum & Plaster
Products (0.15%)
Cementos De Mexico SA 80,000 288,834
Construction & Related
Machinery (1.85%)
Keumkang 10,000 551,357
Powerscreen International PLC 296,000 2,947,468
3,498,825
Consumer Products (2.08%)
Imasco Ltd. 169,000 3,925,481
Crude Petroleum & Natural Gas (1.19%)
Hardy Oil & Gas 520,000 2,256,636
Department Stores (0.78%)
Vendex International 36,292 1,465,891
Drugs (5.65%)
Elan Corp. PLC ADR 65,000(a) 1,803,750
Galencia Holdings AG 2,890 1,113,552
Roussel-Uclaf 10,150 2,688,411
Sandoz AG 2,130 $ 2,472,297
Teva Pharmaceutical ADR 62,000 2,596,250
10,674,260
Electric Light & Wiring
Equipment (0.69%)
Clipsal Industries Holdings 149,000 476,800
Otra NV 44,300 830,675
1,307,475
Electric Services (2.17%)
CEP-A Consolidated Electric Power-Asia 380,000 884,599
Korea Electric Power Corp. 39,500 1,160,571
Korea Mobil Telecommunications Corp. 290 152,530
Northern Ireland Electric 361,000 1,913,459
4,111,159
Electronic Components &
Accessories (1.42%)
Amtek Engineering 675,000 1,173,713
Elec & Eltek International 200,000 604,000
Murata Mfg. 9,000 289,608
Varitronix 340,000 619,996
2,687,317
Electronic Distribution Equipment (1.53%)
Phillips Electronics 82,100 2,894,974
Engines & Turbines (0.83%)
Mabuchi Motor 4,000 203,974
Scapa Group PLC 327,000 1,371,153
1,575,127
Finance Services (1.23%)
MBF Capital Berhad 1,682,000 2,316,647
Foreign Banks, Branches &
Agencies (0.19%)
Shinhan Bank 22,032 354,302
Forest Products (0.35%)
Metsa-Serla 94,000 653,417
Functions Closely Related to
Banking (0.76%)
Liechtenstein Global Trust AG 3,000 1,430,024
Gas Production & Distribution (1.42%)
Hafslund ASA 35,198 259,490
OMV AG 24,800 2,429,311
2,688,801
Highway & Street Construction (0.36%)
Edrasis Psallidas 70,200 679,260
Holding Offices (1.14%)
First Pacific Co. Ltd. 1,560,303 2,149,062
Household Appliances (0.83%)
Fisher & Paykel 430,666 1,574,954
Household Audio & Video
Equipment (0.58%)
SKF 'B' Free 49,700 1,101,577
Industrial Inorganic Chemicals (1.81%)
Bayer AG 90,550 3,422,845
Investment Offices (0.70%)
INVESCO PLC 352,000 1,332,682
Lumber & Other Building
Materials (0.26%)
Wickes PLC 754,000 $ 491,125
Meat Products (4.61%)
Danisco AS 23,000 1,317,869
Orkla B Ordinary Shares 70,400 4,118,951
Unilever NV 21,500 3,270,834
8,707,654
Medical Instruments & Supplies (0.25%)
Nycomed 35,198 474,812
Miscellaneous Chemical Products (2.99%)
Ciba Geigy AG-REG 1,500 1,855,456
Hoechst AG 101,000 3,804,513
5,659,969
Miscellaneous Durable Goods (1.34%)
Hagemeyer NV 33,795 2,540,756
Miscellaneous Equipment Rental &
Leasing (0.88%)
Insituto Mobiliane Italian 211,000 1,670,495
Miscellaneous Food &
Kindred Products (0.86%)
Burns, Philp & Co., Ltd. 989,938 1,570,094
Grupo Herdez SA 171,000 57,283
1,627,377
Miscellaneous Furniture &
Fixtures (0.17%)
Pt Surya Toto 154,000 314,151
Miscellaneous Manufacturers (0.35%)
Carter Holt Harvey Ltd. 297,300 668,743
Miscellaneous Non-Durable
Goods (2.09%)
Grand Metropolitan PLC 524,000 3,954,958
Miscellaneous Plastics
Products, NEC (1.08%)
Royal Plastics Group 110,000(a)(b) 2,050,600
Miscellaneous Textile Goods (0.39%)
Espirit Asia 1,708,000 739,985
Miscellaneous Transportation
Equipment (0.65%)
Autoliv AB 29,000 1,232,531
Miscellaneous Wood Products (0.59%)
Enso Oy 142,000 1,112,419
Motor Vehicles, Parts & Supplies (0.57%)
Dahl International AB 57,000(a) 1,072,352
Motor Vehicles & Equipment (0.96%)
Volvo AB 87,000 1,809,037
Oil & Gas Field Services (1.68%)
Repsol Petroleo, SA 97,400 3,182,357
Personal Credit Institutions (0.49%)
Manhattan Card Co. 1,861,000 920,594
Plastic Materials & Synthetics (1.14%)
Astra AB 47,050 2,150,188
Primary Nonferrous Metals (1.05%)
British Steel PLC 712,000 $ 1,979,710
Pulp Mills (0.77%)
Babcock International Group 19,171 14,048
UPM-Kymmene Oy 70,980 1,441,039
1,455,087
Railroad Equipment (0.44%)
Vae AG 9,350 833,345
Sand & Gravel (0.13%)
Bardon Group PLC 475,900 249,923
Security & Commodity Services (1.49%)
Corporacion Bancaria de Espania SA 72,000 2,824,083
Security Brokers & Dealers (1.29%)
Peregrin Investment Holdings 1,496,000 2,408,749
Peregrine Investment - Warrants 127,000 23,815
2,432,564
Ship & Boat Building & Repairing (0.39%)
Unitor Ships Service 67,500 741,151
Soap, Cleaners & Toilet Goods (0.98%)
Reckitt & Colman PLC 160,000 1,852,467
Special Industry Machinery (1.77%)
Bobst SA 835 1,085,940
IHC Caland NV 23,300 1,301,087
Sulzer AG 1,800 958,116
3,345,143
Sugar & Confectionary Products (2.85%)
Nestle 2,904 3,167,656
Tate & Lyle 286,000 2,221,495
5,389,151
Telephone Communication (7.42%)
Cable & Wireless PLC 105,000 836,102
Nokia Corp. Class A ADR 71,000 3,292,625
Tele Danmark B 34,800 1,754,474
Telecom Italia Mobile 1,440,000 1,642,892
Telecom Italia-DI 1,440,000 2,744,485
Telefonica de Espana, SA 148,400 2,980,223
Telefonos de Mexico SA ADR 25,300 771,650
14,022,451
Water Supply (0.82%)
Wessex Water PLC 268,660 1,546,512
Water Transportation of
Freight, NEC (1.34%)
ICB Shipping AB 'B' Free 213,733 2,539,579
Total Common Stocks 169,998,587
Preferred Stocks (0.75%)
Highway & Street Construction (0.39%)
BAU Holdings AG 15,700 744,626
Motor Vehicles & Equipment (0.36%)
Hyundai Motor Co. Ltd. GDR 63,000(a)(b) 672,525
Total Preferred Stocks 1,417,151
Bonds (0.71%)
Fire, Marine & Casualty
Insurance (0.71%)
Alfa SA Convertible Subordinated
Debentures; 8.00%; 9/15/00 $ 1,300,000(b) $ 1,339,000
Commercial Paper (8.24%)
Personal Credit Institutions (3.91%)
Ford Motor Credit Co.;
5.25%; 11/5/96 3,300,000 3,298,075
5.30%; 11/7/96 4,100,000 4,096,378
7,394,453
Securities Brokers & Dealers (4.33%)
Merrill Lynch & Co.;
5.25%; 11/1/96 3,250,000 3,250,000
5.28%; 11/4/96 4,950,000 4,947,822
8,197,822
Total Commercial Paper 15,592,275
Total Portfolio Investments (99.61%) 188,347,013
Cash, receivables and other assets,
net of liabilities (0.39%) 731,425
Total Net Assets (100.00%) $ 189,078,438
(a) Non-Income producing security - No dividend paid during the period.
(b) Restricted security - See Notes 4 to the financial statements.
Princor World Fund, Inc. Investments by Country
Total Market Percentage of Total
Country Value Market Value
Australia $ 6,298,397 3.34%
Austria 5,685,749 3.02
Canada 5,976,081 3.17
Denmark 3,072,343 1.63
Finland 6,499,499 3.45
France 2,688,411 1.43
Germany 7,227,358 3.84
Greece 1,678,018 0.89
Hong Kong 10,067,090 5.34
Indonesia 314,151 0.17
Israel 2,596,250 1.38
Italy 6,057,872 3.22
Japan 1,164,409 0.62
Korea 2,891,285 1.53
Malaysia 2,316,647 1.23
Mexico 3,633,009 1.93
Netherlands 18,299,486 9.72
New Zealand 5,088,887 2.70
Norway 7,342,330 3.90
Singapore 2,254,513 1.20
Spain 10,102,765 5.36
Sweden 13,032,329 6.92
Switzerland 15,483,227 8.22
Thailand 2,224,433 1.18
United Kingdom 30,760,199 16.33
United States 15,592,275 8.28
Total Market Value $188,347,013 100.00%
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
------------------------------------ -----------------------------------------
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR BALANCED FUND, INC.(b)
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $13.74 $.38 $1.59 $1.97 $(.43) $ (.67) $(1.10)
1995 12.43 .41 1.31 1.72 (.36) (.05) (.41)
1994 13.26 .32 (.20) .12 (.40) (.55) (.95)
1993 12.78 .35 1.14 1.49 (.37) (.64) (1.01)
1992 11.81 .41 .98 1.39 (.42) -- (.42)
Class B:
Year Ended October 31, 1996 13.71 .29 1.55 1.84 (.32) (.67) (.99)
Period Ended October 31, 1995(c) 11.80 .31 1.90 2.21 (.30) -- (.30)
Class R:
Period Ended October 31, 1996(f) 13.81 .24 .73 .97 (.26) -- (.26)
PRINCOR BLUE CHIP FUND, INC.
Class A:
Year Ended October 31,
1996 15.03 .23 2.45 2.68 (.26) (.35) (.61)
1995 12.45 .24 2.55 2.79 (.21) -- (.21)
1994 11.94 .20 .57 .77 (.26) -- (.26)
1993 11.51 .21 .43 .64 (.18) (.03) (.21)
1992 10.61 .17 .88 1.05 (.15) -- (.15)
Class B:
Year Ended October 31, 1996 14.99 .11 2.41 2.52 (.13) (.35) (.48)
Period Ended October 31, 1995(c) 11.89 .15 3.10 3.25 (.15) -- (.15)
Class R:
Period Ended October 31, 1996(f) 16.21 .12 .90 1.02 (.15) -- (.15)
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Class A:
Year Ended October 31,
1996 23.69 .45 5.48 5.93 (.43) (1.47) (1.90)
1995 20.83 .45 3.15 3.60 (.39) (.35) (.74)
1994 21.41 .39 .93 1.32 (.41) (1.49) (1.90)
1993 21.34 .43 1.67 2.10 (.43) (1.60) (2.03)
1992 19.53 .45 1.82 2.27 (.46) -- (.46)
Class B:
Year Ended October 31, 1996 23.61 .21 5.45 5.66 (.22) (1.47) (1.69)
Period Ended October 31, 1995(c) 19.12 .33 4.46 4.79 (.30) -- (.30)
Class R:
Period Ended October 31, 1996(f) 24.73 .19 2.81 3.00 (.16) -- (.16)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio Average
End Total End of Period Average Average Turnover Commission
of Period Return(a) (in thousands) Net Assets Net Assets Rate Paid
PRINCOR BALANCED FUND, INC.(b)
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $14.61 15.10% $ 70,820 1.28% 2.82% 32.6% $.0421
1995 13.74 14.18% 57,125 1.37% 3.21% 35.8% N/A
1994 12.43 0.94% 53,366 1.51% 2.70% 14.4% N/A
1993 13.26 12.24% 39,952 1.35% 2.78% 27.5% N/A
1992 12.78 11.86% 31,339 1.29% 3.39% 30.6% N/A
Class B:
Year Ended October 31, 1996 14.56 14.10% 5,964 2.13% 1.93% 32.6% .0421
Period Ended October 31, 1995(c) 13.71 18.72%(d) 1,263 1.91%(e) 2.53%(e) 35.8%(e) N/A
Class R:
Period Ended October 31, 1996(f) 14.52 7.52%(d) 875 1.49%(e) 2.26%(e) 32.6%(e) .0421(e)
PRINCOR BLUE CHIP FUND, INC.
Class A:
Year Ended October 31,
1996 17.10 18.20% 44,389 1.33% 1.41% 13.3% .0456
1995 15.03 22.65% 35,212 1.38% 1.83% 26.1% N/A
1994 12.45 6.58% 27,246 1.46% 1.72% 5.5% N/A
1993 11.94 5.65% 23,759 1.25% 1.87% 11.2% N/A
1992 11.51 9.92% 19,926 1.56% 1.49% 13.5% N/A
Class B:
Year Ended October 31, 1996 17.03 17.18% 6,527 2.19% .49% 13.3% .0456
Period Ended October 31, 1995(c) 14.99 26.20%(d) 1,732 1.90%(e) .97%(e) 26.1%(e) N/A
Class R:
Period Ended October 31, 1996(f) 17.08 7.02%(d) 1,575 1.48%(e) .68%(e) 13.3%(e) .0456(e)
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Class A:
Year Ended October 31,
1996 27.72 26.41% 435,617 .69% 1.82% 50.2% .0421
1995 23.69 17.94% 339,656 .75% 2.08% 46.0% N/A
1994 20.83 6.67% 285,965 .83% 2.02% 31.7% N/A
1993 21.41 10.42% 240,016 .82% 2.16% 24.8% N/A
1992 21.34 11.67% 190,301 .93% 2.17% 38.3% N/A
Class B:
Year Ended October 31, 1996 27.58 25.19% 9,832 1.70% .80% 50.2% .0421
Period Ended October 31, 1995(c) 23.61 25.06%(d) 2,248 1.50%(e) 1.07%(e) 46.0%(e) N/A
Class R:
Period Ended October 31, 1996(f) 27.57 12.74%(d) 1,752 1.16%(e) 1.18%(e) 50.2%(e) .0421(e)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR EMERGING GROWTH FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $31.45 $.14 $5.05 $5.19 $(.14) $ (.75) $ (.89)
1995 25.08 .12 6.45 6.57 (.06) (.14) (.20)
1994 23.56 -- 1.61 1.61 -- (.09) (.09)
1993 19.79 .06 3.82 3.88 (.11) -- (.11)
1992 18.33 .14 1.92 2.06 (.15) (.45) (.60)
Class B:
Year Ended October 31, 1996 31.31 (.04) 4.97 4.93 (.01) (.75) (.76)
Period Ended October 31, 1995(c) 23.15 -- 8.18 8.18 (.02) -- (.02)
Class R:
Period Ended October 31, 1996(f) 33.77 .04 1.88 1.92 (.02) -- (.02)
PRINCOR GROWTH FUND, INC.
Class A:
Year Ended October 31,
1996 37.22 .35 3.50 3.85 (.35) (1.18) (1.53)
1995 31.14 .35 6.67 7.02 (.31) (.63) (.94)
1994 30.41 .26 2.56 2.82 (.28) (1.81) (2.09)
1993 28.63 .40 2.36 2.76 (.42) (.56) (.98)
1992 25.92 .39 3.32 3.71 (.40) (.60) (1.00)
Class B:
Year Ended October 31, 1996 37.10 .08 3.48 3.56 (.05) (1.18) (1.23)
Period Ended October 31, 1995(c) 28.33 .21 8.76 8.97 (.20) -- (.20)
Class R:
Period Ended October 31, 1996(f) 39.27 .10 .13 .23 (.10) -- (.10)
<FN>
See accompanying notes.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio Average
End Total End of Period Average Average Turnover Commission
of Period Return(a) (in thousands) Net Assets Net Assets Rate Rate Paid
PRINCOR EMERGING GROWTH FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $35.75 16.89% $229,465 1.32% .46% 12.3% $.0391
1995 31.45 26.89% 150,611 1.47% .47% 13.5% N/A
1994 25.08 6.86% 92,965 1.74% .02% 8.1% N/A
1993 23.56 19.66% 48,668 1.66% .26% 7.0% N/A
1992 19.79 11.63% 29,055 1.74% .80% 5.8% N/A
Class B:
Year Ended October 31, 1996 35.48 16.07% 28,480 2.01% (.24)% 12.3% .0391
Period Ended October 31, 1995(c) 31.31 35.65%(d) 8,997 2.04%(e) (.17)%(e) 13.5%(e) N/A
Class R:
Period Ended October 31, 1996(f) 35.67 6.20%(d) 2,016 1.53%(e) .29%(e) 12.3%(e) .0391(e)
PRINCOR GROWTH FUND, INC.
Class A:
Year Ended October 31,
1996 39.54 10.60% 228,361 1.08% .95% 1.8% .0443
1995 37.22 23.29% 174,328 1.16% 1.12% 12.2% N/A
1994 31.14 9.82% 116,363 1.30% .95% 13.6% N/A
1993 30.41 9.83% 80,051 1.26% 1.40% 16.4% N/A
1992 28.63 14.76% 63,405 1.19% 1.46% 15.6% N/A
Class B:
Year Ended October 31, 1996 39.43 9.80% 24,019 1.79% .22% 1.8% .0443
Period Ended October 31, 1995(c) 37.10 31.48%(d) 8,279 1.80%(e) .31%(e) 12.2%(e) N/A
Class R:
Period Ended October 31, 1996(f) 39.40 1.12%(d) 2,014 1.42%(e) .14%(e) 1.8%(e) .0443(e)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
------------------------------------ -------------------------------------------
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR UTILITIES FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $10.94 $.44(g) $ .45 $ .89 $(.43) $ -- $(.43)
1995 9.25 .48(g) 1.70 2.18 (.49) -- (.49)
1994 11.45 .46(g) (2.19) (1.73) (.45) (.02) (.47)
Period Ended October 31, 1993(h) 10.18 .35(g) 1.27 1.62 (.35) -- (.35)
Class B:
Year Ended October 31, 1996 10.93 .36(g) .43 .79 (.34) -- (.34)
Period Ended October 31, 1995(c) 9.20 .40(g) 1.77 2.17 (.44) -- (.44)
Class R:
Period Ended October 31, 1996(f) 11.75 .28 (.41) (.13) (.29) -- (.29)
PRINCOR WORLD FUND, INC.
Class A:
Year Ended October 31,
1996 7.28 .10 1.17 1.27 (.08) (.33) (.41)
1995 7.44 .08 (.02) .06 (.03) (.19) (.22)
1994 6.85 .01 .64 .65 (.02) (.04) (.06)
1993 5.02 .03 1.98 2.01 (.05) (.13) (.18)
1992 5.24 .06 (.14) (.08) (.06) (.08) (.14)
Class B:
Year Ended October 31, 1996 7.24 .03 1.15 1.18 (.02) (.33) (.35)
Period Ended October 31, 1995(c) 6.71 .05 .51 .56 (.03) -- (.03)
Class R:
Period Ended October 31, 1996(f) 7.48 .01 .63 .64 -- -- --
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------------
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio Average
End Total End of Period Average Average Turnover Commission
of Period Return(a) (in thousands) Net Assets Net Assets Rate Paid
PRINCOR UTILITIES FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $11.40 8.13% $ 66,322 1.17%(g) 3.85% 34.2% $.0410
1995 10.94 24.36% 65,873 1.04%(g) 4.95% 13.0% --
1994 9.25 (15.20)% 56,747 1.00%(g) 4.89% 13.8% -
Period Ended October 31, 1993(h) 11.45 15.92%(d) 50,372 1.00%(e)(g) 4.48%(e) 4.3%(e) --
Class B:
Year Ended October 31, 1996 11.38 7.23% 5,579 1.93%(g) 3.07% 34.2% .0410
Period Ended October 31, 1995(c) 10.93 24.18%(d) 3,952 1.72%(e)(g) 3.84%(e) 13.0%(e) --
Class R:
Period Ended October 31, 1996(f) 11.33 (.31)%(d) 311 1.47%(e) 3.77%(e) 34.2%(e) .0410(e)
PRINCOR WORLD FUND, INC.
Class A:
Year Ended October 31,
1996 8.14 18.36% 172,276 1.45% 1.43% 23.8% .0197
1995 7.28 1.03% 126,554 1.63% 1.10% 35.4% N/A
1994 7.44 9.60% 115,812 1.74% .10% 13.2% N/A
1993 6.85 41.39% 63,718 1.61% .59% 19.5% N/A
1992 5.02 (1.57)% 35,048 1.69% 1.23% 19.9% N/A
Class B:
Year Ended October 31, 1996 8.07 17.16% 15,745 2.28% .64% 23.8% .0197
Period Ended October 31, 1995(c) 7.24 9.77%(d) 3,908 2.19%(e) .58%(e) 35.4%(e) N/A
Class R:
Period Ended October 31, 1996(f) 8.12 9.29%(d) 1,057 1.59%(e) .78%(e) 23.8%(e) .0197(e)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Notes to Financial Highlights
(a) Total return is calculated without the front-end sales charge or contingent
deferred sales charge.
(b) Effective December 5, 1994, the name of Princor Managed Fund, Inc. was
changed to Princor Balanced Fund, Inc.
(c) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995. The Growth Funds Class B shares
recognized net investment income as follows for the period from the initial
purchase of Class B shares on December 5, 1994 through December 8, 1994,
none of which was distributed to the sole shareholder, Princor Management
Corporation. The Growth Funds Class B shares incurred unrealized losses on
investments during the initial interim period as follows. This represents
Class B share activities of each fund prior to the initial public offering
of Class B shares:
Per Share
Net Investment Per Share
Fund Income Unrealized (Loss)
Princor Balanced Fund, Inc. -- $(.19)
Princor Blue Chip Fund, Inc. -- (.15)
Princor Capital Accumulation Fund, Inc. -- (.46)
Princor Emerging Growth Fund, Inc. -- (.77)
Princor Growth Fund, Inc. -- (.86)
Princor Utilities Fund, Inc. $.01 (.01)
Princor World Fund, Inc. -- (.07)
(d) Total return amounts have not been annualized.
(e) Computed on an annualized basis.
(f) Period from February 29, 1996, date Class R shares first offered to
eligible purchasers, through October 31, 1996. Certain of the Growth Funds
Class R shares recognized net investment income for the period from the
initial purchase of Class R shares on February 27, 1996 through February
28, 1996 as follows, none of which was distributed to the sole shareholder,
Princor Management Corporation. Additionally, the Growth Funds incurred
unrealized gains (losses) on investments during the initial interim period
as follows. This represents Class R share activities of each fund prior to
the initial offering of Class R shares: Per Share Net Investment Fund
Income
Per Share Per Share
Net Investment Unrealized
Fund Income Gain (Loss)
Princor Balanced Fund, Inc. -- $(.03)
Princor Blue Chip Fund, Inc. $.01 (.02)
Princor Capital Accumulation Fund, Inc. .01 (.11)
Princor Emerging Growth Fund, Inc. -- .19
Princor Growth Fund, Inc. .01 .10
Princor World Fund, Inc. -- .02
(g) Without the Manager's voluntary waiver of a portion of certain of its
expenses (see Note 3 to the financial statements) for the periods
indicated, Princor Utilities Fund, Inc. would have had per share net
investment income and the ratios of expenses to average net assets as
shown:
Year, Per Share Ratio of Expenses
Except Net Investment to Average Net Amount
as Noted Income Assets Waived
Class A 1996 $.43 1.25% $ 54,932
1995 .46 1.30% 151,145
1994 .41 1.50% 284,836
1993(h) .32 1.54%(e) 139,439
Class B 1996 .34 2.06% 6,690
1995(c) .40 1.81%(e) 1,338
Class R 1996 .17(e) 1.47%(e) --
(h) Period from December 16, 1992, date shares first offered to public, through
October 31, 1993. Net investment income, aggregating $.05 per share for the
period from the initial purchase of shares on November 16, 1992 through
December 15, 1992, was recognized, none of which was distributed to its sole
stockholder, Principal Mutual Life Insurance Company, during the period.
Additionally, the fund incurred unrealized gains on investments of $.13 per
share during the initial interim period. This represents activities of the
fund prior to the initial public offering of fund shares.
<PAGE>
<TABLE>
<CAPTION>
October 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
Princor Princor Government
Bond Securities Income
INCOME FUNDS Fund, Inc. Fund, Inc.
<S> <C> <C>
Investment in Securities -- at cost.............................. $115,041,975 $274,024,119
Assets
Investment in securities -- at value (Note 4).................... $119,539,693 $273,231,351
Cash ............................................................ 1,375 1,626
Receivables:
Dividends and interest........................................ 2,485,688 1,554,783
Investment securities sold.................................... -- --
Capital Stock sold............................................ 90,476 137,814
Other assets..................................................... 3,438 16,781
Total Assets 122,120,670 274,942,355
Liabilities
Accrued expenses................................................. 111,047 216,347
Payables:
Investment securities purchased............................... -- 3,243,510
Capital Stock reacquired...................................... 70,654 386,702
Total Liabilities 181,701 3,846,559
Net Assets Applicable to Outstanding Shares...................... $121,938,969 $271,095,796
Net Assets Consist of:
Capital Stock.................................................... $ 109,139 $ 240,740
Additional paid-in capital....................................... 117,597,362 271,587,136
Accumulated undistributed net investment income.................. 728,898 1,535,479
Accumulated net realized loss on investment transactions ........ (994,148) (1,474,791)
Net unrealized appreciation (depreciation) of investments........ 4,497,718 (792,768)
Total Net Assets $121,938,969 $271,095,796
Capital Stock (par value: $.01 a share)
Shares authorized................................................ 100,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets.............................................. $113,437,230 $259,028,642
Shares issued and outstanding........................... 10,151,468 22,999,811
Net asset value per share............................... $11.17 $11.26
Maximum offering price per share(a)..................... $11.73 $11.82
Class B: Net Assets ............................................. $7,976,325 $11,585,991
Shares issued and outstanding........................... 715,311 1,031,289
Net asset value per share(b)............................ $11.15 $11.23
Class R: Net Assets.............................................. $525,414 $481,163
Shares issued and outstanding........................... 47,094 42,922
Net asset value per share............................... $11.16 $11.21
<FN>
(a)Maximum offering price is equal to net asset value plus a front-end
sales charge of 4.75% (1.50% with respect to Princor Limited Term Bond
Fund, Inc.) of the offering price.
(b)Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
October 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
Princor Princor Princor
High Yield Limited Term Bond Tax-Exempt Bond
INCOME FUNDS Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Investment in Securities -- at cost.............................. $29,069,597 $17,205,288 $182,933,094
Assets
Investment in securities -- at value (Note 4).................... $29,838,389 $17,094,603 $189,299,465
Cash ............................................................ 105,755 57,234 56,976
Receivables:
Dividends and interest........................................ 750,523 273,154 3,804,773
Investment securities sold.................................... -- 23,702 --
Capital Stock sold............................................ 7,109 12,868 68,619
Other assets..................................................... 1,990 -- 7,333
Total Assets 30,703,766 17,461,561 193,237,166
Liabilities
Accrued expenses................................................. 29,626 17,397 132,941
Payables:
Investment securities purchased............................... -- -- --
Capital Stock reacquired...................................... 4,679 -- 130,570
Total Liabilities 34,305 17,397 263,511
Net Assets Applicable to Outstanding Shares...................... $30,669,461 $17,444,164 $192,973,655
Net Assets Consist of:
Capital Stock.................................................... $ 37,105 $ 17,633 $ 160,348
Additional paid-in capital....................................... 32,593,119 17,440,914 187,151,821
Accumulated undistributed net investment income.................. 246,818 99,936 947,865
Accumulated net realized loss on investment transactions ........ (2,976,373) (3,634) (1,652,750)
Net unrealized appreciation (depreciation) of investments........ 768,792 (110,685) 6,366,371
Total Net Assets $30,669,461 $17,444,164 $192,973,655
Capital Stock (par value: $.01 a share)
Shares authorized................................................ 100,000,000 100,000,000 100,000,000
Net Asset Value Per Share:
Class A: Net Assets.............................................. $28,432,165 $17,249,143 $187,179,578
Shares issued and outstanding........................... 3,438,404 1,743,544 15,552,762
Net asset value per share............................... $8.27 $9.89 $12.04
Maximum offering price per share(a)..................... $8.68 $10.04 $12.64
Class B: Net Assets ............................................. $2,113,300 $111,593 $5,794,077
Shares issued and outstanding........................... 256,954 11,282 482,072
Net asset value per share(b)............................ $8.22 $9.89 $12.02
Class R: Net Assets.............................................. $123,996 $83,428 N/A
Shares issued and outstanding........................... 15,117 8,441 N/A
Net asset value per share............................... $8.20 $9.88 N/A
<FN>
(a)Maximum offering price is equal to net asset value plus a front-end
sales charge of 4.75% (1.50% with respect to Princor Limited Term Bond
Fund, Inc.) of the offering price.
(b)Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 31, 1996, Except as Noted
STATEMENTS OF OPERATIONS
Princor Princor Government
Bond Securities Income
INCOME FUNDS Fund, Inc. Fund, Inc.
Net Investment Income
<S> <C> <C>
Interest Income.................................................... $8,882,992 $19,137,829
Expenses:
Management and investment advisory fees (Note 3)................ 562,779 1,223,631
Distribution and shareholder servicing fees (Note 1 and 3)...... 293,963 532,899
Transfer and administrative services (Note 1 and 3)............. 221,648 394,360
Registration fees (Note 1)...................................... 41,979 39,149
Custodian fees ................................................. 5,007 25,616
Auditing and legal fees ........................................ 8,852 9,014
Directors' fees ................................................ 8,680 8,705
Other .......................................................... 9,324 23,143
Total Gross Expenses 1,152,232 2,256,517
Less: Management and investment
advisory fees waived......................................... 28,413 --
Total Net Expenses 1,123,819 2,256,517
Net Investment Income 7,759,173 16,881,312
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from investment transactions.............. (608,660) 434,186
Net increase (decrease) in unrealized appreciation/depreciation
on investments ................................................. (1,814,840) (1,721,443)
Net Realized and Unrealized
Gain (Loss) on Investments (2,423,500) (1,287,257)
Net Increase in Net Assets
Resulting from Operations $5,335,673 $15,594,055
<FN>
(1) Period from February 13, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 31, 1996, Except as Noted
STATEMENTS OF OPERATIONS
Princor Princor Princor
High Yield Limited Term Bond Tax-Exempt Bond
Fund, Inc. Fund, Inc. (1) Fund, Inc.
INCOME FUNDS
Net Investment Income
<S> <C> <C> <C>
Interest Income.................................................... $2,596,419 $615,360 $11,408,639
Expenses:
Management and investment advisory fees (Note 3)................ 159,773 44,589 888,967
Distribution and shareholder servicing fees (Note 1 and 3)...... 75,961 8,576 374,119
Transfer and administrative services (Note 1 and 3)............. 66,305 32,982 145,931
Registration fees (Note 1)...................................... 25,733 1,712 39,224
Custodian fees ................................................. 3,743 3,037 3,976
Auditing and legal fees ........................................ 6,186 5,733 8,541
Directors' fees ................................................ 8,705 7,265 8,706
Other .......................................................... 3,174 1,514 15,482
Total Gross Expenses 349,580 105,408 1,484,946
Less: Management and investment
advisory fees waived......................................... -- 25,970 --
Total Net Expenses 349,580 79,438 1,484,946
Net Investment Income 2,246,839 535,922 9,923,693
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from investment transactions.............. 26,628 (3,634) 674,906
Net increase (decrease) in unrealized appreciation/depreciation
on investments ................................................. 765,331 (110,685) 362,726
Net Realized and Unrealized
Gain (Loss) on Investments 791,959 (114,319) 1,037,632
Net Increase in Net Assets
Resulting from Operations $3,038,798 $421,603 $10,961,325
<FN>
(1) Period from February 13, 1996 (date operations commenced) through October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor
Bond
INCOME FUNDS Fund, Inc.
1996 1995
<S> <C> <C>
Operations
Net investment income........................................................ $ 7,759,173 $ 7,110,733
Net realized gain (loss) from investment transactions........................ (608,660) (385,488)
Net increase (decrease) in unrealized appreciation/depreciation
on investments........................................................... (1,814,840) 10,947,591
Net Increase in Net Assets
Resulting from Operations 5,335,673 17,672,836
Dividends and Distributions to Shareholders From net investment income:
Class A.................................................................. (7,395,304) (6,978,094)
Class B.................................................................. (336,861) (57,053)(b)
Class R(c) .............................................................. (3,457) --
From net realized gain on investments:
Class A.................................................................. -- (104,351)
Total Distributions (7,735,622) (7,139,498)
Capital Share Transactions (Note 5)
Shares sold:
Class A.................................................................. 21,969,069 18,360,174
Class B.................................................................. 5,830,264 2,713,516(b)
Class R(c) .............................................................. 517,933 --
Shares issued in reinvestment of dividends and distributions:
Class A.................................................................. 4,977,027 4,697,390
Class B.................................................................. 270,581 46,382(b)
Class R(c) .............................................................. 3,457 --
Shares redeemed:
Class A.................................................................. (18,116,844) (15,323,500)
Class B.................................................................. (773,259) (159,124)(b)
Class R(c) .............................................................. (8,814) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 14,669,414 10,334,838
Total Increase 12,269,465 20,868,176
Net Assets
Beginning of period.......................................................... 109,669,504 88,801,328
End of period (including undistributed net investment
income as set forth below)............................................... $121,938,969 $109,669,504
Undistributed Net Investment Income......................................... $ 728,898 $ 705,347
<FN>
(a) Period from February 13, 1996 (date operations commenced) through
October 31, 1996.
(b) Period from December 5, 1994 (date operations commenced) through
October 31, 1995.
(c) Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Government
Securities Income
INCOME FUNDS Fund, Inc.
1996 1995
<S> <C> <C>
Operations
Net investment income........................................................ $ 16,881,312 $ 16,661,711
Net realized gain (loss) from investment transactions........................ 434,186 (1,074,727)
Net increase (decrease) in unrealized appreciation/depreciation
on investments........................................................... (1,721,443) 25,002,420
Net Increase in Net Assets
Resulting from Operations 15,594,055 40,589,404
Dividends and Distributions to Shareholders From net investment income:
Class A.................................................................. (16,420,667) (16,398,545)
Class B.................................................................. (470,574) (94,011)(b)
Class R(c) .............................................................. (2,908) --
From net realized gain on investments:
Class A.................................................................. -- --
Total Distributions (16,894,149) (16,492,556)
Capital Share Transactions (Note 5)
Shares sold:
Class A.................................................................. 37,110,671 29,006,758
Class B.................................................................. 8,060,500 4,730,337(b)
Class R(c) .............................................................. 469,159 --
Shares issued in reinvestment of dividends and distributions:
Class A.................................................................. 12,945,447 12,817,448
Class B.................................................................. 375,343 78,109(b)
Class R(c) .............................................................. 2,905 --
Shares redeemed:
Class A.................................................................. (50,822,999) (54,093,676)
Class B.................................................................. (1,570,936) (246,114)(b)
Class R(c) .............................................................. (1,707) --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 6,568,383 (7,707,138)
Total Increase 5,268,289 16,389,710
Net Assets
Beginning of period.......................................................... 265,827,507 249,437,797
End of period (including undistributed net investment
income as set forth below)............................................... $271,095,796 $265,827,507
Undistributed Net Investment Income......................................... $ 1,535,479 $ 1,548,316
<FN>
(a) Period from February 13, 1996 (date operations commenced) through
October 31, 1996.
(b) Period from December 5, 1994 (date operations commenced) through
October 31, 1995.
(c) Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor
High Yield
INCOME FUNDS Fund, Inc.
1996 1995
<S> <C> <C>
Operations
Net investment income........................................................ $ 2,246,839 $ 1,881,438
Net realized gain (loss) from investment transactions........................ 26,628 (105,759)
Net increase (decrease) in unrealized appreciation/depreciation
on investments........................................................... 765,331 581,993
Net Increase in Net Assets
Resulting from Operations 3,038,798 2,357,672
Dividends and Distributions to Shareholders From net investment income:
Class A.................................................................. (2,164,495) (1,737,075)
Class B.................................................................. (100,795) (15,260)(b)
Class R(c) .............................................................. (1,126) --
From net realized gain on investments:
Class A.................................................................. -- --
Total Distributions (2,266,416) (1,752,335)
Capital Share Transactions (Note 5)
Shares sold:
Class A.................................................................. 6,203,975 3,890,858
Class B.................................................................. 1,663,572 625,699(b)
Class R(c) .............................................................. 120,413 --
Shares issued in reinvestment of dividends and distributions:
Class A.................................................................. 975,918 1,277,540
Class B.................................................................. 56,034 6,460(b)
Class R(c) .............................................................. 1,126 --
Shares redeemed:
Class A.................................................................. (2,864,299) (2,175,333)
Class B.................................................................. (288,473) (4,140)(b)
Class R(c) .............................................................. -- --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 5,868,266 3,621,084
Total Increase 6,640,648 4,226,421
Net Assets
Beginning of period.......................................................... 24,028,813 19,802,392
End of period (including undistributed net investment
income as set forth below)............................................... $30,669,461 $24,028,813
Undistributed Net Investment Income......................................... $ 246,818 $ 266,395
<FN>
(a) Period from February 13, 1996 (date operations commenced) through
October 31, 1996.
(b) Period from December 5, 1994 (date operations commenced) through
October 31, 1995.
(c) Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Princor
Limited Term Bond Tax-Exempt Bond
INCOME FUNDS Fund, Inc.(a) Fund, Inc.
1996 1996 1995
<S> <C> <C> <C>
Operations
Net investment income........................................................ $ 535,922 $ 9,923,693 $ 9,855,608
Net realized gain (loss) from investment transactions........................ (3,634) 674,906 (1,677,841)
Net increase (decrease) in unrealized appreciation/depreciation
on investments........................................................... (110,685) 362,726 17,420,735
Net Increase in Net Assets
Resulting from Operations 421,603 10,961,325 25,598,502
Dividends and Distributions to Shareholders From net investment income:
Class A.................................................................. (434,063) (9,811,318) (9,781,885)
Class B.................................................................. (1,401)(c) (209,899) (67,120)(b)
Class R(c) .............................................................. (522) -- --
From net realized gain on investments:
Class A.................................................................. -- -- --
Total Distributions (435,986) (10,021,217) (9,849,005)
Capital Share Transactions (Note 5)
Shares sold:
Class A.................................................................. 17,452,369 23,815,010 18,520,960
Class B.................................................................. 108,544(c) 2,684,628 3,375,082(b)
Class R(c) .............................................................. 81,911 -- --
Shares issued in reinvestment of dividends and distributions:
Class A.................................................................. 419,436 6,720,668 6,671,473
Class B.................................................................. 1,352(c) 155,939 49,501(b)
Class R(c) .............................................................. 522 -- --
Shares redeemed:
Class A.................................................................. (605,448) (23,971,299) (32,510,884)
Class B.................................................................. (139)(c) (572,822) (78,915)(b)
Class R(c) .............................................................. -- -- --
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 17,458,547 8,832,124 (3,972,783)
Total Increase 17,444,164 9,772,232 11,776,714
Net Assets
Beginning of period.......................................................... -- 183,201,423 171,424,709
End of period (including undistributed net investment
income as set forth below)............................................... $17,444,164 $192,973,655 $183,201,423
Undistributed Net Investment Income......................................... $ 99,936 $ 947,865 $ 1,048,291
<FN>
(a) Period from February 13, 1996 (date operations commenced) through
October 31, 1996.
(b) Period from December 5, 1994 (date operations commenced) through
October 31, 1995.
(c) Period from February 27, 1996 (date operations commenced) through
October 31, 1996.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Princor Bond Fund, Inc.
Princor Government Securities Income Fund, Inc.
Princor High Yield Fund, Inc.
Princor Limited Term Bond Fund, Inc.
Princor Tax-Exempt Bond Fund, Inc.
Note 1 -- Significant Accounting Policies
Princor Bond Fund, Inc., Princor Government Securities Income Fund, Inc.,
Princor High Yield Fund, Inc., Princor Limited Term Bond Fund, Inc. and Princor
Tax-Exempt Bond Fund, Inc. (the "Income Funds") are registered under the
Investment Company Act of 1940, as amended, as open-end diversified management
investment companies and operate in the mutual fund industry.
On February 13, 1996, the initial purchase of 1,000,000 shares of Class A
Capital Stock of Princor Limited Term Bond Fund, Inc. was made by Principal
Mutual Life Insurance Company (see Note 3).
On February 27, 1996, the initial purchase of Class B shares of Princor Limited
Term Bond Fund, Inc. was made by Princor Management Corporation; the initial
purchases of Class B shares of the other funds were made on December 5, 1994
(see Note 3). All shares outstanding prior to the initial Class B share
purchases have been classified as Class A shares. Effective February 29, 1996,
Princor Limited Term Bond Fund, Inc. began offering Class B shares to the
public; the effective date of the other funds was December 9, 1994. On February
27, 1996, the initial purchases of Class R shares of the Income Funds (except
for Princor Tax-Exempt Bond Fund, Inc.) were made by Princor Management
Corporation (see Note 3). Effective February 29, 1996, the Income Funds (except
for Princor Tax-Exempt Bond Fund, Inc.) began offering Class R shares to
eligible purchasers.
Class A shares generally are sold with an initial sales charge based on
declining rates and certain purchases may be subject to a contingent deferred
sales charge ("CDSC"). Class B shares are sold without an initial sales charge,
but are subject to a declining CDSC on certain redemptions redeemed within six
years of purchase. Class R shares are sold without an initial sales charge and
are not subject to a CDSC. Class B shares and Class R shares bear a higher
ongoing distribution fee than Class A shares. Class B shares automatically
convert into Class A shares, based on relative net asset value (without a sales
charge) after seven years. Class R shares automatically convert into Class A
shares, based on relative net asset value (without a sales charge) after four
years. All classes of shares for each fund represent interests in the same
portfolio of investments, and will vote together as a single class except where
otherwise required by law or as determined by the Fund's respective Board of
Directors. In addition, the Board of Directors of each fund declare separate
dividends on each class of shares.
The Income Funds allocate daily all income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses to each class of shares
based upon the relative proportion of the value of shares outstanding of each
class. Expenses specifically attributable to a particular class, are charged
directly to such class. Class-specific expenses charged to each class during the
period ended October 31, 1996, which are included in the corresponding captions
of the Statement of Operations, were as follows:
<TABLE>
<CAPTION>
Distribution and Transfer and
Shareholder Servicing Fees Administrative Services Registration Fees
Class A Class B Class R Class A Class B Class R Class A Class B Class R
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Princor Bond Fund, Inc. $242,107 $51,424 $432 $ 60,029 $5,019 $9 $17,353 $ 7,593 $50
Princor Government Securities Income Fund, Inc. 457,028 75,494 377 125,085 6,439 6 12,378 7,351 34
Princor High Yield Fund, Inc. 63,145 12,703 113 10,338 1,124 5 7,468 6,128 34
Princor Limited Term Bond Fund, Inc. 8,362 140 74 383 25 5 229 149 54
Princor Tax-Exempt Bond Fund, Inc. 340,847 33,272 N/A 43,552 1,211 N/A 16,105 10,080 N/A
</TABLE>
The Income Funds value securities for which market quotations are readily
available at market value, which is determined using the last reported sale
price or, if no sales are reported, as is regularly the case for some securities
traded over-the-counter, the last reported bid price. When reliable market
quotations are not considered to be readily available, which may be the case,
for example, with respect to certain debt securities and preferred stocks, the
investments are valued by using market quotations, prices provided by market
makers or estimates of market values obtained from yield data and other factors
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by each fund's Board of Directors.
Securities with remaining maturities of 60 days or less are valued at amortized
cost, which approximates market.
The Income Funds record investment transactions generally one day after the
trade date, except for short-term investment transactions which are recorded
generally on the trade date. The identified cost basis has been used in
determining the net realized gain or loss from investment transactions and
unrealized appreciation or depreciation on investments. Dividends are taken into
income on an accrual basis as of the ex-dividend date and interest income is
recognized on an accrual basis.
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting principles.
To the extent these "book/tax" differences are permanent in nature (i.e. that
they result from other than timing of recognition - "temporary"), such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification.
Reclassifications made for the years ended October 31, 1996 and 1995 were not
material.
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.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each fund
is qualified as a "regulated investment company" under the Internal Revenue Code
and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments for
federal income tax reporting purposes is approximately the same as that for
financial reporting purposes.
At October 31, 1996, the following Income Funds had net capital loss
carryforwards as follows:
<TABLE>
<CAPTION>
Princor
Princor Government Princor Princor Princor
Bond Securities Income High Yield Limited Term Bond Tax-Exempt Bond
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C> <C> <C> <C>
Net Capital Loss Carryforward Expires In: 1998 $ 793,000
1999 784,000
2000 561,000
2001 409,000
2002 $ 400,000 323,000
2003 $385,000 1,075,000 106,000 $1,653,000
2004 609,000 $4,000
$994,000 $1,475,000 $2,976,000 $4,000 $1,653,000
</TABLE>
Note 3 -- Management Agreement and Transactions With Affiliates
The Income Funds have agreed to pay investment advisory and management fees to
Princor Management Corporation (wholly owned by Princor Financial Services
Corporation, a subsidiary of Principal Mutual Life Insurance Company) (the
"Manager") computed at an annual percentage rate of each fund's average daily
net assets. The annual rate used in this calculation for the Income Funds is as
follows:
Net Asset Value of Funds
(in millions)
First Next Next Next Over
Fund $100 $100 $100 $100 $400
Princor Bond Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Government Securities
Income Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor High Yield Fund, Inc. 0.60% 0.55% 0.50% 0.45% 0.40%
Princor Limited Term Bond Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
Princor Tax-Exempt Bond Fund, Inc. 0.50% 0.45% 0.40% 0.35% 0.30%
The Income Funds also reimburse the Manager for transfer and administrative
services, including the cost of accounting, data processing, supplies and other
services rendered.
The Manager has agreed to reimburse the Income Funds annually for their total
expenses (excluding brokerage commissions, interest and taxes) in excess of
limits prescribed by any state in which the Income Funds' shares are offered for
sale (currently 2 1/2% of the first $30 million of each fund's average annual
net assets, 2% of the next $70 million of such assets and 1 1/2% of such assets
in excess thereof).
The Manager voluntarily waives a portion of its fee for some of the Income
Funds. The waivers are in amounts that maintain total operating expenses for
each fund within certain limits. The limits are expressed as a percentage of
average daily net assets attributable to each class on an annualized basis
during the reporting period. The amounts waived and the operating expense
limits, which were maintained at or below those shown, are as follows:
Amount
Waived
Year Ended Year Ended Expense
October 31, 1996 October 31, 1995 Limit
Princor Bond
Fund, Inc.
Class A $22,536 $86,018 0.95%
Class B 5,874 300(a) 1.70
Class R 3(c) -- 1.45
Princor Limited
Term Bond
Fund, Inc.
Class A 25,651(b) -- 0.90
Class B 259(b) -- 1.15
Class R 60(c) -- 1.40
(a)Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995.
(b)Period from February 29, 1996, date Class A and Class B shares first
offered to the public through October 31, 1996.
(c)Period from February 29, 1996, date Class R shares first offered to the
eligible purchasers, through October 31, 1996.
The Manager intends to continue its voluntary waiver and, if necessary, pay
expenses normally payable by each of the Funds through February 28, 1998.
Princor Financial Services Corporation, as principal underwriter, receives
proceeds of any CDSC on certain Class A and Class B share redemptions. The
charge is based on declining rates, which for Class A shares begin at .75% and
for Class B shares at 4.00% (.25% and 1.25% for Princor Limited Term Bond Fund,
respectively) of the lesser of the current market value or the cost of shares
being redeemed. Princor Financial Services Corporation also retains sales
charges on sales of Class A shares based on declining rates which begin at 4.75%
of the offering price (1.50% for Princor Limited Term Bond Fund, Inc.). The
aggregate amount of these charges retained, by fund, for the period ended
October 31, 1996 were as follows:
Class A Class B
Princor Bond Fund, Inc. $ 629,234 $ 8,715
Princor Government Securities Income Fund, Inc. 1,209,612 24,199
Princor High Yield Fund, Inc. 157,115 7,572
Princor Limited Term Bond Fund, Inc. 56,766 --
Princor Tax-Exempt Bond Fund, Inc. 682,986 15,744
No brokerage commissions were paid by the Income Funds to Princor Financial
Services Corporation during the periods.
The Income Funds bear distribution and shareholder servicing fees with respect
to Class A shares computed at an annual rate of up to .25% (.15% for the Princor
Limited Term Bond Fund, Inc.) of the average daily net assets attributable to
Class A shares of each fund. Each of the Income Funds adopted a distribution
plan with respect to Class B shares that provides for distribution and
shareholder servicing fees computed at an annual rate of up to 1.00% of the
average daily net assets attributable to Class B shares of each fund (.50% for
the Princor Limited Term Bond Fund, Inc.). Effective February 1996, each of the
Income Funds, with the exception of Princor Tax-Exempt Bond Fund, Inc., adopted
a distribution plan with respect to Class R shares that provides for
distribution and shareholder servicing fees computed at an annual rate of up to
.75% of the average daily net assets attributable to Class R shares of each
fund. Distribution and shareholder servicing fees are paid to Princor Financial
Services Corporation; a portion of the fees are subsequently remitted to retail
dealers. Pursuant to the distribution agreements, fees unused by the principal
underwriter at the end of the fiscal year are returned to the Income Funds.
At October 31, 1996 Principal Mutual Life Insurance Company and subsidiaries of
Principal Mutual Life Insurance Company owned shares of the Income Funds as
follows:
Class A Class B Class R
Princor Bond Fund, Inc. 178,252 111 93
Princor Government Securities Income Fund, Inc. 94,035 109 93
Princor High Yield Fund, Inc. 1,116,209 151 4,365
Princor Limited Term Bond Fund, Inc. 1,036,215 105 4,243
Princor Tax-Exempt Bond Fund, Inc. 92,516 103 N/A
Note 4 -- Investment Transactions
For the period ended October 31, 1996, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U. S. government securities) by the Income Funds were as
follows:
Purchases Sales
Princor Bond Fund, Inc. $17,064,005 $ 2,336,443
Princor High Yield Fund, Inc. 10,072,168 4,730,813
Princor Limited Term Bond Fund, Inc. 17,480,974 830,765
Princor Tax-Exempt Bond Fund, Inc. 25,855,920 17,839,491
Note 4 -- Investment Transactions (Continued)
At October 31, 1996, net unrealized appreciation (depreciation) of investments
by the Income Funds was composed of the following:
<TABLE>
<CAPTION>
Net Unrealized
Gross Unrealized Appreciation (Depreciation)
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Princor Bond Fund, Inc. $5,525,357 $(1,027,639) $4,497,718
Princor Government Securities Income Fund, Inc. 3,150,964 (3,943,732) (792,768)
Princor High Yield Fund, Inc. 1,062,021 (293,229) 768,792
Princor Limited Term Bond Fund, Inc. 85,067 (195,752) (110,685)
Princor Tax-Exempt Bond Fund, Inc. 7,196,152 (829,781) 6,366,371
</TABLE>
Princor Government Securities Income Fund, Inc. may trade portfolio securities
on a "to-be-announced" (TBA) basis. In a TBA transaction, the fund commits to
purchase or sell securities for which all specific information is not known at
the time of the trade. Securities purchased on a TBA basis are not settled until
they are delivered to the fund, normally 15 to 30 days later. These transactions
are subject to market fluctuations and their current value is determined in the
same manner as for other portfolio securities. As of October 31, 1996, the Fund
had TBA purchase commitments involving securities with a face amount of
$3,495,155, cost of $3,243,510 and market value of $3,262,823. Princor
Government Securities Income Fund, Inc. has set aside investment securities and
other assets in excess of the commitments to serve as collateral.
At October 31, 1996, Princor High Yield Fund, Inc., Princor Limited Term Bond
Fund, Inc. and Princor Tax-Exempt Bond Fund, Inc. held the following securities
which may require registration under the Securities Act of 1933, or an exemption
therefrom, in order to effect a sale in the ordinary course of business.
<TABLE>
<CAPTION>
Value at Value as a
Date of October 31, Percentage of
Fund Security Description Acquisition Cost 1996 Net Assets
<S> <C> <C> <C> <C>
Princor High Yield Fund, Inc. Brown Group; Senior Notes 10/2/96 $450,000 $ 451,125 1.47%
California Energy Casecnan
Water & Energy Co., Inc.;
Senior Secured 6/26/96 700,000 777,000 2.53
Euramax International PLC;
Senior Subordinated Notes 9/18/96 200,000 203,000 .66
U.S. Can Corp.;
Senior Subordinated Notes 10/10/96 100,000 103,250 .34
1,534,375 5.00
Princor Limited Term Bond Fund, Inc. B.A.T. Capital Corp.;
Medium-Term Note 7/25/96 583,584 589,534 3.38
Princor Tax-Exempt Bond Fund, Inc. Eddyville, Iowa, IDR Ref. Bonds;
Cargill Inc. Project 1/11/95 859,910 996,250 .52
</TABLE>
The Income Funds' investments are with various issuers in various industries.
The Schedules of Investments contained herein summarize concentration of credit
risk by issuer and industry.
Note 5 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
<TABLE>
<CAPTION>
Princor Princor Princor
Bond Government Securities High Yield
Fund, Inc. Income Fund, Inc. Fund, Inc.
Year Ended October 31, 1996:
Shares sold:
<S> <C> <C> <C>
Class A ................................................... 1,970,454 3,321,877 768,505
Class B ................................................... 523,960 722,764 207,062
Class R*..................................................... 47,584 42,812 14,977
Shares issued in reinvestment of dividends and distributions:
Class A ..................................................... 448,289 1,164,488 121,239
Class B ..................................................... 24,582 33,968 6,991
Class R*..................................................... 318 266 140
Shares redeemed:
Class A ................................................... (1,629,399) (4,575,851) (354,640)
Class B ................................................... (70,602) (141,657) (35,769)
Class R*..................................................... (808) (156) --
Net Increase 1,314,378 568,511 728,505
Year Ended October 31, 1995:
Shares sold:
Class A ................................................... 1,706,844 2,679,878 489,469
Class B**.................................................... 247,333 431,102 78,379
Shares issued in reinvestment of dividends and distributions:
Class A ................................................... 439,527 1,196,621 162,114
Class B**.................................................... 4,196 7,084 812
Shares redeemed:
Class A ................................................... (1,429,838) (5,051,162) (275,812)
Class B**.................................................... (14,158) (21,972) (521)
Net Increase (Decrease) 953,904 (758,449) 454,441
<FN>
* Period from February 27, 1996 (date operations commenced) through October
31, 1996.
** Period from December 5, 1994 (date operations commenced) through
October 31, 1995.
</FN>
</TABLE>
Note 5 -- Capital Share Transactions (Continued)
<TABLE>
<CAPTION>
Princor Princor
Limited Term Bond Tax-Exempt Bond
Fund, Inc.(1) Fund, Inc.
Year Ended October 31, 1996, Except as Noted:
Shares sold:
<S> <C> <C>
Class A ................................................... 1,762,547 1,994,928
Class B ................................................... 11,158 225,823
Class R*..................................................... 8,387 N/A
Shares issued in reinvestment of dividends and distributions:
Class A ................................................... 43,053 563,980
Class B ................................................... 139 13,120
Class R*..................................................... 54 N/A
Shares redeemed:
Class A ................................................... (62,056) (2,011,737)
Class B ................................................... (15) (48,315)
Net Increase 1,763,267 737,799
Year Ended October 31, 1995:
Shares sold:
Class A ................................................... N/A 1,625,100
Class B**.................................................... N/A 293,841
Shares issued in reinvestment of dividends and distributions:
Class A ................................................... N/A 590,347
Class B**.................................................... N/A 4,276
Shares redeemed:
Class A ................................................... N/A (2,897,205)
Class B**.................................................... N/A (6,673)
Net Decrease N/A (390,314)
<FN>
(1) Period from February 13, 1996 (February 27, 1996 -- Princor Limited Term
Bond Fund, Inc. Class B and Class R) date operations commenced through
October 31, 1996.
* Period from February 27, 1996 (date operations commenced) through October
31, 1996.
** Period from December 5, 1994 (date operations commenced) through
October 31, 1995.
</FN>
</TABLE>
Note 6 -- Line of Credit
The Income Funds have an unsecured line of credit with a bank which allows each
fund to borrow up to $500,000. Borrowings are made solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each fund, based on its borrowings, at a rate equal to the bank's
Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee
is charged at the annual rate of .25% of the line of credit. At October 31,
1996, the Income Funds had no outstanding borrowings under the line of credit.
<PAGE>
SCHEDULES OF INVESTMENTS
INCOME FUNDS
PRINCOR BOND FUND, INC.
Principal
Amount Value
Bonds (96.05%)
Air Transportation, Scheduled (2.14%)
Federal Express Corp. 1994 Pass
Through Cert., Series A310-A3;
8.40%; 3/23/10 $1,500,000 $ 1,630,251
Federal Express Corp. Pass Through
Cert.; 7.58%; 7/2/19 1,000,000 981,360
2,611,611
Aircraft & Parts (0.91%)
Textron, Inc. Medium-Term
Notes, Series C;
9.80%; 1/10/00 500,000 548,264
9.55%; 3/19/01 500,000 555,485
1,103,749
Auto & Home Supply Stores (1.23%)
Pep Boys-Manny, Moe & Jack Notes;
7.00%; 6/1/05 1,500,000 1,505,727
Beverages (1.84%)
Joseph E. Seagram & Sons
Guaranteed Debentures;
8.38%; 2/15/07 1,000,000 1,100,487
8.88%; 9/15/11 1,000,000 1,148,211
2,248,698
Cable & Other Pay TV Services (1.87%)
Tele-Communications, Inc. Notes;
7.25%; 8/1/05 2,000,000 1,835,792
Tele-Communications, Inc. Senior
Debentures; 7.88%; 8/1/13 500,000 442,541
2,278,333
Cash Grains (2.10%)
Aktiebolaget SKF Senior Notes;
7.63%; 7/15/03 2,500,000 2,564,580
Combination Utility Services (1.54%)
PG Energy, Inc. First Mortgage
Bonds; 8.38%; 12/1/02 500,000 523,455
Public Service Electric & Gas
Medium-Term Notes;
8.16%; 5/26/09 1,250,000 1,357,626
1,881,081
Construction & Related
Machinery (1.00%)
Caterpillar, Inc. Global Debentures;
9.38%; 8/15/11 1,000,000 1,218,767
Consumer Products (0.82%)
RJR Nabisco Capital Corp. Senior
Notes; 8.75%; 4/15/04 1,000,000 996,250
Copper Ores (2.27%)
Asarco, Inc. Debentures;
7.88%; 4/15/13 1,500,000 1,525,683
Asarco, Inc. Notes; 7.38%; 2/1/03 1,200,000 1,238,024
2,763,707
Crude Petroleum & Natural Gas (0.46%)
Occidental Petroleum Corp.
Medium-Term Notes;
9.73%; 6/15/01 $ 500,000 $ 561,168
Department Stores (2.75%)
Dillard Investment Co. Notes;
9.25%; 5/1/97 200,000 203,348
Harcourt General, Inc. Subordinated
Notes; 9.50%; 3/15/00 400,000 434,194
J.C. Penney Co., Inc. Debentures;
7.13%; 11/15/23 1,000,000 952,107
Sears Roebuck Co.
Medium-Term Notes;
9.05%; 2/6/12 500,000 586,562
9.12%; 2/13/12 1,000,000 1,179,204
3,355,415
Drug Stores & Proprietary Stores (1.51%)
Rite Aid Corp. Senior Debentures;
6.88%; 8/15/13 2,000,000 1,841,486
Eating & Drinking Places (1.91%)
Marriott International, Inc. Notes;
6.75%; 12/15/03 1,300,000 1,287,582
Marrriott International, Inc. Senior
Notes; 7.88%; 4/15/05 1,000,000 1,046,727
2,334,309
Electric Services (4.48%)
Cleveland Electric Illuminating Co.
First Mortgage Medium-Term
Notes; 7.85%; 7/30/02 1,500,000 1,486,729
Ohio Edison Co. First Mortgage
Bonds; 8.25%; 4/1/02 2,000,000 2,073,252
Southern California Edison Co. Notes;
6.38%; 1/15/06 1,000,000 961,250
Toledo Edison Co. Debentures;
8.70%; 9/1/02 1,000,000 945,926
5,467,157
Engines & Turbines (0.80%)
Brunswick Corp. Debentures;
7.38%; 9/1/23 1,000,000 981,492
Fabricated Rubber Products,
NEC (1.39%)
M. A. Hanna Co. Senior Notes;
9.38%; 9/15/03 1,500,000 1,697,530
Farm & Garden Machinery (2.12%)
Case Corp. Notes; 7.25%; 1/15/16 1,000,000 966,973
Tenneco, Inc. Notes;
9.88%; 2/1/01 500,000 558,760
7.88%; 10/1/02 1,000,000 1,053,517
2,579,250
Gas Production & Distribution (1.00%)
Transco Energy Co. Notes;
9.38%; 8/15/01 1,100,000 1,221,017
General Government, NEC (3.46%)
Ontario Hydro Debentures;
7.45%; 3/31/13 2,000,000 2,066,300
Province of Saskatchewan, Canada
Global Notes; 8.00%; 2/1/13 2,000,000 2,153,100
4,219,400
Gold & Silver Ores (1.02%)
Placer Dome, Inc. Notes;
7.13%; 6/15/07 $1,250,000 $ 1,245,971
Grain Mill Products (0.83%)
Ralston Purina Co. Debentures;
7.75%; 10/1/15 1,000,000 1,008,486
Grocery Stores (0.91%)
Food Lion, Inc. Medium-Term
Notes; 8.67%; 8/28/06 1,000,000 1,105,421
Household Furniture (1.61%)
Masco Corp. Debentures;
7.13%; 8/15/13 2,000,000 1,960,464
Industrial Inorganic Chemicals (4.44%)
Dow Chemical Co. Debentures;
7.38%; 3/1/23 1,000,000 986,673
Dow Chemical Co. Medium-Term
Notes; 7.75%; 9/15/20 1,000,000 1,038,469
FMC Corp. Senior Notes;
6.38%; 9/1/03 750,000 722,594
Grace, (W.R.) & Co. Guaranteed
Notes; 8.00%; 8/15/04 2,500,000 2,661,482
5,409,218
Machinery, Equipment,
& Supplies (0.20%)
AAR Corp. Notes; 7.25%; 10/15/03 250,000 244,979
Metalworking Machinery (1.06%)
Black & Decker Corp. Notes;
7.00%; 2/1/06 1,300,000 1,298,272
Millwork, Plywood & Structural
Members (1.40%)
Georgia-Pacific Corp. Debentures;
9.50%; 12/1/11 600,000 715,329
Georgia-Pacific Corp. Senior
Debentures; 7.70%; 6/15/15 1,000,000 997,798
1,713,127
Miscellaneous Chemical
Products (1.25%)
Cabot Corp. Notes;
10.25%; 12/15/97 400,000 417,735
Ferro Corp. Senior Debentures;
7.63%; 5/1/13 1,100,000 1,107,899
1,525,634
Miscellaneous Equipment Rental
& Leasing (0.87%)
McDonnell Douglas Finance Corp.
Medium-Term Notes, Series 9;
9.94%; 6/11/98 1,000,000 1,058,832
Miscellaneous Investing (1.04%)
Weingarten Realty Investors
Medium-Term Notes;
7.29%; 5/23/05 1,250,000 1,273,835
Miscellaneous Metal Ores (2.36%)
Amax, Inc. Notes; 9.88%; 6/13/01 $ 900,000 $ 1,012,114
Cyprus Amax Minerals Notes;
7.38%; 5/15/07 1,100,000 1,118,567
Cyprus Minerals Co. Notes;
10.13%; 4/1/02 650,000 746,406
2,877,087
Motion Picture Production
& Services (0.34%)
Columbia Pictures Entertainment, Inc.
Senior Subordinated Notes;
9.88%; 2/1/98 400,000 418,242
Motor Vehicles & Equipment (2.69%)
Ford Motor Co. Debentures;
8.88%; 1/15/22 1,000,000 1,160,146
7.50%; 8/1/26 1,000,000 1,003,986
General Motors Corp. Global
Medium-Term Notes;
8.88%; 5/15/03 1,000,000 1,111,772
3,275,904
Newspapers (1.99%)
News America Holdings, Inc.
Guaranteed Senior Notes;
8.50%; 2/15/05 2,250,000 2,424,487
Operative Builders (1.25%)
Pulte Corp. Senior Notes;
8.38%; 8/15/04 500,000 531,640
7.30%; 10/24/05 1,000,000 990,774
1,522,414
Paper Mills (7.58%)
Boise Cascade Corp. Notes;
9.90%; 3/15/00 500,000 548,852
9.85%; 6/15/02 1,000,000 1,137,734
Bowater, Inc. Debentures;
9.50%; 10/15/12 1,000,000 1,186,704
9.38%; 12/15/21 1,500,000 1,802,424
Champion International Corp.
Notes; 9.88%; 6/1/00 750,000 831,093
Chesapeake Corp. Notes;
9.88%; 5/1/03 1,000,000 1,157,890
7.20%; 3/15/05 600,000 605,543
James River Corp. Notes;
6.70%; 11/15/03 2,000,000 1,972,238
9,242,478
Paperboard Mills (1.43%)
Federal Paper Board Co., Inc.
Debentures; 8.88%; 7/1/12 1,500,000 1,746,711
Personal Credit Institutions (3.65%)
Coastal Corp. Senior Notes;
9.75%; 8/1/03 1,500,000 1,725,460
General Motors Acceptance Corp.
Global Notes; 8.50%; 1/1/03 2,000,000 2,173,088
Household Finance Corp. Senior
Subordinated Notes;
9.63%; 7/15/00 500,000 550,710
4,449,258
Petroleum Refining (7.49%)
Ashland, Inc. Medium-Term Notes;
7.71%; 5/11/07 $ 500,000 $ 522,936
7.72%; 7/15/13 1,000,000 1,023,691
7.73%; 7/15/13 750,000 768,494
Mapco, Inc. Medium-Term Notes;
8.48%; 8/5/13 1,000,000 1,044,674
Pennzoil Co. Debentures;
10.13%; 11/15/09 1,675,000 2,069,894
Sun Co., Inc. Debentures;
9.00%; 11/1/24 2,000,000 2,315,942
Sun Co., Inc. Notes; 7.13%; 3/15/04 300,000 304,371
Ultramar Credit Corp. Guaranteed
Notes; 8.63%; 7/1/02 1,000,000 1,079,911
9,129,913
Photographic Equipment
& Supplies (0.85%)
Xerox Corp. Notes; 9.63%; 9/1/97 1,000,000 1,030,496
Primary Nonferrous Metals (2.53%)
Reynolds Metals Co.
Medium-Term Notes;
8.22%; 5/30/07 2,000,000 2,168,916
7.65%; 2/4/08 875,000 912,700
3,081,616
Pulp Mills (2.30%)
ITT Rayonier, Inc. Notes;
7.50%; 10/15/02 1,875,000 1,913,478
International Paper Co.
Medium-Term Notes;
9.70%; 8/15/00 800,000 885,404
2,798,882
Refrigeration & Service
Machinery (2.11%)
Westinghouse Electric Corp.
Debentures; 8.63%; 8/1/12 1,000,000 996,077
Westinghouse Electric Corp.
Global Notes; 8.88%; 6/1/01 1,500,000 1,575,123
2,571,200
Rental of Railroad Cars (2.52%)
Gatx Capital Corp. Medium-Term Notes;
Series B; 9.50%; 1/10/02 1,500,000 1,676,723
Series C; 6.86%; 10/13/05 1,000,000 980,385
General American Transportation
Corp. Medium-Term Notes;
10.65%; 11/14/97 400,000 418,229
3,075,337
Sanitary Services (1.51%)
Laidlaw, Inc. Notes;
7.70%; 8/15/02 1,000,000 1,047,317
Laidlaw, Inc. Senior Notes;
7.88%; 4/15/05 750,000 790,392
1,837,709
Telephone Communication (2.12%)
Sprint Corp. Notes; 8.13%; 7/15/02 $1,500,000 $ 1,608,642
U.S. West Capital Funding, Inc.
Notes; 6.80%; 11/23/07 1,000,000 981,660
2,590,302
Variety Stores (3.10%)
Dayton-Hudson Corp. Debentures;
9.25%; 8/15/11 1,000,000 1,180,784
Dayton-Hudson Corp.
Sinking Fund Debentures;
9.50%; 10/15/16 179,000 187,078
Shopko Stores, Inc. Senior
Notes; 9.00%; 11/15/04 2,500,000 2,414,829
3,782,691
Total Bonds 117,129,693
Commercial Paper (1.98%)
Business Credit Institutions (1.98%)
General Electric Capital Corp.;
5.75%; 11/1/96 2,410,000 2,410,000
Total Portfolio Investments (98.03%) 119,539,693
Cash, receivables and other assets, net of
liabilities (1.97%) 2,399,276
Total Net Assets (100.00%) $121,938,969
PRINCOR GOVERNMENT SECURITIES INCOME
FUND, INC.
Description of Issue Principal
Type Rate Maturity Amount Value
Government National Mortgage Association (GNMA)
Certificates (100.33%)
GNMA I 6.00% 10/15/23-4/15/26 $31,210,327 $ 29,210,122
GNMA I 6.50 9/15/23-11/1/26 50,442,101 48,560,459
GNMA I 7.00 10/15/22-4/15/26 62,033,845 61,271,329
GNMA I 7.25 9/15/25-10/15/25 5,798,548 5,766,135
GNMA I 7.50 4/15/17-8/15/24 50,358,279 50,845,673
GNMA I 8.00 8/15/16-2/15/22 14,178,902 14,674,171
GNMA II 6.00 1/20/24-7/20/26 51,485,535 47,593,742
GNMA II 6.50 3/20/24-8/20/26 14,733,359 14,059,720
Total GNMA Certificates 271,981,351
Federal Agency Short-Term Obligations (0.46%)
Federal Home Loan Mortgage Corporation;
5.53%; 11/1/96 1,250,000 1,250,000
Total Portfolio Investments (100.79%) 273,231,351
Liabilities, net of cash, receivables and other
assets (-0.79%) $ (2,135,555)
Total Net Assets (100.00%) $271,095,796
PRINCOR HIGH YIELD FUND, INC.
Principal
Amount Value
Bonds (92.79%)
Agricultural Chemicals (2.65%)
IMC Fertilizer Group, Inc. Senior
Debentures; 9.45%; 12/15/11 $ 700,000 $ 812,733
Aircraft & Parts (2.15%)
Rohr Industries, Inc. Subordinated
Debentures; 9.25%; 3/1/17 700,000 658,000
Automotive Rentals, No Drivers (1.26%)
Alamo Rent-A-Car, Inc. Senior Notes;
11.75%; 1/31/06 350,000 385,000
Blast Furnace & Basic Steel
Products (2.37%)
Ivaco Senior Notes;
11.50%; 9/15/05 350,000 348,250
Weirton Steel Corp. Senior Notes;
10.75%; 6/1/05 400,000 380,000
728,250
Broadwoven Fabric Mills, Cotton (2.27%)
J.P. Stevens & Co., Inc. Sinking
Fund Debentures; 9.00%; 3/1/17 700,000 696,500
Cable & Other Pay TV Services (2.35%)
Jones Intercable, Inc. Senior Notes;
9.63%; 3/15/02 700,000 721,000
Cogeneration - Small Power
Producer (3.60%)
AES Corporation Senior Subordinated
Notes; 10.25%; 7/15/06 700,000 744,625
California Energy Co., Inc. Limited
Resource Senior Secured Notes;
9.88%; 6/30/03 350,000 360,500
1,105,125
Computer & Data Processing
Services (2.50%)
Tenet Heathcare Corp. Senior
Subordinated Notes;
10.13%; 3/1/05 700,000 768,250
Consumer Products (1.95%)
RJR Nabisco, Inc. Senior Notes;
8.75%; 8/15/05 600,000 597,750
Crude Petroleum & Natural Gas (3.16%)
Chesapeake Energy Corp. Senior Notes;
9.13%; 4/15/06 $ 350,000 $ 351,750
Nuevo Energy Co. Senior Subordinated
Notes; 9.50%; 4/15/06 600,000 617,250
969,000
Electric Services (1.17%)
El Paso Electric Co. First Mortgage
Bonds, Series D; 8.90%; 2/1/06 350,000 358,312
Electric Components
& Accessories (2.38%)
Advanced Micro Devices, Inc.
Senior Secured Notes;
11.00%; 8/1/03 700,000 731,500
Engines & Turbines (2.10%)
Outboard Marine Corp. Debentures;
9.13%; 4/15/17 700,000 644,000
Footwear, Except Rubber (1.47%)
Brown Group, Inc. Senior Notes;
9.50%; 10/15/06 450,000(a) 451,125
Forest Products (2.15%)
Doman Industries Ltd. Senior Notes;
8.75%; 3/15/04 700,000 658,000
Fuel Dealers (2.29%)
Petroleum Heat & Power Co., Inc.
Subordinated Notes;
10.13%; 4/1/03 700,000 700,875
General Government, NEC (1.01%)
Republic of Argentina Global Bonds;
8.38%; 12/20/03 350,000 310,188
Groceries & Related Products (2.10%)
Rykoff-Sexton, Inc. Senior
Subordinated Notes;
8.88%; 11/1/03 700,000 644,000
Grocery Stores (3.54%)
Dominick's Finer Foods, Inc.
Senior Subordinated Notes;
10.88%; 5/1/05 350,000 385,875
Ralph's Grocery Co. Senior
Subordinated Notes;
11.00%; 6/15/05 700,000 700,000
1,085,875
Hotels & Motels (4.70%)
Bally's Grand, Inc. First Mortgage
Notes; 10.38%; 12/15/03 700,000 773,500
John Q. Hammons Hotels, L.P. &
Finance Corp. First Mortgage
Notes; 8.88%; 2/15/04 700,000 669,375
1,442,875
Knitting Mills (2.43%)
Tultex Corp. Senior Notes;
10.63%; 3/15/05 700,000 746,375
Metal Cans & Shipping Containers (0.34%)
U.S. Can Corp. Senior Subordinated
Notes; 10.13%; 10/15/06 $ 100,000(a) $ 103,250
Miscellaneous Amusement, Recreation
Service (1.19%)
Rio Hotel & Casino, Inc. Senior
Subordinated Notes;
10.63%; 7/15/05 350,000 364,000
Miscellaneous Converted Paper
Products (2.09%)
Drypers Corp. Senior Notes;
12.50%; 11/1/02 700,000 640,500
Miscellaneous Plastics Products,
NEC (3.29%)
Congoleum Corp. Senior Notes;
9.00%; 2/1/01 700,000 693,000
Plastic Containers, Inc.
Senior Secured Notes;
10.75%; 4/1/01 300,000 315,750
1,008,750
Motor Vehicles & Equipment (2.27%)
Lear Seating Corp. Subordinated
Notes; 8.25%; 2/1/02 700,000 694,750
Nonferrous Foundries (Casting) (1.23%)
Howmet Corp. Senior Subordinated
Notes; 10.00%; 12/1/03 350,000 376,250
Nursing & Personal Care Facilities (2.21%)
Mariner Health Group, Inc. Senior
Subordinated Notes; 9.50%; 4/1/06 700,000 679,000
Petroleum Refining (2.32%)
Crown Central Petroleum Corp.
Senior Notes; 10.88%; 2/1/05 700,000 712,250
Primary Nonferrous Metals (0.66%)
Euramax International PLC Senior
Subordinated Notes; 11.25%; 10/1/06 200,000(a) 203,000
Pulp Mills (2.18%)
Magnetek, Inc. Senior Subordinated
Debentures; 10.75%; 11/15/98 650,000 669,500
Radio, Television, & Computer
Stores (2.34%)
CompUSA, Inc. Senior Subordinated
Notes; 9.50%; 6/15/00 700,000 716,625
Radio & Television Broadcasting (4.30%)
American Radio Systems Senior
Subordinated Notes; 9.00%; 2/1/06 700,000 662,375
EZ Communications, Inc. Senior
Subordinated Notes; 9.75%; 12/1/05 300,000 303,000
Sullivan Broadcasting, Inc. Senior
Subordinated Notes; 10.25%; 12/15/05 $ 350,000 $ 353,500
1,318,875
Soap, Cleaners, & Toilet Goods (2.43%)
Coty, Inc. Senior Subordinated
Notes; 10.25%; 5/1/05 700,000 745,500
Telephone Communication (11.51%)
360 Communications Co. Senior Notes;
7.50%; 3/1/06 350,000 344,031
Paging Network, Inc. Senior Debentures;
8.88%; 2/1/06 700,000 654,500
Rogers Cablesystems Ltd. Senior
Secured Second Priority Notes;
9.63%; 8/1/02 750,000 763,125
Rogers Cantel, Inc. Senior Secured
Debentures; 9.75%; 6/1/16 700,000 698,250
Telecom Argentina Stet-France Telecom
SA Senior Notes; 12.00%; 11/15/02 350,000 377,125
Vanguard Cellular Systems, Inc. Senior
Debentures; 9.38%; 4/15/06 700,000 693,000
3,530,031
Textile Finishing, Except Wool (2.30%)
Dominion Textile (USA), Inc. Guaranteed
Senior Notes; 9.25%; 4/1/06 700,000 704,375
Water Supply (2.53%)
California Energy Casecnan Water &
Energy Co., Inc. Senior Secured,
Series B Bonds; 11.95%; 11/15/10 700,000(a) 777,000
Total Bonds 28,458,389
Commercial Paper (4.50%)
Business Credit Institutions (4.50%)
General Electric Capital Corp.;
5.75%; 11/1/96 1,380,000 1,380,000
Total Portfolio Investments (97.29%) 29,838,389
Cash, receivables and other assets, net of
liabilities (2.71%) 831,072
Total Net Assets (100.00%) $30,669,461
(a) Restricted security - See Note 4 to the financial statements.
PRINCOR LIMITED TERM BOND FUND, INC.
Principal
Amount Value
Bonds (69.35%)
Combination Utility Services (6.30%)
Consolidated Edison Co. Debentures,
Series 92-D; 6.50%; 9/1/99 $100,000 $ 100,656
Consolidated Edison Co. Debentures,
Series 93-B; 6.50%; 2/1/01 730,000 729,898
Pacificorp First Mortgage Medium-Term
Notes; 9.50%; 5/20/99 $250,000 $ 269,228
1,099,782
Consumer Products (7.76%)
B.A.T. Capital Corp. Medium-Term
Notes; 5.32%; 10/28/98 600,000(a) 589,534
Philip Morris Cos. Notes;
7.13%; 12/1/99 750,000 764,472
1,354,006
Department Stores (9.48%)
J. C. Penney Co., Inc. Notes;
9.05%; 3/1/01 770,000 841,311
Sears Roebuck Acceptance Corp.
Medium-Term Notes, Series II;
6.69%; 8/13/01 450,000 452,789
Sears Roebuck Co. Medium-Term Notes;
6.46%; 5/12/00 100,000 100,264
Sears Roebuck Co. Notes;
8.20%; 4/15/99 250,000 259,801
1,654,165
Electric Services (3.48%)
Southern California Edison Co. First
Mortgage Refunding Bonds;
6.75%; 1/15/00 600,000 606,605
Miscellaneous Food & Kindred
Products (1.21%)
General Mills, Inc. Medium-Term Notes;
9.00%; 11/30/98 200,000 211,195
Mortgage Bankers & Brokers (4.83%)
Countrywide Funding Corp.
Medium-Term Notes;
6.05%; 3/1/01 860,000 842,318
Motor Vehicles & Equipment (3.17%)
General Motors Corp. Medium-Term
Notes; 9.20%; 7/2/01 500,000 552,425
Paper Mills (4.68%)
International Paper Co. Notes;
7.00%; 6/1/01 800,000 816,113
Paperboard Mills (2.51%)
Temple-Inland, Inc. Notes;
9.00%; 5/1/01 400,000 437,599
Personal Credit Institutions (12.17%)
American General Finance Corp. Notes;
7.25%; 4/15/00 500,000 514,443
Chrysler Financial Corp.
Medium-Term Notes;
8.45%; 1/28/00 500,000 530,887
Chrysler Financial Corp. Notes;
5.88%; 2/7/01 300,000 292,956
Ford Motor Credit Co. Notes;
6.85%; 8/15/00 775,000 784,947
2,123,233
Security Brokers & Dealers (4.71%)
Lehman Brothers, Inc. Senior
Subordinated Notes;
5.75%; 11/15/98 830,000 821,228
Telephone Communication (9.05%)
Nynex Capital Funding Medium-Term
Notes, Series A; 9.40%; 6/1/00 $670,000 $ 733,834
U. S. West Capital Funding, Inc.
Medium-Term Notes;
6/13%; 11/30/99 850,000 845,383
1,579,217
Total Bonds 12,097,886
Federal Home Loan Mortgage Corporation (FHLMC)
Certificates (20.77%)
Description of Issue Principal
Type Rate Maturity Amount Value
FHLMC 7.25% 12/1/07 $ 799,189 $ 802,554
FHLMC 8.00 12/1/11 419,631 433,911
FHLMC 8.25 1/1/12 154,491 158,832
FHLMC Gold 8.00 10/1/22 325,014 335,538
FHLMC Gold 8.50 1/1/00-4/1/00 1,146,246 1,188,863
FHLMC Gold 9.00 9/1/09 667,108 702,811
Total FHLMC Certificates 3,622,509
Federal National Mortgage Association (FNMA)
Certificates (1.08%)
FNMA 8.00 10/1/06 180,805 187,554
Government National Mortgage Association (GNMA)
Certificates (3.34%)
GNMA I 9.00 7/15/17 154,213 165,138
GNMA II 8.00 1/20/16 403,812 417,206
Total GNMA Certificates 582,344
Principal
Amount Value
Asset-Backed Securities (3.46%)
Personal Credit Institutions (3.46%)
Union Acceptance Corp. 1996-B Auto Trust
Pass-Through Certificates, Class A;
6.45%; 7/8/03 $600,306 $ 604,310
Total Portfolio Investments (98.00%) 17,094,603
Cash and receivables, net of liabilities (2.00%) 349,561
Total Net Assets (100.00%) $17,444,164
(a) Restricted security - See Note 4 to the financial statements.
PRINCOR TAX-EXEMPT BOND FUND, INC.
Principal
Amount Value
Long-Term Tax-Exempt Bonds (96.70%)
Alabama (2.14%)
Courtland, Alabama IDB IDR Series A
Bonds for Champion International;
7.20%; 12/1/13 $3,815,000 $ 4,139,275
Arizona (3.24%)
Navajo County, Arizona Pollution Control
Corp. Rev. Ref. Bonds, Arizona Public
Service Co., Series 1993A;
5.88%; 8/15/28 4,100,000 4,053,875
Pinal County, Arizona Industrial Dev.
Authority Browning-Ferris
Industries, Inc. Proj., Series 1996;
5.00%; 2/1/06 2,250,000 2,199,375
6,253,250
Arkansas (2.54%)
City of Blytheville, Arkansas Solid Waste
Recycling & Sewer Treatment Rev.
Bonds, Series 1992, Nucor Corp.
Project; 6.90%; 12/1/21 4,610,000 4,892,362
California (4.71%)
ABAG Finance Authority for Nonprofit
Corp., Cert. of Participation,
Stanford University Hospital;
5.00%; 11/1/04 750,000 739,687
5.50%; 11/1/13 1,250,000 1,202,763
5.25%; 11/1/20 1,750,000 1,577,188
California Pollution Control Funding
Authority Pollution Control Rev. Ref.
Bonds; for San Diego Gas & Electric,
Series A; 5.90%; 6/1/14 1,000,000 1,040,000
California Pollution Control Funding
Authority Rev. Bonds, Atlantic
Richfield Co. Project; 5.00%; 4/1/08 2,500,000 2,450,000
City of Upland, California San Antonio
Comm. Hospital Cert. of Participation;
5.25%; 1/1/04 2,080,000 2,074,800
9,084,438
Colorado (2.72%)
City & County of Denver, Colorado, Airport
System Rev. Bonds, Series 1991D;
7.75%; 11/15/13 3,185,000 3,822,000
Colorado Health Fac. Authority Rev. Bonds
for Sisters of Charity Healthcare
Systems, Series 1994; 5.25%; 5/15/14 1,500,000 1,430,625
5,252,625
Florida (0.97%)
Nassau County, Florida Pollution Control
Ref. Bonds; ITT Rayonier, Inc. Project;
6.10%; 6/1/05 500,000 518,125
Nassau County, Florida Pollution Control
Rev. Ref., ITT Rayonier, Inc. Project;
7.65%; 6/1/06 $1,265,000 $ 1,350,387
1,868,512
Georgia (3.13%)
Coweta County, Georgia Dev. Authority
Pollution Control Rev. Bonds,
Georgia Power Co., Yates Project;
6.00%; 3/1/18 2,500,000 2,518,750
Fulco, Georgia, Hospital Authority Rev.
Anticipation Cert. for St. Joseph's
Hospital of Atlanta, Inc.;
5.50%; 10/1/14 2,000,000 1,917,500
Municipal Electric Authority of Georgia
Power Rev. Bonds, Series R;
7.30%; 1/1/09 1,505,000 1,599,063
6,035,313
Illinois (15.27%)
Chicago, Illinois O'Hare International
Airport Special Fac. Rev. Bonds for
American Airlines, Inc. Project-A;
7.88%; 11/1/25 6,010,000 6,468,262
City of Chicago, Illinois Adj. Rate Gas
Supply Rev. Bonds, Series 1985A,
Peoples Gas Light & Coke Project;
6.88%; 3/1/15 3,800,000 4,132,500
Illinois Dev. Financial Authority
Pollution Control Rev. Bonds for
Illinois Power Co.; 7.63%; 12/1/16 2,050,000 2,137,371
Illinois Health Fac. Authority for
Sarah Bush Lincoln Health Center
Area E-7 Hospital Association
Bonds, Series 1987;
7.20%; 4/1/01 150,000 155,100
7.38%; 4/1/17 850,000 879,495
Illinois Health Fac. Authority Ref. Rev.
Bonds for OSF Healthcare System;
6.00%; 11/15/10 500,000 499,375
6.00%; 11/15/13 500,000 499,375
Illinois Health Fac. Authority Ref. Rev.
Bonds for OSF Healthcare System,
Series 1993; 5.75%; 11/15/07 1,000,000 998,750
Illinois Health Fac. Authority Rev. Bonds
for Sarah Bush Lincoln Health
Center, Series 1992;
7.25%; 5/15/12 2,950,000 3,071,688
7.25%; 5/15/22 1,515,000 1,566,131
Illinois Health Fac. Authority Rev. Bonds
for South Suburban Hospital,
Series 1992;
7.00%; 2/15/09 500,000 522,500
7.00%; 2/15/18 1,250,000 1,307,813
Illinois Health Fac. Authority Rev. Bonds,
Northwestern Memorial Hospital,
Series 1994A;
5.60%; 8/15/06 500,000 511,250
5.75%; 8/15/08 615,000 626,531
5.80%; 8/15/09 840,000 849,450
6.10%; 8/15/14 1,000,000 1,017,500
Illinois Health Fac. Authority Rev. Ref.
Bonds for Advocate Healthcare,
Series A; 6.75%; 4/15/12 2,000,000 2,110,000
Regional Transportation Authority,
Illinois General Obligation Bonds,
Series 1994A; 6.25%; 6/1/15 $2,000,000 $ 2,105,000
29,458,091
Indiana (6.20%)
City of Mount Vernon, Indiana, Pollution
Control Rev. Bonds for Southern
Indiana Gas & Electric Co. Project;
7.25%; 3/1/14 700,000 764,750
City of Petersburg, Indiana, Pollution
Control Rev. Bonds, for Indianapolis
Power & Light Co. Project,
Series 1993A; 6.10%; 1/1/16 4,000,000 4,100,000
Indiana Health Fac. Financing Authority
Hospital Rev. Ref. Bonds, Welborn
Memorial Baptist Hospital, Series 1993;
5.63%; 7/1/23 1,860,000 1,715,850
Lawrenceburg, Indiana Pollution Control
Rev. Ref. Bonds, Indiana Michigan
Power Co. Project,
Series D; 7.00%; 4/1/15 1,000,000 1,062,500
Series E; 5.90%; 11/1/19 3,220,000 3,119,375
Warrick County, Indiana Environmental
Improvement Rev. Bonds, Southern
Indiana Gas & Electric, Series 1993B;
6.00%; 5/1/23 1,190,000 1,210,825
11,973,300
Iowa (4.37%)
City of Muscatine, Iowa, Electric Rev.
Ref. Bonds, Series 1986;
6.00%; 1/1/06 160,000 160,086
5.00%; 1/1/07 1,665,000 1,565,100
Eddyville, Iowa, IDR Ref. Bonds,
Cargill, Inc. Project; 5.63%; 12/1/13 1,000,000(a) 996,250
Iowa Finance Authority Hospital Fac.
Ref. Rev. Bonds for Jennie
Edmundson Memorial Hospital;
7.40%; 11/1/06 550,000 586,438
7.65%; 11/1/16 4,900,000 5,126,625
8,434,499
Kentucky (0.97%)
City of Ashland, Kentucky, Solid Waste
Rev. Bonds for Ashland Oil, Inc.
Project, Series 1991; 7.20%; 10/1/20 1,000,000 1,063,750
City of Ashland, Kentucky Sewage and
Solid Waste Rev. Bonds for Ashland,
Inc. Project, Series 1995; 7.13%; 2/1/22 750,000 802,500
1,866,250
Louisiana (1.08%)
St. Charles Parish, Louisiana Pollution
Control Rev. Bonds for Louisiana
Power & Light Co. Project;
7.50%; 6/1/21 1,950,000 2,079,187
Maine (1.04%)
Skowhegan, Maine, Pollution Control
Rev. Ref. Bonds for Scott Paper
Co. Project, Series 1993;
5.90%; 11/1/13 2,000,000 2,010,000
Michigan (2.30%)
Michigan State Hospital Financing
Authority Hospital Rev. Bonds for
Detroit Medical Center, Series 1993B;
5.75%; 8/15/13 $ 600,000 $ 589,500
5.50%; 8/15/23 2,000,000 1,865,000
Michigan State Hospital Financing
Authority Rev. Ref. Bonds, Daughters
of Charity Hospital; 5.25%; 11/1/05 1,000,000 943,750
Michigan State Hospital Financing
Authority Rev. Ref. Bonds, Daughters
of Charity Natl. Health System;
5.50%; 11/1/05 1,000,000 1,031,250
4,429,500
Minnesota (1.55%)
City of Bass Brook, Minnesota Pollution
Control Rev. Ref. Bonds for Minnesota
Power & Light Project; 6.00%; 7/1/22 3,000,000 3,000,000
Missouri (1.17%)
Missouri State Health & Educational
Fac. Authority Health Fac. Rev. Bonds,
BJC Health System, Series 1994A;
6.75%; 5/15/12 2,000,000 2,262,500
Montana (1.04%)
Forsyth, Montana Pollution Control Rev.
Ref. Bonds, Montana Power Co.,
Colstrip Project, Series 1993A;
6.13%; 5/1/23 2,000,000 2,002,500
Nebraska (1.87%)
Nebraska Public Power Dist. Power
Supply System Rev. Bonds;
5.30%; 1/1/02 1,000,000 1,026,250
5.40%; 1/1/03 1,500,000 1,545,000
5.50%; 1/1/04 1,000,000 1,035,000
3,606,250
Nevada (1.98%)
Clark County, Nevada, IDR Ref. Bonds,
Nevada Power Co. Project,
Series 1992C; 7.20%; 10/1/22 3,600,000 3,811,500
New Mexico (1.09%)
City of Lordsburg, New Mexico
Pollution Control Rev. Bonds
for Phelps Dodge Corp. Project;
6.50%; 4/1/13 2,000,000 2,102,500
North Carolina (2.01%)
Martin County, North Carolina Industrial
Fac. & Pollution Control Finance
Authority Solid Waste Rev. Bonds,
Weyerhaeuser; 6.80%; 5/1/24 2,000,000 2,157,500
North Carolina Medical Care Hospital
Rev. Bonds for Rex Hospital Project;
6.13%; 6/1/10 1,700,000 1,729,750
3,887,250
North Dakota (1.08%)
Mercer County, North Dakota, Pollution
Control Rev. Bonds, Ottertail Power
Co. Project, Series 1991; 6.90%; 2/1/19 1,950,000 2,086,500
Ohio (5.24%)
Cuyahoga County, Ohio, Hospital Rev.
Bonds for Meridia Health Systems,
Series 1991;
7.25%; 8/15/19 $1,445,000 $ 1,535,313
7.00%; 8/15/23 250,000 264,062
Lorain County, Ohio Hospital Ref. Bonds,
Humility Mary Health Care, Series A;
5.90%; 12/15/08 3,270,000 3,372,188
Ohio Air Quality Dev. Rev. Bonds,
Columbus Southern Power Co. Project,
Series 1985B; 6.25%; 12/1/20 4,900,000 4,942,875
10,114,438
Oklahoma (1.22%)
Tulsa Industrial Authority Rev. Bonds,
St. John Medical Center Project,
Series 1994;
6.25%; 2/15/14 1,280,000 1,321,600
6.25%; 2/15/17 1,000,000 1,028,750
2,350,350
Rhode Island (1.54%)
Rhode Island State Industrial Facilities
Corp. Marine Term Rev. Bonds,
Mobile Oil Refining; 6.00%; 11/1/14 2,900,000 2,979,750
South Carolina (2.53%)
Oconee County, South Carolina Pollution
Control Rev. Ref. Bonds, Duke Power
Co. Project, Series 1993;
5.80%; 4/1/14 1,000,000 1,017,500
York County, South Carolina Exempt Fac.
Industrial Rev. Bonds for Hoechst
Celanese Project, Series 1994;
5.70%; 1/1/24 2,000,000 1,942,500
York County, South Carolina Pollution
Control Rev. Bonds, Bowater, Inc.
Project; 7.63%; 3/1/06 1,700,000 1,923,125
4,883,125
South Dakota (0.56%)
Pennington County, South Dakota
Pollution Control Rev. Ref. Bonds
for Black Hills Power & Light Co.
Project; 6.70%; 6/1/10 1,000,000 1,071,250
Texas (6.15%)
Brazos River Authority, Texas, Pollution
Control Rev. Bonds for Houston
Lighting & Power;
8.25%; 5/1/15 820,000 875,350
7.75%; 10/1/15 855,000 915,919
8.25%; 5/1/19 500,000 533,750
Guadalupe-Blanco River Authority,
Texas, Industrial Dev. Corp.
Pollution Control Rev. E I Du Pont
1982 Series A; 6.35%; 7/1/22 2,500,000 2,640,625
Matagorda County, Texas, Navigational
District No. 1 Pollution Control Rev.
Bonds for Central Power & Light Co.;
7.50%; 12/15/14 $2,585,000 $ 2,843,500
6.00%; 7/1/28 1,000,000 1,006,250
Milam County, Texas Industrial Dev. Corp.
Pollution Control Rev. Ref. Bonds,
Alcoa Project; 5.65%; 12/1/12 2,000,000 2,015,000
Tarrant County, Texas, Health Fac. Dev.
Corp., Harris Methodist Health System
Rev. Bonds; 5.90%; 9/1/06 1,000,000 1,042,500
11,872,894
Utah (0.74%)
Intermountain Power Agency, Utah
Power Supply, Rev. Ref. Bonds,
Series 1993A; 5.50%; 7/1/20 1,500,000 1,430,625
Virginia (2.95%)
Albemarle County, Virginia IDA Hospital
Rev. Ref. Bonds, Martha Jefferson
Hospital; 5.50%; 10/1/15 1,900,000 1,838,250
Arlington County, Virginia, IDA
Hospital Fac. Rev. Ref. Bonds,
Arlington Hospital, Series 1993;
5.00%; 9/1/21 2,715,000 2,406,169
Chesapeake, Virginia IDA Rev. Ref.
Bond for Cargill, Inc. Project;
5.88%; 3/1/13 1,410,000 1,445,250
5,689,669
Washington (4.16%)
City of Seattle, Washington Municipal
Light and Power Rev. Bonds;
1993; 5.10%; 11/1/05 1,950,000 1,962,187
1994; 6.63%; 7/1/16 1,000,000 1,076,250
Pilchuck Dev. Public Corp., State of
Washington, Special Fac. Airport Rev.
Bonds, Series 1993, Tramco, Inc.
Project for BF Goodrich;
6.00%; 8/1/23 3,155,000 3,048,519
Washington Health Care Fac. Authority
Rev. Bonds; Series 1989, Sisters of
Providence; 7.88%; 10/1/10 1,800,000 1,937,250
8,024,206
West Virginia (6.20%)
Marshall County, West Virginia,
Pollution Control Rev. Bonds
for Ohio Power Co. Project;
Series C; 6.85%; 6/1/22 1,200,000 1,278,000
Series D; 5.90%; 4/1/22 4,500,000 4,573,125
Pleasants County, West Virgina
Pollution Control Rev. Bonds
for Potomac Edison Co.;
6.15%; 5/1/15 2,000,000 2,047,500
Putnam County, West Virginia,
Pollution Control Rev. Bonds for
Appalachian Power Co. Project,
Series C; 6.60%; 7/1/19 3,875,000 4,073,594
11,972,219
Wisconsin (2.94%)
Kaukauna, Wisconsin Pollution Control
Rev. Ref. Bonds for Intl. Paper Co.
Project, Series A; 5.40%; 5/1/04 $3,610,000 $ 3,641,587
Wisconsin Health & Educational Fac.
Authority Rev. Bonds; Series 1995;
Franciscan Skemp Medical Center, Inc.;
5.88%; 11/15/10 1,000,000 1,015,000
6.13%; 11/15/15 1,000,000 1,018,750
5,675,337
Total Long-Term Tax-Exempt Bonds 186,599,465
Short-Term Tax-Exempt Bonds (1.40%)
Massachusetts (0.88%)
Commonwealth of Massachusetts, Dedicated
Income Tax Bonds, Series B, LOC
National Westminster;
3.60%; 11/1/96*; 12/1/97 1,700,000 1,700,000
Pennsylvania (0.47%)
Delaware County, Pennsylvania, Fac. Rev.,
Tax and Rev. Anticipation Notes,
Series 1985, Guaranteed by United
Parcel Service; 3.60%; 11/1/96*;12/1/15 900,000 900,000
Wyoming (0.05%)
Uinta County, Wyoming Pollution Control
Ref. Rev. Bonds, Series 1992
Guaranteed by Chevron Corp.;
3.55%; 11/1/96*;12/1/22 100,000 100,000
Total Short-Term Tax-Exempt Bonds 2,700,000
Total Portfolio Investment (98.10%) 189,299,465
Cash, receivables and other assets, net of
liabilities (1.90%) 3,674,190
Total Net Assets (100.00%) $192,973,655
* Demand Date
(a) Restricted security - See Note 4 to the financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR BOND FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $11.42 $.76(b) $(.25) $ .51 $(.76) $ -- $(.76)
1995 10.27 .78(b) 1.16 1.94 (.78) (.01) (.79)
1994 11.75 .78(b) (1.47) (.69) (.78) (.01) (.79)
1993 10.97 .81(b) .79 1.60 (.81) (.01) (.82)
1992 10.65 .85(b) .32 1.17 (.85) -- (.85)
Class B:
Year Ended October 31, 1996 11.41 .67(b) (.25) .42 (.68) -- (.68)
Period Ended October 31, 1995(c) 10.19 .63(b) 1.19 1.82 (.60) -- (.60)
Class R:
Period Ended October 31, 1996(f) 11.27 .51(b) (.13) .38 (.49) -- (.49)
PRINCOR GOVERNMENT
SECURITIES INCOME FUND, INC.
Class A:
Year Ended October 31,
1996 11.31 .70 (.05) .65 (.70) -- (.70)
1995 10.28 .71 1.02 1.73 (.70) -- (.70)
1994 11.79 .69 (1.40) (.71) (.68) (.12) (.80)
1993 11.44 .74 .55 1.29 (.74) (.20) (.94)
1992 11.36 .81 .12 .93 (.81) (.04) (.85)
Class B:
Year Ended October 31, 1996 11.29 .61 (.05) .56 (.62) -- (.62)
Period Ended October 31, 1995(c) 10.20 .56 1.07 1.63 (.54) -- (.54)
Class R:
Period Ended October 31, 1996(f) 11.27 .47 (.08) .39 (.45) -- (.45)
PRINCOR HIGH YIELD FUND, INC.
Class A:
Year Ended October 31,
1996 8.06 .68 .23 .91 (.70) -- (.70)
1995 7.83 .68 .20 .88 (.65) -- (.65)
1994 8.36 .63 (.51) .12 (.65) -- (.65)
1993 8.15 .71 .21 .92 (.71) -- (.71)
1992 7.86 .79 .29 1.08 (.79) -- (.79)
Class B:
Year Ended October 31, 1996 8.05 .61 .20 .81 (.63) -- (.63)
Period Ended October 31, 1995(c) 7.64 .53 .38 .91 (.50) -- (.50)
Class R:
Period Ended October 31, 1996(f) 8.21 .46 (.03) .43 (.44) -- (.44)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio
End Total End of Period Average Average Turnover
of Period Return(a) (in thousands) Net Assets Net Assets Rate
PRINCOR BOND FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 $11.17 4.74% $113,437 .95%(b) 6.85% 3.4%
1995 11.42 19.73% 106,962 .94%(b) 7.26% 5.1%
1994 10.27 (6.01)% 88,801 .95%(b) 7.27% 8.9%
1993 11.75 15.22% 85,015 .92%(b) 7.19% 9.3%
1992 10.97 11.45% 62,534 .88%(b) 7.95% 8.4%
Class B:
Year Ended October 31, 1996 11.15 3.91% 7,976 1.69%(b) 6.14% 3.4%
Period Ended October 31, 1995(c) 11.41 17.98%(d) 2,708 1.59%(b)(e) 6.30%(e) 5.1%(e)
Class R:
Period Ended October 31, 1996(f) 11.16 3.75%(d) 525 1.28%(b)(e) 6.51%(e) 3.4%(e)
PRINCOR GOVERNMENT
SECURITIES INCOME FUND, INC.
Class A:
Year Ended October 31,
1996 11.26 6.06% 259,029 .81% 6.31% 25.9%
1995 11.31 17.46% 261,128 .87% 6.57% 10.1%
1994 10.28 (6.26)% 249,438 .95% 6.35% 24.8%
1993 11.79 11.80% 236,718 .93% 6.38% 52.6%
1992 11.44 8.49% 161,565 .95% 7.04% 54.3%
Class B:
Year Ended October 31, 1996 11.23 5.17% 11,586 1.60% 5.53% 25.9%
Period Ended October 31, 1995(c) 11.29 16.07%(d) 4,699 1.53%(e) 5.68%(e) 10.1%(e)
Class R:
Period Ended October 31, 1996(f) 11.21 3.76%(d) 481 1.18%(e) 5.84%(e) 25.9%(e)
PRINCOR HIGH YIELD FUND, INC.
Class A:
Year Ended October 31,
1996 8.27 11.88% 28,432 1.26% 8.49% 18.8%
1995 8.06 11.73% 23,396 1.45% 8.71% 40.3%
1994 7.83 1.45% 19,802 1.46% 7.82% 27.2%
1993 8.36 11.66% 19,154 1.35% 8.57% 23.4%
1992 8.15 14.35% 16,359 1.41% 9.69% 28.2%
Class B:
Year Ended October 31, 1996 8.22 10.46% 2,113 2.38% 7.39% 18.8%
Period Ended October 31, 1995(c) 8.05 12.20%(d) 633 2.10%(e) 7.78%(e) 40.3%(e)
Class R:
Period Ended October 31, 1996(f) 8.20 5.60%(d) 124 1.59%(e) 7.84%(e) 18.8%(e)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Income from Investment Operations Less Distributions
Net Realized
and
Net Asset Net Unrealized Total Dividends
Value at Invest- Gain from from Net Distributions
Beginning ment (Loss) on Investment Investment from Total
of Period Income Investments Operations Income Capital Gains Distributions
PRINCOR LIMITED TERM
BOND FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended October 31, 1996(g) $ 9.90 $.38(b) $(.04) $ .34 $(.35) $ -- $(.35)
Class B:
Period Ended October 31, 1996(g) 9.90 .36(b) (.05) .31 (.32) -- (.32)
Class R:
Period Ended October 31, 1996(f) 9.90 .36(b) (.06) .30 (.32) -- (.32)
PRINCOR TAX-EXEMPT BOND
FUND, INC.
Class A:
Year Ended October 31,
1996 11.98 .64 .07 .71 (.65) -- (.65)
1995 10.93 .65 1.05 1.70 (.65) -- (.65)
1994 12.62 .64 (1.54) (.90) (.63) (.16) (.79)
1993 11.62 .66 1.11 1.77 (.66) (.11) (.77)
1992 11.47 .68 .19 .87 (.69) (.03) (.72)
Class B:
Year Ended October 31, 1996 11.96 .55 .06 .61 (.55) -- (.55)
Period Ended October 31, 1995(c) 10.56 .50 1.38 1.88 (.48) -- (.48)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Net Asset Ratio of Investment
Value at Net Assets at Expenses to Income to Portfolio
End Total End of Period Average Average Turnover
of Period Return(a) (in thousands) Net Assets Net Assets Rate
PRINCOR LIMITED TERM
BOND FUND, INC.
Class A:
<S> <C> <C> <C> <C> <C> <C>
Period Ended October 31, 1996(g) $ 9.89 3.62%(d) $ 17,249 .89%(b)(e) 6.01%(e) 16.5%(e)
Class B:
Period Ended October 31, 1996(g) 9.89 3.32%(d) 112 1.15%(b)(e) 5.75%(e) 16.5%(e)
Class R:
Period Ended October 31, 1996(f) 9.88 3.24%(d) 83 1.40%(b)(e) 5.64%(e) 16.5%(e)
PRINCOR TAX-EXEMPT BOND
FUND, INC.
Class A:
Year Ended October 31,
1996 12.04 6.08% 187,180 .78% 5.34% 9.8%
1995 11.98 16.03% 179,715 .83% 5.67% 17.6%
1994 10.93 (7.41)% 171,425 .91% 5.49% 20.6%
1993 12.62 15.70% 177,480 .89% 5.45% 20.3%
1992 11.62 7.76% 106,661 .99% 5.96% 22.9%
Class B:
Year Ended October 31, 1996 12.02 5.23% 5,794 1.52% 4.59% 9.8%
Period Ended October 31, 1995(c) 11.96 17.97%(d) 3,486 1.51%(e) 4.78%(e) 17.6%(e)
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Notes to Financial Highlights
(a) Total return is calculated without the front-end sales charge or contingent
deferred sales charge.
(b) Without the Manager's voluntary waiver of a portion of certain of its
expenses (see Note 3 to the financial statements) for the periods
indicated, the following funds would have had per share net investment
income and the ratios of expenses to average net assets as shown:
Year, Per Share Ratio of Expenses
Except Net Investment to Average Net Amount
Fund as Noted Income Assets Waived
Princor Bond Fund, Inc.
Class A 1996 $.76 .97% $ 22,536
1995 .77 1.02% 86,018
1994 .77 1.09% 120,999
1993 .79 1.07% 111,162
1992 .82 1.11% 110,868
Class B 1996 .67 1.79% 5,874
1995(c) .62 1.62%(e) 300
Class R 1996(f) .51 1.28%(e) 3
Princor Limited Term
Bond Fund, Inc.
Class A 1996(g) .37 1.16%(e) 22,716
Class B 1996(g) .34 1.94%(e) 259
Class R 1996(f) .35 1.79%(e) 60
(c) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995. Certain of the Income Funds Class B
shares recognized net investment income as follows, for the period from the
initial purchase of Class B shares on December 5, 1994 through December 8,
1994, none of which was distributed to the sole shareholder, Princor
Management Corporation. Additionally, the Income Funds Class B shares
incurred unrealized losses on investments during the initial interim period
as follows. This represents Class B share activities of each fund prior to
the initial public offering of Class B shares:
Per Share Per Share
Net Investment Unrealized
Fund Income (Loss)
Princor Bond Fund, Inc. $.01 $ -
Princor Government Securities
Income Fund, Inc. .01 (.02)
Princor High Yield Fund, Inc. .01 (.03)
Princor Tax-Exempt Bond Fund, Inc. _ (.05)
(d) Total return amounts have not been annualized.
(e) Computed on an annualized basis.
(f) Period from February 29, 1996, date Class R shares first offered to
eligible purchasers, through October 31, 1996. The Income Funds Class R
shares recognized no net investment income for the period from the initial
purchase by Princor Management Corporation of Class R shares on February
27, 1996 through February 28, 1996. Certain of the Income Funds Class R
shares incurred unrealized losses on investments during the initial interim
period as follows. This represents Class R share activities of each fund
prior to the initial public offering of Class R shares:
Per Share
Fund Unrealized (Loss)
Princor Bond Fund, Inc. $(.03)
Princor Government Securities
Income Fund, Inc. (.03)
Princor Limited Term Bond Fund, Inc. (.02)
(g) Period from February 29, 1996, date shares first offered to the public,
through October 31, 1996. With respect to Class A shares, net investment
income, aggregating $.02 per share for the period from the initial purchase
of shares on February 13, 1996 through February 28, 1996, was recognized,
none of which was distributed to its sole stockholder, Principal Mutual
Life Insurance Company during the period. Additionally, Class A shares
incurred unrealized losses on investments of $.12 per share during the
initial interim period. With respect to Class B shares, no net investment
income was recognized for the period from initial purchase of shares on
February 27, 1996 through February 28, 1996. Additionally, Class B shares
incurred unrealized losses on investments of $.02 per share during the
initial interim period. This represents Class A share and Class B share
activities of the fund prior to the initial public offering of both classes
of shares.
<PAGE>
October 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
Princor Cash
Management
MONEY MARKET FUNDS Fund, Inc.
Assets
Investment in securities -- at value
(approximates cost) (Note 1)........... $695,463,151
Cash................................ 34,190
Receivables:
Dividends and interest ................ 1,146,527
Capital Stock sold..................... 1,902,206
Other assets.............................. 19,872
Total Assets 698,565,946
Liabilities
Accrued expenses.......................... 437,315
Payables:
Investment securities purchased........ 1,007,550
Capital Stock reacquired............... --
Total Liabilities 1,444,865
Net Assets Applicable to
Outstanding Shares ..................... $697,121,081
Net Assets Consist of:
Capital Stock............................. $ 6,971,211
Additional paid-in capital................ 690,149,870
Total Net Assets $697,121,081
Capital Stock (par value: $.01 a share)
Shares authorized......................... 2,000,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $694,962,013
Shares issued and outstanding.... 694,962,013
Net asset value per share........ $1.000
Class B: Net Assets....................... $519,726
Shares issued and outstanding.... 519,726
Net asset value per share(a)..... $1.000
Class R: Net Assets....................... $1,639,342
Shares issued and outstanding.... 1,639,342
Net asset value per share........ $1.000
Princor Tax-Exempt
Cash Management
Fund, Inc.
Assets
Investment in securities -- at value
(approximates cost) (Note 1)........... $98,015,003
Cash................................ 24,318
Receivables:
Dividends and interest ................ 502,427
Capital Stock sold..................... 37,243
Other assets.............................. 3,024
Total Assets 98,582,015
Liabilities
Accrued expenses.......................... 71,208
Payables:
Investment securities purchased........ --
Capital Stock reacquired............... 1,965
Total Liabilities 73,173
Net Assets Applicable to
Outstanding Shares ..................... $98,508,842
Net Assets Consist of:
Capital Stock............................. $ 985,088
Additional paid-in capital................ 97,523,754
Total Net Assets $98,508,842
Capital Stock (par value: $.01 a share)
Shares authorized......................... 1,000,000,000
Net Asset Value Per Share:
Class A: Net Assets....................... $98,481,773
Shares issued and outstanding.... 98,481,773
Net asset value per share........ $1.000
Class B: Net Assets....................... $27,069
Shares issued and outstanding.... 27,069
Net asset value per share(a)..... $1.000
Class R: Net Assets....................... N/A
Shares issued and outstanding.... N/A
Net asset value per share........ N/A
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
<PAGE>
Year Ended October 31, 1996
STATEMENTS OF OPERATIONS
Princor Cash Princor Tax-Exempt
Management Cash Management
MONEY MARKET FUNDS Fund, Inc. Fund, Inc.
Net Investment Income
Interest Income......................... $38,198,478 $3,840,280
Expenses:
Management and investment
advisory fees (Note 3)............ 2,568,929 527,733
Distribution and shareholder
servicing fees (Notes 1 and 3).... 2,017 207
Transfer and administrative
services (Notes 1 and 3).......... 1,762,455 205,099
Registration fees (Note 1)........... 176,121 64,160
Custodian fees....................... 22,042 10,779
Auditing and legal fees.............. 8,700 7,357
Directors' fees...................... 8,706 8,706
Other................................ 45,687 9,232
Total Gross Expenses 4,594,657 833,273
Less: Management and investment
advisory fees waived.............. 13,242 76,266
Total Net Expenses 4,581,415 757,007
Net Investment Income $33,617,063 $3,083,273
See accompanying notes.
<PAGE>
Years Ended Ended October 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS
Princor Cash
Management
MONEY MARKET FUNDS Fund, Inc.
1996 1995
Operations
Net investment income .................. $ 33,617,063 $ 26,040,525
Dividends to Shareholders from net
investment income:
Class A.............................. (33,599,980) (26,038,303)
Class B.............................. (10,263) (2,222)(a)
Class R(b) ................. (6,820) --
Total Dividends (33,617,063) (26,040,525)
Capital Share Transactions (Note 4)
Shares sold:
Class A.............................. 3,094,164,602 2,636,234,604
Class B.............................. 913,414 281,031(a)
Class R(b) .................. 1,820,278 --
Shares issued in reinvestment of dividends:
Class A.............................. 33,369,259 25,316,128
Class B.............................. 9,815 2,222(a)
Class R(b) ................. 6,800 --
Shares redeemed:
Class A.............................. (3,056,436,126) (2,370,032,403)
Class B.............................. (611,240) (75,516)(a)
Class R(b) .......................... (187,736) --
Net Increase (Decrease) in Net Assets
from Capital Share Transactions 73,049,066 291,726,066
Total Increase (Decrease) 73,049,066 291,726,066
Net Assets
Beginning of year....................... 624,072,015 332,345,949
End of year ............................ $697,121,081 $ 624,072,015
Princor Tax-Exempt
Cash Management
Fund, Inc.
1996 1995
Operations
Net investment income .................. $ 3,083,273 $ 3,074,990
Dividends to Shareholders from net
investment income:
Class A.............................. (3,082,691) (3,074,485)
Class B.............................. (582) (505)(a)
Class R(b) ................. N/A N/A
Total Dividends (3,083,273) (3,074,990)
Capital Share Transactions (Note 4)
Shares sold:
Class A.............................. 396,446,652 391,567,743
Class B.............................. 41,568 26,000(a)
Class R(b) .................. N/A N/A
Shares issued in reinvestment of dividends:
Class A.............................. 3,032,398 2,992,959
Class B.............................. 564 505(a)
Class R(b) ................. N/A N/A
Shares redeemed:
Class A.............................. (400,884,456) (374,409,156)
Class B.............................. (41,568) --
Class R(b) .......................... N/A N/A
Net Increase (Decrease) in Net Assets
from Capital Share Transactions (1,404,842) 20,178,051
Total Increase (Decrease) (1,404,842) 20,178,051
Net Assets
Beginning of year....................... 99,913,684 79,735,633
End of year ............................ $ 98,508,842 $ 99,913,684
(a) Period from December 8, 1994 (date operations commenced) through October
31, 1995.
(b) Period from February 27, 1996 (date operations commenced) through October
31, 1996.
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Princor Cash Management Fund, Inc.
Princor Tax-Exempt Cash Management Fund, Inc.
Note 1 -- Significant Accounting Policies
Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund,
Inc. (the "Money Market Funds") are registered under the Investment Company Act
of 1940, as amended, as open-end diversified management investment companies and
operate in the mutual fund industry.
On December 8, 1994, the initial purchases of Class B shares of the Money Market
Funds were made by Princor Management Corporation (see Note 3). All shares
outstanding prior to the initial Class B share purchases have been classified as
Class A shares. Effective December 9, 1994, the Money Market Funds also began
offering Class B shares to the public. Class B shares are sold without an
initial sales charge, but bear a higher ongoing distribution fee and are subject
to a declining contingent deferred sales charge ("CDSC") of up to 4.00% on
certain redemptions redeemed within six years of purchase. Class B shares
automatically convert into Class A shares, based on relative net asset value
(without a sales charge) after seven years.
On February 27, 1996, the initial purchase of Class R shares of Princor Cash
Management Fund, Inc. was made by Princor Management Corporation (see Note 3).
Effective February 29, 1996, Princor Cash Management Fund, Inc. began offering
Class R shares to eligible purchasers. Class R shares are sold without an
initial sales charge or a CDSC. Class R shares bear a higher ongoing
distribution fee than Class A shares. Class R shares automatically convert to
Class A shares, based on relative net asset value (without a sales charge) after
four years.
All classes of shares for each fund represent interests in the same portfolio of
investments, and will vote together as a single class except where otherwise
required by law or as determined by the Fund's respective Boards of Directors.
In addition, the Board of Directors of each fund declare separate dividends on
each class of shares.
The Money Market Funds allocate all income, expenses (other than class-specific
expenses), and realized gains or losses daily to each class of shares based upon
the relative proportion of the number of traded shares outstanding of each
class. Expenses specifically attributable to a particular class are charged
directly to such class. Class-specific expenses charged to each class during the
year ended October 31, 1996, which are included in the corresponding captions of
the Statement of Operations, were as follows:
Distribution and
Shareholder Servicing Fees
Class A Class B Class R
Princor Cash Management Fund, Inc. N/A $1,288 $729
Princor Tax-Exempt Cash Management
Fund, Inc. N/A 207 N/A
Transfer and
Administrative Services
Class A Class B Class R
Princor Cash Management Fund, Inc. $537,868 $107 $5
Princor Tax-Exempt Cash Management
Fund, Inc. 36,072 11 N/A
Registration Fees
Class A Class B Class R
Princor Cash Management Fund, Inc $28,296 $7,111 $50
Princor Tax-Exempt Cash Management
Fund, Inc. 32,956 7,154 N/A
The Money Market Funds value their securities at amortized cost, which
approximates market. Under the amortized cost method, a security is valued by
applying a constant yield to maturity of the difference between the principal
amount due at maturity and the cost of the security to the fund.
The Money Market Funds record investment transactions generally on the trade
date. The identified cost basis has been used in determining the net realized
gain or loss from investment transactions. Dividends are taken into income on an
accrual basis as of the ex-dividend date and interest income is recognized on an
accrual basis.
The Money Market Funds declare all net investment income and any realized gains
and losses from investment transactions as dividends daily to shareholders of
record as of that day.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting principles.
To the extent these "book/tax" differences are permanent in nature (i.e. that
they result from other than timing of recognition - "temporary"), such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. There were no
reclassifications made for the years ended October 31, 1996 or 1995.
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.
The Money Market Fund's investments are with various issuers in various
industries. The Schedules of Investments contained herein summarize
concentration of credit risk by issuer and industry.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each fund
is qualified as a "regulated investment company" under the Internal Revenue Code
and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments for
federal income tax reporting purposes is approximately the same as that for
financial reporting purposes.
Note 3 -- Management Agreement and Transactions With Affiliates
The Money Market Funds have agreed to pay investment advisory and management
fees to Princor Management Corporation (wholly owned by Princor Financial
Services Corporation, a subsidiary of Principal Mutual Life Insurance Company)
(the "Manager") computed at an annual percentage rate of each fund's average
daily net assets. The annual rate used in this calculation for the Money market
Funds is as follows:
Net Asset Value of Funds
(in millions)
First Next Next
Fund $100,000 $100,000 $100,000
Princor Cash Management Fund, Inc. 0.50% 0.45% 0.40%
Princor Tax-Exempt Cash Management
Fund, Inc. 0.50% 0.45% 0.40%
Fund Next Over
$100,000 $400,000
Princor Cash Management Fund, Inc.
Princor Tax-Exempt Cash Management 0.35% 0.30%
Fund, Inc.
0.35% 0.30%
The Money Market Funds also reimburse the Manager for transfer and
administrative services, including the cost of accounting, data processing,
supplies and other services rendered.
The Manager has agreed to reimburse the Money Market Funds annually for their
total expenses (excluding brokerage commissions, interest and taxes) in excess
of limits prescribed by any state in which the Money Market Funds' shares are
offered for sale (currently 2 1/2% of the first $30 million of each fund's
average annual net assets, 2% of the next $70 million of such assets and 1 1/2%
of such assets in excess thereof).
Note 3 -- Management Agreement and Transactions With Affiliates (Continued)
The Manager voluntarily waives a portion of its fee for the Princor Cash
Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc. The
waivers are in amounts that maintain total operating expenses for each fund
within certain limits. The limits are expressed as a percentage of average net
assets attributable to each class on an annualized basis during the reporting
period. The amounts waived and the operating expense limits are as follows:
Amount
Waived
Year Ended Year Ended
October 31, 1996 October 31, 1995
Princor Cash Management Fund, Inc.
Class A(a) $ 7,102 $296,255
Class B(a) 6,140 104(b)
Class R --(c) --
Princor Tax-Exempt Cash Management Fund, Inc.
Class A(a) $69,107 $138,574
Class B(a) 7,160 99(b)
Expense
Limit
Princor Cash Management Fund, Inc. 0.75%
Class A(a) 1.75%
Class B(a) 1.50%
Class R
Princor Tax-Exempt Cash Management Fund, Inc. 0.75%
Class A(a) 1.75%
Class B(a)
(a) For the period November 1, 1994 through February 28, 1995, the expense
limits were .70% and 1.70% for Class A and Class B shares, respectively.
(b) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995.
(c) Period from February 29, 1996, date Class R shares first offered to the
eligible purchasers through October 31, 1996.
The manager intends to continue its voluntary waiver and, if necessary, pay
expenses normally payable by each of the Funds through February 28, 1998.
Princor Financial Services Corporation, as principal underwriter, receives
proceeds of any CDSC on certain Class A and Class B share redemptions. The
charge is based on declining rates, which for Class A shares begin at .75% and
for Class B shares at 4.00% of the lessor of the current market value or the
cost of shares being redeemed. The aggregate amount of these charges retained by
Princor Financial Services Corporation for the year ended October 31, 1996, was
$1,013 for Princor Cash Management Fund, Inc., and $1,631 for Princor Tax-Exempt
Cash Management Fund, Inc.
No brokerage commissions were paid by the Money Market Funds to affiliated
broker dealers during the period.
Each of the Money Market Funds adopted a distribution plan with respect to Class
B shares that provides for distribution and shareholder servicing fees computed
at an annual rate of up to 1.00% of the average daily net assets attributable to
Class B shares of each fund. Effective February 1996, Princor Cash Management
Fund, Inc., adopted a distribution plan with respect to Class R shares that
provides for distribution and shareholder servicing fees computed at an annual
rate of up to .75% of the average daily net assets attributable to Class R
shares of the fund. Distribution and shareholder servicing fees are paid to
Princor Financial Services Corporation; a portion of the fees are subsequently
remitted to retail dealers. Pursuant to the distribution agreements, fees unused
by the principal underwriter at the end of the fiscal year are returned to the
Money Market Funds. There are no distribution or shareholder servicing fees with
respect to Class A shares.
At October 31,1996, Principal Mutual Life Insurance Company, subsidiaries of
Principal Mutual Life Insurance Company, benefit plans sponsored on behalf of
Principal Mutual Life Insurance Company and several joint ventures (in each of
which a subsidiary of Principal Mutual Life Insurance Company is a participant)
owned shares of the Money Market Funds as follows:
Class A Class B Class R
Princor Cash Management Fund, Inc. 5,838,846 28,036 25,730
Princor Tax-Exempt Cash Management Fund, Inc. 1,000,054 27,052 N/A
Note 4 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
Princor Cash
Management Fund, Inc
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 3,094,164,602
Class B ........................................ 913,414
Class R* ......................................... 1,820,278
Shares issued in reinvestment of dividends:
Class A ........................................... 33,369,259
Class B ........................................... 9,815
Class R* ........................................ 6,800
Shares redeemed:
Class A ......................................... (3,056,436,126)
Class B ......................................... (611,240)
Class R* ........................................ (187,736)
Net Increase (Decrease) 73,049,066
Year Ended October 31, 1995:
Shares sold:
Class A ......................................... 2,636,234,604
Class B** ....................................... 281,031
Shares issued in reinvestment of dividends:
Class A ........................................... 25,316,128
Class B** ......................................... 2,222
Shares redeemed:
Class A ......................................... (2,370,032,403)
Class B** ....................................... (75,516)
Net Increase 291,726,066
Princor Tax-Exempt
Cash Management
. Fund, Inc.
Year Ended October 31, 1996:
Shares sold:
Class A ......................................... 396,446,652
Class B ........................................ 41,568
Class R* ......................................... N/A
Shares issued in reinvestment of dividends:
Class A ........................................... 3,032,398
Class B ........................................... 564
Class R* ........................................ N/A
Shares redeemed:
Class A ......................................... (400,884,456)
Class B ......................................... ( 41,568)
Class R* ........................................ N/A
Net Increase (Decrease) (1,404,842)
Year Ended October 31, 1995:
Shares sold:
Class A ......................................... 391,567,743
Class B** ....................................... 26,000
Shares issued in reinvestment of dividends:
Class A ........................................... 2,992,959
Class B** ......................................... 505
Shares redeemed:
Class A ......................................... (374,409,156)
Class B** ....................................... --
Net Increase 20,178,051
* Period from February 27, 1996 (date operations commenced) through October
31, 1996.
** Period from December 8, 1994 (date operations commenced) through October
31, 1995.
Note 5 -- Line of Credit
The Money Market Funds have an unsecured line of credit with a bank which allows
each fund to borrow up to $500,000. Borrowings are made solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each fund, based on its borrowings, at a rate equal to the bank's
Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee
is charged at the annual rate of .25% of the line of credit. At October 31,
1996, the Money Market Funds had no outstanding borrowings under the line of
credit.
<PAGE>
SCHEDULES OF INVESTMENTS
PRINCOR CASH MANAGEMENT FUND, INC.
Principal
Amount Value
Commercial Paper (89.00%)
Advertising (1.13%)
Omnicom Finance, Inc.;
LOC ABN-ARMO Bank N.V.;
5.27%; 11/15/96 $2,900,000 $ 2,894,057
5.27%; 11/19/96 5,000,000 4,986,825
7,880,882
Asset Backed Securities (13.19%)
Corporate Receivables Corp.;
5.26%; 11/14/96 7,500,000 7,485,754
5.26%; 11/25/96 4,450,000 4,434,395
5.26%; 11/26/96 5,450,000 5,430,092
5.30%; 12/3/96 2,500,000 2,488,222
5.30%; 12/4/96 3,300,000 3,283,968
5.32%; 12/4/96 6,000,000 5,970,740
5.27%; 12/11/96 5,000,000 4,970,722
CXC Inc.;
5.26%; 11/26/96 5,500,000 5,479,910
5.26%; 12/10/96 2,925,000 2,908,332
5.25%; 12/11/96 5,000,000 4,970,833
5.26%; 12/12/96 7,250,000 7,206,569
5.26%; 12/16/96 2,500,000 2,483,563
5.26%; 12/17/96 5,000,000 4,966,394
Retailer Funding Corp.;
5.26%; 11/15/96 6,000,000 5,987,727
5.26%; 11/18/96 7,993,000 7,973,146
5.27%; 12/4/96 6,500,000 6,468,600
5.28%; 12/5/96 5,500,000 5,472,573
5.27%; 12/6/96 4,000,000 3,979,506
91,961,046
Business Credit Institutions (1.11%)
American Express Credit Corp.;
5.30%; 11/19/96 6,000,000 5,984,100
General Electric Capital Corp.;
5.75%; 11/1/96 1,785,000 1,785,000
7,769,100
Combination Utility Servics (0.93%)
South Carolina Fuel Co.;
5.28%; 11/13/96 6,500,000 6,488,560
Commercial Banks (0.43%)
Norwest Corp.;
5.42%; 11/4/96 3,000,000 2,998,645
Computer & Office
Equipment (0.28%)
Xerox Corp.;
5.42%; 5/8/97 2,000,000 1,943,391
Department Stores (3.76%)
Sears Roebuck Acceptance Corp.;
5.42%; 11/5/96 7,000,000 6,995,785
5.43%; 11/6/96 9,350,000 9,342,949
5.41%; 11/8/96 4,000,000 3,995,792
5.25%; 12/17/96 1,000,000 993,291
5.39%; 5/13/97 $ 5,000,000$ 4,855,518
26,183,335
Drugs (2.00%)
American Home Products Corp.;
5.26%; 11/20/96 3,000,000 2,991,672
5.26%; 11/26/96 7,000,000 6,974,431
Warner-Lambert Co.;
4.76%; 11/12/96 4,000,000 3,994,182
13,960,285
Electric Services (10.12%)
AES Shady Point, Inc.;
LOC Bank of Tokyo-
Mitsubishi, Ltd.;
5.47%; 1/7/97 4,000,000 3,959,279
5.42%; 1/10/97 1,500,000 1,484,192
5.45%; 1/10/97 500,000 494,701
5.42%; 1/13/97 7,350,000 7,269,219
5.40%; 1/14/97 2,700,000 2,670,030
5.40%; 1/28/97 2,400,000 2,368,320
CommEd Fuel Co., Inc.;
LOC Canadian Imperial
Bank of Commerce;
5.40%; 11/19/96 4,000,000 3,989,200
5.36%; 11/21/96 5,550,000 5,533,473
CommEd Fuel Co., Inc. ;
LOC Credit Suisse;
5.32%; 11/12/96 7,198,000 7,186,299
Connecticut Yankee Atomic Power Co.;
LOC Toronto Dominion Bank;
5.30%; 11/4/96 2,000,000 1,999,117
Transmission Agency-Northern
California; LOC Industrial
Bank of Japan Ltd.;
5.45%; 11/4/96 8,000,000 7,996,367
5.40%; 11/6/96 1,049,000 1,048,213
5.50%; 11/6/96 4,000,000 3,996,944
5.50%; 11/7/96 5,049,000 5,044,372
5.45%; 12/2/96 4,000,000 3,981,228
5.55%; 12/10/96 5,071,000 5,040,511
5.48%; 1/31/97 6,594,000 6,502,659
70,564,124
Farm & Garden Machinery (0.71%)
Caterpillar Financial Services Corp.;
5.40%; 2/20/97 5,000,000 4,916,750
Finance Services (3.46%)
Mitsubishi International Corp.;
5.34%; 11/5/96 1,500,000 1,499,110
5.42%; 11/8/96 5,700,000 5,693,993
5.33%; 11/12/96 2,250,000 2,246,336
5.47%; 12/3/96 3,500,000 3,482,982
5.37%; 12/5/96 5,000,000 4,974,642
5.53%; 12/13/96 3,250,000 3,229,032
5.35%; 3/3/97 3,025,000 2,970,155
24,096,250
Fire, Marine, & Casualty Insurance (0.57%)
General RE Corp.;
5.25%; 12/24/96 4,000,000 3,969,083
Horticultural Specialties (0.24%)
Pioneer Hi-Bred International, Inc.;
5.25%; 11/12/96 1,665,000 1,662,329
Investment Offices (0.43%)
Morgan Stanley Group Inc.;
5.70%; 11/1/96 $ 2,965,000 $ 2,965,000
Life Insurance (1.76%)
American General Corp.;
5.25%; 12/6/96 5,850,000 5,820,141
5.25%; 12/11/96 6,500,000 6,462,083
12,282,224
Miscellaneous Electrical Equipment &
Supplies (3.51%)
General Electric Co.;
5.25%; 11/21/96 5,500,000 5,483,958
5.25%; 11/22/96 5,600,000 5,582,850
5.25%; 11/27/96 6,000,000 5,977,250
5.25%; 12/31/96 7,500,000 7,434,375
24,478,433
Miscellaneous Investing (3.84%)
Delaware Funding Corp.;
5.45%; 11/18/96 2,900,000 2,892,536
5.25%; 12/5/96 5,000,000 4,975,208
5.26%; 12/6/96 7,000,000 6,964,203
5.26%; 12/10/96 3,000,000 2,982,905
5.25%; 12/13/96 7,000,000 6,957,125
MLTC Funding, Inc.;
LOC Citibank, N.A.;
5.26%; 11/25/96 2,000,000 1,992,987
26,764,964
Miscellaneous Manufacturers (1.29%)
Dover Corp.;
5.26%; 11/19/96 3,000,000 2,992,110
5.25%; 11/21/96 2,000,000 1,994,167
5.27%; 12/2/96 4,000,000 3,981,848
8,968,125
Mortgage Bankers & Brokers (3.93%)
Countrywide Home Loan, Inc.;
5.48%; 11/1/96 6,000,000 6,000,000
5.33%; 11/5/96 2,500,000 2,498,519
5.30%; 11/18/96 7,000,000 6,982,481
5.35%; 11/20/96 7,000,000 6,980,235
5.27%; 12/2/96 5,000,000 4,977,309
27,438,544
Motor Vehicles & Equipment (4.88%)
Echlin Inc.;
5.34%; 11/22/96 5,000,000 4,984,425
5.32%; 12/3/96 1,500,000 1,492,907
5.33%; 12/9/96 2,000,000 1,988,748
5.34%; 12/9/96 4,000,000 3,977,453
5.35%; 12/9/96 3,000,000 2,983,059
5.38%; 12/12/96 6,250,000 6,211,705
5.35%; 12/16/96 6,000,000 5,959,875
5.40%; 1/6/97 1,781,000 1,763,368
5.38%; 1/16/97 4,700,000 4,646,618
34,008,158
Personal Credit Institutions (10.66%)
Comoloco, Inc.;
5.32%; 2/27/97 6,000,000 5,895,373
5.45%; 4/1/97 5,000,000 4,885,701
5.40%; 5/9/97 6,000,000 5,829,900
5.50%; 5/23/97 2,500,000 2,422,465
5.38%; 7/24/97 7,500,000 7,202,979
Ford Motor Credit Co.;
5.35%; 11/15/96 $ 3,500,000$ 3,492,718
General Motors Acceptance Corp.;
5.30%; 12/10/96 1,300,000 1,292,536
5.35%; 12/20/96 2,000,000 1,985,436
5.37%; 12/27/96 5,500,000 5,454,057
5.35%; 1/14/97 3,300,000 3,263,709
5.35%; 1/17/97 2,150,000 2,125,398
5.35%; 1/17/97 1,900,000 1,878,258
5.45%; 1/24/97 4,500,000 4,442,775
5.60%; 3/3/97 3,700,000 3,629,782
5.67%; 3/7/97 5,300,000 5,194,822
5.70%; 3/10/97 2,000,000 1,959,150
5.68%; 3/14/97 2,500,000 2,447,539
Household Finance Corp.;
5.30%; 11/18/96 5,925,000 5,910,171
5.34%; 11/25/96 5,000,000 4,982,200
74,294,969
Real Estate Operators & Lessors (3.85%)
Towson Town Center, Inc.;
LOC Bank of Tokyo-Mitsubishi, Ltd.;
5.30%; 11/1/96 2,400,000 2,400,000
5.32%; 11/7/96 4,000,000 3,996,453
5.32%; 11/8/96 7,000,000 6,992,759
5.45%; 11/13/96 1,575,000 1,572,139
5.26%; 11/20/96 4,500,000 4,487,412
5.32%; 12/2/96 7,500,000 7,465,642
26,914,405
Security Brokers & Dealers (9.30%)
Bear Stearns Cos., Inc.;
5.28%; 11/7/96 6,000,000 5,994,720
5.35%; 11/13/96 2,000,000 1,996,433
5.26%; 11/15/96 5,000,000 4,989,772
5.33%; 11/20/96 5,000,000 4,985,935
5.26%; 12/9/96 4,000,000 3,977,791
Goldman Sachs Group L.P.;
5.28%; 11/14/96 5,000,000 4,990,467
5.28%; 11/22/96 2,000,000 1,993,840
5.26%; 11/27/96 2,500,000 2,490,503
Merrill Lynch & Co, Inc.;
5.31%; 11/1/96 5,000,000 5,000,000
5.35%; 11/13/96 4,500,000 4,491,975
5.26%; 11/14/96 7,000,000 6,986,704
5.25%; 11/27/96 7,000,000 6,973,458
5.26%; 12/3/96 5,525,000 5,499,168
5.26%; 12/3/96 1,000,000 995,324
5.33%; 1/6/97 3,500,000 3,465,799
64,831,889
Subdividers & Developers (3.34%)
Hartz 667 Commercial Paper Corp.;
LOC Bank of Tokyo-Mitsubishi, Ltd.;
5.32%; 11/8/96 9,050,000 9,040,638
5.30%; 11/25/96 11,311,000 11,271,034
5.40%; 2/3/97 3,000,000 2,957,700
23,269,372
Telephone Communication (0.72%)
Ameritech Corp.;
5.40%; 11/6/96 5,000,000 4,996,250
Tires & Inner Tubes (3.56%)
Bridgestone/Firestone, Inc.;
LOC DAI-ICHI Kangyo Bank Ltd.;
5.32%; 11/6/96 $ 1,000,000$ 999,261
5.33%; 11/6/96 1,575,000 1,573,834
5.33%; 11/12/96 5,700,000 5,690,717
5.33%; 11/12/96 5,000,000 4,991,857
5.32%; 11/14/96 1,000,000 998,079
5.33%; 11/21/96 4,400,000 4,386,971
5.41%; 11/22/96 2,000,000 1,993,688
5.30%; 11/27/96 2,000,000 1,992,345
Bridgestone/Firestone, Inc.;
LOC Sumitomo Bank Ltd.;
5.32%; 11/12/96 1,200,000 1,198,049
5.32%; 11/15/96 1,000,000 997,931
24,822,732
Total Commercial Paper 620,428,845
Bank Notes (4.87%)
Commercial Banks (4.87%)
Lasalle National Bank;
5.56%; 3/6/97 3,000,000 3,000,000
5.47%; 3/15/97 2,500,000 2,500,000
5.60%; 4/3/97 3,500,000 3,500,000
5.77%; 4/25/97 1,450,000 1,450,000
5.75%; 4/28/97 2,000,000 2,000,000
5.72%; 4/30/97 1,000,000 1,000,000
5.99%; 6/25/97 1,500,000 1,500,000
6.04%; 7/24/97 4,000,000 4,000,000
6.20%; 8/21/97 5,000,000 5,000,000
5.85%; 9/18/97 5,000,000 5,000,000
5.74%; 9/22/97 5,000,000 5,000,000
Total Bank Notes 33,950,000
Bonds (4.64%)
Business Credit Institutions (1.49%)
CIT Group Holdings, Inc. Notes;
8.75%; 7/1/97 1,360,000 1,386,176
John Deere Capital Corp.;
Medium Term Notes, Series C;
5.95%; 6/30/97 9,000,000 8,993,262
10,379,438
Personal Credit Institutions (3.15%)
Associates Corp. of North America
Senior Notes;
6.88%; 1/15/97 5,575,000 5,585,967
8.63%; 6/15/97 4,000,000 4,066,340
6.75%; 7/15/97 6,240,000 6,279,790
5.88%; 8/15/97 1,000,000 997,236
7.75%; 11/1/97 1,000,000 1,017,836
Household Finance Corp.;
7.50%; 3/15/97 2,000,000 2,011,895
Norwest Financial Inc.;
6.50%; 5/15/97 $ 2,000,000$ 2,007,770
21,966,834
Total Bonds 32,346,272
U.S. Government Treasury Bills (1.25%)
Treasury Bills (1.25%)
U.S. Government Treasury Bills;
5.34%; 5/1/97 4,000,000 3,892,607
5.33%; 5/29/97 5,000,000 4,845,427
Total U.S. Government Treasury Bills8,738,034
Total Portfolio Investments (99.76%) 695,463,151
Cash, receivables and other assets, net of
liabilities (0.24%) 1,657,930
Total Net Assets (100.00%) $697,121,081
PRINCOR TAX-EXEMPT CASH MANAGEMENT
FUND, INC.
Principal
Amount Value
Short-Term Tax-Exempt Bonds (99.50%)
Alabama (0.30%)
City of Stevenson, Alabama, IDB
Improvement Rev. Bonds, The Mead
Corp., Series 1986; LOC Credit Suisse;
3.65%; 11/1/96*; 11/1/16 $ 300,000 $ 300,000
Alaska (4.96%)
Alaska Industrial Dev. & Export Authority,
IDB Current Ref. Bonds, Series
1988A; LOC Security Pacific
Bank Washington;
Lot #2; 3.65%; 11/6/96*; 7/1/97 40,000 40,000
Lot #3; 3.65%; 11/6/96*; 7/1/97 365,000 365,000
Lot #5; 3.65%; 11/6/96*; 7/1/98 1,455,000 1,455,000
Lot #6; 3.65%; 11/6/96*; 7/1/01 1,445,000 1,445,000
Lot #7; 3.65%; 11/6/96*; 7/1/01 150,000 150,000
Lot #8; 3.65%; 11/6/96*; 7/1/05 175,000 175,000
Lot #9; 3.65%; 11/6/96*; 7/1/05 235,000 235,000
Lot #12; 3.65%; 11/6/96*; 7/1/12 1,020,000 1,020,000
4,885,000
Arizona (1.32%)
Chandler County, Arizona, IDA, F/R
Monthly IDR, Parsons Municipal
Services, Series 1983; LOC
National Westminster;
3.65%; 11/15/96*; 12/15/09 1,300,000 1,300,000
California (2.04%)
County of Los Angeles, California,
Tax & Rev. Anticipation Notes
4.50%; 6/30/97 $ 2,000,000$ 2,008,263
Colorado (2.54%)
Adams County, Colorado, IDR Bonds,
City View Park Project, Series
1985; LOC Barclays Bank;
3.60%; 11/6/96*; 12/1/15 300,000 300,000
Arapahoe County, Colorado, F/R
Monthly IDR, Beckett
Aviation, Inc., Series 1983;
LOC Barclays Bank;
3.68%; 11/15/96*; 5/15/13 600,000 600,000
City of Thornton, Colorado, F/R
Monthly IDR, Service Merchandise
Co., Inc., Series 1984; LOC CIBC;
3.65%; 11/15/96*; 12/15/99 100,000 100,000
South Denver Metropolis District,
City & County of Denver, Colorado,
General Obligation Bonds, Series 1985;
LOC Barclays Bank;
3.65%; 11/29/96**; 12/1/05 1,500,000 1,500,000
2,500,000
Florida (4.36%)
Florida Housing Finance Agency,
F/R Monthly MF Rev's., Water
Apt. Project, Series 1984A;
LOC Wells Fargo;
3.85%; 11/1/96*; 4/1/07 1,700,000 1,700,000
Florida Housing Finance Agency,
F/R Monthly MF Rev's., Webb
Road 1 Apt. Project, Series 1984;
LOC Wells Fargo;
3.85%; 11/1/96*; 4/1/07 1,000,000 1,000,000
Florida Housing Finance Agency,
F/R Monthly MF Rev's., Webb
Road 2 Apt. Project, Series
1984C; LOC Wells Fargo;
3.85%; 11/1/96*; 4/1/07 1,600,000 1,600,000
4,300,000
Georgia (3.86%)
Burke County, Georgia, Dev. Authority, Adj.
Tender Pollution Control Rev. Bonds,
Ogelthorpe Power Corp., Vogtle Project,
Series 1992A; LOC Credit Suisse;
3.60%; 11/6/96**; 1/1/25 300,000 300,000
3.45%; 11/14/96**; 1/1/25 500,000 500,000
3.45%; 11/18/96**; 1/1/25 500,000 500,000
3.55%; 1/16/97**; 1/1/25 400,000 400,000
3.50%; 1/23/97**; 1/1/25 800,000 800,000
3.50%; 2/4/97**; 1/1/25 500,000 500,000
3.55%; 2/6/97**; 1/1/25 300,000 300,000
3.50%; 2/13/97**; 1/1/25 500,000 500,000
3,800,000
Idaho (2.04%)
State of Idaho Tax Anticipation
Notes, Series 1996;
4.50%; 6/30/97; 2,000,000 2,007,622
Illinois (8.32%)
Chicago, Illinois, Cook County CSX Beckett
Aviation, Inc., F/R Monthly Airport
Rev. Bonds; LOC Barclays Bank;
3.68%; 11/15/96*; 12/15/14 $ 1,000,000 $1,000,000
City of Burbank, Illinois, F/R Monthly IDR,
Service Merchandise Co., Inc., Series
1984; LOC CIBC;
3.65%; 11/15/96*; 9/15/24 2,100,000 2,100,000
City of Galesburg, Illinois, Knox College
Project, Series 1996; LOC LaSalle
National Bank;
3.65%; 11/7/96*; 3/1/31 3,700,000 3,700,000
City of Naperville, Illinois, Economic Dev.
Rev. Bonds, Service Merchandise Co.,
Inc.; LOC CIBC;
3.65%; 11/15/96*; 11/30/24 1,400,000 1,400,000
8,200,000
Indiana (4.26%)
Allen County, Indiana, Econ. Dev. Rev. Bonds
Golden Years Homestead, Series 1996;
LOC Norwest Bank Minnesota, N.A.;
3.65%; 11/7/96*; 8/1/21 2,000,000 2,000,000
Carmel Clay Schools Tax
Anticipation Warrants of 1996;
3.75%; 12/31/96 2,200,000 2,200,698
4,200,698
Iowa (2.64%)
City of Storm Lake, Iowa, Private College
Rev. Bonds, Buena Vista College,
Series 1993; LOC Norwest Bank
Minnesota, N. A.;
3.70%; 11/7/96*; 12/1/03 400,000 400,000
Iowa Higher Education Loan Authority Fac.,
Rev. Bonds; Series 1995;
LOC Norwest Bank Minnesota, N.A.;
3.70%; 11/7/96*; 2/1/05 2,200,000 2,200,000
2,600,000
Louisiana (12.65%)
Jefferson Parish, Louisiana, Hospital Rev.
Bonds, Jefferson Parish Hospital
Service, District #2, Customized
Purchase Program, Series 1985;
Insured by FGIC;
3.55%; 11/6/96*; 12/1/15 3,300,000 3,300,000
Jefferson Parish, Louisiana, IDB Rev. Ref.
Bonds, George J. Achel, Sr. Project,
Series 1986; LOC Barclays Bank;
3.60%; 11/6/96*; 12/1/04 1,400,000 1,400,000
Louisiana Public Fac. Authority, CP
Program Hospital Equip. Rev.
Bonds, Series 1985A, Pooled Project;
LOC Sumitomo Bank;
3.90%; 11/6/96*; 12/1/15 5,365,000 5,365,000
Parish of DeSoto, Louisiana, Adj. Tender
Pollution Control Rev. Ref. Bonds,
Series 1991A; LOC Swiss Bank Corp.;
3.40%; 11/6/96*; 7/1/18 2,400,000 2,400,000
12,465,000
Maine (1.53%)
State of Maine General Obligation Tax
Anticipation Notes;
4.50%; 6/27/97 $ 1,500,000$ 1,505,881
Maryland (0.81%)
Montgomery County, Maryland, F/R
Monthly IDA, Information Systems &
Networks; LOC PNC Bank;
3.55%; 11/1/96*; 4/1/14 800,000 800,000
Massachusetts (3.25%)
Commonwealth of Massachusetts,
Dedicated Income Tax Bonds, Series B;
LOC National Westminster;
3.60%; 11/1/96*; 12/1/97 3,100,000 3,100,000
Commonwealth of Massachusetts,
Dedicated Income Tax Bonds, Series E;
LOC ABN-AMRO Bank;
3.60%; 11/1/96*; 12/1/97 100,000 100,000
3,200,000
Michigan (0.35%)
Township of Cornell, Michigan, The
Economic Dev. Corp.,
Environmental Improvement Rev.
Ref. Bonds, Series 1986, Mead
Escanaba Paper Co. Project;
LOC Suisse Bank;
3.60%; 11/1/96*; 11/1/16 350,000 350,000
Minnesota (11.01%)
City of Coon Rapids, Minnesota
Rev. Bonds for Health Central
System, Series 1985; LOC Norwest
Bank Minnesota, N.A.;
3.60%; 11/6/96*; 8/1/15 1,800,000 1,800,000
City of Rochester, Minnesota, Health Care
Fac. Rev. Bonds, Mayo Foundation/
Mayo Medical Center, Adj. Tender,
Series 1992C;
3.50%; 11/4/96**; 11/15/21 350,000 350,000
3.60%; 11/12/96**; 11/15/21 500,000 500,000
3.40%; 12/12/96**; 11/15/21 400,000 400,000
3.65%; 1/22/97**; 11/15/21 500,000 500,000
3.50%; 1/27/97**; 11/15/21 500,000 500,000
3.65%; 2/3/97**; 11/15/21 400,000 400,000
3.55%; 2/10/97**; 11/15/21 500,000 500,000
3.50%; 2/11/97**; 11/15/21 500,000 500,000
3.60%; 2/12/97**; 11/15/21 400,000 400,000
University of Minnesota Regents Variable
Rate Demand Bonds;
Series 1985F; 3.75%; 2/1/97**; 10/1/01 2,500,000 2,500,000
Series 1985G; 3.75%; 2/1/97**; 10/1/07 2,500,000 2,500,000
10,850,000
Mississippi (0.30%)
Jackson County, Mississippi,
Pollution Control Ref. Rev. Bonds
Series 1993; Guaranteed by
Chevron Corp.;
3.55%; 11/1/96*; 6/1/23 $ 300,000$ 300,000
Missouri (2.04%)
Health & Education Fac. Authority
of Missouri School Dist. Program Notes,
Series 1996A;
4.50%; 9/8/97 2,000,000 2,009,687
Montana (4.97%)
City of Forsyth, Montana, Portland General
Electric Co.; LOC Swiss Bank Corp.;
Series B; 3.50%; 11/6/96*; 6/1/13 2,400,000 2,400,000
Series D; 3.55%; 11/6/96*; 6/1/13 1,500,000 1,500,000
Series 1984; 3.55%; 11/6/96*; 8/1/14 1,000,000 1,000,000
4,900,000
Nebraska (0.51%)
Lincoln Electric System
Commercial Paper Notes;
3.50%; 12/6/96 500,000 500,000
New Hampshire (1.83%)
New Hampshire IDA, F/R Monthly 1983
Hudson, Oerlikon-Buhrle USA/Balzers;
LOC Union Bank of Switzerland;
3.75%; 11/1/96*; 7/1/13 1,800,000 1,800,000
New York (5.08%)
New York State Energy Research & Dev.
Authority Pollution Control Rev. Bonds,
Long Island Lighting Co.; Series 1985B;
LOC Deutsche Bank;
3.25%; 3/1/97**; 3/1/16 4,000,000 4,000,000
New York State Energy Research &
Dev. Authority, Series 1985 D,
For New York State Electric & Gas Corp.;
LOC Union Bank of Switzerland;
3.65%; 12/2/96**; 12/1/15 1,000,000 1,000,000
5,000,000
North Carolina (3.05%)
North Carolina Eastern Municipal Power
Agency, Series 1988B; LOC Morgan
Guaranty Trust Co.; LOC Union
Bank of Switzerland;
3.70%; 1/24/97**; 1/1/26 500,000 500,000
University of North Carolina
Foundation, Inc., Series 1989;
LOC Credit Suisse;
3.50%; 11/6/96*; 10/1/09 2,500,000 2,500,000
3,000,000
Ohio (1.02%)
Village of Evendale, Ohio, SHV Real Estate
Income Project; LOC ABN-AMRO;
3.60%; 11/6/96*; 9/1/15 1,000,000 1,000,000
Pennsylvania (7.83%)
Bucks County, Pennsylvania, IDA SHV
Real Estate, Inc. Project, Series 1985;
LOC ABN-AMRO Bank;
3.60%; 11/6/96*; 7/1/15 $ 2,300,000$ 2,300,000
Chester, Pennsylvania, IDA, F/R Monthly
IDR, Keystone Foods Corp.;
LOC Bank of Scotland;
3.95%; 11/15/96*; 10/15/99 800,000 800,000
Commonwealth of Pennsylvania
Tax Anticipation Notes, First Series
of 1994-1995;
4.50%; 6/30/97 2,500,000 2,512,852
Delaware County, Pennsylvania, Fac. Rev.
Tax & Rev. Anticipation Notes,
Series 1985; Guaranteed by
United Parcel Service;
3.60%; 11/1/96*; 12/1/15 2,100,000 2,100,000
7,712,852
Tennessee (0.51%)
Knox, Tennessee, IDB F/R Monthly IDR
1983, Service Merchandise Co., Inc.;
LOC CIBC;
3.65%; 11/15/96*; 12/15/08 500,000 500,000
Texas (3.07%)
Cedar Hill, Texas, Industrial Dev. Corp.
F/R Monthly IDR 1985, Minyard
Properties Project; LOC Citibank;
3.75%; 11/1/96*; 5/1/02 300,000 300,000
Coppell, Texas, Industrial Dev.
Corp., IDA 1984, Minyard
Properties Project; LOC Citibank;
3.75%; 11/1/96*; 12/1/01 1,170,000 1,170,000
Montgomery County, Texas, Industrial
Dev. Corp. Ref. Bonds,
Series 1986A; Dal-Tile Corp.
Project; LOC Credit Suisse;
3.60%; 11/6/96*; 12/1/03 150,000 150,000
Port Arthur Navigation Dist. Industrial
Dev. Corp. Adj. Tender Pollution
Control Rev. Bonds, American
Petrofina Co. of Texas Project, Series
1985; LOC Sumitomo Bank;
3.65%; 11/1/96*; 5/1/03 1,400,000 1,400,000
3,020,000
West Virginia (1.83%)
Putnam County, West Virginia, F/R Monthly IDR 1981, FMC Corp.
Project; LOC UBS;
3.75%; 11/1/96*; 10/1/11 1,800,000 1,800,000
Wyoming (1.22%)
Lincoln County, Wyoming, Pollution
Control Ref. Bonds, Pacificorp
Project, Series 1991; LOC
Union Bank of Switzerland;
3.50%; 11/7/96**; 1/1/16 500,000 500,000
Uinta County, Wyoming, Pollution Control
Ref. Rev. Bonds; Series 1992;
Guaranteed by Chevron Corp.;
3.55%; 11/1/96*; 12/1/22 700,000 700,000
1,200,000
Total Portfolio Investments (99.50%) 98,015,003
Cash, receivables and other assets
net of liabilities (0.50%) 493,839
Total Net Assets (100.00%) $98,508,842
* Demand Date
** Put Date
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
---------------------------------- ------------------------------------
Net Realized
and
Net Asset Net Unrealized Total Dividends Net Asset
Value at Invest- Gain from from Net Distributions Value at
Beginning ment (Loss) on Investment Investment from Total End
of Period Income(a) Investments Operations Income Capital Gains Distributions of Period
PRINCOR CASH MANAGEMENT FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.000 $.049 -- $.049 $(.049) -- $(.049) $1.000
1995 1.000 .052 -- .052 (.052) -- (.052) 1.000
1994 1.000 .033 -- .033 (.033) -- (.033) 1.000
1993 1.000 .026 -- .026 (.026) -- (.026) 1.000
1992 1.000 .036 -- .036 (.036) -- (.036) 1.000
Class B:
Year Ended October 31, 1996 1.000 .041 -- .041 (.041) -- (.041) 1.000
Period Ended October 31, 1995(c) 1.000 .041 -- .041 (.041) -- (.041) 1.000
Class R:
Period Ended October 31, 1996(f) 1.000 .030 -- .030 (.030) -- (.030) 1.000
PRINCOR TAX-EXEMPT CASH MANAGEMENT FUND, INC.
Class A:
Year Ended October 31,
1996 1.000 .029 -- .029 (.029) -- (.029) 1.000
1995 1.000 .032 -- .032 (.032) -- (.032) 1.000
1994 1.000 .021 -- .021 (.021) -- (.021) 1.000
1993 1.000 .020 -- .020 (.020) -- (.020) 1.000
1992 1.000 .028 -- .028 (.028) -- (.028) 1.000
Class B:
Year Ended October 31, 1996 1.000 .021 -- .021 (.021) -- (.021) 1.000
Period Ended October 31, 1995(c) 1.000 .021 -- .021 (.021) -- (.021) 1.000
</TABLE>
<TABLE>
_____________Ratios/Supplemental Data____________
Ratio of Net
Ratio of Investment
Net Assets at Expenses to Income to Portfolio
Total End of Period Average Average Turnover
Return(b) (in thousands) Net Assets(a) Net Assets Rate
PRINCOR CASH MANAGEMENT FUND, INC.
Class A:
Year Ended October 31,
<S> <C> <C> <C> <C> <C>
1996 5.00% $694,962 .66% 4.88% N/A
1995 5.36% 623,864 .72% 5.24% N/A
1994 3.40% 332,346 .70% 3.27% N/A
1993 2.67% 284,739 .67% 2.63% N/A
1992 3.71% 247,189 .65% 3.66% N/A
Class B:
Year Ended October 31, 1996 4.13% 520 1.50% 4.08% N/A
Period Ended October 31, 1995(c) 4.19%(d) 208 1.42%(e) 4.50%(e) N/A
Class R:
Period Ended October 31, 1996(f) 2.97%(d) 1,639 .99%(e) 4.41%(e) N/A
PRINCOR TAX-EXEMPT CASH MANAGEMENT FUND, INC.
Class A:
Year Ended October 31,
1996 2.92% 98,482 .71% 2.87% N/A
1995 3.24% 99,887 .69% 3.19% N/A
1994 2.11% 79,736 .67% 2.08% N/A
1993 1.99% 79,223 .66% 1.96% N/A
1992 2.86% 69,224 .65% 2.84% N/A
Class B:
Year Ended October 31, 1996 2.13% 27 1.47% 2.11% N/A
Period Ended October 31, 1995(c) 2.19%(d) 27 1.42%(e) 2.40%(e) N/A
<FN>
See accompanying notes.
Notes to Financial Highlights
(a) Without the Manager's voluntary waiver of a portion of certain of its
expenses (see Note 3 to the financial statements) for the periods
indicated, the Money Market Funds would have had per share net investment
income (loss) and the ratios of expenses to average net assets as shown:
Per Share Ratio of
Year, Net Expenses
Except Investment to Average Amount
Fund as Noted Income (Loss) Net Assets Waived
Princor Cash Management
Fund, Inc.
Class A 1996 $ .049 .67% $ 7,102
1995 .052 .78% 296,255
1994 .031 .90% 595,343
1993 .025 .84% 468,387
1992 .035 .80% 385,328
Class B 1996 .029 3.94% 6,140
1995(c) .041 1.63%(e) 104
Princor Tax-Exempt Cash
Management Fund, Inc.
Class A 1996 .028 .77% 69,107
1995 .031 .84% 138,574
1994 .019 .85% 150,515
1993 .018 .83% 131,442
1992 .026 .82% 134,497
Class B 1996 (.243) 27.43% 7,160
1995(c) .018 1.89%(e) 99
(b) Total return is calculated without the front-end sales charge or contingent
deferred sales charge.
(c) Period from December 9, 1994, date Class B shares first offered to the
public, through October 31, 1995.
(d) Total return amounts have not been annualized.
(e) Computed on an annualized basis.
(f) Period from February 29, 1996, date Class R shares first offered to
eligible purchasers through October 31, 1996.
</FN>
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Boards of Directors and Shareholders
Princor Balanced Fund, Inc.
Princor Blue Chip Fund, Inc.
Princor Capital Accumulation Fund, Inc.
Princor Emerging Growth Fund, Inc.
Princor Growth Fund, Inc.
Princor Utilities Fund, Inc.
Princor World Fund, Inc.
Princor Bond Fund, Inc.
Princor Government Securities Income Fund, Inc.
Princor High Yield Fund, Inc.
Princor Limited Term Bond Fund, Inc.
Princor Tax-Exempt Bond Fund, Inc.
Princor Cash Management Fund, Inc.
Princor Tax-Exempt Cash Management Fund, Inc.
We have audited the accompanying statements of assets and liabilities of The
Princor Growth Funds [comprising, respectively, Princor Balanced Fund, Inc.,
Princor Blue Chip Fund, Inc., Princor Capital Accumulation Fund, Inc., Princor
Emerging Growth Fund, Inc., Princor Growth Fund, Inc., Princor Utilities Fund,
Inc., and Princor World Fund, Inc.], The Princor Income Funds (comprising,
respectively, Princor Bond Fund, Inc., Princor Government Securities Income
Fund, Inc., Princor High Yield Fund, Inc., Princor Limited Term Bond Fund, Inc.
, and Princor Tax-Exempt Bond Fund, Inc.) and The Princor Money Market Funds
(comprising, respectively, Princor Cash Management Fund, Inc. and Princor
Tax-Exempt Cash Management Fund, Inc.), including the schedules of investments,
as of October 31, 1996, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting The Princor Growth Funds and The Princor
Income Funds at October 31, 1996, and the results of their operations , the
changes in their net assets and the financial highlights for each of the periods
indicated therein which we audited as set forth in the first paragraph, in
conformity with generally accepted accounting principles.
Des Moines, Iowa ERNST & YOUNG
November 27, 1996
<PAGE>
FEDERAL INCOME TAX INFORMATION
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions shown below. Shareholders
should consult a tax adviser on how to report these distributions for state and
local purposes.
<TABLE>
<CAPTION>
Period Ended October 31, 1996
Per Share Per Share
Income Dividend Distributions Capital Gain Distributions
Total
Total Dividends
Payable Per Total Deductible Payable Long- Short- Capital Gain and
Date Share Dividends Percentage* Date Term** Term*** Distributions Distributions
Princor Balanced Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A Shares 12/28/95 $.1470 27.40% 12/01/95 $ .6225 $.0501
4/1/96 .0950 26.00%
7/1/96 .0950 27.64%
10/1/96 .0950 31.04%
$.4320 $ .6726 $1.1046
B Shares 12/28/95 $.1240 27.40% 12/01/95 $ .6225 $.0501
4/1/96 .0715 26.00%
7/1/96 .0630 27.64%
10/1/96 .0649 31.04%
$.3234 $ .6726 $ .9960
R Shares 4/1/96 $.0922 26.00%
7/1/96 .0839 27.64%
10/1/96 .0876 31.04%
$.2637 $ .2637
Princor Blue Chip Fund, Inc.
A Shares 12/28/95 $.0945 81.30% 12/01/95 $ .3518
4/1/96 .0550 85.02%
7/1/96 .0575 79.21%
10/1/96 .0475 76.96%
$.2545 $ .3518 $ .6063
B Shares 12/28/95 $.0679 81.30% 12/01/95 $ .3518
4/1/96 .0302 85.02%
7/1/96 .0243 79.21%
10/1/96 .0118 76.96%
$.1342 $ .3518 $ .4860
R Shares 4/1/96 $.0530 85.02%
7/1/96 .0475 79.21%
10/1/96 .0458 76.96%
$.1463 $ .1463
Princor Capital Accumulation Fund, Inc.
A Shares 12/28/95 $.2370 93.30% 12/01/95 $1.4029 $.0640
7/1/96 .1944 87.76%
$.4314 $ 1.4669 $1.8983
B Shares 12/28/95 $.1401 93.30% 12/01/95 $1.4029 $.0640
7/1/96 .0823 87.76%
$.2224 $ 1.4669 $1.6893
R Shares 7/1/96 $.1555 87.76%
$.1555 $ .1555
<FN>
*Percent qualifying for deduction by shareholders who are corporations.
**Taxable as long-term capital gain.
***Taxable at ordinary income rates.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Period Ended October 31, 1996
Per Share Per Share
Income Dividend Distributions Capital Gain Distributions
Total
Total Dividends
Payable Per Total Deductible Payable Long- Short- Capital Gain and
Date Share Dividends Percentage* Date Term** Term*** Distributions Distributions
Princor Emerging Growth Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A Shares 12/28/95 $.0980 52.29% 12/01/95 $.6130 $.1366
7/1/96 .0457 46.73%
$.1437 $ .7496 $ .8933
B Shares 12/28/95 $.0075 52.29% 12/01/95 $.6130 $.1366
7/1/96 .0045 46.73%
$.0120 $ .7496 $ .7616
R Shares 7/1/96 $.0230 46.73%
$.0230 $ .0230
Princor Growth Fund, Inc.
A Shares 12/28/95 $.1920 73.38% 12/01/95 $.7991 $.3782
7/1/96 .1651 62.96%
$.3571 $1.1773 $1.5344
B Shares 12/28/95 $.0413 73.38% 12/01/95 $.7991 $.3782
7/1/96 .0140 62.96%
$.0553 $1.1773 $1.2326
R Shares 7/1/96 $.0959 62.96%
$.0959 $ .0959
Princor Utilities Fund, Inc.
A Shares 12/28/95 $.1140 92.63%
4/1/96 .1150 84.58%
7/1/96 .1050 97.81%
10/1/96 .0950 89.50%
$.4290 $ .4290
B Shares 12/28/95 $.0919 92.63%
4/1/96 .0945 84.58%
7/1/96 .0819 97.81%
10/1/96 .0729 89.50%
$.3412 $ .3412
R Shares 4/1/96 $.1134 84.58%
7/1/96 .0897 97.81%
10/1/96 .0906 89.50%
$.2937 $ .2937
Princor World Fund, Inc.
A Shares 12/28/95 $.0755 4.85% 12/01/95 $.2929 $.0367
$.0755 $ .3296 $ .4051
B Shares 12/28/95 $.0225 4.85% 12/01/95 $.2929 $.0367
$.0225 $ .3296 $ .3521
R Shares None
<FN>
*Percent qualifying for deduction by shareholders who are corporations.
**Taxable as long-term capital gain.
***Taxable at ordinary income rates.
Foreign Taxes Paid
Princor World Fund, Inc. makes an election under the Internal Revenue Code
Section 853 to pass through foreign taxes paid by the fund to its shareholders.
The total amount of foreign taxes passed through to shareholders for the year
ended October 31, 1996 totals $.0241 per share. This information is given to
meet certain requirements of the Internal Revenue Code and should not be used by
shareholders for preparing their income tax returns. For tax return preparation
purposes, please refer to the information supplied with the 1099 form you
receive from the fund's transfer agent.
</FN>
</TABLE>
<PAGE>
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions shown below. Shareholders
should consult a tax adviser on how to report these distributions for state and
local purposes.
Ordinary Income Dividends
<TABLE>
<CAPTION>
The Funds paid the following per share income dividends on the dates indicated:
Per Share Dividends/Payable Date
Fund 11/1/95 12/1/95 12/28/95 2/1/96 3/1/96 4/1/96 5/1/96 6/3/96 7/1/96 8/1/96 9/3/96 10/1/96
----- ------- ------- -------- ------ ------ ------ ------ ------ ------ ------ ------ -------
Princor Bond Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $.0650 $.0650 $.0638 $.0638 $.0638 $.0638 $.0638 $.0638 $.0625 $.0625 $.0625 $.0625
Class B $.0589 $.0589 $.0572 $.0572 $.0572 $.0572 $.0572 $.0572 $.0556 $.0556 $.0556 $.0556
Class R -- -- -- -- $.0638 $.0630 $.0605 $.0605 $.0603 $.0609 $.0609 $.0609
Princor Government
Securities Income
Fund, Inc.
Class A $.0588 $.0588 $.0588 $.0588 $.0588 $.0588 $.0588 $.0588 $.0588 $.0588 $.0588 $.0588
Class B $.0526 $.0526 $.0515 $.0515 $.0515 $.0515 $.0515 $.0515 $.0515 $.0515 $.0515 $.0515
Class R -- -- -- -- $.0588 $.0575 $.0550 $.0550 $.0562 $.0572 $.0572 $.0572
Princor High Yield Fund, Inc.
Class A $.0563 $.0563 $.0800 $.0563 $.0563 $.0563 $.0563 $.0563 $.0563 $.0563 $.0563 $.0563
Class B $.0513 $.0513 $.0750 $.0513 $.0513 $.0513 $.0513 $.0500 $.0500 $.0500 $.0500 $.0500
Class R -- -- -- -- $.0563 $.0560 $.0540 $.0540 $.0540 $.0543 $.0543 $.0543
Princor Limited Term Bond
Fund, Inc.
Class A -- -- -- -- $.0250 $.0500 $.0500 $.0475 $.0475 $.0425 $.0425 $.0425
Class B -- -- -- -- $.0250 $.0460 $.0450 $.0426 $.0426 $.0376 $.0392 $.0410
Class R -- -- -- -- $.0250 $.0475 $.0460 $.0435 $.0435 $.0384 $.0384 $.0384
Princor Tax-Exempt Bond
Fund, Inc.*
Class A $.0538 $.0538 $.0538 $.0538 $.0538 $.0538 $.0538 $.0538 $.0538 $.0538 $.0538 $.0538
Class B $.0460 $.0460 $.0460 $.0460 $.0460 $0460 $.0460 $.0460 $.0460 $.0460 $.0442 $.0442
<FN>
*Dividends from the Tax-Exempt Bond Fund, Inc. were exempt from federal income taxation for non-corporate shareholders.
</FN>
</TABLE>
<PAGE>
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions shown below. Shareholders
should consult a tax adviser on how to report these distributions for state and
local purposes.
Ordinary Income Dividends
The Funds paid the following per share income dividends on the dates indicated:
Per Share Dividends/Payable Date
----------------------------------------------
Fund 11/22/95 12/28/95 1/19/96 2/20/96 3/20/96
Princor Cash Management
Fund, Inc.
Class A $.0039 $.0049 $.0033 $.0041 $.0038
Class B $.0033 $.0042 $.0028 $.0034 $.0031
Class R -- -- -- -- $.0028
Princor Tax-Exempt Cash
Management Fund, Inc.*
Class A $.0024 $.0031 $.0020 $.0022 $.0021
Class B $.0018 $.0024 $.0015 $.0016 $.0015
Fund 4/19/96 5/20/96 6/20/96 7/19/96 8/20/96
Princor Cash Management
Fund, Inc.
Class A $.0041 $.0037 $.0040 $.0041 $.0040
Class B $.0034 $.0031 $.0033 $.0034 $.0033
Class R $.0038 $.0036 $.0037 $.0037 $.0036
Princor Tax-Exempt Cash
Management Fund, Inc.*
Class A $.0024 $.0024 $.0024 $.0022 $.0024
Class B $.0017 $.0018 $.0017 $.0015 $.0017
Fund 9/20/96 10/18/96
Princor Cash Management
Fund, Inc.
Class A $.0043 $.0039
Class B $.0036 $.0031
Class R $.0040 $.0035
Princor Tax-Exempt Cash
Management Fund, Inc.*
Class A $.0026 $.0023
Class B $.0019 $.0016
*Dividends from the Tax-Exempt Cash Management Fund, Inc. were exempt from
federal income taxation for non-corporate shareholders.
<PAGE>
<TABLE>
<CAPTION>
GROWTH FUNDS INVESTMENT OBJECTIVE
<S> <C>
Princor Balanced Fund To seek the generation of a total return consisting of current income and capital
appreciation while assuming reasonable risks in furtherance of this objective.
Princor Blue Chip Fund To seek growth of capital and growth of income by investing primarily in common stocks of
well capitalized, established companies.
Princor Capital To seek long-term capital appreciation and a secondary objective of growth of investment
Accumulation Fund income.
Princor Emerging To seek capital appreciation by investing primarily in securities of emerging and other
Growth Fund growth-oriented companies.
Princor Growth Fund To seek growth of capital with realization of current income incidental to the objective of
growth of capital.
Princor Utilities Fund To seek current income and long-term growth of income and capital by investing primarily in
equity and fixed income securities of companies in the public utilities industry.
Princor World Fund To seek long-term growth of capital by investing in a portfolio of equity securities of
companies domiciled in any of the nations of the world.
INCOME FUNDS
Princor Bond Fund To seek as high a level of income as is consistent with preservation of capital and prudent
investment risk.
Princor Government Securities To seek a high level of current income, liquidity and safety of principal.
Income Fund
Princor High Yield Fund To seek high current income. Capital growth is a secondary objective when consistent with
seeking high current income.
Princor Limited Term Bond Fund To seek a high level of current income consistent with a relatively high level of principal
stability by investing in a portfolio of securities with a dollar weighted average maturity of
five years or less.
Princor Tax-Exempt Bond Fund To seek as high a level of current income exempt from federal taxation as is consistent with
preservation of capital.
MONEY MARKET FUNDS
Princor Cash Management Fund To seek as high a level of current income available from short-term securities as is
considered consistent with preservation of principal and maintenance of
liquidity by investing in a portfolio of money market instruments.
Princor Tax-Exempt Cash To seek, through investment in a professionally-managed portfolio of high quality short-term
Management Fund Municipal Obligations, as high a level of current interest income exempt from federal income
tax as is consistent with stability of principal and maintenance of liquidity.
</TABLE>
