PRINCIPAL INVESTORS FUND, INC.
AMENDED AND RESTATED
DISTRIBUTION PLAN AND AGREEMENT
CLASS B SHARES
DISTRIBUTION PLAN AND AGREEMENT made as of March 13, 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 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 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 B
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 Class B
shareholders with tax information.
4. (a) In consideration for the services described above, and the expenses
incurred by the Distributor pursuant to the Distribution Agreement and
Paragraphs 2 and 3 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 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 B 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 B shares.
(b) In consideration of the Distributor's role in the distribution of the
Class B shares of each Series of the Fund (including the Class B shares of
such Series issued in connection with its acquisition of the assets of a
fund of WM Trust I, WM Trust II or WM Strategic Asset Management
Portfolios, LLC ( the "Washington Mutual Funds"), the Fund shall pay the
Distributor its "Allocable Portion," as defined below, of the maximum
distribution fee contemplated by the Fund's Distribution Plan and Agreement
- Class B Shares for each Series as in effect on the date hereof (the
"Plan") that would be attributable to the Distributor under the principles
described below for determining the Distributor's Allocable Portion of the
distribution fee.
Notwithstanding anything to the contrary elsewhere in this Agreement or the
Plan:
(i) The distribution fee accrues daily at the rate of 75 basis points
per annum on the average daily net asset value of all of the
outstanding Class B shares of each Series, including Class B
shares issued in connection with the Fund's acquisition of assets
of the Washington Mutual Funds, subject to the applicable rules
of the NASD, and shall be paid monthly as promptly as possible
after the last day of each month but in any event prior to the
tenth day of the following calendar month;
(ii) The Distributor's Allocable Portion in respect of each Series
shall be 100% until such time as it shall be replaced as
Distributor of the Class B shares of the Series; thereafter, its
Allocable Portion shall be the portion of the total distribution
fee accruing in respect of outstanding Class B shares of the
Series as is fairly attributable to the portion of such
outstanding Class B shares that are outstanding when the
Distributor ceases to serve in that capacity or are later issued
as dividends or other distributions in respect of such Class B
shares or in free exchanges for Class B shares of other Series or
other funds for which the Distributor acts as principal
distributor that are fairly attributable to the Distributor on
the same basis; and the Allocable Portion of each subsequent
distributor (a "Subsequent Distributor") shall be the portion of
such outstanding Class B shares that were sold by the Fund during
the period such Subsequent Distributor served as distributor or
were later issued as dividends or other distributions in respect
of such Class B shares or in free exchanges for Class B shares of
other Series or funds for which such Subsequent Distributor acts
as principal distributor that are fairly attributable to such
Subsequent Distributor on the same basis; it being understood
that the Fund and the Distributor shall agree on procedures for
making these allocations (the "Allocation Procedures");
(iii) The Distributor shall be deemed to have fully earned its
Allocable Portion of the distribution fee payable in respect of
Class B shares of a Series as of any point in time upon the sale
of the outstanding commission shares (i.e., those that are
initially subject to contingent deferred sales charges under
circumstances set forth in the Prospectus for such shares whether
or not such shares are later released from that obligation) of
such Series as of such point in time;
(iv) The Distributor hereby directs the Fund, and the Fund hereby
agrees, to pay all of the Distributor's Allocable Portion of the
distribution fee, as may be more specifically directed by the
Distributor in Irrevocable Payment Instructions, to persons which
have provided funds to the Distributor to cover or otherwise
enable the incurring of expenses associated with services in
connection with the distribution of the Class B shares of the
funds of the Washington Mutual Funds in exchange for the assets
of which Class B shares of the Fund were issued; and
(v) The Fund's obligation to pay the Distributor (or an assignee of
the Distributor) its Allocable Portion of the distribution fee as
provided hereby shall be absolute and unconditional and not
subject to offset or counterclaim and shall not be terminated or
modified (including without limitation, by change in the rules
applicable to the conversion of the Class B shares into shares of
another class) for any reason (including a termination of the
Plan, a termination of the Distributor as distributor of the
Class B shares of the Fund or any Series thereof or a termination
of this Agreement) except:
a. To the extent required by a change in the Investment Company
Act of 1940 (the "1940 Act"), the rules and regulations
under the 1940 Act, the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD"), or any
judicial decisions or interpretive pronouncements by the
Securities and Exchange Commission or its staff, which is
either binding upon the Distributor or generally complied
with by similarly situated distributors of mutual fund
shares;
b. on a basis which does not alter the Distributor's Allocable
Portion of the distribution fee computed with reference to
shares of the Fund or any Series thereof or any other fund
for which it acts as distributor that were outstanding
immediately prior to such termination or modification or
which are thereafter issued directly or indirectly as a
result of dividends or other distributions or free exchanges
of such shares; or
c. in connection with a "Complete Termination" of the Plan by
the Fund, and for this purpose: (1) a "Complete Termination"
of the Plan for the Class B shares of a Series shall occur
only if and only so long as the Plan is terminated for such
Class B shares and following such termination, no
distribution fees are imposed either on such Class B shares
or on any "Similar Class" of shares of such Series; (2) a
"Similar Class" is any class of shares of such Series that
has a sales load structure substantially similar to that of
the class for which this Plan was terminated, taking into
account the total sales load borne directly or indirectly by
holders of such class of shares including commission paid
directly by such holders to brokers on issuance of shares of
such class, asset based sales charges paid by the
Fund/Series and allocated to shares of such class,
contingent deferred sales charges payable by holders of
shares of such class, installment or deferred sales charges
payable by holders of shares of such class, and similar
charges borne directly or indirectly by holders of shares of
such class; and (3) a class of shares would not be
considered substantially similar to the Class B shares if
(I) a front end sales charge is paid by the purchaser, or
(II)(A) the shares are purchased at net asset value, (B) any
commission paid up front to any selling agent(s) does not
exceed 1.0% of the purchase amount, (C) the period during
which any contingent deferred sales charge applies does not
exceed 12 months from the purchase date, and (D) there is no
other sales load feature borne directly or indirectly by
holders of such class of shares.
(vi) This Section 4(b) is not intended to, and shall not, prohibit the
Fund from issuing and selling a Similar Class (as defined in
paragraph v(c)(2) above) of any Series; but is merely intended to
prohibit the Fund from treating a termination of the Plan in
respect of Class B shares of any Series as a "Complete
Termination" for purposes of paragraph (v)(c)(1) of this Section
4(b) while it continues to issue a Similar Class.
(vii) The Fund's obligations under this Section 4(b) shall terminate
upon the Fund's payment in full to the Distributor and each
Subsequent Distributor, if any, such distributor's Allocable
Portion in respect of each Series.
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 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.
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 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.
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 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.
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 B 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 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.
11. While the Plan is in effect, the Fund's board of directors shall satisfy
the fund governance standard 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 B 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
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Distribution Service
Series Fee Fee
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Bond & Mortgage Securities Fund 0.75% 0.25%
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California Insured Intermediate Municipal Bond 0.75% 0.25%
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California Municipal Bond 0.75% 0.25%
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Disciplined LargeCap Blend 0.75% 0.25%
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Diversified International Fund 0.75% 0.25%
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Equity Income I 0.75% 0.25%
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Government Securities & High Quality Bond Fund 0.75% 0.25%
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High Yield II 0.75% 0.25%
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Income 0.75% 0.25%
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International Emerging Markets Fund 0.75% 0.25%
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LargeCap Growth Fund 0.75% 0.25%
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LargeCap Value Fund 0.75% 0.25%
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MidCap Blend Fund 0.75% 0.25%
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MidCap Stock 0.75% 0.25%
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Money Market 0.75% 0.25%
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Mortgage Securities 0.75% 0.25%
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Partners LargeCap Blend Fund 0.75% 0.25%
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Partners LargeCap Blend Fund I 0.75% 0.25%
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Partners LargeCap Growth Fund I 0.75% 0.25%
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Partners LargeCap Value Fund 0.75% 0.25%
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Partners MidCap Growth Fund 0.75% 0.25%
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Partners MidCap Value Fund 0.75% 0.25%
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Partners SmallCap Growth Fund II 0.75% 0.25%
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Principal LifeTime 2020 Fund 0.75% 0.25%
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Principal LifeTime 2030 Fund 0.75% 0.25%
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Principal LifeTime 2040 Fund 0.75% 0.25%
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Principal LifeTime 2050 Fund 0.75% 0.25%
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Principal LifeTime Strategic Income Fund 0.75% 0.25%
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Real Estate Securities Fund 0.75% 0.25%
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XXX - Balanced Portfolio 0.75% 0.25%
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XXX - Conservative Balanced Portfolio 0.75% 0.25%
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XXX - Conservative Growth Portfolio 0.75% 0.25%
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XXX - Flexible Income 0.75% 0.25%
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XXX - Strategic Growth 0.75% 0.25%
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Small Cap Growth 0.75% 0.25%
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SmallCap Blend Fund 0.75% 0.25%
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SmallCap Value Fund 0.75% 0.25%
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Tax-Exempt Bond Fund I 0.75% 0.25%
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West Coast Equity 0.75% 0.25%
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