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SIGNATURE A.S. FILEAN
TITLE V.P. / SECRETARY
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</TABLE>
Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Principal International Emerging Markets Fund, Inc.
In planning and performing our audit of the financial statements of Principal
International Emerging Markets Fund, Inc. for the year ended October 31, 1997,
we considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal control.
The management of Principal International Emerging Markets Fund, Inc. is
responsible for establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs. Generally, controls that are
relevant to an audit pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in conformity with
generally accepted accounting principles. These controls include the
safeguarding of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of specific
internal control components does not reduce to a relatively low level the risk
that errors or irregularities in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control, including
control for activities safeguarding securities, that we consider to be material
weaknesses as defined above as of October 31, 1997.
This report is intended solely for the information and use of management and the
Board of Directors of Principal International Emerging Markets Fund, Inc. and
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
November 26, 1997
SPECIAL MEETING OF SHAREHOLDER
OF
PRINCIPAL INTERNATIONAL EMERGING MARKETS FUND, INC.
801 Grand Avenue, Des Moines, Iowa August 21, 1997 9:00 a.m.
A special meeting of the shareholder of Principal International Emerging
Markets Fund, Inc. was held at 801 Grand Avenue, Des Moines, Iowa at 9:00 a.m.
on August 21, 1997.
The meeting was called to order by Mr. S. L. Jones, who presided as
chairman of the meeting. Ms. K. L. McCartney acted as secretary of the meeting.
Also present was A. S. Filean.
The Secretary reported that the only shareholders of the Corporation were
Principal Mutual Life Insurance Company, the owner of 100% of the Class A Common
Stock, and Princor Management Corporation, the owner of 100% of the Class B
Common Stock and 100% of the Class R Common Stock, that all such shares were
represented by proxies held by Mr. Filean and that a quorum was present.
The Chairman directed that the proxies be appended to the minutes of this
meeting.
The Chairman then stated that it would be in order to elect directors of
the Corporation. Thereupon, Mr. Filean stated that on behalf of Principal Mutual
Life Insurance Company he proposed to nominate and elect a slate of directors.
Thereupon, the following resolution was duly adopted:
"BE IT RESOLVED, That the following nine persons be, and they hereby are,
elected to serve as directors of this Corporation until the next meeting of
stockholders or until their respective successors are elected and
qualified:
James D. Davis
Roy W. Erhle
Pamela A. Ferguson
Richard W. Gilbert
J. Barry Griswell
Stephan L. Jones
Ron E. Keller
Barbara A. Lukavsky
Richard G. Peebler"
The Chairman stated that it would be in order to consider ratification and
approval of the Management Agreement between the Corporation and Princor
Management Corporation in the form approved by the Corporation's Board of
Directors. A copy of said agreement was presented at the meeting. Thereupon, the
following resolution was duly adopted by the vote of all the outstanding shares
of Common Stock of the Corporation:
"BE IT RESOLVED, That the Management Agreement between the Corporation and
Princor Management Corporation, which was approved by the Board of
Directors, including a majority of the non-interested directors thereof,
be, and it hereby is, ratified and approved."
The Chairman then stated that it would be appropriate to consider
ratification and approval of the Sub-Advisory Agreement between Princor
Management Corporation and Invista Capital Management, Inc. in the form approved
by the Corporation's Board of Directors. A copy of such agreement was presented
at the meeting. Thereupon, the following resolution was duly adopted by the vote
of all the outstanding shares of Common Stock of the Corporation:
"BE IT RESOLVED, That the Sub-Advisory Agreement between Princor Management
Corporation and Invista Capital Management, Inc., which was approved by the
Board of Directors, including a majority of the non-interested directors
thereof, be, and it hereby is, ratified and approved."
The Chairman then stated that it would be appropriate to consider the
ratification and approval of the Investment Service Agreement among the
Corporation, Princor Management Corporation and Principal Mutual Life Insurance
Company, which was approved by the Board of Directors. A copy of such agreement
was presented at the meeting. Thereupon, the following resolution was duly
adopted by the vote of all the outstanding shares of Common Stock of the
Corporation:
"BE IT RESOLVED, That the Investment Service Agreement among the
Corporation, Princor Management Corporation and Principal Mutual Life
Insurance Company, which was approved by the Board of Directors, including
a majority of the non-interested directors thereof, be and it hereby is,
ratified and approved."
The Chairman then stated it was necessary to consider ratification and
approval of the Distribution and Shareholder Service Plan and Agreement for
Class A shares in the form adopted by the Corporation's Board of Directors
pursuant to Rule 12b-1 of the Investment Company Act of 1940. A copy of such
agreement was presented at the meeting. Thereupon, the following resolution was
duly adopted by the vote of all the outstanding Class A shares of Common Stock
of the Corporation:
"BE IT RESOLVED, That the Distribution and Shareholder Servicing Plan and
Agreement for Class A Shares, which was adopted by the Board of Directors,
including a majority of the non-interested directors thereof, be, and it
hereby is, ratified and approved."
The Chairman then stated it was necessary to consider ratification and
approval of the Distribution and Shareholder Service Plan and Agreement for
Class B shares in the form adopted by the Corporation's Board of Directors
pursuant to Rule 12b-1 of the Investment Company Act of 1940. A copy of such
agreement was presented at the meeting. Thereupon, the following resolution was
duly adopted by the vote of all the outstanding Class B shares of Common Stock
of the Corporation:
"BE IT RESOLVED, That the Distribution and Shareholder Servicing Plan and
Agreement for Class B Shares, which was adopted by the Board of Directors,
including a majority of the non-interested directors thereof, be, and it
hereby is, ratified and approved."
The Chairman then stated it was necessary to consider ratification and
approval of the Distribution and Shareholder Service Plan and Agreement for
Class R shares in the form adopted by the Corporation's Board of Directors
pursuant to Rule 12b-1 of the Investment Company Act of 1940. A copy of such
agreement was presented at the meeting. Thereupon, the following resolution was
duly adopted by the vote of all the outstanding Class R shares of Common Stock
of the Corporation:
"BE IT RESOLVED, That the Distribution and Shareholder Servicing Plan and
Agreement for Class R Shares, which was adopted by the Board of Directors,
including a majority of the non-interested directors thereof, be, and it
hereby is, ratified and approved."
The Chairman then informed the meeting that the Corporation's Board of
Directors had selected Ernst & Young as the independent public accountant for
the Corporation. Thereupon, the following resolution was duly adopted by the
vote of all the outstanding shares of Common Stock of the Corporation:
"BE IT RESOLVED, That the selection by the Board of Directors, including a
majority of the non-interested Directors thereof, of the firm of Ernst &
Young as the independent public accountant for the Corporation for the year
ending October 31, 1997 be, and it hereby is, ratified and approved,
subject to the right of the Corporation, by vote of a majority of the
Corporation's outstanding voting securities at any meeting called for the
purpose, to terminate such employment forthwith without any penalty."
There being no further business, the meeting was adjourned.
/s/ A. S. Filean
---------------------------------
Secretary
BYLAWS
OF
PRINCIPAL INTERNATIONAL EMERGING MARKETS FUND, INC.
ARTICLE 1
Name, Fiscal Year
1.01 The name of this corporation shall be Principal International
Emerging Markets Fund, Inc., Inc. Except as otherwise from time to time provided
by the board of directors, the fiscal year of the corporation shall begin
November 1 and end October 31.
ARTICLE 2
Stockholders' Meetings
2.01 Place of Meetings. All meetings of the stockholders shall be held
at such place within or without the State of Maryland, as is stated in the
notice of meeting.
2.02 Annual Meetings. The Board of Directors of the Fund shall
determine whether or not an annual meeting of stockholders shall be held. In the
event that an annual meeting of stockholders is held, such meeting shall be held
on the first Tuesday after the first Monday of February in each year or on such
other day during the 31-day period following the first Tuesday after the first
Monday of February as the directors may determine.
2.03 Special Meetings. Special meetings of the stockholders shall be
held whenever called by the chairman of the board, the president or the board of
directors, or when requested in writing by 10% of the Fund's outstanding shares.
2.04 Notice of Stockholders' Meetings. Notice of each stockholders'
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given by mailing such notice
to each stockholder of record at his address as it appears on the records of the
corporation not less than 10 nor more than 90 days prior to the date of the
meeting. Any meeting at which all stockholders entitled to vote are present
either in person or by proxy or of which those not present have waived notice in
writing shall be a legal meeting for the transaction of business notwithstanding
that notice has not been given as herein provided.
2.05 Quorum. Except as otherwise expressly required by law, these
bylaws or the Articles of Incorporation, as from time to time amended, at any
meeting of the stockholders the presence in person or by proxy of the holders of
one-third of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote, shall constitute a quorum, but a lesser
interest may adjourn any meeting from time to time and the meeting may be held
as adjourned without further notice. When a quorum is present at any meeting a
majority of the stock represented thereat shall decide any question brought
before such meeting unless the question is one upon which by express provision
of law or of these bylaws or the Articles of Incorporation a larger or different
vote is required, in which case such express provision shall govern.
2.06 Proxies and Voting Stockholders of record may vote at any meeting
either in person or by written proxy signed by the stockholder or by the
stockholder's duly authorized attorney-in-fact dated not more than eleven months
before the date of exercise, which shall be filed with the Secretary of the
meeting before being voted. Each stockholder shall be entitled to one vote for
each share of stock held, and to a fraction of a vote equal to any fractional
share held.
2.07 Stock Ledger. The Corporation shall maintain at the office of the
stock transfer agent of the Corporation, or at the office of any successor
thereto as stock transfer agent of the Corporation, an original stock ledger
containing the names and addresses of all stockholders and the number of shares
of each class held by each stockholder. Such stock ledger may be in written form
or any other form capable of being converted into written form within a
reasonable time for visual inspection.
ARTICLE 3
Board of Directors
3.01 Number, Service. The Corporation shall have a Board of Directors
consisting of not less than three and no more than fifteen members. The number
of Directors to constitute the whole board within the limits above-stated shall
be fixed by the Board of Directors. The Directors may be chosen (i) by
stockholders at any annual meeting of stockholders held for the purpose of
electing directors or at any meeting held in lieu thereof, or at any special
meeting called for such purpose, or (ii) by the Directors at any regular or
special meeting of the Board to fill a vacancy on the Board as provided in these
bylaws and Maryland General Corporation Law. Each director should serve until
the next annual meeting of shareholders and until a successor is duly qualified
and elected, unless sooner displaced.
3.02 Powers. The board of directors shall be responsible for the entire
management of the business of the Corporation. In the management and control of
the property, business and affairs of the Corporation the board of directors is
hereby vested with all the powers possessed by the corporation itself so far as
this designation of authority is not inconsistent with the laws of the State of
Maryland, but subject to the limitations and qualifications contained in the
Articles of Incorporation and in these bylaws.
3.03 Executive Committee and Other Committees. The board of directors
may elect from its members an executive committee of not less than three which
may exercise certain powers of the board of directors when the board is not in
session pursuant to Maryland law. The executive committee may make rules for the
holding and conduct of its meetings and keeping the records thereof, and shall
report its action to the board of directors.
The board of directors may elect from its members such other committees
from time to time as it may desire. The number composing such committees and the
powers conferred upon them shall be determined by the board of directors at its
own discretion.
3.04 Meetings. Regular meetings of the board of directors may be held
in such places within or without the State of Maryland, and at such times as the
board may from time to time determine, and if so determined, notices thereof
need not be given. Special meetings of the board of directors may be held at any
time or place whenever called by the president or a majority of the directors,
notice thereof being given by the secretary or the president, or the directors
calling the meeting, to each director. Special meetings of the board of
directors may also be held without formal notice provided all directors are
present or those not present have waived notice thereof.
3.05 Quorum. A majority of the members of the board of directors from
time to time in office but in no event not less than one-third of the number
constituting the whole board shall constitute a quorum for the transaction of
business provided, however, that where the Investment Company Act of 1940
requires a different quorum to transact business of a specific nature, the
number of directors so required shall constitute a quorum for the transaction of
such business.
A lesser number may adjourn a meeting from time to time and the meeting
may be held without further notice. When a quorum is present at any meeting a
majority of the members present thereat shall decide any question brought before
such meeting except as otherwise expressly required by law, the Articles of
Incorporation or these bylaws.
3.06 Action by Directors Other than at a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board of Directors or such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
3.07 Holding of Meetings by Conference Telephone Call. At any regular
or special meeting, members of the Board of Directors or any committee thereof
may participate by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting.
ARTICLE 4
Officers
4.01 Selection. The officers of the corporation shall be a president,
one or more vice presidents, a secretary and a treasurer. The board of directors
may, if it so determines, also elect a chairman of the board. All officers shall
be elected by the board of directors and shall serve at the pleasure of the
board. The same person may hold more than one office except the offices of
president and vice president.
4.02 Eligibility. The chairman of the board, if any, and the president
shall be directors of the corporation. Other officers need not be directors.
4.03 Additional Officers and Agents. The board of directors may appoint
one or more assistant treasurers, one or more assistant secretaries and such
other officers or agents as it may deem advisable, and may prescribe the duties
thereof.
4.04 Chairman of the Board of Directors. The chairman of the board, if
any, shall preside at all meetings of the board of directors at which he is
present. He shall have such other authority and duties as the board of directors
shall from time to time determine.
4.05 The President. The president shall be the chief executive officer
of the corporation; he shall have general and active management of the business,
affairs and property of the corporation, and shall see that all orders and
resolutions of the board of directors are carried into effect. He shall preside
at meetings of stockholders, and of the board of directors unless a chairman of
the board has been elected and is present.
4.06 The Vice Presidents. The vice presidents shall respectively have
such powers and perform such duties as may be assigned to them by the board of
directors or the president. In the absence or disability of the president, the
vice presidents, in the order determined by the board of directors, shall
perform the duties and exercise the powers of the president.
4.07 The Secretary. The secretary shall keep accurate minutes of all
meetings of the stockholders and directors, and shall perform all duties
commonly incident to his office and as provided by law and shall perform such
other duties and have such other powers as the board of directors shall from
time to time designate. In his absence an assistant secretary or secretary pro
tempore shall perform his duties.
4.08 The Treasurer. The treasurer shall, subject to the order of the
board of directors and in accordance with any arrangements for performance of
services as custodian, transfer agent or disbursing agent approved by the board,
have the care and custody of the money, funds, securities, valuable papers and
documents of the corporation, and shall have and exercise under the supervision
of the board of directors all powers and duties commonly incident to his office
and as provided by law. He shall keep or cause to be kept accurate books of
account of the corporation's transactions which shall be subject at all times to
the inspection and control of the board of directors. He shall deposit all funds
of the corporation in such bank or banks, trust company or trust companies or
such firm or firms doing a banking business as the board of directors shall
designate. In his absence, an assistant treasurer shall perform his duties.
ARTICLE 5
Vacancies
5.01 Removals. The stockholders may at any meeting called for the
purpose, by vote of the holders of a majority of the capital stock issued and
outstanding and entitled to vote, remove from office any director and, unless
the number of directors constituting the whole board is accordingly decreased,
elect a successor. To the extent consistent with the Investment Company Act of
1940, the board of directors may by vote of not less than a majority of the
directors then in office remove from office any director, officer or agent
elected or appointed by them and may for misconduct remove any thereof elected
by the stockholders.
5.02 Vacancies. If the office of any director becomes or is vacant by
reason of death, resignation, removal, disqualification, an increase in the
authorized number of directors or otherwise, the remaining directors may by vote
of a majority of said directors choose a successor or successors who shall hold
office for the unexpired term; provided that vacancies on the board of
directors may be so filled only if, after the filling of the same, at least
two-thirds of the directors then holding office would be directors elected to
such office by the stockholders at a meeting or meetings called for the purpose.
In the event that at any time less than a majority of the directors were so
elected by the stockholders, a special meeting of the stockholders shall be
called forthwith and held as promptly as possible and in any event within
sixty days for the purpose of electing an entire new board of directors.
ARTICLE 6
Certificates of Stock
6.01 Certificates. The board of directors may adopt a policy of not
issuing certificates except in extraordinary situations as may be authorized
from time to time by an officer of the Corporation. If such a policy is adopted,
a stockholder may obtain a certificate or certificates of the capital stock of
the Corporation owned by such stockholder only if the stockholder demonstrates a
specific reason for needing a certificate. If issued, the certificate shall be
in such form as shall, in conformity to law, be prescribed from time to time by
the board of directors. Such certificates shall be signed by the chairman of the
board of directors or the president or a vice president and by the treasurer or
an assistant treasurer or the secretary or an assistant secretary. If such
certificates are countersigned by a transfer agent or registrar other than the
Corporation or an employee of the Corporation, the signatures of the
aforementioned officers upon such certificates may be facsimile. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the Corporation.
6.02 Replacement of Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or its legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
6.03 Stockholder Open Accounts. The corporation may maintain or cause
to be maintained for each stockholder a stockholder open account in which shall
be recorded such stockholder's ownership of stock and all changes therein, and
certificates need not be issued for shares so recorded in a stockholder open
account unless requested by the stockholder and such request is approved by an
officer.
6.04 Transfers. Transfers of stock for which certificates have been
issued will be made only upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, whereupon
the Corporation will issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction on its books. Transfers of
stock evidenced by open account authorized by Section 6.03 will be made upon
delivery to the Corporation or the transfer agent of the Corporation of
instructions for transfer or evidence of assignment or succession, in each case
executed in such manner and with such supporting evidence as the Corporation or
transfer agent may reasonably require.
6.05 Closing Transfer Books. The transfer books of the stock of the
corporation may be closed for such period (not to exceed 20 days) from time to
time in anticipation of stockholders' meetings or the declaration of dividends
as the directors may from time to time determine.
6.06 Record Dates. The board of directors may fix in advance a date,
not exceeding ninety days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining any consent or for
any other lawful purpose, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date as fixed shall be entitled to such notice of, and to vote
at, such meeting, and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
6.07 Registered Ownership. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner and shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
ARTICLE 7
Notices
7.01 Manner of Giving. Whenever under the provisions of the statutes or
of the Articles of Incorporation or of these bylaws notice is required to be
given to any director, committee member, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given, in the case of
stockholders, in writing, by mail, by depositing the same in a United States
post office or letter box, in a postpaid sealed wrapper, addressed to each
stockholder at such address as it appears on the books of the corporation, or,
in default to other address, to such stockholder at the General Post Office in
the City of Baltimore, Maryland, and, in the case of directors, committee
members and officers, by telephone, or by mail or by telegram to the last
business address known to the secretary of the corporation, and such notice
shall be deemed to be given at the time when the same shall be thus mailed or
telegraphed or telephoned.
7.02 Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
General Provisions
8.01 Disbursement of Funds. All checks, drafts, orders or instructions
for the payment of money and all notes of the corporation shall be signed by
such officer or officers or such other person or persons as the board of
directors may from time to time designate.
8.02 Voting Stock in Other Corporations. Unless otherwise ordered by
the board of directors, any officer shall have full power and authority to
attend and act and vote at any meeting of stockholders of any corporation in
which this corporation may hold stock, and at any such meeting may exercise any
and all the rights and powers incident to the ownership of such stock. Any
officer of this corporation may execute proxies to vote shares of stock of other
corporations standing in the name of this corporation.
8.03 Execution of Instruments. Except as otherwise provided in these
bylaws, all deeds, mortgages, bonds, contracts, stock powers and other
instruments of transfer, reports and other instruments may be executed on behalf
of the corporation by the president or any vice president or by any other
officer or agent authorized to act in such matters, whether by law, the Articles
of Incorporation, these bylaws, or any general or special authorization of the
board of directors. If the corporate seal is required, it shall he affixed by
the secretary or an assistant secretary.
8.04 Seal. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its incorporation and the words "Corporate Seal,
Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE 9
Regulations
9.01 Investment and Related Matters. The Corporation shall not purchase
or hold securities in violation of the investment restrictions enumerated in its
then current prospectus and the registration statement or statements filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933
and the Investment Company Act of 1940, as amended, nor shall the Corporation
invest in securities the purchase of which would cause the Corporation to
forfeit its rights to continue to publicly offer its shares under the laws,
rules or regulations of any state in which it may become authorized to so offer
its shares unless, by specific resolution of the board of directors, the
Corporation shall elect to discontinue the sale of its shares in such state.
9.02 Other Matters. When used in this section the following words shall
have the following meanings: "Sponsor" shall mean any one or more corporations,
firms or associations which have distributor's contracts in effect with this
Corporation. "Manager" shall mean any corporation, firm or association which may
at the time have an investment advisory contract with this Corporation.
(a) Limitation of Holdings by this Corporation of Certain Securities
and of Dealings with Officers or Directors. This Corporation
shall not purchase or retain securities of any issuer if those
officers and directors of the Fund or its Manager owning
beneficially more than one-half of one per cent (0.5%) of the
shares or securities of such issuer together own beneficially
more than five per cent (5%) of such shares or securities; and
each officer and director of this Corporation shall keep the
treasurer of this Corporation informed of the names of all
issuers (securities of which are held in the portfolio of this
Corporation) in which such officer or director owns as much as
one-half of one percent (1/2 of 1%) of the outstanding shares or
securities and (except in the case of a holding by the treasurer)
this Corporation shall not be charged with knowledge of any such
security holding in the absence of notice given if as aforesaid
if this Corporation has requested such information not less often
than quarterly. The Corporation will not lend any of its assets
to the Sponsor or Manager or to any officer or director of the
Sponsor or Manager or of this Corporation and shall not permit
any officer or director, and any officer or director of the
Sponsor or Manager, to deal for or on behalf of the Corporation
with himself as principal agent, or with any partnership,
association or corporation in which he has a financial interest.
Nothing contained herein shall prevent (1) officers and directors
of the Corporation from buying, holding or selling shares in the
Corporation, or from being partners, officers or directors of or
otherwise financially interested in the Sponsor or the Manager or
any company controlling the Sponsor or the Manager; (2)
employment of legal counsel, registrar, transfer agent, dividend
disbursing agent or custodian who is, or has a partner
shareholder, officer or director who is, an officer or director
of the Corporation, if only customary fees are charged for
services to the Corporation; (3) sharing statistical and research
expenses and office hire and expenses with any other investment
company in which an officer or director of the Corporation is an
officer or director or otherwise financially interested.
(b) Limitation Concerning Participating by Interested Persons in
Investment Decisions. In any case where an officer or director of
the Corporation or of the Manager, or a member of an advisory
committee or portfolio committee of the Corporation, is also an
officer or a director of another corporation, and the purchase or
sale of shares issued by that other corporation is under
consideration, the officer or director or committee member
concerned will abstain from participating in any decision made on
behalf of the Corporation to purchase or sell any securities
issued by such other corporation.
(c) Limitation on Dealing in Securities of this Corporation by
certain Officers, Directors, Sponsor or Manager. Neither the
Sponsor nor Manager, nor any officer or director of this
Corporation or of the Sponsor or Manager shall take long or short
positions in securities issued by this Corporation, provided,
however, that:
1) The Sponsor may purchase from this Corporation shares issued
by this Corporation if the orders to purchase from this
Corporation are entered with this Corporation by the Sponsor
upon receipt by the Sponsor of purchase orders for shares of
this Corporation and such purchases are not in excess of
purchase orders received by the Sponsor.
(2) The Sponsor may in the capacity of agent for this
Corporation buy securities issued by this Corporation
offered for sale by other persons.
(3) Any officer or director of this Corporation or of the
Sponsor or Manager or any Company controlling the Sponsor or
Manager may at any time, or from time to time, purchase from
this Corporation or from the Sponsor shares issued by this
Corporation at a price not lower than the net asset value of
the shares, no such purchase to be in contravention of any
applicable state or federal requirement.
(d) Securities and Cash of this Corporation to be held by Custodian
subject to certain Terms and Conditions.
(1) All securities and cash owned by this Corporation shall as
hereinafter provided, be held by or deposited with a bank or
trust company having (according to its last published
report) not less than two million dollars ($2,000,000)
aggregate capital, surplus and undivided profits (which bank
or trust company is hereby designated as "Custodian"),
provided such a Custodian can be found ready and willing to
act.
(2) This Corporation shall enter into a written contract with
the Custodian regarding the powers, duties and compensation
of the Custodian with respect to the cash and securities of
this Corporation held by the Custodian. Said contract and
all amendments thereto shall be approved by the board of
directors of this Corporation.
(3) This Corporation shall upon the resignation or inability to
serve of its Custodian or upon change of the Custodian:
(aa) in case of such resignation or inability to serve, use
its best efforts to obtain a successor Custodian;
(bb) require that the cash and securities owned by this
Corporation be delivered directly to the successor
Custodian; and
(cc) In the event that no successor Custodian can be found,
submit to the stockholders, before permitting delivery
of the cash and securities owned by this Corporation
otherwise than to a successor Custodian, the question
whether or not this Corporation shall be liquidated or
shall function without a Custodian.
(e) Amendment of Investment Advisory Contract. Any investment
advisory contract entered into by this Corporation shall not be
subject to amendment except by (1) affirmative vote at a
shareholders meeting, of the holders of a majority of the
outstanding stock of this Corporation, or (2) a majority of such
Directors who are not interested persons (as the term is defined
in the Investment Company Act of 1940) of the Parties to such
agreements, cast in person at a board meeting called for the
purpose of voting on such amendment.
(f) Reports relating to Certain Dividends. Dividends paid from net
profits from the sale of securities shall be clearly revealed by
this Corporation to its shareholders and the basis of calculation
shall be set forth.
(g) Maximum Sales Commission. The Corporation shall, in any
distribution contract with respect to its shares of common stock
entered into by it, provide that the maximum sales commission to
be charged upon any sales of such shares shall not be more than
nine per cent (9%) of the offering price to the public of such
shares. As used herein, "offering price to the public" shall mean
net asset value per share plus the commission charged adjusted to
the nearest cent.
ARTICLE 10
Purchases and Redemption of Shares:
Suspension of Sales
10.01 Purchase by Agreement. The Corporation may purchase its shares by
agreement with the owner at a price not exceeding the net asset value next
computed following the time when the purchase or contract to purchase is made.
10.02 Redemption. The Corporation shall redeem such shares as are
offered by any stockholder for redemption upon the presentation of a written
request therefor, duly executed by the record owner, to the office or agency
designated by the corporation. If the shareholder has received stock
certificates, the request must be accompanied by the certificates, duly endorsed
for transfer, in acceptable form; and the Corporation will pay therefor the net
asset value of the shares next effective following the time at which the
request, in acceptable form, is so presented. Payment for said shares shall
ordinarily be made by the Corporation to the stockholder within seven days after
the date on which the shares are presented.
10.03 Suspension of Redemption. The obligations set out in Section
10.02 may be suspended (i) for any period during which the New York Stock
Exchange, Inc. is closed other than customary week-end and holiday closings, or
during which trading on the New York Stock Exchange, Inc. is restricted, as
determined by the rules and regulations of the Securities and Exchange
Commission or any successor thereto; (ii) for any period during which an
emergency, as determined by the rules and regulations of the Securities and
Exchange Commission or any successor thereto, exists as a result of which
disposal by the Corporation of securities owned by it is not reasonably
practicable or as a result of which it is not reasonably practicable for the
Corporation to fairly determine the value of its net assets; or (iii) for such
other periods as the Securities and Exchange Commission or any successor thereto
may by order permit for the protection of security holders of the Corporation.
Payment of the redemption or purchase price may be made in cash or, at the
option of the Corporation, wholly or partly in such portfolio securities of the
Corporation as the Corporation may select.
10.04 Suspension of Sales. The Corporation reserves the right to
suspend sales of its shares if, in the judgment of the majority of the board of
directors or a majority of the executive committee of its Board, if such
committee exists, it is in the best interest of the Corporation to do so, such
suspension to continue for such period as may be determined by such majority.
ARTICLE 11
Fractional Shares
11.01 The board of directors may authorize the issue from time to time
of shares of the capital stock of the corporation in fractional denominations,
provided that the transactions in which and the terms upon which shares in
fractional denominations may be issued may from time to time be determined and
limited by or under authority of the board of directors.
ARTICLE 12
Indemnification
12.01(a) Every person who is or was a director, officer or employee of this
Corporation or of any other corporation which he served at the request of this
Corporation and in which this Corporation owns or owned shares of capital stock
or of which it is or was a creditor shall have a right to be indemnified by this
Corporation against all liability and reasonable expenses incurred by him in
connection with or resulting from a claim, action, suit or proceeding in which
he may become involved as a party or otherwise by reason of his being or having
been a director, officer or employee of this Corporation or such other
corporation, provided (1) said claim, action, suit or proceeding shall be
prosecuted to a final determination and he shall be vindicated on the merits, or
(2) in the absence of such a final determination vindicating him on the merits,
the board of directors shall determine that he acted in good faith and in a
manner he reasonably believed to be in the best interest of the Corporation in
the case of conduct in the director's official capacity with the Corporation and
in all other cases, that the conduct was at least not opposed to the best
interest of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; said
determination to be made by the board of directors acting through a quorum of
disinterested directors, or in its absence on the opinion of counsel.
(b) For purposes of the preceding subsection: (1) "liability and reasonable
expenses" shall include hut not be limited to reasonable counsel fees and
disbursements, amounts of any judgment, fine or penalty, and reasonable amounts
paid in settlement; (2) "claim, action, suit or proceeding" shall include every
such claim, action, suit or proceeding, whether civil or criminal, derivative or
otherwise, administrative, judicial or legislative, any appeal relating thereto,
and shall include any reasonable apprehension or threat of such a claim, action,
suit or proceeding; (3) the termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent
creates a rebuttable presumption that the director did not meet the standard of
conduct set forth in subsection (a)(2), supra.
(c) Notwithstanding the foregoing, the following limitations shall apply
with respect to any action by or in the right of the Corporation: (1) no
indemnification shall be made in respect of claim, issue or matter as to which
the person seeking indemnification shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Maryland or the court in which such action or suit was brought shall determine
upon application that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper; and (2) indemnification shall extend only to reasonable
expenses, including reasonable counsel's fees and disbursements.
(d) The right of indemnification shall extend to any person otherwise
entitled to it under this bylaw whether or not that person continues to be a
director, officer or employee of this Corporation or such other corporation at
the time such liability or expense shall be incurred. The right of
indemnification shall extend to the legal representative and heirs of any person
otherwise entitled to indemnification. If a person meets the requirements of
this bylaw with respect to some matters in a claim, action suit, or proceeding,
but not with respect to others, he shall be entitled to indemnification as to
the former. Advances against liability and expenses may be made by the
Corporation on terms fixed by the board of directors subject to an obligation to
repay if indemnification proves unwarranted.
(e) This bylaw shall not exclude any other rights of indemnification or
other rights to which any director, officer or employee may be entitled to by
contract, vote of the stockholders or as a matter of law.
If any clause, provision or application of this section shall be determined
to be invalid, the other clauses, provisions or applications of this section
shall not be affected but shall remain in full force and effect. The provisions
of this bylaw shall be applicable to claims, actions, suits or proceedings made
or commenced after the adoption hereof, whether arising from acts or omissions
to act occurring before or after the adoption hereof.
(f) Nothing contained in this bylaw shall be construed to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
ARTICLE 13
Amendments
13.01 These bylaws may be amended or added to, altered or repealed at
any annual or special meeting of the stockholders by the affirmative vote of the
holders of a majority of the shares of capital stock issued and outstanding and
entitled to vote, provided notice of the general purport of the proposed
amendment, addition, alteration or repeal is given in the notice of said
meeting, or, at any meeting of the board of directors by vote of a majority of
the directors then in office, except that the board of directors may not amend
Article 5 to permit removal by said board without cause of any director elected
by the stockholders.
ARTICLES OF INCORPORATION
OF
PRINCIPAL INTERNATIONAL EMERGING MARKETS FUND, INC.
ARTICLE I
Incorporator
The undersigned Arthur S. Filean and Ernest H. Gillum, whose post office
address is The Principal Financial Group, Des Moines, Iowa 50392, being at least
18 years of age, incorporators, hereby form a corporation under and by virtue of
the laws of Maryland.
ARTICLE II
Name
The name of the corporation is Principal International Emerging Markets
Fund, Inc. hereinafter called the "Corporation."
ARTICLE III
Corporate Purposes and Powers
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts and on
such terms and conditions and for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by these Articles of
Incorporation.
(5) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
To carry out all or any part of the foregoing objects as principal, factor,
agent, contractor, or otherwise, either alone or through or in conjunction with
any person, firm, association or corporation, and, in carrying on its business
and for the purpose of attaining or furnishing any of its objects and purposes,
to make and perform any contracts and to do any acts and things, and to exercise
any powers suitable, convenient or proper for the accomplishment of any of the
objects and purposes herein enumerated or incidental to the powers herein
specified, or which at any time may appear conducive to or expedient for the
accomplishment of any such objects and purposes.
To carry out all or any part of the aforesaid objects and purposes, and to
conduct its business in all or any of its branches, in any or all states,
territories, districts and possessions of the United States of America and in
foreign countries; and to maintain offices and agencies in any or all states,
territories, districts and possessions of the United States of America and in
foreign countries.
The foregoing objects and purposes shall, except when otherwise expressed,
be in no way limited or restricted by reference to or inference from the terms
of any other clause of this or any other article of these Articles of
Incorporation or of any amendment thereto, and shall each be regarded as
independent, and construed as powers as well as objects and purposes.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations of a
similar character by the Maryland General Corporation Law now or hereafter in
force, and the enumeration of the foregoing powers shall not be deemed to
exclude any powers, rights or privileges so granted or conferred.
ARTICLE IV
Principal Office and Resident Agent
The post office address of the principal office of the Corporation in this
State is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The name of the resident agent of the Corporation in this State
is The Corporation Trust Incorporated, a corporation of this State, and the post
office address of the resident agent is 32 South Street, Baltimore, Maryland
21202.
ARTICLE V
Capital Stock
Section 1. Authorized Shares: The total number of shares of stock which the
Corporation shall have authority to issue is one hundred million (100,000,000)
shares, of the par value of one cent ($.01) each and of the aggregate par value
of one million dollars ($1,000,000). The shares may be issued by the Board of
Directors in such separate and distinct series and classes of series as the
Board of Directors shall from time to time create and establish. The Board of
Directors shall have full power and authority, in its sole discretion, to
establish and designate series and classes of series, and to classify or
reclassify any unissued shares in separate series or classes having such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as shall be fixed and determined from time to time by the Board of
Directors. In the event of establishment of classes, each class of a series
shall represent interests in the assets belonging to that series and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions as any other class of the series, except that expenses allocated to
the class of a series may be borne solely by such class as shall be determined
by the Board of Directors and may cause differences in rights as described in
the following sentence. The shares of a class may be converted into shares of
another class upon such terms and conditions as shall be determined by the Board
of Directors, and a class of a series may have exclusive voting rights with
respect to matters affecting only that class. Expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of a particular series or class may be charged to and borne
solely by such series or class, and the bearing of expenses solely by a series
or class may be appropriately reflected (in a manner determined by the Board of
Directors) and cause differences in the net asset value attributable to, and the
dividend, redemption and liquidation rights of, the shares of each series or
class. Subject to the authority of the Board of Directors to increase and
decrease the number of, and to reclassify the shares of any series or class,
there are hereby established three classes of common stock, each comprising the
number of shares and having the designation indicated:
Class Number of Shares
Class A 25,000,000
Class B 25,000,000
Class R 25,000,000
In addition, the Board of Directors is hereby expressly granted authority to
change the designation of any series or class, to increase or decrease the
number of shares of any series or class, provided that the number of shares of
any series or class shall not be decreased by the Board of Directors below the
number of shares thereof then outstanding, and to reclassify any unissued shares
into one or more series or classes that may be established and designated from
time to time. Notwithstanding the designations herein of series and classes, the
Corporation may refer, in prospectuses and other documents furnished to
shareholders, filed with the Securities and Exchange Commission or used for
other purposes, to a series of shares as a "class" and to a class of shares of a
particular series as a "series."
(a) The Corporation may issue shares of stock in fractional denominations
to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately, to the
respective fractions represented thereby, all the rights of whole
shares, including without limitation, the right to vote, the right to
receive dividends and distributions and the right to participate upon
liquidation of the Corporation, but excluding the right to receive a
stock certificate representing fractional shares.
(b) The holder of each share of stock of the Corporation shall be entitled
to one vote for each full share, and a fractional vote for each
fractional share, of stock, irrespective of the series or class, then
standing in the holder's name on the books of the Corporation. On any
matter submitted to a vote of stockholders, all shares of the
Corporation then issued and outstanding and entitled to vote shall be
voted in the aggregate and not by series or class except that (1) when
otherwise expressly required by the Maryland General Corporation Law
or the Investment Company Act of 1940, as amended, shares shall be
voted by individual series or class, and (2) if the Board of
Directors, in its sole discretion, determines that a matter affects
the interests of only one or more particular series or class or
classes then only the holders of shares of such affected series or
class or classes shall be entitled to vote thereon.
(c) Unless otherwise provided in the resolution of the Board of Directors
providing for the establishment and designation of any new series or
class or classes, each series of stock of the Corporation shall have
the following powers, preferences and rights, and qualifications,
restrictions, and limitations thereof:
(1) Assets Belonging to a Class. All consideration received by the
Corporation for the issue or sale of shares of a particular
class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that class for all
purposes, subject only to the rights of creditors, and shall be
so recorded upon the books and accounts of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds, in whatever form the same
may be, together with any General Items allocated to that class
as provided in the following sentence, are herein referred to as
"assets belonging to" that class. In the event that there are any
assets, income, earnings, profits, proceeds thereof, funds or
payments which are not readily identifiable as belonging to any
particular class (collectively "General Items"), such General
Items shall be allocated by or under the supervision of the Board
of Directors to and among any one or more of the classes
established and designated from time to time in such manner and
on such basis as the Board of Directors, in its sole discretion,
deems fair and equitable, and any General Items so allocated to a
particular class shall belong to that class. Each such allocation
by the Board of Directors shall be conclusive and binding for all
purposes.
(2) Liabilities Belonging to a Class. The assets belonging to each
particular class shall be charged with the liabilities of the
Corporation in respect of that class and all expenses, costs,
charges and reserves attributable to that class, and any general
liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as belonging to
any particular class shall be allocated and charged by or under
the supervision of the Board of Directors to and among any one or
more of the classes established and designated from time to time
in such manner and on such basis as the Board of Directors, in
its sole discretion, deems fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so charged to
a class are herein referred to as "liabilities belonging to" that
class. Expenses related to the shares of a series may be borne
solely by that series (as determined by the Board of Directors).
Each allocation of liabilities, expenses, costs, charges and
reserves by the Board of Directors shall be conclusive and
binding for all purposes.
(3) Dividends. The Board of Directors may from time to time declare
and pay dividends or distributions, in stock, property or cash,
on any or all series of stock or classes of series, the amount of
such dividends and property distributions and the payment of them
being wholly in the discretion of the Board of Directors.
Dividends may be declared daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to that
class. All dividends or distributions on shares of a particular
class shall be paid only out of surplus or other lawfully
available assets determined by the Board of Directors as
belonging to such class. Dividends and distributions may vary
between the classes of a series to reflect differing allocations
of the expense of each class of that series to such extent and
for such purposes as the Boards of Directors may deem
appropriate. The Board of Directors shall have the power, in its
sole discretion, to distribute in any fiscal year as dividends,
including dividends designated in whole or in part as capital
gains distributions, amounts sufficient, in the opinion of the
Board of Directors, to enable the Corporation, or where
applicable each series or class of a series of shares, to qualify
as a regulated investment company under the Internal Revenue Code
of 1986, as amended, or any successor or comparable statute
thereto, and regulations promulgated thereunder, and to avoid
liability for the Corporation, or each series of shares or class
of a series, for Federal income and excise taxes in respect of
that or any other year.
(4) Liquidation. In the event of the liquidation of the Corporation
or of the assets attributable to a particular series or class,
the shareholders of each series or class that has been
established and designated and is being liquidated shall be
entitled to receive, as a series or class, when and as declared
by the Board of Directors, the excess of the assets belonging to
that series or class over the liabilities belonging to that
series or class. The holders of shares of any series or class
shall not be entitled thereby to any distribution upon
liquidation of any other series or class. The assets so
distributable to the shareholder of any particular series or
class shall be distributed among such shareholders according to
their respective rights taking into account the proper allocation
of expenses being borne by that series or class. The liquidation
of assets attributable to any particular series or class in which
there are shares then outstanding may be authorized by vote of a
majority of the Board of Directors then in office, subject to the
approval of a majority of the outstanding voting securities of
that series or class, as defined in the Investment Company Act of
1940, as amended. In the event that there are any general assets
not belonging to any particular series or class of stock and
available for distribution, such distribution shall be made to
holders of stock of various series or classes in such proportion
as the Board of Directors determines to be fair and equitable,
and such determination by the Board of Directors shall be
conclusive and binding for all purposes.
(5) Redemption. All shares of stock of the Corporation shall have the
redemption rights provided for in Article V, Section 5.
(d) The Corporation's shares of stock are issued and sold, and all persons
who shall acquire stock of the Corporation shall do so, subject to the
condition and understanding that the provisions of the Corporation's
Articles of Incorporation, as from time to time amended, shall be
binding upon them.
Section 2. Quorum Requirements and Voting Rights: Except as otherwise
expressly provided by the Maryland General Corporation Law, the presence in
person or by proxy of the holders of one-third of the shares of capital stock of
the Corporation outstanding and entitled to vote thereat shall constitute a
quorum at any meeting of the stockholders, except that where the holders of any
series or class are required or permitted to vote as a series or class,
one-third of the aggregate number of shares of that series or class outstanding
and entitled to vote shall constitute a quorum.
Notwithstanding any provision of Maryland General Corporation Law requiring
a greater proportion than a majority of the votes of all series or classes or of
any series or class of the Corporation's stock entitled to be cast in order to
take or authorize any action, any such action may be taken or authorized upon
the concurrence of a majority of the aggregate number of votes entitled to be
cast thereon subject to the applicable laws and regulations as from time to time
in effect or rules or orders of the Securities and Exchange Commission or any
successor thereto. All shares of stock of this Corporation shall have the voting
rights provided for in Article V, Section 1, paragraph (b).
Section 3. No Preemptive Rights: No holder of shares of capital stock of
the Corporation shall, as such holder, have any right to purchase or subscribe
for any shares of the capital stock of the Corporation which the Corporation may
issue or sell (whether consisting of shares of capital stock authorized by these
Articles of Incorporation, or shares of capital stock of the Corporation
acquired by it after the issue thereof, or other shares) other than any right
which the Board of Directors of the Corporation, in its discretion, may
determine.
Section 4. Determination of Net Asset Value: The net asset value of each
share of each series or class of each series of the Corporation shall be the
quotient obtained by dividing the value of the net assets of the Corporation, or
if applicable of the series or class (being the value of the assets of the
Corporation or of the particular series or class or attributable to the
particular series or class less its actual and accrued liabilities exclusive of
capital stock and surplus), by the total number of outstanding shares of the
Corporation or the series or class, as applicable. Such determination may be
made on a series-by-series basis or made or adjusted on a class-by-class basis,
as appropriate, and shall include any expenses allocated to a specific series or
class thereof. The Board of Directors may adopt procedures for determination of
net asset value consistent with the requirements of applicable statutes and
regulations and, so far as accounting matters are concerned, with generally
accepted accounting principles. The procedures may include, without limitation,
procedures for valuation of the Corporation's portfolio securities and other
assets, for accrual of expenses or creation of reserves and for the
determination of the number of shares issued and outstanding at any given time.
Section 5. Redemption and Repurchase of Shares of Capital Stock: Any
shareholder may redeem shares of the Corporation for the net asset value of each
series or class thereof by presentation of an appropriate request, together with
the certificates, if any, for such shares, duly endorsed, at the office or
agency designated by the Corporation. Redemptions as aforesaid, or purchases by
the Corporation of its own stock, shall be made in the manner and subject to the
conditions contained in the bylaws or approved by the Board of Directors.
Section 6. Purchase of Shares: The Corporation shall be entitled to
purchase shares of any series or class of its capital stock, to the extent that
the Corporation may lawfully effect such purchase under Maryland General
Corporation Law, upon such terms and conditions and for such consideration as
the Board of Directors shall deem advisable, by agreement with the stockholder
at a price not exceeding the net asset value per share computed in accordance
with Section 4 of this Article.
Section 7. Redemption of Minimum Amounts:
(a) If after giving effect to a request for redemption by a
stockholder, the aggregate net asset value of his remaining shares of any
series or class will be less than the Minimum Amount then in effect, the
Corporation shall be entitled to require the redemption of the remaining
shares of such series or class owned by such stockholder, upon notice given
in accordance with paragraph (c) of this Section, to the extent that the
Corporation may lawfully effect such redemption under Maryland General
Corporation Law.
(b) The term "Minimum Amount" when used herein shall mean Three Hundred
Dollars ($300) unless otherwise fixed by the Board of Directors from time
to time, provided that the Minimum Amount may not in any event exceed Five
Thousand Dollars ($5,000).
(c) If any redemption under paragraph (a) of this Section is upon
notice, the notice shall be in writing personally delivered or deposited in
the mail, at least thirty days prior to such redemption. If mailed, the
notice shall be addressed to the stockholder at his post office address as
shown on the books of the Corporation, and sent by certified or registered
mail, postage prepaid. The price for shares redeemed by the Corporation
pursuant to paragraph (a) of this Section shall be paid in cash in an
amount equal to the net asset value of such shares, computed in accordance
with Section 4 of this Article.
Section 8. Mode of Payment: Payment by the Corporation for shares of any
series or class of the capital stock of the Corporation surrendered to it for
redemption shall be made by the Corporation within three business days of such
surrender out of the funds legally available therefor, provided that the
Corporation may suspend the right of the holders of capital stock of the
Corporation to redeem shares of capital stock and may postpone the right of such
holders to receive payment for any shares when permitted or required to do so by
law. Payment of the redemption or purchase price may be made in cash or, at the
option of the Corporation, wholly or partly in such portfolio securities of the
Corporation as the Corporation may select.
Section 9. Rights of Holders of Shares Purchased or Redeemed: The right of
any holder of any series or class of capital stock of the Corporation purchased
or redeemed by the Corporation as provided in this Article to receive dividends
thereon and all other rights of such holder with respect to such shares shall
terminate at the time as of which the purchase or redemption price of such
shares is determined, except the right of such holder to receive (i) the
purchase or redemption price of such shares from the Corporation or its
designated agent and (ii) any dividend or distribution or voting rights to which
such holder has previously become entitled as the record holder of such shares
on the record date for the determination of the stockholders entitled to receive
such dividend or distribution or to vote at the meeting of stockholders.
Section 10. Status of Shares Purchased or Redeemed: In the absence of any
specification as to the purpose for which such shares of any series or class of
capital stock of the Corporation are redeemed or purchased by it, all shares so
redeemed or purchased shall be deemed to be retired in the sense contemplated by
the laws of the State of Maryland and may be reissued. The number of authorized
shares of capital stock of the Corporation shall not be reduced by the number of
any shares redeemed or purchased by it.
Section 11. Additional Limitations and Powers: The following provisions are
inserted for the purpose of defining, limiting and regulating the powers of the
Corporation and of the Board of Directors and stockholders:
(a) Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principales by or pursuant to the direction of the Board of Directors, as
to the amount of the assets, debts, obligations or liabilities of the
Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purpose for creating such reserves
or charges, as to the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or
discharged), as to the establishment or designation of procedures or
methods to be employed for valuing any investment or other assets of
the Corporation and as to the value of any investment or other asset,
as to the allocation of any asset of the Corporation to a particular
series or class or classes of the Corporation's stock, as to the funds
available for the declaration of dividends and as to the declaration of
dividends, as to the charging of any liability of the Corporation to a
particular series or class or classes of the Corporation's stock, as to
the number of shares of any series or class or classes of the
Corporation's outstanding stock, as to the estimated expense to the
Corporation in connection with purchases or redemptions of its shares, as
to the ability to liquidate investments in orderly fashion, or as to any
other matters relating to the issue, sale, purchase or redemption or other
acquisition or disposition of investments or shares of the Corporation, or
in the determination of the net asset value per share of shares of any
series or class of the Corporation's stock shall be conclusive and binding
for all purposes.
(b) Except to the extent prohibited by the Investment Company Act of
1940, as amended, or rules, regulations or orders thereunder promulgated by
the Securities and Exchange Commission or any successor thereto or by the
bylaws of the Corporation, a director, officer or employee of the
Corporation shall not be disqualified by his position from dealing or
contracting with the Corporation, nor shall any transaction or contract of
the Corporation be void or voidable by reason of the fact that any
director, officer or employee or any firm of which any director, officer or
employee is a member, or any corporation of which any director, officer or
employee is a stockholder, officer or director, is in any way interested in
such transaction or contract; provided that in case a director, or a firm
or corporation of which a director is a member, stockholder, officer or
director is so interested, such fact shall be disclosed to or shall have
been known by the Board of Directors or a majority thereof. Nor shall any
director or officer of the Corporation be liable to the Corporation or to
any stockholder or creditor thereof or to any person for any loss incurred
by it or him or for any profit realized by such director or officer under
or by reason of such contract or transaction; provided that nothing herein
shall protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office; and provided always that such contract or transaction shall
have been on terms that were not unfair to the Corporation at the time at
which it was entered into. Any director of the Corporation who is so
interested, or who is a member, stockholder, officer or director of such
firm or corporation, may be counted in determining the existence of a
quorum at any meeting of the Board of Directors of the Corporation which
shall authorize any such transaction or contract, with like force and
effect as if he were not such director, or member, stockholder, officer or
director of such firm or corporation.
(c) Specifically and without limitation of the foregoing paragraph (b)
but subject to the exception therein prescribed, the Corporation may enter
into management or advisory, underwriting, distribution and administration
contracts, custodian contracts and such other contracts as may be
appropriate.
ARTICLE VI
Directors
Section 1. Initial Board of Directors: The number of directors of the
Corporation shall initially be nine. The names of the directors who shall hold
office until the first annual meeting of stockholders or until their successors
are duly chosen and qualified are:
James D. Davis Roy W. Ehrle Pamela A. Ferguson
Richard W. Gilbert J. Barry Griswell Stephan L. Jones
Ronald E. Keller Barbara A. Lukavsky Richard G. Peebler
Section 2. Number of Directors: The number of directors in office may be
changed from time to time in the manner specified in the bylaws of the
Corporation, but this number shall never be less than three.
Section 3. Certain Powers of Board of Directors: The business and affairs
of the Corporation shall be managed under the direction of the Board of
Directors, which shall have and may exercise all powers of the Corporation
except those powers which are by law, by these Articles of Incorporation or by
the bylaws of the Corporation conferred upon or reserved to the stockholders. In
addition to its other powers explicitly or implicitly granted under these
Articles of Incorporation, by law or otherwise, the Board of Directors of the
Corporation (a) is expressly authorized to make, alter, amend or repeal bylaws
for the Corporation, (b) is empowered to authorize, without stockholder
approval, the issuance and sale from time to time of shares of capital stock of
the Corporation, whether now or hereafter authorized, in such amounts, for such
amount and kind of consideration and on such terms and conditions as the Board
of Directors shall determine, (c) is empowered to classify or reclassify any
unissued stock, whether now or hereafter authorized, by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of such stock, and (d) shall have the power from time to time to set
apart, out of any assets of the Corporation otherwise available for dividends, a
reserve or reserves for taxes or for any other proper purposes, and to reduce,
abolish or add to any such reserve or reserves from time to time as said Board
of Directors may deem to be in the best interests of the Corporation; and to
determine in its discretion what part of the assets of the Corporation available
for dividends in excess of such reserve or reserves shall be declared in
dividends and paid to the stockholders of the Corporation.
ARTICLE VII
Indemnification
The Corporation shall indemnify its directors, including any director who
serves another corporation, partnership, joint venture, trust or other
enterprise in any capacity at the request of the Corporation, to the maximum
extent permitted by the Maryland General Corporation Law and the Investment
Company Act of 1940. The Corporation shall indemnify its officers to the same
extent as its directors and to such further extent as is consistent with law.
The Corporation shall indemnify its employees and agents to the extent provided
by its Board of Directors.
ARTICLE VIII
Amendments
The Corporation reserves the right from time to time to make any amendment
of these Articles of Incorporation now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in these
Articles of Incorporation, of any outstanding capital stock. "Articles of
Incorporation" or "these Articles of Incorporation" as used herein and in the
bylaws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended or restated.
ARTICLE IX
Duration
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, the undersigned incorporators of Principal
International Emerging Markets Fund, Inc. have executed the foregoing Articles
of Incorporation and hereby acknowledge the same to be their voluntary act and
deed.
Dated the 23rd day of May, 1997
/s/ Arthur S. Filean
-----------------------------------
Arthur S. Filean
/s/ Ernest H. Gillum
-----------------------------------
Ernest H. Gillum
MANAGEMENT AGREEMENT
AGREEMENT to be effective July 1, 1997, by and between PRINCIPAL
INTERNATIONAL EMERGING 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 the Fund, 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 Fund:
(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 the Fund's
portfolio consistent with the Fund's investment objective and policies;
(d) Implement such of its recommended investment program 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, 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 investment business of the Fund; and
(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 investment policies of the Fund are being observed.
2. CORPORATE ADMINISTRATIVE SERVICES
In addition to the investment advisory services set forth in Section 1, the
Manager will perform the following corporate 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 of the Fund (i.e.,
functions other than (i) underwriting and distribution of Fund shares;
(ii) custody of Fund assets, and (iii) transfer and paying agency
services); and
(c) Furnish the services of the supervisory and clerical personnel
necessary to perform the general corporate functions of the Fund.
(d) Determine the net asset value of the shares of the Fund's Capital Stock
as frequently as the Fund shall request, or as shall be required by
applicable law or regulations.
3. RESERVED RIGHT TO DELEGATE DUTIES AND SERVICES TO OTHERS
The Manager in assuming responsibility for the various services as set
forth in this Agreement reserves the right to enter into agreements with others
for the performance of certain duties and services or to delegate the
performance of some or all of such duties and services to Principal Mutual Life
Insurance Company, or an affiliate thereof.
4. EXPENSES BORNE BY THE MANAGER
The Manager will pay:
(a) The compensation and expenses of all officers and executive employees
of the Fund;
(b) The compensation and expenses of all directors of the Fund who are
persons affiliated with the Manager; and
(c) The expenses of the organization of the Fund, including its
registration under the Investment Company Act of 1940, and the initial
registration and qualification of its Capital Stock for sale under the
Securities Act of 1933 and the Blue Sky laws of the states in which it
initially qualifies.
5. COMPENSATION OF THE MANAGER BY FUND
For all services to be rendered and payments made as provided in Sections
1, 2 and 4 hereof, 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 placed on the net assets of the Fund as of the time of determination of
the net asset value on each trading day throughout the month in accordance with
the following schedule.
Average Daily Net Fee as a Percentage of
Assets of the Fund Average Daily Net Assets
--------------------------- ------------------------
First $100,000,000 1.25%
Next 100,000,000 1.20%
Next 100,000,000 1.15%
Next 100,000,000 1.10%
Amount Over 400,000,000 1.05%
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, then for the purposes of this
Section 5 the value of the net assets of the Fund as last determined shall be
deemed to be the value of the net assets 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.
6. SERVICES FURNISHED BY THE MANAGER
The Manager (in addition to the services to be performed by it pursuant to
Sections 1 and 2 hereof) will:
(a) Act as, and provide all services customarily performed by, the
transfer and paying agent of the Fund including, without limitation,
the following:
(i) preparation and distribution to shareholders of 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; and
(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.
(b) Use its best efforts to qualify the Capital Stock of the Fund for sale
in states and jurisdictions other than those in which initially
qualified, as directed by the Fund; and
(c) Prepare stock certificates, and distribute the same as requested by
shareholders of the Fund.
The Manager will maintain records in reasonable detail of the charges for
performance of the services set forth in this Section 6 and at the end of each
calendar month the Fund will compensate the Manager for such charges.
7. EXPENSES BORNE BY FUND
(a) The Fund will pay, without reimbursement by the Manager, the
following expenses:
(i) Taxes, including in case of redeemed shares any initial
transfer taxes, and governmental fees (except with respect
to the Fund's organization and the initial qualification and
registration of its Capital Stock);
(ii) Portfolio brokerage fees and incidental brokerage expenses;
and
(iii) Interest.
(b) The Fund will pay, without reimbursement by the Manager except
under the circumstances set forth in Section 8, the following
expenses:
(i) The fees of its independent auditor and its legal counsel,
incurred subsequent to the Fund's organization and the
initial qualification and registration of its Capital Stock;
(ii) The fees and expenses of the Custodian of its assets;
(iii) The fees and expenses of all directors of the Fund who are
not persons affiliated with the Manager; and
(iv) The cost of meetings of shareholders.
8. REIMBURSEMENT OF CERTAIN FUND EXPENSES
If in any fiscal year of the Fund the normal operating expenses of the Fund
chargeable to its income account shall exceed the lowest applicable percentage
of average net assets or income limitations prescribed by any state in which
Fund shares are qualified for sale, the Manager will pay the Fund, as promptly
as practical after the end of such year, an amount equal to such excess. For
purposes of this Section 8, "normal operating expenses" shall include the
Section 5 investment advisory fee, the Section 6 monthly compensation, and the
expenses enumerated in subsection 7(b), but shall not include the expenses
enumerated in subsection 7(a).
9. AVOIDANCE OF INCONSISTENT POSITION
In connection with purchases or sales of portfolio securities for the
account of the Fund, neither the Manager nor any of the Manager's directors,
officers or employees will act as a principal or agent or receive any
commission.
10. 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 Manager's part in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement.
11. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall remain in force until the first meeting of the
shareholders of the Fund and if it is approved by a vote of 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 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, 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, or by the Manager.
This Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 10, 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.
12. 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, and no amendment of this Agreement shall be effective until approved by
vote of the holders of a majority of the Fund's outstanding voting securities
and by vote of a majority of the directors 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.
13. 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, Des Moines,
Iowa 50392.
14. 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 INTERNATIONAL EMERGING
MARKETS FUND, INC.
/s/ Arthur S. Filean
By _____________________________________
Arthur S. Filean, Vice President
PRINCOR MANAGEMENT CORPORATION
/s/ Stephan L. Jones
By _____________________________________
Stephan L. Jones, President
PRINCIPAL INTERNATIONAL EMERGING MARKETS FUND, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT executed as of July 1, 1997, by and between PRINCOR MANAGEMENT
CORPORATION, an Iowa Corporation (hereinafter called "the Manager") and INVISTA
CAPITAL MANAGEMENT, INC. (hereinafter called "Invista").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment adviser to Principal
International Emerging Markets 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 Invista 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 Invista desires to furnish such services; and
WHEREAS, The Manager has furnished Invista 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 Invista
In accordance with and subject to the Management Agreement, the Manager
hereby appoints Invista 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. Invista accepts
such appointment and agrees to furnish the services hereinafter set forth for
the compensation herein provided. Invista 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 Invista
(a) Invista 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) Invista 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. Invista will conform with all applicable rules and
regulations of the Securities and Exchange Commission.
3. Compensation
As full compensation for all services rendered and obligations assumed by
Invista hereunder with respect to the Fund, the Manager shall pay Invista within
10 days after the end of each calendar month, or as otherwise agreed, an amount
representing Invista's actual cost of providing such services and assuming such
obligations.
4. 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 Mutual Life Insurance
Company, Invista 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 Mutual Life Insurance Company,
Invista 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, Invista 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.
5. 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, Invista, Principal Mutual Life Insurance Company or the Fund cast in
person at a meeting called for the purpose of voting on such approval.
6. 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 Invista and of the Manager
for this purpose shall be The Principal Financial Group, Des Moines, Iowa
50392-0200.
(c) Invista agrees to notify the Manager of any change in Invista'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.
PRINCOR MANAGEMENT CORPORATION
/s/ Stephan L. Jones
By __________________________________________
Stephan L. Jones, President
INVISTA CAPITAL MANAGEMENT, INC.
/s/ C. R. Barnes
By __________________________________________
C. R. Barnes, President
