<PAGE> PAGE 1
000 B000000 10/31/96
000 C000000 0000814574
000 D000000 N
000 E000000 NF
000 F000000 Y
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000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 PRINCOR BOND FUND, INC.
001 B000000 811-05172
001 C000000 5152475476
002 A000000 THE PRINCPAL FINANCIAL GROUP
002 B000000 DES MOINES
002 C000000 IA
002 D010000 50392
002 D020000 0200
003 000000 N
004 000000 N
005 000000 N
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022 A000001 ASSOCIATES CORPORATION OF NORTH AMERICA
022 B000001 74-1494554
022 C000001 224892
022 D000001 0
022 A000002 GENERAL ELECTRIC CAPITAL CORP.
022 B000002 13-1500700
022 C000002 128
022 D000002 0
022 A000003 GENERAL ELECTRIC CO.
022 B000003 42-1192999
022 C000003 12271
022 D000003 0
022 A000004 HOUSEHOLD FINANCE CORP.
022 B000004 36-1239445
022 C000004 7548
022 D000004 0
022 A000005 FORD MOTOR CREDIT CO.
<PAGE> PAGE 2
022 B000005 38-1612444
022 C000005 5241
022 D000005 0
022 A000006 PIPER, JAFFRAY, HOPWOOD
022 B000006 41-0953246
022 C000006 4883
022 D000006 0
022 A000007 PRUDENTIAL FUNDING CORP.
022 B000007 22-2231168
022 C000007 3859
022 D000007 0
022 A000008 AMERICAN EXPRESS CREDIT CORPORATION
022 B000008 11-1988350
022 C000008 3848
022 D000008 0
022 A000009 PAINEWEBBER INC.
022 B000009 13-2638166
022 C000009 3611
022 D000009 0
022 A000010 MESIROW FINANCIAL
022 B000010 36-3194849
022 C000010 3580
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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080 A000000 ICI MUTUAL INSURANCE COMPANY
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SIGNATURE A. S. FILEAN
TITLE VICE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 115,041,975
<INVESTMENTS-AT-VALUE> 119,539,693
<RECEIVABLES> 2,576,164
<ASSETS-OTHER> 3,438
<OTHER-ITEMS-ASSETS> 1,375
<TOTAL-ASSETS> 122,120,670
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 181,701
<TOTAL-LIABILITIES> 181,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,706,501
<SHARES-COMMON-STOCK> 10,151,468
<SHARES-COMMON-PRIOR> 9,362,124
<ACCUMULATED-NII-CURRENT> 728,898
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (994,148)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,497,718
<NET-ASSETS> 121,938,969
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,882,992
<OTHER-INCOME> 0
<EXPENSES-NET> (1,123,819)
<NET-INVESTMENT-INCOME> 7,759,173
<REALIZED-GAINS-CURRENT> (608,660)
<APPREC-INCREASE-CURRENT> (1,814,840)
<NET-CHANGE-FROM-OPS> 5,335,673
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,395,304)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,970,454
<NUMBER-OF-SHARES-REDEEMED> (1,629,399)
<SHARES-REINVESTED> 448,289
<NET-CHANGE-IN-ASSETS> 12,269,465
<ACCUMULATED-NII-PRIOR> 705,347
<ACCUMULATED-GAINS-PRIOR> (385,255)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 562,779
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,152,232
<AVERAGE-NET-ASSETS> 113,961,667
<PER-SHARE-NAV-BEGIN> 11.42
<PER-SHARE-NII> .76
<PER-SHARE-GAIN-APPREC> (.25)
<PER-SHARE-DIVIDEND> (.76)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.17
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's voluntary waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.76
and a ratio of expenses to average net assets of .97%. The amount waived was
$22,536.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 115,041,975
<INVESTMENTS-AT-VALUE> 119,539,693
<RECEIVABLES> 2,576,164
<ASSETS-OTHER> 3,438
<OTHER-ITEMS-ASSETS> 1,375
<TOTAL-ASSETS> 122,120,670
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 181,701
<TOTAL-LIABILITIES> 181,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,706,501
<SHARES-COMMON-STOCK> 715,311
<SHARES-COMMON-PRIOR> 237,371
<ACCUMULATED-NII-CURRENT> 728,898
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (994,148)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,497,718
<NET-ASSETS> 121,938,969
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,882,992
<OTHER-INCOME> 0
<EXPENSES-NET> (1,123,819)
<NET-INVESTMENT-INCOME> 7,759,173
<REALIZED-GAINS-CURRENT> (608,660)
<APPREC-INCREASE-CURRENT> (1,814,840)
<NET-CHANGE-FROM-OPS> 5,335,673
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (336,861)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 523,960
<NUMBER-OF-SHARES-REDEEMED> (70,602)
<SHARES-REINVESTED> 24,582
<NET-CHANGE-IN-ASSETS> 12,269,465
<ACCUMULATED-NII-PRIOR> 705,347
<ACCUMULATED-GAINS-PRIOR> (385,255)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 562,779
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,152,232
<AVERAGE-NET-ASSETS> 113,961,667
<PER-SHARE-NAV-BEGIN> 11.41
<PER-SHARE-NII> .67
<PER-SHARE-GAIN-APPREC> (.25)
<PER-SHARE-DIVIDEND> (.68)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.15
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's voluntary waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.67
and a ratio of expenses to average net assets of 1.79%. The amount waived was
$5,874.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 115,041,975
<INVESTMENTS-AT-VALUE> 119,539,693
<RECEIVABLES> 2,576,164
<ASSETS-OTHER> 3,438
<OTHER-ITEMS-ASSETS> 1,375
<TOTAL-ASSETS> 122,120,670
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 181,701
<TOTAL-LIABILITIES> 181,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,706,501
<SHARES-COMMON-STOCK> 47,094
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 728,898
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (994,148)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,497,718
<NET-ASSETS> 121,938,969
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,882,992
<OTHER-INCOME> 0
<EXPENSES-NET> (1,123,819)
<NET-INVESTMENT-INCOME> 7,759,173
<REALIZED-GAINS-CURRENT> (608,660)
<APPREC-INCREASE-CURRENT> (1,814,840)
<NET-CHANGE-FROM-OPS> 5,335,673
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,457)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47,584
<NUMBER-OF-SHARES-REDEEMED> (808)
<SHARES-REINVESTED> 318
<NET-CHANGE-IN-ASSETS> 12,269,465
<ACCUMULATED-NII-PRIOR> 705,347
<ACCUMULATED-GAINS-PRIOR> (385,255)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 562,779
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,152,232
<AVERAGE-NET-ASSETS> 113,961,667
<PER-SHARE-NAV-BEGIN> 11.27
<PER-SHARE-NII> .51
<PER-SHARE-GAIN-APPREC> (.13)
<PER-SHARE-DIVIDEND> (.49)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.16
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's voluntary waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.51
and a ratio of expenses to average net assets of 1.28%. The amount waived was
$3.
</FN>
</TABLE>
Report of Independent Auditors on Internal Control Structure
Board of Directors and Shareholders
Princor Bond Fund, Inc.
In planning and performing our audit of the financial statements of Princor Bond
Fund, Inc. for the year ended October 31, 1996, we considered its internal
control structure, including procedures 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 the internal control structure.
The management of Princor Bond Fund, Inc. is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure 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 the internal control structure would not necessarily
disclose all matters in the internal control structure 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 the specific internal control structure elements 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 the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
October 31, 1996.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
ERNST & YOUNG
Des Moines, Iowa
November 27, 1996
