U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. _______________

Post-Effective Amendment No. _______________
(Check appropriate box or boxes)

Exact Name of Registrant as Specified in Charter:
Area Code and Telephone Number:

Principal Growth Fund, Inc. (800) 247-4123

Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)

711 High Street, Des Moines, Iowa 50392

Name and Address of Agent for Service:
With a copy to:

Michael D. Roughton John W. Blouch
Counsel Jones & Blouch L.L.P.
Principal Growth Fund, Inc. 1025 Thomas Jefferson Street, N.W.
711 High Street Suite 405 West
Des Moines, Iowa 50392 Washington, D.C. 20007

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
______________________________________________________

Title of Securities Being Registered:

Class A and Class B Common Stock, par value $.01 per share.

______________________________________________________

No filing fee is required because of reliance on Section 24(f) under the
Investment Company Act of 1940, as amended.

It is proposed that this filing will become effective on August 12, 2002,
pursuant to Rule 488.

______________________________________________________

PRINCIPAL GROWTH FUND, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a) UNDER THE SECURITIES ACT OF 1933

FORM N-14 PROXY STATEMENT AND
ITEM NO. PROSPECTUS CAPTION

PART A

Item 1. Beginning of Registration Statement and Outside
Front Cover Page of Prospectus ..................................Cross Reference Sheet; Cover Page

Item 2. Beginning and Outside Back Cover Page of Prospectus..............Table of Contents

Item 3. Fee Table, Synopsis Information and Risk Factors.................Summary; Principal Risk Factors

Item 4. Information about the Transaction................................The Plan

Item 5. Information about the Registrant.................................Incorporation of Documents by
Reference in the Prospectus

Item 6. Information about the Company Being Acquired.....................Incorporation of Documents by
Reference in the Prospectus

Item 7. Voting Information...............................................Introduction and Voting Information

Item 8. Interest of Certain Persons and Experts..........................Not Applicable

Item 9. Additional Information Required for Reoffering
by Persons Deemed to be Underwriters ............................Not Applicable

PART B

Item 10. Cover Page......................................................Cover Page of Statement of
Additional Information

Item 11. Table of Contents...............................................Table of Contents of Statement of
Additional Information

Item 12. Additional Information about the Registrant.....................Statement of Additional Information
of Principal Growth Fund, Inc.
dated March 1, 2002.

Item 13. Additional Information about the Company Being Acquired.........Statement of Additional Information
of Principal Partners LargeCap
Growth Fund, Inc., dated March 1, 2002.

Item 14. Financial Statements............................................Financial Statements as noted in
the Statement of Additional
Information

PART C

Item 15. Indemnification.................................................Indemnification

Item 16. Exhibits........................................................Exhibits

Item 17. Undertakings....................................................Undertakings

August 16, 2002

Dear Shareholder:

The Board of Directors of Principal Partners LargeCap Growth Fund, Inc.
("Partners Growth Fund") has called a special meeting of shareholders for
October 16, 2002 to vote on an Agreement and Plan of Acquisition which provides
for the combination of Partners Growth Fund with the Principal Growth Fund, Inc.
("Growth Fund"). If the Plan is approved by shareholders and implemented, you
will cease to own shares of Partners Growth Fund and will become the owner of
shares of the same class of Growth Fund equal in value to your shares of
Partners Growth Fund. The Board of Partners Growth Fund believes that the
proposed change is in the best interest of the Fund and its shareholders.

Both Funds are growth-oriented funds which invest primarily in common stocks and
seek long-term growth of capital. The principal difference between the two Funds
is the investment strategy of each Fund. Partners Growth Fund invests in a
relatively small number of companies that exhibit accelerating earnings and
relative price strength. This investment strategy has become unpopular with many
investors due to its relative risk and volatility. Growth Fund invests in a
larger number of companies, providing greater diversification, and has a lower
portfolio turnover rate. Growth Fund invests in securities of companies believed
to be superior businesses that possess sustainable competitive advantages.

No matter how many shares you own, it is important that you take time to read
the prospectus/proxy statement and vote as soon as possible. If you have more
than one account in Partners Growth Fund, you have received a consolidated proxy
ballot which allows you to vote all of your accounts at once--by mail, by phone
or via the Internet. Please return ALL of the proxy ballots.

We appreciate your taking the time to respond on this important matter. If you
have questions regarding the proxy or the voting process, please call our proxy
solicitor, D.F. King & Co., Inc. at 1-800-659-6590. If you have questions
concerning your account, please call our shareholder services department
toll-free at 1-800-247-4123.

Sincerely,
LOGO

/s/Ralph C. Eucher

Ralph C. Eucher
President
Principal Partners LargeCap Growth Fund, Inc.

IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE PROPOSAL

Please read the complete prospectus/proxy statement. For your convenience, we
are providing this brief overview of the Agreement and Plan of Acquisition and
the transactions contemplated thereby (Plan) on which you are being asked to
vote.

WHAT WILL HAPPEN IF SHAREHOLDERS APPROVE THE PLAN AND IT BECOMES EFFECTIVE?

At the effective time, which is scheduled for 3:00 p.m. C.S.T. on
October 31, 2002, Principal Growth Fund, Inc. ("Growth Fund") will
acquire all the assets and assume all the liabilities of the Partners
Growth Fund ("Partners Growth Fund") and issue in exchange shares of
its Class A and Class B common stock. The Partners Growth Fund will
immediately redeem all its outstanding Class A and Class B shares by
distributing the Growth Fund shares of the same classes to you. As a
result, you will have the same amount invested in Class A shares
and/or Class B shares of the Growth Fund that you have invested in
those share classes of the Partners Growth Fund at the effective time.
The acquisition will not dilute the value of your shares.

WHY HAS THE BOARD DECIDED TO RECOMMEND THE COMBINATION OF THE PARTNERS GROWTH
FUND WITH THE GROWTH FUND?

The Partners Growth Fund uses an investment strategy of investing in a
relatively small number of companies that exhibit accelerating earnings and
relative price strength. This investment strategy, often referred to as
"momentum investing", has become unpopular with many investors due to its
relative risk and volatility. The decreasing popularity of the investment
style combined with the Partners Growth Fund's poor investment performance
relative to other "largecap growth" funds, has caused the Board to conclude
that combining the Partners Growth Fund with the Growth Fund is in the best
interests of the shareholders of both Funds. The Partners Growth Fund has
been unable to attain sufficient assets to achieve a competitive expense
ratio. The Board does not believe the Partners Growth Fund's assets will
attain such a level within a reasonable period of time.

HOW HAVE THE FUNDS PERFORMED IN RELATION TO EACH OTHER?

The total returns of the Funds for the 1-year, 5-year and 10-year periods ended
June 30, 2002 are as follows:

TOTAL RETURN WITH MAXIMUM SALES CHARGE
--------------------------------------
FUND CLASS A CLASS B
---- --------------------------------------- ----------------------------------
1-YR. 5-YR. 10-YR. 1-YR. 5-YR. SINCE 12/9/94*
----- ----- ------ ----- ----- --------------

Growth -30.53% -4.87% 5.51% -30.49% -4.76% 4.77%
Partners Growth -33.22% -35.79%** N/A -33.16% -35.72%** N/A

TOTAL RETURN AT NET ASSET VALUE
-------------------------------
FUND CLASS A CLASS B
---- --------------------------------------------- ----------------------------------
1-YR. 5-YR. 10-YR. 1-YR. 5-YR. SINCE 12/9/94*
----- ----- ------ ----- ----- --------------

Growth -27.07% -3.95% 6.02% -27.59% -4.53% 4.77%
Partners Growth -29.91% -34.43%** N/A -30.37% -34.98%** N/A
*Inception Date of Class B shares
**Since the Partners Growth Fund inception date, March 1, 2000.

WHAT ARE THE ADVANTAGES OF THE ACQUISITION?

Because the Growth Fund is substantially larger than the Partners
Growth Fund, the Board believes that shareholders will benefit from
economies of scale.

WHO WILL PAY THE FEES AND EXPENSES INCURRED BY THE FUNDS IN CONNECTION WITH THE
PLAN?

Principal Management Corporation (the "Manager"), the manager of the
Funds, will bear all out-of-pocket fees and expenses incurred by the
Funds in connection with the transactions contemplated by the Plan.

DO THE FUNDS HAVE SIMILAR INVESTMENT OBJECTIVES, POLICIES AND PROCEDURES?

The investment objective of the Growth Fund is long-term growth of
capital and secondarily growth of income. The Partners Growth Fund has
an investment objective of long-term growth of capital. Both Funds
invest in equity securities and have many of the same fundamental and
non-fundamental investment policies and restrictions. However, the
Growth Fund is a diversified investment company while the Partners
Growth Fund is not. A diversified investment company may not, with
respect to 75% of its assets, invest more than 5% of its assets in the
securities of one issuer nor more than 10% in the outstanding voting
securities of one issuer. This restriction does not apply to the
Partners Growth Fund. Thus, while the risks of investing in equity
funds in general are similar for the Funds, the Funds have different
risks due to the extent to which each is diversified.

WHO MANAGES THE FUNDS?

Principal Management Corporation ("Manager") is the investment adviser
to both Funds. The Manager has engaged Invista Capital Management,
LLC/(R)/ ("Invista") as investment sub-adviser to the Growth Fund and
Duncan-Hurst Capital Management Inc. ("Duncan-Hurst") as investment
sub-advisor to the Partners Growth Fund. Invista is an indirect
wholly-owned subsidiary of Principal Life Insurance Company and an
affiliate of the Manager. Duncan-Hurst is not an affiliate of the
Manager.

HOW DO THE EXPENSE STRUCTURES OF THE FUNDS COMPARE?

The Funds have different contractual rates for management fees, and
such fees for the Growth Fund are reduced as assets reach higher
levels. The contractual rate for the Partners Growth Fund is 0.90% of
the Fund's average daily net assets. The current contractual rate for
the Growth Fund is 0.60% of the first $250 million of the Fund's
average daily net assets and 0.55% of the next $250 million. As a
percentage of average daily net assets for the year ended October 31,
2001, each Fund had the following expenses:

PARTNERS GROWTH FUND GROWTH FUND
-------------------- -----------
FUND OPERATING EXPENSES CLASS A CLASS B CLASS A CLASS B
----------------------- ------- ------- ------- -------

Management Fees* 0.90% 0.90% 0.57% 0.57%
12b-1 Fees 0.25 0.87 0.25 0.72
Other Expenses 1.54 1.72 0.48 0.59
---- ---- ---- ----
Total Operating Expenses 2.69% 3.49% 1.30% 1.88%
*The Manager has voluntarily agreed to waive a portion of its fee for the Partners Growth Fund. The Manager intends to continue
the waiver and, if necessary, pay expenses normally payable by the Partners Growth Fund through the period ending February 28,
2003. The effect of the waiver is to reduce the Partners Growth Fund's annual operating expenses. The waiver will maintain a
total level of operating expenses (expressed as a percent of average net assets attributable to a Class on an annualized basis)
not to exceed:
1.95% for Class A Shares
2.70% for Class B Shares

The Growth Fund's expenses, assuming implementation of the Plan on
November 1, 2000, as a percentage of average daily net assets are as
follows:

GROWTH FUND
-----------
FUND OPERATING EXPENSE CLASS A CLASS B
---------------------- ------- -------

Management Fees 0.57% 0.57%
12b-1 Fees 0.25% 0.73%
Other Expenses 0.49% 0.58%
---- ----
Total Operating Expenses 1.31% 1.88%

WHAT WILL BE THE SIZE OF THE GROWTH FUND AFTER THE TRANSACTION?

As of June 30, 2002, the Partners Growth Fund had net assets of
approximately $11 million, and the Growth Fund had net assets of
approximately $326 million. The net assets of the Partners Growth Fund
represent less than 4% of the net assets of the Growth Fund, and the
Manager of the Funds believes that their transfer will permit them to
be managed more efficiently. The transfer of the assets will not have
any adverse effect on the Growth Fund.

WHAT ARE THE FEDERAL TAX IMPLICATIONS?

The transactions contemplated by the Plan will result in a tax-free
"reorganization" under Section 368 of the Internal Revenue Code. The
Funds have obtained an opinion from tax counsel to the effect that no
gain or loss will be recognized by either Fund or its shareholders in
connection with the transactions contemplated by the Plan and that
your tax cost basis will not change, and that your holding period of
the securities acquired in the transaction will include your holding
period of the Partners Growth Fund shares.

HAS THE BOARD OF DIRECTORS APPROVED THE PLAN?

Yes. The Board of Directors of each of the Funds has approved the
Plan. The Board of Directors of the Partners Growth Fund recommends
that you vote in favor of the Plan.

WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH A QUORUM BY THE SCHEDULED DATE OF
THE SHAREHOLDER MEETING?

If a quorum is not obtained, the meeting will be postponed to allow
time to solicit additional proxies from shareholders. We urge you to
vote promptly after reviewing the enclosed material so that the
meeting is not delayed.

HOW MANY VOTES AM I ENTITLED TO CAST?

You are entitled to one vote for each share of the Partners Growth
Fund owned on the record date, August 12, 2002.

HOW DO I VOTE MY SHARES?

Voting is easy. You may vote your shares by completing and signing the
enclosed proxy ballot and mailing it in the enclosed postage paid
envelope or, if it is more convenient, you may vote by touch-tone
telephone or via the Internet. Refer to your proxy ballot for the
toll-free telephone number or Internet address. If you need any
assistance or have any questions concerning the Plan or how to vote
your shares, please call 1-800-659-6590.

HOW DO I SIGN THE PROXY BALLOT?

Individual Accounts: Shareholders should sign exactly as their names
appear in the account registration shown on the
proxy ballot.

Joint Accounts: Either owner may sign, but the name of the person
signing should conform exactly to a name that
appears in the account registration shown on the
proxy ballot.

All Other Accounts: The person signing must indicate his or her
capacity. For example, a trustee for a trust or
other entity should sign, "John A. Doe, Trustee."

PRINCIPAL PARTNERS LARGECAP GROWTH FUND, INC.
DES MOINES, IOWA 50392-0200
____________

NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON OCTOBER 16, 2002
___________

To the Shareholders:

Notice hereby is given that a special meeting of the shareholders of Principal
Partners LargeCap Growth Fund, Inc. (Partners Growth Fund) will be held at 2:00
p.m. C.D.T., on October 16, 2002, at the offices of Principal Management
Corporation, 680 8th Street, Des Moines, Iowa 50392-0200. The meeting is being
held to consider and vote on the following matter as well as any other business
that may properly come before the meeting or any adjournment thereof:

1. Approval of an Agreement and Plan of Acquisition among Partners
Growth Fund, Principal Growth Fund, Inc. (Growth Fund) and
Principal Management Corporation, and the transactions
contemplated thereby, pursuant to which the Growth Fund will
acquire all the assets and assume all the liabilities of the
Partners Growth Fund and issue in exchange shares of its Class A
and Class B common stock, and the Partners Growth Fund will
distribute those shares to its Class A and Class B shareholders
in redemption of all its outstanding shares and then dissolve.

You are entitled to notice of and to vote at the meeting, and any adjournment,
if you owned shares of the Partners Growth Fund at the close of business on
August 12, 2002, the record date for the meeting.

Your vote is important. No matter how many shares you own, please read the
attached prospectus/proxy statement, and vote today.
LOGO

/s/A. S. Filean
For the Board of Directors
Arthur S. Filean
Senior Vice President and Secretary

August 16, 2002

PRINCIPAL GROWTH FUND, INC.
PRINCIPAL PARTNERS LARGECAP GROWTH FUND, INC.
PROSPECTUS/PROXY STATEMENT

This prospectus/proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Principal Partners LargeCap
Growth Fund, Inc. (the "Partners Growth Fund") for use at a special meeting of
the shareholders of the Partners Growth Fund, to be held at 2:00 p.m. C.D.T., on
October 16, 2002, at the offices of Principal Management Corporation, 680 8th
Street, Des Moines, Iowa 50392-0200, and at any adjournment of the meeting.

At the meeting, Partners Growth Fund shareholders ("you") will vote on an
Agreement and Plan of Acquisition ("Plan"). Under the Plan, if approved,
Principal Growth Fund, Inc. (the "Growth Fund") will acquire all the assets and
assume all the liabilities of the Partners Growth Fund and issue in exchange
shares of its Class A and Class B common stock. The Partners Growth Fund will
immediately redeem all its outstanding Class A and Class B shares by
distributing the Growth Fund shares of the same classes to you. As a result, you
will have the same amount invested in Class A shares and/or Class B shares of
the Growth Fund that you have invested in those share classes of the Partners
Growth Fund at the effective time. The Funds' manager, Principal Management
Corporation, is also a party to the Plan and has agreed to pay all expenses
incurred by the Funds in connection with the Plan.

Both Funds are Maryland corporations organized by Principal Life Insurance
Company ("Principal Life") and registered as open-end, management investment
companies under the Investment Company Act of 1940 (the "Investment Company
Act"). The Growth Fund is a diversified investment company; the Partners Growth
Fund is not. The Growth Fund's primary investment objective is to seek long-term
growth of capital and secondarily growth of investment income. The investment
objective of the Partners Growth Fund is to seek long-term growth of capital.
Both Funds pursue these investment objectives by investing at least 80% of their
assets in common stocks of companies with large market capitalizations (those
with market capitalizations similar to companies in the Russell 1000 Index) at
the time of purchase.

This prospectus/proxy statement sets forth concisely the information you should
know before voting on the proposed Plan. You should retain it for future
reference.

The prospectuses and Statements of Additional Information for the Growth Fund
and the Partners Growth Fund dated March 1, 2002 have been filed with the
Securities and Exchange Commission ("SEC") and are available without charge by
writing to the Funds or their manager at their principal executive offices, 680
8th Street, Des Moines, Iowa 50392-0200 or by telephoning toll-free
1-800-247-4123. The prospectuses of the Growth Fund and Partners Growth Fund
dated March 1, 2002 and the Statement of Additional Information dated August 12,
2002 relating to this prospectus/proxy statement are incorporated herein by
reference. A copy of the Growth Fund's prospectus accompanies this
prospectus/proxy statement.

_____________________

THE SEC HAS NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_____________________

The date of this prospectus/proxy
statement is August 12, 2002

PROSPECTUS/PROXY STATEMENT

TABLE OF CONTENTS

INTRODUCTION AND VOTING INFORMATION................................... 11
Special Meeting; Voting of Proxies; Adjournment..................... 11
Proxy Solicitation.................................................. 11
Revocation of Proxies............................................... 12
Additional Information.............................................. 12
SUMMARY .............................................................. 12
The Plan............................................................ 12
Reasons for the Plan................................................ 12
Investment Objectives and Policies.................................. 13
Fees and Expenses of the Funds...................................... 14
Purchases........................................................... 15
Exchanges........................................................... 16
Redemption Procedures and Fees...................................... 16
Dividends and Distributions......................................... 16
Federal Income Tax Consequences of the Proposed Combination......... 16
Costs and Expenses.................................................. 16
Continuation of Shareholder Accounts................................ 16
PRINCIPAL RISK FACTORS................................................ 17
THE PLAN.............................................................. 18
Agreement and Plan of Acquisition................................... 18
Description of Securities to Be Issued.............................. 18
Reasons for the Proposed Combination................................ 18
Federal Income Tax Consequences..................................... 19
Capitalization...................................................... 20
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE........................... 20
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS........ 20
ADDITIONAL INFORMATION ABOUT THE FUNDS................................ 24
PROPOSALS OF SHAREHOLDERS............................................. 24
OTHER BUSINESS........................................................ 24

APPENDIX A: FORM OF AGREEMENT AND PLAN OF ACQUISITION

INTRODUCTION AND VOTING INFORMATION

SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT
- -----------------------------------------------
We are furnishing this prospectus/proxy statement to you as shareholders of the
Partners Growth Fund in connection with the solicitation by the Board of
Directors of the Partners Growth Fund of proxies to be used at a special meeting
of the shareholders of the Partners Growth Fund to be held on October 16, 2002
and at any adjournment thereof. The purpose of the meeting is to vote on the
Agreement and Plan of Acquisition to which the Partners Growth Fund, the Growth
Fund and the manager of those Funds, Principal Management Corporation, are
parties. The Plan provides for the combination of the Partners Growth Fund with
the Growth Fund, as more fully described below. The prospectus/ proxy statement
is first being furnished to shareholders on or about August 16, 2002.

THE BOARD OF DIRECTORS OF THE PARTNERS GROWTH FUND HAS APPROVED THE PLAN AND
RECOMMENDS THAT THE SHAREHOLDERS OF THE PARTNERS GROWTH FUND VOTE FOR THE PLAN
AND THE TRANSACTIONS WHICH IT CONTEMPLATES.

Shareholders of record of the Partners Growth Fund at the close of business on
August 16, 2002, the record date, are entitled to vote at the meeting. As of the
record date, the Partners Growth Fund had _____ Class A shares and _____ Class B
shares outstanding and entitled to be voted. Shareholders are entitled to one
vote for each share of each Class held. A quorum must be present at the meeting
for the transaction of business. The holders of record of one-third of the
shares outstanding at the close of business on the record date present in person
or represented by proxy will constitute a quorum for the meeting. The approval
of the Plan requires the affirmative vote of a majority of all the votes
entitled to be cast by shareholders of the Partners Growth Fund. Abstentions and
broker non-votes (proxies from brokers or nominees indicating that they have not
received instructions from the beneficial owners on an item for which the broker
or nominee does not have discretionary power) are counted toward a quorum but do
not represent votes cast for the Plan or any other issue. If the shareholders of
the Partners Growth Fund do not approve the Plan, the Funds will consider
possible alternative arrangements, and Principal Management Corporation will
continue to manage the Partners Growth Fund.

The proxies will vote in accordance with your direction, as indicated on your
proxy ballot, if the proxy ballot is received and is properly executed. If you
properly execute your proxy ballot and give no voting instructions with respect
to the Plan, the proxies will vote your shares in favor of the Plan. The
proxies, in their discretion, may vote upon such other matters as may properly
come before the meeting. We are not aware of any other matters expected to come
before the meeting.

If either (i) a quorum is not present at the meeting or (ii) a quorum is present
but sufficient votes in favor of approving the Plan are not received by 12:00
Noon C.D.T., October 16, 2002, then the persons named as proxies in the enclosed
form of proxy may propose one or more adjournments of the meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of at least a majority of the Partners Growth Fund Shares
represented, in person or by proxy, at the session of the meeting to be
adjourned. The proxies will vote those proxies that they are required to vote
FOR the Plan in favor of such an adjournment and will vote those proxies
required to be voted AGAINST the Plan against such an adjournment.

PROXY SOLICITATION
- ------------------
We will solicit proxies primarily by mail. Additional solicitations may be made
by internet, telephone, facsimile or personal contact by officers or employees
of the Partners Growth Fund or Principal Management Corporation who will not be
specially compensated for these services. In addition, the Partners Growth Fund
has retained D.F. King & Co., Inc. to solicit proxies for estimated fees and
expenses of $_____ for the services it provides to the Partners Growth Fund.
Principal Management Corporation will bear the costs of the meeting, including
costs of preparing and mailing the notice, the prospectus/proxy statement, and
the proxy ballot and of soliciting proxies. Banks, brokers, and other persons
holding Partners Growth Fund shares as nominees will be reimbursed for their
reasonable expenses incurred in sending proxy materials to and obtaining voting
information from the beneficial owners of those shares.

The vote of the shareholders of the Growth Fund is not being solicited because
their approval or consent is not necessary for the approval of the Plan.

REVOCATION OF PROXIES
- ---------------------
You may revoke your proxy: (i) at any time prior to the proxy's exercise by
sending written notice to the Secretary of the Partners Growth Fund, at 680 8th
Street, Des Moines, Iowa, 50392-0200 prior to the meeting; (ii) by the
subsequent execution and return of another proxy prior to the meeting; or (iii)
by being present and voting in person at the meeting after giving oral notice of
revocation to the Chairman of the meeting.

ADDITIONAL INFORMATION
- ----------------------
On August 12, 2002, the directors and officers of the Partners Growth Fund
together owned less than 1% of its outstanding shares and the directors and
officers of the Growth Fund together owned less than 1% of its outstanding
shares. Principal Life, Des Moines, Iowa, 50392-0200, an Iowa life insurance
company and the parent of the manager of the Funds, owned of record and
beneficially, either directly or through subsidiaries, _____% of the outstanding
shares of the Growth Fund (including _____% of the Class A shares and _____% of
the Class B shares) and _____% of the outstanding shares of the Partners Growth
Fund (including _____% of the Class A shares and _____% of the Class B shares)
and, based on those holdings, would own at the effective time _____% of the
outstanding shares of the Growth Fund (_____% of the Class A shares and _____%
of the Class B shares). The ultimate parent of Principal Life is Principal
Financial Group, Inc. The Funds do not know of any other person who owned at the
record date, or will own at the effective time, of record or beneficially 5% or
more of the outstanding shares of either Fund.

SUMMARY

The following is a summary of certain information contained or incorporated by
reference in this prospectus/proxy statement. It is qualified in its entirety by
the more detailed information appearing elsewhere or incorporated by reference
in this prospectus/proxy statement.

THE PLAN
- --------
You are being asked to approve the Plan, which provides for the combination of
the Partners Growth Fund with the Growth Fund. Under the Plan, at the effective
time on the closing date, the Growth Fund will acquire all the assets and assume
all the liabilities of the Partners Growth Fund and issue to the Partners Growth
Fund shares of its Class A and Class B common stock having a value equal to the
net assets acquired attributable to each share class. Immediately thereafter,
the Partners Growth Fund will distribute all the Growth Fund shares to its Class
A and Class B shareholders and thereby redeem all its outstanding shares. Each
Partners Growth Fund shareholder will receive Growth Fund shares equal in value
to the shares of the same class of the Partners Growth Fund held by the
shareholder at the effective time. We expect the effective time will be 3:00
p.m. C.S.T. on October 31, 2002, although the effective time is dependent upon
the receipt of an exemptive order from the SEC permitting the transaction.

REASONS FOR THE PLAN
- --------------------
We believe that the Plan will provide shareholders of the Partners Growth Fund
with an investment in a larger growth-oriented fund with a more favorable
expense ratio and greater possibilities for economies of scale than are likely
with the Partners Growth Fund. The table below reflects the investment
performance of each of the Funds for the periods ended June 30, 2002.

Growth -30.53% -4.87% 5.51% -30.49% -4.76% 4.77%
Partners Growth -33.22% -35.79%** N/A -33.16% -35.72%** N/A

. Year-to-Date = 71st percentile
. one-year period = 80th percentile

In part as a result of the decreasing popularity of the Partners Growth Fund's
investment style and the Fund's under-performance, the Partners Growth Fund has
remained small. The Partners Growth Fund's small asset size is insufficient to
generate a competitive expense ratio. For example, the expense ratio of the
Partners Growth Fund's Class A shares, before waiver, was 2.52% versus an
average of 1.33% for Morningstar's LargeCap Growth category (based on the oldest
share class of each fund, generally the Class A shares, and excluding Index
Funds) as of May 31, 2002.

The Partners Growth Fund's Board has concluded that the Partners Growth Fund's
investment style and performance track record will remain a significant
hindrance to sales and that the Partners Growth Fund's expense ratio will remain
uncompetitive, and that it would be appropriate to stop offering shares of the
Partners Growth Fund and to permit the Growth Fund to acquire the assets of the
Partners Growth Fund. The Board of the Partners Growth Fund, including all of
the directors who are not interested persons of the Partners Growth Fund, has
determined that the Plan is consistent with the best interests of the Partners
Growth Fund and its shareholders, that the terms of the Plan are fair and
reasonable and that the interests of the shareholders of the Partners Growth
Fund will not be diluted as a result of the transactions contemplated by the
Plan.

INVESTMENT OBJECTIVES AND POLICIES
- ----------------------------------
The primary investment objective of the Growth Fund is to seek long-term growth
of capital and secondarily growth of investment income. The investment objective
of the Partners Growth Fund is to seek long-term growth of capital. Both Funds
invest primarily in equity securities of large U.S. companies, but the Partners
Growth Fund invests in fewer companies than the Growth Fund. Thus, while the
risks of investing in stock funds in general are similar for the Funds, the
Funds have different risks due to the extent to which each is diversified.

INVESTMENT ADVISORY SERVICES
- ----------------------------
Principal Management Corporation ("the Manager") serves as investment advisor to
the Growth Fund and Partners Growth Fund. The Manager has entered into a
sub-advisory agreement with Invista Capital Management, LLC ("Invista") to
provide investment advisory services to the Growth Fund. Invista is an indirect
wholly-owned subsidiary of Principal Life Insurance Company and an affiliate of
the Manager. The Manager has entered into a sub-advisory agreement with
Duncan-Hurst Capital Management Inc. (Duncan-Hurst) to provide investment
advisory services to the Partners Growth Fund. Duncan-Hurst is not an affiliate
of the Manager.

The Manager pays Invista a smaller percentage of the fee it receives from the
Growth Fund compared to the percentage it pays to Duncan-Hurst from fees it
receives from the Partners Growth Fund. The Manager also currently waives a
portion of the management fee for services it provides to the Partners Growth
Fund. If the Plan is approved, the combined assets of the Funds will be
sub-advised by an affiliated sub-advisor, the Manager will retain a larger
portion of the advisory fees paid with respect to the former assets of the
Partners Growth Fund and none of such fees will be paid to an unaffiliated
sub-advisor.

FEES AND EXPENSES OF THE FUNDS
- ------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of either Fund.

SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B
----------------------- ---------------------

/
Maximum sales charge imposed
on purchases (as a % of
offering price) 4.75%/(1)/ None
Maximum Contingent Deferred
Sales Charge ("CDSC") (as a%
of dollars subject to charge) None/(2)/ 4.00/(3)/
Redemption or Exchange Fee 1.00%/(4)(5)/ 1.00/(5)/
/ /
///(1)/
Sales charges are reduced or eliminated for purchases of $50,000 or more./
/
///(2)/
A contingent deferred sales charge of 1% applies on certain redemptions
made within 18 months following purchases of $1 million or more made
without a sales charge.//
///(3)/Contingent deferred sales charges are reduced after 12 months and
eliminated after 6 years.
///(4)/
Redemption fees are charged on redemptions of $30,000 or more of shares
redeemed within 30 days after they are purchased.
///(5)/
Exchange fees are charged on redemptions of $30,000 or more of shares
exchanged within 30 days after they are purchased.

ONE-TIME FEES
. You may pay a one-time sales charge for each purchase (Class A shares)
or redemption (Class B shares).
. Class A shares may be purchased at a price equal to the share price plus
an initial sales charge. Investments of $1 million or more of Class A
shares are sold without an initial sales charge but may be subject to a
CDSC at the time of redemption.
. Class B shares have no initial sales charge but may be subject to a
CDSC. If you sell (redeem) shares and the CDSC is imposed, it will
reduce the amount of sales proceeds.
. A redemption fee of 1.00% is charged on redemptions of Class A shares of
$30,000 or more if the shares were purchased within 30 days of the
redemption. The fee is calculated as a percentage of market value at the
time the shares are redeemed.
. An exchange fee of 1.00% is charged on exchanges of $30,000 or more
among the Funds if the shares were purchased within 30 days of the
exchange. The fee is calculated as a percentage of market value at the
time the shares are exchanged.

The operating expenses attributable to the Class A and Class B shares of the
Funds (as a percentage of the average daily net assets) for the fiscal year
ended October 31, 2001 were as follows:

PARTNERS GROWTH FUND GROWTH FUND
-------------------- -----------
FUND OPERATING EXPENSES CLASS A CLASS B CLASS A CLASS B
----------------------- ------- ------- ------- -------

Management Fees 0.90%* 0.90%* 0.57% 0.57%
12b-1 Fees 0.25 0.87 0.25 0.72
Other Expenses 1.54 1.72 0.48 0.59
Total Operating Expenses 2.69% 3.49% 1.30% 1.88%
*The Manager has voluntarily agreed to waive a portion of its fee for the Partners Growth Fund. The Manager intends to continue
the waiver and, if necessary, pay expenses normally payable by the Partners Growth Fund through the period ending February 28,
2003. The effect of the waiver is to reduce the Partners Growth Fund's annual operating expenses. The waiver will maintain a
total level of operating expenses (expressed as a percent of average net assets attributable to a Class on an annualized basis)
not to exceed:
1.95% for Class A Shares
2.70% for Class B Shares

The Growth Fund's expenses, assuming implementation of the Plan on November 1,
2000, as a percentage of average daily net assets are as follows:

GROWTH FUND
-----------
FUND OPERATING EXPENSES CLASS A CLASS B
----------------------- ------- -------

Management Fees 0.57% 0.57%
12b-1 Fees 0.25 0.73
Other Expenses 0.49 0.58
---- ----
Total Operating Expenses 1.31% 1.88%

The following is an example of the effect of the operating expenses of the
Funds. The examples assume (1) a 5% annual return, and (2) the Funds' operating
expenses remain the same. Although your actual costs may be higher or lower, you
would pay the following expenses on a $10,000 investment in shares of the Funds,
based upon these assumptions:

IF YOU DO NOT SELL YOUR SHARES
-----------------------------------------------------------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES
-----------------------------------------------------------------------------------------
1-YEAR 3-YEARS 5-YEARS 10-YEARS
------------------------------------ --------------- --------------- ---------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- ------- ------- -------

Growth Fund $601 $603 $ 868 $ 920 $1,154 $1,249 $1,968 $1,979
Partners Growth Fund 734 758 1,271 1,385 1,832 2,028 3,354 3,504

Growth Fund $601 $191 $ 868 $ 591 $1,154 $1,016 $1,968 $1,979
Partners Growth Fund 736 352 1,271 1,071 1,832 1,812 3,354 3,504

PURCHASES
- ---------
Each Fund offers its shares for sale through Princor Financial Services
Corporation, a broker-dealer that is also the principal underwriter for the
Funds, or other dealers which it selects.

ONGOING FEES
- ------------
Each Fund pays ongoing fees to its Manager, Underwriter and others who provide
services to the Fund. They reduce the value of each share you own.

DISTRIBUTION (12B-1) FEES
- -------------------------
Each of the Funds has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act of 1940. Under the Distribution Plans, the Funds pay a
fee to Princor based on their average daily net asset values. These ongoing fees
pay expenses relating to distribution fees for sales of shares of the Funds and
for services provided by Princor and other selling dealers to shareholders.
Because they are ongoing fees, over time they may exceed other types of sales
charges.

. Class A shares ..................0.25%
. Class B shares ..................1.00%

EXCHANGES
- ---------
Shares of both Funds may be exchanged, without a sales charge or CDSC, for
shares of the same class of other funds sponsored by Principal Life Insurance
Company. If Class B shares of the Funds are exchanged for Class B shares of
other funds, the shares acquired will be subject to the applicable CDSC imposed
by the new fund; however, the holding period of the Class B shares exchanged is
added to the holding period of the Class B shares acquired for purposes of
determining the applicable charge.

REDEMPTION PROCEDURES AND FEES
- ------------------------------
Shares of the Funds may be redeemed at a price equal to the net asset value of
the shares next computed following the receipt of a request for redemption in
proper form.

The amount you receive will be reduced by any applicable CDSC or redemption fee.
Generally, the sale proceeds are sent out on the next business day after the
sell order has been placed.

DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
The Growth Fund and Partners Growth Fund pay their net investment income on an
annual basis. Payments are made to shareholders of record on the business day
prior to the payment date. The payment date is December 19th (or previous
business day).

Net realized capital gains, if any, are distributed annually. Generally the
distribution is made on the second business day of December. Payments are made
to shareholders of record on the business day prior to the payable date. Capital
gains may be taxable at different rates, depending on the length of time that
the Fund holds its assets.

Immediately prior to the reorganization, each of the Funds will pay a dividend
or dividends which, together with all previous dividends, will have the effect
of distributing to their respective shareholders all of their investment company
taxable income for taxable years ending on or prior to the reorganization
(computed without regard to any deduction for dividends paid) and all of its net
capital gains, if any, realized in taxable years ending on or prior to the
reorganization (after reduction for any available capital loss carry forward).
Such dividends will be included in the taxable income of each Fund's respective
shareholders.

FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED COMBINATION
- -----------------------------------------------------------
The combination will be a tax-free "reorganization" under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). In the opinion of tax
counsel to the Funds, no gain or loss will be recognized by either Fund or its
shareholders in connection with the combination, and the tax cost basis of the
Growth Fund shares received by Partners Growth Fund shareholders will equal the
tax cost basis of their shares in the Partners Growth Fund and their holding
period of the Growth Fund shares will include the time during which the
shareholders held the Partners Growth Fund shares.

COSTS AND EXPENSES
- ------------------
Principal Management Corporation will bear all out-of-pocket fees and expenses
incurred by the Funds in connection with the transactions contemplated by the
Plan.

CONTINUATION OF SHAREHOLDER ACCOUNTS
- ------------------------------------
At the effective time, you will cease to be a shareholder of the Partners Growth
Fund and will become a shareholder of the Growth Fund owning Class A shares
and/or Class B shares of the Growth Fund having the same value as the investment
you had in the Partners Growth Fund at the effective time.

PRINCIPAL RISK FACTORS

The primary investment objective of the Growth Fund is to seek long-term growth
of capital and secondarily growth of investment income. The investment objective
of the Partners Growth Fund is to seek long-term growth of capital. Both Funds
invest primarily in equity securities of large U.S. companies, but the Partners
Growth Fund invests in fewer companies than the Growth Fund. Thus, while the
risks of investing in stock funds in general are similar for the Funds, the
Funds have different risks due to the extent to which each is diversified. As
with all mutual funds, as the values of the assets of Growth Fund and Partners
Growth Fund rise or fall, the Funds' share prices change. If you sell your
shares when their value is less than the price you paid, you will lose money.

MAIN RISKS FOR GROWTH FUND
Because it purchases equity securities, the Growth Fund is subject to the risk
that stock prices will fall over short or extended periods of time. Individual
companies may report poor results or be negatively affected by industry and/or
economic trends and developments. In response, the price of securities issued by
such companies may decline. These factors contribute to price volatility, which
is the principal risk of investing in the Growth Fund.

Foreign stocks carry risks that are not generally found in stocks of U.S.
companies. These include the risk that a foreign security could lose value as a
result of political, financial and economic events in foreign countries. In
addition, foreign securities may be subject to securities regulators with less
stringent accounting and disclosure standards than are required of U.S.
companies.

In addition, the Growth Fund is subject to the risk that its principal market
segment, large capitalization growth stocks, may under-perform compared to other
market segments or to the equity markets as a whole. The securities purchased by
the Growth Fund present greater opportunities for growth because of high
potential earnings growth, but may also involve greater risks than securities
that do not have the same potential. The value of the Growth Fund's securities
may fluctuate on a daily basis. As with all mutual funds, as the values of the
Growth Fund's assets rise or fall, the fund's share price changes. If you sell
your shares when their value is less than the price you paid, you will lose
money.

MAIN RISKS FOR PARTNERS GROWTH FUND
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of the stocks owned by the Partners Growth
Fund changes on a daily basis. The current price reflects the activities of
individual companies and general market conditions. In the short-term, stock
prices fluctuate dramatically in response to these factors. As a result, the
value of an investment in the Partners Growth Fund will go up and down. As with
all mutual funds, as the values of the Partners Growth Fund's assets rise or
fall, the fund's share price changes. If you sell your shares when their value
is less than the price you paid, you will lose money.

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Partners Growth Fund's performance may
sometimes be lower or higher than that of other funds.

The Partners Growth Fund may actively trade portfolio securities in an attempt
to achieve its investment objective. Active trading will cause an increased
portfolio turnover rate that increases the Partners Growth Fund's trading costs
and may have an adverse impact on performance.

The Partners Growth Fund is a non-diversified company, as defined in the
Investment Company Act of 1940, as amended, which means that a relatively high
percentage of assets of the Partners Growth Fund may be invested in the
obligations of a limited number of issuers. The value of the shares of the
Partners Growth Fund may be more susceptible to a single economic, political or
regulatory occurrence than the shares of a diversified investment company.

THE PLAN

AGREEMENT AND PLAN OF ACQUISITION
- ---------------------------------
The terms of the Plan are summarized below. The summary is qualified in its
entirety by reference to the Plan, a copy of which is attached as Appendix A.

Under the Plan, the Growth Fund will acquire all the assets and assume all the
liabilities of the Partners Growth Fund and will issue to the Partners Growth
Fund the number of shares of Class A and Class B Common Stock of the Growth Fund
that have a net asset value equal to the net asset value attributable to Class A
and Class B shares of the Partners Growth Fund. We expect that the closing
date will be October 31, 2002, assuming shareholder approval of the Plan and the
obtaining of an SEC order permitting the transaction, and that the effective
time will be the close of regular trading on the NYSE at 4:00 P.M., Eastern
Time, on that date. The Funds will determine their net asset values as of the
effective time using the procedures described in the Growth Fund's prospectus
(which are indentical to the procedures applicable to the Partners Growth Fund).
The Growth Fund will issue to the Partners Growth Fund a number of Class A and
Class B shares equal to the value of the net assets of the Partners Growth Fund
Class A and Class B shares outstanding at the effective time. The Partners
Growth Fund will be managed such that at the effective time it will hold only
cash or other securities that are eligible investments for the Growth Fund.

Immediately after the effective time, the Partners Growth Fund will distribute
to you its Growth Fund shares of the same class as the shares you own of the
Partners Growth Fund in exchange for all your Partners Growth Fund shares of
that class. Each Partners Growth Fund shareholder will receive shares of the
Growth Fund that are equal in value to the shares of the class of the Partners
Growth Fund that are given up by the shareholder in the exchange. In connection
with the exchange, the Growth Fund will credit on its books an appropriate
number of its shares to the account of each Partners Growth Fund shareholder,
and the Partners Growth Fund will cancel on its books all its shares registered
to the account of that shareholder. Any outstanding certificate for Partners
Growth Fund shares that is not surrendered will be deemed to represent the
number of Growth Fund shares for which the Partners Growth shares have been
exchanged. After the effective time, the Partners Growth Fund will dissolve in
accordance with applicable law.

The consummation of the transactions contemplated by the Plan is subject to the
approval of the Plan by the shareholders of the Partners Growth Fund, the
continued correctness at the closing of the representations and warranties of
the Partners Growth Fund in the Plan, the delivery by the Partners Growth Fund
to the Growth Fund of a list of assets and liabilities being transferred and the
Partners Growth Fund's receipt of an SEC order permitting the transaction. The
Plan may be amended in any manner mutually-agreeable to the Funds, except that
no amendment may be made to the Plan which in the opinion of the Board of
Directors of the Partners Growth Fund would materially adversely affect the
interests of the shareholders of that Fund. Either Fund may terminate the Plan
at any time before the effective time if it believes that consummation of the
transactions contemplated by the Plan would not be in the best interests of its
shareholders.

Principal Management Corporation, the manager of the Funds, will pay all fees
and out-of-pocket expenses incurred by the Funds in connection with the
transactions contemplated by the Plan.

DESCRIPTION OF SECURITIES TO BE ISSUED
- --------------------------------------
The Class A and Class B Shares of the Growth Fund are shares of common stock,
par value $.01 per share. They have the same rights with respect to the Growth
Fund as the Class A and Class B Shares of the Partners Growth Fund have with
respect to the Partners Growth Fund. Each share is entitled to one vote and has
equal rights with every other share as to dividends, earnings, voting, assets
and redemption. There is no cumulative voting for directors. Shares are fully
paid and non-assessable, have no preemptive or conversion rights and are freely
transferable. Each fractional share has proportionately the same rights as are
provided for a full share. As of ______________, 2002, the Growth Fund had
________ Class A shares and ________ Class B shares outstanding.

REASONS FOR THE PROPOSED COMBINATION
- ------------------------------------
The Partners Growth Fund uses an investment strategy of investing in a
relatively small number of companies that exhibit accelerating earnings and
relative price strength. This investment strategy, often referred to as
"momemtum investing", has become unpopular with many investors due to the
relative risk and volatility. In addition, the Partners Growth Fund, whose
inception was in March 2000, has a history of under-performance relative to
other largecap growth funds. As of April 30, 2002, the Fund's percentile
rankings relative to all funds in Morningstar's LargeCap Growth category were:

. Year-to-Date = 71st percentile
. 1-year period = 80th percentile

In part as a result of decreasing popularity of the Fund's inestment style and
the Fund's continuous under-performance, the Fund has remained small. The Fund's
small asset size is insufficient to generate a competitive expense ratio. For
example, the expense ratio of the Fund's Class A shares was 2.52% versus an
average of 1.33% for Morningstar's LargeCap Growth category (based on the oldest
share class of each fund, generally the Class A shares, and excluding Index
Funds) as of May 31, 2002.

The Partners Growth Fund's Board has concluded that the Partners Growth Fund's
investment style and performance track record will remain a significant
hindrance to sales and that the Fund's expense ratio will remain uncompetitive,
and that it would be appropriate to stop offering shares of the Partners Growth
Fund and to permit the Growth Fund to acquire the assets of the Partners Growth
Fund. The Board of the Partners Growth Fund, including all of the directors who
are not interested persons of the Fund, has determined that the Plan is
consistent with the best interests of the Partners Growth Fund and its
shareholders, that the terms of the Plan are fair and reasonable and that the
interests of the shareholders of the Partners Growth Fund will not be diluted as
a result of the transactions contemplated by the Plan.

The Plan has been approved by the Board of Directors of each of the Funds,
including all of the directors of each Fund who are not "interested persons" of
that Fund as defined in Section 2(a)(19) of the Investment Company Act. In
approving the Plan, the Boards considered the investment objectives of the two
Funds and determined that interests of the existing shareholders in their
respective Funds will not be diluted as a result of the transactions
contemplated by the Plan. The Partners Growth Fund Board considered the
following factors, among others: (1) possible alternatives to the Plan; (2) the
terms and conditions of the Plan and whether its implementation would result in
dilution of shareholder interests or involve overreaching by any person
concerned; (3) the advantages to the Partners Growth Fund's shareholders of
investing in a larger asset pool with greater diversification; (4) the possible
benefits of a larger asset base to portfolio management of the Growth Fund; (5)
any direct or indirect fees or expenses incurred by the Funds as a result of the
Plan; (6) expense ratios and available information regarding the fees and
expenses of the Funds, including any change in fees or expenses to be paid or
borne by shareholders of the Partners Growth Fund (direct or indirectly) as a
result of the Plan; (7) comparative investment performances of the Funds; (8)
the direct or indirect federal income tax consequences of the Plan to
shareholders of the Partners Growth Fund; (9) the continuity of or changes in
services to be provided to shareholders following implementation of the Plan;
and (10) the compatibility of the investment objectives and policies of the
Funds and changes with respect to the investment objectives and policies of the
Partners Growth Fund that will result from the Plan.

FEDERAL INCOME TAX CONSEQUENCES
- -------------------------------
To be considered a tax-free "reorganization" under Section 368 of the Code, a
reorganization must exhibit a continuity of business enterprise. Because the
Growth Fund will use a portion of the Partners Growth Fund's assets in its
business and will continue the Partners Growth Fund's historic business, the
combination of the Partners Growth Fund with the Growth Fund will exhibit a
continuity of business enterprise. Therefore, the combination will be considered
a tax-free "reorganization," under applicable provisions of the Code. In the
opinion of tax counsel to the Funds, no gain or loss will be recognized by
either Fund or its shareholders in connection with the combination, the tax cost
basis of the Growth Fund shares received by Partners Growth Fund shareholders
will equal the tax cost basis of their shares in the Partners Growth Fund, and
their holding periods for the Growth Fund shares will include their holding
periods for the Partners Growth Fund shares.

As of October 31, 2001, Partners Growth Fund had accumulated capital loss
carryforwards in the amount of approximately $6,725,069. After the
reorganization, these losses will be available to the Growth Fund to offset its
capital gains, although the amount of offsetting losses available in any given
year may be limited. As a result of this limitation, it is possible that the
Growth Fund may not be able to use these losses as rapidly as the Partners
Growth Fund might have, and part of these losses may not be useable at all. The
ability of the Growth Fund to absorb losses in the future depends upon a variety
of factors that cannot be known in advance, including the existence of capital
gains against which these losses may be offset. In addition, the benefits of any
capital loss carryfowards currently are available only to shareholders of
Partners Growth Fund. After the reorganization, however, these benefits will
inure to the benefit of all shareholders of the Growth Fund.

The foregoing is only a summary of the principal federal income tax consequences
of the combination and should not be considered to be tax advice. There can be
no assurance that the Internal Revenue Service will concur on all or any of the
issues discussed above. You may wish to consult with your own tax advisers
regarding the federal, state, and local tax consequences with respect to the
foregoing matters and any other considerations which may apply in your
particular circumstances.

CAPITALIZATION
- --------------
The following table shows the capitalization of the Partners Growth Fund and the
Growth Fund separately, as of October 31, 2001, and combined in the aggregate
(unaudited), as of that date, giving effect to the Plan:

PARTNERS GROWTH FUND GROWTH FUND COMBINED
------------ ----------- --------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------

Net Assets $6,631,790 $2,580,847 $291,540,943 $64,110,907 $298,172,733 $66,691,754
Net Asset Value Per Share $4.43 $4.38 $27.06 $26.43 $27.06 $26.43
Shares Outstanding 1,495,598 589,131 10,773,118 2,425,754 11,018,195 2,523,402

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

For the one-year period ended October 31, 2001, the Growth Fund declined 44.63%,
lagging the Russell 1000 Growth index, which dropped 39.95%. The Growth Fund's
performance benefited from its holdings in financials and health care, which
held up during a difficult economic environment. Consumers remained relatively
resilient during the year and the portfolio benefited from an overweighted
position in these sectors. These positives were offset by the Growth Fund's
technology holdings - key components of information technology spending in the
U.S. economy. As companies experienced flagging demand, capital spending was put
on hold. We continue to believe that we hold market share leaders in the
critical parts of technology spending. Moreover, these companies have solid
balance sheets and are well managed, suggesting they will weather the storm.
Since technology company stock prices can anticipate a resurgence in capital
spending by 9 to 12 months, the Growth Fund is maintaining its positions in
anticipation of an economic recovery in 2002.

S&P 500 Lipper Morningstar

Total Return Stock Large-Cap Large
Growth Growth
Year Ended October GRO w/Sales Index Total Fund Avg. Total Category Total
- ------------------ --- ------- ----- Return --------- Return -------- Return
31, Charge
- --- ------
9,525 10,000 10,000 10,000
1992 10,931 14.76% 10,997 9.97% 10,786 7.86% 10,764 7.64%
1993 12,006 9.83% 12,637 14.91% 12,627 17.07% 12,624 17.28%
1994 13,185 9.82% 13,125 3.86% 12,821 1.54% 12,919 2.34%
1995 16,256 23.29% 16,591 26.41% 15,895 23.98% 16,110 24.70%
1996 17,979 10.60% 20,586 24.08% 18,831 18.47% 19,065 18.34%
1997 23,292 29.55% 27,194 32.10% 23,968 27.28% 24,092 26.37%
1998 26,825 15.17% 33,174 21.99% 26,274 9.62% 27,793 15.36%
1999 31,509 17.46% 41,686 25.66% 32,349 23.12% 38,249 37.62%
2000 35,492 12.64% 44,225 6.09% 37,318 15.36% 44,663 16.77%
2001 20,631 -41.87% 33,213 -24.90% 22,865 -38.73% 27,280 -38.92%

Average Annual Total Returns
as of October 31, 2001
Class 1 Year 5 Year 10 Year Life of Fund
A -44.63% 1.80% 7.51%
B -43.71% 1.94% - 7.14%*
C -43.24% - - -18.93%**
R -42.13% 2.31% - 2.29%***

LOGO

Due to continuing concerns about the U.S. economy, growth stocks underperformed
value stocks over the past year. However, growth stocks have outperformed value
since market lows were established after the September 11 terrorist attacks.
Since the beginning of the year, the Federal Reserve has aggressively lowered
the federal funds rate from 6.5% to 2.5% as of October 31, 2001. Moreover,
inflation will likely remain tame due to slowing economic activity. Although we
expect the economy to pause in the wake of the political events, we think the
aggressive monetary and fiscal policy will eventually take hold. Accordingly, we
think the recent gains in the stock market reflect expectations of an economic
recovery later next year. If so, the rising stock market and low inflation will
be a positive for growth stocks over the next year.

We believe continuing declines in inflation will make growth stock investing
very rewarding over the long term. In an economy where corporations are unable
to raise prices, growth will be highly valued. Despite the difficult downturn in
capital spending over the past year, U.S. corporations will continue their
investments in innovation and productivity enhancing products once the economy
improves. Technology, health care, financials, consumer cyclicals and
communications will likely offer above average growth over the next three to
five years.

COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

The investment objectives of the Funds are fundamental and certain investment
restrictions which are designated as such in each Fund's prospectus or statement
of additional information are fundamental policies that may not be changed
without approval by the holders of the lesser of: (i) 67% of the Fund's shares
present or represented at a shareholder's meeting at which the holders of more
than 50% of such shares are present or represented by proxy; or (ii) more than
50% of the outstanding shares of the Fund. All other investment policies and
restrictions are not fundamental and may be changed by a Fund's Board of
Directors without shareholder approval.

GROWTH FUND
- -----------
The Growth Fund seeks long-term growth of capital and secondarily growth of
investment income through the purchase primarily of common stocks, but the
Growth Fund may invest in other securities.

GROWTH FUND STRATEGY
The Growth Fund invests primarily in common stocks and other equity securities
of large capitalization companies with strong earnings growth potential. Under
normal market conditions, the Growth Fund invests at least 80% of its assets in
common stocks of companies with large market capitalizations (those with market
capitalizations similar to companies in the Russell 1000 Growth Index) at the
time of purchase. Market capitalization is defined as total current market value
of a company's outstanding common stock.

The Sub-Advisor, Invista, uses a bottom-up approach in its selection of
individual securities that it believes have an above average potential for
earnings growth. Selection is based on fundamental analysis of a company
relative to other companies with the focus being on Invista's assessment of
current and future sales growth and operating margins. Companies meeting these
criteria typically have progressed beyond the development stage and are focused
on growing the business. Up to 25% of Growth Fund assets may be invested in
foreign securities.

Invista places strong emphasis on companies it believes are guided by high
quality management teams with a proven ability to execute. In addition, the
Growth Fund attempts to identify and emphasize those companies that are market
leaders possessing the ability to control pricing and margins in their
respective industries. Invista constructs a portfolio that is "benchmark aware"
in that it is sensitive to the sector (companies with similar characteristics)
and security weightings of its benchmark. However, the Growth Fund is actively
managed and prepared to over- and/or under-weight sectors and industries
differently from the benchmark.

PARTNERS GROWTH FUND
- --------------------
The Partners Growth Fund seeks to achieve long-term growth of capital by
investing primarily in common stocks of larger capitalization domestic
companies.

PARTNERS GROWTH FUND STRATEGY
The Partners Growth Fund is a non-diversified fund that invests primarily in
equity securities of companies in the U.S. with comparatively larger market
capitalizations. Under normal market conditions, the Partners Growth Fund
invests at least 80% of its assets in common stocks of companies with large
market capitalizations (those with market capitalizations similar to companies
in the Russell 1000 Index) at the time of purchase. In addition, the Partners
Growth Fund may invest up to 25% of its assets in securities of foreign issuers.

In selecting securities for investment, the Sub-Advisor, Duncan-Hurst, looks at
stocks it believes have prospects for above average growth over an extended
period of time. Duncan-Hurst seeks to identify companies with accelerating
earnings growth and positive company fundamentals. While economic forecasting
and industry sector analysis play a part in its research effort, Duncan-Hurst's
stock selection process begins with individual company analysis. This is often
referred to as a bottom-up approach to investing. From a group of companies that
meet Duncan-Hurst's standards, it selects the securities of those companies that
it believes will have accelerating earnings growth. In making this
determination, Duncan-Hurst considers certain characteristics of a particular
company including new product development, management change and competitive
market dynamics

In addition to having similar investment objectives, the Funds have many similar
investment policies and restrictions.

GROWTH FUND INVESTMENT POLICIES AND RESTRICTIONS

Fundamental Restrictions
- ------------------------
Each of the following restrictions for the Growth Fund is a matter of
fundamental policy and may not be changed without shareholder approval. The
Growth Fund may not:
. Concentrate its investments in any one industry. No more than 25% of the
value of its total assets will be invested in any one industry.
. Invest more than 5% of its total assets in the securities of any one issuer
(other than obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities) or purchase more than 10% of the outstanding
voting securities of any one issuer, except that these limitations shall
apply only with respect to 75% of the Fund's total assets.

. Underwrite securities of other issuers, except that the Fund may acquire
portfolio securities under circumstances where if sold the Fund might be
deemed an underwriter for purposes of the Securities Act of 1933.
. Purchase securities of any company with a record of less than three years'
continuous operation (including that of predecessors) if the purchase would
cause the value of the Fund's aggregate investments in all such companies to
exceed 5% of the Fund's total assets.
. Engage in the purchase and sale of illiquid interests in real estate. For
this purpose, readily marketable interests in real estate investment trusts
are not interests in real estate.
. Invest in commodities or commodity contracts, but it may purchase and sell
financial futures contracts and options on such contracts.
. Purchase or retain in its portfolio securities of any issuer if those
officers and directors of the Fund or its Manager owning beneficially more
than one-half of one percent (0.5%) of the securities of the issuer together
own beneficially more than 5% of such securities.
. Purchase securities on margin, except it may obtain such short-term credits
as are necessary for the clearance of transactions. The Fund may not sell
securities short (except where the Fund holds or has the right to obtain at
no added cost a long position in the securities sold that equals or exceeds
the securities sold short). The deposit or payment of margin in connection
with transactions in options and financial futures contracts is not
considered the purchase of securities on margin. The Fund will not issue or
acquire put and call options.
. Invest more than 5% of its assets at the time of purchase in rights and
warrants (other than those that have been acquired in units or attached to
other securities).
. Invest more than 25% of its total assets in securities of foreign issuers.
. The Fund may not make loans, except that the Fund may a) purchase and hold
debt obligations in accordance with its investment objective and policies,
b) enter into repurchase agreements, and c) lend its portfolio securities
without limitation against collateral (consisting of cash or securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities) equal at all times to not less than 100% of the value of
the securities loaned.
. The Fund does not propose to borrow money except for temporary or emergency
purposes from banks in an amount not to exceed the lesser of a) 5% of the
value of the Fund's assets, less liabilities other than such borrowings, or
b) 10% of the Fund's assets taken at cost at the time such borrowing is
made. The Fund may not pledge, mortgage, or hypothecate its assets (at
value) to an extent greater than 15% of the gross assets taken at cost. The
deposit of underlying securities and other assets in escrow and other
collateral arrangements in connection with transactions in put and call
options, futures contracts and options on futures contracts are not deemed
to be pledges or other encumbrances.

Non-Fundamental Restrictions
- ----------------------------
The Growth Fund has also adopted the following restrictions that are not
fundamental policies and may be changed without shareholder approval. The Growth
Fund may not:
. Invest in companies for the purpose of exercising control or management.
. Purchase warrants in excess of 5% of its total assets, of which 2% may be
invested in warrants that are not listed on the New York or American Stock
Exchange.
. Invest more than 15% of its total assets in securities not readily
marketable and in repurchase agreements maturing in more than seven days.
. Invest more than 5% of its assets in real estate limited partnership
interests.
. Invest in interests in oil, gas, or other mineral exploration or development
programs, but the Fund may purchase and sell securities of companies which
invest or deal in such interests.
. Invest more than 10% of its assets in securities of other investment
companies, invest more than 5% of its total assets in the securities of any
one investment company, or acquire more than 3% of the outstanding voting
securities of any one investment company except in connect with a merger,
consolidation or plan of reorganization.
. Enter into a) any futures contracts and related options for non-bona fide
hedging purposes within the meaning of Commodity Futures Trading Commission
(CFTC) regulations if the aggregate initial margin and premiums required to
establish such positions will exceed 5% of the fair market value of the
Fund's net assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into; and b) any
futures contracts if the aggregate amount of such Fund's commitments under
outstanding futures contracts positions would exceed the market value of its
total assets.

PARTNERS GROWTH FUND INVESTMENT POLICIES AND RESTRICTIONS

Fundamental Restrictions
- ------------------------
Each of the following numbered restrictions for the Partners Growth Fund is a
matter of fundamental policy and may not be changed without shareholder
approval. The Partners Growth Fund may not:
. Issue any senior securities as defined in the 1940 Act, as amended.
Purchasing and selling securities and futures contracts and options thereon
and borrowing money in accordance with restrictions described below do not
involve the issuance of a senior security.
. Invest in physical commodities or commodity contracts (other than foreign
currencies), but it may purchase and sell financial futures contracts,
options on such contracts, swaps and securities backed by physical
commodities.
. Invest in real estate, although it may invest in securities that are secured
by real estate and securities of issuers that invest or deal in real estate.
. Borrow money, except that it may a) borrow from banks (as defined in the
1940 Act, as amended) or other financial institutions or through reverse
repurchase agreements in amounts up to 33 1/3% of its total assets
(including the amount borrowed); b) to the extent permitted by applicable
law, borrow up to an additional 5% of its total assets for temporary
purposes; c) obtain short-term credits as may be necessary for the clearance
of purchases and sales of portfolio securities; and d) purchase securities
on margin to the extent permitted by applicable law (the deposit or payment
of margin in connection with transactions in options and financial futures
contracts is not considered purchase of securities on margin).
. Make loans, except that the Fund may a) purchase and hold debt obligations
in accordance with its investment objective and policies; b) enter into
repurchase agreements; and c) lend its portfolio securities without
limitation against collateral (consisting of cash or securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities)
equal at all times to not less than 100% of the value of the securities
loaned. This limit does not apply to purchases of debt securities or
commercial paper.
. Act as an underwriter of securities, except to the extent that the Fund may
be deemed to be an underwriter in connection with the sale of securities
held in its portfolio.
. Concentrate its investments in any particular industry, except that the Fund
may invest up to 25% of the value of its total assets in a single industry,
provided that, when the Fund has adopted a temporary defensive posture,
there shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
. Sell securities short (except where the Fund holds or has the right to
obtain at no added cost a long position in the securities sold that equals
or exceeds the securities sold short).

Non-Fundamental Restrictions
- ----------------------------
The Partners Growth Fund has also adopted the following restrictions that are
not fundamental policies and that may be changed without shareholder approval.
It is contrary to the Partners Growth Fund's present policy to:
. Invest more than 15% of its net assets in illiquid securities and in
repurchase agreements maturing in more than seven days except to the extent
permitted by applicable law.
. Pledge, mortgage or hypothecate its assets, except to secure permitted
borrowings. The deposit of underlying securities and other assets in escrow
and other collateral arrangements in connection with transactions in put or
call options, futures contracts and options on futures contracts are not
deemed to be pledges or other encumbrances.
. Invest in companies for the purpose of exercising control or management.
. Invest more than 25% of its total assets in securities of foreign issuers.
. Enter into a) any futures contracts and related options for non-bona fide
hedging purposes within the meaning of Commodity Futures Trading Commission
(CFTC) regulations if the aggregate initial margin and premiums required to
establish such positions will exceed 5% of the fair market value of the
Fund's net assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into; and b) any
futures contracts if the aggregate amount of such Fund's commitments under
outstanding futures contracts positions would exceed the market value of its
total assets.
. Invest more than 5% of its total assets in real estate limited partnership
interests.
. Acquire securities of other investment companies, except as permitted by the
1940 Act, as amended, or any rule, order or interpretation thereunder, or in
connection with a merger, consolidation, reorganization, acquisition of
assets or an offer of exchange. The Fund may purchase securities of
closed-end investment companies in the open market where no underwriter or
dealer's commission or profit, other than a customary broker's commission,
is involved.

The Partners Growth Fund has also adopted a non-fundamental restriction which
requires it, under normal circumstances, to invest at least 80% of its net
assets in common stocks of companies with large market capitalizations (those
with market capitalization similar to companies in the Russell 1000 Index). The
Partners Growth Fund will provide 60-days notice to shareholders prior to
implementing a change in this policy for the Fund.

INVESTMENT ADVISORY SERVICES
- ----------------------------
Principal Management Corporation ("the Manager") serves as investment advisor to
the Growth Fund and Partners Growth Fund. The Manager has entered into a
sub-advisory agreement with Invista Capital Management, LLC ("Invista") to
provide investment advisory services to the Growth Fund. Invista is an indirect
wholly-owned subsidiary of Principal Life Insurance Company and an affiliate of
the Manager. The Growth Fund paid the Manager a fee equal to 0.57% of the Growth
Fund's average daily net assets for services provided during the fiscal year
ended October 31, 2001 and the Manager paid Invista a sub-advisory fee equal to
0.07% of such assets.

The Manager has entered into a sub-advisory agreement with Duncan-Hurst Capital
Management Inc. (Duncan-Hurst) to provide investment advisory services to the
Partners Growth Fund. Duncan-Hurst is not an affiliate of the Manager. The
Partners Growth Fund paid the Manager a fee equal to 0.90% before waiver (0.16%
for the Class A shares and 0.11% for the Class B shares after waiver) of the
Partners Growth Fund's average daily net assets for services provided during the
fiscal year ended October 31, 2001 and the Manager paid Duncan-Hurst a
sub-advisory fee of 0.50% of such assets.

If the Plan is approved, the combined assets of the Funds will be sub-advised by
an affiliated sub-advisor, the Manager will retain a larger portion of the
advisory fees paid with respect to the former assets of the Partners Growth Fund
and none of such fees will be paid to an unaffiliated sub-advisor.

ADDITIONAL INFORMATION ABOUT THE FUNDS

Additional information about the Funds is available in their annual reports to
shareholders for the year ended October 31, 2001 and in the following documents
which have been filed with the SEC: prospectus and statement of additional
information for the Partners Growth Fund, both dated March 1, 2002; prospectus
and statement of additional information for the Growth Fund, both dated March 1,
2002; and statement of additional information for the registration statement of
which this prospectus/proxy statement is a part, dated August 12, 2002. You may
obtain copies of the annual reports to shareholders, the prospectuses and the
statements of additional information by contacting Princor Financial Services
Corporation at Des Moines, Iowa 50392-0200, or by telephoning shareholder
services toll-free at 1-800-247-4123.

Each of the Funds is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the Investment Company Act, as applicable.
Accordingly, each files reports, proxy materials and other information with
the SEC. You may inspect those reports, proxy materials and other information at
the public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D. C. 20549. Copies of such materials also may be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D. C.
20549, at prescribed rates, or at no charge from the EDGAR database on the
Commission's website at "www.sec.gov."

PROPOSALS OF SHAREHOLDERS

A shareholder who has an issue that he or she would like to have included in the
agenda at a Principal Mutual Fund shareholder meeting should send the proposal
to the Fund at the Principal Financial Group, Des Moines, Iowa 50392-0200. To be
considered for presentation at a shareholders meeting, the proposal must be
received a reasonable time before a solicitation is made for such meeting.
Timely submission of a proposal does not necessarily mean that such proposal
will be included.

OTHER BUSINESS

We do not know of any business to be brought before the meeting other than the
matters set forth in this prospectus/ proxy statement. Should any other matter
requiring a vote of shareholders arise, however, the proxies will vote thereon
according to their best judgment.

APPENDIX A:
AGREEMENT AND PLAN OF ACQUISITION

AGREEMENT AND PLAN OF ACQUISITION

THIS AGREEMENT made as of the ______ day of June, 2002 is made by and among
Principal Growth, Inc., a Maryland corporation (hereinafter called "Growth
Fund"), Principal Partners LargeCap Growth Fund, Inc., a Maryland corporation
(hereinafter called "Partners Growth Fund"), and Principal Management
Corporation, an Iowa corporation (hereinafter called "Principal Management").

WITNESSETH:

Whereas the Board of Directors of the Growth Fund and the Board of Directors of
the Partners Growth Fund, each an open-end management investment company, deem
it advisable that the Growth Fund acquire all of the assets of the Partners
Growth Fund in exchange for the assumption by the Growth Fund of all of the
liabilities of the Partners Growth Fund and shares issued by the Growth Fund
which are thereafter to be distributed by the Partners Growth Fund pro rata to
its shareholders in complete liquidation and termination of the Partners Growth
Fund and in exchange for all of the Partners Growth Fund's outstanding shares;

NOW, THEREFORE, in consideration of the mutual promises herein contained, each
of the parties hereto represents and warrants to, and agrees with each of the
other parties as follows:

1.The Growth Fund hereby represents and warrants to the Partners Growth
Fund that:

(a) The Growth Fund is a corporation with transferable shares duly
organized and validly existing under the laws of Maryland and has full
power to own its properties and assets and to carry on its business as
such business is now being conducted;

(b) The Growth Fund's statement of assets and liabilities as of October
31, 2001 and the related statements of operations for the year then
ended, changes in net assets each of the two years in the period then
ended and its financial highlights for each of the five years in the
period then ended, all audited by Ernst & Young LLP as set forth in
their report, have been prepared in accordance with accounting
principles generally accepted in the United States. Such financial
statements fairly present the financial position of the Growth Fund as
of such date and the results of its operations, changes in net assets
and financial highlights for the periods covered thereby;

(c) There are no claims, actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting the Growth Fund or its
properties or business or its right to issue and sell shares, or which
would prevent or hinder consummation of the transactions contemplated
hereby, and it is not charged with, or to the Growth Fund's knowledge,
threatened with, any charge or investigation of any violation of any
provision of any federal, state or local law or any administrative
ruling or regulation relating to any aspect of its business or the
issuance or sale of its shares;

(d) The Growth Fund is not a party to or subject to any judgment or
decree or order entered in any suit or proceeding brought by any
governmental agency or by any other person enjoining it in respect of,
or the effect of which is to prohibit, any business practice or the
acquisition of any property or the conduct of business by it or the
issuance or sale of its shares in any area;

(e) The Growth Fund has filed all tax returns required to be filed, has
no liability for any unpaid taxes and has made a proper election to be
treated as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986 (the "Code") for each of its taxable
years. The Growth Fund has not committed any action or failed to
perform any necessary action that would render invalid its election to
be treated as a regulated investment company for any of its taxable
years;

(f) The authorization, execution and delivery of this Agreement on behalf
of the Growth Fund does not, and the consummation of the transactions
contemplated hereby will not, violate or conflict with any provision
of the Growth Fund's Articles of Incorporation or Bylaws, or any
provision of, or result in the acceleration of any obligation under,
any mortgage, lien, lease, agreement, instrument, order,

arbitration award, judgment or decree to which it is party or by which
it or any of its assets is bound, or violate or conflict with any
other material contractual or statutory restriction of any kind or
character to which it is subject;

(g) This Agreement has been duly authorized, executed, and delivered by
the Growth Fund and constitutes a valid and binding agreement of the
Growth Fund and all governmental and other approvals required for the
Growth Fund to carry out the transactions contemplated hereunder have
been or on or prior to the Closing Date (as herein after defined) will
have been obtained;

(h) The Growth Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified
management investment company. The Growth Fund is currently in
compliance with the 1940 Act and the rules of the Securities and
Exchange Commission promulgated thereunder. Neither the Growth Fund
nor its affiliates have violated Section 9 of the 1940 Act, are
currently subject to an exemptive order of the Securities and Exchange
Commission pursuant to Section 9(c) of the 1940 Act, or are currently
subject to any current or threatened investigation or enforcement
action by the Securities and Exchange Commission or any other federal
or state authority which could result in a violation of Section 9(a)
of the 1940 Act;

(i) On the Closing Date, the Growth Fund will own its assets free and
clear of all liens, claims, charges, options and encumbrances;

(j) The Growth Fund will declare to shareholders of record on or prior to
the Closing Date a dividend or dividends which, together with all
previous such dividends, shall have the effect of distributing to its
shareholders all of its income (computed without regard to any
deduction for dividends paid) and all of its net realized capital
gains, if any, as of the Closing Date;

(k) On the Closing Date the shares of the Growth Fund to be delivered to
the Partners Growth Fund hereunder shall have been registered under
the Securities Act of 1933, as amended (the "1933 Act") and duly
authorized, and, when issued and delivered pursuant to this Agreement,
will be validly issued, fully paid and nonassessable; and the Growth
Fund will comply with all applicable laws in connection with the
issuance of such shares and shall not be subject to a stop-order of
the Securities and Exchange Commission in connection therewith.

2.The Partners Growth Fund hereby represents and warrants to the Growth
Fund that:

(a) The Partners Growth Fund is a corporation with transferable shares
duly organized and validly existing under the laws of Maryland and has
full power to own its properties and assets and to carry on its
business as such business is now being conducted;

(b) The Partners Growth Fund's statement of assets and liabilities as of
October 31, 2001 and the related statements of operations for the year
then ended, changes in net assets and financial highlights for the
year ended October 31, 2001 and the period from February 24, 2000
(date operations commenced) to October 31, 2000, all audited by Ernst
& Young LLP as set forth in their report, have been prepared in
accordance with accounting principles generally accepted in the United
States. Such financial statements fairly present the financial
position of the Partners Growth Fund as of that date and the results
of its operations, changes in net assets and financial highlights for
the periods covered thereby;

(c) There are no claims, actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting the Partners Growth Fund or
its properties or business or its tight to issue and sell shares, or
which would prevent or hinder consummation of the transactions
contemplated hereby, and it is not charged with, or to the Partners
Growth Fund's knowledge, threatened with, any charge or investigation
of any violation of any provision of any federal, state or local law
or any administrative ruling or regulation relating to any aspect of
its business or the issuance or sale of its shares;

(d) The Partners Growth Fund is not party to or subject to any judgment or
decree or order entered in any suit or proceeding brought by any
governmental agency or by any other persons enjoining it in respect
of, or the effect of which is to prohibit, any business practice or
the acquisition of any property or the conduct of business by it or
the issuance or sale of its shares in any area;

(e) The Partners Growth Fund has filed all tax returns required to be
filed, has no liability for any unpaid taxes and has made a proper
election to be treated as a regulated investment company under
Subchapter M of the Code for each of its taxable years. The Partners
Growth Fund has not committed any action or failed to perform any
necessary action that would render invalid its election to be treated
as a regulated investment company for any of its taxable years;

(f) The authorization, execution and delivery of this Agreement on behalf
of the Partners Growth Fund does not, and the consummation of the
transactions contemplated hereby will not, violate or conflict with
any provision of the Partners Growth Fund's Articles of Incorporation
or Bylaws, or any provision of, or result in the acceleration of any
obligation under, any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is party or
by which it or any of its assets is bound, or violate or conflict with
any other material contractual or statutory restriction of any kind or
character to which it is subject;

(g) This Agreement has been duly authorized, executed, and delivered by
the Partners Growth Fund and constitutes a valid and binding agreement
of the Partners Growth Fund, and all governmental and other approvals
required for the Partners Growth Fund to carry out the transactions
contemplated hereunder have been or on or prior to the Closing Date
will have been obtained;

(h) On the Closing Date the Partners Growth Fund will own its assets free
and clear of all liens, claims, charges, options, and encumbrances
and, except for the Management Agreement, Investment Service
Agreement, Distribution Agreement, Distribution and Shareholder
Servicing Agreement and the Custodian Agreement with Bank of New York,
there will be no material contracts or agreements (other than this
Agreement) outstanding to which the Partners Growth Fund is a party or
to which it is subject;

(i) On the Closing Date the Partners Growth Fund will have full right,
power and authority to sell, assign and deliver the assets to be sold,
assigned, transferred and delivered to the Growth Fund hereunder, and
upon delivery and payment for such assets, the Growth Fund will
acquire good, marketable title thereto free and clear of all liens,
claims, charges, options and encumbrances;

(j) The Partners Growth Fund will declare to shareholders of record on or
prior to the Closing Date a dividend or dividends which, together with
all previous such dividends, shall have the effect of distributing to
the shareholders all of its income (computed without regard to any
deduction for dividends paid) and all of its net realized capital
gains, if any, as of the Closing; and

(k) The Partners Growth Fund will, from time to time, as and when
requested by the Growth Fund, execute and deliver or cause to be
executed and delivered all such assignments and other instruments, and
will take and cause to be taken such further action, as the Growth
Fund may deem necessary or desirable in order to vest in and confirm
to the Growth Fund title to and possession of all the assets of the
Partners Growth Fund to be sold, assigned, transferred and delivered
hereunder and otherwise to carrot the intent and purpose of this
Agreement.

3.Based on the respective representations and warranties, subject to the
terms and conditions contained herein, the Partners Growth Fund agrees to
transfer to the Growth Fund and the Growth Fund agrees to acquire from
the Partners Growth Fund, all of the assets of the Partners Growth Fund
on the Closing Date and to assume from the Partners Growth Fund all of
the liabilities of the Partners Growth Fund in exchange for the issuance
of the number of shares of the Growth Fund provided in Section 4 which
will be subsequently distributed pro rata to the shareholders of the
Partners Growth Fund in complete liquidation and termination of the
Partners Growth Fund and in exchange for all of the Partners Growth
Fund's

outstanding shares. The Partners Growth Fund shall not issue, sell or
transfer any of its shares after the Closing Date, and only redemption
requests received by the Partners Growth Fund in proper form prior to the
Closing Date shall be fulfilled by the Partners Growth Fund. Redemption
requests received by the Partners Growth Fund thereafter shall be treated
as requests for redemption of those shares of the Growth Fund allocable
to the shareholder in question as provided in Section 6 of this
Agreement.

4.On the Closing Date, the Growth Fund will issue to the Partners Growth
Fund a number of full and fractional shares of the Growth Fund, taken at
their then net asset value, having an aggregate net asset value equal to
the aggregate value of the net assets of the Partners Growth Fund. The
aggregate value of the net assets of the Partners Growth Fund and the
Growth Fund shall be determined in accordance with the then current
Prospectus of the Growth Fund as of closing of the New York Stock
Exchange on the Closing Date.

5.The closing of the transactions contemplated in this Agreement (the
"Closing") shall be held at the offices of Principal Management, 680 8th
Street, Des Moines, Iowa 50392-0200 (or at such other place as the
parties hereto may agree) at 3:00 p.m. Central Daylight Time on October
31, 2002 or on such earlier or later date as the parties hereto may
mutually agree. The date on which the Closing is to be held as provided
in this Agreement shall be known as the "Closing Date."

In the event that on the Closing Date (a) the New York Stock Exchange is
closed for other than customary week-end and holiday closings or (b)
trading on said Exchange is restricted or (c) an emergency exists as a
result of which it is not reasonably practicable for the Growth Fund or
the Partners Growth Fund to fairly determine the value of its assets, the
Closing Date shall be postponed until the first business day after the
day on which trading shall have been fully resumed.

6.
As soon as practicable after the Closing, the Partners Growth Fund shall
(a) distribute on a pro rata basis to the shareholders of record of the
Partners Growth Fund at the close of business on the Closing Date the
shares of the Growth Fund received by the Growth Fund at the Closing in
exchange for all of the Partners Growth Fund's outstanding shares, and
(b) be liquidated and dissolved in accordance with applicable law and its
Articles of Incorporation.

For purposes of the distribution of shares of the Growth Fund to
shareholders of the Partners Growth Fund, the Growth Fund shall credit on
the books of the Growth Fund an appropriate number of shares of the
Growth Fund to the account of each shareholder of the Partners Growth
Fund. The Growth Fund will issue a certificate or certificates only upon
request and, in the case of a shareholder of the Partners Growth Fund
whose shares are represented by certificates, only upon surrender of such
certificates. No certificates will be issued for fractional shares of the
Growth Fund. After the Closing Date and until surrendered, each
outstanding certificate which, prior to the Closing Date, represented
shares of the Partners Growth Fund, shall be deemed for all purposes of
the Growth Fund's Articles of Incorporation and Bylaws to evidence the
appropriate number of shares of the Growth Fund to be credited on the
books of the Growth Fund in respect of such shares of the Partners Growth
Fund as provided above.

7.Subsequent to the execution of this Agreement and prior to the Closing
Date, the Partners Growth Fund shall deliver to the Growth Fund a list
setting forth the assets to be assigned, delivered and transferred to the
Growth Fund, including the securities then owned by the Partners Growth
Fund and the respective federal income tax bases (on an identified cost
basis) thereof, and the liabilities to be assumed by the Growth Fund
pursuant to this Agreement.

8.
All of the Partners Growth Fund's portfolio securities shall be delivered
by the Partners Growth Fund's custodian on the Closing Date to the Growth
Fund or its custodian, either endorsed in proper form for transfer in
such condition as to constitute good delivery thereof in accordance with
the practice of brokers or, if such securities are held in a securities
depository within the meaning of Rule 17f-4 under the 1940 Act,
transferred to an account in the name of the Growth Fund or its custodian
with said depository. All cash to be delivered pursuant to this Agreement
shall be transferred from the Partners Growth Fund's account at its
custodian to the Growth Fund's account at its custodian. If on the
Closing Date the Partners

Growth Fund is unable to make good delivery pursuant to this Section 8 to
the Growth Fund's custodian of any of the Partners Growth Fund's
portfolio securities because such securities have not yet been delivered
to the Partners Growth Fund's custodian by its brokers or by the transfer
agent for such securities, then the delivery requirement of this Section
8 with respect to such securities shall be waived, and the Partners
Growth Fund shall deliver to the Growth Fund's custodian on or by said
Closing Date with respect to said undelivered securities executed copies
of an agreement of assignment in a form satisfactory to the Growth Fund,
and a due bill or due bills in form and substance satisfactory to the
custodian, together with such other documents including brokers'
confirmations, as may be reasonably required by the Growth Fund.

9.
The obligations of the Growth Fund under this Agreement shall be subject
to receipt by the Growth Fund on or prior to the Closing Date of:

(a) Copies of the resolutions adopted by the Board of Directors of the
Partners Growth Fund and its shareholders authorizing the execution of
this Agreement by the Partners Growth Fund and the transactions
contemplated hereunder, certified by the Secretary or Assistant
Secretary of the Partners Growth Fund;

(b) A certificate of the Secretary or Assistant Secretary of the Partners
Growth Fund as to the signatures and incumbency of its officers who
executed this Agreement on behalf of the Partners Growth Fund and any
other documents delivered in connection with the transactions
contemplated thereby on behalf of the Partners Growth Fund;

(c) A certificate of an appropriate officer of the Partners Growth Fund
as to the fulfillment of all agreements and conditions on its part to
be fulfilled hereunder at or prior to the Closing Date and to the
effect that the representations and warranties of the Partners Growth
Fund are true and correct in all material respects at and as of the
Closing Date as if made at and as of such date; and

(d) Such other documents, including an opinion of counsel, as the Growth
Fund may reasonably request to show fulfillment of the purposes and
conditions of this Agreement.

10.
The obligations of the Partners Growth Fund under this Agreement shall be
subject to receipt by the Partners Growth Fund on or prior to the Closing
Date of:

(a) Copies of the resolutions adopted by the Board of Directors of the
Growth Fund authorizing the execution of this Agreement and the
transactions contemplated hereunder, certified by the Secretary or
Assistant Secretary of the Growth Fund;

(b) A certificate of the Secretary or Assistant Secretary of the Growth
Fund as to the signatures and incumbency of its officers who executed
this Agreement on behalf of the Growth Fund and any other documents
delivered in connection with the transactions contemplated thereby on
behalf of the Growth Fund;

(c) A certificate of an appropriate officer of the Growth Fund as to the
fulfillment of all agreements and conditions on its part to be
fulfilled hereunder at or prior to the Closing Date and to the effect
that the representations and warranties of the Growth Fund are true
and correct in all material respects at and as of the Closing Date as
if made at and as of such date; and

(d) Such other documents, including an opinion of counsel, as the
Partners Growth Fund may reasonably request to show fulfillment of the
purposes and conditions of this Agreement.

11.

The obligations of the parties under this Agreement shall be subject to:

(a) Any required approval, at a meeting duly called for the purpose, of
the holders of the outstanding shares of the Partners Growth Fund of
this Agreement and the transactions contemplated hereunder; and

(b) The right to abandon and terminate this Agreement, if either party to
this Agreement believes that the consummation of the transactions
contemplated hereunder would not be in the best interests of its
shareholders.

12. Except as expressly provided otherwise in this Agreement, Principal
Management will pay or cause to be paid all out-of-pocket fees and
expenses incurred by the Partners Growth Fund or the Growth Fund in
connection with the transactions contemplated under this Agreement,
including, but not limited to, accountants' fees, legal fees,
registration fees, printing expenses, transfer taxes (if any) and the
fees of banks and transfer agents. This obligation shall survive the
termination or expiration of this Agreement regardless of the
consummation of the transactions contemplated hereunder.

13.
This Agreement may be amended by an instrument executed by both the duly
authorized officers of the Growth Fund and the Partners Growth Fund at
any time, except that after approval by the shareholders of the Partners
Growth Fund no amendment may be made with respect to the Agreement which
in the opinion of the Board of Directors of the Partners Growth Fund
materially adversely affects the interests of the shareholders of the
Partners Growth Fund. At any time either party hereto may by written
instrument signed by it (i) waive any inaccuracies in the representations
and warranties made to it contained herein and (ii) waive compliance with
any of the covenants or conditions made for its benefit contained herein.

14. In addition to the right to terminate this Agreement described in
paragraph 11, this Agreement may be terminated and the plan described in
the Agreement abandoned at any time prior to the Closing Date, whether
before or after action thereon by the shareholders of the Partners Growth
Fund and notwithstanding favorable action by such shareholders, by mutual
consent of the Board of Directors of the Growth Fund and the Board of
Directors of the Partners Growth Fund. This Agreement may also be
terminated by action of the Board of Directors of the Growth Fund or the
Board of Directors of the Partners Growth Fund (the "Terminating Fund"),
if:

(a) The plan described in the Agreement shall not have become effective
by December 31, 2002 (hereinafter called the "Final Date") unless such
Final Date shall have been changed by mutual agreement; or

(b) The Growth Fund shall, at the Final Date, have failed to comply with
any of its agreements; or

(c) Prior to the Final Date any one or more of the conditions to the
obligations of the Growth Fund contained in this Agreement shall not
be fulfilled to the reasonable satisfaction of the Partners Growth
Fund and its counsel or it shall become evident to the Partners Growth
Fund that any of such conditions are incapable of being fulfilled.

15.
This Agreement shall bind and inure to the benefit of the parties hereto
and is not intended to confer upon any other person any rights or
remedies hereunder.

16.
The parties hereto represent and warrant that they have not employed any
broker, finder or intermediary in connection with this transaction who
might be entitled to a finder's fee or other similar fee or commission.

17.
All prior or contemporaneous agreements and representations are hereby
merged into this Agreement, which constitutes the entire contract between
the parties hereto.

18.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Iowa.

19.
This Agreement maybe executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become
effective when one or more of the counterparts has been signed by all
parties hereto.

20.
Principal Management shall indemnify, defend and hold harmless the Growth
Fund, its officers, directors, employees and agents against all losses,
claims, demands, liabilities and expenses, including reasonable legal and
other expenses incurred in defending claims or liabilities, whether or
not resulting in any liability to the Growth Fund, its officers,
directors, employees or agents, arising out of (1) breach by the Partners
Growth Fund of any warranty made by the Partners Growth Fund herein or
(2) any untrue statement or alleged untrue statement of a material fact
contained in any prospectus or registration statement for the Partners
Growth Fund, as filed with the SEC or any state, or any amendment or
supplement thereto, or in any information provided by the Partners Growth
Fund included in any registration statement filed by the Growth Fund with
the SEC or any state or any amendment or supplement thereto; or which
shall arise out of or be based upon any omission or alleged omission to
state therein a material fact required to be stated in any such
prospectus, registration statement or application necessary to make the
statements therein not misleading. This indemnity provision shall survive
the termination of this Agreement.

21.
The Growth Fund shall indemnify, defend and hold harmless the Partners
Growth Fund, its officers, trustees, employees and agents against all
losses, claims, demands, liabilities and expenses, including reasonable
legal and other expenses incurred in defending claims or liabilities,
whether or not resulting in any liability to the Partners Growth Fund,
its officers, trustees, employees or agents, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus or registration statement for the Growth Fund, as filed with
the SEC or any state, or any amendment or supplement thereto, or any
application prepared by or on behalf of the Growth Fund and filed with
any state regulatory agency in order to register or qualify shares of the
Growth Fund under the securities laws thereof; or which shall arise out
of or be based upon any omission or alleged omission to state therein a
material fact required to be stated in any such prospectus, registration
statement or application necessary to make the statements therein not
misleading; provided, however, the Growth Fund shall not be required to
indemnify the Partners Growth Fund, its officers, trustees, employees and
agents against any loss, claim, demand, liability or expense arising out
of any information provided by the Growth Fund with the SEC or any state,
or any amendment or supplement thereto. This indemnity provision shall
survive the termination of this Agreement.

22. The execution of this Agreement has been authorized by the Board of
Directors of the Growth Fund and by the Board of Directors of the
Partners Growth Fund.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their officers thereunto duly authorized, as of the date first
written above.

PRINCIPAL GROWTH FUND, INC.

BY:

___________________________________

A. S. Filean
Attest:
TITLE:
......
Senior Vice President and Secretary

By:_______________________________________...
Ernest H. Gillum
Title: Vice President and Assistant Secretary
PRINCIPAL PARTNERS LARGECAP GROWTH FUND,
INC.

BY:

___________________________________

A. S. Filean
Attest: TITLE:

Senior Vice President and Secretary

By:_______________________________________...
Ernest H. Gillum
Title: Vice President and Assistant Secretary

PRINCIPAL MANAGEMENT CORPORATION

BY:

__________________________________

A. S. Filean
Attest: TITLE:

Senior Vice President and Secretary

By:_______________________________________...
Ernest H. Gillum
Title: Vice President and Assistant Secretary

PRINCIPAL GROWTH FUND, INC.
DES MOINES, IOWA 50392-0200
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus/ proxy statement dated August 12, 2002 for
the special meeting of the holders of the common stock, $.01 par value per
share, of Principal Partners Growth Fund, Inc. ("Partners Growth Fund"), an
open-end management investment company. The meeting is to be held on Wednesday,
October 16, 2002. A copy of the prospectus/proxy statement may be obtained from
Principal Management Corporation.

The prospectus/proxy statement describes certain transactions contemplated by
the proposed combination of the Partners Growth Fund with Principal Growth Fund,
Inc. ("Growth Fund") pursuant to the terms of an Agreement and Plan of
Acquisition among the two Funds and their manager, Principal Management
Corporation. Under the Plan, the Growth Fund would acquire all the assets and
assume all the liabilities of the Partners Growth Fund and issue in exchange
shares of its Class A and Class B common stock. The Partners Growth Fund would
immediately redeem all its outstanding shares by distributing the Growth Fund
shares to its shareholders. As a result, each shareholder would own shares in
the Growth Fund equal in value to shares of the same class as he or she had
owned in the Partners Growth Fund at the effective time. Principal Management
Corporation has agreed to pay all expenses incurred by the Funds in connection
with the Plan.

The date of the Statement of Additional Information is August 12, 2002.

FINANCIAL STATEMENTS

The following audited historical financial statements and footnotes thereto of
the Partners Growth Fund and the Growth Fund, together with the Report of
Independent Auditors thereon, are incorporated herein by reference from the
Funds' Annual Report to Shareholders for the year ended October 31, 2001:

(1) Statement of Assets and Liabilities, including the schedule of
investments, for each of the Funds as of October 31, 2001;

(2) Statement of Operations for each of the Funds for the year ended
October 31, 2001;

(3) Statement of Changes in Net Assets for each of the Funds for the
periods ended October 31, 2001 and 2000;

(4) Financial Highlights for each of the Funds for each of the five years
(or lesser) in the period ended October 31, 2001; and

(5) Notes to Financial Statements.

The financial statements of the Funds incorporated by reference into this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report and incorporated herein by
reference. Such financial statements are incorporated by reference in reliance
upon such report given on the authority of such firm as experts in accounting
and auditing.

OTHER INFORMATION

The information otherwise required to be set forth in this Statement of
Additional Information is included in the prospectuses and Statements of
Additional Information of the two Funds, all dated March 1, 2002, and in the
Funds' Annual Reports to Shareholders for the year ended October 31, 2001, all
of which are incorporated herein by reference.

PART C: OTHER INFORMATION

Item 15. Indemnification.

The information required in response to this item is incorporated herein by
reference to Item 25 of Post-Effective Amendment No. 57 to Registrant's
Registration Statement on Form N-1A (File No. 02-33228) as filed with the
Commission on February 25, 2002.

Item 16. Exhibits.

Exhibit Number Description

(1)(a)
Articles of Amendment and Restatement of the Charter of the Registrant -
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 48 to Registrant's Registration Statement on Form N-1A (File
No. 02-33228) as filed with the Commission on December 30, 1998.

(1)(b)
Articles Supplementary are incorporated herein by reference to Exhibit
(a)(3) to Post-Effective Amendment No. 52 to Registrant's Registration
Statement on Form N1-A (File No. 02-33228) as filed with the Commission on
December 30, 1999.

(2) By-Laws of the Registrant - incorporated herein by reference to Exhibit (b)
to Post-Effective Amendment No. 52 to Registrant's Registration Statement
on Form N-1A (File No. 02-33228) as filed with the Commission on December
30, 1999.

(3) None

(4) Copy of Agreement and Plan of Acquisition (included as Appendix A to the
Proxy Statement/Prospectus, which is part of the Registration Statement on
Form N-14).

(5) None

(6)(a)
Management Agreement with Principal Management Corporation - incorporated
herein by reference to Exhibit 5(a) to Post-Effective Amendment No. 48 to
Registrant's Registration Statement on Form N-1A (File No. 02-33228) as
filed with the Commission on December 30, 1998.

(6)(b)
Sub-Advisory Agreement with Invista Capital LLC - incorporated herein by
reference to Exhibit 5(c) to Post-Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 02-33228) as
filed with the Commission on February 26, 1996.

(6)(c)
Investment Service Agreement - incorporated herein by reference to Exhibit
5(b) to Post-Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 02-33228) as filed with the Commission on
February 26, 1996.

(7)(a)
Distribution Agreement - incorporated herein by reference to Exhibit 6(a)
to Post-Effective Amendment No. 41 to Registrant's Registration Statement
on Form N-1A (File No. 02-33228) as filed with the Commission on February
26, 1996.

(7)(b)
Dealer Selling Agreement - incorporated herein by reference to Exhibit
(e)(2) to Post-Effective Amendment No. 52 to Registrant's Registration
Statement on Form N-1A (File No. 02-33228) as filed with the Commission on
December 30, 1999.

(8) None

(9) Custody Agreement - incorporated herein by reference to Exhibit 8(a) to
Post-Effective Amendment No. 41 to Registrant's Registration Statement on
Form N-1A (File No. 02-33228) as filed with the Commission on February 26,
1996.

(10)(a)
12b-1 Plan - Class A Shares 12b-1 Plan is incorporated herein by reference
to Exhibit 15(a) to Post-Effective Amendment No. 40 to Registrant's
Registration Statement on Form N-1A (File No. 02-33228) as filed with the
Commission on December 14, 1995.

(10)(b)
12b-1 Plan - Class B Shares 12b-1 Plan - incorporated herein by reference
to Exhibit 15(b) to Post-Effective Amendment No. 40 to Registrant's
Registration Statement on Form N-1A (File No. 02-33228) as filed with the
Commission on December 14, 1995.

(10)(c)
Rule 18f-3 - Multiple Class Distribution Plan - incorporated herein by
reference to Exhibit (o) to Post-Effective Amendment No. 52 to Registrant's
Registration Statement on Form N-1A (File No. 02-33228) as filed with the
Commission on December 30, 1999.

(11) Opinion and consent of Counsel regarding legality of securities being
registered.

(12) Opinion and consent of Counsel regarding certain tax matters and
consequences to shareholders.

(13) None

(14) Consent of Independent Auditors

(15) None

(16) Powers of attorney executed by L. D. Zimpleman, J. E. Aschenbrenner, R. C.
Eucher, J. D. Davis, P. A. Ferguson, R. W. Gilbert, B. A. Lukavsky and W.
C. Kimball.

(17)(a) Form of Proxy Ballot

(17)(b)
Registrant's Rule 24f-2 Notice pursuant to Rule 24f-2 under the Investment
Company Act of 1940 for its fiscal year ended October 31, 2001 -
incorporated herein by reference to Form 24f-2 filed with the Commission on
January 4, 2002.

Item 17. Undertakings.

The undersigned registrant agrees that prior to any public offering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.

The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering of them.

SIGNATURES

As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of Des Moines and the State of
Iowa, on the 12th day of July, 2002.

Principal Growth Fund, Inc.

By: /s/R. C. Eucher
____________________________________
Ralph C. Eucher
President

As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

_______________________ July 12, 2002
R. C. Eucher Director and President
(Principal Executive Officer)

_(L. D. Zimpleman*)____ Director and July 12, 2002
L. D. Zimpleman Chairman of the Board

_(J. E. Aschenbrenner*)____ Director July 12, 2002
J. E. Aschenbrenner

_(J. D. Davis*)____________ Director July 12, 2002
J. D. Davis

_(P. A. Ferguson*)_________ Director July 12, 2002
P. A. Ferguson

_(R. W. Gilbert*)__________ Director July 12, 2002
R. W. Gilbert

_(B. A. Lukavsky*)________ Director July 12, 2002
B. A. Lukavsky

_(W. C. Kimball*)_________ Director July 12, 2002
W. C. Kimball

_/s/K. L. Tibbetts________ Financial Officer July 12, 2002
K. L. Tibbetts (Principal Financial and
Accounting Officer)

By: /s/R. C. Eucher
____________________________________
R. C. Eucher
Attorney -in- Fact *Pursuant to powers
of attorney filed herewith

July 10, 2002

Board of Directors
Principal Growth Fund, Inc.
Des Moines, IA 50392-0200

RE Registration Statement on Form N-14
Pursuant to Securities Act of 1933

I am familiar with the proposed issuance by Principal Growth Fund, Inc. of
shares of its Class A common stock, par value $.01 per share and Class B common
stock, par value $.01 per share, in connection with the transfer to it of the
assets and liabilities of Principal Partners LargeCap Growth Fund, Inc. pursuant
to the terms of an Agreement and Plan of Acquisition to which they are parties
(the "Shares"). I am also familiar with the above-referenced Registration
Statement (the "Registration Statement") filed with the Securities and Exchange
Commission relating to the offer and sale of Shares. Based upon such
investigation as I have deemed necessary, I am of the opinion that the Shares,
when issued in accordance with the terms described in the Registration
Statement, will be legally issued, fully paid and non-assessable.

I hereby consent to the filing of this opinion as a exhibit to the Registration
Statement.

Very truly yours,

/s/Michael D. Roughton

Michael D. Roughton
Counsel

June 10, 2002

Board of Directors
Principal Partners LargeCap Growth Fund, Inc.
711 High Street
Des Moines, IA 50309

RE Acquisition of Principal Partners LargeCap Growth Fund, Inc.
By Principal Growth Fund, Inc.

To the Board of Directors and Shareholders

Principal Growth Fund, Inc. ("Growth Fund") intends to acquire all of the assets
and assume all of the liabilities of Principal Partners LargeCap Growth Fund,
Inc. ("Partners Growth") in a transaction described in a Form N-14 Registration
Statement filed with the United States Securities and Exchange Commission (the
"Registration Statement") on or about July 12, 2002. You have asked for an
opinion concerning the Federal income tax consequences of the proposed
transaction.

Growth Fund is a Maryland Corporation. Continuously since its formation it has
qualified as a regulated investment company for purposes of Subchapter M of the
United States Internal Revenue Code of 1986 (the "Code") and has elected to be
taxed as such.

Partners Growth Fund is also a Maryland Corporation. Partners Growth Fund, like
Growth Fund, has qualified since its inception as a regulated investment company
for purposes of the Code, and has elected to be taxed as such.

Growth Fund and Partners Growth are each an open-end management company
registered with the Securities and Exchange Commission and various states.
Growth Fund is a diversified company; Partners Growth Fund is not.

Growth Fund will acquire all of the assets of Partners Growth, and assume all of
its liabilities, in exchange for Growth Fund shares. Partners Growth will
immediately liquidate and dissolve, distributing the shares of Growth Fund to
Partners Growth shareholders in retirement of their Partners Growth shares. Each
holder of shares of Partners Growth will as a result of the transaction own
shares of Growth Fund of equal value.

In reliance on the information provided in the Registration Statement, I am of
the opinion that:

1.) The acquisition of all of the assets and liabilities of Partners Growth
by Growth Fund in exchange for shares of Growth Fund, followed by
distribution of those shares of Growth Fund to shareholders of Partners
Growth in liquidation of Partners Growth, will constitute a
reorganization within the meaning of section 368(a)(1)(C) of the Code.

2.) Shareholders of Partners Growth will recognize no gain or loss as a
consequence of the surrender of their shares of Partners Growth in
exchange for shares of Growth Fund pursuant to the liquidation of
Partners Growth. (Code Section 354).

3.) The tax basis and holding period of shares of Growth Fund acquired in
exchange for shares of Partners Growth will be the same as the tax basis
and the holding period of the shares of Partners Growth exchanged
therefore. (Code Sections 354 and 1223).

4.) Partners Growth will recognize no gain or loss on the transfer of all
of its assets to Growth Fund. (Code Section 361(a)).

5.) The tax basis of the assets of Partners Growth in the hands of Growth
Fund will be the same as the tax basis of those assets in the hands of
Partners Growth immediately prior to the acquisition. (Code Section
362(b)).

The foregoing opinions are based on the Code, current Treasury Regulations
issued thereunder, published administrative, interpretations thereof and
judicial decisions with respect thereto (collectively the "Tax Law") as of the
date hereof. No assurance can be given that the Tax Laws will not change.

I hereby consent to the use of this letter as an Exhibit to, and reference to it
in, the Registration Statement.

Sincerely yours

/s/Randy Bergstrom

Randy Bergstrom
Counsel to Principal Growth Fund, Inc.

Consent of Independent Auditors

We consent to the reference to our firm under Sections 1(b) and 2(b) in the
Agreement and Plan of Acquisition included as Appendix A to the Prospectus/Proxy
Statement and the caption "Financial Statements" in the Statement of Additional
Information and to the incorporation by reference of our report dated November
26, 2001, with respect to the financial statements and financial highlights of
Principal Growth Fund, Inc. and Principal Partners LargeCap Growth Fund, Inc.
included in this Registration Statement Under the Securities Act of 1933 (Form
N-14), filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Des Moines, Iowa
July 12, 2002

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Principal
Mutual
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It's Fast and Convenient. The accompanying Proxy Statement outlines important
issues affecting your Principal Partners LargeCap Growth Fund. Help us save time
and postage costs by voting on the Internet or by telephone. Each method is
generally available 24 hours a day and will ensure that your vote is confirmed
and posted immediately. DO NOT MAIL THE PROXY CARD IF YOU ARE VOTING BY INTERNET
OR TELEPHONE.

VOTING BY PHONE

... Read the Proxy Statement and have this card at hand.
... Call toll-free 1-888-221-0697
... Enter your Control Number and follow the recorded instructions
... Do not return this paper ballot

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... Read the Proxy Statement and have this card at hand.
... Log on to www.proxyweb.com
... Enter your Control Number and follow the on-screen instructions
... Do not return this paper ballot

VOTE YOUR PROXY TODAY!

SPECIAL MEETING OF SHAREHOLDERS OCTOBER 2, 2002
PRINCIPAL PARTNERS LARGECAP GROWTH FUND, INC.
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned shareholder apoints Arthur S. Filean, Ernest H. Gillum and
Michael J. Beer, and each of them separately, Proxies, with power of
substitution, and authorizes them to represent and to vote as designated on this
ballot, at the meeting of shareholders of the Fund to be held October 2, 2002 at
2:00 p.m., C.D. T., and at any adjournments thereof, all the shares of the Fund
that the undersigned shareholder would be entitled to vote if personally
present.

Check the appropriate box on the ballot, date the ballot and sign exactly as
your name appears. Your signature acknowledges receipt of Notice of the Special
Meeting of Shareholders and Prospectus/Proxy Statement dated August 12, 2002.
Shares will be voted as you instruct. If no direction is made, the proxy will be
voted FOR the proposal listed. In their discretion the Proxies will also be
authorized to vote upon such other matters that may properly come before the
meeting.

Date_________________, 2002

- ---------------------------------------------
Signature of Shareholder(s) (if held jointly)

NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS BALLOT. PLEASE MARK,
SIGN, DATE AND MAIL YOUR PROXY BALLOT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. If
shares are held jointly, either party may sign. If executed by a corporation, an
authorized officer must sign. Executors, adminstrators and trustees should so
indicate when signing.

Please fill in box as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.

The Board of Directors recommend that shareholders vote FOR the following
proposal. Sign the proxy ballot and return it as soon as possible in the
enclosed envelope.

PROPOSAL:

1. Approval of the Agreement and Plan of Acquisition among Principal Partners
LargeCap Growth Fund, Inc., Principal Growth Fund, Inc. and Principal
Management Corporation, and the transaction contemplated therby, pursuant
to which the Growth Fund would acquire all the assets and assume all the
liabilities of the Partners LargeCap Growth Fund and issue in exchange
shares of its Class A and Class B common stock, and the Partners LargeCap
Growth Fund would distribute those shares to its shareholders and then
dissolve.

For_______ Against_______ Abstain__________

POWER OF ATTORNEY

The undersigned hereby constitutes and appoints R. C. Eucher, M. D. Roughton, E.
H. Gillum and A. S. Filean and each of them (with full power to each of them to
act alone), the undersigned's true and lawful attorney-in-fact and agent, with
full power of substitution to each, for and on behalf and in the name of the
undersigned, to execute and file any documents relating to registration under
the Securities Act of 1933 and the Investment Company Act of 1940 with respect
to open-end management investment companies currently organized or to be
organized in the future which are sponsored by Principal Life Insurance Company,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing necessary or appropriate to be done in order to effectuate the
same, as fully to all intents and purposes as the undersigned might or could do
in person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.