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000 C000000 0000814508
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001 A000000 PRINCOR HIGH YIELD FUND, INC.
001 B000000 811-05174
001 C000000 5152475476
002 A000000 THE PRINCIPAL FINANCIAL GROUP
002 B000000 DES MOINES
002 C000000 IA
002 D010000 50392
002 D020000 0200
003 000000 N
004 000000 N
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015 A000001 BANK OF NEW YORK
015 B000001 C
015 C010001 NEW YORK
015 C020001 NY
015 C030001 10286
015 E010001 X
018 000000 Y
019 A000000 Y
019 B000000 27
019 C000000 PRINCORGRP
021 000000 0
022 A000001 GENERAL ELECTRIC CAPITAL CORP.
022 B000001 13-1500700
022 C000001 28604
022 D000001 0
022 A000002 ASSOCIATES CORPORATION OF NORTH AMERICA
022 B000002 74-1494554
022 C000002 7763
022 D000002 0
022 A000003 HOUSEHOLD FINANCE CORP.
022 B000003 36-1239445
022 C000003 3954
022 D000003 0
022 A000004 GENERAL ELECTRIC CO.
022 B000004 42-1192999
022 C000004 3199
022 D000004 0
022 A000005 FORD MOTOR CREDIT CO.
<PAGE> PAGE 2
022 B000005 38-1612444
022 C000005 3027
022 D000005 0
022 A000006 FIRST BOSTON CORP.
022 B000006 13-5659485
022 C000006 1692
022 D000006 769
022 A000007 DONALDSON, LUFKIN & JENRETTE
022 B000007 13-2741729
022 C000007 352
022 D000007 1223
022 A000008 BENEFICIAL CORP.
022 B000008 51-0003820
022 C000008 1199
022 D000008 0
022 A000009 B.T. SECURITIES CORP.
022 B000009 13-3311934
022 C000009 700
022 D000009 370
022 A000010 SALOMON BROTHERS
022 B000010 13-3082694
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SIGNATURE A.S. FILEAN
TITLE VICE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
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<INVESTMENTS-AT-VALUE> 25,462,963
<RECEIVABLES> 701,765
<ASSETS-OTHER> 2,661
<OTHER-ITEMS-ASSETS> 1,964
<TOTAL-ASSETS> 26,169,353
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,587
<TOTAL-LIABILITIES> 55,587
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,871,320
<SHARES-COMMON-STOCK> 3,082,837
<SHARES-COMMON-PRIOR> 2,903,300
<ACCUMULATED-NII-CURRENT> 221,562
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,881,850)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (97,266)
<NET-ASSETS> 26,113,766
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,244,936
<OTHER-INCOME> 0
<EXPENSES-NET> (174,778)
<NET-INVESTMENT-INCOME> 1,070,158
<REALIZED-GAINS-CURRENT> 121,151
<APPREC-INCREASE-CURRENT> (100,727)
<NET-CHANGE-FROM-OPS> 1,090,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,076,982)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 258,370
<NUMBER-OF-SHARES-REDEEMED> (151,066)
<SHARES-REINVESTED> 72,233
<NET-CHANGE-IN-ASSETS> 2,084,953
<ACCUMULATED-NII-PRIOR> 266,395
<ACCUMULATED-GAINS-PRIOR> (3,003,001)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 75,616
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 174,778
<AVERAGE-NET-ASSETS> 25,333,475
<PER-SHARE-NAV-BEGIN> 8.06
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> .01
<PER-SHARE-DIVIDEND> (.42)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.05
<EXPENSE-RATIO> 1.34
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<PERIOD-END> APR-30-1996
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,587
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<PAID-IN-CAPITAL-COMMON> 28,871,320
<SHARES-COMMON-STOCK> 159,648
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<APPREC-INCREASE-CURRENT> (100,727)
<NET-CHANGE-FROM-OPS> 1,090,582
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<DISTRIBUTIONS-OF-GAINS> 0
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<ACCUMULATED-GAINS-PRIOR> (3,003,001)
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<PER-SHARE-NAV-BEGIN> 8.21
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> (.18)
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</TABLE>
SPECIAL MEETING OF SHAREHOLDER
OF
PRINCOR HIGH YIELD FUND, INC.
801 Grand Avenue, Des Moines, Iowa February 28, 1996 9:00 a.m.
A special meeting of the shareholder of Princor High Yield Fund, Inc. was
held at 801 Grand
Avenue, Des Moines, Iowa at 9:00 a.m. on February 28, 1996.
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 R Common Stock of
Princor High Yield Fund 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 Service Plan and Agreement for
Class R shares in the form adopted by the Corporation's Board of Directors
pursuant to Rule 12b-1 of the Investment Company Act of 1940. A copy of such
agreement was presented at the meeting. Thereupon, the following resolution was
duly adopted by the vote of all the outstanding Class R shares of Common Stock
of the Corporation:
"BE IT RESOLVED, That the Distribution and Shareholder Servicing Plan
and Agreement for Class R Shares, which was adopted by the Board of
Directors, including a majority of the non- interested directors
thereof, be, and it hereby is, ratified and approved."
There being no further business, the meeting was adjourned.
E. H. GILLUM
___________________________________
Assistant Secretary
Class R shares are sold without a front-end sales charge or a contingent
deferred sales charge. Class R shares of each Fund are subject to a 12b-1 fee at
annual rate of .75% of the Fund's average net assets attributable to Class R
shares. Class R shares automatically convert into Class A shares, based on
relative net asset values (which means without a sales charge), approximately
four years after purchase. The tables on the next page depict the fees and
expenses applicable to the purchase and ownership of shares of each of the
Funds. Table A depicts Class R shares and is based on amounts incurred by the
Funds' Class A shares during the fiscal year ended October 31, 1995, and
assumptions regarding the level of expenses anticipated for Class R shares
during the current fiscal year. Table B depicts Class A shares and is based on
amounts incurred by the Funds during the fiscal year ended October 31, 1995,
except as otherwise indicated. While Table B depicts the maximum sales charge
applicable to shares sold to the public, no sales charge applies when Class R
shares convert to Class A shares. The table included as an Example indicates the
cumulative expenses an investor would pay on an initial $1,000 investment that
earns a 5% annual return, regardless of whether shares are redeemed. The
examples are based on each Fund's Annual Operating Expenses described in Tables
A and B. Please remember that the Examples should not be considered a
representation of future expenses and that actual expenses may be greater or
less than those shown.
<TABLE>
<CAPTION>
CLASS R SHARES
- ------------------------------------------------------------------------------------------------------------------------
TABLE A 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)
- ---- ----------------------------------- --------------------------------
All Funds None None
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% .75% .52% 1.87%
Blue Chip Fund .50 .75 .63 1.88
Bond Fund .50 .75 .20 1.45**
Capital Accumulation Fund .45 .75 .19 1.39
Cash Management Fund .38 .75 .34 1.47**
Emerging Growth Fund .64 .75 .58 1.97
Government Securities Income Fund .46 .75 .22 1.43
Growth Fund .48 .75 .46 1.69
High Yield Fund .60 .75 .60 1.95
Limited Term Bond Fund .50 .75 .15 1.40***
Utilities Fund .60 .75 .44 1.79
World Fund .74 .75 .64 2.13
<FN>
* A wire charge of up to $6.00 will be deducted for all wire transfers.
** After waiver.
*** Estimated expense after waiver.
****Estimated expenses
</FN>
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES
- ------------------------------------------------------------------------------------------------------------------------
TABLE B Shareholder Transaction Expenses*
-------------------------------------------------------------------------------
Maximum Sales Load Contingent
Imposed on Purchases Deferred
Fund (as a percentage of offering price) Sales Charge
- ---- ----------------------------------- ------------
All funds Except the Limited Term Bond Fund
and Cash Management Fund 4.75% None**
Limited Term Bond Fund 1.50% None**
Cash Management Fund None None
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% .25% .52% 1.37%
Blue Chip Fund .50 .25 .63 1.38
Bond Fund .50 .24 .20 .94***
Capital Accumulation Fund .45 .11 .19 .75
Cash Management Fund .38 None .34 .72***
Emerging Growth Fund .64 .25 .58 1.47
Government Securities Income Fund .46 .19 .22 .87
Growth Fund .48 .22 .46 1.16
High Yield Fund .60 .25 .60 1.45
Limited Term Bond Fund .50 .15 .25 .90****
Utilities Fund .60 .25 .45 1.30
World Fund .74 .25 .64 1.63
<FN>
* A wire charge of up to $6.00 will be deducted for all wire transfers.
** Purchases of $1 million or more are not subject to an initial sales charge but may be subject to a contingent deferred
sales charge of .75% (.25% for Limited Term Bond Fund) on redemptions that occur within 18 months of purchase. See
"Offering Price of Fund's Shares."
*** After waiver.
****Estimated expenses after waiver.
</FN>
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
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 (a) 10 Years (a)
----------------- ----------------- ----------------- -----------------
Class A Class R Class A Class R Class A Class R Class A Class R
Fund Shares Shares Shares Shares Shares Shares Shares Shares
----------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced Fund $61 $19 $89 $59 $119 $95 $204 $183
Blue Chip Fund $61 $19 $89 $59 $119 $96 $205 $184
Bond Fund $57 $15 $76 $46 $97 $73 $157 $135
Capital Accumulation Fund $55 $14 $70 $44 $87 $69 $136 $119
Cash Management Fund $7 $15 $23 $46 $40 $72 $89 $120
Emerging Growth Fund $62 $20 $92 $62 $124 $101 $215 $194
Government Securities Income Fund $56 $15 $74 $45 $93 $72 $150 $129
Growth Fund $59 $17 $83 $53 $108 $86 $182 $161
High Yield Fund $62 $20 $91 $61 $123 $100 $213 $192
Limited Term Bond Fund $23 $14 $40 $44 -- -- -- --
Utilities Fund $60 $16 $87 $49 $115 $81 $197 $166
World Fund $63 $22 $96 $67 $132 $109 $232 $211
<FN>
(a) The amount in this column reflects the conversion of Class R shares to Class A shares four 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 R 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."
The Manager waived a portion of its fee for the Bond and Cash Management
Funds throughout the fiscal year ended October 31, 1995. Without these waivers,
total operating expenses for Class A shares actually incurred by the Funds for
the fiscal year ended October 31, 1995 would have amounted to 1.02% and .78% of
each Fund's average net assets, respectively. The Manager intends to continue
its voluntary waiver and, if necessary, pay expenses normally payable by both of
these Funds through February 28, 1997 in an amount that will maintain a total
level of operating expenses which as a percent of average net assets
attributable to a class on an annualized basis during the period will not
exceed, for the Class A shares, .95% for the Bond Fund and .75% for the Cash
Management Fund, and for the Class R shares, 1.45% for the Bond Fund and 1.50%
for the Cash Management Fund. The Manager voluntarily waived a portion of its
fee for the Utilities Fund through February 29, 1996 in an amount that
maintained a total level of operating expenses which as a percent of average net
assets attributable to a class on an annualized basis during the period did not
exceed 1.10% for the Class A shares. See "How the Funds are Managed."
The Manager intends to voluntarily waive its fee and, if necessary, pay
expenses normally payable by the Limited Term Bond Fund through February 28,
1997 in such amounts that will maintain a total level of operating expenses
which as a percent of net assets attributable to a class on an annualized basis
will not exceed .90% for Class A shares and 1.40% for Class R shares. Without
this waiver, estimated annual total operating expenses incurred by each class of
shares would amount to approximately 1.10% for Class A shares and 1.60% for
Class R shares.
ARTICLES SUPPLEMENTARY
OF
PRINCOR HIGH YIELD FUND, INC.
Princor High Yield Fund, Inc., and Maryland Corporation having its principal
office on this state in Baltimore City, Maryland (hereinafter called the
Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
SECOND: The Board of Directors of the Corporation have classified
authorized but unissued stock of the Corporation under authority contained in
the charter of the Corporation.
THIRD: A description of the stock as set by the Board of Directors and as
provided in Article V of the corporate charter as supplemented by these Articles
Supplementary is as follows:
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 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
Class R 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 the 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 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
hereinafter referred to as "assets belonging to" that class. In the
event that there are any assets, income, earning, 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 a "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
distribution, 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 the holder of
stock of various classes in such proportion as 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 sole, 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
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
classes 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 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
redemptions 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 on 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 id 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 purchase 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 re 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 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 extend 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, of 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 by liable to the Corporation or to
any stockholder or creditor thereof or to any person for any loss incurred
by it or him or for any profit realized by such director or officer under
or by reason of such contract or transaction; provided that nothing herein
shall protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office; and provided always that such contract or transaction shall
have been on terms that were not unfair to the Corporation at the time at
which it was entered into. Any director of the Corporation who is so
interested, or who is a member, stockholder, officer or director of such
firm or corporation, may be counted in determining the existence of a
quorum at any meeting of the Board of Directors of the Corporation which
shall authorize any such transaction or contract, with like force and
effect as if he were not such director, or member, stockholder, officer or
director of such firm or corporation.
(c) Specifically and without limitation of the foregoing paragraph (b) but
subject to the exception therein prescribed, the Corporation may enter into
management or advisory, underwriting, distribution and administration
contracts, custodian contracts and such other contracts as may be
appropriate.
I, Arthur S. Filean, Vice President and Secretary, hereby acknowledge on
behalf of Princor High Yield Fund, Inc., that the foregoing Articles
Supplementary are the corporate act of said Corporation under the penalties of
perjury.
ARTHUR S. FILEAN
By _______________________________________
Arthur S. FIlean, Vice President and Secretary
Princor High Yield Fund, Inc.
ATTEST:
ERNEST H. GILLUM
By ________________________________________
Ernest H. Gillum
Assistant Secretary
