<PAGE> PAGE 1
000 B000000 10/31/96
000 C000000 0001002870
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 PRINCOR LIMITED TERM BOND FUND, INC.
001 B000000 811-07453
001 C000000 5152475476
002 A000000 THE PRINCIPAL FINANCIAL GROUP
002 B000000 DES MOINES
002 C000000 IA
002 D010000 50392
002 D020000 0200
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
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007 C011000 10
022 A000001 FIRST CHICAGO CAPITAL MARKETS
022 B000001 36-3595942
022 C000001 60763
022 D000001 0
022 A000002 ASSOCIATES CORPORATION OF NORTH AMERICA
022 B000002 74-1494554
022 C000002 22050
022 D000002 0
022 A000003 GENERAL ELECTRIC CAPITAL CORP.
022 B000003 13-1500700
022 C000003 4604
022 D000003 0
022 A000004 SALOMON BROTHERS
022 B000004 13-3082694
022 C000004 2679
022 D000004 0
022 A000005 LEWALD, ORSEY, & PEPE
022 B000005 59-2541723
<PAGE> PAGE 2
022 C000005 2597
022 D000005 0
022 A000006 PIPER, JAFFRAY, HOPWOOD
022 B000006 41-0953246
022 C000006 2160
022 D000006 0
022 A000007 SBC CAPITAL MARKETS, INC.
022 B000007 13-3498485
022 C000007 2113
022 D000007 0
022 A000008 GRUNTAL & CO.
022 B000008 13-3179859
022 C000008 1813
022 D000008 0
022 A000009 FREDDIE MACS SS & TG
022 B000009 52-0904874
022 C000009 1465
022 D000009 0
022 A000010 MERRILL LYNCH
022 B000010 13-5674085
022 C000010 998
022 D000010 194
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
070 M010000 N
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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SIGNATURE A.S. FILEAN
TITLE VICE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 17,205,288
<INVESTMENTS-AT-VALUE> 17,094,603
<RECEIVABLES> 309,724
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 57,234
<TOTAL-ASSETS> 17,461,561
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,397
<TOTAL-LIABILITIES> 17,397
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,458,547
<SHARES-COMMON-STOCK> 1,743,544
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 99,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,634)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (110,685)
<NET-ASSETS> 17,444,164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 615,360
<OTHER-INCOME> 0
<EXPENSES-NET> (79,438)
<NET-INVESTMENT-INCOME> 535,922
<REALIZED-GAINS-CURRENT> (3,634)
<APPREC-INCREASE-CURRENT> (110,685)
<NET-CHANGE-FROM-OPS> 421,603
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (434,063)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,762,547
<NUMBER-OF-SHARES-REDEEMED> (62,056)
<SHARES-REINVESTED> 43,053
<NET-CHANGE-IN-ASSETS> 17,444,164
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,589
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,408
<AVERAGE-NET-ASSETS> 12,527,516
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> .38
<PER-SHARE-GAIN-APPREC> (.04)
<PER-SHARE-DIVIDEND> (.35)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.89
<EXPENSE-RATIO> .89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's voluntary waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.37
and a ratio of expenses to average net assets of 1.16%. The amount waived was
$22,716.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 17,205,288
<INVESTMENTS-AT-VALUE> 17,094,603
<RECEIVABLES> 309,724
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 57,234
<TOTAL-ASSETS> 17,461,561
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,397
<TOTAL-LIABILITIES> 17,397
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,458,547
<SHARES-COMMON-STOCK> 11,282
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 99,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,634)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (110,685)
<NET-ASSETS> 17,444,164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 615,360
<OTHER-INCOME> 0
<EXPENSES-NET> (79,438)
<NET-INVESTMENT-INCOME> 535,922
<REALIZED-GAINS-CURRENT> (3,634)
<APPREC-INCREASE-CURRENT> (110,685)
<NET-CHANGE-FROM-OPS> 421,603
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,401)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,158
<NUMBER-OF-SHARES-REDEEMED> (15)
<SHARES-REINVESTED> 139
<NET-CHANGE-IN-ASSETS> 17,444,164
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,589
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,408
<AVERAGE-NET-ASSETS> 12,527,516
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> (.05)
<PER-SHARE-DIVIDEND> (.32)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.89
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's voluntary waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.34
and a ratio of expenses to average net assets of 1.94%. The amount waived was
$259.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 17,205,288
<INVESTMENTS-AT-VALUE> 17,094,603
<RECEIVABLES> 309,724
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 57,234
<TOTAL-ASSETS> 17,461,561
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,397
<TOTAL-LIABILITIES> 17,397
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,458,547
<SHARES-COMMON-STOCK> 8,441
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 99,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,634)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (110,685)
<NET-ASSETS> 17,444,164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 615,360
<OTHER-INCOME> 0
<EXPENSES-NET> (79,438)
<NET-INVESTMENT-INCOME> 535,922
<REALIZED-GAINS-CURRENT> (3,634)
<APPREC-INCREASE-CURRENT> (110,685)
<NET-CHANGE-FROM-OPS> 421,603
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (522)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,387
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 54
<NET-CHANGE-IN-ASSETS> 17,444,164
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,589
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,408
<AVERAGE-NET-ASSETS> 12,527,516
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> (.06)
<PER-SHARE-DIVIDEND> (.32)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.88
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's voluntary waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.35
and a ratio of expenses to average net assets of 1.79%. The amount waived was
$60.
</FN>
</TABLE>
Report of Independent Auditors on Internal Control Structure
Board of Directors and Shareholders
Princor Limited Term Bond Fund, Inc.
In planning and performing our audit of the financial statements of Princor
Limited Term Bond Fund, Inc. for the year ended October 31, 1996, we considered
its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of Princor Limited Term Bond Fund, Inc. is responsible for
establishing and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
October 31, 1996.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
ERNST & YOUNG
Des Moines, Iowa
November 27, 1996
