PRINCIPAL PARTNERS SMALLCAP GROWTH FUND, INC.
                     DISTRIBUTION AND SHAREHOLDER SERVICING
                               PLAN AND AGREEMENT
                                 CLASS A SHARES


      PLAN  AND  AGREEMENT  made as of the 11th day of  December,  2000,  by and
between PRINCIPAL  PARTNERS  SMALLCAP GROWTH FUND, INC., a Maryland  corporation
(the "Fund"),  and PRINCOR FINANCIAL SERVICES  CORPORATION,  an Iowa corporation
(the "Underwriter").

      WHEREAS,  Rule 12b-1 under the Investment Company Act of 1940 (the "Act"),
provides  that  a  registered   open-end   management   investment  company  may
participate  in financing  the  distribution  of  securities  of which it is the
issuer; and

      WHEREAS,  any payments made by the Fund in accordance with Rule 12b-1 must
be made  pursuant  to a written  plan  describing  all  material  aspects of the
proposed financing of distribution; and

      WHEREAS, the Underwriter acts as the underwriter for the Fund; and various
broker-dealers  (the "Dealers"),  including the Underwriter,  sell shares of the
Fund and provide services to existing shareholders; and

      WHEREAS,  the Board of Directors of the Fund has determined  that the Fund
should  make direct  payments to the  Underwriter  for  transmission  to Dealers
(including  the  Underwriter)  in connection  with selling class A shares of the
Fund and the rendering of services to class A shareholders and that such payment
should be separate  from the  investment  advisory  and  management  fee paid to
Princor Management Corporation; and

      WHEREAS, the Board of Directors of the Fund has determined that there is a
reasonable  likelihood  that the  adoption of the Plan will benefit the Fund and
its class A shareholders;

      NOW,  THEREFORE,  the following shall constitute the written Plan pursuant
to which the Fund shall participate in financing the distribution of its class A
shares.

      Section  1.  The  Fund  is  hereby  authorized  to  make  payments  to the
Underwriter  from that portion of the Fund's assets  attributable to its class A
shares for the purpose of compensating the Underwriter and other selling Dealers
for (i)  providing  shareholder  services  to  existing  class  A  shareholders,
including  without  limitation,  furnishing  information  as to  the  status  of
shareholder accounts,  requests,  responding to telephone and written inquiries,
and assisting  class A  shareholders  with tax  information  and (ii)  rendering
assistance  in the  distribution  and promotion of the sale of class A shares to
the public.

      In consideration of the activities described above, the Fund shall pay the
Underwriter a fee after the end of each month at the annual rate of 0.25% of the
daily net asset value of the Fund's class A shares. The Underwriter shall retain
such  amounts  as are  appropriate  to  compensate  the  Underwriter  for actual
expenses  incurred in  distributing  and promoting the sale of class A shares to
the  public  and remit  such  amounts  as are  appropriate  to other  Dealers in
recognition  of  their  services  and  assistance  as  described  above.  If the
aggregate  payments  received by the  Underwriter  under this Plan in any fiscal
year exceed the  expenditures  made by the  Underwriter  in such fiscal year for
these purposes, the Underwriter shall promptly reimburse the Fund for the amount
of such excess.

      Section 2. This Plan shall not take effect until it has been  approved (1)
by a vote of at least a  majority  (as  defined  in the Act) of the  outstanding
class A shares  of the Fund  and (2) by  votes of the  majority  of both (i) the
Board of Directors of the Fund, and (ii) those Directors of the Fund who, except
for their positions as Directors of the Fund, are not  "interested  persons" (as
defined  in the Act) of the Fund and who have no  direct or  indirect  financial
interest in the  operation of this Plan or any  agreements  related to this Plan
(the  "Disinterested  Directors"),  cast in person at a meeting  called  for the
purpose of voting on this Plan or such agreements.

      Section 3. Unless sooner terminated pursuant to Section 5, this Plan shall
continue in effect for a period of twelve  months from the date it takes  effect
and  thereafter  shall  continue  in  effect  so  long as  such  continuance  is
specifically  approved at least annually in the manner  provided for approval of
this Plan in Section 2(2).

      Section 4. A representative  of the Underwriter shall provide to the Board
and the Board shall review at least quarterly a written report of the amounts so
expended and the purposes for which such expenditures were made.

      Section 5. This Plan may be  terminated  at any time by vote of a majority
of the Disinterested Directors, or by vote of a majority (as defined in the Act)
of the Fund's outstanding class A shares.

      Section  6. Any  agreement  of the Fund  related  to this Plan shall be in
writing and shall provide:

      A.   That such agreement may be terminated at any time, without payment of
           any  penalty,  by vote of a majority  of the  members of the Board of
           Directors of the Fund who are not interested  persons of the Fund and
           have no direct or indirect financial interest in the operation of the
           Plan  or in any  agreements  related  to the  Plan  or by a vote of a
           majority  (as defined in the  Investment  Company Act of 1940) of the
           Fund's  outstanding  class A shares  on not  more  than  sixty  days'
           written notice to any other party to the agreement; and

      B.   That such agreement shall terminate automatically in the event of its
           assignment.

      Section 7. While the Plan is in effect,  the selection  and  nomination of
Directors  who are not  interested  persons  (as defined in the Act) of the Fund
shall be committed to the  discretion of the  Directors  who are not  interested
persons.

      Section 8. The Fund  shall  preserve  copies of this Plan and any  related
agreements  and all reports  made  pursuant to  Paragraph 4, for a period of not
less than six years from the date of the Plan, or the agreements or such report,
as the case may be, the first two years in an easily accessible place.

      Section 9. This Plan may not be amended to increase  materially the amount
of distribution  expenses provided for in Section 1 hereof unless such amendment
is approved in the manner provided for initial  approval in Section 2 hereof and
no other  material  amendment to this Plan shall be made unless  approved in the
manner provided for initial approval in Section 2(2) hereof.

      IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered this
Plan as of the first date written above.

          Principal Partners SmallCap Growth Fund, Inc.


          By:    /s/A. S. Filean
                 -------------------------------------------------------
                 A. S.  Filean,  Senior Vice  President  and Secretary


          PRINCOR FINANCIAL SERVICES CORPORATION


          By:     /s/Ralph C. Eucher
                 -------------------------------------------------------
                 Ralph C. Eucher, President