PRINCIPAL SPECIAL MARKETS FUND INC
NSAR-A, 1998-08-21
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<PAGE>      PAGE  1
000 A000000 06/30/98
000 C000000 0000898745
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 U
001 A000000 PRINCIPAL SPECIAL MARKETS FUND, INC.
001 B000000 811-07572
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 Y
007 B000000  4
007 C010100  1
007 C020100 INTERNATIONAL SMALLCAP PORTFOLIO
007 C030100 N
007 C010200  2
007 C020200 INTERNATIONAL EMERGING MARKETS PORTFOLIO
007 C030200 N
007 C010300  3
007 C020300 INTERNATIONAL SECURITIES PORFOLIO
007 C030300 N
007 C010400  4
007 C020400 MORTGAGE-BACKED SECURITIES PORTFOLIO
007 C030400 N
018  00AA00 Y
019 A00AA00 Y
019 B00AA00   41
019 C00AA00 PRINCORGRP
020 A000001 MERRILL LYNCH
020 B000001 13-5674085
020 C000001     37
020 A000002 MORGAN STANLEY & CO
020 B000002 13-2655998
020 C000002     32
020 A000003 ROBERT FLEMING
020 B000003 13-3298866
020 C000003     31
020 A000004 CREDIT LYONNAIS SECURITIES
020 B000004 13-2602298
020 C000004     29
<PAGE>      PAGE  2
020 A000005 JAMES CAPPEL INC.
020 B000005 52-1348224
020 C000005     25
020 A000006 VICKERS BALLAS INC.
020 B000006 13-3743951
020 C000006     23
020 A000007 CARNEGIE INC.
020 B000007 13-3392829
020 C000007     20
020 A000008 ABN AMRO SECURITIES
020 B000008 13-3227945
020 C000008     19
020 A000009 GOLDMAN SACHS CO.
020 B000009 13-5108880
020 C000009     19
020 A000010 CREDIT SUISSE FIRST BOSTON
020 B000010 13-5659485
020 C000010     19
021  000000      535
022 A000001 FIRST CHICAGO CAPITAL MARKETS
022 B000001 36-3595942
022 C000001   1504026
022 D000001         0
022 A000002 ASSOCIATES CORP. OF NORTH AMERICA
022 B000002 74-1494554
022 C000002    130958
022 D000002         0
022 A000003 GENERAL ELECTRIC CAPITAL CORP.
022 B000003 13-1500700
022 C000003    107629
022 D000003         0
022 A000004 GENERAL ELECTRIC CO.
022 B000004 42-1192999
022 C000004     14031
022 D000004         0
022 A000005 MERRILL LYNCH MONEY MARKET SEC.
022 B000005 13-2761776
022 C000005     12259
022 D000005         0
022 A000006 FORD MOTOR CREDIT CO.
022 B000006 38-1612444
022 C000006      7970
022 D000006         0
022 A000007 AMERICAN EXPRESS CREDIT CORP.
022 B000007 11-1988350
022 C000007      6332
022 D000007         0
022 A000008 CREDIT SUISSE FIRST BOSTON CORP.
022 B000008 13-5659485
022 C000008      4308
022 D000008      1115
<PAGE>      PAGE  3
022 A000009 LEHMAN BROTHERS
022 B000009 13-2501865
022 C000009      3782
022 D000009      1394
022 A000010 MERRILL LYNCH
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<PAGE>      PAGE  7
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SIGNATURE   A S FILEAN                                   
TITLE       VICE PRES/SECRETARY 
 

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>

<ARTICLE> 6
       
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>

<ARTICLE> 6
       
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<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>

<ARTICLE> 6
       
<S>                             <C>
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<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               JUN-30-1998
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<INVESTMENTS-AT-VALUE>                      92,870,005
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<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                       74,971
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<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                    82,140,018
<SHARES-COMMON-STOCK>                        7,482,223
<SHARES-COMMON-PRIOR>                        3,205,478
<ACCUMULATED-NII-CURRENT>                      521,699
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<ACCUMULATED-NET-GAINS>                    (1,119,601)
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<DIVIDEND-INCOME>                              680,371
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<EXPENSES-NET>                               (324,331)
<NET-INVESTMENT-INCOME>                        522,097
<REALIZED-GAINS-CURRENT>                   (1,116,152)
<APPREC-INCREASE-CURRENT>                   10,486,436
<NET-CHANGE-FROM-OPS>                        9,892,381
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                      (4,808)
<DISTRIBUTIONS-OF-GAINS>                      (60,584)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                      4,270,347
<NUMBER-OF-SHARES-REDEEMED>                          0
<SHARES-REINVESTED>                              6,398
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</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               JUN-30-1998
<INVESTMENTS-AT-COST>                       14,047,608
<INVESTMENTS-AT-VALUE>                      14,423,541
<RECEIVABLES>                                   76,627
<ASSETS-OTHER>                                     127
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<TOTAL-ASSETS>                              14,502,347
<PAYABLE-FOR-SECURITIES>                       193,634
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                        5,261
<TOTAL-LIABILITIES>                            198,895
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                    15,005,580
<SHARES-COMMON-STOCK>                        1,385,728
<SHARES-COMMON-PRIOR>                        1,343,286
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                    (1,078,061)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                       375,933
<NET-ASSETS>                                14,303,452
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<AVERAGE-NET-ASSETS>                        14,027,713
<PER-SHARE-NAV-BEGIN>                            10.27
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<EXPENSE-RATIO>                                    .45
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</TABLE>


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