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SIGNATURE ARTHUR S. FILEAN
TITLE V.P. & SECRETARY
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 264,922,931
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<OTHER-ITEMS-ASSETS> 3,230
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,250,798)
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<OTHER-INCOME> 18,921,110
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<S> <C>
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<INVESTMENTS-AT-VALUE> 271,804,892
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<SHARES-REINVESTED> 11,432
<NET-CHANGE-IN-ASSETS> (1,680,908)
<ACCUMULATED-NII-PRIOR> 1,535,479
<ACCUMULATED-GAINS-PRIOR> (1,474,791)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 2,355,049
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<PER-SHARE-DIVIDEND> (.67)
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</TABLE>
Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Princor Government Securities Income Fund, Inc.
In planning and performing our audit of the financial statements of Princor
Government Securities Income 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 Government Securities Income 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 Government Securities Income Fund, Inc. and the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
November 26, 1997
SPECIAL MEETING OF SHAREHOLDERS PRINCOR GOVERNMENT SECURITIES INCOME FUND, INC.
HELD SEPTEMBER 16, 1997
1.Election of the Board of Directors.
For Withheld
Davis 13,320,803 264,616
Ehrle 13,291,809 293,610
Ferguson 13,321,908 263,512
Gilbert 13,326,110 259,309
Griswell 13,293,926 291,493
Jones 13,300,094 285,326
Keller 13,303,919 281,501
Lukavsky 13,313,069 272,350
Peebler 13,288,992 296,428
2.Ratification of selection of Ernst & Young LLP as independent public auditors.
In Favor Opposed Abstain
13,147,713 115,460 322,246
3.Approval of name change Principal Government Securities Income Fund, Inc.
In Favor Opposed Abstain
12,593,127 602,448 389,843
4.Approval of modification of management agreement.
In Favor Opposed Abstain
12,357,748 692,513 535,157
5.Approval to eliminate the fundamental investment restriction regarding the
purchase of shares of other investment companies.
In Favor Opposed Abstain Broker Non-Votes
12,124,155 381,237 510,024 570,003
