PRINCOR FINANCIAL SERVICES CORPORATION
The Principal Financial Group
Des Moines, Iowa 50392-0200
(515) 247-5711
PRINCIPAL MUTUAL FUNDS
SELECTED DEALER SELLING AGREEMENT
Dealer Selling Agreement between Princor Financial Services Corporation
("Princor", "We" or "Us") and _________________________________________
("Dealer" or "You") dated as of __________________________.
As Distributor and Principal Underwriter for the Principal Funds (hereinafter
collectively referred to as the "Funds" and individually as a "Fund"), each an
open-end investment company of which we are, or may become, Distributor and
whose shares are offered to the public at an offering price which may or may not
include a sales charge, we invite you to become a Selected Dealer to distribute
shares of the Funds.
1. Each Fund offers three classes of shares - one class which bears a
front-end load (the "Class A Shares") and two classes which bear a deferred
load (the "Class B Shares" and "Class C Shares"). (The Class A Shares,
Class B Shares and the Class C Shares are collectively referred to as the
"Shares"). Class A Shares of the Money Market Fund are offered at net asset
value, without any sales charge.
2. Orders for shares received from you and accepted by us will be at the
current public offering price applicable to each order as established by
the then current prospectus of each Fund. The procedure relating to the
handling of orders shall be subject to instructions which we shall forward
to all Selected Dealers. Each Fund reserves the right to withdraw shares
from sale temporarily or permanently. All orders are subject to acceptance
or rejection by us and the Fund, each in its sole discretion.
3. The sales charge applicable to any sale of Class A Shares by you and the
dealer discount applicable to any order from you for the purchase of Class
A Shares accepted by us shall be that percentage of the applicable public
offering price determined as set forth in the Funds' then current
prospectus and/or statement of additional information.
The rates of any sales charge and/or dealer discount for Class A Shares are
subject to change by us, and any orders placed after the effective date of
such change will be subject to the rate(s) in effect at the time of receipt
of the payment by us.
Any such sales charges and discounts to selected dealers are subject to
reductions under a variety of circumstances as may be described in the
Funds' then current prospectus and/or statement of additional information.
To obtain any such reductions, we must be notified when a sale takes place
which would qualify for the reduced charge. There is currently no sales
charge, selling concession or discount on purchases of shares by the
reinvestment of dividends or capital gains distributions, or when there is
a transfer from one Fund to another Fund or from one account to another
account.
4. If you sell Class B Shares and/or Class C Shares, we will pay you a sales
commission equal to the percentage of the aggregate net asset value of such
classes of shares sold as set forth in the Funds' then current prospectus
and/or statement of additional information.
The rates of any sales charge and/or dealer discount for Class B Shares and
Class C Shares are subject to change by us, and any orders placed after the
effective date of such change will be subject to the rate(s) in effect at
the time of receipt of the payment by us.
We shall be entitled to any contingent deferred sales charges ("CDSC") on
any shares sold. If, with respect to any Class B or Class C Shares sold by
you, any CDSC is waived as provided in the Funds' then current prospectus
and/or statement of additional information, then in any such case you shall
remit to us promptly upon notice an amount equal to the commissions or a
portion of the commission paid on such shares.
5. Redemption of shares will be made at the net asset value of such shares in
accordance with the Funds' then current prospectus and statement of
additional information less, in the case of Class B and Class C Shares, any
applicable CDSC payable to us.
6. All of the Funds (the "Plan Funds") have adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "1940 Act"). No such Agreement has been adopted by Principal Cash
Management Fund Class A shares. Each Agreement defines service to be
provided by Selected Dealers for which they will be compensated pursuant to
the Plan.
(a) As a Selected Dealer, you agree to provide distribution
assistance and administrative support services in connection with
the distribution of shares of the Plan Funds to customers who may
from time to time directly or beneficially own shares, including
but not limited to distributing sales literature, answering
routine customer inquiries regarding the Plan Funds, assisting in
the establishment and maintenance of accounts in the Plan Funds
and in the processing of purchases and redemptions of Shares,
making the Plan Funds' investment plans and dividend options
available, and providing such other information and services in
connection with the distribution of Plan Funds Shares as may be
reasonably requested from time to time.
(b) For such services, you will be compensated in accordance with the
then current prospectus of the Plan Funds.
(c) The Plan may be terminated at any time without payment of any
penalty by any Fund in accordance with the rules governing such
plans promulgated by the Securities and Exchange Commission.
(d) The provisions of the Plan are incorporated herein and made a part
hereof by reference, and will continue in full force and effect so
long as its continuance is approved at least annually pursuant to
Rule 12b-1.
7. Each party to this Agreement represents that it currently is and, while
this Agreement is in effect, will continue to be a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD") and agrees
to abide by all Rules and Regulations of that Association, including the
NASD Rules of Fair Practice. If you are a foreign dealer, not eligible for
membership in the NASD, you still agree to abide by the Rules and
Regulations of the NASD. We both agree to comply with all applicable state
and federal laws, rules and regulations of the Securities and Exchange
Commission and other authorized United States or foreign regulatory
agencies. You further agree that you will not sell, offer for sale, or
solicit shares of the Funds in any state where they have not been qualified
for sale. You will solicit applications and sell shares only in accordance
with the terms and on the basis of the representations contained in the
appropriate prospectus and any supplemental literature furnished by us.
8. You must represent that you are currently a member of SIPC and, while this
Agreement is in effect, will continue to be a member of SIPC. You agree to
notify us immediately if your SIPC membership status changes.
9. IT IS AGREED
(a) That neither of us shall withhold placing customers' orders for
shares so as to profit as a result of such withholding.
(b) We shall not purchase shares from the Funds except for the
purpose of covering purchase orders already received, and you
shall not purchase shares of the Funds except for the purpose of
covering purchase orders already received by you or for your own
bona fide investment purposes, provided, however, any shares
purchased for your own bona fide investment purposes will not be
resold except through redemption of the Funds. Delivery of
certificates, if any, for shares purchased shall be made by a
Fund only against receipt of the purchase price. If payment for
the shares purchased and all necessary applications and documents
required by the Funds or us are not received within five business
days or such shorter time as may be required by law, the sale may
be cancelled forthwith without any responsibility or liability on
our part or on the part of the Funds (in which case you will be
responsible for any loss, including loss of profit, suffered by a
Fund resulting from your failure to make payments or provide
documents as aforesaid), or, at our option, we may cause the
shares ordered to be redeemed by the relevant Fund (in which case
we may hold you responsible for any loss).
(c) We shall accept only unconditional orders. Any right granted to
you to sell shares on behalf of the Funds will not apply to shares
issued in connection with the merger or consolidation of any other
investment company with a Fund or its acquisition, purchase or
otherwise, of all or substantially all the assets of any
investment company or substantially all the outstanding shares of
any such company. Also, any such right shall not apply to shares
issued, sold, or transferred, whether Treasury or newly issued
shares, that may be offered by a Fund to its shareholders as stock
dividends or splits for not less than "net asset value."
(d) We reserve the right to reject any order or application for shares
or to withdraw the offering of shares entirely, and to change any
sales charge and dealer concession, provided that no such change
shall affect concessions on orders accepted by us prior to notice
of such change, unless such change results from a reduction in
sales charges because of legal requirements.
(e) You shall not purchase shares of a Fund from a shareholder at a
price per share which is lower than the current net asset value
per share which is next computed after the receipt of the tender
of such shares by the shareholder.
(f) If shares of the Fund are tendered for redemption within seven
business days after confirmation by us of your original purchase
order for such shares, (i) you shall immediately refund to us the
full concession allowed to you on the original sale, and (ii) we
shall pay to the Fund our share of the "sales charge" on the
original sale by us, and shall also pay to the Fund the refund
which we received under (i) above. You shall be notified by us of
such redemption within ten days of the date on which proper
request for redemption is delivered to us or the Fund.
Termination or cancellation of this Agreement shall not relieve
you or us from requirements of this subparagraph (f).
(g) This Agreement may not be assigned or transferred in any manner
including by operation of law.
10. We will furnish you, without charge, reasonable quantities of prospectuses
and sales material or supplemental literature relating to the sale of
shares of the Funds.
11. In all sales of shares, you act as principal and are not employed by us as
broker-agent or employee. You are not authorized to act for us nor to make
any representations in our behalf. In purchasing or selling shares
hereunder you are entitled to rely only upon the current prospectus and
supplemental literature approved in writing by us. In the offer and sale of
shares of the Funds, you shall not use any prospectus or supplemental
literature not approved in writing by us. No person is authorized to make
any representations concerning shares of the Funds except those contained
in a current prospectus and supplemental literature approved in writing by
us. You will use your best efforts in the promotion of sales of shares and
will be responsible for the proper instruction and training of all sales
personnel employed by you. In making sales of shares, you and your
personnel will conform to the compliance standards set forth in Appendix A
hereto.
12. You will indemnify, defend, and hold harmless our firm and all of its
affiliates, and their officers, directors, employees, agents, and assignees
against all losses, claims, demands, liabilities, and expenses, including
reasonable legal and other expenses incurred in defending such claims or
liabilities, whether or not resulting in any liability to any of them, or
which they or any of them may incur, including but not limited to alleged
violations of the Securities Act of 1933, as amended and/or to the
Securities Exchange Act of 1934, as amended, arising out of the offer or
sale of any securities pursuant to this Agreement, or arising out of the
breach of any of the terms and conditions of this Agreement, other than any
claim, demand, or liability arising from any untrue statement or alleged
untrue statement of a material fact contained in a prospectus for the
Funds, as filed and in effect with the SEC, or any amendment or supplement
thereto, or in any application prepared or approved in writing by our
counsel and filed with any state regulatory agency in order to register or
qualify under the securities laws thereof (the "blue sky applications"), or
which shall arise out of or be based upon any omission or alleged omission
to state therein a material fact required to be stated in the prospectus or
any of the blue sky applications or which is necessary to make the
statements or a part thereof not misleading, which indemnity provision
shall survive the termination of this Agreement.
13. No obligation not expressly assumed by us in this Agreement shall be
implied.
14. Either party to this Agreement may terminate this Agreement by written
notice to the other party. We may modify this Agreement at any time by
written notice to you. Any notice shall be deemed to have been given on the
date upon which it was either delivered personally or by fax transmission
to the other party or to any office or member thereof, or was mailed
post-paid or delivered to a telegraph office for transmission at his or its
address as shown herein.
15. All communications to us should be sent to the above address. Any notice to
you shall be duly given if mailed or telegraphed to you at the address
specified by you herein.
16. This Agreement shall be construed in accordance with the laws of the State
of Iowa and shall be binding upon both parties hereto when signed by both
of us in the spaces provided below. This Agreement shall not be applicable
to shares of the Funds in any state in which those shares are not qualified
for sale.
17. This Agreement shall be binding upon both parties hereto when executed by
both parties and supersedes any prior agreement or understanding between us
and you with respect to the sale of the shares and any of the Funds.
18. This Agreement is in all respects subject to Section 26 of the Rules of
Fair Practice of the NASD which shall control any provisions to the
contrary in this Agreement.
19. If the foregoing represents your understanding, please so indicate by
signing in the proper space below.
PRINCOR FINANCIAL SERVICES CORPORATION
By:
Title:
We accept the offer set forth above, which constitutes a Selling Agreement with
us.
BY:
Signature
Please type or print name
TITLE:
DEALER:
ADDRESS:
DATE:
APPENDIX A
Compliance Standards
Princor Financial Services Corporation ("Princor"), as distributor for the
Principal Funds which offers their shares on both a front-end load and deferred
load basis, has established compliance standards setting forth the basis upon
which shares of the Principal Funds may be sold. These standards are designed
for each broker/dealer ("dealer") which distributes shares of the Principal
Funds and for such dealer's financial advisers.
As Principal Funds are offered with two different arrangements of sales and
distribution fees, it is important for an investor not only to choose a fund
that best suits his or her investment objectives, but also to choose the sales
financing method which best suits the investor's particular situation. To assist
clients of those firms which distribute shares of the Principal Funds in these
decisions and to ensure proper supervision of Principal Fund purchase
recommendations, Princor requires that such dealers adhere to the following
compliance standards when selling Principal Funds:
1. Any purchase that results in a shareholder having less than $250,000
invested in Principal Fund accounts that are aggregated for rights of
accumulation purposes may be either front-end load (Class A) or subject
to a contingent deferred sales charge (Class B).
The dealer's branch office manager (or other appropriate reviewing
officer) must review for suitability the purchase order ticket for
shares subject to either a front-end or a contingent deferred sales
charge, given the relevant facts and circumstances, including but not
limited to:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold the shares
purchased; and
(c) any other relevant circumstances, such as the availability of
purchases under letters of intent or pursuant to rights of
accumulation.
2. Any mutual fund purchase order that results in a shareholder having
$250,000 or more invested in Principal Fund accounts that are
aggregated for rights of accumulation purposes should be for shares
which are subject to a front-end sales load (Class A shares) because
there are few circumstances under which it is advantageous for an
investor to place such an order for Class B shares. Such an order
placed for shares subject to a contingent deferred sales charge must be
approved by the dealer's regional director (or a person of comparable
status) and confirmed in writing by the investor.
General Guidelines
There are instances where one financing method may be more advantageous to an
investor than the other. For example, investors who qualify for a significant
discount on a front-end sales load may determine that a front-end load purchase
is preferable to payment of the higher SEC Rule 12b-1 distribution fee and the
contingent deferred sales charge imposed upon Class B shares.
On the other hand, an investor whose order would not qualify for a discount may
wish to defer the sales load and have all funds invested in shares initially.
Responsibility of Branch Office Manager
(or other appropriate reviewing officer)
The dealer's branch office manager or other appropriate reviewing officer (the
"Reviewing Officer") must ensure that the registered representative has advised
the client of the available financing methods offered by the Principal Funds,
and the impact of choosing one method over another. In certain instances, it may
be appropriate for the branch office manager to discuss the purchase directly
with the client.
Effectiveness
These compliance guidelines are effective immediately upon execution of a dealer
agreement with Princor with respect to any order for shares of any Principal
Fund for which Princor acts as distributor.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and marketing group or its Legal
Department or Compliance Director. Princor will advise dealers of any changes in
these guidelines in the future.
