PRINCIPAL FUNDS, INC. DISTRIBUTION PLAN AND AGREEMENT CLASS C SHARES DISTRIBUTION PLAN AND AGREEMENT made as of March 1, 2010, by and between PRINCIPAL FUNDS, INC., a Maryland corporation (the "Fund"), and PRINCIPAL FUNDS DISTRIBUTOR, INC., a...
| PRINCIPAL FUNDS, INC. | |
| DISTRIBUTION PLAN AND AGREEMENT | |
| CLASS C SHARES | |
| DISTRIBUTION PLAN AND AGREEMENT made as of March 1, 2010, by and between PRINCIPAL | |
| FUNDS, 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 Funds, 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 | |
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| 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. | ||
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| IN WITNESS WHEREOF, the parties hereto have executed and delivered this Plan as of the first date |
| written above. |
| PRINCIPAL FUNDS, INC. |
| BY: /s/ Xxxx X. Xxxxxx |
| XXXX X. XXXXXX, VICE PRESIDENT & SECRETARY |
| PRINCIPAL FUNDS DISTRIBUTOR, INC. |
| BY: /s/ Xxxxxxx X. Beer |
| XXXXXXX X. BEER, EXECUTIVE VICE PRESIDENT |
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| PRINCIPAL FUNDS, INC. | |
| APPENDIX A | |
| Series | |
| Bond and Mortgage Securities Fund | LargeCap Value Fund III |
| California Municipal Fund | MidCap Blend Fund |
| Disciplined LargeCap Blend Fund | MidCap Growth Fund III |
| Diversified International Fund | MidCap Value Fund I |
| Diversified Real Asset Fund | Money Market Fund |
| Equity Income Fund | Preferred Securities Fund |
| Global Diversified Income Fund | Principal Capital Appreciation Fund |
| Global Real Estate Securities Fund | Real Estate Securities Fund |
| Government & High Quality Bond Fund | XXX – Balanced Portfolio |
| High Yield Fund | XXX – Conservative Balanced Portfolio |
| Income Fund | XXX – Conservative Growth Portfolio |
| Inflation Protection Fund | XXX – Flexible Income Portfolio |
| International Emerging Markets Fund | XXX – Strategic Growth Portfolio |
| International Growth Fund | Short-Term Bond Fund |
| LargeCap Blend Fund I | Short-Term Income Fund |
| LargeCap Blend Fund II | SmallCap Blend Fund |
| LargeCap Growth Fund | SmallCap Growth Fund |
| LargeCap Growth Fund I | SmallCap Growth Fund II |
| LargeCap Growth Fund II | SmallCap Value Fund |
| LargeCap S&P 500 Index Fund | Tax-Exempt Bond Fund |
| LargeCap Value Fund | |
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