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PRINCIPAL INVESTORS FUND, INC.
DISTRIBUTION PLAN AND AGREEMENT
CLASS C SHARES
DISTRIBUTION PLAN AND AGREEMENT made as of October 1, 2007, by and between
PRINCIPAL INVESTORS FUND, INC., a Maryland corporation (the "Fund"), and
PRINCIPAL FUNDS DISTRIBUTOR, INC., a Washington corporation (the "Distributor").
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for the Class C shares of each Series
identified in Appendix A, attached hereto (the "Series"), a class of
shares of Principal Investors Fund, Inc. (the "Fund").
2. The Fund has entered into a Distribution Agreement on behalf of the Fund
with the Distributor, under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of shares
of each Series of the Fund (the "Shares"). Such efforts may include, but
neither are required to include nor are limited to, the following: (1)
formulation and implementation of marketing and promotional activities,
such as mail promotions and television, radio, newspaper, magazine and
other mass media advertising; (2) preparation, printing and distribution of
sales literature provided to the Fund's shareholders and prospective
shareholders; (3) preparation, printing and distribution of prospectuses
and statements of additional information of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Distributor may, from time to time, deem advisable; (5)
making payment of sales commission, ongoing commissions and other payments
to brokers, dealers, financial institutions or others who sell Shares
pursuant to Selling Agreements; (6) paying compensation to registered
representatives or other employees of the Distributor who engage in or
support distribution of the Fund's Shares; (7) paying compensation to, and
expenses (including overhead and telephone expenses) of, the Distributor;
(8) providing training, marketing and support to dealers and others with
respect to the sale of Shares; (9) receiving and answering correspondence
from prospective shareholders including distributing prospectuses,
statements of additional information, and shareholder reports; (10)
providing of facilities to answer questions from prospective investors
about Shares; (11) complying with federal and state securities laws
pertaining to the sale of Shares; (12) assisting investors in completing
application forms and selecting dividend and other account options; (13)
providing of other reasonable assistance in connection with the
distribution of the Fund's shares; (14) organizing and conducting of sales
seminars and making payments in the form of transactional compensation or
promotional incentives; and (15) such other distribution and services
activities as the Fund determines may be paid for by the Fund pursuant to
the terms of this Plan and in accordance with Rule 12b-1 of the Act.
3. The Distribution Agreement also authorizes the Distributor to enter into
Service Agreements with other selling dealers and with banks or other
financial institutions to provide shareholder services to existing Class C
shareholders, including without limitation, services such as furnishing
information as to the status of shareholder accounts, responding to
telephone and written inquiries of shareholders, and assisting
shareholders with tax information.
4. In consideration for the services provided and the expenses incurred by the
Distributor pursuant to the Distribution Agreement and Paragraphs 2 and 3
hereof, all with respect to Class C shares of a Series of the Fund, Class C
shares of each Series shall pay to the Distributor a fee at the annual rate
of 1.00%, (or such lesser amount as the Fund Directors may, from time to
time, determine) of the average daily net assets of Class C shares of such
Series, of which 0.75% shall be a distribution fee and 0.25% shall be a
service fee. This fee shall be accrued daily and paid monthly or at such
other intervals as the Fund Directors shall determine. The determination of
daily net assets shall be made at the close of business each day throughout
the month and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of the Fund's Class
C shares. The Distributor may use all or any portion of the fee received
pursuant to this Plan to compensate securities dealers or other persons who
have engaged in the sale of Class C shares or to pay any of the expenses
associated with other activities authorized under Paragraphs 2 and 3
hereof.
5. The Fund presently pays, and will continue to pay, a management fee to
Principal Management Corporation (the "Manager") pursuant to a Management
Agreement between the Fund and the Manager (the "Management Agreement"). It
is recognized that the Manager may use its management fee revenue, as well
as its past profits or its resources from any other source, to make payment
to the Distributor with respect to any expenses incurred in connection with
the distribution of Class C shares, including the activities referred to in
Paragraph 2 hereof. To the extent that the payment of management fees by
the Fund to the Manager should be deemed to be indirect financing of any
activity primarily intended to result in the sale of Class C shares within
the meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
6. This Plan shall not take effect until it has been approved (a) by a vote
of at least a majority (as defined in the Act) of the outstanding Class C
shares of the Series of the Fund and (b) by votes of the majority of both
(i) the Board of Directors of the Fund, and (ii) those Directors of the
Fund who 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.
7. Unless sooner terminated pursuant to Paragraph 6, 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 Paragraph 6(b).
8. 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.
9. 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 outstanding Class C shares of the Series of the Fund.
10. 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 Disinterested Directors or
by a vote of a majority (as defined in the Act) of the outstanding
Class C shares of the Series of the Fund on not more than sixty (60)
days' written notice to any other party to the agreement); and
B. That such agreement shall terminate automatically in the event of its
assignment.
11. While the Plan is in effect, the Fund's board of directors shall satisfy
the fund governance standards as defined in Securities and Exchange
Commission Rule 0-1(a)(7).
12. This Plan does not require the Manager or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of Class C shares.
13. The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 8, 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.
14. This Plan may not be amended to increase materially the amount of Fees
provided for in Paragraph 4 hereof unless such amendment is approved in
the manner provided for initial approval in Paragraph 6 hereof and no
other material amendment to this Plan shall be made unless approved in the
manner provided for initial approval in Paragraph 6(b) hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Plan as of the first date written above.
PRINCIPAL INVESTORS FUND, INC.
BY: /s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER
PRINCIPAL FUNDS DISTRIBUTOR, INC.
BY: /s/ Xxxxxxx X. Beer
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XXXXXXX X. BEER, EXECUTIVE VICE PRESIDENT
PRINCIPAL INVESTORS FUND, INC.
APPENDIX A
Series
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Bond and Mortgage Securities Fund Partners LargeCap Blend Fund
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California Insured Intermediate Municipal Fund Partners LargeCap Blend Fund I
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California Municipal Fund Partners LargeCap Growth Fund I
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Disciplined LargeCap Blend Fund Partners LargeCap Growth Fund II
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Diversified International Fund Partners LargeCap Value Fund
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Equity Income Fund I Partners MidCap Growth Fund
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Global Real Estate Securities Fund Partners MidCap Growth Fund I
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Government Securities & High Quality Bond Partners MidCap Value Fund
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High Yield II Partners SmallCap Growth Fund II
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Income Fund Preferred Securities Fund
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Inflation Protection Fund Real Estate Securities Fund
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International Emerging Markets Fund XXX - Balanced Portfolio
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LargeCap Growth Fund XXX - Conservative Balanced Portfolio
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LargeCap S&P 500 Index Fund XXX - Conservative Growth Portfolio
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LargeCap Value Fund XXX - Flexible Income Portfolio
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Lifetime 2010 Fund XXX - Strategic Growth Portfolio
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Lifetime 2020 Fund Short-Term Bond Fund
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Lifetime 2030 Fund Short-Term Income Fund
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Lifetime 2040 Fund SmallCap Blend Fund
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Lifetime 2050 Fund SmallCap Growth Fund
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LifeTime Strategic Income Fund SmallCap Value Fund
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MidCap Blend Fund Tax-Exempt Bond Fund I
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MidCap Stock Fund Ultra Short Bond Fund
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Money Market Fund West Coast Equity
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Mortgage Securities
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