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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
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022 A000002 GRUNTAL & CO.
022 B000002 13-3179589
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022 A000003 MARK TWAIN BANK
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<PAGE> PAGE 2
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022 B000007 36-0947896
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022 A000008 ADVEST INC.
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<PAGE> PAGE 3
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<PAGE> PAGE 6
SIGNATURE ARTHUR S. FILEAN
TITLE V.P. & SECRETARY
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-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 21,443,423
<INVESTMENTS-AT-VALUE> 21,432,010
<RECEIVABLES> 398,863
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,999
<TOTAL-ASSETS> 21,832,872
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,144
<TOTAL-LIABILITIES> 35,144
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,817,864
<SHARES-COMMON-STOCK> 2,082,741
<SHARES-COMMON-PRIOR> 1,743,544
<ACCUMULATED-NII-CURRENT> 25,655
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (34,378)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,413)
<NET-ASSETS> 21,797,728
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,378,412
<OTHER-INCOME> 1,378,412
<EXPENSES-NET> (178,366)
<NET-INVESTMENT-INCOME> 1,200,046
<REALIZED-GAINS-CURRENT> (30,744)
<APPREC-INCREASE-CURRENT> 99,272
<NET-CHANGE-FROM-OPS> 1,268,574
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,227,443)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 666,459
<NUMBER-OF-SHARES-REDEEMED> (445,740)
<SHARES-REINVESTED> 118,478
<NET-CHANGE-IN-ASSETS> 4,353,564
<ACCUMULATED-NII-PRIOR> 99,936
<ACCUMULATED-GAINS-PRIOR> (3,634)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 97,039
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 237,996
<AVERAGE-NET-ASSETS> 19,322,132
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> (.65)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.88
<EXPENSE-RATIO> .90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>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 $.59
and a ratio of expenses to average net assets of 1.15%. The amount waived was
$46,271.
</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-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 21,443,423
<INVESTMENTS-AT-VALUE> 21,432,010
<RECEIVABLES> 398,863
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,999
<TOTAL-ASSETS> 21,832,872
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,144
<TOTAL-LIABILITIES> 35,144
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,817,864
<SHARES-COMMON-STOCK> 63,117
<SHARES-COMMON-PRIOR> 11,282
<ACCUMULATED-NII-CURRENT> 25,655
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (34,378)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,413)
<NET-ASSETS> 21,797,728
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,378,412
<OTHER-INCOME> 1,378,412
<EXPENSES-NET> (178,366)
<NET-INVESTMENT-INCOME> 1,200,046
<REALIZED-GAINS-CURRENT> (30,744)
<APPREC-INCREASE-CURRENT> 99,272
<NET-CHANGE-FROM-OPS> 1,268,574
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14,695)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 58,936
<NUMBER-OF-SHARES-REDEEMED> (7,993)
<SHARES-REINVESTED> 892
<NET-CHANGE-IN-ASSETS> 4,353,564
<ACCUMULATED-NII-PRIOR> 99,936
<ACCUMULATED-GAINS-PRIOR> (3,634)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 97,039
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 237,996
<AVERAGE-NET-ASSETS> 19,322,132
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> .04
<PER-SHARE-DIVIDEND> (.59)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.90
<EXPENSE-RATIO> 1.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>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 $.46
and a ratio of expenses to average net assets of 3.82%. The amount waived was
$6,528.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 21,443,423
<INVESTMENTS-AT-VALUE> 21,432,010
<RECEIVABLES> 398,863
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,999
<TOTAL-ASSETS> 21,832,872
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,144
<TOTAL-LIABILITIES> 35,144
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,817,864
<SHARES-COMMON-STOCK> 61,475
<SHARES-COMMON-PRIOR> 8,441
<ACCUMULATED-NII-CURRENT> 25,655
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (34,378)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,413)
<NET-ASSETS> 21,797,728
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,378,412
<OTHER-INCOME> 1,378,412
<EXPENSES-NET> (178,366)
<NET-INVESTMENT-INCOME> 1,200,046
<REALIZED-GAINS-CURRENT> (30,744)
<APPREC-INCREASE-CURRENT> 99,272
<NET-CHANGE-FROM-OPS> 1,268,574
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (27,342)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 86,576
<NUMBER-OF-SHARES-REDEEMED> (36,339)
<SHARES-REINVESTED> 2,797
<NET-CHANGE-IN-ASSETS> 4,353,564
<ACCUMULATED-NII-PRIOR> 99,936
<ACCUMULATED-GAINS-PRIOR> (3,634)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 97,039
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 237,996
<AVERAGE-NET-ASSETS> 19,322,132
<PER-SHARE-NAV-BEGIN> 9.88
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> (.60)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> 1.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>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 $.43
and a ratio of expenses to average net assets of 2.95%. The amount waived was
$6,831.
</FN>
</TABLE>
Report of Independent Auditors on Internal Control
The 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, 1997, we considered
its internal control, including control activities 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 internal control.
The management of Princor Limited Term Bond Fund, Inc. is responsible for
establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs. Generally, controls that are relevant to an
audit pertain to the entity's objective of preparing financial statements for
external purposes that are fairly presented in conformity with generally
accepted accounting principles. These controls include the safeguarding of
assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
control 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 internal control would not necessarily disclose all matters
in internal control 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 specific
internal control components 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 internal control, including
control for activities safeguarding securities, that we consider to be material
weaknesses as defined above as of October 31, 1997.
This report is intended solely for the information and use of management and the
Board of Directors of Princor Limited Term Bond Fund, Inc. and the Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
November 26, 1997
SPECIAL MEETING OF SHAREHOLDERS PRINCOR LIMITED TERM BOND FUND, INC.
HELD SEPTEMBER 16, 1997
1.Election of the Board of Directors.
For Withheld
Davis 1,589,936 22,272
Ehrle 1,590,105 22,103
Ferguson 1,590,105 22,103
Gilbert 1,590,105 22,103
Griswell 1,590,105 22,103
Jones 1,590,105 22,103
Keller 1,590,105 22,103
Lukavsky 1,589,838 22,370
Peebler 1,590,105 22,103
2.Ratification of selection of Ernst & Young LLP as independent public auditors.
In Favor Opposed Abstain
1,594,318 248 17,642
3.Approval of name change to Principal Limited Term Bond Fund, Inc.
In Favor Opposed Abstain
1,575,696 17,346 19,166
4.Approval of modification of management agreement.
In Favor Opposed Abstain
1,576,541 16,234 19,433
