PRINCIPAL INVESTORS FUND, INC.
SUB-ADVISORY AGREEMENT
PARTNERS INTERNATIONAL FUND AND
PARTNERS MIDCAP GROWTH FUND II
AGREEMENT executed as of the 1st day of January, 2007, by and between PRINCIPAL
MANAGEMENT CORPORATION, an Iowa corporation (hereinafter called "the Manager"),
and Pyramis Global Advisors, LLC (hereinafter called "the Sub-Advisor").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment adviser to each Fund of the
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-Advisor to furnish it with
portfolio selection and related research and statistical services in connection
with the investment advisory services for each series identified in Appendix A
hereto of the Fund (hereinafter called "Series"), which the Manager has agreed
to provide to the Fund, and the Sub-Advisor desires to furnish such services;
and
WHEREAS, The Manager has furnished the Sub-Advisor with copies properly
certified or authenticated of each of the following and will promptly provide
the Sub-Advisor 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;
(c) The Fund's Articles of Incorporation and By-laws;
(d) Policies, procedures or instructions adopted or approved by the Board
of Directors of the Fund relating to obligations and services provided
by the Sub-Advisor.
NOW, THEREFORE, in consideration of the premises and the terms and conditions
hereinafter set forth, the parties agree as follows:
1. Appointment of Sub-Advisor
In accordance with and subject to the Management Agreement, the Manager
hereby appoints the Sub-Advisor to perform the services described in
Section 2 below for investment and reinvestment of the securities and
other assets of the 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-Advisor accepts such appointment
and agrees to furnish the services hereinafter set forth for the
compensation herein provided. The Sub-Advisor 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-Advisor
The Sub-Advisor will:
(a) Provide investment advisory services, including but not limited to research,
advice and supervision for the 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 economic conditions require, a recommended investment
program for the Fund consistent with the Series' investment
objective and policies; provided however, as conditions warrant,
the Sub-Advisor may revise such investment program without prior
approval from the Board upon consultation with the Manager.
(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
requirements of the 1940 Act; provided however, as conditions
warrant, the Sub-Advisor may implement changes to the investment
program without prior approval from the Board upon consultation
with the Manager.
(d) Reasonably advise and assist the officers of the Fund, as
requested by the officers, in taking such steps as are reasonably
necessary or appropriate to carry out the decisions of its Board
of Directors, and any appropriate committees of such Board,
regarding investment advisory matters for the Series.
(e) Use best efforts to maintain, in connection with the
Sub-Advisor's investment advisory services obligations provided
to the Series, compliance with the 1940 Act and the regulations
adopted by the Securities and Exchange Commission thereunder and
the Series' investment policies and restrictions as stated in the
Fund's prospectus and statement of additional information,
subject to receipt of such additional information as may be
required from the Manager and provided in accordance with Section
12(d) of this Agreement. The Sub-Advisor has no responsibility
for the maintenance of Fund records except insofar as is directly
related to the services provided to the Series. The Manager
acknowledges that the Sub-Advisor is not the compliance agent for
the Fund or the Manager, and does not have full access to all of
the Fund's books and records necessary to perform certain
compliance testing. To the extent that the Sub-Advisor has agreed
to perform the services specified in this Section 2 in accordance
with applicable law (including sub-chapters M and L of the Code,
the 1940 Act and the Advisers Act ("Applicable Law")), the
Sub-Advisor shall perform such services based upon its books and
records with respect to the Fund, which comprise a portion of the
Fund's books and records, and in accordance with written
instructions received from the Fund or the Manager, if any, and
shall not be held responsible under this Agreement so long as it
performs such services in accordance with this Agreement and
Applicable Law based upon such books and records, such
instructions provided by the Fund or the Manager, and such
materials provided by the Manager to the Sub-Advisor pursuant to
Section 12(d) of this Agreement.
(f) Report to the Board of Directors of the Fund on a quarterly and
annual basis 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 the Series are being observed.
(g) Upon request, provide reasonable assistance 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, provided Pyramis
shall not bear responsibility or liability for the determination
or accuracy of the valuation of any securities and other assets
of the Series.
(h) Furnish, at its own expense for the provision of its services
pursuant to this Agreement, (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 the Series (excluding
brokerage expenses and pricing and bookkeeping services). The
Sub-Advisor shall not be obligated to pay any expenses of the
Manager, the Fund or the Series, including, without limitation:
(a) interest and taxes; (b) brokerage commissions and other costs
in connection with the purchase or sale of securities or other
investment instruments of the Fund; and (c) custodian fees and
expenses.
(i) Open accounts with broker-dealers and futures commission
merchants ("broker-dealers"), select broker-dealers to effect all
transactions for the 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 the
Series may be aggregated with contemporaneous purchase or sell
orders of other clients of the Sub-Advisor. 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-Advisor in the manner the Sub-Advisor considers to be the
most equitable and consistent with its fiduciary obligations to
the Fund and to other clients. The Sub-Advisor 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 the 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-Advisor
shall use its best efforts to obtain execution of transactions
for the 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-Advisor may select brokers or
dealers on the basis that they provide brokerage, research or
other services or products to the Sub-Advisor. To the extent
consistent with applicable law, the Sub-Advisor 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-Advisor 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-Advisor and its affiliates have
with respect to the Series as well as to accounts over which they
exercise investment discretion. Not all such services or products
need be used by the Sub-Advisor 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-Advisor provided that all conditions of
such order are complied with.
(j) Maintain all accounts, books and records with respect to the
Series as are required of a sub-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 monthly, quarterly, or annual reports as the Fund or
Manager may reasonably request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Advisor
hereby agrees that all records that it maintains for the Series
are the property of the Fund (except for such reports as are
required to be maintained under the Investment Advisers Act which
shall be the joint property of the Fund and the Sub-Advisor),
agrees to preserve for the periods described by Rule 31a-2 under
the 1940 Act any records that it maintains for the Fund 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 the Series upon request by the Fund or the
Manager; provided that the Sub-Advisor may retain copies of any
such records.
(k) Observe and comply with Rule 17j-1 under the 1940 Act and the
Sub-Advisor'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-Advisor's current Code of Ethics.
Sub-Advisor shall promptly forward to the Manager a copy of any
material amendment to the Sub-Advisor's Code of Ethics.
(l) From time to time as the Manager or the Fund may reasonably
request, furnish the requesting party monthly, quarterly, or
annual reports on portfolio transactions and reports on
investments held by the Series, all in such detail as the Manager
or the Fund may reasonably request. The Sub-Advisor will make
available its investment professionals, other than the portfolio
manager, 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 the Series. The portfolio manager shall be
available to meet with the Fund's Board of Directors at the
Fund's principal place of business on an annual basis on due
notice.
(m) Manager acknowledges receipt of Sub-Advisor's Form ADV more than
48 hours prior to the execution of this Agreement.
(n) Perform quarterly and annual tax compliance tests to monitor the
Series' compliance with Subchapter M of the Code and Section
817(h) of the Code, subject to receipt of such additional
information as may be required from the Manager and provided in
accordance with Section 10(d) of this Agreement. The Sub-Advisor
shall notify the Manager immediately upon having a reasonable
basis for believing that the Series has ceased to be in
compliance or that it might not be in compliance in the future.
If it is determined that the Series is not in compliance with the
requirements noted above, the Sub-Advisor, 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) Absent specific instructions to the contrary provided to it by
the Manager at least thirty (30) days prior to a vote and subject
to its receipt of all necessary voting materials, have the
responsibility and authority to vote proxies solicited by, or
with respect to, the issuers of securities held in the Series.
The Manager shall cause to be forwarded to Sub-Advisor all proxy
solicitation materials that it receives and shall assist
Sub-Advisor in its efforts to conduct the proxy voting process.
(p) Vote proxies received on behalf of the Fund in a manner
consistent with Sub-Advisor'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 Fund to file Form N-PX as required by SEC
rule.
(q) The Sub-Advisor makes no representations or warranty, express or
implied, that any level of performance or investment results will
be achieved by the Series or that the Series will perform
comparably with any standard, including any other clients of the
Sub-Advisor or index.
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-Advisor hereunder with respect to the Fund, the Manager
shall pay the compensation specified in Appendix A to this Agreement.
5. Liability of Sub-Advisor
Neither the Sub-Advisor 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 good faith errors or omissions in connection with any matters
to which this Agreement relates 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 negligence of, or from reckless disregard of, the duties of
the Sub-Advisor or any of its directors, officers, employees, agents
(excluding any broker-dealer selected by the Sub-Advisor), or
affiliates. Notwithstanding the foregoing, the Sub-Advisor, its
directors, officers, and/or employees shall not be liable to the
Manager or the Fund for any loss suffered as a consequence of any
action or inaction of the custodian or any other service provider of
any Series in failing to observe the instructions of the Sub-Advisor.
6. Indemnification
(a)In any action in which the Manager or the Fund or any of its or
their controlling persons, or any directors, officers, agents,
affiliates, and/or employees of any of the foregoing, are parties,
the Sub-Advisor agrees to indemnify and hold harmless the
foregoing persons against any loss, claim, damage, charge,
liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become
subject, insofar as such loss, claim, damage, charge, liability or
expense arises out of or is based upon any demands, claims,
liabilities, expenses, lawsuits, actions or proceedings relating
to this Sub-Advisory Agreement or to the advisory services for the
account of the Fund provided by the Sub-Advisor, provided that the
loss, claim, damage, liability, cost or expense related to, was
based upon, or arose out of an act or omission of the Sub-Advisor
or its officers, directors, employees, affiliates or controlling
persons constituting reckless disregard, willful misfeasance, bad
faith, gross negligence, fraud or willful misconduct.
(b) In any action in which the Sub-Advisor or any of its controlling
persons, or any directors, officers, agents, affiliates, and/or
employees of any of the foregoing, are parties, the Manager agrees
to indemnify and hold harmless the foregoing persons against any
loss, claim, settlement, damage, charge, liability or expense
(including, without limitation, reasonable attorneys' and
accountants' fees) to which such persons may become subject,
insofar as such loss, claim, settlement, damage, charge, liability
or expense arises out of or is based upon any demands, claims,
liabilities, expenses, lawsuits, actions or proceedings relating
to this Sub-Advisory Agreement, the advisory services for the
account of the Fund provided by the Sub-Advisor, the operation of
the Fund or the contents of the Prospectus and Statement of
Additional Information of the Fund in effect from time to time,
provided that the loss, claim, damage, liability, cost or expense
did not relate to, or was not based upon, or did not arise out of
an act or omission of the Sub-Advisor, its shareholders, or any of
its partners, officers, directors, employees, agents or
controlling persons constituting reckless disregard, willful
misfeasance, bad faith, gross negligence, fraud or willful
misconduct.
7. Supplemental Arrangements
The Sub-Advisor may enter into arrangements with other persons
affiliated with the Sub-Advisor or with unaffiliated third parties to
better enable the Sub-Advisor to fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to the
Sub- Advisor, subject to written notification to and approval of the
Manager and, where required by applicable law, the Board of Directors
of the Fund.
8. Regulation
The Sub-Advisor shall make available, promptly upon request, to the
Manager and the Fund any information, reports or other material which
the Manager may be requested to provide to regulatory and
administrative bodies having jurisdiction over the services provided
pursuant to this Agreement pursuant to applicable laws and regulations.
9. References to the Sub-Advisor
During the term of this Agreement, the Manager agrees to furnish to the
Sub-Advisor at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature, or other material prepared
for distribution to sales personnel, shareholders of the Fund or the
public, which refer to the Sub-Advisor or its clients in any way, prior
to use thereof and not to use such material if the Sub-Advisor
reasonably objects in writing five business days (or such time as may
be mutually agreed upon) after receipt thereof. Sales literature may be
furnished to the Sub-Advisor hereunder by first-class or overnight
mail, electronic or facsimile transmission, or hand delivery.
10. 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-Advisor, 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-Advisor or the Fund cast in person at a
meeting called for the purpose of voting on such approval.
If the shareholders of the Series fail to approve the Agreement or any
continuance of the Agreement in accordance with the requirements of the
1940 Act, the Sub-Advisor will continue to act as Sub-Advisor with
respect to the Series pending the required approval of the Agreement or
its continuance or of any contract with the Sub-Advisor or a different
manager or sub-advisor or other definitive action; provided, that the
compensation received by the Sub-Advisor in respect to the Fund 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, the Sub-Advisor, the
Manager or 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.
11. 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-Advisor, Principal Life
Insurance Company or the Fund cast in person at a meeting called for
the purpose of voting on such approval, and such amendment is signed by
both parties.
12. 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-Advisor shall be Pyramis Global Advisors, 00
Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: General Counsel.
(c) Each party will promptly notify the other in writing of the
occurrence of any of the following events:
(1) it fails to be registered as an investment adviser under the
Investment Advisers Act or under the laws of any jurisdiction
in which the Sub-Advisor is required to be registered as an
investment advisor in order to perform its obligations under
this Agreement.
(2) the SEC or other governmental authority has censured it for
mutual fund advisory activities.
(d) The Manager shall provide (or cause the Series custodian to
provide) timely information to the Sub-Advisor regarding such
matters as the composition of the assets of the Series, cash
requirements and cash available for investment in the Series, and
all other reasonable information as may be necessary for the
Sub-Advisor to perform its duties and responsibilities hereunder.
The Sub-Advisor shall be not be charged with following any
amendment to the Fund's prospectus, statement of additional
information, Articles of Incorporation or By-laws or any other
similar document or instruction from the Manager or Fund until
such amendment, documents or instruction is delivered to the
Sub-Advisor in writing.
(e) The parties agree that the name of the Sub-Advisor, the names of
any affiliates of the Sub-Advisor and any derivative, logo,
trademark, service xxxx or trade name are the valuable property
of the Sub-Advisor and its affiliates. During the term of this
Agreement, subject to the Sub-Advisor's prior written consent
(which consent shall not be unreasonably withheld), the Manager
and the Fund shall have the non-exclusive and non-transferable
right to use the Sub-Advisor's name and logo in all materials
relating to the Fund, including all prospectuses, proxy
statements, reports to shareholders, sales literature and other
written materials prepared for distribution to shareholders of
the Trust or the public. However, prior to printing or
distributing of any materials which refer to the Sub-Advisor, the
Manager shall consult with the Sub-Advisor and shall furnish to
the Sub-Advisor a copy of such materials. The Sub-Advisor agrees
to cooperate with the Manager and to review such materials
promptly. The Manager shall not print or distribute such
materials if the Sub-Advisor reasonably objects in writing,
within five (5) business days of its receipt of such copy (or
such other time as may be mutually agreed, which would include
longer time periods for review of the Fund's prospectus and other
parts of the registration statement), to the manner in which its
name and logo are to be used.
Upon termination of this Agreement, the Manager and the Fund shall
forthwith cease to use such name(s), derivatives, logos,
trademarks or service marks or trade names. If the Manager and the
Fund makes any unauthorized use of the Sub-Advisor's names,
derivatives, logos, trademarks or service marks or trade names,
the parties acknowledge that the Sub-Advisor shall suffer
irreparable harm for which monetary damages are inadequate and
thus, the Sub-Advisor shall be entitled to injunctive relief. The
Manager or Fund is permitted to continue to refer to the
Sub-Advisor in registration statement disclosure as required to
meet reporting obligations for past periods under relevant
securities regulations.
(f) The services of the Sub-Advisor to the Fund are not to be deemed
exclusive and it shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
It is specifically understood that directors, officers and
employees of the Sub-Advisor and of its subsidiaries and
affiliates may continue to engage in providing portfolio
management services and advice to other investment companies,
whether or not registered, and other investment advisory clients.
(g) All information furnished by one party to the other party
(including their respective agents, employees and representatives)
hereunder shall be treated as confidential and shall not be
disclosed to third parties, except if it is otherwise in the
public domain or, with notice to the other party, as may be
necessary to comply with applicable laws, rules, regulations,
subpoenas or court orders. Without limiting the foregoing, the
Manager acknowledges that the securities holdings of the
Portfolio(s) constitute trade secrets of the Sub-adviser, and that
is of great value and importance to the success of the
Sub-Adviser's business and the protection of its clients, and
agrees (1) not to use for any purpose, other than for the Manager
or the Fund, or their agents, to supervise or monitor the
Sub-Advisor, the holdings or trade-related information of the
Fund; and (2) not to disclose the Portfolio(s)' holdings, except:
(a) as required by applicable law or regulation; (b) as required
by state or federal regulatory authorities; (c) to the Board,
counsel to the Board, counsel to the Fund, the independent
accountants and any other agent of the Fund; or (d) as otherwise
agreed to by the parties in writing. Manager shall provide
Sub-Adviser with prior notice of any anticipated change to the
Fund's portfolio holdings disclosure policy from those described
in the Fund's then current Registration Statement. Further, the
Manager agrees that information supplied by the Sub-Advisor,
including approved lists, internal procedures, compliance
procedures and any board materials, is valuable to the
Sub-Advisor, and the Manager agrees not to disclose any of the
information contained in such materials, except: (i) as required
by applicable law or regulation; (ii) as required by state or
federal regulatory authorities; (iii) to the Board, counsel to the
Board, counsel to the Fund, the independent accountants and any
other agent of the Fund; or (iv) as otherwise agreed to by the
parties in writing.
(h) This Agreement contains the entire understanding and agreement of
the parties.
(i) It is understood and agreed that no (i) failure or delay to
exercise, nor (ii) single or partial exercise of any right, power,
or privilege given or arising under this Agreement shall operate
as a waiver of future rights to exercise any such right, power or
privilege.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
PRINCIPAL MANAGEMENT CORPORATION
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Vice President
PYRAMIS GLOBAL ADVISORS, LLC
By
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Xxxxxxx Xxxxxx, Senior Vice President
APPENDIX A
The Sub-Advisor shall serve as investment sub-advisor for the Partners
International Fund Series and Partners MidCap Growth Fund II Series of the Fund.
The Manager will pay the Sub-Advisor, as full compensation for all services
provided under this Agreement, a fee computed at an annual rate as follows (the
"Sub-Advisor Percentage Fee"):
Partners International Fund
First $250 million.........................0.45%
Next $500 million..........................0.40%
Over $750 million..........................0.35%
Partners MidCap Growth Fund II
First $250 million.........................0.45%
Next $250 million..........................0.40%
Over $500 million..........................0.35%
The Sub-Advisor Percentage Fee shall be accrued for each calendar day and the
sum of the daily fee accruals shall be paid monthly to the Sub-Advisor. The
daily fee accruals will be computed by multiplying the fraction of one over the
number of calendar days in the year by the applicable annual rate described
above and multiplying this product by the net assets of the Fund as determined
in accordance with the Fund's prospectus and statement of additional information
as of the close of business on the previous business day on which the Fund was
open for business.
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.
