PRINCIPAL INVESTORS FUND, INC.
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
COLUMBUS CIRCLE INVESTORS SUB-ADVISED SERIES
AGREEMENT executed as of December 15, 2006, by and between PRINCIPAL MANAGEMENT
CORPORATION (hereinafter called "the Manager"), and COLUMBUS CIRCLE INVESTORS
("CCI") (hereinafter called "the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment adviser to each Series of
Principal Investors Fund, Inc., (the "Fund"), an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager desires to retain the Sub-Adviser to furnish it with
investment advisory services with respect to all or a portion of the portfolio
assets of each Series of the Fund identified in Appendix A hereto (hereinafter
called "Series"), which the Manager has agreed to provide to the Fund, and the
Sub-Adviser desires to furnish such services; and
WHEREAS, The Manager has furnished the Sub-Adviser with copies properly
certified or authenticated of each of the following and will promptly provide
the Sub-Adviser with copies properly certified or authenticated of any amendment
or supplement thereto:
(a) Management Agreement (the "Management Agreement") with the Fund;
(b) The Fund's registration statement and financial statements as filed
with the Securities and Exchange Commission; and
(c) Policies, procedures or instructions adopted or approved by the Board
of Directors of the Fund relating to obligations and services to be
provided by the Sub-Adviser.
NOW, THEREFORE, in consideration of the premises and the terms and conditions
hereinafter set forth, the parties agree as follows:
1. Appointment of Sub-Adviser
In accordance with and subject to the Management Agreement, the Manager
hereby appoints the Sub-Adviser to perform the services described in
Section 2 below for investment and reinvestment of the securities and
other assets of each Series, subject to the control and direction of
the Manager and the Fund's Board of Directors, for the period and on
the terms hereinafter set forth. The Sub-Adviser accepts such
appointment and agrees to furnish the services hereinafter set forth
for the compensation herein provided. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor and shall,
except as expressly provided or authorized, have no authority to act
for or represent the Fund or the Manager in any way or otherwise be
deemed an agent of the Fund or the Manager.
2. Obligations of and Services to be Provided by the Sub-Adviser
The Sub-Adviser will:
(a) Provide investment advisory services, including but not limited
to research, advice and supervision for each Series.
(b) Furnish to the Board of Directors of the Fund for approval (or
any appropriate committee of such Board), and revise from time to
time as conditions require, a recommended investment program for
each Series consistent with each Series investment objective and
policies.
(c) Implement the approved investment program by placing orders for
the purchase and sale of securities without prior consultation
with the Manager and without regard to the length of time the
securities have been held, the resulting rate of portfolio
turnover or any tax considerations, subject always to the
provisions of the Fund's registration statement, Articles of
Incorporation and Bylaws and the requirements of the 1940 Act, as
each of the same shall be from time to time in effect.
(d) Advise and assist the officers of the Fund, as requested by the
officers, in taking such steps as are necessary or appropriate to
carry out the decisions of its Board of Directors, and any
appropriate committees of such Board, regarding the general
conduct of the investment business of each Series.
(e) Maintain, in connection with the Sub-Adviser's investment
advisory services obligations, compliance with the 1940 Act and
the regulations adopted by the Securities and Exchange Commission
thereunder and the Series' investment strategies and restrictions
as stated in the Fund's prospectus and statement of additional
information.
(f) Report to the Board of Directors of the Fund at such times and in
such detail as the Board of Directors may reasonably deem
appropriate in order to enable it to determine that the
investment policies, procedures and approved investment program
of each Series are being observed.
(g) Upon request, provide assistance and recommendations for the
determination of the fair value of certain securities when
reliable market quotations are not readily available for purposes
of calculating net asset value in accordance with procedures and
methods established by the Fund's Board of Directors.
(h) Furnish, at its own expense, (i) all necessary investment and
management facilities, including salaries of clerical and other
personnel required for it to execute its duties faithfully, and
(ii) administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of
the investment advisory affairs of each Series.
(i) Open accounts with broker-dealers and futures commission
merchants ("broker-dealers"), select broker-dealers to effect all
transactions for each Series, place all necessary orders with
broker-dealers or issuers (including affiliated broker-dealers),
and negotiate commissions, if applicable. To the extent
consistent with applicable law, purchase or sell orders for each
Series may be aggregated with contemporaneous purchase or sell
orders of other clients of the Sub-Adviser. In such event
allocation of securities so sold or purchased, as well as the
expenses incurred in the transaction, will be made by the
Sub-Adviser in the manner the Sub-Adviser considers to be the
most equitable and consistent with its fiduciary obligations to
the Fund and to other clients. The Sub-Adviser will report on
such allocations at the request of the Manager, the Fund or the
Fund's Board of Directors providing such information as the
number of aggregated trades to which each Series was a party, the
broker-dealers to whom such trades were directed and the basis
for the allocation for the aggregated trades. The Sub-Adviser
shall use its best efforts to obtain execution of transactions
for each Series at prices which are advantageous to the Series
and at commission rates that are reasonable in relation to the
benefits received. However, the Sub-Adviser may select brokers or
dealers on the basis that they provide brokerage, research or
other services or products to the Sub-Adviser. To the extent
consistent with applicable law, the Sub-Adviser may pay a broker
or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission or dealer
spread another broker or dealer would have charged for effecting
that transaction if the Sub-Adviser determines in good faith that
such amount of commission is reasonable in relation to the value
of the brokerage and research products and/or services provided
by such broker or dealer. This determination, with respect to
brokerage and research products and/or services, may be viewed in
terms of either that particular transaction or the overall
responsibilities which the Sub-Adviser and its affiliates have
with respect to each Series as well as to accounts over which
they exercise investment discretion. Not all such services or
products need be used by the Sub-Adviser in managing the Series.
In addition, joint repurchase or other accounts may not be
utilized by the Series except to the extent permitted under any
exemptive order obtained by the Sub-Adviser provided that all
conditions of such order are complied with.
(j) Maintain all accounts, books and records with respect to each
Series as are required of an investment advisor of a registered
investment company pursuant to the 1940 Act and Investment
Advisers Act of 1940 (the "Investment Advisers Act"), and the
rules thereunder, and furnish the Fund and the Manager with such
periodic and special reports as the Fund or Manager may
reasonably request. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all
records that it maintains for each Series are the property of the
Fund, agrees to preserve for the periods described by Rule 31a-2
under the 1940 Act any records that it maintains for the Series
and that are required to be maintained by Rule 31a-1 under the
1940 Act, and further agrees to surrender promptly to the Fund
any records that it maintains for a Series upon request by the
Fund or the Manager. The Sub-Adviser has no responsibility for
the maintenance of Fund records except insofar as is directly
related to the services the Sub-Adviser provides to a Series.
(k) Observe and comply with Rule 17j-1 under the 1940 Act and the
Sub-Adviser's Code of Ethics adopted pursuant to that Rule as the
same may be amended from time to time. The Manager acknowledges
receipt of a copy of Sub-Adviser's current Code of Ethics.
Sub-Adviser shall promptly forward to the Manager a copy of any
material amendment to the Sub-Adviser's Code of Ethics along with
certification that the Sub-Adviser has implemented procedures for
administering the Sub-Adviser's Code of Ethics.
(l) From time to time as the Manager or the Fund may request, furnish
the requesting party reports on portfolio transactions and
reports on investments held by a Series, all in such detail as
the Manager or the Fund may reasonably request. The Sub-Adviser
will make available its officers and employees to meet with the
Fund's Board of Directors at the Fund's principal place of
business on due notice to review the investments of a Series.
(m) Provide such information as is customarily provided by a
sub-adviser and may be required for the Fund or the Manager to
comply with their respective obligations under applicable laws,
including, without limitation, the Internal Revenue Code of 1986,
as amended (the "Code"), the 1940 Act, the Investment Advisers
Act, the Securities Act of 1933, as amended (the "Securities
Act"), and any state securities laws, and any rule or regulation
thereunder.
(n) Perform quarterly and annual tax compliance tests to monitor each
Series' compliance with Subchapter M of the Code. The Sub-Adviser
shall notify the Manager immediately upon having a reasonable
basis for believing that a Series has ceased to be in compliance
or that it might not be in compliance in the future. If it is
determined that a Series is not in compliance with the
requirements noted above, the Sub-Adviser, in consultation with
the Manager, will take prompt action to bring the Series back
into compliance (to the extent possible) within the time
permitted under the Code.
(o) Provide a copy of the Sub-Adviser's Form ADV and any amendments
thereto contemporaneously with the filing of such documents with
the Securities and Exchange Commission or other regulatory
agency.
(p) Vote proxies received on behalf of the Series in a manner
consistent with Sub-Adviser's proxy voting policies and
procedures and provide a record of votes cast containing all of
the voting information required by Form N-PX in an electronic
format to enable the Series to file Form N-PX as required by SEC
rule.
(q) Respond to tender offers, rights offerings and other voluntary
corporate action requests affecting securities held by the Fund
and complete and file notices of claims in connection with class
action lawsuits concerning securities owned by the Fund.
3. Prohibited Conduct
In providing the services described in this agreement, the Sub-Adviser
will not consult with any other investment advisory firm that provides
investment advisory services to any investment company sponsored by
Principal Life Insurance Company regarding transactions for the Fund in
securities or other assets.
4. Compensation
As full compensation for all services rendered and obligations assumed
by the Sub-Adviser hereunder with respect to each Series, the Manager
shall pay the compensation specified in Appendix A to this Agreement.
5. Liability of Sub-Adviser
Neither the Sub-Adviser nor any of its directors, officers, employees,
agents or affiliates shall be liable to the Manager, the Fund or its
shareholders for any loss suffered by the Manager or the Fund resulting
from any error of judgment made in the good faith exercise of the
Sub-Adviser's investment discretion in connection with selecting
investments for a Series or as a result of the failure by the Manager
or any of its affiliates to comply with the terms of this Agreement,
except for losses resulting from willful misfeasance, bad faith or
gross negligence of, or from reckless disregard of, the duties of the
Sub-Adviser or any of its directors, officers, employees, agents, or
affiliates.
6. Supplemental Arrangements
The Sub-Adviser may enter into arrangements with other persons
affiliated with the Sub-Adviser or with unaffiliated third parties to
better enable the Sub-Adviser to fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to the
Sub- Adviser, subject to written notification to and approval of the
Manager and, where required by applicable law, the Board of Directors
of the Fund.
7. Regulation
The Sub-Adviser shall submit to all regulatory and administrative
bodies having jurisdiction over the services provided pursuant to this
Agreement any information, reports or other material which any such
body may request or require pursuant to applicable laws and
regulations.
8. Duration and Termination of This Agreement
This Agreement shall become effective on the latest of (i) the date of
its execution, (ii) the date of its approval by a majority of the Board
of Directors of the Fund, including approval by the vote of a majority
of the Board of Directors of the Fund who are not interested persons of
the Manager, the Sub-Adviser, Principal Life Insurance Company or the
Fund cast in person at a meeting called for the purpose of voting on
such approval or (iii) if required by the 1940 Act, the date of its
approval by a majority of the outstanding voting securities of the
Series. It shall continue in effect thereafter from year to year
provided that the continuance is specifically approved at least
annually either by the Board of Directors of the Fund or by a vote of a
majority of the outstanding voting securities of the Series and in
either event by a vote of a majority of the Board of Directors of the
Fund who are not interested persons of the Manager, Principal Life
Insurance Company, the Sub-Adviser or the Fund cast in person at a
meeting called for the purpose of voting on such approval.
If the shareholders of a Series fail to approve the Agreement or any
continuance of the Agreement in accordance with the requirements of the
1940 Act, the Sub-Adviser will continue to act as Sub-Adviser with
respect to the Series pending the required approval of the Agreement or
its continuance or of any contract with the Sub-Adviser or a different
manager or sub-adviser or other definitive action; provided, that the
compensation received by the Sub-Adviser in respect to the Series
during such period is in compliance with Rule 15a-4 under the 1940 Act.
This Agreement may be terminated at any time without the payment of any
penalty by the Board of Directors of the Fund or by the Sub-Adviser,
the Manager or by vote of a majority of the outstanding voting
securities of the Series on sixty days written notice. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 8, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "interested person," "assignment" and "voting security") shall be
applied.
9. Amendment of this Agreement
No material amendment of this Agreement shall be effective until
approved, if required by the 1940 Act or the rules, regulations,
interpretations or orders issued thereunder, by vote of the holders of
a majority of the outstanding voting securities of the Series and by
vote of a majority of the Board of Directors of the Fund who are not
interested persons of the Manager, the Sub-Adviser, Principal Life
Insurance Company or the Fund cast in person at a meeting called for
the purpose of voting on such approval.
10. General Provisions
(a) Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Iowa. The
captions in this Agreement are included for convenience only and
in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(b) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the other party at such
address as such other party may designate for the receipt of such
notices. Until further notice to the other party, it is agreed
that the address of the Manager for this purpose shall be
Principal Financial Group, Xxx Xxxxxx, Xxxx 00000-0000, and the
address of the Sub-Adviser shall be Columbus Circle Investors,
Metro Center, Xxx Xxxxxxx Xxxxx, Xxxxxxxx XX 00000.
(c) The Sub-Adviser will promptly notify the Manager in writing of the
occurrence of any of the following events:
(1) the Sub-Adviser fails to be registered as an investment
adviser under the Investment Advisers Act or under the laws of
any jurisdiction in which the Sub-Adviser is required to be
registered as an investment advisor in order to perform its
obligations under this Agreement.
(2) the Sub-Adviser is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law or
in equity, before or by any court, public board or body,
involving the affairs of a Series.
(d) The Manager shall provide (or cause the Series custodian to
provide) timely information to the Sub-Adviser regarding such
matters as the composition of the assets of a Series, cash
requirements and cash available for investment in a Series, and
all other reasonable information as may be necessary for the
Sub-Adviser to perform its duties and responsibilities hereunder.
(e) This Agreement contains the entire understanding and agreement of
the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
PRINCIPAL MANAGEMENT CORPORATION
/s/Xxxxxxx X. Beer
By __________________________________________
Xxxxxxx X. Beer, Executive Vice President
COLUMBUS CIRCLE INVESTORS
/s/Xxxxx X. Xxxxxxx
By ___________________________________________
Xxxxx X. Xxxxxxx, Managing Director and
Chief Administrative Officer
APPENDIX A
CCI shall serve as investment sub-adviser for each Series identified below. The
Manager will pay CCI, as full compensation for all services provided under this
Agreement, a fee, computed and paid monthly, at an annual rate as shown below of
the Series' net assets managed by CCI as of the first day of each month
allocated to CCI's management.
In calculating the fee for a series included in the table, assets of any
unregistered separate account of Principal Life Insurance Company and any
investment company sponsored by Principal Life Insurance Company to which CCI
provides investment advisory services and which have the same investment mandate
(e.g. LargeCap Growth) as the series for which the fee is calculated, will be
combined with the assets of the series to arrive at net assets.
If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
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Compensation Table
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---------------------------- ------------------------------------------------------------------------------------------------------
Fund Net Assets Managed by CCI
First Next Next Next Next Next Next Next Over
Fund $50 $50 million $100 $200 $350 $750 $500 million $2.5 $4.5
---- ---- ----------- ----- ----- ----- ----- ------------ ----- ----
million million million million million billion billion
------- ------- ------- ------- ------- ------- -------
LargeCap Growth Fund 0.2643% 0.2448% 0.2154% 0.1762% 0.1273% 0.0881% 0.0587% 0.2448% 0.1664%
---------------------- ----------- ------------ ------------ ------------ ----------- ------------ --------------------------------
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Fund Net Assets Managed by CCI
First Next Next Next Over
Fund $25 million $75 million $100 million $100 million $300 million
---- ----------- ----------- ------------ ------------ ------------
MidCap Growth Fund 0.3916% 0.3133% 0.2643% 0.2252% 0.3427%
------------------------------- -------------- -------------- --------------- --------------- --------------- ----------------------
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Fund Net Assets Managed by CCI
Fund All Assets
Partners SmallCap Growth Fund III 0.50%
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