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000 C000000 0000832513
000 D000000 N
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000 F000000 Y
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001 A000000 PRINCOR TAX-EXEMPT CASH MANAGEMENT FUND, INC.
001 B000000 811-05548
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
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022 A000001 MERRILL LYNCH MONEY MARKET SECURITIES
022 B000001 13-2761776
022 C000001 91125
022 D000001 80100
022 A000002 GOLDMAN SACHS MONEY MARKET
022 B000002 13-3160926
022 C000002 55764
022 D000002 46450
022 A000003 PROVIDENT
022 B000003 13-2518466
022 C000003 48900
022 D000003 47400
022 A000004 PAINEWEBBER INC.
022 B000004 13-2638166
022 C000004 28500
022 D000004 30900
022 A000005 SMITH, BARNEY, HARRIS, UPHAM & CO.
022 B000005 13-1912900
022 C000005 42250
022 D000005 3400
022 A000006 LEHMAN BROTHERS
022 B000006 13-2501865
022 C000006 12506
022 D000006 2330
022 A000007 SMITH BARNEY INC.
022 B000007 13-1912900
022 C000007 6200
<PAGE> PAGE 2
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022 A000008 BANKAMERICA CAPITAL MARKETS GROUP
022 B000008 42-1193001
022 C000008 3700
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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> 98,015,003
<INVESTMENTS-AT-VALUE> 98,015,003
<RECEIVABLES> 539,670
<ASSETS-OTHER> 3,024
<OTHER-ITEMS-ASSETS> 24,318
<TOTAL-ASSETS> 98,582,015
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73,173
<TOTAL-LIABILITIES> 73,173
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,508,842
<SHARES-COMMON-STOCK> 98,481,773
<SHARES-COMMON-PRIOR> 99,887,179
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 98,508,842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,840,280
<OTHER-INCOME> 0
<EXPENSES-NET> (757,007)
<NET-INVESTMENT-INCOME> 3,083,273
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,082,691)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 396,446,652
<NUMBER-OF-SHARES-REDEEMED> (400,884,456)
<SHARES-REINVESTED> 3,032,398
<NET-CHANGE-IN-ASSETS> (1,404,842)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 527,733
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 833,273
<AVERAGE-NET-ASSETS> 107,275,282
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .029
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.029)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Without the Manager's voluntary waiver of a portion of expenses
for this period, this fund would have had per share net investment
income of $.028 and a ratio of expenses to average net assets of .77%.
The amount waived was $69,107.
</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> 98,015,003
<INVESTMENTS-AT-VALUE> 98,015,003
<RECEIVABLES> 539,670
<ASSETS-OTHER> 3,024
<OTHER-ITEMS-ASSETS> 24,318
<TOTAL-ASSETS> 98,582,015
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73,173
<TOTAL-LIABILITIES> 73,173
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,508,842
<SHARES-COMMON-STOCK> 27,069
<SHARES-COMMON-PRIOR> 26,505
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 98,508,842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,840,280
<OTHER-INCOME> 0
<EXPENSES-NET> (757,007)
<NET-INVESTMENT-INCOME> 3,083,273
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (582)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,568
<NUMBER-OF-SHARES-REDEEMED> (41,568)
<SHARES-REINVESTED> 564
<NET-CHANGE-IN-ASSETS> (1,404,842)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 527,733
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 833,273
<AVERAGE-NET-ASSETS> 107,275,282
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .021
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.021)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Without the Manager's voluntary waiver of a portion of expenses
for this period, this fund would have had per share net investment
income of $(.243) and a ratio of expenses to average net assets of
27.43%. The amount waived was $7,160.
</FN>
</TABLE>
Report of Independent Auditors on Internal Control Structure
Board of Directors and Shareholders
Princor Tax-Exempt Cash Management Fund, Inc.
In planning and performing our audit of the financial statements of Princor
Tax-Exempt Cash Management 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 Tax-Exempt Cash Management 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
