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020 A000009 ROBERT FLEMING
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SIGNATURE A. S. FILEAN
TITLE VICE PRES. & SEC'Y.
<TABLE> <S> <C>
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 110,109,640
<INVESTMENTS-AT-VALUE> 124,912,216
<RECEIVABLES> 634,613
<ASSETS-OTHER> 0
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<TOTAL-ASSETS> 125,571,524
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<TOTAL-LIABILITIES> 282,750
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110,181,614
<SHARES-COMMON-STOCK> 9,016,636
<SHARES-COMMON-PRIOR> 5,503,994
<ACCUMULATED-NII-CURRENT> 61,967
<OVERDISTRIBUTION-NII> 0
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<NET-CHANGE-FROM-OPS> 8,777,687
<EQUALIZATION> 0
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</TABLE>
Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Principal World Fund, Inc.
In planning and performing our audit of the financial statements of Principal
World 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 World 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 World Fund, Inc. and the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Des Moines, Iowa
January 16, 1998
SPECIAL MEETING OF SHAREHOLDERS PRINCIPAL WORLD FUND, INC.
HELD SEPTEMBER 16, 1997
1. Election of the Board of Directors.
For Withheld
Davis 7,146,215 138,622
Ehrle 7,127,024 157,814
Ferguson 7,133,164 151,673
Gilbert 7,132,327 152,511
Griswell 7,143,716 141,122
Jones 7,137,003 147,835
Keller 7,137,003 147,835
Lukavsky 7,134,739 150,099
Peebler 7,127,675 157,163
2. Ratification of selection of Ernst & Young LLP as independent public
auditors.
In Favor Opposed Abstain
6,982,470 35,609 266,758
3. Approval of change of fund structure. Name changed to Principal Variable
Contract Fund, Inc. International Account effective 1/1/98.
In Favor Opposed Abstain
6,766,206 166,459 352,172
