Principal Prosperity Series Principal Asia Pacific High Dividend Equity Fund

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1 #! Principal Prosperity Series Principal Asia Pacific High Dividend Equity Fund & #$"%& Unaudited Semi-Annual Report 31 December 2006

2 Manager s Report The Asia Pacific ex-japan equity market delivered strong growth in the period under review. The regional market benefited from generally positive sentiment in the global equity markets & still solid growth of the world economy, together with continued fund inflows into the emerging markets. China was one of the best performing markets in Asia, thanks to sustained economic growth and abundant liquidity in the country, plus anticipation of further revaluation of its currency. In contrast, Thailand was hurt by investor concerns over government s policies. Markets seemed to be driven by strong liquidity and a search for higher, albeit riskier, returns. Concerns about the global economy and slightly weaker fundamentals were shrugged off. Currency movements, particularly the weak outlook for the U.S. dollar, will be the key to market stability in The health of the U.S. consumer will be the key determinant affecting global economic growth, particularly among global exporters. While the underlying supply and demand fundamentals are strong, commodity markets reflect a strong speculative demand, with a number of metals and minerals trading near all-time highs. The oil market, despite recently cooling off, could be affected by the political developments in Iran and North Korea. No matter what the investment environment, we continue to focus on selecting stocks which exhibit our three pillars, namely, improving and sustainable business fundamentals, attractive relative valuations and rising investor expectations. &'E!F &'()*+,-./01( &'()*+ $,-./0 &'()*+,-./01! "#$%&'!()*+,-./ &'()*+,-./01 &'()*+,-./%01! "#$%&'()* &'()*+,-"./0 &'()*+#$,-'. &' ()*+,-./01 OMMT&'()*+,- &'()*+,-./01 &'()*+,-./012 &'()*+,-.*/01 &'()*+",-./"0 &'()*+,-./012 &'()*+,-./012 &'()*+,-./012 &'()*+,-./012 &'()*+,- 1

3 OMMS NO PN# Australia (31.06%) Alloco Finance Group Ltd 81,337 $ 824, AMP Ltd 152,181 1,216, ANZ Banking Group 76,770 1,715, Austal Ltd 61, , BHP Billiton Ltd 63,109 1,265, BlueScope Steel Ltd 48, , Bradken Ltd 197,318 1,236, Centro Properties Group 61, , Commonwealth Bank of Australia 49,972 1,956, CSL Ltd 4, , David Jones Ltd 150, , FKP Property Group 254,880 1,320, Incitec Pivot Ltd 17, , Independence Group NL 60, , InvoCare Ltd 88, , Just Group Ltd 265, , Leighton Holdings Limited 15, , Macquarie Bank Ltd 11, , Macquarie Goodman Group 53, , Macquarie Leisure Trust Group 398, , MFS Ltd 208, , Minara Resources Ltd 57, , Mincor Resources NL 179, , Mirvac Group 73, , National Australia Bank Ltd 35,066 1,122, OneSteel Ltd 84, , QBE Insurance Group Ltd 40, , Rio Tinto Ltd 13, , SMS Management & Tech Ltd 113, , St George Bank Ltd 13, , Stockland 49, , Westpac Banking Corp 19, , Woolworths Ltd 43, , WorleyParsons Ltd 15, , Zinifex Ltd 58, , (31.06%) Alloco Finance Group Ltd 81,337 $ 824, AMP Ltd 152,181 1,216, ANZ Banking Group 76,770 1,715, Austal Ltd 61, , BHP Billiton Ltd 63,109 1,265, BlueScope Steel Ltd 48, , Bradken Ltd 197,318 1,236, Centro Properties Group 61, , Commonwealth Bank of Australia 49,972 1,956, CSL Ltd 4, , David Jones Ltd 150, , FKP Property Group 254,880 1,320, Incitec Pivot Ltd 17, , Independence Group NL 60, , InvoCare Ltd 88, , Just Group Ltd 265, , Leighton Holdings Limited 15, , Macquarie Bank Ltd 11, , Macquarie Goodman Group 53, , Macquarie Leisure Trust Group 398, , MFS Ltd 208, , Minara Resources Ltd 57, , Mincor Resources NL 179, , Mirvac Group 73, , National Australia Bank Ltd 35,066 1,122, OneSteel Ltd 84, , QBE Insurance Group Ltd 40, , Rio Tinto Ltd 13, , SMS Management & Tech Ltd 113, , St George Bank Ltd 13, , Stockland 49, , Westpac Banking Corp 19, , Woolworths Ltd 43, , WorleyParsons Ltd 15, , Zinifex Ltd 58, ,

4 OMMS NO PN& The People s Republic of China (7.41%) Angang New Steel Co Ltd H Shares 728,000 $ 1,067, China Overseas Land & I-CW07 (Warrant) 32,250 24, China Shipping Development H Shares 172, , Guangdong Electric Power B Shares 605, , Hengan International Group Co Ltd 114, , Inner Mongolia Yitai Coal B Shares 542, , Petrochina Co Ltd H Shares 1,608,308 2,279, Yantai Changyu Pioneer B Shares 73, , Hong Kong (16.04%) ASM Pacific Technology 135, , Bank of East Asia 210,000 1,188, BOC Hong Kong Holdings Ltd 133, , Cafe de Coral Holdings Ltd 166, , Cathay Pacific Airways 156, , China Mobile Hong Kong Ltd 107, , China Overseas Land & Investment Ltd 262, , CLP Holdings Ltd 104, , CNOOC Ltd 451, , Denway Motors Ltd 512, , EganaGoldpfeil Holdings Ltd 566, , Esprit Holdings Ltd 90,500 1,013, Guoco Group Ltd 28, , Industrial & Commercial Bank of China Ltd 291, , Kerry Properties Ltd 42, , Lee & Man Paper Manufacturing 306, , New World Development Ltd 188, , =(7.41%)! H 728,000 $ 1,067, # -CW07 ( ) 32,250 24, !H 172, , Guangdong Electric Power B Shares 605, , ! 114, , B 542, , ! H 1,608,308 2,279, Yantai Changyu Pioneer B Shares 73, , =(16.04%) ASM 135, , ! 210,000 1,188, ! 133, , , , ! 156, , ! 107, , # 262, , ! 104, , # 451, , ! 512, , ! 566, , ! 90,500 1,013, ! 28, , # 291, , ! 42, , ! 306, , , ,

5 OMMS NO PN& Pacific Basin Shipping Ltd 546,000 $ 344, Shenzhen Investment Ltd 2,792,000 1,163, Sino Land Co 210, , Vtech Holdings Ltd 138, , Indonesia (2.42%) Aneka Tambang TBK PT 348, , Astra Agro Lestari TBK PT 614, , Bank Central Asia PT 645, , International Nickel Indonesia TBK PT 91, , Korea, Republic of (South) (9.16%) Daewoong Pharmaceutical Co 7, , GS Engineering & Construction Corp 10, , Hynix Semiconductor Inc 7, , Hyundai Heavy Industries 2, , KT&G Corp 16,600 1,010, LG Fashion Corp 6, , LG International Corp 9, , MegaStudy Co Ltd 2, , Samsung Electronics Co Ltd 1,620 1,068, Samsung Engineering Co Ltd 4, , Shinhan Financial Group Ltd 13, , SKC Co Ltd 6, , S-Oil Corp 10, , Woongjin Thinkbig Co Ltd 22, , Malaysia (2.51%) Maxis Communications Bhd 246, , Shell Refining Co 144, , KLCC Property Holdings Bhd 937, , ,000 $ 344, ! 2,792,000 1,163, ! 210, , , , (2.42%) Aneka Tambang TBK PT 348, , Astra Agro Lestari TBK PT 614, , Bank Central Asia PT 645, , International Nickel Indonesia TBK PT 91, , =(9.16%) Daewoong Pharmaceutical Co 7, , GS Engineering & Construction Corp 10, , Hynix Semiconductor Inc 7, , Hyundai Heavy Industries 2, , KT&G Corp 16,600 1,010, LG Fashion Corp 6, , LG International Corp 9, , MegaStudy Co Ltd 2, , Samsung Electronics Co Ltd 1,620 1,068, Samsung Engineering Co Ltd 4, , Shinhan Financial Group Ltd 13, , SKC Co Ltd 6, , S-Oil Corp 10, , Woongjin Thinkbig Co Ltd 22, , !=(2.51%) Maxis Communications Bhd 246, , Shell Refining Co 144, , KLCC Property Holdings Bhd 937, ,

6 OMMS NO PN& Philippines (1.04%) Globe Telecom Inc 30,950 $ 779, Pakistan (0.74%) Engro Chemical Pak Ltd 201, , Singapore (6.34%) CapitaLand Ltd 187, , DBS Group Holdings Ltd 36, , Elec & Eltek Int Co Ltd 166, , MMI Holdings Ltd 1,112, , Raffles Education Corp Ltd 288, , Singapore Exchange Ltd 174, , Singapore Press Holdings Ltd 124, , Tat Hong Holdings Ltd 466, , United Overseas Bank Ltd 48, , Thailand (3.18%) Delta Electronics Thai-Foreign 974, , Glow Energy PCL-Foreign 858, , Kiatnakin Bank PCL-Foreign 532, , Precious Shipping PCL-Foreign 490, , Taiwan (13.09%) Realtek Semiconductor Corp 261, , Hon Hai Precision Industry 120, , China Steel Corp 695, , High Tech Computer Corp 18, , Delta Electronics Inc 70, , Nan Ya Plastics Corp 411, , Greatek Electronics Inc 389, , TSRC Corp 1,207, , Wah Lee Industrial Corp 143, , Sincere Navigation 500, , Richtek Technology Corp 32, , Holtek Semiconductor Inc 169, , Makalot Industrial Co Ltd 550,000 1,134, (1.04%) Globe Telecom Inc 30,950 $ 779, !=(0.74%) Engro Chemical Pak Ltd 201, , =(6.34%) CapitaLand Ltd 187, , DBS Group Holdings Ltd 36, , Elec & Eltek Int Co Ltd 166, , MMI Holdings Ltd 1,112, , Raffles Education Corp Ltd 288, , Singapore Exchange Ltd 174, , Singapore Press Holdings Ltd 124, , Tat Hong Holdings Ltd 466, , United Overseas Bank Ltd 48, , =(3.18%) Delta Electronics Thai-Foreign 974, , Glow Energy PCL-Foreign 858, , Kiatnakin Bank PCL-Foreign 532, , Precious Shipping PCL-Foreign 490, , =(13.09%) Realtek Semiconductor Corp 261, , Hon Hai Precision Industry 120, , China Steel Corp 695, , High Tech Computer Corp 18, , Delta Electronics Inc 70, , Nan Ya Plastics Corp 411, , Greatek Electronics Inc 389, , TSRC Corp 1,207, , Wah Lee Industrial Corp 143, , Sincere Navigation 500, , Richtek Technology Corp 32, , Holtek Semiconductor Inc 169, , Makalot Industrial Co Ltd 550,000 1,134,

7 OMMS NO PN& Motech Industries Inc 14,880 $ 183, Hung Poo Real Estate Development Corp 479, , Foxconn Technology Co Ltd 21, , Huaku Construction Corp 243, , Sonix Technology Co Ltd 276, , Huang Hsiang Construction Co 94, , Motech Industries Inc 14,880 $ 183, Hung Poo Real Estate Development Corp 479, , Foxconn Technology Co Ltd 21, , Huaku Construction Corp 243, , Sonix Technology Co Ltd 276, , Huang Hsiang Construction Co 94, , Total Listed Investments $ 69,918, Other Assets: Amounts Receivable on Subscription $ 32, Dividends and Other Receivables 173, Cash at Bank 5,111, $ 5,317, Liabilities: Other Amounts Payable and Provisions 43, $ 43, Total Net Asset Value $ 75,192, ! $ 69,918, ! $ 32, ! 173, ! 5,111, $ 5,317, # 43, $ 43, $ 75,192, Number of Units in Issue 2,947, Net Asset Value per Unit $ Total Listed Investment at Cost $ 54,246,109 2,947, $ # $ 54,246,109 6

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