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000 C000000 0000012603
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001 A000000 PRINCOR CAPITAL ACCUMULATION FUND, INC.
001 B000000 811-01874
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
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015 C010001 NEW YORK
015 C020001 NY
015 C030001 10286
015 E010001 X
018 000000 Y
019 A000000 Y
019 B000000 27
019 C000000 PRINCORGRP
020 A000001 LIPPER ANALYTICAL
020 B000001 13-2792478
020 C000001 16
020 A000002 INSTINET CO.
020 B000002 13-2596491
020 C000002 12
020 A000003 CANTOR, FITZGERALD & CO. INC.
020 B000003 95-1786286
020 C000003 9
020 A000004 BAIRD, ROBERT W. & CO.
020 B000004 39-6037917
020 C000004 8
020 A000005 EXECUTION SERVICES INCORPORATED
020 B000005 13-2862329
020 C000005 8
020 A000006 PRINCIPAL FINANCIAL SECURITIES, INC.
020 B000006 75-0839696
020 C000006 8
<PAGE> PAGE 2
020 A000007 KAHN BROTHERS
020 B000007 13-2948997
020 C000007 7
020 A000008 GOLDMAN SACHS CO.
020 B000008 13-510880
020 C000008 7
020 A000009 SALOMON BROTHERS
020 B000009 13-3082694
020 C000009 6
020 A000010 CHARLES SCHWAB & CO.
020 B000010 94-1727783
020 C000010 6
021 000000 175
022 A000001 GENERAL ELECTRIC CAPITAL CORP.
022 B000001 13-1500700
022 C000001 179213
022 D000001 0
022 A000002 FORD MOTOR CREDIT CO.
022 B000002 38-1612444
022 C000002 71711
022 D000002 0
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022 B000003 74-1494554
022 C000003 62123
022 D000003 0
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022 B000004 11-1988350
022 C000004 36845
022 D000004 0
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022 B000005 42-1192999
022 C000005 27250
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022 B000006 36-1239445
022 C000006 20822
022 D000006 0
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022 B000007 13-1912900
022 C000007 8316
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022 C000008 7552
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022 B000009 22-2231168
022 C000009 6148
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022 A000010 COMMERCIAL CREDIT CO.
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<PAGE> PAGE 3
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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> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 323,069,764
<INVESTMENTS-AT-VALUE> 396,135,080
<RECEIVABLES> 435,773
<ASSETS-OTHER> 36,429
<OTHER-ITEMS-ASSETS> 5,412
<TOTAL-ASSETS> 396,612,694
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 647,960
<TOTAL-LIABILITIES> 647,960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 293,076,853
<SHARES-COMMON-STOCK> 15,341,527
<SHARES-COMMON-PRIOR> 14,337,061
<ACCUMULATED-NII-CURRENT> 1,723,449
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,099,116
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 73,065,316
<NET-ASSETS> 395,964,734
<DIVIDEND-INCOME> 4,181,169
<INTEREST-INCOME> 210,690
<OTHER-INCOME> 0
<EXPENSES-NET> (1,337,660)
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<NET-CHANGE-FROM-OPS> 51,910,573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,591,175)
<DISTRIBUTIONS-OF-GAINS> (20,944,281)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,016,483
<NUMBER-OF-SHARES-REDEEMED> (764,392)
<SHARES-REINVESTED> 752,376
<NET-CHANGE-IN-ASSETS> 54,060,267
<ACCUMULATED-NII-PRIOR> 2,279,052
<ACCUMULATED-GAINS-PRIOR> 21,014,720
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 798,712
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,337,660
<AVERAGE-NET-ASSETS> 373,090,562
<PER-SHARE-NAV-BEGIN> 23.69
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> 3.27
<PER-SHARE-DIVIDEND> (.24)
<PER-SHARE-DISTRIBUTIONS> (1.46)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.45
<EXPENSE-RATIO> .71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 323,069,764
<INVESTMENTS-AT-VALUE> 396,135,080
<RECEIVABLES> 435,773
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 647,960
<TOTAL-LIABILITIES> 647,960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 293,076,853
<SHARES-COMMON-STOCK> 217,625
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 395,964,734
<DIVIDEND-INCOME> 4,181,169
<INTEREST-INCOME> 210,690
<OTHER-INCOME> 0
<EXPENSES-NET> (1,337,660)
<NET-INVESTMENT-INCOME> 3,054,199
<REALIZED-GAINS-CURRENT> 28,188,465
<APPREC-INCREASE-CURRENT> 20,667,909
<NET-CHANGE-FROM-OPS> 51,910,573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18,627)
<DISTRIBUTIONS-OF-GAINS> (159,788)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 122,198
<NUMBER-OF-SHARES-REDEEMED> (7,366)
<SHARES-REINVESTED> 7,539
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<AVERAGE-NET-ASSETS> 373,090,562
<PER-SHARE-NAV-BEGIN> 23.61
<PER-SHARE-NII> .09
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<PER-SHARE-DIVIDEND> (.14)
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</TABLE>
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<FISCAL-YEAR-END> OCT-31-1996
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<INVESTMENTS-AT-COST> 323,069,764
<INVESTMENTS-AT-VALUE> 396,135,080
<RECEIVABLES> 435,773
<ASSETS-OTHER> 36,429
<OTHER-ITEMS-ASSETS> 5,412
<TOTAL-ASSETS> 396,612,694
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 647,960
<TOTAL-LIABILITIES> 647,960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 293,076,853
<SHARES-COMMON-STOCK> 41
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,723,449
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,099,116
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 73,065,316
<NET-ASSETS> 395,964,734
<DIVIDEND-INCOME> 4,181,169
<INTEREST-INCOME> 210,690
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<PER-SHARE-NAV-BEGIN> 24.73
<PER-SHARE-NII> (.09)
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</TABLE>
SPECIAL MEETING OF SHAREHOLDER
OF
PRINCOR CAPITAL ACCUMULATION FUND, INC.
801 Grand Avenue, Des Moines, Iowa February 28, 1996 9:00 a.m.
A special meeting of the shareholder of Princor Capital Accumulation Fund,
Inc. was held at 801 Grand Avenue, Des Moines, Iowa at 9:00 a.m. on February 28,
1996.
The meeting was called to order by Mr. S. L. Jones, who presided as
chairman of the meeting. Mr. E. H. Gillum acted as secretary of the meeting.
Also present was Michael Roughton.
The Secretary reported that the only shareholder of Class R Common Stock of
Princor Capital Accumulation Fund was Princor Management Corporation, that all
such shares were represented by Michael Roughton, counsel for Princor Management
Corporation, and that a quorum was present.
The Chairman then stated it was necessary to consider ratification and
approval of the Distribution and Shareholder Service Plan and Agreement for
Class R shares in the form adopted by the Corporation's Board of Directors
pursuant to Rule 12b-1 of the Investment Company Act of 1940. A copy of such
agreement was presented at the meeting. Thereupon, the following resolution was
duly adopted by the vote of all the outstanding Class R shares of Common Stock
of the Corporation:
"BE IT RESOLVED, That the Distribution and Shareholder Servicing Plan and
Agreement for Class R Shares, which was adopted by the Board of Directors,
including a majority of the non- interested directors thereof, be, and it
hereby is, ratified and approved."
There being no further business, the meeting was adjourned.
E. H. GILLUM
_______________________________
Assistant Secretary
Class R shares are sold without a front-end sales charge or a contingent
deferred sales charge. Class R shares of each Fund are subject to a 12b-1 fee at
annual rate of .75% of the Fund's average net assets attributable to Class R
shares. Class R shares automatically convert into Class A shares, based on
relative net asset values (which means without a sales charge), approximately
four years after purchase. The tables on the next page depict the fees and
expenses applicable to the purchase and ownership of shares of each of the
Funds. Table A depicts Class R shares and is based on amounts incurred by the
Funds' Class A shares during the fiscal year ended October 31, 1995, and
assumptions regarding the level of expenses anticipated for Class R shares
during the current fiscal year. Table B depicts Class A shares and is based on
amounts incurred by the Funds during the fiscal year ended October 31, 1995,
except as otherwise indicated. While Table B depicts the maximum sales charge
applicable to shares sold to the public, no sales charge applies when Class R
shares convert to Class A shares. The table included as an Example indicates the
cumulative expenses an investor would pay on an initial $1,000 investment that
earns a 5% annual return, regardless of whether shares are redeemed. The
examples are based on each Fund's Annual Operating Expenses described in Tables
A and B. Please remember that the Examples should not be considered a
representation of future expenses and that actual expenses may be greater or
less than those shown.
<TABLE>
<CAPTION>
CLASS R SHARES
- ------------------------------------------------------------------------------------------------------------------------
TABLE A Shareholder Transaction Expenses*
-----------------------------------------------------------------------------------------
Contingent Deferred Sales Charge
Maximum Sales Load (as a percentage of the lower of
Imposed on Purchases the original purchase price
Fund (as a percentage of offering price) or redemption proceeds)
- ---- ----------------------------------- --------------------------------
All Funds None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
----------------------------------------------------------------------
Management 12b-1 Other Total Operating
Fund Fee Fee Expenses**** Expenses
--------------------------------- ---------- ----- ------------ ---------------
<S> <C> <C> <C> <C>
Balanced Fund .60% .75% .52% 1.87%
Blue Chip Fund .50 .75 .63 1.88
Bond Fund .50 .75 .20 1.45**
Capital Accumulation Fund .45 .75 .19 1.39
Cash Management Fund .38 .75 .34 1.47**
Emerging Growth Fund .64 .75 .58 1.97
Government Securities Income Fund .46 .75 .22 1.43
Growth Fund .48 .75 .46 1.69
High Yield Fund .60 .75 .60 1.95
Limited Term Bond Fund .50 .75 .15 1.40***
Utilities Fund .60 .75 .44 1.79
World Fund .74 .75 .64 2.13
<FN>
* A wire charge of up to $6.00 will be deducted for all wire transfers.
** After waiver.
*** Estimated expense after waiver.
****Estimated expenses
</FN>
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES
- ------------------------------------------------------------------------------------------------------------------------
TABLE B Shareholder Transaction Expenses*
-------------------------------------------------------------------------------
Maximum Sales Load Contingent
Imposed on Purchases Deferred
Fund (as a percentage of offering price) Sales Charge
- ---- ----------------------------------- ------------
All funds Except the Limited Term Bond Fund
and Cash Management Fund 4.75% None**
Limited Term Bond Fund 1.50% None**
Cash Management Fund None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
-----------------------------------------------------------------------
Management 12b-1 Other Total Operating
Fund Fee Fee Expenses Expenses
---- ---------- ----- -------- ---------------
<S> <C> <C> <C> <C>
Balanced Fund .60% .25% .52% 1.37%
Blue Chip Fund .50 .25 .63 1.38
Bond Fund .50 .24 .20 .94***
Capital Accumulation Fund .45 .11 .19 .75
Cash Management Fund .38 None .34 .72***
Emerging Growth Fund .64 .25 .58 1.47
Government Securities Income Fund .46 .19 .22 .87
Growth Fund .48 .22 .46 1.16
High Yield Fund .60 .25 .60 1.45
Limited Term Bond Fund .50 .15 .25 .90****
Utilities Fund .60 .25 .45 1.30
World Fund .74 .25 .64 1.63
<FN>
* A wire charge of up to $6.00 will be deducted for all wire transfers.
** Purchases of $1 million or more are not subject to an initial sales charge but may be subject to a contingent deferred
sales charge of .75% (.25% for Limited Term Bond Fund) on redemptions that occur within 18 months of purchase. See
"Offering Price of Fund's Shares."
*** After waiver.
****Estimated expenses after waiver.
</FN>
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years (a) 10 Years (a)
----------------- ----------------- ----------------- -----------------
Class A Class R Class A Class R Class A Class R Class A Class R
Fund Shares Shares Shares Shares Shares Shares Shares Shares
----------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund $61 $19 $89 $59 $119 $95 $204 $183
Blue Chip Fund $61 $19 $89 $59 $119 $96 $205 $184
Bond Fund $57 $15 $76 $46 $97 $73 $157 $135
Capital Accumulation Fund $55 $14 $70 $44 $87 $69 $136 $119
Cash Management Fund $7 $15 $23 $46 $40 $72 $89 $120
Emerging Growth Fund $62 $20 $92 $62 $124 $101 $215 $194
Government Securities Income Fund $56 $15 $74 $45 $93 $72 $150 $129
Growth Fund $59 $17 $83 $53 $108 $86 $182 $161
High Yield Fund $62 $20 $91 $61 $123 $100 $213 $192
Limited Term Bond Fund $23 $14 $40 $44 -- -- -- --
Utilities Fund $60 $16 $87 $49 $115 $81 $197 $166
World Fund $63 $22 $96 $67 $132 $109 $232 $211
<FN>
(a) The amount in this column reflects the conversion of Class R shares to Class A shares four years after the initial
purchase.
</FN>
</TABLE>
The purpose of the preceding tables is to help investors understand the
various expenses that they will bear either directly or indirectly. Although
Annual Fund Operating Expenses shown in the Expense Table for Class A shares are
generally based upon each Fund's actual expenses, the 12b-1 Plan adopted by each
of the Funds (except the Money Market Funds which have no such Plan for Class A
shares) permits the Underwriter to retain an annual fee of up to .25% of each
Fund's average net assets. A portion of this annual fee is considered an
asset-based sales charge. Thus, it is theoretically possible for a long-term
shareholder of Class A shares, whether acquired directly or by conversion of
Class R shares, to pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers. See "Distribution and Shareholder Servicing Plans and Fees", "How to
Purchase Shares" and "How the Funds are Managed."
The Manager waived a portion of its fee for the Bond and Cash Management
Funds throughout the fiscal year ended October 31, 1995. Without these waivers,
total operating expenses for Class A shares actually incurred by the Funds for
the fiscal year ended October 31, 1995 would have amounted to 1.02% and .78% of
each Fund's average net assets, respectively. The Manager intends to continue
its voluntary waiver and, if necessary, pay expenses normally payable by both of
these Funds through February 28, 1997 in an amount that will maintain a total
level of operating expenses which as a percent of average net assets
attributable to a class on an annualized basis during the period will not
exceed, for the Class A shares, .95% for the Bond Fund and .75% for the Cash
Management Fund, and for the Class R shares, 1.45% for the Bond Fund and 1.50%
for the Cash Management Fund. The Manager voluntarily waived a portion of its
fee for the Utilities Fund through February 29, 1996 in an amount that
maintained a total level of operating expenses which as a percent of average net
assets attributable to a class on an annualized basis during the period did not
exceed 1.10% for the Class A shares. See "How the Funds are Managed."
The Manager intends to voluntarily waive its fee and, if necessary, pay
expenses normally payable by the Limited Term Bond Fund through February 28,
1997 in such amounts that will maintain a total level of operating expenses
which as a percent of net assets attributable to a class on an annualized basis
will not exceed .90% for Class A shares and 1.40% for Class R shares. Without
this waiver, estimated annual total operating expenses incurred by each class of
shares would amount to approximately 1.10% for Class A shares and 1.60% for
Class R shares.
ARTICLES SUPPLEMENTARY
OF
PRINCOR CAPITAL ACCUMULATION FUND, INC.
Princor Capital Accumulation Fund, Inc., and Maryland Corporation having its
principal office on this state in Baltimore City, Maryland (hereinafter called
the Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
SECOND: The Board of Directors of the Corporation have classified
authorized but unissued stock of the Corporation under authority contained in
the charter of the Corporation.
THIRD: A description of the stock as set by the Board of Directors and as
provided in Article V of the corporate charter as supplemented by these Articles
Supplementary is as follows:
ARTICLE V
Capital Stock
Section 1. Authorized Shares: The total number of shares of stock which
the Corporation shall have authority to issue is one hundred million
(100,000,000) shares, of the par value of one cent ($.01) each and of the
aggregate par value of one million dollars ($1,000,000). The shares may be
issued by the Board of Directors in such separate distinct classes as the Board
of Directors shall from time to time create and establish. The Board of
Directors shall have full power and authority, in its sole discretion, to
establish and designate classes, and to classify or reclassify any unissued
shares in separate classes having such preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption as shall be fixed and determined from time to
time by the Board of Directors. Expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of a
particular class may be charged to and borne solely by such class, and the
bearing of expenses solely by a class may be appropriately reflected (in a
manner determined by the Board of Directors) and cause differences in the net
asset value attributable to, and the dividend, redemption and liquidation rights
of, the shares of each class. Subject to the authority of the Board of Directors
to increase and decrease the number of, and to reclassify the, shares of any
class, there are hereby established two classes of common stock, each comprising
the number of shares and having the designation indicated:
Class Number of Shares
Class A 25,000,000
Class B 25,000,000
Class R 25,000,000
In addition, the Board of Directors is hereby expressly granted authority to
change the designation of any class, to increase or decrease the number of
shares of any class, provided that the number of shares of any class shall not
be decreased by the Board of Directors below the number of shares thereof then
outstanding, and to reclassify any unissued shares into one or more classes that
may be established and designated from time to time. Notwithstanding the
designations herein of classes, the Corporation may refer, in prospectuses and
other documents furnished to shareholders, filed with the Securities and
Exchange Commission or used for other purposes, to a class of shares as a
"series".
(a) The Corporation may issue shares of stock in fractional denominations
to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately, to the
respective fractions represented thereby, all the rights of whole
shares, including without limitation, the right to vote, the right to
receive dividends and distributions and the right to participate upon
liquidation of the Corporation, but excluding the right to receive a
stock certificate representing fractional shares.
(b) The holder of each share of stock of the Corporation shall be entitled
to one vote for each full share, and the fractional vote for each
fractional share of stock, irrespective of the class, then standing in
the holder's name on the books of the Corporation. On any matter
submitted to a vote of stockholders, all shares of the Corporation
then issued and outstanding and entitled to vote shall be voted in the
aggregate and not by class except that (1) when otherwise expressly
required by the Maryland General Corporation Law or the Investment
Company Act of 1940, as amended, shares shall be voted by individual
class, and (2) if the Board of Directors, in its discretion,
determines that a matter affects the interests of only one or more
particular classes then only the holders of shares of such affected
class or classes shall be entitled to vote thereon.
(c) Unless otherwise provided in the resolution of the Board of Directors
providing for the establishment and designation of any new class or
classes, each class of stock of the Corporation shall have the
following powers, preferences and rights, and qualifications,
restrictions and limitations thereof:
(1) Assets belonging to a class. All consideration received by the
Corporation for the issue or sale of shares of a particular
class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that class for all
purposes, subject only to the rights of creditors, and shall be
so recorded upon the books and accounts of the corporation. Such
consideration, assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds, in whatever form the same
may be, together with any general items allocated to that class
as provided in the following sentence, are hereinafter referred
to as "assets belonging to" that class. In the event that there
are any assets, income, earning, profits, proceeds thereof, funds
or payments which are not readily identifiable as belonging to
any particular class (collectively "general items"), such general
items shall be allocated by or under the supervision of the Board
of Directors to and among any one or more of the classes
established and designated from time to time in such manner and
on such basis as the Board of Directors, in its sole discretion,
deems fair and equitable, and any general items so allocated to a
particular class shall belong to that class. Each such allocation
by the Board of Directors shall be conclusive and binding for all
purposes. Notwithstanding the foregoing, the assets belonging to
the Class A Shares and to the Class B Shares need not be
segregated or recorded separately on the books and records of the
Corporation, and reference herein to each of those classes shall
refer to the proportional interest of that class in the aggregate
assets belonging to both classes.
(2) Liabilities belonging to a class. The assets belonging to each
particular class shall be charged with the liabilities of the
Corporation in respect of that class and all expenses, costs,
charges, and reserves attributable to that class, and any general
liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as belonging to
any particular class shall be allocated and charged by or under
the supervision of the Board of Directors to and among any one or
more of the classes established and designated from time to time
in such manner and on such basis as the Board of Directors, in
its sole discretion, deems fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so charged to
a class are herein referred to a "liabilities belonging to" that
class. Each allocation of liabilities, expenses, costs, charges
and reserves by the Board of Directors shall be conclusive and
binding for all purposes.
(3) Dividends. The Board of Directors may from time to time declare
and pay dividends or distributions, in stock, property or cash,
on any or all classes of stock, the amount of such dividends and
property distributions and the payment of them being wholly in
the discretion of the Board of Directors. Dividends may be
declared daily or otherwise pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Board
of Directors may determine, after providing for actual and
accrued liabilities belonging to that class. All dividends or
distributions on shares of a particular class shall be paid only
out of surplus or other lawfully available assets determined by
the Board of Directors as belonging to such class. The Board of
Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distribution,
amounts sufficient, in the opinion of the Board of Directors, to
enable the Corporation, or where applicable each class of shares,
to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended, or any successor or comparable
statute thereto, and regulations, promulgated thereunder, and to
avoid liability for the Corporation, or each class of shares, for
federal income and excise taxes in respect of that or any other
year.
(4) Liquidation. In the event of the liquidation of the Corporation
or of the assets attributable to a particular class, the
shareholders of each class that has been established and
designated and is being liquidated shall be entitled to receive,
as a class, when and as declared by the Board of Directors, the
excess of the assets belonging to that class over the liabilities
belonging to that class. The holders of shares of any class shall
not be entitled thereby to any distribution upon liquidation of
any other class. The assets so distributable to the shareholder
of any particular class shall be distributed among such
shareholders according to their respective rights taking into
account the proper allocation of expenses being borne by that
class. The liquidation of assets attributable to any particular
class in which there are shares then outstanding may be
authorized by vote of a majority of the Board of Directors then
in office, subject to the approval of a majority of the
outstanding voting securities of that class, as defined in the
Investment Company Act of 1940, as amended. In the event that
there are any general assets not belonging to any particular
class of stock and available for distribution, such distribution
shall be made to the holder of stock of various classes in such
proportion as the Board of Directors shall be conclusive and
binding for all purposes.
(5) Redemption. All shares of stock of the Corporation shall have the
redemption rights provided for in Article V, Section 5.
(d) The Corporation's shares of stock are issued and sole, and all persons
who shall acquire stock of the Corporation shall acquire the same,
subject to the condition and understanding that the provisions of the
Corporation's Articles of Incorporation, as from time to time amended,
shall be binding upon them. Section 2. Quorum requirements and voting
rights: Except as otherwise expressly provided by the Maryland General
Corporation Law, the presence in person or by proxy of the holders of
one-third of the shares of capital stock of quorum at any meeting of
the stockholders, except that where the holders of any class are
required or permitted to vote as a class, one-third of the aggregate
number of shares of that class outstanding and entitled to vote shall
constitute a quorum.
Notwithstanding any provision of Maryland General Corporation Law requiring
a greater proportion than a majority of the votes of all classes or of any
classes of the Corporation's stock entitled to be cast in order to take or
authorize any action, any such action may be taken or authorized upon the
concurrence of a majority of the aggregate number of votes entitled to be cast
thereon subject to the applicable laws and regulations as from time to time in
effect or rules or orders of the Securities and Exchange Commission or any
successor thereto. All shares of stock of this Corporation shall have the voting
rights provided for in Article V, Section 1, paragraph (b).
Section 3. No preemptive rights: No holder of shares of capital stock of
the Corporation shall, as such holder, have any right to purchase or subscribe
for any shares of capital stock of the Corporation which the Corporation may
issue or sell (whether consisting of shares of capital stock authorized by these
Articles of Incorporation, or shares of capital stock of the Corporation
acquired by it after the issue thereof, or other shares) other than any right
which the Board of Directors of the Corporation, in its discretion, may
determine.
Section 4. Determination of net asset value: The net asset value of each
shares of the Corporation, or of each class, shall be the quotient obtained by
dividing the value of the net assets of the Corporation, or if applicable of the
class (being the value of the assets of the Corporation or of the particular
class less its actual and accrued liabilities exclusive of capital stock and
surplus), by the total number of outstanding shares of the Corporation or the
class, as applicable. Such determination may be made on a class-by-class basis
and shall include any expenses allocated to a specific class thereof. The Board
of Directors may adopt procedures for determination of net asset value
consistent with the requirements of applicable statutes and regulations and, so
far as accounting matters are concerned, with generally accepted accounting
principles. The procedures may include, without limitation, procedures for
valuation of the Corporation's portfolio securities and other assets, for
accrual of expenses or creation of reserves and for the determination of the
number of shares issued and outstanding at any given time.
Section 5. Redemption and repurchase of shares of capital stock: Any
shareholder may redeem shares of the Corporation for the net asset value of each
class or series thereof by presentation of an appropriate request, together with
the certificates, if any, for such shares, duly endorsed, at the office or
agency designated by the Corporation. Redemptions as aforesaid, or purchases by
the Corporation of its own stock, shall be made in the manner and subject to the
conditions contained in the bylaws or approved by the Board of Directors.
Section 6. Purchase of shares: The Corporation shall be entitled to
purchase shares of any class of its capital stock, to the extent that the
Corporation may lawfully effect such purchase under Maryland General Corporation
Law, upon such terms and conditions and for such consideration as the Board of
Directors shall deem advisable, by agreement with the stockholder at a price not
exceeding the net asset value per share computed in accordance with Section 4 of
this Article.
Section 7. Redemption of minimum amounts:
(a) If after giving effect to a request for redemption by a stockholder
the aggregate net asset value of his remaining shares of any class
will be less than the minimum amount then in effect, the Corporation
shall be entitled to require the redemption of the remaining shares of
such class owned by such stockholder, upon notice given in accordance
with paragraph (c) of this section, to the extent that the Corporation
may lawfully effect such redemptions under Maryland General
Corporation Law.
(b) The term "Minimum Amount" when used herein shall mean Three Hundred
Dollars ($300) unless otherwise fixed by the Board of Directors from
time to time, provided that the minimum amount may not in any event
exceed Five Thousand Dollars ($5,000).
(c) If any redemption under paragraph (a) of this section is upon notice,
the notice shall be in writing personally delivered or deposited in
the mail, at least thirty days prior to such redemption. If mailed,
the notice shall be addressed to the stockholder at his post office
address as shown on the books of the Corporation, and sent by
certified or registered mail, postage prepaid. The price for shares
redeemed by the Corporation pursuant to paragraph (a) of this section
shall be paid in cash in an amount equal to the net asset value of
such shares, computed in accordance with Section 4 of this article.
Section 8. Mode of payment: Payment by the Corporation for shares of any
class of the capital stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven business days of such surrender
out of the funds legally available, therefor, provided that the Corporation may
suspend the right of the holders of capital stock of the Corporation to redeem
shares of capital stock and may postpone the right of such holders to receive
payment for any shares when permitted or required to do so by law. Payment of
the redemption or purchase price may be made in cash or, at the option of the
Corporation, wholly or partly in such portfolio securities of the Corporation as
the Corporation may select.
Section 9. Rights of holders of shares purchased or redeemed: The right
of any holder of any class of capital stock of the Corporation purchased or
redeemed by the Corporation as provided in this article to receive dividends
thereon and all other rights of such holder with respect to such shares shall
terminate on all other rights of such holder with respect to such shares shall
terminate at the time as of which the purchase or redemption price of such
shares id determined, except the right of such holder to receive (i) the
purchase or redemption price of such shares from the Corporation or its
designated agent and (ii) any dividend or distribution or voting rights to which
such holder has previously become entitled as the record holder of such shares
on the record date for the determination of the stockholders entitled to receive
such dividend or distribution or to vote at the meeting of stockholders.
Section 10. Status of shares purchased or redeemed: In the absence of any
specification as to the purchase for which such shares of any class of capital
stock of the Corporation are redeemed or purchased by it, all shares so redeemed
or purchased shall be deemed to re retired in the sense contemplated by the laws
of the State of Maryland and may be reissued. The number of authorized shares of
capital stock of the Corporation shall not be reduced by the number of any
shares redeemed or purchased by it.
Section 11. Additional limitations and powers: The following provisions are
inserted for the purpose of defining limiting and regulating the powers of the
Corporation and of the Board of Directors and stockholders:
(a) Any determination made in good faith and, so far as accounting matters
are involved, in accordance with generally accepted accounting
principles by or pursuant to the direction of the Board of Directors,
as to the amount of the assets, debts, obligations or liabilities of
the Corporation, as to the amount of any reserves or charges set up
and the propriety thereof, as to the time of or purpose for creating
such reserves or charges, as to the use, alteration or cancellation of
any reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been created
shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the establishment or
designation of procedures or methods to be employed for valuing any
investment or other assets as to the allocation of any asset of the
Corporation to a particular class or classes of the Corporation's
stock, as to the funds available for the declaration of dividends and
as to the declaration of dividends, as to the charging of any
liability of the Corporation to a particular class or classes of the
Corporation's stock, as to the number of shares of any class or
classes of the Corporation's outstanding stock, as to the estimated
expense to the Corporation in connection with purchases or redemptions
of its shares, as to the ability to liquidate investments in orderly
fashion, or as to any other matters relating to the issue, sale,
purchase or redemption or other acquisition or disposition of
investments or shares of the Corporation, or in the determination of
the net asset value per share of shares of any class of the
Corporation's stock shall be conclusive and binding for all purposes.
(b) Except to the extend prohibited by the Investment Company Act of 1940,
as amended, or rules, regulations or orders thereunder promulgated by
the Securities and Exchange Commission or any successor thereto or by
the bylaws of the Corporation, a director, officer or employee of the
Corporation shall not be disqualified by his position from dealing or
contracting with the Corporation, nor shall any transaction or
contract of the Corporation be void or voidable by reason of the fact
that any director, officer or employee or any firm of which any
director, officer or employee is a member, of any corporation of which
any director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or contract;
provided that in case a director, or a firm or corporation of which a
director is a member, stockholder, officer or director is so
interested, such fact shall be disclosed to or shall have been known
by the Board of Directors or a majority thereof. Nor shall any
director or officer of the Corporation by liable to the Corporation or
to any stockholder or creditor thereof or to any person for any loss
incurred by it or him or for any profit realized by such director or
officer under or by reason of such contract or transaction; provided
that nothing herein shall protect any director or officer of the
Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office; and provided
always that such contract or transaction shall have been on terms that
were not unfair to the Corporation at the time at which it was entered
into. Any director of the Corporation who is so interested, or who is
a member, stockholder, officer or director of such firm or
corporation, may be counted in determining the existence of a quorum
at any meeting of the Board of Directors of the Corporation which
shall authorize any such transaction or contract, with like force and
effect as if he were not such director, or member, stockholder,
officer or director of such firm or corporation.
(c) Specifically and without limitation of the foregoing paragraph (b) but
subject to the exception therein prescribed, the Corporation may enter
into management or advisory, underwriting, distribution and
administration contracts, custodian contracts and such other contracts
as may be appropriate.
I, Arthur S. Filean, Vice President and Secretary, hereby acknowledge on
behalf of Princor Capital Accumulation Fund, Inc., that the foregoing Articles
Supplementary are the corporate act of said Corporation under the penalties of
perjury.
ARTHUR S. FILEAN
By _______________________________________________
Arthur S. Filean, Vice President and Secretary
Princor Capital Accumulation Fund, Inc.
ATTEST:
ERNEST H. GILLUM
By ________________________________________
Ernest H. Gillum
Assistant Secretary
