PRINCOR UTILITIES FUND, INC.
DISTRIBUTION AND SHAREHOLDER SERVICING
PLAN AND AGREEMENT
CLASS R SHARES
PLAN AND AGREEMENT made as of the ___ of ________, 1995, by and between
PRINCOR UTILITIES FUND, INC., a Maryland corporation (the "Fund"), and PRINCOR
FINANCIAL SERVICES CORPORATION, an Iowa corporation (the "Underwriter").
WHEREAS, Rule 12b-1 under the Investment Company Act of 1940 (the
"Act"), provides that a registered open-end management investment company may
participate in financing the distribution of securities of which it is the
issuer; and
WHEREAS, any payments made by the Fund in accordance with Rule 12b-1
must be made pursuant to a written plan describing all material aspects of the
proposed financing of distribution; and
WHEREAS, the Underwriter acts as the underwriter for the Fund; and
various broker-dealers (the "Dealers"), including the Underwriter, sell shares
of the Fund and provide services to existing shareholders; and
WHEREAS, the Board of Directors of the Fund has determined that the
Fund should make direct payments to the Underwriter for transmission to Dealers
(including the Underwriter) in connection with selling Class R shares of the
Fund and the rendering of services to Class R shareholders and that such payment
should be separate from the investment advisory and management fee paid to
Princor Management Corporation; and
WHEREAS, the Board of Directors of the Fund has determined that there
is a reasonable likelihood that the adoption of the Plan will benefit the Fund
and its Class R shareholders;
NOW, THEREFORE, the following shall constitute the written Plan
pursuant to which the Fund shall participate in financing the distribution of
its Class R shares.
Section 1. The Fund is hereby authorized to make payments to the
Underwriter from that portion of its assets attributable to its Class R shares
for the purpose of reimbursing the Underwriter for expenses it incurs in
connection with sales of the Class R shares and to compensate the Underwriter
and other selling Dealers for (i) providing shareholder services to existing
Class R shareholders, including without limitation, furnishing information as to
the status of shareholder accounts, requests, responding to telephone and
written inquiries, and assisting shareholders with tax information and (ii)
rendering assistance in the distribution and promotion of the sale of Class R
shares to the public.
In consideration of the activities described above, the Fund shall pay
the Underwriter a fee after the end of each month at the annual rate of 0.75% of
the daily net asset value of the Fund's Class R shares. The Underwriter shall
retain such amounts as are appropriate to compensate the Underwriter for actual
expenses incurred in distributing and promoting the sale of Class R shares to
the public and remit such amounts as are appropriate to other Dealers in
recognition of their services and assistance as described above provided however
the Underwriter shall not pay compensation to registered representatives and
Dealers for the services they render to Class R shareholders in an amount
exceeding 0.50% annually of the daily net asset value of the Fund's Class R
shares. If the aggregate payments received by the Underwriter under this Plan in
any fiscal year exceed the expenditures made by the Underwriter in such fiscal
year for these purposes, the Underwriter shall promptly reimburse the Fund for
the amount of such excess.
Section 2. This Plan shall not take effect until it has been approved
(1) by a vote of at least a majority (as defined in the Act) of the outstanding
Class R shares of the Fund and (2) by votes of the majority of both (i) the
Board of Directors of the Fund, and (ii) those Directors of the Fund who, except
for their positions as Directors of the Fund, 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.
Section 3. Unless sooner terminated pursuant to Section 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 Section 2(2).
Section 4. 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.
Section 5. 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 Fund's outstanding Class R shares.
Section 6. 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 members
of the Board of Directors of the Fund who are not interested
persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan or by a vote of a majority (as defined in
the Investment Company Act of 1940) of the Fund's outstanding
Class R shares on not more than sixty days' written notice to
any other party to the agreement); and
B. That such agreement shall terminate automatically in the event
of its assignment.
Section 7. 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.
Section 8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 4, 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.
Section 9. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 1 hereof unless such
amendment is approved in the manner provided for initial approval in Section 2
hereof and no other material amendment to this Plan shall be made unless
approved in the manner provided for initial approval in Section 2(2) hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Plan as of the first date written above.
PRINCOR UTILITIES FUND, INC.
By: ______________________________
A. S. Filean, Vice President
PRINCOR FINANCIAL SERVICES
CORPORATION
By: ______________________________
X. X. Xxxxx, President
