To Principal Mutual Life Insurance Company Customers
Equity and fixed income markets showed continued strength in 1997. A robust
economy and few, if any, inflationary worries have resulted in large stock gains
and stable bond prices so far this year.
However, investors should recognize that this extraordinary stock market rise
cannot be expected to continue indefinitely. To prepare for this potential
decline, you are reminded of the three, time-tested tools used by most
successful investors. These tools include: maintaining a long-term focus,
investing regularly and consistently and diversifying among asset classes.
As you may already know, the Principal Mutual Funds act as underlying investment
options with several different Principal Mutual Life Insurance Company variable
annuity and variable life products. See your contract prospectus for a
description of the Funds.
Recently, you were sent a proxy mailing for the Principal Mutual Funds. The
Board of Directors of the Funds has reviewed several issues and asked that they
be placed on a ballot for your consideration. The issues were explained in
greater detail in the proxy statement. Fund directors are recommending a "yes"
vote. Every vote is important. So, please complete and return your proxy card(s)
promptly.
We thank you for helping us to enjoy another successful year and look forward to
serving your future investment and insurance needs. We hope that you find the
information contained within this Semiannual Report both useful and informative.
CONTENTS
Page
Financial Statements and Financial Highlights
Statements of Assets and Liabilities................................ 2
Statements of Operations ........................................... 4
Statements of Changes in Net Assets................................. 6
Notes to Financial Statements....................................... 10
Schedules of Investments
Principal Aggressive Growth Fund, Inc............................ 18
Principal Asset Allocation Fund, Inc............................. 19
Principal Balanced Fund, Inc..................................... 25
Principal Bond Fund, Inc......................................... 27
Principal Capital Accumulation Fund, Inc......................... 29
Principal Emerging Growth Fund, Inc.............................. 31
Principal Government Securities Fund, Inc........................ 33
Principal Growth Fund, Inc....................................... 34
Principal High Yield Fund, Inc................................... 36
Principal Money Market Fund, Inc................................. 38
Principal World Fund, Inc........................................ 40
Financial Highlights................................................ 44
<PAGE>
<TABLE>
<CAPTION>
June 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Principal Principal
Aggressive Asset Principal Principal
Growth Allocation Balanced Bond
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C> <C>
Investment in securities -- at cost................... $ 89,799,677 $59,014,380 $100,020,999 $69,466,629
Assets
Investment in securities -- at value (Note 4)......... $103,974,021 $65,779,589 $112,427,518 $70,370,487
Cash ................................................. 6,964,282 5,823,943 2,000 2,001
Receivables:
Dividends and interest........................... 115,103 372,000 829,247 1,490,973
Investment securities sold....................... 597,008 471,029 -- --
Capital Stock sold............................... 164,471 28,015 86,186 5,560
Total Assets 111,814,885 72,474,576 113,344,951 71,869,021
Liabilities
Accrued expenses...................................... 77,634 49,148 56,873 30,068
Payables:
Investment securities purchased.................. 1,222,825 533,356 -- --
Capital Stock reacquired......................... 1,000,000 -- -- 27,188
Total Liabilities 2,300,459 582,504 56,873 57,256
Net Assets Applicable to Outstanding Shares........... $109,514,426 $71,892,072 $113,288,078 $71,811,765
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 6,844,217 5,719,959 7,152,926 6,151,944
Net Asset Value Per Share............................. $16.00 $12.57 $15.84 $11.67
Net Assets Consist of:
Capital Stock......................................... $ 68,442 $ 57,200 $ 71,529 $ 61,519
Additional paid-in capital............................ 88,827,082 60,975,705 94,771,465 68,693,109
Accumulated undistributed net investment income....... 157,768 934,669 1,613,211 2,365,568
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... 6,286,790 3,159,289 4,425,354 (212,289)
Foreign currency transactions.................... -- -- -- --
Net unrealized appreciation of investments............ 14,174,344 6,765,209 12,406,519 903,858
Net unrealized depreciation on translation
of assets and liabilities in foreign currencies.. -- -- -- --
Total Net Assets $109,514,426 $71,892,072 $113,288,078 $71,811,765
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Principal Principal Principal
Capital Emerging Government Principal
Accumulation Growth Securities Growth
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C> <C>
Investment in securities -- at cost................... $192,527,762 $135,533,823 $82,856,423 $103,267,836
Assets
Investment in securities -- at value (Note 4)......... $244,616,393 $179,886,922 $83,504,953 $132,164,273
Cash ................................................. 4,028,777 27,656 1,501,455 16,347
Receivables:
Dividends and interest........................... 334,449 104,876 789,671 125,799
Investment securities sold....................... -- -- -- --
Capital Stock sold............................... 192,417 145,474 6,296 6,105
Total Assets 249,172,036 180,164,928 85,802,375 132,312,524
Liabilities
Accrued expenses...................................... 94,931 92,039 36,526 53,097
Payables:
Investment securities purchased.................. -- -- 990,938 --
Capital Stock reacquired......................... -- 1,075 118,803 705
Total Liabilities 94,931 93,114 1,146,267 53,802
Net Assets Applicable to Outstanding Shares........... $249,077,105 $180,071,814 $84,656,108 $132,258,722
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 7,571,281 5,403,552 7,955,503 8,324,965
Net Asset Value Per Share............................. $32.90 $33.32 $10.64 $15.89
Net Assets Consist of:
Capital Stock......................................... $ 75,713 $ 54,036 $ 79,555 $ 83,250
Additional paid-in capital............................ 186,288,379 133,043,110 81,660,821 102,864,422
Accumulated undistributed net investment income....... 2,493,934 815,094 2,638,842 772,279
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... 8,130,448 1,806,475 (371,640) (357,666)
Foreign currency transactions.................... -- -- -- --
Net unrealized appreciation of investments............ 52,088,631 44,353,099 648,530 28,896,437
Net unrealized depreciation on translation
of assets and liabilities in foreign currencies.. -- -- -- --
Total Net Assets $249,077,105 $180,071,814 $84,656,108 $132,258,722
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
Principal Principal
High Money Principal
Yield Market World
Fund, Inc. Fund, Inc. Fund, Inc.
<S> <C> <C> <C>
Investment in securities -- at cost................... $13,247,496 $43,925,599 $ 85,443,453
Assets
Investment in securities -- at value (Note 4)......... $13,680,640 $43,925,599 $109,302,144
Cash ................................................. 371,699 43,815 38,039
Receivables:
Dividends and interest........................... 315,748 202,639 355,006
Investment securities sold....................... 560,496 -- 210,122
Capital Stock sold............................... 2,229 72,432 116,004
Total Assets 14,930,812 44,244,485 110,021,315
Liabilities
Accrued expenses...................................... 7,129 21,866 64,828
Payables:
Investment securities purchased.................. 398,354 519,596 2,861,257
Capital Stock reacquired......................... -- 15,396 --
Total Liabilities 405,483 556,858 2,926,085
Net Assets Applicable to Outstanding Shares........... $14,525,329 $43,687,627 $107,095,230
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 500,000,000 100,000,000
Shares issued and outstanding......................... 1,582,754 43,687,627 7,055,323
Net Asset Value Per Share............................. $9.18 $1.000 $15.18
Net Assets Consist of:
Capital Stock......................................... $ 15,828 $ 436,876 $ 70,553
Additional paid-in capital............................ 14,311,269 43,250,751 81,010,614
Accumulated undistributed net investment income....... 601,181 -- 1,265,045
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... (836,093) -- 911,252
Foreign currency transactions.................... -- -- (19,233)
Net unrealized appreciation of investments............ 433,144 -- 23,858,691
Net unrealized depreciation on translation
of assets and liabilities in foreign currencies.. -- -- (1,692)
Total Net Assets $14,525,329 $43,687,627 $107,095,230
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Principal Principal
Aggressive Asset Principal Principal
Growth Allocation Balanced Bond
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C> <C>
Dividends........................................ $ 477,219 $ 533,881 $ 628,227 $ --
Less: Withholding tax on foreign dividends...... -- -- -- --
Interest......................................... 87,889 666,444 1,269,706 2,501,727
Total Income 565,108 1,200,325 1,897,933 2,501,727
Expenses:
Management and investment advisory
fees (Note 3)................................ 395,273 258,634 298,358 164,684
Custodian fees................................... 9,609 20,571 3,725 2,488
Directors' fees.................................. 3,885 3,860 3,837 3,883
Other............................................ 3,366 1,085 2,446 1,575
Total Expenses 412,133 284,250 308,366 172,630
Net Investment Income 152,975 916,075 1,589,567 2,329,097
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions.......................... 6,286,602 3,159,705 4,425,625 59,264
Foreign currency transactions.................... -- -- -- --
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments...................................... 6,376,545 3,173,555 3,620,209 (277,295)
Translation of assets and liabilities in
foreign currencies.......................... -- -- -- --
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency 12,663,147 6,333,260 8,045,834 (218,031)
Net Increase in Net Assets
Resulting from Operations $12,816,122 $7,249,335 $9,635,401 $2,111,066
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Principal Principal Principal
Capital Emerging Government Principal
Accumulation Growth Securities Growth
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C> <C>
Dividends........................................ $ 2,782,821 $ 532,462 $ -- $ 635,179
Less: Withholding tax on foreign dividends...... -- -- -- --
Interest......................................... 202,287 761,317 2,853,198 415,311
Total Income 2,985,108 1,293,779 2,853,198 1,050,490
Expenses:
Management and investment advisory
fees (Note 3)................................ 515,926 481,083 203,761 276,767
Custodian fees................................... 2,946 3,526 3,734 3,045
Directors' fees.................................. 3,897 3,885 3,932 3,914
Other............................................ 3,724 3,209 2,533 2,421
Total Expenses 526,493 491,703 213,960 286,147
Net Investment Income 2,458,615 802,076 2,639,238 764,343
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions.......................... 8,130,616 1,806,428 245,732 (360,049)
Foreign currency transactions.................... -- -- -- --
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments ..................................... 19,817,802 16,523,182 (213,709) 16,063,973
Translation of assets and liabilities in
foreign currencies.......................... -- -- -- --
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency 27,948,418 18,329,610 32,023 15,703,924
Net Increase in Net Assets
Resulting from Operations $30,407,033 $19,131,686 $2,671,261 $16,468,267
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
STATEMENTS OF OPERATIONS
(unaudited)
Principal Principal
High Money Principal
Yield Market World
Fund, Inc. Fund, Inc. Fund, Inc.
Net Investment Income
Income:
<S> <C> <C> <C>
Dividends........................................ $ -- $ -- $ 1,594,412
Less: Withholding tax on foreign dividends...... -- -- 191,675
Interest......................................... 649,103 1,215,820 195,648
Total Income 649,103 1,215,820 1,598,385
Expenses:
Management and investment advisory
fees (Note 3)................................ 41,720 108,424 317,653
Custodian fees................................... 1,714 5,141 33,805
Directors' fees.................................. 3,874 3,755 3,869
Other............................................ 684 1,372 2,017
Total Expenses 47,992 118,692 357,344
Net Investment Income 601,111 1,097,128 1,241,041
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions.......................... 159,291 -- 927,800
Foreign currency transactions.................... -- -- (19,233)
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments ..................................... (27,143) -- 12,096,898
Translation of assets and liabilities in
foreign currencies.......................... -- -- (2,666)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency 132,148 -- 13,002,799
Net Increase in Net Assets
Resulting from Operations $733,259 $1,097,128 $14,243,840
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Principal Principal
Aggressive Growth Asset Allocation
Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................... $ 152,975 $ 647,024 $ 916,075 $ 1,836,334
Net realized gain from investment transactions...... 6,286,602 10,016,661 3,159,705 4,149,766
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies... 6,376,545 5,099,753 3,173,555 715,006
Net Increase in Net Assets
Resulting from Operations 12,816,122 15,763,438 7,249,335 6,701,106
Dividends and Distributions to Shareholders
From net investment income.......................... -- (642,821) -- (1,837,566)
From net realized gain on investments and foreign
currency transactions......................... (2,899,788) (8,672,973) (1,126,442) (3,447,188)
(2,899,788) (9,315,794) (1,126,442) (5,284,754)
Capital Share Transactions (Note 5)
Shares sold......................................... 24,352,887 54,678,368 5,815,893 20,370,526
Shares issued in reinvestment of dividends
and distributions.............................. 2,359,966 7,733,190 554,955 2,730,827
Shares redeemed..................................... (17,220,310) (12,396,594) (2,232,807) (3,960,605)
Net Increase in Net Assets from
Capital Share Transactions 9,492,543 50,014,964 4,138,041 19,140,748
Total Increase 19,408,877 56,462,608 10,260,934 20,557,100
Net Assets
Beginning of period................................. 90,105,549 33,642,941 61,631,138 41,074,038
End of period (including undistributed net
investment income as set forth below).......... $109,514,426 $90,105,549 $71,892,072 $61,631,138
Undistributed Net Investment Income................. $ 157,768 $ 4,793 $ 934,669 $ 18,594
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Principal Principal
Balanced Bond
Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................... $ 1,589,567 $ 2,416,667 $ 2,329,097 $ 3,648,701
Net realized gain from investment transactions...... 4,425,625 4,291,386 59,264 24,994
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies... 3,620,209 3,030,866 (277,295) (1,454,206)
Net Increase in Net Assets
Resulting from Operations 9,635,401 9,738,919 2,111,066 2,219,489
Dividends and Distributions to Shareholders
From net investment income.......................... -- (2,404,163) -- (3,612,230)
From net realized gain on investments and foreign
currency transactions......................... (43,109) (5,078,241) -- --
(43,109) (7,482,404) -- (3,612,230)
Capital Share Transactions (Note 5)
Shares sold......................................... 19,199,044 51,227,505 8,781,926 38,212,107
Shares issued in reinvestment of dividends
and distributions.............................. 37,483 6,103,434 -- 2,979,214
Shares redeemed..................................... (8,698,410) (11,883,111) (2,467,788) (12,289,678)
Net Increase in Net Assets from
Capital Share Transactions 10,538,117 45,497,828 6,314,138 28,901,643
Total Increase 20,130,409 47,754,343 8,425,204 27,508,902
Net Assets
Beginning of period................................. 93,157,669 45,403,326 63,386,561 35,877,659
End of period (including undistributed net
investment income as set forth below).......... $113,288,078 $93,157,669 $71,811,765 $63,386,561
Undistributed Net Investment Income................. $ 1,613,211 $ 23,644 $ 2,365,568 $ 36,471
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Principal
Capital Accumulation
Fund, Inc.
Six Months Year
Ended Ended
June 30, December 31,
1997 1996
Operations
<S> <C> <C>
Net investment income............................... $ 2,458,615 $ 3,517,895
Net realized gain from investment transactions...... 8,130,616 26,628,772
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies... 19,817,802 6,846,493
Net Increase in Net Assets
Resulting from Operations 30,407,033 36,993,160
Dividends and Distributions to Shareholders
From net investment income.......................... -- (3,541,996)
From net realized gain on investments and foreign
currency transactions......................... (7,389,172) (22,300,640)
(7,389,172) (25,842,636)
Capital Share Transactions (Note 5)
Shares sold......................................... 33,967,608 81,833,141
Shares issued in reinvestment of dividends
and distributions.............................. 7,344,259 25,659,961
Shares redeemed..................................... (20,271,151) (49,264,748)
Net Increase in Net Assets from
Capital Share Transactions 21,040,716 58,228,324
Total Increase 44,058,577 69,378,848
Net Assets
Beginning of period................................. 205,018,528 135,639,680
End of period (including undistributed net
investment income as set forth below).......... $249,077,105 $205,018,528
Undistributed Net Investment Income................. $ 2,493,934 $ 35,319
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
(unaudited)
Principal Principal
Emerging Growth Government Securities
Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................................. $ 802,076 $ 1,008,977 $ 2,639,238 $ 4,677,723
Net realized gain (loss) from investment transactions............. 1,806,428 1,954,051 245,732 98,466
Net realized (loss) from foreign currency transactions............ -- -- -- --
Net increase (decrease) in unrealized appreciation/depreciation
on investments and translation of assets and
liabilities in foreign currencies............................ 16,523,182 15,461,368 (213,709) (1,337,219)
Net Increase in Net Assets Resulting from Operations 19,131,686 18,424,396 2,671,261 3,438,970
Dividends and Distributions to Shareholders
From net investment income........................................ -- (1,000,544) (46,141) (4,644,240)
From net realized gain on investments and foreign
currency transactions......................................... (455,301) (2,245,806) -- --
(455,301) (3,246,350) (46,141) (4,644,240)
Capital Share Transactions (Note 5)
Shares sold....................................................... 27,055,917 78,710,392 5,357,708 47,002,706
Shares issued in reinvestment of dividends
and distributions........................................... 451,711 3,177,572 45,610 4,589,974
Shares redeemed................................................... (3,273,080) (18,425,569) (8,471,688) (15,367,021)
Net Increase (Decrease) in Net Assets from
Capital Shares Transactions 24,234,548 63,462,395 (3,068,870) 36,225,659
Total Increase (Decrease) 42,910,933 78,640,441 (443,750) 35,020,389
Net Assets
Beginning of period............................................... 137,160,881 58,520,440 85,099,858 50,079,469
End of period (including undistributed net investment
income as set forth below)................................... $180,071,814 $137,160,881 $84,656,108 $85,099,858
Undistributed Net Investment Income............................... $ 815,094 $ 13,018 $ 2,638,842 $ 45,745
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
(unaudited)
Principal Principal
Growth High Yield
Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................................. $ 764,343 $ 1,156,675 $ 601,111 $ 1,153,201
Net realized gain (loss) from investment transactions............. (360,049) 242,899 159,291 210,672
Net realized (loss) from foreign currency transactions............ -- -- -- --
Net increase (decrease) in unrealized appreciation/depreciation
on investments and translation of assets and
liabilities in foreign currencies............................ 16,063,973 7,550,339 (27,143) 218,620
Net Increase in Net Assets Resulting from Operations 16,468,267 8,949,913 733,259 1,582,493
Dividends and Distributions to Shareholders
From net investment income........................................ -- (1,148,740) (11,379) (1,116,648)
From net realized gain on investments and foreign
currency transactions......................................... -- (240,516) -- --
-- (1,389,256) (11,379) (1,116,648)
Capital Share Transactions (Note 5)
Shares sold....................................................... 17,289,857 55,634,083 290,077 437,560
Shares issued in reinvestment of dividends
and distributions........................................... -- 1,373,493 11,379 1,116,648
Shares redeemed................................................... (1,111,312) (7,663,844) (238,350) (109,643)
Net Increase (Decrease) in Net Assets from
Capital Shares Transactions 16,178,545 49,343,732 63,106 1,444,565
Total Increase (Decrease) 32,646,812 56,904,389 784,986 1,910,410
Net Assets
Beginning of period............................................... 99,611,910 42,707,521 13,740,343 11,829,933
End of period (including undistributed net investment
income as set forth below)................................... $132,258,722 $99,611,910 $14,525,329 $13,740,343
Undistributed Net Investment Income............................... $ 772,279 $ 7,936 $ 601,181 $ 11,449
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
(unaudited)
Principal Principal
Money Market World
Fund, Inc. Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, December 31, June 30, December 31,
1997 1996 1997 1996
Operations
<S> <C> <C> <C> <C>
Net investment income............................................. $ 1,097,128 $ 2,089,089 $ 1,241,041 $ 1,145,766
Net realized gain (loss) from investment transactions............. -- -- 927,800 875,641
Net realized (loss) from foreign currency transactions............ -- -- (19,233) (9,568)
Net increase (decrease) in unrealized appreciation/depreciation
on investments and translation of assets and
liabilities in foreign currencies............................ -- -- 12,094,232 9,715,294
Net Increase in Net Assets Resulting from Operations 1,097,128 2,089,089 14,243,840 11,727,133
Dividends and Distributions to Shareholders
From net investment income........................................ (1,097,128) (2,089,089) -- (1,149,902)
From net realized gain on investments and foreign
currency transactions......................................... -- -- (253,439) (750,235)
(1,097,128) (2,089,089) (253,439) (1,900,137)
Capital Share Transactions (Note 5)
Shares sold....................................................... 35,998,262 119,544,896 22,050,225 38,889,383
Shares issued in reinvestment of dividends
and distributions........................................... 1,073,081 1,914,643 249,699 1,849,921
Shares redeemed................................................... (39,627,965) (107,885,209) (877,110) (9,449,905)
Net Increase (Decrease) in Net Assets from
Capital Shares Transactions (2,556,622) 13,574,330 21,422,814 31,289,399
Total Increase (Decrease) (2,556,622) 13,574,330 35,413,215 41,116,395
Net Assets
Beginning of period............................................... 46,244,249 32,669,919 71,682,015 30,565,620
End of period (including undistributed net investment
income as set forth below)................................... $43,687,627 $ 46,244,249 $107,095,230 $71,682,015
Undistributed Net Investment Income............................... $ -- $ -- $ 1,265,045 $ 24,004
See accompanying notes.
</TABLE>
<PAGE>
June 30, 1997
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Principal Aggressive Growth Fund, Inc.
Principal Asset Allocation Fund, Inc.
Principal Balanced Fund, Inc.
Principal Bond Fund, Inc.
Principal Capital Accumulation Fund, Inc.
Principal Emerging Growth Fund, Inc.
Principal Government Securities Fund, Inc.
Principal Growth Fund, Inc.
Principal High Yield Fund, Inc.
Principal Money Market Fund, Inc.
Principal World Fund, Inc.
Note 1 -- Significant Accounting Policies
Principal Aggressive Growth Fund, Inc., Principal Asset Allocation Fund, Inc.,
Principal Balanced Fund, Inc., Principal Bond Fund, Inc., Principal Capital
Accumulation Fund, Inc., Principal Emerging Growth Fund, Inc., Principal
Government Securities Fund, Inc., Principal Growth Fund, Inc., Principal High
Yield Fund, Inc., Principal Money Market Fund, Inc. and Principal World Fund,
Inc. (the "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.
Principal Money Market Fund, Inc. values its securities at amortized cost, which
approximates market. Under the amortized cost method, a security is valued by
applying a constant amortization to maturity of the difference between the
principal amount due at maturity and the cost of the security to the fund.
The other 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.
With respect to Principal World Fund, Inc., the value of foreign securities in
foreign currency amounts are expressed in U.S. Dollars at the closing daily rate
of exchange. Shares listed on the Korean Stock Exchange (KSE) which are traded
by foreign investors in foreign over-the-counter transactions generally are
valued at prices the Manager believes would be obtained if such shares were
sold, provided that the Board determines that such valuations are accurate;
otherwise such KSE shares will be valued using the procedures for listed
securities. 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 on valuation
date.
Since the carrying amount of the foreign securities in the Principal World Fund,
Inc. 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 Funds may, pursuant to an exemptive order issued by the Securities and
Exchange Commission, transfer uninvested funds into a joint trading account. The
order permits the Funds' cash balances to be deposited into a single joint
account along with the cash of other registered investment companies managed by
Princor Management Corporation. These balances may be invested in one or more
short-term instruments.
The Funds record investment transactions generally one day after 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 of
investments. The 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 Funds are informed of the ex-dividend
date. Interest income is recognized on an accrual basis.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amount of dividends and foreign withholding taxes recorded on the fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
With respect to Principal Money Market Fund, Inc., all net investment income and
any realized gains and losses from investment transactions are declared as
dividends daily to shareholders of record as of that day. Dividends and
distributions to shareholders of the other funds 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. Permanent book and tax basis
differences are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Reclassifications made for the year ended December 31, 1996 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.
Note 3 -- Management Agreement and Transactions With Affiliates
The 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 Funds is as follows:
Net Assets Value of Funds
(in millions)
First Next Next Next Over
Funds $100 $100 $100 $100 $400
Principal Aggressive
Growth Fund, Inc. .80% .75% .70% .65% .60%
Principal Asset Allocation
Fund, Inc. .80 .75 .70 .65 .60
Principal Balanced
Fund, Inc. .60 .55 .50 .45 .40
Principal Bond Fund, Inc. .50 .45 .40 .35 .30
Principal Capital
Accumulation Fund, Inc. .50 .45 .40 .35 .30
Principal Emerging
Growth Fund, Inc. .65 .60 .55 .50 .45
Principal Government
Securities Fund, Inc. .50 .45 .40 .35 .30
Principal Growth
Fund, Inc. .50 .45 .40 .35 .30
Principal High Yield
Fund, Inc. .60 .55 .50 .45 .40
Principal Money Market
Fund, Inc. .50 .45 .40 .35 .30
Principal World Fund, Inc. .75 .70 .65 .60 .55
Brokerage commissions were paid to affiliates by certain of the funds, as
follows:
Six Months Ended Year Ended
June 30, December 31,
1997 1996
Principal Asset Allocation
Fund, Inc. $ 2,012 $ --
Principal Balanced Fund, Inc. 14,616 1,300
Principal Capital Accumulation
Fund, Inc. 4,560 10,262
Principal Growth Fund, Inc. 1,898 438
Principal World Fund, Inc. 8,398 3,176
All of the shares of the Funds are owned by Principal Mutual Life Insurance
Company and/or one or more Separate Accounts sponsored by Principal Mutual Life
Insurance Company.
Note 4 -- Investment Transactions
For the six months ended June 30, 1997, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Funds were as follows:
Purchases Sales
Principal Aggressive Growth Fund, Inc. $90,894,886 $85,821,723
Principal Asset Allocation Fund, Inc. 33,098,234 37,559,662
Principal Balanced Fund, Inc. 19,594,921 16,144,132
Principal Bond Fund, Inc. 10,388,135 2,182,527
Principal Capital Accumulation Fund, Inc. 41,825,563 31,309,453
Principal Emerging Growth Fund, Inc. 25,935,701 7,082,328
Principal Government Securities Fund, Inc. 1,956,652 2,554,067
Principal Growth Fund, Inc. 5,649,927 3,673,560
Principal High Yield Fund, Inc. 3,966,041 3,000,007
Principal World Fund, Inc. 31,897,809 10,335,250
At June 30, 1997, net unrealized appreciation of investments held by the Funds
was composed of the following:
<TABLE>
<CAPTION>
Net Unrealized
Gross Unrealized Appreciation
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Principal Aggressive Growth Fund, Inc. $15,781,478 $(1,607,134) $14,174,344
Principal Asset Allocation Fund, Inc. 8,199,042 (1,433,833) 6,765,209
Principal Balanced Fund, Inc. 13,835,948 (1,429,429) 12,406,519
Principal Bond Fund, Inc. 1,587,697 (683,839) 903,858
Principal Capital Accumulation Fund, Inc. 54,758,067 (2,669,436) 52,088,631
Principal Emerging Growth Fund, Inc. 50,022,271 (5,669,172) 44,353,099
Principal Government Securities Fund, Inc. 1,354,369 (705,839) 648,530
Principal Growth Fund, Inc. 32,442,033 (3,545,596) 28,896,437
Principal High Yield Fund, Inc. 496,413 (63,269) 433,144
Principal World Fund, Inc. 25,286,948 (1,428,257) 23,858,691
</TABLE>
The Funds may trade U.S. Government 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 June 30, 1997, Principal Government Securities
Fund, Inc. had TBA commitments involving securities with a face amount of
$1,000,000, cost of $990,938 and market value of $1,002,720. The Fund has set
aside investment securities and other assets in excess of the commitments to
serve as collateral.
At June 30, 1997, Principal Asset Allocation Fund, Inc., Principal Balanced
Fund, Inc., Principal Bond Fund, Inc., Principal Emerging Growth Fund, Inc.,
Principal High Yield Fund, Inc. and Principal World Fund, Inc. held the
following securities which were purchased in a private placement transaction and
may require registration in order to effect a sale in the ordinary course of
business.
<PAGE>
<TABLE>
<CAPTION>
Value at Value as a
Date of June 30, Percentage of
Fund Security Description Acquisition Cost 1997 Net Assets
<S> <C> <C> <C> <C> <C>
Principal Asset Florida Residential Property & 5/5/97 $249,620 $ 250,618 .35%
Allocation Fund, Inc. Casualty; Notes
Fomento Economico Mexicano 5/31/96 71,402 140,125 .19
2/19/97 29,700 47,095 .07
2/21/97 24,025 36,867 .05
3/13/97 24,766 34,488 .05
Grupo Financiero Bancomer SA, 5/30/96 63,875 61,887 .09
ADR 5/31/96 10,333 10,041 .01
4/25/97 23,503 33,454 .05
4/29/97 25,200 34,757 .05
5/6/97 12,272 15,931 .02
Israel Electric Corp.; Senior
Notes 12/11/96 249,525 247,301 .34
Lojas Arapua SA GDR; 2/7/97 11,125 8,291 .01
2/14/97 16,088 10,943 .02
2/26/97 73,954 50,405 .07
PTTEP International, Ltd.;
Yankee Dollar Notes 11/8/96 259,810 254,176 .35
Wellsford Real Properties, Inc. 6/2/97 162,501 173,547 .24
6/18/97 1,115 1,100 .00
1,411,026 1.96
Principal Balanced Federal-Mogul Corp.; Series D
Fund, Inc. Convertible 10/15/92 248,325 417,100 .37
Principal Bond John Hancock Mutual Life
Fund, Inc. Insurance Co.; Surplus Notes 1/8/97 958,440 952,495 1.33
Principal Emerging Ciba-Geigy Corp.; Exchangeable
Growth Fund, Inc. Subordinated Debentures 3/20/91 150,000 150,187 .08
Sierra On Line; Convertible
Subordinated Debentures 8/17/94 100,375 368,638 .20
518,825 .28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Value at Value as a
Date of June 30, Percentage of
Fund Security Description Acquisition Cost 1997 Net Assets
<S> <C> <C> <C> <C> <C>
Principal High Yield Fage Dairy Industry S.A.;
Fund, Inc. Senior Notes 2/6/97 $294,000 $ 291,000 2.00%
Fairchild Semiconducter;
Senior Subordinated Notes 3/6/97 125,000 132,500 .91
Indah Kiat Finance Mauritius Lt;
Guaranteed Senior Notes 6/26/97 198,694 198,454 1.37
Navistar Financial;
Senior Subordinated Notes 5/22/97 25,000 25,719 .18
Ocean Energy, Inc.;
Senior Subordinated Notes 6/26/97 199,660 199,250 1.37
Outdoor Systems;
Senior Subordinated Notes 6/25/97 196,000 194,250 1.34
Pen-Tab Industries;
Senior Subordinated Notes 1/30/97 50,000 50,875 .35
Quality Food Centers;
Senior Subordinated Notes 3/13/97 200,000 198,500 1.37
Specialty Retailers, Inc.;
Senior Notes 6/12/97 50,000 50,375 .35
Sun Media Corp.;
Senior Subordinated Notes 2/13/97 50,000 50,500 .35
1,391,423 9.59
Principal World Alfa SA; Convertible 9/25/95 398,000 581,000 .54
Fund, Inc. Subordinated Debentures 11/20/96 329,254 435,750 .41
Fokus Bank 6/25/96 347,410 542,018 .51
Hyundai Motor Co. Ltd. GDR 9/3/96 307,688 243,750 .23
Kemira OY 12/9/96 314,077 245,271 .23
12/10/96 131,955 99,995 .09
12/11/96 241,385 183,010 .17
2/26/97 322,301 264,138 .25
4/10/97 294,742 264,138 .25
Royal Group Technologies Ltd. 6/25/96 272,357 485,445 .45
7/2/96 91,512 160,921 .15
Voest-Alpine Stahl 10/30/95 280,007 416,817 .39
3/27/96 146,558 203,878 .19
6/25/96 256,094 348,858 .33
6/27/96 145,930 194,817 .18
4,669,806 4.37
</TABLE>
The Funds' investments are with various issuers in various industries. The
Schedules of Investments contained herein summarize concentrations of credit
risk by issuer and industry.
<PAGE>
Note 5 -- Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
<TABLE>
<CAPTION>
Principal Aggressive Principal Asset Principal Balanced
Growth Fund, Inc. Allocation Fund, Inc. Fund, Inc.
Six Months Ended June 30, 1997:
<S> <C> <C> <C>
Shares sold................................... 1,617,616 491,624 1,281,540
Shares issued in reinvestment of
dividends and distributions.................. 160,542 48,173 2,562
Shares redeemed............................... (1,138,622) (189,208) (583,332)
Net Increase 639,536 350,589 700,770
Year Ended December 31, 1996:
Shares sold................................... 3,918,263 1,770,239 3,602,550
Shares issued in reinvestment of
dividends and distributions.................. 547,658 239,060 424,022
Shares redeemed............................... (860,656) (337,801) (825,489)
Net Increase 3,605,265 1,671,498 3,201,083
</TABLE>
<TABLE>
<CAPTION>
Principal Principal Capital Principal Emerging
Bond Fund, Inc. Accumulation Fund, Inc. Growth Fund, Inc.
Six Months Ended June 30, 1997:
<S> <C> <C> <C>
Shares sold................................... 772,077 1,113,522 883,025
Shares issued in reinvestment of
dividends and distributions.................. -- 250,401 14,928
Shares redeemed............................... (216,734) (662,278) (106,190)
Net Increase 555,343 701,645 791,763
Year Ended December 31, 1996:
Shares sold................................... 3,340,011 2,763,121 2,884,710
Shares issued in reinvestment of
dividends and distributions.................. 262,934 868,606 110,728
Shares redeemed............................... (1,065,373) (1,641,040) (693,851)
Net Increase 2,537,572 1,990,687 2,301,587
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Government Principal Growth Principal High
Securities Fund, Inc. Fund, Inc. Yield Fund, Inc.
Six Months Ended June 30, 1997:
<S> <C> <C> <C>
Shares sold................................... 516,773 1,178,487 32,348
Shares issued in reinvestment of
dividends and distributions.................. 4,394 -- 1,287
Shares redeemed............................... (821,126) (75,864) (26,304)
Net Increase (Decrease) (299,959) 1,102,623 7,331
Year Ended December 31, 1996:
Shares sold................................... 4,520,032 4,289,963 50,390
Shares issued in reinvestment of
dividends and distributions.................. 445,172 99,697 128,056
Shares redeemed............................... (1,457,956) (604,413) (12,523)
Net Increase 3,507,248 3,785,247 165,923
</TABLE>
<TABLE>
<CAPTION>
Principal Money Principal World
Market Fund, Inc. Fund, Inc.
Six Months Ended June 30, 1997:
<S> <C> <C>
Shares sold................................... 35,998,262 1,596,085
Shares issued in reinvestment of
dividends and distributions.................. 1,073,081 18,817
Shares redeemed............................... (39,627,965) (63,573)
Net Increase (Decrease) (2,556,622) 1,551,329
Year Ended December 31, 1996:
Shares sold................................... 119,544,896 3,308,501
Shares issued in reinvestment of
dividends and distributions.................. 1,914,643 144,196
Shares redeemed............................... (107,885,209) (800,955)
Net Increase 13,574,330 2,651,742
</TABLE>
Note 6 -- Line of Credit
The 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% on the line of credit. At June 30, 1997, the Funds
had no outstanding borrowings under the line of credit.
<PAGE>
SCHEDULES OF INVESTMENTS
PRINCIPAL AGGRESSIVE GROWTH FUND, INC.
Shares
Held Value
Common Stocks (94.94%)
Advertising (0.31%)
Snyder Communications, Inc. 12,800(a) $ 344,800
Aerospace Industries (0.95%)
Thiokol Corp. 14,800 1,036,000
Air Transportation, Scheduled (2.16%)
AMR Corp. 13,600(a) 1,258,000
US Air Group, Inc. 31,600(a) 1,106,000
2,364,000
Aircraft & Parts (11.49%)
Allied Signal, Inc. 24,700 2,074,800
Boeing Co. 26,800 1,422,075
Gulfstream Aerospace Corp. 15,300(a) 451,350
McDonnell Douglas Corp. 25,000 1,712,500
Textron, Inc. 27,000 1,792,125
United Technologies Corp. 62,000 5,146,000
12,598,850
Auto & Home Supply Stores (0.52%)
O'Reilly Automotive, Inc. 14,700(a) 565,950
Bakery Products (0.27%)
Einstein/Noah Bagel Corp. 25,100(a) 299,631
Beverages (1.98%)
Coca-Cola Enterprises 94,100 2,164,300
Cogeneration - Small Power
Producer (0.44%)
AES Corp. 6,800(a) 481,100
Commercial Banks (6.79%)
Bankamerica Corp. 26,600 1,717,363
Chase Manhattan Corp. 11,512 1,117,383
Citicorp 10,800 1,302,075
Wells Fargo & Co. 12,233 3,296,793
7,433,614
Communications Services, NEC (0.15%)
Globalstar Telecommunication Ltd. 5,400(a) 165,375
Computer & Data Processing (5.34%)
America Online Inc. 9,100(a) 506,187
Aris Corp. 3,800(a) 83,125
GTECH Holdings Corp. 80,600(a) 2,599,350
Microsoft Corp. 13,000(a) 1,642,875
Oracle Systems Corp. 12,800(a) 644,800
Sterling Commerce, Inc. 11,400(a) 374,775
5,851,112
Computer & Office Equipment (3.98%)
Compaq Computer Corp. 7,200(a) 714,600
Dell Computer Corp. 4,600(a) 540,213
International Business
Machines Corp. 20,600 1,857,863
International Game Technology 55,300 981,575
Seagate Technology 7,400(a) 260,387
4,354,638
Consumer Products (6.75%)
Philip Morris Cos., Inc. 166,500 7,388,438
Crude Petroleum & Natural Gas (0.34%)
British Petroleum Co. PLC 5,000 374,375
Eating & Drinking Places (2.42%)
Cracker Barrel Old Country Store, Inc. 59,100 1,566,150
McDonald's Corp. 22,400 1,082,200
2,648,350
Electronic Components &
Accessories (1.56%)
Intel Corp. 5,500 779,969
Linear Technology Corp. 9,600 496,800
Texas Instruments 5,100 428,719
1,705,488
Federal & Federally Sponsored
Credit (1.06%)
Student Loan Marketing Association 9,100 1,155,700
Fire, Marine, & Casualty
Insurance (9.27%)
Aetna, Inc. 19,600 2,006,550
Berkshire Hathaway, Inc. 74(a) 3,492,800
Cigna Corp. 1,050 186,375
CNA Financial Corp. 8,600(a) 906,762
Loews Corp. 21,900 2,192,738
Progressive Corp. 6,900 600,300
USF&G Corp. 32,200 772,800
10,158,325
Grocery Stores (0.22%)
Dominicks Supermarkets, Inc. 9,100(a) 242,287
Hospitals (0.49%)
Columbia/HCA Healthcare Corp. 13,700 538,581
Household Audio & Video
Equipment (0.53%)
Time Warner Inc. 12,000 579,000
Industrial Inorganic Chemicals (0.56%)
Monsanto Co. 14,300 615,794
Life Insurance (0.41%)
Equitable of Iowa Cos. 8,100 453,600
Lumber & Other Building
Materials (2.34%)
Home Depot, Inc. 37,100 2,557,581
Medical Instruments &
Supplies (1.14%)
Becton, Dickinson & Co. 24,600 1,245,375
Miscellaneous Business
Services (0.76%)
Viad Corp. 43,100 829,675
Miscellaneous Electrical Equipment &
Supplies (0.61%)
Motorola, Inc. 8,800 668,800
Miscellaneous Furniture & Fixtures (0.78%)
Hillenbrand Industries 17,900 850,250
Miscellaneous Food & Kindred
Products (1.15%)
Campbell Soup Co. 25,100 1,255,000
Miscellaneous Investing (8.57%)
HFS, Inc. 161,900(a) 9,390,200
Miscellaneous Manufacturers (0.27%)
WMS Industries, Inc. 11,900(a) 298,244
Motor Vehicles & Equipment (1.54%)
Ford Motor Co. 13,300 502,075
ITT Industries Inc. 46,100 1,187,075
1,689,150
Newspapers (0.50%)
Gannett Co. 5,600 553,000
Oil & Gas Field Services (1.22%)
Diamond Offshore Drilling 10,100(a) 789,062
Schlumberger Ltd. 4,400 550,000
1,339,062
Periodicals (2.16%)
K-III Communications Corp. 197,300(a) 2,367,600
Personal Credit Institutions (1.47%)
American Express Co. 21,600 1,609,200
Petroleum Refining (0.62%)
Amoco Corp. 7,800 678,113
Photographic Equipment &
Supplies (0.68%)
Xerox Corp. 9,400 741,425
Plastic Materials & Synthetics (0.55%)
DuPont 9,500 597,313
Radio & Television Broadcasting (2.57%)
Clear Channel Communications 35,200(a) 2,164,800
Heftel Broadcasting Co. 11,800(a) 651,950
2,816,750
Savings Institutions (0.67%)
Ahmanson & Co. 11,400 490,200
Ocwen Financial Corp. 7,400(a) 241,425
731,625
Search & Navigation Equipment (0.84%)
Litton Industries Inc. 19,100(a) 922,769
Security & Commodity Services (0.93%)
Franklin Resources, Inc. 14,000 1,015,875
Security Brokers & Dealers (1.66%)
Charles Schwab Corp. 17,100 695,756
Merrill Lynch & Co., Inc. 18,800 1,120,950
1,816,706
Special Industry Machinery (0.63%)
Applied Materials, Inc. 9,800(a) 693,962
Surety Insurance (4.36%)
Ace Ltd. 25,600 1,891,200
CMAC Investment Corp. 48,700 2,325,425
MGIC Investment Corp. 11,600 556,075
4,772,700
Telephone Communication (0.62%)
Iridium World Communications 7,500(a) 135,938
Worldcom, Inc. 16,800(a) 537,600
673,538
Variety Stores (0.31%)
Woolworth Corp. 14,200(a) 340,800
Total Portfolio Investments (94.94%) 103,974,021
Cash and receivables, net of liabilities (5.06%) 5,540,405
Total Net Assets (100.00%) $109,514,426
(a) Non-income producing security - No dividend paid during the past
twelve months.
PRINCIPAL ASSET ALLOCATION FUND, INC.
Shares
Held Value
Common Stocks (67.23%)
Aerospace Industries (0.23%)
Thiokol Corp. 2,400 $ 168,000
Air Transportation, Scheduled (1.31%)
AMR Corp. 3,500(a) 323,750
British Airways PLC ADR 1,400 160,912
Cathay Pacific Airways ADR 8,500 88,046
KLM Royal Dutch Airlines 7,380 227,858
US Air Group, Inc. 4,000(a) 140,000
940,566
Aircraft & Parts (3.10%)
Allied Signal, Inc. 3,200 268,800
Boeing Co. 3,800 201,638
Gulfstream Aerospace Corp. 2,200(a) 64,900
McDonnell Douglas Corp. 3,700 253,450
Rockwell International Corp. 2,600 153,400
Textron, Inc. 5,000 331,875
United Technologies Corp. 11,500 954,500
2,228,563
Auto & Home Supply Stores (0.05%)
O'Reilly Automotive, Inc. 900(a) 34,650
Automotive Rentals, No Drivers (0.10%)
Ryder Systems, Inc. 2,200 72,600
Bakery Products (0.06%)
Einstein/Noah Bagel Corp. 3,700(a) 44,169
Beverages (2.24%)
Bass PLC ADR 5,000 123,125
CIA Cervecerias Unidas ADR 3,380 74,149
CIA Cervejaria Brahma ADR 13,710 209,934
Coca-Cola Enterprises 25,200 579,600
Coca-Cola FEMSA SA ADR 1,170 60,401
Embotelladora Andina ADR B 900 18,788
Fomento Economico Mexicano 43,485(b) 258,575
Kirin Brewery 2,300 239,200
Panamerican Beverages 909 29,883
Quilmes Industrial Quins SA ADR 1,707 19,844
1,613,499
Blast Furnace & Basic Steel
Products (0.24%)
Australian National Industries 8,960 43,495
British Steel PLC ADS 3,500 88,375
Hylsamex Sponsored GDR 730 22,539
Tubos de Acero de Mexico ADR 1,289(a) 23,766
178,175
Books (0.09%)
McGraw-Hill Companies, Inc. 1,100 64,694
Bus Terminal & Service
Facilities (0.06%)
Brasileiros SA GDR 1,230(a) 45,664
Cash Grains (0.01%)
Delta & Pine Land Co. 200 7,125
Cement, Hydraulic (0.16%)
Cementos de Mexico ADR 11,940 114,922
Chemicals & Allied Products (1.19%)
Asahi Chemical Industry Co. ADR 4,100 245,434
Bayer AG Sponsored ADR 10,735 412,881
Mitsubishi Chemical Corp. 6,100 199,370
857,685
Clay, Ceramic & Refractory
Minerals (0.07%)
English China Clays ADR 5,300 54,644
Colleges and Universities (0.02%)
DeVRY, Inc. 500(a) 13,500
Combination Utility Services (0.40%)
CIA Energetica de Minas Cemig ADR 3,615 182,000
NIPSCO Industries, Inc. 2,550 105,347
287,347
Commercial Banks (5.40%)
ABN-AMRO Holdings NV ADR 30,024 560,845
Allied Irish Banks ADR 2,900 135,394
Banco Central ADR 6,500 118,625
Banco Galicia Y Buenos 1,250 32,969
Banco Wiese Ltd. ADR 4,505 29,282
BankAmerica Corp. 4,500 290,531
BankBoston Corp. 1,200 86,475
Banker's Trust 1,350 117,450
Barclays PLC ADS 5,571 441,502
Brierly Investments Ltd. ADR 5,550 108,328
Chase Manhattan 1,840 178,595
Citicorp 2,300 277,294
Commerzbank AG ADR 3,600 102,058
Credicorp Ltd. 370 8,140
First of America Bank Corp. 2,700 123,525
HSBC Holdings ADR 600 180,450
Mellon Bank Corp. 2,400 108,300
National Westminster ADR 1,900 154,138
PNC Financial Corp. 2,100 87,412
Texas Regional Bancshares 100 4,200
Wells Fargo & Co. 2,200 592,900
Westpac Banking ADR 4,900 146,694
3,885,107
Commercial Printing (0.34%)
DAI Nippon Printing Co. 1,100 248,973
Communications Equipment (0.81%)
ADC Telecommunications, Inc. 1,000(a) 33,375
Advanced Fibre Communication 700(a) 42,263
Alcatel Alsthom ADR 4,700 118,675
Glenayre Technologies, Inc. 700(a) 11,462
Hanson PLC ADR 368 9,200
Harris Corp. 1,450 121,800
Matsushita Electrical ADR 800 163,600
Octel Communications Corp. 700(a) 16,406
Premisys Communication, Inc. 500(a) 7,875
Tekelec, Inc. 300(a) 10,612
Tellabs, Inc. 900(a) 50,288
585,556
Communications Services (0.02%)
Globalstar Telecommunication Ltd. 600(a) 18,375
Computer & Data Processing
Services (1.31%)
Acxiom Corp. 700(a) 14,350
America Online, Inc. 100(a) 5,562
Aris Corp. 600(a) 13,125
Autodesk, Inc. 300 11,494
Avant Corp. 500(a) 16,156
BA Merchant Services, Inc. 400(a) 7,625
Baan Company 100(a) 6,887
Bisys Group, Inc. 1100(a) 45,925
Citrix Systems, Inc. 300(a) 13,163
Compuware Corp. 500(a) 23,875
Electronic Arts 400(a) 13,450
GTECH Holdings Corp. 15,600(a) 503,100
Incyte Pharmaceuticals, Inc. 100(a) 6,700
LHS Group 100(a) 4,381
Ontrack Data International 300(a) 6,900
Peoplesoft, Inc. 600(a) 31,650
Sterling Commerce, Inc. 2,100(a) 69,038
Sungard Data Systems, Inc. 800(a) 37,200
Symantec Corp. 700(a) 13,650
Transaction Systems Architect, Inc. 600(a) 20,700
USCS International, Inc. 1,700(a) 55,675
Vantive Corp. 800(a) 22,600
943,206
Computer & Office Equipment (0.76%)
Ascend Communications 1,300(a) 51,188
Hitachi Ltd. ADR 2,900 327,700
International Game Technology 9,400 166,850
545,738
Concrete, Gypsum & Plaster
Products (0.22%)
Cementos de Mexico SA ADR 8,800 76,334
Italcementi Fabriche SPA ADR 13,000 80,986
157,320
Concrete Work (0.13%)
Pioneer International Ltd. ADR 25,000 95,890
Construction & Related
Machinery (0.51%)
Camco International 100 5,475
EVI, Inc. 400(a) 16,800
Kajima Corp. ADR 2,900 170,051
Komatsu Ltd. ADR 5,500 178,799
371,125
Consumer Products (1.99%)
Philip Morris Cos., Inc. 26,350 1,169,281
RJR Nabisco Holdings Corp. 7,900 260,700
1,429,981
Credit Reporting & Collection (0.02%)
First USA Paymentech Inc. 500(a) 14,469
Crude Petroleum & Natural Gas (0.57%)
Broken Hill Proprietary Ltd. ADR 2,200 65,450
Forcenergy Inc. 300(a) 9,112
Newfield Exploration Co. 100(a) 2,000
Occidental Petroleum Corp. 1,800 45,113
Ocean Energy, Inc. 200(a) 9,250
Petrofina SA ADR 2,900 109,910
Societe Generale ADR 3,600 80,450
USX-Marathon Group, Inc. 3,200 92,400
413,685
Department Stores (0.35%)
Marui Corp. ADR 2,800 104,238
Penney (J.C.) Co. 2,900 151,344
255,582
Drug Stores & Proprietary
Stores (0.01%)
Omnicare, Inc. 200 6,275
Drugs (1.19%)
Agouron Pharmaceuticals, Inc. 100(a) 8,087
Arqule, Inc. 500(a) 8,687
Aviron 400(a) 4,900
Dura Pharmaceuticals, Inc. 300(a) 11,962
Elan Corp. PLC ADR 400(a) 18,100
Genzyme Corp. - General Division 1,000(a) 27,750
Human Genome Sciences, Inc. 100(a) 3,325
Inhale Therapeutic Systems 300(a) 7,425
Jones Medical Industries, Inc. 300 14,250
Medicis Pharmaceutical Corp. 300(a) 14,963
Novartis AG Sponsored ADR 2,879 230,462
Novo Nordisk ADR 3,200 175,600
Nycomed 13,172 189,348
Sangstat Medical Corp. 800(a) 18,500
Smithkline Beecham PLC ADR 1,100 100,788
Vertex Pharmaceuticals 200(a) 7,650
Zonagen, Inc. 500(a) 10,937
852,734
Drugs, Proprietaries & Sundries (0.16%)
Amway Japan Ltd. ADS 6,833 118,296
Eating & Drinking Places (0.64%)
Boston Chicken, Inc. 900(a) 12,600
Cracker Barrel Old Country Store, Inc. 8,200 217,300
Host Marriott Corp. 8,200(a) 147,063
McDonald's Corp. 1,800 86,962
462,925
Electric Services (1.52%)
Centrais Electricas Brasileiras SA -
Electrobras ADR 1,655 49,117
Centrais Electricas Brasileiras ADR 10,165 284,210
Chilectra SA 2,223 63,965
Empresa Nacional de
Electricidad SA ADR 1,400 119,088
Enersis SA ADR 631 22,440
EVN Energie-Vansorgung Nied ADR 3,600 92,782
GPU, Inc. 2,100 75,338
National Power ADR 3,300 116,119
Pinnacle West Capital Corp. 4,100 123,256
Shangdong Huaneng Power
Development Ltd. ADS 8,000 86,000
Texas Utilities Co. 1,900 65,431
1,097,746
Electrical Goods (0.03%)
Kent Electronics Corp. 700(a) 25,681
Electronic Components &
Accessories (0.77%)
Altera Corp. 200(a) 10,100
Kyocera Corp. ADR 1,500 238,500
Level One Communications 500(a) 19,219
Linear Technology Corp. 1,600 82,800
Maxim Integrated Products, Inc. 400(a) 22,750
Molex, Inc., Class A 1,100 38,363
PMC Sierra, Inc. 1,100(a) 28,875
Semtech Corp. 100(a) 3,650
Texas Instruments 974 81,877
Xilinx, Inc. 600(a) 29,437
555,571
Electronic Distribution
Equipment (0.82%)
Phillips NV ADR 6,969 500,897
Watkins-Johnson Co. 2,900 89,175
590,072
Engineering & Architectural
Services (0.08%)
Gartner Group, Inc. 500(a) 17,969
Paychex, Inc. 1,100 41,800
59,769
Farm & Garden Machinery (0.15%)
Deere & Co. 1,900 104,263
Federal & Federally Sponsored
Credit (0.57%)
Student Loan Marketing Association
(Non-Voting) 3,200 406,400
Finance Services (0.60%)
Grupo Financiero Bancomer SA ADR 16,165(a)(b) 156,070
Nomura Sec. Co. Ltd. ADR 2,000 276,151
432,221
Fire Marine & Casualty
Insurance (3.26%)
Aetna, Inc. 2,900 296,888
Berkshire Hathaway, Inc. 15(a) 708,000
CIGNA Corp. 250 44,375
CNA Financial Corp. 3,100(a) 326,856
Loews Corp. 3,700 370,463
Mutual Risk Management Ltd. 300 13,762
Progressive Corp. 1,100 95,700
St. Paul Cos., Inc. 1,400 106,750
Tokio Marine & Fire Insurance ADR 4,600 297,850
USF&G Corp. 3,600 86,400
2,347,044
Footwear, Except Rubber (0.16%)
Ollivetti Inc. Cos. 396,825(a) 112,262
Fruit & Vegetable Markets (0.09%)
CIFRA Unsponsored ADR 34,623 63,547
General Industrial Machinery (0.63%)
AmerGroup Ltd. ADR 5,500 49,502
SKF AB ADR 15,370 401,541
451,043
Grain Mill Products (0.07%)
Grupo Industrial Maseca Sade CV ADR 2,885 47,602
Groceries & Related Products (0.15%)
Fleming Cos., Inc. 5,850 105,300
Grocery Stores (0.40%)
Disco SA ADS 633(a) 25,084
Koninklijke Bijenkorf
Beheer NV ADR 2,400 84,090
Santa Isabella SA ADR 5,527 178,245
287,419
Hardware, Plumbing & Heating
Equipment (0.02%)
Wilmar Industries, Inc. 700(a) 17,062
Health & Allied Services, NEC (0.07%)
Healthsouth Corp. 800(a) 19,950
Renal Care Group, Inc. 100(a) 4,169
Renal Treatment Centers, Inc. 300(a) 8,062
Total Renal Care Holdings, Inc. 400(a) 16,075
48,256
Holding Offices (0.42%)
Jardine Strategic Holdings Ltd. ADR 10,000 75,600
Quinenco SA 1,150(a) 21,275
Trizec Hahn Corp. 9,534 203,789
300,664
Home Health Care Services (0.03%)
Pediatrix Medical Group, Inc. 500(a) 22,906
Hospitals (0.02%)
Health Management Association, Inc. 500(a) 14,250
Hotels & Motels (0.74%)
Extended Stay of America 8,700(a) 137,025
John Q. Hammons Hotels, Inc. 17,400(a) 160,950
La Quinta Motor Inns 400 8,750
Ladbroke Group ADR 37,000 144,711
Servico, Inc. 5,300(a) 78,837
530,273
Household Audio & Video
Equipment (0.41%)
Sony Corp. ADR 2,500 220,000
Time Warner, Inc. 1,500 72,375
292,375
Individual & Family Services (0.08%)
ARV Assisted Living, Inc. 5,400(a) 59,400
Industrial Inorganic Chemicals (0.64%)
AKZO ADR 4,283 296,062
Eastman Chemical Co. 1,150 73,025
Olin Corp. 2,300 89,844
458,931
Industrial Organic Chemicals (0.08%)
Nova Corp. ADR 6,700 56,950
Investment Offices (0.51%)
American General Hospitality Corp. 14,700 363,825
Iron & Steel Foundries (0.64%)
Kawasaki Steel Corp. ADR 7,900 257,511
Kubota Corp. ADR 850 83,300
Siderar S.A.I.C. Sponsored ADR 3,630 118,497
459,308
Iron Ores (0.07%)
Cia Vale Do Rio Doce 2,140 47,708
Laundry, Cleaning & Garment
Services (0.02%)
G&K Services, Inc. 400 14,900
Life Insurance (0.32%)
American General Corp. 1,800 85,950
Lincoln National Corp. 2,200 141,625
227,575
Lumber & Other Building
Materials (0.52%)
Home Depot, Inc. 5,400 372,262
Management & Public Relations (0.24%)
Advanced Health Corp. 200(a) 3,675
Corrections Corp. of America 700(a) 27,825
Ogden Corp. 4,300 93,525
Whitman-Hart, Inc. 1,600(a) 45,000
170,025
Measuring & Controlling Devices (0.05%)
Applied Imaging Corp. 800(a) 5,000
Kla-Tencor Corp. 600(a) 29,250
34,250
Meat Products (0.50%)
Groupe Danone 10,764 356,053
Medical Instruments & Supplies (0.13%)
Arterial Vascular Engingeering 200(a) 6,438
Baxter International, Inc. 1,100 57,475
Mentor Corp. 400 11,850
Nitinol Medical Tech. 800(a) 12,100
Novoste Corp. 100(a) 1,637
Vivus, Inc. 200(a) 4,762
94,262
Metalworking Machinery (0.27%)
JLK Direct Distribution 200(a) 5,125
Makita Corp. ADR 13,000 190,125
195,250
Miscellaneous Business Services (0.27%)
Teletech Holdings, Inc. 700(a) 18,375
Viad Corp. 9,100 175,175
193,550
Miscellaneous Converted Paper
Products (0.42%)
Kimberly Clark Mexico ADR 14,600 277,400
P. T. Inti Indorayon Utama ADR 10,000 20,974
298,374
Miscellaneous Electrical Equipment &
Supplies (0.39%)
Motorola, Inc. 900 68,400
TDK Corp. ADS 2,800 209,475
277,875
Miscellaneous Food & Kindred
Products (0.22%)
Nestle Reg. ADR 2,000 132,112
Starbucks Corp. 600(a) 23,363
155,475
Miscellaneous Food Stores (0.04%)
General Nutrition Cos. 1,000(a) 28,000
MAV 415 4,202
32,202
Miscellaneous Investing (10.36%)
Alexandria Real Estate 2,500 54,844
AMLI Residential Property 1,000 23,625
Associated Estates Realty Co. 4,500 105,750
Avalon Properties 7,100 203,238
Bay Apartments Communities 6,600 244,200
Boston Properties, Inc. 3,600(a) 99,000
Brandywine Realty Trust 13,200 267,300
Brookfield Properties I/R 5,900(a) 41,484
Burnham Pacific Properties 13,700 188,375
Carr Realty Corp. 5,500 158,125
Chateau Properties 14,253 407,992
Columbus Realty Trust 200 4,550
Cornerstone Properties 3,500 53,812
East Group Properties 1,000 20,125
Essex Property Trust 9,200 295,550
Federal Realty Investments 2,300 62,100
First Union Real Estate 14,700 207,638
Gables Residential Trust 4,000 101,000
Great Lakes REIT, Inc. 8,100 133,144
Grupo Carso Sponsored ADR 5,040 70,076
Health Care Property Investors, Inc. 2,600 91,650
HFS, Inc. 40,300(a) 2,337,400
Kilroy Realty Corp. 2,600 65,650
Koger Equity, Inc. 3,600 65,700
LTC Properties, Inc. 900 16,312
Manufactured Home Communities 6,100 140,681
Meridian Industrial Trust 2,900 68,150
Merry Land & Investment Co. 5,900 127,956
Oasis Residential, Inc. 5,000 117,500
Omega Healthcare Investors 7,900 258,231
Prentiss Property Trust 2,700 69,188
Price REIT, Inc. 100 3,637
Ramco-Gershenson Properties 100 1,762
Security Capital Atlantic, Inc. 6,200 148,413
Shurgard Storage Center 4,300 120,400
Starwood Lodging Trust 4,800 204,900
Summit Properties, Inc. 1,000 20,625
Taubman Centers 10,300 136,475
Urban Shopping Centers 8,700 277,313
Wellsford Real Properties, Inc. 15,877(a)(b) 174,647
Western Investment Real Estate Trust 3,900 54,113
Westfield America, Inc. 12,000(a) 202,500
7,445,131
Miscellaneous Non-Durable
Goods (0.38%)
Mitsubishi Corp. ADR 11,000 274,927
Miscellaneous Special Trade
Contractors (0.12%)
Hang Lung Development Co. ADR 9,400 86,146
Mortgage Bankers & Brokers (0.03%)
Homeside, Inc. 900(a) 19,688
Motor Vehicles & Equipment (1.68%)
Chrysler Corp. 3,300 108,281
Fiat SPA ADR 4,700 85,775
Ford Motor Co. 1,500 56,625
General Motors Corp. 1,500 83,531
ITT Industries, Inc. 5,800 149,350
Toyota Motor Corp. ADR 8,600 509,550
Volkswagen AG ADR 1,400 214,837
1,207,949
Nonferrous Foundries (Casting) (0.02%)
Matthews Intl. Corp. 300 10,950
Non-Classifiable Establishments (0.07%)
Keppel Corp. Ltd. ADR 5,375 47,741
Non-Store Retailers (0.00%)
Henry Schein, Inc. 100(a) 3,125
Nursing & Personal Care
Facilities (0.00%)
Manor Care, Inc. 100 3,263
Offices & Clinics of Medical
Doctors (0.07%)
Horizon Mental Health Mgmt. 400(a) 9,000
Occusystems, Inc. 500(a) 14,500
Phycor, Inc. 800(a) 27,550
51,050
Oil & Gas Field Services (0.61%)
Diamond Offshore Drilling 2,500(a) 195,313
Ensco International, Inc. 400(a) 21,100
Petroleo Brasileiro SA 5,700 156,193
Schlumberger Ltd. 500 62,500
435,106
Ophthalmic Goods (0.17%)
Bausch & Lomb 2,550 120,169
Paper Mills (0.15%)
Willamette Industries, Inc. 1,500 105,000
Periodicals (0.55%)
K III Communications Corp. 32,900(a) 394,800
Personal Credit Institutions (0.38%)
Advanta Corp. 500 18,375
American Express Co. 3,300 245,850
Firstplus Financial Group 200(a) 6,800
271,025
Personnel Supply Services (0.13%)
Data Processing Resources 500(a) 11,688
Emcare Holdings, Inc. 100(a) 3,662
Robert Half International, Inc. 800(a) 37,650
Romac International, Inc. 1,300(a) 42,575
95,575
Petroleum Refining (1.43%)
Amoco Corp. 900 78,244
Ashland, Inc. 4,600 213,325
Atlantic Richfield Co. 3,200 225,600
Exxon Corp. 1,000 61,500
Mobil Corp. 3,400 237,575
Total SA IE Francaise ADR 2,800 141,750
YPF Sociedad Anonima ADR 2,175 66,881
1,024,875
Photographic Equipment &
Supplies (0.88%)
Eastman Kodak Co. 550 42,212
Fuji Photo Film 8,800 355,300
OCE NV 1,400 179,725
Xerox Corp. 700 55,213
632,450
Plastic Materials & Synthetics (0.19%)
Du Pont (E.I.) De Nemour 1,200 75,450
Shanghai Petrochemical Co. Ltd. ADR 2,600 63,700
139,150
Primary Nonferrous Metals (0.14%)
Phelps Dodge Corp. 1,150 97,966
Radio, Television & Computer
Stores (0.10%)
Lojas Arapua SA GDR 4,200(b) 69,639
Radio & Television Broadcasting (0.66%)
Clear Channel Communications 5,300(a) 325,950
Grupo Televisa SA GDR 4,785(a) 145,344
471,294
Railroads (0.17%)
Nagoya Railroad Co. Ltd. 2,900 119,619
Real Estate Agents & Managers (0.16%)
Atlantic Gulf Communities Co. 15,900(a) 101,363
Crescent Real Estate Equities 400 11,862
Crescent Operating 40 1,318
114,543
Real Estate Operators & Lessors (1.81%)
Alexander Haagen Properties 4,100 66,625
Arden Realty Group, Inc. 6,300 163,800
Beacon Properties Corp. 6,800 226,950
Catellus Dev. Corp. 4,500(a) 81,563
CRA Managed Care, Inc. 300(a) 15,656
IRT Property Co. 900 10,575
Nationwide Health Properties 14,400 316,800
Pacific Gulf Properties 8,400 184,800
Sekisui House Ltd. ADR 2,300 233,155
1,299,924
Research & Testing Services (0.01%)
Parexel International Corp. 100(a) 3,175
Quintiles Transnational Corp. 100(a) 6,962
10,137
Retail Stores, NEC (0.09%)
CIA Brasileira de Distribuicao
Acucar GDR 1,960 44,970
Supermercados Unimac SA 1,190(a) 22,312
67,282
Savings Institutions (0.00%)
Ocwen Financial Corp. 100(a) 3,263
Sawmills & Planning Mills (0.14%)
Louisiana Pacific Corp. 4,700 99,288
Search & Navigation Equipment (0.22%)
Litton Industries, Inc. 3,200(a) 154,600
Security & Commodity Services (0.21%)
Franklin Resources, Inc. 2,050 148,753
Security Brokers & Dealers (0.05%)
Charles Schwab Corp. 900 36,619
Soap, Cleaners & Toilet Goods (0.68%)
KAO Corp. ADR 2,200 305,689
Shiseido Co. Ltd. ADR 11,000 181,683
487,372
Special Industry Machinery (0.02%)
Fusion Systems Corp. 300(a) 11,869
Subdividers & Developers (0.07%)
Singapore Land ADR 11,600 52,732
Sugar & Confectionary Products (0.10%)
Perlis Plantations ADR 25,000 73,295
Surety Insurance (0.95%)
ACE Ltd. 3,200 236,400
CMAC Investment Corp. 6,400 305,600
MGIC Investment Corp. 2,900 139,019
Triad Guaranty, Inc. 100(a) 4,537
685,556
Telephone Communication (3.34%)
AT&T Corp. 3,500 122,719
BCE, Inc. 17,180 481,040
Compania Anonima Telefonos
de Venezuela 1,485 64,041
LCI International, Inc. 500(a) 10,937
Mobile Telecommunications
Technologies 900(a) 12,881
Sprint Corp. 1,700 89,463
Telebras GDR 18 2,731
Telecommunicacoes Brasileiras SA ADR 6,220 943,885
Telefonica de Argentina ADR 2,885 99,893
Telefonica de Espana SA ADS 2,500 215,625
Telefonica Del Peru ADR 1,865 48,840
Telefonos de Mexico SA ADR 3,865 184,554
Teleport Communication 600(a) 20,475
U.S. West Communications Group 2,700 101,756
2,398,840
Tires & Inner Tubes (0.36%)
Bridgestone ADR 1,100 255,702
Variety Stores (0.38%)
Wal-Mart Stores, Inc. 2,800 94,675
Woolworth Corp. 7,350(a) 176,400
271,075
Vocational Schools (0.02%)
Apollo Group, Inc. 500(a) 17,625
Water Transportation of Freight,
NEC (0.15%)
Penninsular & Oriental
Steamships ADR 5,400 107,847
Total Common Stocks 48,333,901
Preferred Stock (0.19%)
Miscellaneous Investing (0.10%)
First Washington Realty Trust; Series A 2,400 73,200
Periodicals (0.05%)
Time Warner; Series M 31(a) 34,149
Real Estate Agents & Managers (0.04%)
Atlantic Gulf Communities 2,772(a) 27,725
Total Preferred Stocks 135,074
Principal
Amount Value
Bonds (3.51%)
Business Credit Institutions (0.46%)
AT&T Capital Corp. Medium-Term
Notes; 5.85%; 1/5/99 $ 330,000 $ 327,749
Commercial Banks (0.34%)
NationsBank Corp. Senior Notes;
5.70%; 2/9/01 250,000 241,558
Electronic Distribution
Equipment (0.34%)
Israel Electric Corp. Senior Notes;
7.25%; 12/15/06 250,000(b) 247,301
Finance Services (0.98%)
First Plus Home Loan Trust Notes;
7.60%; 4/10/30 150,000 151,289
Lehman Brothers Holdings, Inc.
Senior Notes; 7.38%; 5/15/04 300,000 302,260
Team Fleet Finance Corp. Notes;
7.35%; 5/15/03 250,000 254,903
708,452
Metal Mining Services (0.35%)
PTTEP International, Ltd. Yankee
Dollar Notes; 7.63%; 10/1/06 250,000(b) 254,176
Miscellaneous Investing (0.35%)
Florida Residential Property &
Casualty Notes; 7.25%; 7/1/02 250,000(b) 250,618
Personal Credit Institutions (0.69%)
Ford Motor Credit Unsubordinated;
7.20%; 6/15/07 250,000 250,792
GMAC Medium-Term Notes;
6.10%; 12/06/00 250,000 245,545
496,337
Total Bonds 2,526,191
U.S. Government Treasury Notes (20.57%)
6.38%; 5/15/99 2,000,000 2,010,000
6.38%; 5/15/00 4,500,000 4,516,875
6.25%; 5/31/00 1,500,000 1,500,938
6.25%; 4/30/01 1,750,000 1,745,625
6.63%; 4/30/02 1,350,000 1,362,235
7.25%; 8/15/04 3,500,000 3,648,750
Total U.S. Government Treasury Notes 14,784,423
Total Portfolio Investments (91.50%) 65,779,589
Cash and receivables, net of liabilities (8.50%) 6,112,483
Total Net Assets (100.00%) $71,892,072
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Restricted Security - See Note 4 to the financial statements.
PRINCIPAL BALANCED FUND, INC.
Shares
Held Value
Common Stocks (56.65%)
Auto & Home Supply Stores (0.51%)
Autozone, Inc. 24,900(a)$ 586,706
Bakery Products (0.63%)
Sara Lee Corp. 17,100 711,788
Beverages (1.21%)
Pepsico, Inc. 32,000 1,202,000
Universal Foods Corp. 4,300 163,937
1,365,937
Commercial Banks (4.94%)
BankBoston Corp. 16,600 1,196,238
Corestates Financial Corp. 16,400 881,500
First of America Bank Corp. 11,400 521,550
Fleet Financial Group, Inc. 16,000 1,012,000
NationsBank Corp. 16,500 1,064,250
PNC Financial Corp. 22,000 915,750
5,591,288
Commercial Printing (0.53%)
R. R. Donnelley & Sons Co. 16,400 600,650
Communications Equipment (1.10%)
Allen Telecom, Inc. 4,200(a) 87,150
DSC Communications Corp. 17,400(a) 387,150
General Instrument Corp. 30,700(a) 767,500
1,241,800
Computer & Data Processing
Services (2.67%)
Computer Associates International, Inc. 14,700 818,606
Electronic Data Systems Corp. 32,700 1,340,700
First Data Corp. 19,600 861,175
3,020,481
Computer & Office Equipment (1.57%)
Hewlett-Packard Co. 12,400 694,400
International Business
Machines Corp. 12,000 1,082,250
1,776,650
Consumer Products (0.35%)
Philip Morris Cos., Inc. 9,000 399,375
Crude Petroleum & Natural Gas (1.35%)
Texaco, Inc. 14,100 1,533,375
Department Stores (0.82%)
Dillard, Inc., Class A 26,900 931,412
Drug Stores & Proprietary
Stores (0.97%)
Rite Aid Corp. 22,000 1,097,250
Drugs (4.78%)
Abbott Labs 9,600 640,800
American Home Products Corp. 15,900 1,216,350
Johnson & Johnson 12,400 798,250
Merck & Co., Inc. 10,700 1,107,450
Pharmacia & Upjohn, Inc. 35,300 1,226,675
Schering-Plough Corp. 9,000 430,875
5,420,400
Electric Services (2.97%)
Central & Southwest 42,600 905,250
Dominion Resources, Inc. 13,600 498,100
FPL Group, Inc. 11,600 534,325
Houston Industries, Inc. 32,200 690,287
Potomac Electric Power Co. 16,400 379,250
Southern Co. 16,500 360,938
3,368,150
Electrical Industrial Apparatus (1.02%)
Emerson Electric Co. 20,900 1,150,806
Electronic Distribution
Equipment (0.88%)
General Electric Co. 15,200 993,700
Fats & Oils (1.34%)
Archer Daniels Midland Co. 64,595 1,517,983
General Industrial Machinery (0.71%)
BW/IP Holdings, Inc., Class A 6,400 130,000
Pall Corp. 28,900 671,925
801,925
Grain Mill Products (0.89%)
Ralston-Ralston Purina Group 12,200 1,002,687
Greeting Cards (0.81%)
American Greetings Corp. 24,700 916,988
Grocery Stores (3.47%)
Albertson's, Inc. 38,400 1,401,600
American Stores Co. 22,600 1,115,875
Sysco Corp. 38,600 1,408,900
3,926,375
Household Furniture (1.12%)
Masco Corp. 30,500 1,273,375
Industrial Inorganic Chemicals (0.81%)
Dow Chemical Co. 6,600 575,025
Eastman Chemical Co. 5,450 346,075
921,100
Jewelry, Silverware & Plated
Ware (0.23%)
Jostens, Inc. 9,700 259,475
Life Insurance (0.73%)
Lincoln National 12,900 830,437
Management & Public Relations (1.36%)
Cognizant Corp. 20,900 846,450
Dun & Bradstreet Corp. 26,600 698,250
1,544,700
Meat Products (0.74%)
Tyson Foods, Inc. 43,600 833,850
Medical Instruments & Supplies (0.99%)
St. Jude Medical, Inc. 28,850(a) 1,125,150
Medical Service & Health
Insurance (1.49%)
AON Corp. 13,125 679,219
Foundation Health Systems, Inc., Class A 32,340(a) 980,306
Physicians Corp. of America 5,000(a) 31,875
1,691,400
Metal Forgings & Stampings (0.54%)
Newell Co. 15,500 614,188
Miscellaneous Business Services (0.20%)
Safety-Kleen Corp. 13,600 229,500
Miscellaneous Electrical Equipment
& Supplies (0.79%)
Motorola, Inc. 11,800 896,800
Miscellaneous Shopping Goods
Stores (1.22%)
Toys 'R' Us, Inc. 39,400(a) 1,379,000
Motor Vehicles, Parts & Supplies (1.04%)
Grainger (W. W.), Inc. 15,000 1,172,812
Paper Mills (1.20%)
Kimberly Clark Corp. 27,400 1,363,150
Petroleum Refining (3.57%)
Amoco Corp. 6,800 591,175
Atlantic Richfield Co. 23,200 1,635,600
Exxon Corp. 29,600 1,820,400
4,047,175
Plastic Materials & Synthetics (0.11%)
Wellman, Inc. 7,400 128,575
Sanitary Services (2.36%)
Browning-Ferris Industries, Inc. 32,900 1,093,925
Waste Management, Inc. 49,100 1,577,338
2,671,263
Soap, Cleaners & Toilet Goods (0.98%)
Avon Products 15,700 1,107,831
Telephone Communication (1.78%)
AT&T Corp. 32,700 1,146,544
MCI Communications Corp. 22,600 865,156
2,011,700
Variety Stores (1.87%)
Dayton-Hudson Corp. 15,200 808,450
Wal-Mart Stores, Inc. 38,700 1,308,544
2,116,994
Total Common Stocks 64,174,201
Preferred Stocks (1.49%)
Motor Vehicles & Equipment (1.49%)
Federal-Mogul Corp.
Series D Convertible 4,300(b) 417,100
Ford Motor Co.
Series A Convertible 10,000 1,270,000
Total Preferred Stocks 1,687,100
Principal
Amount Value
Bonds (0.77%)
Blast Furnace & Basic Steel
Products (0.19%)
Quanex Corp. Convertible
Subordinated Debentures;
6.88%; 6/30/07 $ 200,000 $ 213,500
Engines & Turbines (0.17%)
Outboard Marine Corp. Convertible
Subordinated Debentures;
7.00%; 7/1/02 200,000 198,500
Petroleum Refining (0.31%)
Pennzoil Co. Senior Exchangeable
Debentures; 6.50%; 1/15/03 200,000 350,000
Trucking & Courier Services, Ex.,
Air (0.10%)
Builders Transport, Inc. Convertible
Subordinated Debentures;
6.50%; 5/1/11 306,000(c) 116,663
Total Bonds 878,663
U.S. Government Treasury Notes & Bonds (36.13%)
5.13%; 2/28/98 $2,500,000 $ 2,489,845
5.13%; 11/30/98 3,000,000 2,966,250
6.00%; 8/15/99 1,100,000 1,097,250
6.38%; 1/15/00 1,900,000 1,910,094
5.50%; 4/15/00 3,500,000 3,437,658
6.13%; 9/30/00 3,500,000 3,483,595
6.25%; 4/30/01 4,000,000 3,990,000
6.38%; 9/30/01 2,000,000 2,000,626
6.38%; 8/15/02 3,000,000 2,998,125
6.25%; 2/15/03 3,000,000 2,976,564
5.75%; 8/15/03 4,800,000 4,635,000
7.25%; 8/15/04 1,500,000 1,563,750
7.50%; 2/15/05 800,000 846,500
5.63%; 2/15/06 3,600,000 3,380,627
7.25%; 5/15/16 1,000,000 1,042,813
7.50%; 11/15/16 1,000,000 1,068,750
7.25%; 8/15/22 1,000,000 1,043,438
Total U. S. Government Treasury Notes & Bonds 40,930,885
Commercial Paper (4.20%)
Personal Credit Institutions (4.20%)
Investment in Joint Trade Account;
Associates Corp.;
6.25%; 7/1/97 4,756,669 4,756,669
Total Portfolio Investments (99.24%) 112,427,518
Cash and receivables, net of liabilities (0.76%) 860,560
Total Net Assets (100.00%) $113,288,078
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Restricted Security - See Note 4 to the financial statements.
(c) Non-income producing security - Security in default.
PRINCIPAL BOND FUND, INC.
Principal
Amount Value
Bonds (94.92%)
Air Transportation, Scheduled (1.38%)
Federal Express Corp.,
Pass-Through Cert.;
7.96%; 3/28/17 $ 500,000 $ 509,265
7.58%; 7/2/19 500,000 484,455
993,720
Aircraft & Parts (0.45%)
Textron, Inc. Medium-Term Notes,
Series C; 9.55%; 3/19/01 300,000 326,524
Auto & Home Supply Stores (0.83%)
Pep Boys-Manny, Moe & Jack Notes;
7.00%; 6/1/05 600,000 596,289
Bakery Products (1.30%)
Nabisco, Inc. Notes;
7.05%; 7/15/07 950,000 931,507
Beverages (2.38%)
Joseph E. Seagram & Sons
Guaranteed Debentures;
8.88%; 9/15/11 1,500,000 1,709,430
Broadwoven Fabric Mills,
Cotton (2.05%)
Burlington Industries, Inc. Notes;
7.25%; 9/15/05 1,500,000 1,469,439
Cable & Other Pay TV
Services (1.41%)
TCI Communications, Inc. Senior
Notes; 8.00%; 8/1/05 1,000,000 1,016,296
Combination Utility Services (0.37%)
Public Service Electric & Gas
Medium-Term Notes;
8.16%; 5/26/09 250,000 267,922
Computer & Office Equipment (2.80%)
Seagate Technology, Inc.
Senior Notes;
7.37%; 3/1/07 2,000,000 2,014,682
Consumer Products (1.11%)
Philip Morris Cos. Notes;
6.80%; 12/1/03 500,000 491,617
RJR Nabisco Capital Corp. Senior
Notes; 8.75%; 4/15/04 300,000 306,375
797,992
Copper Ores (0.43%)
Asarco, Inc. Notes; 7.38%; 2/1/03 300,000 305,980
Crude Petroleum & Natural Gas (1.10%)
Occidental Petroleum Corp.
Medium-Term Notes;
9.73%; 6/15/01 250,000 274,540
Union Oil of California
Medium-Term Notes;
7.77%; 4/19/05 500,000 518,362
792,902
Deep Sea Foreign Transportation of
Freight (1.36%)
American President Cos., Ltd.
Senior Notes; 7.13%; 11/15/03 1,000,000 976,233
Department Stores (3.26%)
Harcourt General, Inc. Subordinated
Notes; 9.50%; 3/15/00 350,000 372,753
J. C. Penney Co., Inc. Medium-
Term Notes, Series A;
6.88%; 10/15/15 1,500,000 1,382,101
Sears Roebuck Co. Medium-Term
Notes; 9.05%; 2/6/12 500,000 584,339
2,339,193
Drug Stores & Proprietary
Stores (1.89%)
Rite Aid Corp. Senior Debentures;
6.88%; 8/15/13 1,500,000 1,359,607
Eating & Drinking Places (2.15%)
Marriott International, Inc.
Notes; 6.75%; 12/15/03 200,000 196,802
Senior Notes; 7.88%; 4/15/05 1,300,000 1,347,573
1,544,375
Electric Services (1.89%)
Cleveland Electric Illuminating Co.
First Mortgage Bonds;
8.75%; 11/15/05 400,000 404,584
Southern California Edison Co.
Notes; 6.38%; 1/15/06 1,000,000 954,700
1,359,284
Engines & Turbines (1.33%)
Brunswick Corp. Debentures;
7.38%; 9/1/23 1,000,000 954,353
Fabricated Rubber Products,
NEC (0.39%)
M. A. Hanna Co. Senior Notes;
9.38%; 9/15/03 250,000 277,063
Farm & Garden Machinery (1.96%)
Case Corp. Notes; 7.25%; 1/15/16 1,500,000 1,410,456
Gas Production & Distribution (1.65%)
Enron Corp. Notes;
7.13%; 5/15/07 750,000 751,553
Transco Energy Co. Notes;
9.38%; 8/15/01 400,000 435,292
1,186,845
General Government, NEC (1.45%)
Ontario Hydro Debentures;
7.45%; 3/31/13 500,000 510,865
Province of Saskatchewan, Canada
Global Notes; 8.00%; 2/1/13 500,000 532,445
1,043,310
Gold & Silver Ores (1.03%)
Placer Dome, Inc. Notes;
7.13%; 6/15/07 750,000 737,158
Grain Mill Products (1.40%)
Ralston Purina Co. Debentures;
7.75%; 10/1/15 1,000,000 1,007,847
Groceries & Related Products (1.99%)
Supervalu, Inc. Medium-Term Notes,
Series B; 6.49%; 12/12/05 1,500,000 1,430,448
Grocery Stores (1.43%)
Food Lion, Inc. Notes;
7.55%; 4/15/07 1,000,000 1,025,108
Highway & Street Construction (2.57%)
Foster Wheeler Corp. Notes;
6.75%; 11/15/05 1,900,000 1,846,811
Hospitals (0.77%)
Columbia/HCA Healthcare Corp.
Medium-Term Notes;
8.70%; 2/10/10 500,000 550,214
Hotels & Motels (2.13%)
Hilton Hotels Corp. Notes;
7.70%; 7/15/02 1,500,000 1,526,481
Household Appliances (0.77%)
Maytag Corp. Medium-Term Notes;
8.62%; 11/15/07 500,000 550,332
Household Furniture (0.68%)
Masco Corp. Debentures;
7.13%; 8/15/13 500,000 486,560
Industrial Inorganic Chemicals (3.16%)
FMC Corp.
Debentures; 7.75%; 7/1/11 1,500,000 1,553,754
Senior Notes; 6.38%; 9/1/03 200,000 194,695
Grace (W.R.) & Co. Guaranteed
Notes; 8.00%; 8/15/04 500,000 523,950
2,272,399
Life Insurance (1.33%)
John Hancock Mutual Life Insurance Co.
Surplus Notes; 7.38%; 2/15/24 1,000,000(a) 952,495
Lumber & Construction
Materials (2.29%)
Crane Co. Notes; 8.50%; 3/15/04 1,524,000 1,642,581
Machinery, Equipment &
Supplies (1.02%)
AAR Corp. Notes; 7.25%; 10/15/03 750,000 732,981
Millwork, Plywood & Structural
Members (1.54%)
Georgia-Pacific Corp.
Debentures; 9.50%; 12/1/11 100,000 118,060
Senior Debentures; 7.70%; 6/15/15 1,000,000 988,501
1,106,561
Miscellaneous Amusement, Recreation
Services (1.98%)
Circus Circus Enterprises Senior Notes;
6.45%; 2/1/06 1,500,000 1,418,856
Miscellaneous Chemical
Products (0.55%)
Ferro Corp. Senior Debentures;
7.63%; 5/1/13 400,000 396,990
Miscellaneous Investing (2.44%)
Washington Real Estate Investment
Trust Senior Notes;
7.25%; 8/13/06 1,000,000 997,947
Weingarten Realty Investors
Medium-Term Notes;
7.29%; 5/23/05 750,000 757,543
1,755,490
Miscellaneous Metal Ores (1.61%)
Amax, Inc. Notes; 9.88%; 6/13/01 100,000 109,915
Cyprus Amax Minerals Notes;
7.38%; 5/15/07 650,000 654,540
Cyprus Minerals Co. Notes;
10.13%; 4/1/02 350,000 393,984
1,158,439
Motion Picture Production &
Services (0.50%)
Columbia Pictures Entertainment, Inc.
Senior Subordinated Notes;
9.88%; 2/1/98 350,000 357,490
Motor Vehicles & Equipment (1.15%)
TRW, Inc. Medium-Term Notes;
9.25%; 12/30/11 700,000 823,317
Newpapers (2.23%)
News America Holdings, Inc.
Guaranteed Senior Notes;
8.50%; 2/15/05 1,500,000 1,599,129
Oil & Gas Field Services (2.82%)
Petroleum Geo-Services ASA
Notes; 7.50%; 3/31/07 2,000,000 2,023,044
Operative Builders (2.15%)
Pulte Corp. Senior Notes;
8.38%; 8/15/04 1,000,000 1,050,536
7.30%; 10/24/05 500,000 492,583
1,543,119
Paper Mills (2.71%)
Bowater, Inc. Debentures;
9.38%; 12/15/21 200,000 235,073
Champion International Corp. Notes;
9.88%; 6/1/00 250,000 271,106
7.10%; 9/1/05 875,000 876,035
Potlatch Corp. Medium-Term Notes;
8.75%; 1/14/22 500,000 563,155
1,945,369
Personal Credit Institutions (1.42%)
General Motors Acceptance Corp.
Medium-Term Notes;
8.25%; 2/24/04 500,000 533,056
Notes; 6.63%; 10/15/05 500,000 483,703
1,016,759
Petroleum Refining (3.90%)
Ashland Oil, Inc. Medium-Term Notes;
7.71%; 5/11/07 500,000 517,125
7.73%; 7/15/13 250,000 254,112
Series F; 8.54%; 1/13/05 250,000 270,928
Pennzoil Co. Debentures;
10.13%; 11/15/09 325,000 397,427
Phillips Petroleum Co. Notes;
9.38%; 2/15/11 500,000 595,241
Sun Co., Inc.
Debentures; 9.00%; 11/1/24 500,000 562,308
Notes; 7.13%; 3/15/04 200,000 200,445
2,797,586
Plastic Materials & Synthetics (2.70%)
Geon Co. Notes;
6.88%; 12/15/05 2,000,000 1,937,094
Primary Nonferrous Metals (0.93%)
Reynolds Metals Co.
Medium-Term Notes;
8.34%; 5/22/07 500,000 538,030
7.65%; 2/4/08 125,000 128,476
666,506
Pulp Mills (0.30%)
International Paper Co. Medium-Term
Notes; 9.70%; 8/15/00 200,000 216,817
Railroads (1.33%)
Union Pacific Corp. Notes;
6.40%; 2/1/06 1,000,000 955,604
Refrigeration & Service
Machinery (0.52%)
Westinghouse Electric Corp.
Debentures; 8.63%; 8/1/12 350,000 370,629
Rental of Railroad Cars (1.45%)
Gatx Capital Corp. Medium-Term
Notes, Series C; 6.86%; 10/13/05 1,000,000 978,639
Signal Capital Corp. Equipment Trust
Cert.; 9.95%; 2/1/06 64,000 66,044
1,044,683
Sanitary Services (1.51%)
Laidlaw, Inc. Senior Notes;
7.88%; 4/15/05 1,045,000 1,084,410
Sawmills & Planning Mills (1.10%)
MacMillan Bloedel Delaware
Guaranteed Notes; 8.50%; 1/15/04 750,000 789,240
Security Brokers & Dealers (2.77%)
Lehman Brothers, Inc.
Senior Subordinated Notes;
7.38%; 1/15/07 2,000,000 1,989,016
Telephone Communication (3.48%)
Sprint Corp. Notes; 8.13%; 7/15/02 500,000 526,706
U.S. West Capital Funding, Inc.
Medium-Term Notes;
6.83%; 11/15/07 1,000,000 970,544
Notes; 7.30%; 1/15/07 1,000,000 1,001,596
2,498,846
Variety Stores (0.32%)
Dayton-Hudson Corp. Debentures;
9.63%; 2/1/08 150,000 175,903
Dayton-Hudson Corp. Sinking Fund
Debentures; 9.50%; 10/15/16 55,000 55,909
231,812
Total Bonds 68,161,623
Commercial Paper (3.07%)
Personal Credit Institutions (3.07%)
Investment in Joint Trade Account;
Associates Corp.;
6.25%; 7/1/97 2,208,864 2,208,864
Total Portfolio Investments (97.99%) 70,370,487
Cash, receivables and other assets,
net of liabilities (2.01%) 1,441,278
Total Net Assets (100.00%) $71,811,765
(a) Restricted Security - See Note 4 to the financial statements.
PRINCIPAL CAPITAL ACCUMULATION
FUND, INC.
Shares
Held Value
Common Stocks (96.76%)
Beverages (3.28%)
Anheuser Busch Cos., Inc. 135,000 $ 5,661,563
Pepsico, Inc. 49,000 1,840,562
Universal Foods Corp. 17,200 655,750
8,157,875
Combination Utility Services (1.51%)
Cinergy Corp. 58,200 2,026,088
Montana Power Co. 75,000 1,739,062
3,765,150
Commercial Banks (14.88%)
Banc One Corp. 123,940 6,003,344
BankBoston Corp. 38,300 2,759,994
Comerica, Inc. 95,000 6,460,000
Corestates Financial Corp. 111,000 5,966,250
First of America Bank Corp. 43,050 1,969,537
KeyCorp 103,000 5,755,125
NationsBank Corp. 36,800 2,373,600
Summit Bancorp. 115,000 5,764,375
37,052,225
Commercial Printing (1.47%)
R. R. Donnelley & Sons Co. 100,000 3,662,500
Communications Equipment (1.54%)
Allen Telecom, Inc. 16,000(a) 332,000
DSC Communications Corp. 52,800(a) 1,174,800
General Instrument Corp. 92,800(a) 2,320,000
3,826,800
Computer & Office Equipment (2.27%)
Hewlett-Packard Co. 33,400 1,870,400
International Business
Machines Corp. 42,000 3,787,875
5,658,275
Crude Petroleum & Natural Gas (1.72%)
Texaco, Inc. 39,400 4,284,750
Drug Stores & Proprietary
Stores (1.16%)
Rite Aid Corp. 58,000 2,892,750
Drugs (6.70%)
Abbott Labs 48,000 3,204,000
American Home Products Corp. 45,000 3,442,500
Merck & Co., Inc. 37,000 3,829,500
Pharmacia & Upjohn, Inc. 179,000 6,220,250
16,696,250
Electric Services (3.77%)
Dominion Resources, Inc. 44,400 1,626,150
FPL Group, Inc. 38,500 1,773,406
Houston Industries, Inc. 231,000 4,952,063
Potomac Electric Power Co. 45,000 1,040,625
9,392,244
Electrical Industrial Apparatus (1.20%)
Emerson Electric Co. 54,180 2,983,286
Electronic Distribution
Equipment (1.31%)
General Electric Co. 50,000 3,268,750
Farm & Garden Machinery (2.39%)
Tenneco, Inc. 131,600 5,946,675
Fats & Oils (1.75%)
Archer Daniels Midland Co. 185,010 4,347,735
General Industrial Machinery (1.68%)
Pall Corp. 180,100 4,187,325
Grain Mill Products (0.94%)
Ralston-Ralston Purina Group 28,600 2,350,562
Greeting Cards (2.67%)
American Greetings Corp. 179,000 6,645,375
Grocery Stores (3.01%)
Albertson's, Inc. 40,600 1,481,900
American Stores Co. 60,000 2,962,500
Sysco Corp. 83,400 3,044,100
7,488,500
Household Furniture (2.49%)
Masco Corp. 148,200 6,187,350
Industrial Inorganic
Chemicals (1.15%)
Dow Chemical Co. 22,000 1,916,750
Eastman Chemical Co. 14,900 946,150
2,862,900
Industrial Organic Chemicals (0.56%)
Ethyl Corp. 150,000 1,387,500
Jewelry, Silverware & Plated
Ware (0.34%)
Jostens, Inc. 31,700 847,975
Life Insurance (2.45%)
American General Corp. 128,000 6,112,000
Management & Public
Relations (2.94%)
Cognizant Corp. 44,900 1,818,450
Dun & Bradstreet Corp. 209,900 5,509,875
7,328,325
Meat Products (1.01%)
Tyson Foods, Inc. 132,000 2,524,500
Medical Instruments &
Supplies (0.83%)
St. Jude Medical, Inc. 53,100(a) 2,070,900
Medical Service & Health
Insurance (1.56%)
AON Corp. 46,575 2,410,256
Foundation Health Systems, Inc.,
Class A 48,620(a) 1,473,794
3,884,050
Metal Forgings & Stampings (1.02%)
Newell Co. 64,000 2,536,000
Miscellaneous Electrical Equipment &
Supplies (0.96%)
Motorola, Inc. 31,400 2,386,400
Miscellaneous Shopping Goods
Stores (1.53%)
Toys 'R' Us, Inc. 108,700(a) 3,804,500
Motor Vehicles, Parts &
Supplies (1.14%)
Grainger (W. W.), Inc. 36,400 2,846,025
Newspapers (0.81%)
Dow Jones & Co., Inc. 50,000 2,009,375
Paper Mills (1.25%)
Kimberly Clark Corp. 62,800 3,124,300
Petroleum Refining (4.98%)
Atlantic Richfield Co. 80,000 5,640,000
Chevron Corp. 30,000 2,218,125
Exxon Corp. 74,000 4,551,000
12,409,125
Photographic Equipment &
Supplies (2.31%)
Eastman Kodak Co. 75,000 5,756,250
Rental of Railroad Cars (2.55%)
GATX Corp. 110,000 6,352,500
Sanitary Services (3.75%)
Browning-Ferris Industries, Inc. 173,900 5,782,175
Waste Management, Inc. 110,600 3,553,025
9,335,200
Soap, Cleaners, & Toilet Goods (1.60%)
Avon Products 56,600 3,993,838
Telephone Communication (5.27%)
AT&T Corp. 52,000 1,823,250
Southern New England Telecom 125,000 4,859,375
US West Communications Group 171,000 6,444,562
13,127,187
Variety Stores (3.01%)
Dayton-Hudson Corp. 61,000 3,244,438
Wal-Mart Stores, Inc. 126,000 4,260,375
7,504,813
Total Common Stocks 240,998,040
Principal
Amount Value
Commercial Paper (1.45%)
Personal Credit Institutions (1.45%)
Investment in Joint Trade Account;
Associates Corp.; 6.25%; 7/1/97 $3,618,353 $ 3,618,353
Total Portfolio Investments (98.21%) 244,616,393
Cash and receivables, net of liabilities (1.79%) 4,460,712
Total Net Assets (100.00%) $249,077,105
(a) Non-income producing security - No dividend paid during the past
twelve months.
PRINCIPAL EMERGING GROWTH FUND, INC.
Shares
Held Value
Common Stocks (86.05%)
Blast Furnace & Basic Steel
Products (0.70%)
Lukens, Inc. 67,300 $ 1,266,081
Carpets & Rugs (0.59%)
Shaw Industries, Inc. 99,300 1,055,063
Chemicals & Allied Products (0.39%)
Sigma-Aldrich Corp. 20,000 701,250
Commercial Banks (7.34%)
First Commerce Corp. 17,600 774,400
First Federal Capital Corp. 60,997 1,494,426
Independent Bank Corp. Michigan 39,690 1,136,126
Mercantile Bancorp., Inc. 20,960 1,273,320
Merchants Bancorp., Inc. 21,500 822,375
National City Corp. 20,100 1,055,250
NationsBank Corp. 7,960 513,420
North Fork Bancorp., Inc. 118,080 2,523,960
Peoples Heritage Financial
Group, Inc. 48,000 1,818,000
Princeton National Bancorp., Inc. 36,000 666,000
Summit Bancorp. 22,900 1,147,863
13,225,140
Commercial Printing (0.45%)
Merrill Corp. 22,300 811,163
Computer & Data Processing
Services (10.25%)
American Management Systems, Inc. 50,000(a) 1,337,500
Bitstream 102,000(a) 280,500
Cadence Design Systems, Inc. 80,000(a) 2,680,000
Cerner Corp. 116,200(a) 2,440,200
HBO & Co. 35,500 2,445,062
Microsoft Corp. 29,600(a) 3,740,700
National Processing, Inc. 21,300(a) 218,325
Sunquest Information Systems, Inc. 97,300(a) 1,459,500
Synopsys, Inc. 105,000(a) 3,858,750
18,460,537
Computer & Office Equipment (4.24%)
Ascend Communications 70,000(a) 2,756,250
EMC Corp. 81,700(a) 3,186,300
Optika Imaging Systems 75,000(a) 375,000
Seagate Technology 4,000(a) 140,750
Systemsoft Corp. 110,000(a) 1,182,500
7,640,800
Construction & Related
Machinery (2.85%)
EVI, Inc. 122,000(a) 5,124,000
Crude Petroleum & Natural
Gas (1.22%)
Devon Energy Corp. 60,000 2,205,000
Dairy Products (0.40%)
Dreyer's Grand Ice Cream, Inc. 18,200 718,900
Drugs (1.89%)
Alliance Pharmaceutical Corp. 30,000(a) 301,875
Forest Laboratories, Inc. 17,400(a) 721,013
Genzyme Corp. - General Division 7,182(a) 199,300
Merck & Co., Inc. 10,000 1,035,000
Pharmacia & Upjohn, Inc. 32,400 1,125,900
Seragen, Inc. 20,000(a) 20,000
3,403,088
Electronic Components &
Accessories (6.40%)
Intel Corp. 37,900 5,374,694
Linear Technology Corp. 46,800 2,421,900
Solectron Corp. 53,100(a) 3,720,319
11,516,913
Engineering & Architectural
Services (0.96%)
Paychex, Inc. 45,600 1,732,800
Family Clothing Stores (0.05%)
Gadzooks, Inc. 5,000(a) 97,500
Finance Services (1.39%)
First Financial Corp. 85,250 2,504,219
Fire, Marine, & Casualty
Insurance (1.59%)
Berkley W.R. Corp. 48,500 2,855,437
Footwear, Except Rubber (0.61%)
Nine West Group, Inc. 28,900(a) 1,103,619
General Industrial Machinery (4.37%)
Flow International Corp. 101,500(a) 989,625
Kaydon Corp. 45,600 2,262,900
Pentair, Inc. 54,600 1,794,975
Roper Industries, Inc. 54,500 2,827,188
7,874,688
Grocery Stores (0.77%)
Casey's General Stores, Inc. 64,500 1,388,766
Holding Offices (0.76%)
ISB Financial Corp. 52,400 1,362,400
Hose, Belting, Gaskets &
Packing (1.09%)
Mark IV Industries 81,818 1,963,632
Hospitals (1.87%)
Humana, Inc. 62,300(a) 1,440,687
Universal Health Services, Inc.,
Class B 50,000(a) 1,925,000
3,365,687
Household Appliances (1.02%)
Maytag Corp. 70,000 1,828,750
Industrial Machinery, NEC (1.08%)
Coltec Industries 100,000(a) 1,950,000
Insurance Agents, Brokers &
Services (1.23%)
Equifax, Inc. 59,400 2,208,937
Investment Offices (1.21%)
AMVESCAP PLC Sponsored ADS 37,560 2,187,870
Iron & Steel Foundries (0.28%)
Atchison Casting Corp. 30,000(a) 498,750
Laundry, Cleaning & Garment
Services (0.77%)
G & K Services, Inc., Class A 37,225 1,386,631
Measuring & Controlling
Devices (1.57%)
ISCO, Inc. 22,513 196,984
Millipore Corp. 49,100 2,160,400
Photon Dynamics 73,600(a) 478,400
2,835,784
Meat Products (0.98%)
Michael Foods, Inc. 95,200 1,761,200
Medical Instruments & Supplies (3.20%)
Boston Scientific Corp. 35,200(a) 2,162,600
Nellcor Puritan Bennett 84,000(a) 1,522,500
Steris Corp. 55,700(a) 2,081,787
5,766,887
Medical Service & Health
Insurance (5.07%)
Alternative Living Services 93,700(a) 2,102,394
Foundation Health Systems, Inc.,
Class A 104,850(a) 3,178,266
Orthofix International NV 77,600(a) 805,100
Pacificare Health Systems, Inc., Class A 190(a) 11,507
Pacificare Health Systems, Inc., Class B 20,598(a) 1,315,697
Patient InfoSystems, Inc. 59,000(a) 265,500
United Healthcare Corp. 27,900 1,450,800
9,129,264
Metal Services, NEC (1.56%)
BMC Industries, Inc. 81,900 2,805,075
Miscellaneous Apparel &
Accessories (0.63%)
Designer Holdings, Ltd. 112,000(a) 1,141,000
Miscellaneous Chemical
Products (1.70%)
Cytec Industries 48,200(a) 1,801,475
H. B. Fuller Co. 23,000 1,265,000
3,066,475
Mortgage Bankers & Brokers (1.19%)
Money Store, Inc. 75,000 2,151,562
Non-Store Retailers (1.19%)
U.S. Office Products Co. 70,000(a) 2,139,375
Office Furniture (0.98%)
Chromcraft Revington, Inc. 36,200(a) 1,036,225
Kimball International, Inc., Class B 18,200 732,550
1,768,775
Oil & Gas Field Services (1.59%)
Diamond Offshore Drilling 36,700(a) 2,867,188
Operative Builders (1.12%)
D. R. Horton, Inc. 151,200 1,568,700
Pulte Corp. 12,621 436,213
2,004,913
Paints & Allied Products (0.73%)
RPM, Inc. 71,700 1,317,488
Plastic Materials & Synthetics (0.70%)
A. Schulman, Inc. 51,000 1,255,875
Plumbing, Heating,
Air-Conditioning (1.40%)
Apogee Enterprises, Inc. 114,000 2,451,000
Metalclad Corp. 45,600(a) 69,825
2,520,825
Refrigeration & Service
Machinery (0.48%)
Tecumseh Products Co., Class A 14,400 862,200
Sanitary Services (0.99%)
Browning-Ferris Industries, Inc. 46,600 1,549,450
USA Waste Services, Inc. 5,847(a) 225,840
1,775,290
Savings Institutions (0.52%)
Sterling Financial Corp. 49,900(a) 929,388
Screw Machine Products, Bolts,
Etc. (0.90%)
TriMas Corp. 57,500 1,617,187
Security Brokers & Dealers (0.84%)
Jefferies Group, Inc. 26,400 1,504,800
Telephone Communication (1.53%)
McLeod, Inc. 81,500(a) 2,750,625
Toys & Sporting Goods (0.97%)
Mattel, Inc. 51,700 1,751,338
Trucking & Courier Services, Ex.
Air (0.44%)
J. B. Hunt Transport Services, Inc. 53,500 795,812
Total Common Stocks 154,955,947
Preferred Stock (0.15%)
Medical Service & Health
Insurance (0.15%)
Pacificare Health Systems, Inc.
Series A Convertible 10,000 268,750
Principal
Amount Value
Bonds (1.12%)
Computer & Data Processing
Services (0.20%)
Sierra On Line Convertible
Subordinated Debentures;
6.50%; 4/1/01 $ 110,000(b) $ 368,638
Industrial Inorganic Chemicals (0.30%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 150,000(b) 150,187
ICN Pharmaceuticals, Inc. Convertible
Subordinated Debentures;
8.50%; 11/15/99 300,000 388,500
538,687
Management & Public Relations (0.56%)
Complete Management, Inc. Convertible
Debentures; 8.00%; 12/15/03 1,000,000 995,000
Sanitary Services (0.06%)
Enclean, Inc. Convertible Subordinated
Debentures; 7.50%; 8/1/01 100,000 102,426
Total Bonds 2,004,751
Commercial Paper (12.58%)
Business Credit Institutions (3.10%)
American Express Credit Corp.;
5.55%; 7/16/97 400,000 399,075
5.54%; 7/21/97 5,200,000 5,183,996
5,583,071
Personal Credit Institutions (8.60%)
Investment in Joint Trade Account;
Associates Corp.; 6.25%; 7/1/97 8,959,254 8,959,254
Ford Motor Credit Co.;
5.47%; 7/2/97 4,325,000 4,324,343
5.45%; 7/7/97 975,000 974,114
5.54%; 7/28/97 1,225,000 1,219,910
15,477,621
Security Brokers & Dealers (0.88%)
Merrill Lynch & Co., Inc.;
5.57%; 7/14/97 1,600,000 1,596,782
Total Commercial Paper 22,657,474
Total Portfolio Investments (99.90%) 179,886,922
Cash and receivables, net of liabilities (0.10%) 184,892
Total Net Assets (100.00%) $180,071,814
(a) Non-income producing security - No dividend paid during the past
twelve months.
(b) Restricted Security - See Note 4 to the financial statements.
PRINCIPAL GOVERNMENT SECURITIES
FUND, INC.
Description of Issue Principal
Type Rate Maturity Amount Value
Government National Mortgage Association (GNMA)
Certificates (32.10%)
GNMA I 6.50% 5/15/26 $ 988,983 $ 946,892
GNMA I 7.00 1/15/24-2/15/27 1,835,482 1,807,245
GNMA I 7.50 1/15/27 988,383 995,905
GNMA I 8.00 10/15/16-6/15/17 1,357,455 1,409,495
GNMA II 6.00 5/20/24-3/20/27 19,833,224 18,342,727
GNMA II 6.50 12/20/25-2/20/26 3,848,516 3,670,885
Total GNMA Certificates 27,173,149
Federal National Mortgage Association (FNMA)
Certificates (19.51%)
FNMA 5.50 5/1/24 1,166,590 1,043,363
FNMA 6.00 11/1/23-3/1/26 3,924,532 3,656,724
FNMA 6.50 11/1/23-6/1/26 7,393,495 7,094,031
FNMA 7.00 8/1/23-2/1/27 2,738,226 2,688,031
FNMA 7.50 4/1/22 1,021,754 1,030,919
FNMA 7.50 TBA* 1,000,000 1,002,720
Total FNMA Certificates 16,515,788
Federal Home Loan Mortgage Corporation (FHLMC) Certificates (15.23%)
FHLMC 5.50 2/1/24-3/1/24 $ 1,392,860 $ 1,269,262
FHLMC 6.00 12/1/23-1/1/26 2,776,930 2,591,983
FHLMC 6.50 4/1/24-5/1/26 5,172,481 4,970,007
FHLMC 7.00 9/1/23-1/1/24 2,497,922 2,466,473
FHLMC 7.50 2/1/22-6/1/24 1,583,695 1,599,496
Total FHLMC Certificates 12,897,221
Principal
Amount Value
Student Loan Marketing Association (SLMA)
Certificates (16.24%)
Student Loan Marketing Association
Debentures;
7.30%; 8/1/12 $10,000,000 $10,318,450
8.47%; 12/1/08 1,000,000 1,127,978
9.15%; 12/1/04 1,200,000 1,364,346
Notes; 6.13%; 12/1/05 560,000 535,754
Notes; 9.25%; 6/1/04 350,000 397,706
Total SLMA Certificates 13,744,234
Private Export Funding Corporation (PEFCO)
Certificates (15.56%)
Private Export Funding Corp.
Secured Notes;
6.62%; 10/1/05 2,000,000 1,975,240
9.45%; 12/31/99 4,500,000 4,824,810
Series SS, Senior Secured Notes;
5.50%; 3/15/01 3,325,000 3,219,331
5.80%; 2/1/04 2,200,000 2,136,090
7.03%; 10/31/03 1,000,000 1,019,090
Total PEFCO Certificates 13,174,561
Total Portfolio Investments (98.64%) 83,504,953
Cash and receivables, not of liabilities (1.36%) 1,151,155
Total Net Assets (100.00%) $84,656,108
* Securities purchased on a to-be-announced basis.
PRINCIPAL GROWTH FUND, INC.
Shares
Held Value
Common Stocks (82.78%)
Advertising (1.17%)
Interpublic Group of Cos., Inc. 25,300 $ 1,551,206
Beverages (1.64%)
Coca-Cola Co. 8,800 594,000
Pepsico, Inc. 42,100 1,581,381
2,175,381
Blast Furnace & Basic Steel
Products (0.48%)
Lukens, Inc. 33,600 632,100
Carpets & Rugs (0.44%)
Shaw Industries, Inc. 54,800 582,250
Cash Grains (1.66%)
Pioneer Hi-Bred International 27,400 2,192,000
Commercial Banks (5.50%)
Banc One Corp. 16,500 799,219
BankBoston Corp. 11,000 792,687
Barnett Banks Inc. 10,000 525,000
CoreStates Financial Corp. 12,300 661,125
First of America Bank Corp. 17,550 802,913
Firstar Corp. 30,000 915,000
FirstMerit Corp. 14,600 700,800
NationsBank Corp. 24,402 1,573,929
Princeton National Bancorp., Inc. 27,300 505,050
7,275,723
Communications Equipment (3.91%)
General Instrument Corp. 75,800(a) 1,895,000
Northern Telecom Ltd. 18,700 1,701,700
Octel Communications Corp. 67,200(a) 1,575,000
5,171,700
Computer & Data Processing
Services (2.87%)
GTECH Holdings Corp. 47,800(a) 1,541,550
Microsoft Corp. 17,800(a) 2,249,475
3,791,025
Computer & Office Equipment (4.16%)
Automatic Data Processing, Inc. 20,000 940,000
Ceridian Corp. 37,400(a) 1,580,150
Digital Equipment Corp. 30,800(a) 1,091,475
Hewlett-Packard Co. 27,500 1,540,000
Pitney Bowes, Inc. 5,000 347,500
5,499,125
Department Stores (0.46%)
May Department Stores 12,800 604,800
Drugs (8.40%)
Alliance Pharmaceutical Corp. 10,000(a) 100,625
Bristol-Myers Squibb Co. 20,000 1,620,000
Forest Laboratories, Inc. 32,600(a) 1,350,863
Genzyme Corp. - General Division 9,500(a) 263,625
Johnson & Johnson 20,000 1,287,500
Lilly (Eli) & Co. 20,000 2,186,250
Merck & Co., Inc. 14,600 1,511,100
Pharmacia & Upjohn, Inc. 27,500 955,625
Smithkline Beecham PLC ADR 20,000 1,832,500
11,108,088
Eating & Drinking Places (1.42%)
Marriott International, Inc. 25,000 1,534,375
McDonald's Corp. 7,000 338,187
1,872,562
Electrical Goods (0.54%)
Avnet, Inc. 12,500 718,750
Electronic Components &
Accessories (3.33%)
Intel Corp. 17,300 2,453,356
Linear Technology Corp. 37,800 1,956,150
4,409,506
Electronic Distribution
Equipment (0.49%)
General Electric Co. 10,000 653,750
Federal & Federally Sponsored
Credit (0.36%)
Federal National Mortgage Association 11,000 479,875
Footwear, Except Rubber (1.65%)
Stride Rite Corp. 169,300 2,179,738
General Industrial Machinery (2.77%)
Ingersoll-Rand Co. 20,400 1,259,700
Tyco International Ltd. 34,500 2,399,906
3,659,606
Grain Mill Products (1.03%)
General Mills, Inc. 2,445 159,231
Ralston-Ralston Purina Group 14,600 1,199,937
1,359,168
Grocery Stores (0.35%)
Casey's General Stores, Inc. 21,200 456,463
Hose, Belting, Gaskets &
Packing (1.11%)
Mark IV Industries 61,425 1,474,200
Hospitals (2.41%)
Columbia/HCA Healthcare Corp. 24,900 978,881
Humana, Inc. 45,500(a) 1,052,188
Universal Health Services, Inc.,
Class B 30,000(a) 1,155,000
3,186,069
Household Furniture (1.10%)
Masco Corp. 34,900 1,457,075
Investment Offices (1.11%)
AMVESCAP PLC Sponsored ADS 25,200 1,467,900
Knitting Mills (0.22%)
Russell Corp. 10,000 296,250
Lumber & Other Building
Materials (1.43%)
Home Depot, Inc. 27,400 1,888,888
Management & Public Relations (1.49%)
Dun & Bradstreet Corp. 5,000 131,250
Medaphis Corp. 183,000(a) 1,841,437
1,972,687
Medical Instruments & Supplies (3.64%)
Becton, Dickinson & Co. 20,000 1,012,500
Boston Scientific Corp. 41,100(a) 2,525,081
Nellcor Puritan Bennett 70,200(a) 1,272,375
4,809,956
Medical Service & Health
Insurance (3.37%)
AON Corp. 17,550 908,212
Foundation Health Systems, Inc.,
Class A 62,080(a) 1,881,800
Pacificare Health Systems, Inc., Class A 1,467 88,845
Pacificare Health Systems, Inc., Class B 4,611 294,528
United Healthcare Corp. 15,000 780,000
Value Health, Inc. 25,000(a) 506,250
4,459,635
Millwork, Plywood & Structural
Members (0.90%)
Georgia-Pacific Corp. 14,000 1,195,250
Miscellaneous Converted Paper
Products (0.50%)
Minnesota Mining & Mfg. Co. 6,500 663,000
Miscellaneous Electrical Equipment &
Supplies (1.57%)
Motorola, Inc. 27,300 2,074,800
Miscellaneous Fabricated Metal
Products (1.12%)
Parker-Hannifin Corp. 24,300 1,474,706
Miscellaneous Investing (1.10%)
HFS, Inc. 25,000(a) 1,450,000
Miscellaneous Plastics Products,
NEC (0.22%)
Rubbermaid, Inc. 10,000 297,500
Miscellaneous Shopping Goods
Stores (0.40%)
Toys 'R' Us, Inc. 15,000(a) 525,000
Motor Vehicles & Equipment (2.68%)
Chrysler Corp. 60,200 1,975,313
Dana Corp. 41,300 1,569,400
3,544,713
Operative Builders (0.50%)
Pulte Corp. 19,300 667,056
Paints & Allied Products (0.35%)
RPM, Inc. 25,000 459,375
Petroleum Refining (1.99%)
Atlantic Richfield Co. 11,600 817,800
Exxon Corp. 29,600 1,820,400
2,638,200
Plastic Materials & Synthetics (0.63%)
A. Schulman, Inc. 33,600 827,400
Preserved Fruits & Vegetables (0.77%)
CPC International, Inc. 11,100 1,024,669
Radio, Television & Computer
Stores (0.21%)
Tandy Corp. 5,000 280,000
Radio & Television Broadcasting (0.82%)
Sinclair Broadcasting Group 35,000 1,080,625
Refrigeration & Service
Machinery (0.76%)
Tecumseh Products Co., Class A 16,800 1,005,900
Rubber & Plastics Footwear (0.88%)
Nike, Inc. 20,000 1,167,500
Sanitary Services (1.10%)
Browning-Ferris Industries, Inc. 29,300 974,225
Waste Management, Inc. 15,000 481,875
1,456,100
Security Brokers & Dealers (0.86%)
Salomon, Inc. 20,400 1,134,750
Soap, Cleaners & Toilet Goods (2.83%)
Colgate-Palmolive Co. 23,400 1,526,850
Ecolab, Inc. 46,400 2,215,600
3,742,450
Telephone Communication (1.09%)
WorldCom, Inc. 45,000(a) 1,440,000
Toys & Sporting Goods (0.92%)
Mattel, Inc. 35,950 1,217,806
Variety Stores (0.39%)
Wal-Mart Stores, Inc. 15,000 507,188
Women's & Children's
Undergarments (1.68%)
Warnaco Group, Class A 69,800 2,224,875
Total Common Stock 109,484,339
Preferred Stock (0.12%)
Medical Service & Health
Insurance (0.12%)
Pacificare Health Systems, Inc.,
Series A Convertible 6,091 163,695
Principal
Amount Value
Commercial Paper (17.03%)
Business Credit Institutions (4.46%)
American Express Credit Corp.;
5.50%; 7/7/97 $ 2,950,000 $ 2,947,296
5.55%; 7/14/97 2,950,000 2,944,088
5,891,384
Personal Credit Institutions (9.15%)
Investment in Joint Trade Account;
Associates Corp.;
6.25%; 7/1/97 6,619,662 6,619,662
Ford Motor Credit Co.;
5.54%; 7/21/97 3,475,000 3,464,305
5.54%; 7/28/97 2,025,000 2,016,586
12,100,553
Security Brokers & Dealers (3.42%)
Merrill Lynch & Co., Inc.
5.55%; 7/2/97 4,525,000 4,524,302
Total Commercial Paper 22,516,239
Total Portfolio Investments (99.93%) 132,164,273
Cash and receivables, net of liabilities (0.07%) 94,449
Total Net Assets (100.00%) $ 132,258,722
(a) Non-income producing security - No dividend paid during the past
twelve months.
PRINCIPAL HIGH YIELD FUND, INC.
Principal
Amount Value
Bonds (93.19%)
Advertising (2.75%)
Lamar Advertising Company Senior
Subordinated Notes; 9.63%; 12/1/06 $ 200,000 $ 205,000
Outdoor Systems Senior Subordinated
Notes; 8.88%; 6/15/07 200,000(a) 194,250
399,250
Aircraft & Parts (1.94%)
Rohr Industries, Inc. Subordinated
Debentures; 9.25%; 3/1/17 300,000 281,250
Blast Furnace & Basic Steel
Products (5.36%)
Ivaco Senior Notes;
11.50%; 9/15/05 150,000 160,875
Titan Wheel International Senior
Subordinated Notes; 8.75%; 4/1/07 300,000 306,000
Weirton Steel Corp. Senior Notes;
10.75%; 6/1/05 300,000 312,000
778,875
Broadwoven Fabric Mills,
Cotton (2.02%)
J.P. Stevens & Co., Inc. Sinking Fund
Debentures; 9.00%; 3/1/17 300,000 293,250
Business Credit Institutions (0.18%)
Navistar Financial Corp. Senior
Subordinated Notes; 9.00%; 6/1/02 25,000(a) 25,719
Cable & Other Pay TV Services (3.60%)
Jones Intercable, Inc. Senior Notes;
9.63%; 3/15/02 300,000 314,250
TCI Communications, Inc. Debentures;
8.75%; 8/1/15 200,000 209,810
524,060
Cogeneration - Small Power
Producer (3.35%)
AES Corp. Senior Subordinated
Notes; 10.25%; 7/15/06 300,000 327,750
California Energy Co., Inc.
Ltd. Resource Senior Secured
Notes; 9.88%; 6/30/03 150,000 159,000
486,750
Crude Petroleum & Natural Gas (6.87%)
Chesapeake Energy Corp. Senior Notes;
8.50%; 3/15/12 200,000 182,000
Nuevo Energy Co. Senior Subordinated
Notes; 9.50%; 4/15/06 400,000 420,000
Ocean Energy, Inc. Senior Subordianted
Notes; 8.88%; 7/15/07 200,000 199,250
Snyder Oil Company Senior
Subordinated Notes; 8.75%; 6/15/07 200,000 198,250
999,500
Dairy Farms (2.00%)
Fage Dairy Industry S.A. Senior Notes;
9.00%; 2/1/07 300,000(a) 291,000
Electrical Industrial Apparatus (1.44%)
Motors & Gears, Inc., Series A Senior
Notes; 10.75%; 11/15/06 200,000 209,000
Electronic Components &
Accessories (3.22%)
Advanced Micro Devices, Inc.; Senior
Secured Notes; 11.00%; 8/1/03 300,000 335,250
Fairchild Semiconductor Corp. Senior
Subordinated Notes; 10.13%; 3/15/07 125,000(a) 132,500
467,750
Engines & Turbines (1.90%)
Outboard Marine Corp. Debentures;
9.13%; 4/15/17 300,000 276,000
Family Clothing Stores (0.35%)
Specialty Retailers, Inc. Senior Notes;
8.50%; 7/15/05 50,000(a) 50,375
Finance Services (1.38%)
DVI, Inc. Senior Notes; 9.88%; 2/1/04 200,000 200,000
Footwear, Except Rubber (1.41%)
Brown Group, Inc. Senior Notes;
9.50%; 10/15/06 200,000 205,000
Forest Products (2.00%)
Doman Industries, Ltd. Senior Notes;
8.75%; 3/15/04 300,000 291,000
Fuel Dealers (2.02%)
Petroleum Heat & Power Co., Inc.
Subordinated Notes; 10.13%; 4/1/03 300,000 294,000
Groceries & Related Products (2.04%)
Rykoff-Sexton, Inc. Senior
Subordinated Notes; 8.88%; 11/1/03 300,000 297,000
Grocery Stores (1.37%)
Quality Food Centers Senior
Subordinated Notes; 8.70%; 3/15/07 200,000(a) 198,500
Hotels & Motels (2.09%)
John Q. Hammons Hotels, L.P. &
Finance Corp. First Mortgage
Notes; 8.88%; 2/15/04 300,000 303,000
Industrial Inorganic Chemicals (1.38%)
PT Tri Polyta Indonesia TBK;
Guaranteed Securited Notes;
11.38%; 12/1/03 200,000 200,500
Knitting Mills (2.26%)
Tultex Corp. Senior Notes;
10.63%; 3/15/05 300,000 327,750
Lumber & Other Building
Materials (0.53%)
Central Tractor Farm & Country, Inc.
Senior Notes; 10.63%; 4/1/07 75,000 77,625
Miscellaneous Amusement, Recreation
Service (3.49%)
Rio Hotel & Casino, Inc. Senior
Subordinated Notes; 9.50%; 4/15/07 300,000 308,250
Station Casinos, Inc. Senior
Subordinated Notes, Series B
9.63%; 6/1/03 200,000 198,000
506,250
Miscellaneous Plastics Products,
NEC (2.09%)
Congoleum Corp. Senior Notes;
9.00%; 2/1/01 300,000 303,000
Motor Vehicles & Equipment (0.37%)
Blue Bird Body Co. Senior Subordinated
Notes; 10.75%; 11/15/06 50,000 53,125
Newspapers (1.74%)
Hollinger International Publishing, Inc.
Senior Notes; 8.63%; 3/15/05 200,000 202,000
Sun Media Corp. Senior Subordinated
Notes; 9.50%; 2/15/07 50,000(a) 50,500
252,500
Nursing & Personal Care
Facilities (2.09%)
Mariner Health Group, Inc. Senior
Subordinated Notes; 9.50%; 4/1/06 300,000 303,375
Oil & Gas Field Services (2.82%)
Dawson Production Services Senior
Notes; 9.38%; 2/1/07 300,000 304,500
Parker Drilling Co. Senior Notes,
Series B; 9.75%; 11/15/06 100,000 105,250
409,750
Paper Mills (1.37%)
Indah Kiat Finance Mauritius Ltd.
Guaranteed Senior Notes;
10.00%; 7/1/07 200,000 198,454
Petroleum Refining (2.17%)
Crown Central Petroleum Corp.
Senior Notes; 10.88%; 2/1/05 300,000 315,000
Primary Nonferrous Metals (0.37%)
Euramax International PLC Senior
Subordinated Notes; 11.25%; 10/1/06 50,000 53,750
Pulp Mills (0.35%)
Pen-Tab Industries, Inc. Senior
Subordinated Debentures;
10.88%; 2/1/07 50,000(a) 50,875
Radio, Television & Computer
Stores (2.13%)
Compusa, Inc. Senior Subordinated
Notes; 9.50%; 6/15/00 300,000 309,750
Radio & Television Broadcasting (3.14%)
American Radio Systems Senior
Subordinated Notes; 9.00%; 2/1/06 300,000 303,750
Sullivan Broadcasting, Inc. Senior
Subordinated Notes; 10.25%; 12/15/05 150,000 153,000
456,750
Retail Stores, NEC (1.44%)
Cole National Group, Inc. Senior
Subordinated Notes; 9.88%; 12/31/06 200,000 209,500
Search & Navigation Equipment (2.10%)
Amresco, Inc. Senior Subordinated
Notes; 10.00%; 3/15/04 300,000 304,500
Soap, Cleaners & Toilet Goods (2.23%)
Coty, Inc. Senior Subordinated Notes;
10.25%; 5/1/05 300,000 323,250
Telephone Communication (9.33%)
Lenfest Communications Senior Notes;
8.38%; 11/1/05 200,000 196,750
Paging Network, Inc. Senior
Debentures; 8.88%; 2/1/06 300,000 273,750
Rogers Cablesystems, Ltd. Senior
Secured Second Priority Notes;
9.63%; 8/1/02 250,000 263,125
Rogers Cantel, Inc. Senior Secured
Debentures; 9.75%; 6/1/16 300,000 318,000
Vanguard Cellular Systems, Inc.
Senior Debentures; 9.38%; 4/15/06 300,000 303,000
1,354,625
Textile Finishing, Except Wool (2.15%)
Dominion Textile (USA), Inc.
Guaranteed Senior Notes;
9.25%; 4/1/06 300,000 312,750
Water Supply (2.35%)
California Energy Casecnan Water &
Energy Co., Inc. Senior Secured
Bonds, Series B; 11.95%; 11/15/10 300,000 342,000
Total Bonds 13,536,358
Commercial Paper (0.99%)
Personal Credit Institutions (0.99%)
Investment in Joint Trade Account;
Associates Corp.; 6.25%; 7/1/97 144,282 144,282
Total Portfolio Investments (94.18%) 13,680,640
Cash and receivables, net of liabilities (5.82%) 844,689
Total Net Assets (100.00%) $14,525,329
(a) Restricted Security - See Note 4 to the financial statements.
PRINCIPAL MONEY MARKET FUND, INC.
Principal
Amount Value
Commercial Paper (81.26%)
Advertising (1.88%)
Omnicom Finance, Inc.;
LOC ABN-AMRO Bank N.V.
5.58%; 7/14/97 $ 825,000 $ 823,337
Asset Backed Securities (3.71%)
Retailer Funding Corp.;
5.57%; 7/15/97 500,000 498,917
Sheffield Receivables Corp.;
5.55%; 7/16/97 625,000 623,555
5.57%; 7/22/97 500,000 498,375
1,620,847
Business Credit Institutions (8.13%)
American Express Credit Corp.;
5.54%; 8/19/97 850,000 843,591
Golden Gate Management, Inc.;
LOC Sumitomo Bank;
5.63%; 7/3/97 1,000,000 999,687
5.67%; 7/25/97 900,000 896,598
General Electric Capital Corp.;
5.85%; 1/23/98 500,000 483,262
International Lease Finance Corp.;
5.65%; 7/17/97 329,000 328,174
3,551,312
Department Stores (4.96%)
Sears Roebuck Acceptance Corp.;
5.55%; 7/28/97 275,000 273,855
5.57%; 7/30/97 675,000 671,971
5.56%; 7/31/97 550,000 547,452
5.56%; 8/4/97 675,000 671,456
2,164,734
Electric Services (5.88%)
AES Shady Point, Inc.;
LOC Bank of Tokyo-Mitsubishi, Ltd.;
5.68%; 7/10/97 1,225,000 1,223,260
CommEd Fuel Co., Inc.;
LOC Credit Suisse;
5.58%; 7/21/97 750,000 747,675
5.54%; 7/25/97 600,000 597,784
2,568,719
Finance Services (6.33%)
Mitsubishi International Corp.;
5.58%; 7/2/97 300,000 299,954
5.56%; 7/9/97 500,000 499,382
5.54%; 7/17/97 500,000 498,769
5.60%; 7/28/97 800,000 796,640
PHH Corp.;
5.61%; 7/25/97 350,000 348,691
5.57%; 8/18/97 325,000 322,586
2,766,022
Forest Products (1.72%)
Weyerhaeuser Co.;
5.55%; 7/18/97 755,000 753,021
Mortgage Bankers & Brokers (4.91%)
Countrywide Home Loan, Inc.;
5.55%; 7/2/97 1,000,000 999,846
5.57%; 7/21/97 675,000 672,911
5.60%; 8/6/97 475,000 472,340
2,145,097
Motor Vehicles & Equipment (7.29%)
Echlin, Inc.;
5.61%; 7/16/97 500,000 498,831
5.60%; 7/23/97 850,000 847,091
5.64%; 7/30/97 400,000 398,183
5.65%; 9/12/97 325,000 321,277
Paccar Financial Corp.;
5.55%; 7/28/97 1,125,000 1,120,317
3,185,699
Paperboard Mills (1.60%)
Sonoco Products Co.;
5.53%; 7/1/97 700,000 700,000
Personal Credit Institutions (9.44%)
Beneficial Corp.;
5.55%; 8/5/97 950,000 944,874
Comoloco, Inc.;
5.38%; 7/24/97 500,000 498,281
5.72%; 12/12/97 500,000 486,971
Ford Motor Credit Co.;
5.54%; 7/28/97 675,000 672,195
General Motors Acceptance Corp.;
5.58%; 7/3/97 500,000 499,845
Norwest Financial, Inc.;
5.55%; 7/29/97 1,025,000 1,020,576
4,122,742
Real Estate Operators &
Lessors (4.27%)
Towson Town Center, Inc.; LOC
Bank of Tokyo-Mitsubishi, Ltd.;
5.63%; 7/7/97 300,000 299,719
5.63%; 7/10/97 500,000 499,296
5.60%; 7/14/97 500,000 498,989
5.67%; 8/1/97 400,000 398,047
5.75%; 8/4/97 172,000 171,066
1,867,117
Security Brokers & Dealers (11.28%)
Bear Stearns Cos., Inc.;
5.55%; 7/17/97 500,000 498,767
Goldman Sachs Group, L.P.;
5.55%; 7/7/97 1,000,000 999,075
5.57%; 7/11/97 750,000 748,840
5.73%; 1/23/98 500,000 483,606
Merrill Lynch & Co., Inc.;
5.55%; 7/14/97 850,000 848,296
5.55%; 7/16/97 500,000 498,844
5.29%; 11/18/97 375,000 367,285
5.80%; 2/2/98 500,000 482,600
4,927,313
Subdividers & Developers (2.29%)
Hartz 667 Commercial Paper Corp.;
LOC Bank of Tokyo-Mitsubishi, Ltd.;
5.63%; 7/2/97 1,000,000 999,844
Telephone Communication (3.00%)
Bell Atlantic Financial Services, Inc.;
5.55%; 7/1/97 310,000 310,000
5.55%; 7/8/97 1,000,000 998,921
1,308,921
Tires & Inner Tubes (4.57%)
Bridgestone/Firestone, Inc.;
LOC Sumitomo Bank Ltd.;
5.60%; 7/8/97 500,000 499,456
5.63%; 7/9/97 1,000,000 998,749
5.63%; 7/11/97 500,000 499,218
1,997,423
Total Commercial Paper 35,502,148
Bank Notes (1.14%)
Commercial Banks (1.14%)
LaSalle National Bank;
6.20%; 8/21/97 500,000 500,000
Bonds (18.14%)
Beverages (1.15%)
Pepsico, Inc.
6.13%; 1/15/98 500,000 500,526
Business Credit Institutions (3.92%)
CIT Group Holdings, Inc.
Debentures; 8.75%; 4/15/98 500,000 510,360
Medium-Term Notes;
6.20%; 4/15/98 500,000 500,264
Senior Notes; 5.85%; 3/16/98 500,000 500,668
General Electric Capital Corp. Notes;
8.00%; 1/15/98 200,000 201,877
1,713,169
Computer & Office Equipment (0.69%)
Xerox Corp. Notes;
9.63%; 9/1/97 300,000 301,853
Consumer Products (1.38%)
Philip Morris Cos. Notes;
6.38%; 1/15/98 600,000 601,055
Electric Services (1.60%)
Southern California Edison Co.
1st Ref. Mortgage; 6.13%; 7/15/97 500,000 500,096
Notes; 5.88%; 2/1/98 200,000 200,056
700,152
Personal Credit Institutions (9.40%)
American General Finance Corp.
Notes; 7.70%; 11/15/97 500,000 503,654
Senior Notes; 8.25%; 1/15/98 500,000 505,709
Associates Corp. of North America
Senior Notes;
6.75%; 7/15/97 500,000 500,165
5.88%; 8/15/97 500,000 500,105
8.38%; 1/15/98 185,000 187,032
Commercial Credit Co. Notes;
8.50%; 2/15/98 800,000 812,459
5.50%; 5/15/98 600,000 596,868
Household Finance Corp. Notes;
6.25%; 10/15/97 500,000 500,704
4,106,696
Total Bonds 7,923,451
Total Portfolio Investments (100.54%) 43,925,599
Liabilities, net of cash and receivables (-0.54%) (237,972)
Total Net Assets (100.00%) $43,687,627
PRINCIPAL WORLD FUND, INC.
Shares
Held Value
Common Stocks (94.33%)
Advertising (1.59%)
WPP Group PLC 415,000 $ 1,702,538
Beverages (1.71%)
Lion Nathan 205,000 518,226
Panamerican Beverages 39,900 1,311,712
1,829,938
Blast Furnace & Basic Steel
Products (1.37%)
British Steel PLC 121,300 300,800
Voest-Alpine Stahl 25,700(b) 1,164,370
1,465,170
Central Reserve Depositories (4.74%)
Banco Totta & Acores 39,000 652,477
Dao Heng Bank Group Ltd. 89,000 487,087
Ergo Bank 126 7,575
National Westminster Bank 110,000 1,478,315
Union Bank of Norway 12,800 381,161
Wing Hang Bank 343,200 2,073,212
5,079,827
Chewing & Smoking Tobacco (1.46%)
Imperial Tobacco Group PLC 243,500 1,566,319
Combination Utility Services (1.56%)
ABB AG 1,105 1,675,104
Commercial Banks (10.40%)
ABN-AMRO Holdings NV 101,156 1,889,587
Bank of Ireland 186,833 2,056,911
Barclays PLC 64,748 1,284,501
Fokus Bank 64,000(b) 542,018
Instituto Mobiliare Italiano 141,000 1,267,881
National Australia Bank Ltd. 89,886 1,277,393
Royal Bank of Canada Montreal, Quebec 36,000(a) 1,632,262
Svenska Handelsbanken AB Free 40,500 1,194,199
11,144,752
Communications Equipment (0.97%)
ECI Telecommunications Ltd. 35,000 1,041,250
Communications Services, NEC (0.97%)
KPN Royal PTT Nederland 26,450 1,039,467
Computer & Office Equipment (0.10%)
Canon, Inc. 4,000 109,062
Construction & Related
Machinery (0.59%)
Powerscreen International PLC 58,100 632,874
Consumer Products (1.51%)
Imasco Ltd. 55,700 1,615,010
Crude Petroleum & Natural Gas (0.45%)
Hardy Oil & Gas 86,200 479,883
Deap Sea Foreign Transportation
of Freight (0.81%)
Van Ommeren NV 22,288 866,803
Department Stores (0.65%)
Vendex International 12,658 694,493
Drugs (6.97%)
Elan Corp. PLC ADR 34,400(a) 1,556,600
Galenica Holdings AG 480(a) 225,538
Novartis AG 1,668 2,670,447
Pharmacia & Upjohn, Inc. 46,500 1,615,875
Teva Pharmaceutical ADR 21,500 1,392,125
7,460,585
Electric Light & Wiring
Equipment (0.21%)
Clipsal Industries Holdings 25,000 88,500
Otra NV 8,300 133,439
221,939
Electric Services (0.23%)
Korea Electric Power Corp. 8,100 241,723
Electronic Components &
Accessories (1.90%)
Amtek Engineering 221,250 388,389
Elec & Eltek International 268,000 1,500,800
Murata Mfg. 1,000 39,850
Varitronix 63,000 106,934
2,035,973
Electronic Distribution
Equipment (3.41%)
Amper SA 38,000 1,082,613
Phillips Electronics 28,900 2,073,850
Techtronic Industries Co. 2,800,000 498,756
3,655,219
Engines & Turbines (2.28%)
Mabuchi Motor 1,400 81,360
PT United Tractors 372,000 1,376,928
Scapa Group PLC 281,000 986,780
2,445,068
Farm & Garden Machinery (1.15%)
New Holland NV 45,000 1,231,875
Finance Services (0.68%)
MBF Capital Berhad 395,000 726,148
Functions Closely Related to
Banking (0.70%)
Liechtenstein Global Trust AG 1,225 752,049
Gas Production & Distribution (1.19%)
OMV AG 9,950 1,274,810
General Industrial Machinery (0.85%)
SKF AB 'B' Free 35,300 913,044
Holding Offices (1.02%)
First Pacific Co., Ltd. 860,382 1,099,455
Household Appliances (0.66%)
Fisher & Paykel 182,087 709,582
Industrial Inorganic Chemicals (2.83%)
Bayer AG 30,100 1,160,792
Kemira OY 112,000(b) 1,056,552
Rhome Poulenc 20,000 817,587
3,034,931
Investment Offices (1.24%)
AMVESCAP PLC 226,800 1,323,009
Life Insurance (0.91%)
QBE Insurance Group Ltd. 162,000(a) 970,892
Meat Products (5.83%)
AFFCO Holdings 1,147,266 396,543
Danisco AS 33,300 2,038,966
Davomas ABADI 780,000(a) 962,369
Orkla B Ordinary Shares 21,300 1,446,031
Unilever NV 6,630 1,398,196
6,242,105
Miscellaneous Chemical Products (1.10%)
Hoechst AG 27,800 1,178,984
Miscellaneous Converted Paper
Products (1.06%)
Bunzl PLC 352,000(a) 1,139,447
Miscellaneous Durable Goods (0.89%)
Hagemeyer NV 18,350 949,660
Miscellaneous Food & Kindred
Products (0.90%)
Greencore Group PLC 197,000(a) 962,290
Miscellaneous Manufacturers (0.44%)
Carter Holt Harvey Ltd. 181,000 467,369
Miscellaneous Non-Durable
Goods (1.95%)
Grand Metropolitan PLC 215,516 2,085,744
Miscellaneous Plastics Products,
NEC (0.60%)
Royal Group Technologies Ltd. 24,100(a)(b) 646,366
Miscellaneous Textile Goods (1.21%)
Espirit Holdings Ltd. 1,822,000 1,293,486
Miscellaneous Transportation
Equipment (1.05%)
Autoliv AB 28,700 1,122,888
Miscellaneous Wood Products (0.19%)
Enso OY 22,300 206,074
Motor Vehicles & Equipment (1.75%)
E.C.I.A. Equipment and Composants 4,600 702,035
Hyndai Motor Co. Ltd. GDR 25,000(b) 243,750
UMW Holdings Berhad 196,000 924,087
1,869,872
Motor Vehicles, Parts & Supplies (0.66%)
Dahl International AB 36,000 707,674
Newspapers (1.28%)
Publishing & Broadcasting Ltd. 240,000 1,371,834
Oil & Gas Field Services (0.76%)
ENI SPA 144,000 814,575
Petroleum Refining (2.95%)
Repsol Petroleo SA 39,860 1,688,500
YPF Sociedad Anonima ADR 48,000 1,476,000
3,164,500
Plastic Materials & Synthetics (0.80%)
Astra AB 48,000 $ 853,554
Pulp Mills (2.22%)
Lassila & Tikanoja Ltd. OY 10,700 896,086
UPM-Kymmene OY 64,140 1,481,791
2,377,877
Security & Commodity
Services (1.36%)
Corporacion Bancaria de Espania SA 26,000 1,458,489
Security Brokers & Dealers (1.70%)
Peregrine Investment Holdings 875,000 1,801,438
Peregrine Investment - Warrants 38,800(a) 17,028
1,818,466
Soap, Cleaners, & Toilet Goods (1.27%)
Reckitt & Colman PLC 90,945 1,355,427
Special Industry Machinery (0.42%)
IHC Caland NV 7,700 421,682
Rauma Group 1,173(a) 26,873
448,555
Sugar & Confectionary Products (2.38%)
Nestle 1,545 2,041,136
Tate & Lyle 68,500 509,030
2,550,166
Telephone Communication (6.14%)
Investec Consultadoria Internacional S 8,600(a) 293,483
Nokia Corp., Class A ADR 23,800 1,755,250
Tele Danmark B 8,500 442,260
Telecom Corp of New Zealand Ltd. 289,000 1,468,979
Telecom Italia-DI 448,200 886,390
Telefonica de Espana SA 59,700 1,729,257
6,575,619
Water Transportation of Freight,
NEC (0.31%)
ICB Shipping AB 'B' Free 32,000 326,937
Total Common Stocks 101,026,750
Preferred Stock (1.06%)
Commercial Banks (1.06%)
National Australia Bank ECU
Convertible Preferred 40,500 1,131,469
Bonds (0.95%)
Principal
Amount Value
Fire, Marine & Casualty
Insurance (0.95%)
Alfa SA Convertible Subordinated
Debentures; 8.00%; 9/15/00 $ 700,000(b)$ 1,016,750
Commercial Paper (5.72%)
Personal Credit Institutions (2.92%)
Associates Corp.;
6.25%; 7/1/97 3,130,000 3,130,000
Security Brokers & Dealers (2.80%)
Goldman Sachs Group L.P.
5.65%; 7/7/97 3,000,000 2,997,175
Total Commercial Paper 6,127,175
Total Portfolio Investments (102.06%) 109,302,144
Liabilities, net of cash and receivables (-2.06%) (2,206,914)
Total Net Assets (100.00%) $107,095,230
(a) Non-Income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
Principal World Fund, Inc. Investments by Country
Total Market Percentage of Total
Country Value Market Value
Argentina $ 1,476,000 1.35%
Australia 4,751,589 4.35
Austria 2,439,180 2.23
Canada 3,893,638 3.56
Denmark 2,481,226 2.27
Finland 5,422,626 4.96
France 1,519,621 1.39
Germany 2,339,776 2.14
Greece 7,575 0.01
Hong Kong 7,377,397 6.75
Indonesia 2,339,296 2.14
Israel 2,433,375 2.23
Italy 2,968,847 2.72
Japan 230,272 0.21
Korea 485,473 0.44
Malaysia 1,650,235 1.51
Mexico 1,016,750 0.93
Netherlands 10,699,051 9.79
New Zealand 3,560,699 3.26
Norway 2,369,210 2.17
Portugal 945,961 0.87
Singapore 1,977,689 1.81
Spain 5,958,859 5.45
Sweden 5,118,294 4.68
Switzerland 7,364,274 6.74
United Kingdom 19,420,470 17.77
United States 9,054,763 8.28
Total Market Value $109,302,144 100.00%
<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 Excess
Net Asset Net Unrealized Total Dividends Distributions
Value at Invest- Gain from from Net Distributions from
Beginning ment (Loss) on Investment Investment from Capital Total
of Period Income Investments Operations Income Capital Gains Gains(a) Distributions
PRINCIPAL AGGRESSIVE GROWTH FUND INC.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1997 $14.52 $.02 $1.91 $1.93 $-- $(.45) $ -- $(.45)
Year Ended December 31,
1996 12.94 .11 3.38 3.49 (.11) (1.80) -- (1.91)
1995 10.11 .13 4.31 4.44 (.13) (1.48) -- (1.61)
Period Ended December 31, 1994(d) 9.92 .05 .24 .29 (.05) (.05) -- (.10)
PRINCIPAL ASSET ALLOCATION FUND, INC.
Six Months Ended June 30, 1997 11.48 .16 1.14 1.30 -- (.21) -- (.21)
Year Ended December 31,
1996 11.11 .36 1.06 1.42 (.36) (.69) -- (1.05)
1995 9.79 .40 1.62 2.02 (.40) (.30) -- (.70)
Period Ended December 31, 1994(d) 9.98 .23 (.18) .05 (.23) -- (.01) (.24)
PRINCIPAL BALANCED FUND, INC.
Six Months Ended June 30, 1997 14.44 .22 1.19 1.41 -- (.01) -- (.01)
Year Ended December 31,
1996 13.97 .40 1.41 1.81 (.40) (.94) -- (1.34)
1995 11.95 .45 2.44 2.89 (.45) (.42) -- (.87)
1994 12.77 .37 (.64) (.27) (.37) (.18) -- (.55)
1993 12.58 .42 .95 1.37 (.42) (.76) -- (1.18)
Six Months Ended December 31, 1992(e) 12.93 .23 .75 .98 (.47) (.86) -- (1.33)
Year Ended June 30, 1992 11.33 .47 1.61 2.08 (.48) -- -- (.48)
PRINCIPAL BOND FUND, INC.
Six Months Ended June 30, 1997 11.33 .38 (.04) .34 -- -- -- --
Year Ended December 31,
1996 11.73 .68 (.40) .28 (.68) -- -- (.68)
1995 10.12 .62 1.62 2.24 (.63) -- -- (.63)
1994 11.16 .72 (1.04) (.32) (.72) -- -- (.72)
1993 10.77 .88 .38 1.26 (.87) -- -- (.87)
Six Months Ended December 31, 1992(e) 11.08 .45 .13 .58 (.89) -- -- (.89)
Year Ended June 30, 1992 10.64 .91 .46 1.37 (.93) -- -- (.93)
PRINCIPAL CAPITAL ACCUMULATION
FUND, INC.
Six Months Ended June 30, 1997 29.84 .32 3.81 4.13 -- (1.07) -- (1.07)
Year Ended December 31,
1996 27.80 .57 5.82 6.39 (.58) (3.77) -- (4.35)
1995 23.44 .60 6.69 7.29 (.60) (2.33) -- (2.93)
1994 24.61 .62 (.49) .13 (.61) (.69) -- (1.30)
1993 25.19 .61 1.32 1.93 (.60) (1.91) -- (2.51)
Six Months Ended December 31, 1992(e) 26.03 .31 1.84 2.15 (.64) (2.35) -- (2.99)
Year Ended June 30, 1992 23.35 .65 2.70 3.35 (.67) -- -- (.67)
PRINCIPAL EMERGING GROWTH FUND, INC.
Six Months Ended June 30, 1997 29.74 .15 3.53 3.68 -- (.10) -- (.10)
Year Ended December 31,
1996 25.33 .22 5.07 5.29 (.22) (.66) -- (.88)
1995 19.97 .22 5.57 5.79 (.22) (.21) -- (.43)
1994 20.79 .14 .03 .17 (.14) (.85) -- (.99)
1993 18.91 .17 3.47 3.64 (.17) (1.59) -- (1.76)
Six Months Ended December 31, 1992(e) 15.97 .10 3.09 3.19 (.21) (.04) -- (.25)
Year Ended June 30, 1992 13.93 .21 2.04 2.25 (.21) -- -- (.21)
See accompanying notes.
</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 of Total End of Period Average Average Turnover Commission
Period Return (in thousands) Net Assets Net Assets Rate Rate
PRINCIPAL AGGRESSIVE GROWTH FUND INC.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1997 $16.00 13.60%(b) $109,514 .83%(c) .31%(c) 179.5%(c) .0563
Year Ended December 31,
1996 14.52 28.05% 90,106 .85% 1.05% 166.9% .0541
1995 12.94 44.19% 33,643 .90% 1.34% 172.9% N/A
Period Ended December 31, 1994(d) 10.11 2.59%(b) 13,770 1.03%(c) 1.06%(c) 105.6%(c) N/A
PRINCIPAL ASSET ALLOCATION FUND, INC.
Six Months Ended June 30, 1997 12.57 11.47%(b) 71,892 .88%(c) 2.83%(c) 149.4%(c) .0559
Year Ended December 31,
1996 11.48 12.92% 61,631 .87% 3.45% 108.2% .0497
1995 11.11 20.66% 41,074 .89% 4.07% 47.1% N/A
Period Ended December 31, 1994(d) 9.79 .52%(b) 28,041 .95%(c) 4.27%(c) 60.7%(c) N/A
PRINCIPAL BALANCED FUND, INC.
Six Months Ended June 30, 1997 15.84 9.74%(b) 113,288 .62%(c) 3.19%(c) 33.5%(c) .0374
Year Ended December 31,
1996 14.44 13.13% 93,158 .63% 3.45% 22.6% .0417
1995 13.97 24.58% 45,403 .66% 4.12% 25.7% N/A
1994 11.95 (2.09)% 25,043 .69% 3.42% 31.5% N/A
1993 12.77 11.06% 21,399 .69% 3.30% 15.8% N/A
Six Months Ended December 31, 1992(e) 12.58 8.00%(b) 18,842 .73%(c) 3.71%(c) 38.4%(c) N/A
Year Ended June 30, 1992 12.93 18.78% 17,344 .72% 3.80% 26.6% N/A
PRINCIPAL BOND FUND, INC.
Six Months Ended June 30, 1997 11.67 3.00%(b) 71,812 .52%(c) 7.07%(c) 8.7%(c) N/A
Year Ended December 31,
1996 11.33 2.36% 63,387 .53% 7.00% 1.7% N/A
1995 11.73 22.17% 35,878 .56% 7.28% 5.9% N/A
1994 10.12 (2.90)% 17,108 .58% 7.86% 18.2% N/A
1993 11.16 11.67% 14,387 .59% 7.57% 14.0% N/A
Six Months Ended December 31, 1992(e) 10.77 5.33%(b) 12,790 .62%(c) 8.10%(c) 6.7%(c) N/A
Year Ended June 30, 1992 11.08 13.57% 12,024 .62% 8.47% 6.1% N/A
PRINCIPAL CAPITAL ACCUMULATION
FUND, INC.
Six Months Ended June 30, 1997 32.90 14.28%(b) 249,077 .48%(c) 2.22%(c) 29.0%(c) .0427
Year Ended December 31,
1996 29.84 23.50% 205,019 .49% 2.06% 48.5% .0426
1995 27.80 31.91% 135,640 .51% 2.25% 49.2% N/A
1994 23.44 .49% 120,572 .51% 2.36% 44.5% N/A
1993 24.61 7.79% 128,515 .51% 2.49% 25.8% N/A
Six Months Ended December 31, 1992(e) 25.19 8.81%(b) 105,355 .55%(c) 2.56%(c) 39.7%(c) N/A
Year Ended June 30, 1992 26.03 14.53% 94,596 .54% 2.65% 34.8% N/A
PRINCIPAL EMERGING GROWTH FUND, INC.
Six Months Ended June 30, 1997 33.32 12.39%(b) 180,072 .65%(c) 1.05%(c) 10.9%(c) .0390
Year Ended December 31,
1996 29.74 21.11% 137,161 .66% 1.07% 8.8% .0379
1995 25.33 29.01% 58,520 .70% 1.23% 13.1% N/A
1994 19.97 .78% 23,912 .74% 1.15% 12.0% N/A
1993 20.79 19.28% 12,188 .78% .89% 22.4% N/A
Six Months Ended December 31, 1992(e) 18.91 20.12%(b) 9,693 .81%(c) 1.24%(c) 8.6%(c) N/A
Year Ended June 30, 1992 15.97 16.19% 7,829 .82% 1.33% 10.1% N/A
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
Selected data for a share of Capital Stock outstanding throughout each period:
Income from
Investment Operations Less Distributions
Net Realized
and Excess
Net Asset Net Unrealized Total Dividends Distributions
Value at Invest- Gain from from Net Distributions from
Beginning ment (Loss) on Investment Investment from Capital Total
of Period Income Investments Operations Income Capital Gains Gains(a) Distributions
PRINCIPAL GOVERNMENT SECURITIES
FUND, INC.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1997 $10.31 $.33 $ .01 $ .34 $(.01) $-- $-- $(.01)
Year Ended December 31,
1996 10.55 .59 (.24) .35 (.59) (.59)
1995 9.38 .60 1.18 1.78 (.61) -- -- (.61)
1994 10.61 .76 (1.24) (.48) (.75) -- -- (.75)
1993 10.28 .71 .33 1.04 (.71) -- -- (.71)
Six Months Ended December 31, 1992(e) 10.93 .40 .04 .44 (.78) -- (.31) (1.09)
Year Ended June 30, 1992 10.24 .80 .71 1.51 (.81) -- (.01) (.82)
PRINCIPAL GROWTH FUND, INC.
Six Months Ended June 30, 1997 13.79 .09 2.01 2.10 -- -- -- --
Year Ended December 31,
1996 12.43 .16 1.39 1.55 (.16) -- (.03) (.19)
1995 10.10 .17 2.42 2.59 (.17) -- (.09) (.26)
Period Ended December 31, 1994(f) 9.60 .07 .51 .58 (.08) -- -- (.08)
PRINCIPAL HIGH YIELD FUND, INC.
Six Months Ended June 30, 1997 8.72 .38 .09 .47 (.01) -- -- (.01)
Year Ended December 31,
1996 8.39 .80 .30 1.10 (.77) -- -- (.77)
1995 7.91 .76 .51 1.27 (.77) (.02) -- (.79)
1994 8.62 .77 (.72) .05 (.76) -- -- (.76)
1993 8.38 .80 .23 1.03 (.79) -- -- (.79)
Six Months Ended December 31, 1992(e) 8.93 .45 (.10) .35 (.90) -- -- (.90)
Year Ended June 30, 1992 8.28 .92 .66 1.58 (.93) -- -- (.93)
PRINCIPAL MONEY MARKET FUND, INC.
Six Months Ended June 30, 1997 1.000 .025 -- .025 (.025) -- -- (.025)
Year Ended December 31,
1996 1.000 .049 -- .049 (.049) -- -- (.049)
1995 1.000 .054 -- .054 (.054) -- -- (.054)
1994 1.000 .037 -- .037 (.037) -- -- (.037)
1993 1.000 .027 -- .027 (.027) -- -- (.027)
Six Months Ended December 31, 1992(e) 1.000 .016 -- .016 (.016) -- -- (.016)
Year Ended June 30, 1992 1.000 .046 -- .046 (.046) -- -- (.046)
PRINCIPAL WORLD FUND, INC.
Six Months Ended June 30, 1997 13.02 .17 2.03 2.20 -- -- (.04) (.04)
Year Ended December 31,
1996 10.72 .22 2.46 2.68 (.22) -- (.16) (.38)
1995 9.56 .19 1.16 1.35 (.18) -- (.01) (.19)
Period Ended December 31, 1994(f) 9.94 .03 (.33) (.30) (.05) (.02) (.01) (.08)
See accompanying notes.
Notes to Financial Highlight
</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 of Total End of Period Average Average Turnover Commission
Period Return (in thousands) Net Assets Net Assets Rate Rate
PRINCIPAL GOVERNMENT SECURITIES
FUND, INC.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1997 $10.64 3.26%(b) $ 84,656 .53%(c) 6.48%(c) 11.0%(c) N/A
Year Ended December 31,
1996 10.31 3.35% 85,100 .52% 6.46% 8.4% N/A
1995 10.55 19.07% 50,079 .55% 6.73% 9.8% N/A
1994 9.38 (4.53)% 36,121 .56% 7.05% 23.2% N/A
1993 10.61 10.07% 36,659 .55% 7.07% 20.4% N/A
Six Months Ended December 31, 1992(e) 10.28 4.10%(b) 31,760 .59%(c) 7.35%(c) 34.5%(c) N/A
Year Ended June 30, 1992 10.93 15.34% 33,022 .58% 7.84% 38.9% N/A
PRINCIPAL GROWTH FUND, INC.
Six Months Ended June 30, 1997 15.89 15.23%(b) 132,259 .51%(c) 1.36%(c) 7.5%(c) .0452
Year Ended December 31,
1996 13.79 12.51% 99,612 .52% 1.61% 2.0% .0401
1995 12.43 25.62% 42,708 .58% 2.08% 6.9% N/A
Period Ended December 31, 1994(f) 10.10 5.42%(b) 13,086 .75%(c) 2.39%(c) 0.9%(c) N/A
PRINCIPAL HIGH YIELD FUND, INC.
Six Months Ended June 30, 1997 9.18 5.36%(b) 14,525 .69%(c) 8.64%(c) 45.7%(c) N/A
Year Ended December 31,
1996 8.72 13.13% 13,740 .70% 9.21% 32.0% N/A
1995 8.39 16.08% 11,830 .73% 9.09% 35.1% N/A
1994 7.91 .62% 9,697 .73% 9.02% 30.6% N/A
1993 8.62 12.31% 9,576 .74% 8.80% 28.7% N/A
Six Months Ended December 31, 1992(e) 8.38 4.06%(b) 8,924 .77%(c) 10.33%(c) 20.6%(c) N/A
Year Ended June 30, 1992 8.93 20.70% 8,556 .77% 11.00% 31.3% N/A
PRINCIPAL MONEY MARKET FUND, INC.
Six Months Ended June 30, 1997 1.000 2.50%(b) 43,688 .55%(c) 5.06%(c) N/A N/A
Year Ended December 31,
1996 1.000 5.07% 46,244 .56% 5.00% N/A N/A
1995 1.000 5.59% 32,670 .58% 5.32% N/A N/A
1994 1.000 3.76% 29,372 .60% 3.81% N/A N/A
1993 1.000 2.69% 22,753 .60% 2.64% N/A N/A
Six Months Ended December 31, 1992(e) 1.000 1.54%(b) 27,680 .59%(c) 3.10%(c) N/A N/A
Year Ended June 30, 1992 1.000 4.64% 25,194 .57% 4.54% N/A N/A
PRINCIPAL WORLD FUND, INC.
Six Months Ended June 30, 1997 15.18 16.98%(b) 107,095 .84%(c) 2.92%(c) 25.4%(c) .0186
Year Ended December 31,
1996 13.02 25.09% 71,682 .90% 2.28% 12.5% .0120
1995 10.72 14.17% 30,566 .95% 2.26% 15.6% N/A
Period Ended December 31, 1994(f) 9.56 (3.37)%(b) 13,746 1.24%(c) 1.31%(c) 14.4%(c) N/A
See accompanying notes.
</TABLE>
<PAGE>
(a) Due to the timing of dividend distributions and the differences in
accounting for income and realized gains (losses) for financial statement
and federal income tax purposes, the fiscal year in which amounts are
distributed may differ from the year in which the income and realized gains
(losses) are recorded for financial statement purposes by the fund. The
differences between the income and gains distributed on a book versus tax
basis are shown in the Financial Highlights as excess distributions from
net investment income and from capital gains.
(b) Total return amounts have not been annualized.
(c) Computed on an annualized basis.
(d) Period from June 1, 1994, date shares first offered to public, through
December 31, 1994. Net investment income, aggregating $.01 per share for
Principal Aggressive Growth Fund, Inc. and $.01 per share for Principal
Asset Allocation Fund, Inc. for the period from the initial purchase of
shares on May 23, 1994 through May 31, 1994, was recognized, none of which
was distributed to the sole stockholder, Principal Mutual Life Insurance
Company, during the period. Additionally, Principal Aggressive Growth Fund,
Inc. and Principal Asset Allocation Fund, Inc. incurred unrealized losses
on investments of $.09 and $.03 per share, respectively, during the initial
interim period. This represented activities of each fund prior to the
initial public offering of fund shares.
(e) Effective July 1, 1992 the fund changed its fiscal year end from June 30 to
December 31.
(f) Period from May 1, 1994, date shares first offered to public, through
December 31, 1994. Net investment income, aggregating $.01 per share for
Principal Growth Fund, Inc. and $.04 per share for Principal World Fund,
Inc. for the period from the initial purchase of shares on March 23, 1994
through April 30, 1994, was recognized, none of which was distributed to
the sole stockholder, Principal Mutual Life Insurance Company, during the
period. Additionally, Principal Growth Fund, Inc. and Principal World Fund,
Inc. incurred unrealized losses on investments of $.41 and $.10 per share,
respectively, during the initial interim period. This represented
activities of each fund prior to the initial public offering of fund
shares.
