PRINCIPAL INVESTORS FUND, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
PARTNERS LARGECAP BLEND FUND I
AGREEMENT effective as of the 2nd day of July, 2003, by and between PRINCIPAL
MANAGEMENT CORPORATION, an Iowa corporation (hereinafter called "the Manager"),
and Wellington Management Company, LLP (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 series 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 a portion of the portfolio of the
Partners LargeCap Blend Fund I of the Fund (hereinafter called the "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 (the "Registration
Statement");
(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, or such portion of the assets of the Series
as the Manager shall specify from time to time, 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, or such
portion of the assets of the Series as the Manager shall specify
from time to time.
(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 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 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) 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.
(e) 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
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 13(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.
(f) 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.
(g) Upon request, provide assistance and recommendations 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.
(h) 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
custodial services, brokerage expenses and pricing and
bookkeeping services).
(i) Open accounts with broker-dealers and futures commission
merchants ("broker-dealers"), select broker-dealers to effect
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. At the request of the Manager, the
Fund or the Fund's Board of Directors, the Sub-Advisor shall
provide a brokerage placement report listing the broker-dealers
to whom trades were placed and the commissions paid to those
broker-dealers. 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
Sub-Advisor's management of 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 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, however, that
Sub-Advisor may retain a copy of 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 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 due notice to review the investments of the Series.
(m) 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. Manager acknowledges receipt of Sub-Advisor's Form
ADV more than 48 hours prior to the execution of this Agreement.
(n) 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.
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 the Sub-Advisor hereunder with respect to the Fund, the Manager
shall pay the compensation specified in Appendix A to this Agreement.
5. Liability and Indemnification
(a) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, neither the Sub-Advisor nor any of its
partners, officers, employees, consultants, or agents thereof
(its "Affiliates") shall be liable for any losses, claims,
damages, liabilities or litigation (including legal and other
expenses) incurred or suffered by the Manager or the Fund as a
result of any error of judgment or mistake of law by the
Sub-Advisor or its Affiliates with respect to the Fund, except
that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive or limit the liability of
the Sub-Advisor or its Affiliates for, and the Sub-Advisor shall
indemnify and hold harmless the Fund, the Manager, all affiliated
persons thereof (within the meaning of Section 2(a)(3) of the
0000 Xxx) and all controlling persons (as described in Section 15
of the Securities Act of 1933, as amended (the "1933 Act"))
(collectively, "Manager Indemnitees") against any and all losses,
claims, damages, liabilities or litigation (including reasonable
legal and other expenses) to which any of the Manager Indemnities
may become subject under the 1933 Act, the 1940 Act, the
Investment Advisers Act or under any other statue, at common law
or otherwise arising out of or based on (i) any willful
misconduct, bad faith, reckless disregard or gross negligence of
the Sub-Advisor in the performance of any of its duties or
obligations hereunder or (ii) any untrue statement of a material
fact concerning the Sub-Advisor contained in the Registration
Statement, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Series or the
omission to state therein a material fact known to the
Sub-Advisor which was required to be stated therein or necessary
to make the statements therein not misleading, if such statement
or omission was made in reliance upon information furnished to
the Manager or the Fund by the Sub-Advisor Indemnitees (as
defined below) for use therein provided that the materials have
been furnished to the Sub-Advisor for their review in accordance
with Section 9 of this Agreement.
(b) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, the Manager and the Fund shall not be
liable for any losses, claims, damages, liabilities or litigation
(including legal and other expenses) incurred or suffered by the
Sub-Advisor as a result of any error of judgment or mistake of
law by the Manager with respect to the Series, except that
nothing in this Agreement shall operate or purport to operate in
any way to exculpate, waive or limit the liability of the Manager
for, and the Manager shall indemnify and hold harmless the
Sub-Advisor, all affiliated persons thereof (within the meaning
of Section 2(a)(3) of the 0000 Xxx) and all controlling persons
(as described in Section 15 of the 1933 Act) (collectively,
"Sub-Advisor Indemnitees") against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal
and other expenses) to which any of the Sub-Advisor Indemnities
may become subject under the 1933 Act, the 1940 Act, the
Investment Advisers Act or under any other statue, at common law
or otherwise arising out of or based on (i) any willful
misconduct, bad faith, reckless disregard or gross negligence of
the Manager in the performance of any of its duties or
obligations hereunder or (ii) any untrue statement of a material
fact contained in the Registration Statement, proxy materials,
reports, advertisements, sales literature, or other materials
pertaining to the Fund or the omission to state therein a
material fact known to the Manager which was required to be
stated therein or necessary to make the statements therein not
misleading, unless such statement or omission concerned the
Sub-Advisor and was made in reliance upon written information
furnished to the Manager or the Fund by the Sub-Advisor
Indemnitees (as defined above) for use therein provided that the
materials have been furnished to the Sub-Advisor for their review
in accordance with Section 9 of this Agreement.
6. 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.
7. 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.
8. Representations of the Manager
The Manager represents and warrants as follows:
(a) The Manager (i) is registered as an investment advisor under the
Investment Advisers Act and will continue to be so registered for
as long as this Agreement remains in effect; (ii) is not
prohibited by the 1940 Act or the Investment Advisers Act from
performing the services contemplated by this Agreement, (iii) has
met, and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency necessary to be met
in order to perform the services contemplated by this Agreement;
(iv) has the authority to enter into and perform the services
contemplated by this Agreement; and (v) will promptly notify the
Sub-Advisor of the occurrence of any event that would disqualify
the Manager from serving as an investment advisor of an
investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) That (i) this Agreement has been approved 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 and (ii) either
(a) this Agreement has been approved by a majority of the
outstanding voting securities of the Series or (b) the Fund has
obtained exemptive relief from the Securities and Exchange
Commission to the effect that no such approval is necessary.
(c) The Manager agrees that neither it nor any of its affiliates will
in any way refer directly or indirectly to its relationship with
the Sub-Advisor, or any of its affiliates, in offering,
marketing, or other promotional materials without the prior
written consent of the Sub-Advisor.
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. The Sub-Advisor's Services Are Not Exclusive
Nothing in this Agreement shall limit or restrict the right of any of
the Sub-Advisor's partners, officers, or employees 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 business, whether of a similar
or a dissimilar nature, or limit or restrict the Sub-Advisor's right to
engage in any other business or to render services of any kind to any
other corporation, form, individual, or association.
11. 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 from year to year thereafter
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, if required by the 1940 Act or the rules,
regulations, interpretations or orders issued thereunder, 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 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 11, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions
of "interested person," "assignment" and "voting security") shall be
applied.
12. 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.
13. 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,
attention: Xxxxx Xxxxxx, Vice President, and the address of the
Sub-Advisor shall be Wellington Management Company, LLP, 00 Xxxxx
Xxxxxx, Xxxxxx, XX 00000, Attention: Regulatory Affairs.
(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 Fund.
(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) 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/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Vice President
WELLINGTON MANAGEMENT COMPANY, LLP
By /s/ Xxxxxx X. XxXxxxxxx
------------------------------------
Xxxxxx X. XxXxxxxxx, Chairman and CEO
APPENDIX A
The Sub-Advisor shall serve as investment sub-advisor for the Series. 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"):
Sub-Advisor's Fee as a Percentage of Average Daily Net Assets
of the Series Managed by the Sub-Advisor
-------------------------------------------------------------
First $500 million.........................0.25%
Over $500 million..........................0.20%
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 Series managed by
the Sub-Advisor 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 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.
For purposes of calculating fees under this Agreement, the assets of the
Sub-Advisor's portion of the Series shall be aggregated with the portion of the
assets of any other affiliated accounts of the Manager managed by the
Sub-Advisor in a similar investment mandate (together, the "Aggregated Assets").
The "Aggregated Assets" will be applied to the above schedule and the resulting
fee shall be prorated back to the Series and other affiliated accounts
accordingly.
