Principal
Mutual
Funds

October    , 1999







Dear Shareholder:

We  recently  mailed  you  proxy  material  for  the  Principal   Mutual  Funds'
Shareholder Meeting to be held November 2, 1999. Our most recent vote tabulation
indicates your vote has not yet been received. In the event the original mailing
did not  reach  you,  or is no  longer  available  to you,  we are  enclosing  a
duplicate proxy ballot, voting instructions and a postage-paid return envelope.

Regardless  of the  number  of  shares  you own,  it is  important  that they be
represented  at the meeting.  We urge you to sign,  date,  and mail the enclosed
proxy  ballot  promptly.  You may  also  vote by  phone  by  calling  our  proxy
solicitor,  D.F.  King  &  Co.,  Inc.  at  1-800-628-8536  or by  touch-tone  at
1-888-221-0697.  You may  also  vote  through  the  Internet  by  logging  on to
www.proxyweb.com.

For the  reasons  set forth in the proxy  statement  which was  included  in the
initial mailing,  your Directors  believe passage of each proposal on the agenda
is in the best  interest of the Funds and their  shareholders  and  recommend a
vote FOR the proposals.

If you have recently voted,  please  disregard this mailing.  We appreciate your
support as a shareholder  and for  selecting the Principal  Mutual Funds to help
reach your financial goals.

Sincerely,

/s/ Ralph C. Eucher

Ralph C. Eucher
President

Securities offered through Princor Financial Services Corporation, a member of
the Principal Financial Group, Des Moines, Iowa 50392-0200 (800) 247-4123/FAX
(515) 248-4745