PRINCIPAL SPECIAL MARKETS FUND, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT executed as of the 26th day of April, 1993, by and between PRINCOR
MANAGEMENT CORPORATION, an Iowa Corporation (hereinafter called "the Manager")
and INVISTA CAPITAL MANAGEMENT, INC. (hereinafter called "Invista").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment adviser to Principal Special
Markets Fund, Inc., (the "Fund"), an open-end management investment company
organized as a series fund with separate portfolios, registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Manager desires to retain Invista to furnish it with portfolio
selection and related research and statistical services in connection with the
investment advisory services which the Manager has agreed to provide to certain
of the Fund's portfolios, and Invista desires to furnish such services; and
WHEREAS, The Manager has furnished Invista with copies properly certified or
authenticated of each of the following:
(a) Management Agreement (the "Management Agreement") with Principal
Special Markets Fund, Inc.;
(b) Copies of the registration statement of the Principal Special Markets
Fund, Inc. as filed pursuant to the federal securities laws of the
United States, including all exhibits and amendments:
NOW, THEREFORE, in consideration of the premises and the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Appointment of Invista
In accordance with and subject to the Management Agreement, the Manager
hereby appoints Invista to perform portfolio selection services described herein
for investment and reinvestment of the securities and other assets of each of
the portfolios of the Fund set forth in Appendix A (the "Portfolios"), subject
to the control and direction of the Fund's Board of Directors, as well as to
assume other obligations as specified in Sections 2 and 3 below, for the period
and on the terms hereinafter set forth. Invista accepts such appointment and
agrees to furnish the services hereinafter set forth for the compensation herein
provided. Invista 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 Invista
(a) Invista shall provide with respect to the Portfolios all services
and obligations of the Manager described in Section 1, Investment Advisory
Services, of the Management Agreement.
(b) Invista shall use the same skill and care in providing services to
the Fund as it uses in providing services to fiduciary accounts for which it has
investment responsibility. Invista will conform with all applicable rules and
regulations of the Securities and Exchange Commission.
3. Expenses
Invista will pay all expenses borne by the Manager pursuant to Section 3,
Expenses Borne by the Manager, of the Management Agreement. Invista will also
reimburse the manager for all of its costs in providing the services described
in Section 2, Corporate and Administrative Responsibilities, of the management
Agreement and for all the costs incurred by the Manager pursuant to the
Investment Service Agreement between the Manager and the Principal Mutual Life
Insurance Company relating to the Portfolios.
4. Compensation
As full compensation for all services rendered and obligations assumed by
Invista hereunder with respect to each Portfolio, the Manager shall pay Invista
within 10 days after the end of each calendar month a fee based on the average
net assets of the Portfolio determined as provided in Section 4 of the
Management Agreement. The annual rate of the fee as a percent of average daily
net assets is set forth in Appendix A for each of the Portfolios. Invista may,
at its option, waive all or a part of its compensation for such period of time
as it deems necessary or appropriate.
5. EFFECTIVE DATE: DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as to any Portfolio on the latest of
(i) the date of its execution or the execution of an amendment making-the
agreement applicable to that Portfolio, (ii) the date of its approval by a
majority of the directors of the Fund, including approval by the vote of a
majority of the directors of the Fund who are not interested persons of the
Manager, Invista, Principal Mutual Life Insurance Company or the Fund, cast in
person at a meeting called for the purpose of voting on such approval, and (iii)
the date of its approval by a majority of the outstanding voting securities of
the Portfolio.
This Agreement will continue in effect as to any Portfolio for more than
two years from the date of its execution or the execution of any amendment
making this Agreement applicable to that Portfolio only so long such 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
Fund and in either event by vote of a majority of the directors of the Fund who
are not interested persons of the Manager, Invista, Principal Mutual Life
Insurance Company, or the Fund cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated at any time
on sixty days' written notice without the payment of any penalty, by the Board
of Directors of the Fund, by vote of a majority of the outstanding voting
securities of the Fund, as to any Portfolio by the vote of a majority of the
outstanding voting securities of that Portfolio, by the Manager or by Invista.
This Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 9, the definitions contained in
Section 2(a) of the Investment Company Act of 1940 and the rules thereunder
(particularly the efinitions of "interested person," "assignment" and "voting
security") shall be applied.
The required shareholder approval of this Agreement or of any continuance
of this Agreement shall be effective with respect to any Portfolio if a majority
of the outstanding voting securities of that Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of the Fund or of any other Portfolio affected by the matter.
If the shareholders of any Portfolio of the Fund fail to approve any
continuance of this Agreement or of the Management Agreement relating to that
Portfolio, and that failure causes either of those agreements to be invalid,
Invista will continue to act as sub-adviser with respect to that Portfolio
pending the required approval of continuance of the invalid agreement, of a new
contract with the Manager or a different adviser or with Invista or a different
sub-adviser or other definitive action; provided, that the compensation received
by Invista in respect of that Portfolio during such period will be no more than
its actual costs incurred in furnishing investment advisory and management
services to that Portfolio or the amount it would have received under this
Agreement in respect of that Portfolio, whichever is less.
6. Amendment of this Agreement
No amendment of this Agreement shall be effective until approved by vote of
the holders of a majority of the outstanding voting securities and by vote of a
majority of the directors of the Fund who are not interested persons of the
Manager, Invista, Principal Mutual Life Insurance Company or the Fund cast in
person at a meeting called for the purpose of voting on such approval. The
required shareholder approval of any amendment to this Agreement shall be
effective with respect to any Portfolio if a majority of the outstanding voting
securities of that Portfolio votes to approve the amendment, notwithstanding
that the amendment may not have been approved by a majority of the outstanding
voting securities of the Fund or of any other Portfolio affected by the Matter.
7. 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 Invista and of the Manager
for this purpose shall be The Principal Financial Group, Xxx Xxxxxx, Xxxx
00000-0000.
(c) Invista agrees to notify the Manager of any change in Invista's
officers and directors within a reasonable time after such change.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
PRINCOR MANAGEMENT CORPORATION
/s/ Xxxxxxx X. Xxxxx
By --------------------------------
Xxxxxxx X. Xxxxx, President
INVISTA CAPITAL MANAGEMENT, INC.
/s/ S. R. Kosmicke
By --------------------------------
S. R. Kosmicke, President
PRINCIPAL SPECIAL MARKETS FUND, INC.
SUB-ADVISORY AGREEMENT - APPENDIX A
Fee as a Percent of
Portfolio Average Daily Net Assets
1. Mortgage-Backed Securities Portfolio .45%
2. International Securities Portfolio .90%
FIRST AMENDMENT TO THE
PRINCIPAL SPECIAL MARKETS FUND, INC.
SUB-ADVISORY AGREEMENT
The Sub-Advisory Agreement executed and entered into by and between Princor
Management Corporation, an Iowa corporation, and Invista Capital Management,
Inc., an Iowa corporation, on the 26th day of April, 1993, is hereby amended to
including the following:
PRINCIPAL SPECIAL MARKETS FUNDS, INC.
SUB-ADVISORY AGREEMENT - APPENDIX A
Portfolio Fees as a Percent of
Average Daily Net Assets
1. International Emerging Markets Portfolio
Net Asset Value of Portfolio
-----------------------------
First $250 million 1.15%
Next $250 million 1.05%
Over $500 million 0.95%
2. International Securities Portfolio 0.90%
3. International SmallCap Portfolio
Net Asset Value of Portfolio
-----------------------------
First $250 million 1.00%
Next $250 million 0.90%
Over $500 million 0.80%
4. Mortgage-Backed Securities Portfolio 0.45%
Executed this ________ day of ________________, 1997
Princor Management Corporation
by:_________________________________
Invista Capital Management, Inc.
by:_________________________________
