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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 Emerging Growth Fund, Inc.
In planning and performing our audit of the financial statements of Princor
Emerging Growth 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 Emerging Growth 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 Emerging Growth Fund, Inc. and the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
November 26, 1997
SPECIAL MEETING OF SHAREHOLDERS PRINCOR EMERGING GROWTH FUND, INC.
HELD SEPTEMBER 16, 1997
1.Election of the Board of Directors.
For Withheld
Davis 4,357,654 127,073
Ehrle 4,355,968 128,760
Ferguson 4,360,306 124,422
Gilbert 4,354,684 130,043
Griswell 4,347,852 136,875
Jones 4,354,487 130,241
Keller 4,356,725 128,003
Lukavsky 4,354,913 129,814
Peebler 4,344,537 140,190
2.Ratification of selection of Ernst & Young LLP as independent public
auditors.
In Favor Opposed Abstain
4,323,493 47,792 113,443
3.Approval of name change Principal MidCap Fund, Inc.
In Favor Opposed Abstain
4,157,790 197,103 129,835
4.Approval of modification of management agreement.
In Favor Opposed Abstain
3,983,217 309,019 192,492
