AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
PRINCIPAL GLOBAL INVESTORS
SUB-ADVISED PRINCIPAL RETAIL MUTUAL FUNDS
AGREEMENT executed as of April 1, 2004 by and between PRINCIPAL MANAGEMENT
CORPORATION, an Iowa Corporation (hereinafter called "the Manager") and
PRINCIPAL GLOBAL INVESTORS, LLC (hereinafter called "PGI").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment adviser to each mutual
fund listed in Schedule A (each referred to herein as the "Fund"), each of which
is 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 PGI to furnish portfolio selection
and related research and statistical services in connection with the investment
advisory services which the Manager has agreed to provide to the Fund, and PGI
desires to furnish such services; and
WHEREAS, The Manager has furnished PGI with copies properly certified or
authenticated of each of the following:
(a) Management Agreement (the "Management Agreement") with the Fund;
(b) Copies of the registration statement of the Fund 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 PGI
In accordance with and subject to the Management Agreement, the Manager
hereby appoints PGI to perform portfolio selection services described in Section
2 below for investment and reinvestment of the securities and other assets of
the Fund, subject to the control and direction of the Fund's Board of Directors,
as well as to assume other obligations as specified in Section 2 below, for the
period and on the terms hereinafter set forth. PGI accepts such appointment and
agrees to furnish the services hereinafter set forth for the compensation herein
provided. PGI 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 PGI
(a) PGI shall provide with respect to the Fund all services and obligations
of the Manager described in Section 1, Investment Advisory Services, of the
Management Agreement. (b) PGI 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. PGI will conform with all applicable
rules and regulations of the Securities and Exchange Commission.
3. Prohibited Conduct
In providing the services described in this agreement, the Sub-Advisor 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
PGI hereunder with respect to the Fund, the Manager shall pay PGI within 10 days
after the end of each calendar month, or as otherwise agreed, an amount
calculated in accordance with Schedule A, attached hereto.
5. 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 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, Principal Life Insurance Company,
PGI 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 Fund. 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 Fund and in
either event by vote of a majority of the directors of the Fund who are not
interested persons of the Manager, Principal Life Insurance Company, PGI or the
Fund cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may, on sixty days written notice, be terminated at any
time 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, PGI or
by the Manager. This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Section 4, the definitions
contained in Section 2(a) of the Investment Company Act of 1940 (particularly
the definitions of "interested person," "assignment" and "voting security")
shall be applied.
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, PGI, Principal Life Insurance Company or the Fund cast in person at a
meeting called for the purpose of voting on such approval.
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 PGI and of the Manager for
this purpose shall be the Principal Financial Group, Xxx Xxxxxx, Xxxx
00000-0000.
(c) PGI agrees to notify the Manager of any change in PGI'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.
PRINCIPAL MANAGEMENT CORPORATION
By /s/A.S. Filean
--------------------------------------------------
A. S. Filean, Senior Vice President
PRINCIPAL GLOBAL INVESTORS, LLC
By /s/Xxxxxx X. Xxxxxxx
---------------------------------------------------
X. X. Xxxxxxx, Executive Director - Equities
Schedule A
PGI shall serve as investment sub-advisor for each Fund identified below. The
Manager will pay PGI, 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 Fund's net assets as of the first day of each month allocated to PGI's
management.
In calculating the fee for a fund included in Table A, assets of all other funds
included in Table A as well as assets of any unregistered separate account of
Principal Life Insurance Company and any investment company sponsored by
Principal Life Insurance Company to which PGI provides investment advisory
services and which invests primarily in fixed-income securities (except money
market separate accounts or investment companies, and excluding assets of all
such separate accounts or investment companies for which advisory services are
provided directly or indirectly by employees of Post Advisory Group, LLC) as
well as the assets of the Balanced Account of Principal Variable Contracts Fund,
will be combined with the assets of the fund to arrive at net assets.
In calculating the fee for a fund included in Table B, assets of any
unregistered separate account of Principal Life Insurance Company and any
investment company sponsored by Principal Life Insurance Company to which PGI
provides investment advisory services and which have the same investment mandate
(e.g. MidCap Value) as the fund for which the fee is calculated, will be
combined with the assets of the fund to arrive at net assets.
The fee for assets of any fund for which advisory services are provided directly
or indirectly by employees of Post Advisory Group, LLC is equal to an annual
rate of 0.3000% of the portion of the net assets of such fund with regard to
which employees of Post Advisory Group, LLC provide investment advisory
services.
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.
---------------------------------------------------------------------------------------------
Table A
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net Asset Value of Fund
First Next Next Over
Fund $5 billion $1 billion $4 billion $10 billion
---- ---------- ---------- ---------- -----------
Balanced Fund,
Government Securities Fund
and Limited Term Bond Fund 0.1150% 0.100% 0.0950% 0.0900%
-------------------------------------- ------------- ------------ ------------ --------------
------------------------------------------------------------------------------------------------------------------------------------
Table B
------------------------------------------------------------------------------------------------------------------------------------
------------------------ -----------------------------------------------------------------------------------------------------------
Net Asset Value of Fund
First Next Next Next Next Next Over
Fund $50 million $50 million $100 million $200 million $350 million $750 million $1.5 billion
---- ----------- ----------- ------------ ------------ ------------ ------------ ------------
Capital Value Fund,
Equity Income Fund
and Growth Fund 0.27% 0.25% 0.22% 0.18% 0.13% 0.09% 0.06%
International Fund 0.35% 0.28% 0.20% 0.16% 0.12% 0.10% 0.08%
Net Asset Value of Fund
First Next Next Next Next Next Over
Fund $25 million $75 million $100 million $300 million $500 million $500 million $1.5 billion
---- ----------- ----------- ------------ ------------ ------------ ------------ ------------
MidCap Fund 0.40% 0.32% 0.27% 0.23% 0.18% 0.13% 0.08%
SmallCap Fund 0.48% 0.36% 0.27% 0.25% 0.22% 0.18% 0.12%
------------------------ -------------- -------------- -------------- --------------- ---------------- -------------- --------------
---------------------------------------------------------------------------
Table C
---------------------------------------------------------------------------
-------------------------------------------- -- ---------------------------
Sub-Advisor
Fund Percentage Fee
International Emerging Markets Fund 0.5000%
International SmallCap Fund 0.5000%
LargeCap Stock Index Fund 0.0150%
-------------------------------------------- -- ---------------------------
