<PAGE> PAGE 1
000 A000000 04/30/95
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001 A000000 PRINCOR BALANCED FUND, INC.
001 B000000 811-5072
001 C000000 5152475476
002 A000000 PRINCIPAL FINANCIAL GROUP
002 B000000 DES MOINES
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002 D010000 50392
002 D020000 0200
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020 A000001 LIPPER ANALYTICAL
020 B000001 13-2792478
020 C000001 4
020 A000002 DAIN BOSWORTH
020 B000002 41-1414269
020 C000002 4
020 A000003 SALOMON BROTHERS
020 B000003 13-3082694
020 C000003 2
020 A000004 KEMPER SECURITIES
020 B000004 36-3223831
020 C000004 1
020 A000005 PAINEWEBBER, INC.
020 B000005 13-2638166
020 C000005 1
020 A000006 SMITH BARNEY SHEARSON
020 B000006 13-2869611
020 C000006 1
020 A000007 EXECUTION SERVICES, INC.
020 B000007 13-2862329
020 C000007 1
020 A000008 BEAR STEARNS & CO.
020 B000008 13-3299429
020 C000008 1
<PAGE> PAGE 2
020 A000009 INSTINET CO.
020 B000009 13-2596491
020 C000009 1
020 A000010 PRINCIPAL FINANCIAL SECURITIES
020 B000010 75-0839696
020 C000010 1
021 000000 21
022 A000001 FORD MOTOR CREDIT CO.
022 B000001 38-1612444
022 C000001 26226
022 D000001 0
022 A000002 GENERAL ELECTRIC CAPITAL CORP.
022 B000002 13-1500700
022 C000002 20880
022 D000002 0
022 A000003 AMERICAN EXPRESS CREDIT CORP.
022 B000003 11-1988350
022 C000003 17627
022 D000003 0
022 A000004 CHEVRON OIL FINANCE CO.
022 B000004 25-1215010
022 C000004 17210
022 D000004 0
022 A000005 HOUSEHOLD FINANCE CORP.
022 B000005 36-1239445
022 C000005 14096
022 D000005 0
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022 B000006 35-0416090
022 C000006 9410
022 D000006 0
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022 B000007 42-1192999
022 C000007 7273
022 D000007 0
022 A000008 ASSOCIATES CORPORATION OF NORTH AMERICA
022 B000008 74-1494554
022 C000008 7263
022 D000008 0
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022 B000009 22-2231168
022 C000009 6973
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022 B000010 51-0003820
022 C000010 6777
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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SIGNATURE A.S. FILEAN
TITLE V.P. & SECRETARY
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
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<INVESTMENTS-AT-VALUE> 54,904,009
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<OTHER-ITEMS-LIABILITIES> 81,318
<TOTAL-LIABILITIES> 614,039
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,022,575
<SHARES-COMMON-STOCK> 4,279,516
<SHARES-COMMON-PRIOR> 4,294,081
<ACCUMULATED-NII-CURRENT> 184,627
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</TABLE>
SPECIAL MEETING OF CLASS B SHAREHOLDER
OF
PRINCOR BALANCED FUND, INC.
801 Grand Avenue, Des Moines, Iowa December 8, 1994 9:00 a.m.
A special meeting of the Class B shareholder of Princor Balanced Fund, Inc.
was held at 801 Grand Avenue, Des Moines, Iowa at 9:00 a.m. on December 6, 1994.
The meeting was called to order by Mr. S. L. Jones, who presided as
chairman of the meeting. Mr. E. H. Gillum acted as secretary of the meeting.
Also present was Michael Roughton.
The Secretary reported that the only shareholder of Class B Common Stock of
Princor Balanced Fund, Inc. was Princor Management Corporation, that all such
shares were represented by Michael Roughton, counsel for Princor Management
Corporation, and that a quorum was present.
The Chairman then stated it was necessary to consider ratification and
approval of the Distribution and Shareholder Servicing 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, 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."
There being no further business, the meeting was adjourned.
E.H. Gillum
---------------------------------
Assistant Secretary
1. Change of mutual funds' investments in restricted and illiquid securities
from 10% to 15% of a fund's assets.
2. Change of the non-fundamental restriction relating to the limits on the
amount of foreign securities that may be held from 10% to 20%.
3. In recognition of the fact that from time to time an investment advisor may
find it appropriate, as a part of the strategy for achieving the investment
objective of the fund, to recommend the purchase of commercial paper issued
in reliance on the exemption from registration in Section 4(2) of the
Securities Act of 1933 ("4(2) paper").
<TABLE>
CLASS A SHARES
TABLE A
Shareholder Transaction Expenses
Maximum Sales Load Imposed
on Purchases
Fund (as a percentage of offering price) Redemption Fee
<S> <C> <C>
All Funds Except the Money
Market Funds 4.75% None*
Money Market Funds None None*
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management 12b-1 Other Total Operating
Fund Fee Fee Expenses
<S> <C> <C> <C> <C>
Balanced Fund .60% .25% .66% 1.51%
Blue Chip Fund .50 .25 .71 1.46
Bond Fund .36** .25 .34 .95**
Capital Accumulation Fund .46 .12 .25 .83
Cash Management Fund .25** None .45 .70**
Emerging Growth Fund .65 .25 .84 1.74
Government Securities Income Fund .46 .20 .29 .95
Growth Fund .50 .25 .55 1.30
High Yield Fund .60 .25 .61 1.46
Tax-Exempt Bond Fund .48 .22 .21 .91
Tax-Exempt Cash Management Fund .31** None .36 .67**
Utilities Fund .10** .25 .65 1.00**
World Fund .75 .25 .74 1.74
<FN>
* A wire charge of up to $6.00 will be deducted for all wire transfers.
**After waiver.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
TABLE B Shareholder Transaction Expenses*
Contingent Deferred Sales Charge
Maximum Sales Load (as a percentage of the lower of
Imposed on Purchases the original purchase price
Fund (as a percentage of offering price) or redemption proceeds)
<S> <C> <C>
All Funds None 4.0% in the first two years,
declining to 1% in the sixth
year and eliminated thereafter
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management 12b-1 Other Total Operating
Fund Fee Fee*** Expenses*** Expenses***
<S> <C> <C> <C> <C>
Balanced Fund .60% 1.00% .66% 2.26%
Blue Chip Fund .50 1.00 .71 2.21
Bond Fund .36** 1.00 .34 1.70**
Capital Accumulation Fund .46 1.00 .25 1.71
Cash Management Fund .25** 1.00 .45 1.70**
Emerging Growth Fund .65 1.00 .84 2.49
Government Securities Income Fund .46 1.00 .29 1.75
Growth Fund .50 1.00 .55 2.05
High Yield Fund .60 1.00 .61 2.21
Tax-Exempt Bond Fund .48 1.00 .21 1.69
Tax-Exempt Cash Management Fund .31** 1.00 .36 1.67**
Utilities Fund .10** 1.00 .65 1.75**
World Fund .75 1.00 .74 2.49
<FN>
* A wire charge of up to $6.00 will be deducted for all wire transfers.
** After waiver.
***Estimated expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Example A
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of
each time period: 1 Year 3 Years 5 Years 10 Years (a)
Class A Class B Class A Class B Class A Class B Class A Class B
Fund Shares Shares Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund $62 $64 $93 $103 $126 $144 $219 $231
Blue Chip Fund $62 $64 $91 $102 $123 $141 $214 $226
Bond Fund $57 $59 $76 $87 $98 $116 $159 $171
Capital Accumulation Fund $56 $59 $73 $87 $91 $116 $145 $167
Cash Management Fund $7 $59 $22 $87 $39 $116 $87 $161
Emerging Growth Fund $64 $66 $100 $110 $137 $155 $243 $255
Government Securities Income Fund $57 $59 $76 $88 $98 $118 $159 $175
Growth Fund $60 $62 $87 $97 $115 $133 $197 $209
High Yield Fund $62 $64 $91 $102 $123 $141 $214 $226
Tax-Exempt Bond Fund $56 $59 $75 $86 $95 $115 $154 $169
Tax-Exempt Cash Management Fund $7 $58 $21 $86 $37 $114 $83 $158
Utilities Fund $57 $59 $78 $88 $100 $118 $164 $177
World Fund $64 $66 $100 $110 $137 $155 $243 $255
</TABLE>
<TABLE>
<CAPTION>
Example B
You would pay the following expenses on the same investment, assuming no redemption:
1 Year 3 Years 5 Years 10 Years (a)
Class A Class B Class A Class B Class A Class B Class A Class B
Fund Shares Shares Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund $62 $23 $93 $67 $126 $121 $219 $231
Blue Chip Fund $62 $22 $91 $69 $123 $118 $214 $226
Bond Fund $57 $17 $76 $54 $98 $92 $159 $171
Capital Accumulation Fund $56 $17 $73 $54 $91 $93 $145 $167
Cash Management Fund $7 $17 $22 $54 $39 $92 $87 $161
Emerging Growth Fund $64 $25 $100 $78 $137 $133 $243 $255
Government Securities Income Fund $57 $18 $76 $55 $98 $95 $159 $175
Growth Fund $60 $21 $87 $64 $115 $110 $197 $209
High Yield Fund $62 $22 $91 $69 $123 $118 $214 $226
Tax-Exempt Bond Fund $56 $17 $75 $53 $95 $92 $154 $169
Tax-Exempt Cash Management Fund $7 $17 $21 $53 $37 $91 $83 $158
Utilities Fund $57 $18 $78 $55 $100 $95 $164 $177
World Fund $64 $25 $100 $78 $137 $133 $243 $255
<FN>
(a) The amount in this column reflects the conversion of Class B shares to
Class A shares seven years after the initial purchase.
</FN>
</TABLE>
The purpose of the preceding tables is to help investors understand the
various expenses that they will bear either directly or indirectly. Although
Annual Fund Operating Expenses shown in the Expense Table for Class A shares are
generally based upon each Fund's actual expenses, the 12b-1 Plan adopted by each
of the Funds (except the Money Market Funds which have no such Plan for Class A
shares) permits the Underwriter to retain an annual fee of up to .25% of each
Fund's average net assets. A portion of this annual fee is considered an
asset-based sales charge. Thus, it is theoretically possible for a long-term
shareholder of Class A shares, whether acquired directly or by conversion of
Class B shares, to pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers. See "Distribution and Shareholder Servicing Plans and Fees", "How to
Purchase Shares" and "How the Funds are Managed."
Class A shares. An investor who purchases Class A shares of any of the
Princor Funds (except the Money Market Funds) pays a sales charge at the time of
purchase. The sales charge ranges from a high of 4.75% on purchases of up to
$50,000 to a low of 0% on purchases of $1 million or more. Certain purchases of
Class A shares qualify for reduced sales charges. See "How to Purchase Shares"
and "Offering Price of Funds' Shares." Class A shares for each of the Funds
(except the Money Market Funds) currently bear a 12b-1 fee at the annual rate of
up to 0.25% of the Fund's average net assets attributable to Class A shares. See
"Distribution and Shareholder Servicing Plans and Fees." All shares outstanding
as of the close of business on December 8, 1994 have been classified as Class A
shares.
Class A shares of the Money Market Funds are sold without a sales charge at
the net asset value next determined after receipt of an order. Net asset value
will usually remain constant at $1.00 per share; however, there can be no
assurance that the net asset value will not change.
Class B shares. Class B shares for each Fund are sold without an initial
sales charge, but are subject to a declining contingent deferred sales charge
which begins at 4% and declines to zero over a six-year schedule. Class B shares
of the Money Market Funds may be purchased only by exchange from other Class B
shares. Class B shares bear a higher 12b-1 fee than Class A shares, currently at
the annual rate of 1.00% of the Fund's average net assets attributable to Class
B shares. Class B shares will automatically convert into Class A shares, based
on relative net asset value, approximately seven years after purchase. Class B
shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made, but (until conversion) will have a
higher expense ratio and pay lower dividends than Class A shares due to the
higher 12b-1 fee. See "How to Purchase Shares and "Offering Price of Funds'
Shares." Class B shares were first offered on December 9, 1994.
"Article II
Name
The name of the corporation is Princor Balanced Fund, Inc. hereinafter
called the 'Corporation'."
SECOND: The Charter of the Corporation is hereby amended by striking out
Article V of the Articles of Incorporation and inserting in lieu thereof the
following:
ARTICLE V
Capital Stock
Section 1. Authorized Shares: The total number of shares of stock which
the Corporation shall have authority to issue is one hundred million
(100,000,000) shares, of the par value of one cent ($.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 classes
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 classes, and to classify or
reclassify any unissued shares in separate 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. Expenses related to the distribution of, and other
identified expenses that should properly be allocated to, the shares of a
particular class may be charged to and borne solely by such class, and
the bearing of expenses solely by a 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 class. Subject to the authority
of the Board of Directors to increase and decrease the number of, and to
reclassify the, shares of any class, there are hereby established two
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
In addition, the Board of Directors is hereby expressly granted authority
to change the designation of any class, to increase or decrease the
number of shares of any class, provided that the number of shares of any
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 classes that may be established and designated from time
to time. Notwithstanding the designations herein of 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 class of shares as a "series" .
<PAGE>
(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 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 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 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 classes then only the holders of shares of such
affected 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
class or classes, each class 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. Notwithstanding the foregoing, the assets belonging to
the Class A Shares and to the Class B Shares need not be
segregated or recorded separately on the books and records of the
Corporation, and reference herein to each of those classes shall
refer to the proportional interest of that class in the aggregate
assets belonging to both classes.
<PAGE>
(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. 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 classes of stock, 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. 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 class 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 class of shares, 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 class,
the shareholders of each class that has been established and
designated and is being liquidated shall be entitled to receive,
as a class, when and as declared by the Board of Directors, the
excess of the assets belonging to that class over the liabilities
belonging to that class. The holders of shares of any class shall
not be entitled thereby to any distribution upon liquidation of
any other class. The assets so distributable to the shareholder of
any particular class shall be distributed among such shareholders
according to their respective rights taking into account the
proper allocation of expenses being borne by that class. The
liquidation of assets attributable to any particular 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 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 class of stock and available for
distribution, such distribution shall be made to holders of stock
of various 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.
<PAGE>
(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 acquire the
same, 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 class are required
or permitted to vote as a class, one-third of the aggregate number of
shares of that 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
classes or of any 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 the Corporation, or of each class, shall be the
quotient obtained by dividing the value of the net assets of the
Corporation, or if applicable of the class (being the value of the
assets of the Corporation or of the particular 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 class, as
applicable. Such determination may be made on a class-by-class basis
and shall include any expenses allocated to a specific 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.
<PAGE>
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 class or series 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 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 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 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 class of the capital stock of the Corporation surrendered to it
for redemption shall be made by the Corporation within seven 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 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.
<PAGE>
Section 10. Status of Shares Purchased or Redeemed: In the absence
of any specification as to the purpose for which such shares of any
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 principles 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 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 class or classes of
the Corporation's stock, as to the number of shares of any 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 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 a 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 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.
<PAGE>
(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.
THIRD: The charter of the Corporation is hereby amended by striking out
Article VI, Section 3 of the Articles of Incorporation and inserting in lieu
thereof the following:
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 by-laws 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 1
Name, Fiscal Year
1.01 The name of this Corporation shall be Princor Balanced Fund, 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
2.06 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.
MEMORANDUM
March 14, 1994
FROM Art Filean
RE Proposed Changes to Non-Fundamental Investment Policies and Restrictions
A mutual fund has two types of investment policies and restrictions, (1) those
that are deemed fundamental and which can only be changed by a vote of
shareholders, and (2) those deemed non-fundamental, which can be changed by
action of the directors. The upcoming shareholder meeting for selected funds
involves some changes to fundamental policies and restrictions, as has been
explained in another memorandum. We are also proposing two changes in the
non-fundamental area, as explained below.
Restricted and Illiquid Securities
Historically, the SEC has restricted mutual funds' investments in restricted and
illiquid securities to 10% of a fund's assets. The thinking behind this was to
assure, to the extent possible, adequate liquidity to meet shareholder
redemptions. Within the past year the SEC has relaxed this restriction to 15%.
The change was to facilitate capital raising activities by those smaller firms
who use restricted securities more frequently by opening up a wider window for
the use of these securities by a major category of institutional investor (i.e.,
mutual funds). The industry has experienced no problems with the 10% restriction
and none are anticipated at 15%.
We propose to change the restriction from 10% to 15% in those funds that have
this as a fundamental policy. An enabling resolution is found in the Resolutions
Section.
Limitations on Purchases of Foreign Securities
Another non-fundamental restriction on certain funds relates to limits on the
amount of foreign securities that may be held. Some of our funds are at 10% and
some at 20%. The difference relates more to when the funds were organized than
anything else. We propose to conform those funds at the 10% level to those at
the 20% level, more for the sake of internal consistency than anything else. An
enabling resolution is found in the Resolutions Section.
<PAGE>
MEMORANDUM
March 14, 1994
TO Mutual Fund Directors
FROM Art Filean
RE Liquidity Determinations for Commercial Paper that is
Restricted as to Resale
In the course of normal investment activities each of the Princor/Principal
Funds (except the funds restricted to purchasing only government securities)
may, for short-term cash management purposes, purchase commercial paper. The two
taxable money market funds are heavy users of commercial paper as a part of
their normal investment strategy. Although the commercial paper used by any fund
so far has not been restricted as to resale (i.e., fully marketable), recent
events in the commercial paper market have somewhat reduced the availability of
fully marketable commercial paper. This circumstance makes use of commercial
paper issued in reliance on an exemption from registration in Section 4(2)
("4(2) paper") of the Securities Act of 1933 (and as a result restricted as to
resale, thus not fully marketable and therefore illiquid by definition) more
attractive from the standpoint of a potential investment. This attractiveness is
based on its availability from a supply standpoint as an investment option,
because in the marketplace today the level of investment sophistication is such
that 4(2) paper is marketed and remarketed with relative ease and in significant
volume. However, a mutual fund generally may not invest more than a certain
percentage of its net assets (10-15%) in restricted or illiquid securities.
Most commercial paper is issued in reliance on the exemption in Section 3(a)(3)
of the Securities Act of 1933 ("3(a)(3)Paper"). Because 3(a)(3) paper may be
sold and resold to the public without 1933 Act registration, it is presumptively
liquid (i.e., fully marketable) and therefore not subject to a percentage
limitation as mentioned above. This is what we have been buying. Commercial
paper that does not meet the requirements of Section 3(a)(3) typically is issued
in reliance on Section 4(2), which exempts from registration "transactions by an
issuer not involving a public offering." Unlike 3(a)(3) paper, 4(2) paper is
considered a restricted security because it may be resold only if the offering
is registered under the 1933 Act or the sale is effected in a private
transaction exempt from registration under the 1933 Act. Therefore, 4(2) paper
generally is regarded as illiquid for purposes of the illiquidity limits.
However, the SEC has now taken the view that a fund's board of directors may
conditionally determine for purposes of liquidity requirements that an issue of
4(2) paper is liquid, and therefore not subject to the percentage limitations.
To make that determination the SEC has proposed certain factors that must be
considered (see attached memorandum). Also, the board may delegate to the fund's
investment advisor the responsibility for determining and monitoring the
liquidity of 4(2) paper in the fund's portfolio, provided the board retains
sufficient oversight.
In the case of the two taxable money market funds, because of a fundamental
investment restriction neither fund can purchase 4(2) paper at this time.
However, one of the agenda items for the upcoming shareholder
meetings for these funds is a proposal to remove that restriction. From an
investment standpoint there is no reason to continue that restriction in today's
market.
We propose that as a matter of operating policy the board take advantage of the
recently broadened opportunity to purchase 4(2) commercial paper, and to
delegate the appropriate liquidity determinations to the management company. An
implementing memorandum to accomplish this is attached, which can be put in
place by a resolution found in the resolution section, if the board feels it is
appropriate to move ahead.
<PAGE>
MEMORANDUM
March 14, 1994
RE Procedures for the Liquidity Determination of Commercial Paper issued in
Reliance on the Exemption from Registration in Section 4(2) of the
Securities Act of 1933
In recognition of the fact that from time to time an investment advisor may find
it appropriate, as a part of the strategy for achieving the investment objective
of a Princor/Principal fund, to recommend the purchase of commercial paper
issued in reliance on the exemption from registration in Section 4(2) of the
Securities Act of 1933 ("4(2) paper"), the following criteria are established:
1. a) The 4(2) paper may not be traded flat or be in default as to
principal or interest;
b) The 4(2) paper must be rated in one of the two highest rating
categories by at least two nationally recognized statistical rating
organizations ("NRSRO"), or if only one NRSRO rates the securities,
by that NRSRO; if the security is unrated, the board or its
delegate must determine that the security is of equivalent quality;
c) The trading market for the specific security must be considered,
taking into account all relevant factors;
d) The liquidity of any 4(2) paper purchased must be monitored as to
the previous criteria as long as it is held in the portfolio;
e) If a determination is made that an issue of 4(2) paper is no longer
liquid, the fund's portfolio must be reviewed to determine whether
the fund must take any action to insure that its portfolio complies
with the appropriate illiquidity limitation.
2. Princor Management Corporation, or any sub-advisor approved by the board,
is delegated the authority to make the appropriate determination for a
fund based on the factors in 1. above.
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
PRINCOR MANAGED FUND, INC.
Princor Managed Fund, Inc., a Maryland Corporation having its principal
office in this state in Baltimore, Maryland (hereinafter called the
Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The charter of the Corporation is hereby amended by striking out
Article II of the Articles of Incorporation and inserting in lieu thereof the
following:
"Article II
Name
The name of the corporation is Princor Balanced Fund, Inc. hereinafter
called the 'Corporation'."
SECOND: The Charter of the Corporation is hereby amended by striking out
Article V of the Articles of Incorporation and inserting in lieu thereof the
following:
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 classes
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 classes, and to classify or
reclassify any unissued shares in separate 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. Expenses related to the distribution of, and other
identified expenses that should properly be allocated to, the shares of a
particular class may be charged to and borne solely by such class, and
the bearing of expenses solely by a 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 class. Subject to the authority
of the Board of Directors to increase and decrease the number of, and to
reclassify the, shares of any class, there are hereby established two
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
<PAGE>
In addition, the Board of Directors is hereby expressly granted authority
to change the designation of any class, to increase or decrease the
number of shares of any class, provided that the number of shares of any
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 classes that may be established and designated from time
to time. Notwithstanding the designations herein of 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 class of shares 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 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 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 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 classes then only the holders of shares of such
affected 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
class or classes, each class 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. Notwithstanding the foregoing, the assets belonging to
the Class A Shares and to the Class B Shares need not be
segregated or recorded separately on the books and records of the
Corporation, and reference herein to each of those classes shall
refer to the proportional interest of that class in the aggregate
assets belonging to both classes.
<PAGE>
(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. 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 classes of stock, 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. 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 class 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 class of shares, 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 class,
the shareholders of each class that has been established and
designated and is being liquidated shall be entitled to receive,
as a class, when and as declared by the Board of Directors, the
excess of the assets belonging to that class over the liabilities
belonging to that class. The holders of shares of any class shall
not be entitled thereby to any distribution upon liquidation of
any other class. The assets so distributable to the shareholder of
any particular class shall be distributed among such shareholders
according to their respective rights taking into account the
proper allocation of expenses being borne by that class. The
liquidation of assets attributable to any particular 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 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 class of stock and available for
distribution, such distribution shall be made to holders of stock
of various 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.
<PAGE>
(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 acquire the
same, 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 class are required
or permitted to vote as a class, one-third of the aggregate number of
shares of that 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
classes or of any 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 the Corporation, or of each class, shall be the
quotient obtained by dividing the value of the net assets of the
Corporation, or if applicable of the class (being the value of the
assets of the Corporation or of the particular 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 class, as
applicable. Such determination may be made on a class-by-class basis
and shall include any expenses allocated to a specific 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.
<PAGE>
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 class or series 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 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 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 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 class of the capital stock of the Corporation surrendered to it
for redemption shall be made by the Corporation within seven 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.
<PAGE>
Section 9. Rights of Holders of Shares Purchased or Redeemed: The
right of any holder of any 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
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 principles 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 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 class or classes of
the Corporation's stock, as to the number of shares of any 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 class of the Corporation's stock shall be
conclusive and binding for all purposes.
<PAGE>
(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 a 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 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.
THIRD: The charter of the Corporation is hereby amended by striking out
Article VI, Section 3 of the Articles of Incorporation and inserting in lieu
thereof the following:
<PAGE>
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 by-laws 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.
FOURTH: The Corporation desires to restate its charter as amended so that,
as amended, said charter shall be restated as follows:
ARTICLE I
Incorporator
The undersigned Arthur S. Filean and Michael D. Roughton, 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 Princor Balanced Fund, Inc. hereinafter
called the "Corporation."
<PAGE>
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 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.
<PAGE>
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 classes 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 classes,
and to classify or reclassify any unissued shares in separate 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. Expenses related to the distribution of, and other identified
expenses that should properly be allocated to, the shares of a particular class
may be charged to and borne solely by such class, and the bearing of expenses
solely by a 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
class. Subject to the authority of the Board of Directors to increase and
decrease the number of, and to reclassify the, shares of any class, there are
hereby established two 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
In addition, the Board of Directors is hereby expressly granted authority to
change the designation of any class, to increase or decrease the number of
shares of any class, provided that the number of shares of any 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 classes that
may be established and designated from time to time. Notwithstanding the
designations herein of 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 class of shares 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 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
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 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 classes then only the holders of
shares of such affected class or classes shall be entitled to vote thereon.
<PAGE>
(c) Unless otherwise provided in the resolution of the Board of
Directors providing for the establishment and designation of any new class
or classes, each class 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. Notwithstanding the foregoing, the assets belonging
to the Class A Shares and to the Class B Shares need not be segregated
or recorded separately on the books and records of the Corporation, and
reference herein to each of those classes shall refer to the
proportional interest of that class in the aggregate assets belonging
to both classes.
(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. Each allocation of liabilities, expenses, costs, charges
and reserves by the Board of Directors shall be conclusive and binding
for all purposes.
<PAGE>
(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 classes of stock, 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.
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 class 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 class of shares, 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 class, the
shareholders of each class that has been established and designated and
is being liquidated shall be entitled to receive, as a class, when and
as declared by the Board of Directors, the excess of the assets
belonging to that class over the liabilities belonging to that class.
The holders of shares of any class shall not be entitled thereby to any
distribution upon liquidation of any other class. The assets so
distributable to the shareholder of any particular class shall be
distributed among such shareholders according to their respective
rights taking into account the proper allocation of expenses being
borne by that class. The liquidation of assets attributable to any
particular 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 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 class of stock and available for
distribution, such distribution shall be made to holders of stock of
various 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 acquire the same,
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
class are required or permitted to vote as a class, one-third of the
aggregate number of shares of that class outstanding and entitled to vote
shall constitute a quorum.
<PAGE>
Notwithstanding any provision of Maryland General Corporation Law requiring
a greater proportion than a majority of the votes of all classes or of any 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
shares of the Corporation, or of each class, shall be the quotient obtained by
dividing the value of the net assets of the Corporation, or if applicable of the
class (being the value of the assets of the Corporation or of the particular
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
class, as applicable. Such determination may be made on a class-by-class basis
and shall include any expenses allocated to a specific 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
class or series 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 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 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 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.
<PAGE>
(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
class of the capital stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven 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 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 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:
<PAGE>
(a) Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles 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 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 class or classes of the
Corporation's stock, as to the number of shares of any 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
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 a
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.
<PAGE>
ARTICLE VI
Directors
Section 1. 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 2. 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 by-laws 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.
<PAGE>
ARTICLE IX
Duration
The duration of the Corporation shall be perpetual.
FIFTH: The provisions set forth in the articles of restatement as
described in the fourth paragraph hereof are all the provisions of the charter
currently in effect, as amended.
SIXTH: The charter, as amended herein, is not otherwise amended by the
articles of restatement.
SEVENTH: The current post office address of principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202. The name of the resident agent of
the Corporation in the State of Maryland is The Corporation Trust Incorporation,
a Maryland corporation, and the post office address of the resident agent is 32
South Street, Baltimore, Maryland 21202.
EIGHTH: The Corporation has nine directors. The names of the directors
are as follows:
James D. Davis David K. Kauf
Roy W. Ehrle Ronald E. Keller
Pamela A. Ferguson Barbara A. Lukavsky
Richard W. Gilbert Richard G. Peebler
Stephan L. Jones
NINTH: The board of directors of the Corporation on March 14, 1994 duly and
unanimously adopted a resolution in which was set forth the foregoing amendment
to and restatement of the charter, declaring that the said amendment and
restatement as proposed was advisable and directing that it be submitted for
action thereon by the stockholders of the Corporation at the special meeting to
be held on June 1, 1994.
TENTH: Notice setting forth a summary of the changes to be effected by said
amendment and restatement of the charter and stating that a purpose of the
meeting of the stockholders would be to take action thereon, was given, as
required by law, to all stockholders entitled to vote thereon. The amendment and
restatement of the 0charter of the Corporation as hereinabove set forth was
approved by the stockholders of the Corporation at said meeting by affirmative
vote of a majority of all votes entitled to be cast thereon.
ELEVENTH: The amendment and restatement of the charter of the Corporation
as hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
<PAGE>
TWELFTH: The Articles of Amendment and Restatement shall become effective
on December 5, 1994.
IN WITNESS WHEREOF, Princor Managed Fund, Inc. has caused these presents to
be signed in its name and on its behalf by its Vice President and its Counsel on
November 28, 1994.
Princor Managed Fund, Inc.
A. S. Filean
By _______________________________________________
Arthur S. Filean, Vice President and Secretary
Michael D. Roughton
-------------------------------------------
Michael D. Roughton, Counsel
Attest
E. H. Gillum
- --------------------------------------------
Assistant Secretary
Ernest H. Gillum
The UNDERSIGNED, Vice President of Princor Managed Fund, Inc., who executed
on behalf of said corporation the foregoing Articles of Amendment and
Restatement, of which this certificate is made a part, hereby acknowledges, in
the name on behalf of said corporation, the foregoing Articles of Amendment and
Restatement to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
A. S. Filean
_______________________________________
Arthur S. Filean
Vice President and Secretary
Princor Managed Fund, Inc.
- 1 -
BYLAWS
OF
PRINCOR BALANCED FUND, INC.
ARTICLE 1
Name, Fiscal Year
1.01 The name of this Corporation shall be Princor Balanced Fund, 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 hairman of the board, the president or the Board of
Directors.
2.04 Notice of Shareholders' Meetings. Notice of each shareholders' 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
shareholder 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 shareholders 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
- 1 -
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 sixty 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 but 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 cannot amend
Article 5 to permit removal by said Board without cause of any director elected
by the stockholders.
MANAGEMENT AGREEMENT
AGREEMENT to be effective the 1st day of November 1994, by and between
PRINCOR BALANCED 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.
<PAGE>
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 3 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 .60%
Next 100,000,000 .55%
Next 100,000,000 .50%
Next 100,000,000 .45%
Amount Over 400,000,000 .40%
<PAGE>
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 4 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.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 AT COST 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 costs
(including a reasonable charge for administrative overhead) incurred by it in
the performance of the services set forth in this Section 5, and at the end of
each calendar month the Fund will reimburse the Manager for such costs.
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 7, the following expenses:
<PAGE>
(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 7, "normal operating expenses" shall include the
Section 4 investment advisory fee, the Section 5 monthly reimbursement, and the
expenses enumerated in subsection 6(b), but shall not include the expenses
enumerated in subsection 6(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 conclusion of the next
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.
<PAGE>
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.
PRINCOR BALANCED FUND, INC.
By _Arthur S. Filean____________________
Arthur S. Filean, Vice President
PRINCOR MANAGEMENT CORPORATION
By __Stephan L. Jones___________________
Stephan L. Jones, President
<PAGE>
PRINCOR BALANCED FUND, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT executed as of the 1st day of November, 1994, 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 Princor
Balanced 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 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.
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
By Stephan L. Jones, ______________________
Stephan L. Jones, President
INVISTA CAPITAL MANAGEMENT, INC.
By S. R. Kosmicke__________________________
S. R. Kosmicke, President
