PRINCIPAL SPECIAL MARKETS FUND, INC.
MANAGEMENT AGREEMENT
AGREEMENT executed as of the 22nd day of April, 1993, by and between
PRINCIPAL SPECIAL MARKETS FUND, INC., a Maryland corporation (hereinafter called
the "Fund") and PRINCOR MANAGEMENT CORPORATION, an Iowa corporation (hereinafter
called the "Manager").
W I T N E S S E T H:
WHEREAS, The Fund has furnished the Manager with copies properly
certified or authenticated of each of the following:
(a) Certificate of Incorporation of the Fund;
(b) Bylaws of the Fund as adopted by the Board of Directors;
(c) Resolutions of the Board of Directors of the Fund selecting the
Manager as investment adviser and approving the form of this
Agreement.
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the Fund hereby appoints the Manager to act as investment
adviser and manager of each of the portfolios of the Fund set forth in Appendix
A (the "Portfolios"), and the Manager agrees to act, perform or assume the
responsibility therefor in the manner and subject to the conditions hereinafter
set forth. The Fund will furnish the Manager from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
1. INVESTMENT ADVISORY SERVICES
The Manager will regularly perform the following services for the
Portfolios:
(a) Provide investment research, advice and supervision:
(b) Provide investment advisory, research and statistical facilities
and all clerical services relating to research, statistical and
investment work;
(c) Furnish to the Board of Directors of the Fund (or any appropriate
committee of such Board), and revise from time to time as
economic conditions require, a recommended investment program for
each of the Portfolios consistent with their investment
objectives and policies;
(d) Implement such of its recommended investment program for each
Portfolio as the Fund shall approve, by placing orders for the
purchase and sale of securities, subject always to the provisions
of the Fund's Certificate of Incorporation and Bylaws and the
requirements of the Investment Company Act of 1940 and the Fund's
Registration Statement, current Prospectus and Statement of
Additional Information, as each of the same shall be from time to
time in effect;
(e) Advise and assist the officers of the Fund 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 Fund's investment business
relating to the Portfolios;
(f) Report to the Board of Directors of the Fund at such times and in
such detail as the Board may deem appropriate in order to enable
it to determine that the Fund's investment policies relating to
each of the Portfolios are being observed.
2. CORPORATE AND ADMINISTRATIVE SERVICES
In addition to the investment advisory services set forth in Section 1,
the Manager will perform the following corporate and administrative services:
(a) Furnish the services of such of the Manager's officers and
employees as may be elected officers or directors of the Fund,
subject to their individual consent to serve and to any
limitations imposed by law.
(b) Furnish office space, and all necessary office facilities and
equipment, for the general corporate functions relating to the
Portfolios (i.e., functions other than (i) underwriting and
distribution of Fund shares, and (ii) custody of Fund assets);
(c) Furnish the services of the supervisory and clerical personnel
necessary to perform the general corporate functions relating to
the Portfolios;
(d) Determine the net asset value of the shares of each class of the
Fund's Capital Stock attributable to a Portfolio as frequently as
the Fund shall request, or as shall be required by applicable law
or regulations;
(e) Act as, and provide all services customarily performed by, the
transfer and paying agent of the Portfolios including, without
limitation, the following:
(i) preparation and distribution to shareholders of
prospectuses, reports, tax information, notices, proxy
statements and proxies;
(ii) preparation and distribution of dividend and capital gain
payments to shareholders;
(iii)issuance, transfer and registry of shares, and maintenance
of open account system;
(iv) delivery, redemption and repurchase of shares, and
remittances to shareholders;
(v) communication with shareholders concerning items (i), (ii),
(iii) and (iv) above.
In the carrying out of this function the Manager may contract
with others for data systems, processing services and other
administrative services.
(f) Use its best efforts to qualify the Capital Stock of the
Portfolios for sale in states and jurisdictions as directed by
the Fund.
(g) Prepare stock certificates, and distribute the same as requested
by shareholders of the Portfolios.
3. EXPENSES BORNE BY THE MANAGER
The Manager will pay all expenses of each of the Portfolios except
those expenses borne by the Fund as provided in Section 5 below.
4. COMPENSATION OF THE MANAGER BY FUND
For all services to be rendered and payments made as provided in
Sections 1, 2 and 3 hereof with respect to each Portfolio, the Fund will accrue
daily and pay the Manager within five days after the end of each calendar month
a fee based on the average of the values of the net assets of each Portfolio as
of the time of determination of the net asset value on each trading day
throughout the month. 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.
Net asset value shall be determined pursuant to applicable provisions
of the Certificate of Incorporation of the Fund. If pursuant to such provisions
the determination of net asset value is suspended for any of the Portfolios,
then for the purposes of this Section 4 the value of the net assets of that
Portfolio as last determined shall be deemed to be the value of the net assets
of that Portfolio for each day the suspension continues.
The Manager may, at its option, waive all or part of its compensation
for such period of time as it deems necessary or appropriate.
5. EXPENSES BORNE BY FUND
The Fund will pay, without reimbursement by the Manager, the following
expenses attributable or allocated to each of the Portfolios:
(a) the fee payable to the Manager as provided for in Section 4
above;
(b) Taxes, including in case of redeemed shares any initial transfer
taxes;
(c) Portfolio brokerage fees and incidental brokerage expenses;
(d) Interest;
(e) Extraordinary expenses, including the cost of meetings of
shareholders of any Portfolio if the meeting is called at the
request of shareholders of that Portfolio.
6. LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Manager in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
7. 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, 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 an 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, 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 or by the Manager. 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 definitions 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 the Management Agreement and that failure causes the Agreement
for that Portfolio to be invalid, the Manager will continue to act as investment
adviser with respect to that Portfolio pending the required approval of
continuance of the Agreement, of a new contract with the Manager or a different
adviser or other definitive action; provided, that the compensation received by
the Manager 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.
8. 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, 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.
9. AGREEMENTS WITH OTHERS
The Manager may enter into agreements with others for the assumption of
any and all duties and responsibilities set forth in this Agreement. Section 6
shall apply to each such person as if it were named therein instead of the
Manager.
10. ADDRESS FOR PURPOSE OF NOTICE
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, 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 Fund and that of the
Manager for this purpose shall be The Principal Financial Group, Xxx Xxxxxx,
Xxxx 00000-0000.
11. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
PRINCIPAL SPECIAL MARKETS FUND, INC.
/s/ XXXXXX X. XXXXXX
By --------------------------------
Xxxxxx X. Xxxxxx, Vice President
PRINCOR MANAGEMENT CORPORATION
/s/ XXXXXXX X. XXXXX
By -------------------------------
Xxxxxxx X. Xxxxx, President
PRINCIPAL SPECIAL MARKETS FUND, INC.
MANAGEMENT AGREEMENT - APPENDIX A
Portfolio Fee as a Percent of
Average Daily Net Assets
1. Mortgage-Backed Securities Portfolio .45%
2. International Securities Portfolio .90%
FIRST AMENDMENT TO THE
PRINCIPAL SPECIAL MARKETS FUND, INC.
MANAGEMENT AGREEMENT
The Management Agreement executed and entered into by and between Principal
Special Markets Fund, Inc., a Maryland corporation, and Princor Management
Corporation, an Iowa corporation, on the 22nd day of April, 1993, is hereby
amended to including the following:
PRINCIPAL SPECIAL MARKETS FUNDS, INC.
MANAGEMENT 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
Principal Special Markets Fund, Inc.
by:_________________________________
Princor Management Corporation
by:_________________________________
