To Principal Mutual Life Insurance Company Customers
Equity markets, both domestic and international, began the year quite strong.
However, as investors received varying economic data fears of inflation
returned. The result was an increasingly nervous marketplace and some weakening
of this upward trend.
Though much attention has been paid to the potential for increasing inflation,
most financial experts do not see this as a real threat. Instead, they look for
a steady economic environment with correspondingly low inflation and interest
rates.
The Principal Mutual Funds continue to experience excellent growth both in
assets and the number of contracts. The Principal Mutual Funds act as investment
options within several different Principal Mutual Life Insurance Company
variable annuity and variable life products. Please see your contract prospectus
for a description of the Funds specifically available in your contract.
For each contract holder, particulary those who have recently joined us, we hope
that you find the information contained in this Semiannual Report helpful in
monitoring your investment.
<PAGE>
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............................. 16
Principal Asset Allocation Fund, Inc.............................. 17
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, 1996
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................... $53,669,288 $39,137,926 $67,233,960 $52,710,002
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Assets
Investment in securities -- at value (Note 4)......... $57,931,524 $41,991,360 $72,596,193 $52,629,596
Cash ................................................. 4,792,442 12,324,611 6,116 4,945
Receivables:
Dividends and interest........................... 137,227 399,106 482,185 1,075,247
Investment securities sold....................... 832,100 131,556 - -
Capital Stock sold............................... 304,376 219,828 395,854 287,400
----------- ----------- ----------- -----------
Total Assets 63,997,669 55,066,461 73,480,348 53,997,188
Liabilities
Accrued expenses...................................... 37,919 35,910 33,455 20,305
Payables:
Investment securities purchased.................. 615,129 189,206 704,417 -
Capital Stock reacquired......................... - - 337 -
----------- ----------- ----------- -----------
Total Liabilities 653,048 225,116 738,209 20,305
----------- ----------- ----------- -----------
Net Assets Applicable to Outstanding Shares........... $63,344,621 $54,841,345 $72,742,139 $53,976,883
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
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......................... 4,483,391 4,738,192 5,089,845 4,757,064
Net Asset Value Per Share............................. $14.13 $11.57 $14.29 $11.35
------ ------ ------ ------
------ ------ ------ ------
Net Assets Consist of:
Capital Stock......................................... $ 44,834 $ 47,382 $ 50,898 $ 47,571
Additional paid-in capital............................ 54,500,267 49,545,819 64,644,178 52,795,999
Accumulated undistributed net investment income....... 321,868 877,508 972,845 1,510,126
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... 4,215,416 1,517,202 1,711,985 (296,407)
Foreign currency transactions.................... - - - -
Net unrealized appreciation (depreciation)
of investments................................... 4,262,236 2,853,434 5,362,233 (80,406)
Net unrealized appreciation on translation
of assets and liabilities in foreign currencies.. - - - -
Total Net Assets $63,344,621 $54,841,345 $72,742,139 $53,976,883
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, 1996
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................... $145,281,805 $ 86,725,251 $78,226,146 $66,913,728
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Assets
Investment in securities -- at value (Note 4)......... $172,894,117 $103,016,897 $77,672,828 $73,490,491
Cash ................................................. 8,047 2,302,307 1,040 9,083
Receivables:
Dividends and interest........................... 172,348 74,912 976,646 72,694
Investment securities sold....................... 2,071,056 - - -
Capital Stock sold............................... 759,901 791,488 543,398 554,228
------------ ------------ ----------- -----------
Total Assets 175,905,469 106,185,604 79,193,912 74,126,496
Liabilities
Accrued expenses...................................... 65,210 47,455 30,619 31,056
Payables:
Investment securities purchased.................. 2,479,651 9,904,451 1,000,000 -
Capital Stock reacquired......................... 236,988 125 16,073 448
------------ ------------ ----------- -----------
Total Liabilities 2,781,849 9,952,031 1,046,692 31,504
------------ ------------ ----------- -----------
Net Assets Applicable to Outstanding Shares........... $173,123,620 $ 96,233,573 $78,147,220 $74,094,992
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
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......................... 5,802,427 3,505,410 7,539,139 5,699,509
Net Asset Value Per Share............................. $29.84 $27.45 $10.37 $13.00
------ ------ ------ ------
------ ------ ------ ------
Net Assets Consist of:
Capital Stock......................................... $ 58,024 $ 35,054 $ 75,391 $ 56,995
Additional paid-in capital............................ 133,719,947 77,995,577 77,361,014 66,714,302
Accumulated undistributed net investment income....... 1,397,395 417,615 1,982,169 504,784
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... 10,335,942 1,493,681 (718,036) 242,148
Foreign currency transactions.................... - - - -
Net unrealized appreciation (depreciation)
of investments................................... 27,612,312 16,291,646 (553,318) 6,576,763
Net unrealized appreciation on translation
of assets and liabilities in foreign currencies.. - - - -
Total Net Assets $173,123,620 $ 96,233,573 $78,147,220 $74,094,992
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, 1996
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................... $12,145,229 $49,089,585 $49,999,222
----------- ----------- -----------
----------- ----------- -----------
Assets
Investment in securities -- at value (Note 4)......... $12,038,875 $49,089,585 $54,813,419
Cash ................................................. 208,753 1,006,055 174,693
Receivables:
Dividends and interest........................... 260,769 49,178 158,150
Investment securities sold....................... - - -
Capital Stock sold............................... 146,665 429,420 283,965
----------- ----------- -----------
Total Assets 12,655,062 50,574,238 55,430,227
Liabilities
Accrued expenses...................................... 6,222 18,944 38,700
Payables:
Investment securities purchased.................. 300,000 998,860 2,205,674
Capital Stock reacquired......................... - 879,066 -
----------- ----------- -----------
Total Liabilities 306,222 1,896,870 2,244,374
----------- ----------- -----------
Net Assets Applicable to Outstanding Shares........... $12,348,840 $48,677,368 $53,185,853
----------- ----------- -----------
----------- ----------- -----------
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 500,000,000 100,000,000
Shares issued and outstanding......................... 1,437,162 48,677,368 4,485,304
Net Asset Value Per Share............................. $8.59 $1.000 $11.86
----- ------ ------
----- ------ ------
Net Assets Consist of:
Capital Stock......................................... $ 14,372 $ 486,773 $ 44,853
Additional paid-in capital............................ 13,041,755 48,190,595 47,104,237
Accumulated undistributed net investment income....... 542,993 - 678,016
Accumulated undistributed net realized
gain (loss) from:
Investment transactions ......................... (1,143,926) - 550,807
Foreign currency transactions.................... - - (6,806)
Net unrealized appreciation (depreciation)
of investments................................... (106,354) - 4,814,197
Net unrealized appreciation on translation
of assets and liabilities in foreign currencies.. - - 549
Total Net Assets $12,348,840 $48,677,368 $53,185,853
----------- ----------- -----------
----------- ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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........................................ $ 387,508 $ 323,490 $ 327,599 $ -
Less: Withholding tax on foreign dividends...... - - - -
Interest......................................... 127,134 756,966 817,643 1,631,352
---------- ---------- ---------- -----------
Total Income 514,642 1,080,456 1,145,242 1,631,352
Expenses:
Management and investment advisory
fees (Note 3)................................ 182,983 183,994 163,058 107,958
Custodian fees................................... 8,023 10,079 4,830 2,908
Directors' fees.................................. 3,907 3,915 3,916 3,888
Other............................................ 678 654 836 673
---------- ---------- ---------- -----------
Total Expenses 195,591 198,642 172,640 115,427
---------- ---------- ---------- -----------
Net Investment Income 319,051 881,814 972,602 1,515,925
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions.......................... 4,308,709 1,556,666 1,723,210 140
Foreign currency transactions.................... - - - -
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments ..................................... 1,564,190 (23,214) (393,211) (2,715,765)
Translation of assets and liabilities in
foreign currencies.......................... - - - -
---------- ---------- ---------- -----------
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency 5,872,899 1,533,453 1,329,999 (2,715,625
---------- ---------- ---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $6,191,950 $2,415,266 $2,302,601 $(1,199,700)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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........................................ $ 1,628,103 $ 280,971 $ - $ 374,935
Less: Withholding tax on foreign dividends...... - - - -
Interest......................................... 146,752 371,879 2,137,141 274,366
----------- ---------- ----------- ----------
Total Income 1,774,855 652,850 2,137,141 649,301
Expenses:
Management and investment advisory
fees (Note 3)................................ 359,495 228,195 150,839 135,433
Custodian fees................................... 4,440 4,136 4,107 3,623
Directors' fees.................................. 3,898 3,909 3,876 3,798
Other............................................ 671 673 672 656
----------- ---------- ----------- ----------
Total Expenses 368,504 236,913 159,494 143,510
----------- ---------- ----------- ----------
Net Investment Income 1,406,351 415,937 1,977,647 505,791
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions.......................... 10,523,598 1,513,506 (2,198) 242,902
Foreign currency transactions.................... - - - -
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments ..................................... 2,187,976 3,923,097 (2,752,776) 1,294,638
Translation of assets and liabilities in
foreign currencies.......................... - - - -
----------- ---------- ----------- ----------
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency 12,711,574 5,436,603 (2,754,974) 1,537,540
----------- ---------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $14,117,925 $5,852,540 $ (777,327) $2,043,331
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
STATEMENTS OF OPERATIONS
(unaudited)
Principal Principal
High Money Principal
Yield Market World
Fund, Inc. Fund, Inc. Fund, Inc.
---------- ---------- ---------
Net Investment Incom
Income:
<S> <C> <C> <C>
Dividends........................................ $ - $ - $ 766,394
Less: Withholding tax on foreign dividends...... - - (90,087)
Interest......................................... 610,308 1,092,747 183,834
-------- ---------- ----------
Total Income 610,308 1,092,747 860,141
Expenses:
Management and investment advisory
fees (Note 3)................................ 35,674 97,046 146,112
Custodian fees................................... 1,948 6,307 20,808
Directors' fees.................................. 3,895 3,828 3,933
Other............................................ 670 740 671
-------- ---------- ----------
Total Expenses 42,187 107,921 171,524
-------- ---------- ----------
Net Investment Income 568,121 984,826 688,617
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain (loss) from:
Investment transactions.......................... 62,130 - 562,082
Foreign currency transactions.................... - - (6,806)
Net increase (decrease) in unrealized
appreciation/depreciation on
Investments ..................................... (348,021) - 2,767,203
Translation of assets and liabilities in
foreign currencies.......................... - - 70
-------- ---------- ----------
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency (285,891) - 3,322,549
-------- ---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $282,230 $ 984,826 $4,011,166
-------- ---------- ----------
-------- ---------- ----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Operations
<S> <C> <C> <C> <C>
Net investment income.................................. $ 319,051 $ 302,552 $ 881,814 $ 1,387,625
Net realized gain (loss) from investment transactions.. 4,308,709 4,905,174 1,556,666 1,628,048
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies...... 1,564,190 2,660,711 (23,214) 3,340,632
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 6,191,950 7,868,437 2,415,266 6,356,305
Dividends and Distributions to Shareholders
From net investment income............................. (666) (305,795) (24,132) (1,398,405)
From net realized gain on investments and foreign
currency transactions............................ (1,649,581) (3,377,897) (462,912) (1,026,374)
----------- ----------- ----------- -----------
(1,650,247) (3,683,692) (487,044) (2,424,779)
Capital Share Transactions (Note 5)
Shares sold............................................ 29,392,420 14,807,229 12,222,259 7,552,421
Shares issued in reinvestment of dividends
and distributions................................. 1,650,247 3,683,692 487,044 2,424,779
Shares redeemed........................................ (5,882,690) (2,803,211) (870,218) (875,745)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 25,159,977 15,687,710 11,839,085 9,101,455
----------- ----------- ----------- -----------
Total Increase 29,701,680 19,872,455 13,767,307 13,032,981
Net Assets
Beginning of period.................................... 33,642,941 13,770,486 41,074,038 28,041,057
----------- ----------- ----------- -----------
End of period (including undistributed net
investment income as set forth below)............. $63,344,621 $33,642,941 $54,841,345 $41,074,038
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Undistributed Net Investment Income.................... $ 321,868 $ 3,483 $ 877,508 $ 19,826
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Operations
<S> <C> <C> <C> <C>
Net investment income.................................. $ 972,602 $ 1,419,736 $ 1,515,925 $ 1,790,567
Net realized gain (loss) from investment transactions.. 1,723,210 1,509,204 140 (178,683)
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies...... (393,211) 4,627,533 (2,715,765) 3,151,543
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 2,302,601 7,556,473 (1,199,700) 4,763,427
Dividends and Distributions to Shareholders
From net investment income............................. (11,522) (1,419,914) (5,799) (1,807,251)
From net realized gain on investments and foreign
currency transactions............................ (840,918) (1,126,793) - -
----------- ----------- ----------- -----------
(852,440) (2,546,707) (5,799) (1,807,251)
Capital Share Transactions (Note 5)
Shares sold............................................ 31,348,329 18,469,155 26,538,000 15,942,301
Shares issued in reinvestment of dividends
and distributions................................. 482,410 1,530,787 5,799 1,815,744
Shares redeemed........................................ (5,942,087) (4,649,589) (7,239,076) (1,944,844)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 25,888,652 15,350,353 19,304,723 15,813,161
----------- ----------- ----------- -----------
Total Increase 27,338,813 20,360,119 18,099,224 18,769,337
Net Assets
Beginning of period.................................... 45,403,326 25,043,207 35,877,659 17,108,322
----------- ----------- ----------- -----------
End of period (including undistributed net
investment income as set forth below)............. $72,742,139 $45,403,326 $53,976,883 $35,877,659
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Undistributed Net Investment Income.................... $ 972,845 $ 11,765 $ 1,510,126 $ -
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)
Principal
Capital Accumulation
Fund, Inc.
-----------------------------
Six Months Year
Ended Ended
June 30, December 31,
1996 1995
------------ ------------
Operations
<S> <C> <C>
Net investment income.................................. $ 1,406,351 $ 2,706,864
Net realized gain (loss) from investment transactions.. 10,523,598 11,294,865
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies...... 2,187,976 19,225,574
------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 14,117,925 33,227,303
Dividends and Distributions to Shareholders
From net investment income............................. (68,376) (2,707,756)
From net realized gain on investments and foreign
currency transactions............................. (3,248,528) (10,552,706)
------------ ------------
(3,316,904) (13,260,462)
Capital Share Transactions (Note 5)
Shares sold............................................ 47,304,803 38,113,651
Shares issued in reinvestment of dividends
and distributions................................. 3,289,150 13,137,194
Shares redeemed........................................ (23,911,034) (56,149,805)
------------ ------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 26,682,919 (4,898,960)
------------ ------------
Total Increase 37,483,940 15,067,881
Net Assets
Beginning of period.................................... 135,639,680 120,571,799
------------ ------------
End of period (including undistributed net
investment income as set forth below)............. $173,123,620 $135,639,680
------------ ------------
------------ ------------
Undistributed Net Investment Income.................... $ 1,397,395 $ 59,419
------------ ------------
------------ ------------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Operations
<S> <C> <C> <C> <C>
Net investment income................................... $ 415,937 $ 502,095 $ 1,977,647 $ 2,727,198
Net realized gain (loss) from investment transactions... 1,513,506 1,202,668 (2,198) (41,117)
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....... 3,923,097 8,417,614 (2,752,776) 4,199,844
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 5,852,540 10,122,377 (777,327) 6,885,925
Dividends and Distributions to Shareholders
From net investment income.............................. (4,675) (496,559) (12,373) (2,764,369)
Excess distribution of net investment income (Note 1)... - - - -
From net realized gain on investments and foreign
currency transactions.............................. (766,929) (473,643) - -
----------- ----------- ----------- -----------
(771,604) (970,202) (12,373) (2,764,369)
Capital Share Transactions (Note 5)
Shares sold............................................. 44,621,027 33,010,562 38,092,002 24,755,653
Shares issued in reinvestment of dividends
and distributions.................................. 723,417 825,122 12,373 2,708,209
Shares redeemed......................................... (12,712,247) (8,379,384) (9,246,924) (17,627,312)
----------- ----------- ----------- -----------
Net Increase in Net Assets from
Capital Share Transactions 32,632,197 25,456,300 28,857,451 9,836,550
----------- ----------- ----------- -----------
Total Increase 37,713,133 34,608,475 28,067,752 13,958,106
Net Assets
Beginning of period..................................... 58,520,440 23,911,965 50,079,469 36,121,363
----------- ----------- ----------- -----------
End of period (including undistributed (overdistributed)
net investment income as set forth below).......... $96,233,573 $58,520,440 $78,147,220 $50,079,469
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Undistributed (overdistributed) Net Investment Income... $ 417,615 $ 6,354 $ 1,982,169 $ 16,895
----------- ----------- ----------- -----------
See accompanying notes. ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Operations
<S> <C> <C> <C> <C>
Net investment income................................... $ 505,791 $ 572,297 $ 568,121 $ 976,414
Net realized gain (loss) from investment transactions... 242,902 298,608 62,130 (49,300)
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....... 1,294,638 5,280,826 (348,021) 664,483
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 2,043,331 6,151,731 282,230 1,591,597
Dividends and Distributions to Shareholders
From net investment income.............................. (6,768) (566,536) (24) (991,915)
Excess distribution of net investment income (Note 1)... - - - (25,104)
From net realized gain on investments and foreign
currency transactions.............................. (4,612) (294,742) - -
----------- ----------- ----------- -----------
(11,380) (861,278) (24) (1,017,019)
Capital Share Transactions (Note 5)
Shares sold............................................. 35,868,195 29,355,706 313,967 673,188
Shares issued in reinvestment of dividends
and distributions.................................. 11,380 753,669 24 1,017,019
Shares redeemed......................................... (6,524,055) (5,778,425) (77,290) (131,664)
----------- ----------- ----------- -----------
Net Increase in Net Assets from
Capital Share Transactions 29,355,520 24,330,950 236,701 1,558,543
----------- ----------- ----------- -----------
Total Increase 31,387,471 29,621,403 518,907 2,133,121
Net Assets
Beginning of period..................................... 42,707,521 13,086,118 11,829,933 9,696,812
----------- ----------- ----------- -----------
End of period (including undistributed (overdistributed)
net investment income as set forth below).......... $74,094,992 $42,707,521 12,348,840 $11,829,933
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Undistributed (overdistributed) Net Investment Income... $ 504,784 $ 5,761 $ 542,993 $ (25,104)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
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,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Operations
<S> <C> <C> <C> <C>
Net investment income................................... $ 984,826 $ 1,502,142 $ 688,617 $ 519,182
Net realized gain (loss) from investment transactions... - - 562,082 174,169
Net realized (loss) from foreign currency transactions.. - - (6,806) (5,526)
Net increase (decrease) in unrealized appreciation/
depreciation on investments and translation of
assets and liabilities in foreign currencies....... - - 2,767,273 2,574,265
----------- ----------- ----------- -----------
Net Increase (Decrease)in Net Assets
Resulting from Operations 984,826 1,502,142 4,011,166 3,262,090
Dividends and Distributions to Shareholders
From net investment income.............................. (984,826) (1,502,142) (23,106) (506,808)
Excess distribution of net investment income (Note 1)... - - - -
From net realized gain on investments and foreign
currency transactions.............................. - - (139,328) (23,834)
----------- ----------- ----------- -----------
(984,826) (1,502,142) (162,434) (530,642)
Capital Share Transactions (Note 5)
Shares sold............................................. 82,700,206 94,151,329 21,697,681 15,630,379
Shares issued in reinvestment of dividends
and distributions.................................. 834,256 1,130,170 139,669 530,642
Shares redeemed......................................... (67,527,013) (91,983,464) (3,065,849) (2,072,943)
----------- ----------- ----------- -----------
Net Increase in Net Assets from
Capital Share Transactions 16,007,449 3,298,035 18,771,501 14,088,078
----------- ----------- ----------- -----------
Total Increase 16,007,449 3,298,035 22,620,233 16,819,526
Net Assets
Beginning of period..................................... 32,669,919 29,371,884 30,565,620 13,746,094
----------- ----------- ----------- -----------
End of period (including undistributed (overdistributed)
net investment income as set forth below).......... $48,677,368 $32,669,919 $53,185,853 $30,565,620
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Undistributed (overdistributed) Net Investment Income... $ - $ - $ 678,016 $ 12,505
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See accompanying notes.
</TABLE>
<PAGE>
June 30, 1996
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 is expressed in U.S. dollars at the closing daily rate
of exchange. The identified cost of the portfolio holdings is translated at
approximate rates prevailing when acquired. Income and expense amounts are
translated at approximate rates prevailing when received or paid, with daily
accruals of such amounts reported at approximate rates prevailing at the date of
valuation.
Since the carrying amount of the foreign securities 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 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 investment and foreign currency transactions is determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles. To the extent these "book/tax" differences are
permanent in nature (i.e. that they result from other than timing of recognition
- - "temporary"), such amounts are reclassified within the capital accounts based
on their federal tax-basis treatment; temporary differences do not require
reclassification. Reclassifications made for the year ended December 31, 1995
were not material.
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 as excess distributions
of net investment income and net realized gain on investments in the
accompanying Statements of Changes in Net Assets.
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 is
approximately the same for both federal income tax and 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 Principal Bond Fund, Inc.,
Principal Capital Accumulation Fund, Inc., Principal Government Securities Fund,
Inc., Principal Growth Fund, Inc. and Principal Money Market Fund, Inc. is .50%
of the first $100 million of the fund's average daily net assets and .45% of the
next $100 million of the fund's average daily net assets. The annual rate used
in this calculation for Principal Asset Allocation Fund, Inc. and Principal
Aggressive Growth Fund, Inc. is .80% of the first $100 million of the fund's
average daily net assets. With respect to Principal Balanced Fund, Inc. and
Principal High Yield Fund, Inc., the annual rate used in this calculation is
.60% of the first $100 million of the fund's average daily net assets. With
respect to Principal Emerging Growth Fund, Inc. and Principal World Fund, Inc.,
the annual rate used in this calculation is .65% and .75%, respectively, of the
first $100 million of the fund's average daily net assets.
Brokerage commissions were paid to affiliates by certain of the funds, as
follows:
Six Months Ended Year Ended
June 30, December 31,
1996 1995
---------------- ------------
Principal Balanced Fund, Inc. $1,300 $ 219
Principal Capital Accumulation
Fund, Inc. 1,098 8,243
Principal Emerging Growth
Fund, Inc. - 910
Principal Growth Fund, Inc. - 4,252
Principal World Fund, Inc. 1,134 2,207
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, 1996, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Funds were as follows:
Purchases Sales
----------- -----------
Principal Aggressive Growth Fund, Inc. $ 1,624,948 $ -
Principal Asset Allocation Fund, Inc. 18,423,844 14,981,401
Principal Balanced Fund, Inc. 21,160,727 4,435,701
Principal Bond Fund, Inc. 21,023,062 70,000
Principal Capital Accumulation Fund, Inc. 47,128,018 31,680,508
Principal Emerging Growth Fund, Inc. 31,037,202 5,514,763
Principal Government Securities Fund, Inc. 15,932,593 1,670,150
Principal Growth Fund, Inc. 19,251,520 1,232,765
Principal High Yield Fund, Inc. 2,498,044 2,109,750
Principal World Fund, Inc. 18,747,085 2,367,819
<TABLE>
<CAPTION>
At June 30, 1996, net unrealized appreciation (depreciation) of investments held
by the Funds was composed of the following:
Net Unrealized
Gross Unrealized Appreciation (Depreciation)
------------------------------
Appreciation (Depreciation) of Investments
------------ -------------- ---------------------------
<S> <C> <C> <C>
Principal Aggressive Growth Fund, Inc. $ 5,188,245 $ (926,009) $ 4,262,236
Principal Asset Allocation Fund, Inc. 3,797,847 (944,413) 2,853,434
Principal Balanced Fund, Inc. 6,349,437 (987,204) 5,362,233
Principal Bond Fund, Inc. 1,106,875 (1,187,281) (80,406)
Principal Capital Accumulation Fund, Inc. 29,882,193 (2,269,881) 27,612,312
Principal Emerging Growth Fund, Inc. 18,505,369 (2,213,223) 16,292,146
Principal Government Securities Fund, Inc. 920,896 (1,474,214) (553,318)
Principal Growth Fund, Inc. 8,952,099 (2,375,336) 6,576,763
Principal High Yield Fund, Inc. 206,303 (312,657) (106,354)
Principal World Fund, Inc. 6,400,394 (1,586,197) 4,814,197
</TABLE>
<TABLE>
<CAPTION>
At June 30, 1996, Principal Asset Allocation Fund, Inc., Principal Balanced
Fund, Inc., Principal Emerging Growth Fund, Inc., Principal High Yield Fund,
Inc. and Principal World Fund, Inc. held the following securities which may
require registration under the Securities Act of 1933 or an exemption therefrom
in order to effect a sale in the ordinary course of business.
Value at Value as a
Date of June 30, Percentage of
Fund Security Description Acquisition Cost 1996 Net Assets
--------------------- --------------------------------- ----------- --------- ---------- -------------
Principal Asset
Allocation Fund, Inc. Alps 96 1 PT;
<S> <C> <C> <C> <C> <C>
Pass Through Certificates 5/22/96 $ 75,000 $ 74,812 .14%
CIA Brasilia de Distribuicao; GDR 5/30/96 48,825 51,150 .09%
5/31/96 49,988 53,212 .10%
Echostar Sattelite Broadcasting;
Senior Discount Notes 3/19/96 60,353 62,000 .11%
6/11/96 16,125 15,500 .03%
Fomento Economico Mexicano 5/30/96 100,040 93,900 .17%
5/31/96 90,900 85,884 .16%
Groupo Financiero Bancomer;
SA ADR 5/30/96 99,375 92,298 .17%
5/31/96 93,125 87,074 .16%
Homeside, Inc.; Senior Notes 5/7/96 20,000 20,700 .04%
Lenfest Communications;
Senior Subordinated Notes 6/20/96 19,844 20,167 .04%
Norcal Waste Systems, Inc.;
Step-Up Senior Notes 6/26/96 63,750 63,300 .12%
Occidente Y Carbide Cellular;
Step-Up Units 5/31/96 65,533 64,687 .12%
Time Warner; Series K
Preferred Stock 4/3/96 96,009 93,100 .17%
Unisys Corp.; Senior Notes 3/22/96 93,886 97,138 .18%
974,922 1.80%
Principal Balanced Federal-Mogul Corp.; Series D
Fund, Inc. Convertible 10/15/92 248,325 240,800 .33%
Principal Emerging Ciba-Geigy Corp.; Exchangeable
Growth Fund, Inc. Subordinated Debentures 3/20/91 150,000 153,750 .16%
Sierra On Line; Convertible
Subordinated Debentures 8/17/94 100,375 346,500 .36%
500,250 .52%
Principal High Yield Mariner Health Corp; Senior
Fund, Inc. Subordinated Notes 4/1/96 298,662 288,375 2.34%
Howmet Corp.; Senior
Subordinated Notes 11/22/95 150,000 157,875 1.28%
446,250 3.62%
Principal World Alfa SA; Convertible
Fund, Inc. Subordinated Debentures 9/25/95 398,000 427,000 .80%
Fokus Bank 6/25/96 645,965 648,458 1.22%
Royal Plastics Group 11/23/94 41,703 77,492 .14%
9/25/95 132,960 151,946 .29%
6/25/96 300,947 303,891 .57%
Voest-Alpine Stahl 10/30/95 280,007 310,895 .58%
3/27/96 146,558 152,068 .29%
6/25/96 256,093 260,205 .49%
6/27/96 145,930 145,309 .27%
---------- -----
$2,477,264 4.65%
</TABLE>
The Fund's investments are with various issuers in various industries. The
Schedules of Investments contained herein summarize concentrations of credit
risk by industry and issuer .
<TABLE>
<CAPTION>
Note 5 - Capital Share Transactions
Transactions in Capital Stock by fund were as follows:
Principal Aggressive Principal Asset Principal Balanced
Growth Fund, Inc. Allocation Fund, Inc. Fund, Inc.
-------------------- --------------------- ------------------
Six Months Ended June 30, 1996:
<S> <C> <C> <C>
Shares sold................................... 2,189,188 1,075,442 2,232,444
Shares issued in reinvestment of
dividends and distributions................... 128,723 43,608 34,754
Shares redeemed............................... (433,936) (78,730) (428,426)
--------- --------- ---------
Net Increase 1,883,975 1,040,320 1,838,772
--------- --------- ---------
--------- --------- ---------
Year Ended December 31, 1995:
Shares sold................................... 1,161,931 692,541 1,392,999
Shares issued in reinvestment of
dividends and distributions................... 287,452 219,390 115,881
Shares redeemed............................... (211,535) (78,261) (354,061)
--------- --------- ---------
Net Increase 1,237,848 833,670 1,154,819
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Principal Principal Capital Principal Emerging
Bond Fund, Inc. Accumulation Fund, Inc. Growth Fund, Inc.
--------------- ----------------------- ------------------
Six Months Ended June 30, 1996:
<S> <C> <C> <C>
Shares sold................................... 2,330,880 1,648,518 1,661,598
Shares issued in reinvestment of
dividends and distributions.................. 496 118,915 28,208
Shares redeemed............................... (633,341) (843,955) (494,598)
--------- --------- ---------
Net Increase 1,698,035 923,478 1,195,208
--------- --------- ---------
--------- --------- ---------
Year Ended December 31, 1995:
Shares sold................................... 1,388,036 1,462,128 1,443,488
Shares issued in reinvestment of
dividends and distributions.................. 155,537 493,432 32,984
Shares redeemed............................... (174,815) (2,220,452) (363,945)
--------- --------- ---------
Net Increase (Decrease) 1,368,758 (264,892) 1,112,527
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Principal Government Principal Growth Principal High
Securities Fund, Inc. Fund, Inc. Yield Fund, Inc.
--------------------- ---------------- ----------------
Six Months Ended June 30, 1996:
<S> <C> <C> <C>
Shares sold................................... 3,674,323 2,779,677 36,739
Shares issued in reinvestment of
dividends and distributions.................. 1,176 921 -
Shares redeemed............................... (884,574) (518,184) (9,077)
--------- --------- ------
Net Increase 2,790,925 2,262,414 27,662
--------- --------- ------
--------- --------- ------
Year Ended December 31, 1995:
Shares sold................................... 2,389,165 2,597,297 77,400
Shares issued in reinvestment of
dividends and distributions.................. 258,394 61,037 121,455
Shares redeemed............................... (1,752,028) (517,157) (15,228)
--------- --------- -------
Net Increase 895,531 2,141,177 183,627
--------- --------- -------
--------- --------- -------
</TABLE>
<TABLE>
<CAPTION>
Principal Money Principal World
Market Fund, Inc. Fund, Inc.
----------------- ---------------
Six Months Ended June 30, 1996:
<S> <C> <C>
Shares sold................................... 82,700,206 1,897,449
Shares issued in reinvestment of
dividends and distributions.................. 834,256 12,840
Shares redeemed............................... (67,527,013) (277,237)
---------- ---------
Net Increase 16,007,449 1,633,052
---------- ---------
---------- ---------
Year Ended December 31, 1995:
Shares sold................................... 94,151,329 1,566,265
Shares issued in reinvestment of
dividends and distributions.................. 1,130,170 49,808
Shares redeemed............................... (91,983,464) (202,182)
---------- ---------
Net Increase 3,298,035 1,413,891
---------- ---------
---------- ---------
</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, 1996, the Funds
had no outstanding borrowings under the line of credit.
<PAGE>
June 30, 1996
SCHEDULES OF INVESTMENTS
PRINCIPAL AGGRESSIVE GROWTH FUND, INC.
Shares
Held Value
Common Stocks (91.45%)
Advertising (0.17%)
Catalina Marketing Corp. 300(a) $ 27,450
Valassis Communications 4,400 81,400
108,850
Agricultural Chemicals (0.34%)
IMC Global Group, Inc. 5,800 218,225
Air Transportation, Scheduled (0.50%)
AMR Corp. 3,500(a) 318,500
Aircraft & Parts (8.72%)
Allied Signal, Inc. 11,800 674,075
Boeing Co. 6,400 557,600
General Dynamics Corp. 5,800 359,600
McDonnell Douglas Corp. 14,600 708,100
Rockwell International Corp. 7,500 429,375
Rohr Industries 6,700(a) 139,862
United Technologies Corp. 23,100 2,656,500
5,525,112
Auto & Home Supply Stores (0.71%)
Autozone, Inc. 13,000(a) 451,750
Bakery Products (0.53%)
Interstate Bakeries 12,400 331,700
Beverages (2.49%)
Coca-Cola Enterprises 26,900 931,412
Pepsico, Inc. 18,200 643,825
1,575,237
Commercial Banks (6.43%)
Chase Manhattan Corp. 7,712 544,660
Citicorp 6,400 528,800
J. P. Morgan & Co. 5,000 423,125
Wells Fargo & Co. 10,783 2,575,789
4,072,374
Communications Equipment (0.32%)
U.S. Robotics Corp. 2,400(a) 205,200
Computer & Data Processing Services (3.90%)
First Data Corp. 7,400 589,225
GTECH Holdings Corp. 28,900 856,162
Microsoft Corp. 6,000(a) 720,750
Oracle Systems Corp. 7,700(a) 303,669
2,469,806
Computer & Office Equipment (2.30%)
Bell & Howell Co. 5,600(a) 182,700
Cisco Systems 5,900(a) 334,087
Hewlett-Packard Co. 3,500 348,687
International Business Machines Corp. 3,600 356,400
International Game Technology 13,700 231,188
1,453,062
Construction & Related Machinery (0.20%)
Baker Hughes, Inc. 3,900 128,213
Consumer Products (12.16%)
Philip Morris Cos., Inc. 44,900 4,669,600
RJR Nabisco 97,900 3,034,900
7,704,500
Department Stores (0.59%)
Harcourt General, Inc. 7,400 370,000
Dimension Stone (0.51%)
Potash Corp. of Saskatchewan 4,900 324,625
Drugs (3.16%)
American Home Products Corp. 11,100 667,387
Amgen, Inc. 3,200(a) 172,800
Pfizer, Inc. 5,000 356,875
Schering-Plough Corp. 12,800 803,200
2,000,262
Eating & Drinking Places (3.16%)
Boston Chicken, Inc. 50,100(a) 1,628,250
Brinker International, Inc. 14,900(a) 223,500
Foodmaker Inc. 17,500(a) 150,937
2,002,687
Electrical Industrial Apparatus (0.51%)
Emerson Electric Co. 3,600 325,350
Electronic Components & Accessories (0.98%)
Intel Corp. 8,400 616,875
Federal & Federally Sponsored Credit (1.08%)
Student Loan Marketing Association
(non-voting) 9,200 680,800
Fire, Marine, & Casualty Insurance (5.48%)
Aetna Life & Casualty Co. 6,200 443,300
Cigna Corp. 6,950 819,231
Loews Corp. 23,200 1,829,900
PartnerRe Holdings Ltd. 9,400 280,825
RenaissanceRe Holdings 3,200 98,400
3,471,656
Grain Mill Products (1.18%)
Kellogg Co. 5,500 402,875
Ralston-Ralston Purina Group 5,400 346,275
749,150
Hospitals (0.66%)
Columbia/HCA Healthcare Corp. 7,800 416,325
Hotels & Motels (2.31%)
Hilton Hotels Corp. 4,200 472,500
La Quinta Motor Inns 29,600 991,600
1,464,100
Industrial Inorganic Chemicals (1.64%)
Monsanto Co. 16,500 536,250
Olin Corp. 5,600 499,800
1,036,050
Insurance Agents, Brokers, & Services (0.59%)
Exel Ltd. 5,300 373,650
Medical Instruments & Supplies (0.58%)
Becton, Dickinson & Co. 4,600 369,150
Medical Service & Health Insurance (0.83%)
Pacificare Health Systems, Inc.; Class B 3,400(a) 230,350
United Healthcare Corp. 5,900 297,950
528,300
Miscellaneous Business Services (0.78%)
CUC International, Inc. 13,950 495,225
Miscellaneous Food Stores (0.33%)
General Nutrition Cos. 12,000(a) 210,000
Miscellaneous Investing (3.00%)
HFS, Inc. 27,100(a) 1,897,000
Miscellaneous Plastics Products, NEC (0.25%)
Premark International Inc. 2,500 46,250
Tupperware Corp. 2,600(a) 109,850
156,100
Motion Picture Production & Services (1.26%)
Viacom, Inc.; Class B 6,800(a) 264,350
Walt Disney Company 8,500 534,438
798,788
Motion Picture Theaters (0.55%)
AMC Entertainment 12,500(a) 348,438
Motor Vehicles & Equipment (2.08%)
ITT Industries 19,900 1,318,375
Newspapers (1.65%)
Gannett Co. 4,700 332,525
New York Times Co. 6,400 208,800
News Corp. Ltd. ADS 21,400 502,900
1,044,225
Oil & Gas Field Services (0.49%)
Schlumberger Ltd. 3,700 311,725
Periodicals (1.51%)
K III Communications 76,500(a) 956,250
Personal Credit Institutions (3.74%)
American Express Co. 39,000 1,740,375
Associates First Capital 6,200(a) 233,275
Dean Witter, Discover & Co. 6,900 395,025
2,368,675
Photographic Equipment & Supplies (1.04%)
Eastman Kodak Co. 8,450 656,988
Photographic Studios, Portrait (0.06%)
PCA International Inc. 2,200 36,850
Plastic Materials & Synthetics (0.68%)
Hercules, Inc. 7,800 430,950
Radio & Television Broadcasting (1.61%)
Heftel Broadcasting Co. 15,900(a) 471,038
Infinity Broadcasting 10,400(a) 312,000
New World Communications 16,100(a) 235,462
1,018,500
Real Estate Operators & Lessors (0.41%)
Insignia Financial Group 9,600(a) 260,400
Refrigeration & Service Machinery (0.24%)
American Standard Inc. 4,600(a) 151,800
Retail Stores, NEC (0.82%)
PETsMART, Inc. 10,900(a) 520,475
Roofing, Siding & Sheet Metal Work (0.41%)
AMRE Inc. 12,000 262,500
Sanitary Services (0.37%)
WMX Technologies, Inc. 7,200 235,800
Search & Navigation Equipment (0.14%)
Watkins Johnson Co. 3,300 90,338
Security & Commodity Services (0.98%)
Franklin Resources, Inc. 10,200 622,200
Special Industry Macinery (0.27%)
Applied Materials, Inc. 5,700(a) 173,850
Surety Insurance (4.75%)
Ace Ltd. 12,700 596,900
CMAC Investment Corp. 28,500 1,638,750
MGIC Investment Corp. 4,600 258,175
The PMI Group, Inc. 12,100 514,250
3,008,075
Telephone Communication (1.22%)
AT&T Corp. 6,000 372,000
Airtouch Communications, Inc. 9,400(a) 265,550
Teleport Communication 6,900(a) 131,963
769,513
Tires & Inner Tubes (0.78%)
Goodyear Tire & Rubber Co. 10,300 496,975
Total Portfolio Investments (91.45%) 57,931,524
Cash and receivables, net of liabilities (8.55%) 5,413,097
Total Net Assets (100.00%) $ 63,344,621
(a) Non-income producing security - No dividend paid during the past twelve
months.
PRINCIPAL ASSET ALLOCATION FUND, INC.
Shares
Held Value
Common Stocks (50.04%)
Advertising (0.08%)
True North Communications 1,500 $ 33,375
Valassis Communications 400(a) 7,400
40,775
Aerospace Industries (0.17%)
Gencorp, Inc. 2,800 42,350
Thiokol Corp. 1,300 51,350
93,700
Agricultural Chemicals (0.04%)
IMC Global Group Inc. 600 22,575
Air Transportation, Scheduled (1.06%)
Airborne Freight Corp. 1,500 39,000
AMR Corp. 900(a) 81,900
British Airways PLC ADR 1,400 120,050
Cathay Pacific Airways ADR 8,500 77,966
KLM Royal Dutch Airlines 7,380 234,315
SkyWest Airlines, Inc. 1,500 27,938
581,169
Aircraft & Parts (1.29%)
Allied Signal, Inc. 1,200 68,550
Boeing Co. 600 52,275
General Dynamics Corp. 600 37,200
McDonnell Douglas Corp. 1,600 77,600
Rockwell International Corp. 2,200 125,950
Rohr Industries 700(a) 14,613
United Technologies Corp. 2,900 333,500
709,688
Auto & Home Supply Stores (0.08%)
Autozone, Inc. 1,300(a) 45,175
Automotive Rentals, No Drivers (0.10%)
Ryder Systems, Inc. 2,000 56,250
Bakery Products (0.06%)
Interstate Bakeries 1,300 34,775
Beer, Wine & Distilled Beverages (0.19%)
Embotelladora Andina SA ADR 2,800 102,900
Beverages (1.22%)
Bass PLC ADR 5,000 123,750
Coca-Cola Enterprises 3,000 103,875
Coors (Adolph); Class B 2,100 37,537
Fomento Economico Mexicano 62,800(c) 179,784
Kirin Brewery 1,200 148,800
Pepsico, Inc. 2,200 77,825
671,571
Bituminous Coal & Lignite Mining (0.07%)
Ashland Coal, Inc. 1,500 39,000
Blast Furnace & Basic Steel Products (0.30%)
Australian National Industries 8,960 29,054
Birmingham Steel 2,800 45,850
British Steel PLC ADS 3,500 88,812
163,716
Bowling Centers (0.24%)
Meija Seika Kaisha Ltd. ADR 2,100 130,004
Broadwoven Fabric Mills, Cotton (0.08%)
Springs Industries, Inc. 900 45,450
Business Credit Institutions (0.09%)
Finova Group, Inc. 1,000 48,750
Chemicals & Allied Products (1.06%)
Aceto, Inc. 2,400 37,800
Bayer AG Sponsored ADR 10,735 379,075
Ciba-Geigy Sponsored ADR 2,700 164,484
581,359
Clay, Ceramic & Refractory Minerals (0.12%)
English China Clays ADR 5,300 64,925
Combination Utility Services (0.68%)
Central Hudson Gas & Electric Corp. 1,500 46,875
CIA Energetica de Mainas Cemig ADR 3,700(a) 105,024
Commonwealth Energy Systems 2,000 51,500
NIPSCO Industries, Inc. 1,850 74,463
Orange & Rockland Utilities, Inc. 1,200 44,100
Washington Water Power Co. 2,700 50,287
372,249
Commercial Banks (4.30%)
ABN-AMRO Holdings NV ADR 7,385 396,295
Allied Irish Banks ADR 2,900 90,262
Banco Central ADR 6,500 66,625
BankAmerica Corp. 750 56,813
Banker's Trust 850 62,794
Barclays PLC ADS 5,571 264,622
Brierly Investments Ltd. ADR 5,550 104,938
Chase Manhattan 340 24,013
Chemical Banking Corp. 1,400 98,875
Citicorp 700 57,837
Commerzbank AG ADR 1,800 74,500
First of America Bank Corp. 1,300 58,175
First Security Corp. 1,400 33,600
HSBC Holdings ADR 600 90,692
J. P. Morgan & Co. 500 42,313
Mellon Bank Corp. 1,000 57,000
National Westminster ADR 1,900 109,250
Onbankcorp Inc. 1,200 39,300
Peoples Heritage Financial Group, Inc. 1,900 38,712
PNC Financial Corp. 1,900 56,525
Summit Bancorp. 72 2,529
Susquehana Bancshares 1,400 37,450
Trustmark Corp. 1,700 35,700
Union Planter's Corp. 1,200 36,450
Wells Fargo & Co. 1,300 310,538
Westpac Banking ADR 4,900 110,250
2,356,058
Commercial Printing (0.07%)
Bowne & Co., Inc. 1,800 37,125
Communications Equipment (0.66%)
Alcatel Alsthom ADR 4,700 82,838
Hanson PLC ADR 2,750 39,187
Harris Corp. 1,250 76,250
Matsushita Electrical ADR 800 148,800
US Robotics Corp. 200(a) 17,100
364,175
Communications Services, NEC (0.03%)
Comsat Corp. 700 18,200
Computer & Data Processing Services (0.53%)
First Data Corp. 800 63,700
Gerber Scientific Inc. 2,700 43,538
GTECH Holdings Corp. 2,700(a) 79,987
Microsoft Corp. 600(a) 72,075
Oracle Systems Corp. 750(a) 29,578
288,878
Computer & Office Equipment (0.64%)
Apple Computer Inc. 1,300 27,300
Bell & Howell Co. 600(a) 19,575
Cisco Systems 600(a) 33,975
Hewlett-Packard Co. 400 39,850
Hitachi Ltd. ADR 1,300 121,875
International Business Machines Corp. 400 39,600
International Game Technology 1,500 25,313
National Computer Systems, Inc. 2,000 42,750
350,238
Concrete, Gypsum & Plaster Products (0.58%)
Ameron International Corp. 1,000 39,500
Cementos de Mexico SA ADR 25,600(a) 176,975
Italcementi Fabriche S P A ADR 13,000 104,308
320,783
Concrete Work (0.13%)
Pioneer International Ltd. ADR 25,000 72,800
Construction & Related Machinery (0.11%)
Baker Hughes, Inc. 400 13,150
Cascade Corp. 3,400 45,475
58,625
Consumer Products (1.67%)
American Brands, Inc. 1,300 58,988
Philip Morris Cos., Inc. 4,850 504,400
RJR Nabisco 11,400 353,400
916,788
Crude Petroleum & Natural Gas (0.42%)
Broken Hill Proprietary Ltd. ADR 2,200 61,325
Petrofina SA ADR 2,900 90,900
Societe Generale ADR 3,600 79,159
231,384
Cutlery, Handtools & Hardware (0.07%)
Starrett (L.S.); Class A 1,500 39,000
Deep Sea Foreign Transportation of Freight (0.01%)
Overseas Shipholding Group, Inc. 400 7,250
Department Stores (0.50%)
Harcourt General, Inc. 900 45,000
Marui Corp. ADR 3,800 168,378
Penney (J.C.) Co. 1,200 63,000
276,378
Dimension Stone (0.05%)
Potash Corp. of Saskatchewan 400 26,500
Drugs (1.17%)
American Home Products Corp. 1,100 66,138
Amgen 300(a) 16,200
Hafslund ADR 13,172 83,115
Novo Nordisk ADR 3,200 114,400
Nycomed 13,172 186,055
Pfizer, Inc. 500 35,687
Schering-Plough Corp. 1,300 81,575
Smithkline Beecham PLC ADR 1,100 59,812
642,982
Drugs, Proprietaries & Sundries (0.57%)
Amway Japan Ltd. ADS 7,000 174,125
Bergen Brunswig 1,400 38,850
Bindley Western Industries, Inc. 2,800 46,900
Block Drug Co. 1,200 50,400
310,275
Eating & Drinking Places (0.49%)
Boston Chicken, Inc. 4,800(a) 156,000
Brinker International, Inc. 1,500(a) 22,500
Foodmaker Inc. 1,800(a) 15,525
Piccadilly Cafeterias 4,000 42,000
Sbarro, Inc. 1,300 32,663
268,688
Electric Services (1.03%)
Empresa Nacional de Electricidad SA ADR 1,400 87,675
EVN Energie-Vansorgung Nied ADR 3,600 99,474
General Public Utilities Corp. 2,100 74,025
National Power ADR 3,300 103,950
Pinnacle West Capital Corp. 2,000 60,750
Shangdong Huaneng Power Development Ltd. ADS 8,000 66,000
Texas Utilities Co. 1,700 72,675
564,549
Electrical Industrial Apparatus (0.07%)
Emerson Electric Co. 400 36,150
Electronic Components & Accessories (0.67%)
AIDA Engineering Ltd. ADR 800 66,885
Dallas Semiconductor 2,000 36,250
Intel Corp. 900 66,094
Nintendo Ltd. ADR 17,600 163,673
Texas Instruments 700 34,912
367,814
Electronic Distribution Equipment (0.41%)
Phillips NV ADR 6,969 227,364
Engineering & Architectural Services (0.06%)
Gilbert Associates, Inc.; Class A 2,700 34,425
Family Clothing Stores (0.10%)
TJX Cos., Inc. 1,600 54,000
Farm & Garden Machinery (0.12%)
Deere & Co. 1,700 68,000
Federal & Federally Sponsored Credit (0.24%)
Student Loan Marketing Association
(Non-Voting) 1,800 133,200
Finance Services (0.33%)
Grupo Financiero Bancomer SA ADR 20,600(a)(c) 179,372
Fire Marine & Casualty Insurance (0.90%)
Aetna Life & Casualty Co. 600 42,900
Argonaut Group, Inc. 1,000 31,250
CIGNA Corp. 850 100,194
Loews Corp. 2,400 189,300
PartnerRe Holdings Ltd. 1,000 29,875
RenaissanceRe Holdings 300 9,225
Selective Insurance Group, Inc. 1,200 39,000
St. Paul Cos., Inc. 1,000 53,500
495,244
Footwear, Except Rubber (0.39%)
Ollivetti Inc. Cos. 396,825 214,047
Gas Production & Distribution (0.16%)
Eastern Enterprises 1,500 49,875
ONEOK, Inc. 1,500 37,500
87,375
General Industrial Machinery (0.83%)
Amer Group Ltd. ADR 5,500 46,169
Binks Mfg. 1,800 49,050
S K F AB ADR 15,370 361,195
456,414
Grain Mill Products (0.19%)
Kellogg Co. 800 58,600
Ralston-Ralston Purina Group 700 44,888
103,488
Groceries & Related Products (0.23%)
Fleming Cos., Inc. 3,450 49,594
International Multifoods Corp. 1,900 34,675
Nash Finch Co. 2,600 41,600
125,869
Grocery Stores (0.78%)
Disco SA ADS 9,980(a) 220,808
Koninklijke Bijenkorf Beheer NV ADR 2,400 101,372
Santa Isabella SA ADR 3,735 103,646
425,826
Holding Offices (0.12%)
Jardine Strategic Holdings Ltd. ADR 10,000 64,000
Hospitals (0.08%)
Columbia/HCA Healthcare Corp. 800 42,700
Hotels & Motels (0.44%)
Hilton Hotels Corp. 400 45,000
La Quinta Motor Inns 2,700 90,450
Ladbroke Group ADR 37,000 103,482
238,932
Household Audio & Video Equipment (0.30%)
Sony Corp. ADR 2,500 165,313
Industrial Inorganic Chemicals (0.85%)
AKZO ADR 4,283 255,909
Eastman Chemical Co. 950 57,831
Monsanto Co. 3,000 97,500
Olin Corp. 600 53,550
464,790
Industrial Machinery, NEC (0.08%)
Commercial Intertech Corp. 1,800 46,350
Industrial Organic Chemicals (0.17%)
Nova Corp. ADR 6,700 60,300
Witco Corp. 1,000 34,375
94,675
Insurance Agents, Brokers & Services (0.06%)
EXEL Ltd. 500 35,250
Iron Ores (0.07%)
Cleveland-Cliffs, Inc. 1,000 39,125
Jewelry, Silverware & Plated Ware (0.08%)
ONEIDA Ltd. 2,200 41,250
Knitting Mills (0.06%)
Guilford Mills, Inc. 1,300 32,500
Laundry, Cleaning & Garment Services (0.08%)
Angelica Corp. 1,900 44,887
Life Insurance (0.23%)
American General Corp. 1,800 65,475
Lincoln National 1,300 60,125
125,600
Logging (0.09%)
Weyerhaeuser Co. 1,200 51,000
Machinery, Equipment & Supplies (0.11%)
AAR Corp. 1,300 26,488
Kaman Corp.; Class A 3,300 33,412
59,900
Management & Public Relations (0.14%)
Ogden Corp. 4,300 77,938
Manifold Business Forms (0.06%)
New England Business Service 1,600 31,200
Measuring & Controlling Devices (0.35%)
Analogic Corp. 2,000 53,500
Beckman Instruments, Inc. 1,000 38,000
Core Industries 2,600 37,375
Cubic Corp. 1,200 39,150
MTS Systems, Corp. 1,200 25,200
193,225
Meat Products (0.59%)
Groupe Danone 10,764 325,757
Medical Instruments & Supplies (0.19%)
Baxter International, Inc. 1,400 66,150
Beckton, Dickinson & Co. 500 40,125
106,275
Medical Service & Health Insurance (0.34%)
Pacificare Health Systems, Inc.; Class B 300(a) 20,325
Provident Companies, Inc. 1,200 44,400
United Healthcare Corp. 600 30,300
United Wisconsin Services 1,800 46,800
US Life Corp. 1,300 42,737
184,562
Metal Cans & Shipping Containers (0.08%)
Ball Corp. 1,500 43,125
Metalworking Machinery (0.26%)
Makita Corp. ADR 9,000 144,000
Miscellaneous Amusement, Recreation Service (0.07%)
Jackpot Enterprises 3,200 40,800
Miscellaneous Business Services (0.09%)
CUC International, Inc. 1,400(a) 49,700
Miscellaneous Chemical Products (0.07%)
Learonal, Inc. 1,500 37,500
Miscellaneous Converted Paper Products (0.05%)
P. T. Inti Indorayon Utama ADR 10,000 29,002
Miscellaneous Electrical Equipment & Supplies (0.31%)
TDK Corp. ADS 2,800 169,750
Miscellaneous Fabricated Metal Products (0.08%)
Barnes Group, Inc. 900 46,013
Miscellaneous Food & Kindred Products (0.21%)
Nestle Reg. ADR 2,000 114,170
Miscellaneous Food Stores (0.05%)
General Nutrition Cos. 1,400(a) 24,500
Miscellaneous Furniture & Fixtures (0.06%)
Kinetic Concepts, Inc. 2,000 31,000
Miscellaneous Investing (6.14%)
Amli Residential Property 6,600 136,125
Avalon Properties 10,900 237,075
Bedford Property Investors 20,500 276,750
Cousins Properties 7,800 153,075
DeBartolo Realty 12,500 201,562
Duke Realty Investments, Inc. 8,700 263,175
Essex Property Trust 5,400 116,100
Felcor Suite Hotels 4,000 122,000
HFS, Inc. 2,800(a) 196,000
Horizon Group Inc. 3,100 63,550
Irvine Apartment Community 5,000 100,625
Liberty Property Trust 6,400 127,200
Manufactured Home Communities 1,800 34,650
Meridian Industrial Trust 12,100 222,338
Patriot American Hospitality 3,700 109,612
ROC Communities 9,400 224,425
Security Capital Industrial Trust 3,000 52,875
Shurgard Storage Center 4,000 101,000
South West Property Trust 15,200 203,300
Sun Communities 2,000 53,750
Taubman Centers 9,400 104,575
Urban Shopping Centers 9,700 230,375
Wellsford Residential Property Trust 1,700 38,250
3,368,387
Miscellaneous Manufacturers (0.08%)
Russ Berrie & Co. 2,400 44,100
Miscellaneous Non-Durable Goods (0.07%)
Stanhome, Inc. 1,400 37,100
Miscellaneous Petroleum & Coal Products (0.03%)
Quaker Chemical Corp. 1,500 19,125
Miscellaneous Plastics Products, NEC (0.09%)
American Filtrona Corp. 1,000 32,000
Premark International, Inc. 300 5,550
Tupperware Corp. 300(a) 12,675
50,225
Miscellaneous Special Trade Contractors (0.16%)
Hang Lung Development Co. ADR 9,400 88,347
Miscellaneous Transporation Services (0.01%)
Petro PSC Properties Warrants 200(a) 6,625
Motion Picture Production & Services (0.15%)
Viacom, Inc.; Class B 700 27,212
Walt Disney Company 900 56,588
83,800
Motion Picture Theaters (0.06%)
AMC Entertainment 1,200(a) 33,450
Motor Vehicles & Equipment (1.72%)
Arvin Industries, Inc. 1,900 42,275
Augat, Inc. 2,000 38,250
Chrysler Corp. 700 43,400
Fiat SPA ADR 4,700 79,900
Ford Motor Co. 1,500 48,563
General Motors Corp. 1,000 52,375
Honda Motor ADR 4,400 224,400
ITT Industries 1,600 106,000
Smith (A.O.) Corp. 2,000 50,000
Toyota Motor Corp. ADR 3,100 155,387
Volkswagen AG ADR 1,400 104,025
944,575
Newspapers (0.19%)
Gannett Co. 500 35,375
New York Times Co. 600 19,575
News Corp. Ltd. ADS 2,100 49,350
104,300
Non-Classifiable Establishments (0.13%)
Keppel Corp. Ltd. ADR 4,300 71,898
Nonresidential Building Construction (0.07%)
Emprasas ICA Sociedad Controladora SA ADR 2,700(a) 37,462
Non-Store Retailers (0.07%)
Lillian Vernon Corp. 2,800 35,700
Oil & Gas Field Services (0.06%)
Schlumberger Ltd. 400 33,700
Operative Builders (0.23%)
Fujita Corp. ADR 2,700 125,545
Ophthalmic Goods (0.10%)
Bausch & Lomb 1,250 53,125
Paints & Allied Products (0.07%)
Dexter Corp. 1,200 35,700
Paper Mills (0.18%)
Potlatch Corp. 1,000 39,125
Willamette Ind., Inc. 1,000 59,500
98,625
Partitions & Fixtures (0.05%)
Knape & Vogt Mfg. 1,560 24,570
Pens, Pencils, Office & Art Supplies (0.07%)
Cross (A.T.) Co.; Class A 2,300 40,825
Periodicals (0.18%)
K III Communications 7,800(a) 97,500
Personal Credit Institutions (0.46%)
American Express Co. 4,000 178,500
Associates First Capital 900(a) 33,863
Dean Witter, Discover & Co. 700 40,075
252,438
Petroleum Refining (0.69%)
Ashland, Inc. 1,500 59,437
Atlantic Richfield Co. 600 71,100
Diamond Shamrock, Inc. 1,200 34,650
Exxon Corp. 800 69,500
Total SA IE Francaise ADR 2,800 103,950
Ultramar Corp. 1,400 40,600
379,237
Photographic Equipment & Supplies (0.87%)
Eastman Kodak Co. 1,450 112,738
Fuji Photo Film 6,800 216,750
OCE Van Der Grinten NV ADR 1,400 147,000
476,488
Photographic Studios, Portrait (0.06%)
CPI Corp. 2,000 33,000
Plastic Materials & Synthetics (0.22%)
Hercules, Inc. 800 44,200
Shanghai Petrochemical Co. Ltd. ADR 2,600 74,100
118,300
Primary Nonferrous Metals (0.11%)
Phelps Dodge Corp. 950 59,256
Radio & Television Broadcasting (0.18%)
Heftel Broadcasting Co. 1,500(a) 44,438
Infinity Broadcasting 1,000(a) 30,000
New World Communications 1,600(a) 23,400
97,838
Real Estate Operators & Lessors (0.05%)
Insignia Financial Group 1,000(a) 27,125
Refrigeration & Service Machinery (0.10%)
American Standard, Inc. 500(a) 16,500
Tecumseh Products Co.; Class A 700 37,625
54,125
Rental of Railroad Cars (0.08%)
GATX Corp. 900 43,425
Residential Building Construction (0.07%)
Ryland Group, Inc. 2,500 37,500
Retail Stores, NEC (0.29%)
CIA Brasileira de Distribuicao GDR 6,325(c) 104,362
PETsMART, Inc. 1,100(a) 52,525
156,887
Roofing, Siding & Sheet Metal Work (0.05%)
AMRE, Inc. 1,300(a) 28,437
Sanitary Services (0.04%)
WMX Technologies, Inc. 700 22,925
Savings Institutions (0.30%)
Astoria Financial Corp. 1,200 32,550
Greenpoint Financial Corp. 1,600 45,200
Standard Federal Bancorp., Inc. 1,000 38,500
Washington Mutual, Inc. 1,600 47,800
164,050
Sawmills & Planning Mills (0.08%)
Louisiana Pacific Corp. 2,100 46,463
Search & Navigation Equipment (0.02%)
Watkins-Johnson Co. 400 10,950
Security & Commodity Services (0.11%)
Franklin Resources, Inc. 1,000 61,000
Soap, Cleaners & Toilet Goods (0.30%)
KAO Corp. ADR 1,200 161,923
Special Industry Machinery (0.10%)
Applied Materials, Inc. 600(a) 18,300
Scitex Corp. 2,000 34,500
52,800
Subdividers & Developers (0.14%)
Singapore Land ADR 11,600 78,487
Sugar & Confectionary Products (0.14%)
Perlis Plantations ADR 20,000 76,946
Surety Insurance (0.62%)
ACE Ltd. 1,300 61,100
CMAC Investment Corp. 2,800 161,000
Enhance Financial Services Group 1,700 47,600
MGIC Investment Corp. 300 16,837
The PMI Group, Inc. 1,200 51,000
337,537
Telephone Communication (2.77%)
Airtouch Communications, Inc. 1,000(a) 28,250
AT&T Corp. 600 37,200
BCE, Inc. 8,590 339,305
Nynex Corp. 1,200 57,000
SBC Communications Inc. 800 39,400
Sprint Corp. 1,500 63,000
Telebras GDR 18 1,253
Telecommunicacoes Brasileiras SA ADR 7,900 550,038
Telefonica de Argentina ADR 6,600 195,525
Telefonica de Espana SA ADS 2,500 137,812
Telfonos de Mexico SA ADR 1,700 56,950
Telport Communication 600(a) 11,475
1,517,208
Tires & Inner Tubes (0.40%)
Bridgestone ADR 900 171,496
Goodyear Tire & Rubber Co. 1,000 48,250
219,746
Variety Stores (0.15%)
Woolworth Corp. 3,550(a) 79,875
Water Supply (0.06%)
SJW Corp. 1,000 33,250
Water Transportation of Freight, NEC (0.15%)
Penninsular & Oriental Steamships ADR 5,400 81,556
Women's & Children's Undergarments (0.26%)
Wacoal Corp. ADR 2,100 141,750
Total Common Stocks 27,443,290
Preferred Stock (0.17%)
Periodicals (0.17%)
Time Warner; Series K 95(a)(c) 93,100
Principal
Amount Value
Bonds (7.70%)
Agricultural Chemicals (0.37%)
IMC Fertilizer Senior Notes;
9.25%; 10/1/00 $ 200,000 $ 204,500
Airports, Flying Fields & Services (0.14%)
Alps 96 1 PT Pass Through Certificates;
12.75%; 6/15/06 75,000(c) 74,812
Asphalt Paving & Roofing Materials (0.07%)
G-I Holdings Senior Notes;
10/01/98 45,000(b) 36,225
Blast Furnace & Basic Steel Products (0.13%)
Algoma Steel, Inc. First Mortgage;
12.38%; 7/15/05 75,000 73,125
Cable & Other Pay TV Services (0.82%)
Cablevision Systems Corp.
Senior Subordinated Notes;
9.88%; 5/15/06 80,000 77,100
Continental Cablevision Debentures;
9.50%; 8/1/13 80,000 87,336
Marcus Cable Company Step-Up
Senior Discount Notes; 12/15/05 150,000(b)* 91,875
Rogers Cable Systems Ltd.
Senior Notes; 10.00%; 3/15/05 100,000 99,250
TCI Communications Inc. Debentures;
7.88%; 2/15/26 105,000 92,333
447,894
Carpets & Rugs (0.06%)
Collins & Aikman Products
Senior Subordinated Notes;
11.50%; 4/15/06 30,000 30,450
Chemicals & Allied Products (0.11%)
Harris Chemical North America
Senior Notes; 10.25%; 7/15/01 60,000 59,850
Communications Equipment (0.18%)
Plantronics, Inc. Senior Notes;
10.00%; 1/15/01 100,000 99,000
Communications Services, NEC (0.54%)
Dial Call Communications, Inc.
Senior Discount Notes, Series B;
12/12/05 500,000(b) 295,000
Computer & Office Equipment (0.18%)
Unisys Corp. Senior Notes;
12.00%; 4/15/03 95,000(c) 97,138
Consumer Products (0.07%)
RJR Nabisco, Inc. Senior Notes;
8.75%; 8/15/05 40,000 39,900
Crude Petroleum & Natural Gas (0.09%)
Nuevo Energy Co. Senior
Subordinated Notes;
9.50%; 4/15/06 50,000 49,438
Electric Services (0.09%)
Midland Cogeneration Debentures;
10.33%; 7/23/02 7,715 8,024
Midland Cogent Debentures;
10.33%; 7/23/02 16,615 17,279
Midland Funding II Notes;
11.75%; 7/23/05 20,000 21,100
46,403
Finance Services (0.22%)
APP International Finance;
Guaranteed by Asia Pulp & Paper
Yankee Dollar Bond;
11.75%; 10/01/05 75,000 76,687
TLC Beatrice International Finance
Senior Notes; 11.50%; 10/01/05 45,000 45,563
122,250
Fire, Marine & Casualty Insurance (0.26%)
Home Holdings Inc. Senior Notes;
8.63%; 12/15/03 125,000 70,000
Reliance Group Holdings Senior
Notes; 9.00%; 11/15/00 75,000 74,437
144,437
Glass & Glassware, Pressed or Blown (0.15%)
Owens-Ill. Inc. Debentures;
11.00%; 12/01/03 75,000 80,625
Grocery Stores (0.15%)
Big V Supermarkets Inc.
Senior Subordinated Notes;
11.00%; 2/15/04 25,000 23,125
Smith's Food and Drug
Senior Subordinated Notes;
11.25%; 5/15/07 60,000 60,750
83,875
Hotels & Motels (0.39%)
Courtyard by Marriott Senior Notes;
10.75%; 2/1/08 90,000 88,200
Host Marriott Travel Plaza
Senior Notes; 9.50%; 5/15/05 95,000 90,844
LaQuinta Inns Senior Subordinated
Notes; 9.25%; 5/15/03 35,000 35,350
214,394
Meat Products (0.09%)
Pilgrim's Pride Corp. Senior
Subordinated Notes;
10.88%; 8/1/03 50,000 47,500
Miscellaneous Amusement, Recreation Service (0.33%)
Grand Casinos Inc. First Mortgage;
10.13%; 12/1/03 15,000 15,450
Six Flags Theme Park Inc.
Senior Subordinated Notes; 6/15/05 150,000(b) 127,125
Trump Atlantic City First Mortgage;
11.25%; 5/1/06 40,000 40,200
182,775
Miscellaneous Converted Paper Products (0.27%)
Crown Paper Co. Senior
Subordinated Notes; 11.00%; 9/1/05 90,000 85,500
SD Warren Co. Senior Subordinated
Notes; 12.00%; 12/15/04 60,000 63,600
149,100
Miscellaneous Electrical Equipment & Supplies (0.02%)
Exide Corp. Senior Subordinated
Notes; 2.90%; 12/15/05 15,000 8,269
Miscellaneous Investing (0.33%)
HMC Acquisition Properties Senior
Notes; 9.00%; 12/15/07 200,000 183,500
Miscellaneous Publishing (0.14%)
Marvel Parent Holding; 4/15/98 100,000(b) 79,250
Miscellaneous Shopping Goods Stores (0.20%)
Southland Corp. Senior Subordinated
Debentures; 5.00%; 12/15/03 140,000 108,325
Miscellaneous Textile Goods (0.18%)
West Point Stevens Senior
Subordinated Debentures;
9.38%; 12/15/05 100,000 97,000
Mortgage Bankers & Brokers (0.04%)
Homeside, Inc. Senior Notes;
11.25%; 5/15/03 20,000(c) 20,700
Operative Builders (0.03%)
MDC Holdings Notes;
11.13%; 12/15/03 20,000 18,800
Paperboard Mills (0.21%)
Gaylord Container Senior Notes;
11.50%; 5/15/01 20,000 20,500
Gaylord Container Senior
Subordinated Debentures;
12.75%; 5/15/01 20,000 21,050
Stone Container Corp. First Mortgage
Notes; 10.75%; 10/1/02 75,000 75,750
117,300
Radio & Television Broadcasting (0.37%)
Echostar Satellite Broadcasting
Step-Up Senior Discount
Notes; 3/15/04 125,000(b)(c)* 77,500
Viacom Subordinated Debentures;
8.00%; 7/7/06 135,000 125,542
203,042
Sanitary Services (0.12%)
Norcal Waste Systems Inc. Step-Up
Senior Notes; 11/15/05 60,000*(c) 63,300
Soap, Cleaners & Toilet Goods (0.17%)
Revlon Worldwide Corp. Senior
Discount Notes; 3/15/98 110,000(b) 91,575
Telephone Communication (0.97%)
Comcast Cellular
Notes; 3/5/00 110,000(b) 75,350
Senior Subordinated Debentures;
9.38%; 5/15/05 60,000 58,050
Lenfest Communications
Senior Notes;
8.38%; 11/1/05 125,000 113,906
Senior Subordinated Notes;
10.50%; 6/15/06 20,000(c) 20,167
MFS Communications Inc. Step-Up
Senior Discount Notes; 1/15/06 185,000(b) 111,463
Occidente Y Carbide Cellular
Step-Up Units; 3/15/04 125,000(b)(c)* 64,687
Philippine Long Distance Telephone
Co. Notes; 9.25%; 6/30/06 25,000 25,289
Telewest PLC Step-Up Debentures;
10/01/07 110,000(b) 64,900
533,812
Variety Stores (0.21%)
DR Structured Finance
Pass thru Certificates;
7.60%; 8/15/07 138,308 117,781
Total Bonds 4,221,345
U.S. Government Treasury Notes (18.66%)
8.00%; 1/15/97 3,809,000 3,857,800
7.88%; 11/15/04 5,931,000 6,375,825
Total U.S. Government Treasury Notes 10,233,625
Total Portfolio Investments (76.57%) 41,991,360
Cash and receivables, net of liabilities (23.43%) 12,849,985
Total Net Assets (100.00%) $ 54,841,345
(a) Non-income producing security - No dividend paid during the past twelve
months.
(b) Non-income producing security - zero-and zero-step coupon bonds.
(c) Restricted Security - See Note 4 to the financial statements.
* Variable Rate
PRINCIPAL BALANCED FUND, INC.
Shares
Held Value
Common Stocks (53.32%)
Advertising (0.43%)
Interpublic Group of Cos., Inc. 6,600 $ 309,375
Beverages (0.77%)
Pepsico, Inc. 11,300 399,737
Universal Foods Corp. 4,300 158,563
558,300
Combination Utility Services (0.53%)
Cinergy Corp. 12,100 387,200
Commercial Banks (4.77%)
Banc One Corp. 20,413 694,042
Bank of Boston Corp. 9,800 485,100
Chase Manhattan Corp. 5,400 381,375
Comerica, Inc. 6,600 294,525
First of America Bank Corp. 7,600 340,100
KeyCorp. 16,200 627,750
Marshall & Ilsley Corp. 6,000 166,500
Nationsbank Corp. 5,800 479,225
3,468,617
Communications Equipment (1.55%)
Allen Group, Inc. 4,200 91,350
DSC Communications Corp. 12,700(a) 382,587
General Instrument Corp. 22,500(a) 649,688
1,123,625
Computer & Office Equipment (1.70%)
Hewlett-Packard Co. 3,800 378,575
International Business Machines Corp. 8,700 861,300
1,239,875
Construction & Related Machinery (0.53%)
Caterpillar, Inc. 5,700 386,175
Consumer Products (0.43%)
Philip Morris Cos., Inc. 3,000 312,000
Crude Petroleum & Natural Gas (1.17%)
Texaco, Inc. 10,100 847,138
Dairy Products (0.31%)
Dean Foods Co. 9,000 222,750
Drugs (6.30%)
Abbott Labs 26,100 1,135,350
American Home Products Corp. 13,700 823,713
Bristol-Myers Squibb Co. 7,300 657,000
Lilly (Eli) & Co. 5,600 364,000
Merck & Co., Inc. 12,300 794,887
Warner-Lambert Co. 14,700 808,500
4,583,450
Electric Services (1.87%)
Dominion Resources, Inc. 10,400 416,000
FPL Group, Inc. 7,000 322,000
Houston Industries, Inc. 14,900 366,912
Potomac Electric Power Co. 9,600 254,400
1,359,312
Electrical Industrial Apparatus (0.56%)
Emerson Electric Co. 4,500 406,687
Electronic Components & Accessories (0.90%)
Duracell International, Inc. 15,200 655,500
Electronic Distribution Equipment (1.52%)
General Electric Co. 12,800 1,107,200
Fats & Oils (1.18%)
Archer Daniels Midland Co. 44,800 856,800
Fire, Marine & Casualty Insurance (0.56%)
Allstate Corp. 8,920 406,975
General Industrial Machinery (0.37%)
BW/IP Holdings, Inc.; Class A 4,200 79,800
Pall Corp. 7,700 185,763
265,563
Grain Mill Products (0.73%)
Ralston-Ralston Purina Group 8,300 532,238
Greeting Cards (0.67%)
American Greetings Corp. 17,800 487,275
Grocery Stores (3.02%)
Albertson's, Inc. 15,000 620,625
American Stores Co. 20,700 853,875
Sysco Corp. 21,100 722,675
2,197,175
Household Furniture (1.01%)
Masco Corp. 24,200 732,050
Industrial Inorganic Chemicals (0.74%)
Dow Chemical Co. 4,600 349,600
Eastman Chemical Co. 3,150 191,756
541,356
Jewelry, Silverware & Plated Ware (0.14%)
Jostens, Inc. 5,300 104,675
Management & Public Relations (0.96%)
Dun & Bradstreet Corp. 11,200 700,000
Meat Products (1.35%)
ConAgra, Inc. 8,141 369,398
Tyson Foods, Inc. 22,300 610,462
979,860
Medical Instruments & Supplies (0.61%)
St. Jude Medical, Inc. 13,350(a) 447,225
Medical Service & Health Insurance (1.04%)
AON Corp. 7,550 383,163
Foundation Health Corp. 8,600(a) 308,525
Physicians Corp. of America 5,000(a) 66,250
757,938
Metal Forgings & Stampings (1.01%)
Newell Co. 24,000 735,000
Metalworking Machinery (0.10%)
Giddings & Lewis 4,600 74,750
Miscellaneous Business Services (0.26%)
Safety-Kleen Corp. 10,900 190,750
Miscellaneous Converted Paper Products (1.36%)
Minnesota Mining & Mfg. Co. 14,300 986,700
Miscellaneous Electrical Equipment & Supplies (0.61%)
Motorola, Inc. 7,000 440,125
Miscellaneous Fabricated Metal Products (0.24%)
Keystone International, Inc. 8,500 176,375
Miscellaneous Shopping Goods Stores (1.03%)
Toys 'R' Us, Inc. 26,400(a) 752,400
Motor Vehicles, Parts & Supplies (0.98%)
Grainger (W. W.), Inc. 9,200 713,000
Offices & Clinics of Medical Doctors (0.40%)
FHP International Corp. 10,700(a) 292,913
Paper Mills (0.86%)
Kimberly Clark Corp. 8,100 625,725
Petroleum Refining (1.75%)
Atlantic Richfield Co. 4,200 497,700
Exxon Corp. 8,900 773,187
1,270,887
Plastic Materials & Synthetics (0.18%)
Wellman, Inc. 5,600 130,900
Sanitary Services (2.09%)
Browning-Ferris Industries, Inc. 22,100 640,900
WMX Technologies, Inc. 26,900 880,975
1,521,875
Security Brokers & Dealers (0.35%)
Edwards (A.G.), Inc. 9,500 257,687
Soap, Cleaners & Toilet Goods (2.04%)
Avon Products 17,100 771,638
Colgate-Palmolive Co. 8,400 711,900
1,483,538
Telephone Communication (2.17%)
AT&T Corp. 15,600 967,200
MCI Communications Corp. 23,900 612,438
1,579,638
Variety Stores (2.17%)
Dayton-Hudson Corp. 6,700 690,937
Wal-Mart Stores, Inc. 35,000 888,125
1,579,062
Total Common Stocks 38,787,659
Preferred Stocks (2.04%)
Commercial Banks (0.25%)
Boatmen's Bancshares, Inc.
Convertible 5,334 184,023
Motor Vehicles & Equipment (1.79%)
Federal-Mogul Corp.
Series D Convertible 4,300(b) 240,800
Ford Motor Co.
Series A Convertible 10,000 1,060,000
1,300,800
Total Preferred Stocks 1,484,823
Principal
Amount Value
Bonds (2.17%)
Blast Furnace & Basic Steel Products (0.26%)
Quanex Corp. Convertible
Subordinated Debentures;
6.88%; 6/30/07 $ 200,000 $ 194,000
Electric Lighting & Wiring Equipment (0.31%)
Cooper Industries, Inc. Convertible
Subordinated Debentures;
7.05%; 1/1/15 208,000 224,640
Electric Industrial Apparatus (0.36%)
Liebert Co. Convertible Subordinated
Debentures; 8.00%; 11/15/10 80,000 266,300
Engines & Turbines (0.28%)
Outboard Marine Corp. Convertible
Subordinated Debentures;
7.00%; 7/1/02 200,000 200,500
Lumber & Other Building Materials (0.27%)
Hechinger Co. Convertible
Subordinated Debentures;
5.50%; 4/1/12 425,000 198,688
Petroleum Refining (0.39%)
Pennzoil Co. Senior Exchangeable
Debentures; 6.50%; 1/15/03 200,000 280,750
Trucking & Courier Services, Ex., Air (0.30%)
Builders Transport, Inc. Convertible
Subordinated Debentures;
6.50%; 5/1/11 306,000 215,730
Total Bonds 1,580,608
U.S. Government Treasury Notes & Bonds (31.88%)
5.13%; 2/28/98 2,500,000 2,463,280
5.13%; 11/30/98 2,000,000 1,951,873
6.38%; 1/15/00 1,900,000 1,899,405
5.50%; 4/15/00 3,500,000 3,396,092
6.13%; 9/30/00 1,000,000 988,437
6.25%; 4/30/01 2,000,000 1,980,000
6.38%; 8/15/02 1,000,000 990,625
6.25%; 2/15/03 1,000,000 981,875
5.75%; 8/15/03 3,200,000 3,044,998
7.25%; 8/15/04 1,500,000 1,552,968
7.50%; 2/15/05 800,000 841,249
7.25%; 5/15/16 1,000,000 1,024,375
7.50%; 11/15/16 1,000,000 1,050,312
7.25%; 8/15/22 1,000,000 1,024,687
Total U. S. Government Treasury Notes & Bonds 23,190,176
Commercial Paper (10.39%)
Business Credit Institutions (6.27%)
American Express Credit Corp.;
5.32%; 7/1/96 1,910,000 1,910,000
5.39%; 7/3/96 1,300,000 1,299,611
General Electric Capital Corp.;
5.35%; 7/2/96 1,350,000 1,349,799
4,559,410
Personal Credit Institutions (4.12%)
Ford Motor Credit Co. ;
5.36%; 7/3/96 1,040,000 1,039,690
5.40%; 7/5/96 1,955,000 1,953,827
2,993,517
Total Commercial Paper 7,552,927
Total Portfolio Investments (99.80%) 72,596,193
Cash, receivables and other assets
net of liabilities (0.20%) 145,946
Total Net Assets (100.00%) $ 72,742,139
(a) Non-income producing security - No dividend paid during the past twelve
months.
(b) Restricted Security - See Note 4 to the financial statements.
PRINCIPAL BOND FUND, INC.
Principal
Amount Value
Bonds (95.70%)
Air Transportation, Scheduled (1.81%)
Federal Express Corp.,
Pass-Through Cert.;
7.96%; 3/28/17 $ 500,000 $ 501,325
7.58%; 7/2/19 500,000 478,590
979,915
Aircraft & Parts (0.61%)
Textron, Inc. Medium-Term Notes,
Series C; 9.55%; 3/19/01 300,000 329,820
Auto & Home Supply Stores (1.06%)
Pep Boys-Manny, Moe & Jack Notes;
7.00%; 6/1/05 600,000 574,460
Bakery Products (1.68%)
Nabisco, Inc. Notes;
7.05%; 7/15/07 950,000 906,375
Beverages (1.05%)
Joseph E. Seagram & Sons
Guaranteed Debentures;
8.88%; 9/15/11 500,000 567,147
Broadwoven Fabric Mills, Cotton (2.67%)
Burlington Industries, Inc. Notes;
7.25%; 9/15/05 1,500,000 1,439,164
Cable & Other Pay TV Services (1.82%)
TCI Communications, Inc. Senior
Notes; 8.00%; 8/1/05 1,000,000 980,784
Cash Grains (0.55%)
Dekalb Corp. Notes;
10.00%; 4/15/98 300,000 296,250
Combination Utility Services (0.49%)
Public Service Electric & Gas
Medium-Term Notes;
8.16%; 5/26/09 250,000 263,930
Consumer Products (0.55%)
RJR Nabisco Capital Corp. Senior
Notes; 8.75%; 4/15/04 300,000 297,375
Copper Ores (0.56%)
Asarco, Inc. Notes; 7.38%; 2/1/03 300,000 302,241
Crude Petroleum & Natural Gas (1.46%)
Occidental Petroleum Corp.
Medium-Term Notes;
9.73%; 6/15/01 250,000 276,430
Union Oil of California
Medium-Term Notes;
7.77%; 4/19/05 500,000 510,735
787,165
Deep Sea Foreign Transportation of Freight (1.78%)
American President Cos., Ltd.
Senior Notes; 7.13%; 11/15/03 1,000,000 959,424
Department Stores (4.68%)
Dillard Investment Co. Notes;
9.25%; 5/1/97 200,000 205,015
Harcourt General, Inc. Subordinated
Notes; 9.50%; 3/15/00 350,000 376,570
J. C. Penney Co., Inc. Medium-
Term Notes, Series A;
6.88%; 10/15/15 1,500,000 1,380,675
Sears Roebuck Co. Medium-Term
Notes; 9.05%; 2/6/12 500,000 566,030
2,528,290
Drug Stores & Proprietary Stores (2.54%)
Rite Aid Corp. Senior Debentures;
6.88%; 8/15/13 1,500,000 1,369,908
Eating & Drinking Places (2.34%)
Marriott International, Inc.
Notes; 6.75%; 12/15/03 200,000 192,391
Senior Notes; 7.88%; 4/15/05 1,050,000 1,069,842
1,262,233
Electric Services (2.44%)
Cleveland Electric Illuminating Co.
First Mortgage Bonds;
8.75%; 11/15/05 400,000 388,000
Southern California Edison Co.
Notes; 6.38%; 1/15/06 1,000,000 927,500
1,315,500
Fabricated Rubber Products, NEC (0.51%)
M. A. Hanna Co. Senior Notes;
9.38%; 9/15/03 250,000 277,176
Farm & Garden Machinery (2.60%)
Case Corp. Notes; 7.25%; 1/15/16 1,500,000 1,402,555
Gas Production & Distribution (2.92%)
Enron Corp. Notes;
7.13%; 5/15/07 750,000 733,772
Tennessee Gas Pipeline Co. Notes;
9.00%; 1/15/97 400,000 406,167
Transco Energy Co. Notes;
9.38%; 8/15/01 400,000 439,231
1,579,170
General Government, NEC (1.90%)
Ontario Hydro Debentures;
7.45%; 3/31/13 500,000 501,785
Province of Saskatchewan, Canada
Global Notes; 8.00%; 2/1/13 500,000 524,880
1,026,665
Gold & Silver Ores (1.36%)
Placer Dome, Inc. Notes;
7.13%; 6/15/07 750,000 732,055
Grain Mill Products (1.80%)
Ralston Purina Co. Debentures;
7.75%; 10/1/15 1,000,000 973,882
Highway & Street Construction (1.76%)
Foster Wheeler Corp. Notes;
6.75%; 11/15/05 1,000,000 947,624
Hospitals (1.01%)
Columbia/HCA Healthcare Corp.
Medium-Term Notes;
8.70%; 2/10/10 500,000 543,940
Hotels & Motels (1.87%)
Hilton Hotels Corp. Notes;
7.70%; 7/15/02 1,000,000 1,008,656
Household Appliances (0.99%)
Maytag Corp. Medium-Term Notes;
8.62%; 11/15/07 500,000 535,990
Household Furniture (0.87%)
Masco Corp. Debentures;
7.13%; 8/15/13 500,000 469,543
Industrial Inorganic Chemicals (1.31%)
FMC Corp. Senior Notes;
6.38%; 9/1/03 200,000 187,367
Grace (W.R.) & Co. Guaranteed
Notes; 8.00%; 8/15/04 500,000 519,565
706,932
Lumber & Construction Materials (3.02%)
Crane Co. Notes; 8.50%; 3/15/04 1,524,000 1,628,676
Machinery, Equipment & Supplies (1.33%)
AAR Corp. Notes; 7.25%; 10/15/03 750,000 715,441
Metalworking Machinery (0.36%)
Black & Decker Corp. Notes;
7.00%; 2/1/06 200,000 194,084
Millwork, Plywood & Structural Members (2.00%)
Georgia-Pacific Corp.
Debentures; 9.50%; 12/1/11 100,000 114,132
Senior Debentures; 7.70%; 6/15/15 1,000,000 965,763
1,079,895
Miscellaneous Chemical Products (0.72%)
Ferro Corp. Senior Debentures;
7.63%; 5/1/13 400,000 389,702
Miscellaneous Investing (1.36%)
Weingarten Realty Investors
Medium-Term Notes;
7.29%; 5/23/05 750,000 735,562
Miscellaneous Metal Ores (2.11%)
Amax, Inc. Notes; 9.88%; 6/13/01 100,000 108,178
Cyprus Amax Minerals Notes;
7.38%; 5/15/07 650,000 636,107
Cyprus Minerals Co. Notes;
10.13%; 4/1/02 350,000 395,929
1,140,214
Motion Picture Production & Services (0.68%)
Columbia Pictures Entertainment, Inc.
Senior Subordinated Notes;
9.88%; 2/1/98 350,000 367,924
Motor Vehicles & Equipment (1.95%)
Arvin Overseas Finance B.V.
Medium-Term Notes;
9.62%; 8/9/96 250,000 250,982
TRW, Inc. Medium-Term Notes;
9.25%; 12/30/11 700,000 799,232
1,050,214
Newpapers (2.93%)
News America Holdings, Inc.
Guaranteed Senior Notes;
8.50%; 2/15/05 1,500,000 1,579,218
Operative Builders (2.77%)
Pulte Corp. Senior Notes;
8.38%; 8/15/04 1,000,000 1,022,517
7.30%; 10/24/05 500,000 473,601
1,496,118
Paper Mills (6.05%)
Bowater, Inc. Debentures;
9.38%; 12/15/21 200,000 231,572
Champion International Corp. Notes;
9.88%; 6/1/00 250,000 274,397
7.10%; 9/1/05 875,000 854,192
Chesapeake Corp. Notes;
7.20%; 3/15/05 1,400,000 1,362,677
Potlatch Corp. Medium-Term Notes;
8.75%; 1/14/22 500,000 543,985
3,266,823
Personal Credit Institutions (1.86%)
General Motors Acceptance Corp.
Medium-Term Notes;
8.25%; 2/24/04 500,000 528,325
Notes; 6.63%; 10/15/05 500,000 473,915
1,002,240
Petroleum Refining (5.07%)
Ashland Oil, Inc. Medium-Term Notes;
7.71%; 5/11/07 500,000 504,390
7.73%; 7/15/13 250,000 246,970
Series F; 8.54%; 1/13/05 250,000 266,022
Pennzoil Co. Debentures;
10.13%; 11/15/09 325,000 379,138
Phillips Petroleum Co. Notes;
9.38%; 2/15/11 500,000 582,833
Sun Co., Inc.
Debentures; 9.00%; 11/1/24 500,000 557,001
Notes; 7.13%; 3/15/04 200,000 197,631
2,733,985
Plastic Materials & Synthetics (2.63%)
Geon Company Notes;
6.88%; 12/15/05 1,500,000 1,421,328
Primary Nonferrous Metals (1.21%)
Reynolds Metals Co.
Medium-Term Notes;
8.34%; 5/22/07 500,000 529,310
7.65%; 2/4/08 125,000 125,947
655,257
Pulp Mills (0.41%)
International Paper Co. Medium-Term
Notes; 9.70%; 8/15/00 200,000 219,876
Railroads (1.72%)
Union Pacific Corp. Notes;
6.40%; 2/1/06 1,000,000 930,743
Refrigeration & Service Machinery (0.60%)
Westinghouse Electric Corp.
Debentures; 8.63%; 8/1/12 350,000 325,670
Rental of Railroad Cars (1.99%)
Gatx Capital Corp. Medium-Term
Notes, Series C; 6.86%; 10/13/05 1,000,000 956,970
Signal Capital Corp. Equipment Trust
Cert.; 9.95%; 2/1/06 109,000 115,386
1,072,356
Sanitary Services (1.98%)
Laidlaw, Inc. Senior Notes;
7.88%; 4/15/05 1,045,000 1,069,243
Sawmills & Planning Mills (1.45%)
MacMillan Bloedel Delaware
Guaranteed Notes; 8.50%; 1/15/04 750,000 781,380
Telephone Communication (2.72%)
Sprint Corp. Notes; 8.13%; 7/15/02 500,000 526,447
U.S. West Capital Funding, Inc.
Medium-Term Notes;
6.83%; 11/15/07 1,000,000 941,920
1,468,367
Variety Stores (1.79%)
Dayton-Hudson Corp. Debentures;
9.63%; 2/1/08 150,000 175,178
Dayton-Hudson Corp. Sinking Fund
Debentures; 9.50%; 10/15/16 250,000 262,138
Shopko Stores, Inc. Senior Notes;
9.00%; 11/15/04 500,000 528,795
966,111
Total Bonds 51,654,596
Commercial Paper (1.80%)
Personal Credit Institutions (1.80%)
Associates Corp. of North America;
5.55%; 7/1/96 975,000 975,000
Total Portfolio Investments (97.50%) 52,629,596
Cash and receivables, net of liabilities (2.50%) 1,347,287
Total Net Assets (100.00%) $ 53,976,883
PRINCIPAL CAPITAL ACCUMULATION
FUND, INC.
Shares
Held Value
Common Stocks (93.30%)
Advertising (0.83%)
Interpublic Group of Cos., Inc. 30,800 $ 1,443,750
Beverages (1.37%)
Pepsico, Inc. 49,000 1,733,375
Universal Foods Corp. 17,200 634,250
2,367,625
Combination Utility Services (1.08%)
Cinergy Corp. 58,200 1,862,400
Commercial Banks (8.66%)
Banc One Corp. 80,640 2,741,760
Bank of Boston Corp. 38,300 1,895,850
Boatmen's Bancshares, Inc. 31,200 1,251,900
Chase Manhattan 23,920 1,689,350
Comerica, Inc. 37,300 1,664,513
First of America Bank Corp. 28,700 1,284,325
KeyCorp 66,600 2,580,750
Nationsbank Corp. 22,800 1,883,850
14,992,298
Communications Equipment (2.67%)
Allen Group, Inc. 16,000 348,000
DSC Communications Corp. 52,800(a) 1,590,600
General Instrument Corp. 92,800(a) 2,679,600
4,618,200
Computer & Office Equipment (3.12%)
Hewlett-Packard Co. 16,700 1,663,738
International Business
Machines Corp. 37,700 3,732,300
5,396,038
Construction & Related Machinery (0.94%)
Caterpillar, Inc. 24,000 1,626,000
Crude Petroleum & Natural Gas (1.91%)
Texaco, Inc. 39,400 3,304,675
Dairy Products (0.61%)
Dean Foods Co. 42,500 1,051,875
Drugs (11.11%)
Abbott Labs 105,000 4,567,500
American Home Products Corp. 61,900 3,721,737
Bristol-Myers Squibb Co. 30,000 2,700,000
Lilly (Eli) & Co. 25,000 1,625,000
Merck & Co., Inc. 52,800 3,412,200
Warner-Lambert Co. 58,300 3,206,500
19,232,937
Electric Services (2.89%)
Dominion Resources, Inc. 44,400 1,776,000
FPL Group, Inc. 38,500 1,771,000
Houston Industries, Inc. 3,100 76,337
Potomac Electric Power Co. 52,400 1,388,600
5,011,937
Electrical Industrial Apparatus (1.57%)
Emerson Electric Co. 30,090 2,719,384
Electronic Components & Accessories (1.52%)
Duracell International, Inc. 61,100 2,634,938
Electronic Distribution Equipment (2.68%)
General Electric Co. 53,700 4,645,050
Fats & Oils (2.08%)
Archer Daniels Midland Co. 188,200 3,599,325
Fire, Marine & Casualty Insurance (1.26%)
Allstate Corp. 47,643 2,173,712
General Industrial Machinery (0.67%)
BW/IP Holdings, Inc., Class A 23,000 437,000
Pall Corp. 30,100 726,162
1,163,162
Grain Mill Products (1.32%)
Ralston-Ralston Purina Group 35,600 2,282,850
Greeting Cards (1.17%)
American Greetings Corp. 74,000 2,025,750
Grocery Stores (4.65%)
Albertson's, Inc. 61,700 2,552,838
American Stores Co. 64,300 2,652,375
Sysco Corp. 83,400 2,856,450
8,061,663
Household Furniture (1.68%)
Masco Corp. 96,400 2,916,100
Industrial Inorganic Chemicals (2.78%)
Dow Chemical Co. 51,400 3,906,400
Eastman Chemical Co. 14,900 907,037
4,813,437
Jewelry, Silverware & Plated Ware (0.36%)
Jostens, Inc. 31,700 626,075
Management & Public Relations (1.62%)
Dun & Bradstreet Corp. 44,900 2,806,250
Meat Products (1.39%)
Tyson Foods, Inc. 88,000 2,409,000
Medical Instruments & Supplies (1.03%)
St. Jude Medical, Inc. 53,100(a) 1,778,850
Medical Service & Health Insurance (1.86%)
AON Corp. 31,050 1,575,788
Foundation Health Corp. 37,400(a) 1,341,725
Physicians Corp. of America 22,900(a) 303,425
3,220,938
Metal Forgings & Stampings (2.05%)
Newell Co. 115,800 3,546,375
Metalworking Machinery (0.22%)
Giddings & Lewis 23,000 373,750
Miscellaneous Business Services (0.44%)
Safety-Kleen Corp. 43,500 761,250
Miscellaneous Converted Paper Products (2.40%)
Minnesota Mining & Mfg. Co. 60,100 4,146,900
Miscellaneous Electrical Equipment & Supplies (1.14%)
Motorola, Inc. 31,400 1,974,275
Miscellaneous Fabricated Metal Products (0.33%)
Keystone International, Inc. 27,300 566,475
Miscellaneous Shopping Goods Stores (1.79%)
Toys 'R' Us, Inc. 108,700(a) 3,097,950
Motor Vehicles, Parts & Supplies (1.63%)
Grainger (W. W.), Inc. 36,400 2,821,000
Offices & Clinics of Medical Doctors (0.73%)
FHP International Corp. 46,200(a) 1,264,725
Paper Mills (1.51%)
Kimberly Clark Corp. 33,800 2,611,050
Petroleum Refining (3.03%)
Atlantic Richfield Co. 17,100 2,026,350
Exxon Corp. 37,000 3,214,375
5,240,725
Plastic Materials & Synthetics (0.31%)
Wellman, Inc. 23,000 537,625
Sanitary Services (3.57%)
Browning-Ferris Industries, Inc. 88,500 2,566,500
WMX Technologies, Inc. 110,600 3,622,150
6,188,650
Security Brokers & Dealers (0.56%)
Edwards (A.G.), Inc. 36,015 976,907
Soap, Cleaners, & Toilet Goods (3.66%)
Avon Products 74,600 3,366,325
Colgate-Palmolive Co. 35,000 2,966,250
6,332,575
Telephone Communication (3.36%)
AT&T Corp. 52,000 3,224,000
MCI Communications Corp. 101,500 2,600,937
5,824,937
Variety Stores (3.74%)
Dayton-Hudson Corp. 31,800 3,279,375
Wal-Mart Stores, Inc. 126,000 3,197,250
6,476,625
Total Common Stocks 161,526,013
Principal
Amount Value
Commercial Paper (6.57%)
Personal Credit Institutions (1.80%)
American Express Credit Corp.;
5.39%; 7/3/96 $ 6,330,000 $ 6,328,104
General Electric Capital Corp.;
5.35%; 7/1/96 5,040,000 5,040,000
Total Commercial Paper 11,368,104
Total Portfolio Investments (99.87%) 172,894,117
Cash, receivables and other assets,
net of liabilities (0.13%) 229,503
Total Net Assets (100.00%) $ 173,123,620
(a) Non-income producing security - No dividend paid during the past twelve
months.
PRINCIPAL EMERGING GROWTH FUND, INC.
Shares
Held Value
Common Stocks (80.84%)
Blast Furnace & Basic Steel Products (1.56%)
Lukens, Inc. 63,100 $ 1,506,513
Carpets & Rugs (1.09%)
Shaw Industries, Inc. 79,700 1,046,062
Chemicals & Allied Products (0.56%)
Sigma-Aldrich Corp. 10,000 535,000
Commercial Banks (4.94%)
Boatmen's Bancshares, Inc. 6,100 244,763
First Federal Capital Corp. 40,665 823,466
Independent Bank Corp. Michigan 25,200 711,900
Mercantile Bancorp., Inc. 14,000 623,000
Merchants Bancorp., Inc. 16,500 536,250
North Fork Bancorp., Inc. 20,000 522,500
Peoples Heritage Financial Group, Inc. 31,000 631,625
Princeton National Bancorp., Inc. 36,000 657,000
4,750,504
Commercial Printing (0.44%)
Merrill Corp. 16,800 420,000
Computer & Data Processing Services (7.44%)
American Management Systems, Inc. 68,000(a) 1,989,000
Cerner Corp. 93,700(a) 2,002,837
HBO & Co. 14,000 948,500
Microsoft Corp. 10,000(a) 1,201,250
Sunquest Information Systems, Inc. 68,100(a) 1,021,500
7,163,087
Computer & Office Equipment (1.32%)
EMC Corp. 63,300(a) 1,178,963
Seagate Technology 2,000(a) 90,000
1,268,963
Construction & Related Machinery (1.38%)
Energy Ventures, Inc. 41,000(a) 1,332,500
Crude Petroleum & Natural Gas (0.76%)
Devon Energy Corp. 30,000 735,000
Dairy Products (0.33%)
Dreyer's Grand Ice Cream, Inc. 10,000 315,000
Drugs (3.11%)
Alliance Pharmaceutical Corp. 30,000(a) 495,000
Forest Laboratories, Inc. 14,500(a) 560,063
Genzyme Corp. - General Division 1,891 95,023
Genzyme Corp. - Tissue Repair 255(a) 2,996
Merck & Co., Inc. 10,000 646,250
Pharmacia & Upjohn, Inc. 24,900 1,104,937
Seragen, Inc. 20,000(a) 87,500
2,991,769
Electronic Components & Accessories (5.51%)
Intel Corp. 30,500 2,239,844
Linear Technology Corp. 42,900 1,287,000
Solectron Corp. 46,900(a) 1,776,337
5,303,181
Engineering & Architectural Services (1.52%)
Paychex, Inc. 30,400 1,463,000
Finance Services (0.82%)
First Financial Corp. 35,000 787,500
Fire, Marine, & Casualty Insurance (1.58%)
Avemco Corp. 35,000 472,500
Berkley W.R. Corp. 25,000 1,043,750
1,516,250
Footwear, Except Rubber (0.99%)
Nine West Group, Inc. 18,700(a) 956,038
General Industrial Machinery (5.86%)
Flow International Corp. 55,000(a) 440,000
Kaydon Corp. 36,300 1,560,900
Pentair, Inc. 54,600 1,638,000
Roper Industries, Inc. 41,000 1,998,750
5,637,650
Grocery Stores (1.07%)
Casey's General Stores, Inc. 51,700 1,027,537
Hardware Stores (0.83%)
Central Tractor Farm & Country, Inc. 64,900(a) 795,025
Holding Offices (0.88%)
ISB Financial Corp. 25,000 368,750
Today's Bancorp., Inc. 16,000 476,000
844,750
Hose, Belting, Gaskets & Packing (1.26%)
Mark IV Industries 53,575 1,212,134
Hospitals (2.29%)
Humana, Inc. 50,200(a) 897,325
Universal Health Services, Inc.; Class B 50,000(a) 1,306,250
2,203,575
Insurance Agents, Brokers & Services (1.62%)
Equifax, Inc. 59,400 1,559,250
Investment Offices (0.91%)
Invesco PLC ADR 25,000 875,000
Iron & Steel Foundries (0.49%)
Atchison Casting Corp. 30,000(a) 472,500
Laundry, Cleaning & Garment Services (1.10%)
G & K Services, Inc.; Class A 37,225 1,060,912
Life Insurance (0.97%)
First Colony Corp. 30,000 930,000
Measuring & Controlling Devices (1.92%)
ISCO, Inc. 8,613 81,819
Millipore Corp. 32,000 1,340,000
Photon Dynamics 45,000(a) 427,500
1,849,319
Meat Products (0.65%)
Michael Foods, Inc. 54,000 627,750
Medical Instruments & Supplies (4.81%)
Boston Scientific Corp. 26,500(a) 1,192,500
Nellcor Puritan Bennett 34,200(a) 1,658,700
Steris Corp. 55,700(a) 1,782,400
4,633,600
Medical Service & Health Insurance (4.54%)
Foundation Health Corp. 31,200(a) 1,119,300
Health System International, Inc. 40,800(a) 1,106,700
Orthofix International NV 66,400(a) 730,400
United Healthcare Corp. 27,900 1,408,950
4,365,350
Metal Services, NEC (1.84%)
BMC Industries, Inc. 61,600 1,771,000
Miscellaneous Chemical Products (2.68%)
Cytec Industries 7,000(a) 598,500
H. B. Fuller Co. 20,000 725,000
Loctite Corp. 27,000 1,255,500
2,579,000
Office Furniture (1.05%)
Chromcraft Revington, Inc. 27,900(a) 652,163
Kimball International, Inc.; Class B 13,000 359,125
1,011,288
Oil & Gas Field Services (1.19%)
Diamond Offshore Drilling 20,000(a) 1,145,000
Operative Builders (1.00%)
D. R. Horton, Inc. 64,800 680,400
Pulte Corp. 10,421 278,762
959,162
Paints & Allied Products (0.86%)
RPM, Inc. 53,000 828,125
Plastic Materials & Synthetics (1.17%)
A. Schulman, Inc. 45,900 1,124,550
Plumbing, Heating, Air-Conditioning (2.17%)
Apogee Enterprises, Inc. 57,000 1,952,250
Metalclad Corp. 45,600(a) 139,650
2,091,900
Refrigeration & Service Machinery (0.63%)
Tecumseh Products Co.; Class A 11,200 602,000
Sanitary Services (1.04%)
Browning-Ferris Industries, Inc. 31,500 913,500
Sanifill, Inc. 1,734 85,399
998,899
Savings Institutions (0.74%)
North Side Savings Bank (NY) 15,000 521,250
Sterling Financial Corp. 13,200(a) 194,700
715,950
Screw Machine Products, Bolts,
Etc. (1.09%)
TriMas Corp. 44,900 1,049,537
Security Brokers & Dealers (0.64%)
Jefferies Group, Inc. 20,000 620,000
Telephone Communication (0.83%)
McLeod, Inc. 33,400(a) 801,600
Toys & Sporting Goods (0.59%)
Mattel, Inc. 20,000 572,500
Trucking & Courier Services, Ex. Air (0.77%)
J. B. Hunt Transport Services, Inc. 35,500 741,063
Total Common Stocks 77,796,293
Preferred Stock (0.53%)
Offices & Clinics of Medical Doctors (0.53%)
FHP International Corp.;
Series A Convertible 20,000(a) 510,000
Principal
Amount Value
Bonds (1.23%)
Computer & Data Processing Services (0.36%)
Sierra On Line Convertible
Subordinated Debentures;
6.50%; 4/1/01 $ 110,000(b) $ 346,500
Industrial Inorganic Chemicals (0.54%)
Ciba-Geigy Corp. Exchangeable
Subordinated Debentures;
6.25%; 3/15/16 150,000(b) 153,750
ICN Pharmaceuticals, Inc. Convertible
Subordinated Debentures;
8.50%; 11/15/99 300,000 366,000
519,750
Nursing & Personal Care Facilities (0.22%)
Greenery Rehabilitation Group, Inc.
Convertible Senior Subordinated
Notes; 8.75%; 4/1/15 250,000 213,125
Sanitary Services (0.11%)
Enclean, Inc. Convertible Subordinated
Debentures; 7.50%; 8/1/01 100,000 101,484
Total Bonds 1,180,859
Commercial Paper (24.45%)
Business Credit Institutions (9.91%)
American Express Credit Corp.;
5.32%; 7/1/96 1,700,000 1,700,000
5.28%; 7/3/96 1,755,000 1,754,485
CIT Group Holdings, Inc.;
5.30%; 7/9/96 3,000,000 2,996,467
General Electric Capital Corp.;
5.25%; 7/5/96 3,085,000 3,083,200
9,534,152
Personal Credit Institutions (11.57%)
Associates Corp. of North America;
5.28%; 7/1/96 1,185,000 1,185,000
5.55%; 7/1/96 3,345,000 3,345,000
Commercial Credit Co.;
5.37%; 7/8/96 3,105,000 3,101,758
Ford Motor Credit Co.;
5.32%; 7/3/96 2,500,000 2,499,261
5.36%; 7/1/96 1,005,000 1,005,000
11,136,019
Security Brokers & Dealers (2.97%)
Smith Barney, Inc.;
5.37%; 7/2/96 2,860,000 2,859,574
Total Commercial Paper 23,529,745
Total Portfolio Investments (107.05%) 103,016,897
Liabilities, net of cash and receivables (-7.05%) (6,783,324)
Total Net Assets (100.00%) $ 96,233,573
(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 (32.73%)
GNMA I 7.00% 1/15/24 $ 849,732 $ 818,743
GNMA I 8.00 10/15/16-6/15/17 2,050,003 2,095,186
GNMA I 8.50 2/15/17-5/15/21 3,211,263 3,335,307
GNMA II 6.00 5/20/24-4/20/26 17,352,061 15,611,668
GNMA II 6.50 12/20/25-2/20/26 4,015,735 3,714,916
Total GNMA Certificates 25,575,820
Federal National Mortgage Association (FNMA) Certificates (15.37%)
FNMA 5.50 5/1/24 1,187,645 1,047,348
FNMA 6.00 11/1/23-3/1/26 4,152,053 3,777,871
FNMA 6.50 11/1/23-5/1/26 3,733,615 3,502,750
FNMA 7.00 8/1/23 813,948 786,347
FNMA 7.50 4/1/22 577,017 572,655
FNMA 8.00 6/1/17-11/1/21 582,673 590,815
FNMA GL 6.50 8/15/25 976,269 913,456
FNMA Major 7.50 4/1/22 532,915 528,130
FNMA Major 8.00 10/1/21 287,777 291,250
Total FNMA Certificates 12,010,622
Federal Home Loan Mortgage Corporation (FHLMC) Certificates (18.25%)
FHLMC 5.50 3/1/24 551,115 493,540
FHLMC 6.00 12/1/23-1/1/26 2,887,437 2,632,186
FHLMC 6.50 4/1/24-5/1/26 3,401,228 3,193,793
FHLMC 7.00 1/1/24 852,266 824,167
FHLMC Gold 5.50 2/1/24 982,502 864,140
FHLMC Gold 6.50 10/1/25-5/1/26 1,980,658 1,855,698
FHLMC Gold 7.00 9/1/23-12/1/23 1,791,853 1,733,352
FHLMC Gold 7.50 2/1/22-6/1/24 1,872,103 1,855,946
FHLMC Gold 8.00 11/1/21 796,166 806,516
Total FHLMC Certificates 14,259,338
Principal
Amount Value
Student Loan Marketing Association (SLMA) Certificates (16.09%)
Student Loan Marketing Association
Debentures;
7.30%; 8/1/12 $ 10,000,000 $ 10,212,219
9.15%; 12/1/24 1,200,000 1,358,640
Notes; 7.82%; 10/14/99 1,000,000 1,002,246
Total SLMA Certificates 12,573,105
Private Export Funding Corporation (PEFCO) Certificates (15.59%)
Private Export Funding Corp.
Series SS, Senior Secured Notes;
5.50%; 3/15/01 2,325,000 2,222,630
5.80%; 2/1/04 2,200,000 2,107,688
7.03%; 10/31/03 1,000,000 1,012,500
Secured Notes;
6.62%; 10/1/05 2,000,000 1,944,900
9.45%; 12/31/99 4,500,000 4,896,225
Total PEFCO Certificates 12,183,943
Federal Agency Short-Term Obligations (1.37%)
Federal Home Loan Mortgage Corp.;
5.25%; 7/1/96 1,070,000 1,070,000
Total Portfolio Investments (99.39%) 77,672,828
Cash and receivables, net of liabilities (0.61%) 474,392
Total Net Assets (100.00%) $ 78,147,220
PRINCIPAL GROWTH FUND, INC.
Shares
Held Value
Common Stocks (79.37%)
Advertising (1.11%)
Interpublic Group of Cos., Inc. 17,500 $ 820,313
Beverages (1.97%)
Coca-Cola Co. 8,800 430,100
Pepsico, Inc. 29,200 1,032,950
1,463,050
Blast Furnace & Basic Steel Products (0.75%)
Lukens, Inc. 23,400 558,675
Carpets & Rugs (0.97%)
Shaw Industries, Inc. 54,800 719,250
Cash Grains (1.96%)
Pioneer Hi-Bred International 27,400 1,448,775
Commercial Banks (5.16%)
Banc One Corp. 16,500 561,000
Barnett Banks Inc. 5,000 305,000
Baybanks, Inc. 5,000 538,750
Boatmen's Bancshares, Inc. 6,000 240,750
First of America Bank Corp. 11,700 523,575
Firstar Corp. 15,000 691,875
Firstmerit Corp. 14,600 463,550
Princeton National Bancorp., Inc. 27,300 498,225
3,822,725
Communications Equipment (3.32%)
General Instrument Corp. 50,000(a) 1,443,750
Northern Telecom Ltd. 18,700 1,016,812
2,460,562
Computer & Data Processing Services (1.44%)
Microsoft Corp. 8,900(a) 1,069,113
Computer & Office Equipment (4.90%)
Automatic Data Processing, Inc. 20,000 772,500
Bay Networks 34,400(a) 885,800
Digital Equipment Corp. 20,500(a) 922,500
Hewlett-Packard Co. 8,200 816,925
Pitney Bowes, Inc. 5,000 238,750
3,636,475
Department Stores (0.76%)
May Department Stores 12,800 560,000
Drugs (8.46%)
Alliance Pharmaceutical Corp. 10,000(a) 165,000
Bristol-Myers Squibb Co. 10,000 900,000
Johnson & Johnson 20,000 990,000
Lilly (Eli) & Co. 20,000 1,300,000
Merck & Co., Inc. 14,600 943,525
Pharmacia & Upjohn, Inc. 20,000 887,500
Smithkline Beecham PLC ADR 20,000 1,087,500
6,273,525
Eating & Drinking Places (0.44%)
McDonald's Corp. 7,000 327,250
Electrical Goods (0.50%)
Avnet, Inc. 8,800 370,700
Electronic Components & Accessories (2.78%)
Intel Corp. 17,300 1,270,469
Linear Technology Corp. 26,300 789,000
2,059,469
Electronic Distribution Equipment (0.58%)
General Electric Co. 5,000 432,500
Federal & Federally Sponsored Credit (0.50%)
Federal National Mortgage Association 11,000 368,500
Footwear, Except Rubber (0.33%)
Stride Rite Corp. 30,000 247,500
General Industrial Machinery (3.13%)
Flow International Corp. 29,200(a) 233,600
Ingersoll-Rand Co. 20,400 892,500
Tyco International Ltd. 29,200 1,189,900
2,316,000
Grain Mill Products (1.68%)
Ralcorp Holdings, Inc. 15,000(a) 309,375
Ralston-Ralston Purina Group 14,600 936,225
1,245,600
Hose, Belting, Gaskets & Packing (1.07%)
Mark IV Industries 35,100 794,137
Hospitals (1.78%)
Humana, Inc. 30,000(a) 536,250
Universal Health Services, Inc.; Class B 30,000(a) 783,750
1,320,000
Household Furniture (0.96%)
Masco Corp. 23,400 707,850
Investment Offices (0.69%)
Invesco PLC ADR 14,600 511,000
Knitting Mills (0.37%)
Russell Corp. 10,000 276,250
Lumber & Other Building Materials (2.00%)
Home Depot, Inc. 27,400 1,479,600
Management & Public Relations (0.42%)
Dun & Bradstreet Corp. 5,000 312,500
Medical Instruments & Supplies (5.17%)
Becton, Dickinson & Co. 10,000 802,500
Boston Scientific Corp. 41,100(a) 1,849,500
Nellcor Puritan Bennett 24,300(a) 1,178,550
3,830,550
Medical Service & Health Insurance (4.22%)
AON Corp. 11,700 593,775
Foundation Health Corp. 21,900(a) 785,663
Health System International, Inc. 14,600(a) 396,025
United Healthcare Corp. 15,000 757,500
Value Health, Inc. 25,000(a) 590,625
3,123,588
Millwork, Plywood & Structural Members (0.29%)
Georgia-Pacific Corp. 3,000 213,000
Miscellaneous Chemical Products (0.63%)
Loctite Corp. 10,000 465,000
Miscellaneous Converted Paper Products (0.35%)
Minnesota Mining & Mfg. Co. 3,800 262,200
Miscellaneous Electrical Equipment & Supplies (1.40%)
Motorola, Inc. 16,500 1,037,437
Miscellaneous Plastics Products, NEC (0.37%)
Rubbermaid, Inc. 10,000 272,500
Miscellaneous Shopping Goods Stores (0.58%)
Toys 'R' Us, Inc. 15,000(a) 427,500
Motor Vehicles & Equipment (2.03%)
Chrysler Corp. 10,000 620,000
Dana Corp. 28,600 886,600
1,506,600
Offices & Clinics of Medical Doctors (0.97%)
FHP International Corp. 26,200(a) 717,225
Operative Builders (0.42%)
Pulte Corp. 11,500 307,625
Paints & Allied Products (0.53%)
RPM, Inc. 25,000 390,625
Petroleum Refining (2.12%)
Atlantic Richfield Co. 5,800 687,300
Exxon Corp. 10,200 886,125
1,573,425
Plastic Materials & Synthetics (0.77%)
A. Schulman, Inc. 23,400 573,300
Preserved Fruits & Vegetables (0.68%)
CPC International, Inc. 7,000 504,000
Radio, Television & Computer Stores (0.32%)
Tandy Corp. 5,000 236,875
Refrigeration & Service Machinery (0.85%)
Tecumseh Products Co.; Class A 11,700 628,875
Rubber & Plastics Footwear (1.39%)
Nike, Inc. 10,000 1,027,500
Sanitary Services (1.69%)
Browning-Ferris Industries, Inc. 26,300 762,700
WMX Technologies, Inc. 15,000 491,250
1,253,950
Security Brokers & Dealers (1.21%)
Salomon, Inc. 20,400 897,600
Shoe Stores (0.07%)
Payless Shoesource Inc. 1,600(a) 50,800
Soap, Cleaners & Toilet Goods (3.38%)
Colgate-Palmolive Co. 11,700 991,575
Ecolab, Inc. 37,100 1,224,300
International Flavors & Fragrances, Inc. 6,000 285,750
2,501,625
Toys & Sporting Goods (1.39%)
Mattel, Inc. 35,950 1,029,069
Variety Stores (0.51%)
Wal-Mart Stores, Inc. 15,000 380,625
Total Common Stock 58,812,813
Preferred Stock (0.42%)
Offices & Clinics of Medical Doctors (0.42%)
FHP International Corp.;
Series A Convertible 12,182 310,641
Principal
Amount Value
Commercial Paper (19.39%)
Business Credit Institutions (8.67%)
American Express Credit Corp.;
5.39%; 7/5/96 $ 1,000,000 $ 999,401
5.39%; 7/9/96 2,200,000 2,197,365
CIT Group Holdings, Inc.;
5.30%; 7/3/96 2,000,000 1,999,411
5.30%; 7/5/96 1,225,000 1,224,278
6,420,455
Personal Credit Institutions (7.12%)
Associates Corp. of North America;
5.35%; 7/2/96 2,340,000 2,339,652
Ford Motor Credit Co.;
5.37%; 7/8/96 2,940,000 2,936,930
5,276,582
Securities Brokers & Dealers (3.60%)
Merrill Lynch & Co., Inc.
5.35%; 7/1/96 2,670,000 2,670,000
Total Commercial Paper 14,367,037
Total Portfolio Investments (99.18%) 73,490,491
Cash and receivables, net of liabilities (0.82%) 604,501
Total Net Assets (100.00%) $ 74,094,992
(a) Non-income producing security - No dividend paid during the past twelve
months.
PRINCIPAL HIGH YIELD FUND, INC.
Principal
Amount Value
Bonds (93.12%)
Agricultural Chemicals (2.45%)
IMC Fertilizer Group, Inc. Senior
Debentures; 9.45%; 12/15/11 $ 300,000 $ 303,000
Aircraft & Parts (2.24%)
Rohr Industries, Inc. Subordinated
Debentures; 9.25%; 3/1/17 300,000 276,000
Automotive Rentals, No Drivers (1.25%)
Alamo Rent-A-Car, Inc. Senior
Notes; 11.75%; 1/31/06 150,000 154,500
Blast Furnace & Basic Steel Products (3.48%)
Ivaco Senior Notes;
11.50%; 9/1/05 150,000 146,250
Weirton Steel Corp. Senior Notes;
10.75%; 6/1/05 300,000 282,750
429,000
Broadwoven Fabric Mills, Cotton (2.31%)
J.P. Stevens & Co. Inc.
Sinking Fund Debentures;
9.00%; 3/1/17 300,000 285,000
Cable & Other Pay TV Services (2.47%)
Jones Intercable, Inc. Senior Notes;
9.63%; 3/15/02 300,000 304,500
Cogeneration - Small Power Producer (3.68%)
AES Corp. Senior Subordinated
Notes; 10.25%; 7/15/06 300,000 301,125
California Energy Co., Inc.
Ltd. Resource Senior Secured
Notes; 9.88%; 6/30/03 150,000 153,375
454,500
Computer & Data Processing Services (2.56%)
Tenet Healthcare Corp.
Senior Subordinated Notes;
10.13%; 3/1/05 300,000 316,500
Consumer Products (3.23%)
RJR Nabisco, Inc. Senior Notes;
8.75%; 8/15/05 400,000 399,000
Crude Petroleum & Natural Gas (4.40%)
Chesapeake Energy Corp.
Senior Notes; 9.13%; 4/15/06 150,000 147,750
Nuevo Energy Co.
Senior Subordinated Notes;
9.50%; 4/15/06 400,000 395,500
543,250
Electric Services (1.20%)
El Paso Electric Co.
First Mortgage Bonds, Series D;
8.90%; 2/1/06 150,000 148,125
Engines & Turbines (2.14%)
Outboard Marine Corp. Debentures;
9.13%; 4/15/17 300,000 264,000
Forest Products (2.15%)
Doman Industries, Ltd. Senior Notes;
8.75%; 3/15/04 300,000 265,794
Fuel Dealers (2.36%)
Petroleum Heat & Power Co., Inc.
Subordinated Notes;
10.13%; 4/1/03 300,000 291,000
General Government, NEC (1.06%)
Republic of Argentina Global Bonds;
8.38%; 12/20/03 150,000 130,687
Groceries & Related Products (2.23%)
Rykoff-Sexton, Inc. Senior
Subordinated Notes;
8.88%; 11/1/03 300,000 275,250
Grocery Stores (3.52%)
Dominick's Finer Foods, Inc.
Senior Subordinated Notes;
10.88%; 5/1/05 150,000 158,625
Ralph's Grocery Co.
Senior Subordinated Notes;
11.00%; 6/15/05 300,000 276,000
434,625
Hotels & Motels (4.93%)
Bally's Grand, Inc. First Mortgage
Notes; 10.38%; 12/15/03 300,000 328,875
John Q. Hammons Hotels, L.P. &
Finance Corp. First Mortgage
Notes; 8.88%; 2/15/04 300,000 280,500
609,375
Knitting Mills (2.52%)
Tultex Corp. Senior Notes;
10.63%; 3/15/05 300,000 311,250
Miscellaneous Amusement, Recreation Service (1.26%)
Rio Hotel & Casino, Inc.
Senior Subordinated Notes;
10.63%; 7/15/05 150,000 156,000
Miscellaneous Converted Paper Products (1.99%)
Drypers Corp. Senior Notes;
12.50%; 11/1/02 300,000 246,000
Miscellaneous Plastics Products, NEC (4.74%)
Congoleum Corp. Senior Notes;
9.00%; 2/1/01 300,000 288,000
Plastic Containers, Inc. Senior
Secured Notes; 10.75%; 4/1/01 300,000 297,750
585,750
Motor Vehicles & Equipment (2.30%)
Lear Seating Corp. Subordinated
Notes; 8.25%; 2/1/02 300,000 284,250
Nonferrous Foundries (Casting) (1.28%)
Howmet Corp. Senior Subordinated
Notes; 10.00%; 12/1/03 150,000(a) 157,875
Nursing & Personal Care Facilities (2.34%)
Mariner Health Group, Inc. Senior
Subordinated Notes; 9.50%; 4/1/06 300,000(a) 288,375
Petroleum Refining (2.45%)
Crown Central Petroleum Corp.
Senior Notes; 10.88%; 2/1/05 300,000 302,250
Pulp Mills (2.79%)
Magnetek, Inc. Senior Subordinated
Debentures; 10.75%; 11/15/98 350,000 344,313
Radio, Television & Computer Stores (2.46%)
Compusa, Inc. Senior Subordinated
Notes; 9.50%; 6/15/00 300,000 303,375
Radio & Television Broadcasting (3.84%)
American Radio Systems
Senior Subordinated Notes;
9.00%; 2/1/06 150,000 141,750
EZ Communications, Inc.
Senior Subordinated Notes;
9.75%; 12/1/05 200,000 190,000
Sullivan Broadcasting Inc.
Senior Subordinated Notes;
10.25%; 12/15/05 150,000 142,875
474,625
Soap, Cleaners & Toilet Goods (2.50%)
Coty, Inc. Senior Subordinated
Notes; 10.25%; 5/1/05 300,000 309,000
Telephone Communication (10.17%)
360 Communications Co.
Senior Notes; 7.50%; 3/1/06 150,000 142,331
Paging Network, Inc. Senior
Debentures; 8.88%; 2/1/06 300,000 271,875
Rogers Cablesystems Ltd. Senior
Secured Second Priority Notes;
9.63%; 8/1/02 250,000 246,875
Rogers Cantel Inc. Senior Secured
Debentures; 9.75%; 6/1/16 300,000 289,125
Telecom Argentina Stet-France
Telecom SA Senior Notes;
12.00%; 11/15/02 150,000 160,500
Vanguard Cellular Systems, Inc.
Senior Debentures; 9.38%; 4/15/06 150,000 145,500
1,256,206
Textile Finishing, Except Wool (2.35%)
Dominion Textile (USA) Inc.
Guaranteed Senior Notes;
9.25%; 4/1/06 300,000 290,250
Water Supply (2.47%)
California Energy Casecnan Water &
Energy Co., Inc. Senior Secured
Bonds Series B; 11.95%; 11/15/10 300,000(a) 305,250
Total Bonds 11,498,875
Commercial Paper (4.37%)
Personal Credit Institutions (4.37%)
Associates Corp. of North America;
5.55%; 7/1/96 540,000 540,000
Total Portfolio Investments (97.49%) 12,038,875
Cash and receivables, net of liabilities (2.51%) 309,965
Total Net Assets (100.00%) $ 12,348,840
(a) Restricted Security - See Note 4 to the financial statements.
PRINCIPAL MONEY MARKET FUND, INC.
Principal
Amount Value
Commercial Paper (94.48%)
Advertising (1.74%)
Omnicom Finance, Inc.;
LOC ABN-AMRO Bank NV;
5.35%; 7/24/96 $ 850,000 $ 847,095
Asset-Backed Securities (4.15%)
Retailer Funding Corp.;
5.38%; 7/15/96 1,000,000 997,908
5.38%; 7/25/96 1,025,000 1,021,323
2,019,231
Business Credit Institutions (4.47%)
American Express Credit Corp.;
5.28%; 7/3/96 460,000 459,865
5.29%; 7/25/96 190,000 189,331
4.95%; 8/16/96 150,000 149,051
5.28%; 8/20/96 400,000 397,067
CIT Group Holdings, Inc.;
5.28%; 8/21/96 500,000 496,260
General Electric Capital Corp.;
5.29%; 1/24/97 500,000 484,791
2,176,365
Department Stores (4.75%)
Sears Roebuck Acceptance Corp.;
5.28%; 7/10/96 275,000 274,637
5.33%; 7/17/96 450,000 448,934
5.36%; 8/9/96 350,000 347,968
5.38%; 8/14/96 675,000 670,561
5.39%; 8/15/96 250,000 248,316
5.41%; 8/20/96 325,000 322,558
2,312,974
Drugs (0.55%)
Warner-Lambert Co.;
4.76%; 11/12/96 275,000 270,128
Electric Services (12.66%)
AES Shady Point, Inc.; LOC Bank of
Tokyo-Mitsubishi, Ltd.;
5.34%; 7/9/96 1,000,000 998,813
5.50%; 7/10/96 750,000 748,969
5.43%; 7/22/96 350,000 348,891
Centerior Fuel Corp.;
LOC Barclays Bank PLC;
5.45%; 7/31/96 375,000 373,297
Commed Fuel Co., Inc.;
LOC Canadian Imperial Bank of
Commerce;
5.34%; 7/8/96 425,000 424,559
5.30%; 7/12/96 125,000 124,798
5.38%; 8/19/96 250,000 248,169
LOC Credit Suisse; 5/30%; 7/11/96 1,000,000 998,528
Connecticut Yankee Atomic Power
Co.; LOC Toronto Dominion Bank;
5.65%; 7/01/96 500,000 500,000
FPL Fuels Inc.;
LOC Barclays Bank PLC;
5.33%; 7/3/96 350,000 349,896
5.35%; 7/31/96 150,000 149,331
5.39%; 7/31/96 400,000 398,203
Southern California Edison;
5.35%; 7/12/96 500,000 499,183
6,162,637
Federal & Federally Sponsored Credit (1.72%)
U.S. Government Treasury Bills;
5.35%; 8/22/96 200,000 198,455
5.09%; 3/6/97 660,000 636,685
835,140
Finance Services (4.90%)
ABN-AMRO North America Finance,
Inc.; 4.91%; 8/23/96 500,000 496,386
Mitsubishi International Corp.;
4.98%; 7/9/96 200,000 199,779
5.31%; 7/29/96 150,000 149,381
5.34%; 9/3/96 300,000 297,152
5.41%; 9/4/96 700,000 693,162
PHH Corp.; 5.36%; 7/23/96 550,000 548,198
2,384,058
Fire, Marine & Casualty Insurance (1.53%)
General Reinsurance Corp.;
5.38%; 8/20/96 750,000 744,396
Gas Production & Distribution (2.05%)
Southwest Gas Corp;
LOC Union Bank of Switzerland;
5.28%; 7/8/96 1,000,000 998,973
Investment Offices (2.92%)
Morgan Stanley Group, Inc.;
5.34%; 7/2/96 475,000 474,930
5.29%; 7/26/96 550,000 547,979
5.27%; 7/30/96 400,000 398,302
1,421,211
Miscellaneous Electrical Equipment & Supplies (1.02%)
General Electric Co.;
5.38%; 8/13/96 500,000 496,787
Miscellaneous Investing (0.61%)
MLTC Funding, Inc.;
LOC Citibank, N.A.;
5.39%; 7/24/96 300,000 298,967
Mortgage Bankers & Brokers (3.77%)
Countrywide Home Loan, Inc.;
5.32%; 8/22/96 850,000 843,468
5.42%; 9/16/96 1,000,000 988,407
1,831,875
Personal Credit Institutions (22.70%)
Associates Corp. of North America;
5.28%; 7/5/96 690,000 689,595
5.29%; 7/25/96 500,000 498,237
5.36%; 7/31/96 450,000 447,990
5.36%; 8/2/96 300,000 298,571
Beneficial Corp.;
5.29%; 7/18/96 525,000 523,688
5.38%; 8/16/96 550,000 546,219
Comoloco Inc.;
5.33%; 8/5/96 150,000 149,223
5.36%; 8/6/96 800,000 795,712
5.37%; 8/12/96 850,000 844,675
5.40%; 9/9/96 400,000 395,800
Ford Motor Credit Co.;
5.30%; 7/12/96 425,000 424,312
5.28%; 7/26/96 350,000 348,717
5.36%; 7/29/96 500,000 497,915
5.36%; 8/8/96 600,000 596,605
General Motors Acceptance Corp.;
4.75%; 11/01/96 250,000 245,943
5.33%; 12/10/96 100,000 97,602
5.35%; 12/13/96 140,000 136,567
5.35%; 12/20/96 250,000 243,610
5.35%; 12/27/96 225,000 219,015
5.35%; 1/17/97 150,000 145,542
5.45%; 1/24/96 150,000 145,299
5.60%; 3/3/97 125,000 120,236
5.67%; 3/7/97 400,000 384,313
5.70%; 3/10/97 200,000 192,020
5.68%; 3/14/97 250,000 239,902
Norwest Financial, Inc.;
5.28%; 7/10/96 750,000 749,010
5.29%; 7/15/96 1,075,000 1,072,788
11,049,106
Real Estate Operators & Lessors (8.44%)
Maguire/Thomas Partners Westlake
Southlake Partnership Notes;
LOC Sumitomo Bank Ltd.;
5.50%; 7/11/96 275,000 274,580
5.38%; 7/23/96 1,000,000 996,715
5.35%; 7/24/96 300,000 298,975
5.40%; 8/15/96 400,000 397,300
5.45%; 9/3/96 200,000 198,062
Towson Town Center, Inc.; LOC
Bank of Tokyo-Mitsubishi, Ltd.;
5.42%; 7/12/96 500,000 499,172
5.42%; 7/16/96 700,000 698,419
5.35%; 7/19/96 500,000 498,662
5.45%; 8/13/96 250,000 248,373
4,110,258
Security Brokers & Dealers (9.79%)
Goldman Sachs Group, L.P.;
5.38%; 8/7/96 375,000 372,927
5.33%; 9/4/96 500,000 495,188
Merrill Lynch & Co., Inc.;
5.06%; 7/31/96 225,000 224,051
5.32%; 7/16/96 500,000 498,892
5.32%; 8/1/96 375,000 373,282
5.38%; 8/7/96 500,000 497,235
5.40%; 8/26/96 725,000 718,910
Smith Barney Inc.;
5.28%; 7/1/96 1,090,000 1,090,000
5.38%; 8/19/96 500,000 496,339
4,766,824
Subdividers & Developers (0.72%)
Hartz 667 Commercial Paper Corp.;
LOC Bank of Tokyo-Mitsubishi,
Ltd.; 5.42%; 7/17/96 350,000 349,157
Telephone Communication (1.74%)
Ameritech Corp.;
5.23%; 7/30/96 150,000 149,368
5.38%; 8/2/96 700,000 696,652
846,020
Tires & Inner Tubes (4.25%)
Bridgestone/Firestone;
LOC Dai-Ichi Kangyo Bank Ltd.;
5.34%; 7/22/96 450,000 448,598
5.38%; 7/19/96 1,000,000 997,310
5.45%; 7/22/96 325,000 323,967
LOC Sumitomo Bank Ltd.;
5.42%; 7/9/96 300,000 299,639
2,069,514
Total Commercial Paper 45,990,716
Bank Notes (4.32%)
Commercial Banks (4.32%)
LaSalle National Bank;
5.75%; 7/8/96 250,000 250,000
5.72%; 8/30/96 500,000 500,000
5.56%; 3/6/97 300,000 300,000
5.47%; 3/15/97 300,000 300,000
5.77%; 4/25/97 350,000 350,000
5.72%; 4/30/97 400,000 400,000
Total Bank Notes 2,100,000
Bonds (2.05%)
Business Credit Institutions (2.05%)
John Deere Capital Corp.
Medium-Term Notes, Series C;
5.95%; 6/30/97 1,000,000 998,869
Total Portfolio Investments (100.85%) 49,089,585
Liabilities, net of cash and receivables (-0.85%) (412,217)
Total Net Assets (100.00%) $ 48,677,368
PRINCIPAL WORLD FUND, INC.
Shares
Held Value
Common Stocks (88.30%)
Aircraft & Parts (0.05%)
Cemex SA 6,936 $ 25,119
Beverages (1.78%)
Lion Nathan 362,000 944,858
Blast Furnace & Basic Steel Products (1.63%)
Voest-Alpine Stahl 25,700(b) 868,477
Cement, Hydraulic (0.07%)
Apasco SA 6,320 34,770
Central Reserve Depositories (3.21%)
Barclays PLC 82,000 984,892
Ergo Bank 3,800 209,141
Union Bank of Norway 12,800 313,285
Wing Hang Bank 50,000 198,307
1,705,625
Combination Utility Services (2.07%)
ABB AG 745 921,398
Iberdrola 1 SA 17,600 180,515
1,101,913
Commercial Banks (9.04%)
ABN-AMRO Holdings NV 12,235 656,557
Bank of Ireland 113,816 778,129
Christiana Bank; Ordinary Shares 74,000 174,283
Fokus Bank 119,000(a)(b) 648,458
Grupo Financiero Bancomer;
Series B 235,000(a) 102,312
Series L 8,704(a) 2,882
Korea Housing Bank 1,290(a) 30,057
National Australia Bank Ltd. 72,885 674,040
Siam City Bank 875,000 938,759
Svenska Handelsbanken AB Free 40,500 802,618
4,808,095
Communications Equipment (0.17%)
ABC Communications Holdings Ltd. 420,000 91,699
Communications Services, NEC (1.38%)
KPN Royal PTT Nederland 19,389 733,771
Computer & Office Equipment (0.16%)
Canon, Inc. 4,000 83,150
Concrete, Gypsum & Plaster Products (0.02%)
Cementos de Mexico SA 3,200 12,623
Construction & Related Machinery (0.77%)
Powerscreen International PLC 58,100 411,658
Consumer Products (0.81%)
Imasco Ltd. 21,000 429,036
Crude Petroleum & Natural Gas (0.63%)
Hardy Oil & Gas 86,200 336,184
Department Stores (0.81%)
Vendex International 12,400 432,226
Drugs (4.23%)
Galencia Holdings AG 480 195,583
Roussel-Uclaf 2,970 712,488
Sandoz AG 460 525,918
Teva Pharmaceutical ADR 21,500 814,312
2,248,301
Electric Light & Wiring Equipment (0.49%)
Clipsal Industries Holdings 25,000 70,250
Otra NV 8,300 191,092
261,342
Electric Services (2.46%)
CEP-A Consolidated Electric Power-Asia 231,000 381,991
Korea Electric Power Corp. 8,100 281,592
Korea Mobil Telecommunications Corp. 290 228,804
Northern Ireland Electric 63,400 414,731
1,307,118
Electronic Components & Accessories (2.53%)
Amtek Engineering 209,250 378,044
Elec & Eltek International 268,000 798,640
Murata Mfg. 1,000 37,837
Varitronix 63,000 131,445
1,345,966
Electronic Distribution Equipment (1.77%)
Phillips Electronics 28,900 939,644
Engines & Turbines (0.17%)
Mabuchi Motor 1,400 89,094
Finance Services (1.25%)
MBF Capital Berhad 481,000 663,119
Flat Glass (0.14%)
Weru AG 200 75,026
Forest Products (0.21%)
Metsa-Serla 16,000 113,649
Functions Closely Related to Banking (1.12%)
Liechtenstein Global Trust AG 1,225 597,016
Gas Production & Distribution (2.34%)
Australia Gas & Light 95,457 397,438
Hafslund ASA 5,467 34,503
OMV AG 8,000 810,282
1,242,223
Highway & Street Construction (0.30%)
Edrasis Psallidas 14,664 157,758
Holding Offices (1.49%)
First Pacific Co., Ltd. 516,382 793,869
Household Appliances (1.07%)
Fisher & Paykel 178,000 570,688
Household Audio & Video Equipment (0.79%)
SKF 'B' Free 17,700 420,128
Industrial Inorganic Chemicals (1.33%)
Bayer AG 20,100 707,133
Investment Offices (0.85%)
Invesco PLC 126,000 452,249
Meat Products (3.80%)
AFFCO Holdings 1,096,185 413,028
Orkla B Ordinary Shares 18,100 880,435
Unilever NV 5,030 727,843
2,021,306
Medical Instruments & Supplies (0.14%)
Nycomed 5,467 75,740
Miscellaneous Chemical Products (3.10%)
Ciba Geigy AG-REG 730 889,432
Hoechst AG 22,500 759,786
1,649,218
Miscellaneous Durable Goods (1.23%)
Hagemeyer NV 9,175 653,600
Miscellaneous Equipment Rental & Leasing (1.32%)
Insituto Mobiliane Italian 84,000 701,392
Miscellaneous Food & Kindred Products (0.82%)
Burns, Philp & Co., Ltd. 230,631 435,645
Miscellaneous Furniture & Fixtures (0.12%)
Pt Surya Toto 29,000 62,301
Miscellaneous Manufacturers (0.78%)
Carter Holt Harvey Ltd. 181,000 412,910
Miscellaneous Non-Durable Goods (2.24%)
Grand Metropolitan PLC 179,500 1,190,934
Miscellaneous Plastics Products, NEC (1.00%)
Royal Plastics Group 35,100(a)(b) 533,329
Miscellaneous Textile Goods (0.69%)
Espirit Asia 1,158,000 366,526
Miscellaneous Transportation Equipment (0.51%)
Autoliv AB 8,900 270,938
Miscellaneous Transportation Services (0.26%)
Koninklijke Pakhoed NV 5,281 137,673
Miscellaneous Wood Products (0.33%)
Enso OY 22,300 173,278
Motor Vehicles & Equipment (0.70%)
Volvo AB 16,450 374,344
Motor Vehicles, Parts & Supplies (0.97%)
Dahl International AB 36,000(a) 518,124
Newspapers (0.94%)
Marcoiberica Distribucion de Edicioues 58,500 497,345
Non-Classifiable Establishments (0.13%)
Thailand International Fund 2 67,000
Office Furniture (0.16%)
Lamex Holdings 242,000 84,413
Oil & Gas Field Services (1.89%)
Repsol Petroleo SA 28,960 1,006,286
Personal Credit Institutions (0.36%)
Manhattan Card Co. 402,000 192,158
Plastic Materials & Synthetics (0.90%)
Astra AB 11,000 479,092
Primary Nonferrous Metals (0.58%)
British Steel PLC 121,300 310,043
Pulp Mills (1.56%)
Asia Pacific Resources 36,300(a) 272,250
Babcock International Group 41,000 56,698
UPM-Kymmene OY 24,140 499,334
828,282
Railroad Equipment (0.26%)
Vae AG 1,470 138,597
Sand & Gravel (0.08%)
Bardon Group PLC 75,900 44,520
Security Brokers & Dealers (1.43%)
Peregrine Investment Holdings 526,000 757,690
Peregrine Investment - Warrants 38,800(a) 4,461
762,151
Security & Commodity Services (2.13%)
Corporacion Bancaria de Espania SA 26,000 1,133,601
Ship & Boat Building & Repairing (0.36%)
Unitor Ships Service 11,930 192,824
Special Industry Machinery (1.59%)
Bobst SA 205 295,632
IHC Caland NV 7,700 378,915
Sulzer AG 290 173,772
848,319
Sugar & Confectionary Products (4.44%)
Huhtamake I Free 7,200 240,212
Nestle 1,005 1,147,410
Tate & Lyle 137,000 974,948
2,362,570
Telephone Communication (7.25%)
Cable & Wireless PLC 21,000 139,003
Compania de Telecomunicaciones ADR 1,600 157,000
Investec Consultadoria Internacional SA 8,600(a) 285,395
Nokia Corp.; Class A ADR 23,800 880,600
Tele Danmark B 8,500 425,515
Telecom Italia-DI 300,200 517,974
Telecom Italia Mobile 419,200 571,530
Telefonica de Espana SA 40,400 743,650
Telefonos de Mexico SA ADR 4,050 135,675
3,856,342
Water Supply (0.30%)
Wessex Water PLC 28,596 158,628
Water Transportation of Freight, NEC (0.79%)
Argonaut AB 'B' Free 17,100(a) 35,306
ICB Shipping AB 'B' Free 32,000 385,805
421,111
Total Common Stocks 46,964,067
Preferred Stocks (0.29%)
Highway & Street Construction (0.29%)
BAU Holdings AG 3,030 154,154
Principal
Amount Value
Bonds (0.80%)
Fire, Marine & Casualty Insurance (0.80%)
Alfa SA Convertible Subordinated
Debentures; 8.00%; 9/15/00 $ 400,000(b) $ 427,000
Commercial Paper (13.67%)
Business Credit Institutions (4.72%)
American Express Credit Co.;
5.28%; 7/1/96 1,780,000 1,780,000
General Electric Capital Corp.;
5.35%; 7/3/96 730,000 729,783
2,509,783
Personal Credit Institutions (5.86%)
Associates Corp. of North America;
5.38%; 7/5/96 1,365,000 1,364,184
Ford Motor Credit Co.;
5.40%; 7/3/96 1,750,000 1,749,475
3,113,659
Security Brokers & Dealers (3.09%)
Merrill Lynch & Co., Inc.;
5.35%; 7/2/96 1,645,000 1,644,756
Total Commercial Paper 7,268,198
Total Portfolio Investments (103.06%) 54,813,419
Liabilities, net of cash,
receivables and other assets (-3.06%) (1,627,566)
Total Net Assets (100.00%) $ 53,185,853
(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
Australia $ 1,507,123 2.75%
Austria 1,971,511 3.60
Canada 962,365 1.76
Denmark 425,515 0.78
Finland 1,026,472 1.87
France 712,488 1.30
Germany 1,541,945 2.81
Greece 366,898 0.67
Hong Kong 3,002,559 5.48
Indonesia 62,301 0.11
Italy 1,790,897 3.27
Japan 210,081 0.38
Korea 540,453 0.99
Malaysia 663,119 1.21
Mexico 177,706 0.32
Netherlands 4,851,322 8.85
New Zealand 2,341,484 4.27
Norway 2,319,528 4.23
Portugal 285,395 0.52
Singapore 378,044 0.69
Spain 3,561,396 6.50
Sweden 3,286,355 6.00
Switzerland 4,746,161 8.66
Thailand 938,759 1.71
United Kingdom 6,252,618 11.40
United States 10,890,924 19.87
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Income from
Investment Operations
--------------------------------
Net Realized
and
Net Asset Net Unrealized Total
Value at Invest- Gain from
Beginning ment (Loss)on Investment
of Period Income Investments Operations
--------- ------- ----------- ----------
PRINCIPAL AGGRESSIVE GROWTH FUND INC.
<S> <C> <C> <C> <C>
Six Months Ended June 30, 1996 $12.94 $.07 $ 1.70 $1.77
Year Ended December 31, 1995 10.11 .13 4.31 4.44
Period Ended December 31, 1994(d) 9.92 .05 .24 .29
PRINCIPAL ASSET ALLOCATION FUND, INC.
Six Months Ended June 30, 1996 11.11 .18 .40 .58
Year Ended December 31, 1995 9.79 .40 1.62 2.02
Period Ended December 31, 1994(d) 9.98 .23 (.18) .05
PRINCIPAL BALANCED FUND, INC.
Six Months Ended June 30, 1996 13.97 .19 .37 .56
Year Ended December 31,
1995 11.95 .45 2.44 2.89
1994 12.77 .37 (.64) (.27)
1993 12.58 .42 .95 1.37
Six Months Ended December 31, 1992(a) 12.93 .23 .75 .98
Year Ended June 30,
1992 11.33 .47 1.61 2.08
1991 10.79 .54 .59 1.13
PRINCIPAL BOND FUND, INC.
Six Months Ended June 30, 1996 11.73 .32 (.70) (.38)
Year Ended December 31,
1995 10.12 .62 1.62 2.24
1994 11.16 .72 (1.04) (.32)
1993 10.77 .88 .38 1.26
Six Months Ended December 31, 1992(a) 11.08 .45 .13 .58
Year Ended June 30,
1992 10.64 .91 .46 1.37
1991 10.72 .94 (.06) .88
PRINCIPAL CAPITAL ACCUMULATION FUND, INC.
Six Months Ended June 30, 1996 27.80 .24 2.46 2.70
Year Ended December 31,
1995 23.44 .60 6.69 7.29
1994 24.61 .62 (.49) .13
1993 25.19 .61 1.32 1.93
Six Months Ended December 31, 1992(a) 26.03 .31 1.84 2.15
Year Ended June 30,
1992 23.35 .65 2.70 3.35
1991 22.48 .74 1.22 1.96
PRINCIPAL EMERGING GROWTH FUND, INC.
Six Months Ended June 30, 1996 25.33 .12 2.33 2.45
Year Ended December 31,
1995 19.97 .22 5.57 5.79
1994 20.79 .14 .03 .17
1993 18.91 .17 3.47 3.64
Six Months Ended December 31, 1992(a) 15.97 .10 3.09 3.19
Year Ended June 30,
1992 13.93 .21 2.04 2.25
1991 14.25 .20 .50 .70
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Less Distributions
-------------------------------------------
Dividends Excess Net Asset
from Net Distributions Distributions Value at
Investment from from Total End of Total
Income Capital Gains Capital Gains Distributions Period Return
---------- ------------- ------------- ------------- --------- ---------
PRINCIPAL AGGRESSIVE GROWTH FUND INC.
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1996 $ - $ (.58) $ - $ (.58) $14.13 14.14%(c)
Year Ended December 31, 1995 (.13) (1.48) - (1.61) 12.94 44.19%
Period Ended December 31, 1994(d) (.05) (.05) - (.10) 10.11 2.59%(c)
PRINCIPAL ASSET ALLOCATION FUND, INC.
Six Months Ended June 30, 1996 - (.12) - (.12) 11.57 5.30%(c)
Year Ended December 31, 1995 (.40) (.30) - (.70) 11.11 20.66%
Period Ended December 31, 1994(d) (.23) - (.01) (.24) 9.79 .52%(c)
PRINCIPAL BALANCED FUND, INC.
Six Months Ended June 30, 1996 - (.24) - (.24) 14.29 4.05%(c)
Year Ended December 31,
1995 (.45) (.42) - (.87) 13.97 24.58%
1994 (.37) (.18) - (.55) 11.95 (2.09)%
1993 (.42) (.76) - (1.18) 12.77 11.06%
Six Months Ended December 31, 1992(a) (.47) (.86) - (1.33) 12.58 8.00%(c)
Year Ended June 30,
1992 (.48) - - (.48) 12.93 18.78%
1991 (.57) (.02) - (.59) 11.33 11.36%
PRINCIPAL BOND FUND, INC.
Six Months Ended June 30, 1996 - - - - 11.35 (3.24)%(c)
Year Ended December 31,
1995 (.63) - - (.63) 11.73 22.17%
1994 (.72) - - (.72) 10.12 (2.90)%
1993 (.87) - - (.87) 11.16 11.67%
Six Months Ended December 31, 1992(a) (.89) - - (.89) 10.77 5.33%(c)
Year Ended June 30,
1992 (.93) - - (.93) 11.08 13.57%
1991 (.96) - - (.96) 10.64 8.94%
PRINCIPAL CAPITAL ACCUMULATION FUND, INC.
Six Months Ended June 30, 1996 (.01) (.65) - (.66) 29.84 9.90%(c)
Year Ended December 31,
1995 (.60) (2.33) - (2.93) 27.80 31.91%
1994 (.61) (.69) - (1.30) 23.44 .49%
1993 (.60) (1.91) - (2.51) 24.61 7.79%
Six Months Ended December 31, 1992(a) (.64) (2.35) - (2.99) 25.19 8.81%(c)
Year Ended June 30,
1992 (.67) - - (.67) 26.03 14.53%
1991 (.79) (.30) - (1.09) 23.35 9.46%
PRINCIPAL EMERGING GROWTH FUND, INC.
Six Months Ended June 30, 1996 - (.33) - (.33) 27.45 9.77%(c)
Year Ended December 31,
1995 (.22) (.21) - (.43) 25.33 29.01%
1994 (.14) (.85) - (.99) 19.97 .78%
1993 (.17) (1.59) - (1.76) 20.79 19.28%
Six Months Ended December 31, 1992(a) (.21) (.04) - (.25) 18.91 20.12%(c)
Year Ended June 30,
1992 (.21) - - (.21) 15.97 16.19%
1991 (.23) (.79) - (1.02) 13.93 5.72%
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of Capital Stock outstanding throughout each period:
Ratios/Supplemental Data
----------------------------------------------------------------
Ratio of Net
Ratio of Investment
Net Assets at Expenses to Income to Portfolio Averge
End of Period Average Average Turnover Commission
(in thousands) Net Assets Net Assets Rate Rate
-------------- ----------- ------------ --------- ----------
PRINCIPAL AGGRESSIVE GROWTH FUND INC.
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1996 $63,345 .85%(b) 1.39%(b) 206.8%(b) $.0544
Year Ended December 31, 1995 33,643 .90% 1.34% 172.9% N/A
Period Ended December 31, 1994(d) 13,770 1.03%(b) 1.06%(b) 105.6%(b) N/A
PRINCIPAL ASSET ALLOCATION FUND, INC.
Six Months Ended June 30, 1996 58,841 .86%(b) 3.83%(b) 77.0%(b) .0462
Year Ended December 31, 1995 41,074 .89% 4.07% 47.1% N/A
Period Ended December 31, 1994(d) 28,041 .95%(b) 4.27%(b) 60.7%(b) N/A
PRINCIPAL BALANCED FUND, INC.
Six Months Ended June 30, 1996 72,742 .63%(b) 3.57%(b) 22.3%(b) .0426
Year Ended December 31,
1995 45,403 .66% 4.12% 25.7% N/A
1994 25,043 .69% 3.42% 31.5% N/A
1993 21,399 .69% 3.30% 15.8% N/A
Six Months Ended December 31, 1992(a) 18,842 .73%(b) 3.71%(b) 38.4%(b) N/A
Year Ended June 30,
1992 17,344 .72% 3.80% 26.6% N/A
1991 14,555 .73% 5.27% 27.1% N/A
PRINCIPAL BOND FUND, INC.
Six Months Ended June 30, 1996 53,977 .53%(b) 7.00%(b) .3%(b) N/A
Year Ended December 31,
1995 35,878 .56% 7.28% 5.9% N/A
1994 17,108 .58% 7.86% 18.2% N/A
1993 14,387 .59% 7.57% 14.0% N/A
Six Months Ended December 31, 1992(a) 12,790 .62%(b) 8.10%(b) 6.7%(b) N/A
Year Ended June 30,
1992 12,024 .62% 8.47% 6.1% N/A
1991 10,552 .63% 9.17% 2.7% N/A
PRINCIPAL CAPITAL ACCUMULATION FUND, INC.
Six Months Ended June 30, 1996 173,124 .49%(b) 1.89%(b) 44.1%(b) .0426
Year Ended December 31,
1995 135,640 .51% 2.25% 49.2% N/A
1994 120,572 .51% 2.36% 44.5% N/A
1993 128,515 .51% 2.49% 25.8% N/A
Six Months Ended December 31, 1992(a) 105,355 .55%(b) 2.56%(b) 39.7%(b) N/A
Year Ended June 30,
1992 94,596 .54% 2.65% 34.8% N/A
1991 76,537 .53% 3.53% 14.0% N/A
PRINCIPAL EMERGING GROWTH FUND, INC.
Six Months Ended June 30, 1996 96,234 .67%(b) 1.18%(b) 18.3%(b) .0397
Year Ended December 31,
1995 58,520 .70% 1.23% 13.1% N/A
1994 23,912 .74% 1.15% 12.0% N/A
1993 12,188 .78% .89% 22.4% N/A
Six Months Ended December 31, 1992(a) 9,693 .81%(b) 1.24%(b) 8.6%(b) N/A
Year Ended June 30,
1992 7,829 .82% 1.33% 10.1% N/A
1991 6,579 .89% 1.70% 11.1% 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
---------------------------------
Net Realized
and
Net Asset Net Unrealized Total
Value at Invest- Gain from
Beginning ment (Loss) on Investment
of Period Income Investments Operations
--------- ------- ------------ ----------
PRINCIPAL GOVERNMENT SECURITIES FUND, INC.
<S> <C> <C> <C> <C>
Six Months Ended June 30, 1996 $10.55 $.26 $ (.44) $(.18)
Year Ended December 31,
1995 9.38 .60 1.18 1.78
1994 10.61 .76 (1.24) (.48)
1993 10.28 .71 .33 1.04
Six Months Ended December 31, 1992(a) 10.93 .40 .04 .44
Year Ended June 30,
1992 10.24 .80 .71 1.51
1991 10.05 .80 .24 1.04
PRINCIPAL GROWTH FUND, INC.
Six Months Ended June 30, 1996 12.43 .09 .48 .57
Year Ended December 31, 1995 10.10 .17 2.42 2.59
Period Ended December 31, 1994(e) 9.60 .07 .51 .58
PRINCIPAL HIGH YIELD FUND, INC.
Six Months Ended June 30, 1996 8.39 .40 (.20) .20
Year Ended December 31,
1995 7.91 .76 .51 1.27
1994 8.62 .77 (.72) .05
1993 8.38 .80 .23 1.03
Six Months Ended December 31, 1992(a) 8.93 .45 (.10) .35
Year Ended June 30,
1992 8.28 .92 .66 1.58
1991 8.96 .99 (.53) .46
PRINCIPAL MONEY MARKET FUND, INC.
Six Months Ended June 30, 1996 1.000 .024 - .024
Year Ended December 31,
1995 1.000 .054 - .054
1994 1.000 .037 - .037
1993 1.000 .027 - .027
Six Months Ended December 31, 1992(a) 1.000 .016 - .016
Year Ended June 30,
1992 1.000 .046 - .046
1991 1.000 .070 - .070
PRINCIPAL WORLD FUND, INC.
Six Months Ended June 30, 1996 10.72 .15 1.04 1.19
Year Ended December 31, 1995 9.56 .19 1.16 1.35
Period Ended December 31, 1994(e) 9.94 .03 (.33) (.30)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
Selected data for a share of Capital Stock outstanding throughout each period:
Less Distributions
-------------------------------------------------------
Dividends Excess Net Asset
from Net Distributions Distributions Value at
Investment from from Total End of Total
Income Capital Gains Capital Gains Distributions Period Return
---------- ------------- ------------- ------------- --------- ----------
PRINCIPAL GOVERNMENT SECURITIES FUND, INC.
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1996 $ - $ - $ - $ - $10.37 (1.71)%(c)
Year Ended December 31,
1995 (.61) - - (.61) 10.55 19.07%
1994 (.75) - - (.75) 9.38 (4.53)%
1993 (.71) - - (.71) 10.61 10.07%
Six Months Ended December 31, 1992(a) (.78) - (.31) (1.09) 10.28 4.10%(c)
Year Ended June 30,
1992 (.81) - (.01) (.82) 10.93 15.34%
1991 (.81) - (.04) (.85) 10.24 10.94%
PRINCIPAL GROWTH FUND, INC.
Six Months Ended June 30, 1996 - - - - 13.00 4.59%(c)
Year Ended December 31, 1995 (.17) - (.09) (.26) 12.43 25.62%
Period Ended December 31, 1994(e) (.08) - - (.08) 10.10 5.42%(c)
PRINCIPAL HIGH YIELD FUND, INC.
Six Months Ended June 30, 1996 - - - - 8.59 2.38%(c)
Year Ended December 31,
1995 (.77) (.02) - (.79) 8.39 16.08%
1994 (.76) - - (.76) 7.91 .62%
1993 (.79) - - (.79) 8.62 12.31%
Six Months Ended December 31, 1992(a) (.90) - - (.90) 8.38 4.06%(c)
Year Ended June 30,
1992 (.93) - - (.93) 8.93 20.70%
1991 (1.14) - - (1.14) 8.28 6.35%
PRINCIPAL MONEY MARKET FUND, INC.
Six Months Ended June 30, 1996 (.024) - - (.024) 1.000 2.47%(c)
Year Ended December 31,
1995 (.054) - - (.054) 1.000 5.59%
1994 (.037) - - (.037) 1.000 3.76%
1993 (.027) - - (.027) 1.000 2.69%
Six Months Ended December 31, 1992(a) (.016) - - (.016) 1.000 1.54%(c)
Year Ended June 30,
1992 (.046) - - (.046) 1.000 4.64%
1991 (.070) - - (.070) 1.000 7.20%
PRINCIPAL WORLD FUND, INC.
Six Months Ended June 30, 1996 (.01) (.04) - (.05) 11.86 11.18%(c)
Year Ended December 31, 1995 (.18) - (.01) (.19) 10.72 14.17%
Period Ended December 31, 1994(e) (.05) (.02) (.01) (.08) 9.56 (3.37)%(c)
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
Selected data for a share of Capital Stock outstanding throughout each period:
Ratios/Supplemental Data
-----------------------------------------------------------------
Ratio of Net
Ratio of Investment
Net Assets at Expenses to Income to Portfolio Averge
End of Period Average Average Turnover Commission
(in thousands) Net Assets Net Assets Rate Rate
-------------- ----------- ------------ --------- ----------
PRINCIPAL GOVERNMENT SECURITIES FUND, INC.
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1996 $78,147 .53%(b) 6.53%(b) 5.0%(b) N/A
Year Ended December 31,
1995 50,079 .55% 6.73% 9.8% N/A
1994 36,121 .56% 7.05% 23.2% N/A
1993 36,659 .55% 7.07% 20.4% N/A
Six Months Ended December 31, 1992(a) 31,760 .59%(b) 7.35%(b) 34.5%(b) N/A
Year Ended June 30,
1992 33,022 .58% 7.84% 38.9% N/A
1991 26,021 .59% 8.31% 4.2% N/A
PRINCIPAL GROWTH FUND, INC.
Six Months Ended June 30, 1996 74,095 .53%(b) 1.86%(b) 5.5%(b) $.0416
Year Ended December 31, 1995 42,708 .58% 2.08% 6.9% N/A
Period Ended December 31, 1994(e) 13,086 .75%(b) 2.39%(b) 0.9%(b) N/A
PRINCIPAL HIGH YIELD FUND, INC.
Six Months Ended June 30, 1996 12,349 .71%(b) 9.55%(b) 37.0%(b) N/A
Year Ended December 31,
1995 11,830 .73% 9.09% 35.1% N/A
1994 9,697 .73% 9.02% 30.6% N/A
1993 9,576 .74% 8.80% 28.7% N/A
Six Months Ended December 31, 1992(a) 8,924 .77%(b) 10.33%(b) 20.6%(b) N/A
Year Ended June 30,
1992 8,556 .77% 11.00% 31.3% N/A
1991 7,085 .82% 12.58% 6.4% N/A
PRINCIPAL MONEY MARKET FUND, INC.
Six Months Ended June 30, 1996 48,677 .48%(b) 4.40%(b) N/A N/A
Year Ended December 31,
1995 32,670 .58% 5.32% N/A N/A
1994 29,372 .60% 3.81% N/A N/A
1993 22,753 .60% 2.64% N/A N/A
Six Months Ended December 31, 1992(a) 27,680 .59%(b) 3.10%(b) N/A N/A
Year Ended June 30,
1992 25,194 .57% 4.54% N/A N/A
1991 26,509 .56% 6.94% N/A N/A
PRINCIPAL WORLD FUND, INC.
Six Months Ended June 30, 1996 53,186 .88%(b) 3.52%(b) 13.8%(b) .0150
Year Ended December 31, 1995 30,566 .95% 2.26% 15.6% N/A
Period Ended December 31, 1994(e) 13,746 1.24%(b) 1.31%(b) 14.4%(b) N/A
See accompanying notes.
</TABLE>
<PAGE>
(a) Effective July 1, 1992 the fund changed its fiscal year end from June 30 to
December 31.
(b) Computed on an annualized basis.
(c) Total return amounts have not been annualized.
(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) 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.
