<PAGE> PAGE 1
000 B000000 10/31/97
000 C000000 0000832513
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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
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004 000000 N
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018 000000 Y
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019 C000000 PRINCORGRP
022 A000001 MERRILL LYNCH MONEY MARKET SECURITIES
022 B000001 13-2761776
022 C000001 93462
022 D000001 89600
022 A000002 PROVIDENT
022 B000002 13-2518466
022 C000002 66000
022 D000002 68400
022 A000003 GOLDMAN SACHS MONEY MARKETS
022 B000003 13-3160926
022 C000003 23200
022 D000003 22800
022 A000004 SMITH BARNEY INC.
022 B000004 13-1912900
022 C000004 25500
022 D000004 0
022 A000005 LEHMAN BROTHERS
022 B000005 13-2501865
022 C000005 13000
022 D000005 1430
022 A000006 SMITH, BARNEY, HARRIS, UPHAM & CO.
022 B000006 13-1912900
022 C000006 12977
022 D000006 1400
<PAGE> PAGE 2
022 A000007 NORWEST INVESTMENT SERVICES INC.
022 B000007 41-1508325
022 C000007 7935
022 D000007 3000
022 A000008 BANC ONE CAPITLA CORPORATION
022 B000008 31-1017233
022 C000008 8057
022 D000008 0
022 A000009 GATES CAPTIAL CORPORATION
022 B000009 13-3636543
022 C000009 8050
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022 A000010 A. G. EDWARDS
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 6
SIGNATURE ARTHUR S. FILEAN
TITLE V.P. & SECRETARY
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-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 93,112,479
<INVESTMENTS-AT-VALUE> 93,112,479
<RECEIVABLES> 5,977,367
<ASSETS-OTHER> 3,025
<OTHER-ITEMS-ASSETS> 140,022
<TOTAL-ASSETS> 99,232,893
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 266,119
<TOTAL-LIABILITIES> 266,119
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,966,774
<SHARES-COMMON-STOCK> 98,939,110
<SHARES-COMMON-PRIOR> 98,481,773
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 98,966,774
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,668,491
<OTHER-INCOME> 3,668,491
<EXPENSES-NET> (706,075)
<NET-INVESTMENT-INCOME> 2,962,416
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,961,821)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 372,738,780
<NUMBER-OF-SHARES-REDEEMED> (375,196,233)
<SHARES-REINVESTED> 2,914,790
<NET-CHANGE-IN-ASSETS> 457,932
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 499,606
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 739,860
<AVERAGE-NET-ASSETS> 100,667,562
<PER-SHARE-NAV-BEGIN> 1.000
<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> 1.000
<EXPENSE-RATIO> .70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's volunteer waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.029
and a ratio of expenses to average net assets of .73%. The amount waived was
$27,978.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 93,112,479
<INVESTMENTS-AT-VALUE> 93,112,479
<RECEIVABLES> 5,977,367
<ASSETS-OTHER> 3,025
<OTHER-ITEMS-ASSETS> 140,022
<TOTAL-ASSETS> 99,232,893
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 266,119
<TOTAL-LIABILITIES> 266,119
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,966,774
<SHARES-COMMON-STOCK> 27,664
<SHARES-COMMON-PRIOR> 27,069
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 98,966,774
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,668,491
<OTHER-INCOME> 3,668,491
<EXPENSES-NET> (706,075)
<NET-INVESTMENT-INCOME> 2,962,416
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (595)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 595
<NET-CHANGE-IN-ASSETS> 457,932
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 499,606
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 739,860
<AVERAGE-NET-ASSETS> 100,667,562
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .022
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.022)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Without the Manager's volunteer waiver of a portion of certain expenses for
this period, this fund would have had per share net investment income of $.188
and a ratio of expenses to average net assets of 22.58%. The amount waived was
$25,807.
</FN>
</TABLE>
Report of Independent Auditors on Internal Control
The 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, 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 Tax-Exempt Cash Management 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 Tax-Exempt Cash Management Fund, Inc. and the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
November 26, 1997
SPECIAL MEETING OF SHAREHOLDERS PRINCOR TAX-EXEMPT CASH MANAGEMENT FUND, INC.
HELD SEPTEMBER 16, 1997
1.Election of the Board of Directors.
For Withheld
Davis 71,109,314 1,750,764
Ehrle 71,075,406 1,784,671
Ferguson 71,188,198 1,671,880
Gilbert 71,188,198 1,671,880
Griswell 70,862,581 1,997,496
Jones 71,150,550 1,709,528
Keller 71,126,436 1,733,641
Lukavsky 70,960,187 1,899,890
Peebler 71,104,126 1,755,951
2.Ratification of selection of Ernst & Young LLP as independent public auditors.
In Favor Opposed Abstain
71,819,882 425,323 614,873
3.Approval of name change to Principal Tax-Exempt Cash Management Fund, Inc.
In Favor Opposed Abstain
3,540,950 136,289 101,361
71,202,432 780,482 877,163
4.Approval of modification of management agreement.
In Favor Opposed Abstain
68,139,890 3,298,216 1,421,972
5.Defeat of proposed change to the fundamental investment restriction with
respect to diversification requirements.
In Favor Opposed Abstain Broker Non-Votes
29,963,800 2,494,905 1,410,739 38,990,633
