4
PRINCIPAL INVESTORS FUND, INC.
DISTRIBUTION PLAN AND AGREEMENT
CLASS B SHARES
DISTRIBUTION PLAN AND AGREEMENT made as of December 13, 2004, by and
between PRINCIPAL INVESTORS FUND, INC., a Maryland corporation (the "Fund"), and
PRINCOR FINANCIAL SERVICES CORPORATION, an Iowa 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 B 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 Princor Financial Services Corporation (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. In consideration for the services described above, and the expenses
incurred by the Distributor pursuant to the Distribution Agreement and
Paragraph 2 hereof, all with respect to Class B shares of a Series of the
Fund, Class B shares of each Series shall pay to the Distributor a fee at
the annual rate as shown on Appendix A (or such lesser amount as the Fund
Directors may, from time to time, determine) of the average daily net
assets of Class B shares of such Series. 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 B shares.
The Distributor shall retain such amounts as are appropriate to compensate
the Distributor for actual expenses incurred in compensating securities
dealers or other persons who have engaged in the sale of Class B shares or
to pay any of the expenses associated with other activities authorized
under Paragraph 2 hereof. If the aggregate payments received by the
Distributor under this Plan in any fiscal year exceed the expenditures
made by the Distributor in such fiscal year for these purposes, the
Distributor shall promptly reimburse the Series for the amount of such
excess.
4. 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 B 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 B shares within
the meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. 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 B
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.
6. Unless sooner terminated pursuant to Paragraph 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 Paragraph 5(b).
7. A representative of the Distributor 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.
8. 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 B shares of the Series of the Fund.
9. 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 B 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.
10. 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.
11. 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 B shares.
12. The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 7, 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.
13. This Plan may not be amended to increase materially the amount of Fees
provided for in Paragraph 3 hereof unless such amendment is approved in
the manner provided for initial approval in Paragraph 5 hereof and no
other material amendment to this Plan shall be made unless approved in the
manner provided for initial approval in Paragraph 5(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/A. S. Filean
-----------------------------------------------------------
A. S. FILEAN, SENIOR VICE PRESIDENT AND SECRETARY
PRINCOR FINANCIAL SERVICES CORPORATION
BY: /s/Xxxxx X. Xxxxxx
-----------------------------------------------------------
XXXXX X. XXXXXX, PRESIDENT
PRINCIPAL INVESTORS FUND, INC.
APPENDIX A
------------------------------------------------- -------------- ------------------------------------------- --------------
Distribution Distribution
Series Fee Series Fee
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Bond & Mortgage Securities Fund 1.00% Partners LargeCap Value Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Equity Income 1.00% Partners MidCap Growth Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Government Securities Fund 1.00% Partners MidCap Value Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
International Emerging Markets Fund 1.00% Partners SmallCap Growth Fund II 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Diversified International Fund 1.00% Principal LifeTime 2020 Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
LargeCap Growth Fund 1.00% Principal LifeTime 2030 Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
LargeCap Value Fund 1.00% Principal LifeTime 2040 Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
MidCap Blend Fund 1.00% Real Estate Securities Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Money Market 0.25% SmallCap Blend Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Partners LargeCap Blend Fund 1.00% SmallCap Value Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Partners LargeCap Blend Fund I 1.00% Tax-Exempt Bond Fund 1.00%
------------------------------------------------- -------------- ------------------------------------------- --------------
------------------------------------------------- -------------- ------------------------------------------- --------------
Partners LargeCap Growth Fund I 1.00%
------------------------------------------------- --------------
