PRINCIPAL INVESTORS FUND, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
PARTNERS LARGECAP BLEND FUND SERIES AND
PARTNERS LARGECAP GROWTH FUND I SERIES
AGREEMENT executed as of August 24, 2004, by and between PRINCIPAL MANAGEMENT
CORPORATION, an Iowa corporation, (hereinafter called "the Manager"), and X.
XXXX PRICE ASSOCIATES, INC., a corporation organized and existing under the laws
of the State of Maryland, (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 the 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-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 to be
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 conditions require, a recommended investment program for
the Series consistent with the 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) Maintain all or part of the Series' uninvested assets in
short-term income producing instruments for such periods of time
as shall be deemed reasonable and prudent by the Sub-Advisor,
including, but not limited to, investments in X. Xxxx Price
Reserve Investment Fund or X. Xxxx Price Government Reserve
Investment Fund which are internal money market funds available
for use only by clients of the Sub-Advisor for short-term
investments.
(e) Instruct the Series' custodian to deliver for cash received,
securities or other cash and/or securities instruments sold,
exchanged, redeemed or otherwise disposed of from the Series, and
to pay cash for securities or other cash and/or securities
instruments delivered to the custodian and/or credited to the
Series upon acquisition of the same for the Series.
(f) Vote proxies, exercise conversion or subscription rights, and
respond to tender offers and other consent solicitations relating
to the Series' investment securities in the manner in which the
Sub-Advisor believes to be in the best interests of the Series
provided such materials have been forwarded to the Sub-Advisor in
a timely fashion by the Series' custodian, and shall review its
proxy voting activities on a periodic basis with the Manager.
Upon sixty (60) days' written notice to the Sub-Advisor, the
Manager may withdraw the authority granted to the Sub-Advisor to
vote proxies pursuant to this Section.
(g) 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 the
general conduct of the investment business of the Series.
(h) Maintain, in connection with the Sub-Advisor'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 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.
(i) 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 the Series are being observed.
(j) Upon request, provide assistance and advice 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.
(k) 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 the Series (excluding
brokerage expenses and pricing and bookkeeping services).
(l) 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, at the
request of the Manager, the Fund or the Fund's Board of
Directors, provide quarterly brokerage allocation summary reports
as specified in Rule 31a-1(b)(9) under the 1940 Act and a copy of
our trade allocation procedures which includes the basis for the
allocation of any 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 Section 28(e) of the Securities Exchange Act of 1934, and
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.
(m) Maintain all accounts, books and records with respect to the
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-Advisor hereby agrees that all
records that it maintains for the 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 the Series upon request by the
Fund or the Manager, provided, however, the Sub-Advisor may
retain copies of such records. The Sub-Advisor has no
responsibility for the maintenance of Fund records except insofar
as is directly related to the services the Sub-Advisor provides
to the Series.
(n) 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 along with
certification that the Sub-Advisor has implemented procedures for
administering the Sub-Advisor's Code of Ethics.
(o) 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 the Series, all in such detail as
the Manager or the Fund may reasonably request. The Sub-Advisor
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 such times as mutually agreeable to the parties to
review the investments of the Series.
(p) Provide such information as is customarily provided by a
sub-advisor 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.
(q) Provide a copy of the Sub-Advisor's Form ADV and any material
amendments thereto contemporaneously with the filing of such
documents with the Securities and Exchange Commission or other
regulatory agency.
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. Obligations of the Manager
During the term of this Agreement, the Manager shall 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 shareholders of the Fund or the public, which refer
to the name "X. Xxxx Price" and any other names of the Sub-Advisor or
its business or clients in any way, at a reasonable time prior to the
use thereof, and the Manager shall not use any such materials if the
Sub-Advisor reasonably objects in writing ten business days (or such
other time as may be mutually agreed) after receipt thereof. The
Manager shall ensure that materials prepared by employees or agents of
the Manager or its affiliates that refer to the Sub-Advisor or its
clients in any way are consistent with those materials previously
approved by the Sub-Advisor as referenced in the preceding sentence.
Upon termination of this Agreement for any reason, the Manager shall as
soon as practicable cease and cause the Fund to cease all use of the
name "X. Xxxx Price."
5. Compensation
As full compensation for all services rendered and obligations assumed
by the Sub-Advisor hereunder with respect to the Series, the Manager
shall pay the compensation specified in Appendix A to this Agreement.
6. Services to Other Clients
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Advisor, or any affiliated person thereof, to render
investment management and corporate administrative services to other
investment companies, to act as investment manager or investment
counselor to other persons, firms, or corporations, or to engage in any
other business activities, or (ii) the right of any director, officer,
or employee of the Sub-Advisor, who may also be a director, officer, or
employee of the Fund, to engage in any other business or to devote his
or her time and attention in part to the management or other aspects of
any other business, whether of a similar nature or a dissimilar nature.
7. 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 error of judgment or mistake of law made in the good faith
exercise of the Sub-Advisor's investment discretion in connection with
selecting investments for the Series or as a result of the failure by
the Manager or any of its affiliates to comply with the terms of this
Agreement and/or insurance laws and rules except for any errors,
mistakes or losses resulting from willful misfeasance, bad faith or
gross 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.
8. 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.
9. Regulation
The Sub-Advisor 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.
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 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 approval of the Board of Directors of the Fund or by
the Sub-Advisor, 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.
11. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge, or
termination is sought.
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 X. Xxxx Price Associates,
Inc., 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxxx, Chief Legal Counsel .
(c) The Sub-Advisor will promptly notify the Manager in writing of the
occurrence of any of the following events:
(1) the Sub-Advisor 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 Sub-Advisor 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 the Series.
(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.
(e) This Agreement contains the entire understanding and agreement of
the parties.
(f) All information and advice 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 as may be
necessary to comply with applicable laws, rules and regulations,
subpoenas or court orders. Without limiting the foregoing, the
Manager acknowledges that the securities holdings of the Series
constitute information of value to the Sub-Advisor, and agrees:
(1) not to use for any purpose, other than for the Manager or the
Series, or their agents, to supervise or monitor the Sub-Advisor,
the holdings or other trading-related information of the Series;
and (2) not to disclose the Series' holdings, except: (a) as
required by applicable law or regulation; (b) as required by state
or federal regulatory authorities; (c) to the Board of Directors
of the Fund, counsel to the Board, counsel to the Fund, the
administrator or any sub-administrator, the independent
accountants and any other agent of the Fund; or (d) as otherwise
agreed to by the parties hereto in writing. 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 of Directors of the Fund, counsel
to the Board, counsel to the Fund, the administrator or any
sub-administrator, the independent accountants and any other agent
of the Fund; or (iv) as otherwise agreed to by the parties hereto
in writing.
Without limiting the foregoing, the Sub-Advisor agrees that any
and all information that it obtains pursuant to this Sub-Advisory
Agreement regarding the Manager or its customers including, but
not limited to, approved lists, internal procedures, compliance
procedures and any board materials, is valuable to the Manager and
will be used exclusively to fulfill the Sub-Advisor's obligations
hereunder, and will not be disclosed to any other party, including
any affiliate of the Sub-Advisor or agent of the Series, except
(i) as necessary for the Sub-Advisor to fulfill its obligations
pursuant to this Sub-Advisory Agreement, (ii) as required by
applicable law or regulation; (iii) as required by state or
federal regulatory authorities; or (iv) as otherwise agreed to by
the parties hereto in writing. Notwithstanding the foregoing, the
Manager agrees that the Sub-Advisor may identify it or the Series
as a client in promotional materials.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
PRINCIPAL MANAGEMENT CORPORATION
/s/Xxxxxx X. Xxxxxx
By ____________________________________________
Xxxxxx X. Xxxxxx, Vice President
X. XXXX PRICE ASSOCIATES, INC.
/s/Xxxxxxx X. Xxxxxx
By ____________________________________________
Xxxxxxx X. Xxxxxx, Vice President
APPENDIX A
The Sub-Advisor shall serve as investment sub-advisor for the Partners
LargeCap Blend Fund Series and Partners LargeCap Growth Fund I 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
shown below (the "Sub-Advisor Percentage Fee"):
Partners LargeCap Blend Fund
First $ 50,000,000 of Assets...................... 0.400%
Next $200,000,000 of Assets....................... 0.350%
Next $350,000,000 of Assets....................... 0.300%
Next $400,000,000 of Assets....................... 0.275%
Assets above $1 billion........................... 0.275% on all assets
Partners LargeCap Growth Fund I
0.350% of Assets for the period ending July 31, 2005; Thereafter:
First $ 50,000,000 of Assets.................... 0.400%
Next $250,000,000 of Assets..................... 0.375%
Assets above $500,000,000....................... 0.350% on all assets
In calculating the fee for a Series, assets of any unregistered separate
account of Principal Life Insurance Company and any investment company sponsored
by Principal Life Insurance Company to which the Sub-Advisor provides investment
advisory services and which have the same investment mandate as the Series, will
be combined (together, the "Aggregated Assets"). The fee charged for the assets
in the Series shall be determined by calculating a fee on the value of the
Aggregated Assets using the above fee schedule and multiplying the aggregate fee
by a fraction, the numerator of which is the amount of assets in the Series and
the denominator of which is the amount of the Aggregated Assets.
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 on or
before the fifth (5th) day of the next succeeding calendar month. 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 Series, as determined in
accordance with the Series' Prospectus and Statement of Additional Information
as of the close of business on the previous business day on which the Series was
open for business. Each month, the Manager will provide the Sub-Advisor with a
worksheet accompanying payment of the subadvisory fee that sets forth the
computation of such subadvisory fee.
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.
