-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T0sG67L9ogN1fsrQXr60FBnGmLPlx0RC5YUDB8biaW+euUnSD++akBWOnLRlQ/oe 6FnsJkJ2T0hB/1/trR+jRw== 0000811803-95-000033.txt : 19951229 0000811803-95-000033.hdr.sgml : 19951229 ACCESSION NUMBER: 0000811803-95-000033 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINCOR CASH MANAGEMENT FUND INC CENTRAL INDEX KEY: 0000707827 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 421193001 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-03585 FILM NUMBER: 95605168 BUSINESS ADDRESS: STREET 1: 711 HIGH STREET CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 51-247-5476 MAIL ADDRESS: STREET 1: PRINCIPAL FINANCIAL GROUP CITY: DES MOINES STATE: IA ZIP: 50392-0200 FORMER COMPANY: FORMER CONFORMED NAME: BLC CASH MANAGEMENT FUND INC DATE OF NAME CHANGE: 19861030 N-30B-2 1 PRINCOR CASH MANAGEMENT ANNUAL REPORT

Contents Page President's Letter.......................1 Comments from the Funds' Portfolio Managers....................2 Building Retirement Security -- Charting Your Route to a More Secure Retirement....................10 The Princor Growth-Oriented Funds Financial Statements and Financial Highlights Statements of Assets and Liabilities..........................12 Statements of Operations.............14 Statements of Changes in Net Assets.........................16 Notes to Financial Statements........18 Schedules of Portfolio Investments Balanced Fund, Inc.................24 Blue Chip Fund, Inc................26 Capital Accumulation Fund, Inc........................27 Emerging Growth Fund, Inc..........29 Growth Fund, Inc...................32 World Fund, Inc....................34 Financial Highlights.................40 The Princor Income-Oriented Funds Financial Statements and Financial Highlights Statements of Assets and Liabilities........................44 Statements of Operations.............46 Statements of Changes in Net Assets.........................48 Notes to Financial Statements........50 Schedules of Portfolio Investments Bond Fund, Inc.....................56 Cash Management Fund, Inc..........58 Government Securities Income Fund, Inc........................61 High Yield Fund, Inc...............61 Tax-Exempt Bond Fund, Inc..........63 Tax-Exempt Cash Management Fund, Inc........................66 Utilities Fund, Inc................68 Financial Highlights.................70 Report of Independent Auditors..........74 Federal Tax Information.................76 The Princor Family of Mutual Funds..............................80 A Message From the President Dear Shareholder: The U.S. stock and bond markets have maintained the strong momentum with which they began the year. As cited in financial publications, since January 1995, stocks have risen dramatically and many market indices have reached record levels. Bond returns have been more modest but remain good, rewarding fixed income investors. Results in international stock markets were mixed with European issues performing best; Japan and Latin America also performed well. Shareholders of both Princor growth- and income-oriented funds have benefited from these strong markets. For the one-year period ending September 30, 1995, all Princor funds have posted positive returns at net asset value, most in double digits. [More complete fund performance information is contained in this report.] Extraordinary performance of this type often leads to unbridled enthusiasm among investors. However, this enthusiasm needs to be tempered with an awareness that returns at this level cannot be expected to continue indefinitely, and this past performance does not guarantee future results. Investors should view these times as confirmation of the three, time-proven tactics of successful investing-focus on the long term, invest regularly and diversify. Looking to the new year, most market strategists expect to see continued economic growth, moderate inflation and limited movement in interest rates. These factors, combined with continued efforts to reduce the federal deficit, should be favorable for the U.S. stock and bond markets. Though international markets have recently lagged those of the U.S., potential gains from international investing remain good for the long term. Of additional interest is our upcoming conversion to a new, enhanced shareholder recordkeeping system. This new system will allow Princor to better meet the service needs of our shareholders. The most recent edition of The Princor Shareholder contains an overview of the conversion. Complete details of the Princor shareholder recordkeeping conversion will be sent to you at the beginning of January. Princor thanks you for helping to make this a very successful year. Buoyed by strong performance, our funds have continued to grow in both assets and the number of shareholders. We look forward to another fine year in 1996. Sincerely, Stephan L. Jones President MANAGER'S COMMENTS Princor Management Corporation, the adviser to the Princor funds, is staffed with investment professionals who manage each individual fund. Comments by these individuals in the following paragraphs summarize in capsule form the general strategy and recent results of each fund over the past year. We believe any Princor fund should, under normal circumstances, represent only a portion of an investor's total investments. For most investors a portfolio should be balanced among stocks, bonds, and cash reserves to fit their own needs and risk tolerance. Those who maintain this balanced approach should be aware of the short-term results, but focus on the long term. Past performance is no guarantee of future results. Fund values will fluctuate so that the shares, upon redemption, may be worth more or less than their original cost. Growth-Oriented Funds Princor Balanced Fund Judi Vogel This balanced portfolio is designed to combine stocks, bonds and cash in a relatively conservative mix which provides both capital appreciation and income to the shareholder without taking on undue risk. Financial markets cooperated in helping us to achieve our objectives over the year. Both stocks and bonds delivered double-digit returns. The economy backed off from strong growth in late 1994 to register modest advances over the succeeding months. Inflation remained benign over the year and still is not a concern today. Apparently the Federal Reserve did a remarkable job of managing interest rates in order to cool the economy without plunging it into recession. Long-term interest rates have fallen about 1.5% over the last 10 months, enabling the bond market to surge. Corporate earnings have continued to be strong four years into an economic expansion thanks to widespread increases in productivity and almost zero growth in labor costs. While higher earnings have boosted common stocks, lower interest rates have enabled prices to soar without the market appearing overvalued. So far 1995 has been a great year in the markets. We have taken a slightly more cautious stance than the average balanced mutual fund with 50% of our holdings in equity-related securities and the balance in fixed income. According to Morningstar's Balanced Fund Overview, the average balanced fund has 53% in equities. Although our asset allocation caused returns to lag relative to the Lipper Balanced Fund Average, the Fund's returns in the absolute were quite attractive. There is no independent market index against which to measure returns of balanced portfolios. However, we show the S&P 500 stock index for your information. Comparison of Change in Value $10,000 Investment Princor Balanced Fund, Inc. Balanced Fund Lipper Total S&P 500 Balanced Year Ended October 31, Return Index Average 9,525 10,000 10,000 1988 10,714 11,628 11,233 1989 11,896 14,697 13,152 1990 10,554 13,595 12,465 1991 14,152 18,152 16,015 1992 15,830 19,959 17,413 1993 17,768 22,938 19,994 1994 17,935 23,823 19,852 1995 20,480 30,112 23,300 Princor Blue Chip Fund Mark Williams The economic slowdown experienced during the first half of the year, combined with moderate inflation, laid the groundwork for the past year's excellent returns. Investors, no longer afraid of interest rate increases, purchased equities aggressively. As the year progressed, investors rotated to those companies able to show consistent earnings growth in spite of the slowdown. The weak dollar also contributed to good earnings comparisons for the multi-national firms in the Fund. We ended this fiscal year ahead of Lipper's Growth and Income Fund average return, while trailing the S&P 500 Index return. Two sectors with moderate weightings in the Fund, Financials and Technology, experienced above-average returns. Our moderate weightings penalized relative performance somewhat, but we believed--and continue to believe--this account has the right exposure to these industries. Going forward, we continue to search for those companies with consistent earnings increases, well-capitalized balance sheets, and strong business prospects. The companies in the Fund are positioned to succeed in the increasingly competitive global marketplace. Comparison of Change in Value $10,000 Investment Princor Blue Chip Fund, Inc. Blue Chip Lipper Fund Growth & Total S&P 500 Income Year Ended October 31, Return Index Fund Average 9,525 10,000 10,000 1991 10,137 10,654 10,544 1992 11,142 11,714 11,499 1993 11,771 13,464 13,424 1994 12,546 13,982 13,763 1995 15,388 17,673 16,510 Princor Capital Accumulation Fund David White Our strategy is to hold common stocks that will produce better rates of return if bought and held forever. Our analysis is very similar to the approach which companies take when making acquisitions. Future cash flows are weighed against today's price. This is our "bottoms up" approach. Overlaying this approach is a "top down" strategy. We look at the big picture: the economy, international trade, secular industry trends, earnings and the stock market. Any macro insights help select specific investments for the portfolio. During this past year, we have been reducing the portolio's exposure to the cyclical side of the economy. The economy was nearing capacity at the end of calendar 1994 which limited cyclical companies ability to expand earnings. Proceeds from these sales were invested in companies that should continue to grow even if the economy slows or enters a recession. Growth stocks, healthcare, food, banks and utilities have received the bulk of the funds. Electronic technology stocks were about the only large sector that produced good returns this past year. Unfortunately, we were underweighted in this sector which hurt performance. Late in the year, the electronic technology sector started to underperform and the sectors this Fund is emphasizing started doing much better. Comparison of Change in Value $10,000 Investment Princor Capital Accumulation Fund, Inc. Capital Accum. S&P 500 Lipper Total Stock Growth & Income Year Ended October 31, Return Index Fund Average 9,525 10,000 10,000 1986 12,189 13,320 12,818 1987 12,731 14,181 12,953 1988 14,565 16,281 15,069 1989 16,578 20,578 18,154 1990 13,624 19,037 16,371 1991 19,160 25,416 21,855 1992 21,396 27,948 23,835 1993 23,624 32,120 27,825 1994 25,199 33,359 28,527 1995 29,721 42,164 34,221 Princor Emerging Growth Fund Mike Hamilton The financial markets continue their strong advance. Strength has been across all usual indexes with NASDAQ doing the best recently. The Princor Emerging Growth Fund performed better than its comparison indexes. The Princor Emerging Growth Fund continues to be structured to take advantage of the economic tide toward efficiency, productivity and global competitiveness. This had led us to overweight technology, industrial cyclicals, financial and healthcare sectors. With the exception of the industrial cyclical area, all did better than the S&P 500. The portfolio has little energy and no utility exposure. We continue to experience a growing balanced economy with little visible imbalances currently. Our outlook is for more of the same and we don't anticipate making any dramatic changes to the portfolio. The focus is on above average growth companies with high returns on capital. Comparison of Change in Value $10,000 Investment Princor Emerging Growth Fund, Inc. Emerging Growth S&P 500 Lipper Total Stock MID CAP Year Ended October 31, Return Index Fund Average 9,525 10,000 10,000 1988 11,409 11,628 11,344 1989 13,651 14,697 14,346 1990 11,357 13,595 12,349 1991 18,689 18,152 19,744 1992 20,862 19,959 21,136 1993 24,964 22,938 26,260 1994 26,676 23,823 26,816 1995 33,721 30,112 33,389 Princor Growth Fund The financial markets have experienced one of the stronger years for participants so far in 1995. The year has witnessed changed economic expectations from strong growth at the start of the year to slower expectations recently. This has influenced returns as the market has shifted from a preference for cyclical companies to purer growth companies. The Princor Growth Fund is positioned for an elongated economic cycle with little excess or imbalance foreseen. The Fund is balanced between cyclical growth companies and companies with diminished dependence on the economic cycle. The portfolio's main weightings are in technology, financials and healthcare. The Fund has done better than its benchmarks given this balance and continued focus on companies providing products and services which improve productivity and are able to compete globally. Comparison of Change in Value $10,000 Investment Princor Growth Fund, Inc. Growth Fund S&P 500 Lipper Total Stock Growth Year Ended October 31, Return Index Fund Average 9,525 10,000 10,000 1986 12,387 13,320 12,759 1987 12,715 14,181 12,704 1988 13,925 16,281 14,719 1989 16,439 20,578 18,297 1990 14,926 19,037 16,166 1991 23,777 25,416 22,847 1992 27,286 27,948 24,643 1993 29,968 32,120 28,849 1994 32,912 33,359 29,293 1995 40,578 42,164 36,318 Princor World Fund Scott Opsal The Fund's fiscal year began with the financial and economic collapse in Mexico following devaluation of the peso. Because the Fund owned stock in Mexican and other emerging market companies, declines in Latin American stock prices caused relative performance to lag. Our overweighting in European cyclicals reversed that trend in mid-year. Europe's cyclical recovery produced strong earnings gains in industrial companies. European markets also benefited from falling interest rates over the course of this year. Europe experienced widespread strength in its currencies relative to the US dollar. Strong foreign currencies and a weak dollar enhance returns for US investors. The Fund experienced significant return advantages from its overweighting in European currencies and European cyclicals, both of which boosted relative returns throughout most of the year. The Japanese market fell dramatically early in the year, but regained its lost ground by year end. The yen has also fluctuated widely during the year. These swings introduced tremendous volatility in International stock index returns, however the Fund's low exposure in Japan allowed some avoidance to this large source of volatility. Comparison of Change in Value $10,000 Investment Princor World Fund World Fund Lipper Total EAFE International Year Ended October 31, Return Index Average 9,525 10,000 10,000 1988 9,529 10,594 10,854 1989 10,055 11,457 12,475 1990 10,149 9,995 12,380 1991 11,552 10,689 13,434 1992 11,371 9,276 12,776 1993 16,077 12,751 17,045 1994 17,620 14,036 18,848 1995 17,801 13,896 18,733 Important Notes of the Growth-Oriented Funds: Standard & Poor's 500 Stock Index: An unmanaged index of 500 widely held common stocks representing industrial, financial, utility and transportation companies listed on the New York Stock Exchange, American Stock Exchange and the Over-the-Counter market. Lipper Growth & Income Fund Average: This average consists of funds which combine a growth of earnings orientation and an income requirement for level and/or rising dividends. The one-year average currently contains 397 funds. Lipper Mid Cap Fund Average: This average consists of funds which by prospectus or portfolio practice, limit their investments to companies with average market capitalizations and/or revenues between $800 million and the average market capitalization of the Wilshire 4500 Index (as captured by the Vanguard Index Extended Market Fund). The one-year average currently contains 93 funds. Lipper Growth Fund Average: This average consists of funds which normally invest in companies whose long-term earnings are expected to grow significantly faster than the earnings of the stocks represented in the major unmanaged stock indices. The one-year average currently contains 537 funds. Lipper Balanced Fund Average: This average consists of funds whose primary objective is to conserve principal by maintaining at all times a balanced portfolio of both stocks and bonds. Typically, the stock/bond ration ranges around 60%/40%. The one-year average currently contains 194 funds. Morgan Stanley EAFE (Europe, Australia and Far East) Index: This average reflects an arithmetic, market value weighted average of performance of more than 900 listed securities which are listed on the stock exchanges of the following countries: Australia, Austria, Belgium, Denmark, Netherlands, New Zealand, Norway, Singapore/Malaysia, Spain, Sweden, Switzerland, and the United Kingdom. Lipper International Fund Average: This average consists of funds which invest in securities primarily traded in markets outside of the United States. The one-year average currently contains 226 funds. Note: Mutual fund data from Lipper Analytical Services, Inc. Income-Oriented Funds Princor Bond Fund Don Brattebo One year ago we were reporting on what had been the worst bond market performance in memory, due primarily to the Federal Reserve raising interest rates frequently. However, with pleasure we report to you that during this past twelve months we have witnessed a dramatic turnaround in the bond market with interest rates falling sharply and bond prices recovering to levels we last saw in early 1994. Not only has there been a recovery in fixed-income markets generally, but the Bond Fund has outperformed most of the funds in its peer group of Lipper Service BBB-rated funds. The reason for this is two-fold: First, we have remained fully invested and maintained our average portfolio maturity of 10 to 12 years to obtain better yields. Secondly, we are more heavily concentrated in BBB-rated, investment grade bonds than other funds, and this quality sector of the market has outperformed most other sectors in the past twelve months. We've come through some wild and challenging markets these past two years, but have held firm to our philosophy of managing for total return over a long time horizon. We continue to seek out better values on a day-to-day basis in order to deliver attractive and competitive returns to you. We believe, once again, the forces and volatility of the markets have reinforced our strategy (and we hope the strategy of our shareholders) of investing and managing for the long term and not the short. Comparison of Change in Value $10,000 Investment Princor Bond Fund, Inc. Bond Fund Lehman Lipper Total Baa BBB Corp. Year Ended October 31, Return Index Average 9,525 10,000 10,000 1988 10,634 11,207 10,947 1989 11,862 12,598 11,980 1990 12,227 13,135 12,295 1991 14,189 15,451 14,397 1992 15,814 17,167 15,952 1993 18,220 19,771 18,362 1994 17,125 18,892 17,376 1995 20,504 22,156 19,873 Princor Government Securities Income Fund Marty Schafer The U.S. Federal Reserve Board's long-term goal of low inflation and steady growth appears closer to reality with each passing year. The dismal performance of 1994 was due to the Fed's actions to slow economic growth and potential inflation. In 1995, dramatic turnaround was the result of the markets recognizing that inflation was well contained at the peak of this economic cycle. In fact, the most powerful ingredient in calculating inflation--labor costs--has been deflating. With wage increases holding steady and benefit packages being trimmed, corporate America has forced workers to work smarter and harder resulting in increased productivity. This provides products with lower unit labor costs. We look for the Fed to continue their vigilant fight against inflation. While ultimately this should be beneficial to all fixed-income investors, the road to solid returns may be rocky from time to time. Our disciplined approach of running a portfolio priced at or below par has once again provided our shareholders with strong performance. This Fund's success reflects our preference for slightly longer duration assets than our competitors. We try to keep our duration between 5 and 6 years. The duration as of October 31, 1995, at 5.25 years. Duration measures the sensitivity of the value of the mortgage-backed securities to changes in interest rates. In general, if interest rates change one percentage point, the value will change in the opposite direction by a percentage which equals the duration. Comparison of Change in Value $10,000 Investment Princor Government Securities Income Fund Government Lehman Lipper Total GNMA GNMA Year Ended October 31, Return Index Average 9,525 10,000 10,000 1986 11,270 11,653 11,343 1987 11,443 12,122 11,537 1988 13,043 13,793 12,917 1989 14,463 15,367 14,177 1990 15,356 16,641 15,212 1991 17,932 19,485 17,484 1992 19,454 21,199 18,937 1993 21,749 22,804 20,474 1994 20,388 22,451 19,844 1995 23,947 25,863 22,550 Princor High Yield Fund Ken Hovey The period of the Fund's fiscal year was good for high yield markets and the Fund, but not as good as for some other income-oriented assets and funds. The Treasury bond market saw a flattening of its yield curve with a sizeable decline in yields in all maturities except the shortest bills. The high yield market is often compared to the ten-year Treasury. This Treasury had increased in yield for much of the prior fiscal year and the reverse occurred for the past fiscal year. The yield peaked in early November and fell throughout the year except for a minor reversal in July and August. For the year, the ten year Treasury declined in yield by 1.79% while the high yield market, as measured by the Merrill Lynch High Yield Master Index, declined in yield by 1.09%. In other words, the positive price change for high yield was less as a result of the decline in interest rates other than for Treasury bonds or other assets more closely correlated to Treasuries. Our Fund performed about as expected during the year except for a sizeable price decline in our holding of Drypers Corp. This company, a manufacturer of baby diapers, has had margin problems due to price competition and raw material prices. Otherwise, the Fund has not experienced credit problems. Our strategy remains to have a balance of "B" and "BB" rated bonds and not to speculate on distressed bonds or trade often for short-term gains. We think, within the context of high yield, that our Fund is relatively well positioned to withstand a weaker or slower growing economy. Additionally, as a consequence of high yield returns lagging behind other fixed-income assets, the going forward return expectations are now more favorable for high yield when compared to other asset types. Comparison of Change in Value $10,000 Investment Princor High Yield Fund, Inc. High Yield Lehman Lipper Total High Yield High Yield Year Ended October 31, Return Index Average 9,525 10,000 10,000 1988 10,879 11,403 11,230 1989 11,171 11,625 11,355 1990 9,550 10,131 9,967 1991 11,998 15,050 13,589 1992 13,719 17,345 15,816 1993 15,319 20,450 18,991 1994 15,540 20,702 18,913 1995 17,363 23,958 21,409 Princor Tax-Exempt Bond Fund Dan Garrett The bond market was a great place to be during the fiscal year ended October 31, 1995. The long term investor was rewarded for staying the course over the past few years. For most periods the Fund has outperformed the Lipper General Municipal Fund average. We have done so by adding value through superior credit quality analysis and avoiding mistakes such as unfavorable bond structures like certificates of participation and lease revenue bonds. We also focus on companies which have strengths within their industries, such as utility companies with low cost structures. We have also avoided bonds which have no call protection, such as housing bonds. There are many questions about the impact tax reform may have on investment markets but few answers because several proposals are being discussed. The municipal market would have risen further in the absence of the tax reform issue. Under a balanced federal budget, interest rates should fall, which would benefit all bond investors. We will continue to find value in credit, structure and call protection features. We focus on the long term balance of current income and total return. Comparison of Change in Value $10,000 Investment Princor Tax-Exempt Bond Fund, Inc. Tax Exempt Lehman Lipper Total Revenue General Year Ended October 31, Return Bond Index Muni. Debt 9,525 10,000 10,000 1986 10,193 10,634 10,639 1987 9,545 10,552 10,257 1988 11,476 12,391 11,880 1989 12,525 13,510 12,805 1990 13,033 14,515 13,515 1991 14,739 16,410 15,177 1992 15,883 17,837 16,298 1993 18,376 20,557 18,817 1994 17,014 19,466 17,714 1995 19,740 22,566 20,141 Princor Utilities Fund Catherine Green Utility stocks have had a very strong year with many stocks rising over 20%. The positive gains were caused by several factors. First, a falling interest rate market had a positive impact on these stocks. Second, there has been much discussion about increasing competition for utilities. As the industry moves forward, many of the companies have developed plans to cope with these changes. This has calmed investors' fears, and the stocks have reacted accordingly. Third, weather changes impact certain regions as companies are able to sell more energy. The last impact has been that of mergers. As companies develop their plans to face the future, more of them are consolidating to become more cost competitive. This has impacted electric utilities positively as they are able to merge and cut costs to stay ahead of the game. Telephones, over 25% of the Fund, have also enjoyed a strong year. Again, aggressive plans to become winners in the fast growing telecommunications area has been a driving factor. As our Fund is a "pure play," we have fared well in this environment. We do not own any non-utility stocks or bonds, so we are focused solely on the common stocks of utility companies. We will continue this focus along with a goal to emphasize low-cost, high quality utility companies. Comparison of Change in Value $10,000 Investment Princor Utilities Fund Utilities Fund S&P 500 Lipper Dow Jones Total Stock Utilities Utilities Year Ended October 31 , Return Index Average With Income 9,525 10,000 10,000 10,000 1993 11,047 10,980 11,575 11,658 1994 9,368 11,403 10,475 9,349 1995 11,651 14,413 12,325 11,810 Princor Cash Management Fund Princor Tax-Exempt Cash Management Fund Mike Johnson Steve Schneider Intervention by the Federal Reserve tapered off during 1995 as opposed to the multitude of Fed tightening actions that occurred in the prior year. The Fed raised short-term rates once again this past February. Then the tightening trend in place since the beginning of 1994 was reversed and a rate cut was affected in July. Since then, levels have remained flat. The average maturity of our own portfolio, as well as that of the industry, started slowing in the third quarter as investors were no longer being given any incentive to buy longer paper. We continue to target and actively monitor the industry averages to keep both our yields and average days in line. Both portfolios continue to invest from a list of approved issues of the highest credit quality actively managed by our investment securities analytical staff. Through the third quarter of 1995, assets for both the Princor taxable and tax-exempt portfolios, as well as those industry-wide, all continued to increase to record levels since the beginning of this year. Important Notes of the Income-Oriented Funds: Lehman Brothers, Baa Index: An unmanaged index of all publicly issued, fixed-rate, nonconvertible, dollar-denominated, SEC-registered corporate debt rated Baa or BBB by Moody's or S&P. Lipper Corporate Debt BBB Rated Fund Average: This average consists of funds which invest at least 65% of their assets in corporate and government debt issues rated in the top four grades. The one-year average currently contains 78 funds. Lehman Brothers, GNMA Index: An unmanaged index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA) and Graduated payment mortgages (GPMs) with at least $100 million outstanding and one year or more to maturity. Lipper GNMA Fund Average: This average consists of funds which invest a least 65% of their assets in Government National Mortgage Association securities. The one-year average currently contains 49 funds. Lehman Brothers, High Yield Index: An unmanaged index of all publicly issued fixed, dollar-denominated, SEC-registered corporate debt rated Ba1 or lower with at least $100 million outstanding and one year or more to maturity. Lipper High Current Yield Fund Average: This average consists of funds which aim at high (relative) current yield from fixed income securities. No quality or maturity restrictions. They tend to invest in lower grade debt issues. The one-year average currently contains 112 funds. Lehman Brothers, Revenue Bond Index: An unmanaged index of investment grade tax-exempt revenue bonds which have been issued within the last five years and at least one-year or more to maturity. Lipper General Municipal Debt Fund Average: This average consists of funds which invest at least 65% of their assets in municipal debt issues in the top four credit ratings. The one-year average currently contains 216 funds. Standard & Poor's 500 Stock Index: An unmanaged index of 500 widely held common stocks representing industrial, financial, utility and transportation companies listed on the New York Stock Exchange, American Stock Exchange and the Over-the-Counter market. Lipper Utilities Fund Average: This average consists of funds which invest 65% of its equity portfolio in utility shares. The one-year average currently contains 79 funds. Dow Jones Utilities Index with Income: This average is a price-weighted average of 15 utility companies that are listed on the New York Stock Exchange and are involved in the production of electrical energy. Note: Mutual fund data from Lipper Analytical Services, Inc. Building Retirement Security-Charting Your Route to a More Secure Retirement Planning for retirement is more difficult than it was in the past. In previous generations, when a person retired at age 65, they could expect to live only a limited number of years. In recent years, modern medical technology and healthier lifestyles help to lengthen our years in retirement. Today, a man retiring at age 65 has a life expectancy of fifteen more years. A woman who retires at the same age can anticipate living another twenty years. The trend toward longer lives is expected to continue. As a result, retirement planning today is a very important aspect of your financial future. Successful retirement planning begins with developing a clear picture of your own retirement. What are your retirement goals and dreams? How much will they cost? How will inflation affect your plans for retirement? By charting out your retirement in detail now, you gain a better idea of the path you need to take. The next step to building retirement security is to look at your sources of retirement income. According to a study done by the Pension and Welfare Benefits Administration, almost 70% of Americans between the ages of 45 and 64, believe that their retirement income needs will be met by their Social Security and employer pension benefits. In other words, from sources other than themselves. In reality, most retirees derive, more than half their retirement income from personal sources. These included: personal savings, investments and additional earnings. These charts show the importance of taking responsibility for a large portion of your own retirement income. Perception Americans, Age 45-64 believe their most important retirement income source is: Pension 43% Social Security 25% Savings 18% Other 10% Earnings 4% Reality The actual percentages for heads of household, age 65 + and $20,000 + total annual income: Savings 32% Earnings 24% Social Security 23% Pension 20% Other 1% As you continue down the retirement-planning road, you need to consider its challenges. In addition to the normal, anticipated financial responsibilities, we all face the threat of disability, caring for aging parents or the loss of a spouse. All these challenge our financial well-being and plans for a more secure retirement. The best way to meet these challenges, should they occur, is by planning ahead. By planning ahead we mean beginning a regular, disciplined savings and investment program. Challenges to Meeting Your Retirement Goals - - Income interruption from loss of job or disability - - Death of Spouse - - Health concerns for you and your family - - The need to care for aging parents - - Your need for long-term care - - Lack of financial planning To help ensure the success of your investment program you may want to use these three basic investment strategies: investing for the long-term, diversification and dollar-cost averaging. One benefit of long-term investing is compounding. The compounding illustration to the right shows how your investment can grow over time, assuming different rates of return. Diversification is the process of spreading your investments among more than one asset class and thereby reducing your potential investment risk. The example shows how diversification leads to a balanced investment portfolio. How Money Grows $100,000 invested Investment earning 10% over 25 years grows to $1,083,471. Investment earning 8% over 25 years grows to $684,848. Investment earning 6% over 25 years grows to $429,187. For illustrative purposes only. Assumes no taxes are paid on earnings as the investment grows. Interest rates do not reflect actual performance of any specific financial product. One of the easiest investment strategies available to you is dollar-cost averaging. This strategy is to invest regulary, and continuously, over time. When investing using this strategy, you are purchasing shares whether the market is up or down. Of course, no strategy guarantees success but, the result should be that your average share cost is less than you would have paid trying to predict the market. When using dollar-cost averaging, you need to evaluate your ability to continue investing during periods lower market levels. Here is how a dollar-cost averaging program might look. Investment Balance Interest Earning Equity Investments: Investments: Money Market Funds Common Stock Bonds Real Estate Government Securities ------------------------ ---------------------- ^ ^ --------------------------------------- ^ Emergency Money Life/Medical/Disability/LTC The final step in building retirement security is to develop a plan of action. To accomplish this, you+ll want to take into consideration the types of savings plans available to you. These might include: a 401(k), IRA, qualified or non-qualified annuities or mutual fund investments. Your registered representative can help you design and implement a plan for building retirement security. Dollar-Cost Averaging Regular Share Shares Investment Price Acquired $300 $25 12 $300 $20 15 $300 $15 20 $300 $20 15 $300 $15 20 $300 $12 25 $1,800 107 Average Share Cost $16.82 ($1,800 / 107 Shares) Average Share Price $17.83 *Sum of Share Price / 6) (Investment programs like dollar-cost averaging do not assure a profit, nor guarantee against a loss in declining markets. The plan involves continuous investment regardless of price fluctuations. So investors should consider their ability to continue purchasing shares during periods of low price levels.) Here is a quick review of the four steps to building retirement security: create a picture of your retirement goals, identify your sources of retirement income, prepare for the challenges you may face along the way and, finally, develop an action plan. Contact your registered representative to guide you through the process of building retirement security.

October 31, 1995 NOTES TO FINANCIAL STATEMENTS Princor Balanced Fund, Inc. Princor Blue Chip Fund, Inc. Princor Capital Accumulation Fund, Inc. Princor Emerging Growth Fund, Inc. Princor Growth Fund, Inc. Princor World Fund, Inc. Note 1 -- Significant Accounting Policies Princor Balanced Fund, Inc., Princor Blue Chip Fund, Inc., Princor Capital Accumulation Fund, Inc., Princor Emerging Growth Fund, Inc., Princor Growth Fund, Inc. and Princor World Fund, Inc. (the "Growth Funds") are registered under the Investment Company Act of 1940, as amended, as open-end diversified management investment companies and operate in the mutual fund industry. On December 5, 1994, the name of Princor Managed Fund, Inc. was changed to Princor Balanced Fund, Inc. On December 5, 1994, the initial purchases of Class B shares of the Growth Funds were made by Princor Management Corporation (See Note 3). All shares outstanding prior to the initial Class B share purchases have been classified as Class A shares. Effective December 9, 1994, the Growth Funds also began offering Class B shares to the public. Class A shares generally are sold with an initial sales charge based on declining rates which begin at 4.75% of the offering price. Class B shares are sold without an initial sales charge, but bear a higher ongoing distribution fee and are subject to a declining contingent deferred sales charge ("CDSC") of up to 4.00% on certain redemptions redeemed within six years of purchase. Class B shares automatically convert into Class A shares, based on relative net asset value (without a sales charge) after seven years. 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 the Funds' respective Boards of Directors. In addition, the Board of Directors of each fund declare separate dividends on each class of shares. The Growth Funds allocate daily all income, expenses (other than class-specific expenses), and realized and unrealized gains or losses to each class of shares based upon the relative proportion of the value of shares outstanding of each class. Class-specific expenses, which include distribution and shareholder servicing fees and any other items specifically attributable to a particular class, are charged directly to such class. The Growth Funds value securities for which market quotations are readily available at market value, which is determined using the last reported sale price or, if no sales are reported, as is regularly the case for some securities traded over-the-counter, the last reported bid price. When reliable market quotations are not considered to be readily available, which may be the case, for example, with respect to certain debt securities, preferred stocks and foreign securities, the investments are valued by using market quotations, prices provided by market makers or estimates of market values obtained from yield data and other factors relating to instruments or securities with similar characteristics in accordance with procedures established in good faith by each fund's Board of Directors. Securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market. With respect to Princor World Fund, Inc., the value of foreign securities in foreign currency amounts is expressed in U.S. dollars at the closing daily rate of exchange. The identified cost of the portfolio holdings is translated at approximate rates prevailing when acquired. Income and expense amounts are translated at approximate rates prevailing when received or paid, with daily accruals of such amounts reported at approximate rates prevailing at the date of valuation. Since the carrying amount of the foreign securities of the fund is determined based on the exchange rate and market values at the close of the period, it is not practicable to isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities during the period. The Growth Funds record investment transactions generally one day after the trade date, except for short-term investment transactions which are recorded generally on the trade date. The identified cost basis has been used in determining the net realized gain or loss from investment transactions and unrealized appreciation or depreciation on investments. Dividends are taken into income on an accrual basis as of the ex-dividend date and interest income is recognized on an accrual basis. Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends and distributions to shareholders from net investment income and net realized gain from investments and foreign currency transactions is determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. To the extent these "book/tax" differences are permanent in nature (i.e. that they result from other than timing of recognition - "temporary"), such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Reclassifications made for the years ended October 31, 1995 and 1994 were not material. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 -- Federal Income Taxes No provision for federal income taxes is considered necessary because each fund is qualified as a "regulated investment company" under the Internal Revenue Code and intends to distribute each year substantially all of its net investment income and realized capital gains to shareholders. The cost of investments for federal income tax reporting purposes is approximately the same as that for financial reporting purposes. Note 3 -- Management Agreement and Transactions With Affiliates The Growth Funds have agreed to pay investment advisory and management fees to Princor Management Corporation (wholly owned by Princor Financial Services Corporation, a subsidiary of Principal Mutual Life Insurance Company) (the "Manager") computed at an annual percentage rate of each fund's average daily net assets. The annual rate used in this calculation for Princor Blue Chip Fund, Inc., Princor Capital Accumulation Fund, Inc. and Princor Growth Fund, Inc. is .50% of the first $100 million of each fund's average daily net assets, .45% of the next $100 million of the fund's average daily net assets, .40% of the next $100 million of the fund's average daily net assets and .35% of the next $100 million of the fund's average daily net assets. With respect to Princor Balanced Fund, Inc. , the annual rate is .60% of the first $100 million of the fund's average daily net assets. With respect to Princor Emerging Growth Fund, Inc., the annual rate is .65% of the first $100 million of the fund's average daily net assets and .60% of the next $100 million of the fund's average daily net assets.With respect to Princor World Fund, Inc., the annual rate is .75% of the first $100 million of the fund's average daily net assets and .70% of the next $100 million of the fund's average daily net assets. The 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 agreed to reimburse the Growth Funds annually for their total expenses (excluding brokerage commissions, interest and taxes) in excess of limits prescribed by any state in which the Growth Funds' shares are offered for sale (currently 2 1/2% of the first $30 million of each fund's average annual net assets, 2% of the next $70 million of such assets and 1 1/2% of such assets in excess thereof). Princor Financial Services Corporation, as principal underwriter, receives proceeds of any CDSC on certain Class B share redemptions within six years of purchase. The charge is based on declining rates, which begin at 4.00% of the lesser of the current market value or the cost of shares being redeemed. Princor Financial Services Corporation also retains sales charges on sales of Class A shares of the Growth Funds. The aggregate amount of these charges retained, by fund, for the period ended October 31, 1995 were as follows: Class A Class B Princor Balanced Fund, Inc. 265,686 793 Princor Blue Chip Fund, Inc. 168,060 359 Princor Capital Accumulation Fund, Inc. 610,408 772 Princor Emerging Growth Fund, Inc. 1,286,754 6,843 Princor Growth Fund, Inc. 1,235,555 1,460 Princor World Fund, Inc. 738,243 1,317 No brokerage commissions were paid by the Growth Funds to Princor Financial Services Corporation during the periods. Brokerage commissions were paid to other affiliates by the following funds: October 31, October 31, 1995 1994 Princor Balanced Fund, Inc. 1,162 -- Princor Capital Accumulation Fund, Inc. 17,491 6,922 Princor Emerging Growth Fund, Inc. 1,200 414 Princor Growth Fund, Inc. 5,894 500 Princor World Fund, Inc. 21,577 -- The Growth Funds bear distribution and shareholder servicing fees with respect to Class A shares computed at an annual rate of up to 0.25% of the average daily net assets attributable to Class A shares of each fund. Effective December 1994, each of the Growth Funds adopted a distribution plan with respect to Class B shares that provides for distribution and shareholder servicing fees computed at an annual rate of up to 1.00% of the average daily net assets attributable to Class B shares of each fund. Distribution and shareholder servicing fees are paid to Princor Financial Services Corporation; a portion of the fees are subsequently remitted to retail dealers. Pursuant to the distribution agreements, fees unused by the principal underwriter at the end of the fiscal year are returned to the Growth Funds. At October 31, 1995, Principal Mutual Life Insurance Company, subsidiaries of Principal Mutual Life Insurance Company and benefit plans sponsored on behalf of Principal Mutual Life Insurance Company owned shares of the Growth Funds as follows: Class A Class B Princor Balanced Fund, Inc. 673,345 85 Princor Blue Chip Fund, Inc. 654,597 84 Princor Capital Accumulation Fund, Inc. 6,477,046 -- Princor Emerging Growth Fund, Inc. 46,736 42 Princor Growth Fund, Inc. 37,575 34 Princor World Fund, Inc. 3,583,118 148 Note 4 -- Investment Transactions For the year ended October 31, 1995, the cost of investment securities purchased and proceeds from investment securities sold (not including short-term investments and U.S. government securities) by the Growth Funds were as follows: Purchases Sales Princor Balanced Fund, Inc. $ 13,161,285 $ 17,644,958 Princor Blue Chip Fund, Inc. 10,109,754 7,438,560 Princor Capital Accumulation Fund, Inc. 147,793,861 139,382,154 Princor Emerging Growth Fund, Inc. 39,381,525 14,694,474 Princor Growth Fund, Inc. 46,105,338 16,304,770 Princor World Fund, Inc. 54,686,386 40,509,439 At October 31, 1995, net unrealized appreciation of investments by the Growth Funds was composed of the following: Net Unrealized Gross Unrealized Appreciation Appreciation (Depreciation) of Investments Princor Balanced Fund, Inc. $ 6,885,832 $ (920,020) $ 5,965,812 Princor Blue Chip Fund, Inc. 9,106,720 (335,640) 8,771,080 Princor Capital Accumulation Fund, Inc. 61,683,452 (9,286,045) 52,397,407 Princor Emerging Growth Fund, Inc. 47,938,146 (5,209,583) 42,728,563 Princor Growth Fund, Inc. 58,622,979 (4,009,668) 54,613,311 Princor World Fund, Inc. 23,433,449 (8,798,236) 14,635,213 At October 31, 1995, Princor Balanced Fund, Inc., Princor Emerging Growth Fund, Inc., Princor Growth Fund, Inc. and Princor World Fund, Inc. held the following securities which may require registration under the Securities Act of 1933, or an exemption therefrom, in order to effect a sale in the ordinary course of business.

The Growth Funds' investments are with various issuers in various industries. The Schedules of Investments contained herein summarize concentrations of credit risk by issuer and industry except for Princor World Fund, Inc. which is summarized by country, industry and issuer. Note 5 -- Capital Share Transactions Transactions in Capital Stock by fund were as follows:

Note 6 -- Line of Credit The Growth Funds have an unsecured line of credit with a bank which allows each fund to borrow up to $500,000. Borrowings are made solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee is charged at the annual rate of .25% on the unused portion of the line of credit. At October 31, 1995, the Growth Funds had no outstanding borrowings under the line of credit. This page left blank intentionally SCHEDULES OF INVESTMENTS GROWTH FUNDS PRINCOR BALANCED FUND, INC. Shares Held Value Common Stocks (44.61%) Advertising (0.40%) Interpublic Group of Cos., Inc. 6,100 $ 236,375 Air Transportation, Scheduled (0.19%) Southwest Airlines Co. 5,500 110,000 Automotive Rentals, No Drivers (0.43%) Ryder Systems, Inc. 10,500 253,313 Beverages (1.46%) Pepsico, Inc. 14,100 743,775 Universal Foods Corp. 3,200 109,600 853,375 Combination Utility Services (0.56%) Cinergy Corp. 8,000 227,000 Scana Corp. 3,700 93,888 320,888 Commercial Banks (6.46%) AmSouth Bancorp. 11,900 474,513 Banc One Corp. 17,637 595,249 Boatmen's Bancshares, Inc. 14,746 560,348 Chase Manhattan Bank Corp. 3,700 210,900 Comerica, Inc. 6,900 232,012 First of America Bank Corp. 5,300 225,912 First Tennessee National Corp. 1,450 77,575 Firstar Corp. 5,400 191,025 KeyCorp. 8,800 297,000 Marshall & Ilsley Corp. 4,300 104,275 Mercantile Bankshares Corp. 14,550 400,125 Meridian Bancorp., Inc. 2,800 119,700 Nationsbank Corp. 4,200 276,150 3,764,784 Communications Equipment (1.13%) Allen Group, Inc. 3,000 73,500 General Instrument Corp. 13,100(a) 248,900 Newbridge Networks Corp. 7,700(a) 234,850 Northern Telecom Ltd. 2,700 97,200 TransPro, Inc. 750(a) 8,250 662,700 Computer & Office Equipment (1.32%) Cabletron Systems, Inc. 2,500(a) 196,563 Hewlett-Packard Co. 1,900 175,987 International Business Machines Corp. 4,100 398,725 771,275 Construction & Related Machinery (0.62%) Caterpillar, Inc. 6,500 364,812 Crude Petroleum & Natural Gas (0.79%) Texaco, Inc. 6,800 463,250 Dairy Products (0.33%) Dean Foods Co. 7,000 195,125 Department Stores (0.50%) Sears, Roebuck & Co. 8,600 $ 292,400 Drugs (3.35%) American Home Products Corp. 1,800 159,525 Bristol-Myers Squibb Co. 7,600 579,500 Lilly (Eli) & Co. 2,700 260,888 Merck & Co., Inc. 11,300 649,750 Warner-Lambert Co. 3,600 306,450 1,956,113 Eating & Drinking Places (0.44%) McDonald's Corp. 6,300 258,300 Electric Light & Wiring Equipment (0.12%) Cooper Industries 2,000 67,500 Electric Services (2.25%) American Electric Power Co., Inc. 10,800 411,750 Dominion Resources, Inc. 8,200 325,950 FPL Group, Inc. 5,600 234,500 Florida Progress Corp. 3,000 99,375 Potomac Electric Power Co. 9,700 242,500 1,314,075 Electrical Industrial Apparatus (0.39%) Emerson Electric Co. 3,200 228,000 Electronic Components & Accessories (0.77%) Duracell International, Inc. 8,600 450,425 Electronic Distribution Equipment (1.05%) General Electric Co. 9,700 613,525 Engineering & Architectural Services (0.14%) Dun & Bradstreet Corp. 1,400 83,650 Fats & Oils (0.43%) Archer Daniels Midland Co. 15,700 253,162 Fire, Marine, & Casualty Insurance (0.50%) Allstate Corp. 7,965 292,713 General Industrial Machinery (0.35%) BW/IP Holdings, Inc.;Class A 4,200 70,350 Pall Corp. 5,600 136,500 206,850 Grain Mill Products (0.82%) Ralston-Ralston Purina Group 8,100 480,938 Grocery Stores (1.15%) American Stores Co. 5,700 170,288 Sysco Corp. 16,500 501,187 671,475 Household Furniture (0.52%) Masco Corp. 10,800 303,750 Industrial Inorganic Chemicals (0.65%) Dow Chemical Co. 5,500 377,438 Insurance Agents, Brokers & Services (0.44%) Equifax, Inc. 6,600 $ 257,400 Jewelry, Silverware, & Plated Ware (0.22%) Jostens, Inc. 5,800 131,225 Meat Products (0.59%) Tyson Foods, Inc. 14,500 346,187 Medical Instruments & Supplies (0.78%) Becton, Dickinson & Co. 2,500 162,500 St. Jude Medical, Inc. 3,700 197,025 United States Surgical Corp. 4,000 98,000 457,525 Medical Service & Health Insurance (1.95%) AON Corp. 3,300 135,713 Foundation Health Corp. 6,200(a) 262,725 Pacificare Health Systems, Inc.; Class B 3,900(a) 283,725 Physicians Corp. of America 4,300(a) 66,112 U.S. Healthcare, Inc. 10,100 388,850 1,137,125 Metal Forgings & Stampings (0.66%) Newell Co. 15,900 383,587 Metalworking Machinery (0.12%) Giddings & Lewis 4,300 69,337 Miscellaneous Business Services (0.21%) Safety-Kleen Corp. 8,000 123,000 Miscellaneous Converted Paper Products (1.85%) Avery Dennison Corp. 6,900 308,775 Minnesota Mining & Mfg. Co. 13,500 767,813 1,076,588 Miscellaneous Electrical Equipment & Supplies (0.46%) Motorola, Inc. 4,100 269,062 Miscellaneous Fabricated Metal Products (0.19%) Keystone International, Inc. 5,000 111,250 Miscellaneous Shopping Goods Stores (0.62%) Toys 'R' Us, Inc. 16,500(a) 360,938 Motor Vehicles & Equipment (0.54%) Ford Motor Co. 11,000 316,250 Offices & Clinics of Medical Doctors (0.31%) FHP International Corp. 7,500(a) 181,875 Personnel Supply Services (0.53%) Olsten Corp. 7,984 307,384 Petroleum Refining (1.22%) Atlantic Richfield Co. 2,400 256,200 Exxon Corp. 6,000 458,250 714,450 Photographic Equipment & Supplies (0.24%) Eastman Chemical Co. 2,350 139,825 Plastic Materials & Synthetics (0.17%) Wellman, Inc. 4,300 101,050 Sanitary Services (1.52%) Browning-Ferris Industries, Inc. 9,800 285,425 WMX Technologies, Inc. 21,400 601,875 887,300 Security Brokers & Dealers (0.30%) Edwards (A.G.), Inc. 6,675 170,213 Soap, Cleaners & Toilet Goods (1.09%) Avon Products 6,200 440,975 Colgate-Palmolive Co. 2,800 193,900 634,875 Telephone Communication (1.90%) AT&T Corp. 9,700 620,800 MCI Communications Corp. 19,300 481,294 1,102,094 Variety Stores (1.58%) Dayton-Hudson Corp. 8,800 605,000 Wal-Mart Stores, Inc. 14,600 315,725 920,725 Total Common Stocks 26,045,476 Preferred Stocks (3.32%) Meat Products (0.88%) Conagra, Inc.; Class E Convertible 13,200 518,100 Motor Vehicles & Equipment (2.35%) Federal-Mogul Corp.; Series D Convertible 7,800(b) 431,925 Ford Motor Co.; Series A Convertible 10,000 940,000 1,371,925 Paper Mills (0.09%) James River Corp. of Virginia; Series L Convertible Exchangeable 1,000 50,000 Total Preferred Stocks 1,940,025 Bonds (4.20%) Principal Amount Value Aircraft & Parts (0.37%) Rohr Industries, Inc. Convertible Subordinated Debentures; 7.00%; 10/1/12 $ 260,000 $ 218,400 Blast Furnace & Basic Steel Products (0.55%) Quanex Corp. Convertible Subordinated Debentures; 6.88%; 6/30/07 $ 350,000 $ 323,750 Electric Lighting & Wiring Equipment (0.42%) Cooper Industries, Inc. Convertible Subordinated Debentures; 7.05%; 1/1/15 245,000 247,450 Electrical Industrial Apparatus (0.51%) Liebert Co. Convertible Subordinated Debentures; 8.00%; 11/15/10 110,000 294,663 Engines & Turbines (0.90%) Outboard Marine Corp. Convertible Subordinated Debentures; 7.00%; 7/1/02 500,000 523,125 Lumber & Other Building Materials (0.47%) Hechinger Co. Convertible Subordinated Debentures; 5.50%; 4/1/12 600,000 274,500 Petroleum Refining (0.60%) Pennzoil Co. Senior Exchangeable Debentures; 6.50%; 1/15/03 300,000 348,000 Trucking & Courier Services, Ex., Air (0.38%) Builders Transport, Inc. Convertible Subordinated Debentures; 6.50%; 5/1/11 306,000 222,615 Total Bonds 2,452,503 U.S. Government Treasury Notes & Bonds (37.72%) Treasury Notes & Bonds (37.72%) 5.13%; 11/30/98 1,000,000 983,750 5.13%; 2/28/98 4,000,000 3,953,747 6.00%; 10/15/99 2,150,000 2,168,139 5.50%; 4/15/00 5,800,000 5,743,809 6.38%; 8/15/02 2,300,000 2,357,500 5.88%; 2/15/04 2,200,000 2,182,125 7.50%; 2/15/05 1,000,000 1,103,125 8.25%; 5/15/05 750,000 815,860 7.25%; 5/15/16 575,000 630,344 7.50%; 11/15/16 575,000 647,594 7.88%; 2/15/21 750,000 883,360 7.25%; 8/15/22 500,000 552,656 22,022,009 Commercial Paper (9.67%) Business Credit Institutions (5.73%) CIT Group Holdings, Inc.; 5.72%;11/2/95 $1,325,000 $1,324,789 General Electric Capital Corp.; 5.88%;11/1/95 2,025,000 2,025,000 3,349,789 Personal Credit Institutions (3.94%) Ford Motor Credit Co.; 5.72%;11/3/95 1,298,554 1,299,587 5.75%;11/6/95 1,000,000 999,201 2,298,788 Total Commercial Paper 5,648,577 Total Portfolio Investments (99.52%) 58,108,590 Cash, receivables and other assets, net of liabilities (0.48%) 279,764 Total Net Assets (100.00%) $58,388,354 (a) Non-income producing security - No dividend paid during the period. (b) Restricted security - See Note 4 to the financial statements PRINCOR BLUE CHIP FUND, INC. Shares Held Value Common Stocks (91.94%) Beverages (4.74%) Coca-Cola Co. 12,600 $ 905,625 Pepsico, Inc. 16,000 844,000 1,749,625 Commercial Banks (4.75%) Banc One Corp. (Ohio) 15,223 513,776 KeyCorp 12,500 421,875 Torchmark Corp. 7,800 323,700 Wachovia Corp. 11,200 494,200 1,753,551 Commercial Printing (1.13%) R. R. Donnelley & Sons Co. 11,400 416,100 Computer & Office Equipment (3.36%) Hewlett-Packard Co. 13,400 1,241,175 Consumer Products (2.01%) Philip Morris Cos., Inc. 8,800 743,600 Department Stores (3.03%) May Department Stores 28,500 1,118,625 Drug Stores & Proprietary Stores (2.95%) Walgreen Co. 38,300 1,091,550 Drugs (14.17%) Baxter International, Inc. 27,200 $1,050,600 Bristol-Myers Squibb Co. 14,500 1,105,625 Johnson & Johnson 14,200 1,157,300 Merck & Co., Inc. 20,100 1,155,750 Warner-Lambert Co. 9,000 766,125 5,235,400 Eating & Drinking Places (2.04%) McDonald's Corp. 18,400 754,400 Electric Services (5.93%) Dominion Resources, Inc. 27,500 1,093,125 KU Energy Corp. 37,000 1,096,125 2,189,250 Electrical Industrial Apparatus (2.45%) Emerson Electric Co. 12,700 904,875 Electronic Distribution Equipment (3.36%) General Electric Co. 19,600 1,239,700 Engineering & Architectural Services (1.97%) Dun & Bradstreet Corp. 12,200 728,950 General Industrial Machinery (1.98%) Pall Corp. 30,000 731,250 Grain Mill Products (2.33%) Ralston-Ralston Purina Group 14,500 860,937 Industrial Inorganic Chemicals (2.08%) Dow Chemical Co. 11,200 768,600 Insurance Agents, Brokers & Services (2.68%) Equifax, Inc. 25,400 990,600 Metal Cans & Shipping Containers (2.68%) Crown Cork & Seal Co., Inc. 28,400(a) 990,450 Miscellaneous Converted Paper Products (2.99%) Minnesota Mining & Mfg. Co. 19,400 1,103,375 Miscellaneous Electrical Equipment & Supplies (2.95%) Motorola, Inc. 16,600 1,089,375 Motor Vehicles & Equipment (1.32%) Ford Motor Co. 17,000 488,750 Petroleum Refining (5.68%) Exxon Corp. 13,800 1,053,975 Royal Dutch Petroleum Co. ADR 8,500 1,044,437 2,098,412 Preserved Fruits & Vegetables (2.62%) H. J. Heinz Co. 20,800 967,200 Sanitary Services (1.52%) WMX Technologies, Inc. 20,000 562,500 Security Brokers & Dealers (1.26%) American Express Co. 11,500 $ 467,188 Soap, Cleaners & Toilet Goods (2.13%) Procter & Gamble Co. 9,700 785,700 Telephone Communication (6.38%) AT&T Corp. 18,900 1,209,600 Bellsouth Corp. 15,000 1,147,500 2,357,100 Variety Stores (1.45%) Dayton-Hudson Corp. 7,800 536,250 Total Common Stocks 33,964,488 Principal Amount Value Commercial Paper (9.24%) Business Credit Institutions (5.18%) General Electric Capital Corp. 5.75%;11/01/95 $1,135,000 $ 1,135,000 John Deere Capital Corp. 5.75%;11/7/95 780,000 779,253 1,914,253 Crude Petroleum & Natural Gas (4.06%) Chevron Oil Finance Co. 5.71%;11/30/95 1,500,000 1,499,524 Total Commercial Paper 3,413,777 Total Portfolio Investments (101.18%) 37,378,265 Liabilities, net of cash, receivables and other assets (-1.18%) (434,526) Total Net Assets (100.00%) $ 36,943,739 (a) Non-Income producing security - No dividend paid during the period. PRINCOR CAPITAL ACCUMULATION FUND, INC. Shares Held Value Common Stocks (98.36%) Advertising (0.98%) Interpublic Group of Cos., Inc. 86,000 $ 3,332,500 Air Transportation, Scheduled (0.42%) Southwest Airlines Co. 71,100 1,422,000 Automotive Rentals, No Drivers (1.12%) Ryder Systems, Inc. 158,400 3,821,400 Beverages (3.29%) Pepsico, Inc. 181,800 $ 9,589,950 Universal Foods Corp. 48,300 1,654,275 11,244,225 Combination Utility Services (1.00%) Cinergy Corp. 120,300 3,413,513 Commercial Banks (7.70%) Banc One Corp. 98,400 3,321,000 Boatmen's Bancshares, Inc. 87,000 3,306,000 Chase Manhattan Bank Corp. 55,900 3,186,300 Comerica, Inc. 104,700 3,520,537 First of America Bank Corp. 80,200 3,418,525 Firstar Corp. 82,100 2,904,288 KeyCorp 132,300 4,465,125 Nationsbank Corp. 33,700 2,215,775 26,337,550 Communications Equipment (2.60%) Allen Group, Inc. 44,700 1,095,150 General Instrument Corp. 166,500(a) 3,163,500 Newbridge Networks Corp. 98,500(a) 3,004,250 Northern Telecom Ltd. 41,200 1,483,200 Transpro, Inc. 11,175(a) 122,925 8,869,025 Computer & Office Equipment (3.16%) Cabletron Systems, Inc. 37,200(a) 2,924,850 Hewlett-Packard Co. 29,300 2,713,912 International Business Machines Corp. 53,100 5,163,975 10,802,737 Construction & Related Machinery (1.56%) Caterpillar, Inc. 95,300 5,348,713 Crude Petroleum & Natural Gas (2.03%) Texaco, Inc. 102,100 6,955,562 Dairy Products (1.16%) Dean Foods Co. 142,200 3,963,825 Department Stores (1.29%) Sears, Roebuck & Co. 29,500 4,403,000 Drugs (7.84%) American Home Products Corp. 26,600 2,357,425 Bristol-Myers Squibb Co. 106,300 8,105,375 Lilly (Eli) & Co. 40,700 3,932,638 Merck & Co., Inc. 147,100 8,458,250 Warner-Lambert Co. 46,400 3,949,800 26,803,488 Eating & Drinking Places (1.14%) McDonald's Corp. 94,800 3,886,800 Electric Light & Wiring Equipment (0.29%) Cooper Industries 29,600 999,000 Electric Services (5.57%) American Electric Power Co., Inc. 141,100 5,379,437 Dominion Resources, Inc. 124,500 4,948,875 FPL Group, Inc. 85,100 3,563,563 Florida Progress Corp. 45,200 1,497,250 Potomac Electric Power Co. 146,800 3,670,000 19,059,125 Electrical Industrial Apparatus (1.85%) Emerson Electric Co. 88,897 6,333,911 Electronic Components & Accessories (1.71%) Duracell International, Inc. 111,600 5,845,050 Electronic Distribution Equipment (2.48%) General Electric Co. 134,200 8,488,150 Fats & Oils (1.03%) Archer Daniels Midland Co. 218,000 3,515,250 Fire, Marine & Casualty Insurance (1.29%) Allstate Corp. 120,051 4,411,874 General Industrial Machinery (0.91%) BW/IP Holdings, Inc.; Class A 64,100 1,073,675 Pall Corp. 84,000 2,047,500 3,121,175 Grain Mill Products (2.13%) Ralston-Ralston Purina Group 122,900 7,297,188 Grocery Stores (2.62%) American Stores Co. 86,200 2,575,225 Sysco Corp. 210,500 6,393,937 8,969,162 Household Furniture (1.27%) Masco Corp. 154,500 4,345,313 Industrial Inorganic Chemicals (1.65%) Dow Chemical Co. 82,300 5,647,837 Insurance Agents, Brokers & Services (1.04%) Equifax, Inc. 91,400 3,564,600 Jewelry, Silverware & Plated Ware (0.58%) Jostens, Inc. 88,200 1,995,525 Meat Products (1.30%) Tyson Foods, Inc. 186,500 4,452,688 Medical Instruments & Supplies (2.01%) Becton, Dickinson & Co. 38,000 2,470,000 St. Jude Medical, Inc. 54,700(a) 2,912,775 United States Surgical Corp. 61,100 1,496,950 6,879,725 Medical Service & Health Insurance (4.27%) Foundation Health Corp. 93,200(a) 3,949,350 Pacificare Health Systems, Inc.; Class B 52,300(a) 3,804,825 Physicians Corp. of America 64,300(a) 988,612 U.S. Healthcare, Inc. 152,200 5,859,700 14,602,487 Metal Forgings & Stampings (1.46%) Newell Co. 207,000 $ 4,993,875 Metalworking Machinery (0.30%) Giddings & Lewis 64,200 1,035,225 Miscellaneous Business Services (0.55%) Safety-Kleen Corp. 121,200 1,863,450 Miscellaneous Converted Paper Products (4.00%) Avery Dennison Corp. 90,000 4,027,500 Minnesota Mining & Mfg. Co. 169,400 9,634,625 13,662,125 Miscellaneous Electrical Equipment & Supplies (1.43%) Motorola, Inc. 74,500 4,889,063 Miscellaneous Fabricated Metal Products (0.50%) Keystone International, Inc. 76,200 1,695,450 Miscellaneous Shopping Goods Stores (1.37%) Toys 'R' Us, Inc. 213,600(a) 4,672,500 Motor Vehicles & Equipment (1.39%) Ford Motor Co. 165,800 4,766,750 Offices & Clinics of Medical Doctors (0.81%) FHP International Corp. 113,700(a) 2,757,225 Petroleum Refining (3.14%) Atlantic Richfield Co. 35,900 3,832,325 Exxon Corp. 90,400 6,904,300 10,736,625 Photographic Equipment & Supplies (0.62%) Eastman Chemical Co. 35,400 2,106,300 Plastic Materials & Synthetics (0.44%) Wellman, Inc. 64,200 1,508,700 Sanitary Services (3.80%) Browning-Ferris Industries, Inc. 136,000 3,961,000 WMX Technologies, Inc. 320,800 9,022,500 12,983,500 Security Brokers & Dealers (0.75%) Edwards (A.G.), Inc. 100,322 2,558,211 Soap, Cleaners & Toilet Goods (2.65%) Avon Products 93,000 6,614,625 Colgate-Palmolive Co. 35,500 2,458,375 9,073,000 Telephone Communication (4.33%) AT&T Corp. 132,800 8,499,200 MCI Communications Corp. 252,800 6,304,200 14,803,400 Variety Stores (3.53%) Dayton-Hudson Corp. 115,100 7,913,125 Wal-Mart Stores, Inc. 191,600 4,143,350 12,056,475 Total Common Stocks 336,294,272 Commercial Paper (1.52%) Business Credit Institutions (0.65%) Cit Group Holdings, Inc.; 5.72%;11/2/95 $2,235,000 $ 2,234,645 Personal Credit Institutions (0.87%) Associates Corp. of North America; 5.75%;11/6/95 2,525,000 2,522,983 Ford Motor Credit Co.; 5.76%; 11/01/95 450,000 450,000 2,972,983 Total Commercial Paper 5,207,628 Total Portfolio Investments (99.88%) 341,501,900 Cash, receivables and other assets, net of liabilities (0.12%) 402,567 Total Net Assets (100.00%) $341,904,467 (a) Non-Income producing security - No dividend paid during the period. PRINCOR EMERGING GROWTH FUND, INC. Shares Held Value Common Stocks (80.85%) Blast Furnace & Basic Steel Products (1.35%) Lukens, Inc. 70,000 $ 2,152,500 Carpets & Rugs (1.40%) Shaw Industries, Inc. 175,000 2,231,250 Chemicals & Allied Products (0.60%) Sigma-Aldrich Corp. 20,000 950,000 Commercial Banks (8.39%) Boatmen's Bancshares, Inc. 10,200 387,600 First Commerce Corp. 15,000 465,000 First Federal Capital Corp. 108,532 1,926,443 Hawkeye Bancorp. 67,000 1,616,375 Independent Bank Corp. Michigan 36,750 1,006,031 Integra Financial Corp. 10,000 587,500 Mercantile Bancorp., Inc. 50,148 2,206,512 Merchants Bancorp., Inc. 57,500 1,538,125 North Fork Bancorp., Inc. 25,000 546,875 Peoples Heritage Financial Group, Inc. 58,900 1,119,100 Princeton National Bancorp., Inc. 92,800 1,508,000 Summit Bancorp. 17,600 499,400 13,406,961 Commercial Printing (0.46%) Bowne & Co., Inc. 5,000 93,125 Merrill Corp. 40,000 640,000 733,125 Communications Equipment (1.80%) California Amplifier, Inc. 50,000(a)$ 1,350,000 Newbridge Networks Corp. 50,000(a) 1,525,000 2,875,000 Computer & Data Processing Services (4.44%) American Management Systems, Inc. 100,000(a) 2,887,500 HBO & Co. 24,000 1,698,000 Microsoft Corp. 25,000(a) 2,500,000 7,085,500 Computer & Office Equipment (2.12%) Digital Biometrics, Inc. 18,500(a) 115,625 EMC Corp. 85,000(a) 1,317,500 Sun Microsystems, Inc. 25,000(a) 1,950,000 3,383,125 Construction & Related Machinery (0.89%) Energy Ventures, Inc. 75,000(a) 1,425,000 Crude Petroleum & Natural Gas (0.27%) Devon Energy Corp. 19,950 433,912 Dairy Products (0.64%) Dreyer's Grand Ice Cream, Inc. 30,000 1,035,000 Drugs (1.39%) Alliance Pharmaceutical Corp. 35,000(a) 420,000 Forest Laboratories, Inc. 10,000(a) 413,750 Merck & Co., Inc. 16,970 975,775 Seragen, Inc. 40,000(a) 235,000 Syntro Corp. 50,000(a) 178,125 2,222,650 Eating & Drinking Places (0.49%) Ryan's Family Steak Houses, Inc. 100,000(a) 775,000 Electronic Components & Accessories (3.39%) Linear Technology Corp. 50,000 2,187,500 Solectron Corp. 80,000(a) 3,220,000 5,407,500 Engineering & Architectural Services (0.55%) Paychex, Inc. 20,250 878,344 Finance Services (1.34%) First Financial Corp. 100,000 2,137,500 Fire, Marine & Casualty Insurance (3.17%) Avemco Corp. 100,000 1,687,500 Berkley W. R. Corp. 78,000 3,373,500 5,061,000 Footwear, Except Rubber (1.12%) Nine West Group, Inc. 40,000(a) 1,780,000 General Industrial Machinery (5.96%) Flow International Corp. 100,000(a) 1,112,500 Kaydon Corp. 80,000 2,310,000 MFRI, Inc. 50,000 300,000 Pentair, Inc. 50,000 2,525,000 Roper Industries, Inc. 90,000 3,262,500 9,510,000 Grocery Stores (0.43%) Casey's General Stores, Inc. 30,000 690,000 Hardware Stores (0.55%) Central Tractor Farm & Country, Inc. 130,000(a) 877,500 Holding Offices (0.92%) ISB Financial Corp. 50,000 837,500 Today's Bancorp., Inc. 29,000 623,500 1,461,000 Hose, Belting, Gaskets & Packing (1.28%) Mark IV Industries 105,105 2,049,548 Hospitals (2.13%) Humana, Inc. 90,000(a) 1,901,250 Universal Health Services, Inc.; Class B 40,000(a) 1,500,000 3,401,250 Industrial Inorganic Chemicals (1.00%) AMSCO International, Inc. 100,000(a) 1,600,000 Insurance Agents, Brokers & Services (1.47%) Equifax, Inc. 60,000 2,340,000 Investment Offices (1.32%) INVESCO PLC ADR 55,000 2,103,750 Iron & Steel Foundries (0.99%) Atchison Casting Corp. 102,000(a) 1,581,000 Laundry, Cleaning & Garment Services (0.52%) G&K Services, Inc.; Class A 37,500 834,375 Life Insurance (1.02%) First Colony Corp. 60,000 1,635,000 Measuring & Controlling Devices (0.20%) ISCO, Inc. 30,935 324,812 Meat Products (1.14%) Michael Foods, Inc. 150,000 1,818,750 Medical Instruments & Supplies (6.23%) Andros Analyzers, Inc. 10,000(a) 172,500 Boston Scientific Corp. 170,760(a) 7,193,265 MDT Corp. 50,000(a) 275,000 Nellcor Puritan Bennett 40,000(a) 2,300,000 9,940,765 Medical Service & Health Insurance (3.73%) Foundation Health Corp. 50,000(a) 2,118,750 Health System International, Inc. 38,900(a) 1,181,588 United Healthcare Corp. 50,000 2,656,250 5,956,588 Metal Forgings & Stampings (0.53%) Varlen Corp. 31,333 838,158 Metal Services, NEC (1.69%) BMC Industries, Inc. 70,000 2,703,750 Miscellaneous Chemical Products (2.71%) Cytec Industries 30,000(a) $1,642,500 H. B. Fuller Co. 40,000 1,260,000 Loctite Corp. 30,000 1,417,500 4,320,000 Miscellaneous Fabricated Metal Products (2.19%) Intel Corp. 50,000 3,493,750 Miscellaneous Plastics Products, NEC (0.09%) Rubbermaid, Inc. 5,266 137,574 Nursing & Personal Care Facilities (0.19%) Horizon Healthcare Corp. 15,131(a) 306,403 Office Furniture (1.07%) Chromcraft Revington, Inc. 50,000(a) 1,200,000 Kimball International, Inc.; Class B 20,000 510,000 1,710,000 Offices & Clinics of Medical Doctors (0.05%) FHP International Corp. 3,360 81,480 Operative Builders (0.50%) Pulte Corp. 25,000 790,625 Paints & Allied Products (0.67%) RPM, Inc. 55,000 1,065,625 Pens, Pencils, Office & Art Supplies (0.04%) Hunt Mfg. Co. 3,450 60,375 Personnel Supply Services (0.25%) Olsten Corp. 10,266 395,241 Plastic Materials & Synthetics (0.88%) A. Schulman, Inc. 75,000 1,406,250 Plumbing, Heating & Air-Conditioning (1.32%) Apogee Enterprises, Inc. 100,000 1,500,000 Metalclad Corp. 228,400 599,550 2,099,550 Refrigeration & Service Machinery (0.74%) Tecumseh Products Co.; Class A 25,000 1,175,000 Sanitary Services (0.91%) Browning-Ferris Industries, Inc. 50,000 1,456,250 Savings Institutions (0.78%) North Side Savings Bank (NY) 16,275 476,044 Sterling Financial Corp. 57,233(a) 772,645 1,248,689 Screw Machine Product, Bolts, Etc. (1.04%) Trimas Corp. 80,000 1,660,000 Security Brokers & Dealers (0.49%) Jefferies Group, Inc. 20,000 785,000 Special Industry Machinery (0.02%) Key Technology, Inc. 2,500(a) 31,875 Toys & Sporting Goods (0.99%) Mattel, Inc. 55,000 $ 1,581,250 Trucking & Courier Services, Ex., Air (1.00%) Consolidated Freightways, Inc. 15,000 348,750 J. B. Hunt Transport Services, Inc. 80,500 1,247,750 1,596,500 Total Common Stocks 129,041,050 Preferred Stocks (2.11%) Gas Production & Distribution (0.45%) Kelley Oil and Gas Corp. Convertible 54,432 721,224 Offices & Clinics of Medical Doctors (1.66%) FHP International Corp. Series A Convertible 111,200 2,641,000 Total Preferred Stocks 3,362,224 Bonds (3.36%) Principal Amount Value Combination Utility Services (0.00%) Bonneville Pacific Corp. Convertible Subordinated Debentures; 7.75%; 8/15/09 $ 150,000(b) $ -- Computer & Data Processing Services (1.63%) Sierra On Line Convertible Subordinated Debentures; 6.50%; 4/1/01 990,000(c) 2,593,800 Computer & Office Equipment (0.14%) Seagate Technology Convertible Subordinated Debentures; 6.75%; 5/1/12 200,000 225,000 Drugs (0.29%) Genzyme Corp. Convertible Notes; 6.75%; 10/1/01 400,000 469,000 Industrial Inorganic Chemicals (0.92%) Ciba-Geigy Corp. Exchangeable Subordinated Debentures; 6.25%; 3/15/16 350,000(c) 349,562 ICN Pharmaceuticals, Inc. Convertible Subordinated Debentures; 8.50%; 11/15/99 1,000,000 1,112,500 1,462,062 Nursing & Personal Care Facilities (0.14%) Greenery Rehabilitation Group, Inc. Convertible Senior Subordinated Notes; 8.75%; 4/1/15 250,000 227,500 Sanitary Services (0.24%) Enclean, Inc.Convertible Subordinated Debentures; 7.50%; 8/1/01 $ 200,000 $ 208,729 Sanifill, Inc. Convertible Subordinated Debentures; 7.50%; 6/1/06 150,000 170,438 379,167 Total Bonds 5,356,529 Commercial Paper (12.32%) Business Credit Institutions (9.02%) Cit Group Holdings, Inc. 5.72%;11/2/95 5,015,000 5,014,203 General Electric Capital Corp.; 5.70%;11/3/95 5,015,000 5,013,412 Deere (John) Capital Corp.; 5.75%;11/7/95 4,375,000 4,370,807 14,398,422 Crude Petroleum & Natural Gas (1.64%) Chevron Oil Finance Co.; 5.74%;11/6/95 2,625,000 2,622,907 Personal Credit Institutions (1.66%) Ford Motor Credit Co.;5.76%;11/1/95 2,650,000 2,650,000 Total Commercial Paper 19,671,329 Total Portfolio Investments (98.64%) 157,431,132 Cash, receivables and other assets, net of liabilities (1.36%) 2,177,482 Net Assets (100.00%) $159,608,614 (a) Non-income producing security - No dividend paid during the period. (b) Non-income producing security - Security in default. (c) Restricted security - See Note 4 to the financial statements. PRINCOR GROWTH FUND, INC. Shares Held Value Common Stocks (87.70%) Advertising (1.27%) Interpublic Group of Cos., Inc. 60,000 $ 2,325,000 Beverages (2.62%) Coca-Cola Co. 30,000 2,156,250 Pepsico, Inc. 50,000 $ 2,637,500 4,793,750 Blast Furnace & Basic Steel Products (1.61%) Lukens, Inc. 80,000 2,460,000 Quanex Corp. 24,142 476,805 2,936,805 Carpets & Rugs (1.40%) Shaw Industries, Inc. 200,000 2,550,000 Cash Grains (2.72%) Pioneer Hi-Bred International 100,000 4,962,500 Commercial Banks (5.75%) Banc One Corp. 50,000 1,687,500 Boatmen's Bancshares, Inc. 45,000 1,710,000 First of America Bank Corp. 40,000 1,705,000 Firstar Corp. 75,000 2,653,125 FirstMerit Corp. 50,000 1,350,000 Meridian Bancorp., Inc. 10,000 427,500 Princeton National Bancorp., Inc. 60,000 975,000 10,508,125 Communications Equipment (0.98%) Northern Telecom Ltd. 50,000 1,800,000 Computer & Data Processing Services (2.30%) Microsoft Corp. 42,000(a) 4,200,000 Computer & Office Equipment (2.23%) Digital Equipment Corp. 6,800(a) 368,050 Hewlett-Packard Co. 30,000 2,778,750 Pitney Bowes, Inc. 10,000 436,250 Tandy Corp. 10,000 493,750 4,076,800 Department Stores (1.40%) May Department Stores 65,000 2,551,250 Drugs (4.84%) Alliance Pharmaceutical Corp. 20,000(a) 240,000 Bristol-Myers Squibb Co. 10,000 762,500 Johnson & Johnson 30,000 2,445,000 Lilly (Eli) & Co. 20,000 1,932,500 Merck & Co., Inc. 44,100 2,535,750 Seragen, Inc. 70,500(a) 414,187 Upjohn Co. 10,000 507,500 8,837,437 Electric Light & Wiring Equipment (0.21%) Raychem Corp. 8,100 375,638 Electrical Goods (0.83%) Avnet, Inc. 30,000 1,511,250 Electronic Components & Accessories (2.16%) Linear Technology Corp. 90,000 3,937,500 Electronic Distribution Equipment (0.69%) General Electric Co. 20,000 1,265,000 Engineering & Architectural Services (0.33%) Dun & Bradstreet Corp. 10,000 $ 597,500 Federal & Federally Sponsored Credit (0.57%) Federal National Mortgage Association 10,000 1,048,750 Footwear, Except Rubber (0.74%) Stride Rite Corp. 120,000 1,350,000 General Industrial Machinery (3.63%) Flow International Corp. 100,000(a) 1,112,500 Ingersoll-Rand Co. 70,000 2,476,250 Tyco International Ltd. 50,000 3,037,500 6,626,250 Grain Mill Products (1.76%) Ralcorp Holdings, Inc. 10,833(a) 249,159 Ralston-Ralston Purina Group 50,000 2,968,750 3,217,909 Grocery Stores (0.27%) Casey's General Stores, Inc. 21,052 484,196 Holding Offices (0.35%) Today's Bancorp., Inc. 30,000 645,000 Hose, Belting, Gaskets & Packing (1.30%) Mark IV Industries 122,054 2,380,053 Hospitals (2.03%) Humana, Inc. 100,000(a) 2,112,500 Universal Health Services, Inc.; Class B 42,511(a) 1,594,162 3,706,662 Household Furniture (1.23%) Masco Corp. 80,000 2,250,000 Investment Offices (1.05%) INVESCO PLC ADR 50,000 1,912,500 Lumber & Other Building Materials (2.04%) Home Depot, Inc. 100,000 3,725,000 Medical Instruments & Supplies (7.94%) Andros Analyzers, Inc. 60,000(a) 1,035,000 Becton, Dickinson & Co. 20,000 1,300,000 Boston Scientific Corp. 206,961(a) 8,718,232 Nellcor Puritan Bennett 60,000(a) 3,450,000 14,503,232 Medical Service & Health Insurance (5.47%) AON Corp. 40,000 1,645,000 Foundation Health Corp. 70,000(a) 2,966,250 Health System International, Inc. 50,000(a) 1,518,750 United Healthcare Corp. 51,000 2,709,375 Value Health, Inc. 50,000 1,143,750 9,983,125 Millwork, Plywood & Structural Members (0.90%) Georgia-Pacific Corp. 20,000 $1,650,000 Miscellaneous Chemical Products (0.52%) Loctite Corp. 20,000 945,000 Miscellaneous Converted Paper Products (0.44%) Minnesota Mining & Mfg. Co. 14,000 796,250 Miscellaneous Electrical Equipment & Supplies (2.16%) Motorola, Inc. 60,000 3,937,500 Miscellaneous Fabricated Metal Products (2.41%) Intel Corp. 63,000 4,402,125 Miscellaneous Shopping Goods Stores (0.42%) Toys 'R' Us, Inc. 35,000(a) 765,625 Motor Vehicles & Equipment (2.79%) Chrysler Corp. 50,000 2,581,250 Dana Corp. 98,000 2,511,250 5,092,500 Office Furniture (0.20%) Chromcraft Revington, Inc. 15,000(a) 360,000 Offices & Clinics of Medical Doctors (0.20%) FHP International Corp. 15,000(a) 363,750 Operative Builders (0.73%) Pulte Corp. 42,105 1,331,571 Petroleum Refining (2.63%) Atlantic Richfield Co. 20,000 2,135,000 Exxon Corp. 35,000 2,673,125 4,808,125 Plastic Materials & Synthetics (0.82%) A. Schulman, Inc. 80,000 1,500,000 Plumbing, Heating & Air- Conditioning (0.38%) Metalclad Corp. 264,500(a) 694,312 Preserved Fruits & Vegetables (0.91%) CPC International, Inc. 25,000 1,659,375 Refrigeration & Service Machinery (1.03%) Tecumseh Products Co.; Class A 40,000 1,880,000 Rubber & Plastics Footwear (0.93%) Reebok International Ltd. 50,000 1,700,000 Sanitary Services (1.97%) Browning-Ferris Industries, Inc. 80,000 2,330,000 WMX Technologies, Inc. 45,000 1,265,625 3,595,625 Security Brokers & Dealers (1.38%) Salomon, Inc. 70,000 $ 2,528,750 Soap, Cleaners & Toilet Goods (5.24%) Colgate-Palmolive Co. 40,000 2,770,000 Ecolab, Inc. 120,000 3,480,000 International Flavors & Fragrances, Inc. 15,000 723,750 SmithKline Beecham PLC ADR 50,000 2,593,750 9,567,500 Toys & Sporting Goods (1.55%) Mattel, Inc. 98,437 2,830,064 Trucking & Courier Services, Ex., Air (0.37%) Roadway Services, Inc. 15,000 671,250 Total Common Stocks 160,140,554 Preferred Stocks (2.13%) Motor Vehicles & Equipment (0.52%) Ford Motor Co.; Series A Convertible 0,000 940,000 Offices & Clinics of Medical Doctors (1.61%) FHP International Corp.; Series A Convertible 124,000 2,945,000 Total Preferred Stocks 3,885,000 Bonds (2.02%) Principal Amount Value Drugs (0.16%) Genzyme Corp. Convertible Notes; 6.75%; 10/1/01 $ 250,000 $ 293,125 Electrical Industrial Apparatus (0.73%) Liebert Co. Convertible Subordinated Debentures; 8.00%; 11/15/10 500,000 1,339,375 Industrial Inorganic Chemicals (0.27%) Ciba-Geigy Corp. Exchangeable Subordinated Debentures; 6.25%; 3/15/16 500,000(b) 499,375 Nursing & Personal Care Facilities (0.50%) Greenery Rehabilitation Group, Inc. Convertible Senior Subordinated Notes; 8.75%; 4/1/15 1,000,000 910,000 Sanitary Services (0.36%) Enclean, Inc. Convertible Subordinated Debentures; 7.50%; 8/1/01 $ 300,000 $ 313,093 Sanifill, Inc. Convertible Subordinated Debentures; 7.50%; 6/1/06 300,000 340,875 653,968 Total Bonds 3,695,843 Commercial Paper (8.07%) Business Credit Institutions (3.53%) CIT Group Holding, Inc.; 5.72%; 11/2/95 3,635,000 3,634,423 John Deere Capital Corp.; 5.75%; 11/7/95 2,815,000 2,812,302 6,446,725 Crude Petroleum & Natural Gas ( 2.39%) Chevron Oil Finance Co.; 5.71%; 11/3/95 2,060,000 2,059,347 5.74%; 11/6/95 2,300,000 2,298,166 4,357,513 Personal Credit Institutions (2.15%) Ford Motor Credit Co.; 5.76%; 11/1/95 3,935,000 3,935,000 Total Commercial Paper 14,739,238 Total Portfolio Investments (99.92%) 182,460,635 Cash, receivables and other assets, net of liabilities (0.08%) 146,221 Total Net Assets (100.00%) $182,606,856 (a) Non-income producing security - No dividend paid during the period. (b) Restricted security - See Note 4 to the financial statements. PRINCOR WORLD FUND, INC. Shares Held Value Common Stocks (97.16%) AUSTRALIA (4.59%) Commercial Banks (2.46%) National Australia Bank Ltd. 374,715 $ 3,203,721 Crude Petroleum & Natural Gas (0.39%) Ampolex Ltd. 259,000(a) 512,224 Gas Production & Distribution (0.81%) Australia Gas & Light 305,000 1,055,597 Miscellaneous Food & Kindred Products (0.93%) Burns, Philp & Co., Ltd. 540,938 $ 1,209,711 5,981,253 AUSTRIA (1.34%) Blast Furnace & Basic Steel Products (0.70%) Voest-Alpine Stahl 30,000(a)(b) 917,237 Railroad Equipment (0.64%) Vae AG 9,350 835,917 1,753,154 CANADA (2.18%) Coal Mining Services (0.49%) Morgan Hydrocarbons, Inc. 13,600(a) 635,234 Communications Equipment (0.88%) Newbridge Networks Corp. 37,700(a) 1,149,850 Iron & Steel Foundries (0.26%) Dofasco, Inc. 26,300 332,412 Miscellaneous Plastics Products, NEC (0.55%) Royal Plastics Group 54,000(a)(b) 722,668 2,840,164 CHILE (0.53%) Telephone Communication (0.53%) Compania DeTelecomunicaciones ADR 9,600 691,200 DENMARK (1.18%) Telephone Communication (1.18%) Tele Danmark B 29,500 1,538,003 FINLAND (3.27%) Forest Products (0.54%) Metsa-Serla 18,800 699,395 Miscellaneous Wood Products (0.85%) Enso-Gutzeit 142,000 1,113,371 Pulp Mills (1.06%) Kymmene 50,700 1,384,756 Sugar & Confectionary Products (0.82%) Huhtamake I Free 36,200 1,073,956 4,271,478 FRANCE (1.29%) Drugs (1.29%) Roussel-Uclaf 10,250 1,680,089 GERMANY (4.62%) Flat Glass (0.37%) Weru AG 1,275 479,846 Industrial Inorganic Chemicals (1.83%) Bayer AG 9,055 $ 2,391,924 Miscellaneous Chemical Products (2.42%) Hoechst AG 12,100 3,153,315 6,025,085 GREECE (0.52%) Highway & Street Construction (0.52%) Edrasis Psallidas 45,000 673,234 Edrasis Psallidas Rights 13,500(a) 8,440 681,674 HONG KONG (5.33%) Communications Equipment (0.30%) ABC Communications Holdings Ltd. 1,946,000 397,667 Electric Services (0.60%) CEP-A Consolidated Electric Power-Asia 387,000 783,331 Electronic Components & Accessories (0.50%) Varitronix 340,000 648,620 Highway & Street Construction (0.07%) Wai Kee Holdings, Ltd 744,000 91,415 Holdings Offices (1.11%) First Pacific Co. Ltd. 1,260,673 1,451,149 Miscellaneous Textile Goods (0.45%) Espirit Asia 1,708,000 579,878 Office Furniture (0.46%) Lamex Holdings 2,660,000 595,179 Personal Credit Institutions (0.81%) Manhattan Card Co. 2,463,000 1,051,231 Security Brokers & Dealers (1.03%) Peregrine Investment Holdings 1,058,000 1,347,850 6,946,320 INDONESIA (1.07%) Miscellaneous Furniture & Fixtures (0.25%) Pt Surya Toto 154,000 318,714 Pulp Mills (0.82%) Asia Pacific Resources 146,700(a) 1,063,575 1,382,289 ITALY (2.76%) Metalworking Machinery (0.23%) Danieli & Co.-DR 110,000 303,610 Telephone Communication (2.53%) Telecom Italia-DI 1,440,000 1,698,209 Telecom Italia Mobile 1,440,000 1,598,845 3,297,054 3,600,664 JAPAN (0.89%) Computer & Office Equipment (0.46%) Canon, Inc. 35,000 $ 599,051 Electronic Components & Accessories (0.24%) Murata Mfg. 9,000 316,006 Engines & Turbines (0.19%) Mabuchi Motor 4,000 242,163 1,157,220 KOREA (2.40%) Commercial Banks (0.31%) Shinhan Bank 16,300 336,588 Shinhan Bank Bonus Shares 2,992(a) 61,783 398,371 Concrete Work (0.60%) Hanil Cemet 13,500 785,140 Construction & Related Machinery (0.59%) Keumkang 10,000 771,091 Electric Services (0.90%) Korea Electric Power Corp. 28,500 1,173,299 3,127,901 MALAYSIA (0.74%) Holding Offices (0.49%) C. I. Holdings 180,000 633,520 Non-Classifiable Establishments (0.25%) Malaysian Pacific Industries 122,000 328,636 962,156 MEXICO (1.57%) Aircraft & Parts (0.13%) Tolmex SA 46,000 174,592 Cement, Hydraulic (0.26%) Apasco SA 90,000 332,770 Concrete, Gypsum & Plaster Products (0.20%) Cementos De Mexico SA 80,000 257,141 Department Stores (0.17%) Sears Roebuck De Mexico SA 83,400(a) 227,771 Foreign Banks, Branches & Agencies (0.21%) Grupo Financiero Bancomer; Series B 1,030,000(a)$ 271,202 Series L 38,148(a) 8,869 280,071 Miscellaneous Food & Kindred Products (0.07%) Grupo Herdez SA 328,000(a) 86,364 Telephone Communication (0.53%) Telefonos De Mexico SA ADR 25,300 695,750 2,054,459 NETHERLANDS (14.41%) Beer, Wine & Distilled Beverages (0.55%) Heineken Holdings 4,343 717,357 Commercial Banks (1.81%) ABN-AMRO Holdings NV 56,218 2,358,814 Communications Services, NEC (2.09%) KPN Royal PTT Nederland 77,786 2,732,118 Electric Light & Wiring Equipment (0.58%) Otra 3,700 761,009 Electronic Distribution Equipment (1.81%) Phillips Electronics 61,100 2,358,718 Grocery Stores (1.33%) Ahold NV New ADR 41,057 1,549,902 Koninklijke Ahold NV 4,989 188,808 1,738,710 Meat Products (2.16%) Unilever NV 21,500 2,812,444 Miscellaneous Durable Goods (1.91%) Hagemeyer NV 50,100 2,492,099 Miscellaneous Transportation Services (0.65%) Koninklijke Pakhoed NV 31,255 850,536 Paperboard Containers & Boxes (0.58%) Koninklijke KNP BT NV 25,080(b) 753,922 Special Industry Machinery (0.94%) IHC Caland NV 43,300 1,230,380 18,806,107 NEW ZEALAND (3.28%) Beverages (1.69%) Lion Nathan 970,000 2,202,433 Household Appliances (1.05%) Fisher & Paykel 421,000 1,375,497 Miscellaneous Manufacturers (0.54%) Carter Holt Harvey Ltd. 297,300 710,356 4,288,286 NORWAY (3.29%) Commercial Banks (1.13%) Christiana Bank Ordinary Shares 361,000 $ 840,338 Fokus Bank 120,000(a)(b) 635,732 1,476,070 Drugs (0.41%) Hafslund Nycomed 19,198 536,271 Meat Products (1.11%) Orkla B Ordinary Shares 29,700 1,444,701 Ship & Boat Building & Repairing (0.64%) Unitor Ships Service 67,500 834,399 4,291,441 SINGAPORE (1.53%) Air Transportation, Scheduled (0.54%) Singapore International Airlines 76,000 703,802 Electric Light & Wiring Equipment (0.28%) Clipsal Industries Holdings 149,000 365,050 Electronic Components & Accessories (0.71%) Amtek Engineering 450,000 922,521 1,991,373 SPAIN (5.46%) Combination Utility Services (1.21%) Iberdrola 1 SA 210,000 1,580,368 Commercial Banks (1.49%) Banco Popular 12,230 1,939,793 Oil & Gas Field Services (1.71%) Repsol Petroleo, SA 74,800 2,230,232 Telephone Communication (1.05%) Telefonica De Espana, SA 109,400 1,378,127 7,128,520 SWEDEN (7.38%) Commercial Banks (1.68%) Svenska Handelsbanken AB Free 130,750 2,194,394 Household Audio & Video Equipment (0.72%) SKF 'B' Free 49,700 942,595 Miscellaneous Transportation Equipment (0.64%) Autoliv AB 14,500 831,555 Motor Vehicles & Equipment (1.50%) Volvo AB 87,000 1,957,755 Plastic Materials & Synthetics (1.30%) Astra AB 47,050 1,699,687 Water Transportation of Freight, NEC (1.54%) Argonaut AB 'B' Free 158,000(a) $ 242,580 ICB Shipping AB 'B' Free 213,733 1,769,426 2,012,006 9,637,992 SWITZERLAND (12.12%) Combination Utility Services (1.09%) BBC AG (Brown Boveri) 1,230 1,425,336 Drugs (2.70%) Galencia Holdings AG 2,890 902,719 Immuno International AG 970 477,954 Sandoz AG 2,600 2,143,578 3,524,251 Functions Closely Related to Banking (1.42%) BIL GT Group 3,000 1,847,760 Miscellaneous Chemical Products (1.99%) Ciba Geigy AG-REG 3,000 2,594,784 Plumbing & Heating, Except Electric (0.30%) Elco Holdings 940 385,425 Pulp Mills (0.34%) Attisholz AG 620 451,698 Special Industry Machinery (2.19%) Bobst SA 1,175 1,778,250 Sulzer AG 1,800 1,076,980 2,855,230 Sugar & Confectionary Products (2.09%) Nestle 2,604 2,726,555 15,811,039 THAILAND (1.95%) Commercial Banks (1.20%) Bangkok Bank 152,000 1,570,746 Non-Classifiable Establishments (0.75%) Thailand International Fund 31 976,500 2,547,246 UNITED KINGDOM (13.46%) Commercial Banks (0.81%) Bank of Ireland 160,000 1,060,348 Construction & Related Machinery (1.38%) Powerscreen International PLC 296,000 1,802,844 Crude Petroleum & Natural Gas (1.18%) Hardy Oil & Gas 520,000 1,534,349 Electric Services (2.03%) Northern Ireland Electric 61,000 2,648,741 Investment Offices (0.65%) Invesco PLC 222,000 $ 849,462 Lumber & Other Building Materials (1.14%) Wickes PLC 754,000 1,487,170 Miscellaneous Fabricated Metal Products (0.50%) Bridon PLC 289,285 652,742 Miscellaneous Non-Durable Goods (1.88%) Grand Metropolitan PLC 355,000 2,453,476 Primary Nonferrous Metals (1.41%) British Steel PLC 712,000 1,836,864 Pulp Mills (0.46%) Babcock International Group 228,171 601,253 Sand & Gravel (0.21%) Bardon Group PLC 650,000 271,793 Telephone Communication (0.52%) Cable & Wireless PLC 105,000 685,913 Water Supply (1.29%) Wessex Water PLC 268,660 1,420,127 Wessex Water PLC; Class A 322,392 258,166 1,678,293 17,563,248 Total Common Stocks 126,758,361 Preferred Stocks (0.58%) AUSTRIA (0.58%) Highway & Street Construction (0.58%) Bau Holdings AG 16,200 751,952 Bonds (0.95%) MEXICO (0.95%) Fire, Marine & Casualty Insurance (0.95%) Alfa SA Convertible Subordinated Debenture; 8.00%; 9/15/00 $1,300,000(b) 1,244,750 Commercial Paper (3.61%) UNITED STATES (3.61%) Business Credit Institutions (2.04%) Cit Group Holdings, Inc.; 5.72%; 11/2/95 1,265,000 1,264,799 General Electric Capital Corp.; 5.88%; 11/1/95 1,390,000 1,390,000 2,654,799 Crude Petroleum & Natural Gas (1.57%) Chevron Oil Finance Co.; 5.71%; 11/3/95 1,360,000 1,359,569 5.74%; 11/6/95 690,000 689,450 2,049,019 Total Commercial Paper 4,703,818 Total Portfolio Investments (102.30%) 133,458,881 Liabilities, net of cash, receivables and other assets, (-2.30%) (2,996,705) Total Net Assets (100.00%) $130,462,176 (a) Non-Income producing security - No dividend paid during the period. (b) Restricted security - See Notes 4 to the financial statements. This page left blank intentionally.

NOTES TO FINANCIAL STATEMENTS Princor Bond Fund, Inc. Princor Cash Management Fund, Inc. Princor Government Securities Income Fund, Inc. Princor High Yield Fund, Inc. Princor Tax-Exempt Bond Fund, Inc. Princor Tax-Exempt Cash Management Fund, Inc. Princor Utilities Fund, Inc. Note 1 -- Significant Accounting Policies Princor Bond Fund, Inc., Princor Cash Management Fund, Inc., Princor Government Securities Income Fund, Inc., Princor High Yield Fund, Inc., Princor Tax-Exempt Bond Fund, Inc., Princor Tax-Exempt Cash Management Fund, Inc. and Princor Utilities Fund, Inc. (the "Income Funds") are registered under the Investment Company Act of 1940, as amended, as open-end diversified management investment companies and operate in the mutual fund industry. On December 8, 1994, the initial purchase of Class B shares of Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc. was made by Princor Management Corporation; the initial purchases of Class B shares of the other funds was made on December 5, 1994 (see Note 3). All shares outstanding prior to the initial Class B share purchases have been classified as Class A shares. Effective December 9, 1994, the Income Funds also began offering Class B shares to the public. Except for Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc., Class A shares generally are sold with an initial sales charge based on declining rates which begin at 4.75% of the offering price. Class B shares are sold without an initial sales charge, but bear a higher ongoing distribution fee and are subject to a declining contingent deferred sales charge ("CDSC") of up to 4.00% on certain redemptions redeemed within six years of purchase. Class B shares automatically convert into Class A shares, based on relative net asset value (without a sales charge) after seven years. 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 the Funds' respective Boards of Directors. In addition, the Board of Directors of each fund declare separate dividends on each class of shares. With respect to Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc., all income, expenses (other than class-specific expenses), and realized and unrealized gains or losses are allocated daily to each class of shares based upon the relative proportion of the number of traded shares outstanding of each class. The other funds allocate such amounts based upon the relative proportion of the value of shares outstanding of each class. Class-specific expenses, which include distribution and shareholder servicing fees and any other items specifically attributable to a particular class, are charged directly to such class. Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc. value their securities at amortized cost, which approximates market. Under the amortized cost method, a security is valued by applying a constant yield to maturity of the difference between the principal amount due at maturity and the cost of the security to the fund. The other funds value securities for which market quotations are readily available at market value, which is determined using the last reported sale price or, if no sales are reported, as is regularly the case for some securities traded over-the-counter, the last reported bid price. When reliable market quotations are not considered to be readily available, which may be the case, for example, with respect to certain debt securities and preferred stocks, the investments are valued by using market quotations, prices provided by market makers or estimates of market values obtained from yield data and other factors relating to instruments or securities with similar characteristics in accordance with procedures established in good faith by each fund's Board of Directors. Securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market. The Income Funds record investment transactions generally one day after the trade date, except for short-term investment transactions which are recorded generally on the trade date. The identified cost basis has been used in determining the net realized gain or loss from investment transactions and unrealized appreciation or depreciation on investments. Dividends are taken into income on an accrual basis as of the ex-dividend date and interest income is recognized on an accrual basis. With respect to Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc., all net investment income and any realized gains and losses from investment transactions are declared as dividends daily to shareholders of record as of that day. Dividends and distributions to shareholders of the other funds are recorded on the ex-dividend date. Dividends and distributions to shareholders from net investment income and net realized gain from investments is determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. To the extent these "book/tax" differences are permanent in nature (i.e. that they result from other than timing of recognition - "temporary"), such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Reclassifications made for the years ended October 31, 1995 and 1994 were not material. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On November 1, 1994, Princor Government Securities Income Fund, Inc. discontinued the accounting practice of equalization, which it had been using since fiscal year 1986. Equalization is a practice whereby a portion of the proceeds from sales and cost of purchases of shares, equivalent on a per-share basis to the amount of the undistributed net investment income on the date of the transaction, is credited or charged to undistributed net investment income. The balance of equalization included in undistributed net investment income at the date of the change, which was immaterial, was transferred to additional paid-in capital. Such reclassification had no effect on net assets, results of operations or net asset value per share of the fund. Note 2 -- Federal Income Taxes No provision for federal income taxes is considered necessary because each fund is qualified as a "regulated investment company" under the Internal Revenue Code and intends to distribute each year substantially all of its net investment income and realized capital gains to shareholders. The cost of investments for federal income tax reporting purposes is approximately the same as that for financial reporting purposes. At October 31, 1995, Princor Bond Fund, Inc. had a net capital loss carryforward of approximately $385,000 which expires in 2003. Princor Government Securities Income Fund, Inc. had a net capital loss carryforward of approximately $1,909,000 of which $1,075,000 expires in 2003 and $834,000 expires in 2002. Princor High Yield Fund, Inc. had a net capital loss carryforward of approximately $3,003,000 of which $106,000 expires in 2003, $323,000 expires in 2002, $409,000 expires in 2001, $561,000 expires in 2000, $784,000 expires in 1999 and $820,000 expires in 1998. Princor Tax-Exempt Bond Fund, Inc. had a net capital loss carryforward of approximately $2,328,000 of which $1,678,000 expires in 2003 and $650,000 expires in 2002. Princor Utilities Fund, Inc. had a net capital loss carryforward of approximately $3,242,000 of which $394,000 expires in 2003 and $2,848,000 expires in 2002. Note 3 -- Management Agreement and Transactions With Affiliates The Income Funds have agreed to pay investment advisory and management fees to Princor Management Corporation (wholly owned by Princor Financial Services Corporation, a subsidiary of Principal Mutual Life Insurance Company) (the "Manager") computed at an annual percentage rate of each fund's average daily net assets. With the exception of Princor High Yield Fund, Inc. and Princor Utilities Fund, Inc., the annual rate used in this calculation is .50% of the first $100 million of each fund's average daily net assets, .45% of the next $100 million of each fund's average daily net assets, .40% of the next $100 million of each fund's average daily net assets, .35% of the next $100 million of each fund's average daily net assets and .30% of each fund's average daily net assets over $400 million. With respect to Princor High Yield Fund, Inc. and Princor Utilities Fund, Inc., the annual rate is .60% of the first $100 million of the fund's average daily net assets. The Income Funds also reimburse the Manager for transfer and administrative services, including the cost of accounting, data processing, supplies and other services rendered. The Manager has agreed to reimburse the Income Funds annually for their total expenses (excluding brokerage commissions, interest and taxes) in excess of limits prescribed by any state in which the Income Funds' shares are offered for sale (currently 2 1/2% of the first $30 million of each fund's average annual net assets, 2% of the next $70 million of such assets and 1 1/2% of such assets in excess thereof). The Manager voluntarily waived a portion of its fee for Princor Bond Fund, Inc. (1995 - $86,318; 1994 - $120,999) throughout the years ended October 31, 1995 and 1994. The waiver was in an amount that maintained total operating expenses as a percentage of the fund's average net assets attributable to each class on an annualized basis during such period at or below .95% and 1.70% of Class A and Class B shares, respectively. The Manager intends to continue such voluntary waiver and, if necessary, reimburse operating expenses otherwise payable by the fund through February 29, 1996. The Manager voluntarily waived a portion of its fee for Princor Cash Management Fund, Inc. (1995 - $296,359; 1994 - $595,343) and Princor Tax-Exempt Cash Management Fund, Inc. (1995 - $138,673; 1994 - $150,515) throughout the years ended October 31, 1995 and 1994. The waivers, through February 28, 1995, were in amounts that maintained total operating expenses for each fund as a percentage of average net assets attributable to each class on an annualized basis during such period at or below .70% and 1.70% of Class A and Class B shares, respectively. During the remainder of the period ended October 31, 1995, the Manager waived a portion of its fee in an amount that maintained total operating expenses for each fund as a percentage of average net assets attributable to each class on an annualized basis during such period at or below .75% and 1.75% of Class A and Class B shares, respectively. The Manager intends to continue such voluntary waivers and, if necessary, reimburse operating expenses otherwise payable by Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc. through February 29, 1996. The Manager voluntarily waived a portion of its fee for Princor Utilities Fund, Inc. (1995 - $152,483; 1994 - $284,836) throughout the years ended October 31, 1995 and 1994. The waiver, through February 28, 1995, was in an amount that maintained total operating expenses for the fund as a percentage of average net assets attributable to each class on an annualized basis during such period at or below 1.00% and 1.75% of Class A and Class B shares, respectively. During the remainder of the year ended October 31, 1995, the Manager waived a portion of its fee in an amount that maintained a total level of operating expenses as a percentage of average net assets attributable to each class on an annualized basis during such period at or below 1.10% and 1.85% of Class A and Class B shares, respectively. The Manager intends to continue such voluntary waiver and, if necessary, reimburse operating expenses otherwise payable by the fund through February 29, 1996. Princor Financial Services Corporation, as principal underwriter, receives proceeds of any CDSC on certain Class B share redemptions within six years of purchase. The charge is based on declining rates, which begin at 4.00% of the lesser of the current market value or the cost of shares being redeemed. Princor Financial Services Corporation also retains sales charges on sales of Class A shares of the Income Funds. The aggregate amount of these charges retained, by fund, for the period ended October 31, 1995 were as follows: Class A Class B Princor Bond Fund, Inc. 474,797 2,016 Princor Government Securities Income Fund, Inc. 831,089 4,304 Princor High Yield Fund, Inc. 93,453 155 Princor Tax-Exempt Bond Fund, Inc. 584,221 -- Princor Utilities Fund, Inc. 283,344 5,189 No brokerage commissions were paid by the Income Funds to Princor Financial Services Corporation during the periods. Brokerage commissions were paid to another affiliate by Princor Utilities Fund, Inc. in the amount of $3,446 and $6,005 for the years ended October 31, 1995 and 1994, respectively. With the exception of Princor Cash Management Fund, Inc. and Princor Tax-Exempt Cash Management Fund, Inc., the Income Funds bear distribution and shareholder servicing fees with respect to Class A shares computed at an annual rate of up to 0.25% of the average daily net assets attributable to Class A shares of each fund. Effective December 1994, each of the Income Funds adopted a distribution plan with respect to Class B shares that provides for distribution and shareholder servicing fees computed at an annual rate of up to 1.00% of the average daily net assets attributable to Class B shares of each fund. Distribution and shareholder servicing fees are paid to Princor Financial Services Corporation; a portion of the fees are subsequently remitted to retail dealers. Pursuant to the distribution agreements, fees unused by the principal underwriter at the end of the fiscal year are returned to the Income Funds. At October 31, 1995, Principal Mutual Life Insurance Company, subsidiaries of Principal Mutual Life Insurance Company, benefit plans sponsored on behalf of Principal Mutual Life Insurance Company and several joint ventures (in each of which a subsidiary of Principal Mutual Life Insurance Company is a participant) owned shares of the Income Funds as follows: Class A Class B Princor Bond Fund, Inc. 178,257 104 Princor Cash Management Fund, Inc. 11,741,334 26,940 Princor Government Securities Income Fund, Inc. 94,034 103 Princor High Yield Fund, Inc. 1,089,954 139 Princor Tax-Exempt Bond Fund, Inc. 92,516 98 Princor Tax-Exempt Cash Management Fund, Inc. 1,000,053 26,496 Princor Utilities Fund, Inc. 285,238 113 Note 4 -- Investment Transactions For the year ended October 31, 1995, the cost of investment securities purchased and proceeds from investment securities sold (not including short-term investments and U.S. government securities) by the Income Funds were as follows: Purchases Sales Princor Bond Fund, Inc. $15,194,745 $ 4,858,780 Princor High Yield Fund, Inc. 11,256,955 8,269,362 Princor Tax-Exempt Bond Fund, Inc. 29,748,742 35,382,420 Princor Utilities Fund, Inc. 11,403,387 7,593,175 At October 31, 1995, net unrealized appreciation of investments by the Income Funds was composed of the following: Net Unrealized Gross Unrealized Appreciation Appreciation (Depreciation) of Investments Princor Bond Fund, Inc. $6,759,913 $ (447,355) $6,312,558 Princor Government Securities Income Fund, Inc. 3,867,663 (2,938,988) 928,675 Princor High Yield Fund, Inc. 796,863 (793,402) 3,461 Princor Tax-Exempt Bond Fund, Inc. 7,213,471 (1,209,826) 6,003,645 Princor Utilities Fund, Inc. 6,246,267 (2,406,058) 3,840,209 At October 31, 1995, Princor High Yield Fund, Inc. and Princor Tax-Exempt Bond Fund, Inc. held the following securities which may require registration under the Securities Act of 1933, or an exemption therefrom, in order to effect a sale in the ordinary course of business.

The Income Funds' investments are with various issuers in various industries. The Schedules of Investments contained herein summarize concentration of credit risk by issuer and industry.

Note 6 -- Line of Credit The Income Funds have an unsecured line of credit with a bank which allows each fund to borrow up to $500,000. Borrowings are made solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each fund, based on its borrowings, at a rate equal to the bank's Fed Funds Unsecured Rate plus 100 basis points. Additionally, a commitment fee is charged at the annual rate of .25% on the unused portion of the line of credit. At October 31, 1995, the Income Funds had no outstanding borrowings under the line of credit. SCHEDULES OF INVESTMENTS INCOME FUNDS PRINCOR BOND FUND, INC. Principal Amount Value Bonds (96.79%) Air Transportation, Scheduled (1.54%) Federal Express Corp. 1994 Pass Through Cert., Series A310-A3; 8.40%; 3/23/10 $1,500,000 $ 1,685,988 Aircraft & Parts (1.03%) Textron, Inc. Medium-Term Notes, Series C; 9.80%; 1/10/00 500,000 562,625 9.55%; 3/19/01 500,000 569,730 1,132,355 Auto & Home Supply Stores (0.46%) Pep Boys-Manny, Moe & Jack Notes; 7.00%; 6/1/05 500,000 502,381 Beverages (1.02%) Joseph E. Seagram & Sons Guaranteed Debentures; 8.38%; 2/15/07 1,000,000 1,113,179 Business Credit Institutions (1.56%) Gatx Capital Corp. Medium-Term Notes, Series B; 9.50%; 1/10/02 1,500,000 1,716,150 Cable & Other Pay TV Services (2.26%) Tele-Communications, Inc. Notes; 7.25%; 8/1/05 2,000,000 1,977,530 Tele-Communications, Inc. Senior Debentures; 7.88%; 8/1/13 500,000 497,284 2,474,814 Cash Grains (2.65%) Aktiebolaget SKF Senior Notes; 7.63%; 7/15/03 2,500,000 2,601,952 Dekalb Corp. Notes; 10.00%; 4/15/98 300,000 301,125 2,903,077 Combination Utility Services (1.74%) Pennsylvania Gas & Water Co. First Mortgage Bonds; 8.38%; 12/1/02 500,000 528,126 Public Service Electric & Gas Medium-Term Notes; 8.16%; 5/26/09 1,250,000 1,375,300 1,903,426 Construction & Related Machinery (1.12%) Caterpillar, Inc. Global Debentures; 9.38%; 8/15/11 1,000,000 1,232,089 Consumer Products (0.92%) RJR Nabisco Capital Corp. Senior Notes; 8.75%; 4/15/04 1,000,000 1,012,500 Copper Ores (2.55%) Asarco, Inc. Debentures; 7.88%; 4/15/13 $1,500,000 $ 1,558,527 Asarco, Inc. Notes; 7.38%; 2/1/03 1,200,000 1,233,161 2,791,688 Crude Petroleum & Natural Gas (0.52%) Occidental Petroleum Corp. Medium-Term Notes; 9.73%; 6/15/01 500,000 572,175 Department Stores (3.13%) Dillard Investment Co. Notes; 9.25%; 5/1/97 200,000 209,458 Harcourt General, Inc. Subordinated Notes; 9.50%; 3/15/00 400,000 445,412 Sears Roebuck Co. Medium-Term Notes; 9.05%; 2/6/12 500,000 585,540 9.12%; 2/13/12 1,000,000 1,177,810 Sears Roebuck Co. Notes; 8.55%; 8/1/96 1,000,000 1,019,256 3,437,476 Drug Stores & Proprietary Stores (1.76%) Rite Aid Corp. Senior Debentures; 6.88%; 8/15/13 2,000,000 1,931,222 Eating & Drinking Places (1.18%) Marriott International Notes; 6.75%; 12/15/03 1,300,000 1,293,357 Electric Services (4.09%) Cleveland Electric Illuminating Co. First Mortgage Medium-Term Notes; 7.85%; 7/30/02 1,500,000 1,458,405 Ohio Edison Co. First Mortgage Bonds; 8.25%; 4/1/02 2,000,000 2,120,048 Toledo Edison Co. Debentures; 8.70%; 9/1/02 1,000,000 909,499 4,487,952 Fabricated Rubber Products, NEC (1.59%) M. A. Hanna Co. Senior Notes; 9.38%; 9/15/03 1,500,000 1,744,348 Farm & Garden Machinery (1.50%) Tenneco, Inc. Notes; 9.88%; 2/1/01 500,000 572,994 7.88%; 10/1/02 1,000,000 1,067,915 1,640,909 Gas Production & Distribution (1.50%) Tennessee Gas Pipeline Co. Notes; 9.25%; 5/15/96 400,000 403,750 Transco Energy Co. Notes; 9.38%; 8/15/01 1,100,000 1,246,611 1,650,361 General Government, NEC (3.90%) Ontario Hydro Debentures; 7.45%; 3/31/13 2,000,000 2,097,420 Province of Saskatchewan, Canada Global Notes; 8.00%; 2/1/13 2,000,000 2,181,240 4,278,660 Gold & Silver Ores (1.14%) Placer Dome, Inc. Notes; 7.13%;6/15/07 $1,250,000 $ 1,250,087 Grain Mill Products (0.94%) Ralston Purina Co. Debenture; 7.75%; 10/1/15 1,000,000 1,031,920 Grocery Stores (1.04%) Food Lion, Inc. Medium-Term Notes; 8.67%; 8/28/06 1,000,000 1,136,480 Household Furniture (1.80%) Masco Corp. Debentures; 7.13%; 8/15/13 2,000,000 1,975,728 Industrial Inorganic Chemicals (3.12%) FMC Corp. Senior Notes; 6.38%; 9/1/03 750,000 733,297 Grace, (W.R.) & Co. Guaranteed Notes; 8.00%; 8/15/04 2,500,000 2,693,419 3,426,716 Iron Ores (0.69%) Cyprus Minerals Co. Notes; 10.13%; 4/1/02 650,000 762,129 Machinery, Equipment, & Supplies (0.23%) AAR Corp. Notes; 7.25%;10/15/03 250,000 247,151 Metalworking Machinery (1.19%) Black & Decker Corp. Notes; 7.00%; 2/1/06 1,300,000 1,300,586 Millwork, Plywood & Structural Members (0.65%) Georgia-Pacific Corp. Debentures; 9.50%; 12/1/11 600,000 716,765 Miscellaneous Chemical Products (1.41%) Cabot Corp. Notes; 10.25%; 12/15/97 400,000 431,966 Ferro Corp. Senior Debentures; 7.63%; 5/1/13 1,100,000 1,116,811 1,548,777 Miscellaneous Equipment Rental & Leasing (0.99%) McDonnell Douglas Finance Corp. Medium-Term Notes, Series 9; 9.94%; 6/11/98 1,000,000 1,088,980 Miscellaneous Investing (1.18%) Weingarten Realty Investors Medium-Term Notes; 7.29%;5/23/05 1,250,000 1,290,487 Miscellaneous Metal Ores (1.04%) Cyprus Amax Minerals Notes; 7.38%;5/15/07 1,100,000 1,136,004 Motion Picture Production & Services (0.39%) Columbia Pictures Entertainment, Inc. Senior Subordinated Notes; 9.88%; 2/1/98 $ 400,000 $ 431,242 Motor Vehicles & Equipment (2.11%) Ford Motor Co. Debentures; 8.88%; 1/15/22 1,000,000 1,186,439 General Motors Corp. Global Medium-Term Notes; 8.88%; 5/15/03 1,000,000 1,126,840 2,313,279 Newspapers (0.75%) News America Holdings, Inc. Guaranteed Senior Notes; 8.50%;2/15/05 750,000 822,565 Paper Mills (8.55%) Boise Cascade Corp. Notes; 9.90%; 3/15/00 500,000 560,506 9.85%; 6/15/02 1,000,000 1,146,330 Bowater, Inc. Debentures; 9.50%; 10/15/12 1,000,000 1,210,729 9.38%; 12/15/21 1,500,000 1,834,570 Champion International Corp. Notes; 9.88%; 6/1/00 750,000 850,928 Chesapeake Corp. Notes; 9.88%; 5/1/03 1,000,000 1,182,301 7.20%; 3/15/05 600,000 613,880 James River Corp. Notes; 6.70%; 11/15/03 2,000,000 1,975,758 9,375,002 Paperboard Mills (1.52%) Federal Paper Board Co., Inc. Debentures; 8.88%; 7/1/12 1,500,000 1,664,116 Personal Credit Institutions (4.12%) Coastal Corp. Senior Notes; 9.75%; 8/1/03 1,500,000 1,739,539 General Motors Acceptance Corp. Global Notes; 8.50%; 1/1/03 2,000,000 2,210,606 Household Finance Corp. Senior Subordinated Notes; 9.63%; 7/15/00 500,000 564,037 4,514,182 Petroleum Refining (8.46%) Ashland Oil, Inc. Medium-Term Notes; 7.71%; 5/11/07 500,000 531,705 7.72%; 7/15/13 1,000,000 1,039,030 7.73%; 7/15/13 750,000 780,007 Mapco, Inc. Medium-Term Notes; 8.48%; 8/5/13 1,000,000 1,071,500 Pennzoil Co. Debentures; 10.13%; 11/15/09 1,675,000 2,084,032 Sun Co., Inc. Debentures; 9.00%;11/1/24 2,000,000 2,362,376 Sun Co., Inc. Notes; 7.13%; 3/15/04 300,000 306,601 Ultramar Credit Corp. Guaranteed Notes 8.63%; 7/1/02 1,000,000 1,103,583 9,278,834 Photographic Equipment & Supplies (0.97%) Xerox Corp. Notes; 9.63%; 9/1/97 $1,000,000 $ 1,063,109 Primary Nonferrous Metals (3.79%) Amax, Inc. Notes; 9.88%; 6/13/01 900,000 1,007,909 Reynolds Metals Co. Medium-Term Notes; 8.22%; 5/30/07 2,000,000 2,214,460 7.65%; 2/4/08 875,000 930,781 4,153,150 Pulp Mills (2.60%) ITT Rayonier, Inc. Notes; 7.50%; 10/15/02 1,875,000 1,941,508 International Paper Co. Medium-Term Notes; 9.70%; 8/15/00 800,000 905,712 2,847,220 Refrigeration & Service Machinery (2.32%) Westinghouse Electric Corp. Debentures; 8.63%; 8/1/12 1,000,000 993,783 Westinghouse Electric Corp. Global Notes; 8.88%; 6/1/01 1,500,000 1,548,652 2,542,435 Rental of Railroad Cars (0.39%) General American Transportation Corp. Medium-Term Notes; 10.65%; 11/14/97 400,000 432,271 Sanitary Services (1.69%) Laidlaw, Inc. Notes; 7.70%; 8/15/02 1,000,000 1,052,908 Laidlaw, Inc. Senior Notes; 7.88%; 4/15/05 750,000 801,284 1,854,192 Telephone Communication (1.48%) Sprint Corp. Notes; 8.13%; 7/15/02 1,500,000 1,626,639 Variety Stores (6.21%) Dayton-Hudson Corp. Debentures; 9.25%; 8/15/11 1,000,000 1,198,944 Dayton-Hudson Corp. Sinking Fund Debentures; 9.50%; 10/15/16 900,000 943,890 K Mart Corp. Global Notes; 8.13%; 12/1/06 1,000,000 951,944 K Mart Corp. Medium-Term Notes; 7.55%; 7/27/04 1,000,000 947,220 Shopko Stores, Inc. Senior Notes; 9.00%; 11/15/04 2,500,000 2,770,027 6,812,025 Total Bonds 106,146,178 Commercial Paper (1.74%) Business Credit Institutions (1.00%) General Electric Capital Corp.; 5.88%; 11/1/95 $ 595,000 $ 595,000 John Deere Capital Corp.; 5.75%; 11/7/95 500,000 499,521 1,094,521 Crude Petroleum & Natural Gas (0.38%) Chevron Oil Finance Co.; 5.71%; 11/3/95 415,000 414,868 Personal Credit Institutions (0.36%) Ford Motor Credit Co.; 5.76%; 11/1/95 400,000 400,000 Total Commercial Paper 1,909,389 Total Portfolio Investments (98.53%) 108,055,567 Cash, receivables and other assets, net of liabilities (1.47%) 1,613,937 Total Net Assets (100.00%) $109,669,504 PRINCOR CASH MANAGEMENT FUND, INC. Principal Amount Value Commercial Paper (95.10%) Advertising (0.53%) Omnicom Finance, Inc.; LOC Swiss Bank Corp.; 5.75%; 11/27/95 $3,350,000 $ 3,336,088 Asset-Backed Securities (3.52%) Retailer Funding Corp.; 5.75%; 11/14/95 2,800,000 2,794,186 5.75%; 11/17/95 3,000,000 2,992,333 5.75%; 11/21/95 2,350,000 2,342,493 5.75%; 11/27/95 1,000,000 995,847 5.75%; 12/1/95 4,475,000 4,453,557 5.73%; 12/5/95 5,000,000 4,972,942 5.73%; 12/8/95 3,450,000 3,429,683 21,981,041 Business Credit Institutions (17.61%) American Express Credit Corp.; 5.75%; 11/2/95 2,500,000 2,499,601 5.55%; 11/6/95 3,900,000 3,896,994 5.64%; 11/17/95 3,660,000 3,650,826 5.64%; 12/19/95 2,300,000 2,282,704 5.63%; 12/28/95 2,350,000 2,329,052 5.63%; 12/29/95 2,500,000 2,477,324 5.68%; 2/6/96 4,300,000 4,234,191 5.65%; 3/7/96 2,800,000 2,744,191 5.50%; 4/1/96 5,000,000 4,883,889 5.58%; 5/28/96 1,725,000 1,669,119 CIT Group Holdings, Inc.; 5.72%; 12/6/95 $3,675,000 $ 3,654,563 5.73%; 12/12/95 3,475,000 3,452,323 5.65%; 2/8/96 2,500,000 2,461,156 5.65%; 2/13/96 5,825,000 5,729,923 5.65%; 2/14/96 4,000,000 3,934,083 5.56%; 2/16/96 4,000,000 3,933,898 5.65%; 2/29/96 3,850,000 3,777,492 General Electric Capital Corp.; 5.75%; 11/10/95 3,250,000 3,245,328 5.70%; 11/13/95 3,550,000 3,543,255 5.64%; 12/27/95 2,375,000 2,354,163 5.58%; 1/29/96 3,000,000 2,958,615 5.59%; 3/1/96 3,000,000 2,943,634 5.62%; 3/25/96 2,750,000 2,687,751 5.60%; 3/26/96 1,500,000 1,465,933 International Lease Finance Corp.; 5.65%; 11/9/95 4,000,000 3,994,978 5.68%; 11/14/95 3,850,000 3,842,103 5.48%; 1/26/96 700,000 690,836 5.66%; 2/7/96 3,900,000 3,839,909 John Deere Capital Corp.; 5.74%; 11/13/95 2,750,000 2,744,738 5.66%; 12/14/95 5,250,000 5,214,507 5.69%; 1/30/96 4,000,000 3,943,100 5.59%; 2/22/96 4,000,000 3,929,814 5.64%; 3/29/96 5,000,000 4,883,283 109,893,276 Computer & Office Equipment (0.88%) Pitney Bowes Credit Corp.; 5.66%; 11/28/95 4,000,000 3,983,020 5.62%; 12/12/95 1,500,000 1,490,399 5,473,419 Drug Stores & Proprietary Stores (0.20%) Melville Corp.; 5.73%; 11/27/95 1,225,000 1,219,931 Electric Services (4.74%) AES Shady Point, Inc.; LOC Bank of Tokyo Ltd.; 5.90%; 11/9/95 5,000,000 4,993,445 5.92%; 11/28/95 750,000 740,380 5.84%; 12/1/95 2,500,000 2,487,833 5.90%; 1/18/96 5,000,000 4,936,083 5.90%; 1/19/96 5,000,000 4,935,264 CommEd Fuel Co., Inc.; LOC Credit Suisse; 5.74%; 11/17/95 1,775,000 1,770,472 5.65%; 12/7/95 3,275,000 3,256,496 Transmission Agency-Northern California; LOC Industrial Bank of Japan Ltd.; 5.80%; 11/17/95 5,000,000 4,987,111 Wisconsin Power & Light Co.; 5.72%; 12/13/95 1,500,000 1,489,990 29,597,074 Electronic Components & Accessories (0.58%) SCI Systems, Inc.; LOC ABN-AMRO Bank NV; 5.80%; 11/10/95 3,600,000 3,594,780 Federal & Federally Sponsored Credit (1.78%) Federal National Mortgage Association; 5.50%; 4/29/96 $5,550,000 $ 5,397,375 5.58%; 8/9/96 4,000,000 3,825,160 U.S. Government Treasury Bills; 5.35%; 8/22/96 2,000,000 1,912,319 11,134,854 Finance Services (4.87%) Mitsubishi International Corp.; 5.68%; 11/6/95 1,400,000 1,398,896 5.70%; 11/7/95 1,200,000 1,198,860 5.59%; 11/10/95 2,550,000 2,546,436 5.75%; 11/14/95 2,000,000 1,995,847 5.74%; 11/15/95 3,000,000 2,993,303 5.70%; 1/10/96 4,000,000 3,955,667 5.77%; 1/24/96 1,900,000 1,874,420 5.63%; 1/31/96 1,700,000 1,675,807 5.76%; 1/31/96 3,325,000 3,276,588 5.70%; 2/9/96 6,000,000 5,905,000 5.68%; 2/23/96 2,000,000 1,964,027 5.55%; 3/15/96 1,650,000 1,615,659 30,400,510 Investment Offices (0.80%) Morgan Stanley Group Inc.; 5.75%; 11/13/95 5,000,000 4,990,417 Jewelry, Silverware, & Plated Ware (1.44%) Jostens, Inc. 5.70%; 11/15/95 5,000,000 4,988,917 5.75%; 11/15/95 4,000,000 3,991,055 8,979,972 Life Insurance (4.71%) American General Corp.; 5.65%; 12/7/95 4,275,000 4,250,846 5.72%; 12/12/95 2,025,000 2,011,808 5.68%; 12/13/95 4,000,000 3,973,493 Prudential Funding Corp.; Prudential Insurance Co. of America; 5.47%; 11/22/95 2,500,000 2,492,023 5.54%; 11/29/95 4,000,000 3,982,765 5.45%; 12/18/95 3,500,000 3,475,097 5.45%; 12/21/95 3,000,000 2,977,292 5.45%; 12/22/95 3,000,000 2,976,837 5.65%; 12/28/95 3,275,000 3,245,702 29,385,863 Miscellaneous Electrical Equipment & Supplies (2.95%) General Electric Co. 5.70%; 11/20/95 2,450,000 2,442,630 5.73%; 11/20/95 4,825,000 4,810,408 5.66%; 12/6/95 4,000,000 3,977,989 5.72%; 12/7/95 4,175,000 4,151,119 5.57%; 12/29/95 3,050,000 3,022,630 18,404,776 Miscellaneous Food & Kindred Products (0.55%) Cargill, Inc.; 5.57%; 1/26/96 3,500,000 3,453,429 Miscellaneous Investing (0.83%) MLTC Funding, Inc.; LOC Union Bank of Switzerland; 5.75%; 11/30/95 $5,200,000 $ 5,175,914 Motor Vehicles & Equipment (0.72%) Paccar Financial Corp.; 5.68%; 11/2/95 4,500,000 4,499,290 Personal Credit Institutions (21.12%) American General Finance Corp.; 5.70%; 11/9/95 4,600,000 4,594,173 5.65%; 12/4/95 4,250,000 4,227,989 5.68%; 12/11/95 5,000,000 4,968,444 Associates Corp. of North America; 5.72%; 11/6/95 5,250,000 5,245,829 5.68%; 11/7/95 4,500,000 4,495,740 5.65%; 12/6/95 3,100,000 3,082,971 5.67%; 12/8/95 5,500,000 5,467,949 5.69%; 12/27/95 4,400,000 4,361,055 5.66%; 2/26/96 2,000,000 1,963,210 5.69%; 2/27/96 4,000,000 3,925,398 Beneficial Corp.; 5.65%; 11/20/95 5,000,000 4,985,090 5.63%; 11/27/95 4,175,000 4,158,024 5.65%; 12/15/95 3,850,000 3,823,414 5.70%; 1/29/96 1,800,000 1,774,635 Ford Motor Credit Co.; 5.60%; 11/13/95 2,800,000 2,794,773 5.60%; 11/15/95 4,000,000 3,991,289 5.70%; 12/15/95 2,950,000 2,929,448 5.69%; 1/12/96 2,300,000 2,273,826 5.67%; 2/1/96 3,675,000 3,621,749 5.66%; 2/12/96 2,250,000 2,213,564 5.67%; 2/20/96 5,000,000 4,912,588 General Motors Acceptance Corp.; 5.59%; 11/3/95 3,500,000 3,498,913 5.70%; 11/3/95 2,300,000 2,299,272 5.59%; 11/7/95 2,950,000 2,947,252 5.59%; 11/8/95 2,000,000 1,997,826 5.57%; 11/10/95 3,000,000 2,995,823 5.47%; 12/6/95 3,225,000 3,207,849 5.54%; 12/14/95 3,575,000 3,551,343 5.64%; 12/20/95 5,000,000 4,961,617 5.71%; 2/12/96 3,400,000 3,344,454 5.69%; 2/13/96 1,800,000 1,770,412 Household Finance Corp.; 5.65%; 11/16/95 3,460,000 3,451,855 5.65%; 11/21/95 4,500,000 4,485,875 5.73%; 12/1/95 3,900,000 3,881,377 Norwest Financial, Inc.; 5.68%; 11/1/95 4,000,000 4,000,000 5.68%; 11/21/95 3,600,000 3,588,640 5.67%; 12/8/95 2,000,000 1,988,345 131,782,011 Real Estate Operators & Lessors (7.12%) Maguire/Thomas Partners Westlake/Southlake Partnership; LOC Sumitomo Bank Ltd. 5.85%; 11/1/95 $5,000,000 $ 5,000,000 5.88%; 11/1/95 2,000,000 2,000,000 5.92%; 11/3/95 7,000,000 6,997,698 5.85%; 12/4/95 5,500,000 5,470,506 5.85%; 12/5/95 5,000,000 4,972,375 5.88%; 12/5/95 1,175,000 1,168,480 5.75%; 12/19/95 5,000,000 4,961,667 Towson Town Center, Inc.; LOC Mitsubishi Bank Ltd. 5.77%; 11/17/95 4,000,000 3,989,742 5.82%; 11/20/95 1,000,000 996,928 5.85%; 11/22/95 1,175,000 1,170,990 5.85%; 12/5/95 7,725,000 7,682,320 44,410,706 Security Brokers & Dealers (14.58%) Bear Stearns Cos., Inc.; 5.71%; 11/15/95 4,000,000 3,991,118 5.72%; 11/16/95 4,050,000 4,040,348 5.71%; 12/1/95 3,875,000 3,856,561 5.71%; 12/13/95 4,400,000 4,370,689 5.63%; 12/15/95 4,675,000 4,642,831 5.72%; 1/11/96 5,000,000 4,943,595 5.70%; 1/12/96 5,000,000 4,943,000 Goldman Sachs Group L.P.; 5.68%; 11/16/95 5,000,000 4,988,167 5.73%; 11/21/95 5,000,000 4,984,083 5.60%; 2/14/96 2,925,000 2,877,225 5.64%; 2/23/96 1,950,000 1,915,173 5.52%; 3/14/96 4,000,000 3,917,813 5.63%; 4/9/96 5,000,000 4,874,889 5.63%; 4/11/96 5,000,000 4,873,325 5.60%; 4/19/96 2,675,000 2,604,261 Merrill Lynch & Co., Inc.; 5.60%; 11/8/95 3,500,000 3,496,189 5.62%; 11/14/95 4,000,000 3,991,882 5.72%; 11/22/95 1,325,000 1,320,579 5.73%; 11/29/95 3,000,000 2,986,630 5.67%; 12/5/95 4,000,000 3,978,580 5.70%; 12/7/95 4,800,000 4,772,640 5.70%; 12/8/95 3,250,000 3,230,960 5.67%; 2/28/96 3,100,000 3,041,898 5.67%; 2/29/96 2,400,000 2,354,640 90,997,076 Subdividers & Developers (0.98%) Hartz 667 Commercial Paper Corp.; LOC Mitsubishi Bank Ltd.; 5.85%; 11/6/95 2,150,000 2,148,253 5.85%; 11/9/95 4,000,000 3,994,800 6,143,053 Telephone Communication (0.44%) Ameritech Corp.; 5.60%; 11/9/95 1,500,000 1,498,133 5.75%; 11/9/95 1,250,000 1,248,403 2,746,536 Tires & Inner Tubes (4.15%) Bridgestone/Firestone, Inc.; LOC Sumitomo Bank Ltd.; 5.92%; 11/3/95 2,525,000 2,524,169 5.82%; 11/22/95 2,775,000 2,765,579 5.77%; 11/29/95 $2,650,000 $ 2,638,107 5.77%; 12/1/95 3,000,000 2,985,575 5.82%; 12/27/95 3,000,000 2,972,840 6.07%; 1/18/96 2,000,000 1,973,697 Bridgestone/Firestone, Inc.; LOC DAI-ICHI Kangyo Bank Ltd.; 5.85%; 11/13/95 1,300,000 1,297,465 5.85%; 11/28/95 2,800,000 2,787,715 5.81%; 12/4/95 4,000,000 3,978,697 5.82%; 12/18/95 2,000,000 1,984,803 25,908,647 Bank Notes (3.77%) Commercial Banks (3.77%) Lasalle National Bank; 5.60%; 11/8/95 3,000,000 3,000,000 5.71%; 11/28/95 3,000,000 3,000,000 5.75%; 11/30/95 4,000,000 4,000,000 7.59%; 12/28/95 1,000,000 1,000,000 5.81%; 6/25/96 3,000,000 3,000,000 5.75%; 7/8/96 3,000,000 3,000,000 5.77%; 7/25/96 3,000,000 3,000,000 5.75%; 8/26/96 1,500,000 1,500,000 5.72%; 8/30/96 2,000,000 2,000,000 23,500,000 Total Portfolio Investments (98.87%) 617,008,663 Cash, receivables and other assets, net of liabilities (1.13%) 7,063,352 Total Net Assets (100.00%) $624,072,015 PRINCOR GOVERNMENT SECURITIES INCOME FUND, INC. Description of Issue Principal Type Rate Maturity Amount Value Government National Mortgage Association (GNMA) Certificates (99.17%) GNMA I 6.00% 10/15/23-3/15/24 $20,503,962 $ 19,463,797 GNMA I 6.50 9/15/23-10/15/25 46,444,296 45,191,229 GNMA I 7.00 10/15/22-12/15/23 66,797,021 66,384,215 GNMA I 7.25 9/15/25 3,605,707 3,610,467 GNMA I 7.50 4/15/17-8/15/24 61,430,532 62,331,042 GNMA I 8.00 8/15/16-8/15/25 39,817,432 41,155,361 GNMA I 8.50 1/15/17-1/15/25 16,686,482 17,435,236 GNMA I 9.00 11/15/22 1,765,170 1,857,735 GNMA II M 6.00 1/20/24-9/20/25 3,053,674 2,868,224 GNMA II M 6.50 9/20/25 999,132 964,682 GNMA GPM 9.00 3/15/09-10/15/09 2,239,566 2,354,344 Total GNMA Certificates 263,616,332 Federal Agency Short-Term Obligations (0.33%) Federal Home Loan Mortgage Corporation; 5.82%; 11/1/95 $ 885,000 $ 885,000 Total Portfolio Investments (99.50%) 264,501,332 Cash, receivables and other assets, net of liabilities (0.50%) 1,326,175 Total Net Assets (100.00%) $265,827,507 PRINCOR HIGH YIELD FUND, INC. Bonds (92.79%) Principal Amount Value Agricultural Chemicals (3.02%) IMC Fertilizer Group, Inc. Senior Debentures; 9.45%; 12/15/11 $700,000 $ 726,250 Aircraft & Parts (2.55%) Rohr Industries, Inc. Subordinated Debentures; 9.25%; 3/1/17 700,000 612,500 Blast Furnace & Basic Steel Products (2.98%) Ivaco Senior Notes; 11.50%; 9/15/05 350,000 346,938 Weirton Steel Corp. Senior Notes; 10.75%; 6/1/05 400,000(a) 368,000 714,938 Broadwoven Fabric Mills, Cotton (2.87%) J.P. Stevens & Co., Inc. Sinking Fund Debentures; 9.00%; 3/1/17 700,000 689,500 Cable & Other Pay TV Services (3.06%) Jones Intercable, Inc. Senior Notes; 9.63%; 3/15/02 700,000 735,875 Cogeneration - Small Power Producer (1.50%) California Energy Co., Inc. Limited Resource Senior Secured Notes; 9.88%; 6/30/03 350,000 360,937 Communications Equipment (2.61%) Rogers Cantel Mobile, Inc. Senior Secured Guaranteed Notes; 10.75%; 11/1/01 600,000 627,000 Computer & Data Processing Services (3.14%) Tenet Heathcare Corp. Senior Subordinated Notes; 10.13%; 3/1/05 700,000 754,250 Computer & Office Equipment (3.22%) Dell Computer Corp. Senior Notes; 11.00%; 8/15/00 $700,000 $ 773,500 Consumer Products (2.50%) RJR Nabisco, Inc. Senior Notes; 8.75%; 8/15/05 600,000 600,000 Electric Services (2.53%) Tucson Electric Power Co. First Mortgage Bonds; 8.50%; 11/1/99 600,000 607,844 Engines & Turbines (2.77%) Outboard Marine Debentures; 9.13%; 4/15/17 700,000 665,000 Ferroalloy Ores, Except Vanadium (2.10%) Geneva Steel Co. Senior Notes; 9.50%; 1/15/04 700,000 505,750 Forest Products (2.91%) Doman Industries Ltd. Senior Notes; 8.75%; 3/15/04 700,000 697,508 Fuel Dealers (2.67%) Petroleum Heat & Power Co., Inc. Subordinated Notes; 10.13%; 4/1/03 700,000 642,250 General Government, NEC (2.12%) Republic of Argentina Global Bonds; 8.38%; 12/20/03 700,000 509,250 Groceries & Related Products (5.95%) Fleming Cos., Inc. Senior Notes; 10.63%; 12/15/01 700,000 736,750 Rykoff-Sexton, Inc. Senior Subordinated Notes; 8.88%; 11/1/03 700,000 693,000 1,429,750 Grocery Stores (7.99%) Dominick's Finer Foods, Inc. Senior Subordinated Notes; 10.88%; 5/1/05 700,000 736,750 Ralph's Grocery Co. Senior Subordinated Notes; 11.00%; 6/15/05 700,000 679,000 Stater Brothers Holdings, Inc. Senior Notes; 11.00%; 3/01/01 500,000 502,500 1,918,250 Hotels & Motels (5.72%) Bally's Grand, Inc. First Mortgage Notes; 10.38%; 12/15/03 $700,000 $ 700,000 John Q. Hammons Hotels, L.P. & Finance Corp. First Mortgage Notes; 8.88%; 2/15/04 700,000 675,500 1,375,500 Knitting Mills (3.00%) Tultex Corp. Senior Notes; 10.63%; 3/15/05 700,000 721,000 Miscellaneous Amusement, Recreation Service (1.42%) Rio Hotel & Casino, Inc. Senior Subordinated Notes; 10.63%; 7/15/05 350,000 341,250 Miscellaneous Converted Paper Products (1.22%) Drypers Corp. Senior Notes; 12.50%; 11/1/02 700,000 294,000 Miscellaneous Plastics Products, NEC (4.13%) Congoleum Corp. Senior Notes; 9.00%; 2/1/01 700,000 686,000 Plastic Containers, Inc. Senior Secured Notes; 10.75%; 4/1/01 300,000 307,500 993,500 Motor Vehicles & Equipment (2.86%) Lear Seating Corp. Subordinated Notes; 8.25%; 2/1/02 700,000 687,750 Petroleum Refining (3.04%) Crown Central Petroleum Corp. Senior Notes; 10.88%; 2/1/05 700,000 729,750 Pulp Mills (2.84%) Magnetek, Inc. Senior Subordinated Debentures; 10.75%; 11/15/98 650,000 682,500 Radio, Television, & Computer Stores (2.89%) CompUSA, Inc. Senior Subordinated Notes; 9.50%; 6/15/00 700,000 695,625 Soap, Cleaners, & Toilet Goods (3.09%) Coty, Inc. Senior Subordinated Notes; 10.25%; 5/1/05 700,000 742,000 Telephone Communication (6.09%) Paging Network, Inc. Senior Debentures; 8.88%; 2/1/06 700,000 700,000 Rogers Cablesystems Ltd. Senior Secured Second Priority Notes; 9.63%; 8/1/02 750,000 763,125 1,463,125 Total Bonds 22,296,352 Commercial Paper (4.39%) Business Credit Institutions (2.48%) General Electric Capital Corp.; 5.88%; 11/1/95 $595,000 $ 595,000 Crude Petroleum & Natural Gas (1.91%) Chevron Oil Finance Corp.; 5.71%; 11/2/95 460,000 459,927 Total Commercial Paper 1,054,927 Total Portfolio Investments (97.18%) 23,351,279 Cash, receivables and other assets, net of liabilities (2.82%) 677,534 Total Net Assets (100.00%) $24,028,813 (a) Restricted security - See Note 4 to the financial statements. PRINCOR TAX-EXEMPT BOND FUND, INC. Principal Amount Value Long-Term Tax-Exempt Bonds (96.95%) Alabama (2.73%) Courtland, Alabama IDB IDR Series A Bonds for Champion International; 7.20%; 12/1/13 $3,815,000 $ 4,153,581 Courtland, Alabama IDB Solid Waste Disposal Rev. Bonds for Champion International Corp. Project; 7.00%; 6/1/22 800,000 841,000 4,994,581 Alaska (1.61%) Valdez, Alaska Terminal Rev. Ref. Bonds, BP Pipelines, Inc. Project, Series C; 5.65%; 12/1/28 3,100,000 2,945,000 Arizona (2.67%) Navajo County Arizona Pollution Control Corp. Rev. Ref. Bonds, Arizona Public Service Co., Series 1993A; 5.88%; 8/15/28 5,100,000 4,896,000 Arkansas (2.67%) City of Blytheville, Arkansas Solid Waste Recycling & Sewer Treatment Rev. Bonds, Series 1992, Nucor Corp. Project; 6.90%; 12/1/21 4,610,000 4,892,363 California (1.91%) ABAG Finance Authority for Nonprofit Corp., Cert.of Participation, Stanford University Hospital; 5.00%; 11/1/04 750,000 728,438 5.50%; 11/1/13 1,250,000 1,198,437 5.25%; 11/1/20 1,750,000 1,570,625 3,497,500 Colorado (2.83%) City & County of Denver, Colorado, Airport System Rev. Bonds, Series 1991D; 7.75%; 11/15/13 $3,185,000 $ 3,754,319 Colorado Health Fac. Authority Rev. Bonds for Sisters of Charity Healthcare Systems, Series 1994; 5.25%; 5/15/14 1,500,000 1,428,750 5,183,069 Georgia (3.27%) Coweta County, Georgia Dev. Authority Pollution Control Rev. Bonds, Georgia Power Co., Yates Project; 6.00%; 3/1/18 2,500,000 2,509,375 Fulco, Georgia, Hospital Authority Rev. Anticipation Cert. for St. Joseph's Hospital of Atlanta, Inc.; 5.50%; 10/1/14 2,000,000 1,857,500 Municipal Electric Authority of Georgia Power Rev. Bonds, Series R; 7.30%; 1/1/09 1,505,000 1,623,519 5,990,394 Illinois (16.77%) Chicago, Illinois O'Hare International Airport Special Fac. Rev. Bonds for American Airlines, Inc. Project-A; 7.88%; 11/1/25 6,010,000 6,453,238 City of Chicago, Illinois Adj. Rate Gas Supply Rev. Bonds, Series 1985A, Peoples Gas Light & Coke Project; 6.88%; 3/1/15 3,800,000 4,123,000 Illinois Dev. Financial Authority Pollution Control Rev. Bonds for Illinois Power Co.; 7.63%; 12/1/16 2,050,000 2,178,125 Illinois Health Fac. Authority for Sarah Bush Lincoln Health Center Area E-7 Hospital Association Bonds, Series 1987; 7.20%; 4/1/01 150,000 157,312 7.38%; 4/1/17 850,000 881,875 Illinois Health Fac. Authority Ref. Rev. Bonds for OSF Healthcare System; 6.00%; 11/15/10 500,000 500,625 6.00%; 11/15/13 500,000 492,500 6.00%; 11/15/23 735,000 712,950 Illinois Health Fac. Authority Ref. Rev. Bonds for OSF Healthcare System, Series 1993; 5.75%; 11/15/07 1,600,000 1,608,000 Illinois Health Fac. Authority Rev. Bonds for Sarah Bush Lincoln Health Center, Series 1992; 7.25%; 5/15/12 2,950,000 3,079,062 7.25%; 5/15/22 1,515,000 1,569,919 Illinois Health Fac. Authority Rev. Bonds for South Suburban Hospital, Series 1992; 7.00%; 2/15/09 500,000 525,625 7.00%; 2/15/18 1,250,000 1,312,500 Illinois Health Fac. Authority Rev. Bonds, Northwestern Memorial Hospital, Series 1994A; 5.60%; 8/15/06 500,000 509,375 5.75%; 8/15/08 615,000 624,225 5.80%; 8/15/09 840,000 846,300 6.10%; 8/15/14 1,000,000 1,017,500 Illinois Health Fac. Authority Rev. Ref. Bonds for Advocate Healthcare, Series A; 6.75%; 4/15/12 $2,000,000 $ 2,077,500 Regional Transportation Authority, Illinois General Obligation Bonds, Series 1994A; 6.25%; 6/1/15 2,000,000 2,057,500 30,727,131 Indiana (6.51%) City of Mount Vernon, Indiana, Pollution Control Rev. Bonds, for Southern Indiana Gas & Electric Co. Project,; 7.25%; 3/1/14 700,000 770,000 City of Petersburg, Indiana, Pollution Control Rev. Bonds, for Indianapolis Power & Light Co. Project, Series 1993A; 6.10%; 1/1/16 4,000,000 4,085,000 Indiana Health Fac. Financing Authority Hospital Rev. Ref. Bonds, Welborn Memorial Baptist Hospital, Series 1993; 5.63%; 7/1/23 1,860,000 1,708,875 Lawrenceburg, Indiana Pollution Control Rev. Ref. Bonds, Indiana Michigan Power Co. Project, Series D; 7.00%; 4/1/15 1,000,000 1,061,250 Series E; 5.90%; 11/1/19 3,220,000 3,099,250 Warrick County, Indiana Environmental Improvement Rev. Bonds, Southern Indiana Gas & Electric, Series 1993B; 6.00%; 5/1/23 1,190,000 1,203,388 11,927,763 Iowa (4.86%) Chillicothe, Iowa Pollution Control Rev. Bonds for Iowa Southern Utilities Co., Series 1977; 5.95%; 2/1/07 500,000 500,500 City of Muscatine, Iowa, Electric Rev. Ref. Bonds, Series 1986; 6.00%; 1/1/06 160,000 160,126 5.00%; 1/1/07 1,665,000 1,581,750 Eddyville, Iowa, IDR Ref. Bonds, Cargill, Inc. Project; 5.63%; 12/1/13 1,000,000(a) 980,000 Iowa Finance Authority Hospital Fac. Ref. Rev. Bonds for Jennie Edmundson Memorial Hospital; 7.40%; 11/1/06 550,000 590,563 7.65%; 11/1/16 4,900,000 5,089,875 8,902,814 Kentucky (1.01%) City of Ashland, Kentucky Sewage and Solid Waste Rev. Bonds for Ashland, Inc. Project, Series 1995; 7.13%; 2/1/22 750,000 795,938 City of Ashland, Kentucky, Solid Waste Rev. Bonds for Ashland Oil, Inc. Project, Series 1991; 7.20%; 10/1/20 1,000,000 1,058,750 1,854,688 Louisiana (1.14%) St. Charles Parish, Louisiana Pollution Control Rev. Bonds for Louisiana Power & Light Co. Project; 7.50%; 6/1/21 $1,950,000 $ 2,081,625 Maine (2.41%) Skowhegan, Maine, Pollution Control Rev. Ref. Bonds for Scott Paper Co. Project, Series 1993; 5.90%; 11/1/13 4,450,000 4,416,625 Michigan (1.31%) Michigan State Hospital Financing Authority Hospital Rev. Bonds for Detroit Medical Center, Series 1993B; 5.75%; 8/15/13 600,000 578,250 5.50%; 8/15/23 2,000,000 1,820,000 2,398,250 Minnesota (1.61%) City of Bass Brook, Minnesota, Pollution Control Rev. Ref. Bonds for Minnesota Power & Light Project; 6.00%; 7/1/22 3,000,000 2,947,500 Missouri (2.26%) Missouri State Environmental Improvement & Energy Authority Rev. Bonds, Union Electric Co., Series 1993; 5.45%; 10/1/28 2,050,000 1,914,187 Missouri State Health & Educational Fac. Authority Health Fac. Rev., BJC Health System, Series 1994A; 6.75%; 5/15/12 2,000,000 2,220,000 4,134,187 Montana (1.09%) Forsyth, Montana, Pollution Control Rev. Ref. Bonds, Montana Power Co., Colstrip Project, Series 1993A; 6.13%; 5/1/23 2,000,000 2,005,000 Nebraska (1.98%) Nebraska Public Power Dist. Power Supply System Rev. Bonds; 5.30%; 1/1/02 1,000,000 1,033,750 5.40%; 1/1/03 1,500,000 1,558,125 5.50%; 1/1/04 1,000,000 1,043,750 3,635,625 Nevada (2.08%) Clark County, Nevada, IDR Ref. Bonds, Nevada Power Co. Project, Series 1992C; 7.20%; 10/1/22 3,600,000 3,807,000 New Mexico (1.14%) City of Lordsburg, New Mexico, Pollution Control Rev. Bonds for Phelps Dodge Corp. Project; 6.50%; 4/1/13 2,000,000 2,090,000 North Carolina (3.85%) Martin County, North Carolina Industrial Fac. & Pollution Control Finance Authority Solid Waste Rev. Bonds, Weyerhaeuser; 6.80%; 5/1/24 3,750,000 3,937,500 North Carolina Medical Care Hospital Rev. Bonds for Rex Hospital Project; 6.13%; 6/1/10 1,700,000 1,734,000 North Carolina Municipal Power Agency Catawba Electric Rev. Bonds; 6.00%; 1/1/15 $1,400,000 $ 1,373,750 7,045,250 North Dakota (1.14%) Mercer County, North Dakota, Pollution Control Rev. Bonds, Ottertail Power Co. Project, Series 1991; 6.90%; 2/1/19 1,950,000 2,096,250 Ohio (4.97%) Cuyahoga County, Ohio, Hospital Rev. Bonds for Meridia Health Systems, Series 1991; 7.25%; 8/15/19 1,445,000 1,551,569 7.00%; 8/15/23 250,000 266,250 Lorain County, Ohio Hospital Ref. Bonds, Humility Mary Health Care, Series A; 5.90%; 12/15/08 2,270,000 2,349,450 Ohio Air Quality Dev. Rev. Bonds, Columbus Southern Power Co. Project, Series 1985B; 6.25%; 12/1/20 4,900,000 4,930,625 9,097,894 Oklahoma (1.38%) Midwest City, Oklahoma Memorial Hospital Authority Rev. Ref. Bonds; 7.50%; 7/1/14 200,000 206,250 Tulsa Industrial Authority Rev. Bonds, St. John Medical Center Project, Series 1994; 6.25%; 2/15/14 1,280,000 1,308,800 6.25%; 2/15/17 1,000,000 1,018,750 2,533,800 South Carolina (1.05%) York County, South Carolina Exempt Fac. Industrial Rev. Bonds for Hoechst Celanese Project, Series 1994; 5.70%; 1/1/24 2,000,000 1,922,500 South Dakota (0.58%) Pennington County, South Dakota Pollution Control Rev. Ref. Bonds for Black Hills Power & Light Co. Project; 6.70%; 6/1/10 1,000,000 1,071,250 Texas (5.39%) Brazos River Authority, Texas, Pollution Control Rev. Bonds for Houston Lighting & Power; 8.25%; 5/1/15 820,000 894,825 7.75%; 10/1/15 855,000 930,881 8.25%; 5/1/19 500,000 545,625 Guadalupe-Blanco Riv Authority, Texas, Industrial Dev. Corp. Pollution Control Rev. E I Du Pont 1982 Series A; 6.35%;7/1/22 2,500,000 2,603,125 Matagorda County, Texas, Navigational District No. 1 Pollution Control Rev. Bonds for Central Power & Light Co.; 7.50%; 12/15/14 2,585,000 2,846,731 6.00%; 7/1/28 1,000,000 1,003,750 Tarrant County, Texas, Health Fac. Dev. Corp. Harris Methodist Health System Rev. Bonds; 5.90%; 9/1/06 1,000,000 1,047,500 9,872,437 Utah (0.78%) Intermountain Power Agency, Utah Power Supply, Rev. Ref. Bonds, Series 1993A; 5.50%; 7/1/20 $1,500,000 $ 1,432,500 Virginia (3.81%) Arlington County, Virginia, IDA Hospital Fac. Rev. Ref. Bonds, Arlington Hospital, Series 1993; 5.00%; 9/1/21 2,715,000 2,358,656 Chesapeake, Virginia Industrial Dev. Authority Rev. Ref. Bond for Cargill, Inc.Project .; 5.88%; 3/1/13 1,410,000 1,411,763 Penninsula Ports Authority of Virgina, Dominion Terminal Associates Project - The Pittson Co.;7.38;6/1/20 3,000,000 3,213,750 6,984,169 Washington (4.51%) City of Seattle, Washington Municipal Light and Power Rev. Bonds; 1993; 5.10%; 11/1/05 1,950,000 1,984,125 1994; 6.63%; 7/1/16 1,000,000 1,075,000 Pilchuck Dev. Public Corp., State of Washington, Special Fac. Airport Rev. Bonds, Series 1993, Tramco, Inc. Project for BF Goodrich; 6.00%; 8/1/23 3,155,000 3,009,081 Washington Health Care Fac. Authority Rev. Bond; Series 1989 Sisters of Providence; 7.88%;10/1/10 2,000,000 2,187,500 8,255,706 West Virginia (6.52%) Marshall County, West Virginia, Pollution Control Rev. Bonds for Ohio Power Co. Project; Series C; 6.85%; 6/1/22 1,200,000 1,279,500 Series D; 5.90%; 4/1/22 4,500,000 4,567,500 Pleasant County, West Virgina Pollution Control Rev. Bonds for Potomac Edison Co.; 6.15%; 5/1/15 2,000,000 2,032,500 Putnam County, West Virginia, Pollution Control Rev. Bonds for Appalachian Power Co. Project, Series C; 6.60%; 7/1/19 3,875,000 4,059,062 11,938,562 Wisconsin (1.11%) Wisconsin Health & Educational Fac. Authority Rev. Bonds; Series 1995; Franciscan Skemp Medical Center, Inc.; 5.88%;11/15/10 1,000,000 1,017,500 6.13%;11/15/15 1,000,000 1,016,250 2,033,750 Total Portfolio Investments (96.95%) 177,611,183 Cash, receivables and other assets, net of liabilities (3.05%) 5,590,240 Total Net Assets (100.00%) $183,201,423 (a) Restricted security - See Note 4 to the financial statements. PRINCOR TAX-EXEMPT CASH MANAGEMENT FUND, INC. Principal Amount Value Short-Term Tax-Exempt Bonds (101.21%) Alabama (1.30%) City of Stevenson, Alabama, IDB, Improvement Rev. Bonds, The Mead Corp., Series 1986; LOC Credit Suisse; 3.90%; 11/1/95*; 11/1/16 $1,300,000 $ 1,300,000 Alaska (5.22%) Alaska Industrial Dev. & Export Authority, IDB Current Ref. Bonds, Series 1988A; LOC Security Pacific Bank Washington; Lot #2; 4.20%; 11/1/95*; 7/1/97 80,000 80,000 Lot #3; 4.20%; 11/1/95*; 7/1/97 505,000 505,000 Lot #5; 4.20%; 11/1/95*; 7/1/98 1,495,000 1,495,000 Lot #6; 4.20%; 11/1/95*; 7/1/01 1,485,000 1,485,000 Lot #7; 4.20%; 11/1/95*; 7/1/01 170,000 170,000 Lot #8; 4.20%; 11/1/95*; 7/1/05 185,000 185,000 Lot #9; 4.20%; 11/1/95*; 7/1/05 250,000 250,000 Lot #12; 4.20%; 11/1/95*; 7/1/12 1,040,000 1,040,000 5,210,000 Arizona (1.30%) Chandler County, Arizona, IDA, F/R Monthly IDR, Parsons Municipal Services, Series 1983; LOC National Westminster; 3.90%; 11/15/95*; 12/15/09 1,300,000 1,300,000 California (3.02%) County of Los Angeles, California, 1995-96 Tax & Rev. Anticipation Notes; 4.50%; 7/1/96 3,000,000 3,014,055 Colorado (1.00%) Adams County, Colorado, IDR Bonds, City View Park Project, Series 1985; LOC Barclays Bank; 3.95%; 11/1/95*; 12/1/15 300,000 300,000 Arapahoe County, Colorado, F/R Monthly IDR, Beckett Aviation, Inc., Series; 1983 LOC Barclays Bank; 3.81%; 11/15/95*; 5/15/13 600,000 600,000 City of Thornton, Colorado, F/R Monthly IDR, Service Merchandise Co., Inc., Series 1984; LOC Industrial Bank of Japan; 3.80%; 11/15/95*; 12/15/99 100,000 100,000 1,000,000 Florida (4.30%) Florida Housing Finance Agency, F/R Monthly MF Rev's., Water Apt. Project, Series 1984A; LOC Wells Fargo; 4.00%; 11/1/95*; 4/1/07 1,700,000 1,700,000 Florida Housing Finance Agency, F/R Monthly MF Rev's., Webb Road 1 Apt. Project, Series 1984; LOC Wells Fargo; 4.00%; 11/1/95*; 4/1/07 $1,000,000 $ 1,000,000 Florida Housing Finance Agency, F/R Monthly MF Rev's., Webb Road 2 Apt. Project; Series 1984C; LOC Wells Fargo; 4.00%; 11/1/95*; 4/1/07 1,600,000 1,600,000 4,300,000 Georgia (8.48%) Burke County, Georgia, Dev. Authority, Adj. Tender Pollution Control Rev. Bonds, Ogelthorpe Power Corp., Vogtle Project, Series 1992A; LOC Credit Suisse; 3.05%; 11/1/95**; 1/1/25 300,000 300,000 3.40%; 11/3/95**; 1/1/25 600,000 600,000 3.65%; 11/6/95**; 1/1/25 500,000 500,000 3.60%; 11/14/95**; 1/1/25 500,000 500,000 3.65%; 11/16/95**; 1/1/25 450,000 450,000 3.70%; 11/21/95**; 1/1/25 350,000 350,000 3.60%; 11/29/95**; 1/1/25 700,000 700,000 3.60%; 12/12/95**; 1/1/25 300,000 300,000 3.80%; 1/17/96**; 1/1/25 400,000 400,000 3.60%; 1/22/96**; 1/1/25 600,000 600,000 3.60%; 2/5/96**; 1/1/25 350,000 350,000 Fulton County, Georgia, Housing Authority, Municipal Housing Rev. Bonds, Series 1986A; LOC Sumitomo Bank Ltd.; 4.30%; 11/1/95*; 8/1/16 2,725,000 2,725,000 Hapeville, Georgia, Dev. Authority, Adj. Tender IDR Bonds, Hapeville Hotel Ltd. Partnership Project, Series 1985; LOC Swiss Bank Corp.; 4.10%; 11/1/95*; 11/1/15 700,000 700,000 8,475,000 Illinois (6.78%) Chicago, Illinois, Cook County CSX Beckett Aviation, Inc., F/R Monthly Airport Rev. Bonds; LOC Barclays Bank; 3.81%; 11/15/95*; 12/15/14 1,000,000 1,000,000 City of Burbank, Illinois, F/R Monthly IDR, Service Merchandise Co., Inc., Series 1984; LOC Pittsburgh National Bank; 3.80%; 11/15/95*; 9/15/24 2,100,000 2,100,000 City of Chicago General Obligation Tender Notes, Series 1995A; LOC Morgan Guaranty; 4.60%; 11/1/95**; 10/31/96 1,270,000 1,270,000 3.75%; 5/1/96**; 10/31/96 1,000,000 1,000,000 City of Naperville, Illinois, Economic Dev. Rev. Bonds, Service Merchandise Co., Inc.; LOC Pittsburgh National Bank; 3.80%; 11/15/95*; 11/30/24 1,400,000 1,400,000 6,770,000 Iowa (4.62%) Iowa Higher Education Loan Authority Fac.; Rev. Bonds; Series 1995; LOC Norwest Bank Minnesota; 3.90%; 11/2/95*; 2/1/05 2,200,000 2,200,000 Iowa School Corp. Warrant Cert. 1995-96 Series A; Guaranteed By Capital Guaranty; 4.75%; 6/28/96 2,000,000 2,011,357 City of Storm Lake, Iowa; Private College Rev. Bonds, Buena Vista College, Series 1993; LOC Norwest Bank Minnesota, N. A.; 3.95%; 11/2/95*; 12/1/03 $400,000 $ 400,000 4,611,357 Louisiana (11.88%) Parish of Desoto, Louisianna; ADJ. Tender Pollution Control Rev. Ref. Bonds, LOC Swiss Bank Corp.; Series 1991A; 3.80%; 11/1/95*; 7/1/18 2,200,000 2,200,000 Series 1991B; 3.80%; 11/1/95*; 7/1/18 600,000 600,000 Jefferson Parish, Louisiana, Hospital Rev. Bonds, Jefferson Parish Hospital Service, District #2, Customized Purchase Program, Series 1985; LOC Mitsubishi Bank; 3.90%; 11/1/95*; 12/1/15 3,300,000 3,300,000 Jefferson Parish, Louisiana, IDB Rev. Ref. Bonds, George J. Achel, Sr. Project, Series 1986; LOC Barclays Bank; 3.95%; 11/1/95*; 12/1/04 1,400,000 1,400,000 Louisiana Public Fac. Authority, CP Program Hospital Equip. Rev. Bonds, Series 1985A, Pooled Project; LOC Sumitomo Bank; 4.30%; 11/1/95*; 12/1/15 4,365,000 4,365,000 11,865,000 Maine (2.01%) State of Maine General Obligation Tax Anticipation Notes; 4.50%; 6/28/96 2,000,000 2,009,488 Maryland (0.90%) Montgomery County, Maryland, F/R Monthly IDA, Information Systems & Networks; LOC Pittsburgh National Bank; 3.75%; 11/1/95*; 4/1/14 900,000 900,000 Massachusetts (0.50%) Commonwealth of Massachusetts, Dedicated Income Tax Bonds, Series B; LOC National Westminster; 3.70%; 11/1/95*; 12/1/97 500,000 500,000 Michigan (0.95%) Township of Cornell, Michigan, The Economic Dev. Corp., Environmental Improvement Rev. Ref. Bonds, Series 1986, Mead Escanaba Paper Co. Project; LOC Suisse Bank; 3.80%; 11/1/95*; 11/1/16 950,000 950,000 Minnesota (9.16%) City of Rochester, Minnesota, Health Care Fac. Rev. Bonds, Mayo Foundation/ Mayo Medical Center, Adj. Tender; Series 1992C; 3.50%; 11/8/95**; 11/15/21 500,000 500,000 3.60%; 11/10/95**; 11/15/21 500,000 500,000 3.75%; 11/20/95**; 11/15/21 500,000 500,000 3.60%; 12/8/95**; 11/15/21 750,000 750,000 3.60%; 12/11/95**; 11/15/21 800,000 800,000 3.75%; 1/24/96**; 11/15/21 600,000 600,000 3.80%; 2/9/96**; 11/15/21 500,000 500,000 3.75%; 2/12/96**; 11/15/21 500,000 500,000 University of Minnesota Regents Variable Rate Demand Bonds; Series 1985F; 3.65%; 2/1/96**; 10/1/01 $2,500,000 $2,500,000 Series 1985G; 3.65%; 2/1/96**; 10/1/07 2,000,000 2,000,000 9,150,000 Montana (4.90%) City of Forsyth, Montana, Portland General Electric Co.; LOC Swiss Bank Corp.; Series B; 3.85%; 11/1/95*; 6/1/13 2,400,000 2,400,000 Series D; 3.85%; 11/1/95*; 6/1/13 1,500,000 1,500,000 Series 1984; 3.85%; 11/1/95*; 8/1/14 1,000,000 1,000,000 4,900,000 Nebraska (2.80%) Nebraska Investment Finance Authority, F/R Monthly MF Rev's., Series 1985A, Apple Creek Associates; LOC Citibank; 4.00%; 11/1/95*; 9/1/07 2,800,000 2,800,000 New Hampshire (1.80%) New Hampshire IDA, F/R Monthly 1983 Hudson, Oerlikon-Buhrle USA/Balzers; LOC Union Bank of Switzerland; 3.90%; 11/1/95*; 7/1/13 1,800,000 1,800,000 New York (4.00%) New York State Energy Research & Dev. Authority Pollution Control Rev. Bonds, Long Island Lighting Co.; Series 1985B; LOC Deutsche Bank; 4.70%; 3/1/96**; 3/1/16 4,000,000 4,000,000 North Carolina (5.60%) North Carolina Eastern Municipal Power Agency, Series 1988B; LOC Morgan Guaranty Trust Co.; LOC Union Bank of Switzerland; 3.65%; 12/5/95**; 1/1/26 500,000 500,000 3.70%; 12/6/95**; 1/1/10 500,000 500,000 3.60%; 1/18/96**; 1/1/26 500,000 500,000 3.65%; 1/19/96**; 1/1/10 300,000 300,000 3.65%; 1/23/96**; 1/1/26 500,000 500,000 3.65%; 1/25/96**; 1/1/10 300,000 300,000 3.80%; 2/7/96**; 1/1/26 500,000 500,000 University of North Carolina Foundation, Inc. Series 1989; LOC Credit Suisse; 3.85%; 11/1/95* 2,500,000 2,500,000 5,600,000 Ohio (1.00%) Village of Evendale, Ohio, SHV Real Estate Income Project; LOC Citibank; 3.85%; 11/1/95*; 9/1/15 1,000,000 1,000,000 Pennsylvania (3.00%) Bucks County, Pennsylvania, IDA SHV Real Estate, Inc. Project, Series 1985; LOC ABN-AMRO Bank; 3.85%; 11/1/95*; 7/1/15 1,800,000 1,800,000 Chester, Pennsylvania, IDA, F/R Monthly IDR, Keystone Foods Corp.; LOC Barclays Bank; 3.85%; 11/15/95*; 10/15/99 800,000 800,000 Delaware County, Pennsylvania, Tax & Rev. Anticipation Notes, Fac. Rev., Series 1985; Guaranteed by United Parcel Service; 3.80%; 11/1/95*; 12/1/15 $400,000 $ 400,000 3,000,000 Tennessee (0.50%) Knox, Tennessee, IDB F/R Monthly IDR 1983, Service Merchandise Co., Inc.; LOC Barclays Bank; 3.80%; 11/15/95*; 12/15/08 500,000 500,000 Texas (10.26%) Calhoun County, Texas, NAV IDA PCA, Alcoa, Series 1987; LOC Credit Suisse; 3.75%; 11/7/95*; 3/1/01 300,000 300,000 Cedar Hill, Texas, Industrial Dev. Corp. F/R Monthly IDR 1985, Minyard Properties Project; LOC Citibank; 4.00%; 11/1/95*; 5/1/02 400,000 400,000 City of Houston Tax and Rev. Anticipation Notes Series 1995; 4.50%: 6/27/96 1,000,000 1,005,488 Coppell, Texas, Industrial Dev. Corp., IDA 1984, Minyard Properties Project; LOC Citibank; 4.00%; 11/1/95*; 12/1/01 1,270,000 1,270,000 Montgomery County, Texas Industrial Developmental Corp. Ref. Bonds Series 1986A; Dal-Tile Corporation Project; LOC Credit Suisse; 3.95%; 11/1/95*; 12/1/03 150,000 150,000 Port Arthur Navigation Dist. Industrial Dev. Corp. Adj. Tender Pollution Control Rev. Bonds, American Petrofina Co. of Texas Project, Series 1985; LOC Sumitomo Bank; 4.20%; 11/1/95*; 5/1/03 3,100,000 3,100,000 Port Dev. Corp., Adj. Tender Marine Terminal Rev. Ref. Bonds, Mitsui & Co. (USA), Inc. Project, Series 1985A; LOC Industrial Bank of Japan; 3.90%; 11/15/95**; 12/1/05 500,000 500,000 3.55%; 12/4/95**; 12/1/05 500,000 500,000 Texas Assocation of Scool Boards Tax Anticipation Notes; Series 1995; 4.75%; 8/30/96 3,000,000 3,016,758 10,242,246 Washington (2.62%) Chelan County, Washington Dev. Corp., PCA, Alcoa, Series 1987; LOC Credit Suisse; 3.75%; 11/7/95*; 3/1/01 200,000 200,000 Port of Kalama, Washington, Public Corp., Port Fac. Rev. Bonds, Conagra, Inc. Project; LOC Morgan Guaranty; 3.80%; 11/1/95*; 1/1/04 2,420,000 2,420,000 2,620,000 West Virginia (1.80%) Putnam County, West Virginia, F/R Monthly IDR 1981, FMC Corp. Project; LOC Bankers Trust; 3.90%; 11/1/95*; 10/1/11 $1,800,000 $ 1,800,000 Wisconsin (1.01%) State of Wisconsin 1995 Operating Notes; 4.50%; 6/17/96 1,000,000 1,005,438 Wyoming (0.50%) Lincoln County, Wyoming, Pollution Control Ref. Bonds, Pacificorp Project, Series 1991; LOC Union Bank of Switzerland; 3.75%; 12/7/95**; 1/1/16 500,000 500,000 Total Portfolio Investments (101.21%) 101,122,584 Liabilities, net of cash, receivables and other assets, (-1.21%) (1,208,900) Total Net Assets (100.00%) $99,913,684 * Demand Date ** Put Date PRINCOR UTILITIES FUND, INC. Shares Held Value Common Stocks (96.01%) Combination Utility Services (20.32%) Cilcorp, Inc. 42,900 $1,673,100 Cinergy Corp. 85,699 2,431,709 LG&E Energy Corp. 50,000 2,075,000 Niagara Mohawk Power Corp. 18,000 193,500 Pacificorp 101,000 1,906,375 Public Service Co. of Colorado 60,000 2,047,500 WPS Resources Corp. 63,000 1,960,875 Washington Water Power Co. 110,000 1,897,500 14,185,559 Electric Services (39.05%) Allegheny Power System, Inc. 67,000 1,767,125 American Electric Power Co., Inc. 56,000 2,135,000 Dominion Resources, Inc. 49,400 1,963,650 Duke Power Co. 45,400 2,031,650 FPL Group, Inc. 50,000 2,093,750 Idaho Power Co. 59,800 1,659,450 KU Energy Corp. 71,800 2,127,075 Mid American Energy Co. 125,000 2,000,000 Minnesota Power & Light Co. 25,000 715,625 New England Electric System 44,000 1,716,000 PP&L Resources, Inc. 47,500 1,068,750 Portland General Corp. 70,000 1,898,750 Southern Co. 84,000 2,005,500 Teco Energy, Inc. 87,000 2,055,375 Texas Utilities Co. 55,200 2,028,600 27,266,300 Gas Production & Distribution (8.79%) Atlanta Gas Light Co. 27,200 $1,050,600 British Gas PLC 26,600 1,010,800 Laclede Gas Co. 20,600 419,725 New Jersey Resources Corp. 43,700 1,092,500 Peoples Energy Corp. 53,000 1,523,750 Washington Energy Co. 56,800 1,043,700 6,141,075 Telephone Communication (27.85%) AT&T Corp. 43,600 2,790,400 Ameritech Corp. 46,000 2,484,000 Bell Atlantic Corp. 39,000 2,481,375 Bellsouth Corp. 27,500 2,103,750 GTE Corp. 51,000 2,103,750 MCI Communications Corp. 55,000 1,371,563 Nynex Corp. 25,000 1,175,000 Sprint Corp. 64,000 2,464,000 US West Communications Group 52,000 2,476,500 19,450,338 Total Common Stocks 67,043,272 Commercial Paper (3.63%) Principal Amount Value Business Credit Institutions (1.24%) John Deere Capital Corp.; 5.75%; 11/7/95 $870,000 $ 869,166 Crude Petroleum & Natural Gas (1.40%) Chevron Oil Finance Co.; 5.71%; 11/3/95 975,000 974,691 Life Insurance (0.99%) Prudential Funding Corp.; 5.62%; 11/1/95 690,000 690,000 Total Commercial Paper 2,533,857 Total Portfolio Investments (99.64%) 69,577,129 Cash, receivables and other assets, net of liabilities (0.36%) 248,241 Total Net Assets (100.00%) $69,825,370 [/TEXT]

Information for federal income tax purposes is presented as an aid to shareholders in reporting the dividend distributions shown below. Shareholders should consult a tax adviser on how to report these distributions for state and local purposes.

EX-27.CLASSA 2 CASH MANAGEMENT CLASS A SHARES WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 YEAR OCT-31-1995 OCT-31-1995 617008663 617008663 13056787 19872 87366 630172683 0 0 6100668 6100668 0 624072015 623864278 332345949 0 0 0 0 0 624072015 0 29621653 0 (3581128) 26040525 0 0 26040525 0 (26038303) 0 0 2636234604 (2370032403) 25316128 291726066 0 0 0 0 1980472 0 3877487 496732007 1.000 .052 0 (.052) 0 0 1.000 .72 0 0 Without the Manager's volunteer waiver of a portion of certain expenses for this period, this fund would have had per share net investment income of $.052 and a ratio of expenses to average net assets of .78%. The amount waived was $296,255.

EX-27.CLASSB 3 CASH MANAGEMENT CLASS B SHARES
6 YEAR OCT-31-1995 OCT-31-1995 617008663 617008663 13056787 19872 87366 630172683 0 0 6100668 6100668 0 624072015 207737 332345949 0 0 0 0 0 624072015 0 29621653 0 (3581128) 26040525 0 0 26040525 0 (2222) 0 0 281031 (75516) 2222 0 0 0 0 0 1980472 0 3877487 496732007 1.000 .041 0 (.041) 0 0 1.000 1.42 0 0 Without the Manager's volunteer waiver of a portion of certain expenses for this period, this fund would have had per share net investment income of $.041 and a ratio of expenses to average net assets of 1.63%. The amount waived was $104.

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