PRINCIPAL INVESTORS FUND, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
PARTNERS LARGECAP GROWTH FUND I
AGREEMENT executed as of the 30th day of June, 2004, by and between PRINCIPAL
MANAGEMENT CORPORATION, an Iowa Corporation (hereinafter called "the Manager")
and XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC. (formerly known as Xxxxxx Xxxxxxx
Xxxx Xxxxxx Investment Management Inc.) (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 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 the Partners LargeCap Growth 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") between the Manager
and the Fund;
(b) The Fund's registration statement as filed with the Securities and
Exchange Commission (the "Registration Statement");
(c) The Fund's Articles of Incorporation and By-laws;
NOW, THEREFORE, in consideration of the promises 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 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
(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 (or any appropriate
committee of such Board), and revise from time to time as
conditions require, a recommended investment program for the
portfolio of the Series consistent with the Series' investment
objective and policies as set forth in the Registration
Statement, as may be amended from time to time.
c) Implement such of its recommended investment program as the Board
of Directors (or any appropriate committee of the Board) shall
approve, by placing orders for the purchase and sale of
securities, 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 reasonably
requested by the officers, 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 investment business of the
Series.
(e) Report to the Board of Directors of the Fund at such times and in
such detail as the Board of Directors may deem appropriate in
order to enable it to determine that the investment policies,
procedures and approved investment program of the Series are
being observed.
(f) Upon reasonable request, provide assistance and recommendations
for the determination of the fair value of certain securities
when 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.
(g) 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. Except for
expenses specifically assumed or agreed to be paid by the
Sub-Advisor under this Agreement, the Sub-Advisor shall not be
liable for any expenses of the Manager, the Fund or the Series
including, without limitation, (i) interest and taxes, (ii)
brokerage commissions and other costs in connection with the
purchase or sale of securities or other investment instruments
with respect to the Series, and (iii) custodian fees and
expenses.
(h) Select brokers and dealers to effect all transactions for the
Series (which may include brokers or dealers affiliated with the
Sub-Advisor, provided such transactions comply with applicable
requirements under the 1940 Act), place all necessary orders with
brokers, dealers, or issuers, and negotiate brokerage 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 a manner the Sub-Advisor
considers to be equitable and consistent with its fiduciary
obligations to the Series and to other clients. The Sub-Advisor
shall use its best efforts to obtain execution of transactions
for the Fund at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received. In doing so, the Sub-Advisor may select brokers or
dealers on the basis that they also 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 and provided that all
conditions of such order are complied with.
(i) Maintain all accounts, books and records with respect to the
Series as are required of an investment adviser of a registered
investment company pursuant to the 1940 Act and Investment
Advisers Act of 1940, as amended, (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 and it will surrender promptly to
the Fund any records that it maintains for the Series upon
request by the Fund or the Manager provided, however, that the
Sub-Advisor may retain a copy of such records. 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.
(j) 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. The
Sub-Advisor shall promptly forward to the Manager a copy of any
material amendments to the Sub-Advisor's Code of Ethics.
(k) From time to time as the Manager or the Fund may reasonably
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 reasonable times at
the Fund's principal place of business upon reasonable notice to
review the investments of the Series.
(l) Provide such information as 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.
(m) Perform quarterly and annual tax compliance tests to monitor the
Series' compliance with Subchapter M of the Code. 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 with Subchapter
M 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.
(n) Maintain, in connection with the Sub-Advisor's investment
advisory services obligations provided hereunder, compliance with
the 1940 Act and the regulations adopted by the Securities and
Exchange Commission thereunder and each Series' investment
strategies and restrictions as stated in the Series' current
prospectus and statement of additional information.
(o) Provide to the Manager a copy of its Form ADV as filed with the
Securities and Exchange Commission, as amended from time to time,
and a list of the persons whom the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to custodians
of assets of the Series.
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 sub-advisory services to the Fund or a fund that is under
common control with the Fund regarding transactions for the Fund in
the securities or other assets allocated to the Sub-Advisor pursuant
to this Agreement, except as permitted by Rule 12d-3-1 under the 1940
Act.
4. 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.
Although the Manager may from time to time waive the compensation it
is entitled to receive from the Series, such waiver will have no
effect on the Manager's obligation to pay the Sub-Advisor the
compensation provided for herein.
5. Liability of Sub-Advisor
Neither the Sub-Advisor nor any of its directors, officers or
employees shall be liable to the Manager, the Fund, the Series or any
shareholder of the Fund for any loss suffered by the Manager, the
Fund, the Series or any shareholder of the Fund resulting from any
error of judgment made in the good faith exercise of the Sub-Advisor's
investment discretion in connection with selecting investments for the
Series except for 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 or employees. The
Manager shall hold harmless and indemnify the Sub-Advisor for any
loss, liability, cost, damage or expense (including reasonable
attorneys fees and costs) arising from any claim or demand by any past
or present shareholder of the Series or the Fund that is not based
upon the obligations of the Sub-Advisor with respect to the Series
under this Agreement. The Manager acknowledges and agrees that the
Sub-Advisor makes no representation 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 or index, including other clients of the Sub-Advisor, whether
public or private.
6. Supplemental Arrangements
The Sub-Advisor may enter into arrangements with other persons
affiliated with the Sub-Advisor for the provision of certain personnel
and facilities to the Sub-Advisor to better enable it to fulfill its
obligations under this Agreement.
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. Duration and Termination of This Agreement
This Agreement shall become effective as of the date of execution and,
unless otherwise terminated, shall remain in force for two years from
the date of execution and 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 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.
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, the Sub-Advisor or the Manager or by vote of a majority of
the outstanding voting securities of the Series. This Agreement shall
automatically terminate in the event of its assignment or upon
termination of the Management Agreement. 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.
9. Amendment of this Agreement
This Agreement may be amended at any time by mutual consent of the
parties, provided that, if required by law, such amendment shall also
have been approved by vote of the holders of a majority of the
outstanding voting securities of the Series and by vote of a majority
of the 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.
10. 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
the Principal Financial Group, Xxx Xxxxxx, Xxxx 00000-0000, and
the address of the Sub-Advisor shall be 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, XX 00000.
(c) Each party will promptly notify the other in writing of the
occurrence of any of the following events:
(1) the party fails to be registered as an investment adviser
under the Investment Advisers Act or under the laws of any
jurisdiction in which the party is required to be registered
as an investment adviser in order to perform its obligations
under this Agreement.
(2) the party 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, any
applicable investment restrictions imposed by state insurance
laws and regulations, 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) No written materials naming or relating to the Sub-Advisor, its
employees or its affiliated companies, other than materials
provided or approved by the Sub-Advisor, shall be used by the
Manager, the Fund or their affiliates in offering or marketing
shares of the Fund.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
PRINCIPAL MANAGEMENT CORPORATION
By _/s/Xxxxxx X. Gillum________________
Xxxxxx X. Xxxxxx, Vice President
XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC.
By _/s/Xxxx Xxx Dickinson___________________
Xxxx Xxx Xxxxxxxxx, Exec. Director
APPENDIX A
The Sub-Advisor shall serve as investment sub-advisor for the Series. With
respect to 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"):
First $200 million.............................0.30%
Next $100 million..............................0.25%
$300 million -- $1 billion.....................0.20%
$1 billion -- $2 billion.......................0.195%
Over $2 billion................................0.19%
In calculating the fee for the Series on or after July 1, 2004, 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. 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 Fund's 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.
