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SIGNATURE A. S. FILEAN
TITLE V.P. & SECRETARY
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<INVESTMENTS-AT-COST> 47444285
<INVESTMENTS-AT-VALUE> 47444285
<RECEIVABLES> 287254
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<TOTAL-ASSETS> 47740169
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<TOTAL-LIABILITIES> 425251
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</TABLE>
Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Principal Money Market Fund, Inc.
In planning and performing our audit of the financial statements of Principal
Money Market Fund, Inc. for the year ended December 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 Principal Money Market 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 activities for safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1997.
This report is intended solely for the information and use of management and the
Board of Directors of Principal Money Market Fund, Inc. and the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Des Moines, Iowa
January 16, 1998
SPECIAL MEETING OF SHAREHOLDERS PRINCIPAL MONEY MARKET FUND, INC.
HELD SEPTEMBER 16, 1997
1. Election of the Board of Directors.
For Withheld
Davis 42,302,140 386,652
Ehrle 42,132,552 556,240
Ferguson 42,395,818 292,974
Gilbert 42,242,211 446,581
Griswell 42,398,065 290,727
Jones 42,242,211 446,581
Keller 42,241,105 447,686
Lukavsky 42,370,943 317,849
Peebler 42,273,229 415,562
2. Ratification of selection of Ernst & Young LLP as independent public
auditors.
In Favor Opposed Abstain
41,920,881 345,708 422,204
3. Approval of change of fund structure. Name changed to Principal Variable
Contract Fund, Inc. Money Market Account effective 1/1/98.
In Favor Opposed Abstain
40,961,885 1,144,958 581,948
4. Approval of elimination of the fundamental investment restriction regarding
the purchase of shares of other investment companies.
In Favor Opposed Abstain
40,903,699 1,312,169 472,924
5. Approval of elimination of the fundamental investment restriction
prohibiting joint participation in any securities trading account.
In Favor Opposed Abstain
40,633,345 1,111,963 943,484
6. Approval of change to the fundamental investment restriction with respect
to diversification requirements.
In Favor Opposed Abstain
40,453,876 1,724,711 510,205
7. Approval of change to the fundamental investment restriction with respect
to purchase of securities of a single issuer.
In Favor Opposed Abstain
40,423,874 1,703,641 534,278
8. Approval of change to the fundamental investment restriction prohibiting
the purchase of restricted securities.
In Favor Opposed Abstain
40,329,737 1,806,422 552,633
