UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 02-33228
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Principal Growth Fund, Inc.
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(Exact name of registrant as specified in charter)
711 High Street Des Moines, IA 50392-2080
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(Address of principal executive offices) (Zip code)
Princor Financial Services Corporation Des Moines, IA 50392-2080
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(Name and address of agent for service)
Registrant's telephone number, including area code: 515 247-5476
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Date of fiscal year end: October 31, 2003
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Date of reporting period: April 30, 2003
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Item 1. Report to Shareholders.
TABLE OF CONTENTS
PAGE
Domestic Growth Funds Financial Statements and Highlights
Statements of Assets and Liabilities................................... 2
Statements of Operations............................................... 9
Statements of Changes in Net Assets.................................... 16
Notes to Financial Statements.......................................... 23
Schedules of Investments
Balanced Fund.........................................................34
Capital Value Fund....................................................48
Growth Fund...........................................................51
LargeCap Stock Index Fund.............................................53
MidCap Fund...........................................................62
Partners Blue Chip Fund...............................................66
Partners Equity Growth Fund...........................................71
Partners LargeCap Blend Fund..........................................74
Partners LargeCap Value Fund..........................................77
Partners MidCap Growth Fund...........................................80
Partners SmallCap Growth Fund.........................................83
Real Estate Fund......................................................85
SmallCap Fund.........................................................86
Utilities Fund........................................................90
Financial Highlights................................................... 91
International Growth Funds Financial Statements and Highlights
Statements of Assets and Liabilities................................... 105
Statements of Operations............................................... 107
Statements of Changes in Net Assets.................................... 109
Notes to Financial Statements.......................................... 111
Schedules of Investments
International Emerging Markets Fund...................................117
International Fund....................................................120
International SmallCap Fund...........................................123
Financial Highlights................................................... 127
Income Funds Financial Statements and Highlights
Statements of Assets and Liabilities................................... 130
Statements of Operations............................................... 132
Statements of Changes in Net Assets.................................... 134
Notes to Financial Statements.......................................... 136
Schedules of Investments
Bond Fund.............................................................142
Government Securities Income Fund.....................................151
Limited Term Bond Fund................................................152
Tax-Exempt Bond Fund..................................................159
Financial Highlights................................................... 162
Money Market Fund Financial Statements and Highlights
Statement of Assets and Liabilities.................................... 166
Statement of Operations................................................ 167
Statements of Changes in Net Assets.................................... 168
Notes to Financial Statements.......................................... 169
Schedule of Investments
Cash Management Fund..................................................172
Financial Highlights....................................................175
Fund Directors..........................................................176
Shareholder Meeting Results.............................................178
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
BALANCED CAPITAL VALUE
FUND, INC. FUND, INC.
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- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST ...... $ 95,122,503 $360,878,965
============ ============
ASSETS
Investment in securities--at value...... $91,191,602/(c)/ $370,778,744/(c)/
Cash.................................... 10,353 10,000
Receivables:
Capital Shares sold.................... 4,369 19,648
Dividends and interest................. 407,908 430,670
Investment securities sold............. 934,911 --
Other assets............................ 5,607 31,710
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Total Assets 92,554,750 371,270,772
LIABILITIES
Accrued expenses........................ 109,313 310,246
Payables:
Capital Shares reacquired.............. 22,319 80,549
Investment securities purchased........ 2,418,055 --
Collateral obligation on securities
loaned, at value....................... 146,395 7,744,532
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Total Liabilities 2,696,082 8,135,327
------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING
SHARES ................................ $ 89,858,668 $363,135,445
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital........................ $113,660,931 $424,326,313
Accumulated undistributed
(overdistributed) net investment income
(operating loss)....................... 58,009 971,466
Accumulated undistributed
(overdistributed) net realized gain
(loss)................................. (19,929,371) (72,062,113)
Net unrealized appreciation
(depreciation) of investments.......... (3,930,901) 9,899,779
------------ ------------
Total Net Assets $ 89,858,668 $363,135,445
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized....................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets..................... $ 75,871,303 $336,594,463
Shares issued and outstanding......... 6,986,230 17,740,575
Net asset value per share............. $ 10.86 $ 18.97
Maximum offering price per share /(a)/ $ 11.52 $ 20.13
============ ============
Class B: Net Assets..................... $ 13,987,365 $ 26,540,982
Shares issued and outstanding......... 1,294,801 1,409,820
Net asset value per share /(b)/ ...... $ 10.80 $ 18.83
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(c) /Includes fair market value of securities loaned, see "Securities Lending"
in Notes to Financial Statements.
See accompanying notes.
2
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
GROWTH LARGECAP STOCK
FUND, INC. INDEX FUND, INC.
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INVESTMENT IN SECURITIES--AT COST ....... $ 362,315,966 $ 58,463,680
============= ============
ASSETS
Investment in affiliated securities--at
value................................... $ -- $ 46,123
Investment in securities--at value....... 295,055,197/(c)/ 44,265,396/(c)/
Cash..................................... 10,001 10,060
Receivables:
Capital Shares sold..................... 77,702 4,708
Dividends and interest.................. 264,878 44,491
Investment securities sold.............. 2,222,814 --
Other assets............................. 14,737 775
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Total Assets 297,645,329 44,371,553
LIABILITIES
Accrued expenses......................... 493,227 24,251
Payables:
Capital Shares reacquired............... 175,440 7,878
Investment securities purchased......... 2,124,649 --
Collateral obligation on securities
loaned, at value........................ 14,271,088 630,044
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Total Liabilities 17,064,404 662,173
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NET ASSETS APPLICABLE TO OUTSTANDING
SHARES ................................. $ 280,580,925 $ 43,709,380
============= ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital......................... $ 516,744,271 $ 60,726,173
Accumulated undistributed
(overdistributed) net investment income
(operating loss)........................ (995,950) 106,739
Accumulated undistributed
(overdistributed) net realized gain
(loss).................................. (167,906,627) (3,109,908)
Net unrealized appreciation
(depreciation) of investments........... (67,260,769) (14,013,624)
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Total Net Assets $ 280,580,925 $ 43,709,380
============= ============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized........................ 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets...................... $ 236,510,149 $ 37,008,728
Shares issued and outstanding.......... 10,571,300 5,461,287
Net asset value per share.............. $ 22.37 $ 6.78
Maximum offering price per share /(a)/ $ 23.73 $ 6.88
============= ============
Class B: Net Assets...................... $ 44,070,776 $ 6,700,652
Shares issued and outstanding.......... 2,038,857 987,295
Net asset value per share /(b)/ ....... $ 21.62 $ 6.79
============= ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value for
Principal Growth Fund, Inc. and 1.50% of the offering price or 1.52% of the
net asset value for Principal LargeCap Stock Index Fund, Inc.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(c) /Includes fair market value of securities loaned, see "Securities Lending"
in Notes to Financial Statements.
See accompanying notes.
3
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
MIDCAP PARTNERS BLUE
FUND, INC. CHIP FUND, INC.
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INVESTMENT IN SECURITIES--AT COST ..... $416,405,520 $144,424,346
============ ============
ASSETS
Investment in securities--at value..... $438,034,874/(c)/ $128,891,255/(c)/
Cash................................... 52,595 572,815
Receivables:
Capital Shares sold................... 134,322 5,693
Dividends and interest................ 190,970 128,588
Investment securities sold............ 443,984 232,179
Other assets........................... 9,008 3,495
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Total Assets 438,865,753 129,834,025
LIABILITIES
Accrued expenses....................... 411,274 106,317
Payables:
Capital Shares reacquired............. 150,814 57,285
Investment securities purchased....... 1,504,028 110,141
Collateral obligation on securities
loaned, at value...................... 44,964,442 179,000
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Total Liabilities 47,030,558 452,743
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NET ASSETS APPLICABLE TO OUTSTANDING
SHARES ............................... $391,835,195 $129,381,282
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital....................... $366,454,446 $184,706,983
Accumulated undistributed
(overdistributed) net investment
income (operating loss)............... (324,729) (198,233)
Accumulated undistributed
(overdistributed) net realized gain
(loss)................................ 4,076,124 (39,596,845)
Net unrealized appreciation
(depreciation) of investments......... 21,629,354 (15,530,623)
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Total Net Assets $391,835,195 $129,381,282
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A
SHARE):
Shares authorized...................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets.................... $329,705,260 $103,221,191
Shares issued and outstanding........ 10,122,351 7,432,092
Net asset value per share............ $ 32.57 $ 13.89
Maximum offering price per share
/(a)/ ................................ $ 34.56 $ 14.74
============ ============
Class B: Net Assets.................... $ 62,129,935 $ 26,160,091
Shares issued and outstanding........ 1,997,154 1,945,187
Net asset value per share /(b)/ ..... $ 31.11 $ 13.45
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(c) /Includes fair market value of securities loaned, see "Securities Lending"
in Notes to Financial Statements.
/ /
See accompanying notes.
4
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
PARTNERS EQUITY PARTNERS LARGECAP
GROWTH FUND, INC. BLEND FUND, INC.
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INVESTMENT IN SECURITIES--AT COST ..... $ 58,267,967 $ 33,396,988
============ ============
ASSETS
Investment in securities--at value..... $49,807,744/(c)/ $ 32,075,460
Cash................................... 1,612,936 1,241,358
Receivables:
Capital Shares sold................... 6,537 65,501
Dividends and interest................ 28,561 64,233
Investment securities sold............ 257,739 87,772
Other assets........................... 995 234
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Total Assets 51,714,512 33,534,558
LIABILITIES
Accrued expenses....................... 129,931 6,255
Payables:
Capital Shares reacquired............. 11,078 9,356
Investment securities purchased....... 985,867 43,894
Collateral obligation on securities
loaned, at value...................... 688,088 --
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Total Liabilities 1,814,964 59,505
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NET ASSETS APPLICABLE TO OUTSTANDING
SHARES ............................... $ 49,899,548 $ 33,475,053
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital....................... $ 88,783,920 $ 37,215,092
Accumulated undistributed
(overdistributed) net investment
income (operating loss)............... (256,288) (13,655)
Accumulated undistributed
(overdistributed) net realized gain
(loss)................................ (30,167,861) (2,404,856)
Net unrealized appreciation
(depreciation) of investments......... (8,460,223) (1,321,528)
------------ ------------
Total Net Assets $ 49,899,548 $ 33,475,053
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A
SHARE):
Shares authorized...................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets.................... $ 37,367,338 $ 23,845,446
Shares issued and outstanding........ 6,054,197 2,938,189
Net asset value per share............ $ 6.17 $ 8.12
Maximum offering price per share
/(a)/ ................................ $ 6.55 $ 8.62
============ ============
Class B: Net Assets.................... $ 12,532,210 $ 9,629,607
Shares issued and outstanding........ 2,084,627 1,206,681
Net asset value per share /(b)/ ..... $ 6.01 $ 7.98
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(c) /Includes fair market value of securities loaned, see "Securities Lending"
in Notes to Financial Statements.
See accompanying notes.
5
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
PARTNERS LARGECAP PARTNERS MIDCAP
VALUE FUND, INC. GROWTH FUND, INC.
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- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST ..... $ 36,097,546 $ 16,819,195
============ ============
ASSETS
Investment in securities--at value..... $ 33,681,991 $ 18,555,014
Cash................................... 1,578,827 313,643
Receivables:
Capital Shares sold................... 13,269 8,614
Dividends and interest................ 52,094 784
Investment securities sold............ -- 479,850
Other assets........................... 265 301
------------ ------------
Total Assets 35,326,446 19,358,206
LIABILITIES
Accrued expenses....................... 28,908 31,562
Payables:
Capital Shares reacquired............. 17,652 --
Investment securities purchased....... 45,630 383,708
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Total Liabilities 92,190 415,270
------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING
SHARES ............................... $ 35,234,256 $ 18,942,936
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital....................... $ 38,409,482 $ 35,246,271
Accumulated undistributed
(overdistributed) net investment
income (operating loss)............... 46,545 (166,557)
Accumulated undistributed
(overdistributed) net realized gain
(loss)................................ (806,216) (17,872,597)
Net unrealized appreciation
(depreciation) of investments......... (2,415,555) 1,735,819
------------ ------------
Total Net Assets $ 35,234,256 $ 18,942,936
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A
SHARE):
Shares authorized...................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets.................... $ 25,797,508 $ 14,181,462
Shares issued and outstanding........ 2,761,153 3,710,792
Net asset value per share............ $ 9.34 $ 3.82
Maximum offering price per share
/(a)/ ................................ $ 9.91 $ 4.05
============ ============
Class B: Net Assets.................... $ 9,436,748 $ 4,761,474
Shares issued and outstanding........ 1,021,249 1,273,117
Net asset value per share /(b)/ ..... $ 9.24 $ 3.74
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
6
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
PARTNERS SMALLCAP REAL ESTATE
GROWTH FUND, INC. FUND, INC.
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INVESTMENT IN SECURITIES--AT COST ......... $ 6,964,842 $ 38,637,610
============ ============
ASSETS
Investment in securities--at value......... $ 7,415,435 $ 43,819,335
Cash....................................... 411,915 10,000
Receivables:
Capital Shares sold....................... 25,870 52,586
Dividends and interest.................... 2,817 38,323
Investment securities sold................ 45,576 --
Other assets............................... 102 447
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Total Assets 7,901,715 43,920,691
LIABILITIES
Accrued expenses........................... 3,846 9,181
Payables:
Capital Shares reacquired................. -- 60,411
Investment securities purchased........... 47,258 --
------------ ------------
Total Liabilities 51,104 69,592
------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 7,850,611 $ 43,851,099
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital........................... $ 13,634,049 $ 39,019,434
Accumulated undistributed (overdistributed)
net investment income (operating loss).... (62,615) (6,633)
Accumulated undistributed (overdistributed)
net realized gain (loss).................. (6,171,416) (343,427)
Net unrealized appreciation (depreciation)
of investments............................ 450,593 5,181,725
------------ ------------
Total Net Assets $ 7,850,611 $ 43,851,099
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized.......................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets........................ $ 5,679,333 $ 32,791,950
Shares issued and outstanding............ 1,414,074 2,972,929
Net asset value per share................ $ 4.02 $ 11.03
Maximum offering price per share /(a)/ .. $ 4.27 $ 11.70
============ ============
Class B: Net Assets........................ $ 2,171,278 $ 11,059,149
Shares issued and outstanding............ 550,166 1,008,107
Net asset value per share /(b)/ ......... $ 3.95 $ 10.97
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
7
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
SMALLCAP UTILITIES
FUND, INC. FUND, INC.
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- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST .......... $ 80,076,140 $ 70,637,077
============ ============
ASSETS
Investment in securities--at value.......... $80,707,760/(c)/ $ 66,636,758
Cash........................................ 10,000 2,882,809
Receivables:
Capital Shares sold........................ 13,146 1,276
Dividends and interest..................... 32,429 339,583
Investment securities sold................. 982,339 456,131
Other assets................................ 1,440 1,966
------------ ------------
Total Assets 81,747,114 70,318,523
LIABILITIES
Accrued expenses............................ 148,370 117,463
Payables:
Capital Shares reacquired.................. 3,159 13,175
Investment securities purchased............ 232,859 2,161,766
Collateral obligation on securities loaned,
at value................................... 8,484,097 --
------------ ------------
Total Liabilities 8,868,485 2,292,404
------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 72,878,629 $ 68,026,119
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital............................ $117,056,950 $ 97,956,172
Accumulated undistributed (overdistributed)
net investment income (operating loss)..... (389,095) 204,372
Accumulated undistributed (overdistributed)
net realized gain (loss)................... (44,420,846) (26,134,106)
Net unrealized appreciation (depreciation)
of investments............................. 631,620 (4,000,319)
------------ ------------
Total Net Assets $ 72,878,629 $ 68,026,119
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized........................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets......................... $ 56,715,291 $ 58,740,898
Shares issued and outstanding............. 8,860,798 6,553,999
Net asset value per share................. $ 6.40 $ 8.96
Maximum offering price per share /(a)/ ... $ 6.79 $ 9.51
============ ============
Class B: Net Assets......................... $ 16,163,338 $ 9,285,221
Shares issued and outstanding............. 2,638,641 1,040,977
Net asset value per share /(b)/ .......... $ 6.13 $ 8.92
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(c) /Includes fair market value of securities loaned, see "Securities Lending"
in Notes to Financial Statements.
See accompanying notes.
8
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
BALANCED CAPITAL VALUE
FUND, INC. FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends.................................... $ 465,123 $ 3,760,027
Interest..................................... 878,535 39,838
Securities lending........................... 768 23,378
----------- ------------
Total Income 1,344,426 3,823,243
Expenses:
Management and investment advisory fees...... 266,407 1,032,595
Distribution fees - Class A.................. 93,527 261,602
Distribution fees - Class B.................. 77,211 133,158
Registration fees - Class A.................. 6,856 4,768
Registration fees - Class B.................. 4,624 4,523
Shareholder reports - Class A................ 4,219 14,830
Shareholder reports - Class B................ 1,043 3,683
Transfer and administrative fees - Class A... 84,384 187,325
Transfer and administrative fees - Class B... 21,419 42,414
Auditing and legal fees...................... 4,026 4,876
Custodian fees............................... 17,509 7,588
Directors' fees.............................. 1,422 12,011
Registration fees............................ 8,444 10,204
Transfer and administrative fees............. 153,258 319,357
Other expenses............................... 2,945 11,579
----------- ------------
Total Gross Expenses 747,294 2,050,513
Less: Fees paid indirectly................... 1,863 10,808
Less: Fees waived - Class A.................. -- 28,669/(a)/
----------- ------------
Total Net Expenses 745,431 2,011,036
----------- ------------
Net Investment Income (Operating Loss) 598,995 1,812,207
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions...................... (2,998,554) (20,317,005)
Other investment companies................... 1,138 2,156
Change in unrealized appreciation/depreciation
of:
Investments.................................. 4,849,186 31,876,642
----------- ------------
Net Realized and Unrealized Gain (Loss) on
Investments 1,851,770 11,561,793
----------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 2,450,765 $ 13,374,000
=========== ============
/(a) /Period from March 1, 2003, through April 30, 2003.
See accompanying notes.
9
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
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PRINCIPAL PRINCIPAL
GROWTH LARGECAP STOCK
FUND, INC. INDEX FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends................................... $ 1,289,470 $ 353,493
Dividends from affiliates................... -- 397
Interest.................................... 22,036 8,885
Securities lending.......................... 3,106 1,290
----------- ----------
Total Income 1,314,612 364,065
Expenses:
Management and investment advisory fees..... 812,285 70,203
Distribution fees - Class A................. 243,225 25,585
Distribution fees - Class B................. 226,181 13,266
Registration fees - Class A................. 7,911 5,424
Registration fees - Class B................. 6,728 4,463
Shareholder reports - Class A............... 20,742 1,883
Shareholder reports - Class B............... 6,274 512
Transfer and administrative fees - Class A.. 321,956 34,783
Transfer and administrative fees - Class B.. 91,075 7,465
Auditing and legal fees..................... 4,837 3,240
Custodian fees.............................. 2,377 10,387
Directors' fees............................. 9,570 1,062
Registration fees........................... 18,342 8,810
Transfer and administrative fees............ 529,347 69,267
Other expenses.............................. 9,712 1,323
----------- ----------
Total Gross Expenses 2,310,562 257,673
Less: Fees paid indirectly.................. 1,250 --
Less: Fees waived - Class A................. -- 53,848
Less: Fees waived - Class B................. -- 12,760
----------- ----------
Total Net Expenses 2,309,312 191,065
----------- ----------
Net Investment Income (Operating Loss) (994,700) 173,000
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions..................... (8,890,551) (109,875)
Investment transactions in affiliates....... -- 71
Futures contracts........................... -- (88,304)
Other investment companies.................. -- 1,517
Change in unrealized
appreciation/depreciation of:
Investments................................. 12,456,847 1,528,692
Investments in affiliates................... -- 1,619
Futures contracts........................... -- 157,238
----------- ----------
Net Realized and Unrealized Gain (Loss) on
Investments 3,566,296 1,490,958
----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 2,571,596 $1,663,958
=========== ==========
See accompanying notes.
10
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
MIDCAP PARTNERS BLUE
FUND, INC. CHIP FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends..................................... $ 2,756,238 $ 1,096,689
Interest...................................... 135,004 5,926
Securities lending............................ 70,008 2,066
----------- ------------
Total Income 2,961,250 1,104,681
Expenses:
Management and investment advisory fees....... 1,091,407 382,369
Distribution fees - Class A................... 365,077 120,340
Distribution fees - Class B................... 184,954 139,582
Registration fees - Class A................... 7,248 6,122
Registration fees - Class B................... 7,440 3,890
Shareholder reports - Class A................. 19,999 12,506
Shareholder reports - Class B................. 5,853 4,823
Transfer and administrative fees - Class A.... 284,234 157,681
Transfer and administrative fees - Class B.... 78,313 53,692
Auditing and legal fees....................... 4,594 4,877
Custodian fees................................ 7,429 5,071
Directors' fees............................... 10,336 4,440
Registration fees............................. 12,617 5,395
Shareholder meeting expense .................. -- 87,969
Transfer and administrative fees.............. 498,393 311,907
Other expenses................................ 11,786 4,498
----------- ------------
Total Gross Expenses 2,589,680 1,305,162
Less: Fees paid indirectly.................... -- 2,248
----------- ------------
Total Net Expenses 2,589,680 1,302,914
----------- ------------
Net Investment Income (Operating Loss) 371,570 (198,233)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions....................... 5,985,711 (17,048,336)
Futures contracts............................. -- 212,425
Other investment companies.................... 187,789 359
Change in unrealized appreciation/depreciation
of:
Investments................................... 13,283,020 19,591,051
Futures contracts............................. -- (61,607)
----------- ------------
Net Realized and Unrealized Gain (Loss) on
Investments 19,456,520 2,693,892
----------- ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations $19,828,090 $ 2,495,659
=========== ============
See accompanying notes.
11
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PARTNERS EQUITY PARTNERS LARGECAP
GROWTH FUND, INC. BLEND FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends............................. $ 281,966 $ 266,386
Interest.............................. 1,669 1,520
Securities lending.................... 1,667 --
---------- ----------
Total Income 285,302 267,906
Expenses:
Management and investment advisory
fees................................. 180,414 105,615
Distribution fees - Class A........... 44,874 25,509
Distribution fees - Class B........... 57,186 33,796
Registration fees - Class A........... 6,811 14,334
Registration fees - Class B........... 5,984 5,091
Shareholder reports - Class A......... 5,017 832
Shareholder reports - Class B......... 1,856 337
Transfer and administrative fees -
Class A.............................. 70,629 12,872
Transfer and administrative fees -
Class B.............................. 26,505 5,607
Auditing and legal fees............... 3,422 3,363
Custodian fees........................ 8,718 12,164
Directors' fees....................... 1,479 437
Registration fees..................... 10,181 6,285
Transfer and administrative fees...... 155,973 54,565
Other expenses........................ 1,841 754
---------- ----------
Total Gross Expenses 580,890 281,561
Less: Fees paid indirectly............ -- 1,403
Less: Fees waived - Class A........... 28,808/(a)/ --
Less: Fees waived - Class B........... 10,492/(a)/ --
---------- ----------
Total Net Expenses 541,590 280,158
---------- ----------
Net Investment Income (Operating Loss) (256,288) (12,252)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from:
Investment transactions............... (701,719) (527,833)
Other investment companies............ -- 7,619
Change in unrealized
appreciation/depreciation of:
Investments........................... 1,262,637 1,202,842
---------- ----------
Net Realized and Unrealized Gain (Loss)
on Investments 560,918 682,628
---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 304,630 $ 670,376
========== ==========
/(a) /Period from March 1, 2003, through April 30, 2003.
See accompanying notes.
12
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PARTNERS LARGECAP PARTNERS MIDCAP
VALUE FUND, INC. GROWTH FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends............................. $ 406,397 $ 19,573
Interest.............................. 1,917 296
---------- ----------
Total Income 408,314 19,869
Expenses:
Management and investment advisory
fees................................. 118,082 77,647
Distribution fees - Class A........... 28,976 16,171
Distribution fees - Class B........... 36,469 19,865
Registration fees - Class A........... 22,180 4,852
Registration fees - Class B........... 10,119 5,123
Shareholder reports - Class A......... 966 1,437
Shareholder reports - Class B......... 380 521
Transfer and administrative fees -
Class A.............................. 13,780 24,433
Transfer and administrative fees -
Class B.............................. 6,025 9,077
Auditing and legal fees............... 3,359 3,116
Custodian fees........................ 4,805 9,954
Directors' fees....................... 483 450
Registration fees..................... 7,196 8,163
Transfer and administrative fees...... 65,997 60,040
Other expenses........................ 692 669
---------- ----------
Total Gross Expenses 319,509 241,518
Less: Fees paid indirectly............ 6,172 3,842
Less: Fees waived - Class A........... -- 38,415
Less: Fees waived - Class B........... -- 15,819
---------- ----------
Total Net Expenses 313,337 183,442
---------- ----------
Net Investment Income (Operating Loss) 94,977 (163,573)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from:
Investment transactions............... (169,822) (58,720)
Change in unrealized
appreciation/depreciation of:
Investments........................... 1,793,556 1,227,495
---------- ----------
Net Realized and Unrealized Gain (Loss)
on Investments 1,623,734 1,168,775
---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $1,718,711 $1,005,202
========== ==========
See accompanying notes.
13
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PARTNERS SMALLCAP REAL ESTATE
GROWTH FUND, INC. FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends................................... $ 12,320 $ 970,818
Interest.................................... 414 3,864
-------- ----------
Total Income 12,734 974,682
Expenses:
Management and investment advisory fees..... 30,548 180,118
Distribution fees - Class A................. 6,220 37,816
Distribution fees - Class B................. 7,809 40,849
Registration fees - Class A................. 3,884 5,065
Registration fees - Class B................. 3,979 5,052
Shareholder reports - Class A............... 360 1,052
Shareholder reports - Class B............... 160 389
Transfer and administrative fees - Class A.. 8,299 21,546
Transfer and administrative fees - Class B.. 3,110 7,906
Auditing and legal fees..................... 2,928 3,376
Custodian fees.............................. 7,123 2,694
Directors' fees............................. 185 832
Registration fees........................... 5,783 7,398
Transfer and administrative fees............ 32,440 66,703
Other expenses.............................. 450 1,390
-------- ----------
Total Gross Expenses 113,278 382,186
Less: Fees paid indirectly.................. 2,426 --
Less: Fees waived - Class A................. 26,697 --
Less: Fees waived - Class B................. 11,175 --
-------- ----------
Total Net Expenses 72,980 382,186
-------- ----------
Net Investment Income (Operating Loss) (60,246) 592,496
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions..................... 78,446 126,534
Other investment companies.................. 416 84,599
Change in unrealized
appreciation/depreciation of:
Investments................................. 80,398 3,712,189
-------- ----------
Net Realized and Unrealized Gain (Loss) on
Investments 159,260 3,923,322
-------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 99,014 $4,515,818
======== ==========
See accompanying notes.
14
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
SMALLCAP UTILITIES
FUND, INC. FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends....................................... $ 402,009 $ 1,500,883
Interest........................................ 12,780 410,699
Securities lending.............................. 16,520 --
----------- -----------
Total Income 431,309 1,911,582
Expenses:
Management and investment advisory fees......... 299,259 201,621
Distribution fees - Class A..................... 68,703 72,067
Distribution fees - Class B..................... 72,361 45,396
Registration fees - Class A..................... 4,256 6,941
Registration fees - Class B..................... 3,955 5,982
Shareholder reports - Class A................... 5,893 4,167
Shareholder reports - Class B................... 1,843 1,293
Transfer and administrative fees - Class A...... 99,721 65,517
Transfer and administrative fees - Class B...... 33,343 20,032
Auditing and legal fees......................... 3,731 4,014
Custodian fees.................................. 18,370 2,231
Directors' fees................................. 2,174 2,294
Registration fees............................... 7,639 10,068
Transfer and administrative fees................ 196,558 139,980
Other expenses.................................. 2,693 2,251
----------- -----------
Total Gross Expenses 820,499 583,854
Less: Fees paid indirectly...................... 95 --
----------- -----------
Total Net Expenses 820,404 583,854
----------- -----------
Net Investment Income (Operating Loss) (389,095) 1,327,728
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions......................... (7,285,448) (1,116,989)
Other investment companies...................... 12,070 --
Change in unrealized appreciation/depreciation
of:
Investments..................................... 9,451,833 4,194,458
----------- -----------
Net Realized and Unrealized Gain (Loss) on
Investments 2,178,455 3,077,469
----------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations $ 1,789,360 $ 4,405,197
=========== ===========
See accompanying notes.
15
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
BALANCED CAPITAL VALUE
FUND, INC. FUND, INC.
- -------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ----------------- ------------- -------------------
- -------------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ 598,995 $ 1,717,950 $ 1,812,207 $ 4,049,622
Net realized gain
(loss) from
investment
transactions......... (2,997,416) (16,279,670) (20,314,849) (36,542,711)
Change in unrealized
appreciation/depreciation
of investments........ 4,849,186 2,509,843 31,876,642 (5,784,560)
----------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 2,450,765 (12,051,877) 13,374,000 (38,277,649)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... (595,051) (1,695,340) (4,002,940) (3,633,650)
Class B............... (60,296) (212,594) (126,542) (31,087)
Class R............... N/A (77,861)/(a)/ N/A (71,112)/(a)/
----------- ------------ ------------ ------------
Total Dividends and
Distributions (655,347) (1,985,795) (4,129,482) (3,735,849)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 4,084,158 26,932,230 11,150,512 43,352,837
Class B............... 1,743,549 3,501,800 2,418,247 5,005,243
Class C............... N/A 48,851/(b)/ N/A 70,324/(b)/
Class R............... N/A 137,045/(a)/ N/A 190,851/(a)/
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... 580,039 1,652,402 3,908,306 3,534,011
Class B............... 59,299 209,671 124,744 30,615
Class R............... N/A 77,689/(a)/ N/A 71,050/(a)/
Shares redeemed:
Class A............... (7,814,814) (19,239,659) (20,022,988) (60,364,436)
Class B............... (2,729,664) (4,693,606) (3,938,630) (7,606,147)
Class C............... N/A (454,349)/(b)/ N/A (738,555)/(b)/
Class R............... N/A (17,988,548)/(a)/ N/A (24,091,902)/(a)/
----------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions (4,077,433) (9,816,474) (6,359,809) (40,546,109)
----------- ------------ ------------ ------------
Total Increase
(Decrease) (2,282,015) (23,854,146) 2,884,709 (82,559,607)
NET ASSETS
Beginning of period.... 92,140,683 115,994,829 360,250,736 442,810,343
----------- ------------ ------------ ------------
End of period
(including
undistributed net
investment income as
set forth below)...... $89,858,668 $ 92,140,683 $363,135,445 $360,250,736
=========== ============ ============ ============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ 58,009 $ 96,836 $ 971,466 $ 3,299,549
=========== ============ ============ ============
/(a) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
/(b) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
See accompanying notes.
16
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
GROWTH LARGECAP STOCK
FUND, INC. INDEX FUND, INC.
- -------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ----------------- ------------ -------------------
- -------------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ (994,700) $ (2,804,294) $ 173,000 $ 240,468
Net realized gain
(loss) from
investment
transactions......... (8,890,551) (95,093,850) (196,591) (1,343,350)
Change in unrealized
appreciation/depreciation
of investments........ 12,456,847 30,258,927 1,687,549 (6,426,145)
------------ ------------ ----------- ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 2,571,596 (67,639,217) 1,663,958 (7,529,027)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... -- -- (255,049) (80,513)
Class B............... -- -- (24,147) (917)
Class R............... N/A -- N/A (20,160)/(b)/
------------ ------------ ----------- ------------
Total Dividends and
Distributions -- -- (279,196) (101,590)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 18,078,120 72,434,189 6,873,918 34,434,181
Class B............... 4,205,233 10,375,854 1,559,320 4,273,283
Class C............... N/A 278,052/(a)/ N/A 123,923/(a)/
Class R............... N/A 495,170/(b)/ N/A 291,969/(b)/
Shares issued in
acquisitions:
Class A............... -- 7,153,814 -- --
Class B............... -- 2,308,042 -- --
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... -- -- 243,056 79,598
Class B............... -- -- 23,508 895
Class R............... N/A -- N/A 19,174/(b)/
Shares redeemed:
Class A............... (27,528,292) (68,093,257) (4,822,609) (8,526,814)
Class B............... (8,463,406) (16,896,819) (774,240) (2,311,444)
Class C............... N/A (1,760,583)/(a)/ N/A (1,608,108)/(a)/
Class R............... N/A (32,963,123)/(b)/ N/A (19,200,366)/(b)/
------------ ------------ ----------- ------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions (13,708,345) (26,668,661) 3,102,953 7,576,291
------------ ------------ ----------- ------------
Total Increase
(Decrease) (11,136,749) (94,307,878) 4,487,715 (54,326)
NET ASSETS
Beginning of period.... 291,717,674 386,025,552 39,221,665 39,275,991
------------ ------------ ----------- ------------
End of period
(including
undistributed net
investment income as
set forth below)...... $280,580,925 $291,717,674 $43,709,380 $ 39,221,665
============ ============ =========== ============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (995,950) $ -- $ 106,739 $ 212,935
============ ============ =========== ============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
17
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
MIDCAP PARTNERS BLUE
FUND, INC. CHIP FUND, INC.
- --------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ----------------- ------------- -------------------
- --------------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ 371,570 $ 641,778 $ (198,233) $ (368,654)
Net realized gain
(loss) from
investment
transactions......... 6,173,500 (2,104,112) (16,835,552) (17,761,893)
Change in unrealized
appreciation/depreciation
of investments........ 13,283,020 (12,746,563) 19,529,444 (17,920,608)
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 19,828,090 (14,208,897) 2,495,659 (36,051,155)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... (1,022,374) (706,130) -- --
From net realized gain
on investments:
Class A............... -- (9,521,601) -- --
Class B............... -- (2,227,460) -- --
Class C............... N/A (35,151)/(a)/ N/A --
Class R............... N/A (749,281)/(b)/ N/A --
Tax return of capital
distributions:
Class A............... -- -- -- (83,661)
------------ ------------ ------------ ------------
Total Dividends and
Distributions (1,022,374) (13,239,623) -- (83,661)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 21,376,839 76,945,011 8,169,263 48,404,259
Class B............... 6,108,798 14,523,881 2,450,920 6,383,199
Class C............... N/A 191,088/(a)/ N/A 147,468/(a)/
Class R............... N/A 272,008/(b)/ N/A 226,814/(b)/
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... 1,003,190 10,064,406 -- 81,359
Class B............... -- 2,198,297 -- --
Class C............... N/A 29,548/(a)/ N/A --
Class R............... N/A 748,773/(b)/ N/A --
Shares redeemed:
Class A............... (27,882,195) (62,966,964) (11,533,720) (33,498,639)
Class B............... (11,525,308) (18,554,471) (4,385,524) (9,541,360)
Class C............... N/A (1,261,936)/(a)/ N/A (1,175,243)/(a)/
Class R............... N/A (27,572,400)/(b)/ N/A (31,654,064)/(b)/
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions (10,918,676) (5,382,759) (5,299,061) (20,626,207)
------------ ------------ ------------ ------------
Total Increase
(Decrease) 7,887,040 (32,831,279) (2,803,402) (56,761,023)
NET ASSETS
Beginning of period.... 383,948,155 416,779,434 132,184,684 188,945,707
------------ ------------ ------------ ------------
End of period
(including
undistributed net
investment income as
set forth below)...... $391,835,195 $383,948,155 $129,381,282 $132,184,684
============ ============ ============ ============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (324,729) $ 326,075 $ (198,233) $ --
============ ============ ============ ============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
18
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PARTNERS EQUITY PARTNERS LARGECAP
GROWTH FUND, INC. BLEND FUND, INC.
- ----------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ---------------- ------------ ------------------
- ----------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ (256,288) $ (781,411) $ (12,252) $ (41,646)
Net realized gain
(loss) from
investment
transactions......... (701,719) (7,270,997) (520,214) (1,603,921)
Change in unrealized
appreciation/depreciation
of investments........ 1,262,637 (4,949,407) 1,202,842 (1,790,442)
----------- ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 304,630 (13,001,815) 670,376 (3,436,009)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 4,726,532 22,616,940 6,658,403 16,061,243
Class B............... 1,581,977 5,262,936 3,589,540 5,672,266
Class C............... N/A 217,409/(a)/ N/A 71,591/(a)/
Class R............... N/A 151,919/(b)/ N/A N/A
Shares redeemed:
Class A............... (5,071,779) (12,975,115) (2,075,545) (2,366,682)
Class B............... (2,032,087) (4,446,713) (700,922) (890,467)
Class C............... N/A (2,390,618)/(a)/ N/A (1,214,597)/(a)/
Class R............... N/A (7,960,152)/(b)/ N/A N/A
----------- ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions (795,357) 476,606 7,471,476 17,333,354
----------- ------------ ----------- -----------
Total Increase
(Decrease) (490,727) (12,525,209) 8,141,852 13,897,345
NET ASSETS
Beginning of period.... 50,390,275 62,915,484 25,333,201 11,435,856
----------- ------------ ----------- -----------
End of period
(including
undistributed net
investment income as
set forth below)...... $49,899,548 $ 50,390,275 $33,475,053 $25,333,201
=========== ============ =========== ===========
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (256,288) $ -- $ (13,655) $ --
=========== ============ =========== ===========
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
19
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PARTNERS LARGECAP PARTNERS MIDCAP
VALUE FUND, INC. GROWTH FUND, INC.
- ----------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ---------------- ------------ ------------------
- ----------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ 94,977 $ 57,214 $ (163,573) $ (378,654)
Net realized gain
(loss) from
investment
transactions......... (169,822) (639,319) (58,720) (2,009,685)
Change in unrealized
appreciation/depreciation
of investments........ 1,793,556 (3,716,939) 1,227,495 (2,362,032)
----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 1,718,711 (4,299,044) 1,005,202 (4,750,371)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... (83,042) (30,757) -- --
From net realized gain
on investments:
Class A............... -- (81,207) -- --
Class B............... -- (28,320) -- --
Class C............... N/A (12,296)/(a)/ N/A --
----------- ----------- ----------- -----------
Total Dividends and
Distributions (83,042) (152,580) -- --
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 5,730,375 19,851,387 2,535,511 9,641,378
Class B............... 2,392,407 6,813,507 944,551 2,379,939
Class C............... N/A 77,035/(a)/ N/A 40,937/(a)/
Class R............... N/A N/A N/A 83,067/(b)/
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... 68,328 110,946 -- --
Class B............... -- 26,440 -- --
Class C............... N/A 12,285/(a)/ N/A --
Shares redeemed:
Class A............... (2,893,576) (3,020,706) (1,858,872) (4,111,555)
Class B............... (815,243) (1,056,185) (588,306) (965,009)
Class C............... N/A (1,469,123)/(a)/ N/A (906,040)/(a)/
Class R............... N/A N/A N/A (2,460,226)/(b)/
----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions 4,482,291 21,345,586 1,032,884 3,702,491
----------- ----------- ----------- -----------
Total Increase
(Decrease) 6,117,960 16,893,962 2,038,086 (1,047,880)
NET ASSETS
Beginning of period.... 29,116,296 12,222,334 16,904,850 17,952,730
----------- ----------- ----------- -----------
End of period
(including
undistributed net
investment income as
set forth below)...... $35,234,256 $29,116,296 $18,942,936 $16,904,850
=========== =========== =========== ===========
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ 46,545 $ 37,098 $ (166,557) $ --
=========== =========== =========== ===========
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
20
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PARTNERS SMALLCAP REAL ESTATE
GROWTH FUND, INC. FUND, INC.
- --------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
----------- --------------- ------------ ------------------
- --------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ (60,246) $ (136,369) $ 592,496 $ 921,297
Net realized gain
(loss) from
investment
transactions......... 78,862 (3,818,569) 211,133 817,036
Change in unrealized
appreciation/depreciation
of investments........ 80,398 477,053 3,712,189 67,830
---------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 99,014 (3,477,885) 4,515,818 1,806,163
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... -- -- (541,803) (641,172)
Class B............... -- -- (140,958) (175,093)
Class R............... N/A N/A N/A (52,490)/(b)/
---------- ----------- ----------- -----------
Total Dividends and
Distributions -- -- (682,761) (868,755)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 1,265,375 4,666,245 6,342,916 21,806,632
Class B............... 703,647 1,311,160 1,854,857 4,827,780
Class C............... N/A 6,956/(a)/ N/A 106,277/(a)/
Class R............... N/A N/A N/A 56,574/(b)/
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... -- -- 385,905 529,828
Class B............... -- -- 97,160 139,170
Class R............... N/A N/A N/A 52,475/(b)/
Shares redeemed:
Class A............... (558,175) (1,127,984) (6,025,074) (6,099,959)
Class B............... (137,291) (173,172) (817,850) (1,865,424)
Class C............... N/A (724,360)/(a)/ N/A (472,205)/(a)/
Class R............... N/A N/A N/A (7,378,695)/(b)/
---------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions 1,273,556 3,958,845 1,837,914 11,702,453
---------- ----------- ----------- -----------
Total Increase
(Decrease) 1,372,570 480,960 5,670,971 12,639,861
NET ASSETS
Beginning of period.... 6,478,041 5,997,081 38,180,128 25,540,267
---------- ----------- ----------- -----------
End of period
(including
undistributed net
investment income as
set forth below)...... $7,850,611 $ 6,478,041 $43,851,099 $38,180,128
========== =========== =========== ===========
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (62,615) $ -- $ (6,633) $ 85,876
========== =========== =========== ===========
/(a ) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
21
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
SMALLCAP UTILITIES
FUND, INC. FUND, INC.
- -----------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ----------------- ------------ ------------------
- -----------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ (389,095) $ (1,043,723) $ 1,327,728 $ 2,438,959
Net realized gain
(loss) from
investment
transactions......... (7,273,378) (25,722,351) (1,116,989) (18,781,719)
Change in unrealized
appreciation/depreciation
of investments........ 9,451,833 9,892,815 4,194,458 599,212
----------- ------------ ----------- ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 1,789,360 (16,873,259) 4,405,197 (15,743,548)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... -- -- (1,213,095) (2,053,979)
Class B............... -- -- (156,539) (262,625)
Class R............... N/A -- N/A (23,458)/(b)/
----------- ------------ ----------- ------------
Total Dividends and
Distributions -- -- (1,369,634) (2,340,062)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 5,485,506 36,332,770 3,591,640 16,103,337
Class B............... 2,277,092 6,292,276 1,062,539 2,787,298
Class C............... N/A 127,969/(a)/ N/A 61,427/(a)/
Class R............... N/A 263,737/(b)/ N/A 79,350/(b)/
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... -- -- 1,136,267 1,915,035
Class B............... -- -- 150,914 251,867
Class R............... N/A -- N/A 23,428/(b)/
Shares redeemed:
Class A............... (6,548,411) (17,873,701) (6,487,617) (17,528,185)
Class B............... (2,082,974) (4,189,922) (2,326,231) (5,426,859)
Class C............... N/A (1,305,418)/(a)/ N/A (705,129)/(a)/
Class R............... N/A (18,637,462)/(b)/ N/A (7,745,051)/(b)/
----------- ------------ ----------- ------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions (868,787) 1,010,249 (2,872,488) (10,183,482)
----------- ------------ ----------- ------------
Total Increase
(Decrease) 920,573 (15,863,010) 163,075 (28,267,092)
NET ASSETS
Beginning of period.... 71,958,056 87,821,066 67,863,044 96,130,136
----------- ------------ ----------- ------------
End of period
(including
undistributed net
investment income as
set forth below)...... $72,878,629 $ 71,958,056 $68,026,119 $ 67,863,044
=========== ============ =========== ============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (389,095) $ -- $ 204,372 $ 246,278
=========== ============ =========== ============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
22
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
1. ORGANIZATION
Principal Balanced Fund, Inc., Principal Capital Value Fund, Inc., Principal
Growth Fund, Inc., Principal LargeCap Stock Index Fund, Inc., Principal MidCap
Fund, Inc., Principal Partners Blue Chip Fund, Inc., Principal Partners Equity
Growth Fund, Inc., Principal Partners LargeCap Blend Fund, Inc., Principal
Partners LargeCap Value Fund, Inc., Principal Partners MidCap Growth Fund, Inc.,
Principal Partners SmallCap Growth Fund, Inc., Principal Real Estate Fund, Inc.,
Principal SmallCap Fund, Inc., and Principal Utilities Fund, Inc. (the "Domestic
Growth Funds") are registered under the Investment Company Act of 1940, as
amended, as open-end diversified management investment companies and operate in
the mutual fund industry.
Each fund offers both Class A shares and Class B shares to the public. Class A
shares generally are sold with an initial sales charge based on declining rates
and certain purchases may be subject to a contingent deferred sales charge
("CDSC") upon redemption. Class B shares are sold without an initial sales
charge, but bear higher ongoing distribution fees and are subject to a declining
CDSC on certain redemptions made within six years of purchase. Class B shares
automatically convert into Class A shares, based on relative net asset value
(without a sales charge), seven years after purchase. Both classes of shares for
each fund represent interests in the same portfolio of investments, and will
vote together as a single class except where otherwise required by law or as
determined by each of the Domestic Growth Funds' respective Board of Directors.
In addition, the Board of Directors of each fund declares separate dividends on
each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the Domestic Growth
Funds:
SECURITY VALUATION . The Domestic Growth Funds value securities for which market
quotations are readily available at market value, which is determined using the
last reported sale price or, if no sales are reported, as is regularly the case
for some securities traded over-the-counter, the last reported bid price. When
reliable market quotations are not considered to be readily available, which may
be the case, for example, with respect to certain debt securities and preferred
stocks, 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 each fund's Board of Directors.
Short-term securities are valued at amortized cost, which approximates market.
INCOME AND INVESTMENT TRANSACTIONS. . The Domestic Growth Funds record
investment transactions on a trade date basis. The identified cost basis has
been used in determining the net realized gain or loss from investment
transactions and unrealized appreciation or depreciation of investments. The
Domestic Growth Funds record dividend income on the ex-dividend date. Interest
income is recognized on an accrual basis. Discounts and premiums on securities
are accreted/amortized over the lives of the respective securities. The Domestic
Growth Funds allocate daily all income and realized and unrealized gains or
losses to each class of shares based upon the relative proportion of the value
of shares outstanding of each class.
EXPENSES. . The Domestic Growth Funds allocate daily all expenses (other than
class-specific expenses) to each class of shares based upon the relative
proportion of the value of shares outstanding of each class. Class-specific
expenses charged to each class during the period ended April 30, 2003 are
included separately in the statements of operations.
DISTRIBUTIONS TO SHAREHOLDERS . Dividends and distributions are recorded on the
ex-dividend date. Dividends and distributions from net investment income and
net realized gain from investments are determined in accordance with federal tax
regulations, which may differ from accounting principles generally accepted in
the United States. These differences are primarily due to differing treatments
for mortgage-backed securities, net operating losses, amortization of premiums
and discounts, losses deferred due to wash sales, commission recapture, and
futures contracts. Permanent book and tax basis differences are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification.
Distributions which exceed current and accumulated earnings and profits for
federal income tax purposes are reported as tax return of capital distributions.
23
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES . No provision for federal income taxes is considered
necessary because each fund is qualified as a "regulated investment company"
under the Internal Revenue Code and intends to distribute each year
substantially all of its net investment income and realized capital gains to
shareholders.
3. OPERATING POLICIES
FEES PAID INDIRECTLY. . The Domestic Growth Funds direct certain portfolio
transactions to a brokerage firm that, in turn, pays a portion of the Fund's
operating expenses. These amounts are reflected in the statement of operations.
FUTURES CONTRACTS . The Domestic Growth Funds may enter into futures contracts
as a hedge against changes in market conditions, and to a limited extent, for
non-hedging purposes. Initial margin deposits are made by cash deposits or
segregation of specific securities as may be required by the exchange on which
the transaction was conducted. Pursuant to the contracts, a fund agrees to
receive from or pay to the broker, an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the fund as a variation margin receivable
or payable on futures contracts. During the period the futures contracts are
open, daily changes in the value of the contracts are recognized as unrealized
gains or losses. These unrealized gains or losses are included as a component of
net unrealized appreciation (depreciation) of investments on the statement of
assets and liabilities. When the contracts are closed, the fund recognizes a
realized gain or loss equal to the difference between the proceeds from, or cost
of, the closing transaction and the fund's cost basis in the contract.
JOINT TRADING ACCOUNT . The Domestic Growth Funds may, pursuant to an exemptive
order issued by the Securities and Exchange Commission, transfer uninvested
funds into a joint trading account. The order permits the Domestic Growth Funds'
cash balances to be deposited into a single joint account along with the cash of
other registered investment companies managed by Principal Management
Corporation (the "Manager"). These balances may be invested in one or more
short-term instruments.
LINE OF CREDIT . The Domestic Growth Funds participate with other funds managed
by Principal Management Corporation in an unsecured joint line of credit with
two banks which allow the participants to borrow up to $75 million,
collectively. Borrowings are made solely to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Interest is charged to each
participant, based on its borrowings, at a rate equal to the Fed Funds Rate plus
..50%. Additionally, a commitment fee is charged at the annual rate of .09% on
the amount of the line of credit. The commitment fee is allocated among the
participating funds in proportion to their average net assets during each
calendar quarter. At April 30, 2003, the Domestic Growth Funds had no
outstanding borrowings under the line of credit.
SECURITIES LENDING. . The Domestic Growth Funds may lend portfolio securities to
approved brokers to earn additional income. Each applicable fund receives
collateral against the loaned securities and maintains collateral in an amount
not less than 100% of the market value of the loaned securities during the
period of the loan. The market value of loaned securities is determined at the
close of business of the funds and any additional required collateral is
delivered to the funds on the next business day. Although risk is mitigated by
the collateral, the fund could experience a delay in recovering its securities
and possible loss of income or value if the borrower fails to return them. As of
April 30, 2003, the Domestic Growth Funds had securities on loan as follows:
VALUE OF VALUE OF SHORT-TERM
SECURITIES LOANED COLLATERAL INVESTMENT SECURITIES
----------------- --------------------------------
Principal Balanced $ 139,401 $ 146,395
Fund, Inc.
Principal Capital Value 7,484,644 7,744,532
Fund, Inc.
Principal Growth Fund, 14,017,825 14,271,088
Inc.
Principal LargeCap 608,892 630,044
Stock Index Fund, Inc.
Principal MidCap Fund, 44,087,251 44,964,442
Inc.
Principal Partners Blue 176,741 179,000
Chip Fund, Inc.
Principal Partners 661,825 688,088
Equity Growth Fund,
Inc.
Principal SmallCap 8,264,563 8,484,097
Fund, Inc.
24
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES
MANAGEMENT SERVICES . The Domestic Growth Funds have agreed to pay investment
advisory and management fees to Principal Management Corporation (wholly owned
by Princor Financial Services Corporation, a subsidiary of Principal Financial
Services, Inc.) computed at an annual percentage rate of each fund's average
daily net assets. The annual rates used in this calculation for the Domestic
Growth Funds are as follows:
NET ASSETS OF FUNDS (IN MILLIONS)
----------------------------------------
FIRST NEXT NEXT NEXT OVER
$100 $100 $100 $100 $400
----- ---- ---- ---- ----
Principal Balanced Fund, Inc. .60% .55% .50% .45% .40%
Principal MidCap Fund, Inc. .65 .60 .55 .50 .45
Principal Real Estate Fund, Inc. .90 .85 .80 .75 .70
Principal SmallCap Fund, Inc. .85 .80 .75 .70 .65
Principal Utilities Fund, Inc. .60 .55 .50 .45 .40
NET ASSETS OF FUNDS (IN MILLIONS)
----------------------------------------
FIRST NEXT NEXT NEXT OVER
$250 $250 $250 $250 $1,000
----- ---- ---- ---- ------
Principal Capital Value Fund, .60% .55% .50% .45% .40%
Inc.
Principal Growth Fund, Inc. .60 .55 .50 .45 .40
Principal Partners Blue Chip .60 .55 .50 .45 .40
Fund, Inc.
Principal Partners Equity .75 .70 .65 .60 .55
Growth Fund, Inc.
Principal Partners LargeCap .75 .70 .65 .60 .55
Blend Fund, Inc.
Principal Partners LargeCap .75 .70 .65 .60 .55
Value Fund, Inc.
Principal Partners SmallCap .90 .85 .80 .75 .70
Growth Fund, Inc.
OVERALL FEE
-------------
Principal LargeCap Stock Index Fund, Inc. .35%
Principal Partners MidCap Growth Fund, Inc. .90
The Domestic Growth Funds also reimburse the Manager for transfer and
administrative services, including the cost of accounting, data processing,
supplies and other services rendered.
The Manager has voluntarily agreed to limit the Fund's expenses for certain of
the Domestic Growth Funds. The limits are expressed as a percentage of average
daily net assets attributable to each class on an annualized basis during the
reporting period.
The operating expense limits, which were maintained at or below that shown, are
as follows:
EXPENSE LIMIT
CLASS A CLASS B
------- -------
Principal Capital Value Fund, Inc.
Principal LargeCap Stock Index Fund, Inc. .90 1.25%
Principal Partners Equity Growth Fund, Inc.
Principal Partners LargeCap Blend Fund, Inc. 1.75 2.50
Principal Partners LargeCap Value Fund, Inc. 1.75 2.50
Principal Partners MidCap Growth Fund, Inc. 1.95 2.70
Principal Partners SmallCap Growth Fund, Inc. 1.95 2.70
Effective March 1, 2003, the operating expense limits for Principal Partners
LargeCap Blend Fund, Inc. and Principal Partners LargeCap Value Fund, Inc.
decreased from 1.95% to 1.75% for Class A shares and from 2.70% to 2.50% for
Class B shares. Also effective March 1, 2003, expense limits began for Class A
shares of Principal Capital Value Fund, Inc. and Principal Partners Equity
Growth Fund, Inc. Class A and Class B shares.
25
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
DISTRIBUTION FEES . The Domestic Growth Funds bear distribution fees with
respect to each class computed at an annual rate of the average daily net assets
attributable to each class of each fund. The annual rate will not exceed the
following limits:
CLASS A CLASS B
------- -------
All Domestic Growth Funds
(except Principal LargeCap Stock Index Fund, Inc.) .25% 1.00%
Principal LargeCap Stock Index Fund, Inc. .15% .50%
Distribution fees are paid to Princor Financial Services Corporation, the
principal underwriter. A portion of the fees is subsequently remitted to retail
dealers. Pursuant to the distribution agreements for Class A and Class B shares,
fees that are unused by the principal underwriter at the end of the fiscal year
are returned to the respective Domestic Growth Funds which generated the excess.
SALES CHARGES . Princor Financial Services Corporation, as principal
underwriter, receives proceeds of any CDSC on certain Class A and Class B share
redemptions. The charge is based on declining rates which for Class A shares
begin at .75% and Class B shares at 4.00% (0.25% and 1.25% for Principal
LargeCap Stock Index Fund, Inc. share classes, respectively) of the lesser of
current market value or the cost of shares being redeemed. Princor Financial
Services Corporation also retains sales charges on sales of Class A shares based
on declining rates. As of March 1, 2003, the maximum rate increased from 4.75%
to 5.75% of the offering price (1.50% for Principal LargeCap Stock Index Fund,
Inc.). The aggregate amount of these charges retained by Princor Financial
Services Corporation for the period ended April 30, 2003, were as follows:
CLASS A CLASS B
------- -------
Principal Balanced Fund, Inc. $ 84,913 $18,799
Principal Capital Value Fund, Inc. 201,191 29,720
Principal Growth Fund, Inc. 334,225 46,333
Principal LargeCap Stock Index Fund, Inc. 30,611 5,328
Principal MidCap Fund, Inc. 398,601 54,933
Principal Partners Blue Chip Fund, Inc. 146,360 36,023
Principal Partners Equity Growth Fund, Inc. 104,401 25,072
Principal Partners LargeCap Blend Fund, Inc. 137,302 7,569
Principal Partners LargeCap Value Fund, Inc. 116,619 9,071
Principal Partners MidCap Growth Fund, Inc. 49,840 7,296
Principal Partners SmallCap Growth Fund, Inc. 31,191 1,572
Principal Real Estate Fund, Inc. 97,039 8,096
Principal SmallCap Fund, Inc. 126,631 20,127
Principal Utilities Fund, Inc. 68,531 13,361
AFFILIATED OWNERSHIP . At April 30, 2003, Principal Life Insurance Company (an
affiliate of the Manager), affiliates of Principal Life Insurance Company and
benefit plans sponsored on behalf of Principal Life Insurance Company owned
shares of the Domestic Growth Funds as follows:
CLASS A CLASS B
------- -------
Principal Capital Value Fund, Inc. 6,088,386 --
Principal Growth Fund, Inc. 44,641 15,198
Principal LargeCap Stock Index Fund, Inc. 200,413 --
Principal Partners LargeCap Blend Fund, Inc. 399,168 100,000
Principal Partners LargeCap Value Fund, Inc. 403,699 100,869
Principal Partners MidCap Growth Fund, Inc. 297,903 100,000
Principal Partners SmallCap Growth Fund, Inc. 399,265 100,000
Principal Real Estate Fund, Inc. 709,908 268,126
26
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
As of April 30, 2003, Principal LargeCap Stock Index Fund, Inc. owned 1,585
shares of Principal Financial Group (parent company of Principal Financial
Services, Inc.).
AFFILIATED BROKERAGE COMMISSIONS . No brokerage commissions were paid by the
Domestic Growth Funds to Princor Financial Services Corporation during the
period. Brokerage commissions were paid to other affiliates by Principal
Partners Blue Chip Fund, Inc., Principal Partners Equity Growth Fund, Inc.,
Principal Partners LargeCap Value Fund, Inc., and Principal Utilities Fund,
Inc., in the amounts of $475, $27, $7,410 and $19,159, respectively.
5. INVESTMENT TRANSACTIONS
For the period ended April 30, 2003, the cost of investment securities purchased
and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Domestic Growth Funds were as
follows:
PURCHASES SALES
------------------------ --------------
Principal Balanced Fund, Inc. $ 44,709,510 $ 46,604,561
Principal Capital Value Fund, Inc. 259,968,008 268,239,742
Principal Growth Fund, Inc. 70,062,154 85,460,648
Principal LargeCap Stock Index Fund, Inc. 4,224,897 924,969
Principal MidCap Fund, Inc. 97,470,170 82,139,895
Principal Partners Blue Chip Fund, Inc. 72,293,324 74,565,055
Principal Partners Equity Growth Fund, Inc. 31,163,420 30,952,387
Principal Partners LargeCap Blend Fund, Inc. 12,144,351 4,504,992
Principal Partners LargeCap Value Fund, Inc. 5,869,246 1,371,346
Principal Partners MidCap Growth Fund, Inc. 16,456,359 15,942,148
Principal Partners SmallCap Growth Fund, Inc. 2,925,009 1,637,056
Principal Real Estate Fund, Inc. 19,694,747 17,341,835
Principal SmallCap Fund, Inc. 52,604,044 55,533,600
Principal Utilities Fund, Inc. 9,735,875 11,978,565
Principal Balanced Fund, Inc. may trade portfolio securities on a
"to-be-announced" (TBA) basis. In a TBA transaction, the fund commits to
purchase or sell securities for which all specific information is not known at
the time of the trade. Securities purchased on a TBA basis are not settled until
they are delivered to the fund, normally 15 to 30 days later. These transactions
are subject to market fluctuations and their current value is determined in the
same manner as for other portfolio securities. As of April 30, 2003, Principal
Balanced Fund, Inc. had TBA purchase commitments involving securities with face
amounts of $1,300,000, cost of $1,314,094, and market values of $1,320,594.
At April 30, 2003, net federal income tax unrealized appreciation (depreciation)
of investments held by the Domestic Growth Funds was composed of the following:
NET UNREALIZED
TAX COST OF APPRECIATION
INVESTMENTS GROSS UNREALIZED (DEPRECIATION)
-----------------------------------
IN SECURITIES APPRECIATION (DEPRECIATION) OF INVESTMENTS
------------- ------------ -------------- --------------
Principal Balanced Fund, Inc. $ 95,422,485 $ 5,640,084 $ (9,870,967) $ (4,230,883)
Principal Capital Value Fund, Inc. 362,270,527 27,183,891 (18,675,674) 8,508,217
Principal Growth Fund, Inc. 362,749,793 25,191,662 (92,886,258) (67,694,596)
Principal LargeCap Stock Index Fund, Inc. 58,475,304 2,847,113 (17,010,898) (14,163,785)
Principal MidCap Fund, Inc. 416,746,840 42,132,084 (20,844,050) 21,288,034
Principal Partners Blue Chip Fund, Inc. 146,438,265 8,402,096 (25,949,106) (17,547,010)
Principal Partners Equity Growth Fund, Inc. 60,735,689 1,244,479 (12,172,424) (10,927,945)
Principal Partners LargeCap Blend Fund, Inc. 33,622,517 1,677,154 (3,224,211) (1,547,057)
Principal Partners LargeCap Value Fund, Inc. 36,118,134 2,366,530 (4,802,673) (2,436,143)
Principal Partners MidCap Growth Fund, Inc. 16,881,720 2,353,227 (679,933) 1,673,294
Principal Partners SmallCap Growth Fund, Inc. 6,969,757 889,155 (443,477) 445,678
Principal Real Estate Fund, Inc. 38,721,654 5,460,889 (363,208) 5,097,681
Principal SmallCap Fund, Inc. 80,245,514 4,952,384 (4,490,138) 462,246
Principal Utilities Fund, Inc. 70,637,077 5,212,836 (9,213,155) (4,000,319)
27
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS (CONTINUED)
The Domestic Growth Funds' investments are with various issuers in various
industries. The schedules of investments contained herein summarize
concentrations of credit risk by issuer and industry.
6. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares were as follows:
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
BALANCED CAPITAL VALUE GROWTH LARGECAP STOCK
FUND, INC. FUND, INC. FUND, INC. INDEX FUND, INC.
---------- ------------- ----------- ------------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A....................................... 384,848 604,738 837,886 1,058,149
Class B....................................... 165,636 132,485 202,545 238,256
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 55,097 211,717 -- 37,278
Class B....................................... 5,657 6,783 -- 3,600
Shares redeemed:
Class A....................................... (740,885) (1,094,630) (1,286,051) (739,205)
Class B....................................... (260,305) (217,360) (411,180) (120,236)
-------- ---------- ---------- ---------
Net Increase (Decrease) (389,952) (356,267) (656,800) 477,842
======== ========== ========== =========
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
BALANCED CAPITAL VALUE GROWTH LARGECAP STOCK
FUND, INC. FUND, INC. FUND, INC. INDEX FUND, INC.
----------- ------------- ----------- ------------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A................... 2,184,054 2,026,603 2,620,956 4,216,015
Class B................... 296,548 242,962 402,856 555,764
Class C*.................. 3,932 3,375 9,405 14,757
Class R**................. 10,852 9,047 16,562 34,031
Shares issued in acquisition:
Class A................... -- -- 323,702 --
Class B................... -- -- 107,601 --
Shares issued in reinvestment of dividends and
distributions:
Class A................... 139,868 164,068 -- 9,376
Class B................... 17,730 1,427 -- 105
Class C*.................. -- -- -- --
Class R**................. 6,265 3,325 -- 2,261
Shares redeemed:
Class A................... (1,657,027) (2,940,497) (2,698,311) (1,142,748)
Class B................... (407,487) (374,272) (688,719) (293,698)
Class C*.................. (37,333) (34,888) (61,566) (192,328)
Class R**................. (1,438,117) (1,111,217) (1,114,179) (2,243,833)
---------- ---------- ---------- ----------
Net Increase (Decrease) (880,715) (2,010,067) (1,081,693) 959,702
========== ========== ========== ==========
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
MIDCAP PARTNERS BLUE CHIP PARTNERS EQUITY PARTNERS LARGECAP
FUND, INC. FUND, INC. GROWTH FUND, INC. BLEND FUND, INC.
---------- ------------------ ----------------- -------------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A....................................... 685,948 611,369 790,618 848,387
Class B....................................... 204,793 187,506 273,399 466,290
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 32,082 -- -- --
Class B....................................... -- -- -- --
Shares redeemed:
Class A....................................... (897,157) (865,831) (854,087) (265,982)
Class B....................................... (388,701) (337,131) (349,519) (92,440)
-------- -------- -------- --------
Net Increase (Decrease) (363,035) (404,087) (139,589) 956,255
======== ======== ======== ========
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
MIDCAP PARTNERS BLUE CHIP PARTNERS EQUITY PARTNERS LARGECAP
FUND, INC. FUND, INC. GROWTH FUND, INC. BLEND FUND, INC.
------------ ------------------ ----------------- -------------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A...................... 2,230,858 2,765,940 2,927,505 1,778,650
Class B...................... 446,289 406,269 739,678 640,523
Class C*..................... 5,781 8,237 26,156 7,597
Class R**.................... 7,881 12,690 18,706 N/A
Shares issued in reinvestment of dividends and
distributions:
Class A...................... 293,362 4,478 -- --
Class B...................... 66,919 -- -- --
Class C*..................... 910 -- -- --
Class R**.................... 22,745 -- -- N/A
Shares redeemed:
Class A...................... (1,882,068 ) (2,137,577) (1,834,435) (277,885)
Class B...................... (578,451 ) (625,365) (629,729) (106,284)
Class C*..................... (38,354) (68,445) (301,760) (127,478)
Class R**.................... (814,599 ) (1,750,820) (961,620) N/A
---------- ---------- ---------- ---------
Net Increase (Decrease) (238,727 ) (1,384,593) (15,499) 1,915,123
========== ========== ========== =========
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
PARTNERS LARGECAP PARTNERS MIDCAP PARTNERS SMALLCAP REAL ESTATE
VALUE FUND, INC. GROWTH FUND, INC. GROWTH FUND, INC. FUND, INC.
----------------- ----------------- ------------------ -------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A....................................... 636,206 698,442 331,037 602,499
Class B....................................... 267,767 265,465 184,855 177,035
Shares issued in reinvestment of dividends and
distributions:
Class A....................................... 7,492 -- -- 36,965
Class B....................................... -- -- -- 9,351
Shares redeemed:
Class A....................................... (321,656) (515,893) (146,243) (577,833)
Class B....................................... (92,437) (167,192) (36,466) (78,549)
-------- -------- -------- --------
Net Increase (Decrease) 497,372 280,822 333,183 169,468
======== ======== ======== ========
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
PARTNERS LARGECAP PARTNERS MIDCAP PARTNERS SMALLCAP REAL ESTATE
VALUE FUND, INC. GROWTH FUND, INC. GROWTH FUND, INC. FUND, INC.
----------------- ----------------- ------------------ -------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A...................... 1,923,352 2,021,655 787,967 2,097,231
Class B...................... 674,924 528,499 237,347 461,940
Class C*..................... 7,521 7,778 924 10,973
Class R**.................... N/A 15,089 N/A 5,727
Shares issued in reinvestment of dividends and
distributions:
Class A...................... 10,534 -- -- 49,988
Class B...................... 2,530 -- -- 13,270
Class C*..................... 1,177 -- -- --
Class R**.................... N/A -- N/A 5,300
Shares redeemed:
Class A...................... (311,324) (955,315) (216,542) (579,422)
Class B...................... (112,524) (236,529) (33,897) (176,406)
Class C*..................... (138,794) (177,675) (107,329) (47,206)
Class R**.................... N/A (461,558) N/A (735,972)
--------- --------- -------- ---------
Net Increase (Decrease) 2,057,396 741,944 668,470 1,105,423
========= ========= ======== =========
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
PRINCIPAL PRINCIPAL
SMALLCAP UTILITIES
FUND, INC. FUND, INC.
----------- ------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A........................................... 886,740 411,870
Class B........................................... 383,122 121,821
Shares issued in reinvestment of dividends and
distributions:
Class A........................................... -- 130,952
Class B........................................... -- 17,438
Shares redeemed:
Class A........................................... (1,063,992) (744,960)
Class B........................................... (352,933) (268,630)
----------- -----------
Net Increase (Decrease) (147,063) (331,509)
========== ===========
PRINCIPAL PRINCIPAL
SMALLCAP UTILITIES
FUND, INC. FUND, INC.
----------- -------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A.......................................... 4,286,033 1,587,989
Class B.......................................... 827,680 285,878
Class C*......................................... 15,403 5,863
Class R**........................................ 31,530 7,475
Shares issued in reinvestment of dividends and
distributions:
Class A.......................................... -- 202,603
Class B.......................................... -- 26,925
Class C*......................................... -- --
Class R**........................................ -- 2,264
Shares redeemed:
Class A.......................................... (2,324,948) (1,826,045)
Class B.......................................... (575,531) (566,311)
Class C*......................................... (156,529) (71,610)
Class R**........................................ (2,116,991) (732,913)
---------- ----------
Net Increase (Decrease) (13,353) (1,077,882)
========== ==========
* Period from November 1, 2001, through January 31, 2002 (discontinuation of
Class C shares).
** Period from November 1, 2001, through December 28, 2001 (discontinuation of
class R shares).
31
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Effective January 31, 2002 and December 28, 2001, respectively, Class C shares
and Class R shares were discontinued and exchanged into Class A shares as
follows:
CLASS C CLASS R
--------------------- ----------------------
SHARES DOLLARS SHARES DOLLARS
EXCHANGED EXCHANGED EXCHANGED EXCHANGED
--------- ---------- --------- -------------
Principal Balanced Fund, Inc. 32,927 $ 411,588 1,365,622 $17,234,146
Principal Capital Value Fund, 31,679 691,243 1,035,368 22,664,211
Inc.
Principal Growth Fund, Inc. 58,198 1,731,397 1,044,339 31,695,678
Principal LargeCap Stock 176,204 1,471,304 2,164,804 18,552,368
Index Fund, Inc.
Principal MidCap Fund, Inc. 35,586 1,237,322 741,644 26,150,354
Principal Partners Blue Chip 64,534 1,138,375 1,648,780 30,222,134
Fund, Inc.
Principal Partners Equity 279,489 2,252,682 913,104 7,642,679
Growth Fund, Inc.
Principal Partners LargeCap 126,217 1,212,946 N/A N/A
Blend Fund, Inc.
Principal Partners LargeCap 137,459 1,463,939 N/A N/A
Value Fund, Inc.
Principal Partners MidCap 170,137 879,610 441,049 2,372,843
Growth Fund, Inc.
Principal Partners SmallCap 106,457 723,907 N/A N/A
Growth Fund, Inc.
Principal Real Estate Fund, 30,150 303,614 726,511 7,308,697
Inc.
Principal SmallCap Fund, Inc. 146,825 1,265,635 2,023,972 18,074,070
Principal Utilities Fund, 51,740 511,193 699,252 7,412,070
Inc.
7. FEDERAL TAX INFORMATION
DISTRIBUTIONS TO SHAREHOLDERS . The federal income tax character of
distributions paid for periods ended April 30, 2003 and October 31, 2002,
respectively, were as follows:
ORDINARY INCOME LONG-TERM CAPITAL GAIN RETURN OF CAPITAL
------------ ------------- ---------
2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
Principal Balanced Fund, $ 655,347 $1,985,795 $ -- $ -- $-- $ --
Inc.
Principal Capital Value 4,129,482 3,735,849 -- -- -- --
Fund, Inc.
Principal Growth Fund, Inc. -- -- -- -- -- --
Principal LargeCap Stock 279,196 101,590 -- -- -- --
Index Fund, Inc.
Principal MidCap Fund, Inc. 1,022,374 706,130 -- 12,533,493 -- --
Principal Partners Blue Chip -- -- -- -- -- 83,661
Fund, Inc.
Principal Partners Equity -- -- -- -- -- --
Growth Fund, Inc.
Principal Partners LargeCap -- -- -- -- -- --
Blend Fund, Inc.
Principal Partners LargeCap 83,042 152,580 -- -- -- --
Value Fund, Inc.
Principal Partners MidCap -- -- -- -- -- --
Growth Fund, Inc.
Principal Partners SmallCap -- -- -- -- -- --
Growth Fund, Inc.
Principal Real Estate Fund, 682,761 868,755 -- -- -- --
Inc.
Principal SmallCap Fund, -- -- -- -- -- --
Inc.
Principal Utilities Fund, 1,369,634 2,340,062 -- -- -- --
Inc.
For federal income tax purposes, short-term capital gain distributions are
considered ordinary income distributions.
32
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
7. FEDERAL TAX INFORMATION (CONTINUED)
DISTRIBUTABLE EARNINGS. .
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY INCOME LONG-TERM CAPITAL GAINS
---------------- -----------------------
Principal Balanced Fund, Inc. $ 117,834 $--
Principal Capital Value Fund,
Inc. 3,299,549 --
Principal Growth Fund, Inc. -- --
Principal LargeCap Stock Index
Fund, Inc. 212,935 --
Principal MidCap Fund, Inc. 326,075 --
Principal Partners Blue Chip
Fund, Inc. -- --
Principal Partners Equity Growth
Fund, Inc. -- --
Principal Partners LargeCap Blend
Fund, Inc. -- --
Principal Partners LargeCap Value
Fund, Inc. 37,098 --
Principal Partners MidCap Growth
Fund, Inc. -- --
Principal Partners SmallCap
Growth Fund, Inc. -- --
Principal Real Estate Fund, Inc. 85,876 --
Principal SmallCap Fund, Inc. -- --
Principal Utilities Fund, Inc. 246,278 --
As of October 31, 2002, the components of distributable earnings on a federal
tax basis were as follows:
CAPITAL LOSS CARRYFORWARDS . Capital loss carryforwards are losses that can be
used to offset future capital gains of the fund. At October 31, 2002, the
Domestic Growth Funds had approximate net capital loss carryforwards as follows:
NET CAPITAL LOSS CARRYFORWARDS EXPIRING IN:
2008 2009 2010
------------- -------------- ----------------
Principal Balanced Fund, Inc. $ -- $ 507,000 $16,148,000
Principal Capital Value Fund, -- 15,220,000 34,377,000
Inc.
Principal Growth Fund, Inc. 1,861,000 58,703,000 98,172,000
Principal LargeCap Stock 4,000 1,122,000 1,755,000
Index Fund, Inc.
Principal MidCap Fund, Inc. -- -- 1,891,000
Principal Partners Blue Chip -- 1,979,000 15,878,000
Fund, Inc.
Principal Partners Equity 3,426,000 15,271,000 7,931,000
Growth Fund, Inc.
Principal Partners LargeCap -- 283,000 1,378,000
Blend Fund, Inc.
Principal Partners LargeCap -- -- 616,000
Value Fund, Inc.
Principal Partners MidCap 1,378,000 11,286,000 5,044,000
Growth Fund, Inc.
Principal Partners SmallCap -- 2,286,000 3,942,000
Growth Fund, Inc.
Principal Real Estate Fund, 498,000 -- --
Inc.
Principal SmallCap Fund, Inc. -- 5,919,000 31,111,000
Principal Utilities Fund, -- 6,235,000 18,782,000
Inc.
Principal Growth Fund, Inc. acquired approximately $10,067,000 of capital
losses, included above, as part of its acquisition of Principal Partners
LargeCap Growth Fund, Inc., which may be applied against realized net taxable
capital gains in future years, subject to certain limitations imposed by Section
382 of the Internal Revenue Code.
33
SCHEDULE OF INVESTMENTS
PRINCIPAL BALANCED FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (63.77%)
ADVERTISING SERVICES (0.04%)
$
WPP Group 1,023 36,480
AEROSPACE & DEFENSE (0.05%)
Herley Industries /1/ 1,200 19,393
Veridian /1/ 1,300 24,687
44,080
AEROSPACE & DEFENSE EQUIPMENT (0.45%)
Lockheed Martin 2,760 138,138
Moog /1/ 1,800 57,240
United Defense Industries /1/ 1,160 28,327
United Technologies 2,892 178,755
402,460
AGRICULTURAL CHEMICALS (0.04%)
Agrium 2,780 31,442
AIRLINES (0.04%)
Deutsche Lufthansa /1/ 3,850 39,529
APPAREL MANUFACTURERS (0.07%)
Jones Apparel Group /1/ 2,320 66,166
APPLIANCES (0.05%)
Electrolux 1,110 41,725
APPLICATIONS SOFTWARE (1.46%)
Citrix Systems /1/ 11,000 208,560
Intuit /1/ 2,770 107,421
Microsoft 34,680 886,767
MRO Software /1/ 3,900 33,423
Siebel Systems /1/ 8,740 75,776
1,311,947
AUTO-CARS & LIGHT TRUCKS (0.64%)
Ford Motor 31,600 325,480
Honda Motor 3,471 57,896
Nissan Motor 8,250 126,555
Peugeot 1,380 64,592
574,523
AUTO-MEDIUM & HEAVY DUTY TRUCKS (0.38%)
Paccar 5,900 344,619
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.15%)
American Axle & Manufacturing
Holdings /1/ 1,620 40,370
Lear /1/ 2,290 91,005
131,375
BEVERAGES-WINE & SPIRITS (0.08%)
Allied Domecq 2,980 68,689
BREWERY (0.60%)
Anheuser-Busch 10,770 537,208
BROADCASTING SERVICES & PROGRAMMING (0.36%)
Fox Entertainment Group /1/ 12,800 325,120
BUILDING PRODUCTS-WOOD (0.03%)
Universal Forest Products 1,750 30,800
BUILDING-RESIDENTIAL & COMMERCIAL (0.38%)
Dominion Homes /1/ 1,330 22,876
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
BUILDING-RESIDENTIAL & COMMERCIAL (CONTINUED)
$
Lennar 5,020 272,285
Lennar 502 26,882
Ryland Group 430 23,319
345,362
CABLE TV (0.49%)
Comcast /1/ 3,400 108,494
Comcast /1/ 10,930 328,556
437,050
CELLULAR TELECOMMUNICATIONS (0.30%)
America Movil 2,800 46,956
NTT DoCoMo 2,100 43,995
Vodafone Group 8,943 176,714
267,665
CHEMICALS-DIVERSIFIED (0.55%)
E. I. Du Pont de Nemours 6,392 271,852
Georgia Gulf 924 20,882
Hercules /1/ 19,700 199,955
492,689
CHEMICALS-SPECIALTY (0.22%)
Crompton 7,655 49,145
Sigma-Aldrich 3,000 149,460
198,605
CIRCUIT BOARDS (0.03%)
Benchmark Electronics /1/ 992 25,742
COMMERCIAL BANKS (1.56%)
Allied Irish Banks 5,180 158,663
Bank of Hawaii 2,400 79,104
Bank of Ireland 1,660 82,668
Bank of Nova Scotia 1,650 64,053
City National 1,820 74,929
First Tennessee National 6,840 299,592
Gold Banc 4,620 40,656
Greater Bay Bancorp 2,200 35,200
Independent Bank 1,057 21,436
Kookmin Bank 1,037 28,569
Local Financial /1/ 2,570 38,550
North Fork Bancorp. 4,080 132,029
Pacific Capital Bancorp. 700 22,828
Sky Financial Group 1,079 21,753
South Financial Group 1,280 31,360
UnionBanCal 6,000 242,400
Yardville National Bancorp. 1,400 25,508
1,399,298
COMMERCIAL SERVICE-FINANCE (0.81%)
H&R Block 3,890 150,232
Paychex 18,640 580,449
730,681
COMMUNICATIONS EQUIPMENT (0.06%)
Siemens 1,140 56,886
COMMUNICATIONS SOFTWARE (0.03%)
Inter-Tel 1,622 26,682
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMPUTER SERVICES (0.33%)
$
CACI International /1/ 700 24,451
Computer Sciences /1/ 7,280 239,876
Fidelity National Information Solutions /1/ 1,600 28,080
292,407
COMPUTERS (0.80%)
Hewlett-Packard 28,618 466,473
International Business Machines 3,020 256,398
722,871
COMPUTERS-INTEGRATED SYSTEMS (0.03%)
MTS Systems 1,800 22,574
COMPUTERS-MEMORY DEVICES (0.53%)
Hutchison Technology /1/ 856 20,236
Maxtor /1/ 3,533 19,432
SanDisk /1/ 1,157 27,999
Veritas Software /1/ 18,500 407,185
474,852
COMPUTERS-PERIPHERAL EQUIPMENT (0.03%)
Electronics for Imaging /1/ 1,410 27,072
CONSUMER PRODUCTS-MISCELLANEOUS (0.09%)
Fortune Brands 1,710 82,764
CONTAINERS-METAL & GLASS (0.38%)
Ball 5,660 317,866
Owens-Illinois /1/ 2,590 23,025
340,891
CONTAINERS-PAPER & PLASTIC (0.14%)
Pactiv /1/ 6,240 128,045
COSMETICS & TOILETRIES (1.32%)
Alberto-Culver 3,070 151,290
Alberto-Culver 500 23,840
Colgate-Palmolive 2,700 154,359
Elizabeth Arden /1/ 2,535 32,194
Procter & Gamble 9,172 824,104
1,185,787
DATA PROCESSING & MANAGEMENT (0.10%)
Automatic Data Processing 1,540 51,790
FileNet /1/ 2,520 38,783
90,573
DISTRIBUTION-WHOLESALE (0.15%)
Aviall /1/ 4,289 35,170
Fastenal 2,520 87,167
Watsco 1,000 15,490
137,827
DIVERSIFIED FINANCIAL SERVICES (1.24%)
Citigroup 28,304 1,110,932
DIVERSIFIED MANUFACTURING OPERATIONS (1.71%)
3M 2,970 374,339
General Electric 27,250 802,513
Griffon /1/ 1,700 23,154
Illinois Tool Works 4,930 315,421
Pentair 571 22,006
1,537,433
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
DIVERSIFIED MINERALS (0.10%)
$
Anglo American 4,050 57,794
Cia Vale do Rio Doce /1/ 1,170 32,713
90,507
DIVERSIFIED OPERATIONS (0.18%)
Brascan 5,890 132,584
Walter Industries 2,500 25,375
157,959
DIVERSIFIED OPERATORS-COMMERCIAL SERVICES (0.17%)
Rentokil Initial 1,900 28,393
Viad 6,300 126,693
155,086
ELECTRIC PRODUCTS-MISCELLANEOUS (0.04%)
Ametek 906 34,156
ELECTRIC-INTEGRATED (1.99%)
Black Hills 754 21,474
CH Energy Group 690 29,015
E.ON 3,600 165,420
Edison International /1/ 22,700 331,193
Endesa 2,850 40,612
Entergy 7,130 332,329
Exelon 6,900 365,976
Korea Electric Power 4,700 44,274
PPL 10,650 385,530
Scottish Power 2,796 69,089
1,784,912
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.17%)
Flextronics International /1/ 4,428 38,745
Koninklijke Philips Electronics 3,156 58,954
Kyocera 540 26,562
OSI Systems /1/ 1,760 26,629
150,890
ELECTRONIC COMPONENTS-SEMICONDUCTOR (0.49%)
Applied Micro Circuits /1/ 5,680 25,447
Intel 10,380 190,992
International Rectifier /1/ 1,110 25,108
Texas Instruments 8,710 161,048
Zoran /1/ 2,100 37,359
439,954
ELECTRONIC DESIGN AUTOMATION (0.05%)
Magma Design Automation /1/ 2,756 41,423
ELECTRONIC MEASUREMENT INSTRUMENTS (0.03%)
Trimble Navigation /1/ 925 23,356
ELECTRONICS-MILITARY (0.09%)
L-3 Communications Holdings /1/ 1,880 83,472
ENGINEERING-RESEARCH & DEVELOPMENT SERVICES (0.08%)
EMCOR Group /1/ 680 34,728
URS /1/ 2,600 36,920
71,648
ENGINES-INTERNAL COMBUSTION (0.05%)
Briggs & Stratton 1,020 46,043
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ENTERPRISE SOFTWARE & SERVICE (0.60%)
$
BEA Systems /1/ 21,990 235,513
Computer Associates International 11,900 193,256
Peoplesoft /1/ 7,200 108,216
536,985
ENTERTAINMENT SOFTWARE (0.03%)
Take-Two Interactive Software /1/ 1,100 24,750
FIDUCIARY BANKS (0.10%)
State Street 2,670 93,530
FINANCE-INVESTMENT BANKER & BROKER (1.52%)
Bear Stearns 5,690 380,320
Goldman Sachs Group 4,300 326,370
Morgan Stanley 14,070 629,632
Nomura Holdings 3,100 31,124
1,367,446
FINANCE-MORTGAGE LOAN/BANKER (0.41%)
Federal National Mortgage Association 5,060 366,293
FINANCE-OTHER SERVICES (0.06%)
Grupo Financiero BBVA Bancomer /1/ 3,100 53,916
FINANCIAL GUARANTEE INSURANCE (0.24%)
Ambac Financial Group 3,670 214,145
FOOD-CONFECTIONERY (0.34%)
Wm. Wrigley Jr. 5,420 307,368
FOOD-MISCELLANEOUS/DIVERSIFIED (0.84%)
American Italian Pasta /1/ 830 36,603
ConAgra Foods 15,900 333,900
McCormick 5,860 145,269
Nestle 1,525 77,725
Unilever 2,614 164,604
758,101
FOOD-RETAIL (0.61%)
Whole Foods Market /1/ 8,680 515,245
Wild Oats Markets /1/ 3,070 33,217
548,462
FOOD-WHOLESALE & DISTRIBUTION (0.57%)
Fresh Del Monte Produce 2,033 39,603
Sysco 16,520 474,619
514,222
GAS-DISTRIBUTION (0.24%)
AGL Resources 2,180 56,091
New Jersey Resources 1,130 38,703
ONEOK 2,060 39,078
Peoples Energy 970 37,685
Southern Union /1/ 2,860 39,897
211,454
HEALTH CARE COST CONTAINMENT (0.18%)
McKesson 5,800 160,892
HOME DECORATION PRODUCTS (0.47%)
Newell Rubbermaid 13,700 417,576
HOME FURNISHINGS (0.06%)
American Woodmark 676 32,414
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HOME FURNISHINGS (CONTINUED)
$
Furniture Brands International /1/ 1,032 24,510
56,924
HOTELS & MOTELS (0.09%)
Accor 5,019 82,704
HUMAN RESOURCES (0.08%)
Adecco 7,257 71,119
IDENTIFICATION SYSTEM-DEVELOPMENT (0.03%)
Identix /1/ 6,109 29,934
IMPORT & EXPORT (0.11%)
Mitsubishi 8,500 101,065
INSTRUMENTS-CONTROLS (0.02%)
Watts Industries 1,100 17,985
INSTRUMENTS-SCIENTIFIC (0.03%)
PerkinElmer 2,700 26,784
INTERNET FINANCIAL SERVICES (0.06%)
IndyMac Bancorp 2,450 54,586
INTERNET INFRASTRUCTURE SOFTWARE (0.02%)
TIBCO Software /1/ 3,990 19,671
INTERNET SECURITY (0.75%)
CheckFree /1/ 7,300 201,261
Symantec /1/ 10,800 474,660
675,921
INVESTMENT COMPANIES (0.05%)
American Capital Strategies 1,850 44,881
LIFE & HEALTH INSURANCE (0.54%)
John Hancock Financial Services 13,440 390,029
Scottish Annuity & Life Holdings 1,780 31,506
Stancorp Financial Group 600 32,220
UICI /1/ 2,370 28,203
481,958
MACHINERY TOOLS & RELATED PRODUCTS (0.03%)
Regal Beloit 1,665 28,555
MACHINERY-CONSTRUCTION & MINING (0.06%)
Terex /1/ 3,210 53,126
MACHINERY-FARM (0.04%)
AGCO /1/ 1,770 32,232
MACHINERY-GENERAL INDUSTRY (0.12%)
Albany International 2,300 54,602
Robbins & Myers 1,900 32,661
Tecumseh Products 600 24,144
111,407
MACHINERY-MATERIAL HANDLING (0.03%)
Nacco Industries 480 25,200
MEDICAL INSTRUMENTS (1.60%)
Biomet 5,510 167,834
Medtronic 15,900 759,066
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL INSTRUMENTS (CONTINUED)
$
St. Jude Medical /1/ 9,680 507,813
1,434,713
MEDICAL PRODUCTS (1.74%)
Becton Dickinson 8,330 294,882
Cooper 1,150 32,085
Johnson & Johnson 21,260 1,198,214
Wright Medical Group /1/ 1,780 33,784
1,558,965
MEDICAL STERILIZATION PRODUCT (0.13%)
Steris /1/ 5,171 117,382
MEDICAL-BIOMEDICAL/GENE (0.08%)
Bio-Rad Laboratories /1/ 560 26,180
Cambrex 1,675 29,145
Enzon /1/ 1,210 16,601
71,926
MEDICAL-DRUGS (2.31%)
Aventis 877 44,148
Bradley Pharmaceuticals /1/ 1,879 27,076
Endo Pharmaceuticals Holdings /1/ 1,376 22,732
Forest Laboratories /1/ 8,220 425,138
GlaxoSmithKline 2,628 106,487
Merck 3,000 174,540
Novartis 3,474 137,154
Novo Nordisk 1,887 68,498
Pfizer 32,260 991,995
Schering 1,200 53,508
Teva Pharmaceutical Industries 600 28,020
2,079,296
MEDICAL-HMO (1.05%)
Aetna 7,290 363,042
Cobalt /1/ 1,900 31,255
UnitedHealth Group 5,990 551,859
946,156
MEDICAL-HOSPITALS (0.04%)
United Surgical Partners International /1/ 2,106 39,024
MEDICAL-OUTPATIENT & HOME MEDICAL CARE (0.06%)
Select Medical /1/ 3,020 51,098
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.63%)
Cardinal Health 10,220 564,962
METAL PROCESSORS & FABRICATION (0.52%)
Precision Castparts 1,200 33,228
Quanex 1,300 37,388
SKF 1,100 32,087
Timken 20,800 368,160
470,863
METAL-DIVERSIFIED (0.12%)
Rio Tinto 1,120 85,904
WMC Resources /1/ 1,900 18,544
104,448
MISCELLANEOUS INVESTING (1.05%)
Alexandria Real Estate Equities 600 25,380
Annaly Mortgage Management 10,900 207,100
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MISCELLANEOUS INVESTING (CONTINUED)
$
Capital Automotive 1,330 34,434
CBL & Associates Properties 1,430 60,703
Chelsea Property Group 607 24,074
Glimcher Realty Trust 1,050 21,693
Healthcare Realty Trust 700 19,271
Home Properties of New York 870 30,215
Keystone Property Trust 1,610 27,692
Macerich 801 26,433
Mills 800 25,568
Pan Pacific Retail Properties 605 23,667
Prentiss Properties Trust 1,170 32,175
Realty Income 700 26,320
Simon Property Group 8,700 319,464
SL Green Realty 1,160 37,387
941,576
MISCELLANEOUS MANUFACTURERS (0.04%)
Applied Films /1/ 1,570 34,148
MONEY CENTER BANKS (1.80%)
ABN AMRO Holding 4,856 80,318
Bank of America 12,022 890,229
Barclays 4,202 117,740
BNP Paribas 7,400 173,677
HSBC Holdings 1,776 97,129
JP Morgan Chase 3,600 105,660
Royal Bank of Canada 2,450 102,288
UBS 1,150 54,568
1,621,609
MOTORCYCLE & MOTOR SCOOTER (0.47%)
Harley-Davidson 9,580 425,735
MULTI-LINE INSURANCE (1.86%)
Allstate 13,300 502,607
American International Group 9,810 568,490
ING Groep 2,400 39,168
MetLife 10,270 295,057
Old Republic International 8,650 264,690
1,670,012
MULTIMEDIA (1.38%)
Belo 8,310 187,058
Gannett 5,200 393,744
Media General 410 22,534
News 5,122 144,850
Viacom /1/ 11,349 492,660
1,240,846
NETWORKING PRODUCTS (1.37%)
Cisco Systems /1/ 59,150 889,616
Emulex /1/ 16,600 340,134
1,229,750
NON-HAZARDOUS WASTE DISPOSAL (0.03%)
Waste Connections /1/ 900 30,276
OFFICE AUTOMATION & EQUIPMENT (0.40%)
Canon 4,973 199,467
Global Imaging Systems /1/ 1,310 24,235
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OFFICE AUTOMATION & EQUIPMENT (CONTINUED)
$
Ikon Office Solutions 17,120 132,851
356,553
OIL COMPANY-EXPLORATION & PRODUCTION (0.86%)
Anadarko Petroleum 1,900 84,360
Apache 5,574 319,111
Burlington Resources 1,950 90,305
Canadian Natural Resources 1,800 60,084
Cimarex Energy /1/ 1,339 26,378
Denbury Resources /1/ 1,850 19,610
Encore Acquisition /1/ 1,590 27,412
Houston Exploration /1/ 820 22,935
Swift Energy /1/ 2,800 23,296
Talisman Energy 1,570 62,627
Westport Resources /1/ 1,770 36,887
773,005
OIL COMPANY-INTEGRATED (3.31%)
BP Amoco 700 26,978
ChevronTexaco 3,197 200,804
ConocoPhillips 4,800 241,440
ENI 1,585 112,614
Exxon Mobil 52,891 1,861,763
Occidental Petroleum 10,940 326,559
Shell Transport & Trading 2,709 97,768
TotalFinaElf 1,555 102,163
2,970,089
OIL FIELD MACHINERY & EQUIPMENT (0.02%)
Universal Compression Holdings /1/ 1,000 18,140
OIL REFINING & MARKETING (0.14%)
Premcor /1/ 814 18,144
Statoil 13,500 106,110
124,254
OIL-FIELD SERVICES (0.04%)
Seacor Smit /1/ 520 18,626
Tetra Technologies /1/ 600 15,960
34,586
PAPER & RELATED PRODUCTS (0.11%)
Boise Cascade 1,135 26,071
Louisiana-Pacific /1/ 4,590 37,087
UPM-Kymmene Oyj 2,396 35,940
99,098
PHARMACEUTICALS (0.04%)
Cima Labs /1/ 1,600 38,640
PHOTO EQUIPMENT & SUPPLIES (0.16%)
Eastman Kodak 4,880 145,961
PIPELINES (0.15%)
Questar 3,400 102,680
TransCanada PipeLines 1,930 30,764
133,444
PROPERTY & CASUALTY INSURANCE (0.75%)
Arch Capital Group /1/ 1,550 53,955
Fidelity National Financial 8,050 276,920
Penn-America Group 4,580 47,678
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PROPERTY & CASUALTY INSURANCE (CONTINUED)
$
PMA Capital 2,970 25,364
ProAssurance /1/ 2,120 54,887
Selective Insurance Group 1,300 32,617
Travelers Property Casualty 11,170 181,512
672,933
PUBLICLY TRADED INVESTMENT FUND (0.15%)
iShares MSCI Japan Index Fund /1/ 12,300 78,843
iShares Russell 2000 Value Index Fund 468 54,213
133,056
PUBLISHING-NEWSPAPERS (0.25%)
Tribune 4,630 226,777
PUBLISHING-PERIODICALS (0.03%)
Wolters Kluwer 2,200 28,653
RADIO (0.19%)
Emmis Communications /1/ 8,000 151,760
Radio One /1/ 1,400 21,420
173,180
RECREATIONAL VEHICLES (0.04%)
Thor Industries 1,090 34,858
REGIONAL BANKS (2.35%)
Fifth Third Bancorp 6,990 344,537
U.S. Bancorp 24,079 533,350
Wachovia 15,600 596,076
Wells Fargo 13,198 636,935
2,110,898
REINSURANCE (0.15%)
Converium Holding /1/ 3,180 72,409
Platinum Underwriters Holdings 2,190 57,925
130,334
RESPIRATORY PRODUCTS (0.04%)
Respironics /1/ 930 35,731
RETAIL-APPAREL & SHOE (0.14%)
AnnTaylor Stores /1/ 1,400 33,124
Brown Shoe 480 14,030
Shoe Carnival /1/ 1,530 22,262
Too /1/ 1,540 28,583
Urban Outfitters /1/ 1,010 30,118
128,117
RETAIL-ARTS & CRAFTS (0.30%)
Michaels Stores /1/ 8,610 268,976
RETAIL-AUTO PARTS (0.02%)
PEP Boys-Manny, Moe & Jack 2,590 22,170
RETAIL-BEDDING (0.99%)
Bed Bath & Beyond /1/ 22,400 885,024
RETAIL-COMPUTER EQUIPMENT (0.17%)
GameStop /1/ 12,939 154,621
RETAIL-CONSUMER ELECTRONICS (0.03%)
Rex Stores /1/ 2,170 23,284
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-DISCOUNT (0.80%)
$
Wal-Mart Stores 12,750 718,080
RETAIL-DRUG STORE (0.33%)
CVS 10,040 243,068
Walgreen 1,830 56,474
299,542
RETAIL-FABRIC STORE (0.04%)
Jo-Ann Stores /1/ 1,260 32,760
RETAIL-HOME FURNISHINGS (0.03%)
Pier 1 Imports 1,279 23,738
RETAIL-JEWELRY (0.10%)
Tiffany 3,070 85,162
RETAIL-LEISURE PRODUCTS (0.03%)
West Marine /1/ 1,700 27,778
RETAIL-MAIL ORDER (0.02%)
Brookstone /1/ 1,240 20,460
RETAIL-MAJOR DEPARTMENT STORE (0.34%)
J.C. Penney 18,000 307,080
RETAIL-OFFICE SUPPLIES (0.02%)
School Specialty /1/ 1,100 20,427
RETAIL-REGIONAL DEPARTMENT STORE (0.39%)
Kohls /1/ 6,170 350,456
RETAIL-RESTAURANTS (0.15%)
CBRL Group 1,020 32,518
Landry's Seafood Restaurant 1,000 18,700
Rare Hospitality International /1/ 988 28,780
Red Robin Gourmet Burgers /1/ 1,959 29,953
Ruby Tuesday 1,440 28,368
138,319
RETAIL-SPORTING GOODS (0.03%)
Gart Sports /1/ 1,204 28,210
SAVINGS & LOANS-THRIFTS (0.84%)
Dime Community Bancshares 1,580 36,435
First Federal Capital 1,300 24,570
Flagstar Bancorp. 1,643 54,383
Flushing Financial 1,500 28,650
Independence Community Bank 1,710 44,717
MAF Bancorp 740 24,982
Washington Mutual 13,321 526,180
Webster Financial 500 18,770
758,687
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (1.36%)
Linear Technology 17,400 599,778
Maxim Integrated Products 14,100 553,989
Taiwan Semiconductor Manufacturing /1/ 7,706 64,499
1,218,266
SEMICONDUCTOR EQUIPMENT (0.25%)
Applied Materials /1/ 15,570 227,322
STEEL-PRODUCERS (0.32%)
POSCO 3,790 77,885
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
STEEL-PRODUCERS (CONTINUED)
$
Steel Dynamics /1/ 3,310 40,051
United States Steel 11,600 166,112
284,048
STEEL-SPECIALTY (0.02%)
Gibraltar Steel 948 16,400
TELECOMMUNICATION EQUIPMENT (0.45%)
Advanced Fibre Communication /1/ 1,775 27,157
Andrew /1/ 33,500 256,945
Arris Group /1/ 6,640 25,903
Nokia 4,314 71,483
Tekelec /1/ 2,080 22,381
403,869
TELECOMMUNICATION SERVICES (0.12%)
Amdocs /1/ 1,650 29,139
Aspect Communications /1/ 6,500 22,815
Cable & Wireless 15,126 55,512
107,466
TELEPHONE-INTEGRATED (2.11%)
ALLTEL 1,800 84,348
AT&T 11,900 202,895
BellSouth 7,300 186,077
CenturyTel 4,000 117,800
Deutsche Telekom 6,560 87,904
KT 3,011 61,003
Nippon Telegraph and Telephone 1,630 28,427
Royal KPN /1/ 8,000 54,080
SBC Communications 10,631 248,340
Sprint 31,273 359,952
Telefonica /1/ 1,665 55,349
Verizon Communications 11,046 412,900
1,899,075
THERAPEUTICS (0.02%)
CV Therapeutics /1/ 1,100 21,978
TOBACCO (0.20%)
British American Tobacco 2,940 56,419
Imperial Tobacco Group 2,400 80,952
Universal 1,020 39,831
177,202
TOOLS-HAND HELD (0.13%)
Black & Decker 2,930 120,863
TRANSPORT-RAIL (0.41%)
Union Pacific 6,200 369,024
TRANSPORT-SERVICES (0.55%)
FedEx 6,800 407,184
TPG 5,700 90,288
497,472
TRANSPORT-TRUCK (0.08%)
Arkansas Best 940 23,829
Old Dominion Freight Line /1/ 654 21,686
SCS Transportation 2,500 29,950
75,465
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
WEB HOSTING & DESIGN (0.03%)
$
Macromedia /1/ 2,270 28,625
TOTAL COMMON STOCKS 57,302,390
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (19.11%)
AEROSPACE & DEFENSE (0.06%)
Boeing
$ $
6.13%; 02/15/33 15,000 15,029
Raytheon
5.38%; 04/01/13 35,000 35,848
5.50%; 11/15/12 5,000 5,184
56,061
AEROSPACE & DEFENSE EQUIPMENT (0.07%)
Lockheed Martin
7.65%; 05/01/16 35,000 43,630
United Technologies
6.10%; 05/15/12 20,000 22,574
66,204
AIRLINES (0.30%)
Northwest Airlines
7.58%; 03/01/19 58,359 56,023
Southwest Airlines
5.10%; 05/01/06 202,351 213,418
269,441
ASSET BACKED SECURITIES (0.10%)
Chase Funding Mortgage Loan
3.07%; 07/25/17 90,000 90,876
AUTO-CARS & LIGHT TRUCKS (0.17%)
DaimlerChrysler Holding
4.75%; 01/15/08 15,000 15,496
7.30%; 01/15/12 50,000 56,852
Ford Motor
7.45%; 07/16/31 90,000 80,103
152,451
AUTO-MEDIUM & HEAVY DUTY TRUCKS (0.06%)
Navistar International
9.38%; 06/01/06 50,000 53,375
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.06%)
Delphi
6.50%; 05/01/09 15,000 16,047
Lear
7.96%; 05/15/05 35,000 37,450
53,497
AUTOMOBILE SEQUENTIAL (0.23%)
Ford Credit Auto Owner Trust
4.72%; 12/15/05 200,000 208,932
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
BEVERAGES-NON-ALCOHOLIC (0.09%)
Coca-Cola Enterprises
$ $
4.38%; 09/15/09 20,000 20,877
5.25%; 05/15/07 25,000 27,099
PepsiAmericas
3.88%; 09/12/07 35,000 35,704
83,680
BEVERAGES-WINE & SPIRITS (0.03%)
Diageo Capital
3.50%; 11/19/07 30,000 30,336
BREWERY (0.15%)
Anheuser-Busch
4.38%; 01/15/13 35,000 34,984
Cia Brasileira de Bebidas
10.50%; 12/15/11 40,000 42,800
Coors Brewing
6.38%; 05/15/12 50,000 55,986
133,770
BROADCASTING SERVICES & PROGRAMMING (0.02%)
Grupo Televisa
8.50%; 03/11/32 20,000 20,000
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.16%)
CRH America
6.95%; 03/15/12 35,000 39,754
Masco
6.00%; 05/03/04 100,000 103,972
143,726
BUILDING PRODUCTS-AIR & HEATING (0.09%)
York International
6.63%; 08/15/06 75,000 80,343
BUILDING PRODUCTS-CEMENT & AGGREGATE (0.23%)
Cemex Central Sa De Cv /2/
8.63%; 07/18/03 200,000 203,000
BUILDING-RESIDENTIAL & COMMERCIAL (0.11%)
DR Horton
8.50%; 04/15/12 50,000 54,750
KB Home
7.75%; 02/01/10 40,000 42,000
96,750
CABLE & OTHER PAY TV SERVICES (0.09%)
AT&T Broadband
8.38%; 03/15/13 63,000 76,864
CABLE TV (0.16%)
British Sky Broadcasting
8.20%; 07/15/09 35,000 39,900
Comcast
5.50%; 03/15/11 30,000 30,947
5.85%; 01/15/10 5,000 5,320
Comcast Cable Communications
6.75%; 01/30/11 25,000 27,594
Cox Communications
6.75%; 03/15/11 35,000 39,805
143,566
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
CASINO HOTELS (0.22%)
Boyd Gaming
$ $
9.25%; 08/01/09 50,000 55,125
Mandalay Resort Group
9.25%; 12/01/05 50,000 52,312
Mirage Resorts
6.75%; 02/01/08 50,000 51,750
Park Place Entertainment
8.50%; 11/15/06 40,000 43,300
202,487
CASINO SERVICES (0.05%)
International Game Technology
8.38%; 05/15/09 35,000 41,758
CELLULAR TELECOMMUNICATIONS (0.17%)
AT&T Wireless Services
7.88%; 03/01/11 45,000 51,845
Telus
7.50%; 06/01/07 40,000 44,400
Verizon Wireless Capital
5.38%; 12/15/06 50,000 53,881
150,126
CHEMICALS-DIVERSIFIED (0.09%)
Chevron Phillips Chemical
7.00%; 03/15/11 50,000 55,252
Dow Chemical
5.00%; 11/15/07 5,000 5,201
5.75%; 11/15/09 20,000 21,285
81,738
COAL (0.05%)
Peabody Energy /2/
6.88%; 03/15/13 40,000 41,600
COATINGS & PAINT (0.03%)
Valspar
6.00%; 05/01/07 25,000 26,807
COMMERCIAL BANKS (0.12%)
KeyBank
5.70%; 08/15/12 20,000 21,668
U.S. Bank
6.38%; 08/01/11 30,000 34,272
Union Planters Bank
5.13%; 06/15/07 50,000 53,170
109,110
COMMERCIAL SERVICE-FINANCE (0.02%)
Deluxe
5.00%; 12/15/12 15,000 14,875
COMPUTER SERVICES (0.04%)
Unisys
8.13%; 06/01/06 35,000 37,450
COMPUTERS (0.04%)
International Business Machines
4.25%; 09/15/09 35,000 36,448
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
COMPUTERS-INTEGRATED SYSTEMS (0.02%)
NCR /2/
$ $
7.13%; 06/15/09 15,000 15,954
CONSUMER PRODUCTS-MISCELLANEOUS (0.05%)
American Greetings
6.10%; 08/01/28 50,000 49,000
CREDIT CARD ASSET BACKED SECURITIES (1.86%)
American Express Credit Account Master Trust
5.53%; 10/15/08 500,000 543,362
Discover Card Master Trust I
5.60%; 05/16/06 1,000,000 1,023,330
MBNA Credit Card Master Note Trust
3.90%; 11/15/07 100,000 104,297
1,670,989
DIVERSIFIED FINANCIAL SERVICES (0.36%)
Citigroup
3.50%; 02/01/08 25,000 25,249
5.88%; 02/22/33 20,000 20,526
6.00%; 02/21/12 25,000 27,849
6.63%; 06/15/32 50,000 56,452
General Electric Capital
6.75%; 03/15/32 100,000 115,719
John Deere Capital
3.13%; 12/15/05 40,000 40,870
7.00%; 03/15/12 30,000 34,857
321,522
DIVERSIFIED MANUFACTURING OPERATIONS (0.05%)
General Electric
5.00%; 02/01/13 5,000 5,168
Tyco International
6.25%; 06/15/03 40,000 40,100
45,268
DIVERSIFIED MINERALS (0.04%)
BHP Billiton Finance
4.80%; 04/15/13 40,000 40,829
DIVERSIFIED OPERATIONS (0.12%)
Hutchison Whampoa International /2/
6.50%; 02/13/13 50,000 50,679
Rio Tinto Finance
5.75%; 07/03/06 50,000 54,676
105,355
ELECTRIC PRODUCTS-MISCELLANEOUS (0.02%)
Emerson Electric
4.63%; 10/15/12 5,000 5,063
6.00%; 08/15/32 10,000 10,571
15,634
ELECTRIC-INTEGRATED (1.13%)
Alabama Power
5.60%; 03/15/33 15,000 14,827
Arizona Public Service
6.50%; 03/01/12 20,000 22,032
CenterPoint Energy Houston Electric /2/
5.70%; 03/15/13 20,000 21,319
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
ELECTRIC-INTEGRATED (CONTINUED)
CenterPoint Energy Resources /2/
$ $
7.88%; 04/01/13 40,000 45,900
Consumers Energy
4.25%; 04/15/08 /2/ 10,000 10,165
6.00%; 03/15/05 35,000 37,275
Dominion Resources
6.75%; 12/15/32 20,000 22,070
DTE Energy
7.05%; 06/01/11 25,000 28,803
Duke Energy
4.50%; 04/01/10 30,000 30,691
Exelon
6.75%; 05/01/11 30,000 33,827
FPL Group Capital
3.25%; 04/11/06 25,000 25,283
GPU
7.70%; 12/01/05 100,000 112,301
Indianapolis Power & Light
7.38%; 08/01/07 35,000 36,078
MidAmerican Energy Holdings
6.75%; 12/30/31 50,000 55,987
Niagara Mohawk Power
5.38%; 10/01/04 50,000 52,106
Oncor Electric Delivery
6.38%; 05/01/12 45,000 50,334
Pepco Holdings
3.75%; 02/15/06 80,000 82,054
PG&E National Energy Group
10.38%; 05/16/11 50,000 26,500
Progress Energy
6.55%; 03/01/04 225,000 233,614
Southwestern Electric Power
4.50%; 07/01/05 50,000 51,851
TXU Energy /2/
6.13%; 03/15/08 20,000 21,387
1,014,404
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.06%)
Flextronics International
9.88%; 07/01/10 45,000 50,400
FEDERAL & FEDERALLY SPONSORED CREDIT (0.07%)
Housing Urban Development
2.99%; 08/01/05 60,000 61,575
FINANCE-AUTO LOANS (0.34%)
Ford Motor Credit
6.88%; 02/01/06 125,000 129,313
General Motors Acceptance
6.88%; 09/15/11 80,000 81,535
7.00%; 02/01/12 15,000 15,369
8.00%; 11/01/31 45,000 46,869
Toyota Motor Credit
2.80%; 01/18/06 35,000 35,627
308,713
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FINANCE-COMMERCIAL (0.01%)
CIT Group
$ $
7.75%; 04/02/12 10,000 11,596
FINANCE-CONSUMER LOANS (0.23%)
American General Finance
5.38%; 09/01/09 35,000 37,415
5.88%; 07/14/06 20,000 21,785
Household Finance
5.75%; 01/30/07 100,000 108,663
7.63%; 05/17/32 30,000 37,149
205,012
FINANCE-INVESTMENT BANKER & BROKER (0.37%)
Banque Paribas
6.88%; 03/01/09 40,000 46,440
Bear Stearns
3.00%; 03/30/06 40,000 40,709
4.00%; 01/31/08 20,000 20,549
Goldman Sachs Group
4.13%; 01/15/08 35,000 36,122
6.60%; 01/15/12 50,000 56,371
Lehman Brothers Holdings
6.63%; 01/18/12 65,000 73,879
Morgan Stanley
5.30%; 03/01/13 25,000 25,947
6.75%; 04/15/11 30,000 34,086
334,103
FINANCE-MORTGAGE LOAN/BANKER (1.82%)
Countrywide Home Loan
4.25%; 12/19/07 25,000 25,884
5.25%; 06/15/04 100,000 103,919
Federal Home Loan Mortgage
3.25%; 02/25/08 225,000 227,275
4.75%; 10/11/12 80,000 81,094
6.00%; 05/25/12 65,000 67,589
6.75%; 03/15/31 256,000 312,732
Federal National Mortgage Association
2.38%; 03/17/06 75,000 75,356
3.70%; 11/01/07 230,000 236,148
3.75%; 07/29/05 175,000 179,742
4.32%; 07/26/07 90,000 95,004
4.75%; 02/21/13 75,000 75,863
5.25%; 08/01/12 145,000 153,357
1,633,963
FINANCE-OTHER SERVICES (0.18%)
Mellon Funding
4.88%; 06/15/07 40,000 42,543
Verizon Global Funding
7.75%; 12/01/30 100,000 123,476
166,019
FOOD-DAIRY PRODUCTS (0.05%)
Dean Foods
6.63%; 05/15/09 40,000 41,200
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FOOD-FLOUR & GRAIN (0.03%)
Archer-Daniels-Midland
$ $
5.94%; 10/01/32 25,000 26,199
FOOD-MISCELLANEOUS/DIVERSIFIED (0.18%)
Corn Products International
8.45%; 08/15/09 40,000 42,045
General Mills
6.00%; 02/15/12 30,000 32,912
Kraft Foods
4.63%; 11/01/06 35,000 36,497
6.25%; 06/01/12 35,000 38,131
Unilever Capital
5.90%; 11/15/32 10,000 10,538
160,123
FOOD-RETAIL (0.11%)
Delhaize America
7.38%; 04/15/06 25,000 25,875
Kroger
7.50%; 04/01/31 20,000 22,843
Safeway
5.80%; 08/15/12 45,000 47,438
96,156
FORESTRY (0.02%)
Tembec Industries /2/
8.63%; 06/30/09 15,000 15,600
GAS-DISTRIBUTION (0.03%)
KeySpan
7.63%; 11/15/10 20,000 24,155
GOLD MINING (0.03%)
Normandy Yandal Operations
8.88%; 04/01/08 40,000 24,000
Placer Dome /2/
6.38%; 03/01/33 4,000 4,079
28,079
HOME DECORATION PRODUCTS (0.02%)
Newell Rubbermaid
4.63%; 12/15/09 15,000 15,392
HOME EQUITY SEQUENTIAL (0.21%)
Long Beach Mortgage Loan Trust
4.92%; 05/25/32 100,000 103,206
Residential Asset Securities
4.59%; 10/25/26 80,000 83,271
186,477
INDUSTRIAL GASES (0.07%)
Praxair
4.75%; 07/15/07 50,000 52,667
6.50%; 03/01/08 10,000 11,213
63,880
INSTRUMENTS-CONTROLS (0.02%)
Parker Hannifin
4.88%; 02/15/13 20,000 20,245
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
INSTRUMENTS-SCIENTIFIC (0.02%)
PerkinElmer /2/
$ $
8.88%; 01/15/13 20,000 21,550
INVESTMENT MANAGEMENT & ADVISORY SERVICES (0.03%)
AMVESCAP
5.38%; 02/27/13 /2/ 10,000 9,940
5.90%; 01/15/07 20,000 21,515
31,455
LIFE & HEALTH INSURANCE (0.04%)
Lincoln National
5.25%; 06/15/07 25,000 26,310
Nationwide Financial Services
5.63%; 02/13/15 10,000 10,167
36,477
MACHINERY-CONSTRUCTION & MINING (0.06%)
Case
6.25%; 12/01/03 50,000 50,000
MEDICAL-DRUGS (0.11%)
Eli Lilly
5.50%; 07/15/06 60,000 65,653
Wyeth
5.25%; 03/15/13 30,000 31,383
97,036
MEDICAL-HMO (0.09%)
Anthem
4.88%; 08/01/05 50,000 52,503
UnitedHealth Group
4.88%; 04/01/13 30,000 30,697
83,200
MEDICAL-HOSPITALS (0.13%)
HCA
6.95%; 05/01/12 50,000 53,766
7.13%; 06/01/06 10,000 10,750
Tenet Healthcare
6.50%; 06/01/12 55,000 52,113
116,629
METAL PROCESSORS & FABRICATION (0.04%)
Timken
5.75%; 02/15/10 40,000 40,766
METAL-DIVERSIFIED (0.08%)
Falconbridge
7.35%; 06/05/12 15,000 16,503
Noranda
7.25%; 07/15/12 50,000 51,485
67,988
MISCELLANEOUS INVESTING (0.11%)
Archstone-Smith Operating Trust
5.00%; 08/15/07 20,000 21,016
Camden Property Trust
5.88%; 06/01/07 5,000 5,348
La Quinta /2/
8.88%; 03/15/11 15,000 15,713
Prologis
5.50%; 03/01/13 20,000 20,761
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
MISCELLANEOUS INVESTING (CONTINUED)
United Dominion Realty Trust
$ $
6.50%; 06/15/09 30,000 33,011
95,849
MONEY CENTER BANKS (0.28%)
Bank of America
4.88%; 09/15/12 125,000 128,658
7.40%; 01/15/11 35,000 42,017
HSBC Holdings
5.25%; 12/12/12 35,000 36,415
Royal Bank of Scotland Group
5.00%; 10/01/14 40,000 41,110
248,200
MORTGAGE BACKED SECURITIES (1.49%)
DLJ Commercial Mortgage
6.59%; 02/15/08 700,000 790,239
JP Morgan Chase Commercial Mortgage Securities
6.04%; 11/15/35 150,000 166,746
LB-UBS Commercial Mortgage Trust
0.87%; 03/15/34 /2/ /3/ 708,201 22,240
5.97%; 03/15/26 325,000 359,200
1,338,425
MULTI-LINE INSURANCE (0.03%)
MetLife
5.38%; 12/15/12 20,000 20,980
Safeco
4.88%; 02/01/10 10,000 10,176
31,156
MULTIMEDIA (0.41%)
AOL Time Warner
6.15%; 05/01/07 70,000 75,450
7.63%; 04/15/31 50,000 55,140
Gannett
4.95%; 04/01/05 75,000 79,435
News America
4.75%; 03/15/10 /2/ 15,000 15,212
6.55%; 03/15/33 /2/ 30,000 30,471
6.63%; 01/09/08 35,000 38,615
Viacom
6.63%; 05/15/11 50,000 57,601
Walt Disney
6.38%; 03/01/12 15,000 16,409
368,333
NON-HAZARDOUS WASTE DISPOSAL (0.04%)
Allied Waste
8.50%; 12/01/08 35,000 37,800
OIL & GAS DRILLING (0.14%)
Nabors Holdings
4.88%; 08/15/09 45,000 46,505
Nabors Industries
6.80%; 04/15/04 50,000 52,323
Transocean
6.63%; 04/15/11 25,000 28,396
127,224
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
OIL COMPANY-EXPLORATION & PRODUCTION (0.70%)
Anadarko Petroleum
$ $
5.38%; 03/01/07 120,000 129,498
Canadian Natural Resources
7.20%; 01/15/32 25,000 29,553
Devon Energy
7.95%; 04/15/32 30,000 37,547
Forest Oil
8.00%; 06/15/08 40,000 42,400
Kerr-McGee
5.88%; 09/15/06 100,000 108,130
Nexen
7.88%; 03/15/32 25,000 28,984
Pemex Project Funding Master Trust
7.88%; 02/01/09 150,000 170,625
Western Oil Sands
8.38%; 05/01/12 35,000 37,450
XTO Energy
7.50%; 04/15/12 45,000 49,500
633,687
OIL COMPANY-INTEGRATED (0.29%)
Amerada Hess
6.65%; 08/15/11 5,000 5,607
7.13%; 03/15/33 10,000 10,988
7.88%; 10/01/29 20,000 23,792
BP Canada Finance
3.63%; 01/15/09 60,000 61,259
ConocoPhillips
4.75%; 10/15/12 70,000 71,387
Occidental Petroleum
4.00%; 11/30/07 25,000 25,389
PanCanadian Energy
7.20%; 11/01/31 35,000 41,802
Petronas Capital /2/
7.88%; 05/22/22 20,000 22,026
262,250
OIL REFINING & MARKETING (0.10%)
Enterprise Products Partners /2/
6.38%; 02/01/13 15,000 16,320
Tesoro Petroleum /2/
8.00%; 04/15/08 40,000 41,400
Valero Energy
6.88%; 04/15/12 30,000 33,380
91,100
PAPER & RELATED PRODUCTS (0.46%)
Abitibi-Consolidated
6.95%; 12/15/06 50,000 51,898
Cascades /2/
7.25%; 02/15/13 50,000 52,750
International Paper
6.75%; 09/01/11 25,000 28,329
NorskeCanada
8.63%; 06/15/11 35,000 36,225
Norske Skog /2/
7.63%; 10/15/11 50,000 56,349
Sappi Papier Holding /2/
6.75%; 06/15/12 20,000 22,522
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
PAPER & RELATED PRODUCTS (CONTINUED)
Smurfit Capital Funding
$ $
6.75%; 11/20/05 40,000 41,000
Weyerhaeuser
6.13%; 03/15/07 60,000 65,246
6.75%; 03/15/12 55,000 61,614
415,933
PIPELINES (0.17%)
Equitable Resources
5.15%; 11/15/12 25,000 26,167
Kinder Morgan Energy Partners
6.75%; 03/15/11 35,000 39,804
National Fuel Gas
5.25%; 03/01/13 25,000 25,268
TEPPCO Partners
6.13%; 02/01/13 10,000 10,574
Texas Eastern Transmission
5.25%; 07/15/07 50,000 52,645
154,458
POULTRY (0.16%)
Tyson Foods
6.63%; 10/01/04 125,000 130,543
7.25%; 10/01/06 10,000 10,864
141,407
PROPERTY & CASUALTY INSURANCE (0.05%)
ACE INA Holdings
8.20%; 08/15/04 30,000 32,143
Travelers Property Casualty /2/
6.38%; 03/15/33 15,000 15,971
48,114
PUBLISHING-BOOKS (0.07%)
Reed Elsevier Capital
6.13%; 08/01/06 55,000 60,078
REAL ESTATE OPERATOR & DEVELOPER (0.06%)
EOP Operating
7.00%; 07/15/11 50,000 56,866
REGIONAL AUTHORITY (0.38%)
Financement Quebec
5.00%; 10/25/12 115,000 121,226
Province of Manitoba
2.75%; 01/17/06 90,000 91,240
Province of Nova Scotia
5.75%; 02/27/12 50,000 55,780
Province of Ontario
5.13%; 07/17/12 35,000 37,674
Region of Lombardy
5.80%; 10/25/32 30,000 32,064
337,984
REGIONAL BANKS (0.71%)
Bank One
7.63%; 08/01/05 80,000 89,742
KeyCorp
4.63%; 05/16/05 100,000 104,969
Korea Development Bank
7.13%; 04/22/04 75,000 78,051
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
REGIONAL BANKS (CONTINUED)
PNC Funding
$ $
5.75%; 08/01/06 100,000 108,874
SunTrust Banks
5.05%; 07/01/07 35,000 37,756
Wachovia
5.63%; 12/15/08 100,000 111,390
Wells Fargo
5.13%; 02/15/07 100,000 108,290
639,072
RESEARCH & DEVELOPMENT (0.03%)
Science Applications International
7.13%; 07/01/32 25,000 28,925
RETAIL-DISCOUNT (0.12%)
Target
5.38%; 06/15/09 60,000 65,042
5.88%; 03/01/12 5,000 5,456
Wal-Mart Stores
4.38%; 07/12/07 35,000 37,003
107,501
RETAIL-DRUG STORE (0.05%)
CVS /2/
7.77%; 01/10/12 38,265 42,826
RETAIL-REGIONAL DEPARTMENT STORE (0.01%)
Kohl's
6.00%; 01/15/33 10,000 10,222
RETAIL-RESTAURANTS (0.06%)
Yum! Brands
7.70%; 07/01/12 50,000 55,625
SATELLITE TELECOM (0.05%)
Echostar DBS
10.38%; 10/01/07 40,000 44,800
SAVINGS & LOANS-THRIFTS (0.10%)
Washington Mutual
3.97%; 03/25/33 72,000 72,739
5.50%; 01/15/13 15,000 15,927
88,666
SOVEREIGN (0.39%)
Chile Government
5.50%; 01/15/13 10,000 10,238
Finland Government
4.75%; 03/06/07 50,000 53,812
Italy Government
5.63%; 06/15/12 50,000 55,553
Mexico Government
8.30%; 08/15/31 25,000 28,287
8.38%; 01/14/11 140,000 166,950
Poland Government
6.25%; 07/03/12 30,000 33,450
348,290
SUPRANATIONAL BANK (0.22%)
Corp Andina de Fomento
6.75%; 03/15/05 65,000 68,482
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
SUPRANATIONAL BANK (CONTINUED)
Corp Andina de Fomento (continued)
$ $
6.88%; 03/15/12 20,000 21,315
European Investment Bank
4.63%; 03/01/07 50,000 53,248
Inter-American Development Bank
3.38%; 03/17/08 50,000 50,717
193,762
TELECOMMUNICATION SERVICES (0.22%)
Citizens Communications
6.38%; 08/15/04 115,000 120,414
7.63%; 08/15/08 30,000 35,051
MasTec
7.75%; 02/01/08 45,000 39,150
194,615
TELEPHONE-INTEGRATED (0.81%)
ALLTEL
7.00%; 07/01/12 40,000 47,302
7.88%; 07/01/32 5,000 6,528
AT&T
6.00%; 03/15/09 20,000 20,526
BellSouth
6.88%; 10/15/31 25,000 29,118
British Telecommunications
7.88%; 12/15/05 150,000 170,043
Deutsche Telekom International Finance
8.25%; 06/15/05 40,000 44,436
8.50%; 06/15/10 35,000 42,187
France Telecom
9.25%; 03/01/11 70,000 85,607
SBC Communications
5.88%; 08/15/12 30,000 32,960
Sprint Capital
6.00%; 01/15/07 40,000 40,800
6.13%; 11/15/08 35,000 35,700
6.90%; 05/01/19 5,000 4,775
Telefonica Europe
7.75%; 09/15/10 50,000 60,159
Telefonos de Mexico
8.25%; 01/26/06 100,000 111,375
731,516
TEXTILE-HOME FURNISHINGS (0.04%)
Mohawk Industries
6.50%; 04/15/07 30,000 33,158
TOOLS-HAND HELD (0.02%)
Stanley Works /2/
4.90%; 11/01/12 20,000 20,365
TRANSPORT-RAIL (0.23%)
Burlington Northern Santa Fe
7.95%; 08/15/30 15,000 18,901
Canadian National Railway
4.40%; 03/15/13 25,000 24,590
Canadian Pacific Railway
5.75%; 03/15/33 15,000 14,982
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
TRANSPORT-RAIL (CONTINUED)
CSX
$ $
6.25%; 10/15/08 65,000 72,628
Union Pacific
5.75%; 10/15/07 70,000 76,441
207,542
TOTAL BONDS 17,173,963
Principal
Type Rate Maturity Amount Value
- ------------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) CERTIFICATES (5.64%)
$ $
FHLMC /4/ 5.00% 12/01/17 - 05/01/33 990,547 1,009,530
FHLMC /4/ 5.50% 03/01/33 - 06/01/33 1,074,274 1,100,580
FHLMC 6.00% 01/01/29 449,758 468,941
FHLMC 6.50% 12/01/20 - 07/01/31 1,047,615 1,095,295
FHLMC 7.00% 12/01/27 - 09/01/31 497,420 525,413
FHLMC 7.50% 10/01/30 - 01/01/31 366,400 391,065
FHLMC 8.00% 12/01/30 - 02/01/31 441,486 476,627
TOTAL FHLMC CERTIFICATES 5,067,451
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) CERTIFICATES (4.43%)
FNMA 5.00% 03/01/18 124,449 128,591
FNMA 5.50% 06/01/31 - 01/01/33 765,409 787,707
FNMA 6.00% 06/01/06 - 03/01/32 1,197,814 1,263,035
FNMA 6.50% 01/01/04 - 10/01/31 1,158,762 1,218,010
FNMA 7.00% 02/01/32 298,068 314,931
FNMA 7.25% 01/15/10 - 05/15/30 215,000 265,797
TOTAL FNMA CERTIFICATES 3,978,071
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) CERTIFICATES (2.59%)
GNMA I 6.00% 06/15/32 170,121 178,187
GNMA I 6.50% 05/15/32 594,235 624,880
GNMA I 7.00% 10/15/29 - 02/15/32 836,340 887,407
GNMA II 6.00% 06/20/26 - 06/20/27 606,798 636,023
TOTAL GNMA CERTIFICATES 2,326,497
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
TREASURY BONDS (2.90%)
U.S. Treasury
$ $
4.75%; 11/15/08 125,000 135,923
4.88%; 02/15/12 55,000 59,628
5.00%; 08/15/11 150,000 164,250
5.38%; 02/15/31 50,000 54,559
5.63%; 05/15/08 300,000 338,777
6.25%; 05/15/30 265,000 319,315
7.13%; 02/15/23 240,000 311,381
7.50%; 11/15/16 265,000 348,972
8.00%; 11/15/21 285,000 399,790
U.S. Treasury Strip /1/
0.00%; 02/15/15 800,000 471,789
TOTAL TREASURY BONDS 2,604,384
Principal
Amount Value
- ------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (2.88%)
DIVERSIFIED FINANCIAL SERVICES (2.88%)
Investment in Joint Trading Account; General Electric
Capital
1.35%; 05/01/03 2,592,451 2,592,451
TOTAL COMMERCIAL PAPER 2,592,451
Shares
Held Value
- ------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (0.16%)
Lehman Brothers; 1.33%; 05/01/03 (collateralized by $
FHLBC; $149,323; 02/13/04) /5/ 146,395 146,395
TOTAL REPURCHASE AGREEMENTS 146,395
-----------
TOTAL PORTFOLIO INVESTMENTS (101.48%) 91,191,602
LIABILITIES, NET OF CASH AND RECEIVABLES (-1.48%) (1,332,934)
TOTAL NET ASSETS (100.00%) $89,858,668
--------------
See accompanying notes.
/1 /Non-income producing security.
/2 /Restricted Security - The fund held securities, which may require
registration under the Securities Act of 1933, or an exemption therefrom, in
order to effect their sale in the ordinary course of business. At the end of
the period, restricted securities totaled $835,338 or 0.93% of net assets.
/3 /Variable rate.
/4 /Security or a portion of the security was purchased in a "to-be-announced"
(TBA) transaction. See Notes to Financial Statements.
/5 /Security was purchased with the cash proceeds from securities loans.
See accompanying notes.
47
SCHEDULE OF INVESTMENTS
PRINCIPAL CAPITAL VALUE FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (98.79%)
AEROSPACE & DEFENSE EQUIPMENT (1.17%)
$
Lockheed Martin 36,950 1,849,347
United Technologies 38,770 2,396,374
4,245,721
APPAREL MANUFACTURERS (0.25%)
Jones Apparel Group /1/ 31,190 889,539
APPLICATIONS SOFTWARE (1.16%)
Citrix Systems /1/ 146,800 2,783,328
Intuit /1/ 36,540 1,417,021
4,200,349
AUTO-CARS & LIGHT TRUCKS (1.20%)
Ford Motor 423,500 4,362,050
AUTO-MEDIUM & HEAVY DUTY TRUCKS (1.28%)
Paccar 79,600 4,649,436
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.34%)
Lear /1/ 31,330 1,245,054
BREWERY (1.24%)
Anheuser-Busch 90,200 4,499,176
BROADCASTING SERVICES & PROGRAMMING (1.20%)
Fox Entertainment Group /1/ 171,500 4,356,100
BUILDING-RESIDENTIAL & COMMERCIAL (1.11%)
Lennar 67,310 3,650,894
Lennar 6,731 360,445
4,011,339
CABLE TV (0.40%)
Comcast /1/ 45,500 1,451,905
CHEMICALS-DIVERSIFIED (1.58%)
E. I. Du Pont de Nemours 85,454 3,634,359
Hercules /1/ 207,200 2,103,080
5,737,439
CHEMICALS-SPECIALTY (0.55%)
Sigma-Aldrich 39,800 1,982,836
COMMERCIAL BANKS (3.04%)
Bank of Hawaii 32,400 1,067,904
City National 24,020 988,903
First Tennessee National 90,980 3,984,924
North Fork Bancorp. 54,240 1,755,207
UnionBanCal 80,430 3,249,372
11,046,310
COMPUTER SERVICES (0.88%)
Computer Sciences /1/ 97,030 3,197,139
COMPUTERS (2.67%)
Hewlett-Packard 383,870 6,257,081
International Business Machines 40,340 3,424,866
9,681,947
COMPUTERS-MEMORY DEVICES (0.39%)
Veritas Software /1/ 63,600 1,399,836
CONSUMER PRODUCTS-MISCELLANEOUS (0.31%)
Fortune Brands 23,570 1,140,788
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CONTAINERS-METAL & GLASS (1.17%)
$
Ball 75,400 4,234,464
CONTAINERS-PAPER & PLASTIC (0.47%)
Pactiv /1/ 83,340 1,710,137
COSMETICS & TOILETRIES (1.78%)
Procter & Gamble 72,060 6,474,591
DIVERSIFIED FINANCIAL SERVICES (3.01%)
Citigroup 278,466 10,929,791
DIVERSIFIED MANUFACTURING OPERATIONS (0.32%)
Illinois Tool Works 18,300 1,170,834
DIVERSIFIED OPERATORS-COMMERCIAL SERVICE (0.47%)
Viad 85,000 1,709,350
ELECTRIC-INTEGRATED (5.22%)
Edison International /1/ 303,700 4,430,983
Entergy 96,140 4,481,085
Exelon 92,500 4,906,200
PPL 142,100 5,144,020
18,962,288
ELECTRONICS-MILITARY (0.30%)
L-3 Communications Holdings /1/ 24,820 1,102,008
ENTERPRISE SOFTWARE & SERVICE (0.71%)
Computer Associates International 159,250 2,586,220
FINANCE-INVESTMENT BANKER & BROKER (4.27%)
Bear Stearns 76,900 5,139,996
Goldman Sachs Group 57,600 4,371,840
Morgan Stanley 133,800 5,987,550
15,499,386
FINANCIAL GUARANTEE INSURANCE (0.79%)
Ambac Financial Group 48,920 2,854,482
FOOD-MISCELLANEOUS/DIVERSIFIED (1.23%)
ConAgra Foods 213,100 4,475,100
HEALTH CARE COST CONTAINMENT (0.59%)
McKesson 77,500 2,149,850
HOME DECORATION PRODUCTS (1.54%)
Newell Rubbermaid 184,000 5,608,320
INTERNET SECURITY (0.74%)
CheckFree /1/ 97,300 2,682,561
LIFE & HEALTH INSURANCE (1.44%)
John Hancock Financial Services 180,020 5,224,180
MEDICAL STERILIZATION PRODUCT (0.33%)
Steris /1/ 53,010 1,203,327
MEDICAL-DRUGS (0.64%)
Merck 40,000 2,327,200
MEDICAL-HMO (1.33%)
Aetna 97,290 4,845,042
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
METAL PROCESSORS & FABRICATION (1.36%)
$
Timken 278,300 4,925,910
MISCELLANEOUS INVESTING (1.94%)
Annaly Mortgage Management 145,530 2,765,070
Simon Property Group 116,500 4,277,880
7,042,950
MONEY CENTER BANKS (3.67%)
Bank of America 160,690 11,899,092
JP Morgan Chase 48,200 1,414,670
13,313,762
MULTI-LINE INSURANCE (4.59%)
Allstate 178,500 6,745,515
American International Group 42,400 2,457,080
MetLife 137,340 3,945,778
Old Republic International 115,420 3,531,852
16,680,225
MULTIMEDIA (3.89%)
Belo 110,970 2,497,935
Gannett 69,100 5,232,252
Viacom /1/ 147,534 6,404,451
14,134,638
NETWORKING PRODUCTS (1.26%)
Emulex /1/ 222,700 4,563,123
OFFICE AUTOMATION & EQUIPMENT (0.49%)
Ikon Office Solutions 230,040 1,785,110
OIL COMPANY-EXPLORATION & PRODUCTION (1.82%)
Anadarko Petroleum 25,000 1,110,000
Apache 75,038 4,295,925
Burlington Resources 25,950 1,201,745
6,607,670
OIL COMPANY-INTEGRATED (8.62%)
ChevronTexaco 42,660 2,679,475
ConocoPhillips 64,200 3,229,260
Exxon Mobil 596,516 20,997,363
Occidental Petroleum 147,180 4,393,323
31,299,421
PHOTO EQUIPMENT & SUPPLIES (0.54%)
Eastman Kodak 65,220 1,950,730
PIPELINES (0.38%)
Questar 46,000 1,389,200
PROPERTY & CASUALTY INSURANCE (1.69%)
Fidelity National Financial 107,610 3,701,784
Travelers Property Casualty 150,380 2,443,675
6,145,459
PUBLISHING-NEWSPAPERS (0.83%)
Tribune 61,560 3,015,209
RADIO (0.56%)
Emmis Communications /1/ 107,500 2,039,275
REGIONAL BANKS (6.57%)
U.S. Bancorp 322,250 7,137,838
Wachovia 209,700 8,012,637
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
REGIONAL BANKS (CONTINUED)
$
Wells Fargo 180,381 8,705,187
23,855,662
RETAIL-COMPUTER EQUIPMENT (0.57%)
GameStop /1/ 173,121 2,068,796
RETAIL-DRUG STORE (0.89%)
CVS 134,020 3,244,624
RETAIL-MAJOR DEPARTMENT STORE (1.13%)
J.C. Penney 241,100 4,113,166
SAVINGS & LOANS-THRIFTS (1.94%)
Washington Mutual 177,924 7,027,998
STEEL-PRODUCERS (0.61%)
United States Steel 155,700 2,229,624
TELECOMMUNICATION EQUIPMENT (0.95%)
Andrew /1/ 448,800 3,442,296
TELEPHONE-INTEGRATED (6.05%)
Alltel 24,800 1,162,128
AT&T 160,000 2,728,000
BellSouth 97,400 2,482,726
CenturyTel 53,600 1,578,520
SBC Communications 142,210 3,322,025
Sprint 419,580 4,829,366
Verizon Communications 157,202 5,876,211
21,978,976
TOOLS-HAND HELD (0.45%)
Black & Decker 39,690 1,637,213
TRANSPORT-RAIL (1.37%)
Union Pacific 83,500 4,969,920
TRANSPORT-SERVICES (1.50%)
FedEx 91,000 5,449,080
TOTAL COMMON STOCKS 358,756,132
Principal
Amount Value
- ----------------------------------------------------------------------------------------------
BONDS (1.20%)
FINANCE-INVESTMENT BANKER & BROKER (0.54%)
Goldman Sachs Group /2/ /3/
$ $
1.39%; 10/02/03 700,000 700,000
Lehman Brothers Holdings /3/
2.02%; 07/15/03 1,275,349 1,275,349
1,975,349
MONEY CENTER BANKS (0.66%)
Bank of America /2/ /3/
1.35%; 07/07/03 1,125,000 1,125,185
Principal
Amount Value
- ----------------------------------------------------------------------------------------------
BONDS (CONTINUED)
MONEY CENTER BANKS (CONTINUED)
JP Morgan Chase /2/ /3/
$ $
1.44%; 05/01/03 1,250,000 1,250,000
2,375,185
TOTAL BONDS 4,350,534
Principal
Amount Value
- ----------------------------------------------------------------------------------------------
COMMERCIAL PAPER (1.18%)
DIVERSIFIED FINANCIAL SERVICES (1.18%)
Investment in Joint Trading Account;
General Electric Capital
1.35%; 05/01/03 $ 4,278,078 $ 4,278,078
TOTAL COMMERCIAL PAPER 4,278,078
Principal
Amount Value
- ----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (0.93%)
Barclays Capital; 1.28%; 05/01/03
(collateralized by Treasury Bill; $
$208,080; 10/02/03) /3/ $ 204,000 204,000
Citigroup Global Markets Holdings; 1.33%;
05/01/03 (collateralized by GNMAs;
$2,496,539; 06/15/28 - 05/15/32) /3/ 2,461,000 2,461,000
UBS Warburg; 1.29%; 05/01/03
(collateralized by Treasury Bonds;
$743,582; 11/15/13 - 02/15/31) /3/ 729,000 729,000
TOTAL REPURCHASE AGREEMENTS 3,394,000
------------
TOTAL PORTFOLIO INVESTMENTS (102.10%) 370,778,744
LIABILITIES, NET OF CASH , RECEIVABLES AND OTHER ASSETS
(-2.10%) (7,643,299)
TOTAL NET ASSETS (100.00%) $363,135,445
---------------
/1 /Non-income producing security.
/2 /Variable rate.
/3 /Security was purchased with the cash proceeds from securities loans.
50
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL GROWTH FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (98.46%)
APPLICATIONS SOFTWARE (4.79%)
$
Microsoft 484,120 12,378,948
Siebel Systems /1/ 122,130 1,058,867
13,437,815
BREWERY (1.01%)
Anheuser-Busch 57,030 2,844,656
CABLE TV (1.69%)
Comcast /1/ 157,730 4,741,364
COMMERCIAL SERVICE-FINANCE (3.64%)
H&R Block 54,370 2,099,769
Paychex 260,360 8,107,611
10,207,380
COMPUTERS-MEMORY DEVICES (1.51%)
Veritas Software /1/ 192,740 4,242,207
COSMETICS & TOILETRIES (3.15%)
Alberto-Culver 43,000 2,119,040
Alberto-Culver 6,600 314,688
Colgate-Palmolive 37,530 2,145,590
Procter & Gamble 47,330 4,252,601
8,831,919
DATA PROCESSING & MANAGEMENT (0.26%)
Automatic Data Processing 21,870 735,488
DISTRIBUTION-WHOLESALE (0.43%)
Fastenal 34,850 1,205,462
DIVERSIFIED FINANCIAL SERVICES (1.41%)
Citigroup 100,983 3,963,583
DIVERSIFIED MANUFACTURING OPERATIONS (7.00%)
3M 41,220 5,195,369
General Electric 380,450 11,204,253
Illinois Tool Works 50,730 3,245,705
19,645,327
ELECTRONIC COMPONENTS-SEMICONDUCTOR (1.75%)
Intel 144,990 2,667,816
Texas Instruments 121,700 2,250,233
4,918,049
ENTERPRISE SOFTWARE & SERVICE (1.71%)
BEA Systems /1/ 307,000 3,287,970
Peoplesoft /1/ 100,400 1,509,012
4,796,982
FIDUCIARY BANKS (0.47%)
State Street 37,230 1,304,167
FINANCE-INVESTMENT BANKER & BROKER (0.91%)
Morgan Stanley 56,810 2,542,247
FINANCE-MORTGAGE LOAN/BANKER (1.82%)
Federal National Mortgage Association 70,610 5,111,458
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCE-MORTGAGE LOAN/BANKER (CONTINUED)
$
Ocean West Holding 100 10
5,111,468
FOOD-CONFECTIONERY (1.53%)
Wm. Wrigley Jr. 75,690 4,292,380
FOOD-MISCELLANEOUS/DIVERSIFIED (0.72%)
McCormick 81,650 2,024,103
FOOD-RETAIL (2.56%)
Whole Foods Market /1/ 120,800 7,170,688
FOOD-WHOLESALE & DISTRIBUTION (2.36%)
Sysco 230,860 6,632,608
INTERNET SECURITY (2.37%)
Symantec /1/ 151,500 6,658,425
MEDICAL INSTRUMENTS (7.13%)
Biomet 77,300 2,354,558
Medtronic 221,070 10,553,882
St. Jude Medical /1/ 135,230 7,094,166
20,002,606
MEDICAL PRODUCTS (7.43%)
Becton Dickinson 116,740 4,132,596
Johnson & Johnson 296,690 16,721,448
20,854,044
MEDICAL-DRUGS (7.00%)
Forest Laboratories /1/ 112,050 5,795,226
Pfizer 450,661 13,857,826
19,653,052
MEDICAL-HMO (2.74%)
UnitedHealth Group 83,330 7,677,193
MEDICAL-WHOLESALE DRUG DISTRIBUTION (2.82%)
Cardinal Health 142,860 7,897,301
MOTORCYCLE & MOTOR SCOOTER (2.12%)
Harley-Davidson 133,800 5,946,072
MULTI-LINE INSURANCE (1.94%)
American International Group 94,130 5,454,833
NETWORKING PRODUCTS (4.43%)
Cisco Systems /1/ 825,840 12,420,634
OIL COMPANY-INTEGRATED (1.45%)
Exxon Mobil 115,150 4,053,280
REGIONAL BANKS (1.72%)
Fifth Third Bancorp 97,900 4,825,491
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-ARTS & CRAFTS (1.34%)
$
Michaels Stores /1/ 120,050 3,750,362
RETAIL-BEDDING (4.40%)
Bed Bath & Beyond /1/ 312,140 12,332,651
RETAIL-DISCOUNT (3.56%)
Wal-Mart Stores 177,520 9,997,926
RETAIL-DRUG STORE (0.28%)
Walgreen 25,510 787,239
RETAIL-JEWELRY (0.42%)
Tiffany 42,930 1,190,878
RETAIL-REGIONAL DEPARTMENT STORE (1.74%)
Kohls /1/ 86,101 4,890,537
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (5.72%)
Linear Technology 242,300 8,352,081
Maxim Integrated Products 196,000 7,700,840
16,052,921
SEMICONDUCTOR EQUIPMENT (1.13%)
Applied Materials /1/ 217,830 3,180,318
TOTAL COMMON STOCKS 276,273,656
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
BONDS (0.29%)
FINANCE-INVESTMENT BANKER & BROKER (0.15%)
Goldman Sachs Group /2/ /3/
$ $
1.39%; 10/02/03 200,000 200,000
Lehman Brothers Holdings /3/
2.02%; 07/15/03 204,055 204,055
404,055
MONEY CENTER BANKS (0.14%)
Bank of America /2/ /3/
1.35%; 07/07/03 200,000 200,033
JP Morgan Chase /2/ /3/
1.44%; 05/01/03 200,000 200,000
400,033
TOTAL BONDS 804,088
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (1.61%)
DIVERSIFIED FINANCIAL SERVICES (1.61%)
Investment in Joint Trading Account; General
Electric Capital
$ $
1.35%; 05/01/03 4,510,453 4,510,453
TOTAL COMMERCIAL PAPER 4,510,453
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (4.80%)
Citigroup Global Markets Holdings; 1.33%;
05/01/03 (collateralized by GNMAs; $
$13,661,474; 06/15/28 - 05/15/32) /3/ $ 13,467,000 13,467,000
TOTAL REPURCHASE AGREEMENTS 13,467,000
------------
TOTAL PORTFOLIO INVESTMENTS (105.16%) 295,055,197
LIABILITIES, NET OF CASH, RECEIVABLES AND
OTHER ASSETS (-5.16%) (14,474,272)
TOTAL NET ASSETS (100.00%) $280,580,925
---------------
1 Non-income producing security.
2 Variable rate.
3 Security was purchased with the cash proceeds from securities loans.
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL LARGECAP STOCK INDEX FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (96.39)
ADVERTISING AGENCIES (0.18%)
$
Interpublic Group 1,909 21,762
Omnicom Group 931 57,629
79,391
AEROSPACE & DEFENSE (0.62%)
Boeing 4,161 113,512
Northrop Grumman 904 79,507
Raytheon 2,009 60,129
Rockwell Collins 889 19,007
272,155
AEROSPACE & DEFENSE EQUIPMENT (0.75%)
General Dynamics 995 61,760
Goodrich 582 8,189
Lockheed Martin 2,256 112,913
United Technologies 2,329 143,955
326,817
AGRICULTURAL OPERATIONS (0.05%)
Monsanto 1,294 22,516
AIRLINES (0.16%)
Delta Air Lines 610 7,802
Southwest Airlines 3,835 61,206
69,008
APPAREL MANUFACTURERS (0.13%)
Jones Apparel Group /1/ 638 18,196
Liz Claiborne 529 17,208
VF 538 21,165
56,569
APPLIANCES (0.06%)
Maytag 386 8,044
Whirlpool 338 18,080
26,124
APPLICATIONS SOFTWARE (3.34%)
Citrix Systems /1/ 847 16,059
Compuware /1/ 1,872 8,218
Intuit /1/ 1,018 39,478
Mercury Interactive /1/ 418 14,187
Microsoft 52,985 1,354,827
Parametric Technology /1/ 1,300 4,290
Siebel Systems /1/ 2,399 20,799
1,457,858
ATHLETIC FOOTWEAR (0.18%)
Nike 1,309 70,071
Reebok International /1/ 297 9,225
79,296
AUTO-CARS & LIGHT TRUCKS (0.44%)
Ford Motor 9,086 93,586
General Motors 2,775 100,039
193,625
AUTO-MEDIUM & HEAVY DUTY TRUCKS (0.10%)
Navistar International /1/ 338 9,430
Paccar 574 33,527
42,957
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.08%)
$
Dana 736 6,838
Delphi Automotive Systems 2,770 23,268
Visteon 639 4,479
34,585
BEVERAGES-NON-ALCOHOLIC (2.15%)
Coca-Cola 12,275 495,910
Coca-Cola Enterprises 2,225 43,365
Pepsi Bottling Group 1,389 28,530
Pepsico 8,551 370,088
937,893
BEVERAGES-WINE & SPIRITS (0.05%)
Brown-Forman 299 22,885
BREWERY (0.51%)
Adolph Coors 180 9,635
Anheuser-Busch 4,238 211,392
221,027
BROADCASTING SERVICES & PROGRAMMING (0.27%)
Clear Channel Communications /1/ 3,034 118,660
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.16%)
Masco 2,436 51,326
Vulcan Materials 502 17,555
68,881
BUILDING PRODUCTS-AIR & HEATING (0.06%)
American Standard /1/ 358 25,486
BUILDING-MAINTENANCE & SERVICE (0.08%)
Ecolab 644 32,902
BUILDING-RESIDENTIAL & COMMERCIAL (0.11%)
Centex 305 20,136
KB Home 237 11,677
Pulte 303 17,571
49,384
CABLE TV (0.83%)
Comcast /1/ 11,427 364,636
CASINO HOTELS (0.05%)
Harrah's Entertainment /1/ 553 21,783
CASINO SERVICES (0.08%)
International Game Technology /1/ 420 36,246
CELLULAR TELECOMMUNICATIONS (0.37%)
AT&T Wireless Services /1/ 13,413 86,648
Nextel Communications /1/ 5,098 75,399
162,047
CHEMICALS-DIVERSIFIED (1.00%)
Dow Chemical 4,511 147,239
E. I. Du Pont de Nemours 4,925 209,460
Hercules /1/ 540 5,481
PPG Industries 839 40,700
Rohm & Haas 1,095 36,256
439,136
CHEMICALS-SPECIALTY (0.12%)
Eastman Chemical 382 11,662
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CHEMICALS-SPECIALTY (CONTINUED)
$
Engelhard 632 15,516
Great Lakes Chemical 248 6,091
Sigma-Aldrich 355 17,686
50,955
CIRCUIT BOARDS (0.04%)
Jabil Circuit /1/ 981 18,345
COATINGS & PAINT (0.05%)
Sherwin-Williams 742 20,687
COMMERCIAL BANKS (0.76%)
Amsouth Bancorp 1,759 37,027
BB&T 2,331 75,991
First Tennessee National 622 27,244
Marshall & Ilsley 1,081 31,803
North Fork Bancorp. 799 25,856
Regions Financial 1,095 36,912
SouthTrust 1,710 45,932
Synovus Financial 1,508 29,361
Zions Bancorp 450 22,171
332,297
COMMERCIAL SERVICE-FINANCE (0.44%)
Concord EFS /1/ 2,519 34,838
Deluxe 281 12,367
Equifax 704 16,326
H&R Block 885 34,178
Moody's 748 36,121
Paychex 1,863 58,014
191,844
COMMERCIAL SERVICES (0.05%)
Convergys /1/ 859 13,933
Quintiles Transnational /1/ 584 8,205
22,138
COMPUTER AIDED DESIGN (0.02%)
Autodesk 561 8,729
COMPUTER SERVICES (0.28%)
Computer Sciences /1/ 927 30,544
Electronic Data Systems 2,359 42,816
Sungard Data Systems /1/ 1,402 30,143
Unisys /1/ 1,615 16,796
120,299
COMPUTERS (3.22%)
Apple Computer /1/ 1,785 25,347
Dell Computer /1/ 12,770 369,181
Gateway /1/ 1,604 4,619
Hewlett-Packard 15,113 246,342
International Business Machines 8,368 710,443
Sun Microsystems /1/ 15,819 52,203
1,408,135
COMPUTERS-INTEGRATED SYSTEMS (0.02%)
NCR /1/ 483 10,587
COMPUTERS-MEMORY DEVICES (0.33%)
EMC /1/ 10,892 99,008
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMPUTERS-MEMORY DEVICES (CONTINUED)
$
Veritas Software /1/ 2,038 44,857
143,865
COMPUTERS-PERIPHERAL EQUIPMENT (0.11%)
Lexmark International /1/ 623 46,420
CONSUMER PRODUCTS-MISCELLANEOUS (0.21%)
American Greetings /1/ 326 4,746
Clorox 1,089 49,244
Fortune Brands 739 35,768
Tupperware 288 3,992
93,750
CONTAINERS-METAL & GLASS (0.04%)
Ball 281 15,781
CONTAINERS-PAPER & PLASTIC (0.10%)
Bemis 262 11,963
Pactiv /1/ 784 16,087
Sealed Air /1/ 415 17,783
45,833
COSMETICS & TOILETRIES (2.54%)
Alberto-Culver 289 14,242
Avon Products 1,165 67,768
Colgate-Palmolive 2,665 152,358
Gillette 5,170 157,427
International Flavors & Fragrances 467 14,841
Kimberly-Clark 2,546 126,714
Procter & Gamble 6,401 575,130
1,108,480
CRUISE LINES (0.20%)
Carnival 3,121 86,108
DATA PROCESSING & MANAGEMENT (0.63%)
Automatic Data Processing 2,968 99,814
First Data 3,724 146,092
Fiserv /1/ 947 27,880
273,786
DISPOSABLE MEDICAL PRODUCTS (0.04%)
C.R. Bard 255 16,162
DISTRIBUTION-WHOLESALE (0.11%)
Genuine Parts 865 27,654
W.W. Grainger 452 20,860
48,514
DIVERSIFIED FINANCIAL SERVICES (2.29%)
Citigroup 25,453 999,030
DIVERSIFIED MANUFACTURING OPERATIONS (5.02%)
3M 1,932 243,509
Cooper Industries 462 17,140
Crane 294 5,742
Danaher 754 52,011
Eaton 349 28,642
General Electric /2/ 49,270 1,451,001
Honeywell International 4,236 99,970
Illinois Tool Works 1,522 97,378
ITT Industries 454 26,468
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
DIVERSIFIED MANUFACTURING OPERATIONS (CONTINUED)
$
Textron 673 19,847
Tyco International 9,883 154,175
2,195,883
DIVERSIFIED OPERATORS-COMMERCIAL SERVICE (0.17%)
Cendant /1/ 5,100 72,828
E-COMMERCE-SERVICES (0.35%)
eBay /1/ 1,529 141,845
TMP Worldwide /1/ 550 9,218
151,063
ELECTRIC PRODUCTS-MISCELLANEOUS (0.29%)
Emerson Electric 2,084 105,659
Molex 949 22,149
127,808
ELECTRIC-GENERATION (0.04%)
AES /1/ 2,692 16,179
ELECTRIC-INTEGRATED (2.34%)
Allegheny Energy 622 5,163
Ameren 788 32,292
American Electric Power 1,925 50,781
Centerpoint Energy 1,507 11,905
Cinergy 833 28,439
CMS Energy 713 4,442
Consolidated Edison 1,057 41,086
Constellation Energy Group 815 23,863
Dominion Resources 1,521 90,013
DTE Energy 829 33,425
Duke Energy 4,414 77,642
Edison International /1/ 1,613 23,534
Entergy 1,099 51,224
Exelon 1,599 84,811
FirstEnergy 1,473 49,684
FPL Group 903 54,966
NiSource 1,232 23,285
PG&E /1/ 2,018 30,230
Pinnacle West Capital 447 14,849
PPL 814 29,467
Progress Energy 1,174 49,050
Public Service Enterprise Group 1,101 42,355
Southern 3,532 102,746
TECO Energy 869 9,377
TXU 1,595 31,772
XCEL Energy 1,974 26,688
1,023,089
ELECTRICAL COMPONENTS & EQUIPMENT (0.01%)
Power-One /1/ 396 2,317
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.06%)
Sanmina /1/ 2,516 12,077
Solectron /1/ 4,090 13,047
25,124
ELECTRONIC COMPONENTS-SEMICONDUCTOR (2.22%)
Advanced Micro Devices /1/ 1,701 12,655
Altera /1/ 1,894 29,944
Applied Micro Circuits /1/ 1,503 6,733
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRONIC COMPONENTS-SEMICONDUCTOR (CONTINUED)
$
Broadcom /1/ 1,366 24,438
Intel 32,802 603,557
LSI Logic /1/ 1,841 9,868
Micron Technology /1/ 3,008 25,568
National Semiconductor /1/ 899 16,838
Nvidia /1/ 780 11,131
PMC - Sierra /1/ 829 6,839
QLogic /1/ 464 20,411
Texas Instruments 8,571 158,478
Xilinx /1/ 1,670 45,207
971,667
ELECTRONIC CONNECTORS (0.01%)
Thomas & Betts /1/ 288 4,553
ELECTRONIC FORMS (0.09%)
Adobe Systems 1,144 39,537
ELECTRONIC MEASUREMENT INSTRUMENTS (0.10%)
Agilent Technologies /1/ 2,312 37,038
Tektronix /1/ 428 8,034
45,072
ENGINEERING-RESEARCH & DEVELOPMENT SERVICES (0.03%)
Fluor 398 13,759
ENGINES-INTERNAL COMBUSTION (0.01%)
Cummins Engine 205 5,558
ENTERPRISE SOFTWARE & SERVICE (0.92%)
BMC Software /1/ 1,155 17,233
Computer Associates International 2,845 46,203
Novell /1/ 1,823 5,013
Oracle /1/ 26,089 309,937
Peoplesoft /1/ 1,549 23,281
401,667
ENTERTAINMENT SOFTWARE (0.10%)
Electronic Arts /1/ 708 41,963
FIDUCIARY BANKS (0.58%)
Bank of New York 3,794 100,351
Mellon Financial 2,133 56,418
Northern Trust 1,094 38,400
State Street 1,645 57,624
252,793
FILTRATION & SEPARATION PRODUCTS (0.03%)
Pall 608 12,841
FINANCE-CONSUMER LOANS (0.19%)
SLM 760 85,120
FINANCE-CREDIT CARD (0.97%)
American Express 6,507 246,355
Capital One Financial 1,098 45,973
MBNA 6,326 119,561
Providian Financial /1/ 1,431 10,547
422,436
FINANCE-INVESTMENT BANKER & BROKER (1.60%)
Bear Stearns 491 32,819
Goldman Sachs Group 2,337 177,378
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCE-INVESTMENT BANKER & BROKER (CONTINUED)
$
Lehman Brothers Holdings 1,201 75,627
Merrill Lynch 4,280 175,694
Morgan Stanley 5,363 239,994
701,512
FINANCE-MORTGAGE LOAN/BANKER (1.37%)
Countrywide Credit Industries 626 42,318
Federal Home Loan Mortgage 3,444 199,407
Federal National Mortgage Association 4,926 356,593
598,318
FINANCIAL GUARANTEE INSURANCE (0.19%)
Ambac Financial Group 524 30,575
MBIA 718 32,095
MGIC Investment 497 22,594
85,264
FOOD-CONFECTIONERY (0.25%)
Hershey Foods 674 43,978
Wm. Wrigley Jr. 1,115 63,232
107,210
FOOD-FLOUR & GRAIN (0.08%)
Archer-Daniels-Midland 3,196 35,412
FOOD-MISCELLANEOUS/DIVERSIFIED (0.88%)
Campbell Soup 2,032 44,765
ConAgra Foods 2,658 55,818
General Mills 1,826 82,371
H.J. Heinz 1,739 51,961
Kellogg 2,021 66,168
McCormick 693 17,179
Sara Lee 3,875 65,023
383,285
FOOD-RETAIL (0.31%)
Albertson's 1,877 37,277
Kroger /1/ 3,778 54,025
Safeway /1/ 2,184 36,298
Winn-Dixie Stores 697 8,734
136,334
FOOD-WHOLESALE & DISTRIBUTION (0.24%)
Supervalu 662 10,903
Sysco 3,236 92,970
103,873
FORESTRY (0.05%)
Plum Creek Timber 915 21,283
GAS-DISTRIBUTION (0.15%)
KeySpan 774 26,215
Nicor 218 6,553
Peoples Energy 176 6,838
Sempra Energy 1,020 27,377
66,983
GOLD MINING (0.12%)
Newmont Mining 1,989 53,743
HEALTH CARE COST CONTAINMENT (0.09%)
McKesson 1,441 39,973
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HOME DECORATION PRODUCTS (0.09%)
$
Newell Rubbermaid 1,323 40,325
HOME FURNISHINGS (0.05%)
Leggett & Platt 963 19,886
HOTELS & MOTELS (0.21%)
Hilton Hotels 1,863 24,815
Marriott International 1,157 41,548
Starwood Hotels & Resorts Worldwide 989 26,545
92,908
HUMAN RESOURCES (0.03%)
Robert Half International /1/ 858 13,968
IDENTIFICATION SYSTEM-DEVELOPMENT (0.03%)
Symbol Technologies 1,141 12,471
INDEPENDENT POWER PRODUCER (0.04%)
Calpine /1/ 1,871 10,047
Mirant /1/ 2,000 6,620
16,667
INDUSTRIAL AUTOMATION & ROBOTS (0.05%)
Rockwell International 919 20,953
INDUSTRIAL GASES (0.22%)
Air Products & Chemicals 1,125 48,454
Praxair 800 46,464
94,918
INSTRUMENTS-CONTROLS (0.17%)
Johnson Controls 440 36,186
Parker Hannifin 584 23,757
Thermo Electron /1/ 809 14,699
74,642
INSTRUMENTS-SCIENTIFIC (0.11%)
Applied Biosystems Group 1,037 18,179
Millipore /1/ 239 8,162
PerkinElmer 625 6,200
Waters /1/ 639 15,342
47,883
INSURANCE BROKERS (0.37%)
Aon 1,533 33,971
Marsh & McLennan 2,659 126,781
160,752
INTERNET BROKERS (0.13%)
Charles Schwab 6,652 57,407
INTERNET SECURITY (0.08%)
Symantec /1/ 755 33,182
INVESTMENT MANAGEMENT & ADVISORY SERVICES (0.21%)
Federated Investors 566 15,446
Franklin Resources 1,274 44,437
Janus Capital Group 1,101 15,304
T. Rowe Price Group 605 18,465
93,652
LEISURE & RECREATION PRODUCTS (0.02%)
Brunswick 446 9,736
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
LIFE & HEALTH INSURANCE (0.60%)
$
Aflac 2,556 83,607
Jefferson-Pilot 710 28,464
John Hancock Financial Services 1,426 41,383
Lincoln National 877 28,029
Principal Financial Group /5/ 1,585 46,123
Torchmark 586 22,707
UnumProvident 1,196 13,754
264,067
LINEN SUPPLY & RELATED ITEMS (0.07%)
Cintas 843 30,264
MACHINERY-CONSTRUCTION & MINING (0.20%)
Caterpillar 1,704 89,630
MACHINERY-FARM (0.12%)
Deere 1,185 52,176
MACHINERY-GENERAL INDUSTRY (0.15%)
Dover 1,002 28,797
Ingersoll-Rand 838 36,939
McDermott International /1/ 316 1,027
66,763
MEDICAL INFORMATION SYSTEM (0.04%)
IMS Health 1,210 18,634
MEDICAL INSTRUMENTS (1.19%)
Biomet 1,282 39,050
Boston Scientific /1/ 2,019 86,918
Guidant 1,519 59,226
Medtronic 6,038 288,254
St. Jude Medical /1/ 879 46,112
519,560
MEDICAL LABORATORY & TESTING SERVICE (0.07%)
Quest Diagnostics /1/ 520 31,070
MEDICAL PRODUCTS (2.41%)
Baxter International 2,937 67,551
Becton Dickinson 1,261 44,639
Johnson & Johnson 14,708 828,943
Stryker 980 65,670
Zimmer Holdings /1/ 965 45,259
1,052,062
MEDICAL-BIOMEDICAL/GENE (1.14%)
Amgen /1/ 6,372 390,667
Biogen /1/ 738 28,037
Chiron /1/ 926 37,809
Genzyme /1/ 1,062 42,777
499,290
MEDICAL-DRUGS (7.75%)
Abbott Laboratories 7,741 314,517
Allergan 640 44,960
Bristol-Myers Squibb 9,591 244,954
Eli Lilly 5,562 354,967
Forest Laboratories /1/ 1,797 92,941
King Pharmaceuticals /1/ 1,192 15,031
Medimmune /1/ 1,245 43,911
Merck 11,118 646,845
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL-DRUGS (CONTINUED)
$
Pfizer 39,473 1,213,795
Schering-Plough 7,261 131,424
Wyeth 6,564 285,731
3,389,076
MEDICAL-GENERIC DRUGS (0.04%)
Watson Pharmaceutical /1/ 529 15,378
MEDICAL-HMO (0.66%)
Aetna 745 37,101
Anthem /1/ 700 48,048
Humana /1/ 803 8,873
UnitedHealth Group 1,507 138,840
Wellpoint Health Networks /1/ 736 55,892
288,754
MEDICAL-HOSPITALS (0.31%)
HCA 2,541 81,566
Health Management Associates 1,182 20,165
Tenet Healthcare /1/ 2,344 34,785
136,516
MEDICAL-NURSING HOMES (0.02%)
Manor Care /1/ 477 9,278
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.36%)
AmerisourceBergen 546 31,586
Cardinal Health 2,239 123,772
155,358
METAL PROCESSORS & FABRICATION (0.01%)
Worthington Industries 425 5,708
METAL-ALUMINUM (0.22%)
Alcoa 4,183 95,916
METAL-COPPER (0.03%)
Phelps Dodge /1/ 440 13,724
METAL-DIVERSIFIED (0.03%)
Freeport-McMoran Copper & Gold 717 12,411
MISCELLANEOUS INVESTING (0.32%)
Apartment Investment & Management 464 17,521
Equity Office Properties Trust 2,038 52,927
Equity Residential Properties Trust 1,341 34,745
Simon Property Group 913 33,525
138,718
MONEY CENTER BANKS (1.92%)
Bank of America 7,439 550,858
JP Morgan Chase 9,885 290,125
840,983
MOTORCYCLE & MOTOR SCOOTER (0.15%)
Harley-Davidson 1,498 66,571
MULTI-LINE INSURANCE (2.86%)
Allstate 3,480 131,509
American International Group 12,916 748,482
Cigna 691 36,139
Cincinnati Financial 799 29,443
Hartford Financial Services 1,264 51,521
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MULTI-LINE INSURANCE (CONTINUED)
$
Loews 918 37,886
MetLife 3,467 99,607
Prudential Financial 2,803 89,612
Safeco 684 26,341
1,250,540
MULTIMEDIA (2.37%)
AOL Time Warner /1/ 22,133 302,779
Gannett 1,323 100,178
McGraw-Hill 959 55,996
Meredith 246 10,632
Viacom /1/ 8,719 378,492
Walt Disney 10,112 188,690
1,036,767
NETWORKING PRODUCTS (1.34%)
Cisco Systems /1/ 35,213 529,604
Lucent Technologies /1/ 19,365 34,857
Network Appliance /1/ 1,680 22,310
586,771
NON-HAZARDOUS WASTE DISPOSAL (0.17%)
Allied Waste Industries /1/ 1,035 8,591
Waste Management 2,946 63,987
72,578
OFFICE AUTOMATION & EQUIPMENT (0.18%)
Pitney Bowes 1,171 41,114
Xerox /1/ 3,640 35,890
77,004
OFFICE SUPPLIES & FORMS (0.07%)
Avery Dennison 544 28,837
OIL & GAS DRILLING (0.20%)
Nabors Industries /1/ 716 28,067
Noble /1/ 662 20,489
Rowan 463 9,492
Transocean Sedco Forex /1/ 1,580 30,099
88,147
OIL COMPANY-EXPLORATION & PRODUCTION (0.56%)
Anadarko Petroleum 1,231 54,656
Apache 791 45,285
Burlington Resources 997 46,171
Devon Energy 1,156 54,621
EOG Resources 572 21,381
Kerr-McGee 497 20,929
243,043
OIL COMPANY-INTEGRATED (4.16%)
Amerada Hess 442 19,956
ChevronTexaco 5,289 332,202
ConocoPhillips 3,351 168,555
Exxon Mobil 33,316 1,172,723
Marathon Oil 1,545 35,180
Occidental Petroleum 1,871 55,850
Unocal 1,277 35,373
1,819,839
OIL REFINING & MARKETING (0.06%)
Ashland 338 10,022
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL REFINING & MARKETING (CONTINUED)
$
Sunoco 378 14,065
24,087
OIL-FIELD SERVICES (0.55%)
Baker Hughes 1,668 46,704
BJ Services /1/ 781 28,515
Halliburton 2,161 46,267
Schlumberger 2,882 120,842
242,328
OPTICAL SUPPLIES (0.02%)
Bausch & Lomb 264 9,282
PAPER & RELATED PRODUCTS (0.47%)
Boise Cascade 288 6,615
Georgia-Pacific 1,238 19,115
International Paper 2,371 84,763
Louisiana-Pacific /1/ 518 4,185
MeadWestvaco 991 23,378
Temple-Inland 266 12,050
Weyerhaeuser 1,084 53,756
203,862
PHOTO EQUIPMENT & SUPPLIES (0.10%)
Eastman Kodak 1,445 43,220
PIPELINES (0.17%)
Dynegy /1/ 1,839 8,092
El Paso 2,966 22,245
Kinder Morgan 604 28,400
Williams 2,558 17,778
76,515
POWER CONVERTER & SUPPLY EQUIPMENT (0.03%)
American Power Conversion /1/ 971 15,128
PRINTING-COMMERCIAL (0.03%)
R.R. Donnelley & Sons 561 11,310
PROPERTY & CASUALTY INSURANCE (0.77%)
ACE 1,300 43,004
Chubb 847 44,798
Progressive 1,078 73,304
St. Paul 1,121 38,495
Travelers Property Casualty 4,981 80,941
XL Capital 672 55,306
335,848
PUBLICLY TRADED INVESTMENT FUND (0.54%)
iShares S&P 500 Index Fund 2,550 234,217
PUBLISHING-NEWSPAPERS (0.34%)
Dow Jones 405 16,038
Knight Ridder 404 26,078
New York Times 749 34,739
Tribune 1,509 73,911
150,766
REGIONAL BANKS (3.96%)
Bank One 5,763 207,756
Comerica 865 37,636
Fifth Third Bancorp 2,861 141,019
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
REGIONAL BANKS (CONTINUED)
$
FleetBoston Financial 5,197 137,825
Huntington Bancshares 1,166 22,690
KeyCorp 2,103 50,703
National City 3,028 90,719
PNC Financial Services Group 1,406 61,723
Suntrust Banks 1,398 79,994
U.S. Bancorp 9,484 210,071
Union Planters 981 27,998
Wachovia 6,735 257,344
Wells Fargo 8,377 404,274
1,729,752
RETAIL-APPAREL & SHOE (0.28%)
Gap 4,376 72,773
Limited 2,590 37,659
Nordstrom 670 11,611
122,043
RETAIL-AUTO PARTS (0.09%)
Autozone /1/ 482 38,950
RETAIL-AUTOMOBILE (0.05%)
AutoNation /1/ 1,435 19,875
RETAIL-BEDDING (0.13%)
Bed Bath & Beyond /1/ 1,456 57,527
RETAIL-BUILDING PRODUCTS (1.13%)
Home Depot 11,515 323,917
Lowe's 3,866 169,679
493,596
RETAIL-CONSUMER ELECTRONICS (0.18%)
Best Buy /1/ 1,593 55,086
Circuit City Stores 1,042 5,971
RadioShack 834 19,774
80,831
RETAIL-DISCOUNT (3.59%)
Big Lots /1/ 575 7,199
Costco Wholesale /1/ 2,257 78,160
Dollar General 1,650 23,991
Family Dollar Stores 851 29,096
Target 4,499 150,446
TJX 2,601 50,069
Wal-Mart Stores 21,855 1,230,874
1,569,835
RETAIL-DRUG STORE (0.47%)
CVS 1,945 47,088
Walgreen 5,074 156,584
203,672
RETAIL-JEWELRY (0.05%)
Tiffany 718 19,917
RETAIL-MAJOR DEPARTMENT STORE (0.22%)
J.C. Penney 1,328 22,656
May Department Stores 1,427 30,852
Sears Roebuck 1,566 44,380
97,888
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-OFFICE SUPPLIES (0.15%)
$
Office Depot /1/ 1,527 19,332
Staples /1/ 2,343 44,610
63,942
RETAIL-REGIONAL DEPARTMENT STORE (0.30%)
Dillards 419 5,857
Federated Department Stores /1/ 943 28,875
Kohls /1/ 1,669 94,799
129,531
RETAIL-RESTAURANTS (0.50%)
Darden Restaurants 846 14,814
McDonald's 6,284 107,456
Starbucks /1/ 1,919 45,077
Wendy's International 571 16,582
Yum! Brands /1/ 1,463 36,136
220,065
RETAIL-TOY STORE (0.02%)
Toys R Us /1/ 1,052 10,783
RUBBER-TIRES (0.02%)
Cooper Tire & Rubber 364 5,125
Goodyear Tire & Rubber 868 4,965
10,090
SAVINGS & LOANS-THRIFTS (0.63%)
Charter One Financial 1,119 32,507
Golden West Financial 760 57,319
Washington Mutual 4,687 185,137
274,963
SCHOOLS (0.11%)
Apollo Group /1/ 863 46,774
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (0.40%)
Analog Devices /1/ 1,803 59,715
Linear Technology 1,549 53,394
Maxim Integrated Products 1,600 62,864
175,973
SEMICONDUCTOR EQUIPMENT (0.43%)
Applied Materials /1/ 8,171 119,296
Kla-Tencor /1/ 942 38,622
Novellus Systems /1/ 740 20,750
Teradyne /1/ 906 10,510
189,178
STEEL-PRODUCERS (0.05%)
Nucor 387 15,809
United States Steel 506 7,246
23,055
STEEL-SPECIALTY (0.00%)
Allegheny Technologies 399 1,656
TELECOMMUNICATION EQUIPMENT (0.40%)
ADC Telecommunications /1/ 3,969 9,478
Andrew /1/ 486 3,728
Comverse Technology /1/ 929 12,142
Qualcomm 3,906 124,562
Scientific-Atlanta 751 12,204
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATION EQUIPMENT (CONTINUED)
$
Tellabs /1/ 2,040 12,607
174,721
TELECOMMUNICATION EQUIPMENT-FIBER OPTICS (0.15%)
CIENA /1/ 2,146 10,451
Corning /1/ 5,935 32,168
JDS Uniphase /1/ 7,008 22,636
65,255
TELECOMMUNICATION SERVICES (0.05%)
Avaya /1/ 1,845 7,196
Citizens Communications /1/ 1,397 15,269
22,465
TELEPHONE-INTEGRATED (3.16%)
Alltel 1,540 72,164
AT&T 3,814 65,029
BellSouth 9,214 234,865
CenturyTel 706 20,792
Qwest Communications International 8,394 31,645
SBC Communications 16,439 384,015
Sprint 4,429 50,978
Sprint PCS /1/ 4,947 17,314
Verizon Communications 13,545 506,312
1,383,114
TELEVISION (0.08%)
Univision Communications /1/ 1,134 34,337
TOBACCO (0.81%)
Altria Group 10,242 315,044
RJ Reynolds Tobacco Holdings 420 11,831
UST 831 26,035
352,910
TOOLS-HAND HELD (0.08%)
Black & Decker 389 16,046
Snap-On 288 8,453
Stanley Works 437 10,501
35,000
TOYS (0.14%)
Hasbro 857 13,712
Mattel 2,165 47,067
60,779
TRANSPORT-RAIL (0.46%)
Burlington Northern Santa Fe 1,856 52,265
CSX 1,063 33,995
Norfolk Southern 1,926 40,850
Union Pacific 1,257 74,817
201,927
TRANSPORT-SERVICES (0.99%)
FedEx 1,477 88,443
United Parcel Service 5,564 345,635
434,078
TRAVEL SERVICES (0.03%)
Sabre Holdings 706 14,762
Shares
Held Value
- --------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TRUCKING & LEASING (0.02%)
$
Ryder System 309 7,676
WEB PORTALS (0.17%)
Yahoo /1/ 2,926 72,506
WIRELESS EQUIPMENT (0.21%)
Motorola 11,393 90,119
TOTAL COMMON STOCKS 42,128,950
Principal
Amount Value
- --------------------------------------------------------------------------------------------
BONDS (0.69%)
FINANCE-INVESTMENT BANKER & BROKER (0.23%)
Lehman Brothers Holdings /3/
$ $
2.02%; 07/15/03 102,028 102,028
MONEY CENTER BANKS (0.46%)
Bank of America /3/ /4/
1.35%; 07/07/03 100,000 100,016
JP Morgan Chase /3/ /4/
1.44%; 05/01/03 100,000 100,000
200,016
TOTAL BONDS 302,044
Principal
Amount Value
- --------------------------------------------------------------------------------------------
COMMERCIAL PAPER (3.55%)
FINANCE-MORTGAGE LOAN/BANKER (3.55%)
Investment in Joint Trading Account; Federal
Home Loan Bank
1.25%; 05/01/03 1,552,525 1,552,525
TOTAL COMMERCIAL PAPER 1,552,525
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (0.75%)
Barclays Capital; 1.28%; 05/01/03
(collateralized by Treasury Bill; $
$57,120; 10/02/03) /3/ $ 56,000 56,000
Citigroup Global Markets Holdings;
1.33%; 05/01/03 (collateralized by
GNMAs; $275,928;06/15/28-
05/15/03) /3/ 272,000 272,000
TOTAL REPURCHASE AGREEMENTS 328,000
------------
TOTAL PORTFOLIO INVESTMENTS (101.38%) 44,311,519
LIABILITIES, NET OF CASH, RECEIVABLES AND
OTHER ASSETS (-1.38%) (602,139)
TOTAL NET ASSETS (100.00%) $43,709,380
--------------
Unrealized
Contract Opening Current Gain (Loss)
Type Commitment Market Value Market Value
- ---------------------------------------------------------------------
FUTURES CONTRACTS
7 S&P 500 Index Buy $1,464,638 $1,603,175 $138,537
June, 2003
Futures
/1 /Non-income producing security.
/2 /Security or a portion of the security was pledged to cover margin
requirements for futures contracts.
/3 /Security was purchased with the cash proceeds from securities loans.
/4 /Variable rate.
/5 /Affiliated security.
See accompanying notes.
61
SCHEDULE OF INVESTMENTS
PRINCIPAL MIDCAP FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (96.60%)
AEROSPACE & DEFENSE (1.91%)
$
Northrop Grumman 19,900 1,750,205
Raytheon 147,167 4,404,708
Rockwell Collins 61,487 1,314,592
7,469,505
AEROSPACE & DEFENSE EQUIPMENT (1.70%)
Alliant Techsystems /1/ 124,150 6,669,338
APPAREL MANUFACTURERS (0.80%)
Polo Ralph Lauren /1/ 134,088 3,144,364
APPLICATIONS SOFTWARE (0.56%)
Intuit /1/ 56,900 2,206,582
BEVERAGES-NON-ALCOHOLIC (0.68%)
Coca-Cola Enterprises 136,376 2,657,968
BROADCASTING SERVICES & PROGRAMMING (1.30%)
Liberty Media /1/ 461,872 5,080,592
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.33%)
Vulcan Materials 36,784 1,286,337
BUILDING PRODUCTS-AIR & HEATING (0.54%)
American Standard /1/ 29,942 2,131,571
BUILDING PRODUCTS-WOOD (1.56%)
Rayonier 121,233 6,105,294
CASINO SERVICES (2.59%)
International Game Technology /1/ 117,400 10,131,620
COMMERCIAL BANKS (5.16%)
M&T Bank 65,410 5,525,183
Marshall & Ilsley 49,700 1,462,174
North Fork Bancorp. 110,437 3,573,741
TCF Financial 244,100 9,666,360
20,227,458
COMMERCIAL SERVICE-FINANCE (2.84%)
Deluxe 75,553 3,325,088
Dun & Bradstreet /1/ 155,200 5,866,560
Moody's 40,300 1,946,087
11,137,735
COMMERCIAL SERVICES (1.92%)
Arbitron /1/ 143,200 4,877,392
Servicemaster 291,027 2,633,794
7,511,186
COMPUTER SERVICES (2.19%)
Ceridian /1/ 187,213 2,611,621
DST Systems /1/ 67,224 2,063,777
Sungard Data Systems /1/ 67,125 1,443,188
Unisys /1/ 238,506 2,480,462
8,599,048
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMPUTERS-INTEGRATED SYSTEMS (0.44%)
$
Diebold 43,300 1,731,134
COMPUTERS-MEMORY DEVICES (0.53%)
Quantum /1/ 417,878 1,441,679
Storage Technology /1/ 25,164 622,054
2,063,733
COMPUTERS-PERIPHERAL EQUIPMENT (0.57%)
Lexmark International /1/ 29,920 2,229,339
CONSUMER PRODUCTS-MISCELLANEOUS (0.79%)
Dial 148,616 3,095,671
COSMETICS & TOILETRIES (0.88%)
International Flavors & Fragrances 108,136 3,436,562
DATA PROCESSING & MANAGEMENT (0.74%)
Certegy /1/ 65,100 1,626,849
SEI Investments 48,941 1,288,617
2,915,466
DENTAL SUPPLIES & EQUIPMENT (1.02%)
Dentsply International 106,900 4,003,405
DIVERSIFIED MANUFACTURING OPERATIONS (1.02%)
Cooper Industries 70,400 2,611,840
ITT Industries 24,100 1,405,030
4,016,870
DIVERSIFIED OPERATORS-COMMERCIAL SERVICES (0.66%)
Viad 128,700 2,588,157
ELECTRIC-INTEGRATED (2.80%)
Ameren 130,257 5,337,932
DQE 89,755 1,220,668
Exelon 36,890 1,956,645
Scana 77,100 2,447,154
10,962,399
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.47%)
Gentex /1/ 60,886 1,838,757
ELECTRONIC COMPONENTS-SEMICONDUCTOR (0.72%)
Applied Micro Circuits /1/ 630,757 2,825,791
FINANCE-CONSUMER LOANS (0.48%)
SLM 16,676 1,867,712
FINANCE-MORTGAGE LOAN/BANKER (0.82%)
Countrywide Credit Industries 47,752 3,228,035
FINANCIAL GUARANTEE INSURANCE (0.26%)
PMI Group 33,100 1,020,142
FOOD-DAIRY PRODUCTS (0.58%)
Dean Foods /1/ 52,200 2,272,266
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FOOD-MISCELLANEOUS/DIVERSIFIED (0.89%)
$
McCormick 141,251 3,501,612
FORESTRY (0.91%)
Plum Creek Timber 153,370 3,567,386
GOLD MINING (1.46%)
Newmont Mining 211,582 5,716,946
HOSPITAL BEDS & EQUIPMENT (1.22%)
Hillenbrand Industries 95,986 4,789,701
HOTELS & MOTELS (0.26%)
Choice Hotels International /1/ 41,692 1,017,285
IDENTIFICATION SYSTEM-DEVELOPMENT (0.68%)
Symbol Technologies 245,000 2,677,850
INSURANCE BROKERS (0.74%)
Arthur J. Gallagher 115,358 2,882,796
INVESTMENT MANAGEMENT & ADVISORY SERVICES (1.18%)
Federated Investors 72,600 1,981,254
Nuveen Investments 108,400 2,655,800
4,637,054
LIFE & HEALTH INSURANCE (1.34%)
Aflac 100,145 3,275,743
Torchmark 51,400 1,991,750
5,267,493
LOTTERY SERVICES (1.32%)
Gtech Holdings /1/ 154,100 5,188,547
MACHINERY-GENERAL INDUSTRY (0.42%)
Dover 56,800 1,632,432
MACHINERY-PUMPS (0.58%)
Graco 74,500 2,287,150
MEDICAL INFORMATION SYSTEM (1.31%)
IMS Health 334,500 5,151,300
MEDICAL INSTRUMENTS (5.96%)
Beckman Coulter 100,475 3,905,463
Biomet 125,200 3,813,592
Boston Scientific /1/ 100,324 4,318,948
Edwards Lifesciences /1/ 173,900 5,020,493
Guidant 90,000 3,509,100
St. Jude Medical /1/ 53,281 2,795,122
23,362,718
MEDICAL PRODUCTS (1.53%)
Becton Dickinson 78,037 2,762,510
Varian Medical Systems /1/ 59,684 3,214,580
5,977,090
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL-BIOMEDICAL/GENE (0.36%)
$
Biogen /1/ 37,000 1,405,630
MEDICAL-HMO (0.51%)
Anthem /1/ 28,970 1,988,501
MEDICAL-HOSPITALS (0.99%)
Health Management Associates 228,000 3,889,680
MEDICAL-OUTPATIENT & HOME MEDICAL CARE (0.56%)
Lincare Holdings /1/ 72,331 2,196,693
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.54%)
AmerisourceBergen 36,361 2,103,484
METAL-DIVERSIFIED (1.25%)
Freeport-McMoran Copper & Gold 284,100 4,917,771
MISCELLANEOUS INVESTING (4.45%)
AMB Property 112,300 3,065,790
Chelsea Property Group 48,400 1,919,544
Kimco Realty 169,233 6,126,235
Prologis Trust 107,100 2,756,754
Public Storage 111,450 3,583,117
17,451,440
MULTIMEDIA (0.51%)
Belo 88,275 1,987,070
NON-HAZARDOUS WASTE DISPOSAL (1.59%)
Republic Services /1/ 291,200 6,249,152
OFFICE AUTOMATION & EQUIPMENT (0.41%)
Pitney Bowes 45,500 1,597,505
OIL & GAS DRILLING (0.27%)
Noble /1/ 33,900 1,049,205
OIL COMPANY-EXPLORATION & PRODUCTION (2.12%)
Apache 44,707 2,559,476
Burlington Resources 57,025 2,640,828
Devon Energy 65,351 3,087,843
8,288,147
OIL COMPANY-INTEGRATED (0.65%)
Marathon Oil 111,700 2,543,409
OIL FIELD MACHINERY & EQUIPMENT (0.42%)
National-Oilwell /1/ 77,971 1,636,611
OIL-FIELD SERVICES (1.28%)
BJ Services /1/ 74,577 2,722,806
Weatherford International /1/ 56,600 2,277,018
4,999,824
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PAPER & RELATED PRODUCTS (0.69%)
$
Boise Cascade 117,400 2,696,678
PIPELINES (1.31%)
Equitable Resources 35,100 1,348,542
Questar 125,200 3,781,040
5,129,582
POWER CONVERTER & SUPPLY EQUIPMENT (0.57%)
American Power Conversion /1/ 143,952 2,242,772
PRINTING-COMMERCIAL (0.96%)
Valassis Communications /1/ 140,798 3,745,227
PROPERTY & CASUALTY INSURANCE (1.43%)
Fidelity National Financial 110,400 3,797,760
Leucadia National 47,232 1,799,539
5,597,299
PUBLICLY TRADED INVESTMENT FUND (8.05%)
iShares Russell 2000 Index Fund 67,900 5,390,581
iShares S&P MidCap 400 Fund 47,200 4,145,576
iShares S&P SmallCap 600 Index Fund 67,400 6,677,992
Standard & Poor's MidCap 400 Depository
Receipts 191,080 15,324,616
31,538,765
PUBLISHING-NEWSPAPERS (0.76%)
Knight Ridder 46,104 2,976,013
REINSURANCE (2.26%)
Everest Re Group 127,100 8,852,515
RETAIL-DISCOUNT (0.60%)
TJX 121,900 2,346,575
RETAIL-HOME FURNISHINGS (0.34%)
Pier 1 Imports 71,000 1,317,760
RETAIL-JEWELRY (0.38%)
Tiffany 53,540 1,485,200
RETAIL-RESTAURANTS (0.05%)
Krispy Kreme Doughnuts /1/ 5,724 185,916
RETAIL-VARIETY STORE (0.30%)
99 Cents Only Stores /1/ 40,000 1,178,400
SAVINGS & LOANS-THRIFTS (1.25%)
Charter One Financial 168,750 4,902,188
TELECOMMUNICATION EQUIPMENT (0.61%)
Comverse Technology /1/ 183,600 2,399,652
TELEPHONE-INTEGRATED (0.48%)
Telephone & Data Systems 43,700 1,883,033
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TOBACCO (2.54%)
$
UST 317,400 9,944,142
TOYS (1.04%)
Mattel 187,600 4,078,424
TRANSPORT-TRUCK (0.41%)
Heartland Express /1/ 69,455 1,597,465
TOTAL COMMON STOCKS 378,513,125
Principal
Amount Value
- ------------------------------------------------------------------------------------------------
BONDS (1.03%)
FINANCE-INVESTMENT BANKER & BROKER (0.52%)
Goldman Sachs Group /2/ /3/
$ $
1.39%; 10/02/03 1,000,000 1,000,000
Lehman Brothers Holdings /3/
2.02%; 07/15/03 1,020,278 1,020,278
2,020,278
MONEY CENTER BANKS (0.51%)
Bank of America /2/ /3/
1.35%; 07/07/03 1,000,000 1,000,164
JP Morgan Chase /2/ /3/
1.44%; 05/01/03 1,000,000 1,000,000
2,000,164
TOTAL BONDS 4,020,442
Principal
Amount Value
- ------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (3.71%)
DIVERSIFIED FINANCIAL SERVICES (3.71%)
Investment in Joint Trading Account; General
Electric Capital
1.35%; 05/01/03 14,557,307 14,557,307
TOTAL COMMERCIAL PAPER 14,557,307
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (10.45%)
Barclays Capital; 1.28%; 05/01/03
(collateralized by Treasury Bill; $
$1,029,180; 10/02/03) /3/ $ 1,009,000 1,009,000
Credit Suisse First Boston; 1.34%;
05/01/03 (collateralized by GNMAs;
$40,525,388;01/15/04-09/15/32) /3/ 39,935,000 39,935,000
TOTAL REPURCHASE AGREEMENTS 40,944,000
------------
TOTAL PORTFOLIO INVESTMENTS (111.79%) 438,034,874
LIABILITIES, NET OF CASH, RECEIVABLES AND
OTHER ASSETS (-11.79%) (46,199,679)
TOTAL NET ASSETS (100.00%) $391,835,195
--------------
/1 /Non-income producing security.
/2 /Variable rate.
/3 /Security was purchased with the cash proceeds from securities loans.
See accompanying notes.
65
SCHEDULE OF INVESTMENTS
PRINCIPAL PARTNERS BLUE CHIP FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (99.48%)
ADVERTISING AGENCIES (0.33%)
$
Omnicom Group 6,845 423,706
AEROSPACE & DEFENSE (1.29%)
Boeing 13,057 356,195
Northrop Grumman 10,100 888,295
Raytheon 14,000 419,020
1,663,510
AEROSPACE & DEFENSE EQUIPMENT (1.09%)
Lockheed Martin 8,500 425,425
United Technologies 16,000 988,960
1,414,385
AGRICULTURAL OPERATIONS (0.25%)
Monsanto 18,300 318,420
APPLIANCES (0.13%)
Whirlpool 3,200 171,168
APPLICATIONS SOFTWARE (3.34%)
Citrix Systems /1/ 7,100 134,616
Microsoft 163,744 4,186,934
4,321,550
ATHLETIC FOOTWEAR (0.25%)
Nike 6,144 328,888
AUTO-CARS & LIGHT TRUCKS (0.98%)
Ford Motor 37,400 385,220
General Motors 24,600 886,830
1,272,050
BEVERAGES-NON-ALCOHOLIC (1.55%)
Coca-Cola 26,900 1,086,760
Coca-Cola Enterprises 4,300 83,807
Pepsico 19,272 834,092
2,004,659
BROADCASTING SERVICES & PROGRAMMING (0.65%)
Clear Channel Communications /1/ 4,900 191,639
Fox Entertainment Group /1/ 25,300 642,620
834,259
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.30%)
Masco 18,251 384,549
CABLE TV (1.02%)
Comcast /1/ 25,100 800,941
Comcast /1/ 17,421 523,675
1,324,616
CELLULAR TELECOMMUNICATIONS (0.59%)
AT&T Wireless Services /1/ 33,800 218,348
Nextel Communications /1/ 30,200 446,658
US Cellular /1/ 4,100 98,605
763,611
CHEMICALS-DIVERSIFIED (0.56%)
Dow Chemical 12,698 414,463
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CHEMICALS-DIVERSIFIED (CONTINUED)
$
PPG Industries 6,500 315,315
729,778
CIRCUIT BOARDS (0.08%)
Jabil Circuit /1/ 5,300 99,110
COATINGS & PAINT (0.25%)
Sherwin-Williams 11,600 323,408
COMMERCIAL BANKS (0.18%)
BB&T 2,500 81,500
UnionBanCal 3,600 145,440
226,940
COMMERCIAL SERVICE-FINANCE (0.68%)
Deluxe 2,400 105,624
Moody's 16,100 777,469
883,093
COMPUTER SERVICES (0.66%)
Computer Sciences /1/ 14,800 487,660
Sungard Data Systems /1/ 17,300 371,950
859,610
COMPUTERS (3.83%)
Dell Computer /1/ 52,400 1,514,884
Hewlett-Packard 105,100 1,713,130
International Business Machines 20,288 1,722,451
4,950,465
COMPUTERS-MEMORY DEVICES (0.07%)
SanDisk /1/ 3,800 91,960
COMPUTERS-PERIPHERAL EQUIPMENT (0.66%)
Lexmark International /1/ 11,500 856,865
CONSULTING SERVICES (0.30%)
Accenture /1/ 24,406 390,984
CONSUMER PRODUCTS-MISCELLANEOUS (0.60%)
Clorox 17,300 782,306
COSMETICS & TOILETRIES (3.24%)
Avon Products 3,600 209,412
Colgate-Palmolive 17,900 1,023,343
Gillette 13,727 417,987
Kimberly-Clark 5,723 284,834
Procter & Gamble 25,145 2,259,278
4,194,854
DATA PROCESSING & MANAGEMENT (0.28%)
Automatic Data Processing 10,799 363,170
DISTRIBUTION-WHOLESALE (0.54%)
Ingram Micro /1/ 8,300 83,000
W.W. Grainger 13,200 609,180
692,180
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES (2.76%)
$
Citigroup 90,890 3,567,433
DIVERSIFIED MANUFACTURING OPERATIONS (3.02%)
3M 1,515 190,951
General Electric 126,183 3,716,089
3,907,040
E-COMMERCE-SERVICES (0.23%)
eBay /1/ 3,200 296,864
ELECTRIC-INTEGRATED (2.07%)
Allegheny Energy 18,900 156,870
Cinergy 5,466 186,609
Consolidated Edison 5,300 206,011
Edison International /1/ 28,200 411,438
Exelon 9,416 499,425
FirstEnergy 3,300 111,309
FPL Group 10,300 626,961
PG&E /1/ 31,700 474,866
2,673,489
ELECTRONIC COMPONENTS-SEMICONDUCTOR (2.03%)
Intel 109,168 2,008,691
LSI Logic /1/ 20,100 107,736
Texas Instruments 27,800 514,022
2,630,449
ELECTRONIC FORMS (0.24%)
Adobe Systems 8,900 307,584
ELECTRONIC PARTS DISTRIBUTION (0.19%)
Arrow Electronics /1/ 7,100 119,848
Avnet /1/ 10,100 128,775
248,623
ENTERPRISE SOFTWARE & SERVICE (0.77%)
BMC Software /1/ 7,500 111,900
Oracle /1/ 74,400 883,872
995,772
ENTERTAINMENT SOFTWARE (0.59%)
Electronic Arts /1/ 12,800 758,656
FIDUCIARY BANKS (0.28%)
State Street 10,381 363,646
FINANCE-CONSUMER LOANS (0.67%)
SLM 7,700 862,400
FINANCE-CREDIT CARD (0.73%)
American Express 22,200 840,492
MBNA 5,200 98,280
938,772
FINANCE-INVESTMENT BANKER & BROKER (1.82%)
Bear Stearns 11,500 768,660
Lehman Brothers Holdings 14,200 894,174
Merrill Lynch 16,798 689,558
2,352,392
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCE-MORTGAGE LOAN/BANKER (0.95%)
$
Countrywide Credit Industries 5,100 344,760
Federal Home Loan Mortgage 6,900 399,510
Federal National Mortgage Association 6,711 485,809
1,230,079
FOOD-DAIRY PRODUCTS (0.24%)
Dreyer's Grand Ice Cream 4,900 313,012
FOOD-FLOUR & GRAIN (0.41%)
Archer-Daniels-Midland 48,100 532,948
FOOD-MISCELLANEOUS/DIVERSIFIED (0.91%)
General Mills 10,126 456,784
Kraft Foods 23,200 716,880
1,173,664
FOOD-RETAIL (0.32%)
Albertson's 8,200 162,852
Safeway /1/ 14,853 246,857
409,709
FOOD-WHOLESALE & DISTRIBUTION (0.31%)
Sysco 14,000 402,220
HEALTH CARE COST CONTAINMENT (0.60%)
McKesson 27,900 773,946
HOME DECORATION PRODUCTS (0.15%)
Newell Rubbermaid 6,300 192,024
INDUSTRIAL AUTOMATION & ROBOTS (0.23%)
Rockwell International 13,000 296,400
INSTRUMENTS-CONTROLS (0.11%)
Johnson Controls 1,800 148,032
INSTRUMENTS-SCIENTIFIC (0.07%)
Applied Biosystems Group 5,100 89,403
INSURANCE BROKERS (0.18%)
Marsh & McLennan 4,900 233,632
LIFE & HEALTH INSURANCE (0.25%)
John Hancock Financial Services 4,800 139,296
Mony Group 3,800 88,274
UnumProvident 7,900 90,850
318,420
MACHINERY-CONSTRUCTION & MINING (0.25%)
Caterpillar 6,260 329,276
MEDICAL INSTRUMENTS (1.09%)
Boston Scientific /1/ 9,500 408,975
Guidant 16,851 657,020
Medtronic 7,300 348,502
1,414,497
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL PRODUCTS (3.01%)
$
Johnson & Johnson 48,118 2,711,930
Stryker 6,900 462,369
Zimmer Holdings /1/ 15,400 722,260
3,896,559
MEDICAL-BIOMEDICAL/GENE (1.60%)
Amgen /1/ 22,226 1,362,676
Biogen /1/ 2,300 87,377
Chiron /1/ 2,900 118,407
Genentech /1/ 5,400 205,146
Idec Pharmaceuticals /1/ 5,200 170,300
Millennium Pharmaceuticals /1/ 11,000 121,000
2,064,906
MEDICAL-DRUGS (7.64%)
Abbott Laboratories 24,733 1,004,902
Eli Lilly 13,233 844,530
Medimmune /1/ 2,700 95,229
Merck 44,114 2,566,553
Pfizer 131,650 4,048,237
Schering-Plough 29,194 528,411
Wyeth 18,432 802,345
9,890,207
MEDICAL-HMO (0.81%)
Aetna 6,200 308,760
Health Net /1/ 11,500 300,035
Pacificare Health Systems /1/ 13,900 442,576
1,051,371
MEDICAL-HOSPITALS (0.20%)
HCA 8,021 257,474
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.68%)
Cardinal Health 15,900 878,952
METAL-ALUMINUM (0.41%)
Alcoa 23,381 536,126
METAL-DIVERSIFIED (0.07%)
Freeport-McMoran Copper & Gold 4,900 84,819
MISCELLANEOUS INVESTING (0.21%)
Equity Office Properties Trust 7,100 184,387
New Plan Excel Realty Trust 4,300 85,914
270,301
MONEY CENTER BANKS (2.19%)
Bank of America 38,279 2,834,560
MULTI-LINE INSURANCE (3.89%)
American International Group 39,987 2,317,247
CNA Financial 5,900 141,305
Hartford Financial Services 10,435 425,330
Loews 7,300 301,271
MetLife 32,700 939,471
Prudential Financial 28,400 907,948
5,032,572
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MULTIMEDIA (3.14%)
$
AOL Time Warner /1/ 131,919 1,804,652
Gannett 4,194 317,570
McGraw-Hill 14,200 829,138
Viacom /1/ 19,400 842,154
Walt Disney 14,600 272,436
4,065,950
NETWORKING PRODUCTS (0.86%)
Cisco Systems /1/ 74,319 1,117,758
NON-HAZARDOUS WASTE DISPOSAL (0.42%)
Republic Services /1/ 7,800 167,388
Waste Management 17,482 379,709
547,097
OFFICE AUTOMATION & EQUIPMENT (0.09%)
Xerox /1/ 12,000 118,320
OFFICE SUPPLIES & FORMS (0.22%)
Avery Dennison 5,300 280,953
OIL & GAS DRILLING (0.48%)
Transocean Sedco Forex /1/ 32,800 624,840
OIL COMPANY-EXPLORATION & PRODUCTION (0.07%)
Apache 1,470 84,158
OIL COMPANY-INTEGRATED (5.22%)
ChevronTexaco 9,842 618,176
ConocoPhillips 27,488 1,382,647
Exxon Mobil 113,391 3,991,363
Marathon Oil 4,600 104,742
Occidental Petroleum 22,100 659,685
6,756,613
OIL REFINING & MARKETING (0.10%)
Valero Energy 3,500 128,625
OIL-FIELD SERVICES (0.87%)
Halliburton 31,600 676,556
Schlumberger 10,719 449,448
1,126,004
PAPER & RELATED PRODUCTS (0.53%)
International Paper 13,146 469,970
MeadWestvaco 9,000 212,310
682,280
PHOTO EQUIPMENT & SUPPLIES (0.49%)
Eastman Kodak 21,200 634,092
POULTRY (0.26%)
Tyson Foods 34,600 333,198
POWER CONVERTER & SUPPLY EQUIPMENT (0.30%)
American Power Conversion /1/ 24,900 387,942
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PROPERTY & CASUALTY INSURANCE (0.82%)
$
Fidelity National Financial 5,000 172,000
First American 10,000 265,000
Travelers Property Casualty 38,712 629,070
1,066,070
RECREATIONAL VEHICLES (0.06%)
Polaris Industries 1,500 79,305
REGIONAL BANKS (4.69%)
Bank One 37,156 1,339,474
FleetBoston Financial 11,700 310,284
Suntrust Banks 6,400 366,208
U.S. Bancorp 35,800 792,970
Wachovia 47,122 1,800,531
Wells Fargo 30,200 1,457,452
6,066,919
RETAIL-APPAREL & SHOE (0.46%)
Gap 16,400 272,732
Limited 22,600 328,604
601,336
RETAIL-BUILDING PRODUCTS (0.50%)
Home Depot 22,775 640,661
RETAIL-DISCOUNT (3.63%)
Dollar General 23,500 341,690
Wal-Mart Stores 77,270 4,351,846
4,693,536
RETAIL-DRUG STORE (0.64%)
CVS 34,416 833,211
RETAIL-MAJOR DEPARTMENT STORE (0.55%)
J.C. Penney 41,600 709,696
RETAIL-OFFICE SUPPLIES (0.67%)
Office Depot /1/ 6,000 75,960
Staples /1/ 41,700 793,968
869,928
RETAIL-RESTAURANTS (0.64%)
McDonald's 18,149 310,348
Starbucks /1/ 22,200 521,478
831,826
RETAIL-TOY STORE (0.23%)
Toys R Us /1/ 28,900 296,225
SATELLITE TELECOM (0.11%)
PanAmSat /1/ 8,500 147,050
SAVINGS & LOANS-THRIFTS (0.41%)
Charter One Financial 8,600 249,830
Hudson City Bancorp. 5,800 134,386
Washington Mutual 3,600 142,200
526,416
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (0.12%)
$
Analog Devices /1/ 4,600 152,352
SEMICONDUCTOR EQUIPMENT (0.32%)
Applied Materials /1/ 28,400 414,640
STEEL-PRODUCERS (0.24%)
United States Steel 21,900 313,608
TELECOMMUNICATION EQUIPMENT (0.75%)
Qualcomm 30,300 966,267
TELEPHONE-INTEGRATED (3.42%)
Alltel 2,700 126,522
AT&T 6,200 105,710
BellSouth 8,100 206,469
Qwest Communications International 33,500 126,295
SBC Communications 57,112 1,334,136
Sprint 69,300 797,643
Verizon Communications 46,083 1,722,583
4,419,358
THERAPEUTICS (0.49%)
Gilead Sciences /1/ 13,700 632,118
TOBACCO (0.25%)
RJ Reynolds Tobacco Holdings 11,700 329,589
TOYS (0.07%)
Mattel 3,900 84,786
TRANSPORT-RAIL (0.55%)
Burlington Northern Santa Fe 17,900 504,064
CSX 6,600 211,068
715,132
TRANSPORT-SERVICES (0.38%)
FedEx 6,745 403,891
United Parcel Service 1,500 93,180
497,071
WEB PORTALS (0.21%)
Yahoo /1/ 10,800 267,624
WIRELESS EQUIPMENT (0.34%)
Motorola 55,800 441,378
TOTAL COMMON STOCKS 128,712,255
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (0.14%)
Barclays Capital; 1.28%; 05/01/03
(collateralized by Treasury Bill; $
$293,580; 10/02/03) /3/ $ 179,000 179,000
TOTAL REPURCHASE AGREEMENTS 179,000
------------
TOTAL PORTFOLIO INVESTMENTS (99.62%) 128,891,255
CASH AND RECEIVABLES, NET OF LIABILITIES (0.38%) 490,027
TOTAL NET ASSETS (100.00%) $129,381,282
--------------
Unrealized
Contract Opening Current Gain (Loss)
Type Commitment Market Value Market Value
- ---------------------------------------------------------------------
FUTURES CONTRACTS
2 S&P 500 EMini Buy $89,142 $91,610 $2,468
June, 2003
Futures
/1 /Non-income producing security.
/2 /Security was purchased with the cash proceeds from securities loans
70
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL PARTNERS EQUITY GROWTH FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (98.44%)
AEROSPACE & DEFENSE (0.26%)
$
Raytheon 4,300 128,699
AEROSPACE & DEFENSE EQUIPMENT (1.35%)
Lockheed Martin 8,700 435,435
United Technologies 3,850 237,968
673,403
APPLICATIONS SOFTWARE (6.59%)
Microsoft 128,550 3,287,023
BEVERAGES-NON-ALCOHOLIC (2.91%)
Coca-Cola 19,575 790,830
Pepsico 15,345 664,132
1,454,962
BREWERY (0.54%)
Anheuser-Busch 5,430 270,848
BROADCASTING SERVICES & PROGRAMMING (1.37%)
Clear Channel Communications /1/ 17,500 684,425
CABLE TV (0.93%)
Comcast /1/ 5,600 178,696
USA Networks /1/ 9,500 284,525
463,221
CELLULAR TELECOMMUNICATIONS (0.21%)
AT&T Wireless Services /1/ 16,100 104,006
CIRCUIT BOARDS (0.23%)
Jabil Circuit /1/ 6,230 116,501
COMMERCIAL SERVICES (0.30%)
Weight Watchers International /1/ 3,155 148,222
COMPUTERS (3.17%)
Dell Computer /1/ 24,650 712,631
Hewlett-Packard 6,100 99,430
International Business Machines 9,050 768,345
1,580,406
COMPUTERS-MEMORY DEVICES (0.89%)
EMC /1/ 20,725 188,390
Veritas Software /1/ 11,600 255,316
443,706
COSMETICS & TOILETRIES (3.84%)
Colgate-Palmolive 6,150 351,595
Gillette 9,800 298,410
Procter & Gamble 14,100 1,266,885
1,916,890
DATA PROCESSING & MANAGEMENT (0.98%)
Automatic Data Processing 3,000 100,890
First Data 9,900 388,377
489,267
DIVERSIFIED FINANCIAL SERVICES (2.78%)
Citigroup 35,416 1,390,078
DIVERSIFIED MANUFACTURING OPERATIONS (6.24%)
3M 6,350 800,354
General Electric 78,550 2,313,297
3,113,651
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
E-COMMERCE-SERVICES (0.52%)
$
eBay /1/ 2,800 259,756
ELECTRONIC COMPONENTS-SEMICONDUCTOR (4.98%)
Altera /1/ 9,200 145,452
Intel 81,500 1,499,600
Microchip Technology 4,820 100,208
QLogic /1/ 2,600 114,374
Texas Instruments 20,725 383,205
Xilinx /1/ 8,900 240,923
2,483,762
ENTERPRISE SOFTWARE & SERVICE (1.35%)
Oracle /1/ 44,200 525,096
Peoplesoft /1/ 10,000 150,300
675,396
FIDUCIARY BANKS (0.64%)
Bank of New York 12,150 321,368
FINANCE-CREDIT CARD (1.01%)
American Express 13,300 503,538
FINANCE-INVESTMENT BANKER & BROKER (1.09%)
Goldman Sachs Group 7,175 544,583
FINANCE-MORTGAGE LOAN/BANKER (2.06%)
Federal Home Loan Mortgage 17,750 1,027,725
FOOD-MISCELLANEOUS/DIVERSIFIED (0.38%)
Kraft Foods 6,150 190,035
INTERNET BROKERS (0.19%)
Charles Schwab 11,000 94,930
INTERNET SECURITY (0.47%)
Symantec /1/ 5,340 234,693
LIFE & HEALTH INSURANCE (0.64%)
Aflac 9,800 320,558
MEDICAL INSTRUMENTS (2.18%)
Boston Scientific /1/ 2,200 94,710
Medtronic 15,375 734,002
St. Jude Medical /1/ 4,925 258,366
1,087,078
MEDICAL PRODUCTS (2.99%)
Johnson & Johnson 26,475 1,492,131
MEDICAL-BIOMEDICAL/GENE (2.09%)
Amgen /1/ 17,015 1,043,190
MEDICAL-DRUGS (10.85%)
Abbott Laboratories 12,950 526,158
Bristol-Myers Squibb 8,550 218,367
Celgene /1/ 2,575 68,521
Eli Lilly 6,300 402,066
Forest Laboratories /1/ 3,000 155,160
Merck 15,250 887,245
Pfizer 84,145 2,587,459
Wyeth 13,050 568,066
5,413,042
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL-HMO (0.64%)
$
UnitedHealth Group 3,450 317,849
MEDICAL-HOSPITALS (0.39%)
HCA 6,000 192,600
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.51%)
Cardinal Health 4,600 254,288
MONEY CENTER BANKS (0.44%)
JP Morgan Chase 7,500 220,125
MOTORCYCLE & MOTOR SCOOTER (0.39%)
Harley-Davidson 4,400 195,536
MULTI-LINE INSURANCE (2.09%)
American International Group 18,025 1,044,549
MULTIMEDIA (1.85%)
Gannett 3,000 227,160
Viacom /1/ 16,020 695,428
922,588
NETWORKING PRODUCTS (2.53%)
Cisco Systems /1/ 83,925 1,262,232
OIL COMPANY-EXPLORATION & PRODUCTION (0.42%)
Burlington Resources 4,500 208,395
OIL COMPANY-INTEGRATED (2.98%)
Exxon Mobil 42,250 1,487,200
OIL FIELD MACHINERY & EQUIPMENT (0.73%)
Smith International /1/ 10,200 362,712
OIL-FIELD SERVICES (2.38%)
Baker Hughes 20,075 562,100
BJ Services /1/ 17,100 624,321
1,186,421
REGIONAL BANKS (1.00%)
Wells Fargo 10,300 497,078
RETAIL-APPAREL & SHOE (0.27%)
Limited 9,225 134,132
RETAIL-BEDDING (0.59%)
Bed Bath & Beyond /1/ 7,400 292,374
RETAIL-BUILDING PRODUCTS (2.65%)
Home Depot 35,580 1,000,865
Lowe's 7,300 320,397
1,321,262
RETAIL-DISCOUNT (5.08%)
Costco Wholesale /1/ 7,300 252,799
Target 8,800 294,272
TJX 9,750 187,687
Wal-Mart Stores 31,950 1,799,424
2,534,182
RETAIL-DRUG STORE (0.49%)
Walgreen 7,975 246,109
Shares
Held Value
- ------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-JEWELRY (0.29%)
$
Tiffany 5,225 144,942
RETAIL-REGIONAL DEPARTMENT STORE (0.96%)
Kohls /1/ 8,450 479,960
RETAIL-RESTAURANTS (0.89%)
Wendy's International 7,340 213,154
Yum! Brands /1/ 9,400 232,180
445,334
SATELLITE TELECOM (0.52%)
Echostar Communications /1/ 8,700 260,652
SCHOOLS (0.16%)
Apollo Group /1/ 1,500 81,299
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (1.43%)
Analog Devices /1/ 5,500 182,160
Linear Technology 9,450 325,741
Maxim Integrated Products 5,250 206,273
714,174
SEMICONDUCTOR EQUIPMENT (0.87%)
Applied Materials /1/ 21,875 319,375
Novellus Systems /1/ 4,050 113,562
432,937
TELECOMMUNICATION EQUIPMENT (0.55%)
Qualcomm 8,575 273,457
TELEPHONE-INTEGRATED (1.31%)
Verizon Communications 17,442 651,982
TELEVISION (0.77%)
Univision Communications /1/ 12,750 386,070
THERAPEUTICS (0.33%)
Gilead Sciences /1/ 3,550 163,797
TOBACCO (0.90%)
Altria Group 14,575 448,327
TOTAL COMMON STOCKS 49,119,656
Principal
Amount Value
- ------------------------------------------------------------------------------------------------
BONDS (1.21%)
FINANCE-INVESTMENT BANKER & BROKER (0.41%)
Lehman Brothers Holdings /2/
$ $
2.02%; 07/15/03 204,055 204,055
MONEY CENTER BANKS (0.80%)
Bank of America /2/ /3/
1.35%; 07/07/03 200,000 200,033
JP Morgan Chase /2/ /3/
1.44%; 05/01/03 200,000 200,000
400,033
TOTAL BONDS 604,088
Principal
Amount Value
- ------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (0.17%)
Citigroup Global Markets Holdings;1.33%;
05/01/03 (collateralized by GNMAs; $85,213; $
06/15/28 - 05/15/32) /2/ $ 84,000 84,000
TOTAL REPURCHASE AGREEMENTS 84,000
-----------
TOTAL PORTFOLIO INVESTMENTS (99.82%) 49,807,744
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (0.18%) 91,804
TOTAL NET ASSETS (100.00%) $49,899,548
-------------
/1 /Non-income producing security.
/2 /Security was purchased with the cash proceeds from securities loans.
/3 /Variable rate.
See accompanying notes.
73
SCHEDULE OF INVESTMENTS
PRINCIPAL PARTNERS LARGECAP BLEND FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (95.82%)
ADVERTISING AGENCIES (0.77%)
$
Interpublic Group 5,300 60,420
Omnicom Group 3,200 198,080
258,500
AEROSPACE & DEFENSE (0.94%)
Raytheon 10,500 314,265
AEROSPACE & DEFENSE EQUIPMENT (0.94%)
Lockheed Martin 6,300 315,315
AGRICULTURAL OPERATIONS (0.37%)
Monsanto 7,067 122,966
APPLICATIONS SOFTWARE (3.18%)
Intuit /1/ 3,800 147,364
Microsoft 35,900 917,963
1,065,327
ATHLETIC FOOTWEAR (0.61%)
Nike 3,800 203,414
BEVERAGES-NON-ALCOHOLIC (2.77%)
Coca-Cola 13,100 529,240
Pepsico 9,190 397,743
926,983
BREWERY (0.63%)
Anheuser-Busch 4,200 209,496
BROADCASTING SERVICES & PROGRAMMING (0.60%)
Clear Channel Communications /1/ 5,100 199,461
CABLE TV (0.81%)
Comcast /1/ 8,500 271,235
COMPUTER SERVICES (0.71%)
Electronic Data Systems 4,800 87,120
Sungard Data Systems /1/ 7,000 150,500
237,620
COMPUTERS (2.86%)
Dell Computer /1/ 10,700 309,337
Hewlett-Packard 10,600 172,780
International Business Machines 5,600 475,440
957,557
COMPUTERS-MEMORY DEVICES (0.73%)
EMC /1/ 26,800 243,612
COMPUTERS-PERIPHERAL EQUIPMENT (1.18%)
Lexmark International /1/ 5,300 394,903
COSMETICS & TOILETRIES (2.00%)
Gillette 6,300 191,835
Procter & Gamble 5,300 476,205
668,040
DATA PROCESSING & MANAGEMENT (0.77%)
Fiserv /1/ 8,750 257,600
DIVERSIFIED FINANCIAL SERVICES (2.31%)
Citigroup 19,700 773,225
DIVERSIFIED MANUFACTURING OPERATIONS (6.78%)
3M 3,200 403,328
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
DIVERSIFIED MANUFACTURING OPERATIONS (CONTINUED)
$
Danaher 4,700 324,206
Eaton 4,500 369,315
General Electric 29,400 865,830
Textron 7,300 215,277
Tyco International 5,800 90,480
2,268,436
ELECTRIC-INTEGRATED (3.24%)
Cinergy 10,200 348,228
FirstEnergy 6,000 202,380
FPL Group 2,300 140,001
NiSource 13,600 257,040
Southern 4,700 136,723
1,084,372
ELECTRONIC COMPONENTS-SEMICONDUCTOR (0.73%)
Intel 13,200 242,880
ENTERPRISE SOFTWARE & SERVICE (0.79%)
Oracle /1/ 22,200 263,736
FIDUCIARY BANKS (1.04%)
Bank of New York 13,200 349,140
FINANCE-CONSUMER LOANS (0.23%)
SLM 700 78,400
FINANCE-INVESTMENT BANKER & BROKER (1.84%)
Goldman Sachs Group 600 45,540
Lehman Brothers Holdings 6,900 434,493
Morgan Stanley 3,000 134,250
614,283
FINANCE-MORTGAGE LOAN/BANKER (1.32%)
Federal Home Loan Mortgage 3,000 173,700
Federal National Mortgage Association 3,700 267,843
441,543
FOOD-CONFECTIONERY (0.64%)
Wm. Wrigley Jr. 3,800 215,498
FOOD-MISCELLANEOUS/DIVERSIFIED (0.21%)
McCormick 2,900 71,891
FOOD-RETAIL (0.92%)
Kroger /1/ 21,600 308,880
GAS-DISTRIBUTION (0.57%)
Sempra Energy 7,100 190,564
INSTRUMENTS-CONTROLS (0.86%)
Johnson Controls 3,500 287,840
INSURANCE BROKERS (1.24%)
Marsh & McLennan 8,700 414,816
LIFE & HEALTH INSURANCE (0.82%)
Lincoln National 8,600 274,856
MACHINERY-CONSTRUCTION & MINING (0.52%)
Caterpillar 3,300 173,580
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MACHINERY-FARM (0.50%)
$
Deere 3,800 167,314
MEDICAL INSTRUMENTS (1.84%)
Guidant 5,300 206,647
Medtronic 1,900 90,706
St. Jude Medical /1/ 6,100 320,006
617,359
MEDICAL PRODUCTS (2.43%)
Baxter International 10,400 239,200
Johnson & Johnson 10,200 574,872
814,072
MEDICAL-BIOMEDICAL/GENE (1.39%)
Amgen /1/ 4,300 263,633
Biogen /1/ 5,300 201,347
464,980
MEDICAL-DRUGS (9.88%)
Abbott Laboratories 6,200 251,906
Bristol-Myers Squibb 8,100 206,874
Eli Lilly 7,100 453,122
Merck 9,200 535,256
Pfizer 42,481 1,306,291
Schering-Plough 17,300 313,130
Wyeth 5,500 239,415
3,305,994
MEDICAL-GENERIC DRUGS (0.95%)
Mylan Laboratories 11,300 319,451
MEDICAL-HMO (0.59%)
Anthem /1/ 2,900 199,056
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.50%)
Cardinal Health 3,000 165,840
METAL-ALUMINUM (0.94%)
Alcoa 13,700 314,141
MONEY CENTER BANKS (1.44%)
Bank of America 6,500 481,325
MULTI-LINE INSURANCE (0.92%)
American International Group 5,300 307,135
MULTIMEDIA (3.31%)
AOL Time Warner /1/ 19,600 268,128
Gannett 5,000 378,600
Viacom /1/ 8,400 364,644
Walt Disney 5,200 97,032
1,108,404
NETWORKING PRODUCTS (0.88%)
Cisco Systems /1/ 19,600 294,784
NON-HAZARDOUS WASTE DISPOSAL (0.87%)
Waste Management 13,400 291,048
OIL COMPANY-EXPLORATION & PRODUCTION (0.44%)
Anadarko Petroleum 3,300 146,520
OIL COMPANY-INTEGRATED (5.29%)
BP Amoco 4,500 173,430
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL COMPANY-INTEGRATED (CONTINUED)
$
ChevronTexaco 6,900 433,389
ConocoPhillips 4,600 231,380
Exxon Mobil 17,100 601,920
Royal Dutch Petroleum 8,100 331,128
1,771,247
OIL-FIELD SERVICES (1.66%)
Baker Hughes 7,300 204,400
Schlumberger 8,400 352,212
556,612
PAPER & RELATED PRODUCTS (1.95%)
International Paper 11,900 425,425
MeadWestvaco 9,700 228,823
654,248
REGIONAL BANKS (2.26%)
Bank One 2,400 86,520
Fifth Third Bancorp 2,500 123,225
FleetBoston Financial 3,800 100,776
Wachovia 2,800 106,988
Wells Fargo 7,000 337,820
755,329
RETAIL-BUILDING PRODUCTS (1.05%)
Home Depot 6,000 168,780
Lowe's 4,200 184,338
353,118
RETAIL-DISCOUNT (4.42%)
Costco Wholesale /1/ 8,600 297,818
Target 11,800 394,592
Wal-Mart Stores 14,000 788,480
1,480,890
RETAIL-DRUG STORE (0.51%)
Walgreen 5,500 169,730
RETAIL-REGIONAL DEPARTMENT STORE (0.20%)
Kohls /1/ 1,200 68,160
SAVINGS & LOANS-THRIFTS (0.99%)
Washington Mutual 8,400 331,800
SEMICONDUCTOR EQUIPMENT (1.17%)
Applied Materials /1/ 26,800 391,280
TELECOMMUNICATION EQUIPMENT (0.52%)
Nokia 10,600 175,642
TELEPHONE-INTEGRATED (4.03%)
BellSouth 9,200 234,508
SBC Communications 18,700 436,832
Sprint 9,900 113,949
Verizon Communications 15,100 564,438
1,349,727
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TOBACCO (0.96%)
Altria Group 4,700 $ 144,572
UST 5,600 175,448
320,020
TOTAL COMMON STOCKS 32,075,460
-----------
TOTAL PORTFOLIO INVESTMENTS (95.82%) 32,075,460
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES
(4.18%) 1,399,593
TOTAL NET ASSETS (100.00%) $33,475,053
-------------
/1 /Non-income producing security.
76
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL PARTNERS LARGECAP VALUE FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (95.59%)
AEROSPACE & DEFENSE EQUIPMENT (0.14%)
$
Goodrich 3,575 50,300
APPAREL MANUFACTURERS (1.15%)
Jones Apparel Group /1/ 3,800 108,376
Liz Claiborne 3,200 104,096
VF 4,900 192,766
405,238
APPLIANCES (0.39%)
Whirlpool 2,575 137,737
AUTO-CARS & LIGHT TRUCKS (0.93%)
General Motors 9,100 328,055
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (2.05%)
Autoliv 5,300 128,790
Dana 9,900 91,971
Delphi Automotive Systems 21,100 177,240
Lear /1/ 3,700 147,038
Magna International 3,000 175,890
720,929
BROADCASTING SERVICES & PROGRAMMING (0.16%)
Liberty Media /1/ 5,000 55,000
BUILDING-RESIDENTIAL & COMMERCIAL (0.82%)
Centex 1,300 85,826
Pulte 3,500 202,965
288,791
CABLE TV (2.06%)
Comcast /1/ 22,711 724,708
CELLULAR TELECOMMUNICATIONS (0.71%)
AT&T Wireless Services /1/ 38,600 249,356
CHEMICALS-DIVERSIFIED (3.08%)
Dow Chemical 11,600 378,624
E. I. Du Pont de Nemours 8,750 372,137
Lyondell Chemical 9,600 139,680
PPG Industries 4,000 194,040
1,084,481
CHEMICALS-SPECIALTY (0.71%)
Cabot 3,400 94,758
Eastman Chemical 1,100 33,583
Lubrizol 3,000 94,830
Millennium Chemicals 2,000 27,820
250,991
COATINGS & PAINT (0.32%)
Sherwin-Williams 4,000 111,520
COMMERCIAL BANKS (1.71%)
Amsouth Bancorp 8,300 174,715
Regions Financial 6,150 207,316
SouthTrust 3,600 96,700
UnionBanCal 3,050 123,220
601,951
COMPUTER SERVICES (0.19%)
Electronic Data Systems 3,675 66,701
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMPUTERS (2.38%)
$
Hewlett-Packard 32,500 529,750
International Business Machines 3,650 309,885
839,635
COMPUTERS-MEMORY DEVICES (0.09%)
Quantum /1/ 8,800 30,360
CONSUMER PRODUCTS-MISCELLANEOUS (0.36%)
Fortune Brands 2,650 128,260
CONTAINERS-METAL & GLASS (0.05%)
Owens-Illinois /1/ 2,000 17,780
CONTAINERS-PAPER & PLASTIC (0.33%)
Smurfit-Stone Container /1/ 6,200 87,234
Sonoco Products 1,300 28,405
115,639
COSMETICS & TOILETRIES (0.43%)
Procter & Gamble 1,700 152,745
DISTRIBUTION-WHOLESALE (1.00%)
Genuine Parts 5,800 185,426
Ingram Micro /1/ 8,700 87,000
Tech Data /1/ 3,300 79,200
351,626
DIVERSIFIED FINANCIAL SERVICES (3.80%)
Citigroup 34,100 1,338,425
DIVERSIFIED MANUFACTURING OPERATIONS (1.13%)
Cooper Industries 3,800 140,980
Eaton 2,600 213,382
FMC /1/ 2,500 45,300
399,662
ELECTRIC-INTEGRATED (4.47%)
Alliant Energy 6,000 105,360
Ameren 4,200 172,116
American Electric Power 6,550 172,789
Cinergy 5,500 187,770
CMS Energy 9,350 58,251
Consolidated Edison 4,575 177,830
Constellation Energy Group 6,100 178,608
Entergy 5,100 237,711
PPL 5,300 191,860
Puget Energy 4,400 92,928
1,575,223
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.29%)
Solectron /1/ 32,600 103,994
ELECTRONIC CONNECTORS (0.06%)
Thomas & Betts /1/ 1,300 20,553
ELECTRONIC PARTS DISTRIBUTION (0.18%)
Arrow Electronics /1/ 2,000 33,760
Avnet /1/ 2,300 29,325
63,085
FINANCE-INVESTMENT BANKER & BROKER (2.65%)
Bear Stearns 2,800 187,152
Lehman Brothers Holdings 4,750 299,107
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCE-INVESTMENT BANKER & BROKER (CONTINUED)
$
Merrill Lynch 3,400 139,570
Morgan Stanley 6,900 308,775
934,604
FINANCE-MORTGAGE LOAN/BANKER (1.68%)
Countrywide Credit Industries 3,500 236,600
Federal Home Loan Mortgage 3,000 173,700
Federal National Mortgage Association 2,525 182,785
593,085
FINANCIAL GUARANTEE INSURANCE (0.97%)
MBIA 4,600 205,620
MGIC Investment 3,000 136,380
342,000
FOOD-CANNED (0.04%)
Del Monte Foods /1/ 1,920 15,264
FOOD-FLOUR & GRAIN (0.36%)
Archer-Daniels-Midland 11,625 128,805
FOOD-MEAT PRODUCTS (0.12%)
Hormel Foods 1,800 41,418
FOOD-MISCELLANEOUS/DIVERSIFIED (1.35%)
ConAgra Foods 8,000 168,000
H.J. Heinz 4,300 128,484
Sara Lee 10,600 177,868
474,352
FOOD-RETAIL (0.70%)
Albertson's 5,200 103,272
Kroger /1/ 10,100 144,430
247,702
FOOD-WHOLESALE & DISTRIBUTION (0.14%)
Supervalu 3,000 49,410
HOME DECORATION PRODUCTS (0.30%)
Newell Rubbermaid 3,500 106,680
HOME FURNISHINGS (0.46%)
Leggett & Platt 7,800 161,070
INDEPENDENT POWER PRODUCER (0.25%)
Reliant Resources /1/ 15,400 86,548
INDUSTRIAL GASES (0.25%)
Praxair 1,500 87,120
INSURANCE BROKERS (0.45%)
Aon 7,100 157,336
LIFE & HEALTH INSURANCE (0.13%)
Torchmark 1,225 47,469
MEDICAL PRODUCTS (0.10%)
Becton Dickinson 1,000 35,400
MEDICAL-DRUGS (2.83%)
Abbott Laboratories 800 32,504
Bristol-Myers Squibb 6,400 163,456
Merck 9,250 538,165
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL-DRUGS (CONTINUED)
$
Schering-Plough 14,500 262,450
996,575
MEDICAL-HMO (1.24%)
Aetna 2,800 139,440
Health Net /1/ 6,700 174,803
Humana /1/ 11,000 121,550
435,793
MONEY CENTER BANKS (3.98%)
Bank of America 15,200 1,125,560
JP Morgan Chase 9,400 275,890
1,401,450
MULTI-LINE INSURANCE (3.74%)
Allstate 10,500 396,795
American International Group 5,889 341,268
Cigna 4,775 249,732
MetLife 8,450 242,769
Old Republic International 2,800 85,680
1,316,244
MULTIMEDIA (0.56%)
AOL Time Warner /1/ 2,900 39,672
Viacom /1/ 2,500 108,525
Walt Disney 2,700 50,382
198,579
OIL COMPANY-INTEGRATED (9.45%)
Amerada Hess 3,900 176,085
ChevronTexaco 11,628 730,355
ConocoPhillips 8,797 442,489
Exxon Mobil 49,000 1,724,800
Occidental Petroleum 8,600 256,710
3,330,439
OIL REFINING & MARKETING (0.85%)
Ashland 4,100 121,565
Valero Energy 4,800 176,400
297,965
PAPER & RELATED PRODUCTS (1.92%)
Boise Cascade 4,000 91,880
Georgia-Pacific 12,550 193,772
International Paper 4,100 146,575
MeadWestvaco 7,540 177,869
Temple-Inland 1,500 67,950
678,046
POULTRY (0.31%)
Tyson Foods 11,335 109,156
POWER CONVERTER & SUPPLY EQUIPMENT (0.26%)
Hubbell 2,900 93,090
PRINTING-COMMERCIAL (0.43%)
R.R. Donnelley & Sons 7,600 153,216
PROPERTY & CASUALTY INSURANCE (2.53%)
ACE 2,800 92,624
Chubb 3,450 182,471
St. Paul 7,125 244,672
Travelers Property Casualty 9,562 155,191
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PROPERTY & CASUALTY INSURANCE (CONTINUED)
$
Travelers Property Casualty 2,387 38,789
XL Capital 2,150 176,945
890,692
REGIONAL BANKS (9.17%)
Bank One 8,300 299,215
Comerica 4,600 200,146
FleetBoston Financial 14,687 389,499
Huntington Bancshares 10,300 200,438
KeyCorp 9,650 232,662
National City 9,950 298,102
Suntrust Banks 4,600 263,212
U.S. Bancorp 15,997 354,334
Union Planters 3,562 101,659
Wachovia 16,100 615,181
Wells Fargo 5,750 277,495
3,231,943
RETAIL-DISCOUNT (0.32%)
TJX 5,800 111,650
RETAIL-MAJOR DEPARTMENT STORE (1.40%)
May Department Stores 10,400 224,848
Sears Roebuck 9,500 269,230
494,078
RETAIL-OFFICE SUPPLIES (0.50%)
Office Depot /1/ 13,900 175,974
RETAIL-REGIONAL DEPARTMENT STORE (0.60%)
Federated Department Stores /1/ 6,900 211,278
RETAIL-RESTAURANTS (0.83%)
McDonald's 11,750 200,925
Wendy's International 3,100 90,024
290,949
SAVINGS & LOANS-THRIFTS (2.24%)
Charter One Financial 2,039 59,233
Golden West Financial 3,200 241,344
Washington Mutual 12,387 489,286
789,863
TELECOMMUNICATION EQUIPMENT (1.35%)
Nortel Networks /1/ 130,800 337,464
Tellabs /1/ 22,300 137,814
475,278
TELECOMMUNICATION EQUIPMENT-FIBER OPTICS (0.87%)
Corning /1/ 56,500 306,230
TELECOMMUNICATION SERVICES (0.26%)
Avaya /1/ 23,600 92,040
TELEPHONE-INTEGRATED (6.52%)
AT&T 17,400 296,670
BellSouth 20,400 519,996
Qwest Communications International 31,300 118,001
SBC Communications 25,800 602,688
Sprint 19,600 225,596
Sprint PCS /1/ 11,000 38,500
Shares
Held Value
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
$
Verizon Communications 13,300 497,154
2,298,605
TOBACCO (1.56%)
Altria Group 12,150 373,734
UST 5,600 175,448
549,182
TOOLS-HAND HELD (0.40%)
Black & Decker 2,300 94,875
Snap-On 1,600 46,960
141,835
TRANSPORT-RAIL (2.53%)
Burlington Northern Santa Fe 9,050 254,848
CSX 7,600 243,048
Norfolk Southern 11,300 239,673
Union Pacific 2,575 153,264
890,833
TOTAL COMMON STOCKS 33,681,991
-----------
TOTAL PORTFOLIO INVESTMENTS (95.59%) 33,681,991
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES
(4.41%) 1,552,265
TOTAL NET ASSETS (100.00%) $35,234,256
-------------
1 Non-income producing security.
See accompanying notes.
79
SCHEDULE OF INVESTMENTS
PRINCIPAL PARTNERS MIDCAP GROWTH FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (97.95%)
ADVERTISING AGENCIES (0.71%)
$
Interpublic Group 11,830 134,862
ADVERTISING SALES (0.52%)
Lamar Advertising /1/ 2,750 98,780
ADVERTISING SERVICES (0.78%)
Getty Images /1/ 4,370 147,924
APPAREL MANUFACTURERS (0.79%)
Coach /1/ 3,420 148,804
APPLICATIONS SOFTWARE (0.73%)
Mercury Interactive /1/ 4,090 138,815
AUTO-MEDIUM & HEAVY DUTY TRUCKS (0.86%)
Navistar International /1/ 5,830 162,657
BEVERAGES-NON-ALCOHOLIC (0.95%)
Coca-Cola Enterprises 9,270 180,672
BUILDING PRODUCTS-AIR & HEATING (0.63%)
American Standard /1/ 1,680 119,599
BUILDING-MAINTENANCE & SERVICE (0.98%)
Ecolab 3,640 185,968
CABLE TV (0.44%)
Cablevision Systems /1/ 3,680 82,506
CASINO SERVICES (0.79%)
International Game Technology /1/ 1,730 149,299
CELLULAR TELECOMMUNICATIONS (0.78%)
Nextel Communications /1/ 10,040 148,492
CHEMICALS-SPECIALTY (0.49%)
Cabot Microelectronics /1/ 2,160 93,355
CIRCUIT BOARDS (0.43%)
Jabil Circuit /1/ 4,300 80,410
COMMERCIAL BANKS (0.45%)
Commerce Bancorp. 2,070 84,187
COMMERCIAL SERVICES (1.55%)
Alliance Data Systems /1/ 4,020 84,420
Corporate Executive Board /1/ 2,390 97,966
Weight Watchers International /1/ 2,380 111,812
294,198
COMPUTER GRAPHICS (0.88%)
Pixar /1/ 2,860 166,995
COMPUTER SERVICES (2.22%)
Affiliated Computer Services /1/ 2,810 134,037
BISYS Group /1/ 6,560 110,733
Sungard Data Systems /1/ 8,160 175,440
420,210
COMPUTERS-MEMORY DEVICES (1.53%)
Veritas Software /1/ 13,160 289,652
COMPUTERS-PERIPHERAL EQUIPMENT (1.35%)
Electronics for Imaging /1/ 3,530 67,776
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMPUTERS-PERIPHERAL EQUIPMENT (CONTINUED)
$
Lexmark International /1/ 2,520 187,765
255,541
CONSULTING SERVICES (0.37%)
FTI Consulting /1/ 1,550 70,138
CONTAINERS-METAL & GLASS (0.50%)
Ball 1,690 94,910
DATA PROCESSING & MANAGEMENT (0.84%)
Fiserv /1/ 5,430 159,859
DENTAL SUPPLIES & EQUIPMENT (0.76%)
Dentsply International 3,865 144,744
DIAGNOSTIC EQUIPMENT (0.48%)
Cytyc /1/ 6,810 89,892
DISTRIBUTION-WHOLESALE (0.38%)
Fastenal 2,090 72,293
DIVERSIFIED MANUFACTURING OPERATIONS (0.74%)
Danaher 2,040 140,719
E-COMMERCE-PRODUCTS (1.04%)
Amazon.com /1/ 6,860 196,676
E-MARKETING-INFORMATION (0.55%)
DoubleClick /1/ 12,020 103,372
ELECTRIC PRODUCTS-MISCELLANEOUS (0.59%)
Molex 4,820 112,499
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.86%)
Sanmina /1/ 33,870 162,576
ELECTRONIC COMPONENTS-SEMICONDUCTOR (4.64%)
Applied Micro Circuits /1/ 6,790 30,419
Cree /1/ 5,230 104,339
Fairchild Semiconductor International /1/ 10,330 122,617
Micron Technology /1/ 13,690 116,365
National Semiconductor /1/ 6,980 130,735
PMC - Sierra /1/ 17,860 147,345
QLogic /1/ 3,170 139,448
Silicon Laboratories /1/ 3,100 88,195
879,463
ELECTRONIC FORMS (1.30%)
Adobe Systems 7,140 246,758
ENTERPRISE SOFTWARE & SERVICE (1.07%)
BEA Systems /1/ 18,990 203,383
ENTERTAINMENT SOFTWARE (1.41%)
Electronic Arts /1/ 4,500 266,715
FIDUCIARY BANKS (0.46%)
Investors Financial Services 3,970 86,586
FINANCE-CREDIT CARD (0.90%)
Providian Financial /1/ 23,060 169,952
FINANCE-INVESTMENT BANKER & BROKER (2.28%)
Bear Stearns 2,920 195,173
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCE-INVESTMENT BANKER & BROKER (CONTINUED)
$
Legg Mason 4,360 236,748
431,921
FOOD-CONFECTIONERY (0.70%)
Hershey Foods 2,030 132,457
FOOD-RETAIL (0.96%)
Whole Foods Market /1/ 3,070 182,235
FOOD-WHOLESALE & DISTRIBUTION (0.51%)
Performance Food Group /1/ 2,760 96,821
HEALTH CARE COST CONTAINMENT (1.01%)
Caremark Rx /1/ 9,640 191,932
HOTELS & MOTELS (0.96%)
Starwood Hotels & Resorts Worldwide 6,740 180,902
HUMAN RESOURCES (1.13%)
Manpower 6,510 214,049
INTERNET SECURITY (1.40%)
VeriSign /1/ 21,300 264,546
INVESTMENT MANAGEMENT & ADVISORY SERVICES (1.33%)
Affiliated Managers Group /1/ 3,580 165,790
Neuberger Berman 2,790 85,653
251,443
LASERS-SYSTEMS & COMPONENTS (0.67%)
Cymer /1/ 4,420 126,191
LOTTERY SERVICES (0.63%)
Gtech Holdings /1/ 3,550 119,529
MEDICAL INSTRUMENTS (2.17%)
Biomet 4,120 125,495
St. Jude Medical /1/ 5,450 285,907
411,402
MEDICAL PRODUCTS (2.40%)
Henry Schein /1/ 3,200 138,080
Varian Medical Systems /1/ 3,310 178,277
Zimmer Holdings /1/ 2,930 137,417
453,774
MEDICAL STERILIZATION PRODUCT (0.31%)
Steris /1/ 2,620 59,474
MEDICAL-BIOMEDICAL/GENE (0.61%)
Idec Pharmaceuticals /1/ 3,510 114,953
MEDICAL-DRUGS (5.71%)
Allergan 3,590 252,197
Cephalon /1/ 2,320 94,749
King Pharmaceuticals /1/ 8,210 103,528
Medicis Pharmaceutical /1/ 4,290 247,276
Medimmune /1/ 10,871 383,420
1,081,170
MEDICAL-GENERIC DRUGS (0.69%)
Pharmaceutical Resources /1/ 2,970 130,531
MEDICAL-HMO (4.40%)
Anthem /1/ 5,360 367,910
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL-HMO (CONTINUED)
$
Mid Atlantic Medical Services /1/ 3,890 169,410
Wellpoint Health Networks /1/ 3,910 296,925
834,245
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.86%)
AmerisourceBergen 2,820 163,137
METAL-COPPER (0.41%)
Phelps Dodge /1/ 2,510 78,287
NETWORKING PRODUCTS (2.25%)
Emulex /1/ 4,370 89,541
Juniper Networks /1/ 17,190 175,682
Network Appliance /1/ 12,070 160,290
425,513
OIL & GAS DRILLING (1.05%)
Ensco International 2,820 71,628
Patterson-UTI Energy /1/ 3,860 127,727
199,355
OIL COMPANY-EXPLORATION & PRODUCTION (1.10%)
Pogo Producing 2,390 94,644
XTO Energy 5,850 114,075
208,719
OIL-FIELD SERVICES (1.52%)
BJ Services /1/ 4,930 179,994
Halliburton 5,000 107,050
287,044
PIPELINES (1.20%)
Kinder Morgan 3,210 150,934
Williams 10,910 75,825
226,759
RADIO (0.90%)
Westwood One /1/ 4,870 169,963
REINSURANCE (0.51%)
Endurance Specialty Holdings 3,520 96,800
RETAIL-APPAREL & SHOE (1.52%)
Abercrombie & Fitch /1/ 4,520 148,618
Chico's FAS /1/ 5,750 139,955
288,573
RETAIL-BEDDING (1.01%)
Bed Bath & Beyond /1/ 4,840 191,228
RETAIL-COMPUTER EQUIPMENT (1.10%)
CDW Computer Centers /1/ 4,880 208,083
RETAIL-CONSUMER ELECTRONICS (0.50%)
Best Buy /1/ 2,720 94,058
RETAIL-JEWELRY (0.82%)
Tiffany 5,590 155,067
RETAIL-OFFICE SUPPLIES (0.68%)
Staples /1/ 6,790 129,282
RETAIL-RESTAURANTS (3.20%)
Cheesecake Factory /1/ 4,490 141,839
Darden Restaurants 6,620 115,916
Shares
Held Value
- -----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-RESTAURANTS (CONTINUED)
$
Panera Bread /1/ 3,660 124,550
Starbucks /1/ 9,520 223,625
605,930
SAVINGS & LOANS-THRIFTS (0.60%)
Sovereign Bancorp 7,340 113,403
SCHOOLS (0.79%)
Apollo Group /1/ 2,775 150,402
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (0.81%)
Cypress Semiconductor /1/ 17,660 153,995
SEMICONDUCTOR EQUIPMENT (3.49%)
Kla-Tencor /1/ 4,970 203,770
Lam Research /1/ 11,220 163,027
Novellus Systems /1/ 7,530 211,141
Teradyne /1/ 7,140 82,824
660,762
TELECOMMUNICATION EQUIPMENT (1.19%)
Comverse Technology /1/ 9,200 120,244
Nortel Networks /1/ 41,050 105,909
226,153
TELECOMMUNICATION EQUIPMENT-FIBER OPTICS (1.86%)
Corning /1/ 34,260 185,689
JDS Uniphase /1/ 51,550 166,507
352,196
TELECOMMUNICATION SERVICES (0.60%)
Citizens Communications /1/ 10,460 114,328
TELEVISION (1.25%)
Univision Communications /1/ 7,800 236,184
THERAPEUTICS (4.11%)
Gilead Sciences /1/ 8,940 412,492
Neurocrine Biosciences /1/ 4,300 194,575
Trimeris /1/ 3,870 171,789
778,856
TOYS (0.48%)
LeapFrog Enterprises /1/ 3,430 91,581
TRANSPORT-SERVICES (0.38%)
Expeditors International of Washington 1,980 71,991
WEB PORTALS (1.14%)
Yahoo /1/ 8,730 216,329
TOTAL COMMON STOCKS 18,555,014
-----------
TOTAL PORTFOLIO INVESTMENTS (97.95%) 18,555,014
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES
(2.05%) 387,922
TOTAL NET ASSETS (100.00%) $18,942,936
-------------
/1 /Non-income producing security.
82
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL PARTNERS SMALLCAP GROWTH FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (94.46%)
APPLICATIONS SOFTWARE (0.65%)
$
Mercury Interactive /1/ 1,500 50,910
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (1.24%)
American Axle & Manufacturing Holdings /1/ 3,900 97,188
BEVERAGES-NON-ALCOHOLIC (1.07%)
Cott /1/ 4,600 84,410
BEVERAGES-WINE & SPIRITS (1.60%)
Constellation Brands /1/ 4,700 126,007
BUILDING-RESIDENTIAL & COMMERCIAL (1.62%)
Hovnanian Enterprises /1/ 1,400 55,720
NVR /1/ 200 71,550
127,270
CHEMICALS-SPECIALTY (1.10%)
Albemarle 3,200 86,400
CIRCUIT BOARDS (1.35%)
Benchmark Electronics /1/ 4,100 106,395
COLLECTIBLES (0.62%)
Action Performance 2,639 48,795
COMMERCIAL BANKS (4.20%)
Greater Bay Bancorp 2,000 32,000
Sterling Bancshares 6,600 78,579
UCBH Holdings 8,620 219,293
329,872
COMPUTER SERVICES (4.74%)
CACI International /1/ 4,690 163,821
Cognizant Technology Solutions /1/ 7,830 140,627
Factset Research Systems 1,940 67,512
371,960
DATA PROCESSING & MANAGEMENT (2.39%)
Fair, Isaac 3,600 187,488
DENTAL SUPPLIES & EQUIPMENT (2.15%)
Patterson Dental /1/ 4,200 168,714
DIVERSIFIED MANUFACTURING OPERATIONS (2.70%)
A.O. Smith 3,700 110,334
ESCO Technologies /1/ 2,600 101,946
212,280
DRUG DELIVERY SYSTEMS (1.16%)
Penwest Pharmaceuticals /1/ 5,000 91,150
E-SERVICES-CONSULTING (0.40%)
Websense /1/ 2,200 31,394
ELECTRONIC COMPONENTS-MISCELLANEOUS (1.51%)
Planar Systems /1/ 6,760 118,908
ELECTRONIC COMPONENTS-SEMICONDUCTOR (2.02%)
Cree /1/ 2,400 47,880
Intersil Holding /1/ 3,900 72,150
Omnivision Technologies /1/ 1,600 38,848
158,878
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ELECTRONIC DESIGN AUTOMATION (0.94%)
$
Verisity /1/ 6,300 73,899
ELECTRONICS-MILITARY (0.67%)
Engineered Support Systems 1,520 52,790
ENGINEERING-RESEARCH & DEVELOPMENT SERVICES (1.43%)
EMCOR Group /1/ 2,200 112,354
ENTERTAINMENT SOFTWARE (0.66%)
THQ /1/ 3,680 51,998
FIDUCIARY BANKS (1.42%)
Investors Financial Services 5,100 111,231
FOOD-WHOLESALE & DISTRIBUTION (1.30%)
Performance Food Group /1/ 2,900 101,732
INDUSTRIAL AUTOMATION & ROBOTS (1.45%)
Cognex /1/ 5,200 113,828
INSTRUMENTS-SCIENTIFIC (0.77%)
Fisher Scientific International /1/ 2,100 60,501
INSURANCE BROKERS (1.37%)
Hilb, Rogal & Hamilton 1,530 54,392
Hub International 3,600 52,956
107,348
INTERNET INFRASTRUCTURE EQUIPMENT (0.87%)
Avocent /1/ 2,300 68,126
MACHINERY-PUMPS (0.75%)
Flowserve /1/ 3,800 58,672
MEDICAL INSTRUMENTS (1.49%)
Advanced Neuromodulation Systems /1/ 2,800 117,236
MEDICAL-BIOMEDICAL/GENE (1.07%)
Affymetrix /1/ 1,600 29,680
InterMune /1/ 1,000 20,330
Telik /1/ 2,600 34,190
84,200
MEDICAL-DRUGS (0.78%)
SICOR /1/ 3,400 60,962
MEDICAL-HOSPITALS (0.63%)
Province Healthcare /1/ 4,983 49,830
MEDICAL-OUTPATIENT & HOME MEDICAL CARE (1.45%)
Odyssey HealthCare /1/ 4,400 113,696
MISCELLANEOUS INVESTING (2.13%)
Mills 2,700 86,292
Ventas 6,200 80,600
166,892
NETWORKING PRODUCTS (0.86%)
Foundry Networks /1/ 6,200 67,456
OFFICE SUPPLIES & FORMS (1.31%)
Moore /1/ 9,000 102,780
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL & GAS DRILLING (1.14%)
$
Patterson-UTI Energy /1/ 2,700 89,343
OIL COMPANY-EXPLORATION & PRODUCTION (2.31%)
Patina Oil & Gas 2,700 93,231
Quicksilver Resources /1/ 3,800 87,856
181,087
OIL-FIELD SERVICES (1.56%)
Tetra Technologies /1/ 4,600 122,360
PHYSICIAN PRACTICE MANAGEMENT (1.78%)
Pediatrix Medical Group /1/ 4,380 139,591
PROPERTY & CASUALTY INSURANCE (0.68%)
RLI 1,800 53,190
PUBLICLY TRADED INVESTMENT FUND (1.82%)
iShares Russell 2000 Index Fund 1,800 142,902
RADIO (1.92%)
Cumulus Media /1/ 6,300 108,612
Salem Communications /1/ 2,000 42,120
150,732
REAL ESTATE MANAGEMENT & SERVICES (0.86%)
Jones Lang LaSalle /1/ 4,500 67,815
RESEARCH & DEVELOPMENT (1.27%)
Pharmaceutical Product Development /1/ 3,800 99,446
RESPIRATORY PRODUCTS (0.72%)
ResMed /1/ 1,535 56,304
RETAIL-APPAREL & SHOE (2.72%)
Aeropostale /1/ 800 14,400
Chico's FAS /1/ 8,200 199,588
213,988
RETAIL-AUTOMOBILE (1.10%)
Copart /1/ 10,200 86,088
RETAIL-COMPUTER EQUIPMENT (0.87%)
Electronics Boutique Holdings /1/ 3,637 68,012
RETAIL-PET FOOD & SUPPLIES (1.35%)
PETCO Animal Supplies /1/ 5,000 105,650
RETAIL-RESTAURANTS (2.57%)
Panera Bread /1/ 2,750 93,583
Ruby Tuesday 5,500 108,350
201,933
RETAIL-SPORTING GOODS (0.78%)
Gart Sports /1/ 2,600 60,918
SAVINGS & LOANS-THRIFTS (5.98%)
BankUnited Financial /1/ 5,900 111,451
First Niagara Financial Group 2,400 29,160
Harbor Florida Bancshares 2,300 61,249
New York Community Bancorp 7,700 267,344
469,204
SCHOOLS (3.83%)
Career Education /1/ 5,000 300,650
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (1.43%)
$
Exar /1/ 5,350 78,913
Pericom Semiconductor /1/ 3,900 33,072
111,985
SEMICONDUCTOR EQUIPMENT (0.63%)
Rudolph Technologies /1/ 3,300 49,863
SEMICONDUCTORS (0.81%)
Artisan Components /1/ 3,200 63,264
SOFTWARE TOOLS (0.82%)
Borland Software /1/ 7,076 64,179
THERAPEUTICS (3.37%)
Amylin Pharmaceuticals /1/ 2,100 40,215
Isis Pharmaceuticals /1/ 5,900 32,627
Neurocrine Biosciences /1/ 2,161 97,785
NPS Pharmaceuticals /1/ 2,900 55,245
Sangstat Medical /1/ 3,100 39,060
264,932
TOYS (0.92%)
LeapFrog Enterprises /1/ 2,700 72,090
TRANSPORT-SERVICES (0.88%)
UTI Worldwide 2,300 69,230
WEB PORTALS (0.47%)
Overture Services /1/ 3,470 37,129
TOTAL COMMON STOCKS 7,415,435
----------
TOTAL PORTFOLIO INVESTMENTS (94.46%) 7,415,435
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES
(5.54%) 435,176
TOTAL NET ASSETS (100.00%) $7,850,611
------------
1 Non-income producing security.
84
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL REAL ESTATE FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -----------------------------------------------------------------------------------------------
COMMON STOCKS (97.91%)
APARTMENT REITS (12.57%)
$
Apartment Investment & Management 24,900 940,224
Archstone-Smith Trust 52,230 1,190,844
Equity Residential Properties Trust 57,400 1,487,234
Home Properties of New York 24,400 847,412
United Dominion Realty Trust 62,800 1,048,132
5,513,846
DIVERSIFIED REITS (10.77%)
Brookfield Properties 65,800 1,332,450
Capital Automotive 57,140 1,479,355
Entertainment Properties Trust 15,514 418,102
iShares Cohen & Steers Realty Majors Index Fund 3,000 255,300
Lexington Corporate Properties Trust 33,600 579,264
Liberty Property Trust 21,000 657,090
4,721,561
FACTORY OUTLET REITS (4.49%)
Chelsea Property Group 49,600 1,967,136
HOTEL REITS (0.71%)
Host Marriott /1/ 29,300 226,196
LaSalle Hotel Properties 6,096 85,283
311,479
MALL REITS (20.97%)
CBL & Associates Properties 38,790 1,646,636
General Growth Properties 41,200 2,291,544
Macerich 15,300 504,900
Mills 39,800 1,272,008
Rouse 24,700 858,325
Simon Property Group 71,400 2,621,808
9,195,221
MANUFACTURED HOUSING REITS (1.45%)
Manufactured Home Communities 19,800 634,392
OFFICE & INDUSTRIAL REITS (25.54%)
Alexandria Real Estate Equities 15,259 645,456
AMB Property 17,517 478,214
Boston Properties 43,200 1,693,440
Centerpoint Properties Trust 20,518 1,189,018
Corporate Office Properties Trust 13,800 210,450
Cousins Properties 27,500 722,150
Duke-Weeks Realty 9,200 252,080
Equity Office Properties Trust 80,001 2,077,626
Prologis Trust 88,650 2,281,851
PS Business Parks 8,142 253,297
SL Green Realty 43,300 1,395,559
11,199,141
SELF STORAGE REITS (1.64%)
Public Storage 22,400 720,160
SHOPPING CENTER REITS (19.77%)
Developers Diversified Realty 81,619 2,056,799
Kimco Realty 53,700 1,943,940
Pan Pacific Retail Properties 48,570 1,900,058
Realty Income 21,000 789,600
Regency Centers 11,248 371,184
Shares
Held Value
- -----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SHOPPING CENTER REITS (CONTINUED)
$
Weingarten Realty Investors 40,700 1,607,650
8,669,231
TOTAL COMMON STOCKS 42,932,167
Principal
Amount Value
- -----------------------------------------------------------------------------------------------
COMMERCIAL PAPER (2.02%)
DIVERSIFIED FINANCIAL SERVICES (2.02%)
Investment in Joint Trading Account; General
Electric Capital
$ $
1.35%; 05/01/03 887,168 887,168
TOTAL COMMERCIAL PAPER 887,168
-----------
TOTAL PORTFOLIO INVESTMENTS (99.80%) 43,819,335
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (0.07%) 31,764
TOTAL NET ASSETS (100.00%) $43,851,099
-------------
/1 /Non-income producing security.
See accompanying notes.
85
SCHEDULE OF INVESTMENTS
PRINCIPAL SMALLCAP FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (95.32%)
ADVERTISING SERVICES (0.53%)
$
R.H. Donnelley /1/ 13,046 389,554
AEROSPACE & DEFENSE EQUIPMENT (1.63%)
Curtiss-Wright 5,298 319,205
Moog /1/ 9,370 297,966
United Defense Industries /1/ 23,374 570,793
1,187,964
APPLICATIONS SOFTWARE (0.83%)
Pinnacle Systems /1/ 36,349 343,498
Progress Software /1/ 13,566 264,401
607,899
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.72%)
American Axle & Manufacturing
Holdings /1/ 21,109 526,036
BUILDING-RESIDENTIAL & COMMERCIAL (0.62%)
Ryland Group 8,341 452,332
CHEMICALS-DIVERSIFIED (1.37%)
Georgia Gulf 21,006 474,735
Hercules /1/ 51,485 522,573
997,308
CHEMICALS-PLASTICS (0.55%)
A. Schulman 24,713 404,280
CHEMICALS-SPECIALTY (1.14%)
Crompton 69,093 443,577
Ferro 16,372 387,034
830,611
COMMERCIAL BANKS (5.76%)
Community First Bankshares 16,139 434,478
First Midwest Bancorp 14,004 387,771
First Republic Bank /1/ 15,857 398,011
Gold Banc 46,646 410,485
Greater Bay Bancorp 25,244 403,904
Local Financial /1/ 33,362 500,430
Sky Financial Group 29,450 593,712
South Financial Group 27,390 671,055
Whitney Holding 11,739 396,543
4,196,389
COMMERCIAL SERVICES (0.61%)
Corporate Executive Board /1/ 10,915 447,406
COMPUTER SERVICES (1.27%)
Anteon International /1/ 20,491 485,227
CACI International /1/ 12,562 438,791
924,018
COMPUTERS-INTEGRATED SYSTEMS (0.89%)
Cray /1/ 38,004 286,930
Kronos /1/ 7,899 360,353
647,283
COMPUTERS-MEMORY DEVICES (1.14%)
Hutchison Technology /1/ 16,269 384,599
Maxtor /1/ 81,656 449,108
833,707
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
COMPUTERS-PERIPHERAL EQUIPMENT (0.63%)
$
Electronics for Imaging /1/ 23,865 458,208
DATA PROCESSING & MANAGEMENT (1.08%)
FileNet /1/ 28,214 434,213
Global Payments 11,274 349,607
783,820
DENTAL SUPPLIES & EQUIPMENT (0.15%)
Sybron Dental Specialties /1/ 5,555 113,044
DIAGNOSTIC KITS (1.21%)
Biosite Diagnostics /1/ 6,699 285,913
Idexx Laboratories /1/ 15,343 598,377
884,290
DISTRIBUTION-WHOLESALE (1.09%)
Aviall /1/ 50,764 416,265
Owens & Minor 20,381 379,086
795,351
DIVERSIFIED MANUFACTURING OPERATIONS (2.22%)
A.O. Smith 18,947 564,999
Carlisle 6,021 273,113
Griffon /1/ 27,287 371,649
Pittston Brink's Group 24,404 311,151
Tredegar 7,312 94,032
1,614,944
E-MARKETING-INFORMATION (0.37%)
Digital River /1/ 15,948 266,651
ELECTRIC PRODUCTS-MISCELLANEOUS (0.63%)
Ametek 12,134 457,452
ELECTRONIC COMPONENTS-MISCELLANEOUS (1.70%)
DSP Group /1/ 17,402 363,702
Methode Electronics 41,291 433,555
OSI Systems /1/ 29,244 442,462
1,239,719
ELECTRONIC COMPONENTS-SEMICONDUCTOR (1.17%)
International Rectifier /1/ 18,947 428,581
Zoran /1/ 24,008 427,103
855,684
ELECTRONIC MEASUREMENT INSTRUMENTS (1.08%)
Analogic 6,171 294,665
Flir Systems /1/ 9,422 490,698
785,363
ELECTRONICS-MILITARY (0.63%)
Engineered Support Systems 13,232 459,547
ENGINES-INTERNAL COMBUSTION (0.96%)
Briggs & Stratton 15,518 700,483
ENTERPRISE SOFTWARE & SERVICE (1.82%)
JDA Software Group /1/ 27,699 311,891
ManTech International /1/ 20,156 314,434
Novell /1/ 117,798 323,944
Packeteer /1/ 28,626 374,428
1,324,697
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT SOFTWARE (0.38%)
$
Take-Two Interactive Software /1/ 12,271 276,098
FINANCE-MORTGAGE LOAN/BANKER (0.46%)
American Home Mortgage Holdings 27,596 336,671
FOOD-MISCELLANEOUS/DIVERSIFIED (1.61%)
American Italian Pasta /1/ 11,121 490,436
Corn Products International 6,891 205,903
Ralcorp Holdings /1/ 19,050 474,345
1,170,684
FOOD-WHOLESALE & DISTRIBUTION (0.77%)
Fresh Del Monte Produce 28,632 557,751
FOOTWEAR & RELATED APPAREL (0.42%)
Wolverine World Wide 16,681 307,598
GARDEN PRODUCTS (0.70%)
Toro 13,592 507,118
GAS-DISTRIBUTION (2.67%)
Energen 17,505 574,164
New Jersey Resources 11,224 384,422
Northwest Natural 18,741 484,080
Southern Union /1/ 36,246 505,632
1,948,298
HEALTHCARE-PRODUCTS (0.35%)
ZOLL Medical /1/ 7,929 256,107
HOME FURNISHINGS (0.45%)
Furniture Brands International /1/ 13,768 326,990
IDENTIFICATION SYSTEM-DEVELOPMENT (0.29%)
Paxar /1/ 20,691 213,738
INSTRUMENTS-SCIENTIFIC (0.65%)
Varian /1/ 15,034 475,225
INTERNET FINANCIAL SERVICES (0.91%)
IndyMac Bancorp 29,710 661,939
INVESTMENT COMPANIES (0.65%)
American Capital Strategies 19,564 474,623
LASERS-SYSTEMS & COMPONENTS (1.17%)
Coherent /1/ 22,448 516,304
Cymer /1/ 11,759 335,719
852,023
LIFE & HEALTH INSURANCE (1.30%)
Reinsurance Group of America 20,388 584,116
UICI /1/ 30,511 363,081
947,197
MACHINERY-CONSTRUCTION & MINING (0.80%)
Terex /1/ 35,182 582,262
MACHINERY-FARM (0.67%)
AGCO /1/ 26,772 487,518
MACHINERY-GENERAL INDUSTRY (1.25%)
Albany International 27,596 655,129
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MACHINERY-GENERAL INDUSTRY (CONTINUED)
$
Tecumseh Products 6,368 256,248
911,377
MEDICAL INSTRUMENTS (0.50%)
Techne /1/ 16,372 363,622
MEDICAL PRODUCTS (0.91%)
Cyberonics /1/ 12,000 273,960
INAMED /1/ 10,503 391,657
665,617
MEDICAL STERILIZATION PRODUCT (0.60%)
Steris /1/ 19,358 439,427
MEDICAL-BIOMEDICAL/GENE (1.46%)
Bio-Rad Laboratories /1/ 9,164 428,417
Cambrex 15,757 274,172
Enzon /1/ 26,155 358,846
1,061,435
MEDICAL-DRUGS (0.70%)
Endo Pharmaceuticals Holdings /1/ 12,451 205,691
Medicis Pharmaceutical /1/ 5,338 307,682
513,373
MEDICAL-HMO (0.62%)
Sierra Health Services /1/ 27,198 451,487
MEDICAL-HOSPITALS (0.56%)
LifePoint Hospitals /1/ 20,979 409,510
MEDICAL-OUTPATIENT & HOME MEDICAL CARE (0.72%)
Apria Healthcare Group /1/ 22,345 523,990
METAL PROCESSORS & FABRICATION (2.33%)
Kaydon 18,741 417,924
Precision Castparts 14,278 395,358
Quanex 13,798 396,830
Worthington Industries 36,132 485,253
1,695,365
METAL-DIVERSIFIED (0.60%)
Hecla Mining /1/ 116,872 437,101
MISCELLANEOUS INVESTING (4.34%)
CBL & Associates Properties 16,372 694,991
Chelsea Property Group 16,784 665,654
Entertainment Properties Trust 12,942 348,787
MFA Mortgage Investments 42,390 397,194
Newcastle Investment 20,182 351,772
Pan Pacific Retail Properties 8,363 327,161
SL Green Realty 11,636 375,028
3,160,587
NON-HAZARDOUS WASTE DISPOSAL (0.61%)
Waste Connections /1/ 13,119 441,323
OIL COMPANY-EXPLORATION & PRODUCTION (2.45%)
Denbury Resources /1/ 43,248 458,429
Forest Oil /1/ 22,345 464,329
Houston Exploration /1/ 15,754 440,639
Tom Brown /1/ 17,079 418,777
1,782,174
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL-FIELD SERVICES (0.68%)
$
Varco International /1/ 28,317 498,096
PAPER & RELATED PRODUCTS (1.15%)
Boise Cascade 19,266 442,540
Louisiana-Pacific /1/ 49,220 397,698
840,238
PHARMACEUTICALS (0.44%)
Cima Labs /1/ 13,180 318,297
PIPELINES (0.67%)
Western Gas Resources 13,283 487,220
PROPERTY & CASUALTY INSURANCE (2.35%)
Arch Capital Group /1/ 18,020 627,276
PMA Capital 33,945 289,890
RLI 12,346 364,824
Selective Insurance Group 17,196 431,448
1,713,438
PUBLICLY TRADED INVESTMENT FUND (3.10%)
iShares Russell 2000 Index Fund 14,200 1,127,338
iShares S&P SmallCap 600 Index Fund 11,430 1,132,484
2,259,822
RACETRACKS (0.61%)
Penn National Gaming /1/ 22,654 442,433
RADIO (0.42%)
Emmis Communications /1/ 16,300 309,211
REINSURANCE (0.74%)
Platinum Underwriters Holdings 20,388 539,263
RESPIRATORY PRODUCTS (0.77%)
Respironics /1/ 14,519 557,820
RETAIL-APPAREL & SHOE (2.59%)
Aeropostale /1/ 32,301 581,418
Claire's Stores 17,711 460,309
Mothers Work /1/ 8,547 214,444
Stage Stores /1/ 6,088 127,361
Urban Outfitters /1/ 16,993 506,731
1,890,263
RETAIL-AUTO PARTS (1.13%)
CSK Auto /1/ 48,212 494,173
PEP Boys-Manny, Moe & Jack 38,202 327,009
821,182
RETAIL-COMPUTER EQUIPMENT (0.51%)
GameStop /1/ 30,969 370,080
RETAIL-DISCOUNT (0.62%)
Tuesday Morning /1/ 19,337 452,099
RETAIL-FABRIC STORE (0.71%)
Jo-Ann Stores /1/ 19,770 514,020
RETAIL-RESTAURANTS (2.07%)
CBRL Group 14,116 450,018
O'Charley's /1/ 25,640 518,954
Shares
Held Value
- -------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-RESTAURANTS (CONTINUED)
$
Rare Hospitality International /1/ 18,638 542,925
1,511,897
RETAIL-SPORTING GOODS (0.86%)
Sports Authority /1/ 72,491 625,597
RETAIL-VIDEO RENTAL (0.57%)
Hollywood Entertainment /1/ 23,211 411,995
SAVINGS & LOANS-THRIFTS (3.86%)
BankAtlantic Bancorp 31,620 364,262
Dime Community Bancshares 21,727 501,025
First Federal Capital 19,456 367,718
First Niagara Financial Group 23,715 288,137
FirstFed Financial /1/ 11,533 374,707
Independence Community Bank 19,358 506,212
Webster Financial 11,018 413,616
2,815,677
SCHOOLS (0.64%)
Sylvan Learning Systems /1/ 26,578 466,178
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (0.41%)
O2Micro International /1/ 25,741 300,912
SEMICONDUCTOR EQUIPMENT (0.40%)
Entegris /1/ 25,640 294,091
STEEL-PRODUCERS (0.65%)
Steel Dynamics /1/ 39,350 476,135
SUPERCONDUCTOR PRODUCTION & SYSTEMS (0.56%)
Intermagnetics General /1/ 20,903 406,145
TELECOMMUNICATION EQUIPMENT (0.45%)
Arris Group /1/ 17,606 68,681
Tekelec /1/ 23,810 256,196
324,877
TELECOMMUNICATION SERVICES (0.45%)
Commonwealth Telephone Enterprises /1/ 8,238 327,461
THERAPEUTICS (1.67%)
Cell Therapeutics /1/ 54,780 493,020
CV Therapeutics /1/ 21,006 419,700
Ilex Oncology /1/ 22,709 304,073
1,216,793
TOBACCO (0.77%)
Universal 14,416 562,945
TRANSPORT-TRUCK (1.31%)
Heartland Express /1/ 22,654 521,042
Roadway Express 11,739 435,047
956,089
WEB HOSTING & DESIGN (0.46%)
Macromedia /1/ 26,350 332,274
TOTAL COMMON STOCKS 69,464,816
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
BONDS (1.24%)
FINANCE-INVESTMENT BANKER & BROKER (0.62%)
Goldman Sachs Group /2/ /3/
$ $
1.39%; 10/02/03 250,000 250,000
Lehman Brothers Holdings /3/
2.02%; 07/15/03 204,056 204,056
454,056
MONEY CENTER BANKS (0.62%)
Bank of America /2/ /3/
1.35%; 07/07/03 250,000 250,041
JP Morgan Chase /2/ /3/
1.44%; 05/01/03 200,000 200,000
450,041
TOTAL BONDS 904,097
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (3.78%)
DIVERSIFIED FINANCIAL SERVICES (3.78%)
Investment in Joint Trading Account; General
Electric Capital
1.35%; 05/01/03 $ 2,758,847 $ 2,758,847
TOTAL COMMERCIAL PAPER 2,758,847
Principal
Amount Value
- -------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (10.40%)
Barclays Capital; 1.28%; 05/01/03
(collateralized by Treasury Bill; $621,180; $
10/02/03) /3/ $ 609,000 609,000
Credit Suisse First Boston; 1.34%; 05/01/03
(collateralized by GNMAs; $6,772,667; 01/15/04
- 09/15/32) /3/ 6,674,000 6,674,000
Citigroup Global Markets Holdings; 1.33%;
05/01/03 (collateralized by GNMAs; $301,289;
06/15/28 - 05/15/32) /3/ 297,000 297,000
TOTAL REPURCHASE AGREEMENTS 7,580,000
-----------
TOTAL PORTFOLIO INVESTMENTS (110.74%) 80,707,760
LIABILITIES, NET OF CASH, RECEIVABLES AND OTHER ASSETS (-10.74%) (7,829,131)
TOTAL NET ASSETS (100.00%) $72,878,629
--------------
/1 /Non-income producing security.
/2 /Variable rate.
/3 /Security was purchased with the cash proceeds from securities loans.
See accompanying notes.
89
SCHEDULE OF INVESTMENTS
PRINCIPAL UTILITIES FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -----------------------------------------------------------------------------------------------
COMMON STOCKS (59.92%)
ELECTRIC-INTEGRATED (41.77%)
$
Allegheny Energy 68,100 565,230
Alliant Energy 33,900 595,284
Ameren 13,300 545,034
American Electric Power 50,900 1,342,742
Consolidated Edison 19,266 748,869
Constellation Energy Group 80,000 2,342,400
Dominion Resources 66,500 3,935,470
DTE Energy 35,544 1,433,134
Energy East 62,600 1,140,572
Entergy 75,200 3,505,072
Exelon 60,900 3,230,136
FirstEnergy 66,804 2,253,299
FPL Group 34,400 2,093,928
NiSource 110,025 2,079,473
Public Service Enterprise Group 36,200 1,392,614
Southern 30,045 874,009
TXU 16,985 338,341
28,415,607
ELECTRIC-TRANSMISSION (2.11%)
National Grid Group 43,620 1,432,481
GAS-DISTRIBUTION (4.44%)
New Jersey Resources 50,850 1,741,612
Peoples Energy 32,900 1,278,165
3,019,777
TELEPHONE-INTEGRATED (11.60%)
BellSouth 98,550 2,512,040
SBC Communications 97,250 2,271,760
Verizon Communications 83,214 3,110,539
7,894,339
TOTAL COMMON STOCKS 40,762,204
Shares
Held Value
- -----------------------------------------------------------------------------------------------
PREFERRED STOCKS (18.93%)
CELLULAR TELECOMMUNICATIONS (2.60%)
US Cellular 65,000 1,764,750
ELECTRIC-DISTRIBUTION (0.78%)
Yorkshire Capital Trust I 20,985 530,921
ELECTRIC-INTEGRATED (7.70%)
Atlantic Capital Trust II 7,400 187,220
Consolidated Edison 7,556 205,901
DTE Energy Trust I 9,140 241,753
Entergy Louisiana 39,580 1,062,327
KeySpan 14,000 710,500
OGE Energy Capital Trust I 18,326 489,487
Ohio Power 5,550 139,860
SCE&G Trust I 55,500 1,401,375
SWEPCO Capital I 31,710 800,678
5,239,101
Shares
Held Value
- -----------------------------------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
FINANCE-OTHER SERVICES (1.48%)
$
PSO Capital I 15,260 384,552
TransCanada Capital 23,790 618,540
1,003,092
GAS-DISTRIBUTION (1.00%)
AGL Capital Trust II 25,385 678,541
MISCELLANEOUS INVESTING (1.72%)
HRPT Properties Trust 45,000 1,170,450
OIL COMPANY-INTEGRATED (0.52%)
Coastal Finance I 17,873 355,137
PIPELINES (1.26%)
TransCanada PipeLines 33,457 858,172
TELEPHONE-INTEGRATED (1.87%)
ALLTEL 5,000 241,500
Citizens Communications 10,000 227,500
Telephone & Data Systems 30,991 804,526
1,273,526
TOTAL PREFERRED STOCKS 12,873,690
Principal
Amount Value
- -----------------------------------------------------------------------------------------------
BONDS (19.11%)
AUTO-CARS & LIGHT TRUCKS (2.86%)
Ford Motor
$ $
9.98%; 02/15/47 1,825,000 1,949,284
ELECTRIC-INTEGRATED (7.48%)
Duke Energy
6.60%; 04/01/22 3,250,000 3,394,943
Georgia Power Capital Trust VI
4.88%; 11/01/42 1,200,000 1,219,661
TXU Gas Capital I
2.64%; 07/01/28 700,000 471,612
5,086,216
OIL COMPANY-INTEGRATED (4.17%)
Phillips 66 Capital Trust II
8.00%; 01/15/37 2,475,000 2,836,989
PIPELINES (4.60%)
KN Capital Trust III
7.63%; 04/15/28 2,900,000 3,128,375
TOTAL BONDS 13,000,864
-----------
TOTAL PORTFOLIO INVESTMENTS (97.96%) 66,636,758
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (2.04%) 1,389,361
TOTAL NET ASSETS (100.00%) $68,026,119
-------------
/1 /Non-income producing security.
90
See accompanying notes.
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL BALANCED FUND, INC.
- -----------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $10.63 $12.17 $14.50 $15.13 $15.28 $15.11
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.08 0.20/(f)/ 0.29 0.32 0.40 0.42
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (1.51)/(f)/ (2.13) 0.02 0.34 1.15
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.31 (1.31) (1.84) 0.34 0.74 1.57
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.08) (0.23) (0.28) (0.33) (0.44) (0.37)
Distributions from
Realized Gains...... -- -- (0.21) (0.64) (0.45) (1.03)
---- ----- ----- ----- -----
Total Dividends and
Distributions (0.08) (0.23) (0.49) (0.97) (0.89) (1.40)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $10.86 $10.63 $12.17 $14.50 $15.13 $15.28
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 2.98%/(d)/ (10.94)% (12.91)% 2.40% 4.85% 11.00%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $75,871 $77,483 $80,547 $94,763 $112,329 $104,414
Ratio of Expenses to
Average Net Assets.. 1.52%/(e)/ 1.42% 1.35% 1.32% 1.28% 1.28%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.53%/(e)/ 1.43% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. 1.50%/(e)/ 1.71%/(f)/ 2.14% 2.26% 2.67% 2.86%
Portfolio Turnover
Rate................ 102.0%/(e)/ 88.1% 107.5% 54.4% 24.2% 57.0%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL BALANCED FUND, INC.
- -----------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $10.59 $12.12 $14.43 $15.06 $15.22 $15.05
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.03 0.12/(g)/ 0.19 0.21 0.29 0.31
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (1.51)/(g)/ (2.11) 0.02 0.32 1.14
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.26 (1.39) (1.92) 0.23 0.61 1.45
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.05) (0.14) (0.18) (0.22) (0.32) (0.25)
Distributions from
Realized Gains...... -- -- (0.21) (0.64) (0.45) (1.03)
---- ----- ----- ----- -----
Total Dividends and
Distributions (0.05) (0.14) (0.39) (0.86) (0.77) (1.28)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $10.80 $10.59 $12.12 $14.43 $15.06 $15.22
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 2.42%/(d)/ (11.55)% (13.53)% 1.61% 4.02% 10.18%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $13,988 $14,658 $17,900 $20,680 $23,570 $18,930
Ratio of Expenses to
Average Net Assets.. 2.51%/(e)/ 2.12% 2.05% 2.12% 2.02% 2.04%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.51%/(e)/ 2.13% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. 0.52%/(e)/ 1.02%/(g)/ 1.44% 1.46% 1.93% 2.08%
Portfolio Turnover
Rate................ 102.0%/(e)/ 88.1% 107.5% 54.4% 24.2% 57.0%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. The effect of this change
for the year ended October 31, 2002 for Class A was to decrease net investment
income by $.01 per share, increase net realized and unrealized gain (loss) on
investments by $.01 per share, and decrease the ratio of net investment income
to average net assets by .09%. Prior periods have not been restated to reflect
this change in presentation.
/(g) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. The effect of this change
for the year ended October 31, 2002 for Class B was to decrease net investment
income by $.01 per share, increase net realized and unrealized gain (loss) on
investments by $.01 per share, and decrease the ratio of net investment income
to average net assets by .08%. Prior periods have not been restated to reflect
this change in presentation.
See accompanying notes.
91
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(D)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL CAPITAL VALUE FUND, INC.
- ----------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $18.48 $20.61 $25.04 $29.58 $31.07 $29.69
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.10 0.22 0.20 0.34 0.52 0.50
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.61 (2.16) (3.40) (2.10) 0.45 3.88
---- ----- ----- ----- ---- ----
Total From Investment
Operations 0.71 (1.94) (3.20) (1.76) 0.97 4.38
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.22) (0.19) (0.30) (0.25) (0.51) (0.53)
Distributions from
Realized Gains...... -- -- (0.93) (2.53) (1.95) (2.47)
---- ----- ----- ----- -----
Total Dividends and
Distributions (0.22) (0.19) (1.23) (2.78) (2.46) (3.00)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $18.97 $18.48 $20.61 $25.04 $29.58 $31.07
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 3.90%/(e)/ (9.52)% (13.31)% (6.20)% 3.00% 15.59%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $336,594 $333,016 $386,827 $452,251 $573,485 $565,052
Ratio of Expenses to
Average Net Assets.. 1.06%/(f)/ 1.01% 0.95% 0.94% 0.75% 0.74%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.08%/(f)/ 1.01% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. 1.11%/(f)/ 1.00% 0.90% 1.38% 1.73% 1.67%
Portfolio Turnover
Rate................ 148.8%/(f)/ 128.8% 126.2% 107.8% 44.5% 23.2%
2003/(D)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL CAPITAL VALUE FUND, INC.
- ----------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $18.30 $20.38 $24.76 $29.41 $30.90 $29.51
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.01) 0.06 0.03 0.11 0.29 0.26
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.63 (2.12) (3.37) (2.09) 0.44 3.86
---- ----- ----- ----- ---- ----
Total From Investment
Operations 0.62 (2.06) (3.34) (1.98) 0.73 4.12
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.09) (0.02) (0.11) (0.14) (0.27) (0.26)
Distributions from
Realized Gains...... -- -- (0.93) (2.53) (1.95) (2.47)
---- ----- ----- ----- -----
Total Dividends and
Distributions (0.09) (0.02) (1.04) (2.67) (2.22) (2.73)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $18.83 $18.30 $20.38 $24.76 $29.41 $30.90
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 3.37%/(e)/ (10.13)% (13.96)% (7.03)% 2.24% 14.71%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $26,541 $27,235 $32,975 $39,017 $53,169 $44,765
Ratio of Expenses to
Average Net Assets.. 2.18%/(f)/ 1.72% 1.71% 1.82% 1.52% 1.52%
Ratio of Gross
Expenses to Average
Net Assets /(c)/ ... 2.18%/(f)/ 1.72% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.01)%/(f)/ 0.29% 0.15% 0.51% 0.96% 0.88%
Portfolio Turnover
Rate................ 148.8%/(f)/ 128.8% 126.2% 107.8% 44.5% 23.2%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. The waiver began on March 1, 2003.
/(c) /Expense ratio without fees paid indirectly.
/(d) /Six months ended April 30, 2003.
/(e) /Total return amounts have not been annualized.
/(f) /Computed on an annualized basis.
See accompanying notes.
92
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL GROWTH FUND, INC.
- ---------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $22.10 $27.06 $71.22 $65.57 $56.09 $50.43
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.05) (0.18) (0.30) (0.37) 0.21 0.35
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.32 (4.78) (21.79) 8.43 9.56 7.14
---- ----- ------ ---- ---- ----
Total From Investment
Operations 0.27 (4.96) (22.09) 8.06 9.77 7.49
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- -- -- -- (0.29) (0.34)
Distributions from
Realized Gains...... -- -- (22.07) (2.41) -- (1.49)
---- ------ ----- -----
Total Dividends and
Distributions -- -- (22.07) (2.41) (0.29) (1.83)
---- ------ ----- ----- -----
Net Asset Value, End
of Period............ $22.37 $22.10 $27.06 $71.22 $65.57 $56.09
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 1.22%/(d)/ (18.33)% (41.87)% 12.64% 17.46% 15.17%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $236,510 $243,504 $291,541 $525,175 $493,117 $395,954
Ratio of Expenses to
Average Net Assets.. 1.54%/(e)/ 1.41% 1.30% 1.08% 0.89% 0.95%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.54%/(e)/ -- -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.57)%/(e)/ (0.66)% (0.71)% (0.52)% 0.33% 0.66%
Portfolio Turnover
Rate................ 51.7%/(e)/ 22.4% 33.4% 121.5% 32.4% 21.9%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL GROWTH FUND, INC.
- ---------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $21.45 $26.43 $70.41 $65.33 $55.98 $50.36
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.27) (0.41) (0.24) (0.89) (0.17) 0.06
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.44 (4.57) (21.67) 8.38 9.55 7.14
---- ----- ------ ---- ---- ----
Total From Investment
Operations 0.17 (4.98) (21.91) 7.49 9.38 7.20
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- -- -- -- (0.03) (0.09)
Distributions from
Realized Gains...... -- -- (22.07) (2.41) -- (1.49)
---- ------ ----- -----
Total Dividends and
Distributions -- -- (22.07) (2.41) (0.03) (1.58)
---- ------ ----- ----- -----
Net Asset Value, End
of Period............ $21.62 $21.45 $26.43 $70.41 $65.33 $55.98
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 0.79%/(d)/ (18.84)% (42.21)% 11.79% 16.75% 14.58%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $44,071 $48,214 $64,111 $110,001 $96,116 $64,809
Ratio of Expenses to
Average Net Assets.. 2.51%/(e)/ 2.05% 1.88% 1.85% 1.50% 1.46%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.51%/(e)/ -- -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (1.55)%/(e)/ (1.30)% (1.29)% (1.30)% (0.28)% 0.15%
Portfolio Turnover
Rate................ 51.7%/(e)/ 22.4% 33.4% 121.5% 32.4% 21.9%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
93
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000/(F)/
---- ---- ---- ----
PRINCIPAL LARGECAP STOCK INDEX FUND, INC.
- -----------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $6.57 $7.85 $10.59 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.03 0.05 0.05 0.03
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (1.29) (2.74) 0.56
---- ----- ----- ----
Total From Investment
Operations 0.26 (1.24) (2.69) 0.59
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.05) (0.04) (0.05) --
---- ----- ----- -----
Total Dividends and
Distributions (0.05) (0.04) (0.05) --
---- ----- ----- -----
Net Asset Value, End
of Period............ $6.78 $6.57 $7.85 $10.59
===== ===== ===== ======
Total Return /(a)/ ... 3.98%/(d)/ (15.92)% (25.46)% 4.96%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $37,009 $33,538 $15,886 $9,855
Ratio of Expenses to
Average Net Assets.. 0.90%/(e)/ 0.90% 0.90% 0.79%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.22%/(e)/ 1.20% 1.44% 1.82%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. 0.92%/(e)/ 0.65% 0.59% 0.76%/(e)/
Portfolio Turnover
Rate................ 4.8%/(e)/ 19.3% 39.3% 189.7%/(e)/
2003/(C)/ 2002 2001 2000/(F)/
---- ---- ---- ----
PRINCIPAL LARGECAP STOCK INDEX FUND, INC.
- -----------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $6.57 $7.84 $10.56 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.02 0.01 0.01 0.02
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (1.28) (2.72) 0.54
---- ----- ----- ----
Total From Investment
Operations 0.25 (1.27) (2.71) 0.56
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.03) -- (0.01) --
----- ----- -----
Total Dividends and
Distributions (0.03) -- (0.01) --
----- ----- -----
Net Asset Value, End
of Period............ $6.79 $6.57 $7.84 $10.56
===== ===== ===== ======
Total Return /(a)/ ... 3.77%/(d)/ (16.18)% (25.65)% 4.66%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $6,700 $5,684 $4,731 $2,838
Ratio of Expenses to
Average Net Assets.. 1.25%/(e)/ 1.25% 1.25% 1.14%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.68%/(e)/ 1.74% 1.87% 2.44%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. 0.56%/(e)/ 0.33% 0.23% 0.45%/(e)/
Portfolio Turnover
Rate................ 4.8%/(e)/ 19.3% 39.3% 189.7%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver began on the first day of the period ended October 31, 2000. The
expense limits for each class were increased on November 1, 2000.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Period from March 1, 2000, date shares first offered, through October 31,
2000.
See accompanying notes.
94
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL MIDCAP FUND, INC.
- ---------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $31.01 $33.08 $52.01 $42.12 $39.90 $45.33
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.05 0.08 (0.02) (0.16) (0.06) (0.07)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 1.61 (1.09) (3.75) 12.08 2.28 (4.26)
---- ----- ----- ----- ---- -----
Total From Investment
Operations 1.66 (1.01) (3.77) 11.92 2.22 (4.33)
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.10) (0.07) -- -- -- --
Distributions from
Realized Gains...... -- (0.99) (15.16) (2.03) -- (1.10)
---- ----- ------ ----- -----
Total Dividends and
Distributions (0.10) (1.06) (15.16) (2.03) -- (1.10)
---- ----- ----- ------ ----- -----
Net Asset Value, End
of Period............ $32.57 $31.01 $33.08 $52.01 $42.12 $39.90
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 5.37%/(d)/ (3.36)% (9.14)% 29.21% 5.56% (9.78)%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $329,705 $319,410 $319,523 $364,639 $313,984 $332,942
Ratio of Expenses to
Average Net Assets.. 1.30%/(e)/ 1.24% 1.16% 1.17% 1.22% 1.22%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- 1.25% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. 0.27%/(e)/ 0.27% 0.20% (0.36)% (0.17)% (0.14)%
Portfolio Turnover
Rate................ 45.7%/(e)/ 76.2% 66.6% 161.8% 59.9% 25.1%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL MIDCAP FUND, INC.
- ---------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $29.59 $31.75 $50.71 $41.29 $39.29 $44.88
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.12) (0.15) 0.22 (0.42) (0.28) (0.23)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 1.64 (1.02) (4.02) 11.87 2.28 (4.26)
---- ----- ----- ----- ---- -----
Total From Investment
Operations 1.52 (1.17) (3.80) 11.45 2.00 (4.49)
Less Dividends and
Distributions:
Distributions from
Realized Gains...... -- (0.99) (15.16) (2.03) -- (1.10)
---- ----- ------ ----- -----
Total Dividends and
Distributions -- (0.99) (15.16) (2.03) -- (1.10)
---- ----- ------ ----- -----
Net Asset Value, End
of Period............ $31.11 $29.59 $31.75 $50.71 $41.29 $39.29
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 5.14%/(d)/ (4.00)% (9.55)% 28.63% 5.09% (10.24)%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $62,130 $64,538 $71,330 $80,721 $68,639 $68,358
Ratio of Expenses to
Average Net Assets.. 1.76%/(e)/ 1.90% 1.61% 1.62% 1.67% 1.73%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- 1.90% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.18)%/(e)/ (0.39)% (0.25)% (0.80)% (0.62)% (0.66)%
Portfolio Turnover
Rate................ 45.7%/(e)/ 76.2% 66.6% 161.8% 59.9% 25.1%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
95
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(E)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL PARTNERS BLUE CHIP FUND, INC.
- ---------------------------------------
CLASS A SHARES /(A)/
- --------------------
Net Asset Value,
Beginning of Period.. $13.59 $17.04 $24.26 $25.25 $21.71 $20.22
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... -- (0.02) (0.02) 0.04 0.15 0.12
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.30 (3.42) (6.84) (0.69) 3.53 3.57
---- ----- ----- ----- ---- ----
Total From Investment
Operations 0.30 (3.44) (6.86) (0.65) 3.68 3.69
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- -- -- (0.05) (0.14) (0.12)
Distributions from
Realized Gains...... -- -- (0.33) (0.29) -- (2.08)
Tax Return of Capital
Distributions /(b)/. -- (0.01) (0.03) -- -- --
----- ----- -----
Total Dividends and
Distributions -- (0.01) (0.36) (0.34) (0.14) (2.20)
---- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $13.89 $13.59 $17.04 $24.26 $25.25 $21.71
====== ====== ====== ====== ====== ======
Total Return /(c)/ ... 2.21%/(f)/ (20.19)% (28.63)% (2.60)% 17.00% 19.48%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $103,221 $104,481 $120,173 $170,462 $184,217 $126,740
Ratio of Expenses to
Average Net Assets.. 1.85%/(g)/ 1.54% 1.50% 1.19% 1.26% 1.31%
Ratio of Gross
Expenses to Average
Net Assets /(d)/ ... 1.85%/(g)/ 1.54% -- 1.33% -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.12)%/(g)/ (0.08)% (0.10)% 0.19% 0.63% 0.57%
Portfolio Turnover
Rate................ 113.2%/(g)/ 79.8% 74.4% 73.6% 16.4% 0.5%
2003/(E)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL PARTNERS BLUE CHIP FUND, INC.
- ---------------------------------------
CLASS B SHARES /(A)/
- --------------------
Net Asset Value,
Beginning of Period.. $13.22 $16.65 $23.89 $25.00 $21.55 $20.14
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.11) (0.13) (0.16) (0.14) (0.02) (0.02)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.34 (3.30) (6.72) (0.67) 3.48 3.53
---- ----- ----- ----- ---- ----
Total From Investment
Operations 0.23 (3.43) (6.88) (0.81) 3.46 3.51
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- -- -- (0.01) (0.01) (0.02)
Distributions from
Realized Gains...... -- -- (0.33) (0.29) -- (2.08)
Tax Return of Capital
Distributions /(b)/. -- -- (0.03) -- -- --
---- -----
Total Dividends and
Distributions -- -- (0.36) (0.30) (0.01) (2.10)
---- ----- ----- ----- -----
Net Asset Value, End
of Period............ $13.45 $13.22 $16.65 $23.89 $25.00 $21.55
====== ====== ====== ====== ====== ======
Total Return /(c)/ ... 1.74%/(f)/ (20.60)% (29.16)% (3.30)% 16.09% 18.59%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $26,160 $27,704 $38,531 $54,550 $56,493 $34,223
Ratio of Expenses to
Average Net Assets.. 2.80%/(g)/ 2.10% 2.21% 1.94% 2.04% 2.02%
Ratio of Gross
Expenses to Average
Net Assets /(d)/ ... 2.80%/(g)/ 2.10% -- 2.05% -- --
Ratio of Net
Investment Income to
Average Net Assets.. (1.06)%/(g)/ (0.64)% (0.81)% (0.56)% (0.15)% (0.14)%
Portfolio Turnover
Rate................ 113.2%/(g)/ 79.8% 74.4% 73.6% 16.4% 0.5%
/(a) /Effective September 18, 2002, Principal Blue Chip Fund, Inc. changed its
name to Principal Partners Blue Chip Fund, Inc.
/(b) /See "Distributions to Shareholders" in the Notes to Financial Statements.
/(c) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(d) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. The waiver was effective for the year ended
October 31, 2000.
/(e) /Six months ended April 30, 2003.
/(f) /Total return amounts have not been annualized.
/(g) /Computed on an annualized basis.
See accompanying notes.
96
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001 2000
---- ---- ---- ----
PRINCIPAL PARTNERS EQUITY GROWTH FUND, INC.
- -------------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $6.12 $7.62 $11.36 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.02) (0.10) (0.10) (0.05)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.07 (1.40) (3.64) 1.41
---- ----- ----- ----
Total From Investment
Operations 0.05 (1.50) (3.74) 1.36
---- ----- ----- ----
Net Asset Value, End
of Period............ $6.17 $6.12 $7.62 $11.36
===== ===== ===== ======
Total Return /(a)/ ... 0.82%/(d)/ (19.69)% (32.92)% 13.60%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $37,368 $37,451 $38,303 $49,794
Ratio of Expenses to
Average Net Assets.. 2.05%/(e)/ 1.98% 1.90% 1.57%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.21%/(e)/ -- -- 1.99%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (0.87)%/(e)/ (1.07)% (1.10)% (0.68)%/(e)/
Portfolio Turnover
Rate................ 131.0%/(e)/ 138.9% 86.4% 62.0%/(e)/
2003/(C)/ 2002 2001 2000
---- ---- ---- ----
PRINCIPAL PARTNERS EQUITY GROWTH FUND, INC.
- -------------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $5.99 $7.52 $11.28 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.06) (0.11) (0.13) (0.10)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.08 (1.42) (3.63) 1.38
---- ----- ----- ----
Total From Investment
Operations 0.02 (1.53) (3.76) 1.28
---- ----- ----- ----
Net Asset Value, End
of Period............ $6.01 $5.99 $7.52 $11.28
===== ===== ===== ======
Total Return /(a)/ ... 0.33%/(d)/ (20.35)% (33.33)% 12.80%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $12,532 $12,939 $15,419 $19,430
Ratio of Expenses to
Average Net Assets.. 2.83%/(e)/ 2.76% 2.63% 2.31%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 3.00%/(e)/ -- -- 2.61%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (1.65)%/(e)/ (1.85)% (1.82)% (1.41)%/(e)/
Portfolio Turnover
Rate................ 131.0%/(e)/ 138.9% 86.4% 62.0%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver was effective for the year ended October 31, 2000. The waiver
began again on March 1, 2003.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
97
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001/(F)/
---- ---- ----
PRINCIPAL PARTNERS LARGECAP BLEND FUND, INC.
- --------------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $7.97 $9.00 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... -- (0.01) --
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.15 (1.02) (1.00)
---- ----- -----
Total From Investment
Operations 0.15 (1.03) (1.00)
---- ----- -----
Net Asset Value, End
of Period............ $8.12 $7.97 $9.00
===== ===== =====
Total Return /(a)/ ... 1.88%/(d)/ (11.44)% (10.00)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $23,845 $18,781 $7,694
Ratio of Expenses to
Average Net Assets.. 1.82%/(e)/ 1.95% 1.95%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.83%/(e)/ 1.98% 2.25%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. 0.09%/(e)/ (0.02)% (0.09)%/(e)/
Portfolio Turnover
Rate................ 33.1%/(e)/ 67.5% 56.9%/(e)/
2003/(C)/ 2002 2001/(F)/
---- ---- ----
PRINCIPAL PARTNERS LARGECAP BLEND FUND, INC.
- --------------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $7.87 $8.94 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.01) (0.03) (0.04)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.12 (1.04) (1.02)
---- ----- -----
Total From Investment
Operations 0.11 (1.07) (1.06)
---- ----- -----
Net Asset Value, End
of Period............ $7.98 $7.87 $8.94
===== ===== =====
Total Return /(a)/ ... 1.40%/(d)/ (11.97)% (10.60)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $9,630 $6,552 $2,670
Ratio of Expenses to
Average Net Assets.. 2.45%/(e)/ 2.70% 2.70%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.46%/(e)/ 2.78% 3.01%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (0.54)%/(e)/ (0.77)% (0.84)%/(e)/
Portfolio Turnover
Rate................ 33.1%/(e)/ 67.5% 56.9%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. Expense limits for each class were decreased on
March 1, 2003.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Period from December 22, 2000, date shares first offered, through October
31, 2001.
See accompanying notes.
98
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001/(F)/
---- ---- ----
PRINCIPAL PARTNERS LARGECAP VALUE FUND, INC.
- --------------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $8.89 $9.98 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.03 0.03 0.02
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.45 (1.00) (0.04)
---- ----- -----
Total From Investment
Operations 0.48 (0.97) (0.02)
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.03) (0.03) --
Distributions from
Realized Gains...... -- (0.09) --
----- -----
Total Dividends and
Distributions (0.03) (0.12) --
---- ----- -----
Net Asset Value, End
of Period............ $9.34 $8.89 $9.98
===== ===== =====
Total Return /(a)/ ... 5.44%/(d)/ (9.89)% (0.20)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $25,797 $21,677 $8,146
Ratio of Expenses to
Average Net Assets.. 1.80%/(e)/ 1.90% 1.95%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.84%/(e)/ 1.90% 2.04%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. 0.79%/(e)/ 0.45% 0.43%/(e)/
Portfolio Turnover
Rate................ 9.1%/(e)/ 10.5% 35.1%/(e)/
2003/(C)/ 2002 2001/(F)/
---- ---- ----
PRINCIPAL PARTNERS LARGECAP VALUE FUND, INC.
- --------------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $8.79 $9.92 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.01 (0.01) (0.02)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.44 (1.03) (0.06)
---- ----- -----
Total From Investment
Operations 0.45 (1.04) (0.08)
Less Dividends and
Distributions:
Distributions from
Realized Gains...... -- (0.09) --
----- -----
Total Dividends and
Distributions -- (0.09) --
----- -----
Net Asset Value, End
of Period............ $9.24 $8.79 $9.92
===== ===== =====
Total Return /(a)/ ... 5.12%/(d)/ (10.62)% (0.80)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $9,437 $7,439 $2,786
Ratio of Expenses to
Average Net Assets.. 2.51%/(e)/ 2.70% 2.70%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.55%/(e)/ 2.71% 2.82%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. 0.08%/(e)/ (0.35)% (0.33)%/(e)/
Portfolio Turnover
Rate................ 9.1%/(e)/ 10.5% 35.1%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. Expense limits for each class were decreased on
March 1, 2003.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Period from December 22, 2000, date shares first offered, through October
31, 2001.
See accompanying notes.
99
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000/(F)/
---- ---- ---- ----
PRINCIPAL PARTNERS MIDCAP GROWTH FUND, INC.
- -------------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $3.61 $4.55 $9.09 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.08) (0.10) (0.04)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.24 (0.86) (4.44) (0.87)
---- ----- ----- -----
Total From Investment
Operations 0.21 (0.94) (4.54) (0.91)
---- ----- ----- -----
Net Asset Value, End
of Period............ $3.82 $3.61 $4.55 $9.09
===== ===== ===== =====
Total Return /(a)/ ... 5.82%/(d)/ (20.66)% (49.94)% (12.68)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $14,181 $12,745 $11,207 $11,875
Ratio of Expenses to
Average Net Assets.. 1.94%/(e)/ 1.95% 1.95% 1.79%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.58%/(e)/ 2.40% 2.67% 2.50%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (1.71)%/(e)/ (1.74)% (1.64)% (1.40)%/(e)/
Portfolio Turnover
Rate................ 184.2%/(e)/ 234.9% 334.0% 265.5%/(e)/
2003/(C)/ 2002 2001 2000/(F)/
---- ---- ---- ----
PRINCIPAL PARTNERS MIDCAP GROWTH FUND, INC.
- -------------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $3.54 $4.49 $9.04 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.08) (0.08) (0.07)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (0.87) (4.47) (0.89)
---- ----- ----- -----
Total From Investment
Operations 0.20 (0.95) (4.55) (0.96)
---- ----- ----- -----
Net Asset Value, End
of Period............ $3.74 $3.54 $4.49 $9.04
===== ===== ===== =====
Total Return /(a)/ ... 5.65%/(d)/ (21.16)% (50.33)% (13.16)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $4,762 $4,160 $3,967 $4,093
Ratio of Expenses to
Average Net Assets.. 2.69%/(e)/ 2.70% 2.70% 2.54%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 3.46%/(e)/ 3.32% 3.45% 3.22%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (2.46)%/(e)/ (2.49)% (2.40)% (2.18)%/(e)/
Portfolio Turnover
Rate................ 184.2%/(e)/ 234.9% 334.0% 265.5%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver began on the first day of the period ended October 31, 2000. The
expense limits for each class were increased on November 1, 2000.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Period from March 1, 2000, date shares first offered, through October 31,
2000.
See accompanying notes.
100
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001/(F)/
---- ---- ----
PRINCIPAL PARTNERS SMALLCAP
- ---------------------------
GROWTH FUND, INC.
- -----------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $3.99 $6.24 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.08) (0.07)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.06 (2.17) (3.69)
---- ----- -----
Total From Investment
Operations 0.03 (2.25) (3.76)
---- ----- -----
Net Asset Value, End
of Period............ $4.02 $3.99 $6.24
===== ===== =====
Total Return /(a)/ ... 0.75%/(d)/ (36.06)% (37.60)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $5,680 $4,899 $4,107
Ratio of Expenses to
Average Net Assets.. 1.95%/(e)/ 1.95% 1.95%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 3.09%/(e)/ 2.95% 2.94%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (1.57)%/(e)/ (1.69)% (1.55)%/(e)/
Portfolio Turnover
Rate................ 49.9%/(e)/ 303.3% 144.5%/(e)/
2003/(C)/ 2002 2001/(F)/
---- ---- ----
PRINCIPAL PARTNERS SMALLCAP
- ---------------------------
GROWTH FUND, INC.
- -----------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $3.93 $6.20 $10.00
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.08) (0.11)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.05 (2.19) (3.69)
---- ----- -----
Total From Investment
Operations 0.02 (2.27) (3.80)
---- ----- -----
Net Asset Value, End
of Period............ $3.95 $3.93 $6.20
===== ===== =====
Total Return /(a)/ ... 0.51%/(d)/ (36.61)% (38.00)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $2,171 $1,579 $1,230
Ratio of Expenses to
Average Net Assets.. 2.70%/(e)/ 2.70% 2.70%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 4.00%/(e)/ 3.98% 3.82%/(e)/
Ratio of Net
Investment Income to
Average Net Assets.. (2.32)%/(e)/ (2.43)% (2.29)%/(e)/
Portfolio Turnover
Rate................ 49.9%/(e)/ 303.3% 144.5%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) / / /Period from December 22, 2000, date shares first offered, through
October 31, 2001.
See accompanying notes.
101
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000 1999 1998/(F)/
---- ---- ---- ---- ---- ----
PRINCIPAL REAL ESTATE FUND, INC.
- --------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $10.03 $9.45 $9.03 $7.73 $8.39 $10.15
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.16 0.30 0.34 0.35 0.31 0.20
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 1.03 0.57 0.42 1.30 (0.67) (1.76)
---- ---- ---- ---- ----- -----
Total From Investment
Operations 1.19 0.87 0.76 1.65 (0.36) (1.56)
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.19) (0.29) (0.34) (0.35) (0.30) (0.20)
----- ----- ----- ----- ----- -----
Total Dividends and
Distributions (0.19) (0.29) (0.34) (0.35) (0.30) (0.20)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $11.03 $10.03 $9.45 $9.03 $7.73 $8.39
====== ====== ===== ===== ===== =====
Total Return /(a)/ ... 11.94%/(d)/ 9.13% 8.49% 21.86% (4.38)% (15.45)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $32,792 $29,198 $12,700 $9,439 $6,459 $5,490
Ratio of Expenses to
Average Net Assets.. 1.74%/(e)/ 1.76% 1.97% 1.88% 2.19% 2.25%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- 2.17% -- --
Ratio of Net
Investment Income to
Average Net Assets.. 3.13%/(e)/ 2.87% 3.57% 4.28% 3.77% 2.89%/(e)/
Portfolio Turnover
Rate................ 88.1%/(e)/ 65.4% 69.5% 79.8% 55.1% 60.4%/(e)/
2003/(C)/ 2002 2001 2000 1999 1998/(F)/
---- ---- ---- ---- ---- ----
PRINCIPAL REAL ESTATE FUND, INC.
- --------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $9.98 $9.41 $9.00 $7.71 $8.38 $10.15
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.13 0.23 0.28 0.30 0.24 0.20
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 1.01 0.57 0.42 1.29 (0.66) (1.78)
---- ---- ---- ---- ----- -----
Total From Investment
Operations 1.14 0.80 0.70 1.59 (0.42) (1.58)
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.15) (0.23) (0.29) (0.30) (0.25) (0.19)
----- ----- ----- ----- ----- -----
Total Dividends and
Distributions (0.15) (0.23) (0.29) (0.30) (0.25) (0.19)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $10.97 $9.98 $9.41 $9.00 $7.71 $8.38
====== ===== ===== ===== ===== =====
Total Return /(a)/ ... 11.51%/(d)/ 8.38% 7.76% 21.00% (5.10)% (15.67)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $11,059 $8,982 $5,663 $4,488 $3,351 $3,120
Ratio of Expenses to
Average Net Assets.. 2.42%/(e)/ 2.47% 2.58% 2.62% 2.98% 2.47%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- 2.75% -- --
Ratio of Net
Investment Income to
Average Net Assets.. 2.43%/(e)/ 2.26% 2.97% 3.53% 2.98% 2.67%/(e)/
Portfolio Turnover
Rate................ 88.1%/(e)/ 65.4% 69.5% 79.8% 55.1% 60.4%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver was effective for the year ended October 31, 2000.
/(c) / Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Period from December 31, 1997, date shares first offered, through October
31, 1998. Class A and Class B shares both recognized $.03 net investment
income per share from December 11, 1997 through December 30, 1997, of which
each class distributed $.01 to its sole shareholder, Principal Life Insurance
Company. During the initial interim period, each class also incurred an
unrealized gain of $.13 per share.
See accompanying notes.
102
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001 2000 1999 1998/(F)/
---- ---- ---- ---- ---- ----
PRINCIPAL SMALLCAP FUND, INC.
- -----------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $6.23 $7.60 $11.24 $11.34 $8.43 $9.92
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.12) (0.11) (0.11) (0.11) (0.08)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.20 (1.25) (1.91) 1.27 3.02 (1.41)
---- ----- ----- ---- ---- -----
Total From Investment
Operations 0.17 (1.37) (2.02) 1.16 2.91 (1.49)
Less Dividends and
Distributions:
Distributions from
Realized Gains...... -- -- (1.62) (1.26) -- --
---- ----- -----
Total Dividends and
Distributions -- -- (1.62) (1.26) -- --
---- ----- -----
Net Asset Value, End
of Period............ $6.40 $6.23 $7.60 $11.24 $11.34 $8.43
===== ===== ===== ====== ====== =====
Total Return /(a)/ ... 2.73%/(d)/ (18.03)% (19.37)% 9.89% 34.52% (15.95)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $56,715 $56,334 $53,763 $60,660 $41,598 $18,438
Ratio of Expenses to
Average Net Assets.. 2.16%/(e)/ 1.94% 1.87% 1.75% 1.92% 2.58%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.16%/(e)/ 1.95% -- 1.76% -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.93)%/(e)/ (0.93)% (0.80)% (0.61)% (1.04)% (1.65)%/(e)/
Portfolio Turnover
Rate................ 151.9%/(e)/ 218.2% 154.9% 138.4% 100.7% 20.5%/(e)/
2003/(C)/ 2002 2001 2000 1999 1998/(F)/
---- ---- ---- ---- ---- ----
PRINCIPAL SMALLCAP FUND, INC.
- -----------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $5.99 $7.36 $11.02 $11.21 $8.41 $9.91
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.05) (0.09) (0.06) (0.10) (0.11) (0.11)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.19 (1.28) (1.98) 1.17 2.91 (1.39)
---- ----- ----- ---- ---- -----
Total From Investment
Operations 0.14 (1.37) (2.04) 1.07 2.80 (1.50)
Less Dividends and
Distributions:
Distributions from
Realized Gains...... -- -- (1.62) (1.26) -- --
---- ----- -----
Total Dividends and
Distributions -- -- (1.62) (1.26) -- --
---- ----- -----
Net Asset Value, End
of Period............ $6.13 $5.99 $7.36 $11.02 $11.21 $8.41
===== ===== ===== ====== ====== =====
Total Return /(a)/ ... 2.34%/(d)/ (18.61)% (20.05)% 9.14% 33.29% (16.15)%/(d)/
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $16,164 $15,624 $17,342 $19,022 $14,158 $6,550
Ratio of Expenses to
Average Net Assets.. 2.95%/(e)/ 2.75% 2.74% 2.41% 2.63% 2.80%/(e)/
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.95%/(e)/ 2.75% -- 2.41% -- --
Ratio of Net
Investment Income to
Average Net Assets.. (1.72)%/(e)/ (1.73)% (1.67)% (1.27)% (1.75)% (1.85)%/(e)/
Portfolio Turnover
Rate................ 151.9%/(e)/ 218.2% 154.9% 138.4% 100.7% 20.5%/(e)/
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. The waiver was effective for the year ended
October 31, 2000.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Period from December 31, 1997, date shares first offered, through October
31, 1998. Class A and Class B shares each recognized $.02 net investment
income per share from December 11, 1997 through December 30, 1997. Each class
distributed $.01 taxable return of capital to its sole shareholder, Principal
Life Insurance Company. During the initial interim period, each class also
incurred an unrealized loss of $.09 per share.
See accompanying notes.
103
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
DOMESTIC GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL UTILITIES FUND, INC.
- ------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $8.57 $10.69 $18.40 $17.86 $16.11 $12.55
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.18 0.31 0.20 0.27 0.33 0.41
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.39 (2.14) (4.05) 1.68 2.00 3.59
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.57 (1.83) (3.85) 1.95 2.33 4.00
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.18) (0.29) (0.20) (0.27) (0.34) (0.44)
Distributions from
Realized Gains...... -- -- (3.66) (1.14) (0.24) --
---- ----- ----- -----
Total Dividends and
Distributions (0.18) (0.29) (3.86) (1.41) (0.58) (0.44)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $8.96 $8.57 $10.69 $18.40 $17.86 $16.11
===== ===== ====== ====== ====== ======
Total Return /(a)/ ... 6.76%/(d)/ (17.30)% (25.74)% 12.09% 14.74% 32.10%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $58,741 $57,881 $72,581 $101,352 $99,857 $83,533
Ratio of Expenses to
Average Net Assets.. 1.59%/(e)/ 1.48% 1.31% 1.23% 1.20% 1.15%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- -- -- 1.23%
Ratio of Net
Investment Income to
Average Net Assets.. 4.09%/(e)/ 3.15% 1.51% 1.59% 1.94% 2.73%
Portfolio Turnover
Rate................ 29.7%/(e)/ 79.4% 106.2% 150.8% 23.5% 11.9%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL UTILITIES FUND, INC.
- ------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $8.53 $10.64 $18.37 $17.83 $16.09 $12.53
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.13 0.21 0.10 0.14 0.22 0.30
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.40 (2.11) (4.07) 1.69 1.98 3.59
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.53 (1.90) (3.97) 1.83 2.20 3.89
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.14) (0.21) (0.10) (0.15) (0.22) (0.33)
Distributions from
Realized Gains...... -- -- (3.66) (1.14) (0.24) --
---- ----- ----- -----
Total Dividends and
Distributions (0.14) (0.21) (3.76) (1.29) (0.46) (0.33)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $8.92 $8.53 $10.64 $18.37 $17.83 $16.09
===== ===== ====== ====== ====== ======
Total Return /(a)/ ... 6.30%/(d)/ (18.02)% (26.41)% 11.30% 13.85% 31.23%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $9,285 $9,982 $15,152 $19,624 $18,282 $11,391
Ratio of Expenses to
Average Net Assets.. 2.60%/(e)/ 2.37% 2.15% 2.00% 1.95% 1.90%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- -- -- 2.00%
Ratio of Net
Investment Income to
Average Net Assets.. 3.08%/(e)/ 2.19% 0.66% 0.82% 1.19% 2.04%
Portfolio Turnover
Rate................ 29.7%/(e)/ 79.4% 106.2% 150.8% 23.5% 11.9%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver ceased on October 31, 1998.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
104
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
INTERNATIONAL EMERGING INTERNATIONAL
MARKETS FUND, INC. FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST ... $ 23,595,014 $ 222,575,675
============ =============
FOREIGN CURRENCY--AT COST ........... $ 64,199 $ 661,014
============ =============
ASSETS
Investment in securities--at value... $ 23,934,193 $ 213,671,946
Foreign currency--at value........... 64,092 660,184
Cash................................. 7,637 20,886
Receivables:
Capital Shares sold................. 348,841 19,946
Dividends and interest.............. 133,555 1,352,812
Investment securities sold.......... 335,446 1,273,892
Other assets......................... -- 6,114
------------ -------------
Total Assets 24,823,764 217,005,780
LIABILITIES
Accrued expenses..................... 58,622 282,837
Payables:
Capital Shares reacquired........... 1,758 171,451
Indebtedness........................ 120,000 --
Investment securities purchased..... 541,359 1,192,988
------------ -------------
Total Liabilities 721,739 1,647,276
------------ -------------
NET ASSETS APPLICABLE TO OUTSTANDING
SHARES ............................. $ 24,102,025 $ 215,358,504
============ =============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital..................... $ 31,428,911 $ 345,734,690
Accumulated undistributed
(overdistributed) net investment
income (operating loss)............. (28,678) 394,663
Accumulated undistributed
(overdistributed) net realized gain
(loss).............................. (7,635,300) (121,900,944)
Net unrealized appreciation
(depreciation) of investments....... 339,179 (8,903,729)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (2,087) 33,824
------------ -------------
Total Net Assets $ 24,102,025 $ 215,358,504
============ =============
CAPITAL STOCK (PAR VALUE: $.01 A
SHARE):
Shares authorized.................... 100,000,000 125,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets.................. $ 18,782,042 $ 190,458,693
Shares issued and outstanding...... 2,637,675 37,420,544
Net asset value per share.......... $ 7.12 $ 5.09
Maximum offering price per share
/(a)/ .............................. $ 7.55 $ 5.40
============ =============
Class B: Net Assets.................. $ 5,319,983 $ 24,899,811
Shares issued and outstanding...... 775,801 4,987,149
Net asset value per share /(b)/ ... $ 6.86 $ 4.99
============ =============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
105
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
INTERNATIONAL
SMALLCAP FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST ...................... $ 32,185,702
============
ASSETS
Investment in securities--at value...................... $ 34,949,004
Cash.................................................... 641,121
Receivables:
Capital Shares sold.................................... 55,684
Dividends and interest................................. 197,667
Investment securities sold............................. 266,356
Other assets............................................ 660
------------
Total Assets 36,110,492
LIABILITIES
Accrued expenses........................................ 92,586
Payables:
Capital Shares reacquired.............................. 30,388
Investment securities purchased........................ 253,755
------------
Total Liabilities 376,729
------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES ............ $ 35,733,763
============
NET ASSETS CONSIST OF:
Capital Shares and additional paid-in-capital........... $ 53,085,604
Accumulated undistributed (overdistributed) net
investment income (operating loss)..................... (121,573)
Accumulated undistributed (overdistributed) net realized
gain (loss)............................................ (19,997,718)
Net unrealized appreciation (depreciation) of
investments............................................ 2,763,302
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign
currencies............................................. 4,148
------------
Total Net Assets $ 35,733,763
============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized....................................... 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets..................................... $ 28,163,719
Shares issued and outstanding......................... 3,232,665
Net asset value per share............................. $ 8.71
Maximum offering price per share /(a)/ ............... $ 9.24
============
Class B: Net Assets..................................... $ 7,570,044
Shares issued and outstanding......................... 905,632
Net asset value per share /(b)/ ...................... $ 8.36
============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 5.75% of the offering price or 6.10% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
106
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
INTERNATIONAL EMERGING INTERNATIONAL
MARKETS FUND, INC. FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING
LOSS)
Income:
Dividends.......................... $ 363,825 $ 2,653,338
Withholding tax on foreign
dividends......................... (33,038) (413,962)
Interest........................... 547 24,744
---------- ------------
Total Income 331,334 2,264,120
Expenses:
Management and investment advisory
fees.............................. 146,686 901,470
Distribution fees - Class A........ 22,767 204,839
Distribution fees - Class B........ 22,526 134,390
Registration fees - Class A........ 3,875 6,192
Registration fees - Class B........ 3,780 5,434
Shareholder reports - Class A...... 2,874 12,311
Shareholder reports - Class B...... 901 3,513
Transfer and administrative fees -
Class A........................... 25,714 179,588
Transfer and administrative fees -
Class B........................... 7,951 45,961
Auditing and legal fees............ 7,846 4,988
Custodian fees..................... 42,094 68,748
Directors' fees.................... 540 7,127
Registration fees.................. 5,143 10,241
Transfer and administrative fees... 57,122 302,947
Other expenses..................... 1,006 6,594
---------- ------------
Total Gross Expenses 350,825 1,894,343
Less: Fees paid indirectly......... 156 5,125
Less: Fees waived - Class A........ 24,073 6,512/(a)/
Less: Fees waived - Class B........ 6,574 --
---------- ------------
Total Net Expenses 320,022 1,882,706
---------- ------------
Net Investment Income (Operating
Loss) 11,312 381,414
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES
Net realized gain (loss) from:
Investment transactions............ 209,709 (15,318,958)
Foreign currency transactions...... (39,956) 21,308
Change in unrealized
appreciation/depreciation of:
Investments........................ 962,986 16,432,276
Translation of assets and
liabilities in foreign currencies. 4,187 17,936
---------- ------------
Net Realized and Unrealized Gain
(Loss) on Investments and Foreign
Currencies 1,136,926 1,152,562
---------- ------------
Net Increase (Decrease) in Net
Assets Resulting from Operations $1,148,238 $ 1,533,976
========== ============
/(a) /Period from March 1, 2003, through April 30, 2003.
See accompanying notes.
107
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
INTERNATIONAL
SMALLCAP FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Dividends.............................................. $ 429,524
Withholding tax on foreign dividends................... (46,143)
Interest............................................... 3,285
-----------
Total Income 386,666
Expenses:
Management and investment advisory fees................ 203,033
Distribution fees - Class A............................ 33,070
Distribution fees - Class B............................ 34,939
Registration fees - Class A............................ 5,648
Registration fees - Class B............................ 4,903
Shareholder reports - Class A.......................... 3,228
Shareholder reports - Class B.......................... 1,160
Transfer and administrative fees - Class A............. 47,274
Transfer and administrative fees - Class B............. 18,438
Auditing and legal fees................................ 3,802
Custodian fees......................................... 18,478
Directors' fees........................................ 1,111
Registration fees...................................... 8,275
Transfer and administrative fees....................... 110,394
Other expenses......................................... 1,939
-----------
Total Gross Expenses 495,692
Less: Fees paid indirectly............................. 405
-----------
Total Net Expenses 495,287
-----------
Net Investment Income (Operating Loss) (108,621)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment transactions................................ (6,255,613)
Foreign currency transactions.......................... (12,148)
Change in unrealized appreciation/depreciation of:
Investments............................................ 7,669,927
Translation of assets and liabilities in foreign
currencies............................................ 5,304
-----------
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currencies 1,407,470
-----------
Net Increase (Decrease) in Net Assets Resulting from
Operations $ 1,298,849
===========
See accompanying notes.
108
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
INTERNATIONAL EMERGING INTERNATIONAL
MARKETS FUND, INC. FUND, INC.
- ------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ---------------- ------------- -------------------
- ------------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ 11,312 $ (143,870) $ 381,414 $ 512,850
Net realized gain
(loss) from
investment
transactions and
foreign currency
transactions......... 169,753 275,027 (15,297,650) (44,717,355)
Change in unrealized
appreciation/depreciation
of investments and
translations of assets
and liabilities in
foreign currencies.... 967,173 765,341 16,450,212 14,492,073
----------- ----------- ------------ -------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 1,148,238 896,498 1,533,976 (29,712,432)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... -- -- (64,843) (494,213)
----------- ----------- ------------ -------------
Total Dividends and
Distributions -- -- (64,843) (494,213)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 2,971,435 7,139,364 14,081,679 97,714,235
Class B............... 280,012 999,656 2,281,193 5,656,985
Class C............... N/A 7,606/(a)/ N/A 227,812/(a)/
Class R............... N/A 18,175/(b)/ N/A 324,145/(b)/
Shares issued in
acquisitions:
Class A............... -- -- -- 6,240,753
Class B............... -- -- -- 1,912,304
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... -- -- 63,916 483,496
Shares redeemed:
Class A............... (3,129,670) (4,890,180) (23,093,910) (103,330,268)
Class B............... (438,052) (630,729) (5,996,171) (8,312,991)
Class C............... N/A (261,587)/(a)/ N/A (1,250,137)/(a)/
Class R............... N/A (1,791,967)/(b)/ N/A (18,046,474)/(b)/
----------- ----------- ------------ -------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions (316,275) 590,338 (12,663,293) (18,380,140)
----------- ----------- ------------ -------------
Total Increase
(Decrease) 831,963 1,486,836 (11,194,160) (48,586,785)
NET ASSETS
Beginning of period.... 23,270,062 21,783,226 226,552,664 275,139,449
----------- ----------- ------------ -------------
End of period
(including
undistributed net
investment income as
set forth below)...... $24,102,025 $23,270,062 $215,358,504 $ 226,552,664
=========== =========== ============ =============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (28,678) $ -- $ 394,663 $ 72,775
=========== =========== ============ =============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
109
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
INTERNATIONAL
SMALLCAP FUND, INC.
- -------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002
------------ ------------------
- -------------------------------------------------------------------------------
OPERATIONS
Net investment income (operating loss)....... $ (108,621) $ (245,681)
Net realized gain (loss) from investment
transactions and foreign currency
transactions................................ (6,267,761) (2,286,565)
Change in unrealized
appreciation/depreciation of investments and
translation of assets and liabilities in
foreign currencies.......................... 7,675,231 (1,861,795)
----------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 1,298,849 (4,394,041)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Class A..................................... (19,057) --
----------- ------------
Total Dividends and Distributions (19,057) --
CAPITAL SHARE TRANSACTIONS
Shares sold:
Class A..................................... 5,266,924 23,663,602
Class B..................................... 844,571 2,084,900
Class C..................................... N/A 1,286,305/(a)/
Class R..................................... N/A 31,922/(b)/
Shares issued in reinvestment of dividends
and distributions:
Class A..................................... 17,605 --
Shares redeemed:
Class A..................................... (4,980,956) (22,250,092)
Class B..................................... (1,051,477) (2,102,781)
Class C..................................... N/A (1,756,461)/(a)/
Class R..................................... N/A (3,272,881)/(b)/
----------- ------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 96,667 (2,315,486)
----------- ------------
Total Increase (Decrease) 1,376,459 (6,709,527)
NET ASSETS
Beginning of period.......................... 34,357,304 41,066,831
----------- ------------
End of period (including undistributed net
investment income as set forth below)....... $35,733,763 $ 34,357,304
=========== ============
Undistributed (Overdistributed) Net
Investment Income (Operating Loss).......... $ (121,573) $ 13,480
=========== ============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
110
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
1. ORGANIZATION
Principal International Emerging Markets Fund, Inc., Principal International
Fund, Inc., and Principal International SmallCap Fund, Inc. (the "International
Growth Funds") are registered under the Investment Company Act of 1940, as
amended, as open-end diversified management investment companies and operate in
the mutual fund industry.
Each fund offers both Class A shares and Class B shares to the public. Class A
shares generally are sold with an initial sales charge based on declining rates
and certain purchases may be subject to a contingent deferred sales charge
("CDSC") upon redemption. Class B shares are sold without an initial sales
charge, but bear higher ongoing distribution fees and are subject to a declining
CDSC on certain redemptions made within six years of purchase. Class B shares
automatically convert into Class A shares, based on relative net asset value
(without a sales charge), seven years after purchase. Both classes of shares for
each fund represent interests in the same portfolio of investments, and will
vote together as a single class except where otherwise required by law or as
determined by each of the International Growth Funds' respective Board of
Directors. In addition, the Board of Directors of each fund declares separate
dividends on each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the International
Growth Funds:
SECURITY VALUATION . The International Growth Funds value securities for which
market quotations are readily available at market value, which is determined
using the last reported sale price or, if no sales are reported, as is regularly
the case for some securities traded over-the-counter, the last reported bid
price. When reliable market quotations are not considered to be readily
available, which may be the case, for example, with respect to certain debt
securities, preferred stocks and foreign securities, the investments are valued
by using prices provided by market makers or estimates of market values obtained
from yield data and other factors relating to instruments or securities with
similar characteristics in accordance with procedures established in good faith
by each fund's Board of Directors. Short-term securities are valued at amortized
cost, which approximates market.
FOREIGN SECURITIES. . Generally, trading in foreign securities is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing net asset value per
share are usually determined as of such times. Occasionally, events which affect
the values of such securities and foreign currency exchange rates may occur
between the times at which they are generally determined and the close of the
New York Stock Exchange. If events materially affecting the value of such
securities occur during such period, then these securities are valued at their
fair value as determined in good faith by Principal Management Corporation (the
"Manager") under procedures established and regularly reviewed by each fund's
Board of Directors. To the extent each fund invests in foreign securities listed
on foreign exchanges which trade on days on which the fund does not determine
its net asset value, for example weekends and other customary national U.S.
holidays, each fund's net asset value could be significantly affected on days
when shareholders can not purchase or redeem shares.
Certain securities issued by companies in emerging market countries may have
more than one quoted valuation at any given point in time, sometimes referred to
as a "local" price and a "premium" price. The premium price is often a
negotiated price, which may not consistently represent a price at which a
specific transaction can be effected. It is the policy of the International
Growth Funds to value such securities at prices at which it is expected those
shares may be sold, and the Manager or any sub-advisor is authorized to make
such determinations subject to such oversight by each fund's Board of Directors
as may occasionally be necessary.
The value of foreign securities in foreign currency amounts is expressed in U.S.
dollars at the closing daily rate of exchange. The identified cost of the fund
holdings is translated at approximate rates prevailing when acquired. Income and
expense amounts are translated at approximate rates prevailing when received or
paid, with daily accruals of such amounts reported at approximate rates
prevailing at the date of valuation. Since the carrying amount of the foreign
securities is determined based on the exchange rate and market values at the
close of the period, it is not practicable to isolate that portion of the
results of operations arising as a result of changes in the foreign exchange
rates from the fluctuations arising from changes in the market prices of
securities during the period.
111
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between trade and settlement dates
on security transactions, and the difference between the amount of dividends and
foreign withholding taxes recorded on the books and the U.S. dollar equivalent
of the amounts actually received or paid. Net unrealized appreciation
(depreciation) on translation of assets and liabilities in foreign currencies
arise from changes in the exchange rate relating to assets and liabilities,
other than investments in securities, purchased and held in non-U.S. denominated
currencies.
INCOME AND INVESTMENT TRANSACTIONS. . The International Growth Funds record
investment transactions on a trade date basis. The identified cost basis has
been used in determining the net realized gain or loss from investment
transactions and unrealized appreciation or depreciation of investments. The
International Growth Funds record dividend income on the ex-dividend date,
except dividend income from foreign securities whereby the ex-dividend date has
passed; such dividends are recorded as soon as the funds are informed of the
ex-dividend date. Interest income is recognized on an accrual basis. Discounts
and premiums on securities are accreted/amortized over the lives of the
respective securities. The International Growth Funds allocate daily all income
and realized and unrealized gains or losses to each class of shares based upon
the relative proportion of the value of shares outstanding of each class.
EXPENSES . The International Growth Funds allocate daily all expenses (other
than class-specific expenses) to each class of shares based upon the relative
proportion of the value of shares outstanding of each class. Class-specific
expenses charged to each class during the period ended April 30, 2003 are
included separately in the statements of operations.
DISTRIBUTIONS TO SHAREHOLDERS . Dividends and distributions are recorded on the
ex-dividend date. Dividends and distributions to shareholders from net
investment income and net realized gain from investments and foreign currency
transactions are determined in accordance with federal tax regulations, which
may differ from accounting principles generally accepted in the United States.
These differences are primarily due to differing treatments for foreign currency
transactions, net operating losses, losses deferred due to wash sales,
commission recapture, and sales of Passive Foreign Investment Companies.
Permanent book and tax basis differences are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification.
Distributions which exceed current and accumulated earnings and profits for
federal income tax purposes, are reported as tax return of capital
distributions.
FEDERAL INCOME TAXES . No provision for federal income taxes is considered
necessary because each fund is qualified as a "regulated investment company"
under the Internal Revenue Code and intends to distribute each year
substantially all of its net investment income and realized capital gains to
shareholders.
112
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
3. OPERATING POLICIES
FEES PAID INDIRECTLY . The International Growth Funds direct certain portfolio
transactions to a brokerage firm that, in turn, pays a portion of the Fund's
operating expenses. The International Growth Funds have also entered into an
arrangement with their custodian whereby interest earned on uninvested cash
balances is used to offset a portion of each fund's expenses. These amounts are
reflected in the statements of operations.
LINE OF CREDIT . The International Growth Funds participate with other funds
managed by Principal Management Corporation in an unsecured joint line of credit
with two banks which allow the participants to borrow up to $75 million,
collectively. Borrowings are made solely to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Interest is charged to each
participant, based on its borrowings, at a rate equal to the Fed Funds Rate plus
..50%. Additionally, a commitment fee is charged at the annual rate of .09% on
the amount of the line of credit. The commitment fee is allocated among the
participating funds in proportion to their average net assets during each
calendar quarter. At April 30, 2003, the Principal International Emerging
Markets Fund, Inc. had an outstanding borrowing of $120,000 at an annual rate of
1.81%. No other International Growth Fund had outstanding borrowings under the
line of credit.
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES
MANAGEMENT SERVICES . The International Growth Funds have agreed to pay
investment advisory and management fees to Principal Management Corporation
(wholly owned by Princor Financial Services Corporation, a subsidiary of
Principal Financial Services, Inc.) computed at an annual percentage rate of
each fund's average daily net assets. The annual rates used in this calculation
for the International Growth Funds are as follows:
NET ASSETS OF FUNDS (IN MILLIONS)
---------------------------------------------
FIRST NEXT NEXT NEXT OVER
$100 $100 $100 $100 $400
-------- -------- -------- -------- ----------
Principal International 1.25% 1.20% 1.15% 1.10% 1.05%
Emerging Markets Fund, Inc.
Principal International 1.20 1.15 1.10 1.05 1.00
SmallCap Fund, Inc.
NET ASSETS OF FUNDS (IN MILLIONS)
--------------------------------------------
FIRST NEXT NEXT NEXT OVER
$250 $250 $250 $250 $1,000
-------- -------- -------- -------- ----------
Principal International .85% .80% .75% .70% .65%
Fund, Inc.
The International Growth Funds also reimburse the Manager for transfer and
administrative services, including the cost of accounting, data processing,
supplies and other services rendered.
The Manager has voluntarily agreed to limit the Fund's expenses for certain of
the International Growth Funds. The limits are expressed as a percentage of
average daily net assets attributable to each class on an annualized basis
during the reporting period. Effective March 1, 2003, the operating expense
limits for Principal International Emerging Markets Fund, Inc. increased from
2.50% to 2.75% for Class A shares and 3.25% to 3.50% for Class B shares. Also
effective March 1, 2003, an expense limit of 1.63% began for Class A shares of
Principal International Fund, Inc.
DISTRIBUTION FEES . The International Growth Funds bear distribution fees with
respect to each class computed at an annual rate of up to .25% for Class A
shares and 1.00% for Class B shares of the average daily net assets attributable
to each class of each fund.
Distribution fees are paid to Princor Financial Services Corporation, the
principal underwriter. A portion of the fees is subsequently remitted to retail
dealers. Pursuant to the distribution agreements for Class A and Class B shares,
fees that are unused by the principal underwriter at the end of the fiscal year
are returned to the respective International Growth Funds which generated the
excess.
113
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
SALES CHARGES . Princor Financial Services Corporation, as principal
underwriter, receives proceeds of any CDSC on certain Class A and Class B share
redemptions. The charge is based on declining rates which for Class A shares
begin at .75% and Class B shares at 4.00% of the lesser of current market value
or the cost of shares being redeemed. Princor Financial Services Corporation
also retains sales charges on sales of Class A shares based on declining rates.
As of March 1, 2003, the maximum rate increased from 4.75% to 5.75% of the
offering price. The aggregate amount of these charges retained by Princor
Financial Services Corporation for the period ended April 30, 2003, were as
follows:
CLASS A CLASS B
------- -------
Principal International Emerging Markets Fund, Inc. $ 28,376 $ 3,377
Principal International Fund, Inc. 163,714 28,816
Principal International SmallCap Fund, Inc. 61,238 9,729
AFFILIATED OWNERSHIP . At April 30, 2003, Principal Life Insurance Company (an
affiliate of the Manager), affiliates of Principal Life Insurance Company and
benefit plans sponsored on behalf of Principal Life Insurance Company owned
shares of the International Growth Funds as follows:
CLASS A CLASS B
------- -------
Principal International Emerging Markets Fund, Inc. 692,531 302,268
Principal International Fund, Inc. 10,557,081 --
Principal International SmallCap Fund, Inc. 180,700 --
AFFILIATED BROKERAGE COMMISSIONS . No brokerage commissions were paid by the
International Growth Funds to affiliated broker dealers during the period.
5. INVESTMENT TRANSACTIONS
For the period ended April 30, 2003, the cost of investment securities purchased
and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the International Growth Funds
were as follows:
PURCHASES SALES
----------------------- --------------
Principal International Emerging $12,004,226 $ 11,487,918
Markets Fund, Inc.
Principal International Fund, Inc. 95,450,354 102,576,841
Principal International SmallCap 30,307,925 30,063,848
Fund, Inc.
At April 30, 2003, net federal income tax unrealized appreciation (depreciation)
of investments held by the International Growth Funds was composed of the
following:
TAX COST OF NET
INVESTMENTS GROSS UNREALIZED UNREALIZED
---------------------------------- APPRECIATION
IN SECURITIES APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------- ------------ -------------- OF INVESTMENTS
---------------
Principal International Emerging Markets Fund, Inc. $ 23,762,673 $ 2,204,382 $ (2,032,862) $ 171,520
Principal International Fund, Inc. 223,402,877 10,029,039 (19,759,970) (9,730,931)
Principal International SmallCap Fund, Inc. 32,243,850 3,463,012 (757,858) 2,705,154
The International Growth Funds' investments are with various issuers in various
industries. The schedules of investments contained herein summarize
concentrations of credit risk by country, issuer and industry.
114
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares were as follows:
PRINCIPAL PRINCIPAL PRINCIPAL
INTERNATIONAL EMERGING INTERNATIONAL INTERNATIONAL
MARKETS FUND, INC. FUND, INC. SMALLCAP FUND, INC.
---------------------- ------------- ---------------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A..................................................... 424,683 2,809,239 630,166
Class B..................................................... 41,746 468,158 104,810
Shares issued in reinvestment of dividends and distributions:
Class A..................................................... -- 12,732 2,098
Class B..................................................... -- -- --
Shares redeemed:
Class A..................................................... (448,250) (4,612,886) (597,045)
Class B..................................................... (65,371) (1,228,215) (131,283)
-------- ---------- --------
Net Increase (Decrease) (47,192) (2,550,972) 8,746
======== ========== ========
PRINCIPAL PRINCIPAL PRINCIPAL
INTERNATIONAL EMERGING INTERNATIONAL INTERNATIONAL
MARKETS FUND, INC. FUND, INC. SMALLCAP FUND, INC.
---------------------- ------------- ---------------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A..................................................... 918,757 16,716,133 2,378,719
Class B..................................................... 132,156 994,232 216,748
Class C*.................................................... 1,050 38,093 133,839
Class R**................................................... 2,476 54,645 2,917
Shares issued in acquisitions:
Class A..................................................... -- 1,273,623 --
Class B..................................................... -- 395,922 --
Shares issued in reinvestment of dividends and distributions:
Class A..................................................... -- 98,673 --
Class B..................................................... -- -- --
Class C*.................................................... -- -- --
Class R**................................................... -- -- --
Shares redeemed:
Class A..................................................... (639,348) (17,839,244) (2,233,689)
Class B..................................................... (85,426) (1,475,529) (220,443)
Class C*.................................................... (33,546) (216,532) (181,428)
Class R**................................................... (239,773) (2,974,499) (321,216)
-------- ----------- ----------
Net Increase (Decrease) 56,346 (2,934,483) (224,553)
======== =========== ==========
* Period from November 1, 2001 through January 31, 2002 (discontinuation of
Class C shares).
** Period from November 1, 2001 through December 28, 2001 (discontinuation of
Class R shares).
115
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Effective January 31, 2002 and December 28, 2001, respectively, Class C shares
and Class R shares were discontinued and exchanged into Class A shares as
follows:
CLASS C CLASS R
---------------------- --------------------------------
SHARES DOLLARS SHARES DOLLARS
EXCHANGED EXCHANGED EXCHANGED EXCHANGED
---------- ---------- --------- -------------
Principal 32,613 $ 258,946 231,357 $ 1,749,057
International Emerging
Markets Fund, Inc.
Principal 174,698 1,023,732 2,804,637 17,192,424
International Fund,
Inc.
Principal 66,379 669,769 311,786 3,186,457
International SmallCap
Fund, Inc.
7. FEDERAL TAX INFORMATION
DISTRIBUTIONS TO SHAREHOLDERS . The federal income tax character of
distributions paid for periods ended April 30, 2003, and October 31, 2002,
respectively, were as follows:
ORDINARY INCOME LONG-TERM CAPITAL GAIN
----------- -------------
2003 2002 2003 2002
---- ---- ---- ----
Principal International $ -- $ -- $-- $--
Emerging Markets Fund, Inc.
Principal International 64,843 494,213 -- --
Fund, Inc.
Principal International 19,057 -- -- --
SmallCap Fund, Inc.
For federal income tax purposes, short-term capital gain distributions are
considered ordinary income distributions.
DISTRIBUTABLE EARNINGS .
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY INCOME LONG-TERM CAPITAL GAINS
---------------- -----------------------
Principal International Emerging
Markets Fund, Inc. $ -- $ --
Principal International Fund,
Inc. 67,299 --
Principal International SmallCap
Fund, Inc. 13,480 --
As of October 31, 2002, the components of distributable earnings on a federal
tax basis were as follows:
CAPITAL LOSS CARRYFORWARDS . Capital loss carryforwards are losses that can be
used to offset future capital gains of the fund. At October 31, 2002, the
International Growth Funds had approximate net capital loss carryforwards as
follows:
NET CAPITAL LOSS CARRYFORWARDS EXPIRING IN:
2007 2008 2009 2010
-------- ---------- ----------- -------------
Principal International Emerging Markets Fund, Inc. $ -- $ -- $ 6,871,000 $ 689,000
Principal International Fund, Inc. 310,000 2,612,000 55,755,000 46,940,000
Principal International SmallCap Fund, Inc. -- -- 10,352,000 3,151,000
Principal International Fund, Inc. acquired approximately $2,448,000 and
$1,920,000 of capital losses, included above, as part of its acquisition of
Principal European Fund, Inc. and Principal Pacific Basin Fund, Inc.,
respectively, which may be applied against realized net taxable gains in future
years, subject to certain limitations imposed by Section 382 of the Internal
Revenue Code.
116
SCHEDULE OF INVESTMENTS
PRINCIPAL INTERNATIONAL EMERGING MARKETS FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- -------------------------------------------------------------------------------------------
COMMON STOCKS (94.72%)
AGRICULTURAL OPERATIONS (0.76%)
$
Bunge 6,537 183,101
AUDIO & VIDEO PRODUCTS (0.48%)
Vestel Elektronik Sanayi /1/ 48,392,000 115,881
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT (1.08%)
Hyundai Mobis 13,040 259,190
BREWERY (2.84%)
Anadolu Efes Biracilik ve Malt Sanayii 5,519,000 110,133
Companhia de Bebidas das Americas 12,486 248,347
Fomento Economico Mexicano 3,400 129,064
Hite Brewery 3,921 196,857
684,401
BUILDING PRODUCTS-CEMENT & AGGREGATE (1.79%)
Anhui Conch Cement 426,000 196,639
Apasco 15,100 102,995
Siam Cement 44,500 131,829
431,463
BUILDING-RESIDENTIAL & COMMERCIAL (1.91%)
Corporacion GEO /1/ 68,700 189,572
Land & Houses Public 1,510,599 271,323
460,895
CASINO HOTELS (0.44%)
Genting Berhad 33,608 106,131
CELLULAR TELECOMMUNICATIONS (3.96%)
America Movil 30,400 509,808
China Mobile 133,850 268,591
Vimpel Communications /1/ 4,418 176,101
954,500
CHEMICALS-PLASTICS (0.56%)
Formosa Plastics 109,000 134,452
COATINGS & PAINT (0.52%)
Kumgang Korea Chemical 1,470 125,222
COMMERCIAL BANKS (7.85%)
Akbank 18,069,000 64,038
Banco Bradesco 10,500 216,300
Bank Pekao 5,900 132,520
Chinatrust Financial Holding /1/ 329,507 257,102
Hansabank 10,585 192,786
Komercni Banka 2,630 183,229
Kookmin Bank 4,799 134,688
OTP Bank 9,800 105,214
Public Bank 276,700 160,195
Standard Bank Investment 69,040 277,059
Thai Farmers Bank /1/ 199,000 168,270
1,891,401
COMPUTERS (0.74%)
Quanta Computer 102,000 178,485
COMPUTERS-PERIPHERAL EQUIPMENT (0.64%)
Ambit Microsystems 54,000 154,131
Shares
Held Value
- -------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CONTAINERS-PAPER & PLASTIC (0.51%)
$
Taiwan Hon Chuan Enterprise 92,000 122,456
DISTRIBUTION-WHOLESALE (0.55%)
Esprit Holdings 67,900 133,205
DIVERSIFIED FINANCIAL SERVICES (2.32%)
FirstRand 127,985 124,884
Shinhan Financial Group 25,270 249,580
Sinopac Holdings /1/ 594,961 185,179
559,643
DIVERSIFIED MINERALS (3.60%)
Anglo American 43,362 628,115
Antofagasta 12,465 125,410
Cia Vale do Rio Doce /1/ 4,100 114,636
868,161
DIVERSIFIED OPERATIONS (1.55%)
Alfa 144,983 247,226
Grupo Carso /1/ 44,647 127,321
374,547
DIVERSIFIED OPERATORS-COMMERCIAL SERVICE (0.43%)
Enka Insaat ve Sanayi 3,002,000 104,476
ELECTRIC PRODUCTS-MISCELLANEOUS (1.63%)
LG Electronics 3,240 111,733
Moatech 16,700 120,130
Techtronic Industries 128,000 160,840
392,703
ELECTRIC-GENERATION (1.62%)
CEZ 41,200 153,676
Huaneng Power International 116,000 110,065
Ratchaburi Electricity Generating Holding 227,100 127,138
390,879
ELECTRIC-INTEGRATED (1.27%)
Korea Electric Power 32,500 306,150
ELECTRONIC COMPONENTS-MISCELLANEOUS (6.69%)
AU Optronics /1/ 325,000 165,017
Samsung Electronics 5,770 1,448,436
1,613,453
ELECTRONIC CONNECTORS (1.14%)
Hon Hai Precision Industry 87,500 273,594
FINANCE-CONSUMER LOANS (1.13%)
African Bank Investments 359,087 271,426
FINANCE-OTHER SERVICES (2.75%)
Fubon Financial Holding 222,000 151,566
Grupo Financiero BBVA Bancomer /1/ 587,029 510,485
662,051
FOOD-DAIRY PRODUCTS (0.67%)
Wimm-Bill-Dann Foods 8,820 161,847
FOOD-MISCELLANEOUS/DIVERSIFIED (0.61%)
Indofood Sukses Makmur 1,752,000 146,446
FOOD-RETAIL (0.50%)
Shoprite Holdings 156,440 120,400
Shares
Held Value
- -------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
GAS-DISTRIBUTION (0.97%)
$
OAO Gazprom 14,870 234,202
GOLD MINING (0.78%)
Harmony Gold Mining 17,670 186,989
INTERNET INFRASTRUCTURE SOFTWARE (0.58%)
RADVision /1/ 22,042 138,865
INTERNET SECURITY (0.58%)
Check Point Software Technologies /1/ 8,950 140,783
LIFE & HEALTH INSURANCE (0.48%)
Sanlam 139,229 115,382
MEDICAL-DRUGS (3.05%)
Dr. Reddy's Laboratories /1/ 6,826 129,011
Pliva D.D. /2/ 12,003 167,300
Ranbaxy Laboratories 7,277 113,740
Teva Pharmaceutical Industries 6,950 324,565
734,616
MONEY CENTER BANKS (2.62%)
Bank Hapoalim /1/ 68,492 118,495
ICICI Bank 16,900 89,063
State Bank of India /2/ 28,597 423,235
630,793
NETWORKING PRODUCTS (0.46%)
Accton Technology /1/ 165,000 111,231
OIL COMPANY-EXPLORATION & PRODUCTION (1.51%)
CNOOC 95,000 124,855
PTT Exploration & Production 40,444 125,945
PTT Public 103,100 113,033
363,833
OIL COMPANY-INTEGRATED (5.31%)
LUKOIL 3,880 267,099
PetroChina 1,210,000 276,162
Petroleo Brasileiro 17,731 328,910
YUKOS 2,329 408,740
1,280,911
OIL REFINING & MARKETING (0.51%)
Tupras-Turkiye Petrol Rafine 17,649,000 122,844
OIL-FIELD SERVICES (0.49%)
Tenaris /1/ 5,035 118,323
PAPER & RELATED PRODUCTS (1.43%)
Sappi 15,467 191,098
Votorantim Celulose e Papel 8,100 153,900
344,998
PETROCHEMICALS (2.84%)
Honam Petrochemical 4,760 119,686
IOI Berhad 88,000 116,947
LG Chemical 6,740 223,557
Reliance Industries /2/ 19,380 225,052
685,242
PLATINUM (0.84%)
Impala Platinum Holdings 4,110 203,345
Shares
Held Value
- -------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
POWER CONVERTER & SUPPLY EQUIPMENT (0.48%)
$
Bharat Heavy Electricals 23,979 116,312
PROPERTY & CASUALTY INSURANCE (0.84%)
Samsung Fire & Marine Insurance 4,080 201,481
REAL ESTATE OPERATOR & DEVELOPER (0.74%)
Consorcio ARA /1/ 96,200 177,501
RETAIL-DISCOUNT (1.46%)
Lojas Americanas 55,592,312 228,343
Walmart de Mexico 44,635 123,600
351,943
RETAIL-HYPERMARKETS (0.61%)
Pick'n Pay Stores 82,070 147,192
RETAIL-MAJOR DEPARTMENT STORE (0.81%)
Shinsegae Department Store 1,630 194,527
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (3.79%)
Realtek Semiconductor 80,000 151,463
Taiwan Semiconductor Manufacturing 361,845 496,162
Taiwan Semiconductor Manufacturing /1/ 15,558 130,220
United Microelectronics /1/ 41,700 135,108
912,953
SEMICONDUCTOR EQUIPMENT (0.64%)
Advanced Semiconductor Engineering 301,000 155,422
SHIPBUILDING (0.48%)
Daewoo Shipbuilding & Marine Engineering 13,672 115,340
STEEL-PRODUCERS (1.88%)
POSCO 22,005 452,203
STEEL-SPECIALTY (0.46%)
Cia Siderurgica Nacional 4,800 110,448
TELECOMMUNICATION SERVICES (2.25%)
SK Telecom 15,274 232,165
Telekomunikasi Indonesia 654,477 309,374
541,539
TELEPHONE-INTEGRATED (5.34%)
Brasil Telecom Participacoes 9,160 324,264
KT 12,280 248,793
Philippine Long Distance Telephone 17,103 123,852
Telefonos de Mexico 12,848 388,138
Telkom 46,910 203,015
1,288,062
TOBACCO (1.49%)
British American Tobacco 10,994 109,940
ITC /2/ 8,400 121,019
KT&G /2/ 16,801 128,600
359,559
TRANSPORT-MARINE (0.46%)
Evergreen Marine 182,000 111,205
TOTAL COMMON STOCKS 22,828,734
Shares
Held Value
- -------------------------------------------------------------------------------------------
PREFERRED STOCKS (4.58%)
COMMERCIAL BANKS (1.12%)
$
Banco Itau Holding Financeira 4,050,000 270,936
ELECTRIC-INTEGRATED (0.60%)
Cia Energetica de Minas Gerais 13,512,484 144,726
STEEL-SPECIALTY (1.52%)
Gerdau 29,649,992 365,975
TELEPHONE-INTEGRATED (0.75%)
Tele Norte Leste Participacoes 11,856,503 180,005
TEXTILE-PRODUCTS (0.59%)
Cia de Tecidos do Norte de Minas -
Coteminas 2,116,900 143,817
TOTAL PREFERRED STOCKS 1,105,459
-----------
TOTAL PORTFOLIO INVESTMENTS (99.30%) 23,934,193
CASH AND RECEIVABLES, NET OF LIABILITIES (0.70%) 167,832
TOTAL NET ASSETS (100.00%) $24,102,025
-------------
/1 /Non-income producing security.
/2 /Restricted Security - The fund held securities, which were purchased in
private placement transactions and may require registration, or an exemption
therefrom, in order to effect their sale in the ordinary course of business.
At the end of the period, restricted securities totaled $1,065,206 or 4.42% of
net assets.
INVESTMENTS BY COUNTRY
Country Value Percentage of
Total Value
- ---------------------------------------------------------------
$
Argentina 118,323 0.49%
Brazil 3,013,708 12.59
China 386,226 1.61
Czech Republic 336,906 1.41
Hong Kong 884,130 3.69
Hungary 272,514 1.14
India 1,217,432 5.09
Indonesia 455,820 1.91
Israel 722,708 3.02
Korea 4,868,338 20.34
Malaysia 493,213 2.06
Mexico 2,505,710 10.47
Philippines 123,852 0.52
Poland 132,520 0.55
Russia 1,247,990 5.21
South Africa 1,840,790 7.69
Spain 192,786 0.81
Taiwan 2,912,793 12.17
Thailand 937,537 3.92
Turkey 517,372 2.16
United Kingdom 753,525 3.15
TOTAL $23,934,193 100.00%
------------- ---------
See accompanying notes.
119
SCHEDULE OF INVESTMENTS
PRINCIPAL INTERNATIONAL FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (98.59%)
ADVERTISING SERVICES (0.51%)
$
Aegis Group 931,800 1,090,875
AIRLINES (0.60%)
Deutsche Lufthansa 124,874 1,282,106
AUTO-CARS & LIGHT TRUCKS (4.51%)
Bayerische Motoren Werke 71,900 2,399,188
Honda Motor 69,719 2,309,157
Nissan Motor 333,770 2,560,788
PSA Peugeot Citroen 52,123 2,439,619
9,708,752
BEVERAGES-WINE & SPIRITS (0.63%)
Pernod-Ricard 15,500 1,360,488
BREWERY (0.60%)
Interbrew 57,550 1,284,516
BUILDING PRODUCTS-CEMENT & AGGREGATE (0.77%)
Lafarge 24,706 1,659,828
BUILDING-HEAVY CONSTRUCTION (0.66%)
Vinci 21,930 1,428,051
CELLULAR TELECOMMUNICATIONS (5.65%)
America Movil 85,600 1,435,512
NTT DoCoMo 793 1,635,737
Orange /1/ 411,821 3,299,872
Vodafone Group 2,940,503 5,804,079
12,175,200
CHEMICALS-DIVERSIFIED (0.99%)
Shin-Estu Chemical 31,460 941,742
Sumitomo Chemical 441,506 1,195,761
2,137,503
CHEMICALS-SPECIALTY (0.96%)
Lonza Group 33,908 2,058,780
COMMERCIAL BANKS (6.65%)
Allied Irish Banks 209,619 3,228,300
Bank of Ireland 286,000 3,526,895
Bank of Nova Scotia 28,400 1,104,444
Chinatrust Financial Holding /1/ 1,939,000 1,512,932
DnB Holding 329,620 1,573,253
National Bank of Canada 93,930 2,285,067
Svenska Handelsbanken 68,433 1,087,606
14,318,497
COMPUTERS-PERIPHERAL EQUIPMENT (0.32%)
Ambit Microsystems 239,000 682,172
COOPERATIVE BANKS (0.86%)
Banco Popolare di Verona e Novara 136,200 1,849,830
DIVERSIFIED FINANCIAL SERVICES (0.89%)
Deutsche Boerse 41,270 1,915,985
DIVERSIFIED MINERALS (1.01%)
Anglo American 69,273 992,012
Cia Vale do Rio Doce /1/ 42,170 1,179,073
2,171,085
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
DIVERSIFIED OPERATIONS (0.61%)
$
Brascan 58,100 1,310,146
DIVERSIFIED OPERATORS-COMMERCIAL SERVICE (0.50%)
Rentokil Initial 356,220 1,067,491
ELECTRIC PRODUCTS-MISCELLANEOUS (1.45%)
Brother Industries 230,000 1,544,776
Sanyo Electric 502,000 1,570,066
3,114,842
ELECTRIC-INTEGRATED (4.16%)
E.ON 53,825 2,552,920
Endesa /1/ 110,482 1,567,116
Iberdrola 99,100 1,595,895
Korea Electric Power 98,530 1,658,386
Scottish & Southern Energy 154,500 1,587,757
8,962,074
ELECTRONIC COMPONENTS-MISCELLANEOUS (1.66%)
Koninklijke Philips Electronics 65,858 1,225,204
Kyocera 7,573 369,569
Samsung Electronics 7,912 1,986,140
3,580,913
FINANCE-INVESTMENT BANKER & BROKER (0.21%)
Nomura Securities /1/ 46,010 455,625
FINANCE-OTHER SERVICES (0.80%)
Grupo Financiero BBVA Bancomer /1/ 1,992,700 1,732,867
FOOD-MISCELLANEOUS/DIVERSIFIED (3.87%)
Nestle 14,114 2,877,329
Unilever 86,556 5,452,872
8,330,201
GAS-DISTRIBUTION (1.89%)
Centrica 823,171 2,187,240
Tokyo Gas 578,000 1,880,463
4,067,703
HOTELS & MOTELS (0.60%)
Accor 38,924 1,282,759
IMPORT & EXPORT (1.22%)
Mitsubishi 440,619 2,619,477
LIFE & HEALTH INSURANCE (0.64%)
Power Corp. of Canada 49,210 1,380,665
MACHINERY TOOLS & RELATED PRODUCTS (0.78%)
Sandvik 66,029 1,679,039
MACHINERY-CONSTRUCTION & MINING (0.89%)
Atlas Copco 79,414 1,927,171
MACHINERY-ELECTRICAL (0.94%)
Schneider Electric 42,625 2,017,898
MEDICAL-DRUGS (6.65%)
Aventis 32,135 1,632,110
GlaxoSmithKline 97,971 1,963,540
Novartis 99,514 3,925,384
Novo Nordisk 45,600 1,651,913
Schering 36,008 1,605,388
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEDICAL-DRUGS (CONTINUED)
$
Takeda Chemical Industries 40,339 1,478,127
Teva Pharmaceutical Industries 13,200 616,440
Yamanouchi Pharmaceutical 57,385 1,448,339
14,321,241
METAL-DIVERSIFIED (0.50%)
Rio Tinto 56,070 1,071,782
MONEY CENTER BANKS (8.94%)
ABN AMRO Holding 172,381 2,912,591
Barclays 433,466 2,994,572
BNP Paribas 85,293 4,003,565
Royal Bank of Canada 38,600 1,609,006
Royal Bank of Scotland 193,320 5,070,258
UniCredito Italiano 610,100 2,669,016
19,259,008
MULTI-LINE INSURANCE (2.09%)
AXA 82,181 1,248,227
ING Groep 80,810 1,312,177
Riunione Adriatica di Sicurta 135,207 1,949,512
4,509,916
MULTIMEDIA (2.31%)
Lagardere 36,150 1,381,358
News 126,828 3,586,696
4,968,054
NON-HOTEL GAMBLING (0.55%)
Hilton Group 485,195 1,186,458
OFFICE AUTOMATION & EQUIPMENT (2.67%)
Canon 111,606 4,510,657
Ricoh 80,610 1,236,254
5,746,911
OIL COMPANY-EXPLORATION & PRODUCTION (1.57%)
Canadian Natural Resources 52,231 1,740,305
Talisman Energy 41,090 1,639,189
3,379,494
OIL COMPANY-INTEGRATED (5.83%)
BP Amoco 135,311 858,555
ENI 268,043 3,819,966
Shell Transport & Trading 641,720 3,843,545
TotalFinaElf 30,821 4,041,558
12,563,624
OIL REFINING & MARKETING (0.69%)
Statoil 187,790 1,489,375
OIL-FIELD SERVICES (0.61%)
Saipem 186,900 1,303,628
PAPER & RELATED PRODUCTS (0.50%)
UPM-Kymmene Oyj 73,956 1,081,207
PHOTO EQUIPMENT & SUPPLIES (0.39%)
Fuji Photo Film 33,220 846,795
PIPELINES (0.31%)
TransCanada PipeLines 42,341 675,874
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
PROPERTY & CASUALTY INSURANCE (1.30%)
$
Mitsui Sumitomo Insurance 424,000 1,990,944
QBE Insurance Group 153,000 817,356
2,808,300
PUBLIC THOROUGHFARES (0.96%)
Brisa-Auto Estradas de Portugal 383,185 2,065,475
PUBLISHING-PERIODICALS (0.60%)
Eniro 168,800 1,289,778
REAL ESTATE MANAGEMENT & SERVICES (0.40%)
Unibail 12,800 856,374
REAL ESTATE OPERATOR & DEVELOPER (0.49%)
Land Securities Group 88,096 1,062,332
REINSURANCE (0.12%)
Converium Holding 5,834 263,461
RETAIL-MAJOR DEPARTMENT STORE (1.69%)
Metro 132,979 3,650,752
SEMICONDUCTOR COMPONENT-INTEGRATED CIRCUITS (0.66%)
Taiwan Semiconductor Manufacturing 1,031,000 1,413,706
SOAP & CLEANING PRODUCTS (0.61%)
Reckitt Benckiser 75,100 1,323,915
STEEL-PRODUCERS (1.46%)
Arcelor 158,695 1,795,831
Pohang Iron & Steel 16,080 1,356,543
3,152,374
TELECOMMUNICATION EQUIPMENT (0.99%)
Nokia 129,013 2,137,745
TELECOMMUNICATION SERVICES (1.38%)
Amdocs /1/ 49,697 877,649
Cable & Wireless 1,748,324 2,102,680
2,980,329
TELEPHONE-INTEGRATED (4.29%)
Deutsche Telekom 232,786 3,112,274
KT 67,941 1,376,485
Nippon Telegraph & Telephone 314 1,100,554
Royal KPN /1/ 200,754 1,335,287
Telecom Italia 136,101 669,829
Telefonica /1/ 147,806 1,634,669
9,229,098
TOBACCO (1.82%)
Altadis 152,250 3,924,944
TRANSPORT-MARINE (0.73%)
Nippon Yusen Kabushiki Kaisha 463,800 1,567,260
TRANSPORT-RAIL (0.49%)
East Japan Railway 232 1,050,478
Shares
Held Value
- ----------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
TRANSPORT-SERVICES (1.16%)
$
Exel 136,300 1,307,049
TPG 75,804 1,182,670
2,489,719
TOTAL COMMON STOCKS 212,321,946
Principal
Amount Value
- ----------------------------------------------------------------------------------------------
COMMERCIAL PAPER (0.63%)
DIVERSIFIED FINANCIAL SERVICES (0.63%)
General Electric Capital
$ $
1.35%; 05/01/03 1,350,000 1,350,000
TOTAL COMMERCIAL PAPER 1,350,000
------------
TOTAL PORTFOLIO INVESTMENTS (99.22%) 213,671,946
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (0.78%) 1,686,558
TOTAL NET ASSETS (100.00%) $215,358,504
--------------
/1 /Non-income producing security.
INVESTMENTS BY COUNTRY
Country Value Percentage of
Total Value
- ----------------------------------------------------------------
$
Australia 4,404,052 2.06%
Belgium 1,284,516 0.60
Brazil 1,179,073 0.55
Canada 11,744,697 5.50
Denmark 1,651,913 0.77
Finland 3,218,953 1.51
France 26,651,707 12.47
Germany 16,518,613 7.73
Ireland 6,755,195 3.16
Israel 616,440 0.29
Italy 12,261,782 5.74
Japan 32,312,568 15.12
Korea 6,377,553 2.99
Luxembourg 1,795,831 0.84
Mexico 3,168,379 1.48
Netherlands 13,420,800 6.28
Norway 3,062,627 1.44
Portugal 2,065,474 0.97
Spain 8,722,625 4.08
Sweden 5,983,594 2.80
Switzerland 9,124,955 4.27
Taiwan 3,608,810 1.69
United Kingdom 35,514,140 16.62
United States 2,227,649 1.04
TOTAL $213,671,946 100.00%
-------------- ---------
122
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL INTERNATIONAL SMALLCAP FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (97.80%)
ADVERTISING SERVICES (0.57%)
$
Aegis Group 173,100 202,651
AIRLINES (0.45%)
Asiana Airlines /1/ 87,140 162,088
APPAREL MANUFACTURERS (0.72%)
Sanyo Shokai 48,100 256,108
APPLIANCES (2.59%)
Fisher & Paykel Appliances Holdings 23,600 141,247
Merloni Elettrodomestici 23,488 285,718
Saeco International Group 44,410 169,996
SEB 3,500 328,104
925,065
AUDIO & VIDEO PRODUCTS (0.58%)
Alpine Electronics 18,368 206,844
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.70%)
Exedy 26,500 249,757
BEVERAGES-NON-ALCOHOLIC (0.37%)
Cott /1/ 7,153 130,685
BEVERAGES-WINE & SPIRITS (0.93%)
Davide Campari 9,593 330,809
BREWERY (1.33%)
Molson 20,669 475,447
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (1.63%)
Geberit 1,219 383,774
Kingspan Group 78,132 197,062
580,836
BUILDING & CONSTRUCTION-MISCELLANEOUS (0.53%)
Carillion 86,587 189,591
BUILDING PRODUCTS-CEMENT & AGGREGATE (1.95%)
Ciments Francais 3,280 176,069
Italcementi 27,906 291,499
Sumitomo Osaka Cement 166,951 230,982
698,550
BUILDING-HEAVY CONSTRUCTION (3.98%)
Daelim Industrial 17,700 288,444
Fomento de Construcciones y Contratas 12,792 327,489
Grupo Dragados 17,925 342,474
Vinci 7,150 465,598
1,424,005
BUILDING-RESIDENTIAL & COMMERCIAL (2.62%)
Crest Nicholson 44,600 153,256
McCarthy & Stone 33,295 191,038
Persimmon 46,390 308,990
Sekisui Chemical 110,800 284,293
937,577
CASINO HOTELS (0.54%)
Sky City Entertainment Group 41,600 193,132
CELLULAR TELECOMMUNICATIONS (0.62%)
Mobistar 6,847 223,125
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CHEMICALS-DIVERSIFIED (0.68%)
$
Mitsubishi Gas Chemical 167,500 241,573
CHEMICALS-SPECIALTY (0.56%)
Daicel Chemical Industries 59,750 199,901
COATINGS & PAINT (1.07%)
Kansai Paint 132,000 381,855
COMMERCIAL BANKS (2.51%)
Anglo Irish Bank 60,609 455,891
Banca Monte dei Paschi di Siena 49,335 136,268
Bank of Kyoto 36,100 154,075
Jyske Bank /1/ 4,580 149,393
895,627
COMMERCIAL SERVICES (1.00%)
Societe Generale de Surveillance Holding 1,022 357,545
COMPUTER SERVICES (0.66%)
Indra Sistemas 27,327 234,826
COMPUTERS-PERIPHERAL EQUIPMENT (0.39%)
Logitech International 3,810 140,456
CONSULTING SERVICES (0.53%)
Drake Beam Morin 5,600 189,703
COOPERATIVE BANKS (0.75%)
Banca Popolare di Lodi 28,160 269,640
DIAGNOSTIC EQUIPMENT (0.45%)
Draegerwerk 4,810 159,697
DISTRIBUTION-WHOLESALE (1.93%)
Esprit Holdings 207,251 406,580
Inchcape 24,290 283,785
690,365
DIVERSIFIED OPERATIONS (1.58%)
DCC 13,700 169,710
Industriforvaltnings AB Kinnevik 25,400 394,367
564,077
DIVERSIFIED OPERATORS-COMMERCIAL SERVICES (0.97%)
Jarvis 67,990 345,011
ELECTRIC PRODUCTS-MISCELLANEOUS (1.97%)
Brother Industries 61,860 415,477
Ultra Electronics Holdings 14,429 106,312
Vossloh 5,233 183,961
705,750
ELECTRIC-TRANSMISSION (0.42%)
Red Electrica de Espana 12,528 148,900
ELECTRONIC COMPONENTS-SEMICONDUCTOR (0.41%)
Micronas Semiconductor Holdings /1/ 6,343 147,316
ELECTRONIC PARTS DISTRIBUTION (0.31%)
Macnica 6,800 109,190
ENERGY-ALTERNATE SOURCES (0.98%)
Grupo Auxiliar Metalurgico /1/ 17,042 349,377
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ENGINEERING-RESEARCH & DEVELOPMENT SERVICES (0.86%)
$
Downer EDI 438,865 164,719
Fugro 3,526 143,038
307,757
FINANCE-CONSUMER LOANS (2.06%)
Cattles 77,560 394,194
Nissin 23,800 104,172
Provident Financial 25,910 237,697
736,063
FINANCE-INVESTMENT BANKER & BROKER (1.68%)
ICAP 27,600 428,980
Seoul Securities 69,086 170,583
599,563
FINANCE-LEASING COMPANY (0.42%)
Sumisho Lease 10,796 150,452
FINANCE-MORTGAGE LOAN/BANKER (0.45%)
Kensington Group 49,800 161,573
FINANCE-OTHER SERVICES (0.54%)
Intrum Justitia 40,166 193,963
FISHERIES (0.48%)
Maruha 152,885 173,063
FOOD-CATERING (0.55%)
Elior 33,570 194,813
FOOD-DAIRY PRODUCTS (0.75%)
Meiji Dairies 72,961 266,736
FOOD-MISCELLANEOUS/DIVERSIFIED (0.79%)
COFCO International 551,400 183,822
Viscofan 13,900 98,504
282,326
FOOD-RETAIL (1.30%)
Colruyt 3,769 246,273
Sobeys 8,490 219,559
465,832
FOOD-WHOLESALE & DISTRIBUTION (1.57%)
Fyffes 252,362 391,474
Metcash Trading 125,184 169,930
561,404
GAS-DISTRIBUTION (1.48%)
Enagas 22,275 161,334
Toho Gas 132,600 368,025
529,359
HOTELS & MOTELS (0.50%)
Jurys Doyle Hotel Group 22,492 177,716
INVESTMENT COMPANIES (1.02%)
Eurazeo 4,066 207,144
Macquarie Infrastructure Group 76,560 157,565
364,709
LEISURE & RECREATION PRODUCTS (0.52%)
Daiichikosho 6,439 186,270
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MACHINERY TOOLS & RELATED PRODUCTS (0.37%)
$
ASM Pacific Technology 53,700 133,233
MACHINERY-CONSTRUCTION & MINING (0.70%)
Hitachi Construction Machinery 48,650 248,839
MACHINERY-ELECTRICAL (0.58%)
Kone 6,079 206,917
MARINE SERVICES (0.34%)
IHC Caland 2,325 120,005
MEDICAL INFORMATION SYSTEM (0.63%)
iSoft Group 53,550 225,948
MEDICAL INSTRUMENTS (1.78%)
Elekta /1/ 13,600 147,976
Getinge 14,239 322,043
Radiometer 2,898 165,534
635,553
MEDICAL LABORATORY & TESTING SERVICE (0.38%)
Unilabs 9,393 136,431
MEDICAL-DRUGS (4.13%)
Acambis 34,300 156,237
Fujirebio 22,780 181,270
Galen Holdings 43,270 306,016
Kaken Pharmaceutical 37,314 156,440
Kissei Pharmaceutical 16,600 194,172
Powderject Pharmaceuticals 32,575 270,728
Schwarz Pharmaceuticals 4,930 211,272
1,476,135
MEDICAL-WHOLESALE DRUG DISTRIBUTION (0.81%)
Kuraya Sanseido 36,060 290,875
METAL PROCESSORS & FABRICATION (0.93%)
Crane Group 22,500 126,674
Sims Group 37,458 205,029
331,703
METAL-DIVERSIFIED (0.95%)
Mitsui Mining & Smelting 129,655 340,282
MISCELLANEOUS INVESTING (0.99%)
Japan Retail Fund Investment 39 189,342
ORIX JREIT 38 164,414
353,756
MORTGAGE BANKS (3.05%)
Alliance & Leicester 13,867 179,741
DEPFA Bank 8,480 458,989
Northern Rock 39,600 452,845
1,091,575
OFFICE AUTOMATION & EQUIP (0.57%)
Neopost 5,850 202,387
OIL COMPANY-EXPLORATION & PRODUCTION (1.02%)
Paladin Resources 145,922 172,583
Penn West Petroleum /1/ 7,170 191,170
363,753
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
OIL REFINING & MARKETING (0.40%)
$
Nippon Mining Holdings 82,406 143,723
OPTICAL SUPPLIES (0.24%)
Moulin International Holdings 201,008 85,052
PAPER & RELATED PRODUCTS (1.19%)
Billerud 11,260 149,359
Mayr-Melnhof Karton 3,260 276,282
425,641
PHOTO EQUIPMENT & SUPPLIES (1.03%)
Minolta 66,788 369,613
PROPERTY & CASUALTY INSURANCE (1.67%)
Aioi Insurance 114,900 254,349
Kingsway Financial Services /1/ 29,831 343,100
597,449
PROPERTY TRUST (1.48%)
CFS Gandel Retail Trust 298,457 261,379
Investa Property Group 204,443 266,010
527,389
PUBLIC THOROUGHFARES (0.48%)
Autostrada Torino 15,842 172,730
PUBLISHING-NEWSPAPERS (2.64%)
Arnoldo Mondadori Editore 28,500 201,968
Compagnie Industriali Riunite 197,974 221,381
John Fairfax Holdings 151,700 289,433
Johnston Press 38,600 231,655
944,437
PUBLISHING-PERIODICALS (1.97%)
Emap 21,822 280,063
Eniro 55,600 424,832
704,895
REAL ESTATE MANAGEMENT & SERVICES (1.79%)
Corio 6,360 189,581
Daibiru 31,400 117,691
Eurocommercial Properties 3,900 88,136
Unibail 3,640 243,531
638,939
REAL ESTATE OPERATOR & DEVELOPER (1.66%)
Hammerson 26,257 190,942
Inmobiliaria Urbis 25,562 184,001
Keppel Land 356,800 219,031
593,974
RETAIL-APPAREL & SHOE (1.42%)
Debenhams 27,400 141,996
New Look Group 41,500 162,583
Next 13,562 204,508
509,087
RETAIL-AUTOMOBILE (0.77%)
USS 5,380 274,278
RETAIL-BUILDING PRODUCTS (0.82%)
Grafton Group 74,500 292,660
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL-CONVENIENCE STORE (0.30%)
$
MINISTOP 6,603 105,861
RETAIL-SPORTING GOODS (0.46%)
Xebio 10,100 163,704
RUBBER & VINYL (0.33%)
Zeon 24,100 116,398
RUBBER-TIRES (1.26%)
Continental 25,342 449,679
SATELLITE TELECOM (1.01%)
PT Multimedia Servicos de Telecomunicacoes e
Multimedia 23,100 362,203
SHIPBUILDING (0.53%)
Samsung Heavy Industries 43,148 191,059
SOAP & CLEANING PRODUCTS (0.35%)
Mcbride 109,700 125,359
STEEL-PRODUCERS (1.17%)
ThyssenKrupp 23,837 244,739
Yodogawa Steel Works 63,600 171,719
416,458
TELECOMMUNICATION EQUIPMENT (0.59%)
Elcoteg Network 15,115 211,360
TELECOMMUNICATION SERVICES (0.58%)
Cable & Wireless 171,898 206,739
TEXTILE-PRODUCTS (0.68%)
Fountain Set Holdings 359,800 244,509
TOYS (0.35%)
Zapf Creation 3,450 126,094
TRANSPORT-MARINE (0.99%)
Kawasaki Kisen Kaisha 154,900 354,584
TRANSPORT-TRUCK (0.95%)
Seino Transportation 57,600 340,017
WATER (0.61%)
Kelda Group 32,893 216,331
Shares
Held Value
- ----------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
WIRE & CABLE PRODUCTS (0.60%)
$
Fujikura 94,305 212,712
TOTAL COMMON STOCKS 34,949,004
------------
TOTAL PORTFOLIO INVESTMENTS (97.80%) 34,949,004
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (2.20%) 784,759
TOTAL NET ASSETS (100.00%) $ 35,733,763
--------------
See accompanying notes.
/1 /Non-income producing security
INVESTMENTS BY COUNTRY
Country Value Percentage of
Total Value
- ---------------------------------------------------------------
$
Australia 1,470,809 4.21%
Austria 446,212 1.28
Belgium 469,398 1.34
Bermuda 268,875 0.77
Canada 1,359,961 3.89
Denmark 314,927 0.90
Finland 418,277 1.20
France 1,817,647 5.20
Germany 1,375,442 3.94
Hong Kong 784,323 2.24
Ireland 2,143,501 6.13
Italy 2,080,009 5.95
Japan 8,558,759 24.49
Korea 812,173 2.32
Netherlands 540,760 1.55
New Zealand 334,380 0.96
Portugal 362,203 1.04
Singapore 219,031 0.63
Spain 1,846,904 5.28
Sweden 1,632,539 4.67
Switzerland 1,165,523 3.33
United Kingdom 6,527,351 18.68
TOTAL $34,949,004 100.00%
------------- ---------
126
See accompanying notes.
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL INTERNATIONAL EMERGING
- --------------------------------
MARKETS FUND, INC.
- ------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $6.77 $6.44 $8.75 $8.56 $6.54 $8.29
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.01 (0.05) (0.03) (0.10) (0.03) (0.02)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.34 0.38 (2.22) 0.31 2.05 (1.73)
---- ---- ----- ---- ---- -----
Total From Investment
Operations 0.35 0.33 (2.25) 0.21 2.02 (1.75)
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- -- -- (0.02) -- --
Distributions from
Realized Gains...... -- -- (0.06) -- -- --
----- -----
Total Dividends and
Distributions -- -- (0.06) (0.02) -- --
----- ----- -----
Net Asset Value, End
of Period............ $7.12 $6.77 $6.44 $8.75 $8.56 $6.54
===== ===== ===== ===== ===== =====
Total Return /(a)/ ... 5.17%/(d)/ 5.12% (25.85)% 2.36% 30.89% (21.11)%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $18,782 $18,029 $15,335 $17,890 $13,401 $7,312
Ratio of Expenses to
Average Net Assets.. 2.56%/(e)/ 2.48% 2.50% 2.49% 2.75% 3.31%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.83%/(e)/ 2.77% 2.71% 2.59% -- --
Ratio of Net
Investment Income to
Average Net Assets.. 0.27%/(e)/ (0.36)% (0.06)% (1.05)% (0.35)% (0.36)%
Portfolio Turnover
Rate................ 99.3%/(e)/ 165.4% 120.5% 112.9% 95.8% 45.2%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL INTERNATIONAL EMERGING
- --------------------------------
MARKETS FUND, INC.
- ------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $6.56 $6.28 $8.60 $8.47 $6.52 $8.28
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.06) (0.05) (0.16) (0.07) (0.05)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.33 0.34 (2.21) 0.29 2.02 (1.71)
---- ---- ----- ---- ---- -----
Total From Investment
Operations 0.30 0.28 (2.26) 0.13 1.95 (1.76)
Less Dividends and
Distributions:
Distributions from
Realized Gains...... -- -- (0.06) -- -- --
----- -----
Total Dividends and
Distributions -- -- (0.06) -- -- --
----- -----
Net Asset Value, End
of Period............ $6.86 $6.56 $6.28 $8.60 $8.47 $6.52
===== ===== ===== ===== ===== =====
Total Return /(a)/ ... 4.57%/(d)/ 4.46% (26.42)% 1.53% 29.91% (21.26)%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $5,320 $5,241 $4,728 $6,198 $5,051 $3,275
Ratio of Expenses to
Average Net Assets.. 3.30%/(e)/ 3.23% 3.25% 3.22% 3.57% 3.59%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 3.56%/(e)/ 3.50% 3.39% 3.22% -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.49)%/(e)/ (1.13)% (0.84)% (1.78)% (1.12)% (0.69)%
Portfolio Turnover
Rate................ 99.3%/(e)/ 165.4% 120.5% 112.9% 95.8% 45.2%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. The waiver began on the first day of the period
ended October 31, 2000. Expense limits were increased on March 1, 2003.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
127
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
2003/(D)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL INTERNATIONAL FUND, INC.
- ----------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $5.05 $5.75 $8.85 $10.04 $9.20 $9.33
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.01 0.02 0.02 0.16 0.13 0.13
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.03 (0.71) (2.34) 0.20 1.28 0.04
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.04 (0.69) (2.32) 0.36 1.41 0.17
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- (0.01) (0.05) (0.23) (0.11) (0.10)
Distributions from
Realized Gains...... -- -- (0.73) (1.32) (0.46) (0.20)
---- ----- ----- ----- -----
Total Dividends and
Distributions -- (0.01) (0.78) (1.55) (0.57) (0.30)
---- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $5.09 $5.05 $5.75 $8.85 $10.04 $9.20
===== ===== ===== ===== ====== =====
Total Return /(a)/ ... 0.83%/(e)/ (11.94)% (28.64)% 3.04% 16.18% 1.93%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $190,459 $197,946 $224,177 $325,369 $338,144 $302,757
Ratio of Expenses to
Average Net Assets.. 1.65%/(f)/ 1.57% 1.42% 1.27% 1.22% 1.25%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 1.66%/(f)/ 1.57% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. 0.49%/(f)/ 0.32% 0.27% 1.76% 1.35% 1.45%
Portfolio Turnover
Rate................ 91.0%/(f)/ 73.5% 93.9% 92.7% 58.7% 38.7%
2003/(D)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL INTERNATIONAL FUND, INC.
- ----------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $4.98 $5.71 $8.78 $9.96 $9.14 $9.26
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.03) (0.03) (0.03) 0.11 0.06 0.07
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.04 (0.70) (2.31) 0.20 1.27 0.04
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.01 (0.73) (2.34) 0.31 1.33 0.11
Less Dividends and
Distributions:
Dividends from Net
Investment Income... -- -- -- (0.17) (0.05) (0.03)
Distributions from
Realized Gains...... -- -- (0.73) (1.32) (0.46) (0.20)
---- ----- ----- ----- -----
Total Dividends and
Distributions -- -- (0.73) (1.49) (0.51) (0.23)
---- ----- ----- ----- -----
Net Asset Value, End
of Period............ $4.99 $4.98 $5.71 $8.78 $9.96 $9.14
===== ===== ===== ===== ===== =====
Total Return /(a)/ ... 0.20%/(e)/ (12.78)% (28.97)% 2.43% 15.27% 1.27%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $24,900 $28,607 $33,277 $48,692 $48,319 $41,676
Ratio of Expenses to
Average Net Assets.. 2.71%/(f)/ 2.39% 2.08% 1.88% 1.90% 1.91%
Ratio of Gross
Expenses to Average
Net Assets /(c)/ ... 2.71%/(f)/ 2.40% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.61)%/(f)/ (0.50)% (0.41)% 1.13% 0.67% 0.77%
Portfolio Turnover
Rate................ 91.0%/(f)/ 73.5% 93.9% 92.7% 58.7% 38.7%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly and the Manager's voluntary
waiver of certain expenses. The waiver began on March 1, 2003.
/(c) /Expense ratio without fees paid indirectly.
/(d) /Six months ended April 30, 2003.
/(e) /Total return amounts have not been annualized.
/(f) /Computed on an annualized basis.
See accompanying notes.
128
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL INTERNATIONAL SMALLCAP FUND, INC.
- -------------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $8.39 $9.49 $17.00 $15.32 $9.99 $9.96
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.02) (0.05) (0.23) (0.32) (0.12) (0.07)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.35 (1.05) (4.62) 3.51 5.53 0.10
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.33 (1.10) (4.85) 3.19 5.41 0.03
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.01) -- -- -- -- --
Distributions from
Realized Gains...... -- -- (2.66) (1.51) (0.08) --
---- ----- ----- -----
Total Dividends and
Distributions (0.01) -- (2.66) (1.51) (0.08) --
---- ----- ----- ----- -----
Net Asset Value, End
of Period............ $8.71 $8.39 $9.49 $17.00 $15.32 $9.99
===== ===== ===== ====== ====== =====
Total Return /(a)/ ... 3.89%/(d)/ (11.59)% (33.02)% 21.21% 54.52% 0.30%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $28,164 $26,821 $28,977 $36,322 $23,612 $11,765
Ratio of Expenses to
Average Net Assets.. 2.72%/(e)/ 2.49% 2.74% 2.46% 2.21% 2.66%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 2.72%/(e)/ 2.49% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (0.43)%/(e)/ (0.35)% (1.08)% (1.41)% (1.02)% (0.81)%
Portfolio Turnover
Rate................ 179.6%/(e)/ 80.3% 151.6% 329.8% 191.5% 99.8%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL INTERNATIONAL SMALLCAP FUND, INC.
- -------------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $8.08 $9.23 $16.72 $15.18 $9.97 $9.96
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... (0.08) (0.13) (0.05) (0.41) (0.20) (0.10)
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.36 (1.02) (4.78) 3.46 5.49 0.11
---- ----- ----- ---- ---- ----
Total From Investment
Operations 0.28 (1.15) (4.83) 3.05 5.29 0.01
Less Dividends and
Distributions:
Distributions from
Realized Gains...... -- -- (2.66) (1.51) (0.08) --
---- ----- ----- -----
Total Dividends and
Distributions -- -- (2.66) (1.51) (0.08) --
---- ----- ----- -----
Net Asset Value, End
of Period............ $8.36 $8.08 $9.23 $16.72 $15.18 $9.97
===== ===== ===== ====== ====== =====
Total Return /(a)/ ... 3.47%/(d)/ (12.46)% (33.52)% 20.43% 53.42% 0.10%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $7,570 $7,536 $8,641 $12,539 $10,926 $6,585
Ratio of Expenses to
Average Net Assets.. 3.66%/(e)/ 3.40% 3.46% 3.04% 2.87% 2.90%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... 3.66%/(e)/ 3.41% -- -- -- --
Ratio of Net
Investment Income to
Average Net Assets.. (1.38)%/(e)/ (1.27)% (1.83)% (1.99)% (1.68)% (1.05)%
Portfolio Turnover
Rate................ 179.6%/(e)/ 80.3% 151.6% 329.8% 191.5% 99.8%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without fees paid indirectly.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
129
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
BOND GOVERNMENT SECURITIES
FUND, INC. INCOME FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST . $223,699,393 $495,142,983
============ ============
ASSETS
Investment in securities--at value. $233,240,932/(c)/ $508,430,580
Cash............................... 10,502 14,902,740
Receivables:
Capital Shares sold............... 158,307 345,883
Dividends and interest............ 2,397,040 1,508,318
Investment securities sold........ 1,727,266 14,728,125
Other assets....................... 8,754 21,446
------------ ------------
Total Assets 237,542,801 539,937,092
LIABILITIES
Accrued expenses................... 94,815 85,518
Payables:
Capital Shares reacquired......... 89,294 159,524
Investment securities purchased... 7,570,252 135,054,783
Collateral obligation on securities
loaned, at value.................. 1,408,275 --
------------ ------------
Total Liabilities 9,162,636 135,299,825
------------ ------------
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES................ $228,380,165 $404,637,267
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital................... $244,205,247 $394,920,249
Accumulated undistributed
(overdistributed) net investment
income (operating loss)........... (394,205) (572,985)
Accumulated undistributed
(overdistributed) net realized
gain (loss)....................... (24,972,416) (2,997,594)
Net unrealized appreciation
(depreciation) of investments..... 9,541,539 13,287,597
------------ ------------
Total Net Assets $228,380,165 $404,637,267
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A
SHARE):
Shares authorized.................. 100,000,000 125,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets................ $194,106,463 $338,641,725
Shares issued and outstanding.... 17,361,954 28,837,999
Net asset value per share........ $ 11.18 $ 11.74
Maximum offering price per share
/(a)/ ............................ $ 11.74 $ 12.33
============ ============
Class B: Net Assets................ $ 34,273,702 $ 65,995,542
Shares issued and outstanding.... 3,066,554 5,650,048
Net asset value per share /(b)/ . $ 11.18 $ 11.68
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 4.75% of the offering price or 4.99% of the net asset value.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
/(c) /Includes fair market value of securities loaned, see "Securities Lending"
in Notes to Financial Statements.
See accompanying notes.
130
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
LIMITED TERM TAX-EXEMPT
BOND FUND, INC. BOND FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST ........ $ 99,194,805 $188,266,441
============ ============
ASSETS
Investment in securities--at value........ $102,448,952 $197,987,903
Cash...................................... 10,113 800
Receivables:
Capital Shares sold...................... 1,274,087 26,068
Dividends and interest................... 1,089,660 2,699,895
Investment securities sold............... 22,185 --
Other assets.............................. 853 10,190
------------ ------------
Total Assets 104,845,850 200,724,856
LIABILITIES
Accrued expenses.......................... 13,823 27,820
Payables:
Capital Shares reacquired................ 101,521 --
Indebtedness............................. -- 55,000
Investment securities purchased.......... 510,313 --
------------ ------------
Total Liabilities 625,657 82,820
------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING
SHARES .................................. $104,220,193 $200,642,036
============ ============
NET ASSETS CONSIST OF:
Capital Shares and additional
paid-in-capital.......................... $102,971,458 $190,220,897
Accumulated undistributed
(overdistributed) net investment income
(operating loss)......................... (603,073) 230,853
Accumulated undistributed
(overdistributed) net realized gain
(loss)................................... (1,402,339) 468,824
Net unrealized appreciation (depreciation)
of investments........................... 3,254,147 9,721,462
------------ ------------
Total Net Assets $104,220,193 $200,642,036
============ ============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized......................... 100,000,000 100,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets....................... $ 88,328,522 $186,626,774
Shares issued and outstanding........... 8,908,047 14,999,708
Net asset value per share............... $ 9.92 $ 12.44
Maximum offering price per share /(a)/ . $ 10.07 $ 13.06
============ ============
Class B: Net Assets....................... $ 15,891,671 $ 14,015,262
Shares issued and outstanding........... 1,580,016 1,123,312
Net asset value per share /(b)/ ........ $ 10.06 $ 12.48
============ ============
/(a) /Maximum offering price equals net asset value plus a front-end sales
charge of 1.50% of the offering price or 1.52% of the net asset value for
Principal Limited Term Bond Fund, Inc. and 4.75% of the offering price or
4.99% of the net asset value for Principal Tax-Exempt Bond Fund, Inc.
/(b) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
131
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
BOND GOVERNMENT SECURITIES
FUND, INC. INCOME FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Interest................................. $5,722,466 $10,217,250
Securities lending....................... 3,149 110
---------- -----------
Total Income 5,725,615 10,217,360
Expenses:
Management and investment advisory fees.. 517,817 811,159
Distribution fees - Class A.............. 216,009 323,655
Distribution fees - Class B.............. 155,192 264,160
Registration fees - Class A.............. 7,912 6,828
Registration fees - Class B.............. 5,989 8,478
Shareholder reports - Class A............ 7,831 6,393
Shareholder reports - Class B............ 2,618 1,761
Transfer and administrative fees - Class
A....................................... 84,441 101,396
Transfer and administrative fees - Class
B....................................... 25,560 26,465
Auditing and legal fees.................. 5,536 4,522
Custodian fees........................... 5,475 7,760
Directors' fees.......................... 4,923 8,282
Registration fees........................ 8,036 8,325
Transfer and administrative fees......... 198,419 236,702
Other expenses........................... 5,241 7,877
---------- -----------
Total Expenses 1,250,999 1,823,763
---------- -----------
Net Investment Income (Operating Loss) 4,474,616 8,393,597
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions.................. 2,074,493 842,106
Change in unrealized
appreciation/depreciation of:
Investments.............................. 2,559,357 (116,591)
---------- -----------
Net Realized and Unrealized Gain (Loss) on
Investments 4,633,850 725,515
---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $9,108,466 $ 9,119,112
========== ===========
See accompanying notes.
132
STATEMENTS OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
LIMITED TERM TAX-EXEMPT
BOND FUND, INC. BOND FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Interest.................................. $1,986,506 $4,467,144
Securities lending........................ 770 --
---------- ----------
Total Income 1,987,276 4,467,144
Expenses:
Management and investment advisory fees... 236,941 459,501
Distribution fees - Class A............... 60,088 200,911
Distribution fees - Class B............... 32,553 62,284
Registration fees - Class A............... 5,692 2,875
Registration fees - Class B............... 5,915 6,463
Shareholder reports - Class A............. 848 1,439
Shareholder reports - Class B............. 311 131
Transfer and administrative fees - Class A 17,839 21,582
Transfer and administrative fees - Class B 6,007 1,935
Auditing and legal fees................... 3,486 4,385
Custodian fees............................ 4,982 1,786
Directors' fees........................... 1,729 4,877
Registration fees......................... 7,498 6,803
Transfer and administrative fees.......... 77,972 37,710
Other expenses............................ 1,746 4,418
---------- ----------
Total Expenses 463,607 817,100
---------- ----------
Net Investment Income (Operating Loss) 1,523,669 3,650,044
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions................... 207,416 467,818
Change in unrealized
appreciation/depreciation of:
Investments............................... 793,007 2,828,877
---------- ----------
Net Realized and Unrealized Gain (Loss) on
Investments 1,000,423 3,296,695
---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $2,524,092 $6,946,739
========== ==========
See accompanying notes.
133
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
BOND GOVERNMENT SECURITIES
FUND, INC. INCOME FUND, INC.
- --------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ----------------- ------------- -------------------
- --------------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ 4,474,616 $ 9,036,456 $ 8,393,597 $ 15,858,636
Net realized gain
(loss) from
investment
transactions......... 2,074,493 (849,697) 842,106 (358,940)
Change in unrealized
appreciation/depreciation
of investments........ 2,559,357 (418,405) (116,591) 1,434,192
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 9,108,466 7,768,354 9,119,112 16,933,888
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... (4,266,266) (8,243,914) (7,790,799) (15,053,562)
Class B............... (645,314) (1,240,075) (1,197,847) (1,976,685)
Class C............... N/A (9,853)/(a)/ N/A (49,830)/(a)/
Class R............... N/A (117,194)/(b)/ N/A (122,126)/(b)/
------------ ------------ ------------ ------------
Total Dividends and
Distributions (4,911,580) (9,611,036) (8,988,646) (17,202,203)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 21,655,817 64,929,924 59,173,866 126,608,103
Class B............... 4,947,110 10,896,586 21,459,183 25,559,953
Class C............... N/A 197,254/(a)/ N/A 1,604,828/(a)/
Class R............... N/A 313,807/(b)/ N/A 156,658/(b)/
Shares issued in
acquisitions:
Class A............... -- 16,770,890 -- --
Class B............... -- 3,749,720 -- --
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... 3,679,575 7,015,398 6,632,191 12,799,155
Class B............... 585,543 1,102,034 1,071,913 1,720,114
Class C............... N/A 7,765/(a)/ N/A 41,984/(a)/
Class R............... N/A 116,372/(b)/ N/A 120,948/(b)/
Shares redeemed:
Class A............... (21,513,863) (44,822,312) (37,782,350) (72,987,837)
Class B............... (6,083,666) (7,694,108) (9,393,219) (10,755,746)
Class C............... N/A (1,406,213)/(a)/ N/A (5,684,635)/(a)/
Class R............... N/A (17,318,230)/(b)/ N/A (14,295,188)/(b)/
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions 3,270,516 33,858,887 41,161,584 64,888,337
------------ ------------ ------------ ------------
Total Increase
(Decrease) 7,467,402 32,016,205 41,292,050 64,620,022
NET ASSETS
Beginning of period.... 220,912,763 188,896,558 363,345,217 298,725,195
------------ ------------ ------------ ------------
End of period
(including
undistributed net
investment income as
set forth below)...... $228,380,165 $220,912,763 $404,637,267 $363,345,217
============ ============ ============ ============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (394,205) $ (248,552) $ (572,985) $ 22,064
============ ============ ============ ============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
134
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
LIMITED TERM TAX-EXEMPT
BOND FUND, INC. BOND FUND, INC.
- ------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ---------------- ------------- ------------------
- ------------------------------------------------------------------------------------------
OPERATIONS
Net investment income
(operating loss)..... $ 1,523,669 $ 2,721,199 $ 3,650,044 $ 7,304,823
Net realized gain
(loss) from
investment
transactions......... 207,416 (561,029) 467,818 1,377,490
Change in unrealized
appreciation/depreciation
of investments........ 793,007 1,055,788 2,828,877 1,384,664
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations 2,524,092 3,215,958 6,946,739 10,066,977
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income:
Class A............... (1,733,464) (2,741,164) (3,436,980) (6,722,419)
Class B............... (279,286) (422,154) (208,460) (410,274)
Class C............... N/A (8,529)/(a)/ N/A (4,720)/(a)/
Class R............... N/A (46,881)/(b)/ N/A N/A
From net realized gain
on investments:
Class A............... -- -- (706,938) --
Class B............... -- -- (53,429) --
------------ ------------ ------------ ------------
Total Dividends and
Distributions (2,012,750) (3,218,728) (4,405,807) (7,137,413)
CAPITAL SHARE
TRANSACTIONS
Shares sold:
Class A............... 27,921,987 54,036,307 12,765,880 28,581,161
Class B............... 4,321,181 8,099,738 1,368,894 3,426,721
Class C............... N/A 116,201/(a)/ N/A 147,114/(a)/
Class R............... N/A 152,408/(b)/ N/A N/A
Shares issued in
reinvestment of
dividends and
distributions:
Class A............... 1,579,625 2,516,175 3,062,232 4,717,856
Class B............... 266,252 398,711 185,735 282,570
Class C............... N/A 6,946/(a)/ N/A 3,704/(a)/
Class R............... N/A 46,360/(b)/ N/A N/A
Shares redeemed:
Class A............... (16,312,793) (19,955,634) (14,667,288) (19,967,853)
Class B............... (2,173,726) (2,117,724) (1,562,759) (2,171,188)
Class C............... N/A (1,137,681)/(a)/ N/A (1,010,061)/(a)/
Class R............... N/A (6,222,733)/(b)/ N/A N/A
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets from
Capital Share
Transactions 15,602,526 35,939,074 1,152,694 14,010,024
------------ ------------ ------------ ------------
Total Increase
(Decrease) 16,113,868 35,936,304 3,693,626 16,939,588
NET ASSETS
Beginning of period.... 88,106,325 52,170,021 196,948,410 180,008,822
------------ ------------ ------------ ------------
End of period
(including
undistributed net
investment income as
set forth below)...... $104,220,193 $ 88,106,325 $200,642,036 $196,948,410
============ ============ ============ ============
Undistributed
(Overdistributed) Net
Investment Income
(Operating Loss)...... $ (603,073) $ (293,955) $ 230,853 $ 260,217
============ ============ ============ ============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
135
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
1. ORGANIZATION
Principal Bond Fund, Inc., Principal Government Securities Income Fund, Inc.,
Principal Limited Term Bond Fund, Inc., and Principal Tax-Exempt Bond Fund, Inc.
(the "Income Funds") are registered under the Investment Company Act of 1940, as
amended, as open-end diversified management investment companies and operate in
the mutual fund industry.
Each fund offers both Class A shares and Class B shares to the public. Class A
shares generally are sold with an initial sales charge based on declining rates
and certain purchases may be subject to a contingent deferred sales charge
("CDSC") upon redemption. Class B shares are sold without an initial sales
charge, but bear higher ongoing distribution fees and are subject to a declining
CDSC on certain redemptions made within six years of purchase. Class B shares
automatically convert into Class A shares, based on relative net asset value
(without a sales charge), seven years after purchase. Both classes of shares for
each fund represent interests in the same portfolio of investments, and will
vote together as a single class except where otherwise required by law or as
determined by each of the Income Funds' respective Board of Directors. In
addition, the Board of Directors of each fund declares separate dividends on
each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the Income Funds:
SECURITY VALUATION . The Income Funds value securities for which market
quotations are readily available at market value, which is determined using the
last reported sale price or, if no sales are reported, as is regularly the case
for some securities traded over-the-counter, the last reported bid price. When
reliable market quotations are not considered to be readily available, which may
be the case, for example, with respect to certain debt securities and preferred
stocks, the investments are valued by using prices provided by market makers or
estimates of market values obtained from yield data and other factors relating
to instruments or securities with similar characteristics in accordance with
procedures established in good faith by each fund's Board of Directors.
Short-term securities are valued at amortized cost, which approximates market.
INCOME AND INVESTMENT TRANSACTIONS. . The Income Funds record investment
transactions on a trade date basis. The identified cost basis has been used in
determining the net realized gain or loss from investment transactions and
unrealized appreciation or depreciation of investments. The Income Funds record
dividend income on the ex-dividend date. Interest income is recognized on an
accrual basis. Discounts and premiums on securities are amortized/accreted over
the lives of the respective securities. The Income Funds allocate daily all
income and realized and unrealized gains or losses to each class of shares based
upon the relative proportion of the value of shares outstanding of each class.
EXPENSES . The Income Funds allocate daily all expenses (other than
class-specific expenses) to each class of shares based upon the relative
proportion of the value of shares outstanding of each class. Class-specific
expenses charged to each class during the period ended April 30, 2003, are
included separately in the statements of operations.
DISTRIBUTIONS TO SHAREHOLDERS . Dividends and distributions are recorded on the
ex-dividend date. Dividends and distributions to shareholders from net
investment income and net realized gain from investments are determined in
accordance with federal tax regulations, which may differ from accounting
principles generally accepted in the United States. These differences are
primarily due to differing treatments for mortgage-backed securities,
amortization of premiums and discounts, expiring capital loss carryforwards and
certain defaulted securities. Permanent book and tax basis differences are
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification.
Distributions which exceed current and accumulated earnings and profits for
federal income tax purposes, are reported as tax return of capital
distributions.
FEDERAL INCOME TAXES . No provision for federal income taxes is considered
necessary because each fund is qualified as a "regulated investment company"
under the Internal Revenue Code and intends to distribute each year
substantially all of its net investment income and realized capital gains to
shareholders.
136
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
3. OPERATING POLICIES
JOINT TRADING ACCOUNT . The Income Funds may, pursuant to an exemptive order
issued by the Securities and Exchange Commission, transfer uninvested funds into
a joint trading account. The order permits the Income Funds' cash balances to be
deposited into a single joint account along with the cash of other registered
investment companies managed by Principal Management Corporation (the
"Manager"). These balances may be invested in one or more short-term
instruments.
LINE OF CREDIT . The Income Funds participate with other funds managed by
Principal Management Corporation in an unsecured joint line of credit with two
banks which allow the participants to borrow up to $75 million, collectively.
Borrowings are made solely to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Interest is charged to each
participant, based on its borrowings, at a rate equal to the Fed Funds Rate plus
..50%. Additionally, a commitment fee is charged at the annual rate of .09% on
the amount of the line of credit. The commitment fee is allocated among the
participating funds in proportion to their average net assets during each
calendar quarter. At April 30, 2003, the Principal Tax Exempt Bond Fund, Inc.
had outstanding borrowing of $55,000 at an annual rate of 1.88%. No other Income
Fund had outstanding borrowings under the line of credit.
SECURITIES LENDING. . Certain of the Income Funds may lend portfolio securities
to approved brokers to earn additional income. Each applicable fund receives
collateral against the loaned securities and maintains collateral in an amount
not less than 100% of the market value of the loaned securities during the
period of the loan. The market value of loaned securities is determined at the
close of business of the funds and any additional required collateral is
delivered to the funds on the next business day. Although risk is mitigated by
the collateral, the fund could experience a delay in recovering its securities
and possible loss of income or value if the borrower fails to return them. As of
April 30, 2003, Principal Bond Fund, Inc. had securities on loan with a market
value of $1,378,879 and short-term collateral value of $1,408,275.
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES
MANAGEMENT SERVICES . The Income Funds have agreed to pay investment advisory
and management fees to Principal Management Corporation (wholly owned by Princor
Financial Services Corporation, a subsidiary of Principal Financial Services,
Inc.) computed at an annual percentage rate of each fund's average daily net
assets. The annual rates used in this calculation for the Income Funds are as
follows:
NET ASSETS OF FUNDS (IN MILLIONS)
----------------------------------------
FIRST NEXT NEXT NEXT OVER
$100 $100 $100 $100 $400
----- ---- ---- ---- ----
Income Funds .50% .45% .40% .35% .30%
The Income Funds also reimburse the Manager for transfer and administrative
services, including the cost of accounting, data processing, supplies and other
services rendered.
DISTRIBUTION FEES . The Income Funds bear distribution fees with respect to each
class computed at an annual rate of the average daily net assets attributable to
each class of each fund. The annual rate will not exceed the following limits:
CLASS A CLASS B
------- -------
Principal Bond Fund, Inc. .25% 1.00%
Principal Government Securities Income Fund, Inc. .25% 1.00%
Principal Limited Term Bond Fund, Inc. .15% .50%
Principal Tax-Exempt Bond Fund, Inc. .25% 1.00%
Distribution fees are paid to Princor Financial Services Corporation, the
principal underwriter. A portion of the fees is subsequently remitted to retail
dealers. Pursuant to the distribution agreements for Class A and Class B shares,
fees that are unused by the principal underwriter at the end of the fiscal year
are returned to the respective Income Funds which generated the excess.
SALES CHARGES . Princor Financial Services Corporation, as principal
underwriter, receives proceeds of any CDSC on certain Class A and Class B share
redemptions. The charge is based on declining rates which for Class A shares
begin at .75% and Class B shares at 4.00% (.25% and 1.25% for Principal Limited
Term Bond Fund, Inc. share classes, respectively) of the lesser of current
market value or the cost of shares being redeemed. Princor Financial Services
Corporation also retains sales charges on sales of
137
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
Class A shares based on declining rates which begin at 4.75% of the offering
price (1.50% for Principal Limited Term Bond Fund, Inc.). The aggregate amount
of these charges retained by Princor Financial Services Corporation for the
period ended April 30, 2003, were as follows:
CLASS A CLASS B
------- -------
Principal Bond Fund, Inc. $283,827 $34,569
Principal Government Securities Income Fund, Inc. 863,088 94,475
Principal Limited Term Bond Fund, Inc. 128,835 12,478
Principal Tax-Exempt Bond Fund, Inc. 177,606 3,298
AFFILIATED OWNERSHIP . At April 30, 2003, Principal Life Insurance Company (an
affiliate of the Manager), affiliates of Principal Life Insurance Company and
benefit plans sponsored on behalf of Principal Life Insurance Company owned
shares of the Income Funds as follows:
CLASS A
-------
Principal Bond Fund, Inc. 310,761
Principal Government Securities Income Fund, Inc. 99,090
Principal Limited Term Bond Fund, Inc. 569,882
AFFILIATED BROKERAGE COMMISSIONS . No brokerage commissions were paid by the
Income Funds to affiliated broker dealers during the period.
5. INVESTMENT TRANSACTIONS
For the period ended April 30, 2003, the cost of investment securities purchased
and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Income Funds were as follows:
PURCHASES SALES
----------- -------------
Principal Bond Fund, Inc. $70,299,476 $59,494,158
Principal Limited Term Bond Fund, Inc. 25,279,058 12,988,928
Principal Tax-Exempt Bond Fund, Inc. 33,274,807 29,617,880
The Income Funds may trade portfolio securities on a "to-be-announced" (TBA)
basis. In a TBA transaction, the fund commits to purchase or sell securities for
which all specific information is not known at the time of the trade. Securities
purchased on a TBA basis are not settled until they are delivered to the fund,
normally 15 to 30 days later. These transactions are subject to market
fluctuations and their current value is determined in the same manner as for
other portfolio securities. As of April 30, 2003, Principal Bond Fund, Inc.,
Principal Government Securities Income Fund, Inc., and Principal Limited Term
Bond Fund, Inc., had TBA purchase commitments involving securities with face
amounts of $4,200,000, $119,610,000, and $500,000, cost of $4,289,598,
$120,256,234, and $510,313, and market values of $4,307,060, $121,547,299, and
$510,156, respectively.
At April 30, 2003, net federal income tax unrealized appreciation (depreciation)
of investments held by the Income Funds was composed of the following:
TAX COST OF GROSS UNREALIZED
INVESTMENTS -----------------------------------
IN SECURITIES APPRECIATION (DEPRECIATION)
------------- ------------ --------------
Principal Bond Fund, Inc. $224,077,377 $ 10,227,229 $ (1,063,674)
Principal Government Securities Income Fund, Inc. 495,142,983 13,297,843 (10,246)
Principal Limited Term Bond Fund, Inc. 99,838,483 2,765,849 (155,380)
Principal Tax-Exempt Bond Fund, Inc. 188,059,927 9,945,347 (17,371)
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
OF INVESTMENTS
----------------
Principal Bond Fund, Inc. $ 9,163,555
Principal Government Securities Income Fund, Inc. 13,287,597
Principal Limited Term Bond Fund, Inc. 2,610,469
Principal Tax-Exempt Bond Fund, Inc. 9,927,976
The Income Funds' investments are with various issuers in various industries.
The schedules of investments contained herein summarize concentrations of credit
risk by issuer and industry.
138
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares were as follows:
PRINCIPAL PRINCIPAL
BOND GOVERNMENT SECURITIES
FUND, INC. INCOME FUND, INC.
----------- ---------------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A..................................... 1,955,592 5,037,198
Class B..................................... 446,862 1,836,315
Shares issued in reinvestment of dividends
and distributions:
Class A..................................... 333,305 566,253
Class B..................................... 53,031 91,996
Shares redeemed:
Class A..................................... (1,945,209) (3,218,998)
Class B..................................... (549,624) (804,217)
---------- ----------
Net Increase (Decrease) 293,957 3,508,547
========== ==========
PRINCIPAL PRINCIPAL
BOND GOVERNMENT SECURITIES
FUND, INC. INCOME FUND, INC.
----------- -----------------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A..................................... 6,011,021 10,915,925
Class B..................................... 1,005,009 2,208,107
Class C*.................................... 18,013 139,333
Class R**................................... 28,816 13,341
Shares issued in acquisition:
Class A..................................... 1,554,299 -
Class B..................................... 347,840 -
Shares issued in reinvestment of dividends
and distributions:
Class A..................................... 649,056 1,105,437
Class B..................................... 102,030 149,301
Class C*.................................... 722 3,651
Class R**................................... 10,721 10,554
Shares redeemed:
Class A..................................... (4,140,062) (6,296,173)
Class B..................................... (710,125) (931,646)
Class C*.................................... (131,049) (494,168)
Class R**................................... (1,608,357) (1,256,671)
---------- ----------
Net Increase (Decrease) 3,137,934 5,566,991
========== ==========
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
PRINCIPAL PRINCIPAL
LIMITED TERM TAX-EXEMPT
BOND FUND, INC. BOND FUND, INC.
--------------- -----------------
PERIOD ENDED APRIL 30, 2003:
Shares sold:
Class A.................................. 2,821,590 1,037,753
Class B.................................. 431,127 111,079
Shares issued in reinvestment of dividends
and distributions:
Class A.................................. 160,038 250,182
Class B.................................. 26,594 15,132
Shares redeemed:
Class A.................................. (1,650,208) (1,190,415)
Class B.................................. (216,671) (126,727)
---------- ----------
Net Increase (Decrease) 1,572,470 97,004
========== ==========
139
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
LIMITED TERM TAX-EXEMPT
BOND FUND, INC. BOND FUND, INC.
--------------- -----------------
YEAR ENDED OCTOBER 31, 2002:
Shares sold:
Class A.................................. 5,568,112 2,361,316
Class B.................................. 823,632 282,539
Class C*................................. 11,808 12,436
Class R**................................ 15,574 N/A
Shares issued in reinvestment of dividends
and distributions:
Class A.................................. 259,412 392,114
Class B.................................. 40,525 23,443
Class C*................................. 705 314
Class R**................................ 4,724 N/A
Shares redeemed:
Class A.................................. (2,052,813) (1,655,386)
Class B.................................. (214,912) (179,211)
Class C*................................. (115,970) (85,493)
Class R**................................ (639,878) N/A
---------- ----------
Net Increase (Decrease) 3,700,919 1,152,072
========== ==========
* Period from November 1, 2001 through January 31, 2002 (discontinuation of
Class C shares).
** Period from November 1, 2001 through December 28, 2001 (discontinuation of
Class R shares).
140
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Effective January 31, 2002 and December 28, 2001, respectively, Class C shares
and Class R shares were discontinued and exchanged into Class A shares as
follows:
CLASS C CLASS R
--------------------- ----------------------
SHARES DOLLARS SHARES DOLLARS
EXCHANGED EXCHANGED EXCHANGED EXCHANGED
--------- ---------- --------- -------------
Principal Bond Fund, Inc. 120,703 $1,303,594 1,509,274 $16,179,413
Principal Government Securities Income Fund, Inc. 369,029 4,258,598 1,175,559 13,436,636
Principal Limited Term Bond Fund, Inc. 102,938 997,469 601,584 5,817,318
Principal Tax-Exempt Bond Fund, Inc. 80,794 964,684 N/A N/A
7. FEDERAL TAX INFORMATION
DISTRIBUTIONS TO SHAREHOLDERS . The federal income tax character of
distributions paid for periods ended April 30, 2003, and October 31, 2002,
respectively, were as follows:
ORDINARY INCOME LONG-TERM CAPITAL GAIN
------------ --------------
2003 2002 2003 2002
---- ---- ---- ----
Principal Bond Fund, Inc. $4,911,580 $ 9,611,036 $ -- $ --
Principal Government 8,988,646 17,202,203 -- --
Securities Income Fund, Inc.
Principal Limited Term Bond 2,012,750 3,218,728 -- --
Fund, Inc.
Principal Tax-Exempt Bond 3,645,440 7,137,413 760,367 --
Fund, Inc.
For federal income tax purposes, short-term capital gain distributions are
considered ordinary income distributions.
DISTRIBUTABLE EARNINGS . As of October 31, 2002, the components of distributable
earnings on a federal tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY INCOME LONG-TERM CAPITAL GAINS
---------------- -----------------------
Principal Bond Fund, Inc. $ 19,679 $ --
Principal Government Securities
Income Fund, Inc. 22,064 --
Principal Limited Term Bond Fund,
Inc. 48,115 --
Principal Tax-Exempt Bond Fund,
Inc. 118,481 760,655
CAPITAL LOSS CARRYFORWARDS . Capital loss carryforwards are losses that can be
used to offset future capital gains of the fund. At October 31, 2002, the
following Income Funds had approximate net capital loss carryforwards as
follows:
NET CAPITAL LOSS CARRYFORWARDS EXPIRING IN:
2003 2004 2005 2006 2007 2008 2009 2010
------- ------ ------- ---------- ---------- --------- ----------- -----------
Principal Bond Fund, Inc. $-- $ -- $ -- $2,271,000 $6,580,000 $10,944,000 $5,680,000 $1,281,000
Principal Government Securities
Income Fund Inc. 481,000 -- 776,000 -- 6,000 942,000 -- 1,635,000
Principal Limited Term Bond Fund, Inc. -- 4,000 31,000 9,000 31,000 263,000 197,000 895,000
Principal Bond Fund, Inc. acquired approximately $18,061,000 of capital losses,
included above, as part of its acquisition of Principal High Yield Fund, Inc.,
which may be applied against realized net taxable capital gains in future years,
subject to certain limitations imposed by Section 382 of the Internal Revenue
Code.
141
SCHEDULE OF INVESTMENTS
PRINCIPAL BOND FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (53.07%)
AEROSPACE & DEFENSE (0.55%)
Boeing
$ $
6.13%; 02/15/33 100,000 100,192
Raytheon
5.38%; 04/01/13 220,000 225,334
5.70%; 11/01/03 925,000 936,570
1,262,096
AEROSPACE & DEFENSE EQUIPMENT (0.18%)
Lockheed Martin
7.65%; 05/01/16 200,000 249,312
United Technologies
6.10%; 05/15/12 140,000 158,022
407,334
AIRLINES (0.25%)
Northwest Airlines
7.58%; 03/01/19 314,238 301,662
Southwest Airlines
5.10%; 05/01/06 259,010 273,175
574,837
ASSET BACKED SECURITIES (0.49%)
Chase Funding Mortgage Loan
3.07%; 07/25/17 550,000 555,353
4.41%; 02/25/17 550,000 563,368
1,118,721
AUTO-CARS & LIGHT TRUCKS (0.36%)
DaimlerChrysler Holding
4.75%; 01/15/08 75,000 77,479
7.30%; 01/15/12 370,000 420,704
Ford Motor
7.45%; 07/16/31 375,000 333,762
831,945
AUTO-MEDIUM & HEAVY DUTY TRUCKS (0.16%)
Navistar International
9.38%; 06/01/06 335,000 357,613
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (0.15%)
Delphi
6.50%; 05/01/09 110,000 117,678
Lear
7.96%; 05/15/05 215,000 230,050
347,728
AUTOMOBILE SEQUENTIAL (1.82%)
Capital Auto Receivables Asset Trust
4.50%; 10/15/07 950,000 998,475
Ford Credit Auto Owner Trust
4.01%; 03/15/06 1,125,000 1,163,290
6.66%; 01/15/05 850,000 877,866
Toyota Auto Receivables Owner Trust
2.65%; 11/15/06 1,100,000 1,118,653
4,158,284
BEVERAGES-NON-ALCOHOLIC (0.29%)
Coca-Cola Enterprises
4.38%; 09/15/09 175,000 182,668
5.25%; 05/15/07 235,000 254,732
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
BEVERAGES-NON-ALCOHOLIC (CONTINUED)
PepsiAmericas
$ $
3.88%; 09/12/07 220,000 224,426
661,826
BEVERAGES-WINE & SPIRITS (0.08%)
Diageo Capital
3.50%; 11/19/07 170,000 171,906
BREWERY (0.41%)
Anheuser-Busch
4.38%; 01/15/13 350,000 349,843
Cia Brasileira de Bebidas
10.50%; 12/15/11 300,000 321,000
Coors Brewing
6.38%; 05/15/12 245,000 274,331
945,174
BROADCASTING SERVICES & PROGRAMMING (0.04%)
Grupo Televisa
8.50%; 03/11/32 100,000 100,000
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.34%)
CRH America
6.95%; 03/15/12 229,000 260,107
Masco
6.00%; 05/03/04 500,000 519,857
779,964
BUILDING PRODUCTS-AIR & HEATING (0.09%)
York International
6.63%; 08/15/06 200,000 214,247
BUILDING-RESIDENTIAL & COMMERCIAL (0.24%)
DR Horton
8.50%; 04/15/12 235,000 257,325
KB Home
7.75%; 02/01/10 265,000 278,250
535,575
CABLE & OTHER PAY TV SERVICES (0.22%)
AT&T Broadband
8.38%; 03/15/13 412,000 502,669
CABLE TV (0.69%)
British Sky Broadcasting
8.20%; 07/15/09 250,000 285,000
Comcast
5.50%; 03/15/11 240,000 247,580
5.85%; 01/15/10 30,000 31,922
Comcast Cable Communications
6.75%; 01/30/11 220,000 242,825
Cox Communications
6.75%; 03/15/11 530,000 602,753
CSC Holdings
7.25%; 07/15/08 150,000 154,500
1,564,580
CASINO HOTELS (0.60%)
Boyd Gaming
9.25%; 08/01/09 360,000 396,900
Principal Amount
Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
CASINO HOTELS (CONTINUED)
Mandalay Resort Group
$ $
9.25%; 12/01/05 360,000 376,650
Mirage Resorts
6.75%; 02/01/08 305,000 315,675
Park Place Entertainment
8.50%; 11/15/06 265,000 286,862
1,376,087
CASINO SERVICES (0.15%)
International Game Technology
8.38%; 05/15/09 290,000 345,996
CELLULAR TELECOMMUNICATIONS (0.53%)
AT&T Wireless Services
7.88%; 03/01/11 295,000 339,871
Telus
7.50%; 06/01/07 445,000 493,950
Verizon Wireless Capital
5.38%; 12/15/06 350,000 377,166
1,210,987
CHEMICALS-DIVERSIFIED (0.26%)
Chevron Phillips Chemical
5.38%; 06/15/07 240,000 250,811
7.00%; 03/15/11 165,000 182,332
Dow Chemical
5.00%; 11/15/07 20,000 20,804
5.75%; 11/15/09 135,000 143,672
597,619
COAL (0.13%)
Peabody Energy /1/
6.88%; 03/15/13 290,000 301,600
COATINGS & PAINT (0.08%)
Valspar
6.00%; 05/01/07 160,000 171,568
COMMERCIAL BANKS (0.52%)
Amsouth Bank
4.85%; 04/01/13 225,000 227,664
Fleet National Bank
5.75%; 01/15/09 250,000 274,279
KeyBank
5.70%; 08/15/12 180,000 195,009
U.S. Bank
6.38%; 08/01/11 200,000 228,478
Union Planters Bank
5.13%; 06/15/07 240,000 255,217
1,180,647
COMMERCIAL SERVICE-FINANCE (0.04%)
Deluxe
5.00%; 12/15/12 95,000 94,209
COMPUTER SERVICES (0.12%)
Unisys
8.13%; 06/01/06 250,000 267,500
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
COMPUTERS (0.10%)
International Business Machines
$ $
4.25%; 09/15/09 220,000 229,105
COMPUTERS-INTEGRATED SYSTEMS (0.04%)
NCR /1/
7.13%; 06/15/09 75,000 79,771
CONSUMER PRODUCTS-MISCELLANEOUS (0.14%)
American Greetings
6.10%; 08/01/28 335,000 328,300
CREDIT CARD ASSET BACKED SECURITIES (3.56%)
American Express Credit Account Master Trust
5.60%; 11/15/06 1,265,000 1,316,224
American Express Master Trust
7.85%; 08/15/05 600,000 651,550
Citibank Credit Card Issuance Trust
4.10%; 12/07/06 1,125,000 1,170,155
Discover Card Master Trust I
5.60%; 05/16/06 3,250,000 3,325,823
MBNA Master Credit Card Trust
6.90%; 01/15/08 1,500,000 1,658,426
8,122,178
DATA PROCESSING & MANAGEMENT (0.15%)
Oracle
6.72%; 02/15/04 335,000 348,645
DIVERSIFIED FINANCIAL SERVICES (1.56%)
Citigroup
3.50%; 02/01/08 410,000 414,084
5.75%; 05/10/06 750,000 820,955
6.00%; 02/21/12 85,000 94,688
6.63%; 06/15/32 315,000 355,650
General Electric Capital
4.63%; 09/15/09 390,000 409,425
6.75%; 03/15/32 475,000 549,664
John Deere Capital
3.13%; 12/15/05 160,000 163,478
3.90%; 01/15/08 100,000 102,050
5.52%; 04/30/04 440,000 457,333
7.00%; 03/15/12 165,000 191,713
3,559,040
DIVERSIFIED MANUFACTURING OPERATIONS (0.18%)
General Electric
5.00%; 02/01/13 145,000 149,869
Tyco International
6.25%; 06/15/03 265,000 265,662
415,531
DIVERSIFIED MINERALS (0.13%)
BHP Billiton Finance
4.80%; 04/15/13 300,000 306,218
DIVERSIFIED OPERATIONS (0.33%)
Hutchison Whampoa International /1/
6.50%; 02/13/13 325,000 329,413
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
DIVERSIFIED OPERATIONS (CONTINUED)
Rio Tinto Finance
$ $
5.75%; 07/03/06 380,000 415,541
744,954
ELECTRIC PRODUCTS-MISCELLANEOUS (0.04%)
Emerson Electric
4.63%; 10/15/12 35,000 35,440
6.00%; 08/15/32 60,000 63,429
98,869
ELECTRIC-INTEGRATED (2.70%)
Alabama Power
5.60%; 03/15/33 110,000 108,733
Arizona Public Service
6.50%; 03/01/12 205,000 225,829
CenterPoint Energy Houston Electric /1/
5.70%; 03/15/13 145,000 154,562
CenterPoint Energy Resources /1/
7.88%; 04/01/13 270,000 309,825
Consumers Energy
4.25%; 04/15/08 /1/ 70,000 71,156
6.00%; 03/15/05 160,000 170,400
Dominion Resources
7.82%; 09/15/14 1,000,000 1,078,149
DTE Energy
6.00%; 06/01/04 525,000 547,902
7.05%; 06/01/11 60,000 69,126
Duke Energy
4.50%; 04/01/10 200,000 204,608
Exelon
6.75%; 05/01/11 200,000 225,512
FPL Group Capital
3.25%; 04/11/06 170,000 171,922
GPU
7.70%; 12/01/05 465,000 522,199
Indianapolis Power & Light
7.38%; 08/01/07 230,000 237,086
MidAmerican Energy Holdings
4.63%; 10/01/07 200,000 204,783
6.75%; 12/30/31 235,000 263,138
Oncor Electric Delivery
6.38%; 05/01/12 275,000 307,598
Pepco Holdings
3.75%; 02/15/06 565,000 579,507
PG&E National Energy Group
10.38%; 05/16/11 240,000 127,200
Progress Energy
6.05%; 04/15/07 165,000 180,895
Southwestern Electric Power
4.50%; 07/01/05 240,000 248,884
TXU Energy /1/
6.13%; 03/15/08 140,000 149,711
6,158,725
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.15%)
Flextronics International
9.88%; 07/01/10 305,000 341,600
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FEDERAL & FEDERALLY SPONSORED CREDIT (0.15%)
Housing Urban Development
$ $
2.99%; 08/01/05 325,000 333,532
FINANCE-AUTO LOANS (1.17%)
Ford Motor Credit
5.75%; 02/23/04 350,000 356,044
6.88%; 02/01/06 535,000 553,459
7.25%; 10/25/11 450,000 451,126
General Motors Acceptance
6.88%; 09/15/11 380,000 387,291
6.88%; 08/28/12 250,000 254,234
7.00%; 02/01/12 250,000 256,146
8.00%; 11/01/31 180,000 187,477
Toyota Motor Credit
2.80%; 01/18/06 220,000 223,940
2,669,717
FINANCE-COMMERCIAL (0.04%)
CIT Group
7.75%; 04/02/12 75,000 86,969
FINANCE-CONSUMER LOANS (0.71%)
American General Finance
5.38%; 09/01/09 200,000 213,802
5.88%; 07/14/06 200,000 217,846
Household Finance
3.38%; 02/21/06 95,000 97,702
5.75%; 01/30/07 700,000 760,642
7.00%; 05/15/12 125,000 143,162
7.63%; 05/17/32 145,000 179,552
1,612,706
FINANCE-INVESTMENT BANKER & BROKER (1.15%)
Banque Paribas
6.88%; 03/01/09 400,000 464,400
Bear Stearns
3.00%; 03/30/06 165,000 167,924
4.00%; 01/31/08 210,000 215,765
Goldman Sachs Group
4.13%; 01/15/08 110,000 113,526
6.88%; 01/15/11 475,000 546,137
Lehman Brothers Holdings
6.63%; 01/18/12 450,000 511,471
Morgan Stanley
1.10%; 04/01/34 /2/ 4,670,060 170,407
5.30%; 03/01/13 165,000 171,253
6.75%; 04/15/11 225,000 255,642
2,616,525
FINANCE-MORTGAGE LOAN/BANKER (4.92%)
Countrywide Home Loan
4.25%; 12/19/07 120,000 124,243
5.25%; 06/15/04 1,000,000 1,039,192
Federal Home Loan Mortgage
3.25%; 02/25/08 1,675,000 1,691,936
4.75%; 10/11/12 550,000 557,522
6.00%; 05/25/12 545,000 566,706
6.25%; 07/15/32 125,000 144,176
6.75%; 03/15/31 541,000 660,889
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FINANCE-MORTGAGE LOAN/BANKER (CONTINUED)
Federal National Mortgage Association
$ $
2.38%; 03/17/06 575,000 577,731
3.70%; 11/01/07 1,430,000 1,468,224
3.75%; 07/29/05 1,075,000 1,104,129
4.32%; 07/26/07 530,000 559,470
4.75%; 02/21/13 550,000 556,329
5.25%; 08/01/12 985,000 1,041,770
6.25%; 05/15/29 1,000,000 1,138,068
11,230,385
FINANCE-OTHER SERVICES (0.96%)
Mellon Funding
4.88%; 06/15/07 190,000 202,078
Verizon Global Funding
6.75%; 12/01/05 1,000,000 1,113,239
7.25%; 12/01/10 650,000 760,057
7.75%; 12/01/30 100,000 123,476
2,198,850
FOOD-DAIRY PRODUCTS (0.12%)
Dean Foods
6.63%; 05/15/09 270,000 278,100
FOOD-FLOUR & GRAIN (0.11%)
Archer-Daniels-Midland
5.94%; 10/01/32 245,000 256,752
FOOD-MISCELLANEOUS/DIVERSIFIED (0.47%)
Corn Products International
8.45%; 08/15/09 265,000 278,547
General Mills
6.00%; 02/15/12 240,000 263,295
Kraft Foods
4.63%; 11/01/06 325,000 338,900
6.50%; 11/01/31 125,000 133,304
Unilever Capital
5.90%; 11/15/32 55,000 57,960
1,072,006
FOOD-RETAIL (0.98%)
Delhaize America
7.38%; 04/15/06 175,000 181,125
Kroger
6.20%; 06/15/12 200,000 215,256
Safeway
3.63%; 11/05/03 1,800,000 1,809,304
5.80%; 08/15/12 35,000 36,896
2,242,581
FORESTRY (0.09%)
Tembec Industries
7.75%; 03/15/12 100,000 101,500
8.63%; 06/30/09 100,000 104,000
205,500
GAS-DISTRIBUTION (0.07%)
KeySpan
7.63%; 11/15/10 140,000 169,083
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
GOLD MINING (0.08%)
Normandy Yandal Operations
$ $
8.88%; 04/01/08 270,000 162,000
Placer Dome /1/
6.38%; 03/01/33 30,000 30,591
192,591
HOME DECORATION PRODUCTS (0.04%)
Newell Rubbermaid
4.63%; 12/15/09 85,000 87,223
HOME EQUITY SEQUENTIAL (0.42%)
Long Beach Mortgage Loan Trust
4.92%; 05/25/32 550,000 567,633
Residential Asset Securities
4.59%; 10/25/26 380,000 395,538
963,171
HOTELS & MOTELS (0.22%)
Marriott International
6.63%; 11/15/03 500,000 511,074
INDUSTRIAL GASES (0.18%)
Praxair
4.75%; 07/15/07 235,000 247,536
6.50%; 03/01/08 150,000 168,196
415,732
INSTRUMENTS-CONTROLS (0.05%)
Parker Hannifin
4.88%; 02/15/13 115,000 116,410
INSTRUMENTS-SCIENTIFIC (0.08%)
PerkinElmer /1/
8.88%; 01/15/13 160,000 172,400
INVESTMENT MANAGEMENT & ADVISORY SERVICES (0.08%)
AMVESCAP
5.38%; 02/27/13 /1/ 75,000 74,552
5.90%; 01/15/07 110,000 118,331
192,883
LIFE & HEALTH INSURANCE (0.11%)
Lincoln National
5.25%; 06/15/07 180,000 189,428
Nationwide Financial Services
5.63%; 02/13/15 60,000 61,005
250,433
MACHINERY-CONSTRUCTION & MINING (0.15%)
Case
6.25%; 12/01/03 335,000 335,000
MEDICAL-DRUGS (0.20%)
Eli Lilly
6.00%; 03/15/12 200,000 225,981
Wyeth
5.25%; 03/15/13 225,000 235,369
461,350
MEDICAL-HMO (0.31%)
Anthem
4.88%; 08/01/05 500,000 525,034
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
MEDICAL-HMO (CONTINUED)
UnitedHealth Group
$ $
4.88%; 04/01/13 185,000 189,296
714,330
MEDICAL-HOSPITALS (0.30%)
HCA
7.13%; 06/01/06 225,000 241,886
Tenet Healthcare
5.00%; 07/01/07 240,000 228,000
6.50%; 06/01/12 235,000 222,663
692,549
METAL PROCESSORS & FABRICATION (0.12%)
Timken
5.75%; 02/15/10 275,000 280,263
METAL-DIVERSIFIED (0.14%)
Falconbridge
7.35%; 06/05/12 65,000 71,511
Noranda
7.25%; 07/15/12 240,000 247,128
318,639
MISCELLANEOUS INVESTING (0.21%)
Camden Property Trust
5.88%; 06/01/07 45,000 48,136
5.88%; 11/30/12 60,000 63,525
La Quinta /1/
8.88%; 03/15/11 90,000 94,275
United Dominion Realty Trust
6.50%; 06/15/09 240,000 264,085
470,021
MONEY CENTER BANKS (0.68%)
Bank of America
4.88%; 09/15/12 1,085,000 1,116,750
7.40%; 01/15/11 55,000 66,027
HSBC Holdings
5.25%; 12/12/12 100,000 104,042
Royal Bank of Scotland Group
5.00%; 10/01/14 250,000 256,938
1,543,757
MORTGAGE BACKED SECURITIES (3.86%)
Chase Manhattan Bank-First Union National Bank
7.44%; 08/15/31 1,750,000 2,069,996
CS First Boston Mortgage Securities
6.39%; 08/15/36 750,000 847,872
GMAC Commercial Mortgage Securities
7.72%; 03/15/33 2,000,000 2,402,214
LB-UBS Commercial Mortgage Trust /1/ /2/
0.87%; 03/15/34 3,257,726 102,305
Merrill Lynch Mortgage Investors
7.34%; 12/26/25 3,000,000 3,270,975
Morgan Stanley Capital I
7.11%; 04/15/33 100,000 116,939
8,810,301
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
MULTI-LINE INSURANCE (0.26%)
Hartford Financial Services Group
$ $
4.70%; 09/01/07 170,000 175,303
MetLife
5.25%; 12/01/06 325,000 352,136
Safeco
4.88%; 02/01/10 75,000 76,323
603,762
MULTIMEDIA (0.88%)
AOL Time Warner
7.63%; 04/15/31 510,000 562,430
Gannett
4.95%; 04/01/05 475,000 503,090
News America
4.75%; 03/15/10 /1/ 90,000 91,270
6.55%; 03/15/33 /1/ 225,000 228,534
6.63%; 01/09/08 250,000 275,820
Viacom
7.88%; 07/30/30 125,000 162,781
Walt Disney
5.38%; 06/01/07 175,000 186,254
2,010,179
NON-HAZARDOUS WASTE DISPOSAL (0.15%)
Allied Waste
8.50%; 12/01/08 325,000 351,000
OFFICE SUPPLIES & FORMS (0.01%)
Avery Dennison
6.00%; 01/15/33 30,000 31,016
OIL & GAS DRILLING (0.35%)
Nabors Holdings
4.88%; 08/15/09 270,000 279,027
Nabors Industries
6.80%; 04/15/04 335,000 350,562
Transocean
6.63%; 04/15/11 150,000 170,379
799,968
OIL COMPANY-EXPLORATION & PRODUCTION (1.89%)
Alberta Energy
7.38%; 11/01/31 55,000 66,318
Anadarko Finance
6.75%; 05/01/11 275,000 315,336
Anadarko Petroleum
5.38%; 03/01/07 325,000 350,725
Canadian Natural Resources
7.20%; 01/15/32 145,000 171,407
Devon Energy
7.95%; 04/15/32 255,000 319,148
Forest Oil
8.00%; 06/15/08 270,000 286,200
Kerr-McGee
5.88%; 09/15/06 510,000 551,463
Nexen
7.88%; 03/15/32 125,000 144,920
Pemex Project Funding Master Trust
7.88%; 02/01/09 700,000 796,250
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
OIL COMPANY-EXPLORATION & PRODUCTION (CONTINUED)
Petroleos Mexicanos
$ $
6.50%; 02/01/05 600,000 639,600
Western Oil Sands
8.38%; 05/01/12 275,000 294,250
XTO Energy
6.25%; 04/15/13 /1/ 50,000 52,125
7.50%; 04/15/12 205,000 225,500
8.75%; 11/01/09 100,000 104,500
4,317,742
OIL COMPANY-INTEGRATED (0.78%)
Amerada Hess
7.13%; 03/15/33 155,000 170,308
7.88%; 10/01/29 70,000 83,272
BP Canada Finance
3.63%; 01/15/09 250,000 255,247
Conoco Funding
7.25%; 10/15/31 400,000 484,814
Occidental Petroleum
4.00%; 11/30/07 175,000 177,725
PanCanadian Energy
7.20%; 11/01/31 200,000 238,868
Petrobras International Finance /1/
9.13%; 02/01/07 225,000 232,875
Petronas Capital /1/
7.88%; 05/22/22 125,000 137,663
1,780,772
OIL REFINING & MARKETING (0.30%)
Enterprise Products Partners /1/
6.38%; 02/01/13 110,000 119,678
Tesoro Petroleum /1/
8.00%; 04/15/08 310,000 320,850
Valero Energy
6.88%; 04/15/12 225,000 250,354
690,882
PAPER & RELATED PRODUCTS (1.26%)
Abitibi-Consolidated
6.95%; 12/15/06 225,000 233,540
Cascades /1/
7.25%; 02/15/13 335,000 353,425
Domtar
7.88%; 10/15/11 200,000 237,536
International Paper
5.85%; 10/30/12 /1/ 55,000 58,797
6.75%; 09/01/11 50,000 56,657
NorskeCanada
8.63%; 06/15/11 290,000 300,150
Norske Skog /1/
7.63%; 10/15/11 500,000 563,494
Sappi Papier Holding /1/
6.75%; 06/15/12 140,000 157,657
Smurfit Capital Funding
6.75%; 11/20/05 330,000 338,250
Weyerhaeuser
6.13%; 03/15/07 275,000 299,044
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
PAPER & RELATED PRODUCTS (CONTINUED)
Weyerhaeuser (continued)
$ $
7.38%; 03/15/32 250,000 285,188
2,883,738
PIPELINES (0.68%)
Duke Energy Field Services
7.88%; 08/16/10 485,000 566,651
Equitable Resources
5.15%; 11/15/12 130,000 136,067
Kinder Morgan Energy Partners
5.35%; 08/15/07 170,000 182,455
6.75%; 03/15/11 160,000 181,963
National Fuel Gas
5.25%; 03/01/13 175,000 176,877
TEPPCO Partners
6.13%; 02/01/13 45,000 47,581
Texas Eastern Transmission
5.25%; 07/15/07 245,000 257,960
1,549,554
POULTRY (0.42%)
Tyson Foods
6.63%; 10/01/04 785,000 819,808
7.25%; 10/01/06 130,000 141,236
961,044
PROPERTY & CASUALTY INSURANCE (0.15%)
ACE INA Holdings
8.20%; 08/15/04 225,000 241,073
Travelers Property Casualty /1/
6.38%; 03/15/33 100,000 106,475
347,548
PUBLISHING-BOOKS (0.17%)
Reed Elsevier Capital
6.13%; 08/01/06 350,000 382,318
REAL ESTATE OPERATOR & DEVELOPER (0.17%)
EOP Operating
7.00%; 07/15/11 350,000 398,061
REGIONAL AUTHORITY (1.08%)
Financement Quebec
5.00%; 10/25/12 580,000 611,401
Province of Manitoba
2.75%; 01/17/06 550,000 557,574
Province of Nova Scotia
5.75%; 02/27/12 465,000 518,753
Province of Ontario
5.13%; 07/17/12 220,000 236,810
Province of Quebec
7.50%; 09/15/29 275,000 355,759
Region of Lombardy
5.80%; 10/25/32 175,000 187,040
2,467,337
REGIONAL BANKS (1.83%)
Bank One
7.63%; 08/01/05 725,000 813,288
KeyCorp
4.63%; 05/16/05 475,000 498,604
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
REGIONAL BANKS (CONTINUED)
Korea Development Bank
$ $
7.13%; 04/22/04 500,000 520,340
PNC Funding
5.75%; 08/01/06 650,000 707,683
SunTrust Banks
5.05%; 07/01/07 250,000 269,684
Wachovia
5.63%; 12/15/08 600,000 668,338
6.38%; 02/01/09 100,000 114,367
Wells Fargo
5.00%; 11/15/14 80,000 82,646
5.13%; 02/15/07 470,000 508,965
4,183,915
RESEARCH & DEVELOPMENT (0.12%)
Science Applications International
7.13%; 07/01/32 240,000 277,680
RETAIL-DISCOUNT (0.30%)
Target
5.38%; 06/15/09 240,000 260,167
5.88%; 03/01/12 170,000 185,518
Wal-Mart Stores
4.38%; 07/12/07 220,000 232,590
678,275
RETAIL-DRUG STORE (0.12%)
CVS /1/
7.77%; 01/10/12 239,158 267,665
RETAIL-REGIONAL DEPARTMENT STORE (0.04%)
Kohl's 10,000,000
6.00%; 01/15/33 80,000 81,779
RETAIL-RESTAURANTS (0.12%)
Yum! Brands
7.70%; 07/01/12 240,000 267,000
SATELLITE TELECOM (0.14%)
Echostar DBS
10.38%; 10/01/07 275,000 308,000
SAVINGS & LOANS-THRIFTS (0.28%)
Washington Mutual
3.97%; 03/25/33 528,000 533,417
5.50%; 01/15/13 100,000 106,180
639,597
SOVEREIGN (1.00%)
Chile Government
5.50%; 01/15/13 80,000 81,900
Finland Government
4.75%; 03/06/07 235,000 252,916
Italy Government
5.63%; 06/15/12 320,000 355,542
Mexico Government
8.30%; 08/15/31 190,000 214,985
8.38%; 01/14/11 990,000 1,180,575
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
SOVEREIGN (CONTINUED)
Poland Government
$ $
6.25%; 07/03/12 175,000 195,125
2,281,043
SPECIAL PURPOSE ENTITY (0.04%)
PDVSA Finance
8.50%; 11/16/12 100,000 82,000
SUPRANATIONAL BANK (0.50%)
Corp Andina de Fomento
6.75%; 03/15/05 190,000 200,178
6.88%; 03/15/12 230,000 245,118
European Investment Bank
4.63%; 03/01/07 375,000 399,360
Inter-American Development Bank
3.38%; 03/17/08 300,000 304,304
1,148,960
TELECOMMUNICATION SERVICES (0.57%)
Citizens Communications
6.38%; 08/15/04 695,000 727,721
7.63%; 08/15/08 250,000 292,091
MasTec
7.75%; 02/01/08 315,000 274,050
1,293,862
TELEPHONE COMMUNICATION (0.09%)
Telstra
6.38%; 04/01/12 190,000 211,352
TELEPHONE-INTEGRATED (2.09%)
ALLTEL
7.00%; 07/01/12 275,000 325,200
7.88%; 07/01/32 60,000 78,336
AT&T
6.00%; 03/15/09 130,000 133,418
BellSouth
6.88%; 10/15/31 225,000 262,065
British Telecommunications
7.88%; 12/15/05 940,000 1,065,604
Deutsche Telekom International Finance
8.25%; 06/15/05 400,000 444,359
8.50%; 06/15/10 210,000 253,123
France Telecom
9.25%; 03/01/11 505,000 617,594
SBC Communications
5.88%; 08/15/12 200,000 219,732
Sprint Capital
6.13%; 11/15/08 100,000 102,000
8.75%; 03/15/32 230,000 251,850
Telefonica Europe
7.75%; 09/15/10 400,000 481,273
Telefonos de Mexico
8.25%; 01/26/06 385,000 428,794
Verizon Florida
6.13%; 01/15/13 90,000 99,606
4,762,954
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
TEXTILE-HOME FURNISHINGS (0.07%)
Mohawk Industries
$ $
6.50%; 04/15/07 145,000 160,262
TOOLS-HAND HELD (0.06%)
Stanley Works /1/
4.90%; 11/01/12 140,000 142,552
TRANSPORT-RAIL (0.87%)
Burlington Northern Santa Fe
7.95%; 08/15/30 110,000 138,607
Canadian National Railway
7.38%; 10/15/31 265,000 326,767
Canadian Pacific Railway
7.13%; 10/15/31 225,000 267,778
CSX
6.25%; 10/15/08 400,000 446,943
Union Pacific
5.75%; 10/15/07 690,000 753,485
6.63%; 02/01/29 50,000 55,765
1,989,345
TRANSPORT-SERVICES (0.24%)
FedEx
8.40%; 03/23/10 500,000 541,655
TOTAL BONDS 121,207,298
Principal
Type Rate Maturity Amount Value
- -----------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) CERTIFICATES (15.29%)
$ $
FHLMC 4.50% 12/01/09 2,516,121 2,573,210
FHLMC /5/ 5.50% 05/01/17 - 06/01/33 10,264,334 10,587,748
FHLMC 6.00% 03/01/22 - 11/01/32 9,637,669 10,042,600
FHLMC 6.50% 03/01/17 - 07/01/31 6,554,461 6,886,521
FHLMC 7.00% 12/01/29 - 05/01/31 2,373,289 2,503,653
FHLMC 7.50% 11/01/29 - 03/01/31 1,421,443 1,517,199
FHLMC 8.00% 09/01/30 753,433 813,405
TOTAL FHLMC CERTIFICATES 34,924,336
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) CERTIFICATES (13.61%)
FNMA 3.32% 06/25/30 600,000 596,535
FNMA /5/ 5.00% 03/01/18 - 05/01/18 4,486,782 4,631,654
FNMA 5.50% 06/01/31 - 03/01/33 4,409,351 4,537,703
FNMA 6.00% 05/01/09 - 05/01/32 3,881,592 4,088,740
FNMA 6.50% 01/01/11 - 09/01/32 11,562,496 12,148,139
FNMA 7.00% 08/01/29 - 02/01/32 2,351,759 2,485,244
FNMA 7.25% 01/15/10 - 05/15/30 2,105,000 2,601,947
TOTAL FNMA CERTIFICATES 31,089,962
Principal
Type Rate Maturity Amount Value
- -----------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) CERTIFICATES (7.31%)
$ $
GNMA I 6.50% 12/15/31 - 12/15/32 7,207,377 7,579,139
GNMA I 7.00% 10/15/29 - 06/15/32 2,390,996 2,536,748
GNMA I 7.50% 10/15/31 1,045,005 1,115,505
GNMA II 6.00% 07/20/28 - 07/20/29 4,573,414 4,777,772
GNMA II 6.50% 03/20/28 - 05/20/29 652,014 683,296
TOTAL GNMA CERTIFICATES 16,692,460
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
TREASURY BONDS (9.47%)
U.S. Treasury
$ $
3.50%; 11/15/06 170,000 177,212
4.38%; 05/15/07 3,435,000 3,685,783
4.75%; 11/15/08 235,000 255,535
4.88%; 02/15/12 1,490,000 1,615,370
5.38%; 02/15/31 2,055,000 2,242,358
5.50%; 05/15/09 1,000,000 1,130,508
6.13%; 08/15/29 25,000 29,547
6.25%; 02/15/07 1,375,000 1,568,681
6.25%; 08/15/23 2,300,000 2,724,063
6.25%; 05/15/30 1,735,000 2,090,607
6.75%; 08/15/26 1,000,000 1,260,312
7.50%; 11/15/16 2,870,000 3,779,431
8.00%; 11/15/21 760,000 1,066,107
TOTAL TREASURY BONDS 21,625,514
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
COMMON STOCKS (0.00%)
COMPUTER SERVICES (0.00%)
$
Decisionone /3/ 3,500 -
Decisionone /3/ 2,054 -
Decisionone /3/ 3,540 -
Decisionone /3/ 2,100 -
-
TOTAL COMMON STOCKS -
Shares
Held Value
- -----------------------------------------------------------------------------------------------------
PREFERRED STOCKS (0.00%)
TELECOMMUNICATION SERVICES (0.00%)
Global Crossing 7,893 -
TOTAL PREFERRED STOCKS -
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (2.76%)
DIVERSIFIED FINANCIAL SERVICES (2.76%)
Investment in Joint Trading Account; General
Electric Capital
$ $
1.35%; 05/01/03 6,293,087 6,293,087
TOTAL COMMERCIAL PAPER 6,293,087
Shares
Held Value
- -----------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (0.62%)
Lehman Brothers; 1.33%; 05/01/03 (collateralized by $
FHLBC; $1,436,441; 02/13/04) /4/ 1,408,275 1,408,275
TOTAL REPURCHASE AGREEMENTS 1,408,275
------------
TOTAL PORTFOLIO INVESTMENTS (102.13%) 233,240,932
LIABILITIES, NET OF CASH, RECEIVABLES AND OTHER ASSETS (-2.13%) (4,860,767)
TOTAL NET ASSETS (100.00%) $228,380,165
---------------
/1 /Restricted Security - The fund held securities, which may require
registration under the Securities Act of 1933, or an exemption therefrom, in
order to effect their sale in the ordinary course of business. At the end of
the period, restricted securities totaled $4,703,221 or 2.06% of net assets.
/2 /Variable rate.
/3 /Non-income producing security.
/4 /Security was purchased with the cash proceeds from securities loans.
/5 /Security or a portion of the security was purchased in a "to-be-announced"
transaction. See Notes to Financial Statements.
150
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL GOVERNMENT SECURITIES INCOME FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Principal
Type Rate Maturity Amount Value
- -----------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) CERTIFICATES (101.69%)
$ $
GNMA I /1/ 5.00% 05/01/33 90,610,000 91,374,567
GNMA I /1/ 5.50% 12/15/13 - 04/01/33 21,501,778 22,309,299
GNMA I 6.00% 03/15/17 - 02/15/33 78,968,765 82,765,348
GNMA I 6.50% 07/15/08 - 09/15/32 67,306,727 70,992,003
GNMA I 7.00% 10/15/22 - 06/15/32 57,644,693 61,278,419
GNMA I 7.25% 09/15/25 - 10/15/25 970,192 1,036,907
GNMA I 7.50% 04/15/17 - 05/15/31 23,894,036 25,570,689
GNMA I 8.00% 08/15/16 - 04/15/31 8,898,296 9,671,531
GNMA II 5.50% 07/20/14 - 04/20/33 19,044,370 19,684,279
GNMA II /1/ 6.00% 01/20/24 - 03/20/32 9,932,262 10,403,244
GNMA II 6.50% 03/20/24 - 03/20/32 15,631,818 16,376,873
TOTAL GNMA CERTIFICATES 411,463,159
Principal
Amount Value
- -----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (23.96%)
FINANCE-MORTGAGE LOAN/BANKER (23.96%)
Federal National Mortgage Association 100,000,000
$ $
1.22%; 05/21/03 15,000,000 14,989,834
Investment in Joint Trading Account; Federal Home
Loan Bank 100,000,000
1.25%; 05/01/03 81,977,587 81,977,587
96,967,421
TOTAL COMMERCIAL PAPER 96,967,421
-------------
TOTAL PORTFOLIO INVESTMENTS (125.65%) 508,430,580
LIABILITIES, NET OF CASH, RECEIVABLES AND OTHER ASSETS (-25.65%) (103,793,313)
TOTAL NET ASSETS (100.00%) $ 404,637,267
----------------
/1 /Security or a portion of the security was purchased in a "to-be-announced"
(TBA) transaction. See Notes to Financial Statements.
See accompanying notes.
151
SCHEDULE OF INVESTMENTS
PRINCIPAL LIMITED TERM BOND FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (87.82%)
AEROSPACE & DEFENSE EQUIPMENT (0.10%)
United Technologies
$ $
4.88%; 11/01/06 100,000 106,998
AUTO-CARS & LIGHT TRUCKS (0.47%)
DaimlerChrysler
6.90%; 09/01/04 465,000 492,462
AUTOMOBILE SEQUENTIAL (6.20%)
Capital Auto Receivables Asset Trust
3.82%; 07/15/05 450,000 459,299
4.16%; 07/16/07 800,000 834,064
Chase Manhattan Auto Owner Trust
4.21%; 01/15/09 1,000,000 1,051,543
DaimlerChrysler Auto Trust
6.85%; 11/06/05 700,000 729,255
7.63%; 06/08/05 610,015 628,274
Ford Credit Auto Owner Trust
4.01%; 03/15/06 720,000 744,505
4.72%; 12/15/05 735,000 767,826
M&I Auto Loan Trust
3.04%; 10/20/08 500,000 511,016
Toyota Auto Receivables Owner Trust
4.72%; 09/15/08 700,000 732,130
6,457,912
BEVERAGES-NON-ALCOHOLIC (0.14%)
Coca-Cola Enterprises
5.25%; 05/15/07 130,000 140,916
BEVERAGES-WINE & SPIRITS (0.21%)
Diageo
7.13%; 09/15/04 115,000 123,160
Diageo Capital
3.38%; 03/20/08 100,000 100,173
223,333
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.07%)
Masco
6.00%; 05/03/04 70,000 72,780
CABLE TV (0.26%)
Comcast Cable Communications
8.13%; 05/01/04 195,000 206,139
Cox Communications
6.88%; 06/15/05 55,000 60,115
266,254
CASINO SERVICES (0.08%)
International Game Technology
7.88%; 05/15/04 80,000 83,958
CELLULAR TELECOMMUNICATIONS (0.74%)
360 Communications
7.50%; 03/01/06 140,000 159,693
AT&T Wireless Services
7.35%; 03/01/06 130,000 144,824
Cingular Wireless
5.63%; 12/15/06 80,000 87,198
Verizon Wireless Capital
5.38%; 12/15/06 250,000 269,405
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
CELLULAR TELECOMMUNICATIONS (CONTINUED)
Vodafone Group
$ $
7.63%; 02/15/05 105,000 115,453
776,573
CHEMICALS-DIVERSIFIED (0.39%)
Chevron Phillips Chemical
5.38%; 06/15/07 110,000 114,955
Dow Chemical
5.75%; 11/15/09 80,000 85,139
E. I. Du Pont de Nemours
3.38%; 11/15/07 100,000 101,280
8.13%; 03/15/04 100,000 105,756
407,130
COATINGS & PAINT (0.08%)
Valspar
6.00%; 05/01/07 75,000 80,422
COMMERCIAL BANKS (0.22%)
Marshall & Isley Bank
4.13%; 09/04/07 100,000 103,096
Union Planters Bank
5.13%; 06/15/07 120,000 127,609
230,705
COMMERCIAL SERVICE-FINANCE (0.07%)
Equifax
4.95%; 11/01/07 65,000 67,866
COMPUTER SERVICES (0.08%)
Electronic Data Systems
6.85%; 10/15/04 80,000 83,600
COMPUTERS (0.23%)
Hewlett-Packard
5.50%; 07/01/07 140,000 150,903
International Business Machines
4.25%; 09/15/09 85,000 88,518
239,421
COSMETICS & TOILETRIES (0.14%)
Gillette
4.00%; 06/30/05 60,000 62,868
Procter & Gamble
4.75%; 06/15/07 75,000 80,365
143,233
CREDIT CARD ASSET BACKED SECURITIES (7.34%)
American Express Credit Account Master Trust
5.60%; 11/15/06 700,000 728,345
American Express Master Trust
7.85%; 08/15/05 830,000 901,311
Bank One Issuance Trust
2.94%; 06/16/08 900,000 919,852
Capital One Master Trust
5.30%; 06/15/09 700,000 748,838
5.45%; 03/16/09 750,000 806,248
Citibank Credit Card Issuance Trust
2.70%; 01/15/08 100,000 101,388
6.90%; 10/17/07 750,000 836,497
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
CREDIT CARD ASSET BACKED SECURITIES (CONTINUED)
Discover Card Master Trust I
$ $
5.60%; 05/16/06 250,000 255,833
6.05%; 08/18/08 710,000 778,930
MBNA Master Credit Card Trust
6.35%; 12/15/06 750,000 794,356
6.90%; 01/15/08 700,000 773,932
7,645,530
CREDIT CARD CONTROL AMORTIZATION (0.39%)
Sears Credit Account Master Trust
7.25%; 11/15/07 399,583 405,951
CRUISE LINES (0.12%)
Carnival
6.15%; 10/01/03 123,000 125,256
DATA PROCESSING & MANAGEMENT (0.15%)
Oracle
6.72%; 02/15/04 150,000 156,110
DIVERSIFIED FINANCIAL SERVICES (1.95%)
Citigroup
6.75%; 12/01/05 1,090,000 1,212,990
General Electric Capital
4.25%; 01/15/08 175,000 182,234
5.00%; 06/15/07 110,000 118,445
John Deere Capital
4.50%; 08/22/07 95,000 99,255
Nisource Finance
7.50%; 11/15/03 330,000 340,280
Textron Financial
5.88%; 06/01/07 75,000 78,473
2,031,677
DIVERSIFIED MANUFACTURING OPERATIONS (0.08%)
Cooper Industries
5.25%; 07/01/07 80,000 85,783
ELECTRIC-DISTRIBUTION (0.08%)
Detroit Edison
5.05%; 10/01/05 75,000 79,882
ELECTRIC-INTEGRATED (1.89%)
Appalachian Power
4.80%; 06/15/05 110,000 114,664
Commonwealth Edison
6.40%; 10/15/05 140,000 151,289
Conectiv
5.30%; 06/01/05 45,000 46,811
Dominion Resources
3.88%; 01/15/04 115,000 116,731
7.82%; 09/15/14 200,000 215,630
Duke Energy /1/
3.75%; 03/05/08 85,000 85,875
Energy East
7.75%; 11/15/34 100,000 102,996
FirstEnergy
5.50%; 11/15/06 95,000 100,387
FPL Group Capital
3.25%; 04/11/06 75,000 75,848
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
ELECTRIC-INTEGRATED (CONTINUED)
Gulf Power
$ $
4.69%; 08/01/03 150,000 151,189
MidAmerican Energy Holdings
4.63%; 10/01/07 90,000 92,153
Niagara Mohawk Power
7.38%; 07/01/03 181,463 182,957
Oncor Electric Delivery
5.00%; 09/01/07 95,000 100,470
Pepco Holdings /1/
5.50%; 08/15/07 105,000 111,917
Progress Energy
6.75%; 03/01/06 140,000 154,425
Tennessee Valley Authority
6.38%; 06/15/05 150,000 164,409
1,967,751
ELECTRONIC COMPONENTS-MISCELLANEOUS (0.07%)
Koninklijke Philips Electronics
6.75%; 08/15/03 75,000 76,039
FEDERAL & FEDERALLY SPONSORED CREDIT (2.56%)
Federal Farm Credit Bank
7.25%; 06/12/07 2,000,000 2,347,382
Student Loan Marketing Association
5.00%; 06/30/04 305,000 318,880
2,666,262
FIDUCIARY BANKS (0.17%)
Bank of New York
4.14%; 08/02/07 100,000 105,269
5.20%; 07/01/07 70,000 75,592
180,861
FINANCE-AUTO LOANS (2.40%)
Ford Motor Credit
5.75%; 02/23/04 1,540,000 1,566,593
General Motors Acceptance
6.13%; 08/28/07 160,000 166,146
6.75%; 01/15/06 630,000 664,327
Toyota Motor Credit
2.80%; 01/18/06 100,000 101,791
2,498,857
FINANCE-COMMERCIAL (1.19%)
CIT Group
7.38%; 04/02/07 420,000 470,423
Heller Financial
6.00%; 03/19/04 645,000 670,431
Tyco Capital
7.50%; 11/14/03 95,000 97,719
1,238,573
FINANCE-CONSUMER LOANS (1.48%)
American General Finance
5.88%; 07/14/06 390,000 424,800
Household Finance
3.38%; 02/21/06 85,000 87,418
6.50%; 01/24/06 545,000 606,343
Sears Roebuck Acceptance
6.56%; 11/20/03 55,000 56,009
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FINANCE-CONSUMER LOANS (CONTINUED)
SLM
$ $
3.63%; 03/17/08 85,000 85,636
5.63%; 04/10/07 75,000 82,044
Washington Mutual Financial
6.50%; 11/15/03 200,000 205,375
1,547,625
FINANCE-CREDIT CARD (0.32%)
American Express
3.75%; 11/20/07 100,000 102,230
Capital One Bank
6.65%; 03/15/04 155,000 159,716
MBNA
2.41%; 06/13/03 75,000 74,939
336,885
FINANCE-INVESTMENT BANKER & BROKER (2.55%)
Banque Paribas
8.35%; 06/15/07 140,000 166,858
Bear Stearns
3.00%; 03/30/06 80,000 81,418
6.50%; 05/01/06 290,000 323,973
Charles Schwab
6.88%; 09/02/03 100,000 101,751
Credit Suisse First Boston
5.75%; 04/15/07 280,000 305,790
Goldman Sachs Group
7.63%; 08/17/05 175,000 195,904
Lehman Brothers Holdings
6.25%; 05/15/06 455,000 504,347
Merrill Lynch
6.00%; 11/15/04 355,000 377,148
Morgan Stanley
7.75%; 06/15/05 540,000 603,354
2,660,543
FINANCE-LEASING COMPANY (0.29%)
Boeing Capital
7.10%; 09/27/05 275,000 301,609
FINANCE-MORTGAGE LOAN/BANKER (23.93%)
Countrywide Home Loan
6.85%; 06/15/04 305,000 322,302
Federal Home Loan Bank System
4.88%; 11/15/06 4,600,000 4,970,567
Federal Home Loan Mortgage
3.88%; 02/15/05 3,900,000 4,056,940
5.25%; 01/15/06 4,675,000 5,068,901
Federal National Mortgage Association
5.13%; 02/13/04 1,305,000 1,345,002
5.25%; 04/15/07 3,800,000 4,171,860
7.00%; 07/15/05 4,500,000 5,009,675
24,945,247
FINANCE-OTHER SERVICES (0.85%)
Caterpillar Financial Services
4.69%; 04/25/05 70,000 73,372
7.59%; 12/10/03 135,000 140,014
Mellon Funding
4.88%; 06/15/07 70,000 74,450
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FINANCE-OTHER SERVICES (CONTINUED)
Mellon Funding (continued)
$ $
5.75%; 11/15/03 50,000 51,174
National Rural Utilities
6.00%; 01/15/04 140,000 144,439
Pemex Finance
6.13%; 11/15/03 88,790 90,101
Verizon Global Funding
6.75%; 12/01/05 280,000 311,707
885,257
FOOD-BAKING (0.10%)
Earthgrains
8.38%; 08/01/03 100,000 101,663
FOOD-MISCELLANEOUS/DIVERSIFIED (0.90%)
Campbell Soup
5.50%; 03/15/07 150,000 162,976
General Mills
5.13%; 02/15/07 85,000 91,548
HJ Heinz /1/
6.56%; 11/15/03 100,000 102,452
Kellogg
6.00%; 04/01/06 165,000 181,262
Kraft Foods
4.63%; 11/01/06 220,000 229,409
Unilever Capital
6.88%; 11/01/05 155,000 172,253
939,900
FOOD-RETAIL (0.58%)
Fred Meyer
7.38%; 03/01/05 150,000 162,136
Safeway
6.05%; 11/15/03 430,000 439,290
601,426
HOME EQUITY SEQUENTIAL (0.64%)
Residential Asset Securities
4.99%; 02/25/27 650,000 669,554
INDUSTRIAL GASES (0.08%)
Praxair
4.75%; 07/15/07 75,000 79,001
INSURANCE BROKERS (0.16%)
Aon
6.30%; 01/15/04 65,000 66,667
Marsh & McLennan
3.63%; 02/15/08 95,000 96,192
162,859
INVESTMENT MANAGEMENT & ADVISORY SERVICES (0.11%)
AMVESCAP
6.60%; 05/15/05 105,000 113,338
LIFE & HEALTH INSURANCE (0.28%)
Lincoln National
5.25%; 06/15/07 110,000 115,762
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
LIFE & HEALTH INSURANCE (CONTINUED)
Torchmark
$ $
6.25%; 12/15/06 160,000 175,080
290,842
MEDICAL PRODUCTS (0.08%)
Baxter International
5.25%; 05/01/07 80,000 85,569
MEDICAL-DRUGS (0.18%)
Eli Lilly
5.50%; 07/15/06 95,000 103,951
Wyeth
7.90%; 02/15/05 80,000 88,182
192,133
MEDICAL-HMO (0.08%)
Anthem
4.88%; 08/01/05 80,000 84,005
MEDICAL-HOSPITALS (0.07%)
Tenet Healthcare
5.00%; 07/01/07 75,000 71,250
METAL-ALUMINUM (0.30%)
Alcan
6.25%; 11/01/08 95,000 107,881
Alcoa
4.25%; 08/15/07 50,000 52,204
7.25%; 08/01/05 135,000 149,754
309,839
MISCELLANEOUS INVESTING (0.84%)
Archstone-Smith Trust
7.15%; 10/15/03 65,000 66,209
Camden Property Trust
5.88%; 06/01/07 70,000 74,879
Duke Realty
7.30%; 06/30/03 95,000 95,813
Kimco Realty
6.50%; 10/01/03 100,000 101,982
Mack-Cali Realty
7.00%; 03/15/04 120,000 125,139
New Plan Excel Realty Trust
5.88%; 06/15/07 25,000 26,428
Oasis Residential
7.00%; 11/15/03 95,000 97,841
Prologis
7.00%; 10/01/03 95,000 97,252
Simon Property Group
6.63%; 06/15/03 115,000 115,637
6.75%; 02/09/04 70,000 72,668
873,848
MONEY CENTER BANKS (1.07%)
Bank of America
4.75%; 10/15/06 575,000 614,347
JP Morgan Chase
5.25%; 05/30/07 285,000 309,226
5.35%; 03/01/07 180,000 195,290
1,118,863
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
MORTGAGE BACKED SECURITIES (10.28%)
Bear Stearns Commercial Mortgage Securities
$ $
3.97%; 11/11/35 444,416 451,713
6.08%; 02/15/35 466,907 509,681
7.64%; 02/15/32 849,407 957,200
Chase Commercial Mortgage Securities
7.03%; 10/15/08 380,219 423,524
7.56%; 10/15/32 500,000 595,605
Commercial Mortgage Acceptance
6.79%; 06/15/31 82,103 90,485
CS First Boston Mortgage Securities
4.39%; 08/15/36 364,773 378,980
6.38%; 12/16/35 100,000 112,865
DLJ Commercial Mortgage
6.14%; 10/15/06 314,857 333,516
DLJ Mortgage Acceptance /1/
7.58%; 03/13/28 485,363 491,960
First Union Commercial Mortgage Securities
7.38%; 04/18/29 600,000 684,816
GE Capital Commercial Mortgage
3.35%; 08/11/36 368,802 377,810
5.99%; 12/10/35 130,000 144,424
GMAC Commercial Mortgage Securities
6.57%; 09/15/33 335,552 366,481
JP Morgan Chase Commercial Mortgage Securities
4.37%; 10/12/37 491,776 506,835
4.55%; 05/12/34 587,900 616,094
JP Morgan Commercial Mortgage Finance
7.07%; 09/15/29 419,803 445,869
LB-UBS Commercial Mortgage Trust
4.90%; 06/15/26 370,000 393,925
5.40%; 03/15/26 487,465 519,827
Lehman Large Loan
6.79%; 06/12/04 583,288 608,424
Merrill Lynch Mortgage Investors
7.12%; 06/18/29 500,000 561,746
Morgan Stanley Capital I
4.57%; 12/18/32 976,884 1,024,024
NationsLink Funding
7.23%; 06/20/31 100,000 116,127
10,711,931
MULTI-LINE INSURANCE (0.18%)
Allstate
7.88%; 05/01/05 70,000 77,934
Hartford Financial Services Group
4.70%; 09/01/07 105,000 108,275
186,209
MULTIMEDIA (0.62%)
AOL Time Warner
6.13%; 04/15/06 235,000 250,160
Gannett
5.50%; 04/01/07 70,000 76,681
Viacom
7.75%; 06/01/05 135,000 150,235
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
MULTIMEDIA (CONTINUED)
Walt Disney
$ $
7.30%; 02/08/05 160,000 172,980
650,056
MUTUAL INSURANCE (0.07%)
Metropolitan Life Insurance /1/
6.30%; 11/01/03 75,000 76,817
OIL COMPANY-EXPLORATION & PRODUCTION (0.66%)
Anadarko Petroleum
5.38%; 03/01/07 185,000 199,644
Canadian Occidental Petroleum
7.13%; 02/04/04 125,000 130,034
Kerr-McGee
5.38%; 04/15/05 70,000 73,680
PennzEnergy
10.25%; 11/02/05 175,000 203,957
Petroleos Mexicanos
6.50%; 02/01/05 80,000 85,280
692,595
OIL COMPANY-INTEGRATED (0.90%)
Amerada Hess
5.90%; 08/15/06 80,000 86,485
BP Canada Finance
3.63%; 01/15/09 145,000 148,043
ChevronTexaco Capital
3.38%; 02/15/08 75,000 76,113
Conoco
5.90%; 04/15/04 200,000 207,863
Marathon Oil
5.38%; 06/01/07 75,000 79,648
Occidental Petroleum
4.00%; 11/30/07 100,000 101,557
Phillips Petroleum
8.50%; 05/25/05 150,000 169,395
Union Oil Company of California
6.38%; 02/01/04 65,000 66,854
935,958
OIL REFINING & MARKETING (0.12%)
Tosco
8.25%; 05/15/03 50,000 50,085
Valero Energy
6.13%; 04/15/07 70,000 74,725
124,810
PAPER & RELATED PRODUCTS (0.46%)
Nexfor
7.50%; 07/15/03 95,000 95,935
Union Camp
7.00%; 08/15/06 129,000 144,471
Weyerhaeuser
2.54%; 09/15/03 115,000 115,010
5.50%; 03/15/05 115,000 120,818
476,234
PIPELINES (0.42%)
Duke Energy Field Services
7.50%; 08/16/05 150,000 164,098
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
PIPELINES (CONTINUED)
Kinder Morgan
$ $
6.65%; 03/01/05 150,000 162,047
Kinder Morgan Energy Partners
5.35%; 08/15/07 100,000 107,326
433,471
POULTRY (0.10%)
Tyson Foods
6.63%; 10/01/04 100,000 104,434
PROPERTY & CASUALTY INSURANCE (0.31%)
ACE INA Holdings
8.20%; 08/15/04 100,000 107,143
St. Paul
7.88%; 04/15/05 125,000 136,495
Travelers Property Casualty /1/
3.75%; 03/15/08 75,000 75,515
319,153
PUBLISHING-NEWSPAPERS (0.08%)
Thomson
5.75%; 02/01/08 75,000 82,760
REAL ESTATE OPERATOR & DEVELOPER (0.41%)
EOP Operating
7.38%; 11/15/03 420,000 431,583
REGIONAL AUTHORITY (0.61%)
New Brunswick
3.50%; 10/23/07 40,000 41,037
Province of Manitoba
2.75%; 01/17/06 155,000 157,135
Province of Ontario
3.50%; 09/17/07 165,000 168,906
Province of Quebec
5.50%; 04/11/06 250,000 272,184
639,262
REGIONAL BANKS (2.64%)
Bank One
7.63%; 08/01/05 450,000 504,800
First Union
7.55%; 08/18/05 490,000 550,059
FleetBoston Financial
7.25%; 09/15/05 150,000 167,193
KeyCorp
4.63%; 05/16/05 110,000 115,466
6.75%; 06/15/03 55,000 55,328
Korea Development Bank
7.13%; 04/22/04 165,000 171,712
PNC Funding
5.75%; 08/01/06 170,000 185,087
SunTrust Banks
5.05%; 07/01/07 70,000 75,512
U.S. Bancorp
6.75%; 10/15/05 177,000 195,239
Wells Fargo
5.90%; 05/21/06 665,000 733,524
2,753,920
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
RETAIL-DISCOUNT (0.56%)
Costco Wholesale
$ $
5.50%; 03/15/07 60,000 65,419
Target
5.40%; 10/01/08 100,000 108,620
Wal-Mart Stores
6.55%; 08/10/04 388,000 412,296
586,335
RETAIL-DRUG STORE (0.10%)
CVS
3.88%; 11/01/07 100,000 101,670
RETAIL-MAJOR DEPARTMENT STORE (0.12%)
Sears Roebuck
6.25%; 01/15/04 120,000 122,349
RETAIL-RESTAURANTS (0.12%)
McDonald's
5.38%; 04/30/07 113,000 121,603
SAVINGS & LOANS-THRIFTS (0.10%)
Golden West Financial
4.13%; 08/15/07 100,000 104,144
SOVEREIGN (1.11%)
Finland Government
4.75%; 03/06/07 150,000 161,436
Italy Government
4.38%; 10/25/06 735,000 776,338
Mexico Government
8.50%; 02/01/06 195,000 224,445
1,162,219
SPECIAL PURPOSE BANKS (0.84%)
KFW International Finance
3.75%; 10/01/04 855,000 880,738
SUPRANATIONAL BANK (2.08%)
Asian Development Bank
2.38%; 03/15/06 345,000 348,087
Corp Andina de Fomento
6.75%; 03/15/05 165,000 173,839
European Investment Bank
4.63%; 03/01/07 945,000 1,006,386
Inter-American Development Bank
6.50%; 10/20/04 595,000 638,804
2,167,116
TELECOMMUNICATION SERVICES (0.15%)
Citizens Communications
6.38%; 08/15/04 150,000 157,062
TELEPHONE-INTEGRATED (1.28%)
BellSouth
5.00%; 10/15/06 150,000 161,139
British Telecommunications
7.88%; 12/15/05 295,000 334,418
Deutsche Telekom International Finance
8.25%; 06/15/05 170,000 188,853
France Telecom
8.70%; 03/01/06 75,000 85,176
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
SBC Communications
$ $
5.75%; 05/02/06 250,000 273,318
Sprint Capital
7.13%; 01/30/06 275,000 290,125
1,333,029
TEXTILE-HOME FURNISHINGS (0.02%)
Mohawk Industries
6.50%; 04/15/07 20,000 22,105
TOOLS-HAND HELD (0.10%)
Stanley Works /1/
3.50%; 11/01/07 100,000 100,123
TRANSPORT-RAIL (0.62%)
Burlington Northern Santa Fe
6.38%; 12/15/05 230,000 254,393
Norfolk Southern
1.96%; 07/07/03 95,000 95,044
7.88%; 02/15/04 100,000 104,763
Union Pacific
7.60%; 05/01/05 175,000 192,673
646,873
TOTAL BONDS 91,527,910
Principal
Type Rate Maturity Amount Value
- -------------------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) CERTIFICATES (5.49%)
$ $
FHLMC /2/ 4.50% 12/01/09 - 05/01/10 3,212,015 3,283,864
FHLMC 5.00% 09/01/09 412,816 427,071
FHLMC 5.50% 12/01/08 - 04/01/09 1,124,196 1,166,101
FHLMC 6.50% 04/01/09 - 04/01/15 141,442 149,953
FHLMC 7.00% 12/01/22 - 03/01/28 221,438 235,313
FHLMC 7.25% 12/01/07 90,715 95,651
FHLMC 7.50% 12/01/29 57,876 61,785
FHLMC 8.00% 12/01/11 - 10/01/22 182,167 199,114
FHLMC 8.25% 01/01/12 8,912 9,625
FHLMC 9.00% 09/01/09 83,680 89,443
TOTAL FHLMC CERTIFICATES 5,717,920
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) CERTIFICATES (3.45%)
FNMA 4.50% 03/01/10 496,022 506,850
FNMA 5.50% 01/01/09 - 09/01/09 1,936,543 2,007,109
FNMA 6.00% 07/01/28 396,946 414,183
FNMA 7.50% 10/01/29 217,345 231,744
FNMA 8.00% 10/01/06 - 05/01/27 73,527 79,785
FNMA 8.50% 05/01/22 229,966 252,433
FNMA 9.00% 02/01/25 93,646 104,513
TOTAL FNMA CERTIFICATES 3,596,617
Principal
Type Rate Maturity Amount Value
- -------------------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) CERTIFICATES (0.05%)
$ $
GNMA II 8.00% 01/20/16 52,290 56,918
TOTAL GNMA CERTIFICATES 56,918
Principal
Amount Value
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (1.49%)
DIVERSIFIED FINANCIAL SERVICES (1.49%)
Investment in Joint Trading Account; General Electric
Capital
$ $
1.35%; 05/01/03 1,549,587 1,549,587
TOTAL COMMERCIAL PAPER 1,549,587
------------
TOTAL PORTFOLIO INVESTMENTS (98.30%) 102,448,952
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (1.70%) 1,771,241
TOTAL NET ASSETS (100.00%) $104,220,193
--------------
/1 /Restricted Security - The fund held securities, which may require
registration under the Securities Act of 1933, or an exemption therefrom, in
order to effect their sale in the ordinary course of business. At the end of
the period, restricted securities totaled $1,044,659 or 1.00% of net assets.
/2 /Security or a portion of the security was purchased in a "to-be-announced"
(TBA) transaction. See Notes to Financial Statements.
158
See accompanying notes.
SCHEDULE OF INVESTMENTS
PRINCIPAL TAX-EXEMPT BOND FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
TAX-EXEMPT BONDS (98.68%)
ALABAMA (1.17%)
Alabama Public School & College Authority
$ $
6.00%; 08/01/14 2,000,000 2,347,760
ALASKA (1.50%)
Valdez, Alaska
Amerada Hess
6.10%; 02/01/24 3,000,000 3,014,850
ARIZONA (1.10%)
Arizona State University
5.50%; 07/01/21 1,000,000 1,100,430
Salt River Project
5.25%; 01/01/18 1,000,000 1,097,080
2,197,510
ARKANSAS (1.10%)
Arkansas
5.25%; 08/01/12 2,000,000 2,215,340
CALIFORNIA (2.34%)
California
5.50%; 06/01/03 3,000,000 3,010,290
California State Department of Water
Resources
5.25%; 05/01/09 1,500,000 1,692,315
4,702,605
COLORADO (1.10%)
Platte River Power Authority
5.38%; 06/01/17 2,000,000 2,212,520
CONNECTICUT (1.80%)
Connecticut
5.38%; 04/15/14 2,000,000 2,257,340
University Of Connecticut
5.38%; 04/01/17 1,220,000 1,360,263
3,617,603
FLORIDA (9.42%)
Dade County, Florida
5.25%; 10/01/11 1,040,000 1,161,254
Florida Municipal Power
5.50%; 10/01/16 2,930,000 3,323,704
Florida State Board of Education
5.50%; 06/01/14 3,000,000 3,452,430
Orange County, Florida
5.13%; 01/01/23 2,000,000 2,108,240
5.50%; 10/01/32 3,000,000 3,222,840
Orlando Utilities Commission
5.25%; 10/01/16 3,125,000 3,454,875
Sunrise, Florida Utilities
5.20%; 10/01/22 2,000,000 2,166,000
18,889,343
GEORGIA (3.52%)
Fulco, Georgia
St. Joseph's Hospital
5.50%; 10/01/14 2,000,000 2,140,740
Georgia
5.25%; 07/01/13 2,600,000 2,908,984
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
TAX-EXEMPT BONDS (CONTINUED)
GEORGIA (CONTINUED)
Georgia (continued)
$ $
5.75%; 07/01/03 2,000,000 2,015,800
7,065,524
ILLINOIS (12.69%)
Chicago
5.25%; 01/01/14 1,000,000 1,118,940
Chicago Midway Airport
5.50%; 01/01/11 1,500,000 1,656,555
Chicago Park District
5.50%; 01/01/18 2,000,000 2,201,340
Chicago Park District
5.60%; 01/01/21 1,400,000 1,528,800
Du Page & Cook Counties
5.50%; 01/01/19 2,855,000 3,288,475
Illinois
5.00%; 03/01/14 2,000,000 2,159,740
5.25%; 04/01/08 2,000,000 2,252,080
5.38%; 10/01/14 2,160,000 2,479,226
Illinois Health Facility
Advocate Health
5.25%; 08/15/18 320,000 365,661
7.00%; 02/15/09 270,000 314,056
7.00%; 02/15/18 720,000 915,437
Illinois Health Facility
Northwestern Memorial Hospital
6.10%; 08/15/14 1,000,000 1,066,400
Illinois Sales Tax
6.00%; 06/15/23 3,000,000 3,613,830
Metropolitan Pier & Exposition Authority
5.50%; 06/15/23 750,000 818,820
Springfield
5.50%; 03/01/15 1,500,000 1,685,760
25,465,120
INDIANA (6.06%)
Indiana Bank
5.38%; 02/01/17 3,000,000 3,360,930
Indiana Health Facility
Clarion Health Partners
5.38%; 02/15/09 2,020,000 2,201,477
Indianapolis Public Improvement
5.50%; 01/01/16 3,000,000 3,379,200
Lawrenceburg, Indiana
Indiana Michigan Power
5.90%; 11/01/19 2,000,000 2,000,920
Warrick County, Indiana
Southern Indiana Gas & Electric
6.00%; 05/01/23 1,190,000 1,214,895
12,157,422
IOWA (0.51%)
Eddyville, Iowa
Cargill
5.63%; 12/01/13 1,000,000 1,029,370
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
TAX-EXEMPT BONDS (CONTINUED)
KENTUCKY (1.70%)
Kentucky Property & Buildings Commission
$ $
5.38%; 02/01/18 1,000,000 1,098,310
Kentucky Turnpike Authority
5.50%; 07/01/12 2,000,000 2,304,560
3,402,870
MAINE (0.88%)
Maine Governmental Facilities Authority
5.38%; 10/01/17 1,600,000 1,761,904
MARYLAND (1.13%)
Maryland
5.25%; 03/01/10 2,000,000 2,272,740
MASSACHUSETTS (2.84%)
Massachusetts
5.25%; 01/01/08 2,000,000 2,231,560
5.50%; 03/01/15 3,000,000 3,457,410
5,688,970
MICHIGAN (3.82%)
Michigan
5.25%; 05/15/22 1,715,000 1,821,433
Michigan
Colorado Power
1.30%; 09/15/08 1,500,000 1,500,000
Michigan
Drinking Water State Revolving Fund
5.00%; 10/01/23 1,165,000 1,215,642
Michigan State Trunk Line
5.25%; 10/01/21 1,000,000 1,069,710
Michigan Strategic Fund
Detroit Edison
5.45%; 09/01/29 2,000,000 2,056,480
7,663,265
MINNESOTA (1.12%)
Minnesota
5.00%; 10/01/07 2,000,000 2,247,140
MISSISSIPPI (1.15%)
Mississippi
5.50%; 09/01/10 2,000,000 2,301,820
MISSOURI (0.87%)
Missouri State Health & Educational
Facilities Authority
5.50%; 06/15/16 1,500,000 1,751,385
NEVADA (1.05%)
Nevada
5.25%; 09/15/27 2,000,000 2,104,700
NEW HAMPSHIRE (1.07%)
New Hampshire Health & Education Facilities
Authority
5.50%; 08/01/27 2,000,000 2,152,680
NEW YORK (5.51%)
Long Island Power Authority
5.25%; 06/01/12 3,000,000 3,226,860
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
TAX-EXEMPT BONDS (CONTINUED)
NEW YORK (CONTINUED)
New York State Dormitory Authority
$ $
5.00%; 03/15/08 520,000 576,883
5.25%; 10/01/23 1,500,000 1,597,395
New York State Environmental Facilities
5.25%; 06/15/17 2,000,000 2,203,940
New York State Thruway Authority
5.50%; 04/01/12 3,000,000 3,442,590
11,047,668
OHIO (2.25%)
Ohio
5.50%; 02/01/05 2,000,000 2,143,240
Summit County, Ohio
5.50%; 12/01/13 1,000,000 1,158,350
5.50%; 12/01/14 1,045,000 1,215,544
4,517,134
OKLAHOMA (3.22%)
Grand River Dam Authority
5.00%; 06/01/12 3,500,000 3,897,425
Tulsa Industrial Authority
St. John Medical Center
6.25%; 02/15/14 1,280,000 1,437,530
6.25%; 02/15/17 1,000,000 1,123,070
6,458,025
PENNSYLVANIA (2.37%)
Pennsylvania
5.50%; 05/01/17 3,000,000 3,376,020
Pennsylvania Industrial Development Authority
5.50%; 07/01/21 1,250,000 1,379,062
4,755,082
PUERTO RICO (0.54%)
Puerto Rico Highway & Transportation
Authority
5.25%; 07/01/21 1,000,000 1,085,260
RHODE ISLAND (0.57%)
Rhode Island
5.50%; 08/01/11 1,000,000 1,148,250
SOUTH CAROLINA (5.22%)
Greenville Hospital
5.50%; 05/01/16 1,500,000 1,530,180
South Carolina
5.25%; 04/01/05 2,000,000 2,148,460
5.75%; 01/01/13 3,000,000 3,445,950
South Carolina Public Service
5.38%; 01/01/16 3,000,000 3,339,030
10,463,620
TENNESSEE (1.37%)
Louden County, Tennessee
Kimberly Clark
6.20%; 02/01/23 2,700,000 2,757,375
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
TAX-EXEMPT BONDS (CONTINUED)
TEXAS (11.21%)
Brazos River Authority
Houston Industries
$ $
5.13%; 05/01/19 2,000,000 2,120,340
Guadalupe-Blanco River Authority
E.I. Dupont De Nemours
6.35%; 07/01/22 2,500,000 2,582,425
Harris County, Texas
5.50%; 08/15/20 2,000,000 2,201,420
Houston, Texas Water & Sewer
5.75%; 12/01/32 2,135,000 2,525,769
Lower Colorado River Authority
5.38%; 05/15/20 3,000,000 3,219,360
San Antonio
5.50%; 05/15/17 2,090,000 2,327,549
Texas State Department Of Housing & Community
Affairs
5.70%; 01/01/33 2,970,000 3,152,893
Texas Technical University
5.50%; 08/15/12 2,000,000 2,283,760
University of Texas
5.25%; 07/01/17 1,905,000 2,083,727
22,497,243
UTAH (1.71%)
Utah
5.38%; 07/01/11 3,000,000 3,426,300
WASHINGTON (2.68%)
Washington
5.00%; 07/01/21 3,000,000 3,134,430
5.50%; 01/01/11 2,000,000 2,239,780
5,374,210
WEST VIRGINIA (3.56%)
Marshall County, West Virginia
Ohio Power
5.90%; 04/01/22 3,500,000 3,582,005
Pleasants County, West Virginia
Potomac Edison
6.15%; 05/01/15 2,000,000 2,205,620
West Virginia
5.20%; 11/01/26 1,250,000 1,345,750
7,133,375
WISCONSIN (0.53%)
Wisconsin Health & Educational Facilities
Franciscan Skemp Medical Center
6.13%; 11/15/15 1,000,000 1,061,920
TOTAL TAX-EXEMPT BONDS 197,987,903
------------
TOTAL PORTFOLIO INVESTMENTS (98.68%) 197,987,903
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (1.32%) 2,654,133
TOTAL NET ASSETS (100.00%) $200,642,036
--------------
See accompanying notes.
161
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL BOND FUND, INC.
- -------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $10.97 $11.11 $10.25 $10.66 $11.59 $11.44
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.23 0.51/(f)/ 0.61 0.72 0.70 0.71
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (0.11)/(f)/ 0.88 (0.40) (0.91) 0.16
---- ----- ---- ----- ----- ----
Total From Investment
Operations 0.46 0.40 1.49 0.32 (0.21) 0.87
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.25) (0.54) (0.63) (0.73) (0.69) (0.72)
Distributions from
Realized Gains...... -- -- -- -- (0.03) --
---- -----
Total Dividends and
Distributions (0.25) (0.54) (0.63) (0.73) (0.72) (0.72)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $11.18 $10.97 $11.11 $10.25 $10.66 $11.59
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 4.24%/(d)/ 3.83% 14.96% 3.23% (1.92)% 7.76%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $194,106 $186,723 $143,818 $124,630 $145,975 $148,081
Ratio of Expenses to
Average Net Assets.. 1.01%/(e)/ 1.06% 1.05% 1.06% 1.04% 0.95%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- -- -- 1.04%
Ratio of Net
Investment Income to
Average Net Assets.. 4.16%/(e)/ 4.73%/(f)/ 5.67% 6.96% 6.25% 6.19%
Portfolio Turnover
Rate................ 65.6%/(e)/ 78.9% 152.0% 60.7% 48.9% 15.2%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL BOND FUND, INC.
- -------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $10.97 $11.11 $10.24 $10.65 $11.58 $11.42
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.19 0.43/(g)/ 0.54 0.64 0.61 0.63
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.23 (0.11)/(g)/ 0.88 (0.39) (0.91) 0.16
---- ----- ---- ----- ----- ----
Total From Investment
Operations 0.42 0.32 1.42 0.25 (0.30) 0.79
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.21) (0.46) (0.55) (0.66) (0.60) (0.63)
Distributions from
Realized Gains...... -- -- -- -- (0.03) --
---- -----
Total Dividends and
Distributions (0.21) (0.46) (0.55) (0.66) (0.63) (0.63)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $11.18 $10.97 $11.11 $10.24 $10.65 $11.58
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 3.86%/(d)/ 3.07% 14.23% 2.45% (2.68)% 7.04%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $34,274 $34,190 $26,348 $22,577 $25,451 $22,466
Ratio of Expenses to
Average Net Assets.. 1.79%/(e)/ 1.83% 1.68% 1.85% 1.79% 1.67%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- -- -- 1.81%
Ratio of Net
Investment Income to
Average Net Assets.. 3.38%/(e)/ 3.95%/(g)/ 5.04% 6.16% 5.50% 5.45%
Portfolio Turnover
Rate................ 65.6%/(e)/ 78.9% 152.0% 60.7% 48.9% 15.2%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver ceased on October 31, 1998.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. The effect of this change
for the year ended October 31, 2002 for Class A was to decrease net investment
income by $.03 per share, increase net realized and unrealized gain (loss) on
investments by $.03 per share, and decrease the ratio of net investment income
to average net assets by .30%. Prior periods have not been restated to reflect
this change in presentation.
/(g) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. The effect of this change
for the year ended October 31, 2002 for Class B was to decrease net investment
income by $.03 per share, increase net realized and unrealized gain (loss) on
investments by $.03 per share, and decrease the ratio of net investment income
to average net assets by .30%. Prior periods have not been restated to reflect
this change in presentation.
See accompanying notes.
162
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(B)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL GOVERNMENT SECURITIES INCOME FUND, INC.
- -------------------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $11.74 $11.77 $11.18 $11.10 $11.63 $11.51
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.27 0.60 0.65 0.68 0.69 0.70
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.01 0.01 0.61 0.07 (0.52) 0.12
---- ---- ---- ---- ----- ----
Total From Investment
Operations 0.28 0.61 1.26 0.75 0.17 0.82
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.28) (0.64) (0.67) (0.67) (0.70) (0.70)
----- ----- ----- ----- ----- -----
Total Dividends and
Distributions (0.28) (0.64) (0.67) (0.67) (0.70) (0.70)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $11.74 $11.74 $11.77 $11.18 $11.10 $11.63
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 2.45%/(c)/ 5.41% 11.64% 7.09% 1.47% 7.38%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $338,642 $310,506 $243,876 $213,114 $237,811 $251,455
Ratio of Expenses to
Average Net Assets.. 0.85%/(d)/ 0.90% 0.90% 0.94% 0.89% 0.86%
Ratio of Net
Investment Income to
Average Net Assets.. 4.56%/(d)/ 5.11% 5.68% 6.14% 6.04% 6.07%
Portfolio Turnover
Rate................ 171.1%/(d)/ 36.5% 51.9% 6.9% 19.4% 17.1%
2003/(B)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL GOVERNMENT SECURITIES INCOME FUND, INC.
- -------------------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $11.67 $11.71 $11.13 $11.05 $11.60 $11.50
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.23 0.52 0.58 0.58 0.61 0.62
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.02 (0.01) 0.59 0.09 (0.54) 0.12
---- ----- ---- ---- ----- ----
Total From Investment
Operations 0.25 0.51 1.17 0.67 0.07 0.74
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.24) (0.55) (0.59) (0.59) (0.62) (0.64)
----- ----- ----- ----- ----- -----
Total Dividends and
Distributions (0.24) (0.55) (0.59) (0.59) (0.62) (0.64)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $11.68 $11.67 $11.71 $11.13 $11.05 $11.60
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 2.14%/(c)/ 4.54% 10.82% 6.32% 0.65% 6.60%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $65,995 $52,839 $36,303 $27,395 $29,751 $24,370
Ratio of Expenses to
Average Net Assets.. 1.60%/(d)/ 1.71% 1.59% 1.75% 1.63% 1.57%
Ratio of Net
Investment Income to
Average Net Assets.. 3.79%/(d)/ 4.30% 4.98% 5.33% 5.30% 5.43%
Portfolio Turnover
Rate................ 171.1%/(d)/ 36.5% 51.9% 6.9% 19.4% 17.1%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Six months ended April 30, 2003.
/(c) /Total return amounts have not been annualized.
/(d) /Computed on an annualized basis.
See accompanying notes.
163
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL LIMITED TERM BOND FUND, INC.
- --------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $9.86 $9.98 $9.50 $9.54 $9.93 $9.88
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.17 0.43/(f)/ 0.56 0.59 0.57 0.57
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.10 (0.08)/(f)/ 0.49 (0.05) (0.39) 0.06
---- ----- ---- ----- ----- ----
Total From Investment
Operations 0.27 0.35 1.05 0.54 0.18 0.63
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.21) (0.47) (0.57) (0.58) (0.57) (0.58)
----- ----- ----- ----- ----- -----
Total Dividends and
Distributions (0.21) (0.47) (0.57) (0.58) (0.57) (0.58)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $9.92 $9.86 $9.98 $9.50 $9.54 $9.93
===== ===== ===== ===== ===== =====
Total Return /(a)/ ... 2.78%/(d)/ 3.70% 11.36% 5.94% 1.83% 6.57%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $88,328 $74,719 $37,942 $25,183 $27,096 $27,632
Ratio of Expenses to
Average Net Assets.. 0.92%/(e)/ 0.94% 1.01% 0.99% 1.00% 0.82%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- 1.20% 1.14% 1.13%
Ratio of Net
Investment Income to
Average Net Assets.. 3.28%/(e)/ 4.07%/(f)/ 5.69% 6.16% 5.76% 5.86%
Portfolio Turnover
Rate................ 28.4%/(e)/ 97.6% 65.7% 31.5% 20.9% 23.8%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL LIMITED TERM BOND FUND, INC.
- --------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $10.00 $10.11 $9.60 $9.60 $9.98 $9.90
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.15 0.37/(g)/ 0.49 0.55 0.52 0.54
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.10 (0.06)/(g)/ 0.53 (0.02) (0.39) 0.06
---- ----- ---- ----- ----- ----
Total From Investment
Operations 0.25 0.31 1.02 0.53 0.13 0.60
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.19) (0.42) (0.51) (0.53) (0.51) (0.52)
----- ----- ----- ----- ----- -----
Total Dividends and
Distributions (0.19) (0.42) (0.51) (0.53) (0.51) (0.52)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $10.06 $10.00 $10.11 $9.60 $9.60 $9.98
====== ====== ====== ===== ===== =====
Total Return /(a)/ ... 2.51%/(d)/ 3.25% 10.84% 5.69% 1.29% 6.24%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $15,892 $13,387 $6,970 $3,291 $2,696 $1,705
Ratio of Expenses to
Average Net Assets.. 1.31%/(e)/ 1.39% 1.50% 1.34% 1.35% 1.22%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- 1.93% 1.92% 2.36%
Ratio of Net
Investment Income to
Average Net Assets.. 2.88%/(e)/ 3.61%/(g)/ 5.17% 5.81% 5.41% 5.44%
Portfolio Turnover
Rate................ 28.4%/(e)/ 97.6% 65.7% 31.5% 20.9% 23.8%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver ceased on November 1, 2000.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
/(f) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. The effect of this change
for the year ended October 31, 2002 for Class A was to decrease net investment
income by $.07 per share, increase net realized and unrealized gain (loss) on
investments by $.07 per share, and decrease the ratio of net investment income
to average net assets by 1.81%. Prior periods have not been restated to
reflect this change in presentation.
/(g) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. The effect of this change
for the year ended October 31, 2002 for Class B was to decrease net investment
income by $.07 per share, increase net realized and unrealized gain (loss) on
investments by $.07 per share, and decrease the ratio of net investment income
to average net assets by 1.86%. Prior periods have not been restated to
reflect this change in presentation.
See accompanying notes.
164
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
INCOME FUNDS
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(B)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL TAX-EXEMPT BOND FUND, INC.
- ------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $12.29 $12.10 $11.65 $11.69 $12.59 $12.38
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.23 0.48/(e)/ 0.54 0.59 0.60 0.60
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.20 0.18/(e)/ 0.51 0.06 (0.90) 0.22
---- ---- ---- ---- ----- ----
Total From Investment
Operations 0.43 0.66 1.05 0.65 (0.30) 0.82
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.23) (0.47) (0.55) (0.58) (0.59) (0.61)
Distributions from
Realized Gains...... (0.05) -- (0.05) (0.11) (0.01) --
---- ----- ----- ----- -----
Total Dividends and
Distributions (0.28) (0.47) (0.60) (0.69) (0.60) (0.61)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $12.44 $12.29 $12.10 $11.65 $11.69 $12.59
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 3.53%/(c)/ 5.64% 9.28% 5.81% (2.51)% 6.76%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $186,627 $183,100 $167,016 $163,846 $186,973 $204,865
Ratio of Expenses to
Average Net Assets.. 0.78%/(d)/ 0.77% 0.82% 0.88% 0.80% 0.83%
Ratio of Net
Investment Income to
Average Net Assets.. 3.77%/(d)/ 4.02%/(e)/ 4.59% 5.12% 4.84% 4.83%
Portfolio Turnover
Rate................ 30.5%/(d)/ 60.0% 51.8% 7.6% 15.6% 6.6%
2003/(B)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL TAX-EXEMPT BOND FUND, INC.
- ------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $12.32 $12.16 $11.71 $11.70 $12.59 $12.39
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.18 0.38/(f)/ 0.48 0.57 0.53 0.53
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 0.21 0.17/(f)/ 0.51 0.07 (0.89) 0.20
---- ---- ---- ---- ----- ----
Total From Investment
Operations 0.39 0.55 0.99 0.64 (0.36) 0.73
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.18) (0.39) (0.49) (0.52) (0.52) (0.53)
Distributions from
Realized Gains...... (0.05) -- (0.05) (0.11) (0.01) --
---- ----- ----- ----- -----
Total Dividends and
Distributions (0.23) (0.39) (0.54) (0.63) (0.53) (0.53)
----- ----- ----- ----- ----- -----
Net Asset Value, End
of Period............ $12.48 $12.32 $12.16 $11.71 $11.70 $12.59
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 3.23%/(c)/ 4.67% 8.70% 5.69% (3.01)% 6.01%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $14,015 $13,848 $12,122 $10,744 $11,480 $11,419
Ratio of Expenses to
Average Net Assets.. 1.55%/(d)/ 1.60% 1.33% 1.37% 1.32% 1.43%
Ratio of Net
Investment Income to
Average Net Assets.. 2.99%/(d)/ 3.19%/(f)/ 4.07% 4.60% 4.32% 4.22%
Portfolio Turnover
Rate................ 30.5%/(d)/ 60.0% 51.8% 7.6% 15.6% 6.6%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Six months ended April 30, 2003.
/(c) /Total return amounts have not been annualized.
/(d) /Computed on an annualized basis.
/(e) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. There was no effect to
the Class A per share net investment income or net realized and unrealized
gain (loss) on investments for the year ended October 31, 2002. The ratio of
net investment income to average net assets increased by .06%. Prior periods
have not been restated to reflect this change in presentation.
/(f) /Effective November 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies. There was no effect to
the Class B per share net investment income or net realized and unrealized
gain (loss) on investments for the year ended October 31, 2002. The ratio of
net investment income to average net assets increased by .06%. Prior periods
have not been restated to reflect this change in presentation.
See accompanying notes.
165
STATEMENT OF ASSETS AND LIABILITIES
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
CASH MANAGEMENT
FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INVESTMENT IN SECURITIES--AT COST .......................... $ 372,981,068
==============
ASSETS
Investment in securities--at value.......................... $ 372,981,068
Cash........................................................ 18,590
Receivables:
Capital Shares sold........................................ 830,524
Dividends and interest..................................... 329,742
Other assets................................................ 29,527
--------------
Total Assets 374,189,451
LIABILITIES
Accrued expenses............................................ 267,835
Payables:
Capital Shares reacquired.................................. 10,528
--------------
Total Liabilities 278,363
--------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES ................ $ 373,911,088
==============
NET ASSETS CONSIST OF:
Capital Shares and additional paid-in-capital............... $ 373,911,088
--------------
Total Net Assets $ 373,911,088
==============
CAPITAL STOCK (PAR VALUE: $.01 A SHARE):
Shares authorized........................................... 2,000,000,000
NET ASSET VALUE PER SHARE:
Class A: Net Assets......................................... $ 364,505,425
Shares issued and outstanding............................. 364,505,425
Net asset value per share................................. $ 1.000
==============
Class B: Net Assets......................................... $ 9,405,663
Shares issued and outstanding............................. 9,405,663
Net asset value per share /(a)/ .......................... $ 1.000
==============
/(a) /Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes.
166
STATEMENT OF OPERATIONS
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
CASH MANAGEMENT
FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (OPERATING LOSS)
Income:
Interest................................................... $2,845,821
Expenses:
Management and investment advisory fees.................... 810,514
Distribution fees - Class B................................ 8,122
Registration fees - Class A................................ 9,541
Registration fees - Class B................................ 5,608
Shareholder reports - Class A............................. 11,838
Shareholder reports - Class B............................. 305
Transfer and administrative fees - Class A................. 247,971
Transfer and administrative fees - Class B................. 5,220
Auditing and legal fees.................................... 5,149
Custodian fees............................................. 6,290
Directors' fees............................................ 11,478
Registration fees.......................................... 15,014
Transfer and administrative fees........................... 325,703
Other expenses............................................. 12,393
----------
Total Expenses 1,475,146
----------
Net Investment Income (Operating Loss) $1,370,675
==========
See accompanying notes.
167
STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
SIX MONTHS ENDED APRIL 30, 2003 EXCEPT AS NOTED (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
CASH MANAGEMENT
FUND, INC.
- -------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002
-------------- -------------------
- -------------------------------------------------------------------------------
OPERATIONS
Net investment income (operating loss).... $ 1,370,675 $ 5,860,948
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income:
Class A.................................. (1,351,965) (5,755,124)
Class B.................................. (18,710) (61,584)
Class C.................................. N/A (1,043)/(a)/
Class R.................................. N/A (43,197)/(b)/
------------- -------------
Total Dividends and Distributions (1,370,675) (5,860,948)
CAPITAL SHARE TRANSACTIONS
Shares sold:
Class A.................................. 324,653,537 736,479,913
Class B.................................. 4,329,914 7,267,116
Class C.................................. N/A 1,054,984/(a)/
Class R.................................. N/A 531,583/(b)/
Shares issued in reinvestment of dividends
and distributions:
Class A.................................. 1,299,559 5,468,029
Class B.................................. 18,045 58,982
Class C.................................. N/A 560/(a)/
Class R.................................. N/A 42,920/(b)/
Shares redeemed:
Class A.................................. (358,834,298) (756,970,073)
Class B.................................. (3,657,115) (5,266,501)
Class C.................................. N/A (1,459,373)/(a)/
Class R.................................. N/A (18,809,442)/(b)/
------------- -------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (32,190,358) (31,601,302)
------------- -------------
Total Increase (Decrease) (32,190,358) (31,601,302)
NET ASSETS
Beginning of period....................... 406,101,446 437,702,748
------------- -------------
End of period............................. $ 373,911,088 $ 406,101,446
============= =============
/(a) /Period from November 1, 2001 through January 31, 2002 (discontinuation of
class).
/(b) /Period from November 1, 2001 through December 28, 2001 (discontinuation of
class).
See accompanying notes.
168
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
1. ORGANIZATION
Principal Cash Management Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company and operates in the mutual fund industry.
The Fund offers both Class A shares and Class B shares to the public. Shares of
the Fund are sold at net asset value; no sales charge applies to purchases of
the Fund. Certain purchases of Class A shares of the Fund may be subject to a
contingent deferred sales charge ("CDSC") if redeemed within eighteen months of
purchase. Class B shares are sold without an initial sales charge, but bear
higher ongoing distribution fees and are subject to a declining CDSC on certain
redemptions made within six years of purchase. Class B shares automatically
convert into Class A shares, based on relative net asset value (without a sales
charge), seven years after purchase. Both classes of shares in the Fund
represent interests in the same portfolio of investments, and will vote together
as a single class except where otherwise required by law or as determined by the
Fund's Board of Directors. In addition, the Board of Directors declares separate
dividends on each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the Fund:
SECURITY VALUATION . The Fund values its securities at amortized cost, which
approximates market. Under the amortized cost method, a security is valued by
applying a constant yield to maturity of the difference between the principal
amount due at maturity and the cost of the security to the Fund.
INCOME AND INVESTMENT TRANSACTIONS. . The Fund records investment transactions
on a trade date basis. The identified cost basis has been used in determining
the net realized gain or loss from investment transactions. Interest income is
recognized on an accrual basis. Discounts and premiums on securities are
accreted/amortized over the lives of the respective securities. The Fund
allocates daily all income and realized gains or losses to each class of shares
based upon the relative proportion of the number of settled shares outstanding
of each class.
The Fund's investments are with various issuers in various industries. The
schedule of investments contained herein summarizes concentration of credit risk
by issuer and industry.
EXPENSES . The Fund allocates daily all expenses (other than class-specific
expenses) to each class of shares based upon the relative proportion of the
number of settled shares outstanding of each class. Class-specific expenses
charged to each class during the period ended April 30, 2003, are included
separately in the statement of operations.
DISTRIBUTIONS TO SHAREHOLDERS . The Fund declares all net investment income and
any net realized gains and losses from investment transactions as dividends
daily to settled shares of record as of that day. Dividends from net investment
income and net realized gain from investments are determined in accordance with
federal tax regulations, which may differ from accounting principles generally
accepted in the United States.
FEDERAL INCOME TAXES . No provision for federal income taxes is considered
necessary because the 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.
169
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
3. OPERATING POLICIES
JOINT TRADING ACCOUNT . The Fund may, pursuant to an exemptive order issued by
the Securities and Exchange Commission, transfer uninvested funds into a joint
trading account. The order permits the Fund's cash balance to be deposited into
a single joint account along with the cash of other registered investment
companies managed by Principal Management Corporation (the "Manager"). These
balances may be invested in one or more short-term instruments.
LINE OF CREDIT . The Fund participates with other funds managed by Principal
Management Corporation in an unsecured joint line of credit with two banks which
allow the participants to borrow up to $75 million, collectively. Borrowings are
made solely to facilitate the handling of unusual and/or unanticipated
short-term cash requirements. Interest is charged to each participant, based on
its borrowings, at a rate equal to the Fed Funds Rate plus .50%. Additionally, a
commitment fee is charged at the annual rate of .09% on the amount of the line
of credit. The commitment fee is allocated among the participating funds in
proportion to their average net assets during each calendar quarter. At April
30, 2003, the Fund had no outstanding borrowings under the line of credit.
4. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATES
MANAGEMENT SERVICES . The Fund has agreed to pay investment advisory and
management fees to Principal Management Corporation (wholly owned by Princor
Financial Services Corporation, a subsidiary of Principal Financial Services,
Inc.) computed at an annual percentage rate of the Fund's average daily net
assets. The annual rate used in this calculation for the Fund is as follows:
NET ASSETS OF FUND (IN MILLIONS)
- --------------------------------------------
FIRST NEXT NEXT NEXT OVER
$100 $100 $100 $100 $400
----- ---- ---- ---- ----
.50% .45% .40% .35% .30%
The Fund also reimburses the Manager for transfer and administrative services,
including the cost of accounting, data processing, supplies and other services
rendered.
DISTRIBUTION FEES . Class B shares bear distribution fees computed at an annual
rate of up to 1.00% of the average daily net assets attributable to the class of
the Fund.
Distribution fees are paid to Princor Financial Services Corporation, the
principal underwriter. A portion of the fees is subsequently remitted to retail
dealers. Pursuant to the distribution agreement for Class B shares, fees that
are unused by the principal underwriter at the end of the fiscal year are
returned to the Fund.
SALES CHARGES . Princor Financial Services Corporation, as principal
underwriter, receives proceeds of any CDSC on certain Class A and Class B share
redemptions. The charge is based on declining rates which for Class A shares
begin at .75% and Class B shares at 4.00% of the lesser of current market value
or the cost of shares being redeemed. The aggregate amount of these charges for
Class A shares and Class B shares retained by Princor Financial Services
Corporation for the period ended April 30, 2003, were $262 and $24,509,
respectively.
AFFILIATED OWNERSHIP . At April 30, 2003, Principal Life Insurance Company (an
affiliate of the Manager), affiliates of Principal Life Insurance Company,
benefit plans sponsored on behalf of Principal Life Insurance Company and
several joint ventures (in each of which a subsidiary of Principal Life
Insurance Company is a participant) owned 8,880,927 Class A shares of the Fund.
AFFILIATED BROKERAGE COMMISSIONS . No brokerage commissions were paid by the
Fund to affiliated broker dealers during the period.
170
NOTES TO FINANCIAL STATEMENTS
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
APRIL 30, 2003 (UNAUDITED)
-------------------------------------------------------------------------------
5. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares were as follows:
PERIOD ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------- ------------------
Shares sold:
Class A..................................... 324,653,537 736,479,913
Class B..................................... 4,329,914 7,267,116
Class C..................................... N/A 1,054,984*
Class R..................................... N/A 531,583**
Shares issued in reinvestment of dividends:
Class A..................................... 1,299,559 5,468,029
Class B..................................... 18,045 58,982
Class C..................................... N/A 560*
Class R..................................... N/A 42,920**
Shares redeemed:
Class A..................................... (358,834,298) (756,970,073)
Class B..................................... (3,657,115) (5,266,501)
Class C..................................... N/A (1,459,373)*
Class R..................................... N/A (18,809,442)**
------------ ------------
Net Increase (Decrease) (31,601,302)
============ ============
* Period from November 1, 2001, through January 31, 2002 (discontinuation of
Class C shares).
** Period from November 1, 2001, through December 28, 2001 (discontinuation of
Class R shares).
With the discontinuation of Class C shares, $342,482 and 342,482 shares were
exchanged into Class A shares on January 31, 2002. With the discontinuation of
Class R shares, $17,764,708 and 17,764,708 shares were exchanged into Class A
shares on December 28, 2001.
6. FEDERAL TAX INFORMATION
DISTRIBUTION TO SHAREHOLDERS. . Federal tax distributions of ordinary income
paid in 2003 and 2002 were $1,370,675 and $5,860,948, respectively.
171
SCHEDULE OF INVESTMENTS
PRINCIPAL CASH MANAGEMENT FUND, INC.
APRIL 30, 2003 (UNAUDITED)
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (91.55%)
ASSET BACKED SECURITIES (9.01%)
Corporate Asset Funding
$ $
1.20%; 07/09/03 2,600,000 2,594,020
1.22%; 06/23/03 1,450,000 1,447,396
1.24%; 07/22/03 2,000,000 1,994,351
CXC
1.23%; 06/17/03 1,810,000 1,807,093
1.23%; 07/29/03 2,300,000 2,293,006
1.25%; 05/07/03 2,725,000 2,724,432
1.26%; 05/06/03 2,500,000 2,499,562
1.26%; 05/15/03 2,500,000 2,498,775
1.26%; 06/09/03 2,400,000 2,396,724
1.26%; 06/27/03 2,500,000 2,495,013
Quincy Capital
1.26%; 05/22/03 2,800,000 2,797,942
Receivables Capital
1.22%; 05/19/03 2,490,000 2,488,481
1.22%; 06/20/03 2,100,000 2,096,442
1.24%; 06/20/03 1,230,000 1,227,882
Windmill Funding
1.25%; 05/01/03 2,000,000 2,000,000
1.28%; 05/16/03 310,000 309,835
33,670,954
COMMERCIAL BANKS (2.13%)
Svenska Handelsbanken
1.21%; 07/01/03 2,300,000 2,295,284
1.23%; 06/24/03 1,990,000 1,986,328
1.24%; 07/01/03 2,200,000 2,195,378
1.26%; 05/05/03 1,500,000 1,499,791
7,976,781
DIVERSIFIED FINANCIAL SERVICES (10.20%)
Amstel Funding
1.15%; 06/11/03 2,400,000 2,396,611
1.23%; 05/13/03 2,700,000 2,698,893
1.25%; 06/16/03 2,059,000 2,055,659
1.25%; 10/28/03 1,235,000 1,227,281
1.26%; 05/19/03 1,635,000 1,633,970
1.27%; 05/05/03 2,500,000 2,499,647
1.27%; 05/12/03 2,500,000 2,499,030
1.27%; 07/21/03 1,500,000 1,495,714
1.28%; 05/05/03 1,300,000 1,299,815
General Electric Capital
1.21%; 06/25/03 2,500,000 2,495,378
1.22%; 06/18/03 2,180,000 2,176,454
1.22%; 06/23/03 2,000,000 1,996,408
1.22%; 07/14/03 2,200,000 2,194,483
1.23%; 06/13/03 2,000,000 1,997,062
1.24%; 06/19/03 2,000,000 1,996,624
1.25%; 09/22/03 1,500,000 1,492,500
1.37%; 05/20/03 1,970,000 1,968,575
Verizon Network Funding
1.23%; 06/03/03 2,000,000 1,997,745
1.25%; 05/05/03 2,000,000 1,999,722
38,121,571
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
DIVERSIFIED OPERATIONS (0.53%)
Rio Tinto Finance
$ $
1.22%; 06/26/03 2,000,000 1,996,204
FINANCE-AUTO LOANS (1.26%)
Paccar Financial
1.21%; 01/16/04 2,000,000 1,982,522
1.43%; 08/01/03 2,745,000 2,734,969
4,717,491
FINANCE-CONSUMER LOANS (1.63%)
American General Finance
1.20%; 07/16/03 2,000,000 1,994,933
1.21%; 06/25/03 2,095,000 2,091,127
1.26%; 05/02/03 2,000,000 1,999,930
6,085,990
FINANCE-CREDIT CARD (3.86%)
American Express Credit
1.19%; 07/03/03 2,000,000 1,995,835
1.23%; 05/20/03 2,000,000 1,998,702
1.23%; 05/23/03 1,665,000 1,663,748
1.24%; 06/30/03 2,700,000 2,694,420
1.24%; 07/15/03 2,000,000 1,994,833
1.24%; 07/17/03 1,760,000 1,755,332
1.24%; 07/22/03 2,335,000 2,328,405
14,431,275
FINANCE-INVESTMENT BANKER & BROKER (20.21%)
Bear Stearns
1.22%; 05/16/03 2,900,000 2,898,526
1.22%; 06/17/03 2,000,000 1,996,814
1.22%; 07/15/03 2,450,000 2,443,773
1.22%; 07/18/03 2,500,000 2,493,392
1.23%; 06/20/03 2,500,000 2,495,729
1.23%; 06/26/03 1,340,000 1,337,436
1.25%; 07/24/03 2,500,000 2,492,708
1.27%; 06/13/03 2,800,000 2,795,753
Citigroup Global Markets Holdings
1.22%; 05/15/03 2,000,000 1,999,051
1.23%; 05/08/03 2,595,000 2,594,379
1.25%; 05/13/03 2,500,000 2,498,958
1.25%; 06/03/03 2,100,000 2,097,594
1.25%; 06/12/03 2,000,000 1,997,083
1.26%; 05/06/03 2,000,000 1,999,650
1.26%; 05/27/03 2,200,000 2,197,998
1.26%; 06/06/03 2,500,000 2,496,850
Goldman Sachs Group
1.18%; 05/08/03 2,100,000 2,099,518
1.20%; 05/14/03 1,220,000 1,219,463
1.22%; 05/23/03 2,255,000 2,253,319
1.23%; 11/19/03 2,000,000 1,986,197
1.26%; 05/13/03 1,930,000 1,929,189
1.26%; 05/14/03 2,600,000 2,598,817
1.26%; 05/27/03 2,000,000 1,998,180
1.26%; 08/22/03 2,330,000 2,320,785
1.30%; 11/04/03 2,000,000 1,986,494
JP Morgan
1.24%; 07/22/03 680,000 678,079
1.26%; 06/26/03 2,000,000 1,996,080
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
FINANCE-INVESTMENT BANKER & BROKER (CONTINUED)
Merrill Lynch
$ $
1.72%; 07/01/03 1,200,000 1,196,503
Morgan Stanley Group
1.23%; 06/24/03 3,960,000 3,952,694
1.24%; 06/27/03 4,600,000 4,590,969
1.25%; 07/17/03 1,520,000 1,515,936
1.27%; 05/14/03 2,600,000 2,598,808
1.27%; 05/16/03 1,800,000 1,799,048
1.30%; 05/09/03 2,000,000 1,999,422
75,555,195
FINANCE-LEASING COMPANY (0.53%)
International Lease Finance
1.25%; 06/20/03 2,000,000 1,996,528
FINANCE-MORTGAGE LOAN/BANKER (0.69%)
Federal National Mortgage Association
1.20%; 12/12/03 2,615,000 2,595,387
FINANCE-OTHER SERVICES (13.95%)
Caterpillar Financial Services
1.25%; 06/04/03 2,565,000 2,561,972
1.25%; 06/10/03 2,600,000 2,596,389
1.27%; 08/05/03 515,000 513,256
Commoloco
1.17%; 05/30/03 1,500,000 1,498,586
1.21%; 07/25/03 1,205,000 1,201,558
1.26%; 05/29/03 2,300,000 2,297,746
1.27%; 06/23/03 2,000,000 1,996,290
Corporate Receivables
1.19%; 05/06/03 2,285,000 2,284,622
1.20%; 06/12/03 2,000,000 1,997,200
1.20%; 07/10/03 2,500,000 2,494,167
1.23%; 06/09/03 2,300,000 2,296,935
1.24%; 05/08/03 2,000,000 1,999,518
1.25%; 07/10/03 1,800,000 1,795,625
Delaware Funding
1.23%; 06/05/03 2,000,000 1,997,608
1.25%; 06/16/03 2,000,000 1,996,806
1.26%; 05/22/03 2,000,000 1,998,530
Private Export Funding
1.21%; 08/21/03 1,500,000 1,494,353
1.23%; 10/07/03 3,500,000 3,480,986
Sheffield Receivables
1.23%; 05/30/03 2,000,000 1,998,018
1.25%; 05/07/03 1,600,000 1,599,667
1.25%; 06/19/03 2,000,000 1,996,597
1.25%; 07/23/03 1,385,000 1,381,009
1.26%; 05/23/03 2,000,000 1,998,460
1.26%; 05/30/03 2,000,000 1,997,970
1.26%; 06/18/03 2,700,000 2,695,464
1.27%; 05/19/03 2,000,000 1,998,740
52,168,072
LIFE & HEALTH INSURANCE (0.64%)
AIG Funding
1.22%; 05/16/03 2,400,000 2,398,780
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
METAL-ALUMINUM (1.16%)
Alcoa
$ $
1.25%; 05/28/03 2,355,000 2,352,792
1.25%; 06/06/03 2,000,000 1,997,500
4,350,292
METAL-DIVERSIFIED (3.73%)
Rio Tinto
1.20%; 07/11/03 2,500,000 2,494,083
1.21%; 07/14/03 2,000,000 1,995,026
1.22%; 06/04/03 2,000,000 1,997,696
1.22%; 06/05/03 2,000,000 1,997,628
1.22%; 07/08/03 2,000,000 1,995,391
1.23%; 06/04/03 1,470,000 1,468,292
1.26%; 05/02/03 2,000,000 1,999,930
13,948,046
MONEY CENTER BANKS (6.70%)
Barclay's U.S. Funding
1.24%; 05/28/03 2,500,000 2,497,675
HBOS Treasury Services
1.20%; 05/09/03 2,400,000 2,399,360
1.22%; 05/09/03 2,070,000 2,069,439
1.24%; 05/28/03 1,000,000 999,070
1.24%; 07/28/03 2,000,000 1,993,962
1.25%; 05/27/03 2,000,000 1,998,195
1.25%; 06/19/03 2,130,000 2,126,376
1.25%; 07/28/03 2,000,000 1,993,913
1.26%; 06/03/03 2,840,000 2,836,720
1.26%; 06/05/03 1,830,000 1,827,758
JP Morgan Chase
1.24%; 05/01/03 2,300,000 2,300,000
1.25%; 05/22/03 2,000,000 1,998,542
25,041,010
MULTIMEDIA (0.40%)
Gannett
1.23%; 05/02/03 1,500,000 1,499,949
OIL COMPANY-INTEGRATED (0.16%)
Shell Finance
1.20%; 08/28/03 580,000 577,642
REGIONAL BANKS (1.76%)
Wells Fargo
1.23%; 05/29/03 2,000,000 1,998,087
1.23%; 06/06/03 2,000,000 1,997,540
1.23%; 06/13/03 2,600,000 2,596,180
6,591,807
SPECIAL PURPOSE ENTITY (4.88%)
BMW US Capital
1.24%; 07/21/03 2,300,000 2,293,583
Southern Company Funding
1.15%; 06/10/03 1,040,000 1,038,579
1.22%; 07/02/03 2,000,000 1,995,798
1.22%; 07/11/03 2,000,000 1,995,188
1.23%; 07/07/03 1,795,000 1,790,891
1.25%; 05/12/03 3,000,000 2,998,854
1.27%; 05/07/03 2,525,000 2,524,465
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
SPECIAL PURPOSE ENTITY (CONTINUED)
Tulip Funding
$ $
1.20%; 06/02/03 2,000,000 1,997,867
1.26%; 09/02/03 1,600,000 1,593,056
18,228,281
SUPRANATIONAL BANK (2.53%)
Corp Andina de Fomento
1.23%; 07/08/03 1,465,000 1,461,596
1.24%; 07/09/03 2,000,000 1,995,247
1.28%; 05/20/03 3,500,000 3,497,636
1.28%; 05/21/03 2,500,000 2,498,222
9,452,701
TELEPHONE COMMUNICATION (1.06%)
Telstra
1.23%; 06/30/03 2,000,000 1,995,900
1.24%; 06/30/03 1,980,000 1,975,908
3,971,808
TELEPHONE-INTEGRATED (0.54%)
SBC International
1.23%; 05/12/03 2,000,000 1,999,248
TOBACCO (3.46%)
Altria Group
1.20%; 05/21/03 2,300,000 2,298,467
1.26%; 05/02/03 2,000,000 1,999,930
1.27%; 05/01/03 2,270,000 2,270,000
1.27%; 05/21/03 2,000,000 1,998,600
1.27%; 06/16/03 2,500,000 2,495,943
1.27%; 06/25/03 1,880,000 1,876,352
12,939,292
TOOLS-HAND HELD (0.53%)
Stanley Works
1.23%; 07/23/03 2,000,000 1,994,328
TOTAL COMMERCIAL PAPER 342,308,632
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
BONDS (8.20%)
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS (0.58%)
Vulcan Materials
5.75%; 04/01/04 2,100,000 2,182,485
DIVERSIFIED FINANCIAL SERVICES (0.65%)
Associates Corp. of North America
5.75%; 11/01/03 1,500,000 1,526,992
General Electric Capital
6.75%; 09/11/03 375,000 382,162
Wells Fargo Financial
7.25%; 07/14/03 500,000 505,395
2,414,549
FINANCE-INVESTMENT BANKER & BROKER (2.77%)
JP Morgan
5.75%; 02/25/04 2,000,000 2,070,591
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------
BONDS (CONTINUED)
FINANCE-INVESTMENT BANKER & BROKER (CONTINUED)
JP Morgan (continued)
$ $
8.50%; 08/15/03 2,000,000 2,035,887
Lehman Brothers Holdings
6.63%; 04/01/04 2,000,000 2,095,102
7.00%; 05/15/03 1,600,000 1,602,773
7.25%; 10/15/03 2,500,000 2,563,950
10,368,303
FINANCE-OTHER SERVICES (1.07%)
Verizon Global Funding
1.37%; 06/16/03 4,000,000 4,000,000
MONEY CENTER BANKS (0.80%)
Bank of America
1.24%; 09/19/03 2,000,000 2,000,000
6.88%; 06/01/03 1,000,000 1,004,195
3,004,195
REGIONAL BANKS (1.79%)
Bank One
1.32%; 11/28/03 2,000,000 2,000,000
1.33%; 06/18/03 2,000,000 2,000,000
1.33%; 10/30/03 2,700,000 2,700,000
6,700,000
TELEPHONE-INTEGRATED (0.54%)
SBC Communications
4.30%; 06/05/03 2,000,000 2,002,904
TOTAL BONDS 30,672,436
------------
TOTAL PORTFOLIO INVESTMENTS (99.75%) 372,981,068
CASH, RECEIVABLES AND OTHER ASSETS, NET OF LIABILITIES (0.25%) 930,020
TOTAL NET ASSETS (100.00%) $373,911,088
--------------
174
See accompanying notes.
FINANCIAL HIGHLIGHTS
PRINCIPAL MUTUAL FUNDS
MONEY MARKET FUND
(UNAUDITED)
-------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
ENDED OCTOBER 31 (EXCEPT AS NOTED):
-------------------------------------------------------------------------------
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL CASH MANAGEMENT FUND, INC.
- ------------------------------------
CLASS A SHARES
- --------------
Net Asset Value,
Beginning of Period.. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.004 0.013 0.043 0.056 0.045 0.051
----- ----- ----- ----- ----- -----
Total From Investment
Operations 0.004 0.013 0.043 0.056 0.045 0.051
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.004) (0.013) (0.043) (0.056) (0.045) (0.051)
------ ------ ------ ------ ------ ------
Total Dividends and
Distributions (0.004) (0.013) (0.043) (0.056) (0.045) (0.051)
------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period............ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 0.36%/(d)/ 1.36% 4.44% 5.71% 4.56% 5.10%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $364,505 $397,386 $412,409 $390,154 $352,675 $294,918
Ratio of Expenses to
Average Net Assets.. 0.77%/(e)/ 0.72% 0.70% 0.70% 0.69% 0.56%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- -- -- 0.56%
Ratio of Net
Investment Income to
Average Net Assets.. 0.73%/(e)/ 1.35% 4.33% 5.54% 4.45% 5.12%
2003/(C)/ 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
PRINCIPAL CASH MANAGEMENT FUND, INC.
- ------------------------------------
CLASS B SHARES
- --------------
Net Asset Value,
Beginning of Period.. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from Investment
Operations:
Net Investment Income
(Operating Loss).... 0.002 0.009 0.037 0.049 0.039 0.042
----- ----- ----- ----- ----- -----
Total From Investment
Operations 0.002 0.009 0.037 0.049 0.039 0.042
Less Dividends and
Distributions:
Dividends from Net
Investment Income... (0.002) (0.009) (0.037) (0.049) (0.039) (0.042)
------ ------ ------ ------ ------ ------
Total Dividends and
Distributions (0.002) (0.009) (0.037) (0.049) (0.039) (0.042)
------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period............ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ======
Total Return /(a)/ ... 0.22%/(d)/ 0.88% 3.71% 5.01% 4.00% 4.25%
Ratio/Supplemental
Data:
Net Assets, End of
Period (in
thousands).......... $9,406 $8,715 $6,655 $5,318 $6,330 $3,602
Ratio of Expenses to
Average Net Assets.. 1.07%/(e)/ 1.27% 1.40% 1.33% 1.19% 1.41%
Ratio of Gross
Expenses to Average
Net Assets /(b)/ ... -- -- -- -- -- 1.49%
Ratio of Net
Investment Income to
Average Net Assets.. 0.43%/(e)/ 0.87% 3.59% 4.87% 4.00% 4.23%
/(a) /Total return is calculated without the front-end sales charge or
contingent deferred sales charge.
/(b) /Expense ratio without the Manager's voluntary waiver of certain expenses.
The waiver ceased on March 1, 1998.
/(c) /Six months ended April 30, 2003.
/(d) /Total return amounts have not been annualized.
/(e) /Computed on an annualized basis.
See accompanying notes.
175
FUND DIRECTORS
Under Maryland law, a Board of Directors oversees the Funds. The Directors have
financial or other relevant experience and meet several times during the year to
review contracts, Funds activities and the quality of services provided to the
Funds. Each director also has the same position with the Principal Investors
Fund, Inc. and the Principal Variable Contracts Fund, Inc. that are also
sponsored by Principal Life Insurance Company. Each director holds office for an
indefinite term. Directors considered to be "interested persons" are defined in
the Investment Company Act of 1940, as amended. The interested persons shown
below are considered to be interested because of a current or former affiliation
with the Manager or Principal Life Insurance Company.
THE FOLLOWING DIRECTORS ARE CONSIDERED NOT TO BE "INTERESTED PERSONS" AS DEFINED
IN THE 1940 ACT .
NUMBER OF
PORTFOLIOS IN
FUND OTHER
COMPLEX DIRECTORSHIPS
NAME, POSITION HELD WITH THE FUND, PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
ADDRESS, AND DATE OF BIRTH DURING PAST 5 YEARS DIRECTOR DIRECTOR
----------------------- ------------- -------------
96 None
James D. Davis
Director since 1974 Attorney. Vice
Member Audit and President, Deere and
Nominating Committee Company, Retired.
4940 Center Court,
Bettendorf, Iowa
03/22/34
96 None
Pamela A. Ferguson
Director since 1993 Professor of
Member Audit and Mathematics, Grinnell
Nominating Committee College since 1998.
4112 River Oaks Prior thereto,
Drive, Des Moines, President, Grinnell
Iowa College.
05/05/43
96 None
Richard W. Gilbert
Director since 1985 President, Gilbert
Member Audit and Communications, Inc.
Nominating Committee since 1993. Prior
5040 Arbor Lane, thereto, President
#302, Northfield, and Publisher,
Illinois. Pioneer Press.
05/08/40
96 None
William C. Kimball Chairman and CEO,
Director since 1999 Medicap Pharmacies,
Member Audit and Inc. since 1998.
Nominating Committee Prior thereto,
4350 Westown Parkway, President and CEO.
Suite 400
West Des Moines, Iowa
11/28/47
96 None
Barbara A. Lukavsky
Director since 1987 President and CEO,
Member Audit and Barbican Enterprises,
Nominating Committee Inc. since 1997.
Member Executive President and CEO, Lu
Committee San ELITE USA, L.C.
13731 Bay Hill Court, 1985-1998.
Clive, Iowa
09/10/40
THE FOLLOWING DIRECTORS ARE CONSIDERED TO BE "INTERESTED PERSONS" AS DEFINED IN
THE 1940 ACT, AS AMENDED, BECAUSE OF CURRENT OR FORMER AFFILIATION WITH THE
MANAGER OR PRINCIPAL LIFE. .
Executive Vice
President, Principal
Life since 2000;
Senior Vice
President, 1996-2000;
John E. Aschenbrenner Vice President - 96 None
Director since 1998 Individual Markets
08/16/49 1990-1996. Director,
Principal Management
Corporation and
Princor Financial
Services Corporation
("Princor").
Senior Vice
President, 2002. Vice
President, Principal
Life Insurance
Ralph C. Eucher Company 1999-2002.
Director and Director and
President since 1999 President, Princor 96 None
Member Executive and Principal
Committee Management
06/14/52 Corporation since
1999. Prior thereto,
Second Vice
President, Principal
Life Insurance
Company.
Executive Vice
President, Principal
Larry D. Zimpleman Life since 2001.
Director and Chairman Senior Vice
of the Board since President,1999-2001. 96 None
December 2001 Vice
Member Executive President,1998-1999.
Committee Prior thereto, Vice
09/07/51 President--Pension
176
The Audit and Nominating Committee considers management's recommendation of
independent auditors for the Funds and oversees the activities of the
independent auditors as well as the internal auditors. The committee also
receives reports about accounting and financial matters affecting the Funds. In
addition, the committee selects and nominates all candidates who are not
"interested persons" of the Funds for election to the Board.
The Executive Committee is selected by the Board. It may exercise all the powers
of the Board, with certain exceptions, when the Board is not in session. The
Committee must report its actions to the Board.
Additional information about the Fund is available in the Prospectus and
Statement of Additional Information both dated March 1, 2003. These documents
may be obtained free of charge by writing or telephoning Princor Financial
Services Corporation, P.O. Box 10423, Des Moines, IA 50306. Telephone
1-800-247-4123.
177
SHAREHOLDER MEETING RESULTS
SPECIAL MEETING OF SHAREHOLDERS PRINCIPAL PARTNERS BLUE CHIP FUND, INC. HELD
NOVEMBER 20, 2002
1) Approval of sub-advisory agreements between Principal Management Corporation,
the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip Fund") investment
adviser, and two sub-advisory firms, Goldman Sachs Asset Management a unit of
the Investment Management Division of Goldman, Sachs & Co., and Wellington
Management Company, LLP.
IN FAVOR OPPOSED ABSTAIN
-------- ------- -------
4,603,617.825 183,614.948 212,522.042
2) Ratification and approval of Principal Management Corporation's ultimate
responsibility to oversee Sub-Advisory activity and accordingly, with the
approval of the Fund's Board of Directors, to appoint and replace the Fund's
Sub-Advisor and enter into and amend sub-advisory agreements without further
shareholder approval.
IN FAVOR OPPOSED ABSTAIN
-------- ------- -------
4,179,659.067 372,186.929 447,908.819
178
Item 2. Code of Ethics.
N/A to the semi-annual filing.
Item 3. Audit Committee Financial Expert.
N/A to the semi-annual filing.
Item 4. Principal Accountant Fees and Services.
N/A to the semi-annual filing.
Items 5-6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
N/A as this is an Open-End Management Investment Company.
Item 8. [Reserved]
Item 9. Controls and Procedures.
In order to ensure that the information that we must disclose in our
filings with the Securities and Exchange Commission is recorded,
processed, summarized and reported on a timely basis, we have adopted
disclosure controls and procedures. Our President, Ralph C. Eucher,
and our Chief Financial Officer, Jill R. Brown, have reviewed and
evaluated our disclosure controls and procedures as of June 18, 2003,
and have concluded that our disclosure controls and procedures are
effective.
There were no significant changes in our internal controls, or in
other factors that could significantly affect our internal controls
subsequent to June 18, 2003.
Item 10. Exhibits.
a. Code of Ethics*
b. 302 Certifications**
c. 906 Certifications**
* To be filed with the annual filing.
** Included as a part of this filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Des Moines and State of Iowa, on the 19th day of June, 2003.
Principal Growth Fund, Inc.
(Registrant)
/s/ Ralph C. Eucher
By _____________________________________
Ralph C. Eucher, President
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
/s/ R. C. Eucher
_____________________________ President and Director June 19, 2003
R. C. Eucher _________________
/s/ Jill R. Brown
_____________________________ Vice President and June 19, 2003
J. R. Brown Chief Financial Officer _________________