the Princor
    Mutual
    Funds


November 17, 1997



Mr. Stephan L. Jones
President
Principal Special Markets Fund, Inc.
The Principal Financial Group
Des Moines, IA 50392-0200



Dear Mr. Jones

     Principal  Mutual Life  Insurance  Company  intends to  purchase  3,100,000
shares of Common Stock of Principal  Special  Markets Fund, Inc. - International
Emerging  Markets  Portfolio,  par value $.01 per share (the "Shares") at $10.00
per share.  In connection  with such purchase,  Principal  Mutual Life Insurance
Company  represents  and  warrants  that  it will  purchase  such  Shares  as an
investment and not with a view to resale, distribution or redemption.


                                 PRINCIPAL MUTUAL LIFE INSURANCE COMPANY


                                 BY_/s/Michael D. Roughton______________
                                    Michael D. Roughton




Princor  Financial  Services  Corporation,  The Principal  Financial  Group, Des
Moines, Iowa 50392-0200 (800) 247-4123/FAX (515) 248-4745