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DISTRIBUTION PLAN AND AGREEMENT made as of June 6, 2011, by and between PRINCIPAL FUNDS, |
| INC., a Maryland corporation (the "Fund"), and PRINCIPAL FUNDS DISTRIBUTOR, INC., a Washington |
| corporation (the " Distributor "). |
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| 1. |
This Distribution and Service Plan (the “Plan”), when effective in accordance with its terms, shall be the written |
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plan contemplated by Securities and Exchange Commission Rule 12b-1 under the Investment Company Act |
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of 1940, as amended (the “Act”) for the Class A shares of each Series identified in Appendix A, attached |
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hereto (the “Series”), a class of shares of Principal Funds, Inc. (the “Fund”). |
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| 2. |
The Fund has entered into a Distribution Agreement on behalf of the Fund with the Distributor, under which the |
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Distributor uses all reasonable efforts, consistent with its other business, to secure purchasers of shares of |
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each Series of the Fund (the “Shares”). Such efforts may include, but neither are required to include nor are |
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limited to, the following: (1) formulation and implementation of marketing and promotional activities, such as |
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mail promotions and television, radio, newspaper, magazine and other mass media advertising; (2) |
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preparation, printing and distribution of sales literature provided to the Fund’s shareholders and prospective |
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shareholders; (3) preparation, printing and distribution of prospectuses and statements of additional |
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information of the Fund and reports to recipients other than existing shareholders of the Fund; (4) obtaining |
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such information, analyses and reports with respect to marketing and promotional activities as the Distributor |
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may, from time to time, deem advisable; (5) making payment of sales commission, ongoing commissions and |
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other payments to brokers, dealers, financial institutions or others who sell Shares pursuant to Selling |
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Agreements; (6) paying compensation to registered representatives or other employees of the Distributor who |
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engage in or support distribution of the Fund’s Shares; (7) paying compensation to, and expenses (including |
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overhead and telephone expenses) of, the Distributor; (8) providing training, marketing and support to dealers |
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and others with respect to the sale of Shares; (9) receiving and answering correspondence from prospective |
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shareholders including distributing prospectuses, statements of additional information, and shareholder |
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reports; (10) providing of facilities to answer questions from prospective investors about Shares; |
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(11) complying with federal and state securities laws pertaining to the sale of Shares; (12) assisting investors |
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in completing application forms and selecting dividend and other account options; (13) providing of other |
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reasonable assistance in connection with the distribution of the Fund’s shares; (14) organizing and conducting |
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of sales seminars and making payments in the form of transactional compensation or promotional incentives; |
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and (15) such other distribution and services activities as the Fund determines may be paid for by the Fund |
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pursuant to the terms of this Plan and in accordance with Rule 12b-1 of the Act. |
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| 3. |
The Distribution Agreement also authorizes the Distributor to enter into Service Agreements with other selling |
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dealers and with banks or other financial institutions to provide shareholder services to existing Class A |
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shareholders, including without limitation, services such as furnishing information as to the status of |
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shareholder accounts, responding to telephone and written inquiries of shareholders, and assisting Class A |
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shareholders with tax information. |
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| 4. |
In consideration for the services described above, and the expenses incurred by the Distributor pursuant to the |
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Distribution Agreement and Paragraphs 2 and 3 hereof, all with respect to Class A shares of a Series of the |
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Fund, Class A shares of each Series shall pay to the Distributor a fee at the annual rate as shown on |
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Appendix A (or such lesser amount as the Fund Directors may, from time to time, determine) of the average |
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daily net assets of Class A shares of such Series. This fee shall be accrued daily and paid monthly or at such |
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other intervals, as the Fund Directors shall determine. The determination of daily net assets shall be made at |
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the close of business each day throughout the month and computed in the manner specified in the Fund’s |
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then current Prospectus for the determination of the net asset value of the Fund’s Class A shares. |
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| 5. |
The Fund presently pays, and will continue to pay, a management fee to Principal Management Corporation |
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(the “Manager”) pursuant to a Management Agreement between the Fund and the Manager (the |
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“Management Agreement”). It is recognized that the Manager may use its management fee revenue, as well |
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as its past profits or its resources from any other source, to make payment to the Distributor with respect to |
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any expenses incurred in connection with the distribution of Class A shares, including the activities referred to |
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in Paragraph 2 hereof. To the extent that the payment of management fees by the Fund to the Manager |
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should be deemed to be indirect financing of any activity primarily intended to result in the sale of Class A |
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shares within the meaning of Rule 12b-1, then such payment shall be deemed to be authorized by this Plan. |
