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SIGNATURE A.S. FILEAN
TITLE V.P./SECRETARY
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Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Princor Capital Accumulation Fund, Inc.
In planning and performing our audit of the financial statements of Princor
Capital Accumulation 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 Capital Accumulation 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 Capital Accumulation Fund, Inc. and the Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
November 26, 1997
SPECIAL MEETING OF SHAREHOLDERS PRINCOR CAPITAL ACCUMULATION FUND, INC.
HELD SEPTEMBER 16, 1997
1.Election of the Board of Directors.
For Withheld
Davis 11,285,657 132,900
Ehrle 11,278,202 140,354
Ferguson 11,280,496 138,061
Gilbert 11,287,795 130,761
Griswell 11,271,302 147,255
Jones 11,286,352 132,205
Keller 11,285,159 133,397
Lukavsky 11,275,129 143,428
Peebler 11,273,997 144,560
2.Ratification of selection of Ernst & Young LLP as independent public auditors.
In Favor Opposed Abstain
11,245,210 38,783 134,564
3.Approval of name change to Principal Capital Value Fund, Inc.
In Favor Opposed Abstain
11,027,240 234,408 156,909
4.Approval of modification of management agreement.
In Favor Opposed Abstain
10,839,806 316,349 262,402
5.Approval to eliminate the fundamental investment restriction regarding the
purchase of shares of other investment companies.
In Favor Opposed Abstain Broker Non-Votes
10,847,398 146,393 238,156 186,609
