<PAGE> PAGE 1
000 B000000 12/31/97
000 C000000 0000814573
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 PRINCIPAL EMERGING GROWTH FUND, INC.
001 B000000 811-05170
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
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
018 000000 Y
019 A000000 Y
019 B000000 33
019 C000000 PRINCORGRP
020 A000001 INVESTMENT TECHNOLOGY GROUP
020 B000001 95-4339369
020 C000001 10
020 A000002 DONALDSON, LUFKIN & JENRETTE
020 B000002 13-2741729
020 C000002 6
020 A000003 MORGAN, J.P. SECURITIES
020 B000003 13-3224016
020 C000003 5
020 A000004 FURMAN SELZ INC
020 B000004 13-2753731
020 C000004 4
020 A000005 BEAR STEARNS & CO.
020 B000005 13-3299429
<PAGE> PAGE 2
020 C000005 4
020 A000006 JONES & ASSOCIATES INC.
020 B000006 95-3583143
020 C000006 4
020 A000007 PRUDENTIAL SECURITIES, INC.
020 B000007 22-2347336
020 C000007 3
020 A000008 INSTINET CO.
020 B000008 13-2596491
020 C000008 3
020 A000009 BUCKINGHAM RESEARCH GROUP
020 B000009 13-3134008
020 C000009 3
020 A000010 UBS SECURITIES LLC
020 B000010 13-2932996
020 C000010 2
021 000000 54
022 A000001 ASSOCIATES CORPORATION OF NORTH AMERICA
022 B000001 74-1494554
022 C000001 1988959
022 D000001 0
022 A000002 FORD MOTOR CREDIT CO.
022 B000002 38-1612444
022 C000002 102237
022 D000002 0
022 A000003 AMERICAN EXPRESS CREDIT CORPORATION
022 B000003 11-1988350
022 C000003 67964
022 D000003 0
022 A000004 HOUSEHOLD FINANCE CORP.
022 B000004 36-1239445
022 C000004 39607
022 D000004 0
022 A000005 GENERAL ELECTRIC CAPITAL CORP.
022 B000005 13-1500700
022 C000005 34212
022 D000005 0
022 A000006 GENERAL ELECTRIC CO.
022 B000006 42-1192999
022 C000006 32382
022 D000006 0
022 A000007 MERRILL LYNCH MONEY MARKET SECURITIES
022 B000007 13-2761776
022 C000007 23778
022 D000007 0
022 A000008 BENEFICIAL CORP
022 B000008 51-0003820
022 C000008 20518
022 D000008 0
022 A000009 CHEVRON OIL FINANCE CO.
022 B000009 25-1215010
<PAGE> PAGE 3
022 C000009 12246
022 D000009 0
022 A000010 CIT GROUP HOLDINGS
022 B000010 13-2994534
022 C000010 10521
022 D000010 0
023 C000000 2382821
023 D000000 9278
027 000000 Y
028 A010000 4686
028 A020000 0
028 A030000 630
028 A040000 4056
028 B010000 4841
028 B020000 0
028 B030000 442
028 B040000 4399
028 C010000 6083
028 C020000 0
028 C030000 785
028 C040000 5298
028 D010000 5445
028 D020000 0
028 D030000 723
028 D040000 4722
028 E010000 5416
028 E020000 0
028 E030000 829
028 E040000 4587
028 F010000 5960
028 F020000 5435
028 F030000 846
028 F040000 10549
028 G010000 32431
028 G020000 5435
028 G030000 4255
028 G040000 33611
028 H000000 0
055 A000000 N
055 B000000 N
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
<PAGE> PAGE 4
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 N
066 D000000 Y
066 E000000 N
066 F000000 N
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
071 A000000 59971
071 B000000 12376
071 C000000 159395
071 D000000 8
072 A000000 12
072 B000000 1428
072 C000000 1194
072 D000000 0
072 E000000 0
072 F000000 1145
072 G000000 0
072 H000000 0
072 I000000 0
072 J000000 6
072 K000000 0
072 L000000 0
072 M000000 8
072 N000000 0
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 0
072 S000000 0
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 12
072 X000000 1171
072 Y000000 0
072 Z000000 1451
072AA000000 4081
072BB000000 0
072CC010000 30028
<PAGE> PAGE 5
072CC020000 0
072DD010000 1424
072DD020000 0
072EE000000 4500
073 A010000 0.2330
073 A020000 0.0000
073 B000000 0.7571
073 C000000 0.0000
074 A000000 26
074 B000000 0
074 C000000 22453
074 D000000 1659
074 E000000 213
074 F000000 199879
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 0
074 K000000 0
074 L000000 523
074 M000000 0
074 N000000 224753
074 O000000 0
074 P000000 0
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 123
074 S000000 0
074 T000000 224630
074 U010000 6333
074 U020000 0
074 V010000 35.47
074 V020000 0.00
074 W000000 0.0000
074 X000000 6
074 Y000000 0
075 A000000 0
075 B000000 181986
076 000000 0.00
077 A000000 Y
077 B000000 Y
077 C000000 Y
077 Q010000 N
077 Q020000 N
077 Q030000 N
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 C000000 16000
081 A000000 Y
081 B000000 32
<PAGE> PAGE 6
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
SIGNATURE A S FILEAN
TITLE VICE PRES\SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 166346096
<INVESTMENTS-AT-VALUE> 224204235
<RECEIVABLES> 522801
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 25912
<TOTAL-ASSETS> 224752948
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 123309
<TOTAL-LIABILITIES> 123309
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 166707986
<SHARES-COMMON-STOCK> 6333224
<SHARES-COMMON-PRIOR> 4611789
<ACCUMULATED-NII-CURRENT> 26884
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 36630
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 57858139
<NET-ASSETS> 224629639
<DIVIDEND-INCOME> 1193912
<INTEREST-INCOME> 1428479
<OTHER-INCOME> 0
<EXPENSES-NET> (1171372)
<NET-INVESTMENT-INCOME> 1451019
<REALIZED-GAINS-CURRENT> 4081051
<APPREC-INCREASE-CURRENT> 30028222
<NET-CHANGE-FROM-OPS> 35560292
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1424135)
<DISTRIBUTIONS-OF-GAINS> (4499721)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1770659
<NUMBER-OF-SHARES-REDEEMED> (222142)
<SHARES-REINVESTED> 172918
<NET-CHANGE-IN-ASSETS> 87468758
<ACCUMULATED-NII-PRIOR> 13018
<ACCUMULATED-GAINS-PRIOR> 455348
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1145372
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1171372
<AVERAGE-NET-ASSETS> 183356158
<PER-SHARE-NAV-BEGIN> 29.74
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> 6.48
<PER-SHARE-DIVIDEND> (.23)
<PER-SHARE-DISTRIBUTIONS> (.76)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 35.47
<EXPENSE-RATIO> .64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Principal Emerging Growth Fund, Inc.
In planning and performing our audit of the financial statements of Principal
Emerging Growth 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 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 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 Emerging Growth Fund, Inc. and the Securities
and Exchange Commission.
/S/ ERNST & YOUNG LLP
Des Moines, Iowa
January 16, 1998
SPECIAL MEETING OF SHAREHOLDERS PRINCIPAL EMERGING GROWTH FUND, INC.
HELD SEPTEMBER 16, 1997
1. Election of the Board of Directors.
For Withheld
Davis 5,412,764 87,079
Ehrle 5,405,141 94,699
Ferguson 5,415,939 83,901
Gilbert 5,417,426 82,414
Griswell 5,417,863 81,977
Jones 5,420,913 78,927
Keller 5,417,884 81,956
Lukavsky 5,409,215 90,625
Peebler 5,412,828 87,012
2. Ratification of selection of Ernst & Young LLP as independent public
auditors.
In Favor Opposed Abstain
5,339,041 38,545 122,254
3. Approval of change of fund structure. Name changed to Principal Variable
Contract Fund, Inc. MidCap Account effective 1/1/98.
In Favor Opposed Abstain
5,183,548 122,191 194,101
