U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _______________
Post-Effective Amendment No. _______________
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
Area Code and Telephone Number:
Principal Investors Fund, Inc. (800) 247-4123
Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)
711 High Street, Des Moines, Iowa 50392
Name and Address of Agent for Service:
With a copy to:
Michael D. Roughton John W. Blouch
Counsel Jones & Blouch L.L.P.
Principal Investors Fund, Inc. 1025 Thomas Jefferson Street, N.W.
711 High Street Suite 405 West
Des Moines, Iowa 50392 Washington, D.C. 20007
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
______________________________________________________
Title of Securities Being Registered:
Advisors Preferred Class, Advisors Select Class, Preferred Class,
Select Class, Institutional Class and Class J Common
Stock,
par value $.01 per share.
______________________________________________________
No filing fee is required because of reliance on Section 24(f) under the
Investment Company Act of 1940, as amended.
It is proposed that this filing will become effective on October 14, 2002,
pursuant to Rule 488.
______________________________________________________
PRINCIPAL INVESTORS FUND, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a) UNDER THE SECURITIES ACT OF 1933
FORM N-14 INFORMATION STATEMENT AND
ITEM NO. PROSPECTUS CAPTION
PART A
Item 1. ......................................
Beginning of Registration Statement and Outside
Front Cover Page of Prospectus .........Cross Reference Sheet; Cover Page
Item 2.......................................
Beginning and Outside Back Cover Page of Prospectus Table of Contents
Item 3.......................................
Fee Table, Synopsis Information and Risk Factors
Summary; Principal Risk Factors
Item 4.......................................Information about the Transaction
The Plan
Item 5.
Information about the Registrant
Incorporation of Documents by
Reference in the Prospectus
Item 6.
Information about the Company Being
Acquired
Incorporation of Documents by
Reference in the Prospectus
Item 7.......................................Voting Information
Introduction and Voting Information
Item 8.......................................
Interest of Certain Persons and Experts Not Applicable
Item 9. ......................................
Additional Information Required for Reoffering
by Persons Deemed to be Underwriters ...Not Applicable
PART B
Item 10......................................Cover Page
Cover Page of Statement of
Additional Information
Item 11......................................Table of Contents
Table of Contents of Statement of
Additional Information
Item 12.
Additional Information about the
Registrant
Statement of Additional Information
of Principal Investors Fund, Inc.
dated May 21, 2002.
Item 14......................................Financial Statements
Financial Statements as noted in
the Statement of Additional
Information
PART C
Item 15......................................Indemnification
Indemnification
Item 16......................................Exhibits Exhibits
Item 17......................................Undertakings Undertakings
October 14, 2002
Dear Shareholder:
The Board of Directors of Principal Investors Fund, Inc. has called a special
meeting of the shareholders of its Technology Fund series for November 20, 2002
to vote on a Plan of Acquisition which provides for the combination of the
Technology Fund with another series of the fund, the LargeCap Growth Fund. If
the Plan is approved by shareholders and implemented, shareholders of the
Technology Fund will cease to own shares of the Technology Fund and will become
the owner of shares of the same class of the LargeCap Growth Fund equal in value
to the shares of the Technology Fund. The Board believes that the proposed
change is in the best interest of each series of the fund and its shareholders.
The Technology Fund and the LargeCap Growth Fund seek long-term growth of
capital. The principal difference between the Technology Fund and the LargeCap
Growth Fund is the investment strategy of each series. The Technology Fund
invests at least 80% of its assets in common stocks and other securities of
technology and telecommunications companies. The LargeCap Growth Fund invests at
least 80% of its assets in common stocks of companies with large market
capitalizations (those with market capitalizations similar to companies in the
Russell 1000 Growth Index). While the LargeCap Growth Fund is not required to
invest in "technology" companies, approximately 20% of its assets are currently
invested in such companies.
It is important that you take time to read the prospectus/information statement.
If you have questions regarding the prospectus/information statement or your
account, please call our shareholder services department toll-free at
1-800-247-4123.
Sincerely,
LOGO
LOGO
/s/Ralph C. Eucher
Ralph C. Eucher
President
Principal Investors Fund, Inc.
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 20, 2002
___________
To the Shareholders:
Notice is hereby given that a special meeting of the shareholders of the
Technology Fund, a series of Principal Investors Fund, Inc., will be held at
2:00 p.m. C.S.T., on November 20, 2002, at the offices of Principal Management
Corporation, 680 8th Street, Des Moines, Iowa 50392-0200. The meeting is being
held to consider and vote on the following matter as well as any other business
that may properly come before the meeting or any adjournment thereof:
1. Approval of a Plan of Acquisition and the transactions
contemplated thereby, pursuant to which the LargeCap Growth Fund,
a series of Principal Investors Fund, Inc., will acquire all the
assets and assume all the liabilities of the Technology Fund and
issue in exchange shares of its Preferred Class, Advisors
Preferred Class, Select Class, Advisors Select Class,
Institutional Class, and Class J common stock, and the Technology
Fund will distribute those shares to its Preferred Class,
Advisors Preferred Class, Select Class, Advisors Select Class,
Institutional Class, and Class J shareholders in redemption of
all its outstanding shares and then dissolve.
You are entitled to notice of and to vote at the meeting, and any adjournment,
if you owned shares of the Technology Fund at the close of business on September
16, 2002, the record date for the meeting.
Please read the attached prospectus/information statement.
LOGO
/s/Arthru S. Filean
For the Board of Directors
Arthur S. Filean
Senior Vice President and Secretary
October 14, 2002
PRINCIPAL INVESTORS FUND, INC.
LARGECAP GROWTH FUND SERIES
TECHNOLOGY FUND SERIES
PROSPECTUS/INFORMATION STATEMENT
This prospectus/information statement is being furnished in connection with a
special meeting of the shareholders of the Technology Fund, a series of
Principal Investors Fund, Inc. ("Investors Fund"), to be held at 2:00 p.m.
C.S.T., on November 20, 2002, at the offices of Principal Management
Corporation, 680 8th Street, Des Moines, Iowa 50392-0200.
At the meeting, shareholders of the Technology Fund will vote on a Plan of
Acquisition ("Plan"). Under the Plan, if approved, the LargeCap Growth Fund,
another series of the Investors Fund, will acquire all the assets and assume all
the liabilities of the Technology Fund and issue in exchange shares of its
Preferred Class, Advisors Preferred Class, Select Class, Advisors Select Class,
Institutional Class, and Class J common stock. The Technology Fund will
immediately redeem all its outstanding Preferred Class, Advisors Preferred
Class, Select Class, Advisors Select Class, Institutional Class, and Class J
shares by distributing the LargeCap Growth Fund shares of the same classes to
its shareholders. As a result, a shareholder of the Technology Fund will have
the same amount invested in the same share class of the LargeCap Growth Fund
that each has invested in those share classes of the Technology Fund at the
effective time. The manager of the Investors Fund, Principal Management
Corporation, has agreed to pay all expenses incurred by the Technology Fund in
connection with the Plan.
The Technology Fund and the LargeCap Growth Fund are each a series of the
Investors Fund, which is a Maryland corporation organized by Principal Life
Insurance Company ("Principal Life") and registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "Investment
Company Act"). The primary investment objective of the Technology Fund and the
LargeCap Growth Fund is to seek long-term growth of capital. The Technology Fund
pursues the investment objective by investing at least 80% of its assets in
common stocks and other securities of technology and telecommunications
companies while the LargeCap Growth Fund invests at least 80% of its assets in
companies with large market capitalizations (those with market capitalizations
similar to companies in the Russell 1000 Growth Index). While the LargeCap
Growth Fund is not required to invest in "technology" companies, approximately
20% of its assets are currently invested in such companies.
This prospectus/information statement sets forth concisely the information you
should know before voting on the proposed Plan. You should retain it for future
reference.
The prospectuses and Statements of Additional Information for the LargeCap
Growth Fund and the Technology Fund dated May 21, 2002 have been filed with the
Securities and Exchange Commission ("SEC") and are available without charge by
writing to the Investors Fund or its manager at their principal executive
offices, 680 8th Street, Des Moines, Iowa 50392-0200 or by telephoning toll-free
1-800-247-4123. The prospectuses of the LargeCap Growth Fund and the Technology
Fund dated May 21, 2002 and the Statement of Additional Information dated
October 14, 2002 relating to this prospectus/information statement are
incorporated herein by reference. As a shareholder of the Technology Fund, you
previously received a current prospectus for the LargeCap Growth Fund in a
prospectus that combines these and other series of the Investors Fund. A copy of
the prospecuts may be obtained as described above.
_____________________
THE SEC HAS NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS/INFORMATION STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_____________________
The date of this prospectus/information
statement is October 14, 2002
PROSPECTUS/INFORMATION STATEMENT
TABLE OF CONTENTS
INTRODUCTION AND VOTING INFORMATION................................... 5
Special Meeting; Voting............................................. 5
Additional Information.............................................. 5
SUMMARY .............................................................. 7
The Plan............................................................ 7
Reasons for the Plan................................................ 7
Investment Objectives and Policies.................................. 8
Fees and Expenses of the Series..................................... 9
Purchases........................................................... 13
Exchanges........................................................... 13
Redemption Procedures and Fees...................................... 13
Dividends and Distributions......................................... 13
Federal Income Tax Consequences of the Proposed Combination......... 14
Costs and Expenses.................................................. 14
Continuation of Shareholder Accounts................................ 14
PRINCIPAL RISK FACTORS................................................ 14
THE PLAN.............................................................. 14
Plan of Acquisition................................................. 14
Description of Securities to Be Issued.............................. 15
Reasons for the Proposed Combination................................ 15
Federal Income Tax Consequences..................................... 16
Capitalization...................................................... 16
MANAGEMENT'S DISCUSSION OF SERIES PERFORMANCE......................... 17
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS........ 18
ADDITIONAL INFORMATION ABOUT THE SERIES............................... 21
PROPOSALS OF SHAREHOLDERS............................................. 22
OTHER BUSINESS........................................................ 22
APPENDIX A: FORM OF PLAN OF ACQUISITION ............................... 23
INTRODUCTION AND VOTING INFORMATION
SPECIAL MEETING; VOTING
- -----------------------
We are furnishing this prospectus/information statement to you as a shareholder
of the Technology Fund which is a series of Principal Investors Fund, Inc., in
connection with a special meeting of the shareholders of the Technology Fund to
be held on November 20, 2002. The purpose of the meeting is to vote on a Plan of
Acquisition for the Technology Fund. A copy of the Plan of Acquisition is
included as Appendix A. The Plan provides for the combination of the Technology
Fund with the LargeCap Growth Fund, which is also a series of Principal
Investors Fund, Inc., as more fully described below. The prospectus/information
statement is first being furnished to shareholders on or about October 14, 2002.
THE BOARD OF DIRECTORS OF THE INVESTORS FUND HAS APPROVED THE PLAN AND
RECOMMENDS THAT THE SHAREHOLDERS OF THE TECHNOLOGY FUND VOTE FOR THE PLAN AND
THE TRANSACTIONS WHICH IT CONTEMPLATES.
Shareholders of record of the Technology Fund at the close of business on
September 16, 2002, the record date, are entitled to vote at the meeting. As of
the record date, the Technology Fund had the following shares outstanding and
entitled to be voted.
OUTSTANDING
TECHNOLOGY FUND
SHARE CLASS SHARES
----------- ---------------
Advisors Preferred
Advisors Select
Preferred
Select
Institutional
Class J
Shareholders of the Technology Fund are entitled to one vote for each share of
each Class held at their respective meeting. A quorum for the Technology Fund
must be present at the meeting for the transaction of business. The holders of
record of one-third of the shares outstanding at the close of business on the
record date present at the meeting will constitute a quorum for the meeting. The
approval of the Plan by the Technology Fund requires the affirmative vote of a
majority of all the votes entitled to be cast by shareholders of the Technology
Fund. Abstentions and broker non-votes (votes from brokers or nominees
indicating that they have not received instructions from the beneficial owners
on an item for which the broker or nominee does not have discretionary power)
are counted toward a quorum but do not represent votes cast for the Plan or any
other issue. If the shareholders of the Technology Fund do not approve the Plan,
the Board will consider possible alternative arrangements, and Principal
Management Corporation will continue to manage the Technology Fund.
Proxies of the shareholders of the Technology Fund are not being solicited
because Principal Life Insurance Company owned a majority of the outstanding
shares of the Technology Fund as of the record date, and is expected to be
present at the meeting and to vote in favor of the proposal to approve the Plan.
ADDITIONAL INFORMATION
- ----------------------
On September 16, 2002, the directors and officers of the Investors Fund together
owned less than 1% of each of the Technology Fund's outstanding shares.
Principal Life, Des Moines, Iowa, 50392-0200, an Iowa life insurance company and
the parent of the manager of the Technology Fund, owned of record and
beneficially, either directly or through subsidiaries, _____% of the outstanding
shares of the LargeCap Growth Fund. The table below shows the percentage of the
outstanding shares of each Class of the Technology Fund owned by Principal Life
on September 16, 2002 and based on those holdings, its percentage of ownership
at the effective time:
PRINCIPAL LIFE'S PRINCIPAL LIFE'S
TECHNOLOGY FUND LARGECAP GROWTH FUND
PERCENTAGE OWNERSHIP PERCENTAGE OWNERSHIP
SHARE CLASS ON SEPTEMBER 16, 2002 AT THE EFFECTIVE TIME
----------- --------------------- -----------------------
Advisors Preferred
Advisors Select
Preferred
Select
Institutional
Class J
The ultimate parent of Principal Life is Principal Financial Group, Inc. The
Investors Fund does not know of any other person who owned at the record date,
or will own at the effective time, of record or beneficially 5% or more of the
outstanding shares of any of the Series.
SUMMARY
The following is a summary of certain information contained or incorporated by
reference in this prospectus/information statement. It is qualified in its
entirety by the more detailed information appearing elsewhere or incorporated by
reference in this prospectus/information statement.
THE PLAN
- --------
You are being asked to approve the Plan, which provides for the combination of
the Technology Fund with the LargeCap Growth Fund. The Technology Fund and
LargeCap Growth Fund are each a series of Principal Investors Fund, Inc.
("Investors Fund"). Under the Plan, at the effective time on the closing date,
the LargeCap Growth Fund will acquire all the assets and assume all the
liabilities of the Technology Fund and issue to the Technology Fund shares of
its Preferred Class, Advisors Preferred Class, Select Class, Advisors Select
Class, Institutional Class and Class J common stock having a value equal to the
net assets acquired attributable to each share class. Immediately thereafter,
the Technology Fund will distribute all the LargeCap Growth Fund shares it
receives to its shareholders who own the same class of the Technology Fund and
thereby redeem all its outstanding shares. Each Technology Fund shareholder will
receive LargeCap Growth Fund shares equal in value to the shares of the same
class of the Technology Fund held by the shareholder at the effective time. If
the Plan is approved, the effective time will be 3:00 p.m. C.S.T. on December 6,
2002, or such earlier or later date as management of the Investors Fund
determines.
REASONS FOR THE PLAN
- --------------------
The catalyst for the Plan is the Principal Financial Group's recent announcement
that it has reached a definitive agreement to sell significant portions of BT
Financial Group businesses, including, the sub-advisor operations for the
Technology Fund. As a result of this sale, Principal Capital Global Investors
Limited ("PCGIL") will not provide investment advisory services to the
Technology Fund after October 31, 2002. The Manager will continue to provide
investment advisory services to the Technology Fund after October 31, 2002
through the effective time. The Technology Fund has relatively small amounts of
assets and have experienced limited sales of shares. The likelihood that the
Technology Fund will achieve significant asset levels in the foreseeable future
is low. The Board for the Technology Fund considered these and other factors,
and determined that the proposed Plan would be in the best interests of the
Technology Fund and its shareholders, that the terms of each Plan are fair and
reasonable and that the interests of the shareholders of the Technology Fund
will not be diluted as a result of the transactions contemplated by the Plan.
The Board believes that the Plan will provide shareholders of the Technology
Fund with an investment in a larger growth-oriented, fund that has a significant
portion of its assets invested in "technology" companies and that has a more
favorable expense ratio than the Technology Fund. The table below reflects the
investment performance of the Technology Fund and the LargeCap Growth Fund for
the periods ended August 31, 2002.
TOTAL RETURN WITH MAXIMUM SALES CHARGE*
----------------------------------------------------------------------------------------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT SELECT
SERIES CLASS CLASS CLASS CLASS
------ ---------------------------------------- ----------------- -------------------- ---------
SINCE SINCE SINCE
1-YR. INCEPTION** 1-YR. INCEPTION** 1-YR. INCEPTION** 1-YR.
----- ----------- ----- ----------- ----- ----------- -----
LargeCap Growth Fund -20.61% -30.40% -20.79% -30.56% -20.61% -30.40% -20.94%
Technology Fund -35.56% -44.12% -35.80% -44.29% -35.74% -44.20% -36.04%
SERIES
------
SINCE
INCEPTION**
-----------
LargeCap Growth Fund -30.63%
Technology Fund -44.47%
TOTAL RETURN WITH MAXIMUM SALES CHARGE*
-------------------------------------------
INSTITUTIONAL
SERIES CLASS
------ -------------------------------------------
1-YR.
-----
LargeCap Growth Fund -20.43%
Technology Fund -35.39%
*No front-end or back-end sales charge applies to any of the share classes, except Class J shares. A contingent deferred sales
charge of 1.00% is charged on redemptions of Class J shares within 18 months of their purchase.
**Inception Date of December 6, 2000.
***Inception Date of March 1, 2001.
SERIES CLASS J
------ -------------------
SINCE 1-YR. SINCE
INCEPTION ----- INCEPTION***
--------- ------------
LargeCap Growth Fund -23.47%*** -21.94% -24.67%
Technology Fund -43.91%** -36.77% -38.98%
*No front-end or back-end sales charge applies to any of the share classes, except Class J shares. A contingent deferred sales
charge of 1.00% is charged on redemptions of Class J shares within 18 months of their purchase.
**Inception Date of December 6, 2000.
***Inception Date of March 1, 2001.
INVESTMENT OBJECTIVES AND POLICIES
- ----------------------------------
The primary investment objective of the LargeCap Growth Fund and the Technology
Fund is to seek long-term growth of capital. The Technology Fund invests at
least 80% of its assets in technology and telecommunication companies. The
LargeCap Growth Fund invests at least 80% of its assets in companies with large
market capitalizations (companies with market capitalizations similar to
companies included in the Russell 1000 Growth Index). The LargeCap Growth Fund
currently has approximately 20% of its assets invested in "technology"
companies. Thus, while the risks of investing in stock funds in general are
similar for each series, each has different risks due to the extent to which
each is diversified.
INVESTMENT ADVISORY SERVICES
- ----------------------------
Principal Management Corporation ("the Manager") serves as investment advisor to
the Investors Fund. The Manager has entered into a sub-advisory agreement with
Invista Capital Management, LLC ("Invista") to provide investment advisory
services to the LargeCap Growth Fund. Invista is an indirect wholly-owned
subsidiary of Principal Life and an affiliate of the Manager. The Manager has
entered into a sub-advisory agreement with Principal Capital Global Investors,
LLC ("PCGIL") to provide investment advisory services to the Technology Fund.
PCGIL is also an affiliate of the Manager.
The Manager pays Invista a smaller percentage of the fee it receives from the
LargeCap Growth Fund compared to the percentage it pays to PCGIL from fees it
receives from the Technology Fund. The Manager also currently waives a portion
of the management fee, or pays expenses of, the Class J shares of each of the
series. If the Plan is approved, the combined assets of the series will continue
to be sub-advised by a sub-advisor affiliated with the Manager, the Manager will
retain a larger portion of the advisory fees it will receive with respect to the
assets formerly owned by the Technology Fund, and the overall amount of the
management fee waiver or expense reimbursement for Class J shares by the Manager
will be reduced.
FEES AND EXPENSES OF THE SERIES
- -------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of any of the series.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT SELECT INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS J
--------- --------- ------ -------- ------------- ------------
Maximum sales charge imposed on purchases
(as a % of offering price) None None None None None None
Maximum Contingent Deferred Sales Charge
("CDSC") (as a % of dollars subject to
charge) None None None None None 1.00/(1)/
Redemption or Exchange Fee None None None None None 1.00/(2)/
// // / / /
///(1)/A contingent deferred sales charge of 1% applies on certain redemptions of shares made within 18 months after they are
purchased.//
///(2)/
Redemption fees or exchange fees are charged on redemptions or exchanges of $50,000 or more of shares redeemed within 30 days
after they are purchased.
ONE-TIME FEES
. Class J shares have no initial sales charge but may be subject to a
CDSC. If you sell (redeem) shares and the CDSC is imposed, it will
reduce the amount of sales proceeds.
. A redemption fee or exchange fee of 1.00% is charged on redemptions or
exchanges of Class J shares of $50,000 or more if the shares were
purchased within 30 days of the redemption or exchange. The fee is
calculated as a percentage of market value at the time the shares are
redeemed or exchanged.
The operating expenses attributable to each share class of the series (as a
percentage of the average daily net assets) for the fiscal year ended October
31, 2001 were as follows:
TECHNOLOGY FUND
---------------------------------------------------------------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT INSTITUTIONAL
FUND OPERATING EXPENSES CLASS CLASS SELECT CLASS CLASS CLASS CLASS J*
----------------------- --------- --------- ------------ -------- ------------- --------
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees 0.00 0.31 0.00 0.37 0.00 0.50
Other Expenses 0.26 0.26 0.38 0.38 0.00 8.73
---- ---- ---- ---- ---- -----
Total Operating Expenses 1.26% 1.57% 1.38% 1.75% 1.00% 10.23%
LARGECAP GROWTH FUND
--------------------------------------------------------------------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT
FUND OPERATING EXPENSES CLASS CLASS SELECT CLASS CLASS
----------------------- --------- --------- ------------ --------
Management Fees 0.55% 0.55% 0.55% 0.55%
12b-1 Fees 0.00 0.31 0.00 0.37
Other Expenses 0.26 0.26 0.38 0.38
--------- --------- ---- ----
Total Operating Expenses % % 0.93% 1.30%
*The Manager has voluntarily agreed to waive a portion of its fee for the Class J shares of the LargeCap Growth Fund and the
Technology Fund. The Manager intends to continue the waiver and, if necessary, pay expenses normally payable by Class J shares of
the LargeCap Growth Fund and the Technology Fund through the period ending February 28, 2003. The effect of the waiver is to
reduce each series Class J share annual operating expenses. The waiver will maintain a total level of operating expenses for Class
J shares of the LargeCap Growth Fund and the Technology Fund (expressed as a percent of average net assets attributable to Class J
shares on an annualized basis) not to exceed:
. 1.95% for the Technology Fund through October 31, 2002 and 2.50% thereafter through February 28, 2003.
. 1.50% for the LargeCap Growth Fund through October 31, 2002 and 1.60% thereafter through February 28, 2003.
INSTITUTIONAL
FUND OPERATING EXPENSES CLASS CLASS J*
----------------------- ------------- --------
Management Fees 0.55% 0.55%
12b-1 Fees 0.00 0.50
Other Expenses 0.00 7.23
---- ----
Total Operating Expenses 0.55% 8.28%
*The Manager has voluntarily agreed to waive a portion of its fee for the Class J shares of the LargeCap Growth Fund and the
Technology Fund. The Manager intends to continue the waiver and, if necessary, pay expenses normally payable by Class J shares of
the LargeCap Growth Fund and the Technology Fund through the period ending February 28, 2003. The effect of the waiver is to
reduce each series Class J share annual operating expenses. The waiver will maintain a total level of operating expenses for Class
J shares of the LargeCap Growth Fund and the Technology Fund (expressed as a percent of average net assets attributable to Class J
shares on an annualized basis) not to exceed:
. 1.95% for the Technology Fund through October 31, 2002 and 2.50% thereafter through February 28, 2003.
. 1.50% for the LargeCap Growth Fund through October 31, 2002 and 1.60% thereafter through February 28, 2003.
The LargeCap Growth Fund's expenses, assuming implementation of the Plan on
August 31, 2002, as a percentage of average daily net assets are as follows:
LARGECAP GROWTH FUND
------------------------------------------------------------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT SELECT
FUND OPERATING EXPENSES CLASS CLASS CLASS* CLASS
----------------------- --------- --------- ------ --------
Management Fees 0.55% 0.55% 0.55% 0.55%
12b-1 Fees 0.00 0.25 0.10 0.30
Other Expenses 0.26 0.32 0.28 0.45
---- ---- ---- ----
Total Operating Expenses 0.81% 1.12% 0.93% 1.30%
*A Distribution Plan and Agreement was adopted by the Investors Fund pursuant to Rule 12b-1 for the Select Class shares effective
June 10, 2001.
**The Manager has voluntarily agreed to waive a portion of its fee for the Class J shares of the LargeCap Growth Fund. The Manager
intends to continue the waiver and, if necessary, pay expenses normally payable by Class J shares of the LargeCap Growth Fund
through the period ending February 28, 2003. The effect of the waiver is to reduce the LargeCap Growth Fund's Class J shares
annual operating expenses. The waiver will maintain a total level of operating expenses for Class J shares of the LargeCap Growth
Fund (expressed as a percent of average net assets attributable to Class J shares on an annualized basis) not to exceed 1.50%
through October 31, 2002 and 1.60% thereafter through February 28, 2003.
INSTITUTIONAL
FUND OPERATING EXPENSES CLASS CLASS J**
----------------------- ------------- ---------
Management Fees 0.55% 0.55%
12b-1 Fees 0.00 0.50
Other Expenses 0.00 7.23
---- ----
Total Operating Expenses 0.55% 8.28%
*A Distribution Plan and Agreement was adopted by the Investors Fund pursuant to Rule 12b-1 for the Select Class shares effective
June 10, 2001.
**The Manager has voluntarily agreed to waive a portion of its fee for the Class J shares of the LargeCap Growth Fund. The Manager
intends to continue the waiver and, if necessary, pay expenses normally payable by Class J shares of the LargeCap Growth Fund
through the period ending February 28, 2003. The effect of the waiver is to reduce the LargeCap Growth Fund's Class J shares
annual operating expenses. The waiver will maintain a total level of operating expenses for Class J shares of the LargeCap Growth
Fund (expressed as a percent of average net assets attributable to Class J shares on an annualized basis) not to exceed 1.50%
through October 31, 2002 and 1.60% thereafter through February 28, 2003.
The following is an example of the effect of the operating expenses of the
series as of October 31, 2001. The examples assume (1) a 5% annual return, and
(2) the series' operating expenses remain the same. Although your actual costs
may be higher or lower, you would pay the following expenses on a $10,000
investment in shares of the series, based upon these assumptions:
NUMBER OF YEARS YOU OWN YOUR PREFERRED CLASS SHARES
----------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ------------ ------------ ---------------
LargeCap Growth Fund $ 83 $259 $450 $1,002
Technology Fund 128 400 692 1,523
NUMBER OF YEARS YOU OWN YOUR ADVISORS PREFERRED CLASS SHARES
-------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------- -------------- -------------- -----------------
LargeCap Growth Fund $114 $356 $617 $1,363
Technology Fund 160 496 855 1,867
NUMBER OF YEARS YOU OWN YOUR SELECT CLASS SHARES
-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- --------------
LargeCap Growth Fund $ 95 $296 $515 $1,143
Technology Fund 140 437 755 1,657
NUMBER OF YEARS YOU OWN YOUR ADVISORS SELECT CLASS SHARES
----------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------ ------------- ------------- ----------------
LargeCap Growth Fund $132 $412 $713 $1,568
Technology Fund 178 551 949 2,062
NUMBER OF YEARS YOU OWN YOUR INSTITUTIONAL CLASS SHARES
--------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------ ------------- ------------- ----------------
LargeCap Growth Fund $ 56 $176 $307 $ 689
Technology Fund 102 318 552 1,225
IF YOU SELL YOUR CLASS J SHARES
--------------------------------------------
NUMBER OF YEARS YOU OWN YOUR CLASS J SHARES
--------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- --------------
LargeCap Growth Fund $253 $465 $ 803 $1,757
Technology Fund 297 600 1,032 2,233
IF YOU DO NOT SELL YOUR CLASS J SHARES
--------------------------------------------
NUMBER OF YEARS YOU OWN YOUR CLASS J SHARES
--------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- --------------
LargeCap Growth Fund $150 $465 $803 $1,757
Technology Fund 194 600 1,032 2,233
The following is an example of the effect of the operating expenses of the
LargeCap Growth Fund, assuming implementation of the Plan on August 31, 2002.
The examples assume (1) a 5% annual return, and (2) the series' operating
expenses remain the same. Although your actual costs may be higher or lower, you
would pay the following expenses on a $10,000 investment in shares of the
LargeCap Growth Fund, based upon these assumptions:
NUMBER OF YEARS YOU OWN YOUR PREFERRED CLASS SHARES
----------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ------------ ------------ ---------------
LargeCap Growth Fund $83 $259 $450 $1,002
NUMBER OF YEARS YOU OWN YOUR ADVISORS PREFERRED CLASS SHARES
-------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------- -------------- -------------- -----------------
LargeCap Growth Fund $114 $356 $617 $1,363
NUMBER OF YEARS YOU OWN YOUR SELECT CLASS SHARES
-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- --------------
LargeCap Growth Fund $95 $296 $515 $1,143
NUMBER OF YEARS YOU OWN YOUR ADVISORS SELECT CLASS SHARES
----------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------ ------------- ------------- ----------------
LargeCap Growth Fund $132 $412 $713 $1,568
NUMBER OF YEARS YOU OWN YOUR INSTITUTIONAL CLASS SHARES
--------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------ ------------- ------------- ----------------
LargeCap Growth Fund $56 $176 $307 $689
IF YOU SELL YOUR CLASS J SHARES
--------------------------------------------
NUMBER OF YEARS YOU OWN YOUR CLASS J SHARES
--------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- --------------
LargeCap Growth Fund $256 $474 $818 $1,791
IF YOU DO NOT SELL YOUR CLASS J SHARES
--------------------------------------------
NUMBER OF YEARS YOU OWN YOUR CLASS J SHARES
--------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- --------------
LargeCap Growth Fund $154 $474 $818 $1,791
PURCHASES
- ---------
Shares of the LargeCap Growth Fund and the Technology Fund are offered for sale
through Princor Financial Services Corporation ("Princor"), a broker-dealer that
is also the principal underwriter for the Investors Fund, or other dealers which
it selects.
ONGOING FEES
- ------------
The LargeCap Growth Fund and the Technology Fund pay ongoing fees to the
Manager, and for some of the share classes, Princor and others who provide
services to the fund. They reduce the value of each share you own.
DISTRIBUTION (12B-1) FEES
- -------------------------
The Investors Fund has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act of 1940 for its Advisors Preferred, Advisors Select,
Select and Class J shares for the LargeCap Growth Fund and the Technology Fund.
Under each Distribution Plan, each series pays a fee to Princor based on the
average daily net asset values attributable to these share classes. These
ongoing fees pay expenses relating to distribution fees for sales of shares of
the share classes and for services provided by Princor and other selling dealers
to shareholders. Because they are ongoing fees, over time they may exceed other
types of sales charges.
. Advisors Preferred Class shares .0.25%
. Advisors Select Class Shares....0.30%
. Select Class Shares.............0.10%
. Class J shares ..................0.50%
EXCHANGES
- ---------
Shares of the LargeCap Growth Fund and the Technology Fund may be exchanged,
without payment of a sales charge or CDSC, for shares of the same class of other
series of the Investors Fund. If Class J shares are exchanged for Class J shares
of another series, the shares acquired will be subject to the applicable CDSC
imposed by the new series; however, the holding period of the Class J shares
exchanged is added to the holding period of the Class J shares acquired for
purposes of determining the applicable charge.
REDEMPTION PROCEDURES AND FEES
- ------------------------------
Shares of the LargeCap Growth Fund and the Technology Fund may be redeemed at a
price equal to the net asset value of the shares next computed following the
receipt of a request for redemption in proper form.
The amount you receive will be reduced by any applicable CDSC or redemption fee
for Class J shares. Generally, the sale proceeds are sent out on the next
business day after the sell order has been placed.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
The LargeCap Growth Fund and the Technology Fund each pay its net investment
income on an annual basis. Payments are made to shareholders of record on the
business day prior to the payment date. The payment date is December 19th (or
previous business day).
Net realized capital gains, if any, are distributed annually. Generally the
distribution is made on the second business day of December. Payments are made
to shareholders of record on the business day prior to the payable date. Capital
gains may be taxable at different rates, depending on the length of time that
the fund holds its assets.
Immediately prior to the reorganization, the LargeCap Growth Fund and the
Technology Fund will pay a dividend or dividends which, together with all
previous dividends, will have the effect of distributing to their respective
shareholders all of their investment company taxable income for taxable years
ending on or prior to the reorganization (computed without regard to any
deduction for dividends paid) and all of its net capital gains, if any, realized
in taxable years ending on or prior to the reorganization (after reduction for
any available capital loss carry forward). Such dividends will be included in
the taxable income of each series' respective shareholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED COMBINATION
- -----------------------------------------------------------
The combination will be a tax-free "reorganization" under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). In the opinion of tax
counsel to the Investors Fund, no gain or loss will be recognized by a series or
its shareholders in connection with the combination, and the tax cost basis of
the LargeCap Growth Fund shares received by shareholders of the Technology Fund
will equal the tax cost basis of their shares in the Technology Fund and their
holding period of the LargeCap Growth Fund shares will include the time during
which the shareholders held the Technology Fund shares.
COSTS AND EXPENSES
- ------------------
Principal Management Corporation will bear all out-of-pocket fees and expenses
incurred by the series in connection with the transactions contemplated by the
Plan.
CONTINUATION OF SHAREHOLDER ACCOUNTS
- ------------------------------------
At the effective time of the Plan, you will cease to be a shareholder of the
Technology Fund and will become a shareholder of the LargeCap Growth Fund owning
the same class of shares of the LargeCap Growth Fund having the same value as
the investment you had in the Technology Fund at the effective time.
PRINCIPAL RISK FACTORS
The primary investment objective of the LargeCap Growth Fund and the Technology
Fund is to seek long-term growth of capital. Each series invests primarily in
equity securities, but the Technology Fund invests at least 80% of its assets in
technology and telecommunications companies; the LargeCap Growth Fund invests at
least 80% of its assets in companies with large market capitalizations
(companies with market capitalizations similar to those of companies included in
the Russell 1000 Growth Index). The LargeCap Growth Fund is not required to
invest in "technology" companies, but approximately 20% of its assets are
currently invested in such companies. Thus, while the risks of investing in
stock funds in general are similar for each, they have different risks due to
the extent to which each is diversified. As with all mutual funds, as the values
of the assets of each series rise or fall, the share prices change for each. If
you sell your shares when their value is less than the price you paid, you will
lose money.
MAIN RISKS
Because it purchases equity securities, each series is subject to the risk that
prices of securities it owns will fall over short or extended periods of time.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. In response, the price of
securities issued by such companies may decline. These factors contribute to
price volatility. In addition, foreign stocks carry risks that are not generally
found in stocks of U.S. companies. These include the risk that a foreign
security could lose value as a result of political, financial and economic
events in foreign countries. In addition, foreign securities may be subject to
securities regulators with less stringent accounting and disclosure standards
than are required of U.S. companies.
In addition, the LargeCap Growth Fund is subject to the risk that its principal
market segment, large capitalization growth stocks, may under-perform compared
to other market segments or to the equity markets as a whole. The securities
purchased by the LargeCap Growth Fund present greater opportunities for growth
because of high potential earnings growth, but may also involve greater risks
than securities that do not have the same potential.
The Technology Fund may invest in securities of companies with small to medium
market capitalizations. While small companies may offer greater opportunities
for capital growth than larger, more established companies, they also involve
greater risk and should be considered speculative. Small to mid-sized companies
may pose greater risk due to narrow product lines, limited financial resources,
less depth in management or a limited trading market for their securities.
Historically, these securities have fluctuated in price more than larger company
securities, especially over the short-term.
The Technology Fund is also subject to the risk that its principal market
segment, technology stocks, may under-perform compared to other market segments
or to the equity markets as a whole. The competitive pressures of advancing
technology and the number of companies and product offerings which continue to
expand could cause technology companies to become increasingly sensitive to
short product cycles and aggressive pricing. To the extent that the Technology
Fund's investments are concentrated in issuers conducting business in the same
industry, the
Technology Fund is subject to legislative or regulatory changes, adverse market
conditions and/or increased competition affecting that industry.
THE PLAN
PLAN OF ACQUISITION
- -------------------
The terms of the Plan are summarized below. The summary is qualified in its
entirety by reference to the Plan, a copy of which is attached as Appendix A.
Under the Plan, the LargeCap Growth Fund will acquire all the assets and assume
all the liabilities of the Technology Fund and will issue to the Technology Fund
the number of shares of Common Stock of each share class of the LargeCap Growth
Fund that has a net asset value equal to the net asset value attributable to
each share class of the Technology Fund. We expect that the closing date will
be December 6, 2002, assuming shareholder approval of the Plan, and that the
effective time will be the close of regular trading on the NYSE at 4:00 P.M.,
Eastern Standard Time, on that date. The series will determine their net asset
values as of the effective time using the procedures described in the Investors
Fund's prospectus (the procedures applicable to the LargeCap Growth Fund and the
Technology Fund are indentical). The LargeCap Growth Fund will issue to the
Technology Fund a number of shares of each share class equal to the value of the
net assets of the Technology Fund shares of each share class outstanding at the
effective time. The Technology Fund will be managed such that at the effective
time it will hold only cash or other securities that are eligible investments
for the LargeCap Growth Fund.
Immediately after the effective time, the Technology Fund will distribute to you
its LargeCap Growth Fund shares of the same class as the shares you own of the
Technology Fund in exchange for all your Technology Fund shares of that class.
The Technology Fund shareholder will receive shares of the LargeCap Growth Fund
that are equal in value to the shares of the class of the Technology Fund that
are given up by the shareholder in the exchange. In connection with the
exchange, the LargeCap Growth Fund will credit on its books an appropriate
number of its shares to the account of the Technology Fund shareholder, and the
Technology Fund will cancel on its books all its shares registered to the
account of that shareholder. Any outstanding certificate for Technology Fund
shares that is not surrendered will be deemed to represent the number of
LargeCap Growth Fund shares for which the Technology shares have been exchanged.
After the effective time, the Technology Fund will dissolve in accordance with
applicable law.
The consummation of the transactions contemplated by the Plan for the Technology
Fund is subject to the approval of the Plan by its shareholders. The Plan may be
amended, but no amendment may be made to the Plan which in the opinion of the
Board of Directors would materially adversely affect the interests of the
shareholders of the Technology Fund after its shareholders have approved the
Plan. The Board of Directors may terminate the Plan at any time before the
effective time if it believes that consummation of the transactions contemplated
by the Plan would not be in the best interests of the shareholders.
The Manager will pay all fees and out-of-pocket expenses incurred by the series
in connection with the transactions contemplated by the Plan.
DESCRIPTION OF SECURITIES TO BE ISSUED
- --------------------------------------
The share classes of the LargeCap Growth Fund are shares of common stock, par
value $.01 per share. They have the same rights with respect to the LargeCap
Growth Fund as the share classes of the Technology Fund have with respect to the
Technology Fund. Each share is entitled to one vote and has equal rights with
every other share as to dividends, earnings, voting, assets and redemption.
There is no cumulative voting for directors. Shares are fully paid and
non-assessable, have no preemptive or conversion rights and are freely
transferable. Each fractional share has proportionately the same rights as are
provided for a full share. As of September 16, 2002, the LargeCap Growth Fund
had the following number of shares of each class outstanding:
NUMBER OF OUTSTANDING
CLASS SHARES
----- ---------------------
Preferred
Advisors Preferred
Select
Advisors Select
Institutional
Class J
REASONS FOR THE PROPOSED COMBINATION
- ------------------------------------
The catalyst for the Plan is the Principal Financial Group's recent announcement
that it has reached a definitive agreement to sell significant portions of BT
Financial Group businesses. As a result of this sale, PCGIL will not provide
investment advisory services to the Technology Fund after October 31, 2002. The
Manager will continue to provide investment advisory services to the Technology
Fund after October 31, 2002 through the effective time. The Technology Fund has
a relatively small amount of assets and has experienced limited sales of shares.
The likelihood that the Technology Fund will achieve significant asset levels in
the foreseeable future is low. The Board of Directors considered these and other
factors, and determined that the proposed Plan would be in the best interests of
the Technology Fund and its shareholders, that the terms of the Plan are fair
and reasonable and that the interests of the shareholders of the Technology Fund
will not be diluted as a result of the transactions contemplated by the Plan.
The Plan has been approved by the Board of Directors of the Investors Fund,
including all of the directors who are not "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act. In approving the Plan, the Board
considered the following factors, among others: (1) possible alternatives to the
Plan; (2) the terms and conditions of the Plan and whether its implementation
would result in dilution of shareholder interests or involve overreaching by any
person concerned; (3) the advantages to the Technology Fund's shareholders of
investing in a larger asset pool with greater diversification; (4) any direct or
indirect fees or expenses incurred by the series as a result of the Plan; (5)
expense ratios and available information regarding the fees and expenses of the
series, including any change in fees or expenses to be paid or borne by
shareholders of the Technology Fund (direct or indirectly) as a result of the
Plan; (6) comparative investment performances of the series; (7) the direct or
indirect federal income tax consequences of the Plan to shareholders of the
Technology Fund; (8) the continuity of or changes in services to be provided to
shareholders following implementation of the Plan; and (9) the compatibility of
the investment objectives and policies of the series and changes with respect to
the investment objectives and policies of the Technology Fund that will result
from the Plan.
FEDERAL INCOME TAX CONSEQUENCES
- -------------------------------
To be considered a tax-free "reorganization" under Section 368 of the Code, a
reorganization must exhibit a continuity of business enterprise. Because the
LargeCap Growth Fund will use a portion of the Technology Fund's assets in its
business and will continue the Technology Fund's historic business, the
combination of the Technology Fund with the LargeCap Growth Fund will exhibit a
continuity of business enterprise. Therefore, the combination will be considered
a tax-free "reorganization," under applicable provisions of the Code. In the
opinion of tax counsel to the Investors Fund, no gain or loss will be recognized
by any of the series or its shareholders in connection with the combination, the
tax cost basis of the LargeCap Growth Fund shares received by shareholders of
the Technology Fund will equal the tax cost basis of their shares in the
Technology Fund, and their holding periods for the LargeCap Growth Fund shares
will include their holding periods for the Technology Fund shares.
As of October 31, 2001, the Technology Fund had accumulated capital loss
carryforwards in the amount of approximately $1,608,000. After the
reorganization, these losses will be available to the LargeCap Growth Fund to
offset its capital gains, although the amount of offsetting losses available in
any given year may be limited. As a result of this limitation, it is possible
that the LargeCap Growth Fund may not be able to use these losses as rapidly as
the Technology Fund might have, and part of these losses may not be useable at
all. The ability of the LargeCap Growth Fund to absorb losses in the future
depends upon a variety of factors that cannot be known in advance, including the
existence of capital gains against which these losses may be offset. In
addition, the benefits of any capital loss carryfowards currently are available
only to shareholders of the Technology Fund. After the reorganization, however,
these benefits will inure to the benefit of all shareholders of the LargeCap
Growth Fund.
The foregoing is only a summary of the principal federal income tax consequences
of the combination and should not be considered to be tax advice. There can be
no assurance that the Internal Revenue Service will concur on all or any of the
issues discussed above. You may wish to consult with your own tax advisers
regarding the federal, state, and local tax consequences with respect to the
foregoing matters and any other considerations which may apply in your
particular circumstances.
CAPITALIZATION
- --------------
The following table shows the capitalization of the Technology Fund and the
LargeCap Growth Fund separately, as of August 31, 2002, and combined in the
aggregate (unaudited), as of that date, giving effect to the Plan:
TECHNOLOGY FUND
-----------------------------------------------------------------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT INSTITUTIONAL
CLASS CLASS CLASS SELECT CLASS CLASS CLASS J
--------- --------- -------- ------------ ------------- -------
Net Assets $364,197 $885,491 $500,557 $365,280 $4,613,170 $1,859,768
Net Asset Value Per Share $ 3.64 $ 3.66 $ 3.62 $ 3.65 $ 3.68 $ 3.57
Shares Outstanding 100,116 242,256 138,177 100,116 1,253,998 520,539
LARGECAP GROWTH FUND
----------------------------------------------------------------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT INSTITUTIONAL
CLASS CLASS CLASS SELECT CLASS CLASS CLASS J
--------- --------- -------- ------------ ------------- -------
Net Assets $653,263 $1,553,699 $651,458 $655,176 $19,598,117 $4,838,250
Net Asset Value Per Share $ 5.22 $ 5.24 $ 5.21 $ 5.24 $ 5.14 $ 5.07
Shares Outstanding 125,144 296,424 125,140 125,140 3,813,832 953,867
COMBINED LARGECAP GROWTH FUND
------------
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT INSTITUTIONAL
CLASS CLASS CLASS SELECT CLASS CLASS CLASS J
--------- --------- -------- ------------ ------------- -------
Net Assets $1,017,460 $2,439,190 $1,152,015 $1,020,456 $24,211,288 $6,698,017
Net Asset Value Per Share $ 5.22 $ 5.24 $ 5.21 $ 5.24 $ 5.14 $ 5.07
Shares Outstanding 194,913 465,411 221,217 194,850 4,711,336 632,685
MANAGEMENT'S DISCUSSION OF LARGECAP GROWTH FUND PERFORMANCE
The following discussion relates to the performance of the LargeCap Growth Fund
during its most recent fiscal year, which ended October 31,2001.
LOGO
GROWTH OF $10,000
Cumulative Returns
as of October 31, 2001
Class Life of Fund*
Advisors Preferred -35.88%
Advisors Select -35.98%
J -20.85%
Institutional -19.66%
Preferred -35.77%
Select -35.77%
Russell Standard &
1000 Poor's/Barra Morningstar LargeCap
Growth 500 Growth Large Growth Growth Fund,
Index(3) Index(2) Category(1) Advisors Select
10 10 10 10
"2001" 6.663 7.309 6.661 6.402
Note: Past performance is not predictive of future performance.
The performance of Advisors Preferred, Preferred, Select, Institutional,
and Class J shares will vary from the performance of Advisors Select
shares based on the differences in sales charges and fees.
* The inception date of the Institutional Class and Class J shares was
March 1, 2001. The Advisors Preferred, Advisors Select, Preferred
and Select Classes inception was December 1, 2000.
Since inception, the LargeCap Growth Fund declined 35.98%, lagging the Russell
1000 Growth Index, which dropped 33.37%. Performance benefited from holdings in
the financial and health care sectors, which held up during a difficult economic
environment. Consumers remained relatively resilient during the year and the
portfolio benefited from an overweighted position in these sectors. These
positives were offset by the Fund's technology holdings, key components of
information technology spending in the U.S. economy. As companies experienced
flagging demand, capital spending was put on hold.
We continue to believe that we hold market share leaders in the critical parts
of technology spending. Moreover, these companies have solid balance sheets and
are well managed, suggesting they will weather the storm. Since technology
company stock prices can anticipate a resurgence in capital spending by nine to
twelve months, the portfolio is maintaining its positions in anticipation of an
economic recovery in 2002.
Due to continuing concerns about the U.S. economy, growth stocks under performed
value stocks for the past year. However, growth stocks have outperformed value
since market lows established after the September 11 terrorist attacks. By
October 31, the Federal Reserve (Fed) had aggressively lowered the fed funds
rate from 6.5% to 2.5%. Moreover, inflation will likely remain tame due to
slowing economic activity. Although we expect the economy to pause in the wake
of the political events, we think the aggressive monetary and fiscal policy will
eventually take hold. Accordingly, we think the recent rise in the stock market
reflects expectations of an economic recovery later next year. If so, the rising
stock market and low inflation will be a positive for growth stocks over the
next 12 months.
We believe continuing declines in inflation will make growth stock investing
very rewarding over the long term. In an economy where corporations are unable
to raise prices, growth will be highly valued. Despite the difficult downturn in
capital spending over the past year, U.S. corporations will continue their
investments in innovation and productivity enhancing products once the economy
improves. Technology, health care, financials, consumer cyclicals and
communications will likely offer above average growth over the next three to
five years.
1) MORNINGSTAR LARGE GROWTH CATEGORY consists of large-cap growth funds that
invest in big companies that are projected to grow faster than the overall
stock market. Most of these funds focus on either companies in rapidly
expanding industries with a high percentage of sales coming from foreign
markets.
2) S&P/BARRA 500 GROWTH INDEX is a market capitalization-weighted index of the
stocks in the S&P 500 Index having the highest book to price ratios. The index
consists of approximately half of the S&P 500 on a market capitalization basis.
3) RUSSELL 1000 VALUE INDEX is an index that measures the performance of those
Russell 1000 companies with lower price to book ratios and lower forecasted
growth values.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives of the series are fundamental and certain investment
restrictions which are designated as such in each series' prospectus or
statement of additional information are fundamental policies that may not be
changed without approval by the holders of the lesser of: (i) 67% of the series'
shares present or represented at a shareholder's meeting at which the holders of
more than 50% of such shares are present or represented by proxy; or (ii) more
than 50% of the outstanding shares of the series. All other investment policies
and restrictions are not fundamental and may be changed by a series' Board of
Directors without shareholder approval.
LARGECAP GROWTH FUND
- --------------------
The LargeCap Growth Fund seeks long-term growth of capital.
LARGECAP GROWTH FUND STRATEGY
The LargeCap Growth Fund invests primarily in common stocks and other equity
securities of large capitalization companies with strong earnings growth
potential. Under normal market conditions, the LargeCap Growth Fund invests at
least 80% of its assets in common stocks of companies with large market
capitalizationS (those with market capitalizations similar to companies in the
Russell 1000 Growth Index) at the time of purchase. Market capitalization is
defined as total current market value of a company's outstanding common stock.
The Sub-Advisor, Invista, uses a bottom-up approach (focusing on individual
stock selection rather than forecasting stock market trends) in its selection of
individual securities that it believes have an above average potential for
earnings growth. Selection is based on fundamental analysis of a company
relative to other companies with the focus being on Invista's assessment of
current and future sales growth and operating margins. Companies meeting these
criteria typically have progressed beyond the development stage and are focused
on growing the business. Up to 25% of the LargeCap Growth Fund's assets may be
invested in foreign securities.
Invista places strong emphasis on companies it believes are guided by high
quality management teams with a proven ability to execute. In addition, the
LargeCap Growth Fund attempts to identify and emphasize those companies that are
market leaders possessing the ability to control pricing and margins in their
respective industries. Invista constructs a portfolio that is "benchmark aware"
in that it is sensitive to the sector (companies with similar characteristics)
and security weightings of its benchmark. However, the LargeCap Growth Fund is
actively managed and prepared to over- and/or under-weight sectors and
industries differently from the benchmark.
TECHNOLOGY FUND
- ---------------
The Technology Fund seeks to achieve long-term growth of capital.
TECHNOLOGY FUND STRATEGY
Under normal market conditions, the Technology Fund invests at least 80% of its
assets in common stocks and other securities of technology and
telecommunications companies domiciled in any of the nations of the world. The
Sub-Advisor, Principal Capital Global Investors, LLP ("PCGIL"), believes that as
markets are becoming increasingly globalized, companies can no longer be
researched on a purely regional basis. Companies are increasingly influenced by
global, not just local trends, and for this reason PCGIL believes that analysis
and research needs to be conducted in a global context. PCGIL considers
companies in a broad range of technology-related industries, generally
including: computers; software and peripheral products; electronics;
communications equipment and services; and information services.
PCGIL selects securities for the Technology Fund based on its own global
investment research. The research program is focused on three key criteria:
.. business franchise - considering factors such as the company's relationship
with its suppliers and customers, the degree of rivalry with competitors as
well as the exposure to regulatory and technological risk;
.. quality of management - assessing the company's management on its ability to
execute current business plans, manage the capital invested in the business as
well as the level of transparency with respect to strategy and operations; and
.. business valuation - determining the private market or "true business value"
of the firm.
PCGIL's qualitative analysis is complemented by disciplined valuation
techniques. These include proprietary models as well as conventional market
measurements and industry specific models of relative value. This analytical
framework ensures consistency and transparency throughout the research process.
Portfolios are constructed and managed within predetermined guidelines that are
regularly monitored by PCGIL.
In addition to having similar investment objectives, the LargeCap Growth Fund
and the Technology Fund have many similar investment policies and restrictions.
TECHNOLOGY FUND AND LARGECAP GROWTH FUND INVESTMENT POLICIES AND RESTRICTIONS
Fundamental Restrictions
- ------------------------
Each of the following restrictions for the Technology Fund and LargeCap Growth
Fund is a matter of fundamental policy and may not be changed without
shareholder approval. The Technology Fund and LargeCap Growth Fund each may not:
. Issue any senior securities as defined in the 1940 Act, as amended.
Purchasing and selling securities and futures contracts and options thereon
and borrowing money in accordance with restrictions described below do not
involve the issuance of a senior security.
. Invest in physical commodities or commodity contracts (other than foreign
currencies), but it may purchase and sell financial futures contracts,
options on such contracts, swaps and securities backed by physical
commodities.
. Invest in real estate, although it may invest in securities that are secured
by real estate and securities of issuers that invest or deal in real estate.
. Borrow money, except that it may a) borrow from banks (as defined in the
1940 Act, as amended) or other financial institutions or through reverse
repurchase agreements in amounts up to 33 1/3% of its total assets
(including the amount borrowed); b) to the extent permitted by applicable
law, borrow up to an additional 5% of its total assets for temporary
purposes; c) obtain short-term credits as may be necessary for the clearance
of purchases and sales of portfolio securities; and d) purchase securities
on margin to the extent permitted by applicable law (the deposit or payment
of margin in connection with transactions in options and financial futures
contracts is not considered purchase of securities on margin).
. Make loans, except that the series may a) purchase and hold debt obligations
in accordance with its investment objective and policies; b) enter into
repurchase agreements; and c) lend its portfolio securities without
limitation against collateral (consisting of cash or securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities)
equal at all times to not less than 100% of the value of the securities
loaned. This limit does not apply to purchases of debt securities or
commercial paper.
. Invest more than 5% of its total assets in the securities of any one issuer
(other than obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities) or purchase more than 10% of the outstanding
voting securities of any one issuer, except that this limitation shall apply
only with respect to 75% of the total assets of the series.
. Act as an underwriter of securities, except to the extent that the series
may be deemed to be an underwriter in connection with the sale of securities
held in its portfolio.
. Concentrate its investments in any particular industry, except that the
LargeCap Growth Fund may invest up to 25% of the value of its total assets
in a single industry, provided that, when the series has adopted a temporary
defensive posture, there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. This restriction does not apply to the Technology Fund.
. Sell securities short (except where the series holds or has the right to
obtain at no added cost a long position in the securities sold that equals
or exceeds the securities sold short).
Non-Fundamental Restrictions
- ----------------------------
The Technology Fund and LargeCap Growth Fund have also adopted the following
restrictions that are not fundamental policies and that may be changed without
shareholder approval. It is contrary to the Technology Fund and LargeCap Growth
Fund's present policy to:
. Invest more than 15% of its net assets in illiquid securities and in
repurchase agreements maturing in more than seven days except to the extent
permitted by applicable law.
. Pledge, mortgage or hypothecate its assets, except to secure permitted
borrowings. The deposit of underlying securities and other assets in escrow
and other collateral arrangements in connection with transactions in put or
call options, futures contracts and options on futures contracts are not
deemed to be pledges or other encumbrances.
. Invest in companies for the purpose of exercising control or management.
. Enter into a) any futures contracts and related options for non-bona fide
hedging purposes within the meaning of Commodity Futures Trading Commission
(CFTC) regulations if the aggregate initial margin and premiums required to
establish such positions will exceed 5% of the fair market value of the
series' net assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into; and b) any
futures contracts if the aggregate amount of such series' commitments under
outstanding futures contracts positions would exceed the market value of its
total assets.
. Invest more than 5% of its total assets in real estate limited partnership
interests.
. Acquire securities of other investment companies in reliance on Section
12(d) (1) (F) or (G) of the 1940 Act.
The Technology Fund has also adopted a non-fundamental restriction which
requires it, under normal circumstances, to invest at least 80% of its net
assets in securities of technology and telecommunication companies. Technology
related industries are defined broadly, and includes computers, software and
peripheral products, electronics, communications equipment and services and
information services.
The LargeCap Growth Fund has also adopted a non-fundamental policy which
requires it, under normal market conditions, to invest at least 80% of its
assets in securities of companies that have large market capitalization
(companies with market capitalizations similar to market capitalization of
companies included in the Russell 1000 Growth Index). In addition, the LargeCap
Growth Fund may not invest more than 25% of its assets in foreign securities.
INVESTMENT ADVISORY SERVICES
- ----------------------------
Principal Management Corporation ("the Manager") serves as investment advisor to
the Investors Fund. The Manager has entered into a sub-advisory agreement with
Invista Capital Management, LLC ("Invista") to provide investment advisory
services to the LargeCap Growth Fund. Invista is an indirect wholly-owned
subsidiary of Principal Life Insurance Company and an affiliate of the Manager.
The LargeCap Growth Fund paid the Manager a fee equal to 0.55% (0.0% for the
Class J shares after waiver) of the LargeCap Growth Fund's average daily net
assets for services provided during the fiscal year ended October 31, 2001 and
the Manager paid Invista a sub-advisory fee equal to 0.07% of such assets.
The Manager has entered into a sub-advisory agreement with Principal Capital
Global Investors LLC ("PCGIL") to provide investment advisory services to the
Technology Fund. PCGIL is also an affiliate of the Manager. The Technology Fund
paid the Manager a fee equal to 1.00% (0.0% for the Class J shares after waiver)
of the Technology Fund's average daily net assets for services provided during
the fiscal year ended October 31, 2001 and the Manager paid PCGIL a sub-advisory
fee of 0.50% of such assets.
If the Plan is approved, the combined assets of the Technology and LargeCap
Growth Funds will continue to be sub-advised by a sub-advisor affiliated with
the Manager, the Manager will retain a larger portion of the advisory fees it
will receive with respect to the assets formerly owned by the Technology Fund
and the amount of the management fee waiver or expense reimbursement for Class J
shares by the Manager will be reduced.
ADDITIONAL INFORMATION ABOUT THE SERIES
Additional information about the series is available in their semi-annual
reports to shareholders for the six months ended April 30, 2002, in their annual
reports to shareholders for the year ended October 31, 2001 and in the following
documents which have been filed with the SEC: prospectus and statement of
additional information for the Investors Fund (including the LargeCap Growth
Fund and Technology Fund) dated May 21, 2002; and statement of additional
information for the registration statement of which this prospectus/information
statement is a part, dated October 14, 2002. You may obtain copies of the
semi-annual and annual reports to shareholders, the prospectuses and the
statements of additional information by contacting Princor Financial Services
Corporation at Des Moines, Iowa 50392-0200, or by telephoning shareholder
services toll-free at 1-800-247-4123.
Each of the series is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the Investment Company Act, as
applicable. Accordingly, each files reports, proxy materials and other
information with the SEC. You may inspect those reports, proxy materials and
other information at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D. C. 20549. Copies of such materials also
may be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D. C. 20549, at prescribed rates, or at no charge from the
EDGAR database on the Commission's website at "www.sec.gov."
PROPOSALS OF SHAREHOLDERS
A shareholder who has an issue that he or she would like to have included in the
agenda at a Principal Investors Fund shareholder meeting should send the
proposal to the fund at the Principal Financial Group, Des Moines, Iowa
50392-0200. To be considered for presentation at a shareholders meeting, the
proposal must be received a reasonable time before a solicitation is made for
such meeting. Timely submission of a proposal does not necessarily mean that
such proposal will be included.
OTHER BUSINESS
We do not know of any business to be brought before the meeting other than the
matters set forth in this prospectus/ information statement.
APPENDIX A:
PRINCIPAL INVESTORS FUND
PLAN OF ACQUISITION
TECHNOLOGY FUND AND LARGECAP GROWTH FUND
The Board of Directors of Principal Investors Fund (the "Fund") deem it
advisable that the LargeCap Growth Fund of the Fund acquire all of the assets of
the Technology Fund in exchange for the assumption by the LargeCap Growth Fund
of all of the liabilities of the Technology Fund and shares issued by the
LargeCap Growth Fund which are thereafter to be distributed by the Technology
Fund pro rata to its shareholders in complete liquidation and termination of the
Technology Fund and in exchange for all of the Technology Fund's outstanding
shares.
The Technology Fund will transfer to the LargeCap Growth Fund and the LargeCap
Growth Fund will acquire from the Technology Fund, all of the assets of the
Technology Fund on the Closing Date and will assume from the Technology Fund all
of the liabilities of the Technology Fund in exchange for the issuance of the
number of shares of the LargeCap Growth Fund determined as provided in the
following paragraphs, which will be subsequently distributed pro rata to the
shareholders of the Technology Fund in complete liquidation and termination of
the Technology Fund and in exchange for all of the Technology Fund's outstanding
shares. The Technology Fund will not issue, sell or transfer any of its shares
after the Closing Date, and only redemption requests received by the Technology
Fund in proper form prior to the Closing Date shall be fulfilled by the
Technology Fund. Redemption requests received by the Technology Fund thereafter
will be treated as requests for redemption of those shares of the LargeCap
Growth Emerging Markets Fund allocable to the shareholder in question.
Each Fund will declare to its shareholders of record on or prior to the Closing
Date a dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to its shareholders all of its income
(computed without regard to any deduction for dividends paid) and all of its net
realized capital gains, if any, as of the Closing Date;
On the Closing Date, the LargeCap Growth Fund will issue to the Technology Fund
a number of full and fractional shares of the LargeCap Growth Fund, taken at
their then net asset value, having an aggregate net asset value equal to the
aggregate value of the net assets of the Technology Fund. The aggregate value of
the net assets of the Technology Fund and the LargeCap Growth Fund shall be
determined in accordance with the then current Prospectus of the LargeCap Growth
Fund as of closing of the New York Stock Exchange on the Closing Date.
The closing of the transactions contemplated in this Plan (the "Closing") shall
be held at the offices of Principal Management, 680 8th Street, Des Moines, Iowa
50392-0200 at 3:00 p.m. Central Daylight Time on December 6, 2002 or on such
earlier or later date as fund management may determine. The date on which the
Closing is to be held as provided in this Plan shall be known as the "Closing
Date."
In the event that on the Closing Date (a) the New York Stock Exchange is closed
for other than customary week-end and holiday closings or (b) trading on said
Exchange is restricted or (c) an emergency exists as a result of which it is not
reasonably practicable for the LargeCap Growth Fund or the Technology Fund to
fairly determine the value of its assets, the Closing Date shall be postponed
until the first business day after the day on which trading shall have been
fully resumed.
As soon as practicable after the Closing, the Technology Fund shall (a)
distribute on a pro rata basis to the shareholders of record of the Technology
Fund at the close of business on the Closing Date the shares of the LargeCap
Growth Fund received by the Technology Fund at the Closing in exchange for all
of the Technology Fund's outstanding shares, and (b) be liquidated in accordance
with applicable law and the Fund's Articles of Incorporation.
For purposes of the distribution of shares of the LargeCap Growth Fund to
shareholders of the Technology Fund, the LargeCap Growth Fund shall credit on
the books of the LargeCap Growth Fund an appropriate number of shares of the
LargeCap Growth Fund to the account of each shareholder of the Technology Fund.
No certificates will be issued for shares of the LargeCap Growth Fund. After the
Closing Date and until surrendered, each outstanding certificate, if any, which,
prior to the Closing Date, represented shares of the Technology Fund, shall be
deemed for all purposes of the
Fund's Articles of Incorporation and Bylaws to evidence the appropriate number
of shares of the LargeCap Growth Fund to be credited on the books of the
LargeCap Growth Fund in respect of such shares of the Technology Fund as
provided above.
Prior to the Closing Date, the Technology Fund shall deliver to the LargeCap
Growth Fund a list setting forth the assets to be assigned, delivered and
transferred to the LargeCap Growth Fund, including the securities then owned by
the Technology Fund and the respective federal income tax bases (on an
identified cost basis) thereof, and the liabilities to be assumed by the
LargeCap Growth Fund pursuant to this Plan.
All of the Technology Fund's portfolio securities shall be delivered by the
Technology Fund's custodian on the Closing Date to the LargeCap Growth Fund or
its custodian, either endorsed in proper form for transfer in such condition as
to constitute good delivery thereof in accordance with the practice of brokers
or, if such securities are held in a securities depository within the meaning of
Rule 17f-4 under the 1940 Act, transferred to an account in the name of the
LargeCap Growth Fund or its custodian with said depository. All cash to be
delivered pursuant to this Plan shall be transferred from the Technology Fund's
account at its custodian to the LargeCap Growth Fund's account at its custodian.
If on the Closing Date the Technology Fund is unable to make good delivery to
the LargeCap Growth Fund's custodian of any of the Technology Fund's portfolio
securities because such securities have not yet been delivered to the Technology
Fund's custodian by its brokers or by the transfer agent for such securities,
then the delivery requirement with respect to such securities shall be waived,
and the Technology Fund shall deliver to the LargeCap Growth Fund's custodian on
or by said Closing Date with respect to said undelivered securities executed
copies of an agreement of assignment in a form satisfactory to the LargeCap
Growth Fund, and a due bill or due bills in form and substance satisfactory to
the custodian, together with such other documents including brokers'
confirmations, as may be reasonably required by the LargeCap Growth Fund.
This Plan may be abandoned and terminated, whether before or after action
thereon by the shareholders of the Technology Fund and notwithstanding favorable
action by such shareholder, if the Board of Directors believe that the
consummation of the transactions contemplated hereunder would not be in the best
interests of the shareholders of either Fund. This Plan may be amended by the
Fund's Board of Directors at any time, except that after approval by the
shareholders of the Technology Fund no amendment may be made with respect to the
Plan which in the opinion of the Board of Directors materially adversely affects
the interests of the shareholders of the Technology Fund.
Except as expressly provided otherwise in this Plan, Principal Management will
pay or cause to be paid all out-of-pocket fees and expenses incurred by the
Technology Fund or the LargeCap Growth Fund in connection with the transactions
contemplated under this Plan, including, but not limited to, accountants' fees,
legal fees, registration fees, printing expenses, transfer taxes (if any) and
the fees of banks and transfer agents.
PRINCIPAL INVESTORS FUND, INC.
DES MOINES, IOWA 50392-0200
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus/ information statement dated October 14, 2002
for the special meeting of the holders of each share class of the common stock,
$.01 par value per share, of the Technology Fund, a series of Principal
Investors Fund, Inc., an open-end management investment company. The meeting is
to be held on Wednesday, November 20, 2002. A copy of the prospectus/information
statement may be obtained from Principal Management Corporation.
The prospectus/information statement describes certain transactions contemplated
by the proposed combination of the Technology Fund with the LargeCap Growth
Fund, also a series of Principal Investors Fund, Inc., pursuant to the terms of
a Plan of Acquisition ("Plan"). Under the Plan, the LargeCap Growth Fund would
acquire all the assets and assume all the liabilities of the Technology Fund and
issue in exchange shares of each share class of its common stock. The Technology
Fund would immediately redeem all its outstanding shares by distributing the
LargeCap Growth Fund shares to its shareholders. As a result, each shareholder
would own shares in the LargeCap Growth Fund equal in value to shares of the
same class as he or she had owned in the Technology Fund at the effective time.
Principal Management Corporation has agreed to pay all expenses incurred by the
series in connection with the Plan.
The date of the Statement of Additional Information is October 14, 2002.
OTHER INFORMATION
The information otherwise required to be set forth in this Statement of
Additional Information is included in the prospectuses and Statements of
Additional Information of the Investors Fund, dated May 21, 2002, and in the
Investors Fund's Annual Report to Shareholders for the year ended October 31,
2001, all of which are incorporated herein by reference.
FINANCIAL STATEMENTS
The financial statements and footnotes thereto of the Principal Investors Fund,
Inc., together with the Report of Independent Auditors thereon, are incorporated
herein by reference from the Principal Investors Fund's Annual Report to
Shareholders for the year ended October 31, 2001.
The financial statements of Principal Investors Fund, Inc. listed above and
incorporated by reference into this Statement of Additional Information have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon and incorporated herein by reference. Such financial statements
are incorporated by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
PRO FORMA
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL INVESTORS FUND, INC.
APRIL 30, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
COMBINED
LARGECAP TECHNOLOGY PRO FORMA LARGECAP
GROWTH FUND FUND ADJUSTMENTS GROWTH FUND
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
INVESTMENT IN
SECURITIES--AT COST.. $ 16,974,357 $ 8,861,065 $ -- $ 25,835,422
============ ============ ========= ============
FOREIGN CURRENCY--AT
COST ................ $ -- $ 181,376 $ -- $ 181,376
============ ============ ========= ============
ASSETS
Investment in
securities--at value. $ 15,393,401 $ 7,564,396 -- 22,957,797
Foreign currency--at
value................ -- 182,475 -- 182,475
Cash.................. 10,144 625,006 -- 635,150
Receivables:
Capital Shares sold.. 35,938 -- -- 35,938
Dividends and
interest............ 4,082 10,275 -- 14,357
Investment securities
sold................ 58,500 128,172 -- 186,672
Foreign currency
contracts........... -- 20,289 -- 20,289
Prepaid expenses...... 2,136 3,687 -- 5,823
------------ ------------ --------- ------------
Total Assets 15,504,201 8,534,300 -- 24,038,501
LIABILITIES
Payables:
Capital Shares
reacquired.......... -- 11,796 -- 11,796
Investment securities
purchased........... 68,685 559,444 -- 628,129
Foreign currency
contracts........... -- 36,776 -- 36,776
------------ ------------ --------- ------------
Total Liabilities 68,685 608,016 -- 676,701
------------ ------------ --------- ------------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES $ 15,435,516 $ 7,926,284 $ -- $ 23,361,800
============ ============ ========= ============
NET ASSETS CONSIST OF:
Capital Shares and
additional
paid-in-capital...... $ 18,430,183 $ 11,687,962 $ -- $ 30,118,145
Accumulated
undistributed
(overdistributed) net
investment income
(operating loss)..... (12,312) (6,095) -- (18,407)
Accumulated
undistributed
(overdistributed) net
realized gain (loss). (1,401,399) (2,441,998) -- (3,843,397)
Net unrealized
appreciation
(depreciation) of
investments.......... (1,580,956) (1,296,669) -- (2,877,625)
Net unrealized
appreciation
(depreciation) on
translation of assets
and liabilities in
foreign currencies... -- (16,916) -- (16,916)
------------ ------------ --------- ------------
Total Net Assets $ 15,435,516 $ 7,926,284 $ -- $ 23,361,800
============ ============ ========= ============
CAPITAL STOCK (PAR
VALUE: $.01 A SHARE):
Shares authorized..... 145,000,000 125,000,000 -- 145,000,000
NET ASSET VALUE PER
SHARE:
Advisors Preferred:
Net Assets........... $ 767,466 $ 492,920 $ -- $ 1,260,386
Shares issued and
outstanding.......... 125,144 100,116 (19,705)/(b)/ 205,555
Net asset value per
share................ $ 6.13 $ 4.92 -- $ 6.13
============ ============ == ============
Advisors Select: Net
Assets............... $ 765,811 $ 491,936 $ -- $ 1,257,747
Shares issued and
outstanding.......... 125,141 100,232 (19,850)/(b)/ 205,523
Net asset value per
share................ $ 6.12 $ 4.91 -- $ 6.12
============ ============ == ============
Class J: Net Assets... $ 4,086,160 $ 2,028,065 $ -- $ 6,114,225
Shares issued and
outstanding.......... 684,888 418,963 (79,254)/(b)/ 1,024,597
Net asset value per
share /(a)/.......... $ 5.97 $ 4.84 -- $ 5.97
============ ============ == ============
Institutional: Net
Assets............... $ 6,890,119 $ 3,922,082 $ -- $ 10,812,201
Shares issued and
outstanding.......... 1,143,539 789,253 (138,825)/(b)/ 1,793,967
Net asset value per
share................ $ 6.03 $ 4.97 -- $ 6.03
============ ============ == ============
Preferred: Net Assets. $ 2,156,783 $ 497,245 $ -- $ 2,654,028
Shares issued and
outstanding.......... 350,611 100,627 (19,774)/(b)/ 431,464
Net asset value per
share................ $ 6.15 $ 4.94 -- $ 6.15
============ ============ == ============
Select: Net Assets.... $ 769,177 $ 494,036 $ -- $ 1,263,213
Shares issued and
outstanding.......... 125,140 100,116 (19,785)/(b)/ 205,471
Net asset value per
share................ $ 6.15 $ 4.93 -- $ 6.15
============ ============ == ============
/(a) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(b) /Reflects new shares issued, net of retired shares of Technology Fund.
See accompanying notes.
PRO FORMA
STATEMENTS OF OPERATIONS
PRINCIPAL INVESTORS FUND, INC.
TWELVE MONTHS ENDED APRIL 30, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
COMBINED
LARGECAP TECHNOLOGY PRO FORMA LARGECAP
GROWTH FUND FUND ADJUSTMENTS /(A)/ GROWTH FUND
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
NET INVESTMENT INCOME
(OPERATING LOSS)
Income:
Dividends............ $ 46,660 $ 38,413 $ -- $ 85,073
Withholding tax on
foreign dividends... -- (3,289) -- (3,289)
Interest............. 12,200 3,262 -- 15,462
----------- ----------- -------- -----------
Total Income 58,860 38,386 -- 97,246
Expenses:
Management and
investment advisory
fees................ 42,153 58,621 (26,230) 74,544
Distribution fees.... 15,499 9,744 -- 25,243
Administrative
service fees........ 3,789 2,657 -- 6,446
Service fees......... 7,234 5,073 -- 12,307
Transfer and
administrative fees
- Class J........... 8,715 5,038 -- 13,753
Other expenses -
Class J............. -- 2 -- 2
----------- ----------- -------- -----------
Total Gross Expenses 77,390 81,135 -- 158,525
Less: Fees paid
indirectly.......... -- 323 -- 323
----------- ----------- -------- -----------
Total Net Expenses 77,390 80,812 -- 158,202
----------- ----------- -------- -----------
Net Investment Income
(Operating Loss) (18,530) (42,426) -- (60,956)
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS
AND FOREIGN
CURRENCIES
Net realized gain
(loss) from:
Investment
transactions........ (1,121,576) (2,014,838) -- (3,136,414)
Foreign currency
transactions........ -- 17,179 -- 17,179
Change in unrealized
appreciation/depreciation
of:
Investments........... (691,826) (493,676) -- (1,185,502)
Translation of assets
and liabilities in
foreign currencies... -- (21,009) -- (21,009)
----------- ----------- -------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments and
Foreign Currencies (1,813,402) (2,512,344) -- (4,325,746)
----------- ----------- -------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations $(1,831,932) $(2,554,770) $ -- $(4,386,702)
=========== =========== ======== ===========
/(a) /Reflects estimated reduction in expenses due to lower management and
investment advisory fees, larger net assets and greater economies of scale,
and assumes the LargeCap Growth Fund fee structure was in effect for the
twelve months ended April 30, 2002.
See accompanying notes.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
-------------------------------------------------------------------------------
1. BASIS OF COMBINATION
On September 9, 2002, the Board of Directors of Principal Investors Fund, Inc.
Technology Fund approved an Agreement and Plan of Reorganization whereby,
subject to approval by the shareholders of Technology Fund, LargeCap Growth Fund
will acquire all the assets of the Technology Fund subject to the liabilities of
such fund, in exchange for a number of shares equal to the pro rata net assets
of shares of the LargeCap Growth Fund (the "Merger").
The Merger will be accounted for as a tax-free merger of investment companies.
The pro forma combined financial statements are presented for the information of
the reader and may not necessarily be representative of what the actual combined
financial statements would have been had the reorganization occurred at April
30, 2002. The unaudited pro forma schedule of investments and statement of
assets and liabilities reflect the financial position of the Technology Fund and
the LargeCap Growth Fund at April 30, 2002. The unaudited pro forma statement of
operations reflects the results of operations of the Technology Fund and the
LargeCap Growth Fund for the twelve months ended April 30, 2002. The statements
have been derived from the Funds' respective books and records utilized in
calculating daily net asset value at the dates indicated above for Technology
Fund and LargeCap Growth Fund under accounting principles generally accepted in
the United States. The historical cost of investment securities will be carried
forward to the surviving entity and results of operations of LargeCap Growth
Fund for pre-combination periods will not be restated.
The pro forma schedule of investments and statements of assets and liabilities
and operations should be read in conjunction with the historical financial
statements of the Funds incorporated by reference in the Statements of
Additional Information.
2. SECURITY VALUATION
LargeCap Growth Fund and Technology Fund value securities for which market
quotations are readily available at market value, which is determined using the
last reported sale price or, if no sales are reported, as is regularly the case
for some securities traded over-the-counter, the last reported bid price. When
reliable market quotations are not considered to be readily available, which may
be the case, for example, with respect to certain debt securities, preferred
stocks and international securities the investments are valued by using 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 the
Fund's Board of Directors. Securities with remaining maturities of 60 days or
less are valued at amortized cost, which approximates market.
3. CAPITAL SHARES
The pro forma net asset value per share assumes additional shares of common
stock issued in connection with the proposed acquisition of Technology Fund by
LargeCap Growth Fund as of April 30, 2002. The number of additional shares
issued was calculated by dividing the net asset value of each class of
Technology Fund by the respective class net asset value per share of LargeCap
Growth Fund.
4. PRO FORMA ADJUSTMENTS
The accompanying pro forma financial statements reflect changes in fund shares
as if the merger had taken place on April 30, 2002. The expenses of the
Technology Fund were adjusted assuming the fee structure of LargeCap Growth Fund
was in effect for the twelve months ended April 30, 2002.
5. DISTRIBUTIONS
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.
LargeCap Growth Fund and Technology Fund will distribute substantially all of
their net investment income and any realized gains prior to the merger date.
- -----------------------------------------------------------------------------------------------------------------------------
Principal Amount or Number of Shares
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LargeCap Technology
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Growth Fund Fund Combined
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (87.69%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Applications Software (6.11%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
3,450 16,102 19,552 Microsoft 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
8,510 8,286 16,796 Siebel Systems 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Cable TV (2.04%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
17,840 17,840 Comcast
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Cellular Telecommunications (3.51%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
18,521 18,521 AT&T Wireless Services 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
58,980 58,980 mm02 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
8 8 NTT DoCoMo
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
32 32 NTT DoCoMo
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
318,454 318,454 Vodafone Group
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Commercial Service-Finance (2.94%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,300 7,300 H&R Block
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
10,530 10,530 Paychex
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Computer Services (.90%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
3,863 3,863 Electronic Data Systems
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Computers (3.12%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
6,099 6,099 International Business Machines
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
18,050 8,585 26,635 Sun Microsystems 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Computers-Integrated Systems (.64%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,823 5,823 Brocade Communications System 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Computers-Memory Devices (2.06%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,500 7,500 EMC
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,630 6,922 14,552 Veritas Software 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Consulting Services (.64%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
8,566 8,566 KPMG Consulting 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Data Processing & Management (1.48%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
6,820 6,820 Automatic Data Processing
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Diversified Financial Services (1.82%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
9,820 9,820 Citigroup
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Diversified Manufacturing Operations (2.57%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
19,040 19,040 General Electric
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Electronic Components-Miscellaneous (1.14%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,366 7,366 Flextronics International 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,332 5,332 Koninklijke Philips Electronics
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Electronic Components-Semiconductor (6.12%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
4,033 4,033 Aixtron
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
3,063 3,063 Broadcom 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
6,247 6,247 Infineon Technologies
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,320 12,385 17,705 Intel
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
4,004 4,004 Micron Technology
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
6,210 6,210 STMicroelectronics
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
6,910 4,521 11,431 Texas Instruments
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Engineering-Research & Development Services (1.20%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,366 5,366 Altran Technologies
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Enterprise Software & Service (0.81%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
10,650 BEA Systems 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,444 7,444 Oracle 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Fiduciary Banks (1.01%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1,490 1,490 Bank of New York
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
3,540 3,540 State Street
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Finance-Investment Banker & Broker (0.57%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
2,810 2,810 Morgan Stanley Dean Witter
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Finance-Mortgage Loan/Banker (1.29%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
3,810 3,810 Federal National Mortgage Association
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Food-Confectionery (.28%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1,170 1,170 Wm. Wrigley Jr.
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Food-Wholesale/Distribution (1.95%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
15,720 15,720 Sysco
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Internet Security (.15%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1,970 1,970 Check Point Software Technologies 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Medical Instruments (3.86%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
9,240 9,240 Biomet
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
14,360 14,360 Medtronic
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Medical Products (3.49%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
12,780 12,780 Johnson & Johnson
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Medical-Drugs (4.66%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
29,920 29,920 Pfizer
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Medical-Hospitals (1.73%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,520 5,520 Tenet Healthcare 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Medical-Wholesale Drug Distribution (2.28%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,675 7,675 Cardinal Health
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Motorcycle & Motor Scooter (0.29%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1,280 1,280 Harley-Davidson
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Multi-line Insurance (1.66%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,600 5,600 American International Group
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Networking Products (3.61%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
31,110 26,517 57,627 Cisco Systems 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Regional Banks (2.12%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,220 7,220 Fifth Third Bancorp
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Retail-Bedding (3.08%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
19,350 19,350 Bed Bath & Beyond 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Retail-Building Products (1.17%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
5,900 5,900 Home Depot
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Retail-Drug Store (0.44%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
2,710 2,710 Walgreen
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Retail-Regional Department Store (2.00%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
6,330 6,330 Kohls 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Semiconductor Component-Integrated Circuits (4.62%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
10,050 10,050 Linear Technology
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
8,130 3,952 12,082 Maxim Integrated Products 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
35,000 35,000 Taiwan Semiconductor Manufacturing 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Semiconductor Equipment (1.69%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
9,300 9,300 Applied Materials 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,463 7,463 ASM Lithography Holding 1
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Telecommunication Equipment (1.60%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
23,086 23,086 Nokia
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Telephone-Integrated (7.04%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
11,021 11,021 AT&T
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
4,280 4,280 BellSouth
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,040 7,040 KT
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
16,680 16,680 Portugal Telecom
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
8,182 8,182 SBC Communications
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
536 536 Swisscom
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
4,874 4,874 TDC
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
27,662 27,662 Telecom Italia
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
7,833 7,833 Verizon Communications
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (10.58%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Finance-Mortgage Loan/Banker (10.58%)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Investment in Joint Trading Account;
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank System
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
2,470,595 1.79%; 05/01/02
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1 Non-Income Producing Security.
- -----------------------------------------------------------------------------------------------------------------------------
Market Value
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
LargeCap Technology
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Growth Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (87.69%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Applications Software (6.11%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Microsoft 1 $ 180,297 $ 841,491 $ 1,021,788
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Siebel Systems 1 205,857 200,438 406,295
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cable TV (2.04%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Comcast 477,220 477,220
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cellular Telecommunications (3.51%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
AT&T Wireless Services 1 165,763 165,763
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
mm02 1 37,604 37,604
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NTT DoCoMo 20,249 20,249
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NTT DoCoMo 81,495 81,495
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Vodafone Group 513,972 513,972
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Commercial Service-Finance (2.94%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
H&R Block 292,876 292,876
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Paychex 393,085 393,085
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Computer Services (.90%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems 209,606 209,606
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Computers (3.12%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
International Business Machines 510,852 510,852
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Sun Microsystems 1 147,649 70,226 217,875
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Computers-Integrated Systems (.64%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Brocade Communications System 1 149,011 149,011
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Computers-Memory Devices (2.06%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
EMC 68,550 68,550
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Veritas Software 1 216,234 196,169 412,403
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Consulting Services (.64%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
KPMG Consulting 1 149,905 149,905
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Data Processing & Management (1.48%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Data Processing 346,729 346,729
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Diversified Financial Services (1.82%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Citigroup 425,206 425,206
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Diversified Manufacturing Operations (2.57%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
General Electric 600,712 600,712
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Electronic Components-Miscellaneous (1.14%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Flextronics International 1 102,019 102,019
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Koninklijke Philips Electronics 164,656 164,656
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Electronic Components-Semiconductor (6.12%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Aixtron 63,234 63,234
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Broadcom 1 105,673 105,673
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Infineon Technologies 113,371 113,371
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Intel 152,205 354,335 506,540
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Micron Technology 94,895 94,895
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
STMicroelectronics 193,056 193,056
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Texas Instruments 213,726 139,835 353,561
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Engineering-Research & Development Services (1.20%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Altran Technologies 280,448 280,448
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Enterprise Software & Service (0.81%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
BEA Systems 1 114,168 114,168
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Oracle 1 74,738 74,738
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Fiduciary Banks (1.01%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Bank of New York 54,519 54,519
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
State Street 180,930 180,930
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Finance-Investment Banker & Broker (0.57%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter 134,093 134,093
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Finance-Mortgage Loan/Banker (1.29%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Association 300,723 300,723
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Food-Confectionery (.28%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Wm. Wrigley Jr. 64,350 64,350
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Food-Wholesale/Distribution (1.95%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Sysco 456,037 456,037
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Internet Security (.15%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Check Point Software Technologies 1 35,756 35,756
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Medical Instruments (3.86%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Biomet 260,845 260,845
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Medtronic 641,749 641,749
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Medical Products (3.49%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 816,131 816,131
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Medical-Drugs (4.66%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Pfizer 1,087,592 1,087,592
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Medical-Hospitals (1.73%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare 1 405,002 405,002
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Medical-Wholesale Drug Distribution (2.28%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cardinal Health 531,494 531,494
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Motorcycle & Motor Scooter (0.29%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Harley-Davidson 67,827 67,827
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Multi-line Insurance (1.66%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
American International Group 387,072 387,072
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Networking Products (3.61%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cisco Systems 1 455,761 388,474 844,235
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Regional Banks (2.12%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Fifth Third Bancorp 495,220 495,220
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Retail-Bedding (3.08%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Bed Bath & Beyond 1 719,239 719,239
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Retail-Building Products (1.17%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Home Depot 273,583 273,583
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Retail-Drug Store (0.44%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Walgreen 102,357 102,357
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Retail-Regional Department Store (2.00%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Kohls 1 466,521 466,521
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Semiconductor Component-Integrated Circuits (4.62%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Linear Technology 390,543 390,543
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Maxim Integrated Products 1 404,874 196,809 601,683
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing 1 88,216 88,216
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Semiconductor Equipment (1.69%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Applied Materials 1 226,176 226,176
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
ASM Lithography Holding 1 169,468 169,468
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunication Equipment (1.60%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Nokia 373,618 373,618
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Telephone-Integrated (7.04%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
AT&T 144,595 144,595
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
BellSouth 129,898 129,898
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
KT 159,456 159,456
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Portugal Telecom 121,746 121,746
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
SBC Communications 254,133 254,133
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Swisscom 159,963 159,963
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TDC 140,596 140,596
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Telecom Italia 220,099 220,099
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Verizon Communications 314,182 314,182
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 12,922,806 7,564,396 20,487,202
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (10.58%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Finance-Mortgage Loan/Banker (10.58%)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Investment in Joint Trading Account;
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank System
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
1.79%; 05/01/02 2,470,595 2,470,595
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO INVESTMENTS 15,393,401 7,564,396 22,957,797
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash and receivables, net of liabilities (1.73%) 42,115 361,888 404,003
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS (100.00%) 15,435,516 7,926,284 23,361,800
- ---------------------------------------------------------------===============================================================
- ---------------------------------------------------------------===============================================================
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
1 Non-Income Producing Security.
- ------------------------------------------------------------------------------------------------------------------------------
PART C: OTHER INFORMATION
Item 15. Indemnification.
The information required in response to this item is incorporated herein by
reference to Item 25 of Post-Effective Amendment No. 24 to Registrant's
Registration Statement on Form N-1A (File No. 33-59474) as filed with the
Commission on May 21, 2002.
Item 16. Exhibits.
Exhibit Number Description
(1)(a)
Articles of Amendment and Restatement of the Charter of the Registrant -
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 12 to Registrant's Registration Statement on Form N-1A (File
No. 33-59474) as filed with the Commission on September 22, 2000.
(1)(b)
Articles Supplementary are incorporated herein by reference to Exhibit
(a)(4) to Post-Effective Amendment No. 19 to Registrant's Registration
Statement on Form N1-A (File No. 33-59474) as filed with the Commission on
October 12, 2001.
(2) By-Laws of the Registrant - incorporated herein by reference to Exhibit (b)
to Post-Effective Amendment No. 12 to Registrant's Registration Statement
on Form N-1A (File No. 33-59474) as filed with the Commission on September
22, 2000.
(3) None
(4) Copy of Plan of Acquisition (included as Appendix A to the Information
Statement/Prospectus, which is part of the Registration Statement on Form
N-14).
(5) None
(6)(a)
Management Agreement with Principal Management Corporation - incorporated
herein by reference to Exhibit (d)(1)c to Post-Effective Amendment No. 13
to Registrant's Registration Statement on Form N-1A (File No. 33-59474) as
filed with the Commission on December 5, 2000.
(6)(b)
Sub-Advisory Agreement with Invista Capital LLC - incorporated herein by
reference to Exhibit 5(c) to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A (File No. 33-59474) as
filed with the Commission on February 25, 2002.
(7)(a)
Distribution Agreement - incorporated herein by reference to Exhibit 6(a)
to Post-Effective Amendment No. 12 to Registrant's Registration Statement
on Form N-1A (File No. 33-59474) as filed with the Commission on September
22, 2000.
(7)(b)
Dealer Selling Agreement - incorporated herein by reference to Exhibit
(e)(2) to Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A (File No. 33-59474) as filed with the Commission on
June 12, 2001.
(8) None
(9) Custody Agreement - incorporated herein by reference to Exhibit 8(a) to
Post-Effective Amendment No. 13 to Registrant's Registration Statement on
Form N-1A (File No. 33-59474) as filed with the Commission on December 5,
2000.
(10)(a)
12b-1 Plan - Advisors Preferred Class Shares 12b-1 Plan is incorporated
herein by reference to Exhibit 15(a) to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A (File No. 33-59474) as
filed with the Commission on September 22, 2000.
(10)(b)
12b-1 Plan - Advisors Select Class Shares 12b-1 Plan - incorporated herein
by reference to Exhibit 15(b) to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A (File No. 33-59474) as
filed with the Commission on September 22, 2000.
(10)(c) 12b-1 Plan - Select Class Shares 12b-1 Plan.
(10)(d) 12b-1 Plan - Class J Shares 12b-1 Plan.
(10)(e)
Rule 18f-3 - Multiple Class Distribution Plan - incorporated herein by
reference to Exhibit (o) to Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A (File No. 33-59474) as filed with the
Commission on September 22, 2000.
(11) Opinion and consent of Counsel regarding legality of securities being
registered.
(12) Opinion and consent of Counsel regarding certain tax matters and
consequences to shareholders.
(13) None
(14) Consent of Independent Auditors
(15) None
(16) Powers of attorney executed by L. D. Zimpleman, J. E. Aschenbrenner, R. C.
Eucher, J. D. Davis, P. A. Ferguson, R. W. Gilbert, B. A. Lukavsky and W.
C. Kimball.
(17)(a) Form of Proxy Ballot
(17)(b)
Registrant's Rule 24f-2 Notice pursuant to Rule 24f-2 under the Investment
Company Act of 1940 for its fiscal year ended October 31, 2001 -
incorporated herein by reference to Form 24f-2 filed with the Commission on
January 4, 2002.
Item 17. Undertakings.
The undersigned registrant agrees that prior to any public offering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of Des Moines and the State of
Iowa, on the 13th day of September, 2002.
Principal Investors Fund, Inc.
By:_/s/Ralph C. Eucher____________________
Ralph C. Eucher
President
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/R. C. Eucher
___________________________ September 13, 2002
R. C. Eucher Director and President
(Principal Executive Officer)
_(L. D. Zimpleman*)________Director and September 13, 2002
L. D. Zimpleman Chairman of the Board
_(J. E. Aschenbrenner*)____Director September 13, 2002
J. E. Aschenbrenner
_(J. D. Davis*)____________Director September 13, 2002
J. D. Davis
_(P. A. Ferguson*)_________Director September 13, 2002
P. A. Ferguson
_(R. W. Gilbert*)__________Director September 13, 2002
R. W. Gilbert
_(B. A. Lukavsky*)________ Director September 13, 2002
B. A. Lukavsky
_(W. C. Kimball*)_________ Director September 13, 2002
W. C. Kimball
/s/K. L. Tibbetts
_______________________ Financial Officer September 10, 2002
K. L. Tibbetts (Principal Financial and
Accounting Officer)
By:_/s/R. C. Eucher_____________________
R. C. Eucher
Attorney -in- Fact *Pursuant to powers
of attorney previously filed
September 9, 2002
Board of Directors
Principal Investors Fund, Inc.
Des Moines, IA 50392-0200
RE Registration Statement on Form N-14
Pursuant to Securities Act of 1933
I am familiar with the proposed issuance by Principal Investors Fund, Inc. of
shares of each of its share classes of common stock of the LargeCap Growth Fund
series, par value $.01 per share, in connection with the transfer to it of the
assets and liabilities of the Technology Fund series pursuant to the terms of a
Plan of Acquisition (the "Shares"). I am also familiar with the above-referenced
Registration Statement (the "Registration Statement") filed with the Securities
and Exchange Commission relating to the offer and sale of Shares. Based upon
such investigation as I have deemed necessary, I am of the opinion that the
Shares, when issued in accordance with the terms described in the Registration
Statement, will be legally issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as a exhibit to the Registration
Statement.
Very truly yours,
/s/Michael D. Roughton
Michael D. Roughton
Counsel
September 3, 2002
Board of Directors
Principal Investor's Fund, Inc.
711 High Street
Des Moines, IA 50309
RE Acquisition of Technology Fund
By LargeCap Growth Fund
To the Board of Directors and Shareholders
LargeCap Growth Fund ("LargeCap Growth") intends to acquire all of the assets
and assume all of the liabilities of Technology Fund ("Technology") in a
transaction described in a Form N-14 Registration Statement to be filed with the
United States Securities and Exchange Commission (the "Registration Statement")
on or about September 10, 2002. You have asked for an opinion concerning the
Federal income tax consequences of the proposed transaction.
LargeCap Growth is a series fund, meaning a segregated portfolio of assets, of
Principal Investors Fund, Inc., a Maryland Corporation. Continuously since its
formation it has qualified as a regulated investment company for purposes of
Subchapter M of the United States Internal Revenue Code of 1986 (the "Code") and
has elected to be taxed as such.
Technology is also a series fund of Principal Investors Fund, Inc. Technology,
like LargeCap Growth, has qualified since its inception as a regulated
investment company for purposes of the Code, and has elected to be taxed as
such.
LargeCap Growth and Technology are each a diversified, open-end management
company registered with the Securities and Exchange Commission and various
states.
LargeCap Growth will acquire all of the assets of Technology, and assume all of
its liabilities, in exchange for LargeCap Growth shares. Technology will
immediately liquidate and dissolve, distributing the shares of LargeCap Growth
to Technology shareholders in retirement of their Technology shares. Each
holder of shares of Technology will as a result of the transaction own shares of
LargeCap Growth of equal value.
In reliance on the information provided in the Registration Statement, I am of
the opinion that:
1) The acquisition of all of the assets and liabilities of Technology by
LargeCap Growth in exchange for shares of LargeCap Growth, followed by
distribution of those shares of LargeCap Growth to shareholders of Technology
in liquidation of Technology, will constitute a reorganization within the
meaning of section 368(a)(1)(C) of the Code.
2) Shareholders of Technology will recognize no gain or loss as a consequence of
the surrender of their shares of Technology in exchange for shares of LargeCap
Growth pursuant to the liquidation of Technology. (Code Section 354).
3) The tax basis and holding period of shares of LargeCap Growth acquired in
exchange for shares of Technology will be the same as the tax basis and the
holding period of the shares of Technology exchanged therefore. (Code
Sections 354 and 1223).
4) Technology will recognize no gain or loss on the transfer of all of its
assets to LargeCap Growth. (Code Section 361(a)).
5) The tax basis of the assets of Technology in the hands of LargeCap Growth
will be the same as the tax basis of those assets in the hands of Technology
immediately prior to the acquisition. (Code Section 362(b)).
The foregoing opinions are based on the Code, current Treasury Regulations
issued thereunder, published administrative, interpretations thereof and
judicial decisions with respect thereto (collectively the "Tax Law") as of the
date hereof. No assurance can be given that the Tax Laws will not change.
I hereby consent to the use of this letter as an Exhibit to, and reference to it
in, the Registration Statement.
Sincerely yours,
/s/Randy Bergstrom
Randy Bergstrom
Counsel to Principal Investor's Fund, Inc.
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Financial Statements"
in the Statement of Additional Information and to the incorporation by reference
of our report dated December 5, 2001, with respect to the financial statements
and financial highlights of the of the Principal Investors Fund, Inc. included
in this Registration Statement Under the Securities Act of 1933 (Form N-14),
filed with the Securities and Exchange Commission.
LOGO
/s/Ernst & Young LLP
Ernst & Young LLP
Des Moines, Iowa
September 13, 2002