<DOCUMENT>
<TYPE>497
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<FILENAME>pif-sai07.txt
<DESCRIPTION>PIF SAI 10-01-07
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PRINCIPAL INVESTORS FUND, INC.
(THE "FUND")
STATEMENT OF ADDITIONAL INFORMATION
dated October 1, 2007
This Statement of Additional Information (SAI) is not a prospectus. It contains
information in addition to the information in the Fund's prospectuses. The
Fund's prospectuses, dated October 1 and May 29, 2007, which we may amend from
time to time, contain the basic information you should know before investing in
the Fund. You should read this SAI together with the Fund's prospectus.
The audited financial statements, schedules of investments and auditor's report
included in the Fund's Annual Report to Shareholders, for the fiscal year ended
October 31, 2006 are hereby incorporated by reference into and are legally a
part of this SAI. This SAI also incorporates information by reference from the
semiannual shareholder's report.
For a free copy of the current prospectus or annual report, call 1-800-222-5852
or write:
Principal Investors Fund, Inc.
Principal Financial Group
Des Moines, IA 50392-2080
The prospectuses for Classes A, B, and C shares, Class J shares, Select,
Preferred, Advisors Signature, Advisors Select, and Advisors Preferred share
classes may be viewed at www.Principal.com.
TABLE OF CONTENTS
Fund History............................................................3
Description of the Fund's Investments and Risks.........................6
Management..............................................................34
Control Persons and Principal Holders of Securities.....................41
Investment Advisory and Other Services..................................100
Multiple Class Structure................................................116
Brokerage Allocation and Other Practices................................120
Purchase and Redemption of Shares.......................................143
Pricing of Fund Shares..................................................143
Taxation of the Funds...................................................145
Portfolio Holdings Disclosure...........................................147
Proxy Voting Policies...................................................148
Financial Statements....................................................148
General Information.....................................................149
Disclosure Regarding Portfolio Managers.................................149
Appendix A - Description of Bond Ratings................................150
Appendix B - Proxy Voting Policies......................................153
Appendix C - Portfolio Manager Information..............................387
FUND HISTORY
The Principal Investors Fund ("the Registrant" or the "Fund") is a registered,
open-end management investment company, commonly called a mutual fund. The Fund
consists of multiple investment portfolios which are referred to as "Funds."
Each portfolio operates for many purposes as if it were an independent mutual
fund. Each portfolio has its own investment objective, strategy, and management
team. Each of the Funds is diversified except California Insured Intermediate
Municipal Fund, California Municipal Fund, Global Real Estate Securities Fund,
Preferred Securities Fund, Real Estate Securities, and Tax-Exempt Bond Fund I
which are non-diversified.
The Fund was organized as the Principal Special Markets Fund, Inc. on January
28, 1993 as a Maryland corporation. The Fund changed its name to Principal
Investors Fund, Inc. effective September 14, 2000.
The Articles of Incorporation have been amended from time to time. Some
amendments added or changed the names of Funds or added classes of shares. Those
amendments are as follows:
. September 14, 2000 to add the Bond & Mortgage Securities, Government
Securities, High Quality Intermediate Term Bond, High Quality Long Term Bond,
High Quality Short Term Bond, International I, International II, International
Emerging Markets, LargeCap Growth, LargeCap S&P 500 Index, LargeCap Value,
MidCap Blend, MidCap Growth, MidCap S&P 400 Index, MidCap Value, Money Market,
Real Estate, Partners LargeCap Blend, Partners LargeCap Blend I, Partners
LargeCap Growth I, Partners LargeCap Growth II, Partners LargeCap Value,
Partners MidCap Growth, Partners MidCap Value, Partners SmallCap Growth I,
Partners SmallCap Growth II, SmallCap Blend, SmallCap Growth, SmallCap S&P 600
Index and SmallCap Value Funds;
. December 13, 2000 to add the Principal LifeTime 2010, Principal LifeTime 2020,
Principal LifeTime 2030, Principal LifeTime 2040, Principal LifeTime 2050,
Principal LifeTime Strategic Income Funds (referred to herein as the
"Principal LifeTime" Funds), and Partners SmallCap Value Fund;
. March 14, 2001 to add the Capital Preservation Fund;
. April 17, 2002 to add the Preferred Securities Fund;
. September 26, 2002 to add the LargeCap Blend I, Partners LargeCap Growth,
Partners SmallCap Blend, and Partners SmallCap Value I Funds and to change the
name of the LargeCap Blend Fund to Partners LargeCap Blend Fund I;
. September 18, 2003 to add the Partners International, Partners MidCap Growth
I, and Partners MidCap Value I Funds;
. February 3, 2004 to change the name of the Real Estate Fund to Real Estate
Securities Fund;
. March 8, 2004 to add the Partners LargeCap Value Fund I, Partners SmallCap
Growth Fund III, and Partners SmallCap Value Fund II;
. June 21, 2004 to add the Advisors Signature Class, the High Yield Fund and the
Partners LargeCap Value Fund II;
. September 13, 2004 to add Inflation Protection Fund and Partners MidCap Growth
Fund II;
. December 16, 2004 to add the Equity Income, Partners Global Equity and
Tax-Exempt Bond Funds, change the name of International Fund I to Diversified
International, change the name of International II to International Growth,
and change the name of LargeCap Blend I to Disciplined LargeCap Blend;
. February 4, 2005 to add Class A and Class B shares to the Disciplined LargeCap
Blend; and
. May 23, 2005 to change the name of the Capital Preservation Fund to Ultra
Short Bond Fund;
. September 30, 2005 to change the name of the High Quality Short-Term Bond Fund
to Short-Term Bond Fund;
. September 30, 2005 to change the name of the Government Securities Fund to
Government & High Quality Bond Fund;
. September 20, 2006 to add the California Insured Intermediate Municipal Fund,
California Municipal Fund, Equity Income Fund I, High Yield Fund II, Income
Fund, MidCap Stock Fund, Mortgage Securities Fund, Short-Term Income Fund,
Strategic Asset Management Balanced Portfolio, Strategic Asset Management
Conservative Balanced Portfolio, Strategic Asset Management Conservative
Growth Portfolio, Strategic Asset Management Flexible Income Portfolio,
Strategic Asset Management Strategic Growth Portfolio, Tax-Exempt Bond Fund I,
and West Coast Equity Fund. The California Insured Intermediate Municipal
Fund, California Municipal Fund, Equity Income Fund I, High Yield Fund II,
Income Fund, MidCap Stock Fund, Mortgage Securities Fund, Short-Term Income
Fund, Strategic Asset Management Balanced Portfolio, Strategic Asset
Management Conservative Balanced Portfolio, Strategic Asset Management
Conservative Growth Portfolio, Strategic Asset Management Flexible Income
Portfolio, Strategic Asset Management Strategic Growth Portfolio, Tax-Exempt
Bond Fund I, and
West Coast Equity Fund are each successors to the following series of WM Trust
I, WM Trust II, or WM Strategic Asset Management Portfolios, LLC, as of
January 12, 2007.
SUCCESSOR FUND PREDECESSOR FUND
-------------- ----------------
California Insured California Insured Intermediate Municipal (WM Trust II)
Intermediate Municipal
California Municipal California Municipal (WM Trust II)
Equity Income I Equity Income (WM Trust I)
High Yield II High Yield (WM Trust I)
Income Income (WM Trust I)
MidCap Stock Mid Cap Stock (WM Trust I)
Mortgage Securities U.S. Government Securities (WM Trust I)
Short-Term Income Short
Term Income (WM Trust II)
Strategic Asset Management Portfolios
Strategic Asset (WM Strategic Asset Management Portfolios, LLC)
Management Portfolios
Balanced Portfolio Balanced Portfolio
Conservative Balanced Conservative Balanced Portfolio
Portfolio
Conservative Growth Conservative Growth Portfolio
Portfolio
Flexible Income Flexible Income Portfolio
Portfolio
Strategic Growth Strategic Growth Portfolio
Portfolio
Tax-Exempt Bond I Tax-Exempt Bond
(WM Trust I)
West Coast Equity West Coast Equity
(WM Trust I)
The WM Trust I Funds identified in the above table, other than the Mid Cap Stock
and High Yield Funds, are successors to the following Washington corporations,
or series thereof, which commenced operations in the years indicated and made up
the group of mutual funds known as the "Composite Funds": Composite U.S.
Government Securities, Inc. (predecessor to the U.S. Government Securities Fund)
(1982); Composite Income Fund, Inc. (predecessor to the Income Fund) (1975);
Composite Tax-Exempt Bond Fund, Inc. (predecessor to the Tax-Exempt Bond Fund)
(1976); Composite Northwest Fund, Inc. (predecessor to the West Coast Equity
Fund) (1986); and Composite Bond & Stock Fund, Inc. (predecessor to the Equity
Income Fund) (1939).
Each of the Composite Funds was reorganized as a series of WM Trust I, a
Massachusetts Business Trust, on March 20, 1998. In connection with this
reorganization, the Trust, which conducted no operations prior to that date,
changed its name to WM Trust I. The High Yield Fund was organized on March 23,
1998, and the Mid Cap Stock Fund was organized on March 1, 2000.
Prior to March 20, 1998, the name of WM Trust II, a Massachusetts Business
Trust, was "Sierra Trust Funds" and the name of WM Strategic Asset Management
Portfolios, a Massachusetts Limited Liability Company, was "Sierra Asset
Management Portfolios." On July 16, 1999, each Portfolio succeeded to a
corresponding fund of the same name that was a series of WM Strategic Asset
Management Portfolios. These Trusts were part of a family of mutual funds known
as the "Sierra Funds."
Prior to March 1, 2002, the West Coast Equity Fund was known as the Growth Fund
of the Northwest and prior to March 1, 2000, it was known as the Northwest Fund.
Prior to August 1, 2000, the Conservative Balanced Portfolio was known as the
Income Portfolio and the Equity Income Fund was known as the Bond & Stock Fund.
Prior to March 1, 2000, the Short Term Income Fund was known as the Short Term
High Quality Bond Fund. Prior to March 20, 1998, the Flexible Income Portfolio
was known as the Sierra Value Portfolio, the Conservative Balanced Portfolio was
known as the Sierra Income Portfolio, the Balanced Portfolio was known as the
Sierra Balanced Portfolio, the Conservative Growth Portfolio was known as the
Sierra Growth Portfolio, and the Strategic Growth Portfolio was known as the
Sierra Capital Growth Portfolio.
. September 13, 2007 to add the Global Real Estate Securities Fund.
Classes offered by each Fund are shown in the table below.
CLASS CLASS CLASS CLASS ADVISORS ADVISORS ADVISORS
FUND NAME A B C J PREFERRED SELECT SIGNATURE PREFERRED SELECT INSTITUTIONAL
--------- ----- ----- ----- ----- --------- -------- --------- --------- ------ -------------
Bond & Mortgage Securities Fund X X X X X X X X X X
California Insured Municipal Fund X X X
California Municipal Fund X X X
Disciplined LargeCap Blend X X X X X X X X X
Diversified International Fund X X X X X X X X X X
Equity Income Fund I X X X X
Global Real Estate Securities Fund X X X
Government & High Quality Bond
Fund X X X X X X X X X X
High Quality Intermediate-Term
Bond Fund X X X X X X X
High Yield Fund X
High Yield Fund II X X X X
Income Fund X X X X
Inflation Protection Fund X X X X X X X X X
International Emerging Markets
Fund X X X X X X X X X X
International Growth Fund X X X X X X X X X
LargeCap Growth Fund X X X X X X X X X X
LargeCap S&P 500 Index Fund X X X X X X X X X
LargeCap Value Fund X X X X X X X X X X
MidCap Blend Fund X X X X X X X X X X
MidCap Growth Fund X X X X X X X
MidCap S&P 400 Index Fund X X X X X X X
MidCap Stock Fund X X X X
MidCap Value Fund X X X X X X X
Money Market Fund X X X X X X X X X X
Mortgage Securities Fund X X X X
Partners Global Equity Fund X X X X X X
Partners International Fund X X X X X X
Partners LargeCap Blend Fund X X X X X X X X X X
Partners LargeCap Blend Fund I X X X X X X X X X X
Partners LargeCap Growth Fund I X X X X X X X X X X
Partners LargeCap Growth Fund II X X X X X X X X X
Partners LargeCap Value Fund X X X X X X X X X X
Partners LargeCap Value Fund I X X X X X X
Partners LargeCap Value Fund II X X X X X X
Partners MidCap Growth Fund X X X X X X X X X X
Partners MidCap Growth Fund I X X X X X X X X
Partners MidCap Growth Fund II X X X X X X
Partners MidCap Value Fund X X X X X X X X X X
Partners MidCap Value Fund I X X X X X X
Partners SmallCap Blend Fund X X X X X X
Partners SmallCap Growth Fund I X X X X X X X
Partners SmallCap Growth Fund II X X X X X X X X X X
Partners SmallCap Growth Fund III X X X X X X
Partners SmallCap Value Fund X X X X X X X
Partners SmallCap Value Fund I X X X X X X
Partners SmallCap Value Fund II X X X X X X
Preferred Securities Fund X X X X X X X X X
Principal LifeTime 2010 Fund X X X X X X X X X
Principal LifeTime 2020 Fund X X X X X X X X X X
Principal LifeTime 2030 Fund X X X X X X X X X X
Principal LifeTime 2040 Fund X X X X X X X X X X
Principal LifeTime 2050 Fund X X X X X X X X X X
Principal LifeTime Strategic
Income Fund X X X X X X X X X X
Real Estate Securities Fund X X X X X X X X X X
SAM Balanced Portfolio X X X X X X X X X X
SAM Conservative Balanced
Portfolio X X X X X X X X X X
SAM Conservative Growth Portfolio X X X X X X X X X X
SAM Flexible Income Portfolio X X X X X X X X X X
SAM Strategic Growth Portfolio X X X X X X X X X X
Short-Term Bond Fund X X X X X X X X X
Short-Term Income Fund X X X
SmallCap Blend Fund X X X X X X X X X X
SmallCap Growth Fund X X X X X X X X X X
SmallCap S&P 600 Index Fund X X X X X X X
SmallCap Value Fund X X X X X X X X X X
Tax-Exempt Bond Fund I X X X
Ultra Short Bond Fund X X X X X X X X X
West Coast Equity Fund X X X X
Each class has different expenses. Because of these different expenses, the
investment performance of the classes will vary. For more information, including
your eligibility to purchase certain classes of shares, call the Principal
Investors Fund at 1-800-547-7754.
DESCRIPTION OF THE FUNDS' INVESTMENTS AND RISKS
FUND POLICIES
The investment objectives, investment strategies and the main risks of each Fund
are described in the Prospectus. This Statement of Additional Information
contains supplemental information about those strategies and risks and the types
of securities the Sub-Advisor can select for each Fund. Additional information
is also provided about the strategies that the Fund may use to try to achieve
its objective.
The composition of each Fund and the techniques and strategies that the
Sub-Advisor may use in selecting securities will vary over time. A Fund is not
required to use all of the investment techniques and strategies available to it
in seeking its goals.
Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the restrictions apply at the time transactions are entered into.
Accordingly, any later increase or decrease beyond the specified limitation,
resulting from market fluctuations or in a rating by a rating service, does not
require elimination of any security from the portfolio.
The investment objective of each Fund and, except as described below as
"Fundamental Restrictions," the investment strategies described in this
Statement of Additional Information and the prospectuses are not fundamental and
may be changed by the Board of Directors without shareholder approval. The
Fundamental Restrictions may not be changed without a vote of a majority of the
outstanding voting securities of the affected Fund. The Investment Company Act
of 1940, as amended, ("1940 Act") provides that "a vote of a majority of the
outstanding voting securities" of a Fund means the affirmative vote of the
lesser of 1) more than 50% of the outstanding shares or 2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding Fund shares are
represented at the meeting in person or by proxy. Each share has one vote, with
fractional shares voting proportionately. Shares of all classes of a Fund will
vote together as a single class except when otherwise required by law or as
determined by the Board of Directors.
With the exception of the diversification test required by the Internal Revenue
Code, the Funds will not consider collateral held in connection with securities
lending activities when applying any of the following fundamental restrictions
or any other investment restriction set forth in each Fund's prospectus or
Statement of Additional Information.
Bond & Mortgage Securities, California Insured Intermediate Municipal,
California Municipal, Disciplined LargeCap Blend, Diversified International,
Equity Income I, Global Real Estate Securities, Government & High Quality Bond,
High Quality Intermediate-Term Bond, High Yield, High Yield II, Income,
Inflation Protection, International Growth, International Emerging Markets,
LargeCap Growth, LargeCap S&P 500 Index, LargeCap Value, MidCap Blend, MidCap
Growth, MidCap S&P 400 Index, MidCap Stock, MidCap Value, Money Market, Mortgage
Securities, Partners Global Equity, Partners LargeCap Blend, Partners LargeCap
Blend I, Partners LargeCap Growth I, Partners LargeCap Growth II, Partners
LargeCap Value, Partners LargeCap Value I, Partners LargeCap Value II, Partners
MidCap Growth, Partners MidCap Growth I, Partners MidCap Value, Partners MidCap
Value I, Partners SmallCap Blend,
Partners SmallCap Growth I, Partners SmallCap Growth II, Partners SmallCap
Growth III, Partners SmallCap Value, Partners SmallCap Value I, Partners
SmallCap Value II, Preferred Securities, Real Estate Securities, Short-Term
Bond, Short-Term Income, SmallCap Blend, SmallCap Growth, SmallCap Value,
SmallCap S&P 600 Index, Tax-Exempt Bond I, Ultra Short Bond, and West Coast
Equity Funds
FUNDAMENTAL RESTRICTIONS
Each of the following numbered restrictions for the above-listed Funds is a
matter of fundamental policy and may not be changed without shareholder
approval. Each may not:
1) Issue any senior securities as defined in the 1940 Act. Purchasing and
selling securities and futures contracts and options thereon and borrowing
money in accordance with restrictions described below do not involve the
issuance of a senior security.
2) Invest in physical commodities or commodity contracts (other than foreign
currencies), but it may purchase and sell financial futures contracts, options
on such contracts, swaps, and securities backed by physical commodities.
3) Invest in real estate, although it may invest in securities that are secured
by real estate and securities of issuers that invest or deal in real estate.
4) Borrow money, except as permitted under the Investment Company Act of 1940,
as amended, and as interpreted, modified, or otherwise permitted by regulatory
authority having jurisdiction, from time to time.
5) Make loans, except that the Fund may a) purchase and hold debt obligations
in accordance with its investment objectives and policies, b) enter into
repurchase agreements, and c) lend its portfolio securities without limitation
against collateral (consisting of cash or liquid assets) equal at all times to
not less than 100% of the value of the securities loaned. This limit does not
apply to purchases of debt securities or commercial paper.
6) Invest more than 5% of its total assets in the securities of any one issuer
(other than obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities) or purchase more than 10% of the outstanding
voting securities of any one issuer, except that this limitation shall apply
only with respect to 75% of the total assets of the Fund. This restriction
does not apply to the California Insured Intermediate Municipal, California
Municipal, Global Real Estate Securities, Preferred Securities, Real Estate
Securities, or Tax-Exempt Bond I Funds.
7) Act as an underwriter of securities, except to the extent that the Fund may
be deemed to be an underwriter in connection with the sale of securities held
in its portfolio.
8) Concentrate its investments in any particular industry, except that the Fund
may invest up to 25% of the value of its total assets in a single industry,
provided that, when the Fund has adopted a temporary defensive posture, there
shall be no limitation on the purchase of obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities. This restriction
applies to the LargeCap S&P 500 Index, MidCap S&P 400 Index, and SmallCap S&P
600 Index Funds except to the extent that the related Index also is so
concentrated. This restriction does not apply to the Global Real Estate
Securities, Preferred Securities, or Real Estate Securities Funds.
9) Sell securities short (except where the Fund holds or has the right to
obtain at no added cost a long position in the securities sold that equals or
exceeds the securities sold short).
NON-FUNDAMENTAL RESTRICTIONS
Each of these Funds has also adopted the following restrictions that are not
fundamental policies and may be changed without shareholder approval. It is
contrary to each Fund's present policy to:
1) Invest more than 15% (10% in the case of the Money Market Fund) of its net
assets in illiquid securities and in repurchase agreements maturing in more
than seven days except to the extent permitted by applicable law.
2) Pledge, mortgage, or hypothecate its assets, except to secure permitted
borrowings. The deposit of underlying securities and other assets in escrow
and other collateral arrangements in connection with transactions in put or
call options, futures contracts, options on futures contracts, and
over-the-counter swap contracts are not deemed to be pledges or other
encumbrances.
3) Invest in companies for the purpose of exercising control or management.
4) Invest more than 25% (35% for Preferred Securities Fund) of its assets in
foreign securities, except that the Diversified International, Global Real
Estate Securities, International Growth, International Emerging Markets, Money
Market and Partners Global Equity Funds each may invest up to 100% of its
assets in foreign securities, the LargeCap S&P 500 Index, MidCap S&P 400
Index, and SmallCap S&P 600 Index Funds each may invest in foreign securities
to the extent that the relevant index is so invested, and the California
Insured Intermediate Municipal, California Municipal, Government & High
Quality Bond, Mortgage Securities, and Tax-Exempt Bond I Funds may not invest
in foreign securities.
5) Invest more than 5% of its total assets in real estate limited partnership
interests (except the Global Real Estate Securities and Real Estate Securities
Funds).
6) Acquire securities of other investment companies in reliance on Section
12(d)(1)(F) or (G) of the 1940 Act, invest more than 10% of its total assets
in securities of other investment companies, invest more than 5% of its total
assets in the securities of any one investment company, or acquire more than
3% of the outstanding voting securities of any one investment company except
in connection with a merger, consolidation, or plan of reorganization. The
Fund may purchase securities of closed-end investment companies in the open
market where no underwriter or dealer's commission or profit, other than a
customary broker's commission, is involved.
Each Fund (except the Diversified International, Income, International Growth,
and International Emerging Markets Funds) has also adopted the non-fundamental
policy which requires it, under normal circumstances, to invest at least 80% of
its net assets in the type of securities, industry or geographic region (as
described in the prospectus) as suggested by the name of the Fund. The Fund will
provide 60-days notice to shareholders prior to implementing a change in this
policy for the Fund.
The Tax-Exempt Bond Fund I has also adopted a fundamental policy which requires
it, under normal circumstances, to invest at least 80% of its net assets in
investments, the income from which is exempt from federal income tax or so that
at least 80% of the income the Fund distributes will be exempt from federal
income tax.
The California Insured Intermediate Municipal Fund has adopted a fundamental
policy that requires it, under normal circumstances, to invest at least 80% of
its net assets in investments the income from which is exempt from federal
income tax and California state personal income tax so that at least 80% of the
income the Fund distributes will be exempt from federal income tax and
California state personal income tax. The Fund also has adopted a
non-fundamental policy that requires it, under normal circumstances, to invest
at least 80% of its net assets in insured intermediate-term municipal
obligations.
The California Municipal Fund has adopted a fundamental policy that requires it,
under normal circumstances, to invest at least 80% of its net assets in
investments the income from which is exempt from federal income tax and
California state personal income tax or so that at least 80% of the income the
Fund distributes will be exempt from federal income tax and California state
personal income tax. The Fund also has adopted a non-fundamental policy that
requires it, under normal circumstances, to invest at least 80% of its net
assets in municipal obligations.
Partners MidCap Growth Fund II
FUNDAMENTAL RESTRICTIONS
Each of the following numbered restrictions for the above-listed Fund is a
matter fundamental policy and may not be changed without shareholder approval.
The Fund may not:
1) With respect to 75% of the Fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities, or securities of other investment
companies) if, as a result, (a) more than 5% of the fund's total assets would
be invested in the securities of that issuer, or (b) the fund would hold more
than 10% of the outstanding voting securities of that issuer;
2) Issue senior securities, except in connection with the insurance program
established by the fund pursuant to an exemptive order issued by the
Securities and Exchange Commission or as otherwise permitted under the 1940
Act.
3) Borrow money, except as permitted under the 1940 Act, as amended, and as
interpreted, modified or otherwise permitted by regulatory authority having
jurisdiction, from time to time.
4) Underwrite securities issued by others, except to the extent that the Fund
may be considered an underwriter within the meaning of the Securities Act of
1933 in the disposition of restricted securities or in connection with
investments in other investment companies.
5) Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, more than 25% of the Fund's total assets would be invested in
the securities of companies whose principal business activities are in the
same industry;
6) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
7) Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).
8) Lend any security or make any other loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this limitation does
not apply to purchases of debt securities or to repurchase agreements, or to
acquisitions of loans, loan participations, or other forms of debt
instruments.
NON-FUNDAMENTAL RESTRICTIONS
The Fund has also adopted the following restrictions that are not fundamental
policies and may be changed without shareholder approval.
1) The Fund does not currently intend to sell securities short, unless it owns
or has the right to obtain securities equivalent in kind and amount to the
securities sold short, and provided that transactions in futures contracts and
options are not deemed to constitute selling securities short.
2) The Fund does not currently intend to purchase securities on margin, except
that the Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in connection
with futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
3) The Fund may not borrow money, except as permitted under the 1940 Act, as
interpreted, modified, or otherwise permitted by regulatory authority having
jurisdiction, from time to time.
4) The Fund does not currently intend to purchase any security if, as a result,
more than 10% of its net assets would be invested in securities that are
deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
For purposes of the Fund's illiquid securities limitation discussed above, if
through a change in values, net assets, or other circumstances, the Fund were
in a position where more than 10% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
5) The Fund does not currently intend to lend assets other than securities to
other parties, except by (a) lending money (up to 15% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) assuming any unfunded
commitments in connection with the acquisition of loans, loan participations,
or other forms of debt instruments. (This limitation does not apply to
purchases of debt securities, to repurchase agreements, or to acquisitions of
loans, loan participations, or other forms of debt instruments.)
6) Acquire securities of other investment companies in reliance on Section
12(d)(1)(F) or (G) of the 1940 Act, invest more than 10% of its total assets
in securities of other investment companies, invest more than 5% of its total
assets in the securities of any one investment company, or acquire more than
3% of the outstanding voting securities of any one investment company except
in connection with a merger, consolidation or plan of reorganization. The Fund
may purchase securities of closed-end investment companies in the open market
where no underwriter or dealer's commission or profit, other than a customary
broker's commission, is involved.
In addition to the Fund's fundamental and non-fundamental limitations discussed
above:
. the Fund has also adopted a non-fundamental policy which requires it, under
normal circumstances, to invest at least 80% of its net assets in securities
of medium market capitalization companies. The Fund will provide 60-days
notice to shareholders prior to implementing a change in this policy for the
Fund.
. for purposes of normally investing at least 80% of the Fund's assets in
securities of companies with medium market capitalizations, Pyramis Global
Advisors, LLC (formerly known as Fidelity Management & Research Company),
intends to measure the capitalization range of the Russell Midcap Index and
the Standard & Poor's MidCap 400 Index (S&P MidCap 400) no less frequently
than once a month.
Partners International Fund
FUNDAMENTAL RESTRICTIONS
Each of the following numbered restrictions for the above-listed Fund is a
matter of fundamental policy and may not be changed without shareholder
approval. The Fund may not:
1) Issue any senior securities as defined in the 1940 Act. Purchasing and
selling securities and futures contracts and options thereon and borrowing
money in accordance with restrictions described below do not involve the
issuance of a senior security.
2) With respect to 75% of the Fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. government
or any of its agencies or instrumentalities or securities of other investment
companies) if, as a result, a) more than 5% of the Fund's total assets would
be invested in the securities of that issuer or b) the Fund would hold more
than 10% of the outstanding voting securities of that issuer.
3) Borrow money, except as permitted under the 1940 Act, as interpreted,
modified, or otherwise permitted by regulatory authority having jurisdiction,
from time to time.
4) Act as an underwriter of securities, except to the extent that the Fund may
be deemed to be an underwriter in connection with the sale of securities held
in its portfolio.
5) Concentrate its investments in any particular industry, except that the Fund
may invest up to 25% of the value of its total assets in a single industry,
provided that, when the Fund has adopted a temporary defensive posture, there
shall be no limitation on the purchase of obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities.
6) Invest in real estate, although it may invest in securities that are secured
by real estate and securities of issuers that invest or deal in real estate.
7) Invest in physical commodities or commodity contracts (other than foreign
currencies), but it may purchase and sell financial futures contracts, options
on such contracts, swaps, and securities backed by physical commodities.
8) Make loans, except that the Fund may a) purchase and hold debt obligations
in accordance with its investment objectives and policies, b) enter into
repurchase agreements, and c) lend its portfolio securities without limitation
against collateral (consisting of cash or liquid assets) equal at all times to
not less than 100% of the value of the securities loaned. This limit does not
apply to purchases of debt securities or commercial paper.
NON-FUNDAMENTAL RESTRICTIONS
The Fund has also adopted the following restrictions that are not fundamental
policies and may be changed without shareholder approval. It is contrary to the
Fund's present policy to:
1) Sell securities short, unless it owns or has the right to obtain securities
equivalent in kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to constitute
selling securities short.
2) Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing securities on margin.
3) Purchase any security if, as a result, more than 15% of its net assets would
be invested in securities that are deemed to be illiquid because they are
subject to legal or contractual restrictions on resale or because they cannot
be sold or disposed of in the ordinary course of business at approximately the
prices at which they are valued.
4) Acquire securities of other investment companies in reliance on Section
12(d)(1)(F) or (G) of the 1940 Act, invest more than 10% of its total assets
in securities of other investment companies, invest more than 5% of its total
assets in the securities of any one investment company, or acquire more than
3% of the outstanding voting securities of any one investment company except
in connection with a merger, consolidation, or plan of reorganization. The
Fund may purchase securities of closed-end investment companies in the open
market where no underwriter or dealer's commission or profit, other than a
customary broker's commission, is involved.
Principal LifeTime 2010, Principal LifeTime 2020, Principal LifeTime 2030,
Principal LifeTime 2040, Principal LifeTime 2050 and Principal LifeTime
Strategic Income Funds and the Strategic Asset Management Portfolios (Balanced,
Conservative Balanced, Conservative Growth, Flexible Income, and Strategic
Growth Portfolios)
FUNDAMENTAL RESTRICTIONS
Each of the following numbered restrictions for the above-listed Funds is a
matter of fundamental policy and may not be changed without shareholder
approval. Each may not:
1) Issue senior securities as defined in the 1940 Act. Purchasing and selling
securities and futures contracts and options thereon and borrowing money in
accordance with restrictions described below do not involve the issuance of a
senior security.
2) Purchase or sell commodities or commodities contracts except that the Fund
may invest in underlying funds that may purchase or write interest rate,
currency, and stock and bond index futures contracts and related options
thereon.
3) Purchase or sell real estate or interests therein, although the Fund may
purchase underlying funds which purchase securities of issuers that engage in
real estate operations and securities secured by real estate or interests
therein.
4) Borrow money, except as permitted under the 1940 Act, as interpreted,
modified, or otherwise permitted by regulatory authority having jurisdiction,
from time to time.
5) Make loans, except that the Fund may a) purchase underlying funds which
purchase and hold debt obligations and b) enter into repurchase agreements.
This limit does not apply to purchases of debt securities or commercial paper
by the Fund or an underlying fund. For the purpose of this restriction,
lending of fund securities by the underlying funds are not deemed to be loans.
6) Act as an underwriter of securities, except to the extent that the Fund or
an underlying fund may be deemed to be an underwriter in connection with the
sale of securities held in its portfolio.
7) Invest 25% or more of the value of its total assets in securities of issuers
in any one industry except that the Fund will concentrate its investments in
the mutual fund industry. This restriction does not apply to the Fund's
investments in the mutual fund industry by virtue of its investments in the
underlying funds. This restriction also does not apply to obligations issued
or guaranteed by the U.S. government, its agencies, or instrumentalities.
8) Sell securities short.
NON-FUNDAMENTAL RESTRICTIONS
Each of these Funds has also adopted the following restrictions that are not
fundamental policies and may be changed without shareholder approval. It is
contrary to each Fund's present policy to:
1) Pledge, mortgage, or hypothecate its assets, except to secure permitted
borrowings. For the purpose of this restriction, collateral arrangements with
respect to the writing of options by the underlying funds and collateral
arrangements with respect to initial or variation margin for futures by the
underlying funds are not deemed to be pledges of assets.
2) Invest in companies for the purpose of exercising control or management.
INVESTMENT STRATEGIES AND RISKS
Restricted Securities
---------------------
Generally, restricted securities are not readily marketable because they are
subject to legal or contractual restrictions upon resale. They are sold only in
a public offering with an effective registration statement or in a transaction
that is exempt from the registration requirements of the Securities Act of 1933.
When registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security.
If adverse market conditions were to develop during such a period, the Fund
might obtain a less favorable price than existed when it decided to sell.
Restricted securities and other securities not readily marketable are priced at
fair value as determined in good faith by or under the direction of the
Directors.
Each of the Funds has adopted investment restrictions that limit its investments
in restricted securities or other illiquid securities up to 15% of its net
assets (or, in the case of the Money Market Fund, 10%). The Directors have
adopted procedures to determine the liquidity of Rule 4(2) short-term paper and
of restricted securities under Rule 144A. Securities determined to be liquid
under these procedures are excluded from the preceding investment restriction.
Foreign Securities
------------------
Foreign companies may not be subject to the same uniform accounting, auditing,
and financial reporting practices as are required of U.S. companies. In
addition, there may be less publicly available information about a foreign
company than about a U.S. company. Securities of many foreign companies are less
liquid and more volatile than securities of comparable U.S. companies.
Commissions on foreign securities exchanges may be generally higher than those
on U.S. exchanges, although each Fund seeks the most favorable net results on
its portfolio transactions.
Foreign markets also have different clearance and settlement procedures than
those in U.S. markets. In certain markets there have been times when settlements
have been unable to keep pace with the volume of securities transactions, making
it difficult to conduct these transactions. Delays in settlement could result in
temporary periods when a portion of a Fund's assets is not invested and is
earning no return. If a Fund is unable to make intended security purchases due
to settlement problems, the Fund may miss attractive investment opportunities.
In addition, a Fund may incur a loss as a result of a decline in the value of
its portfolio if it is unable to sell a security.
With respect to certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political, or social instability, or
diplomatic developments that could affect a Fund's investments in those
countries. In addition, a Fund may also suffer losses due to nationalization,
expropriation, or differing accounting practices and treatments. Investments in
foreign securities are subject to laws of the foreign country that may limit the
amount and types of foreign investments. Changes of governments or of economic
or monetary policies, in the U.S. or abroad, changes in dealings between
nations, currency convertibility, or exchange rates could result in investment
losses for a Fund. Finally, even though certain currencies may be convertible
into U.S. dollars, the conversion rates may be artificial relative to the actual
market values and may be unfavorable to a Fund's investors.
Foreign securities are often traded with less frequency and volume, and
therefore may have greater price volatility, than is the case with many U.S.
securities. Brokerage commissions, custodial services, and other costs relating
to investment in foreign countries are generally more expensive than in the U.S.
Though the Funds intend to acquire the securities of foreign issuers where there
are public trading markets, economic or political turmoil in a country in which
a Fund has a significant portion of its assets or deterioration of the
relationship between the U.S. and a foreign country may negatively impact the
liquidity of a Fund's portfolio. The Fund may have difficulty meeting a large
number of redemption requests. Furthermore, there may be difficulties in
obtaining or enforcing judgments against foreign issuers.
Investments in companies of developing countries may be subject to higher risks
than investments in companies in more developed countries. These risks include:
. increased social, political, and economic instability;
. a smaller market for these securities and low or nonexistent volume of trading
that results in a lack of liquidity and in greater price volatility;
. lack of publicly available information, including reports of payments of
dividends or interest on outstanding securities;
. foreign government policies that may restrict opportunities, including
restrictions on investment in issuers or industries deemed sensitive to
national interests;
. relatively new capital market structure or market-oriented economy;
. the possibility that recent favorable economic developments may be slowed or
reversed by unanticipated political or social events in these countries;
. restrictions that may make it difficult or impossible for the fund to vote
proxies, exercise shareholder rights, pursue legal remedies, and obtain
judgments in foreign courts; and
. possible losses through the holding of securities in domestic and foreign
custodial banks and depositories.
In addition, many developing countries have experienced substantial, and in some
periods, extremely high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of those countries.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. A Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for
repatriation.
Further, the economies of developing countries generally are heavily dependent
upon international trade and, accordingly, have been and may continue to be
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade.
Depositary Receipts
-------------------
Depositary Receipts are generally subject to the same sort of risks as direct
investments in a foreign country, such as, currency risk, political and economic
risk, and market risk, because their values depend on the performance of a
foreign security denominated in its home currency.
The Funds that may invest in foreign securities may invest in:
. American Depositary Receipts ("ADRs") - receipts issued by an American bank or
trust company evidencing ownership of underlying securities issued by a
foreign issuer. They are designed for use in U.S. securities markets.
. European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
- receipts typically issued by a foreign financial institution to evidence an
arrangement similar to that of ADRs.
Depositary Receipts may be issued by sponsored or unsponsored programs. In
sponsored programs, an issuer has made arrangements to have its securities
traded in the form of Depositary Receipts. In unsponsored programs, the issuer
may not be directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities of underlying unsponsored programs, and there may not be a
correlation between the availability of such information and the market value of
the Depositary Receipts.
Securities of Smaller Companies
-------------------------------
The Funds may invest in securities of companies with small- or mid-sized market
capitalizations. Market capitalization is defined as total current market value
of a company's outstanding common stock. Investments in companies with smaller
market capitalizations may involve greater risks and price volatility (wide,
rapid fluctuations) than investments in larger, more mature companies. Smaller
companies may be less mature than older companies. At this earlier stage of
development, the companies may have limited product lines, reduced market
liquidity for their shares, limited financial resources or less depth in
management than larger or more established companies. Small companies also may
be less significant within their industries and may be at a competitive
disadvantage relative to their larger competitors. While smaller companies may
be subject to these additional risks, they may also realize more substantial
growth than larger or more established companies. Small company stocks may
decline in price as large company stocks rise, or rise in price while larger
company stocks decline. Investors should therefore expect the net asset value of
the Fund that invests a substantial portion of its assets in small company
stocks may be more volatile than the shares of a Fund that invests solely in
larger company stocks.
Unseasoned Issuers
------------------
The Funds may invest in the securities of unseasoned issuers. Unseasoned issuers
are companies with a record of less than three years continuous operation,
including the operation of predecessors and parents. Unseasoned issuers by their
nature have only a limited operating history that can be used for evaluating the
companies' growth prospects. As a result, investment decisions for these
securities may place a greater emphasis on current or planned product lines and
the reputation and experience of the company's management and less emphasis on
fundamental valuation factors than would be the case for more mature growth
companies. In addition, many unseasoned issuers also may be small companies and
involve the risks and price volatility associated with smaller companies.
Spread Transactions, Options on Securities and Securities Indices, and Futures
------------------------------------------------------------------------------
Contracts and Options on Futures Contracts
------------------------------------------
The Funds (except the Principal LifeTime Funds) may each engage in the
practices described under this heading.
. Spread Transactions. Each Fund may purchase covered spread options. Such
covered spread options are not presently exchange listed or traded. The
purchase of a spread option gives the Fund the right to put, or sell, a
security that it owns at a fixed dollar spread or fixed yield spread in
relationship to another security that the Fund does not own, but which is used
as a benchmark. The risk to the Fund in purchasing covered spread options is
the cost of the premium paid for the spread option and any transaction costs.
In addition, there is no assurance that closing transactions will be
available. The purchase of spread options can be used to protect each Fund
against adverse changes in prevailing credit quality spreads, i.e., the yield
spread between high quality and lower quality securities. The security
covering the spread option is maintained in segregated accounts either with
the Fund's custodian or on the Fund's records. The Funds do not consider a
security covered by a spread option to be "pledged" as that term is used in
the Fund's policy limiting the pledging or mortgaging of assets.
. Options on Securities and Securities Indices. Each Fund may write (sell) and
purchase call and put options on securities in which it invests and on
securities indices based on securities in which the Fund invests. The Funds
may engage in these transactions to hedge against a decline in the value of
securities owned or an increase in the price of securities which the Fund
plans to purchase, or to generate additional revenue.
. Writing Covered Call and Put Options. When a Fund writes a call option, it
gives the purchaser of the option the right to buy a specific security at a
specified price at any time before the option expires. When a Fund writes a
put option, it gives the purchaser of the option the right to sell to the
Fund a specific security at a specified price at any time before the option
expires. In both situations, the Fund receives a premium from the purchaser
of the option.
The premium received by a Fund reflects, among other factors, the current
market price of the underlying security, the relationship of the exercise
price to the market price, the time period until the expiration of the
option and interest rates. The premium generates additional income for the
Fund if the option expires unexercised or is closed out at a profit. By
writing a call, a Fund limits its opportunity to profit from any increase in
the market value of the underlying security above the exercise price of the
option, but it retains the risk of loss if the price of the security should
decline. By writing a put, a Fund assumes the risk that it may have to
purchase the underlying security at a price that may be higher than its
market value at time of exercise.
The Funds write only covered options and comply with applicable regulatory
and exchange cover requirements. The Funds usually own the underlying
security covered by any outstanding call option. With respect to an
outstanding put option, each Fund deposits and maintains with its custodian
or segregates on the Fund's records, cash, or other liquid assets with a
value at least equal to the exercise price of the option.
Once a Fund has written an option, it may terminate its obligation before
the option is exercised. The Fund executes a closing transaction by
purchasing an option of the same series as the option previously written.
The Fund has a gain or loss depending on whether the premium received when
the option was written exceeds the closing purchase price plus related
transaction costs.
. Purchasing Call and Put Options. When a Fund purchases a call option, it
receives, in return for the premium it pays, the right to buy from the
writer of the option the underlying security at a specified price at any
time before the option expires. A Fund purchases call options in
anticipation of an increase in the market value of securities that it
intends ultimately to buy. During the life of the call option, the Fund is
able to buy the underlying security at the exercise price regardless of any
increase in the market price of the underlying security. In order for a call
option to result in a gain, the market price of the underlying security must
exceed the sum of the exercise price, the premium paid, and transaction
costs.
When a Fund purchases a put option, it receives, in return for the premium
it pays, the right to sell to the writer of the option the underlying
security at a specified price at any time before the option expires. A Fund
purchases put options in anticipation of a decline in the market value of
the underlying security. During the life of the put option, the Fund is able
to sell the underlying security at the exercise price regardless of any
decline in the market price of the underlying security. In order for a put
option to result in a gain, the market price of the underlying security must
decline, during the option period, below the exercise price enough to cover
the premium and transaction costs.
Once a Fund purchases an option, it may close out its position by selling an
option of the same series as the option previously purchased. The Fund has a
gain or loss depending on whether the closing sale price exceeds the initial
purchase price plus related transaction costs.
. Options on Securities Indices. Each Fund may purchase and sell put and call
options on any securities index based on securities in which the Fund may
invest. Securities index options are designed to reflect price fluctuations
in a group of securities or segment of the securities market rather than
price fluctuations in a single security. Options on securities indices are
similar to options on securities, except that the exercise of securities
index options requires cash payments and does not involve the actual
purchase or sale of securities. The Funds engage in transactions in put and
call options on securities indices for the same purposes as they engage in
transactions in options on securities. When a Fund writes call options on
securities indices, it holds in its portfolio underlying securities which,
in the judgment of the Sub-Advisor, correlate closely with the securities
index and which have a value at least equal to the aggregate amount of the
securities index options.
. Risks Associated with Option Transactions. An option position may be closed
out only on an exchange that provides a secondary market for an option of
the same series. The Funds generally purchase or write only those options
for which there appears to be an active secondary market. However, there is
no assurance that a liquid secondary market on an exchange exists for any
particular option, or at any particular time. If a Fund is unable to effect
closing sale transactions in options it has purchased, it has to exercise
its options in order to realize any profit and may incur transaction costs
upon the purchase or sale of underlying securities. If a Fund is unable to
effect a closing purchase transaction for a covered option that it has
written, it is not able to sell the underlying securities, or dispose of the
assets held in a segregated account, until the option expires or is
exercised. A Fund's ability to terminate option positions established in the
over-the-counter market may be more limited than for exchange-traded options
and may also involve the risk that broker-dealers participating in such
transactions might fail to meet their obligations.
. Futures Contracts and Options on Futures Contracts. Each Fund may purchase and
sell financial futures contracts and options on those contracts. Financial
futures contracts are commodities contracts based on financial instruments
such as U.S. Treasury bonds or bills or on securities indices such as the S&P
500 Index. Futures
contracts, options on futures contracts, and the commodity exchanges on which
they are traded are regulated by the Commodity Futures Trading Commission.
Through the purchase and sale of futures contracts and related options, a Fund
may seek to hedge against a decline in the value of securities owned by the
Fund or an increase in the price of securities that the Fund plans to
purchase. Each Fund may enter into futures contracts and related options
transactions both for hedging and non-hedging purposes.
. Futures Contracts. When a Fund sells a futures contract based on a financial
instrument, the Fund is obligated to deliver that kind of instrument at a
specified future time for a specified price. When a Fund purchases that kind
of contract, it is obligated to take delivery of the instrument at a
specified time and to pay the specified price. In most instances, these
contracts are closed out by entering into an offsetting transaction before
the settlement date. The Fund realizes a gain or loss depending on whether
the price of an offsetting purchase plus transaction costs are less or more
than the price of the initial sale or on whether the price of an offsetting
sale is more or less than the price of the initial purchase plus transaction
costs. Although the Funds usually liquidate futures contracts on financial
instruments, by entering into an offsetting transaction before the
settlement date, they may make or take delivery of the underlying securities
when it appears economically advantageous to do so.
A futures contract based on a securities index provides for the purchase or
sale of a group of securities at a specified future time for a specified
price. These contracts do not require actual delivery of securities but
result in a cash settlement. The amount of the settlement is based on the
difference in value of the index between the time the contract was entered
into and the time it is liquidated (at its expiration or earlier if it is
closed out by entering into an offsetting transaction).
When an Fund purchases or sells a futures contract, it pays a commission to
the futures commission merchant through which the Fund executes the
transaction. When entering into a futures transaction, the Fund does not pay
the execution price, as it does when it purchases a security, or a premium,
as it does when it purchases an option. Instead, the Fund deposits an amount
of cash or other liquid assets (generally about 5% of the futures contract
amount) with its futures commission merchant. This amount is known as
"initial margin." In contrast to the use of margin account to purchase
securities, the Fund's deposit of initial margin does not constitute the
borrowing of money to finance the transaction in the futures contract. The
initial margin represents a good faith deposit that helps assure the Fund's
performance of the transaction. The futures commission merchant returns the
initial margin to the Fund upon termination of the futures contract if the
Fund has satisfied all its contractual obligations.
Subsequent payments to and from the futures commission merchant, known as
"variation margin," are required to be made on a daily basis as the price of
the futures contract fluctuates, a process known as "marking to market." The
fluctuations make the long or short positions in the futures contract more
or less valuable. If the position is closed out by taking an opposite
position prior to the settlement date of the futures contract, a final
determination of variation margin is made. Any additional cash is required
to be paid to or released by the broker and the Fund realizes a loss or
gain.
In using futures contracts, the Fund may seek to establish more certainly,
than would otherwise be possible, the effective price of or rate of return
on portfolio securities or securities that the Fund proposes to acquire. A
Fund, for example, sells futures contracts in anticipation of a rise in
interest rates that would cause a decline in the value of its debt
investments. When this kind of hedging is successful, the futures contract
increases in value when the Fund's debt securities decline in value and
thereby keeps the Fund's net asset value from declining as much as it
otherwise would. A Fund may also sell futures contracts on securities
indices in anticipation of or during a stock market decline in an endeavor
to offset a decrease in the market value of its equity investments. When a
Fund is not fully invested and anticipates an increase in the cost of
securities it intends to purchase, it may purchase financial futures
contracts. When increases in the prices of equities are expected, a Fund may
purchase futures contracts on securities indices in order to gain rapid
market exposure that may partially or entirely offset increases in the cost
of the equity securities it intends to purchase.
. Options on Futures Contracts. The Funds may also purchase and write call and
put options on futures contracts. A call option on a futures contract gives
the purchaser the right, in return for the premium paid, to purchase a
futures contract (assume a long position) at a specified exercise price at
any time before the option expires. A put option gives the purchaser the
right, in return for the premium paid, to sell a futures contract (assume a
short position), for a specified exercise price, at any time before the
option expires.
Upon the exercise of a call, the writer of the option is obligated to sell
the futures contract (to deliver a long position to the option holder) at
the option exercise price, which will presumably be lower than the current
market price of the contract in the futures market. Upon exercise of a put,
the writer of the option is obligated to purchase the futures contract
(deliver a short position to the option holder) at the option exercise
price, which will presumably be higher than the current market price of the
contract in the futures market. However, as with the trading of futures,
most options are closed out prior to their expiration by the purchase or
sale of an offsetting option at a market price that reflects an increase or
a decrease from the premium originally paid. Options on futures can be used
to hedge substantially the same risks addressed by the direct purchase or
sale of the underlying futures contracts. For example, if a Fund anticipates
a rise in interest rates and a decline in the market value of the debt
securities in its portfolio, it might purchase put options or write call
options on futures contracts instead of selling futures contracts.
If a Fund purchases an option on a futures contract, it may obtain benefits
similar to those that would result if it held the futures position itself.
But in contrast to a futures transaction, the purchase of an option involves
the payment of a premium in addition to transaction costs. In the event of
an adverse market movement, however, the Fund is not subject to a risk of
loss on the option transaction beyond the price of the premium it paid plus
its transaction costs.
When a Fund writes an option on a futures contract, the premium paid by the
purchaser is deposited with the Fund's custodian. The Fund must maintain
with its futures commission merchant all or a portion of the initial margin
requirement on the underlying futures contract. It assumes a risk of adverse
movement in the price of the underlying futures contract comparable to that
involved in holding a futures position. Subsequent payments to and from the
futures commission merchant, similar to variation margin payments, are made
as the premium and the initial margin requirements are marked to market
daily. The premium may partially offset an unfavorable change in the value
of portfolio securities, if the option is not exercised, or it may reduce
the amount of any loss incurred by the Fund if the option is exercised.
. Risks Associated with Futures Transactions. There are a number of risks
associated with transactions in futures contracts and related options. A
Fund's successful use of futures contracts is subject to the ability of the
Sub-Advisor to predict correctly the factors affecting the market values of
the Fund's portfolio securities. For example, if a Fund is hedged against
the possibility of an increase in interest rates which would adversely
affect debt securities held by the Fund and the prices of those debt
securities instead increases, the Fund loses part or all of the benefit of
the increased value of its securities it hedged because it has offsetting
losses in its futures positions. Other risks include imperfect correlation
between price movements in the financial instrument or securities index
underlying the futures contract, on the one hand, and the price movements of
either the futures contract itself or the securities held by the Fund, on
the other hand. If the prices do not move in the same direction or to the
same extent, the transaction may result in trading losses.
Prior to exercise or expiration, a position in futures may be terminated
only by entering into a closing purchase or sale transaction. This requires
a secondary market on the relevant contract market. The Fund enters into a
futures contract or related option only if there appears to be a liquid
secondary market. There can be no assurance, however, that such a liquid
secondary market exists for any particular futures contract or related
option at any specific time. Thus, it may not be possible to close out a
futures position once it has been established. Under such circumstances, the
Fund continues to be required to make daily cash payments of variation
margin in the event of adverse price movements. In such situations, if the
Fund has insufficient cash, it may be required to sell portfolio securities
to meet daily variation margin requirements at a time when it may be
disadvantageous to do so. In addition, the Fund may be required to perform
under the terms of the futures contracts it holds. The inability to close
out futures positions also could have an adverse impact on the Fund's
ability effectively to hedge its portfolio.
Most United States futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day. This daily
limit establishes the maximum amount that the price of a futures contract
may vary either up or down from the previous day's settlement price at the
end of a trading session. Once the daily limit has been reached in a
particular type of contract, no more trades may be made on that day at a
price beyond that limit. The daily limit governs only price movements during
a particular trading day and therefore does not limit potential losses
because the limit may prevent the liquidation of unfavorable positions.
Futures contract prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
. Limitations on the Use of Futures and Options on Futures Contracts. Each
Fund intends to come within an exclusion from the definition of "commodity
pool operator" provided by Commodity Futures Trading Commission regulations.
Each Fund may enter into futures contracts and related options transactions,
for hedging purposes and for other appropriate risk management purposes, and
to modify the Fund's exposure to various currency, equity, or fixed-income
markets. Each Fund may engage in speculative futures trading. When using
futures contracts and options on futures contracts for hedging or risk
management purposes, each Fund determines that the price fluctuations in the
contracts and options are substantially related to price fluctuations in
securities held by the Fund or which it expects to purchase. In pursuing
traditional hedging activities, each Fund may sell futures contracts or
acquire puts to protect against a decline in the price of securities that
the Fund owns. Each Fund may purchase futures contracts or calls on futures
contracts to protect the Fund against an increase in the price of securities
the Fund intends to purchase before it is in a position to do so.
When a Fund purchases a futures contract, or purchases a call option on a
futures contract, it segregates portfolio assets, which must be liquid and
marked to the market daily, in a segregated account. The amount so
segregated plus the amount of initial margin held for the account of its
futures commission merchant equals the market value of the futures contract.
High-Yield/High-Risk Bonds
--------------------------
The Bond & Mortgage Securities, Equity Income I, High Yield, High Yield II,
Income, Inflation Protection, MidCap Stock, Partners International, Partners
MidCap Growth II, Short-Term Bond, Tax-Exempt Bond I, Ultra Short Bond, and West
Coast Equity Funds each may invest a portion of its assets in bonds that are
rated below investment grade (i.e., bonds rated BB or lower by Standard & Poor's
Ratings Services or Ba or lower by Moody's Investors Service, Inc.(commonly
known as "junk bonds")). Lower rated bonds involve a higher degree of credit
risk, which is the risk that the issuer will not make interest or principal
payments when due. In the event of an unanticipated default, a Fund would
experience a reduction in its income and could expect a decline in the market
value of the bonds so affected. The Bond & Mortgage Securities, Equity Income I,
Government & High Quality Bond, High Quality Intermediate-Term Bond, High Yield
II, Income, MidCap Stock, Short-Term Bond, Short-Term Income, and West Coast
Equity Funds may also invest in unrated bonds of foreign and domestic issuers.
Unrated bonds, while not necessarily of lower quality than rated bonds, may not
have as broad a market. Because of the size and perceived demand of the issue,
among other factors, certain municipalities may not incur the expense of
obtaining a rating. The Sub-Advisor will analyze the creditworthiness of the
issuer, as well as any financial institution or other party responsible for
payments on the bond, in determining whether to purchase unrated bonds. Unrated
bonds will be included in the limitation each Fund has with regard to high yield
bonds unless the Sub-Advisor deems such securities to be the equivalent of
investment grade bonds.
Mortgage- and Asset-Backed Securities
-------------------------------------
The yield characteristics of the mortgage- and asset-backed securities in which
the Bond & Mortgage Securities, California Insured Intermediate Municipal,
California Municipal, Equity Income I, Government & High Quality Bond, High
Quality Intermediate-Term Bond, High Yield, High Yield II, Income, Inflation
Protection, MidCap Stock, Mortgage Securities, Partners International, Preferred
Securities, Short-Term Bond, Short-Term Income, Tax-Exempt Bond I, Ultra Short
Bond, and West Coast Equity Funds, and each of the Strategic Asset Management
Portfolios, may invest differ from those of traditional debt securities. Among
the major differences are that the interest and principal payments are made more
frequently on mortgage- and asset-backed securities (usually monthly) and that
principal
may be prepaid at any time because the underlying mortgage loans or other assets
generally may be prepaid at any time. As a result, if the Fund purchases those
securities at a premium, a prepayment rate that is faster than expected will
reduce their yield, while a prepayment rate that is slower than expected will
have the opposite effect of increasing yield. If the Fund purchases these
securities at a discount, faster than expected prepayments will increase their
yield, while slower than expected prepayments will reduce their yield. Amounts
available for reinvestment by the Fund are likely to be greater during a period
of declining interest rates and, as a result, are likely to be reinvested at
lower interest rates than during a period of rising interest rates.
In general, the prepayment rate for mortgage-backed securities decreases as
interest rates rise and increases as interest rates fall. However, rising
interest rates will tend to decrease the value of these securities. In addition,
an increase in interest rates may affect the volatility of these securities by
effectively changing a security that was considered a short-term security at the
time of purchase into a long-term security. Long-term securities generally
fluctuate more widely in response to changes in interest rates than short- or
medium-term securities.
The market for privately issued mortgage- and asset-backed securities is smaller
and less liquid than the market for U.S. government mortgage-backed securities.
A collateralized mortgage obligation may be structured in a manner that provides
a wide variety of investment characteristics (yield, effective maturity, and
interest rate sensitivity). As market conditions change, and especially during
periods of rapid market interest rate changes, the ability of a collateralized
mortgage obligation to provide the anticipated investment characteristics may be
greatly diminished. Increased market volatility and/or reduced liquidity may
result.
Real Estate Investment Trusts
-----------------------------
REITs are pooled investment vehicles that invest in income producing real
-------------------------------------------------------------------------
estate, real estate related loans, or other types of real estate interests. U.S.
--------------------------------------------------------------------------------
REITs are allowed to eliminate corporate level federal tax so long as they meet
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certain requirements of the Internal Revenue Code. Foreign REITs ("REIT-like")
------------------------------------------------------------------------------
entities may have similar tax treatment in their respective countries. Equity
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real estate investment trusts own real estate properties, while mortgage real
-----------------------------------------------------------------------------
estate investment trusts make construction, development, and long-term mortgage
-------------------------------------------------------------------------------
loans. Their value may be affected by changes in the underlying property of the
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trusts, the creditworthiness of the issuer, property taxes, interest rates, and
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tax and regulatory requirements, such as those relating to the environment. Both
--------------------------------------------------------------------------------
types of trusts are not diversified, are dependent upon management skill, are
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subject to heavy cash flow dependency, defaults by borrowers, self-liquidation,
-------------------------------------------------------------------------------
and the possibility of failing to qualify for tax-free status of income under
-----------------------------------------------------------------------------
the Internal Revenue Code and failing to maintain exemption from the 1940 Act.
------------------------------------------------------------------------------
In addition, foreign REIT-like entities will be subject to foreign securities
-----------------------------------------------------------------------------
risks. (See "Foreign Securities")
----------------------------------------
Zero-coupon securities
----------------------
The Funds may invest in zero-coupon securities. Zero-coupon securities have no
stated interest rate and pay only the principal portion at a stated date in the
future. They usually trade at a substantial discount from their face (par)
value. Zero-coupon securities are subject to greater market value fluctuations
in response to changing interest rates than debt obligations of comparable
maturities that make distributions of interest in cash.
Securities Lending
------------------
All Funds may lend their portfolio securities. None of the Funds will lend its
portfolio securities if as a result the aggregate of such loans made by the Fund
would exceed the limits established by the 1940 Act. Portfolio securities may be
lent to unaffiliated broker-dealers and other unaffiliated qualified financial
institutions provided that such loans are callable at any time on not more than
five business days' notice and that cash or other liquid assets equal to at
least 100% of the market value of the securities loaned, determined daily, is
deposited by the borrower with the Fund and is maintained each business day.
While such securities are on loan, the borrower pays the Fund any income
accruing thereon. The Fund may invest any cash collateral, thereby earning
additional income, and may receive an agreed-upon fee from the borrower.
Borrowed securities must be returned when the loan terminates. Any gain or loss
in the market value of the borrowed securities that occurs during the term of
the loan belongs to the Fund and its shareholders. A Fund pays reasonable
administrative, custodial, and other fees in connection with such loans and may
pay a negotiated portion of the interest earned on the cash or government
securities pledged as collateral to the borrower or placing broker. A Fund does
not normally retain voting rights attendant to securities it has lent, but it
may call a loan of securities in anticipation of an important vote.
Short Sales
-----------
Each Fund, other than the Principal LifeTime Funds and the SAM Portfolios, may
engage in "short sales against the box." This technique involves selling either
a security owned by the Fund, or a security equivalent in kind and amount to the
security sold short that the Fund has the right to obtain, for delivery at a
specified date in the future. A Fund may enter into a short sale against the box
to hedge against anticipated declines in the market price of portfolio
securities. If the value of the securities sold short increases prior to the
scheduled delivery date, a Fund loses the opportunity to participate in the
gain.
Forward Foreign Currency Exchange Contracts
-------------------------------------------
The Funds may, but are not obligated to, enter into forward foreign currency
exchange contracts. Currency transactions include forward currency contracts,
exchange listed or over-the-counter options on currencies. A forward currency
contract involves a privately negotiated obligation to purchase or sell a
specific currency at a specified future date at a price set at the time of the
contract.
The typical use of a forward contract is to "lock in" the price of a security in
U.S. dollars or some other foreign currency which a Fund is holding in its
portfolio. By entering into a forward contract for the purchase or sale, for a
fixed amount of dollars or other currency, of the amount of foreign currency
involved in the underlying security transactions, a Fund may be able to protect
itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar or other currency which is being used for
the security purchase and the foreign currency in which the security is
denominated in or exposed to during the period between the date on which the
security is purchased or sold and the date on which payment is made or received.
The Sub-Advisor also may from time to time utilize forward contracts for other
purposes. For example, they may be used to hedge a foreign security held in the
portfolio or a security which pays out principal tied to an exchange rate
between the U.S. dollar and a foreign currency, against a decline in value of
the applicable foreign currency. They also may be used to lock in the current
exchange rate of the currency in which those securities anticipated to be
purchased are denominated in or exposed to. At times, a Fund may enter into
"cross-currency" hedging transactions involving currencies other than those in
which securities are held or proposed to be purchased are denominated.
A Fund segregates assets consisting of foreign securities denominated in or
exposed to the currency for which the Fund has entered into forward contracts
under the second circumstance, as set forth above, for the term of the forward
contract. It should be noted that the use of forward foreign currency exchange
contracts does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange between the currencies that
can be achieved at some future point in time. Additionally, although such
contracts tend to minimize the risk of loss due to a decline in the value of the
hedged currency, they also tend to limit any potential gain that might result if
the value of the currency increases.
Currency hedging involves some of the same risks and considerations as other
transactions with similar instruments. Currency transactions can result in
losses to a Fund if the currency being hedged fluctuates in value to a degree or
in a direction that is not anticipated. Further, the risk exists that the
perceived linkage between various currencies may not be present or may not be
present during the particular time that a Fund is engaging in proxy hedging.
Currency transactions are also subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be adversely affected by
government exchange controls, limitations or restrictions on repatriation of
currency, and manipulations or exchange restrictions imposed by governments.
These forms of governmental actions can result in losses to a Fund if it is
unable to deliver or receive currency or monies in settlement of obligations.
They could also cause hedges the Fund has entered into to be rendered useless,
resulting in full currency exposure as well as incurring transaction costs.
Currency exchange rates may also fluctuate based on factors extrinsic to a
country's economy. Buyers and sellers of currency futures contracts are subject
to the same risks that apply to the use of futures contracts generally. Further,
settlement of a currency futures contract for the purchase of most currencies
must occur at a bank based in the issuing nation. The ability to establish and
close out positions on trading options on currency futures contracts is subject
to the maintenance of a liquid market that may not always be available.
Repurchase and Reverse Repurchase Agreements, Mortgage Dollar Rolls and
-----------------------------------------------------------------------
Sale-Buybacks
-------------
The Funds may invest in repurchase and reverse repurchase agreements. In a
repurchase agreement, a Fund purchases a security and simultaneously commits to
resell that security to the seller at an agreed upon price on an agreed upon
date within a number of days (usually not more than seven) from the date of
purchase. The resale price consists of the purchase price plus an amount that is
unrelated to the coupon rate or maturity of the purchased security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is in effect secured by the value (at least equal to the amount
of the agreed upon resale price and marked-to-market daily) of the underlying
security or "collateral." A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause a
Fund to suffer a loss if the market value of such securities declines before
they can be liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, a Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that mature in more
than seven days are subject to each Fund's limit on illiquid investments. While
it is not possible to eliminate all risks from these transactions, it is the
policy of the Fund to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by the Sub-Advisor.
A Fund may use reverse repurchase agreements, mortgage dollar rolls, and
economically similar transactions to obtain cash to satisfy unusually heavy
redemption requests or for other temporary or emergency purposes without the
necessity of selling portfolio securities, or to earn additional income on
portfolio securities, such as Treasury bills or notes. In a reverse repurchase
agreement, a Fund sells a portfolio security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument at a
particular price and time. While a reverse repurchase agreement is outstanding,
a Fund will maintain cash or appropriate liquid assets to cover its obligation
under the agreement. The Fund will enter into reverse repurchase agreements only
with parties that the Sub-Advisor deems creditworthy. Using reverse repurchase
agreements to earn additional income involves the risk that the interest earned
on the invested proceeds is less than the expense of the reverse repurchase
agreement transaction. This technique may also have a leveraging effect on the
Fund, although the Fund's intent to segregate assets in the amount of the
reverse repurchase agreement minimizes this effect.
A "mortgage dollar roll" is similar to a reverse repurchase agreement in certain
respects. In a "dollar roll" transaction a Fund sells a mortgage-related
security, such as a security issued by the Government National Mortgage
Association, to a dealer and simultaneously agrees to repurchase a similar
security (but not the same security) in the future at a pre-determined price. A
dollar roll can be viewed, like a reverse repurchase agreement, as a
collateralized borrowing in which a Fund pledges a mortgage-related security to
a dealer to obtain cash. Unlike in the case of reverse repurchase agreements,
the dealer with which a Fund enters into a dollar roll transaction is not
obligated to return the same securities as those originally sold by the Fund,
but only securities which are "substantially identical." To be considered
"substantially identical," the securities returned to a Fund generally must: (1)
be collateralized by the same types of underlying mortgages; (2) be issued by
the same agency and be part of the same program; (3) have a similar original
stated maturity; (4) have identical net coupon rates; (5) have similar market
yields (and therefore price); and (6) satisfy "good delivery" requirements,
meaning that the aggregate principal amounts of the securities delivered and
received back must be within 0.01% of the initial amount delivered.
A Fund's obligations under a dollar roll agreement must be covered by segregated
liquid assets equal in value to the securities subject to repurchase by the
Fund.
A Fund also may effect simultaneous purchase and sale transactions that are
known as "sale-buybacks." A sale-buyback is similar to a reverse repurchase
agreement, except that in a sale-buyback, the counterparty who purchases the
security is entitled to receive any principal or interest payments made on the
underlying security pending settlement of the Fund's repurchase of the
underlying security. A Fund's obligations under a sale-buyback typically would
be offset by liquid assets equal in value to the amount of the Fund's forward
commitment to repurchase the subject security.
Swap Agreements and Options on Swap Agreements
----------------------------------------------
Each Fund (except Money Market Fund) may engage in swap transactions, including,
but not limited to, swap agreements on interest rates, security or commodity
indexes, specific securities and commodities, and credit and event-linked swaps,
to the extent permitted by its investment restrictions. To the extent a Fund may
invest in foreign currency-denominated securities, it may also invest in
currency exchange rate swap agreements. A Fund may also enter into options on
swap agreements ("swap options").
A Fund may enter into swap transactions for any legal purpose consistent with
its investment objectives and policies, such as for the purpose of attempting to
obtain or preserve a particular return or spread at a lower cost than obtaining
a return or spread through purchases and/or sales of instruments in other
markets, to protect against currency fluctuations, as a duration management
technique, to protect against any increase in the price of securities a Fund
anticipates purchasing at a later date, or to gain exposure to certain markets
in the most economical way possible.
Swap agreements are two party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments, which may be adjusted for an interest factor. The
gross returns to be exchanged or "swapped" between the parties are generally
calculated with respect to a "notional amount," i.e., the return on or increase
in value of a particular dollar amount invested at a particular interest rate,
in a particular foreign currency, or in a "basket" of securities or commodities
representing a particular index. Forms of swap agreements include interest rate
caps, under which, in return for a premium, one party agrees to make payments to
the other to the extent that interest rates exceed a specified rate, or "cap";
interest rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a
specified rate, or "floor"; and interest rate collars, under which a party sells
a cap and purchases a floor or vice versa in an attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels.
Consistent with a Fund's investment objectives and general investment policies,
certain of the Funds may invest in commodity swap agreements. For example, an
investment in a commodity swap agreement may involve the exchange of
floating-rate interest payments for the total return on a commodity index. In a
total return commodity swap, a Fund will receive the price appreciation of a
commodity index, a portion of the index, or a single commodity in exchange for
paying an agreed-upon fee. If the commodity swap is for one period, a Fund may
pay a fixed fee, established at the outset of the swap. However, if the term of
the commodity swap is for more than one period, with interim swap payments, a
Fund may pay an adjustable or floating fee. With a "floating" rate, the fee may
be pegged to a base rate, such as the London Interbank Offered Rate, and is
adjusted each period. Therefore, if interest rates increase over the term of the
swap contract, a Fund may be required to pay a higher fee at each swap reset
date.
A Fund may enter into credit default swap agreements. The "buyer" in a credit
default contract is obligated to pay the "seller" a periodic stream of payments
over the term of the contract provided that no event of default on an underlying
reference obligation has occurred. If an event of default occurs, the seller
must pay the buyer the full notional value, or "par value," of the reference
obligation in exchange for the reference obligation. A Fund may be either the
buyer or seller in a credit default swap transaction. If a Fund is a buyer and
no event of default occurs, the Fund will lose its investment and recover
nothing. However, if an event of default occurs, the Fund (if the buyer) will
receive the full notional value of the reference obligation that may have little
or no value. As a seller, a Fund receives a fixed rate of income throughout the
term of the contract, which typically is between six months and three years,
provided that there is no default event. If an event of default occurs, the
seller must pay the buyer the full notional value of the reference obligation.
A swap option is a contract that gives a counterparty the right (but not the
obligation) in return for payment of a premium, to enter into a new swap
agreement or to shorten, extend, cancel, or otherwise modify an existing swap
agreement, at some designated future time on specified terms. Each Fund (except
Money Market Fund) may write (sell) and purchase put and call swap options. Most
swap agreements entered into by the Funds would calculate the obligations of the
parties to the agreement on a "net basis." Consequently, a Fund's current
obligations (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's current obligations under a swap agreement will be accrued daily
(offset against any amounts owed to the Fund) and any accrued but unpaid net
amounts owed to a swap counterparty will be covered by the segregation of assets
determined to be liquid by the Manager or Sub-Advisor in accordance with
procedures established by the Board of Directors, to avoid any potential
leveraging of the Fund's portfolio. Obligations under swap agreements so covered
will not be construed to be "senior securities" for purposes of the Fund's
investment restriction concerning senior securities. Each Fund will not enter
into a swap agreement with any single party if the net amount owed or to be
received under existing contracts with that party would exceed 5% of the Fund's
total assets.
Whether a Fund's use of swap agreements or swap options will be successful in
furthering its investment objective of total return will depend on the ability
of the Fund's Manager or Sub-Advisor to predict correctly whether certain types
of investments are likely to produce greater returns than other investments.
Because they are two party contracts and because they may have terms of greater
than seven days, swap agreements may be considered to be illiquid. Moreover, a
Fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The Funds will enter into swap agreements only with counterparties
that present minimal credit risks, as determined by the Fund's Manager or
Sub-Advisor. Certain restrictions imposed on the Funds by the Internal Revenue
Code may limit the Funds' ability to use swap agreements. The swaps market is a
relatively new market and is largely unregulated. It is possible that
developments in the swaps market, including potential government regulation,
could adversely affect a Fund's ability to terminate existing swap agreements or
to realize amounts to be received under such agreements.
Depending on the terms of the particular option agreement, a Fund will generally
incur a greater degree of risk when it writes a swap option than it will incur
when it purchases a swap option. When a Fund purchases a swap option, it risks
losing only the amount of the premium it has paid should it decide to let the
option expire unexercised. However, when a Fund writes a swap option, upon
exercise of the option the Fund will become obligated according to the terms of
the underlying agreement.
Liquidity. Some swap markets have grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, these swap
markets have become relatively liquid.
The liquidity of swap agreements will be determined by the Manager or
Sub-Advisor based on various factors, including:
. the frequency of trades and quotations,
. the number of dealers and prospective purchasers in the marketplace,
. dealer undertakings to make a market,
. the nature of the security (including any demand or tender features), and
. the nature of the marketplace for trades (including the ability to assign or
offset a portfolio's rights and obligations relating to the investment).
Such determination will govern whether a swap will be deemed to be within each
Fund's restriction on investments in illiquid securities.
For purposes of applying the Funds' investment policies and restrictions (as
stated in the Prospectuses and this Statement of Additional Information) swap
agreements are generally valued by the Funds at market value. In the case of a
credit default swap sold by a Fund (i.e., where the Fund is selling credit
default protection), however, the Fund will value the swap at its notional
amount. The manner in which the Funds value certain securities or other
instruments for purposes of applying investment policies and restrictions may
differ from the manner in which those investments are valued by other types of
investors.
When-Issued, Delayed Delivery, and Forward Commitment Transactions
------------------------------------------------------------------
Each of the Funds may purchase or sell securities on a when-issued, delayed
delivery, or forward commitment basis. When such purchases are outstanding, the
Fund will segregate until the settlement date assets determined to be liquid by
the Sub-Advisor in accordance with procedures established by the Board of
Directors, in an amount sufficient to meet the purchase price. Typically, no
income accrues on securities a Fund has committed to purchase prior to the time
delivery of the securities is made, although a Fund may earn income on
securities it has segregated.
When purchasing a security on a when-issued, delayed delivery, or forward
commitment basis, the Fund assumes the rights and risks of ownership of the
security, including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. Because the Fund
is not required to pay for the security until the delivery date, these risks are
in addition to the risks associated with the Fund's other investments. If the
Fund remains substantially fully invested at a time when when-issued, delayed
delivery, or forward commitment purchases are outstanding, the purchases may
result in a form of leverage.
When the Fund has sold a security on a when-issued, delayed delivery, or forward
commitment basis, the Fund does not participate in future gains or losses with
respect to the security. If the other party to a transaction fails to deliver or
pay for the securities, the Fund could miss a favorable price or yield
opportunity or could suffer a loss. A Fund may dispose of or renegotiate a
transaction after it is entered into, and may sell when-issued, delayed
delivery, or forward commitment securities before they are delivered, which may
result in a capital gain or loss. There is no percentage limitation on the
extent to which the Funds may purchase or sell securities on a when-issued,
delayed delivery, or forward commitment basis.
Money Market Instruments/Temporary Defensive Position
-----------------------------------------------------
The Money Market Fund invests all of its available assets in money market
instruments maturing in 397 days or less. In addition, all of the Funds may make
money market investments (cash equivalents), without limit, pending other
investment or settlement, for liquidity, or in adverse market conditions.
Following are descriptions of the types of money market instruments that the
Funds may purchase:
. U.S. Government Securities - Securities issued or guaranteed by the U.S.
government, including treasury bills, notes, and bonds.
. U.S. Government Agency Securities - Obligations issued or guaranteed by
agencies or instrumentalities of the U.S. government.
. U.S. agency obligations include, but are not limited to, the Bank for
Cooperatives, Federal Home Loan Banks, and Federal Intermediate Credit
Banks.
. U.S. instrumentality obligations include, but are not limited to, the
Export-Import Bank, Federal Home Loan Mortgage Corporation, and Federal
National Mortgage Association.
Some obligations issued or guaranteed by U.S. government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury. Others, such as those issued by the Federal National Mortgage
Association, are supported by discretionary authority of the U.S. government
to purchase certain obligations of the agency or instrumentality. Still
others, such as those issued by the Student Loan Marketing Association, are
supported only by the credit of the agency or instrumentality.
. Bank Obligations - Certificates of deposit, time deposits and bankers'
acceptances of U.S. commercial banks having total assets of at least one
billion dollars and overseas branches of U.S. commercial banks and foreign
banks, which in the opinion of the Sub-Advisor, are of comparable quality.
However, each such bank with its branches has total assets of at least five
billion dollars, and certificates, including time deposits of domestic savings
and loan associations having at least one billion dollars in assets that are
insured by the Federal Savings and Loan Insurance Corporation. The Fund may
acquire obligations of U.S. banks that are not members of the Federal Reserve
System or of the Federal Deposit Insurance Corporation.
Obligations of foreign banks and obligations of overseas branches of U.S.
banks are subject to somewhat different regulations and risks than those of
U.S. domestic banks. For example, an issuing bank may be able to maintain that
the liability for an investment is solely that of the overseas branch which
could expose a Fund to a greater risk of loss. In addition, obligations of
foreign banks or of overseas branches of U.S. banks may be affected by
governmental action in the country of domicile of the branch or parent bank.
Examples of adverse foreign governmental actions include the imposition of
currency controls, the imposition of withholding taxes on interest income
payable on such obligations, interest limitations, seizure or nationalization
of assets, or the declaration of a moratorium. Deposits in foreign banks or
foreign branches of U.S. banks are not covered by the Federal Deposit
Insurance Corporation. A Fund only buys short-term instruments where the risks
of adverse governmental action are believed by the Sub-Advisor to be minimal.
A Fund considers these factors, along with other appropriate factors, in
making an investment decision to acquire such obligations. It only acquires
those which, in the opinion of management, are of an investment quality
comparable to other debt securities bought by the Fund. A Fund may invest in
certificates of deposit of selected banks having less than one billion dollars
of assets providing the certificates do not exceed the level of insurance
(currently $100,000) provided by the applicable government agency.
A certificate of deposit is issued against funds deposited in a bank or
savings and loan association for a definite period of time, at a specified
rate of return. Normally they are negotiable. However, a Fund occasionally may
invest in certificates of deposit which are not negotiable. Such certificates
may provide for interest penalties in the event of withdrawal prior to their
maturity. A bankers' acceptance is a short-term credit instrument issued by
corporations to finance the import, export, transfer, or storage of goods.
They are termed "accepted" when a bank guarantees their payment at maturity
and reflect the obligation of both the bank and drawer to pay the face amount
of the instrument at maturity.
. Commercial Paper - Short-term promissory notes issued by U.S. or foreign
corporations.
. Short-term Corporate Debt - Corporate notes, bonds, and debentures that at the
time of purchase have 397 days or less remaining to maturity.
. Repurchase Agreements - Instruments under which securities are purchased from
a bank or securities dealer with an agreement by the seller to repurchase the
securities at the same price plus interest at a specified rate.
. Taxable Municipal Obligations - Short-term obligations issued or guaranteed by
state and municipal issuers which generate taxable income.
The ratings of nationally recognized statistical rating organization ("NRSRO"),
such as Moody's Investor Services, Inc. ("Moody's") and Standard & Poor's
("S&P"), which are described in Appendix A, represent their opinions as to the
quality of the money market instruments which they undertake to rate. It should
be emphasized, however, that ratings are general and are not absolute standards
of quality. These ratings, including ratings of NRSROs other than Moody's and
S&P, are the initial criteria for selection of portfolio investments, but the
Sub-Advisor further evaluates these securities.
Municipal Obligations
---------------------
The California Insured Intermediate Municipal, California Municipal, and
Tax-Exempt Bond I Funds (the "Municipal Funds") can invest in "Municipal
Obligations." Municipal Obligations are obligations issued by or on behalf of
states, territories, and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities,
including municipal utilities, or multi-state agencies or authorities. The
interest on Municipal Obligations is exempt from federal income tax in the
opinion of bond counsel to the issuer. Three major classifications of Municipal
Obligations are: Municipal Bonds, that generally have a maturity at the time of
issue of one year or more; Municipal Notes, that generally have a maturity at
the time of issue of six months to three years; and Municipal Commercial Paper,
that generally has a maturity at the time of issue of 30 to 270 days.
The term "Municipal Obligations" includes debt obligations issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets, water and sewer works, and electric utilities.
Other public purposes for which Municipal Obligations are issued include
refunding outstanding obligations, obtaining funds for general operating
expenses, and lending such funds to other public institutions and facilities.
AMT-SUBJECT BONDS . Industrial development bonds are issued by or on behalf of
public authorities to obtain funds to provide for the construction, equipment,
repair or improvement of privately operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit,
industrial, port or parking facilities, air or water pollution control
facilities, and certain local facilities for water supply, gas, electricity, or
sewage or solid waste disposal. They are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from federal income tax in the
opinion of bond counsel to the issuer, even though the interest may be subject
to the federal alternative minimum tax.
. Municipal Bonds. Municipal Bonds may be either "general obligation" or
"revenue" issues. General obligation bonds are secured by the issuer's pledge
of its faith, credit, and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenues derived from a
particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source (e.g., the
user of the
facilities being financed), but not from the general taxing power. Industrial
development bonds and pollution control bonds in most cases are revenue bonds
and generally do not carry the pledge of the credit of the issuing
municipality. The payment of the principal and interest on industrial revenue
bonds depends solely on the ability of the user of the facilities financed by
the bonds to meet its financial obligations and the pledge, if any, of real
and personal property so financed as security for such payment. The Fund may
also invest in "moral obligation" bonds that are normally issued by special
purpose public authorities. If an issuer of moral obligation bonds is unable
to meet its obligations, the repayment of the bonds becomes a moral commitment
but not a legal obligation of the state or municipality in question.
. Municipal Notes. Municipal Notes usually are general obligations of the issuer
and are sold in anticipation of a bond sale, collection of taxes, or receipt
of other revenues. Payment of these notes is primarily dependent upon the
issuer's receipt of the anticipated revenues. Other notes include
"Construction Loan Notes" issued to provide construction financing for
specific projects, and "Bank Notes" issued by local governmental bodies and
agencies to commercial banks as evidence of borrowings. Some notes ("Project
Notes") are issued by local agencies under a program administered by the U.S.
Department of Housing and Urban Development. Project Notes are secured by the
full faith and credit of the United States.
. Bond Anticipation Notes ("BANs") are usually general obligations of state
and local governmental issuers which are sold to obtain interim financing
for projects that will eventually be funded through the sale of long-term
debt obligations or bonds. The ability of an issuer to meet its obligations
on its BANs is primarily dependent on the issuer's access to the long-term
municipal bond market and the likelihood that the proceeds of such bond
sales will be used to pay the principal and interest on the BANs.
. Tax Anticipation Notes ("TANs") are issued by state and local governments to
finance the current operations of such governments. Repayment is generally
to be derived from specific future tax revenues. TANs are usually general
obligations of the issuer. A weakness in an issuer's capacity to raise taxes
due to, among other things, a decline in its tax base or a rise in
delinquencies, could adversely affect the issuer's ability to meet its
obligations on outstanding TANs.
. Revenue Anticipation Notes ("RANs") are issued by governments or
governmental bodies with the expectation that future revenues from a
designated source will be used to repay the notes. In general they also
constitute general obligations of the issuer. A decline in the receipt of
projected revenues, such as anticipated revenues from another level of
government, could adversely affect an issuer's ability to meet its
obligations on outstanding RANs. In addition, the possibility that the
revenues would, when received, be used to meet other obligations could
affect the ability of the issuer to pay the principal and interest on RANs.
. Construction Loan Notes are issued to provide construction financing for
specific projects. Permanent financing, the proceeds of which are applied to
the payment of construction loan notes, is sometimes provided by a
commitment by the Government National Mortgage Association ("GNMA") to
purchase the loan, accompanied by a commitment by the Federal Housing
Administration to insure mortgage advances thereunder. In other instances,
permanent financing is provided by commitments of banks to purchase the
loan. The Tax-Exempt Bond I, California Municipal, and California Insured
Intermediate Municipal Funds will only purchase construction loan notes that
are subject to GNMA or bank purchase commitments.
. Bank Notes are notes issued by local governmental bodies and agencies such
as those described above to commercial banks as evidence of borrowings. The
purposes for which the notes are issued are varied but they are frequently
issued to meet short-term working-capital or capital-project needs. These
notes may have risks similar to the risks associated with TANs and RANs.
. Municipal Commercial Paper. Municipal Commercial Paper refers to short-term
obligations of municipalities that may be issued at a discount and may be
referred to as Short-Term Discount Notes. Municipal Commercial Paper is
likely to be used to meet seasonal working capital needs of a municipality
or interim construction financing. Generally they are repaid from general
revenues of the municipality or refinanced with long-term debt. In most
cases Municipal Commercial Paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.
. Variable and Floating Rate Obligations. Certain Municipal Obligations,
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and debt instruments issued by domestic banks or
corporations may carry variable or floating rates of interest. Such
instruments bear interest at rates which are not fixed, but which vary with
changes in specified market rates or indices, such as a bank prime rate or
tax-exempt money market index. Variable rate notes are adjusted to current
interest rate levels at certain specified times, such as every 30 days. A
floating rate note adjusts automatically whenever there is a change in its
base interest rate adjustor, e.g., a change in the prime lending rate or
specified interest rate indices. Typically such instruments carry demand
features permitting the Fund to redeem at par.
The Fund's right to obtain payment at par on a demand instrument upon demand
could be affected by events occurring between the date the Fund elects to
redeem the instrument and the date redemption proceeds are due which affects
the ability of the issuer to pay the instrument at par value. The
Sub-Advisor monitors on an ongoing basis the pricing, quality, and liquidity
of such instruments and similarly monitors the ability of an issuer of a
demand instrument, including those supported by bank letters of credit or
guarantees, to pay principal and interest on demand. Although the ultimate
maturity of such variable rate obligations may exceed one year, the Fund
treats the maturity of each variable rate demand obligation as the longer of
a) the notice period required before the Fund is entitled to payment of the
principal amount through demand or b) the period remaining until the next
interest rate adjustment. Floating rate instruments with demand features are
deemed to have a maturity equal to the period remaining until the principal
amount can be recovered through demand.
The Fund may purchase participation interests in variable rate Municipal
Obligations (such as industrial development bonds). A participation interest
gives the purchaser an undivided interest in the Municipal Obligation in the
proportion that its participation interest bears to the total principal
amount of the Municipal Obligation. The Fund has the right to demand payment
on seven days' notice, for all or any part of the Fund's participation
interest in the Municipal Obligation, plus accrued interest. Each
participation interest is backed by an irrevocable letter of credit or
guarantee of a bank. Banks will retain a service and letter of credit fee
and a fee for issuing repurchase commitments in an amount equal to the
excess of the interest paid on the Municipal Obligations over the negotiated
yield at which the instruments were purchased by the Fund.
. Stand-By Commitments. The Municipal Funds may acquire stand-by commitments
with respect to municipal obligations held in their respective portfolios.
Under a stand-by commitment, a broker-dealer, dealer, or bank would agree to
purchase, at the relevant Funds' option, a specified municipal security at a
specified price. Thus, a stand-by commitment may be viewed as the equivalent
of a put option acquired by a Fund with respect to a particular municipal
security held in the Fund's portfolio.
The amount payable to a Fund upon its exercise of a stand-by commitment
normally would be (1) the acquisition cost of the municipal security
(excluding any accrued interest that the Fund paid on the acquisition), less
any amortized market premium or plus any amortized market or original issue
discount during the period the Fund owned the security, plus, (2) all
interest accrued on the security since the last interest payment date during
the period the security was owned by the Fund. Absent unusual circumstances,
the Fund would value the underlying municipal security at amortized cost. As
a result, the amount payable by the broker-dealer, dealer or bank during the
time a stand-by commitment is exercisable would be substantially the same as
the value of the underlying municipal obligation.
A Fund's right to exercise a stand-by commitment would be unconditional and
unqualified. Although a Fund could not transfer a stand-by commitment, it
could sell the underlying municipal security to a third party at any time.
It is expected that stand-by commitments generally will be available to the
Funds without the payment of any direct or indirect consideration. The Funds
may, however, pay for stand-by commitments if such action is deemed
necessary. In any event, the total amount paid for outstanding stand-by
commitments held in a Fund's portfolio would not exceed 0.50% of the value
of a Fund's total assets calculated immediately after each stand-by
commitment is acquired.
The Funds intend to enter into stand-by commitments only with
broker-dealers, dealers, or banks that their Sub-Advisors believe present
minimum credit risks. A Fund's ability to exercise a stand-by commitment
will depend upon the ability of the issuing institution to pay for the
underlying securities at the time the stand-by commitment is exercised. The
credit of each institution issuing a stand-by commitment to a Fund will be
evaluated on an ongoing basis by the Sub-Advisor.
A Fund intends to acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its right thereunder for
trading purposes. The acquisition of a stand-by commitment would not affect
the valuation of the underlying municipal security. Each stand-by commitment
will be valued at zero in determining net asset value. Should a Fund pay
directly or indirectly for a stand-by commitment, its costs will be
reflected in realized gain or loss when the commitment is exercised or
expires. The maturity of a municipal security purchased by a Fund will not
be considered shortened by any stand-by commitment to which the obligation
is subject. Thus, stand-by commitments will not affect the dollar-weighted
average maturity of a Fund's portfolio.
. Other Municipal Obligations. Other kinds of Municipal Obligations are
occasionally available in the marketplace, and the Fund may invest in such
other kinds of obligations to the extent consistent with its investment
objective and limitations. Such obligations may be issued for different
purposes and with different security than those mentioned above.
. Risks of Municipal Obligations. The yields on Municipal Obligations are
dependent on a variety of factors, including general economic and monetary
conditions, money market factors, conditions in the Municipal Obligations
market, size of a particular offering, maturity of the obligation, and
rating of the issue. The Fund's ability to achieve its investment objective
also depends on the continuing ability of the issuers of the Municipal
Obligations in which it invests to meet their obligation for the payment of
interest and principal when due.
Municipal Obligations are subject to the provisions of bankruptcy,
insolvency, and other laws affecting the rights and remedies of creditors,
such as the Federal Bankruptcy Act. They are also subject to federal or
state laws, if any, which extend the time for payment of principal or
interest, or both, or impose other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. The power or ability of
issuers to pay, when due, principal of and interest on Municipal Obligations
may also be materially affected by the results of litigation or other
conditions.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Obligations. It may be expected that similar proposals
will be introduced in the future. If such a proposal was enacted, the
ability of the Fund to pay "exempt interest" dividends may be adversely
affected. The Fund would reevaluate its investment objective and policies
and consider changes in its structure.
Special Considerations Relating to California Municipal Obligations
-------------------------------------------------------------------
The California Insured Intermediate Municipal Fund and the California Municipal
Fund concentrate their investments in California municipal obligations, and
therefore may be significantly impacted by political, economic, or regulatory
developments that affect issuers in California and their ability to pay
principal and interest on their obligations. The ability of issuers to pay
interest on, and repay principal of, California municipal obligations may be
affected by (1) amendments to the California Constitution and related statutes
that limit the taxing and spending authority of California government entities,
(2) voter initiatives, (3) a wide variety of California laws and regulations,
including laws related to the operation of health care institutions and laws
related to secured interests in real property, and (4) the general financial
condition of the State of California and the California economy.
Insurance
---------
The insured municipal obligations in which the California Insured Intermediate
Municipal Fund will invest and the other Municipal Funds may invest are insured
under insurance policies that relate to the specific municipal obligation in
question and that are issued by an insurer having a claims-paying ability rated
AAA by S&P or Aaa by Moody's. This insurance is generally non-cancelable and
will continue in force so long as the municipal obligations are outstanding and
the insurer remains in business.
The insured municipal obligations are generally insured as to the scheduled
payment of all installments of principal and interest as they fall due. The
insurance covers only credit risk and therefore does not guarantee the market
value of the obligations in a Fund's investment portfolio or a Fund's NAV. The
Fund's NAV will continue to fluctuate in response to fluctuations in interest
rates. A Fund's investment policy requiring investment in insured municipal
obligations will not affect the Fund's ability to hold its assets in cash or to
invest in escrow-secured and defeased bonds or in certain short-term tax-exempt
obligations, or affect its ability to invest in uninsured taxable obligations
for temporary or liquidity purposes or on a defensive basis.
Taxable Investments of the Municipal Funds
------------------------------------------
Each of the Municipal Funds may invest a portion of its assets, as described in
the prospectus, in taxable short-term investments consisting of: Obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, domestic bank certificates of deposit and bankers'
acceptances, short-term corporate debt securities such as commercial paper, and
repurchase agreements ("Taxable Investments"). These investments must have a
stated maturity of one year or less at the time of purchase and must meet the
following standards: banks must have assets of at least $1 billion; commercial
paper must be rated at least "A" by S&P or "Prime" by Moody's or, if not rated,
must be issued by companies having an outstanding debt issue rated at least "A"
by S&P or Moody's; corporate bonds and debentures must be rated at least "A" by
S&P or Moody's. Interest earned from Taxable Investments is taxable to
investors. When, in the opinion of the Fund's Manager, it is advisable to
maintain a temporary "defensive" posture, each Municipal Fund may invest without
limitation in Taxable Investments. At other times, Taxable Investments,
Municipal Obligations that do not meet the quality standards required for the
80% portion of the portfolio and Municipal Obligations the interest on which is
treated as a tax preference item for purposes of the federal alternative minimum
tax will not exceed 20% of the Fund's total assets.
Other Investment Companies
--------------------------
Each Fund reserves the right to invest up to 10% of its total assets in the
securities of all investment companies, but may not acquire more than 3% of the
voting securities of, nor invest more than 5% of its total assets in securities
of, any other investment company. Securities of other investment companies,
including shares of closed-end investment companies, unit investment trusts,
various exchange-traded funds ("ETFs"), and other open-end investment companies,
represent interests in professionally managed portfolios that may invest in any
type of instrument. Certain types of investment companies, such as closed-end
investment companies, issue a fixed number of shares that trade on a stock
exchange or over-the-counter at a premium or a discount to their net asset
value. Others are continuously offered at net asset value, but may also be
traded in the secondary market. ETFs are often structured to perform in a
similar fashion to a broad-based securities index. Investing in ETFs involves
substantially the same risks as investing directly in the underlying
instruments. In addition, ETFs involve the risk that they will not perform in
exactly the same fashion, or in response to the same factors, as the index or
underlying instruments.
As a shareholder in an investment company, an Fund would bear its ratable share
of that entity's expenses, including its advisory and administrative fees. The
Fund would also continue to pay its own advisory fees and other expenses.
Consequently, the Fund and its shareholders, in effect, will be absorbing two
levels of fees with respect to investments in other investment companies.
INDUSTRY CONCENTRATIONS
Each of the Principal LifeTime Funds and Strategic Asset Management Portfolios
concentrates its investments in the mutual fund industry.
Each of the other Funds, except the Global Real Estate Securities, Preferred
Securities, and Real Estate Securities Funds, may not concentrate (invest more
than 25% of its assets) its investments in any particular industry. The LargeCap
S&P 500 Index, MidCap S&P 400 Index, and SmallCap S&P 600 Index Funds may
concentrate their investments in a particular industry only to the extent that
the relevant indices are so concentrated. The International Growth Fund,
Partners LargeCap Growth Fund, Partners LargeCap Growth Fund II, Partners
LargeCap Value Fund I, Partners LargeCap Value Fund II, Partners MidCap Growth
Fund II, Partners SmallCap Growth Fund II, Partners SmallCap Value Fund II and
each of the funds sub-advised by Edge Asset Management, Inc. use the industry
groups of Global Industry Classification Standard (GICS/(R)/). The other Funds
use industry classifications based on the "Directory of Companies Filing Annual
Reports with the Securities and Exchange Commission ("SEC")." The Funds
interpret their policy with respect to concentration in a particular industry to
apply to direct investments in the securities
of issuers in a particular industry. For purposes of this restriction,
mortgage-backed securities that are issued or guaranteed by the U.S. government,
its agencies or instrumentalities are not subject to the Funds' industry
concentration restrictions, by virtue of the exclusion from that test available
to all U.S. government securities. In the case of privately issued
mortgage-related securities, or any asset-backed securities, and municipal
obligations issued by government or political subdivisions of governments, the
Funds take the position that such securities do not represent interests in any
particular "industry" or group of industries.
PORTFOLIO TURNOVER
Portfolio turnover is a measure of how frequently a portfolio's securities are
bought and sold. The portfolio turnover rate is generally calculated as the
dollar value of the lesser of a portfolio's purchases or sales of shares of
securities during a given year, divided by the monthly average value of the
portfolio securities during that year (excluding securities whose maturity or
expiration at the time of acquisition were less than one year). For example, a
portfolio reporting a 100% portfolio turnover rate would have purchased and sold
securities worth as much as the monthly average value of its portfolio
securities during the year.
It is not possible to predict future turnover rates with accuracy. Many variable
factors are outside the control of a portfolio manager. The investment outlook
for the securities in which a portfolio may invest may change as a result of
unexpected developments in securities markets, economic or monetary policies, or
political relationships. High market volatility may result in a portfolio
manager using a more active trading strategy than might otherwise be employed.
Each portfolio manager considers the economic effects of portfolio turnover but
generally does not treat the portfolio turnover rate as a limiting factor in
making investment decisions.
Sale of shares by investors may require the liquidation of portfolio securities
to meet cash flow needs. In addition, changes in a particular portfolio's
holdings may be made whenever the portfolio manager considers that a security is
no longer appropriate for the portfolio or that another security represents a
relatively greater opportunity. Such changes may be made without regard to the
length of time that a security has been held.
Higher portfolio turnover rates generally increase transaction costs that are
expenses of the Account. Active trading may generate short-term gains (losses)
for taxable shareholders.
The following Funds had significant variation in portfolio turnover rates over
the two most recently completed fiscal years:
. Diversified International (2006 - 107.5%; 2005 - 202.7%): In 2005, the PIF
Diversified International Fund acquired the assets of the Principal
International Fund and Principal International SmallCap Fund. The management
approach remains consistent and thus the current turnover is in-line with
historical standards.
. Equity Income I (2006 - 81.0%; 2005 - 32.0%) The Fund experienced a higher
turnover due to portfolio repositioning and the purchase of additional
largecap, value-and yield-oriented securities.
. Government & High Quality Bond (2006 - 271.5%; 2005 - 542.3%): The Fund
experienced lower turnover as market conditions warranted less need for
portfolio repositioning. The management approach remains consistent and thus
turnover levels may increase as conditions change going forward.
. LargeCap Value (2006 - 92.8%; 2005 - 181.1%): The Fund experienced lower
turnover as market conditions warranted less need for portfolio repositioning.
The management approach remains consistent and thus turnover levels may
increase as conditions change going forward.
. MidCap Blend (2006 - 43.4%; 2005 - 133.8%): In 2005, the PIF MidCap Blend Fund
acquired the assets of the Principal MidCap Fund, Inc. and larger sales due to
the asset size drove the portfolio turnover higher. The management approach
remains consistent and thus current turnover is in-line with historical
standards.
. Short-Term Bond (2006 - 49.1%; 2005 - 110.8%): The Fund experienced lower
turnover as market conditions warranted less need for portfolio repositioning.
The management approach remains consistent and thus turnover levels may
increase as conditions change going forward.
MANAGEMENT
BOARD OF DIRECTORS
Under Maryland law, the Board of Directors of the Fund is responsible for
overseeing the management of the Fund's business and affairs. The Board meets
several times during the year to fulfill this responsibility. Other than serving
as Directors, most of the Board members have no affiliation with the Fund or its
service providers. Each Director serves until a successor is duly qualified and
elected.
MANAGEMENT INFORMATION
The following table presents certain information regarding the Directors of the
Fund, including their principal occupations which, unless specific dates are
shown, are of more than five years duration. In addition, the table includes
information concerning other directorships held by each Director in reporting
companies under the Securities Exchange Act of 1934 or registered investment
companies under the 1940 Act. Information is listed separately for those
Directors who are "interested persons" (as defined in the 1940 Act) of the Fund
(the "Interested Directors") and those Directors who are not interested persons
of the Fund (the "Independent Directors"). All Directors serve as directors for
each of the two investment companies (with a total of 108 portfolios) sponsored
by Principal Life: the Fund and the Principal Variable Contracts Fund, Inc.
(collectively, the "Fund Complex").
Each officer of the Fund has the same position with the Principal Variable
Contracts Fund, Inc.
The following directors are considered to be Independent Directors.
-------------------------------------------------------------------
NUMBER
OF
PORTFOLIOS
IN FUND OTHER
COMPLEX DIRECTORSHIPS
OVERSEEN HELD
NAME, ADDRESS, AND POSITION(S) HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) BY BY
YEAR OF BIRTH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR
------------------ --------------------- ----------- ----------------------- ---------- -------------
Elizabeth Ballantine Director Since 2004 Principal, EBA Associates 108 The McClatchy Company
711 High Street Member Audit and (consulting and investments)
Des Moines, Iowa 50392 Nominating Committee
1948
Kristianne Blake Director Since 2007 President, Kristianne Gates 108 Avista Corporation;
711 High Street Member Audit and Blake, P.S. (CPA specializing in Russell Investment
Des Moines, Iowa 50392 Nominating Committee personal financial and tax Company*
1954 planning) Russell Investment
Funds*
Richard W. Gilbert Director Since 2000 President, Gilbert 108 Calamos
711 High Street Member Audit and Communications, Inc. Asset
Des Moines, Iowa 50392 Nominating Committee (management advisory services) Management,
1940 Inc.
Mark A. Grimmett Director Since 2004 Executive Vice President and 108
711 High Street Member Audit and CFO, Merle Norman Cosmetics, None
Des Moines, Iowa 50392 Nominating Committee Inc.
1960 (manufacturer and distributor of
skin care products)
Fritz S. Hirsch Director Since 2005 President and CEO, Sassy, Inc. 108 None
711 High Street Member Audit and (manufacturer of infant and
Des Moines, Iowa 50392 Nominating juvenile products)
1951 Committee
William C. Kimball Director Since 2000 Retired. Formerly, Chairman and 108 Casey's General Store,
711 High Street Member Audit and CEO, Medicap Pharmacies, Inc. Inc.
Des Moines, Iowa 50392 Nominating Committee (chain of retail pharmacies)
1947
Barbara A. Lukavsky Director Since 1993 President and CEO, Barbican 108
711 High Street Member Audit and Enterprises, Inc. None
Des Moines, Iowa 50392 Nominating Committee (holding company for franchises
1940 Member Executive in the cosmetics industry)
Committee
Daniel Pavelich Director Since 2007 Retired. Formerly, Chairman and 108 Catalytic Inc; Vaagen
711 High Street Member Audit and CEO of BDO Seidman (tax, Bros. Lumber, Inc.
Des Moines, Iowa 50392 Nominating Committee accounting and financial
1944 consulting services)
Richard Yancey Director Since 2007 Retired. Formerly, Managing 108 AdMedia Partners, Inc.;
711 High Street Member Audit and Director of Dillon Read & Co. Czech and Slovak
Des Moines, Iowa 50392 Nominating Committee (an investment bank, now part of American Enterprise Fund
1926 UBS)
* The PIF Funds and the funds of Russell Investment Funds and Russell Investment Company have one or more common sub-advisors.
The following directors are considered to be Interested Directors because they
are affiliated persons of Principal Management Corporation (the "Manager");
Principal Funds Distributor, Inc. (the "Distributor"), the Fund's principal
underwriter for Class A, Class B, and Class C shares; or Princor Financial
Services Corporation ("Princor"), the Fund's principal underwriter for
Institutional Class, Class J, Advisors Select, Advisors Signature, Advisors
Preferred, Select, and Preferred share classes.
The address for the Distributor is as follows:
----------------------------------------------
1201 Third Ave., 8th Floor
Seattle, Washington 98101
The address for Princor is as follows:
--------------------------------------
711 High Street
Des Moines, Iowa 50392
NUMBER
OF
PORTFOLIOS
IN FUND OTHER
COMPLEX DIRECTORSHIPS
POSITIONS WITH THE MANAGER AND ITS OVERSEEN HELD
NAME, ADDRESS AND POSITION(S) HELD WITH LENGTH OF AFFILIATES; PRINCIPAL OCCUPATION(S) BY BY
YEAR OF BIRTH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR
----------------- --------------------- ----------- ----------------------------------- ---------- -------------
Ralph C. Eucher Director Since 1999 Director and President, the Manager 108
711 High Street President and Chief since 1999. Director, the Distributor None
Des Moines, Iowa 50392 Executive since 2007. Director, Princor since
1952 Officer 1999. President, Princor 1999-2005.
Member Executive Senior Vice President, Principal Life,
Committee since 2002. Prior thereto, Vice
President.
William G. Papesh Director Since 2007 President and CEO of WM Group of Funds; 108 None
1201 Third Avenue, 8th President and Director of Edge Asset
Floor Management, Inc.
Seattle, WA
1943
Larry D. Zimpleman Director Since 2001 Chairman and Director, the Manager 108 None
711 High Street Chairman of the Board and Princor since 2001. President and
Des Moines, Iowa 50392 Member Executive Chief Operating Officer, Principal Life
1951 Committee since 2006. President, Retirement and
Investor Services, Principal Financial
Group, Inc. 2003-2006. Executive Vice
President, 2001-2003, and prior thereto,
Senior Vice President, Principal Life.
Officers of the Fund
--------------------
The following table presents certain information regarding the officers of the
------------------------------------------------------------------------------
Fund, including their principal occupations which, unless specific dates are
----------------------------------------------------------------------------
shown, are of more than five years duration. Officers serve at the pleasure of
------------------------------------------------------------------------------
the Board of Directors.
-----------------------
NAME, ADDRESS AND POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
YEAR OF BIRTH FUND DURING PAST 5 YEARS
----------------- --------------------- -----------------------
Craig L. Bassett Treasurer (since 1993) Vice President and Treasurer,
711 High Street Principal Life
Des Moines, Iowa
50392
1952
Michael J. Beer Executive Vice Executive Vice President and
711 High Street President Chief Operating Officer, the
Des Moines, Iowa (since 1993) and Chief Manager; Executive Vice
50392 Financial President, the Distributor,
1961 Officer (since 2007) since 2007; President,
Princor, since 2005
Randy L. Bergstrom Assistant Tax Counsel Counsel, Principal Life
711 High Street (since 2005)
Des Moines, Iowa
50392
1955
David J. Brown Chief Compliance Vice President, Product &
711 High Street Officer Distribution Compliance,
Des Moines, Iowa (since 2004) Principal Life; Senior Vice
50392 President, the Manager, since
1960 2004; Senior Vice President,
the Distributor, since 2007,
Second Vice President,
Princor, since 2003, and
prior thereto, Vice
President, the Manager and
Princor
Jill R. Brown Senior Vice President Second Vice President,
1100 Investment Blvd (since 2007) Principal Financial Group and
El Dorado Hills, CA Senior Vice President, the
95762 Manager and Princor, since
1967 2006, Chief Financial
Officer, Princor since 2003,
Vice President, Princor
2003-2006. Senior Vice
President and Chief Financial
Officer, the Distributor,
since 2007; prior thereto,
Assistant Financial
Controller, Principal Life
Steve Gallaher Assistant Counsel Second Vice President and
711 High Street (since 2006) Counsel, Principal Life since
Des Moines, Iowa 50392 2006; Self-Employed Writer in
1955 2005; 2004 and prior thereto
Senior Vice President and
Counsel of Principal
Residential Mortgage, Inc.
Ernest H. Gillum Vice President and Vice President and Chief
711 High Street Assistant Secretary Compliance Officer, the
Des Moines, Iowa (since 1993) Manager, since 2004, and
50392 prior thereto, Vice
1955 President, Compliance and
Product Development, the
Manager
Patrick A. Kirchner Assistant Counsel Counsel, Principal Life
711 High Street (since 2002)
Des Moines, Iowa
50392
1960
Carolyn F. Kolks Assistant Tax Counsel Counsel, Principal Life,
711 High Street (since 2005) since 2003 and prior thereto,
Des Moines, Iowa Attorney
50392
1962
Sarah J. Pitts Assistant Counsel Counsel, Principal Life
711 High Street (since 2000)
Des Moines, Iowa
50392
1945
Debra C. Ramsey Senior Vice President President, Principal Funds
1100 Investment Blvd of Distribution Distributors, Inc. and Second
El Dorado Hills, CA (since 2007) Vice President, Principal
95762 Financial Group since 2007.
1953 Prior thereto, President of
WM Funds Distributor and WM
Shareholder Services.
Layne A. Rasmussen Vice President and Vice President and Controller
711 High Street Controller - Mutual Funds, the Manager
Des Moines, Iowa (since 2000)
50392
1958
Michael D. Roughton Counsel Vice President and Senior
711 High Street (since 1993) Securities Counsel, Principal
Des Moines, Iowa Financial Group, Inc.; Senior
50392 Vice President and Counsel,
1951 the Manager, the Distributor
and Princor; and Counsel,
Principal Global
Adam U. Shaikh Assistant Counsel Counsel, Principal Life,
711 High Street (since 2006) since 2006. Prior thereto,
Des Moines, Iowa 50392 practicing attorney.
1972
Dan Westholm Assistant Treasurer Director Treasury, since
711 High Street (since 2006) 2003. Prior thereto,
Des Moines, Iowa Assistant Treasurer.
50392
1966
Beth Wilson Secretary Director and Secretary,
711 High Street (since 2007) Principal Funds, since 2007.
Des Moines, Iowa Prior thereto, Business
50392 Manager for Pella Corp.
1956
BOARD COMMITTEES . The Fund's board has an Audit and Nominating Committee and
an Executive Committee. Committee members are identified above. The Audit and
Nominating Committee is comprised of all the Independent Directors. During the
last fiscal year, the Audit and Nominating Committee met four times.
The auditing functions of the Audit and Nominating Committee include: (1)
appointing, compensating, and conducting oversight of the work of the
independent auditors; (2) reviewing the scope and approach of the proposed audit
plan and the audit procedures to be performed; (3) ensuring the objectivity of
the internal auditors and the independence of the independent auditors; and (4)
establishing and maintaining procedures for the handling of complaints received
regarding accounting, internal controls, and auditing. In addition, the
committee meets with the independent and internal auditors to discuss the
results of the audits and reports to the full Board of the Fund. The committee
also receives reports about accounting and financial matters affecting the Fund.
The nominating functions of the Audit and Nominating Committee include selecting
and nominating all candidates who are not "interested persons" of the Fund (as
defined in the 1940 Act) for election to the Board. Generally, the committee
requests director nominee suggestions from the committee members and management.
In addition, the committee will consider director candidates recommended by
shareholders of the Fund. Recommendations should be submitted in writing to
Principal Investors Fund, Inc. at 680 8th Street, Des Moines, Iowa 50392-2080.
The committee has not established any specific minimum qualifications for
nominees. When evaluating a person as a potential nominee to serve as an
independent director, the committee will generally consider, among other
factors: age; education; relevant business experience; geographical factors;
whether the person is "independent" and otherwise qualified under applicable
laws and regulations to serve as a director; and whether the person is willing
to serve, and willing and able to commit the time necessary for attendance at
meetings and the performance of the duties of an independent director. The
committee also meets personally with the nominees and conducts a reference
check. The final decision is based on a combination of factors, including the
strengths and the experience an individual may bring to the Board. The Board
does not use regularly the services of any professional search firms to identify
or evaluate or assist in identifying or evaluating potential candidates or
nominees.
The Executive Committee is selected by the Board. It may exercise all the powers
of the Board, with certain exceptions, when the Board is not in session. The
Committee must report its actions to the Board. During the year ended October
31, 2006, the committee met once.
The following tables set forth the aggregate dollar range of the equity
securities of the mutual funds within the Fund Complex which were beneficially
owned by the Directors as of December 31, 2006. The Fund Complex currently
includes the separate series of the Fund and of Principal Variable Contracts
Fund, Inc.
For the purpose of these tables, beneficial ownership means a direct or indirect
pecuniary interest. Only the Directors who are "interested persons" are eligible
to participate in an employee benefit program which invests in Principal
Investors Fund. Directors who beneficially owned shares of the series of the
Fund did so through variable life insurance and variable annuity contracts
issued by Principal Life. Please note that exact dollar amounts of securities
held are not listed. Rather, ownership is listed based on the following dollar
ranges:
INDEPENDENT DIRECTORS (NOT CONSIDERED TO BE "INTERESTED PERSONS")
Independent directors Kristianne Blake, Daniel Pavelich, and Richard Yancey, who
began serving as directors of the Fund on January 16, 2007, did not own shares
of any of the funds as of December 31, 2006.
A $0
B $1 up to and including $10,000
C $10,001 up to and including $50,000
D $50,001 up to and including $100,000
E $100,001 or more
PRINCIPAL INVESTORS FUND BALLANTINE GILBERT GRIMMETT HIRSCH KIMBALL LUKAVSKY
------------------------ ---------- ------- -------- ------ ------- --------
Bond & Mortgage Securities A D C A A A
Disciplined LargeCap Blend A B A A A A
Diversified International C D A A A A
Government & High Quality Bond A B C A A A
Inflation Protection A A C A A A
International Emerging Markets C A A A A A
LargeCap Growth A D A A A A
LargeCap Value A C A A A A
MidCap Blend A D C A A A
Money Market A B C A A D
Partners LargeCap Blend I A B C A A A
Partners LargeCap Value C A A A A A
Partners MidCap Value A A A A D A
Preferred Securities A A A A D A
Principal LifeTime 2010 A A C A A A
Principal LifeTime 2050 A A A E A A
Real Estate Securities C A C A E A
Short-Term Bond A A A A A A
SmallCap Blend A A C A A A
Ultra Short Bond A A C A A A
TOTAL FUND COMPLEX E E E E E D
DIRECTORS CONSIDERED TO BE "INTERESTED PERSONS"
William G. Papesh, who began serving as a director on January 5, 2007, did not
own shares of any of the funds as of December 31, 2006.
A $0
B $1 up to and including $10,000
C $10,001 up to and including $50,000
D $50,001 up to and including $100,000
E $100,001 or more
RALPH C. LARRY D.
PRINCIPAL INVESTORS FUND EUCHER ZIMPLEMAN
------------------------ ------ ---------
Bond & Mortgage Securities A A
Disciplined LargeCap Blend C A
Diversified International E A
Government & High Quality Bond C A
LargeCap Growth D A
LargeCap S&P 500 Index E A
LargeCap Value A A
MidCap Blend E A
Money Market D A
Partners LargeCap Blend E A
Partners LargeCap Blend I C A
Partners LargeCap Growth I C A
Partners LargeCap Growth II C A
Partners LargeCap Value E A
Partners MidCap Growth A A
Real Estate Securities A A
Short-Term Bond A A
PRINCIPAL INVESTORS FUND (THROUGH PARTICIPATION IN AN EMPLOYEE
BENEFIT PLAN)
Bond & Mortgage Securities C A
Diversified International A A
Government & High Quality Bond C A
International Emerging Markets A A
LargeCap Growth D A
LargeCap S&P 500 Index A A
LargeCap Value D A
MidCap Blend C A
Partners LargeCap Blend I A A
Partners LargeCap Growth I A A
Partners LargeCap Value A A
Partners MidCap Growth A A
Principal LifeTime 2020 A E
Principal LifeTime Strategic Income A A
Real Estate Securities A A
SmallCap S&P 600 Index E A
TOTAL FUND COMPLEX E E
COMPENSATION . The Fund does not pay any remuneration to its Directors who are
employed by the Manager or its affiliates or to its officers who are furnished
to the Fund by the Manager and its affiliates pursuant to the Management
Agreement. Each Director who is not an "interested person" received compensation
for service as a member of the Boards of all investment companies sponsored by
Principal Life based on a schedule that takes into account an annual retainer
amount and the number of meetings attended. These fees and expenses are divided
among the funds and portfolios based on their relative net assets.
The following table provides information regarding the compensation received by
the Independent Directors from the Fund and the from the Fund Complex during the
fiscal year ended October 31, 2006. On that date, there were 2 funds (with a
total of 110 portfolios in the Fund Complex). The Fund does not provide
retirement benefits to any of the Directors.
DIRECTOR THE FUND FUND COMPLEX
-------- -------- ------------
$ $
Elizabeth Ballantine 51,802 81,000
Kristianne Blake* $0 $0
$ $
Fritz Hirsch 52,442 82,000
$ $
Richard W. Gilbert 52,442 82,000
$ $
Mark A. Grimmett 60,116 94,000
$ $
William C. Kimball 52,442 82,000
$ $
Barbara A. Lukavsky 52,442 82,000
Daniel Pavelich* $0 $0
Richard Yancey* $0 $0
* Not elected as a Director until January 16, 2007.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of September 21, 2007, the Officers and Directors of the Fund as a group
owned less than 1% of the outstanding shares of any Class of any of the Funds.
The following table shows as of September 21, 2007 the percentage of the
outstanding shares of each of the Funds owned of record or beneficially by
Principal Life, either directly or through subsidiaries. Principal Life and its
subsidiaries own all of these shares both of record and beneficially, except as
otherwise indicated. The ultimate parent of Principal Life is Principal
Financial Group, Inc.
% OF OUTSTANDING
FUND SHARES OWNED
---- ----------------
Bond & Mortgage Securities 0.31%
California Insured Intermediate Municipal 0.00
California Municipal 0.00
Disciplined LargeCap Blend 1.66
Diversified International 2.29
Equity Income I 0.00
Government & High Quality Bond 0.43
High Quality Intermediate-Term Bond 0.00
High Yield 25.23
High Yield II 0.00
Income 0.00
Inflation Protection 68.08
International Emerging Markets 0.01
International Growth 30.49
LargeCap Growth 1.80
LargeCap S&P 500 Index 0.03
LargeCap Value 10.06
MidCap Blend 0.02
MidCap Growth 0.09
MidCap Stock 0.00
MidCap S&P 400 Index 0.00
MidCap Value 0.01
Money Market 10.02
Mortgage Securities 0.00
Partners Global Equity 9.37
Partners International 58.22
Partners LargeCap Blend 56.43
Partners LargeCap Blend I 0.00
Partners LargeCap Growth I 53.74
Partners LargeCap Growth II 86.91
Partners LargeCap Value 63.33
Partners LargeCap Value I 59.99
Partners LargeCap Value II 97.56
Partners MidCap Growth 53.22
Partners MidCap Growth I 93.66
Partners MidCap Growth II 93.54
Partners MidCap Value 59.84
Partners MidCap Value I 82.95
Partners SmallCap Blend 96.60
Partners SmallCap Growth I 50.20
Partners SmallCap Growth II 80.07
Partners SmallCap Growth III 45.60
Partners SmallCap Value 81.12
Partners SmallCap Value I 72.01
Partners SmallCap Value II 97.11
Preferred Securities 18.66
Principal LifeTime 2010 61.05
Principal LifeTime 2020 61.44
Principal LifeTime 2030 61.85
Principal LifeTime 2040 66.38
Principal LifeTime 2050 74.34
Principal Lifetime Strategic Income 60.54
Real Estate Securities 13.39
SAM Balanced Portfolio 0.02
SAM Conservative Balanced Portfolio 0.07
SAM Conservative Growth Portfolio 0.03
SAM Flexible Income Portfolio 0.02
SAM Strategic Growth Portfolio 0.04
Short-Term Bond 2.64
Short-Term Income 0.00
SmallCap Blend 11.45
SmallCap Growth 0.01
SmallCap S&P 600 Index 0.02
SmallCap Value 0.00
Tax-Exempt Bond I 0.00
Ultra Short Bond 3.64
West Coast Equity 0.00
The Directors and Officers of the Fund, member companies of the Principal
Financial Group, and certain other persons may purchase shares of the Funds
without the payment of any sales charge. The sales charge is waived on these
transactions because there are either no distribution costs or only minimal
distribution costs associated with the transactions. For a description of the
persons entitled to a waiver of sales charge in connection with their purchase
of shares of the Funds, see the discussion of the waiver of sales charges under
the caption "The Costs of Investing" in the prospectus for the Class A, B, and C
shares.
As of September 4, 2007, each of the following owned more than 25% of the voting
securities of the specified Funds:
SHAREHOLDER PERCENTAGE
OF RECORD FUND OF OWNERSHIP
----------- ---- ------------
Bond & Mortgage Securities
Principal LifeTime 2020 Fund Fund 26.6%
Principal Life Insurance Co High Yield Fund 34.0
PIF SAM Balanced Portfolio Income Fund
Principal Life Insurance Co Inflation Protection Fund 67.4
Principal Life Insurance Co International Growth Fund 30.4
PIF SAM Balance Portfolio Mortgage Securities Fund
Principal Life Insurance Co Partners Global Equity Fund
Principal Life Insurance Co Partners International Fund 58.2
Principal Life Insurance Co Partner LargeCap Blend Fund 57.0
Partners LargeCap Growth Fund
Principal Life Insurance Co I
Partners LargeCap Growth Fund
Principal Life Insurance Co II 86.9
Principal Life Insurance Co Partners LargeCap Value Fund
Partners LargeCap Value Fund
Principal Life Insurance Co I 59.8
Partners LargeCap Value Fund
Principal Life Insurance Co II 97.6
Principal Life Insurance Co Partners MidCap Growth Fund 53.9
Principal Life Insurance Co Partners MidCap Growth Fund I
Partners MidCap Growth Fund
Principal Life Insurance Co II
Principal Life Insurance Co Partners MidCap Value Fund 60.3
Principal Life Insurance Co Partners MidCap Value Fund I 83.6
Principal Life Insurance Co Partners SmallCap Blend Fund 97.6
Partners SmallCap Growth Fund
Principal Life Insurance Co I 50.6
Partners SmallCap Growth Fund
Principal Life Insurance Co II 80.1
Partners SmallCap Growth Fund
Principal Life Insurance Co III 45.9
Principal Life Insurance Co Partners SmallCap Value Fund 81.3
Partners SmallCap Value Fund
Principal Life Insurance Co I 72.2
Partners SmallCap Value Fund
Principal Life Insurance Co II 97.3
Principal Life Insurance Co Principal LifeTime 2010 Fund 61.4
Principal Life Insurance Co Principal LifeTime 2020 Fund 61.5
Principal Life Insurance Co Principal LifeTime 2030 Fund 61.8
Principal Life Insurance Co Principal LifeTime 2040 Fund 66.3
Principal Life Insurance Co Principal LifeTime 2050 Fund 74.1
Principal LifeTime Strategic
Principal Life Insurance Co Income Fund
PIF SAM Flexible Income
Portfolio Short-Term Income Fund
Principal LifeTime 2010 Fund Ultra Short Bond Fund
Principal LifeTime Strategic
Income Fund Ultra Short Bond Fund
Delaware Charter Guarantee &
Trust
FBO Various Qualified Plans
FBO Principal Financial Group
Attn: RIS NPIO Trade Desk
711 High Street
Des Moines, IA 50392 MidCap S&P 400 Index Fund
National Financial Services
For the Exclusive Benefit of
our Customers
200 Liberty Street
New York, NY 10281-1003 Money Market Fund 51.6
Trustar - FBO Church of God
Attn: NPIO Trade Desk
P.O. BOX 8963 High Quality
WILMINGTON, DE 19899-0960 Intermediate-Term Bond Fund 26.5
The address for each Principal LifeTime Fund, PIF SAM Portfolio and Principal
Life Insurance Company is 711 High Street, Des Moines, IA 50392-0200. Shares
owned by the Principal LifeTime Funds or Principal Life Insurance Company must
be voted in the same proportion as shares of the Funds owned by other
shareholders are voted. Therefore, neither the Principal LifeTime Funds, PIF SAM
Portfolios nor Principal Life Insurance Company exercise voting discretion.
The By-laws of the Principal Investors Fund sets the quorum requirement (a
quorum must be present at a meeting of shareholders for business to be
transacted). The By-laws of the Fund states that a quorum is "The presence in
person or by proxy of one-third of the shares of each Fund outstanding at the
close of business on the Record Date constitutes a quorum for a meeting of that
Fund."
Certain proposals presented to shareholders for approval require the vote of a
"majority of the outstanding voting securities," which is a term defined in the
1940 Act to mean, with respect to a Fund, the affirmative vote of the lesser of
(1) 67% or more of the voting securities of the Fund present at the meeting of
that Fund, if the holders of more than 50% of the outstanding voting securities
of the Fund are present in person or by proxy, or (2) more than 50% of the
outstanding voting securities of the Fund (a "Majority of the Outstanding Voting
Securities"). Approval of such proposals would not be controlled merely by a
Principal LifeTime Fund.
Certain proposals require for approval the affirmative vote of the holders of a
plurality of the shares voted at the meeting and thus may be approved by vote of
a Principal LifeTime Fund.
As of September 4, 2007, the following shareholders owned 5% or more of the
outstanding shares of any Class of the Funds:
ADVISORS ADVISORS ADVISORS CLASS CLASS CLASS CLASS
FUND NAME PREFERRED SELECT SIGNATURE PREFERRED SELECT INSTITUTIONAL J A B C
Bond & Mortgage Securities Fund 4592 4590 4605 4593 4591 4594 4501 4101 4201 4401
California Insured Intermediate
Municipal Fund 4176 4276 4476
California Municipal Fund 4177 4277 4477
Disciplined LargeCap Blend 4697 4695 4619 4698 4696 4699 4192 4292 4492
Diversified International Fund 4672 4670 4617 4673 4671 4674 4508 4108 4208 4408
Equity Income Fund I 4949 4104 4204 4404
Global Real Estate Securities 4905 4131 4431
Government & High Quality Bond
Fund 4612 4610 4607 4613 4611 4614 4503 4153 4253 4453
High Quality Intermediate-Term
Bond Fund 4622 4620 4608 4623 4621 4624 4504
High Yield Fund 4798
High Yield Fund II 4585 4178 4278 4478
Income Fund 4586 4179 4279 4479
Inflation Protection Fund 4707 4705 4709 4708 4706 4715 4546 4154 4454
International Emerging Markets
Fund 4662 4660 4616 4663 4661 4664 4507 4107 4207 4407
International Growth Fund 4812 4810 4618 4813 4811 4814 4509 4132 4432
LargeCap Growth Fund 4702 4700 4625 4703 4701 4704 4512 4112 42142 4412
LargeCap S&P 500 Index Fund 4712 4710 4626 4713 4711 4714 4513 4113 4413
LargeCap Value Fund 4722 4720 4627 4723 4721 4724 4514 4114 4214 4414
MidCap Blend Fund 4742 4740 4639 4743 4741 4749 4521 4121 4221 4421
MidCap Growth Fund 4752 4750 4645 4753 4751 4759 4522
MidCap S&P 400 Index Fund 4762 4760 4646 4763 4761 4769 4523
MidCap Stock Fund 4587 4181 4281 4481
MidCap Value Fund 4772 4770 4647 4773 4771 4774 4524
Money Market Fund 4782 4780 4648 4783 4781 4784 4525 4199 4299 4499
Mortgage Securities Fund 4807 4197 4297 4497
Partners Global Equity Fund 4857 4855 4859 4858 4856 4865
Partners International Fund 4787 4785 4649 4788 4786 4789
Partners LargeCap Blend Fund 4822 4820 4650 4823 4821 4824 4527 4127 4227 4427
Partners LargeCap Blend Fund I 4692 4690 4651 4693 4691 4694 4511 4111 4211 4411
Partners LargeCap Growth Fund I 4832 4830 4653 4833 4831 4834 4528 4128 4228 4428
Partners LargeCap Growth Fund II 4842 4840 4654 4843 4841 4844 4529 4129 4429
Partners LargeCap Value Fund 4852 4850 4655 4853 4851 4854 4530 4180 4280 4480
Partners LargeCap Value Fund I 4802 4800 4656 4803 4801 4804
Partners LargeCap Value Fund II 4779 4777 4796 4795 4778 4797
Partners MidCap Growth Fund 4872 4870 4658 4873 4871 4874 4532 4182 4282 4482
Partners MidCap Growth Fund I 4877 4875 4659 4878 4876 4879 4186 4486
Partners MidCap Growth Fund II 4718 4716 4775 4719 4717 4776
Partners MidCap Value Fund 4882 4880 4665 4883 4881 4884 4533 4183 4283 4483
Partners MidCap Value Fund I 4892 4890 4666 4893 4891 4894
Partners SmallCap Blend Fund 4887 4885 4667 4888 4886 4889
Partners SmallCap Growth Fund I 4902 4900 4668 4906 4901 4904 4534
Partners SmallCap Growth Fund II 4913 4911 4669 4914 4912 4915 4535 4185 4285 4485
Partners SmallCap Growth Fund
III 4817 4815 4675 4818 4816 4819
Partners SmallCap Value Fund 4922 4920 4676 4923 4921 4924 4536
Partners SmallCap Value Fund I 4927 4925 4677 4928 4926 4935
Partners SmallCap Value Fund II 4837 4835 4678 4838 4836 4839
Preferred Securities Fund 4938 4936 4679 4939 4937 4929 4545 4195 4495
Principal LifeTime 2010 Fund 4727 4725 4628 4728 4726 4729 4515 4109 4409
Principal LifeTime 2020 Fund 4732 4730 4629 4733 4731 4734 4516 4116 4216 4416
Principal LifeTime 2030 Fund 4737 4735 4635 4738 4736 4739 4517 4117 4217 4417
Principal LifeTime 2040 Fund 4746 4744 4636 4747 4745 4748 4518 4118 4218 4418
Principal LifeTime 2050 Fund 4756 4754 4637 4757 4755 4758 4519 4119 4219 4419
Principal LifeTime Strategic
Income Fund 4766 4764 4638 4767 4765 4768 4520 4123 4223 4423
Real Estate Securities Fund 4932 4930 4685 4933 4931 4934 4537 4187 4287 4487
SAM Balanced Portfolio 4846 4809 4848 4847 4845 4589 4548 4189 4289 4489
SAM Conservative Balanced
Portfolio 4867 4849 4869 4868 4866 4657 4549 4190 4290 4490
SAM Conservative Growth
Portfolio 4897 4895 4899 4898 4896 4799 4550 4193 4293 4493
SAM Flexible Income Portfolio 4916 4908 4918 4917 4909 4806 4552 4196 4296 4496
SAM Strategic Growth Portfolio 4946 4919 4948 4947 4945 4805 4551 4194 4294 4494
Short-Term Bond Fund 4642 4640 4615 4643 4641 4644 4506 4156 4456
Short-Term Income Fund 4588 4184 4484
SmallCap Blend Fund 4942 4940 4686 4943 4941 4944 4538 4188 4288 4488
SmallCap Growth Fund 4952 4950 4687 4953 4951 4954 4539 4175 4275 4475
SmallCap S&P 600 Index Fund 4962 4960 4688 4963 4961 4964 4540
SmallCap Value Fund 4972 4970 4689 4973 4971 4974 4541 4191 4291 4491
Tax-Exempt Bond Fund I 4106 4206 4406
Ultra Short Bond Fund 4987 4985 4989 4988 4986 4990 4547 4102 4402
West Coast Equity Fund 4808 4198 4298 4498
FUND/CLASS PERCENTAGE OF
NUMBER NAME AND ADDRESS OWNERSHIP
PIF - BOND & MORTGAGE SECURITIES FUND
4592 DELAWARE CHARTER GUARANTEE & TRUS 94.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4590 DELAWARE CHARTER GUARANTEE & TRUS 98.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4605 DELAWARE CHARTER GUARANTEE & TRUS 99.6
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4401 PERSHING LLC 6.3
P O BOX 2052
JERSEY CITY NJ 07303-2052
4594 LIFETIME 2010 FUND 25.6
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4594 LIFETIME 2020 FUND 37.4
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4594 LIFETIME STRATEGIC INCOME FUND 13.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
4594 LIFETIME 2030 FUND 17.4
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4593 DELAWARE CHARTER GUAR & TRUST 5.7
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4593 DELAWARE CHARTER GUARANTEE & TRUS 71.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4593 TRUSTAR FBO SOUTHWIRE CO SALARIED 401K PL 12.7
ATTN NPIO TRADE DESK
P.O. BOX 8963
WILMINGTON, DE 19899
4591 DELAWARE CHARTER GUARANTEE & TRUS FBO VARIOUS 95.0
QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
4176 NFS LLC FEBO THE ROBERTSON TR 5.4
DR QUINTON R ROBERTSON U/A 04/12/95
110 DEAN RD
WOODSIDE CA 94062-2418
4476 CITIGROUP GLOBAL MARKETS INC. 00164714189 5.1
333 WEST 34TH STREET - 3RD FLOOR
NEW YORK NY 10001-2402
4476 FIRST CLEARING, LLC A/C 2047-7483 6.0
WILLARD & JOAN CLIFTON FAMILY LIVING TRUST
6732 W BELMONT AVE
FRESNO CA 93723-9528
PIF - CALIFORNIA MUNICIPAL FUND
4477 NFS LLC FEBO MARK WIESINGER STEVE WARD WIESINGER 5.7
LAUREN CHRISTIE THERRE
2734 WALNUT BLVD
WALNUT CREEK CA 94596-4764
PIF - DISCIPLINED LARGECAP BLEND FUND
4697 DCGT AS TTEE AND/OR CUST FBO VARIOUS QUALIFED 99.0
PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
4695 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4619 DELAWARE CHARTER GUARANTEE & TRUS 95.9
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4192 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 42.2
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4699 LIFETIME 2010 FUND 5.2
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4699 LIFETIME 2020 FUND 12.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4699 LIFETIME 2040 FUND 5.9
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4699 LIFETIME 2030 FUND 11.7
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4699 SAM BALANCED PORTFOLIO PIF 17.6
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4699 SAM CONS GROWTH PORTFOLIO PIF 18.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4699 SAM STRATEGIC GROWTH PORTFOLIO PIF 13.1
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4698 PRINCIPAL TRUST COMPANY 6.8
FBO ASSOCIATED BANC-CORP DEFERRED COMP PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
4698 DCGT as TTEE and/or CUST 80.6
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4698 Principal Trust Company 6.3
FBO AAS DC Plan for Key Employees
ATTN Susan Saggione
1013 Centre Rd
Wilmington, DE 19805
4696 DCGT AS TTEE AND/OR CUST 100.0
FBO VARIOUS QUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
PIF - DIVERSIFIED INTERNATIONAL FUND
4672 DELAWARE CHARTER GUARANTEE & TRUS 95.4
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4670 DELAWARE CHARTER GUARANTEE & TRUS 96.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4617 DELAWARE CHARTER GUARANTEE & TRUS 98.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4108 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 17.9
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4408 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 13.4
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4674 SAM BALANCED PORTFOLIO PIF 32.9
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4674 SAM CONS GROWTH PORTFOLIO PIF 34.7
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4674 SAM STRATEGIC GROWTH PORTFOLIO PIF 24.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4673 DELAWARE CHARTER GUAR & TRUST 12.9
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4673 DELAWARE CHARTER GUARANTEE & TRUS 80.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4671 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - EQUITY INCOME FUND
4104 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 15.1
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4404 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 14.6
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4949 SAM BALANCED PORTFOLIO PIF 34.2
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4949 SAM CONS GROWTH PORTFOLIO PIF 36.2
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4949 SAM STRATEGIC GROWTH PORTFOLIO PIF 24.2
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
PIF - GOVERNMENT & HIGH QUALITY BOND FUND
4612 DELAWARE CHARTER GUARANTEE & TRUS 8.1
FBO VARIOUS NONQUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4612 DELAWARE CHARTER GUARANTEE & TRUS 88.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4610 DELAWARE CHARTER GUARANTEE & TRUS 95.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4607 DELAWARE CHARTER GUARANTEE & TRUS 95.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4453 EDNA J BROWNLEE TR & ARTHUR E BROWNLEE III TR 8.5
BROWNLEE LIVING TRUST UA MAY 12 2006
4901 S 153RD ST APT 336
OMAHA NE 68137-5049
4453 LOUISE M ABRAHAMSON TR 8.1
LOUISE M ABRAHAMSON MARITAL TRUST
C/O REMINGTON HTS
12606 W DODGE RD
OMAHA NE 68154-2349
4453 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O CHRISTINE 12.9
WOGEE
2241 ARDSHEAL DR
LA HABRA HGTS CA 90631-7704
4453 EDMUND B RIESBERG 7.1
2805 FOREST ST
CARROLL IA 51401-3460
4613 DELAWARE CHARTER GUAR & TRUST 16.9
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4613 DELAWARE CHARTER GUARANTEE & TRUS 62.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4611 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - HIGH QUALITY INTERMEDIATE TERM BOND FUND
4622 DELAWARE CHARTER GUARANTEE & TRUS 14.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4622 TRUSTAR FBO THE CHURCH OF GOD 83.2
ATTN NPIO TRADE DESK
P.O. BOX 8963
WILMINGTON, DE 19899
4620 DELAWARE CHARTER GUARANTEE & TRUS 97.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4608 DCGT AS TTEE AND/OR CUST 7.1
FBO PRINCIPAL FINANCIAL GROUP NON - QUALIFIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4608 DELAWARE CHARTER GUARANTEE & TRUS 92.9
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4623 WELLS FARGO TRUST COMPANY TRUSTEE 6.4
FBO WORLD INS EXECUTIVE SERP PLN
ATTN DEANNA SWERTZIC
1919 DOUGLAS ST
OMAHA, NE 68102-1317
4623 DELAWARE CHARTER GUARANTEE & TRUS 43.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4623 DCGT as TTEE and/or CUST 45.9
FBO THE WESLEYAN PENSION FUND
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4621 DCGT AS TTEE AND/OR CUST 24.4
FBO CAPITAL CORP OF THE WEST 401 K PLAN
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4621 DELAWARE CHARTER GUARANTEE & TRUS 75.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - HIGH YIELD FUND
4798 LIFETIME 2010 FUND 6.7
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4798 LIFETIME 2020 FUND 20.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4798 LIFETIME 2040 FUND 10.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4798 LIFETIME 2030 FUND 19.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4798 PRINCIPAL LIFE INSURANCE CO FBO PRINCIPAL 34.2
FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREE
DES MOINES IA 50392
PIF - HIGH YIELD FUND II
4178 PRUDENTIAL INVESTMENT MANAGEMENT SERVICE 18.9
FOR THE BENEFIT OF MUTUAL FUND CLIENTS
MAIL STOP NJ-05-11-20
100 MULBERRY ST GATEWAY CTR 3 FL 11
NEWARK NJ 07102
4478 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 16.8
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4585 LIFETIME 2020 FUND 8.1
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4585 LIFETIME 2030 FUND 7.7
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4585 SAM BALANCED PORTFOLIO PIF 28.2
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4585 SAM CONS GROWTH PORTFOLIO PIF. 13.1
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4585 SAM FLEXIBLE INCOME PORTFOLIO PIF 7.0
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4585 SAM STRATEGIC GROWTH PORTFOLIO PIF 12.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
PIF - INCOME FUND
4586 SAM BALANCED PORTFOLIO PIF 50.3
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4586 SAM CONS BALANCED PORTFOLIO PIF 11.8
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4586 SAM CONS GROWTH PORTFOLIO PIF 17.2
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4586 SAM FLEXIBLE INCOME PORTFOLIO PIF 20.7
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
PIF - INFLATION PROTECTION FUND
4707 DELAWARE CHARTER GUARANTEE & TRUS 90.5
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4705 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4709 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4154 PRINCIPAL LIFE INSURANCE CO CUST IRA ROSEMARY T 7.5
DIECKHAUS
PO BOX 17
SAINT ALBANS MO 63073-0017
4454 PERSHING LLC 29.8
P O BOX 2052
JERSEY CITY NJ 07303-2052
4454 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 17.0
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4454 PRIN LIFE INS CO CUST ROLLOVER IRA EDMUND J 5.0
D'ANDREA
1381 FAHLANDER DR S
COLUMBUS OH 43229-5108
4454 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O DEBORAH 6.8
RIVERA
139 ARDEN
IRVINE CA 92620-0295
4715 LIFETIME 2010 FUND 13.1
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4715 LIFETIME STRATEGIC INCOME FUND 16.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
4715 PRINCIPAL LIFE INSURANCE CO 69.9
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES IA 50392
4708 DELAWARE CHARTER GUARANTEE & TRUS 40.1
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4708 BANKERS TRUST COMPANY (E826) 46.6
FBO PARTNER RE RESTURATION - SALARY DEFERRED PLAN
ATTN DEBBIE WILLIAM
453 7TH ST
DES MOINES IA 50309-4110
4708 Simpson Housing LLLP 11.0
FBO Simpson Housing LLLP DC Plan
ATTN Toni McIntosh
8110 East Untion Ave; Ste 200
Denver, CO 80237
4706 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
PIF - INTERNATIONAL EMERGING MARKETS FUND
4662 DELAWARE CHARTER GUARANTEE & TRUS 87.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4660 DELAWARE CHARTER GUARANTEE & TRUS 99.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4616 DELAWARE CHARTER GUARANTEE & TRUS 97.6
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4664 LIFETIME 2010 FUND 6.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4664 LIFETIME 2020 FUND 17.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4664 LIFETIME 2040 FUND 9.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4664 LIFETIME 2030 FUND 17.1
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4664 SAM BALANCED PORTFOLIO PIF 14.4
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4664 SAM CONS GROWTH PORTFOLIO PIF 15.3
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4664 SAM STRATEGIC GROWTH PORTFOLIO PIF 10.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4663 DELAWARE CHARTER GUAR & TRUST 26.4
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4663 DELAWARE CHARTER GUARANTEE & TRUS 67.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4661 DELAWARE CHARTER GUARANTEE & TRUS 99.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - INTERNATIONAL GROWTH FUND
4812 DELAWARE CHARTER GUARANTEE & TRUS 96.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4810 DELAWARE CHARTER GUARANTEE & TRUS 99.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4618 DELAWARE CHARTER GUARANTEE & TRUS 95.7
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4814 LIFETIME 2010 FUND 7.4
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4814 LIFETIME 2020 FUND 19.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4814 LIFETIME 2040 FUND 9.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4814 LIFETIME 2030 FUND 18.4
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4814 PRINCIPAL LIFE INSURANCE CO 33.5
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4813 DELAWARE CHARTER GUARANTEE & TRUS 87.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4811 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - LARGECAP GROWTH FUND
4702 DELAWARE CHARTER GUARANTEE & TRUS 96.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4700 DELAWARE CHARTER GUARANTEE & TRUS 87.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4700 DCGT as TTEE and/or CUST 12.3
FBO Principal Financial Group Non - Qualified Prin
Advtg Omnibus.
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4625 DELAWARE CHARTER GUARANTEE & TRUS 97.6
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4112 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 11.3
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4412 PRINCIPAL LIFE INS CO CUST IRA WILLIAM R GIRTEN 5.3
2664 CHATHAM LN
OWENSBORO KY 42303-9633
4704 LIFETIME 2020 FUND 5.1
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4704 LIFETIME 2030 FUND 5.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4704 SAM BALANCED PORTFOLIO PIF 26.9
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4704 SAM CONS GROWTH PORTFOLIO PIF 27.7
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4704 SAM STRATEGIC GROWTH PORTFOLIO PIF 19.1
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4703 WACHOVIA BANK FBO VARIOUS RETIREMENT PLANS 27.2
9888888836 NC 1076
1525 WEST WT HARRIS BLVD
CHARLOTTE NC 28288-0001
4703 DELAWARE CHARTER GUARANTEE & TRUS 61.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4701 DELAWARE CHARTER GUARANTEE & TRUS 99.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - LARGECAP S&P 500 INDEX FUND
4712 DELAWARE CHARTER GUARANTEE & TRUS 75.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4712 TRUSTAR FBO THE CHURCH OF GOD 21.5
ATTN NPIO TRADE DESK
P.O. BOX 8963
WILMINGTON, DE 19899
4710 DELAWARE CHARTER GUARANTEE & TRUS 96.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4626 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO PFG PRINCIPAL ADVANTAGE OMNIBUS CLIENT 904
711 HIGH STREET
DES MOINES, IA 50303
4413 PRINCIPAL LIFE INSURANCE CO CUST IRA OF SUE C 5.1
TEHEE
PO BOX 3233
BELL GARDENS CA 90202-3233
4714 DCGT AS TTEE AND/OR CUST 17.9
FBO MIDAMERICA BANK
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4714 DCGT as TTEE and/or CUST 20.2
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4713 DELAWARE CHARTER GUAR & TRUST 7.5
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4713 DELAWARE CHARTER GUARANTEE & TRUS 78.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4713 DCGT as TTEE and/or CUST 5.4
FBO THE WESLEYAN PENSION FUND
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4711 DELAWARE CHARTER GUARANTEE & TRUS. 98.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - LARGECAP VALUE FUND
4722 PRINCIPAL TRUST COMPANY 5.3
FBO EXEC EXCESS OF LYKES BROS INC
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
4722 DELAWARE CHARTER GUARANTEE & TRUS 7.5
FBO VARIOUS NONQUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4722 DELAWARE CHARTER GUARANTEE & TRUS 71.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4722 Principal Trust Company 5.2
FBO DC with D. James McDowell
ATTN Susan Saggione
1013 Centre Rd
Wilmington, DE 19805
4720 DELAWARE CHARTER GUARANTEE & TRUS 96.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4627 DELAWARE CHARTER GUARANTEE & TRUS 15.3
FBO VARIOUS NONQUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4627 DELAWARE CHARTER GUARANTEE & TRUS 84.7
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4724 LIFETIME 2010 FUND 9.9
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4724 LIFETIME 2020 FUND 24.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4724 LIFETIME 2040 FUND 13.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4724 LIFETIME 2050 FUND 6.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4724 LIFETIME 2030 FUND 24.9
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4724 THE PRINCIPAL TRUST FOR POST- RETIREMENT MEDICAL 12.3
BENEFITS RETIRED EE 5072
ATTN CRYSTAL MORRIS S-003-S60
PRINCIPAL FINANCIAL GROUP
DES MOINES, IA 50392-0480
4723 DELAWARE CHARTER GUAR & TRUST 23.8
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4723 WELLS FARGO TRUST COMPANY TRUSTEE 10.5
FBO WORLD INS EXECUTIVE SERP PLN
ATTN DEANNA SWERTZIC
1919 DOUGLAS ST
OMAHA, NE 68102-1317
4723 DELAWARE CHARTER GUARANTEE & TRUS 55.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4721 DELAWARE CHARTER GUARANTEE & TRUS 68.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4721 NATIONWIDE TRUST COMPANY FSB 30.9
FBO PARTICIPATING RETIREMENT PLANS
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
PIF - MIDCAP BLEND FUND
4742 DELAWARE CHARTER GUARANTEE & TRUS 5.5
FBO VARIOUS NONQUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4742 DELAWARE CHARTER GUARANTEE & TRUS 80.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4742 Principal Trust Company 6.3
FBO Winn Mgt Group 2006 Def Comp Pl an
Attn: Susan Saggione
1013 Centre Rd
Wilmington DE 19805
4740 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4639 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4749 THE FULTON COMPANY 83.9
C/O FULTON FINANCIAL ADVISORS
PO BOX 3215
LANCASTER PA 17604-3215
4743 DELAWARE CHARTER GUAR & TRUST 31.7
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4743 DELAWARE CHARTER GUARANTEE & TRUS 57.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4741 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - MIDCAP GROWTH FUND
4752 DUKE CORPORATE EDUCATION TTEE 6.3
FBO NQ PLAN OF DUKE CORPORATE EDU
BARBARA FRICK
333 LIGGETT ST.
DURHAM, NC 27701
4752 DELAWARE CHARTER GUARANTEE & TRUS 82.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4750 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4645 DCGT AS TTEE AND/OR CUST 5.1
FBO PRINCIPAL FINANCIAL GROUP NON - QUALIFIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4645 DCGT as TTEE and/or CUST 94.9
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4759 STATE STREET BANK & TRUST COMPANY 52.9
FBO HOLLOWWAVE & CO
ATTN: MASTER NOTE CONTROL
PO BOX 5496
BOSTON MA 02206-5496
4759 WACHOVIA BANK, N.A. OMNIBUS REIN/REIN 9999999954 46.5
1525 WEST WT HARRIS BLVD.
CHARLOTTE, NC 28288-1151
4753 DCGT AS TTEE AND/OR CUST 57.8
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4753 DELAWARE CHARTER GUARANTEE & TRUS 35.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4751 DCGT as TTEE and/or CUST 90.4
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
PIF - MIDCAP S&P 400 INDEX FUND
4762 DELAWARE CHARTER GUARANTEE & TRUS 92.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4760 DELAWARE CHARTER GUARANTEE & TRUS 97.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4646 ATTN NPIO TRADE DESK DCGT AS TTEE AND/OR CUST 8.8
FBO SHEET METAL WORKERS LOCAL UNION 20 PENSION
711 HIGH ST
DES MOINES IA 50309-2732
4646 DELAWARE CHARTER GUARANTEE & TRUS 89.1
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4769 DCGT as TTEE and/or CUST 24.2
FBO Principal Financial Group Qualified Prin Advtg
Omnibus
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4763 DELAWARE CHARTER GUARANTEE & TRUS 85.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4763 DCGT as TTEE and/or CUST 9.0
FBO THE WESLEYAN PENSION FUND
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4761 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - MIDCAP STOCK FUND
4181 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 39.9
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4481 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 16.2
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4587 SAM BALANCED PORTFOLIO PIF 31.1
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4587 SAM CONS GROWTH PORTFOLIO PIF 35.6
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4587 SAM STRATEGIC GROWTH PORTFOLIO PIF 27.0
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
PIF - MIDCAP VALUE FUND
4772 DELAWARE CHARTER GUARANTEE & TRUS 80.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4770 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4647 DELAWARE CHARTER GUARANTEE & TRUS 93.5
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4773 DELAWARE CHARTER GUARANTEE & TRUS 24.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4773 Principal Trust Company 60.6
FBO Def Comp of HDR Inc
ATTN Susan Saggione
1013 Centre Rd
Wilmington, DE 19805
4771 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - MONEY MARKET FUND
4782 DELAWARE CHARTER GUARANTEE & TRUS 52.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4782 TRUSTAR FBO THE CHURCH OF GOD 7.1
ATTN NPIO TRADE DESK
P.O. BOX 8963
WILMINGTON, DE 19899
4780 DELAWARE CHARTER GUARANTEE & TRUS 99.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4648 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4199 PERSHING LLC AS AGENT FOR ITS CUSTOMERS 9.6
ATTN CASH MANAGMENT SERVICES
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
4199 NATIONAL FINANCIAL SERVICES 67.8
FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
200 LIBERTY STREET
NEW YORK NY 10281-1003
4499 CHARLES L BRINKMAN & CARMELA M BRINKMAN JTWROS 7.7
2817 MEADOWBROOK DR
PLANO TX 75075-6430
4784 COMPUTERSHARE INVESTOR SVCS LLC 13.4
2 N LA SALLE ST FL 3
CHICAGO IL 60602-4050
4784 WM FINANCIAL SERVICES INC MISC W/O DISTRICT A 14.8
ATTN ACCOUNTING DEPARTMENT
1201 3RD AVE WMT 2035
SEATTLE WA 98101
4784 SAM BALANCED PORTFOLIO PIF 10.6
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4784 WMBFA INSURANCE AGENCY INC 43.0
ATTN ACCOUNTING DEPARTMENT
1201 THIRD AVE WMT 2035
SEATTLE WA 98101
4784 WMFS INSURANCE SERVICES INC 15.2
1201 3RD AVE STE 2035
SEATTLE WA 98101-3033
4783 DELAWARE CHARTER GUAR & TRUST 9.1
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4783 DELAWARE CHARTER GUARANTEE & TRUS 55.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4781 DELAWARE CHARTER GUARANTEE & TRUS 97.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - MORTGAGE SECURITIES FUND
4807 SAM BALANCED PORTFOLIO PIF 53.6
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4807 SAM CONS BALANCED PORTFOLIO PIF 11.3
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4807 SAM CONS GROWTH PORTFOLIO PIF 18.4
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4807 SAM FLEXIBLE INCOME PORTFOLIO PIF 16.8
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
PIF - PARTNERS GLOBAL EQUITY FUND
4857 DCGT as TTEE and/or CUST FBO Various Qualified 100.0
Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4855 DCGT AS TTEE AND/OR CUST 69.5
FBO VARIOUS QUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
4855 DCGT AS TTEE AND/OR CUST 30.5
FBO VARIOUS NONQUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
4859 DCGT AS TTEE AND/OR CUST 98.2
FBO VARIOUS QUALIFED PLANS ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
4865 PRINCIPAL LIFE INSURANCE CO 86.2
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES IA 50392
4858 DCGT as TTEE and/or CUST 100.0
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4856 DCGT AS TTEE AND/OR CUST 99.8
FBO VARIOUS QUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
PIF - PARTNERS INTERNATIONAL FUND
4787 DELAWARE CHARTER GUARANTEE & TRUS 93.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4785 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4649 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4789 LIFETIME 2020 FUND 11.7
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4789 LIFETIME 2040 FUND 6.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4789 LIFETIME 2030 FUND 11.5
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4789 PRINCIPAL LIFE INSURANCE CO 61.5
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4788 DELAWARE CHARTER GUARANTEE & TRUS 97.6
FBO PRINCIPA FINACIAL GROUP
711 HIGH STREET
DES MOINES, IA 50303
4786 DELAWARE CHARTER GUARANTEE & TRUS 98.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS LARGECAP BLEND FUND
4822 DELAWARE CHARTER GUARANTEE & TRUS 99.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4820 DELAWARE CHARTER GUARANTEE & TRUS 98.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4650 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4824 PRINCIPAL LIFE INSURANCE CO 88.6
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4823 DELAWARE CHARTER GUARANTEE & TRUS 96.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4821 DELAWARE CHARTER GUARANTEE & TRUS 99.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS LARGECAP BLEND FUND I
4692 DELAWARE CHARTER GUARANTEE & TRUS 95.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4690 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4651 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4411 PRINCIPAL LIFE INSURANCE CO CUST IRA OF EDGARD 8.5
BARONA
28 FARMINGDALE RD
FORDS NJ 08863-1328
4411 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O CHRISTINE 10.6
WOGEE
2241 ARDSHEAL DR
LA HABRA HGTS CA 90631-7704
4411 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O FAYE 6.5
HAGNER
6510 E YOSEMITE AVE
ORANGE CA 92867-2468
4694 LIFETIME 2010 FUND 13.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4694 LIFETIME 2020 FUND 31.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4694 LIFETIME 2040 FUND 15.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4694 LIFETIME 2050 FUND 6.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4694 LIFETIME 2030 FUND 29.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4693 DELAWARE CHARTER GUAR & TRUST 37.5
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4693 DELAWARE CHARTER GUARANTEE & TRUS FBO VARIOUS 56.7
QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4691 DELAWARE CHARTER GUARANTEE & TRUS FBO VARIOUS 99.9
QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS LARGECAP GROWTH FUND I
4832 DELAWARE CHARTER GUARANTEE & TRUS 98.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4830 DELAWARE CHARTER GUARANTEE & TRUS 99.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4653 DELAWARE CHARTER GUARANTEE & TRUS 99.2
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4428 PERSHING LLC 7.2
P O BOX 2052
JERSEY CITY NJ 07303-2052
4428 PRINCIPAL LIFE INSURANCE CO CUST IRA OF SUSAN A 7.1
BOGNASKI
8212 MAPLESTAR RD
LAS VEGAS NV 89128-1674
4834 LIFETIME 2020 FUND 12.1
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4834 LIFETIME 2040 FUND 6.9
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4834 LIFETIME 2030 FUND 11.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4834 PRINCIPAL LIFE INSURANCE CO 61.0
C/O PENSION TRADE DESK PO BOX 9397
DES MOINES, IA 50306-9397
4833 DCGT AS TTEE AND/OR CUST 10.5
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4833 DELAWARE CHARTER GUARANTEE & TRUS 83.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4831 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS LARGECAP GROWTH FUND II
4842 DELAWARE CHARTER GUARANTEE & TRUS 93.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4840 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4654 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4129 PRINCIPAL LIFE INSURANCE CO CUST IRA OF TONY E 5.9
HILL
1740 SAINT JAMES CIR
THE VILLAGES FL 32162-7651
4429 DONALD J BERNSTEIN TRANSFER ON DEATH SUBJECT TO 17.1
STA TOD RULES
148 CRYSTAL KEY WAY
BOYNTON BEACH FL 33426-5210
4429 PRINCIPAL LIFE INSURANCE CO CUST IRA OF PAUL S 29.1
UDOWYCHENKO
PO BOX 306
BELLE MEAD NJ 08502-0306
4429 PRINCIPAL LIFE INSURANCE CO CUST IRA OF ELMER R 8.8
PETERS
2882 VILLA CT
BETTENDORF IA 52722-7554
4429 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O PATRICIA 5.7
A DUNN
WEST58 HAWAII DR
ALISO VIEJO CA 92656-3314
4844 PRINCIPAL LIFE INSURANCE CO 100.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4843 DCGT AS TTEE AND/OR CUST 13.7
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4843 DELAWARE CHARTER GUARANTEE & TRUS 84.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4841 DELAWARE CHARTER GUARANTEE & TRUS 99.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS LARGECAP VALUE FUND
4852 DELAWARE CHARTER GUARANTEE & TRUS 97.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4850 DELAWARE CHARTER GUARANTEE & TRUS 99.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4655 DELAWARE CHARTER GUARANTEE & TRUS 98.5
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4480 PRINCIPAL LIFE INSURANCE CO CUST IRA OF DAVID M 5.0
KNAPP
1453 COUNTY ROAD 200 N
GOODFIELD IL 61742-7504
4854 LIFETIME 2020 FUND 5.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4854 PRINCIPAL LIFE INSURANCE CO 81.5
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4853 DELAWARE CHARTER GUARANTEE & TRUS 94.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4851 DELAWARE CHARTER GUARANTEE & TRUS 99.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS LARGECAP VALUE FUND I
4802 DCGT AS TTEE AND/OR CUST 97.4
FBO VARIOUS QUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
4800 DELAWARE CHARTER GUARANTEE & TRUS 89.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4800 DCGT as TTEE and/or CUST 10.4
FBO Principal Financial Group Non - Qualified Prin
Advtg Omnibus
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4656 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4804 LIFETIME 2020 FUND 11.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4804 LIFETIME 2040 FUND 6.4
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4804 LIFETIME 2030 FUND 11.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4804 PRINCIPAL LIFE INSURANCE CO 62.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4803 DELAWARE CHARTER GUARANTEE & TRUS 99.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4801 DCGT as TTEE and/or CUST 100.0
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
PIF - PARTNERS LARGECAP VALUE FUND II
4779 DELAWARE CHARTER GUARANTEE & TRUS 83.9
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4779 California Society of CPAs 12.6
FBO 457b of CA Society of CPAs
ATTN Tannis Kirschenbaum
1235 Radio Road
Redwood City, Ca 94065
4777 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4796 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4797 PRINCIPAL LIFE INSURANCE CO 100.0
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES IA 50392
4795 DELAWARE CHARTER GUARANTEE & TRUS 99.6
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4778 DCGT AS TTEE AND/OR CUST 89.2
FBO PRINCIPAL FINANCIAL GROUP QUALI FIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
PIF - PARTNERS MIDCAP GROWTH FUND
4872 DELAWARE CHARTER GUARANTEE & TRUS 98.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4870 DELAWARE CHARTER GUARANTEE & TRUS 96.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4658 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4482 PRINCIPAL LIFE INSURANCE CO CUST IRA OF DAVID M 10.0
KNAPP
1453 COUNTY ROAD 200 N
GOODFIELD IL 61742-7504
4482 PRINCIPAL LIFE INSURANCE CO CUST IRA OF WALTER C 7.3
RUPPMAN
212 S MAIN ST
WASHINGTON IL 61571-2559
4874 LIFETIME 2020 FUND 9.5
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4874 LIFETIME 2040 FUND 5.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4874 LIFETIME 2030 FUND 10.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4874 PRINCIPAL LIFE INSURANCE CO 72.4
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES IA 50392
4873 DELAWARE CHARTER GUAR & TRUST 23.0
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4873 DCGT AS TTEE AND/OR CUST 13.3
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4873 DELAWARE CHARTER GUARANTEE & TRUS 58.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4871 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS MIDCAP GROWTH FUND I
4877 DELAWARE CHARTER GUARANTEE & TRUS 94.1
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4875 DELAWARE CHARTER GUARANTEE & TRUS 91.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4875 DCGT as TTEE and/or CUST 8.5
FBO Principal Financial Group Non - Qualified Prin
Advtg Omnibus
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4659 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4186 JEANETTE A MEEK TR JEANETTE A MEEK FAMILY TRUST UA 5.5
APRIL 25 2003
15103 AVENUE 288
VISALIA CA 93292-9669
4186 LINDA L LONNBERG-PARDINI TR 5.1
LINDA L LONNBERG-PARDINI TRUST UA DEC 02 2003
1947 CHALON GLEN CT
LIVERMORE CA 94550-8206
4186 PRINCIPAL LIFE INSURANCE CO CUST SEP IRA LARRY M 8.4
SIMON
9711 ELMHURST DR
GRANITE BAY CA 95746-7111
4486 PERSHING LLC 9.4
P O BOX 2052
JERSEY CITY NJ 07303-2052
4486 PRINCIPAL LIFE INSURANCE CO CUST IRA OF PAUL S 12.7
UDOWYCHENKO
PO BOX 306
BELLE MEAD NJ 08502-0306
4486 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O DEBRA J 11.3
SCHWANE
N48W16125 LONE OAK LN
MENOMONEE FLS WI 53051-7529
4486 PRINCIPAL LIFE INSURANCE CO CUST IRA OF BARBARA 5.2
REED
12440 MOSS RANCH RD
MIAMI FL 33156-5717
4486 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O NORA V 9.6
CLAVIJO
13428 SW 62ND ST APT I109
MIAMI FL 33183-5081
4879 PRINCIPAL LIFE INSURANCE CO 100.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4878 DELAWARE CHARTER GUARANTEE & TRUS 43.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4878 DCGT AS TTEE AND/OR CUST FBO MEDICAL SERVICES OF 52.7
NORTHWEST A RKANSAS ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4876 DELAWARE CHARTER GUARANTEE & TRUS 98.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS MIDCAP GROWTH FUND II
4718 DELAWARE CHARTER GUARANTEE & TRUS 99.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4716 DCGT AS TTEE AND/OR CUST 5.1
FBO PRINCIPAL FINANCIAL GROUP NON - QUALIFIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4716 DELAWARE CHARTER GUARANTEE & TRUS 94.9
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4775 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4776 PRINCIPAL LIFE INSURANCE CO 100.0
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES IA 50392
4719 DCGT AS TTEE AND/OR CUST 28.8
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4719 DELAWARE CHARTER GUARANTEE & TRUS 56.4
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4717 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
PIF - PARTNERS MIDCAP VALUE FUND
4882 DELAWARE CHARTER GUARANTEE & TRUS 95.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4880 DELAWARE CHARTER GUARANTEE & TRUS 99.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4665 DELAWARE CHARTER GUARANTEE & TRUS 95.7
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4483 PRINCIPAL LIFE INSURANCE CO CUST IRA OF DAVID M 5.4
KNAPP
1453 COUNTY ROAD 200 N
GOODFIELD IL 61742-7504
4483 PRINCIPAL LIFE INSURANCE CO CUST IRA OF MICHAEL 5.1
YORK
8275 SOUTHPORT TER
DULUTH GA 30097-1655
4483 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O CHRISTINE 8.2
WOGEE
2241 ARDSHEAL DR
LA HABRA HGTS CA 90631-7704
4884 PRINCIPAL LIFE INSURANCE CO 89.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4883 DELAWARE CHARTER GUARANTEE & TRUS 93.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4881 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS MIDCAP VALUE FUND I
4892 DELAWARE CHARTER GUARANTEE & TRUS 94.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4890 DELAWARE CHARTER GUARANTEE & TRUS 95.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4666 DELAWARE CHARTER GUARANTEE & TRUS 99.7
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4894 PRINCIPAL LIFE INSURANCE CO 87.9
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4893 DELAWARE CHARTER GUARANTEE & TRUS 96.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4891 DCGT AS TTEE AND/OR CUST FBO VARIOUS QUALIFED 100.0
PLANS
ATTN NPIO TRADE DESK.
711 HIGH STREET
DES MOINES, IA 50303
PIF - PARTNERS SMALLCAP BLEND FUND
4887 DELAWARE CHARTER GUARANTEE & TRUS 98.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4885 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4667 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4889 PRINCIPAL LIFE INSURANCE CO 100.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4888 DELAWARE CHARTER GUARANTEE & TRUS 95.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4886 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS SMALLCAP GROWTH FUND I
4902 DELAWARE CHARTER GUARANTEE & TRUS 84.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4902 LOS ANGELES COUNTY FAIR ASSOC 6.5
FBO LA COUNTY FAIR ASSOC SUP EXEC DC PLAN
ATTN RAY ORTEGASO
1101 W MCKINLEY AVE
POMONA CA 91768-1639
4900 DELAWARE CHARTER GUARANTEE & TRUS 98.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4668 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4904 LIFETIME 2040 FUND 13.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4904 LIFETIME 2050 FUND 6.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4904 LIFETIME 2030 FUND 20.5
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4904 PRINCIPAL LIFE INSURANCE CO 59.3
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4906 DCGT AS TTEE AND/OR CUST 27.8
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4906 DELAWARE CHARTER GUARANTEE & TRUS 69.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4901 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS SMALLCAP GROWTH FUND II
4913 DELAWARE CHARTER GUARANTEE & TRUS 94.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4911 DELAWARE CHARTER GUARANTEE & TRUS 95.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4669 DCGT AS TTEE AND/OR CUST 5.2
FBO PRINCIPAL FINANCIAL GROUP NON - QUALIFIED PRIN
ADVTG OMNIBUS ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4669 DELAWARE CHARTER GUARANTEE & TRUS 94.8
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4485 PERSHING LLC 5.3
P O BOX 2052
JERSEY CITY NJ 07303-2052
4485 PRINCIPAL LIFE INSURANCE CO CUST IRA OF PAUL H 7.4
JOHNSON
19323 CEDAR CREEJ ST
CANYON COUNTY CA 91351
4485 PRINCIPAL LIFE INSURANCE CO CUST IRA OF BARBARA 8.8
REED
12440 MOSS RANCH RD
MIAMI FL 33156-5717
4485 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O PATRICIA 7.9
A DUNN WEST
58 HAWAII DR
ALISO VIEJO CA 92656-3314
4915 PRINCIPAL LIFE INSURANCE CO 100.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4914 DCGT AS TTEE AND/OR CUST 5.7
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4914 FBO PRINCIPAL FINANCIAL GROUP 90.0
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4912 DELAWARE CHARTER GUARANTEE & TRUS 99.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS SMALLCAP GROWTH FUND III
4817 DELAWARE CHARTER GUARANTEE & TRUS 94.5
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4815 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4675 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4819 LIFETIME 2010 FUND 7.8
ATTN MUTUAL FUND ACCOUNTING-H221 711 HIGH ST
DES MOINES, IA 50392-0200
4819 LIFETIME 2020 FUND 19.4
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4819 LIFETIME 2040 FUND 7.2
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4819 LIFETIME 2030 FUND 13.9
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4819 PRINCIPAL LIFE INSURANCE CO 47.2
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4818 DCGT AS TTEE AND/OR CUST 45.3
FBO MEDICAL SERVICES OF NORTHWEST ARKANSAS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4818 DELAWARE CHARTER GUARANTEE & TRUS 52.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4816 DCGT as TTEE and/or CUST 100.0
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
PIF - PARTNERS SMALLCAP VALUE FUND
4922 DELAWARE CHARTER GUARANTEE & TRUS 98.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4920 DELAWARE CHARTER GUARANTEE & TRUS 11.8
FBO VARIOUS NONQUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4920 DELAWARE CHARTER GUARANTEE & TRUS 88.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4676 DELAWARE CHARTER GUARANTEE & TRUS 99.9
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4924 PRINCIPAL LIFE INSURANCE CO 100.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4923 DELAWARE CHARTER GUARANTEE & TRUS 93.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4921 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS SMALLCAP VALUE FUND I
4927 FBO PRINCIPAL FINANCIAL GROUP 92.7
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4925 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4677 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4935 LIFETIME 2030 FUND 6.9
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4935 PRINCIPAL LIFE INSURANCE CO 86.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4928 DELAWARE CHARTER GUARANTEE & TRUS 92.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4926 DELAWARE CHARTER GUARANTEE & TRUS 99.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PARTNERS SMALLCAP VALUE FUND II
4837 DELAWARE CHARTER GUARANTEE & TRUS 95.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4835 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4678 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4839 PRINCIPAL LIFE INSURANCE CO 100.0
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4838 FBO PRINCIPAL FINANCIAL GROUP 97.8
ATTN RIS NPIO TRADE DESK
711 HIGH STREET DES MOINES, IA 50392
4836 DCGT AS TTEE AND/OR CUST 99.9
FBO VARIOUS QUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
PIF - PREFERRED SECURITIES FUND
4938 DCGT as TTEE and/or CUST 95.9
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4936 DCGT AS TTEE AND/OR CUST 98.7
FBO VARIOUS QUALIFED PLANS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50303
4679 DELAWARE CHARTER GUARANTEE & TRUS 99.7
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4195 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 6.7
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE, FL 32246-6484
4495 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 51.4
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE, FL 32246-6484
4929 LIFETIME 2010 FUND 16.0
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4929 LIFETIME 2020 FUND 26.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4929 LIFETIME 2040 FUND 7.0
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4929 LIFETIME STRATEGIC INCOME FUND 5.5
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
4929 LIFETIME 2030 FUND 18.4
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4929 PRINCIPAL LIFE INSURANCE CO 21.5
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4939 DCGT as TTEE and/or CUST 93.3
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4937 DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL 93.9
GROUP QUALI FIED PRIN ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
PIF - PRINCIPAL LIFETIME 2010 FUND
4727 DELAWARE CHARTER GUARANTEE & TRUS 97.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4725 DELAWARE CHARTER GUARANTEE & TRUS 99.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4628 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4109 PRINCIPAL LIFE INSURANCE CO CUST IRA DOMENICK J 6.0
YEZZI JR
4 CREEKWOOD CV N
LITTLE ROCK AR 72116-6394
4409 PRINCIPAL LIFE INSURANCE CO CUST IRA OF HENLEY W 18.4
JOHNS
32180 AUGUSTA DR
AVON LAKE OH 44012-2710
4729 PRINCIPAL LIFE INSURANCE CO 99.2
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4728 DELAWARE CHARTER GUARANTEE & TRUS 95.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4726 DELAWARE CHARTER GUARANTEE & TRUS 99.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PRINCIPAL LIFETIME 2020 FUND
4732 DELAWARE CHARTER GUARANTEE & TRUS 96.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4730 DELAWARE CHARTER GUARANTEE & TRUS 99.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4629 DELAWARE CHARTER GUARANTEE & TRUS 99.2
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4416 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O JAMES A 6.1
WAGNER
1307 N BITTERSWEET LN
MUNCIE IN 47304-2966
4416 PRINCIPAL LIFE INSURANCE CO CUST IRA OF MARGARET L 6.5
WALKER
352 DAKAR ST
HENDERSON NV 89015-5669
4734 PRINCIPAL LIFE INSURANCE CO 98.9
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4733 DELAWARE CHARTER GUARANTEE & TRUS 93.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4731 DELAWARE CHARTER GUARANTEE & TRUS 99.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PRINCIPAL LIFETIME 2030 FUND
4737 DELAWARE CHARTER GUARANTEE & TRUS 98.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4735 DELAWARE CHARTER GUARANTEE & TRUS 99.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4635 DELAWARE CHARTER GUARANTEE & TRUS 99.1
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4417 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 5.3
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4739 PRINCIPAL LIFE INSURANCE CO 99.1
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4738 DELAWARE CHARTER GUARANTEE & TRUS 94.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4736 DELAWARE CHARTER GUARANTEE & TRUS 99.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PRINCIPAL LIFETIME 2040 FUND
4746 DELAWARE CHARTER GUARANTEE & TRUS 98.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4744 DELAWARE CHARTER GUARANTEE & TRUS 99.5
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4636 DELAWARE CHARTER GUARANTEE & TRUS 99.2
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4418 PRINCIPAL LIFE INSURANCE CO CUST IRA OF DIANA R 6.1
BUSENBARK
2305 S 80TH AVE
OMAHA NE 68124-2219
4418 NFS LLC FEBO JACQUELINE F BUNDY TOD ON FILE 10.1
22543 BERDON ST
WOODLAND HILLS CA 91367-4409
4748 PRINCIPAL LIFE INSURANCE CO 99.2
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4747 DELAWARE CHARTER GUARANTEE & TRUS 96.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4745 DELAWARE CHARTER GUARANTEE & TRUS 99.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PRINCIPAL LIFETIME 2050 FUND
4756 DELAWARE CHARTER GUARANTEE & TRUS 97.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4754 DELAWARE CHARTER GUARANTEE & TRUS 99.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4637 DELAWARE CHARTER GUARANTEE & TRUS 98.3
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4219 NFS LLC FEBO NFS/FMTC IRA 6.6
FBO DONALD J BOHANNON
7430 COLONIAL CT
SANFORD FL 32771-9744
4219 PRINCIPAL LIFE INS CO CUST IRA CAROL V NOLAN 6.9
607 MOURNING DOVE CIR
LAKE MARY FL 32746-3933
4419 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 5.1
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4419 PRINCIPAL LIFE INSURANCE CO CUST IRA OF MARGERY C 6.2
HEHMAN
317 NE LANDINGS DR
LEES SUMMIT MO 64064-1585
4419 PRINCIPAL LIFE INSURANCE CO IRA (DCD) FLORENCE 6.5
SIMON
FBO MICHAEL SIMON
725 S LOOMIS ST APT 302
CHICAGO IL 60607-4053
4758 PRINCIPAL LIFE INSURANCE CO 99.7
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4757 DELAWARE CHARTER GUARANTEE & TRUS 94.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4755 DELAWARE CHARTER GUARANTEE & TRUS 99.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - PRINCIPAL LIFETIME STRATEGIC INCOME FUND
4766 DELAWARE CHARTER GUARANTEE & TRUS 98.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4764 DELAWARE CHARTER GUARANTEE & TRUS 5.3
FBO VARIOUS NONQUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4764 DELAWARE CHARTER GUARANTEE & TRUS 94.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4638 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4123 PRINCIPAL LIFE INSURANCE CO CUST IRA OF RONALD O 5.8
KRIEGER
520 BRYAN DR
SAINT LOUIS MO 63122-3647
4123 PRINCIPAL LIFE INSURANCE CO CUST IRA OF THOMAS J 20.3
SONDAG
2258 TAMARACK DR
DOWNERS GROVE IL 60515-4262
4223 PRINCIPAL LIFE INSURANCE CO CUST 403B PLAN OF 13.0
JUDITH A JEDLICKA
35 PENATAQUIT PL
HUNTINGTON NY 11743-2414
4223 PRINCIPAL LIFE INSURANCE CO CUST IRA MARY T 5.1
FLANNERY
217 E GRAVERS LN
PHILA PA 19118-2802
4223 DELORES E BUHRMAN TRANSFER ON DEATH SUBJECT TO STA 5.0
TOD RULES
514 MILLER ST
HOLDREGE NE 68949-2057
4223 PRINCIPAL LIFE INSURANCE CO CUST IRA OF DELORES E 6.7
BUHRMAN
514 MILLER ST
HOLDREGE NE 68949-2057
4223 PERSHING LLC 6.8
P O BOX 2052
JERSEY CITY NJ 07303-2052
4223 NFS LLC FEBO LARRY ANDERSON DDS PA DEFINED BENEF 7.8
LARRY ANDERSON TTEE U/A 12/12/02
877 111TH AVE N STE 3
NAPLES FL 34108-1853
4423 PERSHING LLC 5.5
P O BOX 2052
JERSEY CITY NJ 07303-2052
4423 PRINCIPAL LIFE INSURANCE CO CUST IRA OF ROBERT C 7.9
CORE
420 N MICHIGAN ST
LAKE CITY IA 51449-1059
4423 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O NANCY P 5.9
LOIACONI
110B HERITAGE HLS
SOMERS NY 10589-1316
4768 PRINCIPAL LIFE INSURANCE CO 99.4
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4767 DELAWARE CHARTER GUARANTEE & TRUS 92.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4765 DELAWARE CHARTER GUARANTEE & TRUS 99.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - REAL ESTATE SECURITIES FUND
4932 DELAWARE CHARTER GUARANTEE & TRUS 78.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4932 TRUSTAR FBO THE CHURCH OF GOD 16.4
ATTN NPIO TRADE DESK
P.O. BOX 8963
WILMINGTON, DE 19899
4930 DELAWARE CHARTER GUARANTEE & TRUS 99.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4685 DELAWARE CHARTER GUARANTEE & TRUS 95.6
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4487 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O ROBERT A 8.7
COGBURN
RR 2 BOX 168
CHEYENNE OK 73628-9652
4934 LIFETIME 2010 FUND 9.3
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4934 LIFETIME 2020 FUND 15.3
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4934 LIFETIME 2030 FUND 10.5
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4934 PRINCIPAL LIFE INSURANCE CO 20.3
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4934 SAM BALANCED PORTFOLIO PIF 10.7
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4934 SAM CONS GROWTH PORTFOLIO PIF 11.3
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4934 SAM STRATEGIC GROWTH PORTFOLIO PIF 7.9
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4933 DELAWARE CHARTER GUAR & TRUST 9.8
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4933 DELAWARE CHARTER GUARANTEE & TRUS 73.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4933 DCGT as TTEE and/or CUST 7.3
FBO THE WESLEYAN PENSION FUND
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4931 DELAWARE CHARTER GUARANTEE & TRUS 98.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - SAM BALANCED PORTFOLIO
4848 DCGT AS TTEE AND/OR CUST 11.3
FBO PRINCIPAL FINANCIAL GROUP QUALI FIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4548 PRINCIPAL LIFE INSURANCE CO CUST IRA OF CHRISTINA 6.0
P PRATHER
18291 WOODHAM CARNE RD
SONORA CA 95370-9744
4548 PRINCIPAL LIFE INS CO CUST IRA OF MONICA CAVALIERE 11.9
62581 ROMEO PLANK RD
RAY TOWNSHIP MI 48096-2946
4548 PRINCIPAL LIFE INS CO CUST IRA OF JOSEPH M 20.4
MCFADDEN
741 MARTHA LN
WARMINSTER PA 18974-2919
4548 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O JEROME 7.6
SCHMIDT
8234 HIGHWAY 238
LITTLE FALLS MN 56345-4422
4589 PRINCIPAL LIFE INSURANCE CO CUST 98.5
FBO PRINCIPAL FINANCIAL GROUP OMNIB US WRAPPED
ATTN NPIO TRADE DESK
711 HIGH STREET T-008-E20
DES MOINES IA 50392-9992
PIF - SAM CONSERVATIVE BALANCED PORTFOLIO
4549 PRINCIPAL LIFE INSURANCE CO CUST IRA OF BEN WU 7.8
18881 BELLGROVE CIR
SARATOGA CA 95070-4566
4549 PRINCIPAL LIFE INS CO CUST IRA OF AL N ULMASOV 7.1
1419 W GEORGETOWN LOOP
COLUMBIA MO 65203-0463
4549 PRINCIPAL LIFE INS CO CUST IRA OF WILLIAM A 8.7
SCHLICK JR
24701 RAYMOND WAY SPC 18
LAKE FOREST CA 92630-4739
4549 PRINCIPAL LIFE INS CO CUST IRA OF ELAINE METZ 9.4
17766 SE 159TH TER
WEIRSDALE FL 32195-3173
4549 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O JEROME 19.2
GOTTHAINER
6 KLAKRING CT
ANNAPOLIS MD 21403-3620
4657 PRINCIPAL LIFE INSURANCE CO CUST 96.8
FBO PRINCIPAL FINANCIAL GROUP OMNIB US WRAPPED
ATTN NPIO TRADE DESK
711 HIGH STREET T-008-E20
DES MOINES IA 50392-9992
PIF - SAM CONSERVATIVE GROWTH PORTFOLIO
4899 DCGT AS TTEE AND/OR CUST 20.1
FBO PRINCIPAL FINANCIAL GROUP QUALI FIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH STREET
DES MOINES IA 50392-2732
4550 PRINCIPAL LIFE INS CO CUST IRA OF PEGGY A TITTLE 7.4
9894 GRASSCREEK CT
CINCINNATI OH 45231-2008
4550 PRINCIPAL LIFE INS CO CUST IRA OF MELVIN E LEUNG 7.5
1655 VIA ESCONDIDO
SAN LORENZO CA 94580-2018
4550 CHRISTOPHER W SEITZ & JOY D SEITZ JTTEN 8.4
118 TANGLEWOOD DR
SHARPSVILLE IN 46068-9296
4799 PRINCIPAL LIFE INSURANCE CO CUST 98.9
FBO PRINCIPAL FINANCIAL GROUP OMNIB US WRAPPED
ATTN NPIO TRADE DESK
711 HIGH STREET T-008-E20
DES MOINES IA 50392-9992
PIF - SAM FLEXIBLE INCOME PORTFOLIO
4916 DCGT AS TTEE AND/OR CUST 72.7
FBO PRINCIPAL FINANCIAL GROUP QUALI FIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4552 PRINCIPAL LIFE INSURANCE CO CUST IRA OF ALBERTO G 46.7
ROY
201 PASEO DEL CABALLO
WALNUT CA 91789-1628
4552 PRINCIPAL LIFE INS CO CUST IRA OF GREGORY FRADETTE 8.7
5014 SACRED DATURA AVE
LAS VEGAS NV 89139-5505
4552 PRINCIPAL LIFE INSURANCE CO CUST ROTH IRA OF 5.8
MICHELE A SCALVA
116 N MELDRUM ST APT 1
FORT COLLINS CO 80521-2662
4552 PRINCIPAL LIFE INSURANCE CO CUST IRA JOHN V DONLEY 6.2
19117 PERRY ST
TRIANGLE VA 22172-2118
4552 PRINCIPAL LIFE INSURANCE CO CUST IRA BARBARA J 7.8
CLIFF
2223 WOODLAND DR APT 6
DUBUQUE IA 52002-2880
4806 PRINCIPAL LIFE INSURANCE CO CUST 65.0
FBO PRINCIPAL FINANCIAL GROUP OMNIB US WRAPPED
ATTN NPIO TRADE DESK
711 HIGH STREET T-008-E20
DES MOINES IA 50392-9992
PIF - SAM STRATEGIC GROWTH PORTFOLIO
4946 AIMBRIDGE EMPLOYEE SERVICE CORP 9.2
FBO DEF COMP PLAN OF AESC
ATTN KATY MILARTA
4100 MIDWAY RD STE 2115
CARROLLTON TX 75007-1965
4948 DCGT AS TTEE AND/OR CUST 73.0
FBO PRINCIPAL FINANCIAL GROUP QUALI FIED PRIN
ADVTG OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4551 PRINCIPAL LIFE INS CO CUST IRA OF HUGH W BURKS 8.8
321 LONGWOOD DR
STAFFORD VA 22556-1049
4551 PRINCIPAL LIFE INS CO CUST IRA OF SANDRA A BRONSON 5.2
1308 W WALNUT ST
CHILLICOTHE IL 61523-1334
4551 PERSHING LLC 7.1
P O BOX 2052
JERSEY CITY NJ 07303-2052
4805 PRINCIPAL LIFE INSURANCE CO CUST 97.7
FBO PRINCIPAL FINANCIAL GROUP OMNIB US WRAPPED
ATTN NPIO TRADE DESK
711 HIGH STREET T-008-E20
DES MOINES IA 50392-9992
PIF - SHORT-TERM BOND FUND
4642 DELAWARE CHARTER GUARANTEE & TRUS 79.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4640 DCGT AS TTEE AND/OR CUST 99.5
FBO THE CHURCH OF GOD
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4615 DELAWARE CHARTER GUARANTEE & TRUS 92.5
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4456 RAYMOND JAMES & ASSOC INC 12.0
FBO WENTWORTH TR BIN# 16900975
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
4456 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O CHRISTINE 5.8
WOGEE
2241 ARDSHEAL DR
LA HABRA HGTS CA 90631-7704
4456 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O FAYE 5.8
HAGNER
6510 E YOSEMITE AVE
ORANGE CA 92867-2468
4456 PRINCIPAL LIFE INSURANCE CO CUST IRA R/O SHARLA 9.2
MCQUILLIN
3522 KEMPTON DR
LOS ALAMITOS CA 90720-4111
4456 EDMUND B RIESBERG 6.4
2805 FOREST ST
CARROLL IA 51401-3460
4643 Bankers Trust Company 19.5
FBO Republic Bancorp Def Comp Plan
Attn: Debbie Williams
453 7th St
Des Moines IA 50309
4643 DELAWARE CHARTER GUARANTEE & TRUS 48.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4643 DCGT as TTEE and/or CUST 19.6
FBO THE WESLEYAN PENSION FUND
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
4641 DCGT AS TTEE AND/OR CUST 58.5
FBO CAPITAL CORP OF THE WEST 401 K PLAN
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50309-2732
4641 DELAWARE CHARTER GUARANTEE & TRUS 9.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4641 DCGT as TTEE and/or CUST 32.3
FBO Principal Financial Group Qualified FIA
Omnibus
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
PIF - SHORT-TERM INCOME FUND
4588 SAM BALANCED PORTFOLIO PIF 24.3
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4588 SAM CONS BALANCED PORTFOLIO PIF 20.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4588 SAM FLEXIBLE INCOME PORTFOLIO PIF 55.2
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
PIF - SMALLCAP BLEND FUND
4942 DELAWARE CHARTER GUARANTEE & TRUS 88.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4940 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4686 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4488 PRINCIPAL LIFE INSURANCE CO CUST IRA OF GARY D 5.3
STROUP
840 CORTEZ ST
DENVER CO 80221-3561
4944 THE PRINCIPAL TRUST FOR POST- RETIREMENT MEDICAL 12.1
BENEFITS
RETIRED IND FIELD 5073
ATTN CRYSTAL MORRIS S-003-S60
PRINCIPAL FINANCIAL GROUP
DES MOINES, IA 50392-0480
4944 PRINCIPAL TRUST FOR LIFE INS BENEFITS FOR EE'S - 6.8
RETIRED 5016
ATTN CRYSTAL MORRIS S-003-S60
PRINCIPAL FINANCIAL GROUP
DES MOINES, IA 50392-0480
4944 PRINCIPAL TRUST FOR HEALTH BENEFITS FOR IND FIELD 10.5
- RETIRED 5025
ATTN CRYSTAL MORRIS S-003-S60
PRINCIPAL FINANCIAL GROUP
DES MOINES, IA 50392-0480
4944 THE PRINCIPAL TRUST FOR POST- RETIREMENT MEDICAL 62.2
BENEFITS
RETIRED EE 5072
ATTN CRYSTAL MORRIS S-003-S60
PRINCIPAL FINANCIAL GROUP
DES MOINES, IA 50392-0480
4943 DELAWARE CHARTER GUARANTEE & TRUS 59.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4943 RELIANCE TRUST CO TTEE 6.6
FBO OLD MUTUAL US LIFE EXCESS PLAN
ERIC ANDERSON
3384 PEACHTREE RD NE
ATLANTA GA 30326-1181
4943 Principal Trust Company FBO Exec NQ Excess of 5.7
Keller Foundation
Attn: Susan Saggione
1013 Centre Rd
Wilmington DE 19805
4941 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - SMALLCAP GROWTH FUND
4952 DELAWARE CHARTER GUARANTEE & TRUS 95.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4950 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4687 DELAWARE CHARTER GUARANTEE & TRUS 88.5
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4175 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 53.4
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4475 PERSHING LLC 10.5
P O BOX 2052
JERSEY CITY NJ 07303-2052
4475 PERSHING LLC 5.9
P O BOX 2052
JERSEY CITY NJ 07303-2052
4475 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 10.8
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4954 SAM BALANCED PORTFOLIO PIF 31.1
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4954 SAM CONS GROWTH PORTFOLIO PIF 34.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4954 SAM STRATEGIC GROWTH PORTFOLIO PIF 23.3
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4953 GE CAPITAL REAL ESTATE 16.7
FBO GE CAP REAL ESTATE SAVINGS PLAN
ATTN NANCY LANHAM
16479 DALLAS PKWY STE 500
ADDISON TX 75001-6852
4953 DELAWARE CHARTER GUARANTEE & TRUS 80.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4951 DCGT as TTEE and/or CUST 100.0
FBO Various Qualified Plans
ATTN NPIO TRADE DESK
711 High Street
Des Moines, IA 50303
PIF - SMALLCAP S&P 600 INDEX FUND
4962 DELAWARE CHARTER GUARANTEE & TRUS 94.3
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4960 DELAWARE CHARTER GUARANTEE & TRUS 97.7
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4688 ATTN NPIO TRADE DESK DCGT AS TTEE AND/OR CUST 11.7
FBO SHEET METAL WORKERS LOCAL UNION 20 PENSION
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4688 DELAWARE CHARTER GUARANTEE & TRUS 87.1
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4964 LIFETIME 2010 FUND 18.8
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4964 LIFETIME 2020 FUND 33.5
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4964 LIFETIME 2040 FUND 8.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4964 LIFETIME 2030 FUND 17.7
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4963 DELAWARE CHARTER GUAR & TRUST 7.1
FBO PRINCIPAL FINANCIAL GROUP
ATTN: RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4963 DELAWARE CHARTER GUARANTEE & TRUS 86.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4961 DELAWARE CHARTER GUARANTEE & TRUS 99.8
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - SMALLCAP VALUE FUND
4972 DELAWARE CHARTER GUARANTEE & TRUS 96.6
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4970 DELAWARE CHARTER GUARANTEE & TRUS 99.9
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4689 DELAWARE CHARTER GUARANTEE & TRUS 96.9
FBO VARIOUS QUALIFED PLANS
711 HIGH STREET
DES MOINES, IA 50303
4491 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 18.5
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4974 LIFETIME 2010 FUND 5.6
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4974 LIFETIME 2020 FUND 13.8
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4974 LIFETIME 2040 FUND 5.1
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4974 LIFETIME 2030 FUND 9.9
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES, IA 50392-0200
4974 SAM BALANCED PORTFOLIO PIF 18.8
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4974 SAM CONS GROWTH PORTFOLIO PIF 20.1
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4974 SAM STRATEGIC GROWTH PORTFOLIO PIF 14.0
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4973 DELAWARE CHARTER GUARANTEE & TRUS 88.2
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4971 DELAWARE CHARTER GUARANTEE & TRUS 100.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - TAX-EXEMPT BOND FUND I
4406 PERSHING LLC 10.6
P O BOX 2052
JERSEY CITY NJ 07303-2052
4406 MG TRUST COMPANY CUST 5.6
FBO STEPHEN C DOMBROVSKI SOLO K
700 17TH ST STE 300
DENVER CO 80202-3531
4406 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 8.6
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4406 LPL FINANCIAL SERVICES A/C 1089-6851 10.4
9785 TOWNE CENTRE DRIVE
SAN DIEGO CA 92121-1968
PIF - ULTRA SHORT BOND FUND
4987 DELAWARE CHARTER GUARANTEE & TRUS 98.4
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4985 CITIZENS BUSINESS BANK FBO AAA ELE MOTOR SALES & 6.7
SERV INC RETMT SAV
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4985 DELAWARE CHARTER GUARANTEE & TRUS 93.0
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
4402 BENNETT B STRAHAN 9.0
6131 FALLS OF NEUSE RD STE 300
RALEIGH NC 27609-3518
4402 PERSHING LLC 6.4
P O BOX 2052
JERSEY CITY NJ 07303-2052
4402 MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS 35.0
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
4402 PRINCIPAL LIFE INSURANCE CO CUST IRA OF ANTHONY F 5.2
SHIRCEL
1711 KAAT LN
SHEBOYGAN WI 53081-9106
4990 LIFETIME 2010 FUND 41.9
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392-0200
4990 LIFETIME STRATEGIC INCOME FUND 49.6
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
4990 PRINCIPAL LIFE INSURANCE CO 5.5
C/O PENSION TRADE DESK
PO BOX 9397
DES MOINES, IA 50306-9397
4988 DELAWARE CHARTER GUARANTEE & TRUS 97.1
FBO VARIOUS QUALIFED PLANS
FBO PRINCIPAL FINANCIAL GROUP
ATTN RIS NPIO TRADE DESK
711 HIGH STREET
DES MOINES, IA 50392
PIF - WEST COAST EQUITY FUND
4198 NFS LLC FEBO FIIOC AS AGENT FOR QUALIFIED EMPLOYEE 31.2
BENEFIT PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY KW1C
COVINGTON KY 41015-1987
4808 SAM BALANCED PORTFOLIO PIF 33.5
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES, IA 503920200
4808 SAM CONS GROWTH PORTFOLIO PIF 35.5
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
4808 SAM STRATEGIC GROWTH PORTFOLIO PIF 26.4
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES, IA 50392
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORS
The Manager of the Fund is Principal Management Corporation ("Principal"), a
wholly owned subsidiary of Principal Financial Services, Inc. Principal is an
affiliate of Principal Life. The address of Principal is the Principal Financial
Group, Des Moines, Iowa 50392-2080. Principal was organized on January 10, 1969,
and since that time has managed various mutual funds sponsored by Principal
Life.
Principal has executed agreements with various Sub-Advisors. Under those
Sub-Advisory agreements, the Sub-Advisor agrees to assume the obligations of
Principal to provide investment advisory services for a specific Fund. For these
services, each Sub-Advisor is paid a fee by Principal.
Fund(s): Partners LargeCap Value and Partners SmallCap Growth I
Sub-Advisor: AllianceBernstein L.P. ("AllianceBernstein"). AllianceBernstein is
located at 1345 Avenue of the Americas, New York, NY 10105.
Fund(s): Partners LargeCap Growth II and Partners LargeCap Value II
Sub-Advisor: American Century Investment Management, Inc. ("American Century")
was founded in 1958. Its office is located in the American Century
Tower at 4500 Main Street, Kansas City, MO 64111.
Fund(s): Partners SmallCap Value
Sub-Advisor: Ark Asset Management Co., Inc. ("Ark Asset") is an independent,
100% employee owned investment management firm. Ark Asset's offices are
located at 125 Broad Street, New York, NY 10004.
Fund(s): MidCap Value
Sub-Advisor: Barrow, Hanley, Mewhinney & Strauss ("BHMS") is an investment
advisory firm that was founded in 1979. It is registered as an
investment adviser under the Investment Advisers Act of 1940. BHMS
manages investments for institutional investors. It is a wholly owned
subsidiary of Old Mutual Asset Management (US), which is a wholly owned
subsidiary of Old Mutual plc. BHMS's address is 2200 Ross Avenue, 31st
Floor, Dallas, Texas 75201.
Fund(s): Partners LargeCap Growth II and Partners LargeCap Value
Sub-Advisor: BNY Investment Advisors ("BNY"), a separately identifiable division
of The Bank of New York, is located at 1633 Broadway, NY, NY 10019.
Founded by Alexander Hamilton in 1784, The Bank of New York is one of
the largest commercial banks in the United States. The Bank of New York
began offering investment services in the 1830s and manages investments
for institutions and individuals.
Fund(s): LargeCap Growth, MidCap Growth, and Partners SmallCap Growth III
Sub-Advisor: Columbus Circle Investors ("CCI") is an affiliate of PGI and a
member of the Principal Financial Group. CCI was founded in 1975. Its
address is Metro Center, One Station Place, Stamford, CT 06902.
Fund(s): Partners SmallCap Value II
Sub-Advisor: Dimensional Fund Advisors Inc. ("Dimensional"), located at 1299
Ocean Avenue, Santa Monica, CA 90401, is a registered investment
advisor.
Sub-Advisor: Vaughan Nelson Investment Management, LP ("Vaughan Nelson") is
located at 600 Travis Street, Suite 6300, Houston, Texas 77002. Founded
in 1970, Vaughan Nelson is a subsidiary of IXIS Asset Management US
Group, L.P.
Sub-Advisor: UBS Global Asset Management (Americas) Inc. ("UBS Global AM"), a
Delaware corporation located at One North Wacker, Chicago, IL 60606, is
a registered investment advisor. UBS Global AM, a subsidiary of UBS AG,
is a member of the UBS Global Asset Management business group (the
"Group") of UBS AG.
Fund(s): Equity Income I, High Yield II, Income, MidCap Stock, Mortgage
Securities, Short-Term Income, SAM Balanced Portfolio, SAM Conservative
Balanced Portfolio, SAM Conservative Growth Portfolio, SAM Flexible
Income Portfolio, SAM Strategic Growth Portfolio and West Coast Equity
Sub-Advisor: Edge Asset Management, Inc. (formerly known as WM Advisors, Inc.)
("Edge") is an affiliate of Principal and a member of the Principal
Financial Group. Edge has been in the business of investment management
since 1944. Its address is 1201 Third Avenue, 8th Floor, Seattle, WA
98101.
Fund(s): Partners SmallCap Growth Fund II
Sub-Advisor: Emerald Advisers, Inc. ("Emerald") is a wholly owned subsidiary of
Emerald Asset Management. Emerald provides professional investment
advisory services to institutional investors, high net worth
individuals and the general public. Emerald's offices are located at
1703 Oregon Pike Road, Suite 101, Lancaster, PA 17601.
Sub-Advisor: Essex Investment Management Company, LLC ("Essex") is a
Boston-based management firm which specializes in growth equity
investments. Essex manages portfolios for corporations, endowments,
foundations, municipalities, public funds, Taft-Hartley accounts, and
private clients. Essex offers a range of growth equity strategies and
employs proprietary fundamental research combined with active portfolio
management. Its address is 125 High Street, 29th Floor, Boston, MA
02110.
Fund(s): Partners LargeCap Blend I and Partners MidCap Value I
Sub-Advisor: Goldman Sachs Asset Management, L.P. ("Goldman Sachs") is part of
the Investment Management Division ("IMD") of Goldman, Sachs & Co.
Goldman Sach's principal office is located at 32 Old Slip, New York, NY
10005.
Fund(s): Partners Global Equity and Partners SmallCap Value I
Sub-Advisor: J.P. Morgan Investment Management Inc. ("J.P. Morgan"), 245 Park
Avenue, New York, NY 10167 is an indirect wholly owned subsidiary of
JPMorgan Chase & Co. ("JPMorgan"), a bank holding company. Morgan
offers a wide range of services to governmental, institutional,
corporate, and individual customers and acts as investment advisor to
individual and institutional clients.
Fund(s): Partners MidCap Value I and Partners SmallCap Value
Sub-Advisor: Los Angeles Capital Management and Equity Research, Inc. ("LA
Capital") is an independent, employee-owned firm. It is located at
11150 Santa Monica Boulevard, Los Angeles, CA 90025.
Fund(s): Partners SmallCap Growth III
Sub-Advisor: Mazama Capital Management, Inc. ("Mazama") is an independent
employee-owned money management firm specializing in small and mid cap
growth investing for institutional clients. The firm is headquartered
at One Southwest Columbia Street, Suite 1500, Portland Oregon 97258.
Fund(s): Partners MidCap Growth I, Partners SmallCap Blend and Partners SmallCap
Value I
Sub-Advisor: Mellon Equity Associates, LLP ("Mellon Equity"), 500 Grant Street,
Suite 4200, Pittsburgh, PA 15258. Mellon Equity is a wholly owned
subsidiary of Mellon Financial Corporation ("Mellon").
Fund(s): California Insured Intermediate Municipal, California Municipal and
Tax-Exempt Bond I
Sub-Advisor: Morgan Stanley Investment Management Inc. d/b/a Van Kampen (''Van
Kampen''), 1221 Avenue of the Americas, New York, New York 10020, acts
as sub-advisor to the California Municipal, California Insured
Intermediate Municipal, and Tax-Exempt Bond I Funds. Van Kampen is an
indirect wholly owned subsidiary of Morgan Stanley, a publicly held
global financial services company. Van Kampen provides investment
advice to a wide variety of individual, institutional, and investment
company clients.
Fund(s): Partners MidCap Value
Sub-Advisor: Neuberger Berman Management, Inc. ("Neuberger Berman") is an
affiliate of Neuberger Berman, LLC. Neuberger Berman, LLC is located at
605 Third Avenue, 2nd Floor, New York, NY 10158-0180. The two firms
continue an asset management history that began in 1939. Neuberger
Berman is an indirect, wholly owned subsidiary of Lehman Brothers
Holdings, Inc. Lehman Brothers is located at 745 Seventh Avenue, New
York, NY 10019.
Sub-Advisor: Jacobs Levy Equity Management, Inc. ("Jacobs Levy") provides
investment advice based upon quantitative equity strategies. The firm
focuses on detecting opportunities in the U.S. equity market and
attempting to profit from them through engineered, risk-controlled
portfolios. Based in Florham Park, New Jersey, Jacobs Levy is focused
exclusively on the management of U.S. equity separate accounts for
institutional clients. Its address is 100 Campus Drive, Florham Park,
NJ 07932-0650.
Fund(s): Bond & Mortgage Securities, Disciplined LargeCap Blend, Diversified
International, Government & High Quality Bond, High Quality
Intermediate-Term Bond, Inflation Protection, International Emerging
Markets, International Growth, LargeCap S&P 500 Index, LargeCap Value,
MidCap Blend, MidCap S&P 400 Index, MidCap Value, Money Market,
Principal LifeTime 2010, Principal LifeTime 2020, Principal LifeTime
2030, Principal LifeTime 2040, Principal LifeTime 2050, Principal
LifeTime Strategic Income, Short-Term Bond, SmallCap Blend, SmallCap
Growth, SmallCap S&P 600 Index, SmallCap Value, and Ultra Short Bond
Funds.
Sub-Advisor: Principal Global Investors, LLC ("PGI") is an indirectly
wholly-owned subsidiary of Principal Life Insurance Company and an
affiliate of the Manager. PGI has been active in retirement plan
investing since 1941 and has sub-advised mutual fund assets since 1969.
PGI manages equity, fixed-income and real estate investments primarily
for institutional investors, including Principal Life. Principal Global
Investor's headquarters address is 801 Grand Avenue, Des Moines, Iowa
50392 and has other primary asset management offices in New York,
London, Sydney and Singapore.
Fund(s): High Yield
Sub-Advisor: J.P. Morgan Investment Management Inc. ("J.P. Morgan"), 245 Park
Avenue, New York, NY 10167 is an indirect wholly owned subsidiary of
JPMorgan Chase & Co. ("JPMorgan"), a bank holding company. Morgan
offers a wide range of services to governmental, institutional,
corporate, and individual customers and acts as investment advisor to
individual and institutional clients.
Sub-Advisor: Lehman Brothers, 190 South LaSalle Street, Chicago, IL 60603, is a
wholly-owned subsidiary of Lehman Brothers Holdings, Inc., a
publicly-owned holding company. Lehman Brothers offers a wide range of
investment advisory services to meet the needs of clients with diverse
investment objectives.
Fund(s): Global Real Estate Securities and Real Estate Securities
Sub-Advisor: Principal Real Estate Investors, LLC ("Principal - REI"), an
indirect wholly owned subsidiary of Principal Life, an affiliate of
Principal, and a member of the Principal Financial Group, was founded
in 2000. It manages investments for institutional investors, including
Principal Life. Principal - REI's address is 801 Grand Avenue, Des
Moines, IA 50392.
Fund(s): Partners International and Partners MidCap Growth II
Sub-Advisor: Pyramis Global Advisors, LLC (formerly known as Fidelity Management
& Research Company) ("Pyramis") is the Sub-Advisor. Pyramis's address
is 82 Devonshire Street, Boston, MA 02109.
Fund(s): Preferred Securities
Sub-Advisor: Spectrum Asset Management, Inc. ("Spectrum") is an indirect
subsidiary of Principal Life, an affiliate of PGI and a member of the
Principal Financial Group. Spectrum was founded in 1987. Its address is
4 High Ridge Park, Stamford, CT 06905.
Fund(s): Partners LargeCap Blend and Partners LargeCap Growth I
Sub-Advisor: T. Rowe Price Associates, Inc. ("T. Rowe Price"), a wholly owned
subsidiary of T. Rowe Price Group, Inc., a financial services holding
company, has over 69 years of investment management experience. T. Rowe
Price is located at 100 East Pratt Street, Baltimore, MD 21202.
Fund(s): Partners MidCap Growth
Sub-Advisor: Turner Investment Partners, Inc. ("Turner") was founded in 1990.
Its address is 1205 Westlakes Drive, Suite 100, Berwyn, PA 19312.
Fund(s): Partners LargeCap Value I
Sub-Advisor: UBS Global Asset Management (Americas) Inc. ("UBS Global AM"), a
Delaware corporation located at One North Wacker, Chicago, IL 60606, is
a registered investment advisor. UBS Global AM, a subsidiary of UBS AG,
is a member of the UBS Global Asset Management business group (the
"Group") of UBS AG.
THE SUB-SUB-ADVISORS
PGI, has entered into a sub-sub-advisory agreement with Post for the Bond &
Mortgage Securities and Ultra Short Bond Funds, and with Spectrum for the Bond &
Mortgage Securities and High Quality Intermediate-Term Bond Funds. Under the
agreements, the sub-sub-advisors agree to manage the day-to-day investment of
the Funds' assets allocated to it consistent with the Funds' investment
objectives, policies and restrictions and will be responsible for, among other
things, placing all orders for the purchase and sale of portfolio securities,
subject to supervision and monitoring by each Sub-Advisor and oversight by the
Board. Each firm, at its own expense, will provide all investment, management,
and administrative personnel, facilities, and equipment necessary for the
investment advisory services which it conducts for the Funds.
Under the agreements, PGI pays each sub-sub-advisor a fee which is accrued daily
and paid monthly (calculated as percentage of the average daily net assets
managed by each respective firm). Entering into these agreements does not change
the management fee that the Fund pays Principal under its Management Agreement
or the sub-advisory fee that Principal pays PGI under its sub-advisory
agreement. PGI, and not the Fund, will bear the expenses of the services that
each of the sub-sub-advisors provides to the Fund under the agreements.
PGI is the sub-advisor for the Bond & Mortgage Securities Fund. Day-to-day
management decisions concerning a portion of the Bond & Mortgage Securities
Fund's portfolio are made by Spectrum Asset Management, Inc. ("Spectrum"), and
Post Advisory Group, LLC ("Post") each of which serves as sub-sub-advisor.
Similar day-to-day management decisions concerning a portion of the High Quality
Intermediate-Term Bond Fund's portfolio are made by Spectrum and such decisions
for a portion of the Ultra Short Bond Fund's portfolio are made by Post.
Each of the persons affiliated with the Fund who is also an affiliated person of
Principal or PGI is named below, together with the capacities in which such
person is affiliated:
NAME OFFICE HELD WITH THE OFFICE HELD WITH PRINCIPAL/PGI
---- FUND ------------------------------
--------------------
Craig L. Bassett Treasurer Treasurer (Principal)
Executive Vice Executive Vice President and
Michael J. Beer President and Chief Chief Operating Officer
Financial Officer (Principal)
Chief Compliance Senior Vice President
David J. Brown Officer (Principal)
Senior Vice President and Chief
Jill R. Brown Senior Vice President Financial Officer (Principal)
Director, President Director and President
Ralph C. Eucher and CEO (Principal)
Stephen G. Gallaher Assistant Counsel 2nd Vice President and Counsel
Vice President and Vice President and Chief
Ernest H. Gillum Assistant Secretary Compliance Officer (Principal)
Patrick A. Kirchner Assistant Counsel Counsel (Principal)
Sarah J. Pitts Assistant Counsel Counsel (Principal)
Vice President and Vice President and Controller
Layne A. Rasmussen Controller (Principal) Mutual Funds
Senior Vice President and
Counsel (Principal); Counsel
Michael D. Roughton Counsel (PGI)
Adam U. Shaikh Assistant Counsel Counsel (Principal)
Dan Westholm Assistant Treasurer Director - Treasury
Director and Secretary,
Beth C. Wilson Secretary Principal Funds, (Principal)
Director and Chairman Director and Chairman of the
Larry D. Zimpleman of the Board Board (Principal)
CODES OF ETHICS
The Fund, Principal, each of the Sub-Advisors, the Distributor and Princor have
adopted Codes of Ethics ("Codes") under Rule 17j-1 of the 1940 Act. Principal
has also adopted such a Code under Rule 204A-1 of the Investment Advisers Act of
1940. These Codes are designed to prevent persons with access to information
regarding the portfolio trading activity of a Fund from using that information
for their personal benefit. In certain circumstances, personal securities
trading is permitted in accordance with procedures established by the Codes. The
Boards of Directors of Principal, the Fund, the Distributor, Princor and each of
the Sub-Advisors periodically review their respective Codes. The Codes are on
file with, and available from, the Securities and Exchange Commission. A copy of
the Fund's Code will also be provided upon request, which may be made by
contacting the Fund.
FEES PAID TO THE MANAGER
Principal is paid a fee by each Fund for its services, which includes any fee
paid to the Sub-Advisor. The fee paid by each Fund (as a percentage of the
average daily net assets) for the fiscal year ended October 31, 2006 was:
Bond & Mortgage
Securities 0.53% Partners MidCap Growth 1.00%
Disciplined LargeCap Partners MidCap Growth
Blend 0.59% I 1.00%
Diversified Partners MidCap Growth
International 0.90% II 1.00%
Government & High
Quality Bond 0.40% Partners MidCap Value 1.00%
High Quality
Intermediate-Term Bond 0.40% Partners MidCap Value I 1.00%
High Yield 0.65% Partners SmallCap Blend 1.00%
Partners SmallCap
Inflation Protection 0.40% Growth I 1.10%
International Emerging Partners SmallCap
Markets 1.35%/(1)/ Growth II 1.00%
Partners SmallCap
International Growth 0.99% Growth III 1.10%
LargeCap Growth 0.67%/(2)/ Partners SmallCap Value 1.00%
Partners SmallCap Value
LargeCap S&P 500 Index 0.15% I 1.00%
Partners SmallCap Value
LargeCap Value 0.45% II 1.00%
MidCap Blend 0.64% Preferred Securities 0.75%
MidCap Growth 0.65% Principal LifeTime 2010 0.1225%
MidCap S&P 400 Index 0.15% Principal LifeTime 2020 0.1225%
MidCap Value 0.65% Principal LifeTime 2030 0.1225%
Money Market 0.40% Principal LifeTime 2040 0.1225%
Partners Global Equity 0.95% Principal LifeTime 2050 0.1225%
Principal Lifetime
Partners International 1.09% Strategic Income 0.1225%
Partners LargeCap Blend 0.74% Real Estate Securities 0.84%
Partners LargeCap Blend
I 0.45% Short-Term Bond 0.40%
Partners LargeCap
Growth I 0.74% SmallCap Blend 0.75%
Partners LargeCap
Growth II 0.99% SmallCap Growth 0.75%
Partners LargeCap Value 0.77% SmallCap S&P 600 Index 0.15%
Partners LargeCap Value
I 0.80% SmallCap Value 0.75%
Partners LargeCap Value
II 0.85% Ultra Short Bond 0.40%
/ //(1)/ The Fund's management fees have decreased effective October 1, 2006.
/ //(2)/ The Fund's management fees have increased effective January 16, 2007.
The management fee schedules for the Funds are as follows:
FIRST $500 NEXT $500 NEXT $500 OVER $1.5
FUND MILLION MILLION MILLION BILLION
---- ------- ------- ------- -------
Disciplined LargeCap
Blend 0.60% 0.58% 0.56% 0.55%
Global Real Estate
Securities 0.90 0.88 0.86 0.85
Government & High
Quality Bond 0.40 0.38 0.36 0.35
High Quality
Intermediate-Term Bond 0.40 0.38 0.36 0.35
High Yield 0.65 0.63 0.61 0.60
Inflation Protection 0.40 0.38 0.36 0.35
International Emerging
Markets 1.20 1.18 1.16 1.15
International Growth 1.00 0.98 0.96 0.95
LargeCap S&P 500 Index 0.15 0.15 0.15 0.15
LargeCap Value 0.45 0.43 0.41 0.40
MidCap Blend 0.65 0.63 0.61 0.60
MidCap Growth 0.65 0.63 0.61 0.60
MidCap S&P 400 Index 0.15 0.15 0.15 0.15
MidCap Value 0.65 0.63 0.61 0.60
Partners Global Equity 0.95 0.93 0.91 0.90
Partners International 1.10 1.08 1.06 1.05
Partners LargeCap
Blend 0.75 0.73 0.71 0.70
Partners LargeCap
Blend I 0.45 0.43 0.41 0.40
Partners LargeCap
Growth I 0.75 0.73 0.71 0.70
Partners LargeCap
Growth II 1.00 0.98 0.96 0.95
Partners LargeCap
Value I 0.80 0.78 0.76 0.75
Partners LargeCap
Value II 0.85 0.83 0.81 0.80
Partners MidCap Growth 1.00 0.98 0.96 0.95
Partners MidCap Growth
I 1.00 0.98 0.96 0.95
Partners MidCap Growth
II 1.00 0.98 0.96 0.95
Partners MidCap Value 1.00 0.98 0.96 0.95
Partners MidCap Value
I 1.00 0.98 0.96 0.95
Partners SmallCap
Blend 1.00 0.98 0.96 0.95
Partners SmallCap
Growth I 1.10 1.08 1.06 1.05
Partners SmallCap
Growth II 1.00 0.98 0.96 0.95
Partners SmallCap
Growth III 1.10 1.08 1.06 1.05
Partners SmallCap
Value 1.00 0.98 0.96 0.95
Partners SmallCap
Value I 1.00 0.98 0.96 0.95
Partners SmallCap
Value II 1.00 0.98 0.96 0.95
Preferred Securities 0.75 0.73 0.71 0.70
Principal LifeTime
2010 0.1225 0.1225 0.1225 0.1225
Principal LifeTime
2020 0.1225 0.1225 0.1225 0.1225
Principal LifeTime
2030 0.1225 0.1225 0.1225 0.1225
Principal LifeTime
2040 0.1225 0.1225 0.1225 0.1225
Principal LifeTime
2050 0.1225 0.1225 0.1225 0.1225
Principal LifeTime
Strategic Income 0.1225 0.1225 0.1225 0.1225
Real Estate Securities 0.85 0.83 0.81 0.80
Short-Term Bond 0.40 0.38 0.36 0.35
SmallCap Blend 0.75 0.73 0.71 0.70
SmallCap Growth 0.75 0.73 0.71 0.70
SmallCap S&P 600 Index 0.15 0.15 0.15 0.15
SmallCap Value 0.75 0.73 0.71 0.70
Tax-Exempt Bond I 0.50 0.48 0.46 0.45
Ultra Short Bond 0.40 0.39 0.38 0.37
FIRST $500 NEXT $500 NEXT $500 NEXT $500 NEXT $1 OVER $3
FUND MILLION MILLION MILLION MILLION BILLION BILLION
---- ------- ------- ------- ------- ------- -------
Bond & Mortgage
Securities 0.55% 0.53% 0.51% 0.50% 0.48% 0.45%
Diversified
International 0.90 0.88 0.86 0.85 0.83 0.80
Money Market 0.40 0.39 0.38 0.37 0.36 0.35
Partners LargeCap
Value 0.80 0.76 0.75 0.73 0.70
FIRST $500 NEXT $500 NEXT $1 NEXT $1 OVER $3
FUND MILLION MILLION BILLION BILLION BILLION
---- ------- ------- ------- ------- -------
LargeCap Growth 0.68% 0.65% 0.62% 0.58% 0.55%
FUND FIRST $1.0 BILLION OVER $1.0 BILLION
---- ------------------ -----------------
California Insured
Intermediate Municipal 0.50% 0.45%
California Municipal 0.50 0.45
FIRST $250 NEXT $250 OVER $500
FUND MILLION MILLION MILLION
---- ------- ------- -------
Equity Income I 0.60% 0.55% 0.50%
FUND FIRST $250 MILLION OVER $250 MILLION
---- ------------------ -----------------
High Yield II 0.625% 0.500%
FUND FIRST $2 BILLION OVER $2 BILLION
---- ---------------- ---------------
Income 0.50% 0.45%
Mortgage Securities 0.50% 0.45%
FIRST $1 NEXT $1 NEXT $1 OVER $3
FUND BILLION BILLION BILLION BILLION
---- ------- ------- ------- -------
MidCap Stock 0.75% 0.70% 0.65% 0.60%
FIRST $200 NEXT $300 OVER $500
FUND MILLION MILLION MILLION
---- ------- ------- -------
Short-Term Income 0.50% 0.45% 0.40%
FIRST $500 NEXT $500 OVER $1
FUND MILLION MILLION BILLION
---- ------- ------- -------
West Coast Equity 0.625% 0.500% 0.375%
FIRST $500 NEXT $500 NEXT $1 NEXT $1 NEXT $1 NEXT $1 OVER $5
FUND MILLION MILLION BILLION BILLION BILLION BILLION BILLION
---- ------- ------- ------- ------- ------- ------- -------
SAM Balanced Portfolio
* 0.55% 0.50% 0.45% 0.40% 0.35% 0.30% 0.25%
SAM Conservative
Balanced Portfolio * 0.55 0.50 0.45 0.40 0.35 0.30 0.25
SAM Conservative
Growth Portfolio * 0.55 0.50 0.45 0.40 0.35 0.30 0.25
SAM Flexible Income
Portfolio * 0.55 0.50 0.45 0.40 0.35 0.30 0.25
SAM Strategic Growth
Portfolio * 0.55 0.50 0.45 0.40 0.35 0.30 0.25
* Breakpoints based on aggregate SAM Portfolio net assets
Each Fund pays all of its operating expenses, except those Funds for which
Principal has agreed to pay such expenses. Under the terms of the Management
Agreement, Principal is responsible for paying the expenses associated with the
organization of each Fund, including the expenses incurred in the initial
registration of the Funds with the Securities and Exchange Commission,
compensation of personnel, officers and directors who are also affiliated with
the Principal, and expenses and compensation associated with furnishing office
space and all necessary office facilities and equipment and personnel necessary
to perform the general corporate functions of the Fund. Principal is also
responsible for providing portfolio accounting services to each of the Funds,
without charge, pursuant to a Portfolio Accounting Services Agreement; provided
however, Principal is not so obligated with respect to the Equity Income I,
LargeCap Growth, Disciplined LargeCap Blend, Diversified International, Money
Market, Real Estate Securities, SmallCap Growth, SmallCap Value, and Tax-Exempt
Bond I Funds. That agreement will terminate effective March 1, 2008, at which
time the services will be provided to each Fund at cost, under the terms of the
Management Agreement. Principal Shareholder Services, Inc., a wholly owned
subsidiary of Principal, provides transfer agent services for Class A, B, C, J
and Institutional Class shares, including qualifying shares of the Fund for sale
in states and other jurisdictions, for each Fund pursuant to an additional
agreement with the Fund. Principal is also responsible for providing certain
shareholder services to the Advisors Select, Advisors Preferred, Advisors
Signature, Select, and Preferred share classes pursuant to an additional
agreement.
The Manager has contractually agreed to limit the Fund's expenses (excluding
interest the Funds incur in connection with investments they make) on certain
share classes of certain of the Funds. The reductions and reimbursements are in
amounts that maintain total operating expenses at or below certain limits. The
limits are expressed as a percentage of average daily net assets attributable to
each respective class on an annualized basis. The operating expense limits and
the agreement terms are as follows:
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS J CLASS EXPIRATION
------- ------- ------- ------- ------------- ----------
Bond & Mortgage
Securities 0.94 1.60 1.75** N/A N/A 06/30/2009
California Insured
Intermediate
Municipal 0.86 1.62 1.62 N/A N/A 02/28/2008
California Municipal 0.83 1.59 1.59 N/A N/A 02/28/2008
Disciplined LargeCap
Blend 0.88 1.91 1.82 N/A N/A 02/28/2008
Diversified
International 1.29 2.30 2.08 1.59 0.90 02/28/2008
Equity Income I 0.87 1.73 1.65 N/A N/A 02/28/2008
Global Real Estate
Securities 1.45 N/A 2.20 N/A .95 02/28/2009
Government Securities
& High Quality Bond N/A N/A 1.65 N/A N/A 02/28/2008
High Quality
Intermediate-Term
Bond N/A N/A N/A 1.35 N/A 02/28/2008
High Yield II 0.90 1.66 1.65 N/A N/A 02/28/2008
Income 0.90 1.64 1.65 N/A N/A 02/28/2008
Inflation Protection
Fund 0.90* N/A 1.65 1.15 N/A 02/28/2008
International
Emerging Markets N/A N/A 2.80 N/A N/A 02/28/2008
International Growth 1.60 N/A 2.35 N/A N/A 02/29/2009
LargeCap Growth 1.28 2.26 2.03 N/A N/A 02/28/2008
LargeCap S&P 500
Index N/A N/A 1.30 N/A N/A 02/28/2008
LargeCap Value N/A N/A 1.70 N/A N/A 02/28/2008
MidCap Blend 1.02 1.32 1.95** N/A N/A 06/30/2008
MidCap Stock 1.10 2.06 1.95 N/A N/A 02/28/2008
Money Market 0.64 1.74 1.79 N/A N/A 02/28/2008
Mortgage Securities 0.91 1.65 1.63 N/A N/A 02/28/2008
Partners LargeCap
Blend N/A N/A 2.20 N/A N/A 02/28/2008
Partners LargeCap
Blend I N/A N/A 1.90 N/A N/A 02/28/2008
Partners LargeCap
Growth I N/A N/A 2.20 N/A N/A 02/28/2008
Partners LargeCap
Growth II 1.70 N/A 2.45 1.75 N/A 02/28/2008
Partners LargeCap
Value N/A N/A 2.25 N/A N/A 02/28/2008
Partners MidCap
Growth 1.75 2.50 2.50** N/A N/A 06/30/2008
Partners MidCap
Growth I 1.75 N/A 2.50 N/A N/A 02/28/2008
Partners MidCap Value 1.75 2.50 2.50 N/A N/A 02/28/2008
Partners SmallCap
Growth I N/A N/A N/A 2.05 N/A 02/28/2008
Partners SmallCap
Growth II 1.95 2.70 2.70** 2.05** N/A 06/30/2008
Partners SmallCap
Value N/A N/A N/A 1.95 N/A 02/28/2008
Preferred Securities 1.00* N/A 1.75 1.60 N/A 02/28/2008
Principal LifeTime
2010 0.50* N/A 1.25** 0.75 N/A 02/28/2008
Principal LifeTime
2020 0.50* 1.25* 1.25** 0.75 N/A 02/28/2008
Principal LifeTime
2030 0.50* 1.25* 1.25** 0.75 N/A 02/28/2008
Principal LifeTime
2040 0.50* 1.25* 1.25** 0.75 N/A 02/28/2008
Principal LifeTime
2050 0.50* 1.25* 1.25 0.75 N/A 02/28/2008
Principal LifeTime
Strategic Income 0.50* 1.25* 1.25** 0.75 N/A 02/28/2008
Real Estate
Securities 1.28 2.08 1.98 N/A N/A 02/28/2008
Short-Term Bond N/A N/A 1.70 N/A N/A 02/28/2008
SAM Balanced 0.66 1.43 1.42 0.95 N/A 02/28/2008
SAM Conservative
Balanced 0.68 1.45 1.43 0.95 N/A 02/28/2008
SAM Conservative
Growth 0.68 1.45 1.44 0.95 N/A 02/28/2008
SAM Flexible Income 0.67 1.44 1.43 0.95 N/A 02/28/2008
SAM Strategic Growth 0.70 1.47 1.46 0.95 N/A 02/28/2008
Short-Term Income 0.95 N/A 1.67 N/A N/A 02/28/2008
SmallCap Blend N/A N/A 2.20 N/A N/A 02/28/2008
SmallCap Growth 1.42 2.57 2.21 1.50 0.75 02/28/2008
SmallCap Value 1.35 2.29 2.08 1.47 0.75 02/28/2008
Tax-Exempt Bond I 0.76 1.15 1.65** N/A N/A 06/30/2008
Ultra Short Bond 0.75* N/A 1.50 1.20 N/A 02/28/2008
West Coast Equity 0.86 1.78 1.70 N/A N/A 02/28/2008
///* /Effective: March 1, 2006
**
Expiration: February
28, 2008
ADVISORS ADVISORS
PREFERRED PREFERRED SELECT SELECT ADVISORS
CLASS CLASS CLASS CLASS SIGNATURE CLASS EXPIRATION
--------- --------- -------- ------ --------------- ----------
Diversified International 1.47% 1.16% 1.65% 1.28% 1.78% 02/28/2008
SmallCap Growth 1.32 1.01 1.50 1.13 1.63 02/28/2008
SmallCap Value 1.32 1.01 1.50 1.13 1.63 02/28/2008
Fees paid for investment management services during the periods indicated were
as follows:
MANAGEMENT FEES FOR PERIODS ENDED OCTOBER 31
--------------
FUND 2006 2005 2004
---- ---- ---- ----
Bond & Mortgage
Securities $ 8,920,241 $ 5,132,094 $ 2,688,040
California Insured
Intermediate Municipal 604,603 702,877 811,881
California Municipal 2,007,196 2,102,225 2,357,821
Disciplined LargeCap
Blend 5,236,138 2,484,913 153,994
Diversified
International 5,968,204 2,283,907 745,729
Equity Income Fund I 16,718,327 10,506,944 6,494,421
Government & High
Quality Bond 1,617,006 916,595 438,596
High Quality
Intermediate-Term Bond 496,920 370,871 240,603
High Yield 544,912 245,108/(//1//)/
High Yield II 4,845,844 4,227,833 3,656,109
Income 6,152,234 5,931,217 5,564,174
Inflation Protection 375,925 152,501/(//1//)/
International Emerging
Markets 2,932,054 1,077,236 357,526
International Growth 9,966,850 5,444,797 3,091,203
LargeCap Growth 4,310,950 1,766,507 604,743
LargeCap S&P 500 Index 1,241,257 948,572 899,740
LargeCap Value 2,852,897 1,282,322 460,338
MidCap Blend 4,990,756 2,079,396 452,794
MidCap Growth 175,119 124,298 130,927
MidCap S&P 400 Index 208,057 120,885 74,404
MidCap Stock 6,864,331 6,140,244 4,418,962
MidCap Value 850,777 654,579 427,898
Money Market 2,597,951 1,601,301 715,144
Mortgage Securities 8,890,316 8,599,051 6,850,427
Partners Global Equity 198,582 69,130/(//2//)/
Partners International 7,962,057 4,289,099 835,381/(//3//)/
Partners LargeCap
Blend 6,463,592 5,180,187 3,816,625
Partners LargeCap
Blend I 957,510 408,998 129,570
Partners LargeCap
Growth I 7,298,420 6,070,305 5,138,429
Partners LargeCap
Growth II 8,533,285 5,283,105 1,399,401
Partners LargeCap
Value 16,314,826 12,192,603 9,526,884
Partners LargeCap
Value I 3,271,462 1,151,198 17,053/(//4//)/
Partners LargeCap
Value II 1,812,059 896,443/(//1//)/
Partners MidCap Growth 4,510,813 1,615,525 366,292
Partners MidCap Growth
I 2,749,755 2,011,387 639,467/(//3//)/
Partners MidCap Growth
II 5,490,302 2,330,011/(//1//)/
Partners MidCap Value 6,294,150 4,369,396 1,797,583
Partners MidCap Value
I 6,350,949 4,266,927 1,248,775/(//3//)/
Partners SmallCap
Blend 2,430,278 2,040,434 815,310
Partners SmallCap
Growth I 1,302,665 1,142,276 886,227
Partners SmallCap
Growth II 5,835,968 3,800,328 2,462,995
Partners SmallCap
Growth III 2,123,142 763,865 21,005/(//4//)/
Partners SmallCap
Value 3,084,714 3,094,810 2,420,186
Partners SmallCap
Value I 3,376,783 1,934,248 878,429
Partners SmallCap
Value II 3,353,323 1,471,842 84,203
Preferred Securities 3,696,031 2,067,479 1,282,198
Principal LifeTime
2010 1,004,036 549,232 281,820
Principal LifeTime
2020 1,780,906 860,943 403,222
Principal LifeTime
2030 1,468,816 727,582 384,217
Principal LifeTime
2040 648,933 292,998 127,700
Principal LifeTime
2050 303,710 131,676 63,674
Principal LifeTime
Strategic Income 419,143 264,658 114,614
Real Estate Securities 8,663,199 4,924,525 2,459,268
SAM Balanced Portfolio 14,338,795 22,943,464 17,411,691
SAM Conservative
Balanced Portfolio 2,021,150 3,473,818 2,416,230
SAM Conservative
Growth Portfolio 11,566,375 18,481,899 13,878,166
SAM Flexible Income
Portfolio 2,936,668 6,144,510 5,205,986
SAM Strategic Growth
Portfolio 6,956,462 11,039,655 8,045,722
Short-Term Bond 792,753 393,548 199,011
Short-Term Income 1,247,103 1,318,161 1,297,592
SmallCap Blend 2,375,684 1,293,621 640,271
SmallCap Growth 298,481 220,898 187,554
SmallCap S&P 600 Index 510,394 310,146 139,801
SmallCap Value 1,236,949 654,297 328,987
Tax-Exempt Bond I 991,921 1,085,937 1,200,519
Ultra Short Bond 856,494 324,495 333,736
West Coast Equity 8,647,482 7,293,109 6,264,888
/ //(//1//)/ Period from December 29, 2004 (date operations commenced) through
October 31, 2005.
/ //(//2//)/ Period from March 1, 2005 (date operations commenced) through
October 31, 2005.
/ //(//3//)/ Period from December 29, 2003 (date operations commenced) through
October 31, 2004.
/ //(//4//)/ Period from June 1, 2004 (date operations commenced) through
October 31, 2004.
Sub-Advisory Agreements for the Funds
-------------------------------------
FUNDS FOR WHICH PRINCIPAL GLOBAL INVESTORS, LLC ("PGI") SERVES AS SUB-ADVISOR
. PGI is Sub-Advisor for each Fund identified below in Tables A, B, and C. The
Manager pays PGI a fee, computed and paid monthly, at an annual rate as shown
below.
To calculate the fee for a Fund in Table A, assets of the Fund, along with the
assets of all other Funds in Table A, are combined with any:
. Principal Life non-registered separate account sub-advised by PGI with assets
invested primarily in fixed-income securities (except money market separate
accounts),
. Principal Life sponsored mutual fund sub-advised by PGI with assets invested
primarily in fixed-income securities (except money market mutual funds), and
. assets of the Principal Variable Contracts Fund, Inc. - Balanced Account.
The calculation does not include any portion of such mutual funds and/or
separate accounts for which advisory services are provided, directly or
indirectly, by employees of Post Advisory Group, LLC ("Post").
To calculate the fee for a Fund in Table B, the assets of the Fund are combined
with assets sub-advised by PGI with the same investment mandate (e.g., midcap
value) in
. (a) Principal Life non-registered separate account sub-advised by PGI and
. (b) Principal Life sponsored mutual fund sub-advised by PGI.
For any Fund for which investment advisory services are provided, directly or
indirectly, by employees of Post, the Manager pays a fee equal to an annual rate
of 0.30% for the portion of the net assets for which Post provides investment
advisory services.
PGI SUB-ADVISED FUNDS
TABLE A
NET ASSET VALUE OF FUND
------------------------------------------------
FIRST NEXT NEXT OVER
FUND $5 BILLION $1 BILLION $4 BILLION $10 BILLION
---- ----------- ---------- ---------- -----------
Bond & Mortgage
Securities, Government &
High Quality Bond,
Quality Intermediate-Term
Bond, Inflation
Protection, Short-Term
Bond, and Ultra Short Bond 0.1126% 0.0979% 0.0930% 0.0881%
TABLE B
NET ASSET VALUE OF FUND
-------------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT NEXT NEXT OVER
FUND $50 MILLION $50 MILLION $100 MILLION $200 MILLION $350 MILLION $750 MILLION $1.5 BILLION
---- ------------ ----------- ------------- ------------- ------------ ------------ ------------
Disciplined LargeCap
Blend, and LargeCap Value 0.2643% 0.2448% 0.2154% 0.1762% 0.1273% 0.0881% 0.0587%
Diversified International
and International Growth 0.3427 0.2741 0.1958 0.1566 0.1175 0.0979 0.0783
FIRST NEXT NEXT NEXT NEXT NEXT
$25 MILLION $75 MILLION $100 MILLION $300 MILLION $500 MILLION $500 MILLION
----------- ----------- ------------ ------------ ------------ ------------
MidCap Blend and
MidCap Value (PGI) 0.3916% 0.3133% 0.2643% 0.2252% 0.1762% 0.1273%
SmallCap Blend,
SmallCap Growth and
SmallCap Value 0.4699 0.3524 0.2643 0.2448 0.2154 0.1762
OVER
$1.5 BILLION
------------
MidCap Blend and 0.0783%
MidCap Value (PGI)
SmallCap Blend, 0.1175
SmallCap Growth and
SmallCap Value
TABLE C
FUND SUB-ADVISOR FEE AS A % OF NET ASSETS
---- -------------------
International
Emerging Markets 0.4895%
LargeCap S&P 500
Index 0.0147
MidCap S&P 400 Index 0.0147
Money Market 0.0734
Principal LifeTime 2010, 2020, 2030, 2040, 2050 and
Strategic Income Funds 0.0416
SmallCap S&P 600
Index 0.0147
FUNDS FOR WHICH EDGE ASSET MANAGEMENT, INC. (FORMERLY KNOWN AS WM ADVISORS,
INC.) ("EDGE") SERVES AS SUB-ADVISOR . Edge is Sub-Advisor for each Fund
identified below in Tables A, B, and C. Principal pays Edge a fee, computed and
paid monthly, at an annual rate as shown below.
In calculating the fee for a fund included in Table A, assets of all other funds
included in Table A as well as assets of any unregistered separate account of
Principal Life Insurance Company and any investment company sponsored by
Principal Life Insurance Company to which Edge or PGI provides investment
advisory services and which invests primarily in fixed-income securities (except
money market separate accounts or investment companies), will be combined with
the assets of the fund to arrive at net assets.
In calculating the fee for a fund included in Table B, assets of any
unregistered separate account of Principal Life Insurance Company and any
investment company sponsored by Principal Life Insurance Company to which Edge
or PGI provides investment advisory services and which have the same investment
mandate (e.g., MidCap Stock) as the fund for which the fee is calculated, will
be combined with the assets of the fund to arrive at net assets.
EDGE SUB-ADVISED FUNDS
TABLE A
NET ASSET VALUE OF FUND
------------------------------------------------
FIRST NEXT NEXT OVER
FUND $5 BILLION $1 BILLION $4 BILLION $10 BILLION
---- ----------- ---------- ---------- -----------
Income, Mortgage
Securities and Short-Term
Income 0.1126% 0.0979% 0.0930% 0.0881%
TABLE B
NET ASSET VALUE OF FUND
-------------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT NEXT NEXT OVER
FUND $50 MILLION $50 MILLION $100 MILLION $200 MILLION $350 MILLION $750 MILLION $1.5 BILLION
---- ------------ ----------- ------------- ------------- ------------ ------------ ------------
Equity Income I 0.2643% 0.2448% 0.2154% 0.1762% 0.1273% 0.0881% 0.0587%
FIRST NEXT NEXT NEXT NEXT NEXT
$25 MILLION $75 MILLION $100 MILLION $300 MILLION $500 MILLION $500 MILLION
----------- ----------- ------------ ------------ ------------ ------------
MidCap Stock and
West Coast Equity 0.3916% 0.3133% 0.2643% 0.2252% 0.1762% 0.1273%
OVER
$1.5 BILLION
------------
MidCap Stock and 0.0783%
West Coast Equity
TABLE C
FUND SUB-ADVISOR FEE AS A % OF NET ASSETS
---- ------------
High Yield II 0.2643%
SAM Balanced
Portfolio 0.0416%
SAM Conservative
Balanced Portfolio 0.0416
SAM Conservative
Growth Portfolio 0.0416
SAM Flexible Income
Portfolio 0.0416
SAM Strategic Growth Portfolio 0.0416
ALL OTHER FUNDS.
In calculating the fee for each Fund each Sub-Advisor, except J.P. Morgan and
Lehman Brothers, has agreed that, assets of any existing registered investment
company sponsored by Principal Life Insurance Company to which the Sub-Advisor
provides investment advisory services and which have the same investment mandate
as the Fund for which the fee is being calculated, will be combined (together,
the "Aggregated Assets"). The fee charged for the assets in a Fund shall be
determined by calculating a fee on the value of the Aggregated Assets using the
fee schedules described in the tables below and multiplying the aggregate fee by
a fraction, the numerator of which is the amount of assets in the Fund and the
denominator of which is the amount of the Aggregated Assets.
FUND FIRST $1.2 BILLION OVER $1.2 BILLION
---- ------------------ -----------------
California Insured
Intermediate Municipal * 0.15% 0.125%
California Municipal * 0.15 0.125
Tax-Exempt Bond I * 0.15 0.125
/ //* /Breakpoints are based on aggregate net assets of the California Insured
Intermediate Municipal, California Municipal, and Tax-Exempt Bond I Funds.
SUB-ADVISOR FEE
FUND AS A % OF NET ASSETS
---- ---------------------
High Yield
(J.P. Morgan and Lehman Brothers) 0.30%
Partners LargeCap Growth Fund II (BNY) 0.15
Partners LargeCap Value Fund (BNY) 0.15
Partners MidCap Growth and Partners SmallCap Value II
(DFA) 0.50
Partners SmallCap Growth Fund III (CCI) 0.50
NET ASSET VALUE OF FUND
-------------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT NEXT NEXT NEXT
FUND $50 MILLION $50 MILLION $100 MILLION $200 MILLION $350 MILLION $750 MILLION $500 MILLION
---- ------------ ----------- ------------- ------------- ------------ ------------ ------------
LargeCap Growth (CCI) 0.2643% 0.2448% 0.2154% 0.1762% 0.1273% 0.0881% 0.0587%
NEXT OVER
FUND $2.5 BILLION $4.5 BILLION
---- ------------- ------------
LargeCap Growth (CCI) 0.2448% 0.1664%
NET ASSET VALUE OF FUND
---------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT OVER
FUND $25 MILLION $75 MILLION $100 MILLION $100 MILLION $300 MILLION
---- ----------- ----------- ------------ ------------ ------------
MidCap Growth (CCI) 0.3916% 0.3133% 0.2643% 0.2252% 0.3427%
NET ASSET VALUE OF FUND
-----------------------------------------------------------------
FIRST NEXT NEXT NEXT OVER
FUND $10 MILLION $15 MILLION $25 MILLION $50 MILLION $100 MILLION
---- ------------ ----------- ----------- ----------- ------------
MidCap Value (BHMS) 0.80% 0.60% 0.50% 0.40% 0.35%
NET ASSET VALUE OF FUND
FIRST NEXT NEXT NEXT NEXT OVER
FUND $50 MILLION $100 MILLION $150 MILLION $200 MILLION $500 MILLION $1 BILLION
---- ------------ ------------ ------------ ------------ ------------ ----------
Partners Global Equity (J.P. Morgan) 0.55% 0.45% 0.40% 0.35% 0.30% 0.25%
NET ASSET VALUE OF FUND
----------------------------------------------------------------------------
FIRST NEXT NEXT NEXT OVER
FUND $50 MILLION $200 MILLION $350 MILLION $400 MILLION $1 BILLION
---- ------------ ------------ ------------ ------------ ----------
Partners LargeCap Blend (T. Rowe) 0.40% 0.35% 0.30% 0.275% 0.275% on all assets
NET ASSET VALUE OF FUND
----------------------------------------
FIRST NEXT OVER
FUND $250 MILLION $500 MILLION $750 MILLION
---- ------------ ------------ ------------
Partners International (Fidelity) 0.45% 0.40% 0.35%
NET ASSET VALUE OF FUND
---------------------------------------
FIRST NEXT OVER
FUND $500 MILLION $1 BILLION $1.5 BILLION
---- ------------- ---------- ------------
Partners LargeCap Blend I (GSAM) 0.15% 0.12% 0.10%
NET ASSET VALUE OF FUND
------------------------------------------------------------------------------
FIRST NEXT NEXT OVER
FUND $250 MILLION $250 MILLION $500 MILLION $1 BILLION
---- ------------ ------------ ------------ --------------------
Partners LargeCap Growth I (T. Rowe) 0.400% 0.375% 0.350% 0.350 % on all assets
The Sub-Advisory Fees on all assets through the period ending July 31, 2007 is 0.350%.
NET ASSET VALUE OF FUND
------------------------------------------------------
FIRST NEXT NEXT OVER
FUND $50 MILLION $200 MILLION $500 MILLION $750 MILLION
---- ------------ ------------ ------------ ------------
Partners LargeCap
Growth II
(American Century) 0.45% 0.40% 0.35% 0.30%
NET ASSET VALUE OF FUND
-------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT NEXT NEXT OVER
FUND $10 MILLION $15 MILLION $25 MILLION $50 MILLION $50 MILLION $50 MILLION $200 MILLION
---- ------------ ----------- ----------- ----------- ----------- ----------- ------------
Partners LargeCap Value
(Bernstein) 0.600% 0.500% 0.400% 0.300% 0.250% 0.225% 0.200%
NET ASSET VALUE OF FUND
---------------------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT NEXT NEXT NEXT OVER
FUND $10 MILLION $15 MILLION $25 MILLION $50 MILLION $50 MILLION $50 MILLION $300 MILLION $500 MILLION
---- ------------ ----------- ----------- ----------- ----------- ----------- ------------ ------------
Partners LargeCap
Value I (UBS) 0.600% 0.500% 0.400% 0.300% 0.250% 0.225% 0.200% 0.180%
NET ASSET VALUE OF FUND
-------------------------------------------------------
FIRST NEXT NEXT OVER
FUND $200 MILLION $300 MILLION $250 MILLION $750 MILLION
---- ------------- ------------ ------------ ------------
Partners LargeCap
Value II
(American Century) 0.40% 0.35% 0.30% 0.28%
NET ASSET VALUE OF FUND
--------------------------
FIRST OVER
FUND $50 MILLION $50 MILLION
---- ------------ ------------
Partners MidCap Growth I (Mellon Equity) 0.40% 0.35%
NET ASSET VALUE OF FUND
-----------------------------------------
FIRST NEXT OVER
FUND $250 MILLION $250 MILLION $500 MILLION
---- ------------- ------------ ------------
Partners MidCap Growth II
(Fidelity) 0.45% 0.40% 0.35%
NET ASSET VALUE OF FUND
---------------------------------------------------------------------
FIRST NEXT NEXT NEXT OVER
FUND $100 MILLION $150 MILLION $250 MILLION $250 MILLION $750 MILLION
---- ------------- ------------ ------------ ------------ ------------
Partners MidCap Value
(Neuberger Berman) 0.500% 0.475% 0.450% 0.425% 0.400%
NET ASSET VALUE OF FUND
----------------------------
FIRST OVER
FUND $100 MILLION $100 MILLION
---- ------------- -------------
Partners MidCap Value (Jacobs Levy) 0.65% 0.50%
NET ASSET VALUE OF FUND
----------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT
FUND $25 MILLION $25 MILLION $75 MILLION $225 MILLION
---- ------------ ----------- ----------- ------------
Partners MidCap Value
I (GSAM) 0.60% 0.55% 0.50% 0.45%
If assets exceed $75 million, the fee on the first $50 million will be 0.50%
Partners MidCap Value
I (LA Capital) 0.30 % for all assets managed
OVER
FUND $350 MILLION
---- ------------
Partners MidCap Value 0.40%
I (GSAM)
Partners MidCap Value
I (LA Capital)
NET ASSET VALUE OF FUND
-----------------------------------------
FIRST NEXT OVER
FUND $100 MILLION $200 MILLION $300 MILLION
---- ------------- ------------ ------------
Partners SmallCap Blend (Mellon
Equity),
Partners SmallCap Value I (Mellon
Equity and J.P. Morgan), and
Partners SmallCap Value (Ark and
LA Capital) 0.50% 0.45% 0.35%
NET ASSET VALUE OF FUND
---------------------------------------
FIRST NEXT OVER
FUND $25 MILLION $75 MILLION $100 MILLION
---- ------------ ----------- ------------
Partners SmallCap Growth I
(AllianceBernstein) 0.65% 0.60% 0.55%
NET ASSET VALUE OF FUND
-------------------------------------
FIRST NEXT NEXT OVER
$50 $50 $50 $150 MILLIO
MILLI ON MILLI ON MILLI ON -----N-----
FUND -------- -------- -------- -
----
Partners SmallCap Growth II
(Essex) 0.70% 0.60% 0.55% 0.50%
NET ASSET VALUE OF FUND
----------------------------------------
FIRST NEXT OVER
FUND $50 MILLION $250 MILLION $300 MILLION
---- ------------ ------------ ------------
Partners SmallCap Growth II (UBS) 0.60% 0.55% 0.45%
NET ASSET VALUE OF FUND
-----------------------------------------------------
FIRST NEXT NEXT OVER
FUND $10 MILLION $40 MILLION $150 MILLION $200 MILLION
---- ------------ ----------- ------------ ------------
Partners SmallCap
Growth II (Emerald) 0.75% 0.60% 0.50% 0.45%
NET ASSET VALUE OF FUND
-----------------------------------------
FIRST NEXT OVER
FUND $150 MILLION $150 MILLION $300 MILLION
---- ------------- ------------ ------------
Partners SmallCap Growth III
(Mazama) 0.60% 0.55% 0.50%
NET ASSET VALUE OF FUND
FIRST NEXT OVER
FUND $100 MILLION $200 MILLION $300 MILLION
---- ------------ ------------ ------------
Partners SmallCap Value II
(Vaughan Nelson) 0.50% 0.45% 0.35%
NET ASSET VALUE OF FUND
-----------------------------------------
FIRST NEXT OVER
FUND $100 MILLION $150 MILLION $250 MILLION
---- ------------- ------------ ------------
Preferred Securities (Spectrum) 0.35% 0.30% 0.20%
NET ASSET VALUE OF FUND
FIRST NEXT OVER
FUND $1 BILLION $500 MILLION $1.5 BILLION
---- ---------- ------------ ------------
Real Estate Securities
(Principal-REI) 0.4895% 0.4405% 0.3916%
Global Real Estate Securities
(Principal-REI) 0.54% 0.48% 0.44%
Cash Management Sub-Advisory Agreement for the Funds
----------------------------------------------------
Principal has entered into a Cash Management Sub-Advisory Agreement with PGI
pursuant to which PGI agrees to perform all of the cash management investment
advisory responsibilities of Principal for each Fund that is sub-advised by
either Principal - REI or Spectrum. Principal pays PGI an amount representing
PGI's actual cost providing such services and assuming such operations.
Fees paid for Sub-Advisory services during the periods indicated were as
follows:
SUB-ADVISOR FEES FOR PERIODS ENDED OCTOBER 31
---------------------------------------------
FUND 2006 2005 2004
---- ---- ---- ----
Bond & Mortgage Securities 1,712,597 965,821 489,690
Disciplined LargeCap Blend 1,247,567 737,975 26,676
Diversified International 622,876 253,035 87,311
Government & High Quality
Bond 418,729 237,361 112,697
High Quality
Intermediate-Term Bond 126,870 95,143 58,966
High Yield 228,513 97,221
Inflation Protection 94,517 37,515
International Emerging
Markets 1,040,321 381,019 126,291
International Growth 934,458 540,383 402,164
LargeCap Growth 910,195 420,546 125,152
LargeCap S&P 500 Index 120,173 92,098 88,110
LargeCap Value 845,837 388,294 124,547
MidCap Blend 1,217,850 456,095 92,119
MidCap Growth 77,350 57,498 51,963
MidCap S&P 400 Index 20,069 11,626 7,201
MidCap Value 181,525 238,799 115,018
Money Market 474,127 285,990 129,565
Partners Global Equity 115,012 40,028
Partners International 3,028,429 1,683,058 342,873/(//1//)/
Partners LargeCap Blend 2,343,882 2,074,683 1,525,528
Partners LargeCap Blend I 326,871 140,842 41,827
Partners LargeCap Growth I 3,320,216 2,759,550 1,755,858
Partners LargeCap Growth II 3,089,166 2,085,021 698,830
Partners LargeCap Value 4,427,904 3,325,819 2,604,172
Partners LargeCap Value I 1,039,956 438,232 12,829/(//2//)/
Partners LargeCap Value II 846,452 421,955
Partners MidCap Growth 2,255,911 808,179 183,597
Partners MidCap Growth I 982,450 723,574 235,545/(//1//)/
Partners MidCap Growth II 2,299,413 1,004,994
Partners MidCap Value 2,986,157 2,029,861 876,162
Partners MidCap Value I 2,683,182 1,934,024 597,749/(//1//)/
Partners SmallCap Blend 1,143,682 968,804 396,780
Partners SmallCap Growth I 712,663 623,616 451,286
Partners SmallCap Growth II 3,127,955 2,078,467 1,362,138
Partners SmallCap Growth III 1,136,567 416,901 11,486/(//2//)/
Partners SmallCap Value 1,488,149 1,477,171 1,143,107
Partners SmallCap Value I 1,603,978 923,990 439,225
Partners SmallCap Value II 1,677,320 736,338 42,228/(//2//)/
Preferred Securities 1,647,396 922,498 383,753/(//1//)/
Principal LifeTime 2010 331,946 181,571 93,337
Principal LifeTime 2020 587,353 283,309 133,052
Principal LifeTime 2030 483,901 240,712 128,111
Principal LifeTime 2040 213,323 96,223 41,962
Principal LifeTime 2050 99,932 43,085 21,103
Principal Lifetime Strategic
Income 138,995 86,547 37,851
Real Estate Securities 4,887,334 3,046,527 1,554,098
Short-Term Bond 203,094 101,559 45,853
SmallCap Blend 589,799 325,799 180,544
SmallCap Growth 113,703 83,660 66,935
SmallCap S&P 600 Index 49,532 29,737 13,404
SmallCap Value 445,699 247,839 121,251
Ultra Short Bond 213,841 69,929 132,079
/ //(//1//)/ Period from December 29, 2003 (date operations commenced) through
October 31, 2004.
/ //(//2//)/ Period from June 1, 2004 (date operations commenced) through
October 31, 2004.
UNDERWRITING FEES
FOR PERIODS ENDED OCTOBER 31,
-------------------------------------------
FUND 2006 2005 2004
---- ---- ---- ----
Bond & Mortgage Securities 544,445 294,296 99,544
California Insured
Intermediate Municipal 281,402* 367,154 611,099
California Municipal 1,129,981* 901,145 921,812
Disciplined LargeCap Blend 223,515 77,696/(//3//)
Diversified International 937,475 286,335 27,421
Equity Income I 11,764,838* 6,134,650 2,280,127
Government & High Quality
Bond 453,416 214,484 74,082
High Quality
Intermediate-Term Bond 9,778 8,681 13,111
High Yield II 2,226,864* 757,240 1,033,077
Income 965,734* 1,055,320 1,324,591
Inflation Protection 35,118 22,590/(1)/
International Emerging
Markets 518,896 127,886 14,286
International Growth 20,174 18,248 6,688
LargeCap Growth 641,437 199,805 8,420
LargeCap S&P 500 Index 172,283 152,974 133,840
LargeCap Value 460,660 190,577 9,935
MidCap Blend 1,172,355 438,134 39,839
MidCap Growth 5,068 8,293 6,902
MidCap S&P 400 Index 7,604 5,459 6,318
MidCap Stock 716,954* 300,926 212,517
MidCap Value 31,990 35,082 39,869
Money Market 116,457 78,061 87,923
Mortgage Securities 379,545 529,816 969,521
Partners LargeCap Blend 439,982 181,269 22,210
Partners LargeCap Blend I 289,745 108,625 9,048
Partners LargeCap Growth I 250,861 84,307 8,759
Partners LargeCap Growth II 17,152 9,534 2,938
Partners LargeCap Value 376,080 175,752 23,263
Partners MidCap Growth 179,635 56,596 8,550
Partners MidCap Growth I 29,443 2,207/(//4//)/
Partners MidCap Value 155,973 65,667 13,833
Partners SmallCap Growth I 1,690 3,248 9,033
Partners SmallCap Growth II 165,540 54,077 3,023
Partners SmallCap Value 2,698 819 1,347
Preferred Securities 81,954 40,193 4,023/(//2//)/
Principal LifeTime 2010 367,836 38,655 39,613
Principal LifeTime 2020 656,684 115,301 79,585
Principal LifeTime 2030 618,088 178,579 65,709
Principal LifeTime 2040 373,419 171,240 20,441
Principal LifeTime 2050 195,103 82,520 2,495
Principal Lifetime
Strategic Income 102,422 15,703 14,534
Real Estate Securities 608,032 214,854 39,498
SAM Balanced Portfolio 15,166,207 20,947,741 22,083,985
SAM Conservative Balanced
Portfolio 2,047,872 3,557,387 3,735,119
SAM Conservative Growth
Portfolio 9,433,707 13,457,799 15,528,793
SAM Flexible Income
Portfolio 3,407,634 4,723,154 5,253,693
SAM Strategic Growth
Portfolio 6,269,066 8,144,915 8,955,726
Short-Term Bond 93,242 73,893 46,790
Short-Term Income 144,241 169,386 421,749
SmallCap Blend 388,415 148,121 45,328
SmallCap Growth 7,415 12,788 17,309
SmallCap S&P 600 Index 28,212 25,294 11,488
SmallCap Value 150,529 42,446 11,318
Tax-Exempt Bond I 304,831 334,011 389,395
Ultra Short Bond 19,139 18,943 39,771*
West Coast Equity 3,778,504 2,385,809 2,056,344
/ //(1)/ Period from December 29, 2004 (date operations commenced) through
October 31, 2005.
/ //(//2//)/ Period from December 29, 2003 (date operations commenced) through
October 31, 2004.
/ //(//3//)/ Period from June 28, 2005 (date operations commenced for Class A
and Class B shares) through October 31, 2005.
/ //(//4//)/ Period from June 28, 2005 (date operations commenced for Class A
shares) through October 31, 2005.
MULTIPLE CLASS STRUCTURE
The Board of Directors has adopted a multiple class plan (the Multiple Class
Plan) pursuant to SEC Rule 18f-3. The share classes that are offered by each
Fund are identified in the chart included under the heading "Fund History." The
share classes offered under the plan include: Institutional Class, Select Class,
Preferred Class, Advisors Select Class, Advisors Signature Class, Advisors
Preferred Class, Class J, Class A, Class B, and Class C shares.
Class A shares are generally sold with a sales charge that is a variable
percentage based on the amount of the purchase, as described in the prospectus.
Certain redemptions of Class A shares within 18 months of purchase may be
subject to a contingent deferred sales charge ("CDSC"), as described in the
prospectus. Participants in employer-sponsored plans that had at least $1
million in assets as of January 12, 2007 can purchase Class A shares at net
asset value provided the participant notes that he or she meets this
qualification on the application to purchase shares.
Class B shares are not subject to a sales charge at the time of purchase but are
subject to a CDSC on shares redeemed within five full years of purchase, as
described in the prospectus.
The Class B share CDSC on shares purchased on or before January 16, 2007, if
any, is determined by multiplying the lesser of the market value at the time of
redemption or the initial purchase price of the shares sold by the appropriate
percentage from the table below (for shares issued in connection with the WM
Reorganization, the CDSC is determined by multiplying the initial purchase price
by the appropriate percentage):
ACCOUNTS INCLUDED IN
CERTAIN SPONSORED PLANS
ESTABLISHED AFTER 02/01/1998
YEARS SINCE PURCHASE PAYMENTS MADE CDSC AS A % OF DOLLAR AMOUNT AND BEFORE 03/01/2002
---------------------------------- ---------------------------- ---------------------
2 years or less 4.00% 3.00%
more than 2 years, up to 4 years 3.00 2.00
more than 4 years, up to 5 years 2.00 1.00
more than 5 years, up to 6 years 1.00 None
more than 6 years None None
Class C shares are not subject to a sales charge at the time of purchase but are
subject to a 1% CDSC on shares redeemed within 12 months of purchase, as
described in the prospectus.
The Class J shares are sold without any front-end sales charge. A CDSC of 1% is
imposed if Class J shares are redeemed within 18 months of purchase, as
described in the prospectus.
Contingent deferred sales charges for Class A, B, C, and J shares are waived on
shares:
. that were purchased pursuant to the Small Amount Force Out ("SAFO") program;
. shares redeemed within 90 days after an account is re-registered due to a
shareholder's death;
. shares redeemed due to the shareholder's post-purchase disability, as
defined in the Internal Revenue Code of 1986, as amended;
. shares redeemed from retirement plans to satisfy minimum distribution rules
under the Internal Revenue Code;
. shares redeemed to pay retirement plan fees;
. shares redeemed involuntarily from small balance accounts (values of less
than $300);
. shares redeemed through a periodic withdrawal plan in an amount of up to
1.00% per month (measured cumulatively with respect to non-monthly plans) of
the value of the Fund account at the time, and beginning on the date, the
periodic withdrawal plan is established;
. shares redeemed from a retirement plan to assure the plan complies with
Sections 401(k), 401(m), 408(k) and 415 of the Internal Revenue Code; or
. shares redeemed from retirement plans qualified under Section 401(a) of the
Internal Revenue Code due to the plan participant's death, disability,
retirement, or separation from service after attaining age 55.
The Advisors Select, Advisors Signature, Advisors Preferred, Institutional,
Select, and Preferred Classes are available without any front-end sales charge
or contingent deferred sales charge. The Advisors Select, Advisors Signature,
Advisors Preferred, Select, and Preferred Classes are available through
employer-sponsored retirement plans. Such plans may impose fees in addition to
those charged by the Funds. The Advisors Select, Advisors Signature, Advisors
Preferred, and Select share classes are subject to asset based charges
(described below).
Currently, all of the operating expenses for each Fund's Advisors Select,
Advisors Signature, Advisors Preferred, Select, and Preferred Class shares are
absorbed by Principal. Principal receives a fee for providing investment
advisory and certain corporate administrative services under the terms of the
Management Agreement. In addition to the management fee, the Fund's Advisors
Select, Advisors Signature, Advisors Preferred, Select, and Preferred Class
shares pay Principal a service fee and an administrative services fee under the
terms of a Service Agreement and an Administrative Services Agreement.
Service Agreement (Advisors Preferred, Advisors Select, Advisors Signature,
---------------------------------------------------------------------------
Preferred and Select Classes only)
----------------------------------
The Service Agreement provides for Principal to provide certain personal
services to shareholders (plan sponsors) and beneficial owners (plan members) of
those classes. These personal services include:
. responding to plan sponsor and plan member inquiries,
. providing information regarding plan sponsor and plan member investments; and
. providing other similar personal services or services related to the
maintenance of shareholder accounts as contemplated by National Association of
Securities Dealers (NASD) Rule 2830 (or any successor thereto).
As compensation for these services, the Fund will pay Principal service fees
equal to 0.25% of the average daily net assets attributable to the Advisors
Select Class, 0.25% of the average daily net assets of the Advisors Signature
Class, 0.17% of the average daily net assets of the Advisors Preferred Class,
and 0.15% of the average daily net assets attributable to each of the Select
Class and Preferred Class. The service fees are calculated and accrued daily and
paid monthly to Principal (or at such other intervals as the Fund and Principal
may agree).
Administrative Service Agreement (Advisors Preferred, Advisors Select, Advisors
-------------------------------------------------------------------------------
Signature, Preferred and Select Classes only)
---------------------------------------------
The Administrative Service Agreement provides for Principal to provide services
to beneficial owners of Fund shares. Such services include:
. receiving, aggregating, and processing purchase, exchange, and redemption
requests from plan shareholders;
. providing plan shareholders with a service that invests the assets of their
accounts in shares pursuant to pre-authorized instructions submitted by plan
members;
. processing dividend payments from the Funds on behalf of plan shareholders and
changing shareholder account designations;
. acting as shareholder of record and nominee for plans;
. maintaining account records for shareholders and/or other beneficial owners;
. providing notification to plan shareholders of transactions affecting their
accounts;
. forwarding prospectuses, financial reports, tax information and other
communications from the Fund to beneficial owners;
. distributing, receiving, tabulating and transmitting proxy ballots of plan
shareholders; and
. other similar administrative services.
As compensation for these services, the Fund will pay Principal service fees
equal to 0.20% of the average daily net assets attributable to the Advisors
Select Class, 0.28% of the average daily net assets of the Advisors Signature
Class, 0.15% of the average daily net assets of the Advisors Preferred Class,
0.13% of the average daily net assets of the Select Class and 0.11% of the
average daily net assets of the Preferred Class. The service fees are calculated
and accrued daily and paid monthly to Principal (or at such other intervals as
the Fund and Principal may agree).
Principal may, at its discretion appoint (and may at any time remove), other
parties, including companies affiliated with Principal, as its agent to carry
out the provisions of the Service Agreement and/or the Administrative Service
Agreement. However, the appointment of an agent shall not relieve Principal of
any of its responsibilities or liabilities under those Agreements. Any fees paid
to agents under these Agreements shall be the sole responsibility of Principal.
Rule 12b-1 Fees / Distribution Plans and Agreements
---------------------------------------------------
In addition to the management and service fees, certain of the Fund's share
classes, are subject to Distribution Plans and Agreements (described below)
sometimes referred to as a Rule 12b-1 Plan. Rule 12b-1 permits a fund to pay
expenses associated with the distribution of its shares in accordance with a
plan adopted by the Board of Directors and approved by its shareholders.
Pursuant to such rule, the Board of Directors and initial shareholders of the
Advisors Select, Advisors Signature, Advisors Preferred, Select, A, B, C, and J
Classes of shares have approved and entered into a Distribution Plan and
Agreement.
In adopting the Plans, the Board of Directors (including a majority of directors
who are not interested persons of the Fund (as defined in the 1940 Act),
hereafter referred to as the independent directors) determined that there was a
reasonable likelihood that the Plan would benefit the Funds and the shareholders
of the affected classes. Pursuant to Rule 12b-1, information about revenues and
expenses under the Plans is presented to the Board of Directors each quarter for
its consideration in continuing the Plans. Continuance of the Plans must be
approved by the Board of Directors, including a majority of the independent
directors, annually. The Plans may be amended by a vote of the Board of
Directors, including a majority of the independent directors, except that the
Plans may not be amended to materially increase the amount spent for
distribution without majority approval of the shareholders of the affected
class. The Plans terminate automatically in the event of an assignment and may
be terminated upon a vote of a majority of the independent directors or by vote
of a majority of the outstanding voting securities of the affected class.
Payments under the 12b-1 plans will normally be made for funds that are closed
to new investors.
The Plans provide that each Fund makes payments to the Fund's Distributor (in
the case of Class A, Class B, and Class C shares) or Princor (in the case of
Class J shares, Advisors Select, Advisors Signature, Advisors Preferred, and
Select share classes) from assets of each share class that has a Plan to
compensate the Distributor or Princor and other selling dealers, various banks,
broker-dealers and other financial intermediaries, for providing certain
services to the Fund. Such services may include:
. formulation and implementation of marketing and promotional activities;
. preparation, printing, and distribution of sales literature;
. preparation, printing, and distribution of prospectuses and the Fund reports
to other than existing shareholders;
. obtaining such information with respect to marketing and promotional
activities as the Distributor or Princor deems advisable;
. making payments to dealers and others engaged in the sale of shares or who
engage in shareholder support services; and
. providing training, marketing, and support with respect to the sale of Shares.
The Fund pays the Distributor or Princor a fee after the end of each month at an
annual rate as a percentage of the daily net asset value of the assets
attributable to each share class as follows:
MAXIMUM
ANNUALIZED
SHARE CLASS 12B-1 FEE
----------- ----------
Advisors Signature 0.35%
Advisors Select 0.30%
Advisors Preferred 0.25%
Class A shares (except Short-Term Bond, LargeCap S&P
500 Index, Money Market, and Ultra Short) /(1)/ 0.25%
Class A shares of Short-Term Bond, LargeCap S&P 500
Index, and Ultra Short 0.15%
Class B shares /(1)/ 1.00%
Class C shares/(//1//)/ 1.00%
Class J shares (except Money Market and SmallCap
Blend) /(1)/ 0.50%
Class J shares of Money Market /(1)/ 0.25%
Class J shares of SmallCap Blend
Select 0.10%
///(//1//)/
The Distributor also receives the proceeds of any CDSC imposed on the
redemption of Class A, B or C shares, as does Princor with regard to Class J
shares
The Distributor or Princor may remit on a continuous basis all of these sums (up
to 0.25% for Class B shares) to its investment representatives and other
financial intermediaries as a trail fee in recognition of their services and
assistance.
Currently, the Distributor and Princor make payments to dealers on accounts for
which such dealer is designated dealer of record. Payments are based on the
average net asset value of the accounts invested in Class A, Class B, Class C,
Class J, Advisors Preferred Class, Advisors Select Class, Advisors Signature,
Select Class, or Preferred Class shares.
At least quarterly, the Distributor and Princor provide to the Fund's Board of
Directors, and the Board reviews, a written report of the amounts expended
pursuant to the Plans and the purposes for which such expenditures were made.
Under the Plans, the Funds have no legal obligation to pay any amount that
exceeds the compensation limit. The Funds do not pay, directly or indirectly,
interest, carrying charges, or other financing costs in association with these
Plans. All fees paid under a Fund's Rule 12b-1 Plan are paid to the Distributor
or Princor, each of which is entitled to retain such fees paid by the Fund
without regard to the expenses which it incurs.
Transfer Agency Agreement (Institutional Class, Class A, Class B, Class C, and
------------------------------------------------------------------------------
Class J shares only)
--------------------
The Transfer Agency Agreement provides for Principal Shareholder Services, Inc.,
a wholly owned subsidiary of Principal to act as transfer and shareholder
servicing agent for the Institutional Class, Class A, Class B, Class C, and
Class J shares. Principal provides these services to the Institutional Class
shares without charge. With respect to each of the Class A, B, C and J shares,
the Fund will pay Principal Shareholder Services a fee for the services provided
pursuant to the Agreement in an amount equal to the costs incurred by Principal
Shareholder Services for providing such services. The services include:
. issuance, transfer, conversion, cancellation, and registry of ownership of
Fund shares, and maintenance of open account system;
. preparation and distribution of dividend and capital gain payments to
shareholders;
. delivery, redemption and repurchase of shares, and remittances to
shareholders;
. the tabulation of proxy ballots and the preparation and distribution to
shareholders of notices, proxy statements and proxies, reports, confirmation
of transactions, prospectuses and tax information;
. communication with shareholders concerning the above items; and
. use of its best efforts to qualify the Capital Stock of the Fund for sale in
states and jurisdictions as directed by the Fund.
CUSTODIAN
The custodian of the portfolio securities and cash assets of the Funds is Bank
of New York, 100 Church Street, 10th Floor, New York, NY 10286. The custodian
performs no managerial or policy-making functions for the Funds.
BROKERAGE ALLOCATION AND OTHER PRACTICES
BROKERAGE ON PURCHASES AND SALES OF SECURITIES
All orders for the purchase or sale of portfolio securities are placed on behalf
of an Fund by the Fund's Sub-Advisor or Sub-Sub-Advisor pursuant to the terms of
the applicable sub-advisory agreement. In distributing brokerage business
arising out of the placement of orders for the purchase and sale of securities
for any Fund, the objective of each Fund's Sub-Advisor is to obtain the best
overall terms. In pursuing this objective, a Sub-Advisor considers all matters
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and executing capability of the
broker or dealer, confidentiality, including trade anonymity, and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis). This may mean in some instances that a Sub-Advisor will pay a
broker commissions that are in excess of the amount of commissions another
broker might have charged for executing the same transaction when the
Sub-Advisor believes that such commissions are reasonable in light of a) the
size and difficulty of the transaction, b) the quality of the execution
provided, and c) the level of commissions paid relative to commissions paid by
other institutional investors. (Such factors are viewed both in terms of that
particular transaction and in terms of all transactions that broker executes for
accounts over which the Sub-Advisor exercises investment discretion. A
Sub-Advisor may purchase securities in the over-the-counter market, utilizing
the services of principal market makers unless better terms can be obtained by
purchases through brokers or dealers, and may purchase securities listed on the
NYSE from non-Exchange members in transactions off the Exchange.)
A Sub-Advisor may give consideration in the allocation of business to services
performed by a broker (e.g., the furnishing of statistical data and research
generally consisting of, but not limited to, information of the following types:
analyses and reports concerning issuers, industries, economic factors and
trends, portfolio strategy, and performance of client accounts). If any such
allocation is made, the primary criteria used will be to obtain the best overall
terms for such transactions. A Sub-Advisor may also pay additional commission
amounts for research services. Such statistical data and research information
received from brokers or dealers as described above may be useful in varying
degrees and a Sub-Advisor may use it in servicing some or all of the accounts it
manages. Sub-Advisors allocated portfolio transactions for the Funds indicated
in the following table to certain brokers for the year ended October 31, 2006
due to research services provided by such brokers. The table also indicates the
commissions paid to such brokers as a result of these portfolio transactions.
FUND AMOUNT OF TRANSACTIONS COMMISSIONS PAID
---- ---------------------- ----------------
International Emerging Markets $ 279,230,658 $200,714
Disciplined LargeCap Blend 1,387,362,470 207,540
Diversified International 700,457,732 339,563
International Growth 1,226,779,471 487,077
LargeCap Growth 1,790,701 301,707
LargeCap S&P 500 Index 162,842,352 1,946
LargeCap Value 595,165,397 195,340
MidCap Blend 190,465,229 159,442
MidCap Growth 101,696 26,558
MidCap S&P 400 Index 5,180,094 1,513
MidCap Value 73,846,558 26,558
Partners International* 1,250,772 63
Partners LargeCap Blend I 104,080,916 2,289
Partners LargeCap Value 2,293,031 54,785
Partners LargeCap Value I 46,118,417 51,693
Partners MidCap Growth 119,025,873 126,140
Partners MidCap Growth I 125,191,863 139,330
Partners MidCap Growth II* 1,205,419 55,156
Partners MidCap Value 100,986,285 162,231
Partners MidCap Value I 307,112,126 13,634
Partners SmallCap Blend 53,826,983 72,978
Partners SmallCap Growth I 1,089,543 21,307
Partners SmallCap Growth II 84,044,802 179,697
Partners SmallCap Growth III 953,908 37,424
Partners SmallCap Value 140,292,188 17,692
Partners SmallCap Value I 15,310,729 25,662
Partners SmallCap Value II 20,445,590 47,518
Real Estate Securities 446,221,310 127,820
SmallCap Blend 206,229,337 165,020
SmallCap Growth 21,499,367 23,726
SmallCap S&P 600 Index 51,988,063 3,701
SmallCap Value 171,366,744 78,393
* Information from 10/1/2005 to 09/30/2006.
Subject to the rules promulgated by the SEC, as well as other regulatory
requirements, the Board has approved procedures whereby a Fund may purchase
securities that are offered in underwritings in which an affiliate of a
Sub-Advisor, or the Manager, participates. These procedures prohibit a Fund from
directly or indirectly benefiting a Sub-Advisor affiliate or a Manager affiliate
in connection with such underwritings. In addition, for underwritings where a
Sub-Advisor affiliate or a Manager participates as a principal underwriter,
certain restrictions may apply that could, among other things, limit the amount
of securities that the Fund could purchase in the underwritings. The Sub-Advisor
shall determine the amounts and proportions of orders allocated to the
Sub-Advisor or affiliate. The Directors of the Fund will receive quarterly
reports on these transactions.
The Board has approved procedures that permit a Fund to effect a purchase or
sale transaction between the Fund and any other affiliated mutual fund or
between the Fund and affiliated persons of the Fund under limited circumstances
prescribed by SEC rules. Any such transaction must be effected without any
payment other than a cash payment for the securities, for which a market
quotation is readily available, at the current market price; no brokerage
commission or fee (except for customary transfer fees), or other remuneration
may be paid in connection with the transaction. The Board receives quarterly
reports of all such transactions.
The Board has also approved procedures that permit an Fund's sub-advisor to
place portfolio trades with an affiliated broker under circumstances prescribed
by SEC Rules 17e-1 and 17a-10. The procedures require that total commissions,
fees, or other remuneration received or to be received by an affiliated broker
must be reasonable and fair compared to the commissions, fees or other
remuneration received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable time period. The Board receives
quarterly reports of all transactions completed pursuant to the Fund's
procedures.
Purchases and sales of debt securities and money market instruments usually are
principal transactions; portfolio securities are normally purchased directly
from the issuer or from an underwriter or marketmakers for the securities. Such
transactions are usually conducted on a net basis with the Fund paying no
brokerage commissions. Purchases from underwriters include a commission or
concession paid by the issuer to the underwriter, and the purchases from dealers
serving as marketmakers include the spread between the bid and asked prices.
The Board has approved procedures whereby a Fund may participate in a commission
recapture program. Commission recapture is a form of institutional discount
brokerage that returns commission dollars directly to a Fund. It provides a way
to gain control over the commission expenses incurred by a Fund's Manager and/or
Sub-Advisor, which can be significant over time and thereby reduces expenses,
improves cash flow and conserves assets. A Fund can derive commission recapture
dollars from both equity trading commissions and fixed-income (commission
equivalent) spreads. The Funds (except the Partners International Fund and the
Partners MidCap Growth Fund II) may participate in a program through a
relationship with Frank Russell Securities, Inc. The Partners International Fund
and the Partners MidCap Growth Fund II participate in the program offered by FMR
and Fidelity Management Trust Company. From time to time, the Board reviews
whether participation in the recapture program is in the best interest of the
Funds.
The following table shows the brokerage commissions paid during the periods
indicated.
TOTAL BROKERAGE COMMISSIONS PAID
FOR PERIODS ENDED OCTOBER 31
----------------------------
FUND 2006 2005 2004
---- ---- ---- ----
Disciplined LargeCap Blend 1,621,001 439,257 39,795
Diversified International 2,719,306 1,303,762 609,341
International Emerging Markets 1,804,931 885,888 293,378
International Growth 4,018,611 2,497,112 2,023,724
LargeCap Growth 1,774,756 803,804 194,234
LargeCap S&P 500 Index 37,117 47,749 144,431
LargeCap Value 1,341,775 789,928 657,455
MidCap Blend 984,751 513,070 156,531
MidCap Growth 101,266 90,153 209,051
MidCap S&P 400 Index 36,095 27,702 15,200
MidCap Value 278,632 390,693 456,168
Partners Global Equity 33,512 11,802
Partners International 1,719,023 1,001,485 212,405/(//1//)/
Partners LargeCap Blend 835,529 777,011 1,068,263
Partners LargeCap Blend I 102,361 28,674 10,140
Partners LargeCap Growth I 1,025,363 1,135,959 2,452,319
Partners LargeCap Growth II 1,287,778 804,869 241,795
Partners LargeCap Value 693,087 1,028,079 1,437,776
Partners LargeCap Value I 355,587 293,488 5,829/(//2//)/
Partners LargeCap Value Fund II 25,596 66,682
Partners MidCap Growth 1,126,532 562,152 219,464
Partners MidCap Growth I 709,302 480,719 137,437/(//1//)/
Partners MidCap Growth Fund II 1,217,532 712,400
Partners MidCap Value 1,667,242 689,499 434,798
Partners MidCap Value I 795,049 658,581 286,243/(//1//)/
Partners SmallCap Blend 762,390 728,409 449,003
Partners SmallCap Growth I 310,035 338,247 278,114
Partners SmallCap Growth II 1,696,184 831,932 539,355
Partners SmallCap Growth III 666,261 404,958 6,588/(//2//)/
Partners SmallCap Value 446,911 535,750 307,050
Partners SmallCap Value I 620,098 301,508 179,389
Partners SmallCap Value II 489,547 366,699 32,691/(//2//)/
Preferred Securities 346,066 191,092 160,934
Real Estate Securities 800,233 424,531 652,573
SmallCap Blend 914,025 707,663 321,213
SmallCap Growth 143,795 193,475 176,941
SmallCap S&P 600 Index 149,342 92,649 50,929
SmallCap Value 636,024 486,333 314,762
/ //(//1//)/ Period from December 29, 2003 (date operations commenced) through
October 31, 2004.
/ //(//2//)/ Period from June 1, 2004 (date operations commenced) through
October 31, 2004.
Certain broker-dealers are considered to be affiliates of the Fund.
. Archipelago Securities, LLC, Goldman Sachs Asset Management, Goldman Sachs
Execution & Clearing, LP and Goldman Sachs JBWere are affiliates of Goldman
Sachs & Co. Goldman Sachs Asset Management acts as a sub-advisor for the
Partners LargeCap Blend Fund I and Partners MidCap Value Fund I.
. BNY Brokerage, Inc., BNY Capital Markets, Inc., B-Trade Services, LLC and
Lynch, Jones & Ryan, Inc. are affiliates of BNY Asset Management which acts as
sub-advisor to Partners LargeCap Growth Fund II, and Partners LargeCap Value.
. J.P.Morgan Securities is an affiliate of J.P.Morgan Investment Management Inc.
which acts as a sub-advisor for Partners SmallCap Value I, Partners Global
Equity, and an account of Principal Variable Contracts Fund, Inc.
. J.P.Morgan Securities is an affiliate of American Century Investment
Management, Inc. which acts as Sub-Advisor for the Partners LargeCap Growth
Fund II, Partners LargeCap Value Fund II, and an Account of the Principal
Variable Contracts Fund, Inc.
. Lehman Brothers, Inc. and Neuberger Berman Management, Inc. are affiliates of
Neuberger Berman LLC. Neuberger Berman Management Inc. acts as a sub-advisor
for the Partners MidCap Value Fund and an account of Principal Variable
Contracts Fund, Inc.
. Morgan Stanley DW Inc., is affiliated with Van Kampen/Morgan Stanley Asset
Management, which acts as sub-advisor to one account of the Principal Variable
Contracts Fund, Inc. and to each of the Municipal Funds.
. Sanford C. Bernstein & Co., LLC is an affiliate of AllianceBernstein L.P.
which sub-advises Partners LargeCap Value Fund, Partners SmallCap Growth Fund,
and an account of Principal Variable Contracts Fund, Inc.
. Spectrum Asset Management, Inc. is an affiliate of Principal Global Investors,
LLC which serves as sub-advisor for several accounts of the Principal Variable
Contracts Fund, Inc. and portfolios of the Principal Investors Fund.
. UBS Financial Services Inc. and UBS Securities LLC are affiliates of UBS
Global AM which acts as sub-advisor to the Partners SmallCap Growth Fund II,
Partners LargeCap Value I, and an account of the Principal Variable Contracts
Fund, Inc.
Brokerage commissions paid to affiliates during the periods ending October 31
were as follows:
COMMISSIONS PAID TO ARCHIPELAGO SECURITIES, LLC
-----------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners LargeCap
Blend
2005 422 0.05 0.14
2004 348 0.03 0.12
Partners LargeCap
Blend I
2004 6 0.06 0.08
Partners LargeCap
Growth I
2005 44 0.00 0.03
2004 298 0.11 0.11
Partners LargeCap
Growth II
2005 854 0.11 0.50
2004 10,683 4.42 10.18
Partners LargeCap
Value II
2005 28 0.04 0.38
Partners MidCap
Growth
2004 5 0.00 0.01
Partners MidCap
Growth I
2005 2,622 0.55 1.14
Partners SmallCap
Blend
2005 3,855 0.53 0.87
Partners SmallCap
Value I
2005 819 0.27 0.39
2004 164 0.09 0.15
COMMISSIONS PAID TO BNY BROKERAGE, INC.
---------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 21,645 1.34 0.91
International
Emerging Markets
2006 674 0.04 0.07
LargeCap Growth
2006 19,640 1.11 0.67
LargeCap S&P 500
Index
2006 1,410 3.80 0.37
LargeCap Value
2006 8,822 0.66 0.28
MidCap Blend
2006 6,289 0.64 0.61
MidCap S&P 400 Index
2006 103 0.28 0.04
MidCap Value
2006 2,175 0.78 0.59
Partners LargeCap
Blend
2006 1,256 0.15 0.17
Partners LargeCap
Growth I
2006 1,848 0.18 0.17
Partners LargeCap
Value I
2006 5,955 1.67 0.85
Partners MidCap
Growth
2006 1,568 0.14 0.12
Partners MidCap
Growth I
2006 13,226 1.86 1.13
Partners MidCap
Growth II
2006 1,248 0.10 0.12
Partners MidCap Value
I
2006 475 0.06 0.03
Partners SmallCap
Blend
2006 3,881 0.51 0.38
Partners SmallCap
Growth II
2006 77 0.00 0.00
Partners SmallCap
Growth III
2006 56 0.01 0.00
Partners SmallCap
Value I
2006 716 0.12 0.05
Partners SmallCap
Value II
2006 6,703 1.37 0.69
SmallCap Blend
2006 428 0.05 0.03
SmallCap Growth
2006 350 0.24 0.26
SmallCap Value
2006 2,113 0.33 0.35
COMMISSIONS PAID TO BNY CAPITAL MARKETS, INC.
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners MidCap Value
2006 249 0.01 0.02
COMMISSIONS PAID TO B-TRADE SERVICES, LLC
-----------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 4,254 0.26 0.45
Diversified
International
2006 943 0.03 0.09
International Growth
2006 1,169 0.03 0.03
LargeCap Value
2006 98 0.01 0.02
MidCap Blend
2006 9,601 0.98 2.20
MidCap Value
2006 697 0.25 0.47
Partners LargeCap
Blend
2006 46,416 5.56 6.59
Partners LargeCap
Blend I
2006 8 0.01 0.04
Partners LargeCap
Growth I
2006 44,585 4.35 8.84
Partners LargeCap
Growth II
2006 108,512 8.43 14.81
Partners LargeCap
Value II
2006 203 0.79 0.83
Partners MidCap
Growth
2006 39,903 3.54 4.14
Partners MidCap
Growth I
2006 8,996 1.27 1.15
Partners MidCap Value
I
2006 6,460 0.81 2.48
Partners SmallCap
Blend
2006 10,285 1.35 1.73
Partners SmallCap
Growth I
2006 113 0.04 0.12
Partners SmallCap
Growth II
2006 154,568 9.11 9.27
Partners SmallCap
Value
2006 89 0.02 0.10
Partners SmallCap
Value I
2006 1,314 0.21 0.23
Real Estate
Securities
2006 2,769 0.35 0.70
SmallCap Blend
2006 24,686 2.70 4.51
SmallCap Growth
2006 4,122 2.87 3.34
SmallCap Value
2006 859 0.14 0.43
COMMISSIONS PAID TO CDC IXIS ASSET MANAGEMENT DISTRIBUTORS, LP
--------------------------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners
International
2006 58 0.00 0.00
2005 1,176 0.12 0.08
COMMISSIONS PAID TO DEAN WITTER REYNOLDS, INC.
----------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
SmallCap Growth II
2005 4,376 0.53 0.50
COMMISSIONS PAID TO FIDELITY BROKERAGE SERVICES, LLC
----------------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners
International
2005 1.00 0.00 0.00
Partners LargeCap
Blend I
2005 48 0.17 0.25
Partners MidCap
Growth II
2006 83,344 6.85 8.56
2005 29,948 4.20 8.99
Partners MidCap Value
2006 2,860 0.17 0.21
Partners MIdCap Value
I
2006 7,997 1.01 1.03
SmallCap Blend
2005 661 0.09 0.09
SmallCap Growth
2005 145 0.07 0.08
SmallCap Value
2005 191 0.04 0.03
COMMISSIONS PAID TO GOLDMAN SACHS & CO.
---------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 66,547 4.11 2.35
2005 16,071 3.66 1.17
2004 171 0.43 0.15
Diversified
International
2006 199,047 7.32 6.67
2005 81,387 6.24 5.41
2004 16,052 2.63 2.21
International
Emerging Markets
2006 63,702 3.53 3.30
2005 20,748 2.34 2.23
2004 554 0.19 0.28
International Growth
2006 288,720 7.18 4.82
2005 93,939 3.76 2.86
2004 48,231 2.38 1.90
LargeCap Growth
2006 28,046 1.58 1.26
2005 30,865 3.84 3.06
2004 7,615 3.92 3.22
LargeCap S&P 500
Index
2006 823 2.22 1.41
2005 133 0.28 0.27
2004 75 0.05 0.02
LargeCap Value
2006 48,528 3.62 2.43
2005 80,821 10.23 6.13
2004 32,041 4.87 3.06
MidCap Blend
2006 18,818 1.91 1.89
2005 10,209 1.99 2.06
2004 5,234 3.34 3.03
MidCap Growth
2006 2,212 2.18 2.40
2005 4,374 4.85 3.83
2004 13,668 6.54 6.77
MidCap S&P 400 Index
2005 168 0.60 0.56
2004 340 2.23 1.90
MidCap Value
2006 6,623 2.27 1.59
2005 12,937 3.31 2.61
2004 17,492 3.83 3.75
Partners Global
Equity
2006 1,294 3.86 6.05
2005 324 2.75 1.83
Partners
International
2006 191,758 11.16 9.55
2005 84,903 8.48 14.78
2004 17,597 8.28 9.88
Partners LargeCap
Blend
2006 27,132 3.25 2.71
2005 23,814 3.06 4.00
2004 21,834 2.04 1.37
Partners LargeCap
Blend I
2006 4,538 4.43 1.51
2005 783 2.73 1.38
2004 360 3.55 2.74
Partners LargeCap
Growth I
2006 48,726 4.75 3.92
2005 28,376 2.50 3.49
2004 85,476 3.49 3.34
Partners LargeCap
Growth II
2006 22,220 1.73 0.97
2005 46,395 5.76 3.24
2004 12,690 5.25 2.71
Partners LargeCap
Value
2006 54,249 7.83 7.60
2005 267,727 26.04 22.59
2004 197,081 13.71 14.65
Partners LargeCap
Value I
2006 11,579 3.26 1.74
2005 2,540 0.87 0.42
2004 40 0.69 0.89
Partners LargeCap
Value II
2006 381 1.49 0.53
2005 1,951 2.93 1.76
Partners MidCap
Growth
2006 74,253 6.59 4.01
2005 66,605 11.85 9.36
2004 22,398 10.21 9.53
Partners MidCap
Growth I
2006 13,322 1.88 1.60
2005 136,955 28.49 25.63
2004 20,352 14.81 10.62
Partners MidCap
Growth II
2006 748 0.06 0.04
Partners MidCap Value
2006 17,322 1.04 0.62
2005 11,227 1.63 1.51
2004 4,825 1.11 1.24
Partners MidCap Value
I
2006 13,952 1.75 0.90
2005 30,402 4.62 4.90
2004 11,123 3.89 4.10
Partners SmallCap
Blend
2006 6,799 0.89 0.91
2005 31,884 4.38 4.81
2004 141,341 31.48 46.42
Partners SmallCap
Growth I
2006 11,502 3.71 4.08
2005 18,377 5.43 5.57
2004 18,611 6.69 9.13
Partners SmallCap
Growth II
2006 5,977 0.35 0.28
2005 4,515 0.54 0.90
2004 7,225 1.34 1.05
Partners SmallCap
Growth III
2006 2,012 0.30 0.06
2005 28,727 7.09 6.28
2004 3,719 56.45 62.16
Partners SmallCap
Value
2004 1,220 .04 0.36
Partners SmallCap
Value I
2006 60,820 9.81 9.06
2005 4,832 1.60 1.21
2004 4,056 2.26 1.78
Partners SmallCap
Value II
2006 1,940 0.40 0.48
2005 22 0.01 0.01
Real Estate
Securities
2006 93,385 11.67 7.65
2005 3,945 0.93 1.11
2004 31,044 4.76 2.33
SmallCap Blend
2006 15,278 1.67 1.13
2005 17,655 2.49 1.05
2004 4,875 1.52 1.34
SmallCap Growth
2006 5,128 3.57 2.40
2005 3,471 1.79 1.34
2004 4,746 2.68 2.70
SmallCap S&P 600
Index
2006 9 0.01 0.01
2005 730 0.79 0.68
2004 1,607 3.16 3.67
SmallCap Value
2006 15,721 2.47 1.76
2005 26,887 5.53 3.67
2004 14,955 4.75 3.26
COMMISSIONS PAID TO GOLDMAN SACHS EXECUTION & CLEARING, LP
---------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners LargeCap
Blend
2006 2,286 0.27 0.78
2005 3,466 0.45 1.01
2004 1,044 0.10 0.16
Partners LargeCap
Blend I
2006 670 0.65 1.19
2005 1,758 6.13 21.78
2004 252 2.49 5.97
Partners LargeCap
Growth I
2006 1,678 0.16 0.76
2005 5,154 0.45 0.83
2004 63 0.00 0.03
Partners LargeCap
Growth II
2006 65,345 5.07 11.57
2005 34,360 4.27 10.32
2004 13,370 5.53 8.65
Partners LargeCap
Value I
2006 7,010 1.97 4.82
2005 5,469 1.86 4.61
Partners LargeCap
Value II
2006 269 1.05 1.10
2005 1,992 2.99 7.70
Partners MidCap
Growth
2006 54,622 4.85 10.32
2005 25,955 4.62 9.17
2004 5,523 2.52 5.07
Partners MidCap Value
2006 255 0.02 0.01
2005 1,815 0.26 0.11
2004 310 0.07 0.05
Partners SmallCap
Blend
2004 124 0.03 0.04
Partners SmallCap
Growth I
2006 11 0.00 0.02
Partners SmallCap
Growth II
2006 13,840 0.82 3.48
2005 3,354 0.40 2.07
2004 1,520 0.28 0.11
Partners SmallCap
Growth III
2006 688 0.10 0.04
Partners SmallCap
Value I
2005 557 0.18 0.18
COMMISSIONS PAID TO GOLDMAN SACHS JBWERE
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Diversified
International
2004 171 0.03 0.02
International Growth
2004 738 0.04 0.02
Partners
International
2005 969 0.10 0.05
2004 29 0.01 0.01
COMMISSIONS PAID TO JPMORGAN CAZENOVE LIMITED
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Diversified
International
2006 15,437 0.57 0.60
2005 5,278 0.40 0.42
International
Emerging Markets
2005 784 0.09 0.12
International Growth
2006 16,802 0.42 0.33
2005 23,016 0.92 0.73
Partners
International
2006 10,104 0.59 0.48
2005 13,758 1.37 0.79
COMMISSIONS PAID TO J.P. MORGAN SECURITIES
------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 34,156 2.11 1.19
2004 7 0.02 0.01
Diversified
International
2006 104,908 3.86 3.28
2005 33,868 2.60 2.01
2004 33,645 5.52 5.12
International
Emerging Markets
2006 101,007 5.60 5.55
2005 35,095 3.96 3.42
2004 21,088 7.19 5.25
International Growth
2006 142,097 3.54 3.06
2005 153,151 6.13 4.67
2004 127,778 6.31 7.39
LargeCap Growth
2006 3,720 0.21 0.26
2005 1,312 0.16 0.11
2004 1,788 0.92 0.92
LargeCap Value
2006 26,866 2.00 1.21
2005 14,320 1.81 1.26
2004 9,656 1.47 1.55
MidCap Blend
2006 14,936 1.52 1.59
2005 10,543 2.05 2.19
2004 2,946 1.88 1.61
MidCap Growth
2006 3,896 3.85 4.25
2005 1,972 2.19 1.73
2004 2,584 1.24 1.49
MidCap Value
2006 5,938 2.13 1.04
2005 3,609 0.92 0.83
2004 6,036 1.32 1.46
Partners
International
2006 77,044 4.48 4.33
2005 53,801 5.37 5.59
2004 11,259 5.30 4.10
Partners LargeCap
Blend
2006 25,691 3.07 3.05
2005 21,365 2.75 2.27
2004 16,265 1.52 0.78
Partners LargeCap
Blend I
2006 7,466 7.29 4.48
2005 26 0.09 0.34
2004 35 0.34 0.39
Partners LargeCap
Growth I
2006 38,312 3.74 3.43
2005 30,229 2.66 2.58
2004 53,955 2.20 2.15
Partners LargeCap
Growth II
2005 126 0.02 0.02
2004 1,103 0.46 0.35
Partners LargeCap
Value
2006 5,024 0.72 0.35
2004 1,888 0.13 0.03
Partners LargeCap
Value I
2006 15,046 4.23 3.16
2005 7,615 2.59 1.19
2004 212 3.64 2.32
Partners LargeCap
Value II
2006 48 0.19 0.18
Partners MidCap
Growth
2006 210,349 18.67 15.55
2005 23,692 4.21 3.52
2004 3,576 1.63 1.36
Partners MidCap
Growth I
2006 40,694 5.74 5.02
2005 20,405 4.24 3.74
2004 8,032 5.84 3.29
Partners MidCap
Growth II
2006 42,307 3.47 2.92
Partners MidCap Value
2006 40,337 2.42 1.38
2005 11,345 1.65 1.38
2004 7,211 1.66 1.55
Partners MidCap Value
I
2006 21,453 2.70 2.00
2005 8,607 1.31 0.99
2004 10,363 3.62 2.60
Partners SmallCap
Blend
2006 36,902 4.84 4.24
2005 27,888 3.83 3.78
2004 2,715 0.60 0.68
Partners SmallCap
Growth I
2006 40,505 13.06 11.47
2005 3,443 1.02 1.82
2004 5,301 1.91 3.71
Partners SmallCap
Growth II
2006 140,886 8.31 5.27
2005 865 0.10 0.09
2004 4,120 0.76 0.48
Partners SmallCap
Growth III
2006 6,984 1.05 1.54
2005 55,313 13.66 13.88
2004 1,461 22.18 14.72
Partners SmallCap
Value
2006 3,544 0.79 0.74
Partners SmallCap
Value I
2006 31,860 5.14 4.20
2005 1,820 0.60 0.28
Partners SmallCap
Value II
2006 579 0.12 0.15
2005 32 0.01 0.02
Real Estate
Securities
2006 14,913 1.86 1.95
2005 8,564 2.02 1.30
2004 5,365 0.82 0.70
SmallCap Blend
2006 10,801 1.18 0.78
2005 1,904 0.27 0.29
2004 1,006 0.31 0.26
SmallCap Growth
2006 3,548 2.47 1.71
2005 3,779 1.95 1.61
2004 2,423 1.37 0.82
SmallCap S&P 600
Index
2006 226 0.15 0.05
2004 152 0.30 0.10
SmallCap Value
2006 7,079 1.11 0.93
2005 2,928 0.60 0.48
2004 3,732 1.19 1.41
COMMISSIONS PAID TO LEHMAN BROTHERS
-----------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 94,378 5.82 6.62
2005 23,210 5.28 6.10
2004 1,394 3.50 2.92
Diversified
International
2006 103,073 3.79 5.35
2005 47,886 3.67 3.34
2004 44,076 7.23 6.35
International
Emerging Markets
2006 25,732 1.43 1.32
2005 33,577 3.79 3.32
2004 4,313 1.47 1.60
International Growth
2006 236,043 5.87 7.97
2005 72,740 2.91 3.17
2004 200,059 9.89 8.50
LargeCap Growth
2006 145,011 8.17 7.74
2005 108,088 13.45 10.51
2004 7,636 3.93 3.94
LargeCap S&P 500
Index
2006 1,789 4.82 10.67
2005 14,223 29.79 59.24
2004 61,951 42.89 30.09
LargeCap Value
2006 51,346 3.83 5.47
2005 46,629 5.90 5.29
2004 50,432 7.67 7.15
MidCap Blend
2006 53,701 5.45 4.94
2005 55,007 10.72 10.05
2004 9,947 6.35 5.61
MidCap Growth
2006 11,929 11.78 9.69
2005 4,761 5.28 3.64
2004 15,283 7.31 6.55
MidCap S&P 400 Index
2006 9,000 24.93 28.15
2005 3,692 13.33 20.07
2004 4,786 31.49 32.04
MidCap Value
2006 14,642 5.26 4.82
2005 19,805 5.07 5.60
2004 22,858 5.01 4.99
Partners Global
Equity Fund
2006 3,690 11.01 8.43
2005 931 7.89 3.96
Partners
International
2006 195,178 11.35 13.14
2005 106,440 10.63 10.22
2004 14,506 6.83 5.90
Partners LargeCap
Blend
2006 18,897 2.26 2.72
2005 38,876 5.00 5.73
2004 100,040 9.36 18.30
Partners LargeCap
Blend I
2006 4,535 4.43 6.88
2005 443 1.55 1.96
2004 351 3.47 2.19
Partners LargeCap
Growth I
2006 28,450 2.77 6.30
2005 34,552 3.04 3.52
2004 153,167 6.25 5.49
Partners LargeCap
Growth II
2006 33,544 2.60 1.74
2005 15,985 1.99 1.26
2004 575 0.24 0.11
Partners LargeCap
Value
2006 4,147 0.60 2.27
2004 401 0.03 0.05
Partners LargeCap
Value I
2006 4,861 1.37 1.43
2005 4,722 1.61 1.08
2004 55 0.94 0.54
Partners LargeCap
Value II
2006 444 1.74 0.87
2005 168 0.25 0.11
Partners MidCap
Growth
2006 51,063 4.53 3.68
2005 22,244 3.96 3.86
2004 16,530 7.53 7.03
Partners MidCap
Growth I
2006 40,272 5.68 5.05
2005 27,952 5.81 5.95
2004 2,813 2.05 1.49
Partners MidCap
Growth II
2006 86,513 7.11 8.45
2005 41,885 5.88 6.67
Partners MidCap Value
2006 149,183 8.95 6.56
2005 106,573 15.46 15.29
2004 90,905 20.91 21.33
Partners MidCap Value
I
2006 23,455 2.95 3.00
2005 34,204 5.19 5.15
2004 14,344 5.01 5.37
Partners SmallCap
Blend
2006 36,736 4.82 4.61
2005 40,825 5.60 4.33
2004 22,992 5.12 2.91
Partners SmallCap
Growth I
2006 26,284 8.48 8.45
2005 24,275 7.18 6.86
2004 20,750 7.46 7.29
Partners SmallCap
Growth II
2006 43,258 2.55 1.64
2005 6,420 0.77 0.71
2004 11,440 2.12 1.29
Partners SmallCap
Growth III
2006 10,170 1.53 2.06
2005 21,754 5.37 4.26
2004 25 0.38 0.61
Partners SmallCap
Value
2006 788 0.18 0.12
2005 885 0.17 0.12
2004 6,080 1.98 1.65
Partners SmallCap
Value I
2006 14,856 2.40 1.73
2005 6,404 2.12 1.90
2004 2,323 1.29 1.05
Partners SmallCap
Value II
2006 187 0.04 0.04
2005 247 0.07 0.07
Real Estate
Securities
2006 110,179 13.77 22.79
2005 65,908 15.52 27.62
2004 73,885 11.32 19.74
SmallCap Blend
2006 27,373 2.99 3.06
2005 26,262 3.71 3.71
2004 8,785 2.73 2.43
SmallCap Growth
2006 6,484 4.51 5.78
2005 12,361 6.39 5.24
2004 12,649 7.15 8.31
SmallCap S&P 600
Index
2006 26,276 17.59 21.43
2005 42,675 46.06 42.28
2004 25,705 50.47 44.08
SmallCap Value
2006 20,152 3.17 3.16
2005 29,549 6.08 6.44
2004 18,235 5.79 6.46
COMMISSIONS PAID TO LYNCH, JONES & RYAN, INC.
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners MidCap
Growth
2006 1,582 0.14 0.09
Partners SmallCap
Growth III
2005 64 0.01 0.01
Partners SmallCap
Value II
2006 285 0.06 0.08
COMMISSIONS PAID TO MORGAN STANLEY DW, INC.
-------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 49,642 3.06 3.34
2005 39,290 8.94 5.98
2004 715 1.80 0.69
Diversified
International
2006 197,616 7.27 7.35
2005 81,905 6.28 5.88
2004 49,229 8.08 7.09
International
Emerging Markets
2006 112,716 6.24 6.51
2005 70,173 7.92 8.86
2004 40,269 13.73 14.03
International Growth
2006 285,954 7.12 13.42
2005 222,538 8.91 7.99
2004 102,879 5.08 3.91
LargeCap Growth
2006 39,365 2.22 2.58
2005 15,839 1.97 1.84
2004 2,628 1.35 1.82
LargeCap S&P 500
Index
2006 7,948 21.41 34.97
2005 14,711 30.81 26.59
2004 1,144 0.79 0.79
LargeCap Value
2006 46,206 3.44 5.42
2005 50,076 6.34 11.48
2004 34,117 5.19 8.50
MidCap Blend
2006 27,715 2.81 3.38
2005 37,713 7.35 3.84
2004 12,839 8.20 13.48
MidCap Growth
2006 4,901 4.84 5.30
2005 1,350 1.50 1.37
2004 4,991 2.39 2.49
MidCap S&P 400 Index
2006 2,493 6.91 8.28
2005 5,219 18.84 21.39
2004 96 0.63 0.62
MidCap Value
2006 5,373 1.93 2.04
2005 13,759 3.52 5.09
2004 19,405 4.25 6.66
Partners Global
Equity
2006 5,249 15.66 11.65
2005 1,142 9.67 5.18
Partners
International
2006 146,733 8.54 9.27
2005 60,233 6.61 5.64
2004 15,982 7.52 6.08
Partners LargeCap
Blend
2006 25,940 3.10 2.49
2005 38,900 5.01 5.75
2004 51,587 4.83 2.67
Partners LargeCap
Blend I
2006 5,379 5.25 5.82
2005 3,618 12.62 16.12
2004 1,714 16.91 28.38
Partners LargeCap
Growth I
2006 56,611 5.52 5.46
2005 76,581 6.74 5.90
2004 9,275 0.38 0.43
Partners LargeCap
Growth II
2006 20,545 1.60 0.69
2005 3,279 0.41 0.24
2004 3,096 1.28 1.28
Partners LargeCap
Value
2006 38,149 5.50 14.72
2005 58 0.01 0.01
Partners LargeCap
Value I
2006 14,765 4.15 5.57
2005 4,648 1.58 3.03
2004 207 3.55 1.58
Partners LargeCap
Value II
2006 1,440 5.63 1.67
2005 135 0.20 0.37
Partners MidCap
Growth
2006 34,914 3.10 2.42
2005 15,727 2.80 2.59
2004 4,920 2.24 2.06
Partners MidCap
Growth I
2006 23,012 3.24 3.67
2005 24,505 5.10 4.43
2004 6,297 4.58 5.81
Partners MidCap
Growth II
2006 171,168 14.06 16.45
2005 83,440 11.71 10.09
Partners MidCap Value
2006 30,020 1.80 1.36
2005 15,530 2.25 3.05
2004 4,725 1.09 1.15
Partners MidCap Value
I
2006 16,080 2.02 2.61
2005 18,104 2.75 3.01
2004 20,186 7.05 6.83
Partners SmallCap
Blend
2006 24,326 3.19 4.14
2005 38,170 5.24 3.88
2004 19,996 4.45 3.09
Partners SmallCap
Growth I
2006 11,344 3.66 2.99
2005 12,060 3.57 2.77
2004 16,074 5.78 5.38
Partners SmallCap
Growth II
2006 5,304 0.31 0.35
2005 7,342 0.88 2.01
2004 15,281 2.83 2.64
Partners SmallCap
Growth III
2006 46 0.01 0.04
2004 40 0.61 0.40
Partners SmallCap
Value
2006 264 0.06 0.04
2005 810 0.15 0.08
2004 7,845 2.55 2.44
Partners SmallCap
Value I
2006 28,082 4.53 6.95
2005 26,943 8.94 11.14
2004 15,622 8.71 9.04
Partners SmallCap
Value II
2006 5,011 1.02 4.62
2005 2,092 0.57 0.20
Real Estate
Securities
2006 3,309 0.41 0.34
2005 3,880 0.91 1.02
2004 14,994 2.30 4.41
SmallCap Blend
2006 19,316 2.11 2.30
2005 15,668 2.21 2.48
2004 9,516 2.96 2.04
SmallCap Growth
2006 2,186 1.52 1.89
2005 11,936 6.17 10.09
2004 10,379 5.87 7.46
SmallCap S&P 600
Index
2006 9,357 6.27 7.06
2005 13,696 14.78 19.26
2004 596 1.17 2.08
SmallCap Value
2006 19,826 3.12 3.43
2005 32,681 6.72 7.43
2004 14,495 4.60 4.76
COMMISSIONS PAID TO NATIONAL FINANCIAL SERVICES, LLC
----------------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
LargeCap Growth
2006 2,000 0.11 0.08
Partners LargeCap
Blend
2006 1,248 0.15 0.09
2004 1,365 0.13 0.05
Partners MidCap
Growth Fund II
2005 1,645 0.23 0.20
Partners MidCap Value
I
2004 1,547 0.54 2.31
Partners SmallCap
Value I
2006 919 0.15 0.13
2005 397 0.13 0.13
2004 3,680 2.05 1.29
Partners SmallCap
Value II
2005 623 0.17 0.12
COMMISSIONS PAID TO NEUBERGER BERMAN, LLC
-----------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners MidCap
Growth II
2006 7,197 0.59 0.47
2005 2,265 0.32 0.57
Partners MidCap Value
2005 2,710 0.39 0.24
2004 7,790 1.79 2.04
Partners SmallCap
Growth I
2006 22 0.01 0.01
Partners SmallCap
Value II
2005 1,871 0.51 0.23
COMMISSIONS PAID TO PERSHING, LLC
---------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
MidCap Growth
2006 4 0.00 0.00
Partners LargeCap
Growth I
2006 180 0.02 0.03
Partners LargeCap
Value
2006 76,921 11.10 8.20
Partners LargeCap
Value I
2006 461 0.13 0.06
Partners MidCap
Growth
2006 1,491 0.13 0.12
Partners MidCap Value
2006 3,845 0.23 0.10
Partners SmallCap
Growth II
2006 18,811 1.11 1.03
Partners SmallCap
Value II
2006 4,915 1.00 0.56
2005 713 0.19 0.19
COMMISSIONS PAID TO SANFORD C. BERNSTEIN & CO., LLC
---------------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 3,431 0.21 0.30
2005 15,010 3.42 1.75
2004 4,965 12.48 7.51
Diversified
International
2006 4,572 0.17 0.16
2004 867 0.14 0.14
International
Emerging Markets
2006 927 0.05 0.11
International Growth
2004 1,277 0.06 0.04
LargeCap Growth
2006 13,320 0.75 0.66
2005 5,067 0.63 0.66
2004 16,900 8.70 10.84
LargeCap Value
2006 15,902 1.19 1.36
2005 10,195 1.29 0.70
2004 3,983 0.61 0.50
MidCap Blend
2006 13,377 1.36 1.12
2005 8,009 1.56 1.25
2004 7,220 4.61 5.21
MidCap Growth
2006 798 0.79 0.84
2005 94 0.10 0.13
2004 8,455 4.04 4.47
MidCap S&P 400 Index
2004 79 0.52 0.44
MidCap Value
2006 748 0.27 0.21
2005 1,994 0.51 0.41
2004 5,605 1.23 1.24
Partners Global
Equity
2006 1,299 3.88 2.52
2005 760 6.44 3.74
Partners
International
2006 438 0.03 0.01
2005 451 0.05 0.04
2004 330 0.16 0.12
Partners LargeCap
Blend
2006 18,928 2.27 2.37
2005 30,046 3.87 3.20
2004 11,745 1.10 0.82
Partners
LargeCap Blend I
2006 1,658 1.62 1.00
2004 185 1.83 0.66
Partners LargeCap
Growth I
2006 16,311 1.59 1.07
2005 20,738 1.83 1.12
2004 52,359 2.14 1.62
Partners LargeCap
Growth II
2006 115,977 9.01 21.44
2005 48,496 6.03 8.15
2004 10,027 4.15 2.54
Partners LargeCap
Value
2006 112,304 16.20 9.42
2005 590,920 57.48 54.85
2004 992,248 69.01 68.44
Partners LargeCap
Value I
2006 5,312 1.49 1.58
2005 538 0.18 0.13
Partners LargeCap
Value II
2006 9,421 36.81 54.26
2005 4,424 6.63 9.89
Partners MidCap
Growth
2006 926 0.08 0.04
2005 3,955 0.70 0.36
Partners MidCap
Growth I
2006 14,180 2.00 3.02
2005 527 0.11 0.18
Partners MidCap Value
2006 43,075 2.58 2.00
2005 28,860 4.19 3.66
2004 16,204 3.73 3.30
Partners MidCap Value
I
2006 17,230 2.17 2.72
2005 33,305 5.06 6.91
2004 10,118 3.53 3.28
Partners SmallCap
Blend
2006 14,871 1.95 3.54
2005 792 0.11 0.12
2004 25 0.01 0.00
Partners SmallCap
Growth II
2006 240 0.01 0.09
2005 1,555 0.19 0.36
2004 85 0.02 0.01
Partners SmallCap
Value
2004 1,318 0.43 0.74
Partners SmallCap
Value I
2006 28,907 4.66 6.43
2005 9,991 3.31 4.09
2004 1,431 0.80 0.60
Partners SmallCap
Value II
2006 554 0.11 0.08
Real Estate
Securities
2005 210 0.05 0.06
SmallCap Blend
2006 4,387 0.48 0.53
2005 4,428 0.63 0.97
2004 36,320 11.31 14.24
SmallCap Growth
2006 90 0.06 0.04
2005 452 0.23 0.28
2004 1,556 0.88 1.30
SmallCap S&P 600
Index
2004 40 0.08 0.13
SmallCap Value
2006 1,422 0.22 0.22
2005 2,574 0.53 0.47
2004 1,538 0.49 0.71
COMMISSIONS PAID TO SPECTRUM ASSET MANAGEMENT
---------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Preferred Securities
2006 346,026 99.99 99.99
2005 191,079 100.00 100.00
2004 160,934 100.00 100.00
COMMISSIONS PAID TO UBS FINANCIAL SERVICES
------------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Partners LargeCap
Blend
2005 115 0.01 0.01
Partners MidCap
Growth
2004 314 0.14 0.09
Partners MidCap
Growth I
2006 1,060 0.15 0.09
Partners SmallCap
Growth II
2006 1,092 0.06 0.06
2005 1,720 0.21 0.18
2004 115 0.02 0.01
Partners SmallCap
Value
2005 7,022 1.31 1.13
Partners SmallCap
Value I
2004 54 0.03 0.08
Partners SmallCap
Value II
2006 369 0.08 0.23
2005 1,102 0.30 0.34
COMMISSIONS PAID TO UBS SECURITIES LLC
--------------------------------------
TOTAL DOLLAR AS PERCENT OF PERCENT OF DOLLAR AMOUNT OF
FUND AMOUNT TOTAL COMMISSIONS COMMISSIONABLE TRANSACTIONS
---- ------ ----------------- ---------------------------
Disciplined LargeCap
Blend
2006 140,705 8.68 11.26
2005 21,359 4.86 4.35
2004 2,022 5.08 5.73
Diversified
International
2006 279,876 10.29 11.05
2005 199,103 15.27 21.82
2004 94,095 15.44 18.62
International
Emerging Markets
2006 159,729 8.85 9.11
2005 107,366 12.12 14.60
2004 34,207 11.66 14.42
International Growth
2006 532,972 13.26 15.54
2005 265,102 10.62 22.68
2004 247,510 12.23 17.36
LargeCap Growth
2006 78,317 4.41 4.42
2005 29,522 3.67 3.06
2004 4,136 2.13 2.13
LargeCap S&P 500
Index
2006 42 0.11 0.39
2005 303 0.63 0.70
2004 1,867 1.29 1.27
LargeCap Value
2006 86,070 6.41 6.83
2005 68,115 8.62 8.84
2004 66,694 10.14 14.20
MidCap Blend
2006 53,996 5.48 3.78
2005 24,246 4.73 4.54
2004 21,565 13.78 19.01
MidCap Growth
2006 667 0.66 1.20
2005 1,081 1.20 0.95
2004 14,723 7.04 9.72
MidCap S&P 400 Index
2006 168 0.47 0.58
2005 1,869 6.75 7.86
2004 586 3.86 3.58
MidCap Value
2006 24,249 8.70 8.31
2005 31,806 8.14 8.99
2004 52,745 11.56 14.44
Partners Global
Equity
2006 6,173 18.42 20.24
2005 587 4.97 2.36
Partners
International
2006 145,642 8.47 10.13
2005 104,532 10.44 11.15
2004 21,542 10.14 10.54
Partners LargeCap
Blend
2006 34,559 4.14 3.35
2005 51,392 6.61 5.87
2004 75,820 7.10 5.00
Partners
LargeCap Blend I
2006 3,439 3.36 1.19
2005 1,343 4.69 3.11
2004 160 1.58 1.16
Partners LargeCap
Growth I
2006 117,888 11.50 9.21
2005 98,554 8.68 9.04
2004 105,387 4.30 4.49
Partners LargeCap
Growth II
2006 29,708 2.31 1.19
2005 8,269 1.03 0.79
2004 2,318 0.96 0.49
Partners LargeCap
Value
2006 12,050 1.74 1.25
2005 36,713 3.57 8.38
2004 46,454 3.23 3.94
Partners LargeCap
Value I
2006 2,950 0.83 0.32
2005 7,800 2.66 2.19
2004 70 1.20 0.97
Partners LargeCap
Value II
2006 356 1.39 0.43
2005 793 1.19 0.44
Partners MidCap
Growth
2006 43,507 3.86 3.20
2005 51,264 9.12 7.80
2004 967 0.44 0.35
Partners MidCap
Growth I
2006 2,595 0.37 0.17
2005 4,112 0.86 0.76
Partners MidCap
Growth II
2006 50,494 4.15 3.61
2005 10,476 1.47 1.32
Partners MidCap Value
2006 23,405 1.40 0.76
2005 8,684 1.26 1.15
2004 9,142 2.10 1.96
Partners MidCap Value
I
2006 40,376 5.08 4.14
2005 21,555 3.27 3.08
2004 18,818 6.57 4.78
Partners SmallCap
Blend
2006 2,356 0.31 0.17
2004 3,960 0.88 0.81
Partners SmallCap
Growth I
2006 56,527 18.23 21.61
2005 38,040 11.25 14.58
2004 19,319 6.95 7.34
Partners SmallCap
Growth II
2006 2,687 0.16 0.07
2005 7,589 0.91 1.74
Partners SmallCap
Growth III
2005 3,746 0.93 0.92
2004 321 4.87 5.06
Partners SmallCap
Value
2006 892 0.20 0.34
2005 8,271 1.54 0.91
2004 2,550 0.83 0.28
Partners SmallCap
Value I
2006 3,343 0.54 0.36
2005 10,338 3.43 2.22
2004 8,374 4.67 2.48
Partners SmallCap
Value II
2006 20,462 4.18 2.49
2005 18,866 5.14 2.75
Real Estate
Securities
2006 16,168 2.02 2.44
2005 14,706 3.46 5.72
2004 41,888 6.42 5.61
SmallCap Blend
2006 24,771 2.71 3.45
2005 28,548 4.03 5.01
2004 20,016 6.23 8.45
SmallCap Growth
2006 13,568 9.44 14.27
2005 14,810 7.65 7.51
2004 12,301 6.95 16.23
SmallCap S&P 600
Index
2006 3,052 2.04 1.82
2005 272 0.29 0.74
2004 732 1.44 2.37
SmallCap Value
2006 119,507 18.79 24.15
2005 69,871 14.37 17.74
2004 18,328 5.82 7.85
ALLOCATION OF TRADES BY THE SUB-ADVISORS AND SUB-SUB-ADVISORS
Each Sub-Advisor and Sub-Sub-Advisor manages a number of accounts other than the
Fund's portfolios. Each has adopted and implemented policies and procedures that
it believes address the potential conflicts associated with managing accounts
for multiple clients and ensures that all clients are treated fairly and
equitably.
Investments the Sub-Advisor or Sub-Sub-Advisor deems appropriate for the Fund's
portfolio may also be deemed appropriate by it for other accounts. Therefore,
the same security may be purchased or sold at or about the same time for both
the Fund's portfolio and other accounts. In such circumstances, the Sub-Advisor
or Sub-Sub-Advisor may determine that orders for the purchase or sale of the
same security for the Fund's portfolio and one or more other accounts should be
combined. In this event the transactions will be priced and allocated in a
manner deemed by the Sub-Advisor or Sub-Sub-Advisor to be equitable and in the
best interests of the Fund portfolio and such other accounts. While in some
instances combined orders could adversely affect the price or volume of a
security, the Fund believes that its participation in such transactions on
balance will produce better overall results for the Fund.
PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
Participating insurance companies and certain other designated organizations are
authorized to receive purchase orders on the Funds' behalf and those
organizations are authorized to designate their agents and affiliates as
intermediaries to receive purchase orders. Purchase orders are deemed received
by a Fund when authorized organizations, their agents or affiliates receive the
order. The Funds are not responsible for the failure of any designated
organization or its agents or affiliates to carry out its obligations to its
customers. Class A shares of the Funds are purchased at their public offering
price and other shares of the Funds are purchased at the net asset value ("NAV")
per share, as determined at the close of the regular trading session of the NYSE
next occurring after a purchase order is received and accepted by an authorized
agent of a Fund. In order to receive a day's price, an order must be received in
good order by the close of the regular trading session of the NYSE as described
below in "Pricing of Fund Shares."
SALES OF SHARES
Payment for shares tendered for redemption is ordinarily made in cash. The Board
may determine, however, that it would be detrimental to the remaining
shareholders to make payment of a redemption order wholly or partly in cash. The
Fund may, therefore, pay the redemption proceeds in whole or in part by a
distribution "in kind" of securities from the Fund's portfolio in lieu of cash.
If the Fund pays the redemption proceeds in kind, the redeeming shareholder
might incur brokerage or other costs in selling the securities for cash. The
Fund will value securities used to pay redemptions in kind using the same method
the Fund uses to value its portfolio securities as described below in "Pricing
of Fund Shares."
The right to require the Funds to redeem their shares may be suspended, or the
date of payment may be postponed, whenever: 1) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed except for holidays
and weekends; 2) the SEC permits such suspension and so orders; or 3) an
emergency exists as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
Certain designated organizations are authorized to receive sell orders on the
Fund's behalf and those organizations are authorized to designate their agents
and affiliates as intermediaries to receive redemption orders. Redemption orders
are deemed received by the Fund when authorized organizations, their agents or
affiliates receive the order. The Fund is not responsible for the failure of any
designated organization or its agents or affiliates to carry out its obligations
to its customers.
Principal Management Corporation (the "Manager") may recommend to the Board, and
the Board may elect, to close certain funds to new investors or close certain
funds to new and existing investors. The Manager may make such a recommendation
when a fund approaches a size where additional investments in the fund have the
potential to adversely impact fund performance and make it increasingly
difficult to keep the fund fully invested in a manner consistent with its
investment objective.
PRICING OF FUND SHARES
Each Fund's shares are bought and sold at the current net asset value ("NAV")
per share. Each Fund's NAV for each class is calculated each day the New York
Stock Exchange ("NYSE") is open, as of the close of business of the Exchange
(normally 3:00 p.m. Central Time). The NAV of Fund shares is not determined on
days the NYSE is closed (generally, New Year's Day, Martin Luther King, Jr. Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas). When an order to buy or sell shares is
received, the share price used to fill the order is the next price calculated
after the order is received in proper form.
For all Funds except the Money Market Fund, the share price is calculated by:
. taking the current market value of the total assets of the Fund
. subtracting liabilities of the Fund
. dividing the remainder proportionately into the classes of the Fund
. subtracting the liability of each class
. dividing the remainder by the total number of shares owned in that class.
In determining NAV, securities listed on an Exchange, the NASDAQ National Market
and foreign markets are valued at the closing prices on such markets, or if such
price is lacking for the trading period immediately preceding the time of
determination, such securities are valued at their current bid price.
Municipal securities held by the Funds are traded primarily in the
over-the-counter market. Valuations of such securities are furnished by one or
more pricing services employed by the Funds and are based upon appraisals
obtained by a pricing service, in reliance upon information concerning market
transactions and quotations from recognized municipal securities dealers.
Other securities that are traded on the over-the-counter market are valued at
their closing bid prices. Each Fund will determine the market value of
individual securities held by it, by using prices provided by one or more
professional pricing services which may provide market prices to other funds,
or, as needed, by obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days are valued on an amortized cost
basis. Securities for which quotations are not readily available, and other
assets, are valued at fair value determined in good faith under procedures
established by and under the supervision of the Board of Directors.
A Fund's securities may be traded on foreign securities markets that close each
day prior to the time the NYSE closes. In addition, foreign securities trading
generally or in a particular country or countries may not take place on all
business days in New York. The Fund has adopted policies and procedures to "fair
value" some or all securities held by a Fund if significant events occur after
the close of the market on which the foreign securities are traded but before
the Fund's NAV is calculated. Significant events can be specific to a single
security or can include events that impact a particular foreign market or
markets. A significant event can also include a general market movement in the
U.S. securities markets. These fair valuation procedures are intended to
discourage shareholders from investing in the Fund for the purpose of engaging
in market timing or arbitrage transactions. The values of foreign securities
used in computing share price are determined at the time the foreign market
closes. Foreign securities and currencies are converted to U.S. dollars using
the exchange rate in effect at the close of the NYSE. Occasionally, events
affecting the value of foreign securities occur when the foreign market is
closed and the NYSE is open. The NAV of a Fund investing in foreign securities
may change on days when shareholders are unable to purchase or redeem shares. If
the Sub-Advisor believes that the market value is materially affected, the share
price will be calculated using the policy adopted by the Fund.
Certain securities issued by companies in emerging market countries may have
more than one quoted valuation at any point in time, sometimes referred to as a
"local" price and a "premium" price. The premium price is often a negotiated
price which may not consistently represent a price at which a specific
transaction can be effected. It is the policy of the Funds to value such
securities at prices at which it is expected those shares may be sold, and the
Manager or any Sub-Advisor is authorized to make such determinations subject to
the oversight of the Board of Directors as may from time to time be necessary.
Money Market Fund
-----------------
The share price of each Class of shares of the Money Market Fund is determined
at the same time and on the same days as the Funds described above. All
securities held by the Money Market Fund are valued on an amortized cost basis.
Under this method of valuation, a security is initially valued at cost;
thereafter, the Fund assumes a constant proportionate amortization in value
until maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price that
would be received upon sale of the security.
Use of the amortized cost valuation method by the Money Market Fund requires the
Fund to maintain a dollar weighted average maturity of 90 days or less and to
purchase only obligations that have remaining maturities of 397 days or less or
have a variable or floating rate of interest. In addition, the Fund invests only
in obligations determined by the Directors to be of high quality with minimal
credit risks.
The Board of Directors has established procedures for the Money Market Fund
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such
procedures include a directive to the Sub-Advisor to test price the portfolio or
specific securities on a weekly basis
using a mark-to-market method of valuation to determine possible deviations in
the net asset value from $1.00 per share. If such deviation exceeds 1/2 of 1%,
the Board of Directors promptly considers what action, if any, will be
initiated. In the event the Board of Directors determines that a deviation
exists which may result in material dilution or other unfair results to
shareholders, it takes such corrective action as it regards as appropriate,
including: sale of portfolio instruments prior to maturity; the withholding of
dividends; redemptions of shares in kind; the establishment of a net asset value
per share based upon available market quotations; or splitting, combining or
otherwise recapitalizing outstanding shares. The Fund may also reduce the number
of shares outstanding by redeeming proportionately from shareholders, without
the payment of any monetary compensation, such number of full and fractional
shares as is necessary to maintain the net asset value at $1.00 per share.
TAXATION OF THE FUNDS
It is a policy of the Funds to make distributions of substantially all of their
respective investment income and any net realized capital gains. The Funds
intend to qualify as regulated investment companies by satisfying certain
requirements prescribed by Subchapter M of the Internal Revenue Code. If a Fund
fails to qualify as a regulated investment company, it will be liable for taxes,
significantly reducing its distributions to shareholders and eliminating
shareholders' ability to treat distributions (as long or short-term capital
gains) of the Fund in the manner they were received by the Fund.
All income dividends and capital gains distributions, if any, on a Fund's
Advisors Select, Advisors Preferred, Advisors Signature, Select, Preferred, and
Institutional class shares are reinvested automatically in additional shares of
the same class of the same Fund. Dividends and capital gains distributions, if
any, on a Fund's Class A, Class B, Class C, and Class J shares are reinvested
automatically in additional shares of the same Class of shares of the same Fund
unless the shareholder elects to take dividends in cash. The reinvestment will
be made at the NAV determined on the first business day following the record
date.
Certain Funds may purchase securities of certain foreign corporations considered
to be passive foreign investment companies by the Internal Revenue Service. In
order to avoid taxes and interest that must be paid by the Funds if these
instruments appreciate in value, the Funds may make various elections permitted
by the tax laws. However, these elections could require that the Funds recognize
taxable income, which in turn must be distributed.
The Fund is required in certain cases to withhold and remit to the U.S. Treasury
30.0% of ordinary income dividends and capital gain dividends, and the proceeds
of redemption of shares, paid to any shareholder 1) who has provided either an
incorrect tax identification number or no number at all, 2) who is subject to
backup withholding by the Internal Revenue Service for failure to report the
receipt of interest or dividend income properly, or 3) who has failed to certify
to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
A shareholder recognizes gain or loss on the sale or redemption of shares of the
Fund in an amount equal to the difference between the proceeds of the sales or
redemption and the shareholder's adjusted tax basis in the shares. All or a
portion of any loss so recognized may be disallowed if the shareholder purchases
other shares of the Fund within 30 days before or after the sale or redemption.
In general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of the Fund is considered capital gain or loss
(long-term capital gain or loss if the shares were held for longer than one
year). However, any capital loss arising from the sales or redemption of shares
held for six months or less is disallowed to the extent of the amount of
exempt-interest dividends received on such shares and (to the extent not
disallowed) is treated as a long-term capital loss to the extent of the amount
of capital gain dividends received on such shares. Capital losses in any year
are deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder a) incurs a sales charge in acquiring shares of the Fund, b)
disposes of such shares less than 91 days after they are acquired, and c)
subsequently acquires shares of the Fund or another fund at a reduced sales
charge pursuant to a right to reinvest at such reduced sales charge acquired in
connection with the acquisition of the shares disposed of, then the sales charge
on the shares disposed of (to the extent of the reduction in the sales charge on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Shareholders should consult their own tax advisors as to the federal, state and
local tax consequences of ownership of shares of the Funds in their particular
circumstances.
SPECIAL TAX CONSIDERATIONS
Municipal Funds
---------------
Each of the Municipal Funds also intends to qualify to pay "exempt-interest
dividends" to its shareholders. An exempt-interest dividend is that part of
dividend distributions made by the Fund which consist of interest received by
that Fund on tax-exempt Municipal Obligations. Shareholders incur no federal
income taxes on exempt-interest dividends. However, these exempt-interest
dividends may be taxable under state or local law. Fund shareholders that are
corporations must include exempt-interest dividends in determining whether they
are subject to the corporate alternative minimum tax. Exempt-interest dividends
that derive from certain private activity bonds must be included by individuals
as a preference item in determining whether they are subject to the alternative
minimum tax. The Fund may also pay ordinary income dividends and distribute
capital gains from time to time. Ordinary income dividends and distributions of
capital gains, if any, are taxable for federal purposes.
If a shareholder receives an exempt-interest dividend with respect to shares of
the Funds held for six months or less, then any loss on the sale or exchange of
such shares, to the extent of the amount of such dividend, is disallowed. If a
shareholder receives a capital gain dividend with respect to shares held for six
months or less, then any loss on the sale or exchange of such shares is treated
as a long term capital loss to the extent the loss exceeds any exempt-interest
dividend received with respect to such shares, and is disallowed to the extent
of such exempt-interest dividend.
Interest on indebtedness incurred or continued by a shareholder to purchase or
carry shares of this Fund is not deductible. Furthermore, entities or persons
who are "substantial users" (or related persons) under Section 147(a) of the
Internal Revenue Code of facilities financed by private activity bonds should
consult their tax advisors before purchasing shares of the Fund.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Obligations. If legislation is enacted that eliminates or
significantly reduces the availability of Municipal Obligations, it could
adversely affect the ability of the Fund to continue to pursue its investment
objectives and policies. In such event, the Fund would reevaluate its investment
objectives and policies.
International Funds
-------------------
Some foreign securities purchased by the Funds may be subject to foreign taxes
that could reduce the yield on such securities. The amount of such foreign taxes
is expected to be insignificant. The Funds may from year to year make the
election permitted under Section 853 of the Internal Revenue Code to pass
through such taxes to shareholders. If such election is not made, any foreign
taxes paid or accrued will represent an expense to each affected Fund that will
reduce its investment company taxable income.
Futures Contracts and Options
-----------------------------
As previously discussed, some of the Funds invest in futures contracts or
options thereon, index options, or options traded on qualified exchanges. For
federal income tax purposes, capital gains and losses on futures contracts or
options thereon, index options or options traded on qualified exchanges are
generally treated as 60% long-term and 40% short-term. In addition, the Funds
must recognize any unrealized gains and losses on such positions held at the end
of the fiscal year. A Fund may elect out of such tax treatment, however, for a
futures or options position that is part of an "identified mixed straddle" such
as a put option purchased with respect to a portfolio security. Gains and losses
on futures and options included in an identified mixed straddle are considered
100% short-term and unrealized gains or losses on such positions are not
realized at year-end. The straddle provisions of the Code may require the
deferral of realized losses to the extent that a Fund has unrealized gains in
certain offsetting positions at the end of the fiscal year. The Code may also
require recharacterization of all or a part of losses on certain offsetting
positions from short-term to long-term, as well as adjustment of the holding
periods of straddle positions.
PORTFOLIO HOLDINGS DISCLOSURE
The Fund publishes month-end portfolio holdings information for each of the
Fund's portfolios on the principal.com website on the last business day of the
following month. The Funds may also occasionally publish information on the
website relating to specific events, such as the impact of a natural disaster,
corporate debt default or similar events on portfolio holdings. In addition,
composite portfolio holdings information for the Money Market Fund is published
each week as of the prior week on the principalglobal.com website. It is the
Fund's policy to disclose only public information regarding portfolio holdings
(i.e. information published on the website or filed with the SEC), except as
described below.
POLICY. . The Fund and Principal have adopted a policy of disclosing non-public
portfolio holdings information to third parties only to the extent required by
federal law, and to the following third parties, so long as such third party has
agreed, or is legally obligated, to maintain the confidentiality of the
information and to refrain from using such information to engage in securities
transactions:
1) Daily to the Fund's portfolio pricing services, FT Interactive Data
Corporation, J.J. Kenny and Bear Stearns, to obtain prices for portfolio
securities;
2) Upon proper request to government regulatory agencies or to self regulatory
organizations;
3) As needed to Ernst & Young LLP, the independent registered public accounting
firm, in connection with the performance of the services provided by Ernst &
Young LLP to the Fund;
4) To the sub-advisers' proxy service providers (Institutional Shareholder
Services and Automatic Data Processing) to facilitate voting of proxies; and
5) To the Fund's custodian, Bank of New York, in connection with the services
provided by the custodian to the Fund.
The Fund is also permitted to enter into arrangements to disclose portfolio
holdings to other third parties in connection with the performance of a
legitimate business purpose if such third party agrees in writing to maintain
the confidentiality of the information prior to the information being disclosed.
Any such written agreement must be approved by an officer of the Fund, the
Manager or the Fund's sub-advisor. Approval must be based on a reasonable belief
that disclosure to such other third party is in the best interests of the Fund's
shareholders. If a conflict of interest is identified in connection with
disclosure to any such third party, the Fund's or the Manager's Chief Compliance
Officer ("CCO") must approve such disclosure, in writing before it occurs. Such
third parties currently include:
Bloomberg, LP Frank Russell Company
Check Free Investment Services Hub Data
Confluence Technologies, Inc. Investment Company Institute
Depository Trust Co. ix Partners, Ltd.
Eagle Investment Systems J.P. Morgan Investor Services
EzE Castle Software LLC Mellon Trust
FactSet Research Systems PFPC
Financial Model Co. Russell Implementation Services
Frank Russell Securities, Inc. R.R. Donnelley and Sons Company
Any agreement by which any Fund or any party acting on behalf of the Fund agrees
to provide Fund portfolio information to a third party, other than a third party
identified in the policy described above, must be approved prior to information
being provided to the third party, unless the third party is a regulator or has
a duty to maintain the confidentiality of such information and to refrain from
using such information to engage in securities transactions. A written record of
approval will be made by the person granting approval.
The Fund may also disclose to Edge, non-public portfolio holdings information
relating to the Underlying Funds in which the SAM portfolios invest to
facilitate Edge's management of the SAM portfolios. Edge may use underlying Fund
portfolio holdings information of funds managed by unaffiliated advisory firms
solely for the purpose of managing the SAM portfolios.
The Fund's non-public portfolio holdings information policy applies without
variation to individual investors, institutional investors, intermediaries that
distribute the Fund's shares, third party service providers, rating and ranking
organizations, and affiliated persons of the Fund. Neither the Fund nor the
Manager nor any other party receive compensation in connection with the
disclosure of Fund portfolio information. The Fund's CCO will periodically, but
no less frequently than annually, review the Fund's portfolio holdings
disclosure policy and recommend changes the CCO believes are appropriate, if
any, to the Fund's Board of Directors. In addition, the Fund's Board of
Directors must approve any change in the Fund's portfolio holdings disclosure
policy that would expand the distribution of such information.
PROXY VOTING POLICIES AND PROCEDURES
The Board of Directors has delegated responsibility for decisions regarding
proxy voting for securities held by each Fund to that Fund's Sub-Advisor or
Sub-Sub-Advisor. The Sub-Advisor will vote such proxies in accordance with its
proxy policies and procedures, which have been reviewed by the Board of
Directors, and which are found in Appendix B. Any material changes to the proxy
policies and procedures will be submitted to the Board of Directors for
approval.
The Principal LifeTime Funds and SAM Portfolios invest in shares of other Funds.
Principal is authorized to vote proxies related to the underlying funds. If an
underlying fund holds a shareholder meeting, in order to avoid any potential
conflict of interest, Principal will vote shares of such fund on any proposal
submitted to the fund's shareholders in the same proportion as the votes of
other shareholders of the underlying fund.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12 month period ended June 30, 2007, is
available, without charge, upon request, by calling 1-800-222-5852 or on the SEC
website at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the Funds for the fiscal year ended October 31,
2006, are incorporated herein by reference to the Funds' Annual Reports. The
financial statements of the Funds for the period ended April 30, 2007, are
incorporated herein by reference to the Funds' Semiannual Reports.
The financial statements of the predecessor funds of California Insured
Intermediate Municipal Fund, California Municipal Bond Fund, Equity Income Fund
I, High Yield Fund II, Income Fund, MidCap Stock Fund, Mortgage Securities Fund,
Short-Term Income Fund, Tax-Exempt Bond Fund I, West Coast Equity Fund, SAM
Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth
Portfolio, SAM Flexible Income Portfolio and SAM Strategic Growth Portfolio for
the fiscal year ended October 31, 2006 are incorporated herein by reference to
the predecessor funds Annual Reports.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
The financial statements of the Funds for the fiscal year ended October, 31,
2006, have been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
The financial statements of the predecessor funds of California Insured
Intermediate Municipal Fund, California Municipal Bond Fund, Equity Income Fund
I, High Yield Fund II, Income Fund, MidCap Stock Fund, Mortgage Securities Fund,
Short-Term Income Fund, Tax-Exempt Bond Fund I, West Coast Equity Fund, SAM
Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth
Portfolio, SAM Flexible Income Portfolio and SAM Strategic Growth Portfolio for
the fiscal year ended October, 31, 2006, including the related financial
highlights which appear in the Funds' Prospectuses, have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
GENERAL INFORMATION
MIDCAP S&P 400 INDEX FUND, LARGECAP S&P 500 INDEX FUND, AND SMALLCAP S&P 600
INDEX FUND ONLY
The Funds are not sponsored, endorsed, sold, or promoted by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation
or warranty, express or implied, to Fund shareholders or any member of the
public regarding the advisability of investing in securities generally or in the
Funds particularly or the ability of the S&P 500 Index, S&P MidCap 400 Index, or
S&P SmallCap 600 Index to track general stock market performance. S&P's only
relationship to the Principal Life Insurance Company and the Manager is the
licensing of certain trademarks and trade names of S&P and the S&P 500 Index,
S&P MidCap 400 Index, and S&P SmallCap 600 Index which are determined, composed,
and calculated by S&P without regard to Principal Life Insurance Company, the
Manager, or the Funds. S&P has no obligation to take the needs of Principal Life
Insurance Company, the Manager or Fund shareholders into consideration in
determining, composing or calculating the S&P 500 Index, the S&P MidCap 400
Index, or the S&P SmallCap 600 Index. S&P is not responsible for and has not
participated in the determination of the prices of the Funds or the timing of
the issuance or sale of the Funds or in the determination or calculation of the
equation by which the Funds are to be converted into cash. S&P has no obligation
or liability in connection with the administration, marketing, or trading of the
Funds.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX, S&P MIDCAP 400 INDEX, OR S&P SMALLCAP 600 INDEX OR ANY DATA CONTAINED
THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY PRINCIPAL LIFE INSURANCE COMPANY, THE MANAGER, FUND
SHAREHOLDERS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX,
THE S&P MIDCAP 400 INDEX, OR THE S&P SMALLCAP 600 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIES WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX OR THE S&P SMALLCAP 600
INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
DISCLOSURE REGARDING PORTFOLIO MANAGERS
Appendix C outlines information relating to the portfolio managers responsible
for day-to-day portfolio management as of the end of the most recent fiscal year
unless otherwise noted.
APPENDIX A
Description of Bond Ratings:
Moody's Investors Service, Inc. Rating Definitions:
Long-Term Obligation Ratings
Moody's long-term obligation ratings are opinions of the relative credit risk of
fixed-income obligations with an original maturity of one year or more. They
address the possibility that a financial obligation will not be honored as
promised. Such ratings reflect both the likelihood of default and any financial
loss suffered in the event of default.
Aaa: Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.
Aa: Obligations rated Aa are judged to be of high quality and are subject to
very low credit risk.
A: Obligations rated A are considered upper-medium grade and are subject to
low credit risk.
Baa: Obligations rated Baa are subject to moderate credit risk. They are
considered medium-grade and as such may possess certain speculative
characteristics.
Ba: Obligations rated Ba are judged to have speculative elements and are
subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high
credit risk.
Caa: Obligations rated Caa are judged to be of poor standing and are subject to
very high credit risk.
Ca: Obligations rated Ca are highly speculative and are likely in, or very
near, default, with some prospect of recovery of principal and interest.
C: Obligations rated C are the lowest rated class of bonds and are typically
in default, with little prospect for recovery of principal or interest.
NOTE: Moody's appends numerical modifiers, 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category, the modifier 2 indicates
a mid-range ranking, and the modifier 3 indicates a ranking in the lower end of
that generate rating category.
SHORT-TERM NOTES: The four ratings of Moody's for short-term notes are MIG 1,
MIG 2, MIG 3, and MIG 4. MIG 1 denotes "best quality, enjoying strong protection
from established cash flows." MIG 2 denotes "high quality" with "ample margins
of protection." MIG 3 notes are of "favorable quality...but lacking the
undeniable strength of the preceding grades." MIG 4 notes are of "adequate
quality, carrying specific risk for having protection...and not distinctly or
predominantly speculative."
Description of Moody's Commercial Paper Ratings:
Moody's Commercial Paper ratings are opinions of the ability to repay punctually
promissory obligations not having an original maturity in excess of nine months.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment capacity of rated issuers:
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations.
Issuers rated Prime-3 (or related supporting institutions) have an acceptable
capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
Description of Standard & Poor's Corporation's Debt Ratings:
A Standard & Poor's debt rating is a current assessment of the creditworthiness
of an obligor with respect to a specific obligation. This assessment may take
into consideration obligors such as guarantors, insurers, or lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or obtained
by Standard & Poor's from other sources Standard & Poor's considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended, or withdrawn as a result of changes in, or unavailability
of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default -- capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws of
bankruptcy and other laws affecting creditor's rights.
AAA: Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.
A: Debt rated "A" has a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.
BBB: Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher-rated categories.
BB, B, CCC, CC: Debt rated "BB," "B," "CCC," and "CC" is regarded, on balance,
as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "CC"
the highest degree of speculation. While such debt will likely have
some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
C: The rating "C" is reserved for income bonds on which no interest is being
paid.
D: Debt rated "D" is in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not
rate a particular type of obligation as a matter of policy.
Standard & Poor's, Commercial Paper Ratings
A Standard & Poor's Commercial Paper Rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. Ratings are applicable to
both taxable and tax-exempt commercial paper. The four categories are as
follows:
A: Issues assigned the highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2, and 3 to indicate the relative degree of safety.
A-1: This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Issues that possess
overwhelming safety characteristics will be given a "+" designation.
A-2: Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated "A-1."
A-3: Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the highest
designations.
B: Issues rated "B" are regarded as having only an adequate capacity for
timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D: This rating indicates that the issue is either in default or is expected to
be in default upon maturity.
The Commercial Paper Rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended, or withdrawn as a
result of changes in or unavailability of, such information.
Standard & Poor's rates notes with a maturity of less than three years as
follows:
SP-1: A very strong, or strong, capacity to pay principal and interest. Issues
that possess overwhelming safety characteristics will be given a "+"
designation.
SP-2: A satisfactory capacity to pay principal and interest.
SP-3: A speculative capacity to pay principal and interest.
APPENDIX B
PROXY VOTING POLICIES
The Proxy voting policies applicable to each Fund follows.
APPENDIX B
PROXY VOTING POLICIES
The Proxy voting policies applicable to each Fund follows.
OCTOBER 2005
ALLIANCE CAPITAL MANAGEMENT L.P.
STATEMENT OF POLICIES AND PROCEDURES FOR PROXY VOTING
INTRODUCTION
As a registered investment adviser, Alliance Capital Management L.P. ("Alliance
Capital", "we" or "us") has a fiduciary duty to act solely in the best interests
of our clients. We recognize that this duty requires us to vote client
securities in a timely manner and make voting decisions that are in the best
interests of our clients. Consistent with these obligations, we will disclose
our clients' voting records only to them and as required by mutual fund vote
disclosure regulations. In addition, the proxy committees may, after careful
consideration, choose to respond to surveys regarding past votes.
This statement is intended to comply with Rule 206(4)-6 of the Investment
Advisers Act of 1940. It sets forth our policies and procedures for voting
proxies for our discretionary investment advisory clients, including investment
companies registered under the Investment Company Act of 1940. This statement
applies to Alliance Capital's growth and value investment groups investing on
behalf of clients in both US and non-US securities.
PROXY POLICIES
This statement is designed to be responsive to the wide range of proxy voting
subjects that can have a significant effect on the investment value of the
securities held in our clients' accounts. These policies are not exhaustive due
to the variety of proxy voting issues that we may be required to consider.
Alliance Capital reserves the right to depart from these guidelines in order to
avoid voting decisions that we believe may be contrary to our clients' best
interests. In reviewing proxy issues, we will apply the following general
policies:
CORPORATE GOVERNANCE: Alliance Capital's proxy voting policies recognize the
importance of good corporate governance in ensuring that management and the
board of directors fulfill their obligations to the shareholders. We favor
proposals promoting transparency and accountability within a company. We will
vote for proposals providing for equal access to the proxy materials so that
shareholders can express their views on various proxy issues. We also support
the appointment of a majority of independent directors on key committees and
separating the positions of chairman and chief executive officer. Finally,
because we believe that good corporate governance requires shareholders to have
a meaningful voice in the affairs of the company, we will support non-binding
shareholder proposals that request that companies amend their by-laws to provide
that director nominees be elected by an affirmative vote of a majority of the
votes cast.
ELECTIONS OF DIRECTORS: Unless there is a proxy fight for seats on the Board or
we determine that there are other compelling reasons for withholding votes for
directors, we will vote in favor of the management proposed slate of directors.
That said, we believe that directors have a duty to respond to shareholder
actions that have received significant shareholder support. We may withhold
votes for directors that fail to act on key issues such as failure to implement
proposals to declassify boards, failure to implement a majority vote
requirement, failure to submit a rights plan to a shareholder vote or failure to
act on tender offers where a majority of shareholders have tendered their
shares. In addition, we will withhold votes for directors who fail to attend at
least seventy-five percent of board meetings within a given year without a
reasonable excuse. Finally, we may withhold votes for directors of non-U.S.
issuers where there is insufficient information about the nominees disclosed in
the proxy statement.
APPOINTMENT OF AUDITORS: Alliance Capital believes that the company remains in
the best position to choose the auditors and will generally support management's
recommendation. However, we recognize that there may be inherent conflicts when
a company's independent auditor performs substantial non-audit related services
for the company. Although we recognize that there may be special circumstances
that could lead to high levels of non-audit fees in some years, we would
normally consider non-audit fees in excess of 70% of total fees paid to the
auditing firm to be disproportionate. Therefore, absent unique circumstances, we
may vote against the appointment of auditors if the fees for non-audit related
services exceed 70% of the total fees paid by the company to the auditing firm
or there are other reasons to question the independence of the company's
auditors.
CHANGES IN LEGAL AND CAPITAL STRUCTURE: Changes in a company's charter,
articles of incorporation or by-laws are often technical and administrative in
nature. Absent a compelling reason to the contrary, Alliance Capital will cast
its votes in accordance with the company's management on such proposals.
However, we will review and analyze on a case-by-case basis any non-routine
proposals that are likely to affect the structure and operation of the company
or have a material economic effect on the company. For example, we will
generally support proposals to increase authorized common stock when it is
necessary to implement a stock split, aid in a restructuring or acquisition or
provide a sufficient number of shares for an employee savings plan, stock option
or executive compensation plan. However, a satisfactory explanation of a
company's intentions must be disclosed in the proxy statement for proposals
requesting an increase of greater than one hundred percent of the shares
outstanding. We will oppose increases in authorized common stock where there is
evidence that the shares will be used to implement a poison pill or another form
of anti-takeover device.
CORPORATE RESTRUCTURINGS, MERGERS AND ACQUISITIONS: Alliance Capital believes
proxy votes dealing with corporate reorganizations are an extension of the
investment decision. Accordingly, we will analyze such proposals on a
case-by-case basis, weighing heavily the views of our research analysts that
cover the company and our investment professionals managing the portfolios in
which the stock is held.
PROPOSALS AFFECTING SHAREHOLDER RIGHTS: Alliance Capital believes that certain
fundamental rights of shareholders must be protected. We will generally vote in
favor of proposals that give shareholders a greater voice in the affairs of the
company and oppose any measure that seeks to limit those rights. However, when
analyzing such proposals we will weigh the financial impact of the proposal
against the impairment of shareholder rights.
ANTI-TAKEOVER MEASURES: Alliance Capital believes that measures that impede
corporate transactions such as takeovers or entrench management not only
infringe on the rights of shareholders but may also have a detrimental effect on
the value of the company. We will generally oppose proposals, regardless of
whether they are advanced by management or shareholders, the purpose or effect
of which is to entrench management or excessively or inappropriately dilute
shareholder ownership. Conversely, we support proposals that would restrict or
otherwise eliminate anti-takeover or anti-shareholder measures that have already
been adopted by corporate issuers. For example, we will support shareholder
proposals that seek to require the company to submit a shareholder rights plan
to a shareholder vote. We will evaluate, on a case-by-case basis, proposals to
completely redeem or eliminate such plans. Furthermore, we will generally oppose
proposals put forward by management (including the authorization of blank check
preferred stock, classified boards and supermajority vote requirements) that
appear to be anti-shareholder or intended as management entrenchment mechanisms.
EXECUTIVE COMPENSATION: Alliance Capital believes that company management and
the compensation committee of the board of directors should, within reason, be
given latitude to determine the types and mix of compensation and benefit awards
offered to company employees. Whether proposed by a shareholder or management,
we will review proposals relating to executive compensation plans on a
case-by-case basis to ensure that the long-term interests of management and
shareholders are properly aligned. In general, we will analyze the proposed
plans to ensure that shareholder equity will not be excessively diluted. With
regard to stock award or option plans, we consider whether the option exercise
prices are below the market price on the date of grant and whether an
acceptable number of employees are eligible to participate in such programs. We
will generally oppose plans that have below market value exercise prices on the
date of issuance or permit repricing of underwater stock options without
shareholder approval. Other factors such as the company's performance and
industry practice will generally be factored into our analysis. We will support
proposals requiring managements to submit severance packages that exceed 2.99
times the sum of an executive officer's base salary plus bonus that are
triggered by a change in control to a shareholder vote. Finally, we will
support shareholder proposals requiring companies to expense stock options
because we view them as a large corporate expense that should be appropriately
accounted for.
Social and Corporate Responsibility: Alliance Capital will review and analyze
on a case-by-case basis proposals relating to social, political and
environmental issues to determine whether they will have a financial impact on
shareholder value. We will vote against proposals that are unduly burdensome or
result in unnecessary and excessive costs to the company. We may abstain from
voting on social proposals that do not have a readily determinable financial
impact on shareholder value.
PROXY VOTING PROCEDURES
-----------------------
PROXY VOTING COMMITTEES
-----------------------
Our growth and value investment groups have formed separate proxy voting
committees to establish general proxy policies for Alliance Capital and consider
specific proxy voting matters as necessary. These committees periodically review
these policies and new types of corporate governance issues, and decide how we
should vote on proposals not covered by these policies. When a proxy vote cannot
be clearly decided by an application of our stated policy, the proxy committee
will evaluate the proposal. In addition, the committees, in conjunction with the
analyst that covers the company, may contact corporate management and interested
shareholder groups and others as necessary to discuss proxy issues. Members of
the committee include senior investment personnel and representatives of the
Legal and Compliance Department. The committees may also evaluate proxies where
we face a potential conflict of interest (as discussed below). Finally, the
committees monitor adherence to these policies.
CONFLICTS OF INTEREST
----------------------
Alliance Capital recognizes that there may be a potential conflict of interest
when we vote a proxy solicited by an issuer whose retirement plan we manage, or
we administer, who distributes Alliance Capital sponsored mutual funds, or with
whom we or an employee has another business or personal relationship that may
affect how we vote on the issuer's proxy. Similarly, Alliance may have a
potential material conflict of interest when deciding how to vote on a proposal
sponsored or supported by a shareholder group that is a client. We believe that
centralized management of proxy voting, oversight by the proxy voting committees
and adherence to these policies ensures that proxies are voted with only our
clients' best interests in mind. Additionally, we have implemented procedures to
ensure that our votes are not the product of a material conflict of interests,
including: (i) on an annual basis, the proxy committees will take reasonable
steps to evaluate the nature of Alliance Capital's and our employees' material
business and personal relationships (and those of our affiliates) with any
company whose equity securities are held in client accounts and any client that
has sponsored or has material interest in a proposal upon which we will be
eligible to vote; (ii) requiring anyone involved in the decision making process
to disclose to the chairman of the appropriate proxy committee any potential
conflict that they are aware of (including personal relationships) and any
contact that they have had with any interested party regarding a proxy vote;
(iii) prohibiting employees involved in the decision making process or vote
administration from revealing how we intend to vote on a proposal in order to
reduce any attempted influence from interested parties; and (iv) where a
material conflict of interests exists, reviewing our proposed vote by applying a
series of objective tests and, where necessary, considering the views of third
party research services to ensure that our voting decision is consistent with
our clients' best interests.
Because under certain circumstances Alliance Capital considers the
recommendation of third party research services, the proxy committees will take
reasonable steps to verify that any third party research service is in fact
independent based on all of the relevant facts and circumstances. This includes
reviewing the third party research service's conflict management procedures and
ascertaining, among other things, whether the third party research service (i)
has the capacity and competency to adequately analyze proxy issues; and (ii) can
make such recommendations in an impartial manner and in the best interests of
our clients.
PROXIES OF CERTAIN NON-US ISSUERS
---------------------------------
Proxy voting in certain countries requires "share blocking." Shareholders
wishing to vote their proxies must deposit their shares shortly before the date
of the meeting (usually one-week) with a designated depositary. During this
blocking period, shares that will be voted at the meeting cannot be sold until
the meeting has taken place and the shares are returned to the clients'
custodian banks. Absent compelling reasons to the contrary, Alliance Capital
believes that the benefit to the client of exercising the vote does not outweigh
the cost of voting (i.e. not being able to sell the shares during this period).
Accordingly, if share blocking is required we generally abstain from voting
those shares.
In addition, voting proxies of issuers in non-US markets may give rise to a
number of administrative issues that may prevent Alliance Capital from voting
such proxies. For example, Alliance Capital may receive meeting notices without
enough time to fully consider the proxy or after the cut-off date for voting.
Other markets require Alliance Capital to provide local agents with power of
attorney prior to implementing Alliance Capital's voting instructions. Although
it is Alliance Capital's policy to seek to vote all proxies for securities held
in client accounts for which we have proxy voting authority, in the case of
non-US issuers, we vote proxies on a best efforts basis.
LOANED SECURITIES
-----------------
Many clients of Alliance Capital have entered into securities lending
arrangements with agent lenders to generate additional revenue. Alliance
Capital will not be able to vote securities that are on loan under these types
of arrangements. However, under rare circumstances, for voting issues that may
have a significant impact on the investment, we may request that clients recall
securities that are on loan if we determine that the benefit of voting outweighs
the costs and lost revenue to the client or fund and the administrative burden
of retrieving the securities.
PROXY VOTING RECORDS
--------------------
Clients may obtain information about how we voted proxies on their behalf by
contacting their Alliance Capital administrative representative. Alternatively,
clients may make a written request for proxy voting information to: Mark R.
Manley, Senior Vice President & Chief Compliance Officer, Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, NY 10105.
AMERICAN CENTURY INVESTMENTS
PROXY VOTING POLICIES
American Century Investment Management, Inc. and American Century Global
Investment Management, Inc. (collectively, the "Adviser") are the investment
managers for a variety of clients, including the American Century family of
mutual funds. As such, the Adviser has been delegated the authority to vote
proxies with respect to investments held in the accounts it manages. The
following is a statement of the proxy voting policies that have been adopted by
the Adviser.
GENERAL PRINCIPLES
In voting proxies, the Adviser is guided by general fiduciary principles. It
must act prudently, solely in the interest of our clients, and for the exclusive
purpose of providing benefits to them. The Adviser will attempt to consider all
factors of its vote that could affect the value of the investment. We will not
subordinate the interests of clients in the value of their investments to
unrelated objectives. In short, the Adviser will vote proxies in the manner that
we believe will do the most to maximize shareholder value.
SPECIFIC PROXY MATTERS
A.ROUTINE MATTERS
1) ELECTION OF DIRECTORS
a)
GENERALLY. THE ADVISER will generally support the election of directors that
result in a board made up of a majority of independent directors. In
general, the Adviser will vote in favor of management's director nominees if
they are running unopposed. The Adviser believes that management is in the
best possible position to evaluate the qualifications of directors and the
needs and dynamics of a particular board. The Adviser of course maintains
the ability to vote against any candidate whom it feels is not qualified.
For example, we will generally vote for management's director nominees
unless there are specific concerns about the individual, such as criminal
wrongdoing or breach of fiduciary responsibilities. Conversely, we will vote
against individual directors if they do not provide an adequate explanation
for repeated absences at board meetings. When management's nominees are
opposed in a proxy contest, the Adviser will evaluate which nominees'
publicly-announced management policies and goals are most likely to maximize
shareholder value, as well as the past performance of the incumbents. In
cases where the Adviser's clients are significant holders of a company's
voting securities, management's recommendations will be reviewed with the
client or an appropriate fiduciary responsible for the client (e.g., a
committee of the independent directors of a fund, the trustee of a
retirement plan).
b) COMMITTEE SERVICE. The Adviser will withhold votes for non-independent
directors who serve on the audit, compensation and/or nominating committees
of the board.
C)
CLASSIFICATION OF BOARDS. The Adviser will support proposals that seek to
declassify boards. Conversely, the Adviser will oppose efforts to adopt
classified board structures.
D)
MAJORITY INDEPENDENT BOARD. The Adviser will support proposals calling for a
majority of independent directors on a board. We believe that a majority of
independent directors can helps to facilitate objective decision making and
enhances accountability to shareholders.
E)WITHHOLDING CAMPAIGNS. The Adviser will support proposals calling for
shareholders to withhold votes for directors where such actions will advance
the principles set forth in paragraphs (a) through (d) above.
2) RATIFICATION OF SELECTION OF AUDITORS
The Adviser will generally rely on the judgment of the issuer's audit committee
in selecting the independent auditors who will provide the best service to the
company. The Adviser believes that independence of the auditors is paramount and
will vote against auditors whose independence appears to be impaired. We will
vote against proposed auditors in those circumstances where (1) an auditor has a
financial interest in or association with the company, and is therefore not
independent; (2) non-audit fees comprise more than 50% of the total fees paid by
the company to the audit firm; or (3) there is reason to believe that the
independent auditor has previously rendered an opinion to the issuer that is
either inaccurate or not indicative of the company's financial position.
B. EQUITY-BASED COMPENSATION PLANS
The Adviser believes that equity-based incentive plans are economically
significant issues upon which shareholders are entitled to vote. The Adviser
recognizes that equity-based compensation plans can be useful in attracting and
maintaining desirable employees. The cost associated with such plans must be
measured if plans are to be used appropriately to maximize shareholder value.
The Adviser will conduct a case-by-case analysis of each stock option, stock
bonus or similar plan or amendment, and generally approve management's
recommendations with respect to adoption of or amendments to a company's
equity-based compensation plans, provided that the total number of shares
reserved under all of a company's plans is reasonable and not excessively
dilutive.
The Adviser will review equity-based compensation plans or amendments thereto on
a case-by-case basis. Factors that will be considered in the determination
include the company's overall capitalization, the performance of the company
relative to its peers, and the maturity of the company and its industry; for
example, technology companies often use options broadly throughout its employee
base which may justify somewhat greater dilution.
Amendments which are proposed in order to bring a company's plan within
applicable legal requirements will be reviewed by the Adviser's legal counsel;
amendments to executive bonus plans to comply with IRS Section 162(m) disclosure
requirements, for example, are generally approved.
The Adviser will generally vote against the adoption of plans or plan amendments
that:
. provide for immediate vesting of all stock options in the event of a change of
control of the company (see "Anti-Takeover Proposals" below);. reset
outstanding stock options at a lower strike price unless accompanied by a
corresponding and proportionate reduction in the number of shares designated.
The Adviser will generally oppose adoption of stock option plans that
explicitly or historically permit repricing of stock options, regardless of the
number of shares reserved for issuance, since their effect is impossible to
evaluate;
. establish restriction periods shorter than three years for restricted stock
grants;
. do not reasonably associate awards to performance of the company; and
. are excessively dilutive to the company.
C.ANTI-TAKEOVER PROPOSALS
In general, the Adviser will vote against any proposal, whether made by
management or shareholders, which the Adviser believes would materially
discourage a potential acquisition or takeover. In most cases an acquisition or
takeover of a particular company will increase share value. The adoption of
anti-takeover measures may prevent or frustrate a bid from being made, may
prevent consummation of the acquisition, and may have a negative effect on share
price when no acquisition proposal is pending. The items below discuss specific
anti-takeover proposals.
1) CUMULATIVE VOTING
The Adviser will vote in favor of any proposal to adopt cumulative voting and
will vote against any proposal to eliminate cumulative voting that is already in
place, except in cases where a company has a staggered board. Cumulative voting
gives minority shareholders a stronger voice in the company and a greater chance
for representation on the board. The Adviser believes that the elimination of
cumulative voting constitutes an anti-takeover measure.
2) STAGGERED BOARD
If a company has a "staggered board," its directors are elected for terms of
more than one year and only a segment of the board stands for election in any
year. Therefore, a potential acquiror cannot replace the entire board in one
year even if it controls a majority of the votes. Although staggered boards may
provide some degree of continuity and stability of leadership and direction to
the board of directors, the Adviser believes that staggered boards are primarily
an anti-takeover device and will vote against them. However, the Adviser does
not necessarily vote against the re-election of staggered boards.
3) BLANK CHECK" PREFERRED STOCK
Blank check preferred stock gives the board of directors the ability to issue
preferred stock, without further shareholder approval, with such rights,
preferences, privileges and restrictions as may be set by the board. In response
to a hostile take-over attempt, the board could issue such stock to a friendly
party or "white knight" or could establish conversion or other rights in the
preferred stock which would dilute the common stock and make an acquisition
impossible or less attractive. The argument in favor of blank check preferred
stock is that it gives the board flexibility in pursuing financing, acquisitions
or other proper corporate purposes without incurring the time or expense of a
shareholder vote. Generally, the Adviser will vote against blank check preferred
stock. However, the Adviser may vote in favor of blank check preferred if the
proxy statement discloses that such stock is limited to use for a specific,
proper corporate objective as a financing instrument.
4) ELIMINATION OF PREEMPTIVE RIGHTS
When a company grants preemptive rights, existing shareholders are given an
opportunity to maintain their proportional ownership when new shares are issued.
A proposal to eliminate preemptive rights is a request from management to revoke
that right.
While preemptive rights will protect the shareholder from having its equity
diluted, it may also decrease a company's ability to raise capital through stock
offerings or use stock for acquisitions or other proper corporate purposes.
Preemptive rights may therefore result in a lower market value for the company's
stock. In the long term, shareholders could be adversely affected by preemptive
rights. The Adviser generally votes against proposals to grant preemptive
rights, and for proposals to eliminate preemptive rights.
5) NON-TARGETED SHARE REPURCHASE
A non-targeted share repurchase is generally used by company management to
prevent the value of stock held by existing shareholders from deteriorating. A
non-targeted share repurchase may reflect management's belief in the favorable
business prospects of the company. The Adviser finds no disadvantageous effects
of a non-targeted share repurchase and will generally vote for the approval of a
non-targeted share repurchase subject to analysis of the company's financial
condition.
6) INCREASE IN AUTHORIZED COMMON STOCK
The issuance of new common stock can also be viewed as an anti-takeover measure,
although its effect on shareholder value would appear to be less significant
than the adoption of blank check preferred. The Adviser will evaluate the amount
of the proposed increase and the purpose or purposes for which the increase is
sought. If the increase is not excessive and is sought for proper corporate
purposes, the increase will be approved. Proper corporate purposes might
include, for example, the creation of additional stock to accommodate a stock
split or stock dividend, additional stock required for a proposed acquisition,
or additional stock required to be reserved upon exercise of employee stock
option plans or employee stock purchase plans. Generally, the Adviser will vote
in favor of an increase in authorized common stock of up to 100%; increases in
excess of 100% are evaluated on a case-by-case basis, and will be voted
affirmatively if management has provided sound justification for the increase.
7) "SUPERMAJORITY" VOTING PROVISIONS OR SUPER VOTING SHARE CLASSES
A "supermajority" voting provision is a provision placed in a company's charter
documents which would require a "supermajority" (ranging from 66 to 90%) of
shareholders and shareholder votes to approve any type of acquisition of the
company. A super voting share class grants one class of shareholders a greater
per-share vote than those of shareholders of other voting classes. The Adviser
believes that these are standard anti-takeover measures and will vote against
them. The supermajority provision makes an acquisition more time-consuming and
expensive for the acquiror. A super voting share class favors one group of
shareholders disproportionately to economic interest. Both are often proposed in
conjunction with other anti-takeover measures.
8) "FAIR PRICE" AMENDMENTS
This is another type of charter amendment that would require an offeror to pay a
"fair" and uniform price to all shareholders in an acquisition. In general, fair
price amendments are designed to protect shareholders from coercive, two-tier
tender offers in which some shareholders may be merged out on disadvantageous
terms. Fair price amendments also have an anti-takeover impact, although their
adoption is generally believed to have less of a negative effect on stock price
than other anti-takeover measures. The Adviser will carefully examine all fair
price proposals. In general, the Adviser will vote against fair price proposals
unless it can be determined from the proposed operation of the fair price
proposal that it is likely that share price will not be negatively affected and
the proposal will not have the effect of discouraging acquisition proposals.
9) LIMITING THE RIGHT TO CALL SPECIAL SHAREHOLDER MEETINGS.
The incorporation statutes of many states allow minority shareholders at a
certain threshold level of ownership (frequently 10%) to call a special meeting
of shareholders. This right can be eliminated (or the threshold increased) by
amendment to the company's charter documents. The Adviser believes that the
right to call a special shareholder meeting is significant for minority
shareholders; the elimination of such right will be viewed as an anti-takeover
measure and we will vote against proposals attempting to eliminate this right
and for proposals attempting to restore it.
10) POISON PILLS OR SHAREHOLDER RIGHTS PLANS
Many companies have now adopted some version of a poison pill plan (also known
as a shareholder rights plan). Poison pill plans generally provide for the
issuance of additional equity securities or rights to purchase equity securities
upon the occurrence of certain hostile events, such as the acquisition of a
large block of stock.
The basic argument against poison pills is that they depress share value,
discourage offers for the company and serve to "entrench" management. The basic
argument in favor of poison pills is that they give management more time and
leverage to deal with a takeover bid and, as a result, shareholders may receive
a better price. The Adviser believes that the potential benefits of a poison
pill plan are outweighed by the potential detriments. The Adviser will generally
vote against all forms of poison pills.
We will, however, consider on a case-by-case basis poison pills that are very
limited in time and preclusive effect. We will generally vote in favor of such a
poison pill if it is linked to a business strategy that will - in our view -
likely result in greater value for shareholders, if the term is less than three
years, and if shareholder approval is required to reinstate the expired plan or
adopt a new plan at the end of this term.
11) GOLDEN PARACHUTES
Golden parachute arrangements provide substantial compensation to executives who
are terminated as a result of a takeover or change in control of their company.
The existence of such plans in reasonable amounts probably has only a slight
anti-takeover effect. In voting, the Adviser will evaluate the specifics of the
plan presented.
12) REINCORPORATION
Reincorporation in a new state is often proposed as one part of a package of
anti-takeover measures. Several states (such as Pennsylvania, Ohio and Indiana)
now provide some type of legislation that greatly discourages takeovers.
Management believes that Delaware in particular is beneficial as a corporate
domicile because of the well-developed body of statutes and case law dealing
with corporate acquisitions.
We will examine reincorporation proposals on a case-by-case basis. If the
Adviser believes that the reincorporation will result in greater protection from
takeovers, the reincorporation proposal will be opposed. We will also oppose
reincorporation proposals involving jurisdictions that specify that directors
can recognize non-shareholder interests over those of shareholders. When
reincorporation is proposed for a legitimate business purpose and without the
negative effects identified above, the Adviser will vote affirmatively.
13) CONFIDENTIAL VOTING
Companies that have not previously adopted a "confidential voting" policy allow
management to view the results of shareholder votes. This gives management the
opportunity to contact those shareholders voting against management in an effort
to change their votes.
Proponents of secret ballots argue that confidential voting enables shareholders
to vote on all issues on the basis of merit without pressure from management to
influence their decision. Opponents argue that confidential voting is more
expensive and unnecessary; also, holding shares in a nominee name maintains
shareholders' confidentiality. The Adviser believes that the only way to insure
anonymity of votes is through confidential voting, and that the benefits of
confidential voting outweigh the incremental additional cost of administering a
confidential voting system. Therefore, we will vote in favor of any proposal to
adopt confidential voting.
14) OPTING IN OR OUT OF STATE TAKEOVER LAWS
State takeover laws typically are designed to make it more difficult to acquire
a corporation organized in that state. The Adviser believes that the decision of
whether or not to accept or reject offers of merger or acquisition should be
made by the shareholders, without unreasonably restrictive state laws that may
impose ownership thresholds or waiting periods on potential acquirors.
Therefore, the Adviser will vote in favor of opting out of restrictive state
takeover laws.
C. OTHER MATTERS
1) SHAREHOLDER PROPOSALS INVOLVING SOCIAL, MORAL OR ETHICAL MATTERS
The Adviser will generally vote management's recommendation on issues that
primarily involve social, moral or ethical matters, such as the MacBride
Principles pertaining to operations in Northern Ireland. While the resolution of
such issues may have an effect on shareholder value, the precise economic effect
of such proposals, and individual shareholder's preferences regarding such
issues is often unclear. Where this is the case, the Adviser believes it is
generally impossible to know how to vote in a manner that would accurately
reflect the views of the Adviser's clients, and therefore will review
management's assessment of the economic effect of such proposals and rely upon
it if we believe its assessment is not unreasonable.
Shareholders may also introduce social, moral or ethical proposals which are the
subject of existing law or regulation. Examples of such proposals would include
a proposal to require disclosure of a company's contributions to political
action committees or a proposal to require a company to adopt a non-smoking
workplace policy. The Adviser believes that such proposals are better addressed
outside the corporate arena, and will vote with management's recommendation; in
addition, the Adviser will generally vote against any proposal which would
require a company to adopt practices or procedures which go beyond the
requirements of existing, directly applicable law.
2) ANTI-GREENMAIL PROPOSALS
"Anti-greenmail" proposals generally limit the right of a corporation, without a
shareholder vote, to pay a premium or buy out a 5% or greater shareholder.
Management often argues that they should not be restricted from negotiating a
deal to buy out a significant shareholder at a premium if they believe it is in
the best interest of the company. Institutional shareholders generally believe
that all shareholders should be able to vote on such a significant use of
corporate assets. The Adviser believes that any repurchase by the company at a
premium price of a large block of stock should be subject to a shareholder vote.
Accordingly, it will vote in favor of anti-greenmail proposals.
3) INDEMNIFICATION
The Adviser will generally vote in favor of a corporation's proposal to
indemnify its officers and directors in accordance with applicable state law.
Indemnification arrangements are often necessary in order to attract and retain
qualified directors. The adoption of such proposals appears to have little
effect on share value.
4) NON-STOCK INCENTIVE PLANS
Management may propose a variety of cash-based incentive or bonus plans to
stimulate employee performance. In general, the cash or other corporate assets
required for most incentive plans is not material, and the Adviser will vote in
favor of such proposals, particularly when the proposal is recommended in order
to comply with IRC Section 162(m) regarding salary disclosure requirements.
Case-by-case determinations will be made of the appropriateness of the amount of
shareholder value transferred by proposed plans.
5) DIRECTOR TENURE
These proposals ask that age and term restrictions be placed on the board of
directors. The Adviser believes that these types of blanket restrictions are not
necessarily in the best interests of shareholders and therefore will vote
against such proposals, unless they have been recommended by management.
6) DIRECTORS' STOCK OPTIONS PLANS
The Adviser believes that stock options are an appropriate form of compensation
for directors, and the Adviser will vote for director stock option plans which
are reasonable and do not result in excessive shareholder dilution. Analysis of
such proposals will be made on a case-by-case basis, and will take into account
total board compensation and the company's total exposure to stock option plan
dilution.
7) DIRECTOR SHARE OWNERSHIP
The Adviser will vote against shareholder proposals which would require
directors to hold a minimum number of the company's shares to serve on the Board
of Directors, in the belief that such ownership should be at the discretion of
Board members.
MONITORING POTENTIAL CONFLICTS OF INTEREST
Corporate management has a strong interest in the outcome of proposals submitted
to shareholders. As a consequence, management often seeks to influence large
shareholders to vote with their recommendations on particularly controversial
matters. In the vast majority of cases, these communications with large
shareholders amount to little more than advocacy for management's positions and
give the Adviser's staff the opportunity to ask additional questions about the
matter being presented. Companies with which the Adviser has direct business
relationships could theoretically use these relationships to attempt to unduly
influence the manner in which the Adviser votes on matters for its clients. To
ensure that such a conflict of interest does not affect proxy votes cast for the
Adviser's clients, our proxy voting personnel regularly catalog companies with
whom the Adviser has significant business relationships; all discretionary
(including case-by-case) voting for these companies will be voted by the client
or an appropriate fiduciary responsible for the client (e.g., a committee of the
independent directors of a fund or the trustee of a retirement plan).
************************************************************
The voting policies expressed above are of course subject to modification in
certain circumstances and will be reexamined from time to time. With respect to
matters that do not fit in the categories stated above, the Adviser will
exercise its best judgment as a fiduciary to vote in the manner which will most
enhance shareholder value.
Case-by-case determinations will be made by the Adviser's staff, which is
overseen by the General Counsel of the Adviser, in consultation with equity
managers. Electronic records will be kept of all votes made.
Original 6/1/1989
Revised 12/05/1991
Revised 2/15/1997
Revised 8/1/1999
Revised 7/1/2003
Revised 12/13/2005
ARK ASSET MANAGEMENT CO., INC.
STATEMENT OF PROXY VOTING POLICIES AND PROCEDURES
FEBRUARY 2005
INTRODUCTION
------------
Proxy voting is an important responsibility. This statement sets forth the
current policies and procedures of Ark Asset Management Co., Inc. ("Ark") with
regard to the voting of proxies over which we have investment responsibility.
These policies and procedures are available to our clients upon request.
GENERAL PROXY VOTING POLICY
---------------------------
Proxy voting guidelines are required by Rule 206(4)-6 of the Investment Advisers
Act of 1940, as amended (the "Adviser's Act"). Pursuant to various provisions
of the Adviser's Act, Ark acts in a fiduciary capacity with respect to each of
its clients and, therefore, Ark must act in the interest of the beneficial
owners of the accounts it manages. Accordingly, in voting proxies, Ark is
guided by general fiduciary principles. Ark will attempt to consider all
factors of its vote that could affect the value of the beneficial owner's
investments. With respect to proxies that Ark votes, the primary objective of
Ark is to vote such proxies in the manner that it believes will do the most to
maximize the value of its clients' investments. Ark will likely vote against
any management proposals that Ark believes could prevent companies from
realizing their maximum market value, or would insulate companies and/or
management, from accountability to shareholders or prudent regulatory
compliance.
In addition, the Department of Labor has made it clear that the voting of
proxies is an integral part of our duties as an investment manager for clients
that are ERISA plan assets. As such, Ark must vote proxies in the best interest
of its plan clients and their participants and beneficiaries. We will do so in
accordance with our fiduciary responsibilities as defined in ERISA and the
regulations promulgated thereunder, exercising our professional investment
judgment on all such matters. In determining our vote, we will not subordinate
the economic interest of the plan and its participants and beneficiaries to any
other entity or interested party. We will not allow our voting to be dictated
by the position of any outsiders, other than following the recommendations of an
independent third party in situations involving conflicts of interest (see
"Conflicts of Interest" below) or where required by applicable law. It is Ark's
intent to vote all proxies, either directly or through a proxy voting service
appointed by Ark. However, if a client participates in a stock loan program, the
proxy of a stock on loan at record date may not be forwarded to Ark according to
the provision of stock loan agreements, and Ark shall not be responsible for not
being able to vote those proxies.
Ark's proxy voting process is dynamic and subject to periodic review.
Reflecting this ongoing process, our judgment concerning the manner in which
the best economic interest of the shareholders is achieved can and has changed
over time based on additional information, further analysis, and changes in the
economic environment. Our policy may be revised in Ark's discretion to address
any such changes.
The following summarizes Ark's current proxy voting policy and procedures. It
is meant solely as a guide and cannot address every issue that may arise. All
decisions will be based on our analysis of the company, its management, the
merits of the individual proposal, and its expected economic impact on the
specific company.
PROXY VOTING POLICIES AND PROCEDURES
------------------------------------
Each proxy proposal is reviewed on a case-by-case basis by Ark's Proxy
Coordinator to determine the issues presented in the proxy. The proxy is then
marked for vote by a senior investment professional consistent with our
professional investment judgment as to what will best benefit the financial and
economic interest of the client, including any plan and its participants and
beneficiaries.
A record of all proxy decisions and the rationale for voting will be retained
and available for inspection by the client at any time in accordance with the
procedures listed below.
BUSINESS OPERATIONS
These are proposals that are a standard and necessary aspect of business
operations and that we believe will not typically have a significant effect on
the value of the investment. Factors that are considered in reviewing these
proposals include the financial performance of the Company, attendance and
independence of board members and committees, and enforcement of strict
accounting practices. Each proposal is reviewed individually and we generally
support such items unless our analysis indicates activity that we consider is
not in the best interest of the shareholders. Standard business operations
include:
. . Name changes
. . Election of directors
. . Ratification of auditors
. . Maintaining current levels of directors' indemnification and liability
. . Increase in authorized shares (common stock only) if there is no intention
to significantly dilute shareholders' proportionate interest
. . Employee stock purchase or ownership plans
CHANGES IN STATUS
There are proposals that change the status of the corporation, its individual
securities, or the ownership status of the securities. We will review each
issue on a case-by-case basis. As stated previously, voting decisions will be
made in a manner that, in our professional investment judgment, best benefit the
financial and economic interest of the client, including any plan and its
participants and beneficiaries. Changes in Status include proposals regarding:
. . Mergers, acquisitions, restructurings
. . Reincorporations
. . Changes in capitalization
SHAREHOLDER DEMOCRACY
We will generally vote against any proposal that attempts to limit shareholder
democracy in a way that could restrict the ability of the shareholders to
realize the value of their investment. This would include proposals endorsing
or facilitating:
. . Increased indemnification protections for directors or officers
. . Certain supermajority requirements
. . Unequal voting rights
. . Classified boards
. . Cumulative voting
. . Authorization of new securities if intention appears to be to unduly dilute
shareholders' proportionate interest
. . Amending state of incorporation if intention appears to disfavor the
economic interest of the shareholders
We will generally support proposals that maintain or expand shareholder
democracy such as:
. . Annual elections
. . Independent directors
. . Confidential voting
. . Proposals that require shareholder approval for:
. . Adoption or retention of "poison pills" or golden parachutes
. . Elimination of cumulative voting or preemptive rights
. . Reclassification of company boards
COMPENSATION
We believe reasonable compensation is appropriate for directors, executives and
employees. Compensation should be used as an incentive and to align the
interests of the involved parties with the long-term financial success of the
Company. It should not be excessive or utilized in a way that compromises
independence or creates a conflict of interest. Among the factors we consider
when reviewing a compensation proposal is the potential dilution of outstanding
shares, whether a plan has broad-based participation and whether a plan allows
for the re-pricing of options. Each proposal is reviewed individually.
OTHER MATTERS
Some proxy proposals address social, environmental, and issues of conscience
with regard to the business conduct of a company. As with all proxies, Ark will
review each issue on a case-by-case basis and determine what in our opinion,
will best enhance the value of the investment for the client, including any plan
and its participants and beneficiaries.
CONFLICTS OF INTEREST
---------------------
Ark must act as a fiduciary when voting proxies on behalf of its clients. In
that regard, Ark will seek to avoid any conflict of interest by following the
proxy voting policies and procedures set forth in this document. In addition,
Ark will actively monitor the proxies it receives on behalf of its clients to
identify and resolve any potential conflict of interest.
Where Ark identifies a potential conflict of interest, Ark will initially
determine whether such potential conflict is material. Where Ark determines
there is a potential for a material conflict of interest regarding a proxy, Ark
will take one or some of the following steps: (i) inform the client of the
conflict and Ark's proposed voting decision; (ii) discuss the proxy vote with
the client and provide the client with an opportunity to direct the voting on
its behalf; and/or (iii) seek the recommendations of an independent third party.
Whenever Ark determines there is a potential for a material conflict of
interest, Ark will document which step or steps it took to ensure the proxy vote
was in the best interest of the client - and not the product of any material
conflict. Such documentation will be maintained in accordance with the
recordkeeping procedures set forth below.
RECORDKEEPING
-------------
In accordance with Rule 204-2 under the Adviser's Act, Ark will maintain the
following: (i) a copy of these proxy voting policies and procedures; (ii) proxy
statements received regarding client securities; (iii) records of votes cast on
behalf of a client; (iv) written records of client requests for proxy voting
information, (v) written responses to a client's written or oral requests, and
(vi) any documents prepared by Ark that were material to how a proxy was voted
or that memorialized the basis for the voting decision.
In maintaining item (ii) above, Ark may rely on proxy statements filed on the
SEC's EDGAR system in lieu of maintaining internal copies. In maintaining item
(iii) above, Ark may rely on the records of any third party, such as a proxy
voting service; provided, however, that Ark will not rely on such a third party
without the express agreement of such party to provide a copy of the documents
upon request.
Ark will take reasonable measures to maintain and preserve each of these
documents in an easily accessible place for a period of not less than six (6)
years from commencing from the end of the fiscal year during which the last
entry was made on such record. During the first two (2) years of such six (6)
year period, all required documents will be maintained in Ark's main office.
DISCLOSURE OF PROXY VOTING RECORD
---------------------------------
Ark will provide a summary of these policies and procedures in its Form ADV Part
II to be furnished to clients. Ark will further provide a copy of these
policies and procedures to any client upon request. In addition, Ark will
inform its clients how they can obtain further information about the manner in
which Ark has voted their proxies.
Upon a request from a client, Ark will furnish its proxy voting record with
respect to such client's securities. In general, Ark will respond to such
client request; however, any client request for information that Ark is not
required to maintain pursuant to its recordkeeping responsibilities under Rule
204-2, may require additional time for an appropriate response (including, if
applicable, that such records are no longer available or maintained by Ark).
Except as may be required under the Investment Company Act of 1940, in
accordance with Rule 206(4)-6(b) under the Adviser's Act, Ark is not required to
publicly disclose how it voted any particular proxy or group of proxies. This
non-disclosure may be important for investment advisers to maintain privacy
regarding clients (for example, to protect the privacy of their clients'
holdings).
With respect to each of Ark's clients that is either an open-end or closed-end
management investment company registered under the Investment Company Act of
1940 and for which Ark has been delegated the responsibility for voting the
proxies, Ark will coordinate with such investment company to ensure that the
information required under Form N-PX or Form N-CSR, as the case may be, is
accurate and complete.
Proxy Voting
BHMS has responsibility for voting proxies for portfolio securities consistent
with the best economic interests of the beneficial owners. BHMS maintains
written policies and procedures as to the handling, research, voting and
reporting of proxy voting and makes appropriate disclosures about our Firm's
proxy policies and procedures to clients. BHMS will provide information to
clients about how their proxies were voted and will retain records related to
proxy voting.
BHMS retains Institutional Shareholder Services (ISS) for corporate governance
research and beginning January 1, 2007, BHMS will use ISS policy
recommendations. PersonNameClare Burch, the Proxy Coordinator, will review each
proxy for each company to insure that all votes are in the best interest of the
beneficial owners.
Proxy Oversight Committee
o BHMS' Proxy Oversight Committee reviews and reevaluates ISS policies.
Policy modifications and updates implemented by ISS will be reviewed by
the Proxy Oversight Committee on an on-going basis to assure that all
proxy voting decisions are in the best interests of the beneficial
owner.
o The Proxy Oversight Committee includes portfolio managers James Barrow,
Richard Englander and PersonNameJane Gilday, and Proxy Coordinator,
PersonNameClare Burch.
Conflicts of Interest
o All proxies will be voted uniformly in accordance with ISS
recommendations unless BHMS overrides a specific issue. This includes
proxies of companies who are also clients, thereby eliminating
potential conflicts of interest.
BHMS has adopted written procedures to implement the Firm's policy and reviews
to monitor and insure our policy is observed, implemented properly and amended
or updated, as appropriate, including:
o BHMS sends a daily electronic transfer of all stock positions to ISS
(Institutional Shareholder Services).
o ISS identifies all accounts eligible to vote for each security and
posts the proposals and research on its website.
o The Proxy Coordinator reviews each proxy proposed and reevaluates
existing voting guidelines. Any new or controversial issues are
presented to the Proxy Oversight Committee for evaluation.
o ISS verifies that every vote is received, voted and recorded.
o BHMS sends a proxy report to each client, at least annually (or as
requested by client), listing number of shares voted and disclosing how
each proxy was voted.
o BHMS scans all voting records and saves digital copies to the network
which is backed up daily.
o BHMS' guidelines addressing specific issues are available upon request
by calling 214-665-1900 or by e-mailing
clientservices@barrowhanley.com.
o BHMS will identify any conflicts that exist between the interests of
the Firm and the client by reviewing the relationship of the Firm with
the issuer of each security to determine if we or any of our employees
have any financial, business or personal relationship with the issuer.
o If a material conflict of interest exists, the Proxy Coordinator will
determine whether it is appropriate to disclose the conflict to the
affected clients, to give the clients an opportunity to vote the
proxies themselves, or to address the voting issue through other
objective means such as voting in a manner consistent with a
predetermined voting policy or receiving an independent third party
voting recommendation.
o BHMS will maintain a record of the voting resolution of any conflict of
interest.
o The Proxy Coordinator shall retain the following proxy records in
accordance with the SEC'sfive-year retention requirement:
>> These policies and procedures and any amendments;
>> A record of each vote cast;
>> Any document BHMS created that was material to making a decision
on how to vote proxies, or that memorializes that decision
including periodic reports to the Proxy Oversight Committee; and
>> A copy of each written request from a client for information on
how BHMS voted such client's proxies and a copy of any written
response.
Clare Burch is responsible for implementing and monitoring our proxy voting
policy, procedures, disclosures and recordkeeping, including outlining our
voting guidelines in our procedures.
THE BANK OF NEW YORK - BNY ASSET MANAGEMENT
BEACON FIDUCIARY ADVISERS, INC.
ESTABROOK CAPITAL MANAGEMENT
GANNETT WELSH & KOTLER LLC
PROXY VOTING POLICIES AND PROCEDURES
I.INTRODUCTION AND GENERAL PRINCIPLES
-------------------------------------
A.BNY Asset Management, a division of The Bank of New York ("Adviser") and
certain of its affiliates have been delegated the authority and responsibility
to vote the proxies of certain of its respective trust and investment advisory
clients, including both ERISA and non-ERISA clients.
B.Adviser understands that proxy voting is an integral aspect of investment
management. Accordingly, proxy voting must be conducted with the same degree of
prudence and loyalty accorded any fiduciary or other obligation of an investment
manager.
C.Adviser believes that the following policies and procedures are reasonably
expected to ensure that proxy matters are conducted in the best interest of
clients, in accordance with Adviser's fiduciary duties, applicable rules under
the Investment Advisers Act of 1940 and fiduciary standards and responsibilities
for ERISA clients set out in Department of Labor interpretations. Proxies will
be voted in the best interest of the Adviser's clients. Only those factors
which affect the economic value of a particular asset will be considered and
votes will be based solely on the ultimate economic interest of the client.
D.In instances where Adviser does not have authority to vote client proxies, it
is the responsibility of the client to instruct the relevant custody bank or
banks to mail proxy material directly to such client.
E.In all circumstances, Adviser will comply with specific client directions to
vote proxies, whether or not such client directions specify voting proxies in a
manner that is different from Adviser's policies and procedures.
F.There may be circumstances under which Adviser may abstain from voting a
client proxy for cost reasons (e.g., non-U.S. securities). Adviser understands
that it must weigh the costs and benefits of voting proxy proposals relating to
foreign securities and make an informed decision with respect to whether voting
a given proxy proposal is prudent and solely in the interests of the client and,
in the case of an ERISA client, the plan's participants and beneficiaries.
Adviser's decision in such circumstances will take into account the effect that
the proxy vote, either by itself or together with other votes, is expected to
have on the value of the client's investment and whether this expected effect
would outweigh the cost of voting.
II.RESPONSIBILITY AND OVERSIGHT
-------------------------------
A.Adviser has designated a Proxy Committee with the responsibility for
administering and overseeing the proxy voting process, including:
1) developing, authorizing, implementing and updating Adviser's policies and
procedures (including the proxy voting guidelines referenced in Section III
below);
2) overseeing the proxy voting process; and
3) engaging and overseeing any third-party vendors as voting delegate
("Delegate") to review, monitor and/or vote proxies.
B.Such Proxy Committee will meet as frequently and in such manner as necessary
or appropriate in order to fulfill its responsibilities. The Proxy Voting
Guidelines referenced in Section III below shall be reviewed and, if necessary,
revised on at least an annual basis.
C.The members of the Proxy Committee will be appointed from time to time and
will include the Chief Investment Officer, the chief trust officer, a senior
portfolio manager and members of the Portfolio Administration Department.
D.In the event that one or more members of the Proxy Committee are not
independent with respect to a particular matter, such members shall recuse
themselves from consideration of such matter.
III.PROXY VOTING GUIDELINES
---------------------------
A.Adviser has determined that, except as set forth below, proxies will be voted
in accordance with the voting recommendations contained in the proxy voting
guidelines which have been prepared by the Adviser. A summary of the current
applicable proxy voting guidelines is attached to these Voting Policies and
Procedures as Exhibit A.
B.In the event the foregoing proxy voting guidelines state that a particular
issue shall be voted on a "case-by-case" basis or do not otherwise address how a
proxy should be voted, the Proxy Committee will follow the procedures set forth
in Section V, Paragraph D.
C.There may be circumstances under which the Chief Investment Officer, a
portfolio manager or other investment professional ("Investment Professional")
believes that it is in the best interest of a client or clients to vote proxies
in a manner inconsistent with the foregoing proxy voting guidelines. In such
event, the procedures set forth in Section V, Paragraph C will be followed.
IV. PROXY VOTING PROCEDURES
----------------------------
A.If a client makes a specific request, Adviser will vote client proxies in
accordance with such client's request even if it is in a manner inconsistent
with Adviser's policies and procedures (including the proxy voting guidelines).
Such specific requests must be made in writing by the individual client or by
an authorized officer, representative or named fiduciary of a client.
B.At the recommendation of the Proxy Committee, Adviser may engage Delegate as
its voting delegate to:
1) research and make voting determinations in accordance with the proxy voting
guidelines described in Section III;
2) vote and submit proxies in a timely manner;
3) handle other administrative functions of proxy voting;
4) maintain records of proxy statements received in connection with proxy votes
and provide copies of such proxy statements promptly upon request;
5) maintain records of votes cast; and
6) provide recommendations with respect to proxy voting matters in general.
C.Except in instances where clients have retained voting authority, Adviser will
instruct custodians of client accounts to forward all proxy statements and
materials received in respect of client accounts to Delegate.
D.Notwithstanding the foregoing, Adviser retains final authority and fiduciary
responsibility for proxy voting.
V. CONFLICTS OF INTEREST
-------------------------
A.Adviser will obtain a copy of any Delegate policies or procedures regarding
potential conflicts of interest that could arise in Delegate proxy voting
services to Adviser as a result of business conducted by Delegate. Adviser will
examine such policies to determine whether potential conflicts of interest of
Delegate are minimized by these Policies, Procedures and Practices.
B.As Delegate will vote proxies in accordance with the proxy voting guidelines
described in Section III, Adviser believes that this process is reasonably
designed to address material conflicts of interest that may arise between
Adviser and a client as to how proxies are voted.
C.In the event that an Investment Professional believes that it is in the best
interest of a client or clients to vote proxies in a manner inconsistent with
the proxy voting guidelines described in Section III, such Investment
Professional will contact a member of the Proxy Committee and complete and sign
a questionnaire in the form adopted by the Proxy Committee from time to time.
Such questionnaire will require specific information, including the reasons the
Investment Professional believes a proxy vote in this manner is in the best
interest of a client or clients and disclosure of specific ownership, business
or personal relationship or other matters that may raise a potential material
conflict of interest between Adviser and the client with respect to the voting
of the proxy in that manner.
The Proxy Committee will review the questionnaire completed by the Investment
Professional and consider such other matters as it deems appropriate to
determine that there is no material conflict of interest between Adviser and the
client with respect to the voting of the proxy in that manner. The Proxy
Committee shall document its consideration of such other matters in a form
adopted by the Proxy Committee from time to time.
In the event that the Proxy Committee determines that such vote will not present
a material conflict between Adviser and the client, the Proxy Committee will
make a determination whether to vote such proxy as recommended by the Investment
Professional. In the event of a determination to vote the proxy as recommended
by the Investment Professional, an authorized member of the Proxy Committee
shall instruct Delegate to vote in such manner with respect to such client or
clients.
In the event that the Proxy Committee determines that the voting of a proxy as
recommended by the Investment Professional presents a material conflict of
interest between Adviser and the client or clients with respect to the voting of
the proxy, the Proxy Committee shall: (i) take no further action, in which case
Delegate shall vote such proxy in accordance with the proxy voting guidelines
described in Section III; (ii) disclose such conflict to the client or clients
and obtain written direction from the client as to how to vote the proxy; (iii)
suggest that the client or clients engage another party to determine how to vote
the proxy; or (iv) instruct Delegate or engage another independent third party
to determine how to vote the proxy.
D.In the event that the proxy voting guidelines described in Section III state
that an issue shall be voted on a "case-by-case" basis or do not otherwise
address how a proxy should be voted, the Proxy Committee will make a
determination as to how the proxy should be voted. After determining how it
believes the proxy should be voted, the Proxy Committee will consider such
matters as it deems appropriate to determine that there is no material conflict
of interest between Adviser and the client or clients with respect to the voting
of the proxy in that manner. The Proxy Committee shall document its
consideration of such matters in a form adopted by the Proxy Committee from time
to time.
In the event that the Proxy Committee determines that such vote will not present
a material conflict between Adviser and the client, an authorized member of the
Proxy Committee shall instruct Delegate to vote in such manner with respect to
such client or clients.
In the event that the Proxy Committee determines that such vote presents a
material conflict of interest between Adviser and the client or clients with
respect to the voting of the proxy, the Proxy Committee shall: (i) disclose such
conflict to the client or clients and obtain written direction from the client
as to vote the proxy; (ii) suggest that the client or clients engage another
party to determine how proxies should be voted; or (iii) instruct Delegate or
engage another independent third party to determine how proxies should be voted.
E.Material conflicts cannot be resolved by simply abstaining from voting.
VI. RECORDKEEPING
------------------
1) Adviser will maintain records relating to the implementation of these proxy
voting policies and procedures, including: a copy of these policies and
procedures which shall be made available to clients, upon request;
2) proxy statements received regarding client securities (which will be
satisfied by relying on EDGAR or Delegate);
3) a record of each vote cast (which Delegate may maintain on Adviser's
behalf);
4) a copy of each questionnaire completed by any Investment Professional under
Section V above;
5) any other document created by Adviser that was material to making a decision
how to vote proxies on behalf of a client or that memorializes the basis for
that decision (including, without limitation, the matters outlined in Section
V.D above); and
6) each written client request for proxy voting records and Adviser's written
response to any client request (written or oral) for such records.
Such proxy voting books and records shall be maintained in an easily accessible
place for a period of five years, the first two by the Proxy Committee member
who represents the Portfolio Administration Department.
VII. DISCLOSURE
------------------
Except as otherwise required by law, Adviser has a general policy of not
disclosing to any issuer or third party how Adviser or its voting delegate voted
a client's proxy.
September 30, 2004
COLUMBUS CIRCLE INVESTORS
PROXY VOTING POLICY
2006
I. PROCEDURES
----------
Columbus Circle Investors (Columbus Circle) is generally authorized by its
clients, as a term of its Investment Advisory Agreement, the authority to vote
and give proxies for the securities held in clients' investment accounts. At
their election, however, clients may retain this authority, in which case
Columbus Circle will consult with clients regarding proxy voting decisions as
requested.
For those clients for whom Columbus Circle Investors (Columbus Circle) has
undertaken to vote proxies, Columbus Circle retains the final authority and
responsibility for such voting subject to any specific restrictions or voting
instructions by clients.
In addition to voting proxies for clients, Columbus Circle:
1) provides clients with a concise summary of its proxy voting policy, which
includes information describing how clients may obtain a copy of this complete
policy and information regarding how specific proxies related to each
respective investment account are voted. Columbus Circle provides this
summary to all new clients as part of its Form ADV, Part II disclosure
brochure, which is available to any clients upon request;
2) applies its proxy voting policy according to the following voting policies
and keeps records of votes for each client through Institutional Shareholder
Services;
3) keeps records of proxy voting available for inspection by each client or
governmental agencies - to both determine whether the votes were consistent
with policy and to determine all proxies were voted;
4) monitors such voting for any potential conflicts of interest and maintains
systems to deal with these issues appropriately; and
5) maintains this written proxy voting policy, which may be updated and
supplemented from time to time;
Frank Cuttita, Columbus Circle's Chief Administrative Officer and Chief
Compliance Officer, will maintain Columbus Circle's proxy voting process.
Clients with questions regarding proxy voting decisions in their accounts
should contact Mr. Cuttita.
II. VOTING GUIDELINES
-----------------
Keeping in mind the concept that no issue is considered "routine," outlined
below are general voting parameters on various types of issues when there are
no extenuating circumstances, i.e., company specific reason for voting
differently. The Operating Committee of Columbus Circle has adopted the
following voting parameters.
To assist in its voting process, Columbus Circle has engaged Institutional
Shareholder Services (ISS), an independent investment advisor that specializes
in providing a variety of fiduciary level proxy related services to
institutional investment managers, plan sponsors, custodians, consultants, and
other institutional investors. ISS also provides Columbus Circle with reports
that reflect proxy voting activities for Columbus Circle's client portfolios
which provide information for appropriate monitoring of such delegated
responsibilities.
Columbus Circle has delegated to ISS the authority to vote Columbus Circle's
clients' proxies consistent with the following parameters. ISS further has
the authority to determine whether any extenuating specific company
circumstances exist that would mandate a special consideration of the
application of these voting parameters. If ISS makes such a determination,
the matter will be forwarded to Mr. Frank Cuttita for review. Likewise, ISS
will present to Columbus Circle any specific matters not addressed within the
following parameters for consideration.
A. MANAGEMENT PROPOSALS:
1.When voting on ballot items that are fairly common management sponsored
initiatives certain items are generally, although not always, voted
affirmatively.
. "Normal" elections of directors
. Approval of auditors/CPA
. Directors' liability and indemnification
. General updating/corrective amendments to charter
. Elimination of cumulative voting
. Elimination of preemptive rights
2.When voting items that have a potential substantive financial or best
interest impact, certain items are generally, although not always, voted
affirmatively:
. Capitalization changes that eliminate other classes of stock and voting
rights
. Changes in capitalization authorization for stock splits, stock dividends,
and other specified needs.
. Stock purchase plans with an exercise price of not less than 85% FMV
. Stock option plans that are incentive based and not excessive
. Reductions in supermajority vote requirements
. Adoption of antigreenmail provisions
3.When voting items which have a potential substantive financial or best
interest impact, certain items are generally not voted in support of the
proposed management sponsored initiative:
. Capitalization changes that add classes of stock that are blank check in
nature or that dilute the voting interest of existing shareholders
. Changes in capitalization authorization where management does not offer an
appropriate rationale or that are contrary to the best interest of
existing shareholders
. Anti-takeover and related provisions which serve to prevent the majority
of shareholders from exercising their rights or effectively deter
appropriate tender offers and other offers
. Amendments to bylaws that would require super-majority shareholder votes
to pass or repeal certain provisions
. Classified or single-slate boards of directors
. Reincorporation into a state that has more stringent anti-takeover and
related provisions
. Shareholder rights plans that allow appropriate offers to shareholders to
be blocked by the board or trigger provisions which prevent legitimate
offers from proceeding.
. Excessive compensation or non-salary compensation related proposals,
always company specific and considered case-by-case
. Change-in-control provisions in non-salary compensation plans, employment
contracts, and severance agreements that benefit management and would be
costly to shareholders if triggered
. Amending articles to relax quorum requirements for special resolutions
. ^ Re-election of director(s) directly responsible for a company's
fraudulent or criminal act
. ^ Re-election of director(s) who holds offices of chairman and CEO
. Re-election of director(s) who serve on audit, compensation and nominating
committees
. ^ Election of directors with service contracts of three years, which
exceed best practice and any change in control provisions
. ^ Adoption of option plans/grants to directors or employees of related
companies
. ^ Lengthening internal auditors' term in office to four years
B. SHAREHOLDER PROPOSALS:
Traditionally shareholder proposals have been used mainly for putting social
initiatives and issues in front of management and other shareholders. Under
ERISA, it is inappropriate to use (vote) plan assets to carry out such social
agendas or purposes. Thus, shareholder proposals are examined closely for
their relationship to the best interest of shareholders, i.e., beneficiaries,
and economic impact.
1.When voting shareholder proposals, in general, initiatives related to the
following items are supported:
. Auditors should attend the annual meeting of shareholders
. ^Election of the board on an annual basis
. Equal access to proxy process
. ^Submit shareholder rights plan poison pill to vote or redeem
. ^Undo various anti-takeover related provisions
. ^Reduction or elimination of super-majority vote requirements
. Anti-greenmail provisions
. ^ Submit audit firm ratification to shareholder votes
. Audit firm rotations every five or more years
. Requirement to expense stock options
. ^ Establishment of holding periods limiting executive stock sales
. ^ Report on executive retirement benefit plans
. ^ Require two-thirds of board to be independent
. ^ Separation of chairman and chief executive posts
2.When voting shareholder proposals, in general, initiatives related to the
following items are not supported:
. Requiring directors to own large amounts of stock before being eligible to
be elected
. Restoring cumulative voting in the election of directors
. Reports which are costly to provide or which would require duplicative
efforts or expenditures which are of a non-business nature or would
provide no pertinent information from the perspective of ERISA
shareholders
. Restrictions related to social, political or special interest issues which
impact the ability of the company to do business or be competitive and
which have a significant financial or best interest impact, such as
specific boycotts or restrictions based on political, special interest
or international trade considerations; restrictions on political
contributions; and the Valdez principles.
. Restrictions banning future stock option grants to executives except in
extreme cases
3.Additional shareholder proposals require case-by-case analysis
. Prohibition or restriction of auditors from engaging in non-audit services
(auditors will be voted against if non-audit fees are greater than audit
and audit-related fees, and permitted tax fees combined)
. Requirements that stock options be performance-based
. Submission of extraordinary pension benefits for senior executives under a
company's SERP for shareholder approval
. Shareholder access to nominate board members^
. Requiring offshore companies to reincorporate into the United States
Another expression of active involvement is the voting of shareholder
proposals. Columbus Circle evaluates and supports those shareholder proposals
on issues that appropriately forward issues of concern to the attention of
corporate management. Historically, many shareholder proposals received very
little support, often not even enough to meet SEC refiling requirements in the
following year although the SEC is considering relaxing the standards for the
placement of shareholder initiatives on ballots. Support of appropriate
shareholder proposals is becoming a more widespread and acknowledged practice
and is viewed by many as a direct expression of concern on an issue to
corporate management. It is noted, however, that the source (and motivation
of the shareholder proposal proponent) can affect outcome on a shareholder
proposal vote.
Columbus Circle has not, to date, actively considered filing shareholder
proposals, writing letters to companies on a regular basis, or engaging
numerous companies in a dialogue. These activities and others that could be
considered expressions of activism are not under consideration at this time.
Should a particular equity company's policy become of concern, the evaluation
and voting process will continue to be the first level of monitoring and
communication. Columbus Circle's staff participates in national forums and
maintains contacts with corporate representatives.
III. CONFLICTS OF INTEREST
Columbus Circle will monitor its proxy voting process for material conflicts
of interest. By maintaining the above-described proxy voting process, most
votes are made based on overall voting parameters rather than their
application to any particular company thereby eliminating the effect of any
potential conflict of interest.
Columbus Circle has reviewed its business, financial and personal
relationships to determine whether any conflicts of interest exist, and will
at least annually assess the impact of any conflicts of interest. As of the
date of this policy, Columbus Circle may have a conflict of interest related
to voting certain securities of publicly held companies to which the firm
provides investment advisory services.
In the event of a vote involving a conflict of interest that does not meet the
specific outlined parameters above or and requires additional company-specific
decision-making, Columbus Circle will vote according to the voting
recommendation of ISS. In the rare occurrence that ISS does not provide a
recommendation, CCI may request client consent on the issue.
Effective Date: June 19, 2007** CONFIDENTIAL AND PROPRIETARY
** The transition to these Procedures from the previous version of these
procedures will occur in stages commencing on this date. New ballots received on
the ISS system after this date will be voted under the Guidelines
PROXY VOTING POLICIES AND PROCEDURES
DIMENSIONAL FUND ADVISORS LP
DIMENSIONAL FUND ADVISORS LTD.
DFA AUSTRALIA LIMITED
Introduction
Dimensional Fund Advisors LP ("Dimensional") is an investment adviser
registered with the U.S. Securities and Exchange Commission ("SEC") pursuant to
the Investment Advisers Act of 1940 (the "Advisers Act"). Dimensional controls
Dimensional Fund Advisors Ltd. ("DFAL") and DFA Australia Limited ("DFAA")
(Dimensional, DFAL and DFAA are collectively referred to as the "Advisors").
DFAL and DFAA are also investment advisors registered under the Advisers Act.
The Advisors provide investment advisory or subadvisory services to
various types of clients, including registered funds, unregistered commingled
funds, defined benefit plans, defined contribution plans, private and public
pension funds, foundations, endowment funds and other types of investors. These
clients frequently give the Advisors the authority and discretion to vote proxy
statements relating to the underlying securities that are held on behalf of such
clients. Also, a client may, at times, ask an Advisor to provide voting advice
on certain proxies without delegating full voting discretion to the Advisor.
Depending on the client, the Advisors' duties may include making decisions
regarding whether and how to vote proxies as part of an investment manager's
fiduciary duty under ERISA.
The following Proxy Voting Policies and Procedures (the "Policy") will
apply to proxies received by the Advisors on behalf of clients to the extent
that relationships with such clients are subject to the Advisers Act or clients
that are registered investment companies under the Investment Company Act of
1940 (the "40 Act"), including The DFA Investment Trust Company, DFA Investment
Dimensions Group Inc., Dimensional Investment Group Inc. and Dimensional
Emerging Markets Value Fund Inc. (together, the "Dimensional Investment
Companies"). The Advisors believe that this Policy is reasonably designed to
meet their goal of ensuring that the Advisors vote (or refrain from voting)
proxies in a manner consistent with the best interests of their clients, as
understood by the Advisors at the time of the vote.
Exhibit A to this Policy includes the Advisors' Proxy Voting Guidelines
(the "Guidelines"). The Guidelines have been developed by Institutional
Shareholder Services, an independent third party service provider ("ISS") except
with respect to certain matters which are generally described in Exhibit A. The
Investment Committee of Dimensional has determined that, in general, voting
proxies pursuant to the Guidelines should be in the best interests of clients.
Therefore, an Advisor will usually vote proxies in accordance with the
Guidelines. The Guidelines provide a framework for analysis and decision making,
but do not address all potential issues. In order to be able to address all the
relevant facts and circumstances related to a proxy vote, the Advisors reserve
the right to vote counter to the Guidelines if, after a review of the matter, an
Advisor believes that a client's best interests would be served by such a vote.
In such circumstance, the analysis will be documented in writing and
periodically presented to the Committee (as hereinafter defined). To the extent
that the Guidelines do not cover potential voting issues, an Advisor will vote
on such issues in a manner that is consistent with the spirit of the Guidelines
and that the Advisor believes would be in the best interests of the client.
The Advisor may, but will not ordinarily take social concerns into
account in voting proxies with respect to securities held by clients including
those held by socially screened portfolios or accounts.
The Advisors have retained ISS to provide information on shareholder
meeting dates and proxy materials, translate proxy materials printed in a
foreign language, provide research on proxy proposals and voting recommendations
in accordance with the Guidelines, effect votes on behalf of the clients for
whom the Advisors have proxy voting responsibility and provide reports
concerning the proxies voted. Although the Advisors may consider the
recommendations of third party proxy service providers on proxy issues, the
Advisors remain ultimately responsible for all proxy voting decisions.
Procedures for Voting Proxies
The Investment Committee at Dimensional is generally responsible for
overseeing each Advisor's proxy voting process. The Investment Committee has
formed a Corporate Governance Committee (the "Corporate Governance Committee" or
the "Committee") composed of certain officers, directors and other personnel of
the Advisors and has delegated to its members authority to (i) oversee the
voting of proxies, (ii) make determinations as to how to vote certain specific
proxies, (iii) verify the on-going compliance with this Policy and (iv) review
this Policy from time to time and recommend changes to the Investment Committee.
The Committee may designate one or more of its members to oversee specific,
ongoing compliance with respect to these Procedures and may designate other
personnel of each Advisor to vote proxies on behalf of the Advisors' clients,
including all authorized traders of the Advisors ("Authorized Persons"). The
Committee may modify this Policy from time to time to meet the goal of acting in
a manner consistent with the best interests of the clients.
Generally, the Advisors analyze proxy statements on behalf of their
clients and vote (or refrain from voting) proxies in accordance with this Policy
and the Guidelines. Therefore, an Advisor generally will not vote differently
for different clients except when a client has expressly directed the Advisor to
vote differently for such client's account. In the case of separate accounts,
where an Advisor has contractually agreed to follow a client's individualized
proxy voting guidelines, the Advisor will vote the client's proxies pursuant to
the client's guidelines.
Each Advisor votes (or refrains from voting) proxies for its clients in
a manner that the Advisor determines is in the best interests of its clients and
which seeks to maximize the value of the client's investments. In some cases,
the Advisor may determine that it is in the best interests of clients to refrain
from exercising the clients' proxy voting rights. The Advisor may determine that
voting is not in the best interest of a client and refrain from voting if the
costs, including the opportunity costs, of voting would, in the view of the
Advisor, exceed the expected benefits of voting to the client. For securities on
loan, the Advisor will balance the revenue-producing value of loans against the
difficult-to-assess value of casting votes. It is the Advisors' belief that the
expected value of casting a vote generally will be less than the securities
lending income, either because the votes will not have significant economic
consequences or because the outcome of the vote would not be affected by the
Advisor recalling loaned securities in order to ensure they are voted. The
Advisor does intend to recall securities on loan if it determines that voting
the securities is likely to materially affect the value of a client's investment
and that it is in the client's best interests to do so.
In cases where the Advisor does not receive a solicitation or enough
information within a sufficient time (as reasonably determined by the Advisor)
prior to the proxy-voting deadline, the Advisor may be unable to vote.
Generally, the Advisors do not intend to engage in shareholder activism
with respect to a pending vote. However, if an issuer's management, shareholders
or proxy solicitors contact the Advisors with respect to a pending vote, a
member of the Committee may discuss the vote with such party and report to the
full Committee.
International Proxy Voting
While the Advisors utilize the Policy and Guidelines for both their
international and domestic portfolios and clients, there are some significant
differences between voting U.S. company proxies and voting non-U.S. company
proxies. For U.S. companies, it is relatively easy to vote proxies, as the
proxies are typically received automatically and may be voted by mail or
electronically. In most cases, the officers of a U.S. company soliciting a proxy
act as proxies for the company's shareholders.
With respect to non-U.S. companies, however, it is typically both
difficult and costly to vote proxies due to local regulations, customs or other
requirements or restrictions, and such circumstances may outweigh any
anticipated economic benefit of voting. The major difficulties and costs may
include: (i) appointing a proxy; (ii) obtaining reliable information about the
time and location of a meeting; (iii) obtaining relevant information about
voting procedures for foreign shareholders; (iv) restrictions on trading
securities that are subject to proxy votes (share-blocking periods); (v)
arranging for a proxy to vote locally in person; (vi) fees charged by custody
banks for providing certain services with regard to voting proxies; and (vii)
foregone income from securities lending programs. The Advisors do not vote
proxies of non-U.S. companies if they determine that the expected costs of
voting outweigh any anticipated economic benefit to the client of voting.(1) The
Advisors determine whether to vote proxies of non-U.S. companies on a client by
client basis, and generally implement uniform voting procedures for all proxies
of companies in each country. The Advisors periodically review voting logistics,
including costs and other voting difficulties, on a client by client and country
by country basis, in order to determine if there have been any material changes
that would affect the Advisors' decision of whether or not to vote. In the event
an Advisor is made aware of and believes that an issue to be voted is likely to
materially affect the economic value of a portfolio, that its vote is reasonably
likely to influence the ultimate outcome of the contest, and that the expected
benefits to the client of voting the proxies exceed the expected costs, the
Advisor will make every reasonable effort to vote such proxies.
Conflicts of Interest
Occasions may arise where an Authorized Person, the Committee, an
Advisor, or an affiliated person of the Advisor may have a conflict of interest
in connection with the proxy voting process. A conflict of interest may exist,
for example, if an Advisor is actively soliciting investment advisory business
from the company soliciting the proxy. However, proxies that the Advisors
receive on behalf of their clients generally will be voted in accordance with
the predetermined Guidelines. Therefore, proxies voted should not result from
any conflicts of interest.
In the limited instances where (i) an Authorized Person is considering
voting a proxy contrary to the Guidelines (or in cases for which the Guidelines
do not prescribe a particular vote), and (ii) the Authorized Person believes a
potential conflict of interest exists, the Authorized Person will disclose the
potential conflict to a member of the Committee. Such disclosure will describe
the proposal to be voted upon and disclose any personal conflict of interest
(e.g., familial relationship with company management) the Authorized Person may
have relating to the proxy vote, in which case the Authorized Person will remove
himself or herself from the proxy voting process.
If the Committee member determines that there is no material conflict
of interest involving the Advisor or affiliated persons of the Advisor, the
Committee member may approve voting the proxy contrary to the Guidelines, so
long as the Committee member believes such a vote would be in the best interests
of the client. If the Committee member has actual knowledge of a material
conflict of interest and recommends a vote contrary to the Guidelines, prior to
voting the Advisor will fully disclose the material conflict to the client and
vote the proxy in accordance with the direction of the client.(2) If the client
has not provided the Advisor with voting instructions within a sufficient time
(as reasonably determined by the Advisor) prior to the proxy-voting deadline,
the Advisor will vote the proxy in accordance with the Guidelines.
Availability of Proxy Voting Information and Recordkeeping
Each Advisor will inform its clients on how to obtain information
regarding the Advisor's voting of its clients' securities. The Advisor will
provide its clients with a summary of its proxy voting guidelines, process and
policies and will inform its clients of how they can obtain a copy of the
complete Policy upon request. The Advisor will include such information
described in the preceding two sentences in Part II of its Form ADV. The Advisor
will also provide its existing clients with the above information.
Recordkeeping
The Advisors will also keep records of the following items: (i) their
proxy voting guidelines, policies and procedures; (ii) proxy statements received
regarding client securities (unless such statements are available on the SEC's
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system); (iii)
records of votes they cast on behalf of clients, which may be maintained by a
third party service provider if the service provider undertakes to provide
copies of those records promptly upon request; (iv) records of written client
requests for proxy voting information and the Advisors' responses (whether a
client's request was oral or in writing); and (v) any documents prepared by the
Advisors that were material to making a decision how to vote, or that
memorialized the basis for the decision. The Advisors will maintain these
records in an easily accessible place for at least six years from the end of the
fiscal year during which the last entry was made on such records. For the first
two years, each Advisor will store such records at one of its principal offices.
Disclosure
Dimensional shall disclose in the statements of additional information
of the Dimensional Investment Companies a summary of procedures which
Dimensional uses to determine how to vote proxies relating to portfolio
securities of the Dimensional Investment Companies. The disclosure will include
a description of the procedures used when a vote presents a conflict of interest
between shareholders and Dimensional, DFA Securities Inc. ("DFAS") or an
affiliate of Dimensional or DFAS.
The semi-annual reports of the Dimensional Investment Companies shall
indicate that the procedures are available: (i) by calling Dimensional collect;
or (ii) on the SEC's website. If a request for the procedures is received, the
requested description must be sent within three business days by a prompt method
of delivery.
Dimensional, on behalf of each Dimensional Investment Company it
advises, shall file its proxy voting record with the SEC on Form N-PX no later
than August 31 of each year, for the twelve-month period ending June 30 of the
current year. Such filings shall contain all information required to be
disclosed on Form N-PX.
[PG NUMBER]
EXHIBIT A
PROXY VOTING GUIDELINES
See Attached
(1) As the SEC has stated, "There may even be times when refraining from voting
a proxy is in the client's best interest, such as when the adviser
determines that the cost of voting the proxy exceeds the expected benefit
to the client...For example, casting a vote on a foreign security may
involve additional costs such as hiring a translator or traveling to the
foreign country to vote the security in person." See Proxy Voting by
Investment Advisers, Release No. IA-2106 (Jan. 31, 2003). Additionally, the
Department of Labor has stated it "interprets ERISAss. 404(a)(1) to require
the responsible plan fiduciary to weigh the costs and benefits of voting on
proxy proposals relating to foreign securities and make an informed
decision with respect to whether voting a given proxy proposal is prudent
and solely in the interest of the plan's participants and beneficiaries."
See Preamble to Department of Labor Interpretative Bulletin 94-2, 59 FR
38860 (July 29, 1994) 19,971, CCH, 22,485-23 to 22,485-24 (1994).
(2) In the case of a client that is a Dimensional Investment Company, a
Committee member will determine if any conflict of interest may exist,
regardless of whether the conflict is material. If the Committee member has
actual knowledge of a conflict of interest and recommends a vote contrary
to the Guidelines, prior to voting the Advisor will fully disclose the
conflict to the Dimensional Investment Company's Board of
Directors/Trustees or an authorized committee of the Board and vote the
proxy in accordance with the direction of such Board or committee.
(C) 2006 Institutional Shareholder Services Inc. All Rights Reserved.
Concise Summary of ISS 2007 Proxy Voting Guidelines
Effective for Meetings Feb. 1, 2007
Updated Dec. 15, 2006
1. Auditors
Auditor Ratification
Vote FOR proposals to ratify auditors, unless any of the following apply:
o An auditor has a financial interest in or association with the company, and is
therefore not independent, o There is reason to believe that the independent
auditor has rendered an opinion which is neither
accurate nor indicative of the company's financial position; or
o Fees for non-audit services ("Other" fees) are excessive.
2. Board of Directors
Voting on Director Nominees in Uncontested Elections
Vote CASE-BY-CASE on director nominees, examining, but not limited to, the
following factors:
o Composition of the board and key board committees; o Attendance at board
and committee meetings;
o Corporate governance provisions and takeover activity;
o Disclosures under Section 404 of Sarbanes-Oxley Act; o Long-term company
performance relative to a market and peer index;
o Extent of the director's investment in the company;
o Existence of related party transactions;
o Whether the chairman is also serving as CEO;
o Whether a retired CEO sits on the board;
o Number of outside boards at which a director serves;
o Majority vote standard for director elections without a provision to allow
for plurality voting when there are more nominees than seats.
WITHHOLD from individual directors who:
o Attend less than 75 percent of the board and committee meetings without
a valid excuse (such as illness, service to the nation, work on behalf
of the company);
o Sit on more than six public company boards*;
o Are CEOs of public companies who sit on the boards of more than two
public companies besides their own-- withhold only at their outside
boards.
WITHHOLD from the entire board of directors, (except from new nominees, who
should be considered on a CASE-BY-CASE basis) if:
o The company's proxy indicates that not all directors attended 75% of the
aggregate of their board and committee meetings, but fails to provide the
required disclosure of the names of the directors involved. If this
information cannot be obtained, withhold from all incumbent directors;
o The company's poison pill has a dead-hand or modified dead-hand feature.
Withhold every year until this feature is removed;
o The board adopts or renews a poison pill without shareholder approval since
the beginning of 2005, does not commit to putting it to shareholder vote
within 12 months of adoption, or reneges on a commitment to put the pill to
a vote, and has not yet received a withhold recommendation for this issue;
o The board failed to act on a shareholder proposal that received approval by
a majority of the shares outstanding the previous year;
o The board failed to act on a shareholder proposal that received approval of
the majority of shares cast for the previous two consecutive years;
o The board failed to act on takeover offers where the majority of the
shareholders tendered their shares; o At the previous board election, any
director received more than 50 percent withhold votes of the shares cast
and the company has failed to address the issue(s) that caused the high
withhold rate; o The company is a Russell 3000 company that underperformed
its industry group (GICS group) under the criteria discussed in the section
"Performance Test for Directors".
WITHHOLD from Inside Directors and Affiliated Outside Directors (per the
Classification of Directors below) when:
o The inside or affiliated outside director serves on any of the three key
committees: audit, compensation, or nominating;
o The company lacks an audit, compensation, or nominating committee so that
the full board functions as that committee;
o The company lacks a formal nominating committee, even if board attests that
the independent directors fulfill the functions of such a committee; o The
full board is less than majority independent. WITHHOLD from the members of
the Audit Committee if:
o The non - audit fees paid to the auditor are excessive (see discussion
under Auditor Ratification);
o A material weakness identified in the Section 404 Sarbanes-Oxley Act
disclosures rises to a level of serious concern; there are chronic internal
control issues and an absence of established effective control mechanisms;
o There is persuasive evidence that the audit committee entered into an
inappropriate indemnification agreement with its auditor that limits the
ability of the company, or its shareholders, to pursue legitimate legal
recourse against the audit firm.
WITHHOLD from the members of the Compensation Committee if:
o There is a negative correlation between the chief executive's pay and
company performance (see discussion under Equity Compensation Plans);
o The company reprices underwater options for stock, cash or other
consideration without prior shareholder approval, even if allowed in their
equity plan;
o The company fails to submit one-time transfers of stock options to a
shareholder vote; o The company fails to fulfill the terms of a burn rate
commitment they made to shareholders;
o The company has backdated options (see "Options Backdating" policy);
o The company has poor compensation practices (see "Poor Pay Practices"
policy). Poor pay practices may warrant withholding votes from the CEO and
potentially the entire board as well.
WITHHOLD from directors, individually or the entire board, for egregious actions
or failure to replace management as appropriate.
Classification/Declassification of the Board
Vote AGAINST proposals to classify the board. Vote FOR proposals to repeal
classified boards, and to elect all directors annually.
Independent Chair (Separate Chair/CEO)
Generally vote FOR shareholder proposals requiring an independent director fill
the position of chair, unless there are compelling reasons to recommend against
the proposal, such as a counterbalancing governance structure. This should
include all of the following:
o Has a designated lead director, elected by and from the independent
board members with clearly delineated and comprehensive duties. (The
role may alternatively reside with a presiding director, vice chairman,
or rotating lead director; however the director must serve a minimum of
one year in order to qualify as a lead director.) At a minimum these
should include:
- Presiding at all meetings of the board at which the chairman is not
present, including executive sessions of the independent directors,
- Serving as liaison between the chairman and the independent directors,
- Approving information sent to the board,
- Approving meeting agendas for the board,
- Approves meetings schedules to assure that there is sufficient time
for discussion of all agenda items,
- Having the authority to call meetings of the independent directors,
- If requested by major shareholders, ensuring that he is available for
consultation and direct communication;
o Two-thirds independent board;
o All-independent key committees;
o Established governance guidelines;
o The company does not under-perform its peers*.
*Starting in 2007, the industry peer group used for this evaluation will change
from the 4-digit GICS group to the average of the 12 companies in the same
6-digit GICS group that are closest in revenue to the company, and identified on
the executive compensation page of proxy analyses. To fail, the company must
under-perform its index and industry group on all 4 measures (1 and 3 year
performance, industry peers, and index).
Majority Vote Shareholder Proposals
Generally vote FOR precatory and binding resolutions requesting that the board
change the company's bylaws to stipulate that directors need to be elected with
an affirmative majority of votes cast, provided it does not conflict with the
state law where the company is incorporated. Binding resolutions need to allow
for a carve-out for a plurality vote standard when there are more nominees than
board seats. Companies are strongly encouraged to also adopt a post-election
policy (also know as a director resignation policy) that will provide guidelines
so that the company will promptly address the situation of a holdover director.
3. Proxy Contests
Voting for Director Nominees in Contested Elections
Vote CASE-BY-CASE on the election of directors in contested elections,
considering the following factors: o Long-term financial performance of the
target company relative to its industry; o Management's track record; o
Background to the proxy contest; o Qualifications of director nominees (both
slates); o Strategic plan of dissident slate and quality of critique against
management; o Likelihood that the proposed goals and objectives can be achieved
(both slates); o Stock ownership positions.
Reimbursing Proxy Solicitation Expenses
Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When
voting in conjunction with support of a dissident slate, vote FOR the
reimbursement of all appropriate proxy solicitation expenses associated with the
election.
4. Takeover Defenses
Poison Pills
Vote FOR shareholder proposals requesting that the company submit its poison
pill to a shareholder vote or redeem it UNLESS the company has: (1) A
shareholder approved poison pill in place; or (2) The company has adopted a
policy concerning the adoption of a pill in the future specifying that the board
will only adopt a shareholder rights plan if either:
o Shareholders have approved the adoption of the plan; or
o The board, in its exercise of its fiduciary responsibilities,
determines that it is in the best interest of shareholders under the
circumstances to adopt a pill without the delay in adoption that would
result from seeking stockholder approval (i.e. the "fiduciary out"
provision). A poison pill adopted under this fiduciary out will be put
to a shareholder ratification vote within twelve months of adoption or
expire. If the pill is not approved by a majority of the votes cast on
this issue, the plan will immediately terminate.
Vote FOR shareholder proposals calling for poison pills to be put to a vote
within a time period of less than one year after adoption. If the company has no
non-shareholder approved poison pill in place and has adopted a policy with the
provisions outlined above, vote AGAINST the proposal. If these conditions are
not met, vote FOR the proposal, but with the caveat that a vote within twelve
months would be considered sufficient.
Vote CASE-by-CASE on management proposals on poison pill ratification, focusing
on the features of the shareholder rights plan. Rights plans should contain the
following attributes:
o No lower than a 20% trigger, flip-in or flip-over;
o A term of no more than three years;
o No dead-hand, slow-hand, no-hand or similar feature that limits the ability
of a future board to redeem the pill;
o Shareholder redemption feature (qualifying offer clause); if the board
refuses to redeem the pill 90 days after a qualifying offer is announced,
ten percent of the shares may call a special meeting or seek a written
consent to vote on rescinding the pill.
Supermajority Vote Requirements
Vote AGAINST proposals to require a supermajority shareholder vote. Vote FOR
proposals to lower supermajority vote requirements.
5. Mergers and Corporate Restructurings
For mergers and acquisitions, review and evaluate the merits and drawbacks of
the proposed transaction, balancing various and sometimes countervailing factors
including:
o Valuation - Is the value to be received by the target shareholders (or paid
by the acquirer) reasonable? While the fairness opinion may provide an
initial starting point for assessing valuation reasonableness, emphasis is
placed on the offer premium, market reaction and strategic rationale.
o Market reaction - How has the market responded to the proposed deal? A
negative market reaction should cause closer scrutiny of a deal.
o Strategic rationale - Does the deal make sense strategically? From where is
the value derived? Cost and revenue synergies should not be overly
aggressive or optimistic, but reasonably achievable. Management should also
have a favorable track record of successful integration of historical
acquisitions.
o Negotiations and process - Were the terms of the transaction negotiated at
arm's-length? Was the process fair and equitable? A fair process helps to
ensure the best price for shareholders. Significant negotiation "wins" can
also signify the deal makers' competency. The comprehensiveness of the
sales process (e.g., full auction, partial auction, no auction) can also
affect shareholder value.
o Conflicts of interest - Are insiders benefiting from the transaction
disproportionately and inappropriately as compared to non-insider
shareholders? As the result of potential conflicts, the directors and
officers of the company may be more likely to vote to approve a merger than
if they did not hold these interests. Consider whether these interests may
have influenced these directors and officers to support or recommend the
merger. The CIC figure presented in the "ISS Transaction Summary" section
of this report is an aggregate figure that can in certain cases be a
misleading indicator of the true value transfer from shareholders to
insiders. Where such figure appears to be excessive, analyze the underlying
assumptions to determine whether a potential conflict exists.
o Governance - Will the combined company have a better or worse governance
profile than the current governance profiles of the respective parties to
the transaction? If the governance profile is to change for the worse, the
burden is on the company to prove that other issues (such as valuation)
outweigh any deterioration in governance.
6. State of Incorporation
Reincorporation Proposals
Vote CASE-BY-CASE on proposals to change a company's state of incorporation,
taking into consideration both financial and corporate governance concerns,
including the reasons for reincorporating, a comparison of the governance
provisions, comparative economic benefits, and a comparison of the
jurisdictional laws. Vote FOR re-incorporation when the economic factors
outweigh any neutral or negative governance changes.
7. Capital Structure
Common Stock Authorization
Vote CASE-BY-CASE on proposals to increase the number of shares of common stock
authorized for issuance using a model developed by ISS. Vote FOR proposals to
approve increases beyond the allowable increase when a company's shares are in
danger of being de-listed or if a company's ability to continue to operate as a
going concern is uncertain.
In addition, for capital requests that are less than or equal to 300 percent of
the current authorized shares and marginally fail the calculated allowable cap
(i.e., exceed the allowable cap by no more than 5 percent) vote on a
CASE-BY-CASE basis, In this situation, vote FOR the increase based on the
company's performance, and whether the company's ongoing use of shares has shown
prudence.
Issue Stock for Use with Rights Plan
Vote AGAINST proposals that increase authorized common stock for the explicit
purpose of implementing a non-shareholder approved shareholder rights plan
(poison pill).
Preferred Stock
Vote AGAINST proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock). Vote FOR proposals to create "de-clawed"
blank check preferred stock (stock that cannot be used as a takeover defense).
Vote FOR proposals to authorize preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable. Vote AGAINST proposals to
increase the number of blank check preferred stock authorized for issuance when
no shares have been issued or reserved for a specific purpose. Vote CASE-BY-CASE
on proposals to increase the number of blank check preferred shares after
analyzing the number of preferred shares available for issue given a company's
industry and performance in terms of shareholder returns.
8. Executive and Director Compensation
Poor Pay Practices
WITHHOLD from compensation committee members, CEO, and potentially the entire
board, if the company has poor compensation practices, such as:
o Egregious employment contracts (e.g., those containing multi-year
guarantees for bonuses and grants);
o Excessive perks that dominate compensation (e.g., tax gross-ups for
personal use of corporate aircraft);
o Huge bonus payouts without justifiable performance linkage or proper
disclosure;
o Performance metrics that are changed (e.g., canceled or replaced during the
performance period without adequate explanation of the action and the link
to performance);
o Egregious pension/SERP (supplemental executive retirement plan) payouts
(e.g., the inclusion of additional years of service not worked or inclusion
of performance-based equity awards in the pension calculation);
o New CEO awarded an overly generous new hire package (e.g., including
excessive "make whole" provisions or any of the poor pay practices listed
in this policy);
o Excessive severance provisions (e.g., including excessive change in control
payments);
o Change in control payouts without loss of job or substantial diminution of
job duties;
o Internal pay disparity;
o Options backdating (covered in a separate policy); and
Equity Compensation Plans
Vote CASE-BY-CASE on equity-based compensation plans. Vote AGAINST the equity
plan if any of the following factors apply:
o The total cost of the company's equity plans is unreasonable;
o The plan expressly permits the repricing of stock options without prior
shareholder approval;
o There is a disconnect between CEO pay and the company's performance;
o The company's three year burn rate exceeds the greater of 2% and the mean
plus 1 standard deviation of its industry group; or o The plan is a vehicle
for poor pay practices.
Director Compensation
Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the
cost of the plans against the company's allowable cap.
On occasion, director stock plans that set aside a relatively small number of
shares when combined with employee or executive stock compensation plans exceed
the allowable cap. Vote for the plan if ALL of the following qualitative factors
in the board's compensation are met and disclosed in the proxy statement:
o Director stock ownership guidelines with a minimum of three times the
annual cash retainer.
o Vesting schedule or mandatory holding/deferral period:
- A minimum vesting of three years for stock options or restricted
stock; or
- Deferred stock payable at the end of a three-year deferral period.
o Mix between cash and equity:
- A balanced mix of cash and equity, for example 40% cash/60% equity or
50% cash/50% equity; or
- If the mix is heavier on the equity component, the vesting schedule or
deferral period should be more stringent, with the lesser of five
years or the term of directorship.
o No retirement/benefits and perquisites provided to non-employee directors;
and
o Detailed disclosure provided on cash and equity compensation delivered to
each non-employee director for the most recent fiscal year in a table. The
column headers for the table may include the following: name of each
non-employee director, annual retainer, board meeting fees, committee
retainer, committee-meeting fees, and equity grants.
Employee Stock Purchase Plans--Qualified Plans
Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR employee
stock purchase plans where all of the following apply:
o Purchase price is at least 85% of fair market value;
o Offering period is 27 months or less; and
o The number of shares allocated to the plan is ten percent or less of the
outstanding shares.
Employee Stock Purchase Plans--Non-Qualified Plans
Vote CASE-by-CASE on nonqualified employee stock purchase plans. Vote FOR
nonqualified employee stock purchase plans with all the following features:
o Broad-based participation (i.e., all employees of the company with the
exclusion of individuals with 5% or more of beneficial ownership of the
company);
o Limits on employee contribution, which may be a fixed dollar amount or
expressed as a percent of base salary;
o Company matching contribution up to 25% of employee's contribution, which
is effectively a discount of 20% from market value;
o No discount on the stock price on the date of purchase, since there is a
company matching contribution.
Options Backdating
In cases where a company has practiced options backdating, WITHHOLD on a
CASE-BY-CASE basis from the members of the compensation committee, depending on
the severity of the practices and the subsequent corrective actions on the part
of the board. WITHHOLD from the compensation committee members who oversaw the
questionable options grant practices or from current compensation committee
members who fail to respond to the issue proactively, depending on several
factors, including, but not limited to:
o Reason and motive for the options backdating issue, such as inadvertent vs.
deliberate grant date changes;
o Length of time of options backdating;
o Size of restatement due to options backdating;
o Corrective actions taken by the board or compensation committee, such as
canceling or repricing backdated options, or recouping option gains on
backdated grants;
o Adoption of a grant policy that prohibits backdating, and creation of a
fixed grant schedule or window period for equity grants going forward.
Severance Agreements for Executives/Golden Parachutes
Vote FOR shareholder proposals to require golden parachutes or executive
severance agreements to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into employment
contracts. Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden
parachutes. An acceptable parachute should include, but is not limited to, the
following:
o The triggering mechanism should be beyond the control of management;
o The amount should not exceed three times base amount (defined as the
average annual taxable W-2 compensation) during the five years prior to
the year in which the change of control occurs;
o Change-in-control payments should be double-triggered, i.e., (1) after
a change in control has taken place, and (2) termination of the
executive as a result of the change in control. Change in control is
defined as a change in the company ownership structure.
9. Corporate Responsibility
Animal Rights
Generally vote AGAINST proposals to phase out the use of animals in product
testing unless: o The company is conducting animal testing programs that are
unnecessary or not required by regulation; o The company is conducting animal
testing when suitable alternatives are accepted and used at peer firms; o The
company has been the subject of recent, significant controversy related to its
testing programs.
Drug Pricing and Re-importation
Generally vote AGAINST proposals requesting that companies implement specific
price restraints on pharmaceutical products, unless the company fails to adhere
to legislative guidelines or industry norms in its product pricing. Vote
CASE-BY-CASE on proposals requesting that the company evaluate their product
pricing considering: o The existing level of disclosure on pricing policies; o
Deviation from established industry pricing norms; o The company's existing
initiatives to provide its products to needy consumers; o Whether the proposal
focuses on specific products or geographic regions.
Generally vote FOR proposals requesting that companies report on the financial
and legal impact of their policies regarding prescription drug re-importation
unless such information is already publicly disclosed. Generally vote AGAINST
proposals requesting that companies adopt specific policies to encourage or
constrain prescription drug re-importation.
Genetically Modified Foods
Vote AGAINST proposals asking companies to voluntarily label genetically
engineered (GE) ingredients in their products, or alternatively to provide
interim labeling and eventually eliminate GE ingredients due to the costs and
feasibility of labeling and/or phasing out the use of GE ingredients.
Genetically Modified Foods
Vote AGAINST proposals asking companies to voluntarily label genetically
engineered (GE) ingredients in their products or alternatively to provide
interim labeling and eventually eliminate GE ingredients due to the costs and
feasibility of labeling and/or phasing out the use of GE ingredients.
Tobacco
Most tobacco-related proposals (such as on second-hand smoke, advertising to
youth, and spin-offs of tobacco-related business) should be evaluated on a
CASE-BY-CASE basis.
Toxic Chemicals
Generally vote FOR resolutions requesting that a company discloses its policies
related to toxic chemicals. Vote CASE-BY-CASE on resolutions requesting that
companies evaluate and disclose the potential financial and legal risks
associated with utilizing certain chemicals.
Generally vote AGAINST resolutions requiring that a company reformulate its
products within a certain timeframe, unless such actions are required by law in
specific markets.
Arctic National Wildlife Refuge
Generally vote AGAINST request for reports outlining potential environmental
damage from drilling in the Arctic National Wildlife Refuge (ANWR) unless: o New
legislation is adopted allowing development and drilling in the ANWR region; o
The company intends to pursue operations in the ANWR; and o The company has not
disclosed an environmental risk report for its ANWR operations.
Concentrated Area Feeding Operations (CAFOs)
Vote FOR resolutions requesting that companies report to shareholders on the
risks and liabilities associated with CAFOs, unless: o The company has publicly
disclosed guidelines for its corporate and contract farming operations,
including compliance monitoring; or
o The company does not directly source from CAFOs.
Global Warming and Kyoto Protocol Compliance
Generally vote FOR proposals requesting a report on greenhouse gas emissions
from company operations and/or products unless this information is already
publicly disclosed or such factors are not integral to the company's line of
business. Generally vote AGAINST proposals that call for reduction in greenhouse
gas emissions by specified amounts or within a restrictive time frame unless the
company lags industry standards and has been the subject of recent, significant
fines or litigation resulting from greenhouse gas emissions.
Generally vote FOR resolutions requesting that companies outline their
preparations to comply with standards established by Kyoto Protocol signatory
markets unless: o The company does not maintain operations in Kyoto signatory
markets; o The company already evaluates and substantially discloses such
information; or, o Greenhouse gas emissions do not significantly impact the
company's core businesses.
Political Contributions
Vote CASE-BY-CASE on proposals to improve the disclosure of a company's
political contributions considering: recent significant controversy or
litigation related to the company's political contributions or governmental
affairs; and the public availability of a policy on political contributions.
Vote AGAINST proposals barring the company from making political contributions.
Link Executive Compensation to Social Performance
Vote CASE-BY-CASE on proposals to review ways of linking executive compensation
to social factors, such as corporate downsizings, customer or employee
satisfaction, community involvement, human rights, environmental performance,
predatory lending, and executive/employee pay disparities.
Outsourcing/Off-shoring
Vote CASE-BY-CASE on proposals calling for companies to report on the risks
associated with outsourcing, considering: the risks associated with certain
international markets; the utility of such a report to shareholders; the
existence of a publicly available code of corporate conduct that applies to
international operations.
Country-specific Human Rights Reports
Vote CASE-BY-CASE on requests for reports detailing the company's operations in
a particular country and on proposals to implement certain human rights
standards at company facilities or those of its suppliers and to commit to
outside, independent monitoring.
10. Mutual Fund Proxies
Election of Directors
Vote CASE-BY-CASE on the election of directors and trustees, following the same
guidelines for uncontested directors for public company shareholder meetings.
However, mutual fund boards do not usually have compensation committees, so do
not withhold for the lack of this committee.
Converting Closed-end Fund to Open-end Fund
Vote CASE-BY-CASE on conversion proposals, considering the following factors: o
Past performance as a closed-end fund; o Market in which the fund invests; o
Measures taken by the board to address the discount; and o Past shareholder
activism, board activity, and votes on related proposals.
Establish Director Ownership Requirement
Generally vote AGAINST shareholder proposals that mandate a specific minimum
amount of stock that directors must own in order to qualify as a director or to
remain on the board.
Reimburse Shareholder for Expenses Incurred
Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation
expenses. When supporting the dissidents, vote FOR the reimbursement of the
proxy solicitation expenses.
* Dimensional will screen votes otherwise subject to this policy based on the
qualifications and circumstances of the directors involved.
[PG NUMBER]
ISS 2007 International Proxy Voting Guidelines Summary
Effective for Meetings Feb. 1, 2007
Updated Dec. 15, 2006
The following is a concise summary of the ISS general policies for voting
non-U.S. proxies. In addition, ISS has country- and market-specific policies,
which are not captured below.
Operational Items........................................................................................4
Financial Results/Director and Auditor Reports.....................................................4
Appointment of Auditors and Auditor Fees...........................................................4
Appointment of Internal Statutory Auditors.........................................................4
Allocation of Income...............................................................................4
Stock (Scrip) Dividend Alternative.................................................................4
Amendments to Articles of Association..............................................................4
Change in Company Fiscal Term......................................................................4
Lower Disclosure Threshold for Stock Ownership.....................................................4
Amend Quorum Requirements..........................................................................5
Transact Other Business............................................................................5
Board of Directors.......................................................................................5
Director Elections.................................................................................5
2007 International Classification of Directors.....................................................6
Director Compensation..............................................................................7
Discharge of Board and Management..................................................................7
Director, Officer, and Auditor Indemnification and Liability Provisions............................7
Board Structure....................................................................................7
Capital Structure........................................................................................7
Share Issuance Requests............................................................................7
Increases in Authorized Capital....................................................................8
Reduction of Capital...............................................................................8
Capital Structures.................................................................................8
Preferred Stock....................................................................................8
Debt Issuance Requests.............................................................................8
Pledging of Assets for Debt........................................................................9
Increase in Borrowing Powers.......................................................................9
Share Repurchase Plans.............................................................................9
Reissuance of Shares Repurchased...................................................................9
Capitalization of Reserves for Bonus Issues/Increase in Par Value..................................9
Other....................................................................................................9
Reorganizations/Restructurings.....................................................................9
Mergers and Acquisitions...........................................................................9
Mandatory Takeover Bid Waivers....................................................................10
Reincorporation Proposals.........................................................................10
Expansion of Business Activities..................................................................10
Related-Party Transactions........................................................................10
Compensation Plans................................................................................10
Antitakeover Mechanisms...........................................................................10
Shareholder Proposals.............................................................................10
Operational Items
Financial Results/Director and Auditor Reports
Vote FOR approval of financial statements and director and auditor reports,
unless:
o There are concerns about the accounts presented or audit procedures
used; or
o The company is not responsive to shareholder questions about specific
items that should be publicly disclosed.
Appointment of Auditors and Auditor Fees
Vote FOR the reelection of auditors and proposals authorizing the board to fix
auditor fees, unless:
o There are serious concerns about the accounts presented or the audit
procedures used;
o The auditors are being changed without explanation; or
o Non-audit-related fees are substantial or are routinely in excess of
standard annual audit-related fees.
Vote AGAINST the appointment of external auditors if they have previously served
the company in an executive capacity or can otherwise be considered affiliated
with the company.
Appointment of Internal Statutory Auditors
Vote FOR the appointment or reelection of statutory auditors, unless:
o There are serious concerns about the statutory reports presented or
the audit procedures used;
o Questions exist concerning any of the statutory auditors being
appointed; or
o The auditors have previously served the company in an executive
capacity or can otherwise be considered affiliated with the company.
Allocation of Income
Vote FOR approval of the allocation of income, unless:
o The dividend payout ratio has been consistently below 30 percent
without adequate explanation; or
o The payout is excessive given the company's financial position.
Stock (Scrip) Dividend Alternative
Vote FOR most stock (scrip) dividend proposals.
Vote AGAINST proposals that do not allow for a cash option unless management
demonstrates that the cash option is harmful to shareholder value.
Amendments to Articles of Association
Vote amendments to the articles of association on a CASE-BY-CASE basis.
Change in Company Fiscal Term
Vote FOR resolutions to change a company's fiscal term unless a company's
motivation for the change is to postpone its AGM.
Lower Disclosure Threshold for Stock Ownership
Vote AGAINST resolutions to lower the stock ownership disclosure threshold below
5 percent unless specific reasons exist to implement a lower threshold.
Amend Quorum Requirements
Vote proposals to amend quorum requirements for shareholder meetings on a
CASE-BY-CASE basis.
Transact Other Business
Vote AGAINST other business when it appears as a voting item.
Board of Directors
Director Elections
Vote FOR management nominees in the election of directors, unless:
o Adequate disclosure has not been provided in a timely manner;
o There are clear concerns over questionable finances or restatements;
o There have been questionable transactions with conflicts of interest;
o There are any records of abuses against minority shareholder
interests; or
o The board fails to meet minimum corporate governance standards.
Vote FOR individual nominees unless there are specific concerns about the
individual, such as criminal wrongdoing or breach of fiduciary responsibilities.
Vote AGAINST shareholder nominees unless they demonstrate a clear ability to
contribute positively to board deliberations.
Vote AGAINST individual directors if repeated absences at board meetings have
not been explained (in countries where this information is disclosed).
Vote AGAINST labor representatives if they sit on either the audit or
compensation committee, as they are not required to be on those committees.
Please see the International Classification of Directors on the following page.
------------------------------------------------------------------------------
Executive Director
o Employee or executive of the company;
o Any director who is classified as a non-executive, but receives
salary, fees, bonus, and/or other benefits that are in line with the
highest-paid executives of the company.
Non-Independent Non-Executive Director (NED)
o Any director who is attested by the board to be a non-independent NED;
o Any director specifically designated as a representative of a
significant shareholder of the company;
o Any director who is also an employee or executive of a significant
shareholder of the company;
o Beneficial owner (direct or indirect) of at least 10 percent of the
company's stock, either in economic terms or in voting rights (this
may be aggregated if voting power is distributed among more than one
member of a defined group, e.g., members of a family that beneficially
own less than 10 percent individually, but collectively own more than
10 percent), unless market best practice dictates a lower ownership
and/or disclosure threshold (and in other special market-specific
circumstances);
o Government representative;
o Currently provides (or a relative(1) provides) professional
services(4) to the company, to an affiliate of the company, or to an
individual officer of the company or of one of its affiliates in
excess of $10,000 per year;
o Represents customer, supplier, creditor, banker, or other entity with
which company maintains transactional/commercial relationship (unless
company discloses information to apply a materiality test(2));
o Any director who has conflicting or cross-directorships with executive
directors or the chairman of the company;
o Relative(1) of current employee of the company or its affiliates;
o Relative(1) of former executive of the company or its affiliates;
o A new appointee elected other than by a formal process through the
general meeting (such as a contractual appointment by a substantial
shareholder);
o Founder/co-founder/member of founding family but not currently an
employee;
o Former executive (five-year cooling off period);
o Years of service will NOT be a determining factor unless it is
recommended best practice in a market:
-9 years (from the date of election) in the United Kingdom and
Ireland;
-12 years in European markets.
Independent NED
o No material(3) connection, either direct or indirect, to the company
other than a board seat.
Employee Representative
o Represents employees or employee shareholders of the company
(classified as employee representative but considered a
non-independent NED).
Footnotes:
(1)Relative follows the SECs proposed definition of immediate family members
which covers spouses, parents, children, step-parents, step-children, siblings,
in-laws, and any person (other than a tenant or employee) sharing the household
of any director, nominee for director, executive officer, or significant
shareholder of the company.
(2) If the company makes or receives annual payments exceeding the greater of
$200,000 or 5 percent of the recipients gross revenues. (The recipient is the
party receiving the financial proceeds from the transaction.)
(3) For purposes of ISS' director independence classification, material will be
defined as a standard of relationship (financial, personal, or otherwise) that a
reasonable person might conclude could potentially influence ones objectivity in
the boardroom in a manner that would have a meaningful impact on an individual's
ability to satisfy requisite fiduciary standards on behalf of shareholders.
(4) Professional services can be characterized as advisory in nature and
generally include the following: investment banking/financial advisory services;
commercial banking (beyond deposit services); investment services; insurance
services; accounting/audit services; consulting services; marketing services;
and legal services. The case of participation in a banking syndicate by a
non-lead bank should be considered a transaction (and hence subject to the
associated materiality test) rather than a professional relationship.
------------------------------------------------------------------------------
Director Compensation
Vote FOR proposals to award cash fees to non-executive directors unless the
amounts are excessive relative to other companies in the country or industry.
Vote non-executive director compensation proposals that include both cash and
share-based components on a CASE-BY-CASE basis.
Vote proposals that bundle compensation for both non-executive and executive
directors into a single resolution on a CASE-BY-CASE basis.
Vote AGAINST proposals to introduce retirement benefits for non-executive
directors.
Discharge of Board and Management
Vote FOR discharge of the board and management, unless:
o There are serious questions about actions of the board or management
for the year in question; or
o Legal action is being taken against the board by other shareholders.
Vote AGAINST proposals to remove approval of discharge of board and management
from the agenda.
Director, Officer, and Auditor Indemnification and Liability Provision
Vote proposals seeking indemnification and liability protection for directors
and officers on a CASE-BY-CASE basis.
Vote AGAINST proposals to indemnify auditors.
Board Structure
Vote FOR proposals to fix board size.
Vote AGAINST the introduction of classified boards and mandatory retirement ages
for directors.
Vote AGAINST proposals to alter board structure or size in the context of a
fight for control of the company or the board.
Capital Structure
Share Issuance Requests
General Issuances:
Vote FOR issuance requests with preemptive rights to a maximum of 100 percent
over currently issued capital.
Vote FOR issuance requests without preemptive rights to a maximum of 20 percent
of currently issued capital.
Specific Issuances:
Vote on a CASE-BY-CASE basis on all requests, with or without preemptive rights.
Increases in Authorized Capital
Vote FOR non-specific proposals to increase authorized capital up to 100 percent
over the current authorization unless the increase would leave the company with
less than 30 percent of its new authorization outstanding.
Vote FOR specific proposals to increase authorized capital to any amount,
unless:
o The specific purpose of the increase (such as a share-based
acquisition or merger) does not meet ISS guidelines for the purpose
being proposed; or
o The increase would leave the company with less than 30 percent of its
new authorization outstanding after adjusting for all proposed
issuances.
Vote AGAINST proposals to adopt unlimited capital authorizations.
Reduction of Capital
Vote FOR proposals to reduce capital for routine accounting purposes unless the
terms are unfavorable to shareholders.
Vote proposals to reduce capital in connection with corporate restructuring on a
CASE-BY-CASE basis.
Capital Structures
Vote FOR resolutions that seek to maintain or convert to a one-share, one-vote
capital structure.
Vote AGAINST requests for the creation or continuation of dual-class capital
structures or the creation of new or additional supervoting shares.
Preferred Stock
Vote FOR the creation of a new class of preferred stock or for issuances of
preferred stock up to 50 percent of issued capital unless the terms of the
preferred stock would adversely affect the rights of existing shareholders.
Vote FOR the creation/issuance of convertible preferred stock as long as the
maximum number of common shares that could be issued upon conversion meets ISS'
guidelines on equity issuance requests.
Vote AGAINST the creation of a new class of preference shares that would carry
superior voting rights to the common shares.
Vote AGAINST the creation of blank check preferred stock unless the board
clearly states that the authorization will not be used to thwart a takeover bid.
Vote proposals to increase blank check preferred authorizations on a
CASE-BY-CASE basis.
Debt Issuance Requests
Vote non-convertible debt issuance requests on a CASE-BY-CASE basis, with or
without preemptive rights.
Vote FOR the creation/issuance of convertible debt instruments as long as the
maximum number of common shares that could be issued upon conversion meets ISS'
guidelines on equity issuance requests.
Vote FOR proposals to restructure existing debt arrangements unless the terms of
the restructuring would adversely affect the rights of shareholders. Pledging of
Assets for Debt Vote proposals to approve the pledging of assets for debt on a
CASE-BY-CASE basis.
Increase in Borrowing Powers
Vote proposals to approve increases in a company's borrowing powers on a
CASE-BY-CASE basis.
Share Repurchase Plans
Vote FOR share repurchase plans, unless:
o Clear evidence of past abuse of the authority is available; or
o The plan contains no safeguards against selective buybacks.
Reissuance of Shares Repurchased
Vote FOR requests to reissue any repurchased shares unless there is clear
evidence of abuse of this authority in the past.
Capitalization of Reserves for Bonus Issues/Increase in Par Value
Vote FOR requests to capitalize reserves for bonus issues of shares or to
increase par value.
Other
Reorganizations/Restructurings
Vote reorganizations and restructurings on a CASE-BY-CASE basis.
Mergers and Acquisitions
Vote CASE-BY-CASE on mergers and acquisitions taking into account the following:
For every M&A analysis, ISS reviews publicly available information as of the
date of the report and evaluates the merits and drawbacks of the proposed
transaction, balancing various and sometimes countervailing factors including:
o Valuation - Is the value to be received by the target shareholders (or
paid by the acquirer) reasonable? While the fairness opinion may
provide an initial starting point for assessing valuation
reasonableness, ISS places emphasis on the offer premium, market
reaction, and strategic rationale.
o Market reaction - How has the market responded to the proposed deal? A
negative market reaction will cause ISS to scrutinize a deal more
closely.
o Strategic rationale - Does the deal make sense strategically? From
where is the value derived? Cost and revenue synergies should not be
overly aggressive or optimistic, but reasonably achievable. Management
should also have a favorable track record of successful integration of
historical acquisitions.
o Conflicts of interest - Are insiders benefiting from the transaction
disproportionately and inappropriately as compared to non-insider
shareholders? ISS will consider whether any special interests may have
influenced these directors and officers to support or recommend the
merger.
o Governance - Will the combined company have a better or worse
governance profile than the current governance profiles of the
respective parties to the transaction? If the governance profile is to
change for the worse, the burden is on the company to prove that other
issues (such as valuation) outweigh any deterioration in governance.
Vote AGAINST if the companies do not provide sufficient information upon request
to make an informed voting decision.
Mandatory Takeover Bid Waivers
Vote proposals to waive mandatory takeover bid requirements on a CASE-BY-CASE
basis.
Reincorporation Proposals
Vote reincorporation proposals on a CASE-BY-CASE basis.
Expansion of Business Activities
Vote FOR resolutions to expand business activities unless the new business takes
the company into risky areas.
Related-Party Transactions
Vote related-party transactions on a CASE-BY-CASE basis.
Compensation Plans
Vote compensation plans on a CASE-BY-CASE basis.
Antitakeover Mechanisms
Vote AGAINST all antitakeover proposals unless they are structured in such a way
that they give shareholders the ultimate decision on any proposal or offer.
Shareholder Proposals
Vote all shareholder proposals on a CASE-BY-CASE basis.
Vote FOR proposals that would improve the company's corporate governance or
business profile at a reasonable cost.
Vote AGAINST proposals that limit the company's business activities or
capabilities or result in significant costs being incurred with little or no
benefit.
As Revised January 2, 2007
The Role of Edge Asset Management, Inc.
In its capacity as an investment adviser for each of its clients, Edge Asset
Management, Inc. ("EAM") shall, except where EAM and the client have otherwise
agreed, assist the client in voting proxies with respect to its portfolio
securities to the extent that such proxies relate to matters involving
investment judgment. In addition, the client may authorize EAM, in its capacity
as adviser, to vote the client's proxies. In such cases, EAM is responsible for
casting the proxy votes in a manner consistent with the best interests of the
client.
The Role of the Proxy Voting Service
EAM has engaged Institutional Shareholder Services ("ISS") to assist in the
voting of proxies. ISS is responsible for coordinating with the client's
custodian to ensure that all proxy materials received by the custodian relating
to the client's portfolio securities are processed in a timely fashion. Subject
to the right of the client and/or EAM to instruct ISS to vote a specific proxy
in a specific manner (an "Exception"), ISS will vote all proxies in accordance
with its proxy voting guidelines. (Where those guidelines call for a
determination to be made on a case-by-case basis, ISS is responsible for
obtaining such information as is reasonably necessary for it to determine how to
vote such proxies in the best interests of the client, and for so voting such
proxies.) ISS will notify EAM as to how it intends to vote each proxy no later
than 3 business days prior to voting such proxy. In the event EAM wishes to
create an Exception for a proxy vote, it will notify ISS at least 1 business day
before the last day on which the proxy could be voted. Except as may otherwise
be agreed by a client, EAM will provide a report (including both the basis and
rationale for the Exception and a certification as to the absence of any
conflict of interest (as described below under "Conflicts of Interest") relating
to such proxy) with respect to each Exception to the client at least quarterly.
ISS will identify to EAM any proxy with respect to which it may be deemed to
have a conflict of interest at least 5 business days prior to the last day such
proxy could be voted. EAM will determine how any such proxy will be voted,
unless it may also be deemed to have a conflict, in which case EAM will make a
recommendation to the client with respect to the proxy, and the client will
determine how the proxy should be voted.
Conflicts of Interest
Occasions may arise where a person or organization involved in the proxy voting
process for a client may have a conflict of interest in voting the client's
proxy. A conflict of interest may exist, for example, if EAM has a business
relationship with (or is actively soliciting business from) either the company
soliciting the proxy or a third party that has a material interest in the
outcome of a proxy vote or that is actively lobbying for a particular outcome of
a proxy vote. Any individual with knowledge of a personal conflict of interest
(e.g., a familial relationship with company management) relating to a particular
proxy shall disclose that conflict to EAM and otherwise remove himself from the
proxy voting process. EAM will review each proxy with respect to which it wishes
to create an Exception to determine if a conflict of interest exists and will
provide the client with a Conflicts Report for each proxy that (1) describes any
conflict of interest, (2) discusses the procedures used to address such conflict
of interest, and (3) discloses any contacts from parties outside EAM (other than
routine communications from proxy solicitors) with respect to the proxy.
Proxy Voting Guidelines of Edge Asset Management, Inc.
As Revised January 2, 2007
The proxy voting guidelines below give a general indication of how Edge Asset
Management, Inc. ("EAM") will vote a client's portfolio securities on proposals
dealing with a particular issue. In cases where EAM has engaged a proxy voting
service, the proxy voting service will vote all proxies relating to client's
portfolio securities in accordance with its guidelines, except as otherwise
instructed by the client or EAM. If a portfolio security is currently being
loaned by a client but is the subject of a vote that EAM determines is material
to the value of the security, EAM will seek to recall that portfolio security
and vote the proxy in accordance with these guidelines. Votes with respect to
portfolio securities on loan will otherwise be voted in the discretion of the
borrower.
The proxy voting guidelines are just that - guidelines. The guidelines are not
exhaustive and do not include all potential voting issues. Because proxy issues
and the circumstances of individual companies are so varied, there may be
instances when EAM may not vote in strict adherence to these guidelines.
EAM, as part of its ongoing review and analysis of all client portfolio
holdings, is responsible for monitoring significant corporate developments,
including proxy proposals submitted to shareholders, and notifying the client
and/or any proxy voting service of circumstances where the client's interests
warrant a vote contrary to these guidelines.
The vast majority of matters presented to shareholders for a vote involve
proposals made by a company itself (sometimes referred to as "management
proposals"), which have been approved and recommended by its board of directors.
In view of the enhanced corporate governance practices currently being
implemented in public companies and EAM's intent to hold corporate boards
accountable for their actions in promoting shareholder interests, the client's
proxies generally will be voted in support of decisions reached by independent
boards of directors. Accordingly, the client's proxies will be voted FOR
board-approved proposals, except as indicated below.
DOMESTIC (U.S.) PROXIES
1. Auditors
o Vote FOR proposals to ratify auditors, unless any of the following
apply:
o An auditor has a financial interest in or association with the
company, and is therefore not independent;
o Fees for non-audit services are excessive; or
o There is reason to believe that the independent auditor has
rendered an opinion which is neither accurate nor indicative of
the company's financial position.
o Vote CASE-BY-CASE on shareholder proposals asking companies to
prohibit or limit their auditors from engaging in non-audit services.
o Vote CASE-BY-CASE on shareholder proposals asking for audit firm
rotation, taking into account these factors:
o Tenure of the audit firm
o Establishment and disclosure of a renewal process whereby the
auditor is regularly evaluated for both audit quality and
competitive price
o Length of the rotation period advocated in the proposal
o Significant audit-related issues
o Number of audit committee meetings held each year
o Number of financial experts serving on the committee
2. Board of Directors
a. Voting on Director Nominees in Uncontested Elections
Generally, vote CASE-BY-CASE. But WITHHOLD votes from:
o Insiders and affiliated outsiders on boards that are not at least
majority independent
o Directors who sit on more than six boards, or on more than two
public boards in addition to their own if they are CEOs of public
companies
o Directors who adopt a poison pill without shareholder approval
since the company's last annual meeting and there is no
requirement to put the pill to shareholder vote within 12 months
of its adoption
o Directors who serve on the compensation committee when there is a
negative correlation between chief executive pay and company
performance (fiscal year end basis)
o Directors who have failed to address the issue(s) that resulted
in any of the directors receiving more than 50% withhold votes
out of those cast at the previous board election
b. Classification/Declassification of the Board
o Vote AGAINST proposals to classify the board.
o Vote FOR proposals to repeal classified boards and to elect all
directors annually.
c. Independent Chairman (Separate Chairman/CEO)
o Vote FOR shareholder proposals asking that the chairman and CEO
positions be separated (independent chairman), unless the company
has a strong countervailing governance structure, including a
lead director, two-thirds independent board, all independent key
committees, and established governance guidelines. Additionally,
the company should not have underperformed its peers.
d. Majority of Independent Directors/Establishment of Committees
o Vote FOR shareholder proposals asking that a majority or more of
directors be independent unless the board composition already
meets the proposed threshold by ISS's definition of independence.
o Vote FOR shareholder proposals asking that board audit,
compensation, and/or nominating committees be composed
exclusively of independent directors if they currently do not
meet that standard.
3. Shareholder Rights
a. Shareholder Ability to Act by Written Consent
o Vote AGAINST proposals to restrict or prohibit shareholder
ability to take action by written consent.
o Vote FOR proposals to allow or make easier shareholder
action by written consent.
b. Shareholder Ability to Call Special Meetings
o Vote AGAINST proposals to restrict or prohibit shareholder
ability to call special meetings.
o Vote FOR proposals that remove restrictions on the right of
shareholders to act independently of management.
c. Supermajority Vote Requirements
o Vote AGAINST proposals to require a supermajority
shareholder vote.
o Vote FOR proposals to lower supermajority vote requirements.
d. Cumulative Voting
o Vote AGAINST proposals to eliminate cumulative voting.
o Vote proposals to restore or permit cumulative voting on a
CASE-BY-CASE basis relative to the company's other
governance provisions.
e. Confidential Voting
o Vote FOR shareholder proposals requesting that corporations
adopt confidential voting, use independent vote tabulators
and use independent inspectors of election, as long as the
proposal includes a provision for proxy contests as follows:
In the case of a contested election, management should be
permitted to request that the dissident group honor its
confidential voting policy. If the dissidents agree, the
policy remains in place. If the dissidents will not agree,
the confidential voting policy is waived.
o Vote FOR management proposals to adopt confidential voting.
4. Proxy Contests
a. Voting for Director Nominees in Contested Elections
o Votes in a contested election of directors must be evaluated
on a CASE-BY-CASE basis, considering the factors that
include the long-term financial performance, management's
track record, qualifications of director nominees (both
slates), and an evaluation of what each side is offering
shareholders.
b. Reimbursing Proxy Solicitation Expenses
o Vote CASE-BY-CASE. Where ISS recommends in favor of the
dissidents, ISS also recommends voting for reimbursing proxy
solicitation expenses.
5. Poison Pills
o Vote FOR shareholder proposals that ask a company to submit
its poison pill for shareholder ratification. Review on a
CASE-BY-CASE basis shareholder proposals to redeem a
company's poison pill and management proposals to ratify a
poison pill.
6. Mergers and Corporate Restructurings
o Vote CASE-BY-CASE on mergers and corporate restructurings
based on such features as the fairness opinion, pricing,
strategic rationale, and the negotiating process.
7. Reincorporation Proposals
o Proposals to change a company's state of incorporation
should be evaluated on a CASE-BY-CASE basis, giving
consideration to both financial and corporate governance
concerns, including the reasons for reincorporating, a
comparison of the governance provisions, and a comparison of
the jurisdictional laws. Vote FOR reincorporation when the
economic factors outweigh any neutral or negative governance
changes.
8. Capital Structure
a. Common Stock Authorization
o Votes on proposals to increase the number of shares of
common stock authorized for issuance are determined on a
CASE-BY-CASE basis using a model developed by ISS.
o Vote AGAINST proposals at companies with dual-class capital
structures to increase the number of authorized shares of
the class of stock that has superior voting rights.
o Vote FOR proposals to approve increases beyond the allowable
increase when a company's shares are in danger of being
delisted or if a company's ability to continue to operate as
a going concern is uncertain.
b. Dual-class Stock
o Vote AGAINST proposals to create a new class of common stock
with superior voting rights.
o Vote FOR proposals to create a new class of nonvoting or
sub-voting common stock if:
o It is intended for financing purposes with minimal or
no dilution to current shareholders, or
o It is not designed to preserve the voting power of an
insider or significant shareholder.
9. Executive and Director Compensation
o Votes with respect to compensation plans should be determined on
a CASE-BY-CASE basis. ISS's methodology for reviewing
compensation plans primarily focuses on the transfer of
shareholder wealth (the dollar cost of pay plans to shareholders
instead of simply focusing on voting power dilution). Using the
expanded compensation data disclosed under the SEC's rules, ISS
will value every award type. ISS will include in its analyses an
estimated dollar cost for the proposed plan and all continuing
plans. This cost, dilution to shareholders' equity, will also be
expressed as a percentage figure for the transfer of shareholder
wealth, and will be considered long with dilution to voting
power. Once ISS determines the estimated cost of the plan, ISS
compares it to a company-specific dilution cap.
o Vote AGAINST equity plans that explicitly permit repricing or
where the company has a history of repricing without shareholder
approval.
o Vote FOR a plan if the cost is reasonable (below the cap) unless
any of the following conditions apply:
o The plan expressly permits repricing of underwater options
without shareholder approval; or
o There is a disconnect between the CEO's pay and performance
(an increase in pay and a decrease in performance), the main
source for the pay increase is equity-based, and the CEO
participates in the plan being voted on
o The company's most recent three-year burn rate is excessive
and is an outlier within its peer group.
a. Management Proposals Seeking Approval to Reprice Options
o Votes on management proposals seeking approval to reprice
options are evaluated on a CASE-BY-CASE basis giving
consideration to the following:
o Historic trading patterns
o Rationale for the repricing
o Value-for-value exchange
o Option vesting
o Term of the option
o Exercise price
o Participation
o Treatment of surrendered options.
b. Qualified Employee Stock Purchase Plans
o Votes on employee stock purchase plans should be determined
on a CASE-BY-CASE basis.
o Vote FOR employee stock purchase plans where all of the
following apply:
o Purchase price is at least 85 percent of fair market value,
o Offering period is 27 months or less, and
o Potential voting power dilution (VPD) is ten percent or
less.
o Vote AGAINST employee stock purchase plans where any of the
opposite conditions obtain.
c. Nonqualified Employee Stock Purchase Plans
o Vote on nonqualified employee stock purchase plans on a
CASE-BY-CASE basis.
o Vote FOR nonqualified plans with all the following features:
o Broad-based participation
o Limits on employee contribution (a fixed dollar amount
or a percentage of base salary)
o Company matching contribution up to 25 percent of
employee's contribution, which is effectively a
discount of 20 percent from market value
o No discount on the stock price on the date of purchase
since there is a company matching contribution
o Vote AGAINST nonqualified employee stock purchase plans if
they do not meet the above criteria.
d. Shareholder Proposals on Compensation
o Generally, vote on a CASE-BY-CASE basis for all other
shareholder proposals regarding executive and director pay,
taking into account company performance, pay level versus
peers, pay level versus industry, and long term corporate
outlook. But generally vote FOR shareholder proposals that:
o Advocate the use of performance-based awards like
indexed, premium-priced, and performance-vested options
or performance-based shares, unless the proposal is
overly restrictive or the company already substantially
uses such awards.
o Call for a shareholder vote on extraordinary benefits
contained in Supplemental Executive Retirement Plans
(SERPs).
10. Social and Environmental Issues
o These issues cover a wide range of topics, including consumer and
public safety, environment and energy, general corporate issues,
labor standards and human rights, military business, and
workplace diversity. In general, vote CASE-BY-CASE. While a wide
variety of factors goes into each analysis, the overall principal
guiding all vote recommendations focuses on how the proposal will
enhance the economic value of the company. Vote:
o FOR proposals for the company to amend its Equal Employment
Opportunity (EEO) Statement to include reference to sexual
orientation, unless the change would result in excessive
costs for the company.
o AGAINST resolutions asking for the adopting of voluntary
labeling of ingredients or asking for companies to label
until a phase out of such ingredients has been completed.
o CASE-BY-CASE on proposals calling for companies to report on
the risks associated with outsourcing, with consideration of
the risks associated with certain international markets, the
utility of such a report to shareholders, and the existence
of a publicly available code of corporate conduct that
applies to international operations
FOREIGN (NON-U.S.) PROXIES
1. Financial Results/Director and Auditor Reports
o Vote FOR approval of financial statements and director and auditor
reports, unless:
o There are concerns about the accounts presented or audit
procedures used, or
o The company is not responsive to shareholder questions about
specific items that should be publicly disclosed.
2. Appointment of Auditors and Auditor Compensation
o Vote FOR the reelection of auditors and proposals authorizing the
board to fix auditor fees, unless:
o There are serious concerns about the accounts presented or the
audit procedures used,
o The auditors are being changed without explanation, or
o Non-audit-related fees are substantial or are routinely in excess
of standard annual audit fees.
o Vote AGAINST the appointment of external auditors if they have
previously served the company in an executive capacity or can
otherwise be considered affiliated with the company.
o ABSTAIN if a company changes its auditor and fails to provide
shareholders with an explanation for the change.
3. Appointment of Internal Statutory Auditors
o Vote FOR the appointment or reelection of statutory auditors, unless:
o There are serious concerns about the statutory reports presented
or the audit procedures used,
o Questions exist concerning any of the statutory auditors being
appointed, or
o The auditors have previously served the company in an executive
capacity or can otherwise be considered affiliated with the
company.
4. Allocation of Income
o Vote FOR approval of the allocation of income, unless:
o The dividend payout ratio has been consistently below 30 percent
without adequate explanation, or
o The payout is excessive given the company's financial position.
5. Stock (Scrip) Dividend Alternative
o Vote FOR most stock (scrip) dividend proposals.
o Vote AGAINST proposals that do not allow for a cash option unless
management demonstrates that the cash option is harmful to shareholder
value.
6. Amendments to Articles of Association
o Vote amendments to the articles of association on a CASE-BY-CASE
basis.
7. Change in Company Fiscal Term
o Vote FOR resolutions to change a company's fiscal term unless a
company's motivation for the change is to postpone its AGM.
8. Lower Disclosure Threshold for Stock Ownership
o Vote AGAINST resolutions to lower the stock ownership disclosure
threshold below five percent unless specific reasons exist to
implement a lower threshold.
9. Amend Quorum Requirements
o Vote proposals to amend quorum requirements for shareholder meetings
on a CASE-BY-CASE basis.
10. Transact Other Business
o Vote AGAINST other business when it appears as a voting item.
11. Director Elections
o Vote FOR management nominees in the election of directors, unless:
o Adequate disclosure has not been met in a timely fashion,
o There are clear concerns over questionable finances or
restatements,
o There have been questionable transactions with conflicts of
interest,
o There are any records of abuses against minority shareholder
interests, and
o There are clear concerns about the past performance of the
company or the board; or
o The board fails to meet minimum corporate governance standards.
o Vote FOR individual nominees unless there are specific concerns about
the individual, such as criminal wrongdoing or breach of fiduciary
responsibilities.
o Vote AGAINST shareholder nominees unless they demonstrate a clear
ability to contribute positively to board deliberations.
o Vote AGAINST individual directors if they cannot provide an
explanation for repeated absences at board meetings (in countries
where this information is disclosed).
o Vote AGAINST labor representatives if they sit on either the audit or
compensation committee, as they are not required to be on those
committees.
12. Director Compensation
o Vote FOR proposals to award cash fees to nonexecutive directors unless
the amounts are excessive relative to other companies in the country
or industry.
o Vote nonexecutive director compensation proposals that include both
cash and share-based components on a CASE-BY-CASE basis.
o Vote proposals that bundle compensation for both nonexecutive and
executive directors into a single resolution on a CASE-BY-CASE basis.
o Vote AGAINST proposals to introduce retirement benefits for
nonexecutive directors.
13. Discharge of Board and Management
o Vote FOR discharge of the board and management, unless:
o There are serious questions about actions of the board or
management for the year in question, or
o Legal action is being taken against the board by other
shareholders.
o Vote AGAINST proposals to remove approval of discharge of board and
management from the agenda.
14. Director, Officer, and Auditor Indemnification and Liability Provisions
o Vote proposals seeking indemnification and liability protection for
directors and officers on a CASE-BY-CASE basis.
o Vote AGAINST proposals to indemnify auditors.
15. Board Structure
o Vote FOR proposals to fix board size.
o Vote AGAINST the introduction of classified boards and mandatory
retirement ages for directors.
o Vote AGAINST proposals to alter board structure or size in the context
of a fight for control of the company or the board.
16. Share Issuance Requests
a. General Issuances
o Vote FOR issuance requests with preemptive rights to a maximum of
100 percent over currently issued capital.
o Vote FOR issuance requests without preemptive rights to a maximum
of 20 percent of currently issued capital.
b. Specific Issuances
o Vote on a CASE-BY-CASE basis on all requests, with or without
preemptive rights.
17. Increases in Authorized Capital
o Vote FOR nonspecific proposals to increase authorized capital up to
100 percent over the current authorization unless the increase would
leave the company with less than 30 percent of its new authorization
outstanding.
o Vote FOR specific proposals to increase authorized capital to any
amount, unless:
o The specific purpose of the increase (such as a share-based
acquisition or merger) does not meet ISS guidelines for the
purpose being proposed; or
o The increase would leave the company with less than 30 percent of
its new authorization outstanding after adjusting for all
proposed issuances (and less than 25 percent for companies in
Japan).
o Vote AGAINST proposals to adopt unlimited capital authorizations.
18. Reduction of Capital
o Vote FOR proposals to reduce capital for routine accounting purposes
unless the terms are unfavorable to shareholders.
o Vote proposals to reduce capital in connection with corporate
restructuring on a CASE-BY-CASE basis.
19. Capital Structures
o Vote FOR resolutions that seek to maintain or convert to a one share,
one vote capital structure.
o Vote AGAINST requests for the creation or continuation of dual class
capital structures or the creation of new or additional supervoting
shares.
20. Preferred Stock
o Vote FOR the creation of a new class of preferred stock or for
issuances of preferred stock up to 50 percent of issued capital unless
the terms of the preferred stock would adversely affect the rights of
existing shareholders.
o Vote FOR the creation/issuance of convertible preferred stock as long
as the maximum number of common shares that could be issued upon
conversion meets ISS's guidelines on equity issuance requests.
o Vote AGAINST the creation of a new class of preference shares that
would carry superior voting rights to the common shares.
o Vote AGAINST the creation of blank check preferred stock unless the
board clearly states that the authorization will not be used to thwart
a takeover bid.
o Vote proposals to increase blank check preferred authorizations on a
CASE-BY-CASE basis.
21. Debt Issuance Requests
o Vote nonconvertible debt issuance requests on a CASE-BY-CASE basis,
with or without preemptive rights.
o Vote FOR the creation/issuance of convertible debt instruments as long
as the maximum number of common shares that could be issued upon
conversion meets ISS's guidelines on equity issuance requests.
o Vote FOR proposals to restructure existing debt arrangements unless
the terms of the restructuring would adversely affect the rights of
shareholders.
22. Pledging of Assets for Debt
o Vote proposals to approve the pledging of assets for debt on a
CASE-BY-CASE basis.
23. Increase in Borrowing Powers
o Vote proposals to approve increases in a company's borrowing powers on
a CASE-BY-CASE basis.
24. Share Repurchase Plans:
o Vote FOR share repurchase plans, unless:
o Clear evidence of past abuse of the authority is available, or
o The plan contains no safeguards against selective buybacks.
25. Reissuance of Shares Repurchased:
o Vote FOR requests to reissue any repurchased shares unless there is
clear evidence of abuse of this authority in the past.
26. Capitalization of Reserves for Bonus Issues/Increase In Par Value:
o Vote FOR requests to capitalize reserves for bonus issues of shares or
to increase par value.
27. Reorganizations/Restructurings:
o Vote reorganizations and restructurings on a CASE-BY-CASE basis.
28. Mergers and Acquisitions:
o Vote FOR mergers and acquisitions, unless:
o The impact on earnings or voting rights for one class of
shareholders is disproportionate to the relative contributions of
the group, or
o The company's structure following the acquisition or merger does
not reflect good corporate governance.
o Vote AGAINST if the companies do not provide sufficient information
upon request to make an informed voting decision.
o ABSTAIN if there is insufficient information available to make an
informed voting decision.
29. Mandatory Takeover Bid Waivers:
o Vote proposals to waive mandatory takeover bid requirements on a
CASE-BY-CASE basis.
30. Reincorporation Proposals:
o Vote reincorporation proposals on a CASE-BY-CASE basis.
31. Expansion of Business Activities:
o Vote FOR resolutions to expand business activities unless the new
business takes the company into risky areas.
32. Related-Party Transactions:
o Vote related-party transactions on a CASE-BY-CASE basis.
33. Compensation Plans:
o Vote compensation plans on a CASE-BY-CASE basis.
34. Anti-takeover Mechanisms:
o Vote AGAINST all anti-takeover proposals unless they are structured in
such a way that they give shareholders the ultimate decision on any
proposal or offer.
35. Shareholder Proposals:
o Vote all shareholder proposals on a CASE-BY-CASE basis.
o Vote FOR proposals that would improve the company's corporate
governance or business profile at a reasonable cost.
o Vote AGAINST proposals that limit the company's business activities or
capabilities or result in significant costs being incurred with little
or no benefit.
EMERALD ADVISERS, INC.
PROXY VOTING POLICY
The voting policies set forth below apply to all proxies which Emerald Advisers,
Inc. is entitled to vote. It is EAI's policy to vote all such proxies. Corporate
governance through the proxy process is solely concerned with the accountability
and responsibility for the assets entrusted to corporations. The role of
institutional investors in the governance process is the same as the
responsibility due all other aspects of the fund's management. First and
foremost, the investor is a fiduciary and secondly, an owner. Fiduciaries and
owners are responsible for their investments. These responsibilities include:
1) Selecting proper directors
2) Insuring that these directors have properly supervised management
3) Resolve issues of natural conflict between shareholders and managers
a) Compensation
b) Corporate Expansion
c) Dividend Policy
d) Free Cash Flow
e) Various Restrictive Corporate Governance Issues, Control Issues, etc.
f) Preserving Integrity
In voting proxies, EAI will consider those factors which would affect the value
of the investment and vote in the manner, which in its view, will best serve the
economic interest of its clients. Consistent with this objective, EAI will
exercise its vote in an activist pro-shareholder manner in accordance with the
following policies.
I. BOARD OF DIRECTORS
In theory, the Board represents shareholders, in practice, all too often Board
members are selected by management. Their allegiance is therefore owed to
management in order to maintain their very favorable retainers and prestigious
position. In some cases, corporations never had a nominating process, let
alone criteria for the selection of Board members. Shareholders have begun to
focus on the importance of the independence of the Board of Directors and the
nominating process for electing these Board members. Independence is an
important criterium to adequately protect shareholders' ongoing financial
interest and to properly conduct a board member's oversight process.
Independence though, is only the first criteria for a Board. Boards need to be
responsible fiduciaries in their oversight and decision-making on behalf of
the owners of the corporations. Too many companies are really ownerless.
Boards who have failed to perform their duties, or do not act in the best
interests of the shareholders should be voted out. A clear message is sent
when a no confidence vote is given to a set of directors or to a full Board.
A. ELECTION OF DIRECTORS, a Board of Directors, or any number of Directors. In
order to assure Boards are acting solely for the shareholders they
represent, the following resolutions will provide a clear message to
underperforming companies and Boards who have failed to fulfill duties
assigned to them.
. Votes should be cast in favor of shareholder proposals asking that boards
be comprised of a majority of outside directors.
. Votes should be case in favor of shareholder proposals asking that board
audit, compensation and nominating committees be comprised exclusively of
outside directors.
. Votes should be cast against management proposals to re-elect the board if
the board has a majority of inside directors.
. Votes should be withheld for directors who nay have an inherent conflict
of interest by virtue of receiving consulting fees from a corporation
(affiliated outsiders).
. Votes should be withheld, on a case by case basis, for those directors of
the compensation committees responsible for particularly egregious
compensation plans.
. Votes should be withheld for directors who have failed to attend 75% of
board or committee meetings in cases where management does not provide
adequate explanation for absences.
. Votes should be withheld for incumbent directors of poor performing
companies; defining poor performing companies as those companies who have
below average stock performance (vs. peer group/Wilshire 5000) and below
average return on assets and operating margins.
. Votes should be cast in favor of proposals to create shareholder advisory
committees. These committees will represent shareholders' views, review
management, and provide oversight of the board and their directors.
B. SELECTION OF ACCOUNTANTS: EAI will generally support a rotation of
accountants to provide a truly independent audit. This rotation should
generally occur every 4-5 years.
C. INCENTIVE STOCK PLANS. EAI will generally vote against all excessive
compensation and incentive stock plans which are not performance related.
D. CORPORATE RESTRUCTURING PLANS or company name changes, will generally be
evaluated on a case by case basis.
E. ANNUAL MEETING LOCATION.
This topic normally is brought forward by minority shareholders, requesting
management to hold the annual meeting somewhere other than where management
desires. RESOLUTION: EAI normally votes with management, except in those
cases where management seeks a location to avoid their shareholders.
F. PREEMPTIVE RIGHTS.
This is usually a shareholder request enabling shareholders to participate
first in any new offering of company common stock. RESOLUTION: We do not
feel that preemptive rights would add value to shareholders, we would vote
against such shareholder proposals.
G. MERGERS AND/OR ACQUISITIONS.
Each Merger and/or acquisition has numerous ramifications for long term
shareholder value. RESOLUTION: After in-depth valuation EAI will vote its
shares on a case by case basis.
II. CORPORATE GOVERNANCE ISSUES
These issues include those areas where voting with management may not be in
the best interest of the institutional investor. All proposals should be
examined on a case by case basis.
A. PROVISIONS RESTRICTING SHAREHOLDER RIGHTS.
These provisions would hamper shareholders' ability to vote on certain
corporate actions, such as changes in the bylaws, greenmail, poison pills,
recapitalization plans, golden parachutes, and on any item that would limit
shareholders' rights to nominate, elect, or remove directors. These items
can change the course of the corporation overnight and shareholders should
have the right to vote on these critical issues. RESOLUTION: Vote AGAINST
------------------------
management proposals to implement such restrictions and vote For shareholder
----------------------------------------------------------------------------
proposals to eliminate them.
----------------------------
B. ANTI-SHAREHOLDER MEASURES
These are measures designed to entrench management so as to make it more
difficult to effect a change in control of the corporation. They are
normally not in the best interest of shareholders since they do not allow
for the most productive use of corporate assets.
1. CLASSIFICATION OF THE BOARD OF DIRECTORS:
A classified Board is one in which directors are not elected in the same
year rather their terms of office are staggered. This eliminates the
possibility of removing entrenched management at any one annual election
of directors. RESOLUTION: Vote AGAINST proposals to classify the Board and
------------------------------------------------------------
support proposals (usually shareholder initiated) to implement annual
---------------------------------------------------------------------
election of the Board.
----------------------
2. SHAREHOLDER RIGHTS PLANS (POISON PILLS):
Anti-acquisition proposals of this sort come in a variety of forms. In
general, issuers confer contingent benefits of some kind on their common
stockholders. The most frequently used benefit is the right to buy shares
at discount prices in the event of defined changes in corporate control.
RESOLUTION: Vote Against proposals to adopt Shareholder Rights Plans, and
-------------------------------------------------------------------------
vote For Shareholder proposals eliminating such plans.
------------------------------------------------------
3. UNEQUAL VOTING RIGHTS:
A takeover defense, also known as superstock, which give holders
disproportionate voting rights. EAI adheres to the One Share, One Vote
philosophy, as all holders of common equity must be treated fairly and
equally. RESOLUTION: Vote AGAINST proposals creating different classes of
----------------------------------------------------------------
stock with unequal voting privileges.
-------------------------------------
4. SUPERMAJORITY CLAUSES:
These are implemented by management requiring that an overly large amount
of shareholders (66-95% of shareholders rather than a simple majority)
approve business combinations or mergers, or other measures affecting
control. This is another way for management to make changes in control of
the company more difficult. RESOLUTION: Vote AGAINST management proposals
---------------------------------------------
to implement supermajority clauses and support shareholder proposals to
-----------------------------------------------------------------------
eliminate them.
---------------
5. FAIR PRICE PROVISIONS:
These provisions allow management to set price requirements that a
potential bidder would need to satisfy in order to consummate a merger.
The pricing formulas normally used are so high that the provision makes
any tender offer prohibitively expensive. Therefore, their existence can
foreclose the possibility of tender offers and hence, the opportunity to
secure premium prices for holdings. RESOLUTION: Vote AGAINST management
-----------------------------------
proposals to implement fair price provisions and vote FOR shareholder
---------------------------------------------------------------------
proposals to eliminate them. CAVEAT: Certain fair price provisions are
---------------------------
legally complex and require careful analysis and advice before concluding
whether or not their adoption would serve stockholders' interest.
6. INCREASES IN AUTHORIZED SHARES AND/OR CREATION OF NEW CLASSES OF COMMON
AND PREFERRED STOCK:
a. INCREASING AUTHORIZED SHARES.
EAI will support management if they have a stated purpose for increasing
the authorized number of common and preferred stock. Under normal
circumstances, this would indicate stock splits, stock dividends, stock
option plans, and for additional financing needs. However, in certain
circumstances, it is apparent that management is proposing these
increases as an anti-takeover measure. When used in this manner, share
increases could inhibit or discourage stock acquisitions by a potential
buyer, thereby negatively affecting a fair price valuation for the
company. Resolution: On a case by case basis, vote AGAINST management if
they attempt to increase the amount of shares that they are authorized
to issue if their intention is to use the excess shares to discourage a
beneficial business combination. One way to determine if management
intends to abuse its rights to issue shares is if the amount of
authorized shares requested is double the present amount of authorized
shares.
b. CREATION OF NEW CLASSES OF STOCK.
Managements have proposed authorizing shares of new classes of stock,
usually preferreds, which the Board would be able to issue at their
discretion. The Board would also be granted the discretion to determine
the dividend rate, voting privileges, redemption provisions, conversion
rights, etc. without approval of the shareholders. These "blank check"
issues are designed specifically to inhibit a takeover, merger, or
accountability to its shareholders. Resolution: EAI would vote AGAINST
----------------------------------
management in allowing the Board the discretion to issue any type of
--------------------------------------------------------------------
"blank check" stock without shareholder approval.
-------------------------------------------------
C. DIRECTORS AND MANAGEMENT LIABILITY AND INDEMNIFICATION
These proposals are a result of the increasing cost of insuring directors
and top management against lawsuits. Generally, managements propose that the
liability of directors and management be either eliminated or limited.
Shareholders must have some recourse for losses that are caused by
negligence on the part of directors and management. Therefore directors and
management should be responsible for their fiduciary duty of care towards
the company. The Duty of Care is defined as the obligation of directors and
management to be diligent in considering a transaction or in taking or
refusing to take a corporate action. Resolution: On a case by case basis,
------------------------------------
EAI votes AGAINST attempts by management to eliminate director's and
--------------------------------------------------------------------
management liability for their duty of care.
--------------------------------------------
D. COMPENSATION PLANS (INCENTIVE PLANS)
Management occasionally will propose to adopt an incentive plan which will
become effective in the event of a takeover or merger. These plans are
commonly known as "golden parachutes" or "tin parachutes" as they are
specifically designed to grossly or unduly benefit a select few in
management who would most likely lose their jobs in an acquisition.
Shareholders should be allowed to vote on all plans of this type.
Resolution: On a case by case basis, vote AGAINST attempts by management to
---------------------------------------------------------------------------
adopt proposals that are specifically designed to grossly or unduly benefit
---------------------------------------------------------------------------
members of executive management in the event of an acquisition.
---------------------------------------------------------------
E. GREENMAIL
EAI would not support management in the payment of greenmail. Resolution:
-----------
EAI would vote FOR any shareholder resolution that would eliminate the
----------------------------------------------------------------------
possibility of the payment of greenmail.
----------------------------------------
F. CUMULATIVE VOTING
Cumulative voting entitles stockholders to as many votes as equal the number
of shares they own multiplied by the number of directors being elected.
According to this set of rules, a shareholder can cast all votes towards a
single director, or any two or more. This is a proposal usually made by a
minority shareholder seeking to elect a director to the Board who
sympathizes with a special interest. It also can be used by management that
owns a large percentage of the company to ensure that their appointed
directors are elected. Resolution: Cumulative voting tends to serve special
----------------------------------------------------
interests and not those of shareholders, therefore EAI will vote AGAINST any
----------------------------------------------------------------------------
proposals establishing cumulative voting and For any proposal to eliminate
--------------------------------------------------------------------------
it.
---
G. PROPOSALS DESIGNED TO DISCOURAGE MERGERS & ACQUISTIONS IN ADVANCE
These provisions direct Board members to weigh socioeconomic and legal as
well as financial factors when evaluation takeover bids. This catchall
apparently means that the perceived interests of customers, suppliers,
managers, etc. would have to be considered along with those of the
shareholder. These proposals may be worded: "amendments to instruct the
Board to consider certain factors when evaluation an acquisition proposal".
Directors are elected to primarily to promote and protect shareholder
interests. Directors should not allow other considerations to dilute or
deviated from those interests. Resolution: EAI will vote AGAINST proposals
-------------------------------------------
that would discourage the most productive use of corporate assets in
--------------------------------------------------------------------
advance.
--------
H. CONFIDENTIAL VOTING
A company that does not have a secret ballot provision had the ability to
see the proxy votes before the annual meeting. In this way, management is
able to know before the final outcome how their proposals are being
accepted. If a proposal is not going their way, management has the ability
to call shareholders to attempt to convince them to change their votes.
Elections should take place in normal democratic process which includes the
secret ballot. Elections without the secret ballot can lead to coercion of
shareholders, employees, and other corporate partners. Resolution: Vote FOR
--------------------
proposals to establish secret ballot voting.
--------------------------------------------
I. DISCLOSURE
Resolution: EAI will vote AGAINST proposals that would require any kind of
--------------------------------------------------------------
unnecessary disclosure of business records. EAI will vote For proposals that
----------------------------------------------------------------------------
require disclosure of records concerning unfair labor practices or records
--------------------------------------------------------------------------
dealing with the public safety.
-------------------------------
J. SWEETENERS
Resolution: EAI will vote AGAINST proposals that include what are called
------------------------------------------------------------------------
"sweeteners" used to entice shareholders to vote for a proposal that
--------------------------------------------------------------------
includes other items that may not be in the shareholders' best interest. For
----------------------------------------------------------------------------
instance, including a stock split in the same proposal as a classified
----------------------------------------------------------------------
Board, or declaring an extraordinary dividend in the same proposal
------------------------------------------------------------------
installing a shareholders' rights plan (Poison Pill).
-----------------------------------------------------
K. CHANGING THE STATE OF INCORPORATION
If management sets forth a proposal to change the State of Incorporation,
the reason for the change is usually to take advantage of another state's
liberal corporation laws, especially regarding mergers, takeovers, and
anti-shareholder measures. Many companies view the redomestication in
another jurisdiction as an opportune time to put new anti-shareholder
measures on the books or to purge their charter and bylaws of inconvenient
shareholder rights, written consent, cumulative voting, etc. Resolution: ON
--------------
A CASE BY CASE BASIS, EAI will vote AGAINST proposals changing the State of
---------------------------------------------------------------------------
Incorporation for the purposes of their anti-shareholder provisions and will
----------------------------------------------------------------------------
support shareholder proposals calling for reincorporation into a
----------------------------------------------------------------
jurisdiction more favorable to shareholder democracy.
-----------------------------------------------------
L. EQUAL ACCESS TO PROXY STATEMENTS
EAI supports stockholders' rights to equal access to the proxy statement, in
the same manner that management has access. Stockholders are owners of a
corporation and should not be bound by timing deadlines and other obstacles
that presently shareholders must abide by in sponsoring proposals in a proxy
statement. The Board should not have the ability to arbitrarily prevent a
shareholder proposal from appearing in the proxy statement. Resolution: EAI
---------------
will support any proposal calling for equal access to proxy statements.
-----------------------------------------------------------------------
M. ABSTENTION VOTES
EAI supports changes in the method of accounting for abstention votes.
Abstention votes should not be considered as shares "represented" or "cast"
at an annual meeting. Only those shares cast favoring or opposing a proposal
--------------------
should be included in the total votes cast to determine if a majority vote
has been achieved. Votes cast abstaining should not be included in total
votes cast. Resolution: EAI will support any proposal to change a company's
---------------------------------------------------------------
by-laws or articles of incorporation to reflect the proper account for
----------------------------------------------------------------------
abstention votes.
-----------------
III. OTHER ISSUES
On other major issues involving questions of community interest, moral and
social concern, fiduciary trust and respect for the law such as:
A. Human Rights
B. Nuclear Issues
C. Defense Issues
D. Social Responsibility
EAI, in general supports the position of management. Exceptions to this policy
include:
1. SOUTH AFRICA
EAI will actively encourage those corporations that have South African
interests to adopt and adhere to the Statement of Principles for South
Africa, formerly known as the Sullivan Principles, and to take further
actions to promote responsible corporate activity.
2. NORTHERN IRELAND
EAI will actively encourage U.S. companies in Northern Ireland to adopt
and adhere to the MacBride Principles, and to take further actions to
promote responsible corporate activity.
ESSEX INVESTMENT MANAGEMENT COMPANY, LLC
SUMMARY OF PROXY VOTING POLICIES AND PROCEDURES
INTRODUCTION
Essex views seriously its responsibility to exercise proxy voting authority over
securities within its clients' portfolios. As an investment adviser and
fiduciary of client assets, Essex utilizes proxy voting policies and procedures
intended to protect the value of shareholder investments and are designed to
reasonably ensure that Essex votes proxies in the best interest of clients for
whom Essex has voting authority. In voting proxies, we seek to both maximize
the long-term value of our clients' assets and to cast votes that we believe to
be fair and in the best interest of the affected client(s). Proxies are
considered client assets and are managed with the same care, skill and diligence
as all other client assets.
The following, is a summary of the policies and procedures that govern the
voting of proxies in situations where Essex is responsible for such voting.
Essex clients will either retain proxy voting authority or delegate it to Essex.
If a client has delegated such authority to Essex (whether in the client's
investment management agreement with Essex or otherwise), Essex will vote
proxies for that client. If a particular client for whom Essex has investment
discretion has not explicitly delegated proxy voting authority to Essex, Essex
will vote such client's proxies. .
VOTING AGENT
Essex has contracted with an independent third party, Institutional Shareholders
Services ("ISS"), to conduct in-depth proxy research, execute proxy votes, and
keep various records necessary for tracking proxy voting actions taken and proxy
voting materials for the appropriate client account. ISS specializes in
providing a variety of fiduciary-level services related to proxy voting. ISS
researches proxy issues and then independent from Essex executes votes.
Essex has adopted ISS' proxy voting policy guidelines as its own and votes
Essex's clients' proxies (for those clients over which it has proxy voting
authority) according to those policy guidelines. There are three sets of ISS
proxy voting policy guidelines adopted by Essex, two for Taft-Hartley
Union/Public Plan Sponsor clients (PVS or SIRS proxy voting policy and
guidelines) and another, for all other clients, covering U.S. and global
proxies. It is the client's decision as to which set of guidelines will be
used to vote its proxies.
Details of ISS' proxy voting policy guidelines are available upon request.
In extraordinary circumstances, Essex's Proxy Voting Committee ("Committee") and
Compliance Officer may actively issue a voting instruction. The Committee is
discussed below.
PROXY VOTING COMMITTEE
Essex's Proxy Voting Committee is responsible for deciding what is in the best
interests of clients when determining how proxies are voted. The Committee
meets at least annually to review and re-approve (if the Committee determines
they continue to be reasonably designed to be in the best interest of Essex's
clients), ISS' proxy voting policies as Essex's own proxy voting policies. Any
changes to the ISS voting policies must be reviewed, approved, and adopted by
the Committee at the time the changes occur. The Committee also would become
involved in extraordinary circumstances in which Essex decides to exercise it
voting discretion.
CONFLICTS OF INTEREST
As noted, Essex has an agreement with ISS as an independent proxy voting agent
and Essex has adopted the ISS proxy voting policies. The adoption of the ISS
proxy voting policies provides pre-determined policies for voting proxies and is
thus designed to remove conflicts of interest that could affect the outcome of a
vote. The intent of this policy is to remove any discretion that Essex may have
to interpret on how to vote proxies in cases where Essex has a material conflict
of interest or the appearance of a material conflict of interest.
There may be a situation where ISS itself may have a material conflict with an
issuer of a proxy vote for which it is voting on Essex's clients' behalf. In
those situations, ISS will fully or partially abstain from voting and Essex's
Committee will provide the actual voting recommendation after a review of the
vote(s) involved. Essex's Compliance Officer must approve any decision made on
such vote prior to the vote being cast.
Essex's Committee and Compliance Officer will also become involved in any other
situation, though expected to be rare, where Essex takes voting discretion from
ISS. In both of the preceding circumstances, the Committee and Essex's
Compliance Officer will work to ensure that prior to a vote being made,
conflicts of interest were identified and material conflicts were properly
addressed such that the vote was in the best interest of the clients rather than
the product of the conflict.
HOW TO OBTAIN VOTING INFORMATION
Clients may obtain information about how Essex voted proxies for securities held
in their account(s) or a copy of Essex's full proxy voting policy and procedures
by contacting Valerie Sullivan at (617) 342-3241 or at
proxyvoting@essexinvest.com.
October 2003
GOLDMAN SACHS ASSET MANAGEMENT
("GSAM")*
POLICY ON PROXY VOTING
FOR INVESTMENT ADVISORY CLIENTS
GSAM has adopted the policies and procedures set out below regarding the voting
of proxies on securities held in client accounts (the "Policy"). These policies
and procedures are designed to ensure that where GSAM has the authority to vote
proxies, GSAM complies with its legal, fiduciary, and contractual obligations.
GUIDING PRINCIPLES
Proxy voting and the analysis of corporate governance issues in general are
important elements of the portfolio management services we provide to our
advisory clients who have authorized us to address these matters on their
behalf. Our guiding principles in performing proxy voting are to make decisions
that (i) favor proposals that tend to maximize a company's shareholder value and
(ii) are not influenced by conflicts of interest. These principles reflect
GSAM's belief that sound corporate governance will create a framework within
which a company can be managed in the interests of its shareholders.
PUBLIC EQUITY INVESTMENTS
To implement these guiding principles for investments in publicly-traded
equities, we follow the Institutional Shareholder Services ("ISS") Standard
Proxy Voting Guidelines (the "Guidelines"), except in circumstances as described
below. The Guidelines embody the positions and factors GSAM generally considers
important in casting proxy votes. They address a wide variety of individual
topics, including, among other matters, shareholder voting rights, anti-takeover
defenses, board structures, the election of directors, executive and director
compensation, reorganizations, mergers, and various shareholder proposals.
Recognizing the complexity and fact-specific nature of many corporate governance
issues, the Guidelines often do not direct a particular voting outcome, but
instead identify factors ISS considers in determining how the vote should be
cast. A summary of the Guidelines is attached as Appendix A.
In connection with each proxy vote, ISS prepares a written analysis and
recommendation (an "ISS Recommendation") that reflects ISS's application of
Guidelines to the particular proxy issues. Where the Guidelines do not direct a
particular response and instead list relevant factors, the ISS Recommendation
will reflect ISS's own evaluation of the factors. As explained more fully below,
however, each GSAM equity portfolio management team ("Portfolio Management
Team") may on any particular proxy vote decide to diverge from the Guidelines or
an ISS Recommendation. In such cases, our procedures require: (i) the requesting
Portfolio Management Team to set forth the reasons for their decision; (ii) the
approval of the Local Chief Investment Officer for the requesting Portfolio
Management Team; (iii) notification to the Global Chief Investment Officer and
other appropriate GSAM personnel; (iv) a determination that the decision is not
influenced by any conflict of interest; and (v) the creation of a written record
reflecting the process.
The principles and positions reflected in this Policy are designed to guide us
in voting proxies, and not necessarily in making investment decisions. Portfolio
Management Teams base their determinations of whether to invest in a particular
company on a variety of factors, and while corporate governance may be one such
factor, it may not be the primary consideration.
Senior management of GSAM periodically reviews this Policy, including our use of
the Guidelines, to ensure it continues to be consistent with our guiding
principles.
Implementation by Portfolio Management Teams
General Overview
While it is GSAM's policy generally to follow the Guidelines and the ISS
Recommendations, the active-equity and quantitative-equity Portfolio Management
Teams have developed different approaches for using the Guidelines and ISS
Recommendations in light of their different investment philosophies and
processes.
Active Equity
Our active-equity Portfolio Management Teams view the analysis of corporate
governance practices as an integral part of the investment research and stock
valuation process. Therefore, on a case-by-case basis and subject to the
approval process described above, each active-equity Portfolio Management Team
may vote differently from the Guidelines or a particular ISS Recommendation. In
forming their views on particular matters, our active-equity Portfolio
Management Teams are permitted to consider applicable regional rules and
practices, including codes of conduct and other guides, regarding proxy voting,
in addition to the Guidelines and ISS Recommendations.
In our active-equity investment research process, responsibility for analyzing
corporate board structures and the corporate governance practices of portfolio
companies in connection with proxy voting decisions lies with the relevant
Portfolio Management Team. Accordingly, each active-equity Portfolio Management
Team is charged with performing these functions for the portfolio companies as
part of the team's research efforts.
As part of that research process, each active-equity Portfolio Management Team
has regular internal research meetings to discuss the companies held in a
particular team's investment portfolio. Among the topics that may be discussed
at these meetings are issues pertaining to a portfolio company's record and
policies on corporate governance practices that may affect shareholder value.
Each active-equity Portfolio Management Team determines how to allocate
responsibility for analyzing corporate governance issues and proxy voting
decisions among the team's members. Under each arrangement, the work related to
proxy voting is integrated into our research process. Each active-equity
Portfolio Management Team remains responsible for ensuring that corporate
governance issues are analyzed and proxy votes are cast in a manner consistent
with our guiding principles.
Quantitative Equity
Our quantitative-equity Portfolio Management Teams, by contrast, have decided to
follow the Guidelines and ISS Recommendations exclusively, based on such
Portfolio Management Teams' investment philosophy and approach to portfolio
construction, as well as the evaluation of ISS's services and methodology in
analyzing shareholder and corporate governance matters. Nevertheless, our
quantitative-equity Portfolio Management Teams retain the authority to revisit
this position, with respect to both their general approach to proxy voting
(subject to the approval of GSAM senior management) and any specific shareholder
vote (subject to the approval process described above).
Use of Third-Party Service Providers
We utilize independent service providers, such as ISS, to assist us in
developing substantive proxy voting positions. ISS also updates and revises the
Guidelines on a periodic basis, and any such revisions are reviewed by GSAM to
determine whether they are consistent with our guiding principles. In addition,
ISS assists us in the proxy voting process by providing operational,
recordkeeping and reporting services.
GSAM's decision to retain ISS to perform the services described in this Policy
is based principally on the view the services ISS provides will result in proxy
voting decisions that are consistent with our guiding principles. GSAM
management is responsible for reviewing our relationship with ISS and for
evaluating the quality and effectiveness of the various services provided by ISS
to assist us in satisfying our proxy voting responsibilities.
GSAM may hire other service providers to replace or supplement ISS with respect
to any of the services GSAM currently receives from ISS. In addition, individual
Portfolio Management Teams may supplement the information and analyses ISS
provides from other sources.
Conflicts of Interest
Pursuant to this Policy, GSAM has implemented procedures designed to prevent
conflicts of interest from influencing its proxy voting decisions. These
procedures include our use of the Guidelines and ISS Recommendations. Proxy
votes cast by GSAM in accordance with the Guidelines and ISS Recommendations
will not present any conflicts of interest because GSAM casts such votes in
accordance with a pre-determined policy based upon the recommendations of an
independent third party.
Our procedures also prohibit the influence of conflicts of interest where an
active-equity Portfolio Management Team decides to vote against an ISS
Recommendation. In general, conflicts of interest between GSAM and other
businesses within Goldman Sachs should not affect GSAM in light of the
information barrier policies separating GSAM from those other businesses. In
addition, in any particular case, the approval process for a decision to vote
against an ISS Recommendation, as described above, includes an inquiry into
potential conflicts of interest, and GSAM senior management will not approve
decisions that are based on the influence of such conflicts.
FIXED INCOME AND PRIVATE INVESTMENTS
Voting decisions with respect to client investments in fixed income securities
and the securities of privately-held issuers generally will be made by the
relevant portfolio managers based on their assessment of the particular
transactions or other matters at issue.
EXTERNAL MANAGERS
Where GSAM places client assets with managers outside of GSAM, whether through
separate accounts, funds-of-funds or other structures, such external managers
generally will be responsible for voting proxies in accordance with the
managers' own policies. GSAM may, however, retain such responsibilities where it
deems appropriate.
CLIENT DIRECTION
Clients may choose to vote proxies themselves, in which case they must arrange
for their custodians to send proxy materials directly to them. GSAM can also
accommodate individual clients that have developed their own guidelines with ISS
or another proxy service. Clients may also discuss with GSAM the possibility of
receiving individualized reports or other individualized services regarding
proxy voting conducted on their behalf.
************************************************
APPENDIX A
ISS STANDARD PROXY VOTING GUIDELINES SUMMARY
The following is a concise summary of the ISS Standard Proxy Voting Guidelines
(the "Guidelines"), which form the substantive basis of GSAM's Policy on Proxy
Voting for Investment Advisory Clients ("Policy") with respect to public equity
investments. As described in the main body of the Policy, GSAM may diverge from
the Guidelines and a related ISS recommendation on any particular proxy vote or
in connection with any individual investment decision.
1. Auditors
Vote FOR proposals to ratify auditors, unless any of the following apply:
. An auditor has a financial interest in or association with the company,
and is therefore not independent,
. Fees for non-audit services are excessive, or
. There is reason to believe that the independent auditor has rendered an
opinion which is neither accurate nor indicative of the company's
financial position.
2. Board of Directors
a. Voting on Director Nominees in Uncontested Elections
Votes on director nominees should be made on a CASE-BY-CASE basis,
examining the following factors: independence of the board and key board
committees, attendance at board meetings, corporate governance provisions
and takeover activity, long-term company performance, responsiveness to
shareholder proposals, any egregious board actions, and any excessive
non-audit fees or other potential auditor conflicts.
b. Classification/Declassification of the Board
Vote AGAINST proposals to classify the board.
Vote FOR proposals to repeal classified boards and to elect all directors
annually.
c. Independent Chairman (Separate Chairman/CEO)
Vote on a CASE-BY-CASE basis shareholder proposals requiring that the
positions of chairman and CEO be held separately. Because some companies
have governance structures in place that counterbalance a combined
position, certain factors should be taken into account in determining
whether the proposal warrants support. These factors include the presence
of a lead director, board and committee independence, governance
guidelines, company performance, and annual review by outside directors of
CEO pay.
d. Majority of Independent Directors/Establishment of Committees
Vote FOR shareholder proposals asking that a majority or more of directors
be independent unless the board composition already meets the proposed
threshold by ISS's definition of independence.
Vote FOR shareholder proposals asking that board audit, compensation,
and/or nominating committees be composed exclusively of independent
directors if they currently do not meet that standard.
3. Shareholder Rights
a. Shareholder Ability to Act by Written Consent
Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent.
Vote FOR proposals to allow or make easier shareholder action by written
consent.
b. Shareholder Ability to Call Special Meetings
Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings.
Vote FOR proposals that remove restrictions on the right of shareholders
to act independently of management.
c. Supermajority Vote Requirements
Vote AGAINST proposals to require a supermajority shareholder vote.
Vote FOR proposals to lower supermajority vote requirements.
d. Cumulative Voting
Vote AGAINST proposals to eliminate cumulative voting.
Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE
basis relative to the company's other governance provisions.
e. Confidential Voting
Vote FOR shareholder proposals requesting that corporations adopt
confidential voting, use independent vote tabulators and use independent
inspectors of election, as long as the proposal includes a provision for
proxy contests as follows: In the case of a contested election, management
should be permitted to request that the dissident group honor its
confidential voting policy. If the dissidents agree, the policy remains in
place. If the dissidents will not agree, the confidential voting policy is
waived.
Vote FOR management proposals to adopt confidential voting.
4. Proxy Contests
a. Voting for Director Nominees in Contested Elections
Votes in a contested election of directors must be evaluated on a
CASE-BY-CASE basis, considering the factors that include the long-term
financial performance, management's track record, qualifications of
director nominees (both slates), and an evaluation of what each side is
offering shareholders.
b. Reimbursing Proxy Solicitation Expenses
Vote CASE-BY-CASE. Where ISS recommends in favor of the dissidents, ISS
also recommends voting for reimbursing proxy solicitation expenses.
5. Poison Pills
Vote FOR shareholder proposals that ask a company to submit its poison pill
for shareholder ratification. Review on a CASE-BY-CASE basis shareholder
proposals to redeem a company's poison pill and management proposals to
ratify a poison pill.
6. Mergers and Corporate Restructurings
Vote CASE-BY-CASE on mergers and corporate restructurings based on such
features as the fairness opinion, pricing, strategic rationale, and the
negotiating process.
7. Reincorporation Proposals
Proposals to change a company's state of incorporation should be evaluated
on a CASE-BY-CASE basis, giving consideration to both financial and
corporate governance concerns, including the reasons for reincorporating, a
comparison of the governance provisions, and a comparison of the
jurisdictional laws. Vote FOR reincorporation when the economic factors
outweigh any neutral or negative governance changes.
8. Capital Structure
a. Common Stock Authorization
Votes on proposals to increase the number of shares of common stock
authorized for issuance are determined on a CASE-BY-CASE basis using a
model developed by ISS.
Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has
superior voting rights.
Vote FOR proposals to approve increases beyond the allowable increase when
a company's shares are in danger of being de-listed or if a company's
ability to continue to operate as a going concern is uncertain.
b. Dual-class Stock
Vote AGAINST proposals to create a new class of common stock with superior
voting rights.
Vote FOR proposals to create a new class of non-voting or sub-voting
common stock if:
. It is intended for financing purposes with minimal or no dilution to
current shareholders
. It is not designed to preserve the voting power of an insider or
significant shareholder
9. Executive and Director Compensation
Votes with respect to compensation plans should be determined on a
CASE-BY-CASE basis. The ISS methodology for reviewing compensation plans
primarily focuses on the transfer of shareholder wealth (the dollar cost of
pay plans to shareholders instead of simply focusing on voting power
dilution). Using the expanded compensation data disclosed under the
Securities and Exchange Commission's rules, ISS will value every award type.
ISS will include in its analyses an estimated dollar cost for the proposed
plan and all continuing plans. This cost, dilution to shareholders' equity,
will also be expressed as a percentage figure for the transfer of
shareholder wealth, and will be considered along with dilution to voting
power. Once ISS determines the estimated cost of the plan, ISS compares it
to a company-specific dilution cap.
Vote AGAINST equity plans that explicitly permit repricing or where the
company has a history of repricing without shareholder approval.
a. Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are
evaluated on a CASE-BY-CASE basis giving consideration to the following:
. Historic trading patterns
. Rationale for the repricing
. Value-for-value exchange
. Option vesting
. Term of the option
. Exercise price
. Participation
b. Employee Stock Purchase Plans
Votes on employee stock purchase plans should be determined on a
CASE-BY-CASE basis.
Vote FOR employee stock purchase plans where all of the following apply:
. Purchase price is at least 85 percent of fair market value;
. Offering period is 27 months or less; and
. Potential voting power dilution is ten percent or less.
Vote AGAINST employee stock purchase plans where any of the opposite
conditions obtain.
c. Shareholder Proposals on Compensation
Vote on a CASE-BY-CASE basis for all other shareholder proposals regarding
executive and director pay, taking into account company performance, pay
level versus peers, pay level versus industry, and long-term corporate
outlook.
10. Social and Environmental Issues
These issues cover a wide range of topics, including consumer and public
safety, environment and energy, general corporate issues, labor standards
and human rights, military business, and workplace diversity.
In general, vote CASE-BY-CASE. While a wide variety of factors go into each
analysis, the overall principle guiding all vote recommendations focuses on
how the proposal will enhance the economic value of the company.
JPMorgan Asset Management Corporate Governance Page 1
Global Proxy Voting
Procedures and Guidelines
2007 Edition
April 1, 2007
Table of Contents- Global
Part I: JPMorgan Asset Management Global Proxy-Voting Procedures
A. Objective.................... 3
B. Proxy Committee................. 3
C. The Proxy Voting Process........... 3-4
D. Material Conflicts of Interest.......... 5
E. Escalation of Material Conflicts of Interest.................... 5
F. Recordkeeping................................................... 6
Exhibit A....................................................... 6
Part II: JPMorgan Asset Management Global Proxy-Voting Guidelines
A. NorthAmerica.................................................................. 8-23
Table of Contents............................................................9-10
Guidelines.............................................. 11-23
B. Europe, Middle East, Africa, Central America and South America...............24-35
Table of Contents...............................................................25
Guidelines............................... 26-35
C. Asia (ex-Japan).......................... 36-44
Table of Contents........................ 37
Guidelines............................... 38-44
D. Japan................................................. 45-46
Part I: JPMorgan Asset Management Global
Proxy Voting Procedures
A. Objective
As an investment adviser within JPMorgan Asset Management, each of the
entities listed on Exhibit A attached hereto (each referred to
individually as a "JPMAM Entity" and collectively as "JPMAM") may be
granted by its clients the authority to vote the proxies of the securities
held in client portfolios. In such cases, JPMAM's objective is to vote
proxies in the best interests of its clients. To further that objective,
JPMAM adopted these Procedures. (1)
These Procedures incorporate detailed guidelines for voting proxies on
specific types of issues (the "Guidelines"). The Guidelines have been
developed and approved by the relevant Proxy Committee (as defined below)
with the objective of encouraging corporate action that enhances
shareholder value. Because proxy proposals and individual company facts and
circumstances may vary, JPMAM may not always vote proxies in accordance
with the Guidelines.
B. Proxy Committee
To oversee the proxy-voting process on an ongoing basis, a Proxy Committee
will be established for each global location where proxy-voting decisions
are made. Each Proxy Committee will be composed of a Proxy Administrator
(as defined below) and senior officers from among the Investment, Legal,
Compliance and Risk Management Departments. The primary functions of each
Proxy Committee are to periodically review general proxy-voting matters;
to determine the independence of any third-party vendor which it has
delegated proxy voting responsibilities and to conclude that there are no
conflicts of interest that would prevent such vendor from providing such
proxy voting services prior to delegating proxy responsibilities; review
and approve the Guidelines annually; and provide advice and
recommendations on general proxy-voting matters as well as on specific
voting issues to be implemented by the relevant JPMAM Entity. The Proxy
Committee may delegate certain of its responsibilities to subgroups
composed of Proxy Committee members. The Proxy Committee meets at least
semi-annually, or more frequently as circumstances dictate.
C. The Proxy Voting Process (2)
JPMAM investment professionals monitor the corporate actions of the
companies held in their clients' portfolios. To assist JPMAM investment
professionals with public companies' proxy voting proposals, a JPMAM Entity
may, but shall not be obligated to, retain the services of an independent
proxy voting service ("Independent Voting Service"). The Independent Voting
Service is assigned responsibility for various functions, which may include
one or more of the following: coordinating with client custodians to ensure
that all proxy materials are processed in a timely fashion; providing JPMAM
with a comprehensive analysis of each proxy proposal and providing JPMAM
with recommendations on how to vote each proxy proposal based on the
Guidelines or, where no Guideline exists or where the Guidelines require a
case-by-case analysis, on the Independent Voting Service's analysis; and
executing the voting of the proxies in accordance with Guidelines and its
recommendation, except when a recommendation is overridden by JPMAM, as
described below. If those functions are not assigned to an Independent
Voting Service, they are performed or coordinated by a Proxy Administrator
(as defined below).
-----------------------
(1) 1. Proxies for the JPMorgan Value Opportunities Fund are voted in
accordance with the Washington Management Group's proxy voting policies and
not the policies of JPMAM. The JPMorgan Multi-Manager Funds vote proxies in
accordance with the voting policies of each of the Managers, as applicable,
and not the policies of JPMAM, except, to the extent the JPMAM policies
apply to the JPMorgan Multi-Manager Small Cap Value Fund. The Undiscovered
Managers Behavioral Growth Fund, Undiscovered Managers Behavorial Value
Fund, and the UM Small Cap Growth Fund vote proxies in accordance with the
voting policies of their subadvisers and not the policies of JPMAM.
(2)The Proxy Voting Committee may determine: (a) not to recall securities
on loan if, in its judgment, the negative consequences to clients of
recalling the loaned securities would outweigh the benefits of voting in
the particular instance or (b) not to vote certain foreign securities
positions if, in its judgment, the expense and administrative inconvenience
or other burdens outweigh the benefits to clients of voting the securities.
C. The Proxy Voting Process - Continued
Situations often arise in which more than one JPMAM client invests in the
same company or in which a single client may invest in the same company but
in multiple accounts. In those situations, two or more clients, or one
client with different accounts, may be invested in strategies having
different investment objectives, investment styles, or portfolio managers.
As a result, JPMAM may cast different votes on behalf of different clients
or on behalf of the same client with different accounts.
Each JPMAM Entity appoints a JPMAM professional to act as a proxy
administrator ("Proxy Administrator") for each global location of such
entity where proxy-voting decisions are made. The Proxy Administrators are
charged with oversight of these Procedures and the entire proxy-voting
process. Their duties, in the event an Independent Voting Service is
retained, include the following: evaluating the quality of services
provided by the Independent Voting Service; escalating proposals identified
by the Independent Voting Service as non-routine, but for which a Guideline
exists (including, but not limited to, compensation plans, anti-takeover
proposals, reincorporation, mergers, acquisitions and proxy-voting
contests) to the attention of the appropriate investment professionals and
confirming the Independent Voting Service's recommendation with the
appropriate JPMAM investment professional (documentation of those
confirmations will be retained by the appropriate Proxy Administrator);
escalating proposals identified by the Independent Voting Service as not
being covered by the Guidelines (including proposals requiring a
case-by-case determination under the Guidelines) to the appropriate
investment professional and obtaining a recommendation with respect
thereto; reviewing recommendations of JPMAM investment professionals with
respect to proposals not covered by the Guidelines (including proposals
requiring a case-by-case determination under the Guidelines) or to override
the Guidelines (collectively, "Overrides"); referring investment
considerations regarding Overrides to the Proxy Committee, if necessary;
determining, in the case of Overrides, whether a material conflict, as
described below, exists; escalating material conflicts to the Proxy
Committee; and maintaining the records required by these Procedures.
In the event investment professionals are charged with recommending how to
vote the proxies, the Proxy Administrator's duties include the following:
reviewing recommendations of investment professionals with respect to
Overrides; referring investment considerations regarding such Overrides to
the Proxy Committee, if necessary; determining, in the case of such
Overrides, whether a material conflict, as described below, exists;
escalating material conflicts to the Proxy Committee; and maintaining the
records required by these Procedures.
In the event a JPMAM investment professional makes a recommendation in
connection with an Override, the investment professional must provide the
appropriate Proxy Administrator with a written certification
("Certification") which shall contain an analysis supporting his or her
recommendation and a certification that he or she (A) received no
communication in regard to the proxy that would violate either the J.P.
Morgan Chase ("JPMC") Safeguard Policy (as defined below) or written policy
on information barriers, or received any communication in connection with
the proxy solicitation or otherwise that would suggest the existence of an
actual or potential conflict between JPMAM'S interests and that of its
clients and (B) was not aware of any personal or other relationship that
could present an actual or potential conflict of interest with the clients'
interests.
D. Material Conflicts of Interest
The U.S. Investment Advisers Act of 1940 requires that the proxy-voting
procedures adopted and implemented by a U.S. investment adviser include
procedures that address material conflicts of interest that may arise between
the investment adviser's interests and those of its clients. To addsuch material
potential conflicts of interest, JPMAM relies on certain policies and
procedures. In order to maintain the integrity and independence of JPMAM's
investment processes and decisions, including proxy-voting decisions, and to
protect JPMAM's decisions from influences that could lead to a vote other than
in its clients' best interests, JPMC (including JPMAM) adopted a Safeguard
Policy, and established formal informational barriers designed to restrict the
flow of information from JPMC's securities, lending, investment banking and
other divisions to JPMAM investment professionals. The information barriers
include, where appropriate: computer firewalls; the establishment of separate
legal entities; and the physical separation of employees from separate business
divisions. Material conflicts of interest are further avoided by voting in
accordance with JPMAM's predetermined Guidelines. When an Override occurs, any
potential material conflict of interest that may exist is analyzed in the
process outlined in these Procedures.
Examples of such material conflicts of interest that could arise include
circumstances in which:
(i) management of a JPMAM investment management client or prospective
client, distributor or prospective distributor of its investment management
products, or critical vendor, is soliciting proxies and failure to vote in
favor of management may harm JPMAM's relationship with such company and
materially impact JPMAM's business; or (ii) a personal relationship between
a JPMAM officer and management of a company or other proponent of a proxy
proposal could impact JPMAM's voting decision.
E. Escalation of Material Conflicts of Interest
When an Override occurs, the investment professional must complete the
Certification and the Proxy Administrator will review the circumstances
surrounding such Certification. When a potential material conflict of
interest has been identified, the Proxy Administrator, in consultation with
a subgroup of the Proxy Committee, will evaluate the potential conflict and
determine whether an actual material conflict of interest exists. That
subgroup shall include a Proxy Committee member from the Investment
Department and one or more Proxy Committee members from the Legal,
Compliance or Risk Management Departments. In the event that the Proxy
Administrator and the subgroup of the Proxy Committee determine that an
actual material conflict of interest exists, they shall make a
recommendation on how the relevant JPMAM Entity shall vote the proxy. Sales
and marketing professionals will be precluded from participating in the
decision-making process.
Depending upon the nature of the material conflict of interest, JPMAM, in
the course of addressing the material conflict, may elect to take one or more of
the following measures, or other appropriate action: o removing certain JPMAM
personnel from the proxy voting process;
o "walling off" personnel with knowledge of the material conflict to ensure
that such personnel do not influence the relevant proxy vote;
o voting in accordance with the applicable Guidelines, if any, if the
application of the Guidelines would objectively result in the casting of a
proxy vote in a predetermined manner; or
o deferring the vote to the Independent Voting Service, if any, which will
vote in accordance with its own recommendation.
The resolution of all potential and actual material conflict issues will be
documented in order to demonstrate that JPMAM acted in the best interests of its
clients.
F. Recordkeeping
JPMAM is required to maintain in an easily accessible place for seven (7)
years all records relating to the proxy voting process. Those records include
the following:
o a copy of the JPMAM Proxy Voting Procedures and Guidelines; o a copy of each
proxy statement received on behalf of JPMAM clients; o a record of each vote
cast on behalf of JPMAM client holdings;
o a copy of all documents created by JPMAM personnel that were material
to making a decision on the voting of client securities or that
memorialize the basis of the decision;
o a copy of the documentation of all dialogue with issuers and JPMAM
personnel created by JPMAM personnel prior to the voting of client
securities; and
o a copy of each written request by a client for information on how JPMAM
voted proxies on behalf of the client, as well as a copy of any written
response by JPMAM to any request by a JPMAM client for information on
how JPMAM voted proxies on behalf of our client.
It should be noted that JPMAM reserves the right to use the services of the
Independent Voting Service to maintain certain required records in accordance
with all applicable regulations.
Exhibit A
JPMorgan Investment Advisors Inc.
JPMorgan Chase Bank , NA
J.P. Morgan Asset Management (UK) Limited
J.P. Morgan Investment Management Inc.
JF Asset Management Limited
JF Asset Management (Singapore) Limited
JF International Management Inc.
Security Capital Research & Management Incorporated
Part II: Proxy Voting Guidelines
JPMAM is a global asset management organization with the capabilities to invest
in securities of issuers located around the globe. Because the regulatory
framework and the business cultures and practices vary from region to region,
our proxy voting guidelines have been customized for each region to take into
account such variations.
JPMAM currently has four sets of proxy voting guidelines covering the regions of
(1) North America, (2) Europe, Middle East, Africa, Central America and South
America (3) Asia (ex-Japan) and (4) Japan, respectively. Notwithstanding the
variations among the guidelines, all of these guidelines have been designed with
the uniform objective of encouraging corporate action that enhances shareholder
value. As a general rule, in voting proxies of a particular security, each JPMAM
Entity will apply the guidelines of the region in which the issuer of such
security is organized.
In March 2007, JPMAM signed the Principles for Responsible Investment, an
initiative of the UN Secretary-General.
Part II.A: North America Proxy Voting
Part II.A: North America Guidelines Table of Contents
1. Uncontested Director Elections....................................................................11
2. Proxy Contests....................................................................................11
a. Election of Directors.............................................................................11
b. Reimburse Proxy Solicitation Expenses.............................................................11
3. Ratification of Auditors..........................................................................12
4. Proxy Contest Defenses.........................................................................13-14
a. Board Structure: Staggered vs. Annual Elections...................................................13
b. Shareholder Ability to Remove Directors...........................................................13
c. Cumulative Voting.................................................................................13
d. Shareholder Ability to Call Special Meeting.......................................................14
e. Shareholder Ability to Act by Written Consent.....................................................14
f. Shareholder Ability to Alter the Size of the Board................................................14
5. Tender Offer Defenses..........................................................................14-15
a. Poison Pills......................................................................................14
b. Fair Price Provisions.............................................................................14
c. Greenmail.........................................................................................14
d. Unequal Voting Rights.............................................................................14
e. Supermajority Shareholder Vote Requirement to Amend Charter or Bylaws.............................14
f. Supermajority Shareholder Vote Requirement to Approve Mergers.....................................15
6. Miscellaneous Board Provisions.................................................................15-16
a. Separate Chairman and CEO Positions...............................................................15
b. Lead Directors and Executive Sessions.............................................................15
c. Majority of Independent Directors.................................................................15
d. Stock Ownership Requirements......................................................................15
e. Term of Office....................................................................................16
f. Director and Officer Indemnification and Liability Protection.....................................16
g. Board Size.........................................................................................6
h. Majority Vote Standard............................................................................16
7. Miscellaneous Governance Provisions............................................................16-17
a. Independent Nominating Committee..................................................................16
b. Confidential Voting...............................................................................16
c. Equal Access......................................................................................16
d. Bundled Proposals.................................................................................16
e. Charitable Contributions..........................................................................16
f. Date/Location of Meeting..........................................................................16
g. Include Nonmanagement Employees on Board..........................................................17
h. Adjourn Meeting if Votes are Insufficient.........................................................17
i. Other Business....................................................................................17
j. Disclosure of Shareholder Proponents..............................................................17
8. Capital Structure..............................................................................17-18
a. Common Stock Authorization........................................................................17
b. Stock Distributions: Splits and Dividends.........................................................17
c. Reverse Stock Splits..............................................................................17
d. Blank Check Preferred Authorization...............................................................17
e. Shareholder Proposals Regarding Blank Check Preferred Stock.......................................17
f. Adjustments to Par Value of Common Stock..........................................................17
g. Restructurings/Recapitalizations..................................................................18
h. Share Repurchase Programs.........................................................................18
i. Targeted Share Placements.........................................................................18
Part II.A: North America Guidelines Table of Contents
9. Executive and Director Compensation............................................................18-20
a. Stock-based Incentive Plans....................................................................18-19
b. Approval of Cash or Cash-and-Stock Bonus Plans....................................................19
c. Shareholder Proposals to Limit Executive and Director Pay.........................................19
d. Golden and Tin Parachutes.........................................................................19
e. 401(k) Employee Benefit Plans.....................................................................19
f. Employee Stock Purchase Plans.....................................................................19
g. Option Expensing..................................................................................19
h. Option Repricing..................................................................................19
i. Stock Holding Periods.............................................................................19
j. Transferable Stock Options........................................................................20
10. Incorporation.....................................................................................20
a. Reincorporation Outside of the United States......................................................20
b. Voting on State Takeover Statutes.................................................................20
c. Voting on Reincorporation Proposals...............................................................20
11. Mergers and Corporate Restructurings..............................................................20
a. Mergers and Acquisitions..........................................................................20
b. Nonfinancial Effects of a Merger or Acquisition...................................................20
c. Corporate Restructuring...........................................................................20
d. Spin-offs.........................................................................................20
e. Asset Sales.......................................................................................20
f. Liquidations......................................................................................20
g. Appraisal Rights..................................................................................20
h. Changing Corporate Name...........................................................................20
12. Social and Environmental Issues................................................................21-22
a. Energy and Environment............................................................................21
b. Northern Ireland..................................................................................21
c. Military Business.................................................................................21
d. International Labor Organization Code of Conduct..................................................21
e. Promote Human Rights in China, Nigeria, and Burma.................................................21
f. World Debt Crisis.................................................................................22
g. Equal Employment Opportunity and Discrimination...................................................22
h. Animal Rights.....................................................................................22
i. Product Integrity and Marketing...................................................................22
j. Human Resources Issues............................................................................22
k. Link Executive Pay with Social and/or Environmental Criteria......................................22
13. Foreign Proxies...................................................................................22
14. Pre-Solicitation Contact............................................................................22-23
Part II.A: North America Guidelines
1. Uncontested Director Elections
Votes on director nominees should be made on a case-by-case (for) basis.
Votes generally will be WITHHELD from directors who:
1) attend less than 75 percent of the board and committee meetings without
a valid excuse for the absences; or
2) implement or renew a dead-hand or modified dead-hand poison pill; or
adopted or renewed apoison pill without shareholder approval since the
company's last annual meeting, does not put the pill to a vote at the
current annual meeting, and there is no requirement to put the pill to
shareholder vote within 12 months of its adoption.
3) are inside or affiliated outside directors and sit on the audit,
compensation, or nominating committees; or
4) ignore a shareholder proposal that is approved by a i) majority of the
shares outstanding, or ii) majority of the votes cast for two consecutive
years; or
5) are inside or affiliated outside directors and the full board serves as
the audit, compensation, or nominating committee or the company does not
have one of these committees; or
6) WITHHOLD votes from insiders and affiliated outsiders on boards that are
not at least majority independent; or
7) WITHHOLDING from directors who are CEOs of publicly-traded companies who
serve on more than three public boards and all other directors who serve on
more than six public company boards.
8) WITHHOLD votes from compensation committee members where there is a
pay-for performance disconnect for Russell 3000 companies. (See 9a -
Stock-Based Incentive Plans, last
paragraph). WITHHOLD votes from compensation committee members if the
company does not submit one-time transferable stock options to shareholders
for approval.
9) WITHHOLD votes from audit committee members in circumstances in which
there is evidence (such as audit reports or reports mandated under the
Sarbanes Oxley Act) that there exists material weaknesses in the company's
internal controls.
10) WITHHOLD votes from compensation committee members who were present at
the time of the grant of backdated options or options the pricing or the
timing of which we believe may have been manipulated to provide additional
benefits to executives.
11) Vote case by case for shareholder proposals requesting companies to
amend their bylaws in order to create access to the proxy so as to nominate
candidates for directors. We recognize the importance of shareholder access
to the ballot process as a means to ensure that boards do not become
self-perpetuating and self-serving. However, we are also aware that some
proposals may promote certain interest groups and could be disruptive to
the nomination process. Until the SEC can review the issue of shareholder
access, we will reserve our position on this issue to be case by case.
Special attention will be paid to companies that display a chronic lack of
shareholder accountability.
2. Proxy Contests
2a. Election of Directors
Votes in a contested election of directors must be evaluated on a
case-by-case basis, considering the following factors: long-term financial
performance of the subject company relative to its industry; management's
track record; background to the proxy contest; qualifications of director
nominees (both slates); evaluation of what each side is offering
shareholders as well as the likelihood that the proposed objectives and
goals can be met; and stock ownership positions.
2b. Reimburse Proxy Solicitation Expenses
Decisions to provide full reimbursement for dissidents waging a proxy
contest should be made on a case-by-case basis.
3. Ratification of Auditors
Vote for proposals to ratify auditors, unless an auditor has a financial
interest in or association with the company, and is therefore not
independent; or there is reason to believe that the independent auditor has
rendered an opinion that is neither accurate nor indicative of the
company's financial position.
Generally vote against auditor ratification and withhold votes from Audit
Committee members if non-audit fees exceed audit fees.
Vote case-by-case on auditor Rotation Proposals: tenure of Audit Firm;
establishment and disclosure of a renewal process whereby the auditor is
regularly evaluated for both audit quality and competitive price; length of
the rotation period advocated in the proposal; significant audit related
issues; and number of annual Audit Committee meetings held and the number
of financial experts that serve on the Audit Committee.
Generally vote against auditor indemnification and limitation of liability;
however we recognize there may be situations where indemnification and
limitations on liability may be appropriate.
4. Proxy Contest Defenses
4a. Board Structure: Staggered vs. Annual Elections
Proposals regarding classified boards will be voted on a case-by-case
basis. Classified boards normally will be supported if the company's
governing documents contain each of the following provisions:
1) Majority of board composed of independent directors,
2) Nominating committee composed solely of independent directors,
3) Do not require more than a two-thirds shareholders' vote to remove a
director, revise any bylaw or revise any classified board provision,
4) Confidential voting (however, there may be a provision for suspending
confidential voting during proxy contests),
5) Ability of shareholders to call special meeting or to act by written
consent with 90 days' notice,
6) Absence of superior voting rights for one or more classes of stock,
7) Board does not have the sole right to change the size of the board
beyond a stated range that has been approved by shareholders, and
8) Absence of shareholder rights plan that can only be removed by the
incumbent directors (dead-hand poison pill).
4b. Shareholder Ability to Remove Directors Vote against proposals that
provide that directors may be removed only for cause.
Vote for proposals to restore shareholder ability to remove directors with
or without cause.
Vote against proposals that provide that only continuing directors may
elect replacements to fill board vacancies.
Vote for proposals that permit shareholders to elect directors to fill
board vacancies.
4c. Cumulative Voting
Cumulative voting proposals will be voted on a case-by-case basis. If there
are other safeguards to ensure that shareholders have reasonable access and
input into the process of nominating and electing directors, cumulative
voting is not essential. Generally, a company's governing documents must
contain the following provisions for us to vote against restoring or
providing for cumulative voting:
1) Annually elected board,
2) Majority of board composed of independent directors,
3) Nominating committee composed solely of independent directors,
4) Confidential voting (however, there may be a provision for suspending
confidential voting during proxy contests),
5) Ability of shareholders to call special meeting or to act by written
consent with 90 days' notice,
6) Absence of superior voting rights for one or more classes of stock,
7) Board does not have the sole right to change the size of the board
beyond a stated range that has been approved by shareholders, and
8) Absence of shareholder rights plan that can only be removed by the
incumbent directors (dead- hand poison pill).
4d. Shareholder Ability to Call Special Meeting
Vote against proposals to restrict or prohibit shareholder ability to call
special meetings. The ability to call special meetings enables shareholders
to remove directors or initiate a shareholder resolution without having to
wait for the next scheduled meeting.
Vote for proposals that remove restrictions on the right of shareholders to
act independently of management.
4e. Shareholder Ability to Act by Written Consent
We generally vote for proposals to restrict or prohibit shareholder ability
to take action by written consent. The requirement that all shareholders be
given notice of a shareholders' meeting and matters to be discussed therein
seems to provide a reasonable protection of minority shareholder rights.
We generally vote against proposals to allow or facilitate shareholder
action by written consent.
4f. Shareholder Ability to Alter the Size of the Board Vote for proposals
that seek to fix the size of the board.
Vote against proposals that give management the ability to alter the size
of the board without shareholder approval.
5. Tender Offer Defenses
5a. Poison Pills Vote for shareholder proposals that ask a company to
submit its poison pill for shareholder ratification.
Review on a case-by-case basis shareholder proposals to redeem a company's
poison pill.
Studies indicate that companies with a rights plan secure higher premiums
in hostile takeover situations.
Review on a case-by-case basis management proposals to ratify a poison
pill. We generally look for shareholder friendly features including a two- to
three-year sunset provision, a permitted bid provision, a 20 percent or higher
flip-in provision, and the absence of dead-hand features.
5b. Fair Price Provisions
Vote proposals to adopt fair price provisions on a case-by-case basis,
evaluating factors such as the vote required to approve the proposed
acquisition, the vote required to repeal the fair price provision, and the
mechanism for determining the fair price.
Generally, vote against fair price provisions with shareholder vote
requirements greater than a majority of disinterested shares.
5c. Greenmail
Vote for proposals to adopt antigreenmail charter or bylaw amendments or
otherwise restrict a company's ability to make greenmail payments.
5d. Unequal Voting Rights
Generally, vote against dual-class recapitalizations as they offer an
effective way for a firm to thwart hostile takeovers by concentrating
voting power in the hands of management or other insiders.
Vote for dual-class recapitalizations when the structure is designed to
protect economic interests of investors.
5e. Supermajority Shareholder Vote Requirement to Amend Charter or Bylaws
Vote against management proposals to require a supermajority shareholder
vote to approve charter and bylaw amendments. Supermajority provisions
violate the principle that a simple majority of voting shares should be all
that is necessary to effect change regarding a company.
Vote for shareholder proposals to lower supermajority shareholder vote
requirements for charter and bylaw amendments.
5f. Supermajority Shareholder Vote Requirement to Approve Mergers
Vote against management proposals to require a supermajority shareholder
vote to approve mergers and other significant business combinations.
Supermajority provisions violate the principle that a simple majority of
voting shares should be all that is necessary to effect change regarding a
company.
Vote for shareholder proposals to lower supermajority shareholder vote
requirements for mergers and other significant business combinations.
6. Miscellaneous Board Provisions
6a. Separate Chairman and CEO Positions
We will generally vote for proposals looking to separate the CEO and
Chairman roles unless the company has governance structures in place that
can satisfactorily counterbalance a combined chairman and CEO/president
post. Such a structure should include most or all of the following:
o Designated lead director, appointed from the ranks of the independent
board members with clearly delineated duties. At a minimum these
should include:
(1) Presides at all meetings of the board at which the chairman
is not present, including executive sessions of the
independent directors,
(2) Serves as liaison between the chairman and the independent
directors,
(3) Approves information sent to the board,
(4) Approves meeting agendas for the board,
(5) Approves meeting schedules to assure that there is
sufficient time for discussion of all agenda items,
(6) Has the authority to call meetings of the independent
directors, and
(7) If requested by major shareholders, ensures that he is
available for consultation and direct communication;
o 2/3 of independent board;
o All-independent key committees;
o Committee chairpersons nominated by the independent directors;
o CEO performance is reviewed annually by a committee of outside
directors; and
o Established governance guidelines.
Additionally, the company should not have underperformed its peers and
index on a one-year and three-year basis, unless there has been a
change in the Chairman/CEO position within that time. Performance will
be measured according to shareholder returns against index and peers.
6b. Lead Directors and Executive Sessions
In cases where the CEO and Chairman roles are combined, we will vote for
the appointment of a "lead" (non-insider) director and for regular
"executive" sessions (board meetings taking place without the CEO/Chairman
present).
6c. Majority of Independent Directors
We generally vote for proposals that call for the board to be composed of a
majority of independent directors. We believe that a majority of
independent directors can be an important factor in facilitating objective
decision making and enhancing accountability to shareholders.
Vote for shareholder proposals requesting that the board's audit,
compensation, and/or nominating committees include independent directors
exclusively.
Generally vote for shareholder proposals asking for a 2/3 independent
board.
6d. Stock Ownership Requirements
Vote for shareholder proposals requiring directors to own a minimum amount
of company stock in order to qualify as a director or to remain on the
board, so long as such minimum amount is not excessive or unreasonable.
6e. Term of Office
Vote against shareholder proposals to limit the tenure of outside
directors. Term limits pose artificial and arbitrary impositions on the
board and could harm shareholder interests by forcing experienced and
knowledgeable directors off the board.
6f. Director and Officer Indemnification and Liability Protection
Proposals concerning director and officer indemnification and liability
protection should be evaluated on a case-by-case basis.
Vote against proposals to limit or eliminate director and officer liability
for monetary damages for violating the relevant duty of care.
Vote against indemnification proposals that would expand coverage beyond
legal expenses to acts, such as negligence, that are more serious
violations of fiduciary obligations than mere carelessness.
Vote for proposals that provide such expanded coverage in cases when a
director's or officer's legal defense was unsuccessful only if: (1) the
director was found to have acted in good faith and in a manner that he
reasonably believed was in the company's best interests, and (2) the
director's legal expenses would be covered.
6g. Board Size
Vote for proposals to limit the size of the board to 15 members.
6h. Majority Vote Standard
We would generally vote for proposals asking for the board to initiate the
appropriate process to amend the company's governance documents
(certificate of incorporation or bylaws) to provide that director nominees
shall be elected by the affirmative vote of the majority of votes cast at
an annual meeting of shareholders. We would generally review on a
case-by-case basis proposals that address alternative approaches to a
majority vote requirement.
7. Miscellaneous Governance Provisions
7a. Independent Nominating Committee
Vote for the creation of an independent nominating committee.
7b. Confidential Voting
Vote for shareholder proposals requesting that companies adopt confidential
voting, use independent tabulators, and use independent inspectors of
election as long as the proposals include clauses for proxy contests as
follows: In the case of a contested election, management should be
permitted to request that the dissident group honor its confidential voting
policy. If the dissidents agree, the policy remains in place. If the
dissidents do not agree, the confidential voting policy is waived.
Vote for management proposals to adopt confidential voting.
7c. Equal Access
Vote for shareholder proposals that would give significant company
shareholders equal access to management's proxy material in order to
evaluate and propose voting recommendations on proxy proposals and director
nominees and to nominate their own candidates to the board.
7d. Bundled Proposals
Review on a case-by-case basis bundled or "conditioned" proxy proposals. In
the case of items that are conditioned upon each other, examine the
benefits and costs of the packaged items. In instances where the joint
effect of the conditioned items is not in shareholders' best interests,
vote against the proposals. If the combined effect is positive, support
such proposals.
7e. Charitable Contributions
Vote against shareholder proposals regarding charitable contributions. In
the absence of bad faith, self-dealing, or gross negligence, management
should determine which contributions are in the best interests of the
company.
7f. Date/Location of Meeting
Vote against shareholder proposals to change the date or location of the
shareholders' meeting. No one site will meet the needs of all shareholders.
7g. Include Nonmanagement Employees on Board
Vote against shareholder proposals to include nonmanagement employees on
the board. Constituency representation on the board is not supported,
rather decisions are based on director qualifications.
7h. Adjourn Meeting if Votes are Insufficient
Vote for proposals to adjourn the meeting when votes are insufficient.
Management has additional opportunities to present shareholders with
information about its proposals.
7i. Other Business
Vote for proposals allowing shareholders to bring up "other matters" at
shareholder meetings.
7j. Disclosure of Shareholder Proponents
Vote for shareholder proposals requesting that companies disclose the names
of shareholder proponents. Shareholders may wish to contact the proponents
of a shareholder proposal for additional information.
8. Capital Structure
8a. Common Stock Authorization
Review proposals to increase the number of shares of common stock
authorized for issue on a case-by-case basis.
Vote against proposals to increase the number of authorized shares of a
class of stock that has superior voting rights in companies that have
dual-class capital structure.
8b. Stock Distributions: Splits and Dividends
Vote for management proposals to increase common share authorization for a
stock split, provided that the increase in authorized shares would not
result in an excessive number of shares available for issuance given a
company's industry and performance as measured by total shareholder
returns.
8c. Reverse Stock Splits
Vote for management proposals to implement a reverse stock split that also
reduces the number of authorized common shares to a level where the number
of shares available for issuance is not excessive given a company's
industry and performance in terms of shareholder returns.
Vote case-by-case on proposals to implement a reverse stock split that does
not proportionately reduce the number of shares authorized for issue.
8d. Blank Check Preferred Authorization
Vote against proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock).
Vote for proposals to create "blank check" preferred stock in cases when
the company expressly states that the stock will not be used as a takeover
device.
Vote for proposals to authorize preferred stock in cases when the company
specifies voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable.
Vote case-by-case on proposals to increase the number of blank check
preferred shares after analyzing the number of preferred shares available
for issue given a company's industry and performance as measured by total
shareholder returns.
8e. Shareholder Proposals Regarding Blank Check Preferred Stock
Vote for shareholder proposals to have blank check preferred stock
placements, other than those shares issued for the purpose of raising
capital or making acquisitions in the normal course of business, submitted
for shareholder ratification.
8f. Adjustments to Par Value of Common Stock
Vote for management proposals to reduce the par value of common stock. The
purpose of par value is to establish the maximum responsibility of a
shareholder in the event that a company becomes insolvent.
8g. Restructurings/Recapitalizations
Review proposals to increase common and/or preferred shares and to issue
shares as part of a debt restructuring plan on a case-by-case basis.
Consider the following issues:
Dilution--How much will ownership interest of existing shareholders be
reduced, and how extreme will dilution to any future earnings be?
Change in Control--Will the transaction result in a change in control of
the company?
Bankruptcy--Generally, approve proposals that facilitate debt
restructurings unless there areclear signs of self-dealing or other abuses.
8h. Share Repurchase Programs
Vote for management proposals to institute open-market share repurchase
plans in which all shareholders may participate on equal terms.
8i. Targeted Share Placements
These shareholder proposals ask companies to seek stockholder approval
before placing 10% or more of their voting stock with a single investor.
The proposals are in reaction to the placement by various companies of a
large block of their voting stock in an ESOP, parent capital fund or with a
single friendly investor, with the aim of protecting themselves against a
hostile tender offer. These proposals are voted on a case by case basis
after reviewing the individual situation of the company receiving the
proposal.
9. Executive and Director Compensation
9a. Stock-based Incentive Plans
Votes with respect to compensation plans should be determined on a
case-by-case basis. The analysis of compensation plans focuses primarily on
the transfer of shareholder wealth (the dollar cost of pay plans to
shareholders). Other matters included in our analysis are the amount of the
company's outstanding stock to be reserved for the award of stock options,
whether the exercise price of an option is less than the stock's fair
market value at the date of the grant of the options, and whether the plan
provides for the exchange of outstanding options for new ones at lower
exercise prices. Every award type is valued. An estimated dollar cost for
the proposed plan and all continuing plans is derived. This cost, dilution
to shareholders' equity, will also be expressed as a percentage figure for
the transfer of shareholder wealth and will be considered along with
dilution to voting power.
Once the cost of the plan is estimated, it is compared to a
company-specific dilution cap. The allowable cap is industry-specific,
market cap-based, and pegged to the average amount paid by companies
performing in the top quartile of their peer groupings. To determine
allowable caps, companies are categorized according to standard industry
code (SIC) groups. Top quartile performers for each group are identified on
the basis of five-year total shareholder returns. Industry-specific cap
equations are developed using regression analysis to determine those
variables that have the strongest correlation to shareholder value
transfer. Industry equations are
used to determine a company-specific allowable cap; this is accomplished by
plugging company specific data into the appropriate industry equation to
reflect size, performance, and levels of cash compensation.
Votes are primarily determined by this quantitative analysis. If the
proposed plan cost is above the allowable cap, an against vote is
indicated. If the proposed cost is below the allowable cap, a vote for the
plan is indicated unless the plan violates the repricing guidelines. If the
company has a history of repricing options or has the express ability to
reprice underwater stock options without first securing shareholder
approval under the proposed plan, the plan receives an against vote-- even
in cases where the plan cost is considered acceptable based on the
quantitative analysis.
We vote against equity plans that have high average three year burn rates,
unless the company has publicly committed to reduce the burn rate to a rate
that is comparable to its peer group (as determined by JPMAM). JPMAM
defines high average three-year burn rate as the following: the company's
most recent three-year burn rate exceeds one standard deviation by Russell
3000 index and non-Russell 3000 index; the company's most recent three-year
burn rate exceeds two percent of common shares outstanding.
9a. Stock-based Incentive Plans
For companies in the Russell 3000 we will generally vote against a plan
when there is a disconnect between the CEO's pay and performance (an
increase in pay and a decrease in performance), the main source for the pay
increase is equity-based, and the CEO participates in the plan being voted
on. Specifically, if the company has negative one- and three-year total
shareholder returns, and its CEO also had an increase in total direct
compensation from the prior year, it would signify a disconnect in pay and
performance. If more than half of the increase in total direct compensation
is attributable to the equity component, we would generally recommend
against the equity plan in which the CEO participates.
9b. Approval of Cash or Cash-and-Stock Bonus Plans
Vote for cash or cash-and-stock bonus plans to exempt the compensation from
limits on deductibility under the provisions of Section 162(m) of the
Internal Revenue Code.
9c. Shareholder Proposals to Limit Executive and Director Pay
Generally, vote for shareholder proposals that seek additional disclosure
of executive and director pay information.
Review on a case-by-case basis all other shareholder proposals that seek to
limit executive and director pay.
Review on a case-by-case basis shareholder proposals for performance pay
such as indexed or
premium priced options if a company has a history of oversized awards and
one-, two- and three-year returns below its peer group.
9d. Golden and Tin Parachutes
Review on a case-by-case basis all proposals to ratify or cancel golden or
tin parachutes. Favor golden parachutes that limit payouts to two times
base salary, plus guaranteed retirement and other benefits.
9e. 401(k) Employee Benefit Plans
Vote for proposals to implement a 401(k) savings plan for employees.
9f. Employee Stock Purchase Plans
Vote for qualified employee stock purchase plans with the following
features: the purchase price is at least 85 percent of fair market value;
the offering period is 27 months or less; and potential voting power
dilution (shares allocated to the plan as a percentage of outstanding
shares) is ten percent or less.
Vote for nonqualified employee stock purchase plans with the following
features: broad-based participation (i.e., all employees of the company
with the exclusion of individuals with five percent or more of beneficial
ownership of the company); limits on employee contribution, which may be a
fixed dollar amount or expressed as a percentage of base salary; company
matching contribution up to 25 percent of the employee's contribution,
which is effectively a discount of 20 percent from market value; and no
discount on the stock price on the date of purchase since there is a
company matching contribution
9g. Option Expensing
Generally, vote for shareholder proposals to expense fixed-price options.
.
9h. Option Repricing
In most cases, we take a negative view of option repricings and will,
therefore, generally vote against such proposals. We do, however, consider
the granting of new options to be an acceptable alternative and will
generally support such proposals.
9i. Stock Holding Periods
Generally vote against all proposals requiring executives to hold the stock
received upon option exercise for a specific period of time.
9j. Transferable Stock Options
Review on a case-by-case basis proposals to grant transferable stock
options or otherwise permit the transfer of outstanding stock options,
including cost of proposal and alignment with shareholder interests.
10. Incorporation
10a. Reincorporation Outside of the placecountry-regionUnited States
Generally speaking, we will vote against companies looking to reincorporate
outside of the placecountry-regionU.S.
10b. Voting on State Takeover Statutes
Review on a case-by-case basis proposals to opt in or out of state takeover
statutes (including control share acquisition statutes, control share
cash-out statutes, freezeout provisions, fair price provisions, stakeholder
laws, poison pill endorsements, severance pay and labor contract
provisions, antigreenmail provisions, and disgorgement provisions).
10c. Voting on Reincorporation Proposals
Proposals to change a company's state of incorporation should be examined
on a case-by-case basis. Review management's rationale for the proposal,
changes to the charter/bylaws, and differences in the state laws governing
the companies.
11. Mergers and Corporate Restructurings
11a. Mergers and Acquisitions
Votes on mergers and acquisitions should be considered on a case-by-case
basis, taking into account factors including the following: anticipated
financial and operating benefits; offer price (cost vs. premium); prospects
of the combined companies; how the deal was negotiated; and changes in
corporate governance and their impact on shareholder rights.
11b. Nonfinancial Effects of a Merger or Acquisition
Some companies have proposed a charter provision which specifies that the
board of directors may examine the nonfinancial effect of a merger or
acquisition on the company. This provision would allow the board to
evaluate the impact a proposed change in control would have on employees,
host communities, suppliers and/or others. We generally vote against
proposals to adopt such charter provisions. We feel it is the directors'
fiduciary duty to base decisions solely on the financial interests of the
shareholders.
11c. Corporate Restructuring
Votes on corporate restructuring proposals, including minority squeezeouts,
leveraged buyouts, "going private" proposals, spin-offs, liquidations, and
asset sales, should be considered on a case-by-case basis.
11d. Spin-offs
Votes on spin-offs should be considered on a case-by-case basis depending
on the tax and regulatory advantages, planned use of sale proceeds, market
focus, and managerial incentives.
11e. Asset Sales
Votes on asset sales should be made on a case-by-case basis after
considering the impact on the balance sheet/working capital, value received
for the asset, and potential elimination of diseconomies.
11f. Liquidations
Votes on liquidations should be made on a case-by-case basis after
reviewing management's efforts to pursue other alternatives, appraisal
value of assets, and the compensation plan for executives managing the
liquidation.
11g. Appraisal Rights
Vote for proposals to restore, or provide shareholders with, rights of
appraisal. Rights of appraisal provide shareholders who are not satisfied
with the terms of certain corporate transactions the right to demand a
judicial review in order to determine a fair value for their shares.
11h. Changing Corporate Name Vote for changing the corporate name.
12. Social and Environmental Issues
We believe that a company's environmental policies may have a long-term impact
on the company's financial performance. We believe that good corporate
governance policies should consider the impact of company operations on the
environment and the cost of compliance with laws and regulations relating to
environmental matters, physical damage to the environment (including the costs
of clean-ups and repairs), consumer preferences and capital investments related
to climate change. Furthermore, we believe that corporate shareholders have a
legitimate need for information to enable them to evaluate the potential risks
and opportunities that climate change and other environmental matters pose to
the company's operations, sales and capital investments. Therefore, we generally
encourage a level of reporting that is not unduly costly or burdensome, but
which provides sufficient information to enable shareholders to evaluate the
company's environmental policies and performance. At the same time, we recognize
that, in some cases, a company may already be providing current,
publicly-available information on the possible impact that climate change will
have on the company, as well as associated policies and procedures that address
the risks and opportunities to the company, or a shareholder proposal may seek a
level of disclosure that exceeds that provided by the company's industry peers
and that may put the company at a competitive disadvantage.
12a. Energy and Environment
Vote case-by-case on proposals that request companies to subscribe to the CERES
Principles.
Vote for proposals that request companies to outline their preparedness to
comply with the Kyoto Protocol.
Vote case-by-case on disclosure reports that seek additional information.
Vote case-by-case on proposals that request a report on greenhouse gas emissions
from company operations and/or products.
Vote case-by-case on proposals that request a report on the impact of climate
change on the company's operations and/or products.
Vote case-by-case on proposals seeking additional information on other
environmental matters affecting the company, its operations and/or its products.
12b. placecountry-regionNorthern Ireland
Vote case-by-case on proposals pertaining to the MacBride Principles.
Vote case-by-case on disclosure reports that seek additional information about
progress being made toward eliminating employment discrimination.
12c. Military Business
Vote case-by-case on defense issue proposals.
Vote case-by-case on disclosure reports that seek additional information on
military-related operations.
12d. International Labor Organization Code of Conduct
Vote case-by-case on proposals to endorse international labor organization code
of conducts.
Vote case-by-case on disclosure reports that seek additional information on
company activities in this area.
12e. Promote Human Rights in country-regionChina, country-regionNigeria, the
country-regionSudan and placecountry-regionBurma Vote case-by-case on proposals
to promote human rights in countries such as country-regionChina,
country-regionNigeria, the country-regionSudan and placecountry-regionBurma.
Vote case-by-case on disclosure reports that seek additional information on
company activities regarding human rights.
12f. World Debt Crisis
Vote case-by-case on proposals dealing with third world debt.
Vote case-by-case on disclosure reports regarding company activities with
respect to third world debt.
12g. Equal Employment placeOpportunity and Discrimination
Vote case-by-case on proposals regarding equal employment opportunities and
discrimination.
Vote case-by-case on disclosure reports that seek additional information about
affirmative action efforts, particularly when it appears that companies have
been unresponsive to shareholder requests.
12h. Animal Rights
Vote case-by-case on proposals that deal with animal rights.
12i. Product Integrity and Marketing
Vote case-by-case on proposals that ask companies to end their production of
legal, but socially questionable, products.
Vote case-by-case on disclosure reports that seek additional information
regarding product integrity and marketing issues.
12j. Human Resources Issues
Vote case-by-case on proposals regarding human resources issues.
Vote case-by-case on disclosure reports that seek additional information
regarding human resources issues.
12k. Link Executive Pay with Social and/or Environmental Criteria
Vote case-by-case on proposals to link executive pay with the attainment of
certain social and/or environmental criteria.
Vote case-by-case on disclosure reports that seek additional information
regarding this issue.
13. Foreign Proxies
Responsibility for voting non-U.S. proxies rests with our Proxy Voting
Committee located in placeCityLondon. The Proxy Committee is composed of
senior analysts and portfolio managers and officers of the Legal and
Compliance Department. It is chaired by a Managing Director of the Firm. A
copy of our policy for voting international proxies can be provided upon
request.
14. Pre-Solicitation Contact
From time to time, companies will seek to contact analysts, portfolio
managers and others in advance of the formal proxy solicitation to solicit
support for certain contemplated proposals. Such contact can potentially
result in the recipient receiving material non-public information and
result in the imposition of trading restrictions. Accordingly,
pre-solicitation contact should occur only under very limited circumstances
and only in accordance with the terms set forth herein.
What is material non-public information?
The definition of material non-public information is highly subjective. The
general test, however, is whether or not such information would reasonably
affect an investor's decision to buy, sell or hold securities, or whether
it would be likely to have a significant market impact. Examples of such
information include, but are not limited to: o a pending acquisition or
sale of a substantial business; o financial results that are better or
worse than recent trends would lead one to expect; o major management
changes; o an increase or decrease in dividends; o calls or redemptions or
other purchases of its securities by the company; o a stock split, dividend
or other recapitalization; or o financial projections prepared by the
Company or the Company's representatives.
What is pre-solicitation contact?
Pre-solicitation contact is any communication, whether oral or written,
formal or informal, with the Company or a representative of the Company
regarding proxy proposals prior to publication of the official proxy
solicitation materials. This contact can range from simply polling
investors as to their reaction to a broad topic, e.g., "How do you feel
about dual classes of stock?", to very specific inquiries, e.g., "Here's a
term sheet for our restructuring. Will you vote to approve this?"
Determining the appropriateness of the contact is a factual inquiry which
must be determined on a case-by-case basis. For instance, it might be
acceptable for us to provide companies with our general approach to certain
issues. Promising our vote, however, is prohibited under all circumstances.
Likewise, discussion of our proxy guidelines, in whole or in part, with a
company or others is prohibited. In the event that you are contacted in
advance of the publication of proxy solicitation materials, please notify
the Legal/Compliance Department immediately. The Company or its
representative should be instructed that all further contact should be with
the Legal/Compliance Department.
It is also critical to keep in mind that as a fiduciary, we exercise our
proxies solely in the best interests of our clients. Outside influences,
including those from within J.P. Morgan Chase should not interfere in any
way in our decision making process. Any calls of this nature should be
referred to the Legal/Compliance Department for response.
Part II.B: Europe, Middle East, Africa, Central America and South America
Proxy Voting October, 2006
Part II.B: Europe, Middle East, Africa, Central America and South America
Guidelines Table of Contents
1. Reports & Accounts................................................................................26
a. Annual Report.....................................................................................26
b. Remuneration Report...............................................................................26
2. Dividends.........................................................................................26
3. Boards of Directors...........................................................................26-28
a. Board Structure...................................................................................26
b. Chairman..........................................................................................27
c. Board Size........................................................................................27
d. Board placeCityIndependence.......................................................................27
e. Board Committees..................................................................................27
f. Director placeCityIndependence....................................................................28
g. Director's Liability..............................................................................28
h. Multiple Directorships`...........................................................................28
i. Investment Trust Directors........................................................................29
4. Compensation...................................................................................29-30
a. Directors' Contracts..............................................................................29
b. Executive Director Remuneration...................................................................29
c. Non-Executive Director's Remuneration.............................................................29
d. Share Option Schemes..............................................................................29
e. Long-Term Incentive Plans (L-TIPs)................................................................30
f. Pensions..........................................................................................30
5. Auditors..........................................................................................30
a. Auditor placeCityIndependence.....................................................................30
b. Auditor Remuneration..............................................................................30
6. Issue of Capital..................................................................................31
a. Issue of Equity...................................................................................31
b. Issue of Debt.....................................................................................31
c. Share Repurchase Programmes.......................................................................31
7. Mergers/Acquisitions..............................................................................31
8. Voting Rights.....................................................................................32
9. Others........................................................................................32-33
a. Poison Pills......................................................................................32
b. Composite Resolutions.............................................................................32
c. Social/Environmental Issues.......................................................................32
d. Charitable Issues.................................................................................33
e. Political Issues..................................................................................33
10. Activism.......................................................................................33-34
a. Shareholder Activism and Company Engagement.......................................................33
b. Activism Policy...................................................................................33
11. CSR............................................................................................34-35
a. Sustainability Statement..........................................................................34
b. Sustainability Policy.............................................................................35
REPORTS & ACCOUNTS
Annual Report
Reports and accounts should be both detailed and transparent, and should be
submitted to shareholders for approval. They should meet accepted reporting
standards, such as those prescribed by of the International Accounting Standards
Board (IASB) and should meet with the spirit as well as the letter of those
reporting standards.
The annual report should include a statement of compliance with relevant codes
of best practice, in markets where they exist. For placecountry-regionUK
companies, a statement of compliance with the Combined Code should be made,
together with detailed explanations regarding any area of non-compliance.
Legal disclosure varies from market to market. If, in our opinion, a company's
standards of disclosure (whilst meeting minimum legal requirements) are
insufficient in any particular area, we will inform company management of our
concerns. Depending on the circumstances, we will either abstain or vote against
the resolution concerned. Similar consideration would relate to the use of
inappropriate accounting methods.
Remuneration Report
The remuneration policy as it relates to senior management should ideally be
presented to shareholders as a separate voting item. We would expect the report
to contain full details of all aspects of individual director's emoluments. We
will endeavour to engage with the company or seek an explanation regarding any
areas of remuneration which fall outside our guidelines and we will abstain or
vote against the remuneration report if we feel that explanation is
insufficient.
see Compensation
DIVIDENDS
Proposals for the payment of dividends should be presented to shareholders for
approval, and should be fully disclosed in advance of the meeting. We will vote
against dividend proposals if we deem the payout ratio to be too low, or if the
earnings and cash cover are inadequate and payment of the proposed dividend
would prejudice the solvency or future prospects of the company.
BOARD OF DIRECTORS
Board Structure
Companies should be controlled by an effective board, with an appropriate
balance of executive and non-executive directors, such that no single
stakeholder, or group of stakeholders, has a disproportionate or undue level of
influence. JPMAM is generally in favour of unitary boards of the type found in
the placecountry-regionUK, as opposed to tiered board structures. We find that
unitary boards offer flexibility while, with a tiered structure, there is a risk
of upper tier directors becoming remote from the business, while lower tier
directors become deprived of contact with outsiders of wider experience. No
director should be excluded from the requirement to submit him/herself for
re-election on a regular basis.
Chairman
Boards should be headed by an effective Chairman, who is independent on
appointment. There should be a clear division of responsibilities at the head of
a company, such that no one individual has unfettered powers of decision. JPMAM
believes that the roles of Chairman and Chief Executive Officer should normally
be separate and will generally vote against combined posts.
Board Size
Board size should be appropriate to the size and complexity of the company.
JPMAM will exercise its voting powers in favour of reducing excessively-large
boards wherever possible. Boards with more than 20 directors are usually deemed
excessively large, whereas less than 5 directors may be too small to provide
sufficient levels of independence for key committees.
Board placeCityIndependence
JPMAM believes that a strong independent element to a board is essential to the
effective running of a company. The calibre and number of non-executive
directors on a board should be such that their views will carry significant
weight in the board's decisions.
We agree with the ICGN, that the majority of a board of directors should be
independent, especially if the company has a joint Chairman / CEO. However, as a
minimum, all boards should comprise at least one third independent non-executive
directors, unless the company is of such a size that sustaining such a number
would be an excessive burden.
JPMAM will use its voting powers to encourage appropriate levels of board
independence, taking into account local market practice.
In order to help assess their contribution to the company, the time spent by
each non-executive director should be disclosed to shareholders, as well as
their attendance at board and committee meetings.
Board Committees
Boards should delegate key oversight functions, such as responsibility for
Audit, Nominations and Remuneration issues, to independent committees. The
Chairman and members of any Committee should be clearly identified in the annual
report. Any Committee should have the authority to engage independent advisers
where appropriate at the company's expense.
Audit Committees should consist solely of non-executive directors, who are
independent of management. The Committee should include at least one person with
appropriate financial qualifications but they should all undergo appropriate
training that provides and maintains a reasonable degree of financial literacy.
Formal arrangements should be in place for the Committee to hold regular
meetings with external auditors, without executive or staff presence, and they
should have an explicit right of unrestricted access to company documents and
information.
Nomination Committees should be majority-independent, and there should be a
formal nomination process for the appointment of Directors.
Remuneration Committees should be independent, and no director should be able to
determine their own emolument. The remuneration report (where applicable) should
be the responsibility of the Remuneration Committee.
See Remuneration Report
Director placeCityIndependence
We agree with the ICGN that a director will generally be deemed to be
independent if he or she has no significant financial, familial or other ties
with the company which might pose a conflict, and has not been employed in an
executive capacity by the company for at least the previous ten years.
A non-executive director who has served more than three terms (or ten years) in
the same capacity can no longer normally be deemed to be independent. Directors
staying on beyond this duration would require the fullest explanation to
shareholders, and we would expect such directors to offer themselves for
re-election annually.
In determining our vote, we will always consider independence issues on a
case-by-case basis, taking into account any exceptional individual
circumstances, together with local markets' differing attitudes to director
independence.
Director's Liability
In certain markets, this proposal asks shareholders to give blanket discharge
from responsibility for all decisions made during the previous financial year.
Depending on the market, this resolution may or may not be legally binding, and
may not release the board from its legal responsibility.
JPMAM will usually vote against discharging the board from responsibility in
cases of pending litigation, or if there is evidence of wrongdoing for which the
board must be held accountable.
Companies may arrange Directors and Officers ("D&O") liability insurance, to
indemnify executives in certain circumstances, such as class action lawsuits and
other litigation. JPMAM generally supports such proposals, although we do not
approve of arrangements where directors are given 100% indemnification, as this
could absolve them of responsibility for their actions and encourage them to act
recklessly. Such arrangements should not extend to third parties, such as
auditors.
Multiple Directorships
In order to be able to devote sufficient time to his or her duties, we would not
normally expect a non-executive to hold more than five significant directorships
at any one time. For executives, only one additional non-executive post would
normally be considered appropriate without further explanation.
We agree with the findings of the Higgs Report in the placecountry-regionUK that
no single individual should chair more than one major listed company.
Investment Trust Directors
In the placecountry-regionUK, the boards of investment trust companies are
unusual in being normally comprised solely of non-executive directors, the
majority of whom (including the Chairman) are independent of the management
company. We believe this to be appropriate and expect investment trust boards to
comply with the Association of Investment Trust Directors (AITC) Code of
Corporate Governance
We note that the AITC Code does not make explicit recommendations on board
tenure. We take this into account when assessing director independence, although
we agree with the AITC that investment trust companies should have a formal
policy on tenure, and that any director serving beyond three terms should offer
themselves for re-election annually. Given the highly specialised nature of
these companies it is particularly important that the board contains the correct
mix of skills and experience.
COMPENSATION
Directors' Contracts
JPMAM believes that directors' contracts should be of one year's duration or
less. This is in line with the view of the NAPF and ABI, as well as accepted
market best practice in the placecountry-regionUK. However, JPMAM always
examines these issues on a case-by-case basis and we are aware that there will
occasionally be a case for contracts of a longer duration in exceptional
circumstances, in order to secure personnel of the required calibre.
Similarly, we agree with the view of the NAPF and ABI that special provisions
whereby additional payment becomes due in the event of a change of control are
an inappropriate use of shareholder funds and should be discouraged.
Market practice regarding the length of director's service contracts varies
enormously, and JPMAM is cognisant that it would be inappropriate to enforce
placecountry-regionUK standards in some other markets. To this end, JPMAM
investment takes into account local market practice when making judgements in
this area.
Executive Director's Remuneration
Executive remuneration is and will remain a contentious issue, particularly the
overall quantum of remuneration. However, company policy in this area cannot be
prescribed by any code or formula to cater for all circumstances and must depend
on responsible and well-informed judgement on the part of remuneration
committees. Any remuneration policy should be transparent and fully disclosed to
shareholders in a separate Remuneration Report within the Annual Report.
Compensation should contain both a short-term and long-term element, which fully
aligns the executive with shareholders.
JPMAM will generally vote against shareholder proposals to restrict arbitrarily
the compensation of executives or other employees. We feel that the specific
amounts and types of employee compensation are within the ordinary business
responsibilities of the board and the company management. However, the
remuneration of executive directors should be determined by independent
remuneration committees and fully disclosed to shareholders. Any stock option
plans or long-term incentive plans should meet our guidelines for such plans set
forth herein.
We strongly believe that directors should be encouraged to hold meaningful
amounts of company stock, equivalent to at least one year's salary.
Transaction bonuses, or other retrospective ex-gratia payments, should not be
made.
Non-Executive Director's Remuneration
JPMAM believes that non-executive directors should be paid, at least in part, in
shares of the company wherever possible, in order to align their interests with
the interests of shareholders. Performance criteria, however, should never be
attached. Non-executive directors should not be awarded share options.
Share Option Schemes
Share option schemes should be clearly explained and fully disclosed to both
shareholders and participants, and put to shareholders for approval. Each
director's share options should be detailed, including exercise prices, expiry
dates and the market price of the shares at the date of exercise. They should
take into account appropriate levels of dilution, such as those set out in ABI,
NAPF and similar guidelines. Options should vest in reference to challenging
performance criteria, which are disclosed in advance. Share options should never
be issued at a discount, and there should be no award for below-median
performance.
Best practice requires that share options be fully expensed, so that
shareholders can assess their true cost to the company. The assumptions and
methodology behind the expensing calculation should also be explained to
shareholders.
We will generally vote against the cancellation and re-issue, re-testing or
re-pricing, of underwater options.
Long-Term Incentive Plans (L-TIPs)
Share-based Long-Term Incentive Plans ("L-TIP") should use a methodology such as
total shareholder return ("TSR"), coupled with a financial underpin, such as
growth in earnings per share ("EPS"). Performance should be benchmarked against
an appropriate comparator group of companies and a graph of recent performance
should be included. Awards should increase on a straight line basis, with a
maximum award only vesting for the very highest performance. As with share
option schemes, there should be no award for below-median performance, and
awards for at-median performance should be modest. Beneficiaries should be
encouraged to retain any resultant shares for a suitable time.
JPMAM, in agreement with the stipulations of the Combined Code, feels that the
performance related elements of any L-TIP should be designed to give directors
keen incentives to perform at the highest levels, and that grants under such
schemes should be subject to performance criteria which are challenging and
which reflect the company's objectives.
In all markets JPMAM will vote in favour of well-structured schemes with keen
incentives and challenging performance criteria, which are fully disclosed to
shareholders in advance, and vote against payments which are excessive or
performance criteria which are undemanding, or where there is excessive
discretion exercised by remuneration committees. We would expect remuneration
committees to explain why criteria are considered to be challenging and how they
align the interests of shareholders with the interests of the recipients.
Pensions
Pension arrangements should be transparent and cost-neutral to shareholders.
JPMAM believes it is inappropriate for executives to participate in pension
arrangements which are materially different to those of employees (such as
continuing to participate in a final salary arrangement, when employees have
been transferred to a money purchase scheme). One-off payments into individual
director's pension schemes, changes to pension entitlements and waivers
concerning early retirement provisions must be fully disclosed and justified to
shareholders.
AUDITORS
Auditor placeCityIndependence
Auditors must provide an independent and objective check on the way in which the
financial statements have been prepared and presented. JPMAM will vote against
the appointment or re-appointment of auditors who are not perceived as being
independent. The length of time both the audit company and the audit partner
have served in their capacity with a given company may be a factor in
determining independence.
Auditor Remuneration
Companies should be encouraged to distinguish clearly between audit and
non-audit fees. Audit committees should keep under review the non-audit fees
paid to the auditor, both in relation to the size of the total audit fee and in
relation to the company's total expenditure on consultancy, and there should be
a mechanism in place to ensure that consultancy work is put out to competitive
tender.
We would oppose non-audit fees consistently exceeding audit fees, where no
explanation was given to shareholders. Audit fees should never be excessive.
see Audit Committee
ISSUE OF CAPITAL
Issue of Equity
In most countries, company law requires that shareholder approval be obtained in
order to increase the authorised share capital of the company. Any new issue of
equity should take into account appropriate levels of dilution, such as those
set out in ABI, NAPF and similar guidelines.
JPMAM believes strongly that any new issue of equity should first be offered to
existing shareholders on a pre-emptive basis. Pre-emption rights are a
fundamental right of ownership, and we will vote against any attempts to
suspend, bypass or eliminate pre-emption rights, except for purely technical
reasons (e.g. rights offers which may not be legally offered to shareholders in
certain jurisdictions).
JPMAM will vote against increases in capital which would allow the company to
adopt "poison pill" takeover defence tactics, or where the increase in
authorised capital would dilute shareholder value in the long-term.
Issue of Debt
Reasons for increased bank borrowing powers are many and varied, including
allowing normal growth of the company, the financing of acquisitions, and
allowing increased financial leverage. Management may also attempt to borrow as
part of a takeover defence.
JPMAM will vote in favour of proposals which will enhance a company's long-term
prospects. We will vote against any uncapped or poorly-defined increase in bank
borrowing powers or borrowing limits, as well as issuances which would result in
the company reaching an unacceptable level of financial leverage, where there is
a material reduction in shareholder value, or where such borrowing is expressly
intended as part of a takeover defence.
Share Repurchase Programmes
Boards may instigate share repurchase or stock buy-back programs for a number of
reasons. JPMAM will vote in favour of such programmes where the repurchase would
be in the best interests of shareholders, and where the company is not thought
to be able to use the cash in a more useful way.
We will vote against such programmes when shareholders' interests could be
better served by deployment of the cash for alternative uses, or where the
repurchase is a defensive manoeuvre or an attempt to entrench management.
MERGERS / ACQUISITIONS
Mergers and acquisitions are always reviewed on a case-by-case basis by the
investment analyst in conjunction with portfolio managers and, in exceptional
circumstances, the Proxy Committee. Individual circumstances will always apply.
However, as a general rule, JPMAM will favour mergers and acquisitions where the
proposed acquisition price represents fair value, where shareholders cannot
realise greater value through other means, and where all shareholders receive
fair and equal treatment under the merger/acquisition terms.
VOTING RIGHTS
JPMAM believes in the fundamental principle of "one share, one vote".
Accordingly, we will vote to phase out dual voting rights or classes of share
which either confer special voting rights to certain stakeholders, or restricted
voting rights, and we will oppose attempts to introduce new ones. We are opposed
to mechanisms that skew voting rights, such as voting right limits or cumulative
voting; directors should represent all shareholders equally, and voting power
should accrue in direct relation to the shareholder's equity capital commitment
to the company.
While certain fundamental changes to a company's business, Articles of
Association, or share capital should require a supermajority vote, voting on
routine business should require a simple majority only (51%). We will generally
oppose amendments to require inappropriate supermajority votes, or supermajority
requirements which are being introduced as a tool to entrench management.
OTHERS
Poison Pills
Poison pills, or shareholder rights plans, are devices designed to defend
against hostile takeover. Typically, they give shareholders of a target company,
or a friendly third party, the right to purchase shares at a substantial
discount to market value, or shares with special conversion rights, in the event
of a pre-defined "triggering event" occurring, such as the announcement of a
hostile takeover offer or an outsider's acquisition of a certain percentage of
stock. Corporations may or may not be able to adopt poison pills without
shareholder approval, depending on the market.
JPMAM is fundamentally opposed to any artificial barrier to the efficient
functioning of markets. The market for corporate control should, ultimately, be
for shareholders, not managers, to decide. We find no clear evidence that poison
pills enhance shareholder value. Rather, they are used as tools to entrench
management.
JPMAM will generally vote against anti-takeover devices and support proposals
aimed at revoking existing plans. Where anti-takeover devices exist, they should
be fully disclosed to shareholders and shareholders should be given the
opportunity to review them periodically.
Composite Resolutions
Agenda items at shareholder meetings should be presented in such a way that they
can be voted upon clearly, distinctly and unambiguously. We normally oppose
deliberately vague, composite or "bundled" resolutions, depending on the context
and local market practice.
Any amendments to Articles of Association should be presented to shareholders in
such a way that they can be voted on independently. Shareholders should
similarly be able to vote on the election of directors individually, rather than
in bundled slates.
Social / Environmental Issues
Companies should conduct their business in a manner which recognises their
responsibilities to employees and other stakeholders, as well as broader society
and the environment. Full details of our sustainability policy are available in
Part IV of this document.
JPMAM reviews shareholder proposals concerning social and environmental issues.
In normal circumstances, the consideration of social issues in investment
decisions is the duty of directors; nevertheless, from time to time, a company's
response to the circumstances of a particular social or environmental issue may
have economic consequences, either directly or indirectly. In these cases, the
economic effects are considered in determining our vote.
Where management is proposing changes with a social, environmental or ethical
dimension, these proposals should be in line with JPMAM's CSR policy.
see Corporate Social Responsibility (CSR)
Charitable Issues
Charitable donations are generally acceptable, provided they are within
reasonable limits and fully disclosed to shareholders.
Political Issues
JPMAM does not support the use of shareholder funds for political donations.
III. ACTIVISM
SHAREHOLDER ACTIVISM AND COMPANY ENGAGEMENT
The Institutional Shareholders' Committee (ISC), comprising the trade bodies of
the placecountry-regionUK's investing institutions, published a Statement of
Principles which sets out the responsibilities of institutional shareholders in
respect of investee companies. JPMAM endorses the ISC Principles, which are set
out below:
"Institutional shareholders and/or agents in relation to their responsibilities
in respect of investee companies [...] will:
o set out their policy on how they will discharge their responsibilities -
clarifying the priorities attached to particular issues and when they will take
action o monitor the performance of and establish, where necessary, a regular
dialogue with investee companies o intervene where necessary o evaluate the
impact of their activism o report back to clients/beneficial owners"
It is important to note that the above only applies in the case of
placecountry-regionUK companies, irrespective of their market capitalisation,
although there will be occasions when intervention is not appropriate for
reasons of cost-effectiveness or practicability. However, JPMAM will continue to
intervene outside the placecountry-regionUK where we believe this to be
necessary in order to protect our clients' interests.
Activism Policy
I. Discharge of Responsibilities
Our policy is to vote at all placecountry-regionUK company meetings on behalf of
all clients where we have authority to do so. Our investment managers and
analysts have explicit responsibilities for monitoring the companies in the
universe of stocks from which clients' portfolios are constructed. Whilst we
attach considerable importance to meetings with management (and several hundred
take place at JPMAM each year), we also emphasise the benefits of fundamental
research into companies in our investment processes.
Our primary responsibility is to protect our clients' interests and, as active
managers, we therefore absolutely reserve the right to dispose of an investment
where a company fails to meet our expectations.
II. Monitor Performance
As noted above the monitoring of company performance is a key part of our
investment processes. The Corporate Governance Team routinely benchmarks
companies in our investment universe versus our Guidelines in order to identify
governance outliers. This then drives our proxy voting and engagement activity.
Engagement on corporate governance issues such as remuneration and board
structures is ongoing and does not only occur at the time of an AGM. We maintain
a log of all private meetings held with companies. We regard ongoing engagement
meetings as confidential and will not comment on them outside JPMAM.
III. Intervening Where Necessary
JPMAM does not normally intervene directly in the management of companies.
However where a company has failed to meet our expectations and it is not clear
what action is being taken to remedy the situation, but we believe that the
potential of the company still justifies retention in our clients' portfolios,
we will arrange to meet with senior management in order to express our concerns.
Intervention at companies is never publicised.
In the small capitalisation end of the market, more aggressive intervention is
more common, but still infrequent, as we may hold a significant percentage of a
company's equity.
IV. Evaluating and Reporting
We are convinced that a strong governance culture leads ultimately to a better
business and a better stock market rating. As investors we continually
scrutinise companies' governance policies as a part of our investment research
and take comfort from good governance. Where we have pushed for change, either
in governance policies or in business strategy, we measure success by the extent
that change is forthcoming and whether our clients benefit as a result.
Reports detailing our engagement activity are available to clients on a
quarterly basis.
IV. CSR
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
CSR Statement
JPMAM believes that companies should act in a socially responsible manner. They
should conduct their business in a way which recognises their responsibilities
to employees and other stakeholders, as well as broader society and the
environment.
We have had experience of tailoring portfolios to meet individual ethical
requirements for over fifty years. We believe that we operate to the highest
standards and that our CSR screens will meet or exceed the requirements of most
clients. For (placecountry-regionUK) pension fund clients, who are not permitted
to exclude specific areas of investment from their portfolios, we have developed
a number of strategies to positively target companies with superior social,
ethical and environmental credentials.
For institutional clients such as charitable foundations and endowments, where
the legal framework for ethical and socially responsible investing is less
restrictive, JPMAM has substantial experience over a long period of time of
managing ethically-constrained portfolios. This service is client-preference led
and flexible, and forms part of our charitable sector specialist investment
services.
For clients who have not specified individual social or environmental criteria
in their guidelines, these issues are still taken into account by analysts and
portfolio managers as part of the overall stock selection process, and
engagement activity is still undertaken by JPMAM on their behalf. This is
detailed in the following section.
CSR Policy
Where JPMAM engages with companies on social, environmental and sustainability
issues, we have adopted a positive engagement approach. Thus, specific assets or
types of assets are not excluded explicitly on social, environmental or ethical
criteria (unless specifically requested by clients). Rather, analysts take such
issues into account as part of the mainstream analytical process.
Although JPMAM's priority at all times is the best economic interests of its
clients, we recognise that, increasingly, non-financial issues, such as social
and environmental factors, have the potential to impact the share price, as well
as the reputation of a company. They are also increasingly the subject of
shareholder and other litigation.
CSR specialists within the Corporate Governance Team are tasked with assessing
how companies deal with and report on social and environmental risks and issues
specific to their sectors and/or industry. This analysis is then used to
identify outliers within our investee companies which require further
engagement. Engagement will either take place at scheduled company one-to-one
meetings, or at dedicated meetings with either non-executive directors, or CSR
specialists (where they exist), or (increasingly) via the company's broker. This
engagement activity is then reported to clients on a quarterly basis.
Where social or environmental issues are the subject of a proxy vote, JPMAM will
consider the issue on a case-by-case basis, keeping in mind at all times the
best economic interests of our clients. Increasingly, shareholder proposals are
being used by activist groups to target companies as a means of promoting
single-issue agendas. In these instances, it is important to differentiate
between constructive resolutions, intended to bring about genuine social or
environmental improvement, and hostile proposals intended to limit management
power, which may in fact ultimately destroy shareholder value.
In formulating our CSR policy, we have endeavoured not to discriminate against
individual companies or sectors purely on the grounds of the particular business
sector in which they are involved. Thus a tobacco company or a company in an
extractive industry will not be automatically marked down because their sector
is perceived as "unfriendly". Similarly, a company in a low-impact industry,
such as financial services, will still be expected to have in place detailed
policies and rigorous oversight of its environmental impact.
We would expect larger companies in particular to have established a CSR
Committee or similar organ with responsibility for this area. Such a function
should have direct access to the board and, ideally, there should be a main
board director with direct responsibility for CSR issues. We would normally
expect companies to publish a separate Corporate Social Responsibility Report,
or to provide a CSR statement within their Annual Report, as well as their
website.
Part II.C: Asia (ex-Japan) Proxy Voting
Part II.C: Asia Ex-Japan Proxy Voting Guidelines
Table of Contents
I Principles.........................................................................................36
II Policy and Procedures...........................................................................37-38
1. Proxy Committee................................................................................37
2. Voting.........................................................................................37
3. Engagement.....................................................................................37
4. Conflicts of Interest..........................................................................38
III Voting Guidelines...............................................................................38-42
1. Reports & Accounts.............................................................................38
2. Dividends......................................................................................38
3. Auditors.......................................................................................38
4. Boards.........................................................................................39
5. Directors......................................................................................39
6. Non-Executive Directors........................................................................40
7. Issue of Capital............................................................................40-41
8. Mergers/Acquisitions...........................................................................41
9. Voting Rights..................................................................................41
10. Share Options/Long-Term Incentive Plans (L-TIPs)...............................................41
11. Others.........................................................................................41
IV Activism...........................................................................................42
V Sustainability.....................................................................................42
Part II.C: Asia Ex-Japan Proxy Voting Guidelines
I. PRINCIPLES
JF Asset Management ("JFAM") is committed to delivering superior
investment performance to its clients worldwide. We believe that one of
the drivers of investment performance is an assessment of the corporate
governance principles and practices of the companies in which we invest
our clients' assets and we expect those companies to demonstrate high
standards of governance in the management of their business.
We have set out below the principles which provide the framework for
our corporate governance activity. Although the policies and guidelines
set out in this document apply to Hong Kong and therefore principally
concern accounts managed from the Hong Kong office, our colleagues in
CityLondon, StateNew York and placeCityTokyo have similar standards,
consistent with law and best practice in these different locations.
1. Fiduciary priority. Our clients appoint us to manage their assets in
order to maximise the likelihood of meeting or exceeding their
investment objectives at acceptable risk levels. Every decision to
buy, hold or sell any security will be consistent with that overriding
objective.
2. Evaluation. Our clients expect us, as their delegates, to monitor
the governance of companies in which we have invested their
assets.
3. Engagement. We encourage excellence in the management of
companies through the considered application of our corporate
governance policies and guidelines. We welcome consultation by
companies with their leading shareholders on corporate governance
issues.
4. Proxy voting. Company management is accountable to the
shareholders, our clients. It is our responsibility to ensure
this is recognised through the considered use of our clients'
votes.
5. Litigation and Joint Working Parties. JFAM will align itself with
other shareholders, for example, by joining class action suits or
working parties as local practice dictates, where we are
convinced that this is in the best interests of our clients.
6. Disclosure. JFAM's corporate governance guidelines and policies
are available to clients and companies alike. We believe that
they conform to best practice and we are prepared to discuss them
openly with other interested parties.
7. Ongoing commitment. JFAM is committed to reviewing its corporate
governance principles, policies and guidelines to ensure that
they fully reflect our interpretation of best market practice.
JF Asset Management
Hong Kong Proxy Committee
II. POLICY and PROCEDURES
JF Asset Management ("JFAM") manages the voting rights of the shares
entrusted to it as it would manage any other asset. It is the policy of
JFAM to vote in a prudent and diligent manner, based exclusively on our
reasonable judgement of what will best serve the financial interests of
the beneficial owners of the security.
1. Proxy Committee
The Hong Kong Proxy Committee has been established to oversee the proxy
voting process in the placeAsia ex-Japan region on an ongoing basis. It
is composed of the Proxy Administrator and senior officers from the
Investment, Compliance and Risk Management Departments. The main
functions of the Proxy Committee are to review the Proxy Voting
Guidelines to ensure they are aligned with best practice; and to
provide advice and recommendations on general proxy voting matters as
well as on specific voting issues as they occur. The Proxy Committee
may delegate certain of its responsibilities to subgroups composed of
Proxy Committee members. It meets quarterly, or more frequently as
circumstances dictate and its minutes are circulated to senior
management including the Asia Risk Committee to whom it reports.
2. Voting
As these Guidelines represent what we consider to be in the best
financial interests of our clients, we would normally expect clients to
allow us to use them as a template for voting. However, we recognise
that in certain circumstances further analysis may be required.
In view of our overriding fiduciary duty to act in the best interest of
our clients, the Guidelines are an indication only of JFAM's voting
policy. The portfolio manager has discretion to override the policy
should individual circumstances dictate.
Our Guidelines are primarily targeted at companies listed on main stock
exchanges. It is sometimes difficult for smaller companies to apply the
same corporate governance standards and we would look at any issues for
such companies on a case-by-case basis. We would, however, encourage
them to apply the highest possible standards of governance.
For markets in placeAsia ex-Japan, we will generally abstain from
voting at AGMs on the grounds that the matters normally considered at
such meetings are of a routine and non-contentious nature. To ensure we
fulfil our fiduciary obligation to always act in our clients' best
interests, we will review each AGM notice to check whether there are
any non-routine matters such as company reorganisations/restructurings,
takeover/merger and senior management compensation plans included
therein. If any such matters are identified then we will consider each
one individually so that our clients' best interests are served. Also,
certain markets require that shares are blocked from trading in order
to be tendered for voting purposes. In these instances, it may be in
our clients' best interests to abstain from voting in order to preserve
the ability to trade. For these countries, a decision will be taken on
a case-by-case basis by the research analyst in conjunction with the
portfolio manager in order to determine how our clients' best interests
are served.
Situations can sometimes arise where more than one JFAM client invests
in the same company or in which a single client may invest in the same
company but in multiple accounts. In those situations, two or more
clients, or one client with different accounts, may be invested in
strategies having different investment objectives, investment styles,
or portfolio managers. As a result, JFAM may cast different votes on
behalf of different clients or on behalf of the same client with
different accounts.
3. Engagement
We regard regular, systematic and direct contact with senior company
management, both executive and non-executive, as crucially important.
We consider that these dialogues have been useful and plan to expand
this approach.
4. Conflicts of Interest
In order to maintain the integrity and independence of JFAM's
proxy-voting decisions, JPMorgan Chase (including JPMAM) has
established formal barriers designed to restrict the flow of
information between JPMC's securities, lending, investment banking and
other divisions to JPMAM investment professionals.
Where a potential material conflict of interest has been identified,
the Proxy Administrator, in consultation with the Proxy Committee,
evaluates the potential conflict and determines whether an actual
conflict exists. In the event that this is the case, they make a
recommendation on how to vote the proxy. A record of such decisions is
available to clients on request.
Finally, it should be pointed out that this document is intended as an
overview only. Specific issues should always be directed to your
account administrator or portfolio manager.
III. VOTING GUIDELINES
1. REPORTS & ACCOUNTS
1a. Annual Report
Reports and accounts should be both detailed and transparent, and
should be submitted to shareholders for approval. They should meet
accepted reporting standards, and company accounts should employ
Generally Accepted Accounting Practices (GAAP). Reports should meet
with the spirit as well as the letter of reporting standards, including
the most recent recommendations of the International Accounting
Standards Board (IASB).
The annual report should include a statement of compliance with
relevant codes of best practice, in markets where they exist.
Legal disclosure varies from market to market. If, in our opinion, a
company's standards of disclosure (whilst meeting minimum legal
requirements) are insufficient in any particular area, we will inform
company management of our concerns. Depending on the circumstances, we
will either abstain or vote against the resolution concerned. Similar
consideration would relate to the use of inappropriate accounting
methods.
2. DIVIDENDS
Proposals for the payment of dividends should be presented to
shareholders for approval, and should be fully disclosed in advance of
the meeting. We will vote against dividend proposals if we feel that
payment of the proposed dividend would prejudice the solvency or future
prospects of the company.
3. AUDITORS
3a. Auditor placeCityIndependence
Auditors must provide an independent and objective check on the way in
which the financial statements have been prepared and presented. JFAM
will vote against the appointment or re-appointment of auditors who are
not perceived as being independent.
3b. Auditor Remuneration
Companies should be encouraged to distinguish clearly between audit and
non-audit fees. Audit fees should never be excessive.
4. BOARDS
4a. Chairman & CEO
JFAM believes that it is best practice for the roles of Chairman and
Chief Executive Officer to be separate.
4b. Board Structure
JFAM is in favour of unitary boards of the type found in placeHong
Kong, as opposed to tiered board structures.
4c. Board Size
Boards with more than 20 directors are considered to be excessively
large.
4d. Board placeCityIndependence
JFAM believes that a strong independent element to a board is essential
to the effective running of a company. The calibre and number of
non-executive directors on a board should be such that their views will
carry significant weight in the board's decisions.
We believe that as a minimum, all boards should have at least three
non-executive directors, unless the company is of such a size that
sustaining such a number would be an excessive burden.
JFAM will use its voting powers to encourage appropriate levels of
board independence, taking into account local market practice.
4e. Board Committees
Where appropriate, boards should delegate key oversight functions to
independent committees. The Chairman and members of any Committee
should be clearly identified in the annual report.
5. DIRECTORS
5a. Executive Director's Remuneration
Executive remuneration is and will remain a contentious issue,
particularly the overall quantum of remuneration.
JFAM will generally vote against shareholder proposals to restrict
arbitrarily the compensation of executives or other employees.
5b. Director's Liability
In certain markets, this proposal asks shareholders to give blanket
discharge from responsibility for all decisions made during the
previous financial year. Depending on the market, this resolution may
or may not be legally binding, and may not release the board from its
legal responsibility.
JFAM will usually vote against discharging the board from
responsibility in cases of pending litigation, or if there is evidence
of wrongdoing for which the board must be held accountable.
5c. Directors over 70
JFAM considers that a similar standard of care should be applied to the
selection of a director over 70 as would be applied to that of any
other director, although we would expect to see such a director offer
himself or herself for re-election each year.
6. NON-EXECUTIVE DIRECTORS
6a. Role of Non-Executive Directors
As stated earlier in these guidelines, JFAM believes that a strong
independent element to a board is important to the effective running of
a company.
In determining our vote, we will always consider independence issues on
a case-by-case basis, taking into account any exceptional individual
circumstances, together with local markets' differing attitudes to
director independence.
In order to help assess their contribution to the company, the time
spent by each non-executive director should be disclosed to
shareholders, as well as their attendance at board and committee
meetings.
Audit and Remuneration Committees should be composed exclusively of
independent directors.
6b. Director placeCityIndependence
We consider that a director will generally be deemed to be independent
if he or she has no significant financial, familial or other ties with
the company which might pose a conflict, and has not been employed in
an executive capacity by the company for at least the previous ten
years.
6c. Multiple Directorships
In order to be able to devote sufficient time to his or her duties, we
would not normally expect a non-executive to hold more than five
significant directorships at any one time. For executives, only one
additional non-executive post would normally be considered appropriate
without further explanation.
7. ISSUE OF CAPITAL
7a. Issue of Equity
In most countries, company law requires that shareholder approval be
obtained in order to increase the authorised share capital of the
company. Proposals for equity issues will also specify whether
pre-emptive rights are to be retained or suppressed or partially
suppressed for the issue. As a general rule, JFAM believes that any new
issue of equity should first be offered to existing shareholders on a
pre-emptive basis.
JFAM will vote in favour of increases in capital which enhance a
company's long-term prospects.
7b. Issue of Debt
Reasons for increased bank borrowing powers are many and varied,
including allowing normal growth of the company, the financing of
acquisitions, and allowing increased financial leverage. Management may
also attempt to borrow as part of a takeover defence.
JFAM will vote in favour of proposals which will enhance a company's
long-term prospects. We will vote against an increase in bank borrowing
powers which would result in the company reaching an unacceptable level
of financial leverage, where such borrowing is expressly intended as
part of a takeover defence, or where there is a material reduction in
shareholder value.
7c. Share Repurchase Programmes
Boards may instigate share repurchase or stock buy-back programs for a
number of reasons. JFAM will vote in favour of such programmes where
the repurchase would be in the best interests of shareholders, and
where the company is not thought to be able to use the cash in a more
useful way.
We will vote against such programmes when shareholders' interests could
be better served by deployment of the cash for alternative uses, or
where the repurchase is a defensive manoeuvre or an attempt to entrench
management.
8. MERGERS / ACQUISITIONS
Mergers and acquisitions are always reviewed on a case-by-case basis by
the investment analyst in conjunction with portfolio managers and, in
exceptional circumstances, the Proxy Committee. Individual
circumstances will always apply. However, as a general rule, JFAM will
favour mergers and acquisitions where the proposed acquisition price
represents fair value, where shareholders cannot realise greater value
through other means, and where all shareholders receive fair and equal
treatment under the merger/acquisition terms.
9. VOTING RIGHTS
JFAM believes in the fundamental principle of "one share, one vote".
Accordingly, we will vote to phase out dual voting rights or classes of
share with restricted voting rights, and will oppose attempts to
introduce new ones. We are opposed to mechanisms that skew voting
rights, such as cumulative voting; directors should represent all
shareholders equally, and voting rights should accrue in accordance
with the shareholder's equity capital commitment to the company.
10. SHARE OPTIONS / LONG-TERM INCENTIVE PLANS (L-TIPs)
10a. Share Options
Best practice requires that share options be fully expensed, so that
shareholders can assess their true cost to the company. The assumptions
and methodology behind the expensing calculation should also be
explained to shareholders.
We will generally vote against the cancellation and re-issue,
re-pricing, of underwater options.
10b. Long-Term Incentive Plans (L-TIPs)
A Long-Term Incentive Plan ("L-TIP") can be defined as any arrangement,
other than deferred bonuses and retirement benefit plans, which require
one or more conditions in respect of service and/or performance to be
satisfied over more than one financial year.
JFAM normally will vote in favour of schemes with keen incentives and
challenging performance criteria, which are fully disclosed to
shareholders in advance, and vote against payments which are excessive
or performance criteria which are undemanding.
11. OTHERS
11a. Charitable Issues
Charitable donations are generally acceptable, provided they are within
reasonable limits and fully disclosed to shareholders.
11b. Political Issues
JFAM does not normally support the use of shareholder funds for
political donations, and would require the fullest explanation as to
why this would be beneficial to shareholders.
IV. ACTIVISM
Activism Policy
1. Discharge of Responsibilities
a) Our primary responsibility is to protect our clients' interests
and, as active managers, we therefore absolutely reserve the right
to dispose of an investment where a company fails to meet our
expectations.
b) Our investment managers and analysts have explicit
responsibilities for monitoring the companies in the universe of
stocks from which clients' portfolios are constructed. Whilst we
attach considerable importance to meetings with management (and
several hundred take place in placeAsia ex-Japan each year), we
also emphasise the benefits of fundamental research into companies
in our investment processes. Industry research, balance sheet
analysis and company news flow all have a role to varying degrees
in our company monitoring.
c) Our approach to dealing with conflicts of interest is described
fully in our Corporate Governance Policies and Procedures. We seek
to minimise conflicts by controlling information flows between
different parts of JPMorgan Chase. Where a material conflict does
arise we require investors who make the voting decision to certify
that they have acted solely in the clients' best interests.
2. Monitor Performance
Monitoring of company performance is a key part of our investment
processes. We maintain a record of all private meetings held with
companies. We regard these meetings as confidential and will not
comment on them outside JFAM.
3. Evaluating and Reporting
We are convinced that a strong governance culture leads ultimately to a
better business and a better stock market rating. As investors we
scrutinise companies' governance policies as a part of our investment
research and take comfort from good governance.
V. Sustainability
Where JFAM engages with companies on broader social, environmental and
sustainability issues, we have adopted a positive engagement approach.
Thus, specific assets or types of assets are not excluded on purely
social, environmental or ethical criteria (unless specifically
requested by clients). Rather, analysts take such issues into account
as part of the mainstream analytical process. Where appropriate, JFAM
will also engage with company management on specific issues at company
one-to-one meetings. This engagement activity can then be reported to
clients as required.
Where social or environmental issues are the subject of a proxy vote,
JFAM will consider the issue on a case-by-case basis, keeping in mind
at all times the best financial interests of our clients.
It is anticipated that our SRI program will continue to expand both in
terms of scope and market coverage as client demand and availability of
suitable resources dictate.
Part II.D: country-region Japan Proxy Voting
Part II.D: country-regionJapan Proxy Voting Guidelines
1. Number of Directors
To ensure a swift management decision-making process, the appropriate
number of directors should be 20 or less.
2. Director's Tenure
Director's tenure should be equal to/less than 1 year.
3. Director's Remuneration
Remuneration of directors should generally be determined by an independent
committee.
4. Audit fees
Audit fees must be at an appropriate level.
5. Capital Increase
Capital increases will be judged on a case-by-case basis depending on its
purpose. Vote against capital increases if the purpose is to defend against a
takeover.
6. Borrowing of Funds
Vote against abrupt increases in borrowing of funds if the purpose is to
defend against a takeover.
7. Share Repurchase Programs
Vote in favor of share repurchase programs if it leads to an increase in
the value of the company's shares.
8. Payout ratio
As a general rule, vote against any proposal for appropriation of profits
which involves a payout ratio of less than 50% (after taking into account
other forms of payouts to shareholders such as share repurchase programs)
if the capital ratio is equal to or greater than 50% and there is no
further need to increase the level of retained earnings.
9. Mergers/Acquisitions
Mergers and acquisitions must only be consummated at a price representing
fair value.
10. Stock Options
Stock option programs should generally be publicly disclosed. Programs
which result in increases in remuneration despite declines in corporate
earnings (such as through a downward adjustment of the exercise price) is
generally not acceptable.
11. Political Contributions
Do not approve any use of corporate funds for political activities.
12. Environmental/Social Issues
Do not take into account environmental/social issues that do not affect the
economic value of the company.
JACOBS LEVY EQUITY MANAGEMENT, INC.
PROXY VOTING POLICIES AND PROCEDURES
AS OF JANUARY 1, 2006
I.POLICY
Proxy voting is an important right of shareholders and reasonable care and
diligence must be undertaken to ensure that such rights are properly and timely
exercised. When Jacobs Levy has discretion to vote the proxies of its clients,
proxies will be voted in the best interests of its clients and in accordance
with these policies and procedures.
II.PROXY VOTING PROCEDURES
Proxies are obtained by the Portfolio Accounting Department through ADP Proxy
Edge, a third party application used for proxy notification and voting.
Portfolio Accounting, headed by the Manager of Portfolio Accounting, reports
to the Jacobs Levy Compliance Officer. Portfolio Accountants will:
a) download share information from client's custodian through ADP Proxy Edge;
b) reconcile share information between Jacobs Levy's accounting records and
the custodian's records and resolve any variances; and
c) make the initial determination how Jacobs Levy should vote the proxy as
dictated by voting guidelines and will load the vote into ADP Proxy Edge.
Portfolio Accounting will send a package with all supporting documentation
to the Manager of Portfolio Accounting. The Manager of Portfolio Accounting
is responsible for reviewing and approving the proposed proxy vote (and
consulting with the Compliance Officer and/or the Principals, if necessary).
Once approved, Portfolio Accounting submits the votes electronically
through ADP Proxy Edge.
Where Jacobs Levy retains a third party to assist in coordinating and voting
proxies with respect to client securities, the Compliance Officer shall monitor
the third party to assure that all proxies are being properly voted and
appropriate records are being retained.
III.VOTING GUIDELINES
Jacobs Levy will vote proxies in the best interests of its clients. Clients can
provide specific voting guidelines, which would be implemented for their
account. Jacobs Levy believes that voting proxies in accordance with the
following guidelines is in the best interests of its clients.
Jacobs Levy utilizes the services of Institutional Shareholder Services (ISS),
a third party provider of proxy analyses and voting recommendations. ISS
assigns a proxy issue code to all proxy voting proposals and also issues a
voting recommendation. A cumulative listing of ISS proxy issue codes is
maintained by Portfolio Accounting. Jacobs Levy will vote proxies in
accordance with ISS' recommendations, except as provided in (a) - (d) below:
a) There are specific proxy issues that Jacobs Levy has identified with
respect to which it will vote with management and others with respect to
which it will vote against management because Jacobs Levy believes the
intent is to entrench management or dilute the value or safety of shares to
shareholders. A comprehensive listing of these issues is included as
Exhibit A.
b) It is Jacobs Levy's belief that it is not its place to make moral or social
decisions for companies and therefore Jacobs Levy intends to vote with
management's recommendations on such issues, as management is in a better
position to judge the effects of such decisions on the company.
c) In certain circumstances, a proxy may include "hidden" additional issues
for which Jacobs Levy's position, as noted above, may differ from the
overall ISS recommendation. In these instances, Jacobs Levy will not vote
with the ISS recommendation.
d) Any issue with a new ISS proxy issue code will be forwarded to one of the
Principals or the Compliance Officer for review and determination of how the
proxy should be voted.
IV.CONFLICTS OF INTEREST
a) The Compliance Officer will identify any conflicts that exist between the
interests of Jacobs Levy and its clients. This examination will include a
review of the relationship of Jacobs Levy with the issuer of each security
to determine if the issuer is a client of Jacobs Levy or has some other
relationship with Jacobs Levy or a client of Jacobs Levy.
b) If a material conflict exists, Jacobs Levy will determine whether voting in
accordance with the voting guidelines and factors described above is in the
best interests of the clients or whether some alternative action is
appropriate, including, without limitation, following the ISS
recommendation.
V.DISCLOSURE
a) Jacobs Levy will disclose in its Form ADV Part II that clients may contact
the Compliance Officer, Peter A. Rudolph, via email or telephone at
pete.rudolph@jlem.com or (973) 410-9222 in order to obtain information on
how Jacobs Levy voted such client's proxies and/or to request a copy of
these policies and procedures. If a client requests this information, the
Compliance Officer will prepare a written response to the client that lists,
with respect to each voted proxy that the client has inquired about, (1) the
name of the issuer; (2) the proposal voted upon; and (3) how Jacobs Levy
voted the client's proxy.
b) A concise summary of these Proxy Voting Policies and Procedures will be
included in Jacobs Levy's Form ADV Part II, and will be updated whenever
these policies and procedures are updated. Jacobs Levy's Form ADV Part II
will be offered to existing clients annually.
VI. RECORDKEEPING
The Manager of Portfolio Accounting and Compliance Officer will maintain files
relating to Jacobs Levy's proxy voting procedures. Records will be maintained
and preserved for at least five years from the end of the fiscal year during
which the last entry was made on a record, with records for at least the most
recent two years kept in the offices of Jacobs Levy. Records of the following
will be included in the files:
a) Copies of these proxy voting policies and procedures, and any amendments
thereto.
b) A hard and electronic copy of each proxy statement that Jacobs Levy
receives. In addition, Jacobs Levy may obtain a copy of proxy statements
from ADP.
c) A hard copy and electronic record of each vote that Jacobs Levy casts. In
addition, voting records may be obtained from ADP.
d) A copy of any document Jacobs Levy created that was material to making a
decision on how to vote proxies, or that memorializes that decision.
e) A copy of each written client request for information on how Jacobs Levy
voted such client's proxies, and a copy of any written response to any
(written or oral) client request for information on how Jacobs Levy voted
its proxies.
EXHIBIT A
VOTING POLICY ON SPECIFIC PROXY ISSUES
MANAGEMENT PROPOSALS - ROUTINE/BUSINESS
ISSUE
CODE DESCRIPTION VOTE
----- -----------
M0101 Ratify Auditors For
M0106 Amend Articles/Charter-General Matters For
M0111 Change Company Name For
M0117 Designate Inspector or Shareholder Rep. of Minutes
of Meetings For
M0119 Reimburse Proxy Contest Expense Against
M0124 Approve Stock Dividend Program For
M0125 Other Business Against
M0129 Approve Minutes of Meeting For
M0136 Approve Auditors and Authorize Board to Fix
Remuneration of Auditors For
M1050 Receive Financial Statements and Statutory Reports For
MANAGEMENT PROPOSALS - DIRECTOR RELATED
ISSUE
CODE DESCRIPTION VOTE
----- ----------- ----
M0201 Elect Directors For
M0205 Allow Board to Set its Own Size Against
M0206 Classify the Board of Directors Against
M0207 Eliminate Cumulative Voting For
M0215 Declassify the Board of Directors For
M0218 Elect Directors to Represent Class X Shareholders For
M0226 Classify Board and Elect Directors Against
MANAGEMENT PROPOSALS - CAPITALIZATION
ISSUE
CODE DESCRIPTION VOTE
----- ----------- ----
M0304 Increase Authorized Common Stock For
M0308 Approve Reverse Stock Split For
M0309 Approve Increase in Common Stock and a Stock Split For
M0314 Eliminate Preemptive Rights For
M0316 Amend Votes Per Share of Existing Stock Against
M0320 Eliminate Class of Preferred Stock For
M0322 Cancel Company Treasury Shares For
M0325 Reduce Authorized Common Stock For
M0374 Approve Reduction in Share Capital For
Lehman Brothers Asset Management LLC
Due to the nature of securities traded for Lehman Brothers Asset Management LLC,
proxy voting will be a limited process. When such a situation occurs the
following policies and procedures will be followed.
Proxy Voting Policies
Lehman Brothers Asset Management LLC (LBAM) is aware and compliant with SEC Rule
206(4)-6 regarding proxy voting and disclosure and Rule 204-2 pertaining to
books and records. Therefore, LBAM shall vote corporate governance proposals in
a manner that promotes clear responsibility of management and boards to the long
run interests of shareholders. LBAM shall be diligent, independent and consider
the best interest of our clients in arriving at proxy voting decisions.
Upon a client's request, LBAM will disclose how the client's proxies were voted.
Clients can send their requests via e-mail to pricing@lehman.com.
Proxy Voting Procedures
Ann Benjamin, Andy Johnson, Managing Directors, or designees, are responsible
for LBAM's proxy votes and guidelines. The Security Control unit within the
Operations Department has administrative responsibility.
Guidelines have been established to apply to the most frequently appearing proxy
proposals. Proxy proposals for shares in closed-end funds are excepted from the
guidelines, and voting decisions relating to such proposals will be determined
on a case-by-case basis. Where specific guidelines don't apply, the general
principles of the Proxy Voting Policies are used. Specific fact situations might
warrant departure from the guidelines. Proxies are voted after review of
relevant materials (annual report, SEC filings -10K, and votes registered from
the prior year) in accordance with these guidelines. The voting rights of
securities that are on loan are determined at the time of signing the loan
agreement between our clients and their custodian banks; usually the securities
on loan do not allow LBAM the voting rights.
Administratively, LBAM utilizes paper ballots. Paper ballots are received via
the United States Postal System and holdings for all clients as of record date
are obtained from the accounting system (Portia). The ballots' shares and LBAM's
holdings are verified. If there are discrepancies between the ballot shares and
LBAM's holdings, the custodian is contacted for resolution. Proxies are voted by
choosing the appropriate vote selection and the signing of the paper ballots.
The signed proxies are mailed in the provided pre-addressed envelope.
In rare instances where ballot shares have not been received from all custodians
within two weeks of the meeting date, LBAM contacts the custodian. The custodian
will follow up with a faxed copy of the paper ballot. If a copy of the ballot is
faxed, LBAM returns (via fax or by mail) the proxy with voting instructions to
the custodian.
After all proxies are voted, the Operations Department of LBAM keeps a copy of
the signed ballot as record of the security, meeting date, proposals, and how we
voted for each client. Records are maintained in the Operations Department of
LBAM office for five years; after that time the records can be moved to an
off-site facility.
The guidelines are designed to eliminate the influence of any conflicts of
interest on LBAM's proxy voting decisions. Although LBAM does not foresee any
material conflicts of interest arising, in the event a material conflict of
interest does arise, the facts and circumstances of the conflict would be
discussed with Lori Loftus, the Chief Compliance Officer, prior to voting. Lori
Loftus, Ann Benjamin and/or Andy Johnson will decide if the conflict can be
resolved or avoided by applying the guidelines. If the conflict cannot be
resolved or avoided by applying the guidelines, LBAM may rely on the advice of
an independent third party to determine how to vote the proxy.
Original Date: January 31, 2003
Revised Date: June 30, 2003
Revised Date: July 23, 2003
Revised Date: September 17, 2004
Revised Date: September 13, 2005
Revised Date: February 26, 2007
Lehman Brothers Asset Management LLC
Due to the nature of securities traded for Lehman Brothers Asset Management LLC,
proxy voting will be a limited process. When such a situation occurs the
following policies and procedures will be followed.
Proxy Voting Policies
Lehman Brothers Asset Management LLC (LBAM) is aware and compliant with SEC Rule
206(4)-6 regarding proxy voting and disclosure and Rule 204-2 pertaining to
books and records. Therefore, LBAM shall vote corporate governance proposals in
a manner that promotes clear responsibility of management and boards to the long
run interests of shareholders. LBAM shall be diligent, independent and consider
the best interest of our clients in arriving at proxy voting decisions.
Upon a client's request, LBAM will disclose how the client's proxies were voted.
Clients can send their requests via e-mail to pricing@lehman.com.
Proxy Voting Procedures
Ann Benjamin, Andy Johnson, Managing Directors, or designees, are responsible
for LBAM's proxy votes and guidelines. The Security Control unit within the
Operations Department has administrative responsibility.
Guidelines have been established to apply to the most frequently appearing proxy
proposals. Proxy proposals for shares in closed-end funds are excepted from the
guidelines, and voting decisions relating to such proposals will be determined
on a case-by-case basis. Where specific guidelines don't apply, the general
principles of the Proxy Voting Policies are used. Specific fact situations might
warrant departure from the guidelines. Proxies are voted after review of
relevant materials (annual report, SEC filings -10K, and votes registered from
the prior year) in accordance with these guidelines. The voting rights of
securities that are on loan are determined at the time of signing the loan
agreement between our clients and their custodian banks; usually the securities
on loan do not allow LBAM the voting rights.
Administratively, LBAM utilizes paper ballots. Paper ballots are received via
the United States Postal System and holdings for all clients as of record date
are obtained from the accounting system (Portia). The ballots' shares and LBAM's
holdings are verified. If there are discrepancies between the ballot shares and
LBAM's holdings, the custodian is contacted for resolution. Proxies are voted by
choosing the appropriate vote selection and the signing of the paper ballots.
The signed proxies are mailed in the provided pre-addressed envelope.
In rare instances where ballot shares have not been received from all custodians
within two weeks of the meeting date, LBAM contacts the custodian. The custodian
will follow up with a faxed copy of the paper ballot. If a copy of the ballot is
faxed, LBAM returns (via fax or by mail) the proxy with voting instructions to
the custodian.
After all proxies are voted, the Operations Department of LBAM keeps a copy of
the signed ballot as record of the security, meeting date, proposals, and how we
voted for each client. Records are maintained in the Operations Department of
LBAM office for five years; after that time the records can be moved to an
off-site facility.
The guidelines are designed to eliminate the influence of any conflicts of
interest on LBAM's proxy voting decisions. Although LBAM does not foresee any
material conflicts of interest arising, in the event a material conflict of
interest does arise, the facts and circumstances of the conflict would be
discussed with Lori Loftus, the Chief Compliance Officer, prior to voting. Lori
Loftus, Ann Benjamin and/or Andy Johnson will decide if the conflict can be
resolved or avoided by applying the guidelines. If the conflict cannot be
resolved or avoided by applying the guidelines, LBAM may rely on the advice of
an independent third party to determine how to vote the proxy.
Original Date: January 31, 2003
Revised Date: June 30, 2003
Revised Date: July 23, 2003
Revised Date: September 17, 2004
Revised Date: September 13, 2005
Revised Date: February 26, 2007
LOS ANGELES CAPITAL
MANAGEMENT
PROXY VOTING PROCEDURES
I.INTRODUCTION
Los Angeles Capital Management (LACM) has adopted and implemented policies and
procedures that are reasonably designed to ensure that proxies are voted in the
best interest of clients, in accordance with our fiduciary duties and SEC rule
206(4)-6 under the Investment Advisers Act of 1940. Our authority to vote the
proxies of our clients is established by our advisory contracts or comparable
documents, and our proxy voting guidelines have been tailored to reflect these
specific contractual obligations. In addition to SEC requirements governing
advisers, our proxy voting policies reflect the long-standing fiduciary
standards and responsibilities for ERISA accounts set out in Department of Labor
Bulletin 94-2, 29 C.F.R. 2509.94-2 (July 29, 1994).
II.STATEMENT OF POLICIES AND PROCEDURES
A.CLIENT'S BEST INTEREST
LACM's proxy voting procedures are designed and implemented in a way that is
reasonably expected to ensure that proxy matters are conducted in the best
interest of clients. We are able to accomplish this by employing Glass,
Lewis & Co. to act as an independent voting agent on our behalf thereby
minimizing any conflicts that could arise. Glass, Lewis & Co. provides
objective proxy analysis voting recommendations and manages the operational
end of the process, ensuring compliance with all applicable laws and
regulations.
B.CASE-BY-CASE BASIS
Although we have established guidelines which were developed in conjunction
with Glass, Lewis & Co., and we have a pre-determined voting policy, we
retain the right to ultimately cast each vote on a case-by-case basis,
taking into consideration the contractual obligations under the advisory
agreement and all other relevant facts and circumstances at the time of the
vote.
C.CONFLICTS OF INTEREST
Any material conflicts that arise are resolved in the best interest of
clients. We believe by employing Glass, Lewis & Co. to monitor and vote all
proxies on our behalf, we are able to minimize the extent to which there may
be a material conflict between LACM's interests and those of our clients.
Most votes are based on a pre-determined policy while case by case votes
are made by utilizing recommendations of Glass, Lewis & Co.
D.LIMITATIONS
1. Limited Value. LACM reserves the right to abstain from voting a client
--------------
proxy if it concludes that the effect on shareholders' economic interests
or the value of the portfolio holding is indeterminable or insignificant.
2. Special Considerations. Certain accounts may warrant specialized
-----------------------
treatment in voting proxies. Contractual stipulations and individual
client direction will dictate how voting will be done in these cases.
a. Mutual Funds
(1) Proxies will be voted in accordance with the requirements of the
Securities Act of 1933, the Securities Exchange Act of 1934, and the
Investment Company Act of 1940.4
(2) Proxies of portfolio companies voted will be subject to any
applicable investment restrictions of the fund.
(3) Proxies of portfolio companies will be voted in accordance with any
resolutions or other instructions approved by authorized persons of the
fund.
b. ERISA Accounts
(1) Responsibilities for voting ERISA accounts include: the duty of
loyalty, prudence, compliance with the plan, as well as a duty to avoid
prohibited transactions.
(2) From time to time, LACM may engage in active monitoring and
communications with the issuer with respect to ERISA accounts,
particularly while maintaining a long-term or relatively illiquid
investment in the issuer. This may be achieved through a variety of
means, including exercising the legal rights of a shareholder.
E. CLIENT DIRECTION
LACM recognizes that a client may issue directives regarding how particular
proxy issues are to be voted for the client's portfolio holdings. LACM will
require that the contract provides for such direction including instructions
as to how those votes will be managed in keeping with the client's wishes
particularly when it is different from the adviser's policies and
procedures.
F. BASIS FOR FORMULATION
LACM has developed procedures and proxy voting guidelines that outline the
general principals and philosophy behind our proxy voting program.
Specifically, LACM has contracted to have Glass, Lewis & Co. manage the
proxy voting for all of the firm's accounts. In addition, LACM has created
and adopted a procedures statement and a guideline statement which it has
instructed Glass, Lewis & Co. to implement.
LACM may also incorporate information gathered from other sources beyond
Glass, Lewis & Co. These include:
1. Source of Information. The adviser may conduct research internally and/or
----------------------
use the resources of an independent research consultant.
2. Information. The adviser's policies and procedures may be based on the
------------
following information: legislative materials, studies of corporate
governance and other proxy voting issues, and/or analyses of shareholder
and management proposals by a certain sector of companies, e.g. Fortune
500 companies.
G.SHAREHOLDER ACTIVISM
The firm does not actively engage in shareholder activism, such as dialogue
with management with respect to pending proxy voting issues.
H. AVAILABILITY OF POLICIES AND PROCEDURES
LACM will provide all clients with a copy of the policies and procedures
upon request, however, please note they may be updated periodically.
I.DISCLOSURE OF VOTE
Clients may request at any time a copy of our voting records for their
account by simply making a formal request to LACM.
1. Clients LACM will make this information available to an advisory client
-------
upon its request within a reasonable time period and in a manner
appropriate to the nature of the advisory business. For further
information, please contact Carin Madden of LACM at 310-479-9878.
2. Third Parties LACM has a general policy of not disclosing to third
-------------
parties how it (or its voting delegate) voted a client's proxy.
III.RESPONSIBILITY AND OVERSIGHT
A.Designated Individual or Committee LACM has a designated compliance officer
who has the responsibility for administering and overseeing the proxy voting
process. In addition there is a Proxy Committee who formally approves and
reviews all proxy guidelines, procedures and voting records.
B.Duties of the Compliance Officer and the Proxy Committee.
1.Develop, authorize, implement and update the policies and procedures;
2.Oversee the proxy voting process;
3.Monitor legislative and corporate governance developments and coordinate
any corporate or other communication related to proxy issues;
4.Engage and oversee the third-party vendor, Glass, Lewis & Co., to review,
monitor, and/or vote proxies;
5.The committee will meet as necessary to fulfill its responsibilities.
IV. PROCEDURES
A.Client Direction LACM's responsibility for voting proxies are determined
generally by the obligations set forth under each advisory contract.
1.ERISA Accounts Voting ERISA client proxies is a fiduciary act of plan
--------------
asset management that must be performed by the adviser, unless the voting
right is retained by a named fiduciary of the plan. (DOL Bulletin 94-2)
2. Change in Client Direction. LACM, while accepting direction from clients
---------------------------
on specific proxy issues for their own account, reserves the right to
maintain its standard position on all other client accounts.
B.PROCESS OF VOTING PROXIES
1.Obtain Proxy Registered owners of record, e.g. the trustee or custodian
-----------
bank, that receive proxy materials from the issuer or its information agent,
or an ERISA plan are instructed to sign the proxy in blank and forward it
directly Glass, Lewis & Co., the voting delegate.
a. Securities Lending. LACM may recall securities that are part of a
-------------------
securities lending program for materially important votes.
2.Match Each proxy received is matched to the securities to be voted and a
-----
reminder is sent to any custodian or trustee that has not forwarded the
proxies within a reasonable time.
3.Categorize Each proxy is reviewed and categorized according to issues and
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the proposing parties.
4.Conflicts of Interest Each proxy is reviewed by the proxy administrator
---------------------
or committee member to assess the extent to which there may be a material
conflict between the adviser's interests and those of the client. Upon
notifying the client of the conflict and unless the client issues a specific
directive to LACM on how to vote, LACM will vote in accordance with a
pre-determined policy based on the recommendations of Glass, Lewis & Co. If
the client issues a directive that clearly creates a conflict of interest
for LACM, the client will be given two options. One option will be to vote
its own proxy on that issue and the other will be to turn the decision over
to another independent third party to vote.
5.Vote Glass, Lewis & Co. then votes the proxy in accordance with the
----
firm's policies and procedures and returns the voted proxy to the issuer or
its information agent.
6.Review Glass, Lewis & Co. has the responsibility to ensure that materials
------
are received by LACM in a timely manner. In addition they monitor and
reconcile on a regular basis the proxies received against holding on the
record date of client accounts over which we have voting authority. This
ensures that all shares held on the record date, and for which a voting
obligation exists. are voted.
C.Voting Delegate. LACM has engaged Glass, Lewis & Co. as a service provider
to assist with administrative functions. Glass, Lewis & Co. is charged with
the following duties.
I . Documentation. Glass, Lewis & Co. will document any decision to
--------------
delegate its voting authority to a voting delegate.
2.Final Authority. Despite the relationship with Glass, Lewis & Co., LACM
----------------
retains final authority and fiduciary responsibility for proxy voting.
3.Consistency. LACM has verified that Glass, Lewis & Co.'s procedures are
------------
consistent with LACM's policies and procedures.
4. Reports. Glass, Lewis & Co. uses an online system where LACM has access
--------
to all proxy ballots and votes therefore we are able to generate any report
as needed at any time.
D.RECORDKEEPING
1.Section 204 Glass, Lewis & Co. maintains all records of proxies voted
-----------
pursuant to Section 204-2 of the Advisers Act.
2.Contents
--------
a. As required by Rule 204-2(c): (1) a copy of its policies and procedures;
(2) proxy statements received regarding client securities (maintained at
Glass, Lewis & Co. who will provide a copy promptly upon request); (3) a
record of each vote cast (maintained at Glass, Lewis & Co. who will
provide a copy promptly upon request); (4) a copy of any document created
by LACM that was material to making a decision on how to vote proxies on
behalf of a client or that memorializes the basis for that decision; and
(5) each written client request for proxy voting records and LACM's
written response to any (written or oral) client request for such records.
b. For ERISA accounts, LACM is required to maintain accurate proxy voting
records (both procedures and actions taken in individual situations) to
enable the named fiduciary to determine whether LACM is fulfilling its
obligations. (DOL Bulletin 942) Retention may include:
(1) issuer name and meeting;
(2) issues voted on and record of the vote;
(3) number of shares eligible to be voted on the record date; and
(4) numbers of shares voted.
3.Duration Proxy voting books and records will be maintained at Glass,
---------
Lewis & Co., who will provide copies of those records promptly upon request,
for a period of five years.
MAZAMA CAPITAL MANAGEMENT, INC
PROXY VOTING
POLICY
Mazama Capital Management, Inc. ("Mazama"), as a matter of policy and as a
fiduciary to our clients, has responsibility for voting proxies for portfolio
securities consistent with the best economic interests of the clients. Our firm
maintains written policies and procedures as to the handling, research, voting
and reporting of proxy voting and makes appropriate disclosures about our firm's
proxy policies and practices. Our policy and practice includes the
responsibility to monitor corporate actions, receive and vote client proxies and
disclose any potential conflicts of interest as well as making information
available to clients about the voting of proxies for their portfolio securities
and maintaining relevant and required records.
BACKGROUND
Proxy voting is an important right of shareholders and reasonable care and
diligence must be undertaken to ensure that such rights are properly and timely
exercised. Investment advisers registered with the SEC, and which exercise
voting authority with respect to client securities, are required by Rule
206(4)-6 of the Advisers Act to (a) adopt and implement written policies and
procedures that are reasonably designed to ensure that client securities are
voted in the best interests of clients, which must include how an adviser
addresses material conflicts that may arise between an adviser's interests and
those of its clients; (b) to disclose to clients how they may obtain information
from the adviser with respect to the voting of proxies for their securities; (c)
to describe to clients a summary of its proxy voting policies and procedures
and, upon request, furnish a copy to its clients; and (d) maintain certain
records relating to the adviser's proxy voting activities when the adviser does
have proxy voting authority.
GUIDING PRINCIPLES
Proxy voting procedures must adhere to the following broad principles:
1.Voting rights have economic value and must be treated accordingly. This means
the fiduciary (Mazama) has a duty to vote proxies in those cases where fiduciary
responsibility has been delegated to Mazama.
2.Fiduciaries must maintain documented voting policies or guidelines to govern
proxy voting decisions.
3.Fiduciaries should keep records of proxy voting.
PROXY ADMINISTRATION
The Compliance Department has the responsibility for the implementation and
monitoring of our proxy voting policy, practices, disclosures and record
keeping, including outlining our voting guidelines in our procedures. The
Director of Research is responsible for determining our firm's positions on all
major corporate issues, creates guidelines and oversees the voting process.
Mazama takes an active role in voting proxies on behalf of all accounts for
which the firm has been hired as investment manager, unless proxy voting
responsibility has been retained by the client. Generally, routine proxies will
be voted with management as indicated on the proxy.
Mazama has retained Institutional Shareholder Services ("ISS"), an expert in the
proxy voting and corporate governance area, to provide proxy advisory and voting
services. These services include in-depth research, analysis, and voting
recommendations as well as vote execution, reporting, auditing and consulting
assistance for the handling of proxy voting responsibility and corporate
governance-related efforts. ISS provides administrative assistance to the proxy
voting process by electronically executing the votes while allowing Mazama to
retain voting authority.
VOTING POLICIES
All proxy materials received on behalf of clients are forwarded to Institutional
Shareholder Services (ISS).
1.Absent material conflicts, the Director of Research will determine how Mazama
should vote the proxy in accordance with applicable voting guidelines.
2.Proxy ballots for securities no longer held in client accounts will not be
voted.
Mazama generally votes in favor of routine issues. Such issues may include but
are not limited to:
1.Elect directors
2.Appoint auditors
3.Eliminate preemptive rights
4.Increase authorized shares issued
With regard to non-routine issues, Mazama considers many things including, but
not limited to:
1.Management's recommendation;
2.The recommendation of ISS; and
3.Mazama's assessment as to what is best for shareholders
With regard to issues which are often included in proxies, Mazama believes as
follows:
EXECUTIVE COMPENSATION
----------------------
Mazama's goal is to assure that a company's equity-based compensation plan is
aligned with shareholders' long-term interests. While we evaluate most plans on
a case-by case basis, Mazama generally opposes compensation packages that
provide what we view as excessive awards to a few senior executives or that
contain excessively dilutive stock option plans. We generally oppose plans that
give a company the ability to re-price options.
ANTI-TAKEOVER AND CORPORATE GOVERNANCE ISSUES
---------------------------------------------
Mazama generally opposes anti-takeover measures and other proposals designed to
limit the ability of shareholders to act on possible transactions. Mazama
strongly favors having only independent board members in all sub-committees
(compensation, nominating, audit, etc.) and may vote against certain board
members if they are affiliated with the company and also members of the
sub-committees. When voting on corporate governance proposals, we will consider
the dilutive impact to shareholders and the effect on shareholder rights.
SOCIAL AND CORPORATE RESPONSIBILITY ISSUES
------------------------------------------
Mazama generally votes with a company's management on social issues unless they
have substantial economic implications for the company's business and operations
and have not been adequately addressed by management.
PROCEDURE
Mazama has adopted procedures to implement the firm's policy and reviews to
monitor and ensure the firm's policy is observed, implemented properly and
amended or updated, as appropriate, which include the following:
VOTING PROCEDURES
1.All employees will forward any proxy materials received on behalf of clients
to the Director of Research;
2.The Director of Research will determine which client accounts hold the
security to which the proxy relates;
3.Absent material conflicts, the Director of Research will determine how Mazama
should vote the proxy in accordance with applicable voting guidelines, complete
the proxy and vote the proxy in a timely and appropriate manner.
DISCLOSURE
1.Mazama will provide conspicuously displayed information in its ADV Part II
summarizing this proxy voting policy and procedures, including a statement that
clients may request information regarding how Mazama voted a client's proxies,
and that clients may request a copy of these policies and procedures.
2.The Compliance Officer ("CO") will also send a copy of this summary to all
existing clients who have previously received Mazama's ADV Part II; or the CO
may send each client the amended ADV Part II. Either mailing shall highlight the
inclusion of information regarding proxy voting.
CLIENT REQUESTS FOR INFORMATIOn
1.All client requests for information regarding proxy votes, or policies and
procedures, received by any employee should be forwarded to the CO.
2.In response to any request the Compliance will prepare a written response to
the client with the information requested, and as applicable will include the
name of the issuer, the proposal voted upon, and how Mazama voted the client's
proxy with respect to each proposal about which client inquired.
CONFLICTS OF INTEREST
1.Mazama will identify any conflicts that exist between the interests of the
adviser and the client by reviewing the relationship of Mazama with the issuer
of each security to determine if Mazama or any of its employees has any
financial, business or personal relationship with the issuer.
2.If a material conflict of interest exists, Director of Research will determine
whether it is appropriate to disclose the conflict to the affected clients, to
give the clients an opportunity to vote the proxies themselves, or to address
the voting issue through other objective means such as voting in a manner
consistent with a predetermined voting policy or receiving an independent third
party voting recommendation.
3.Mazama will maintain a record of the voting resolution of any conflict of
interest.
RECORDKEEPING
The CO shall retain the following proxy records in accordance with the SEC's
five-year retention requirement.
These policies and procedures and any amendments;
1.A record of each vote that Mazama casts;
2.Any document Mazama created that was material to making a decision how to vote
proxies, or that memorializes that decision including period reports to the
General Manager;
3.A copy of each written request from a client for information on how Mazama
voted such client's proxies, and a copy of any written response.
MELLON FINANCIAL CORPORATION
PROXY VOTING POLICY
(APPROVED 08/20/04)
1. SCOPE OF POLICY - This Proxy Voting Policy has been adopted by the investment
advisory subsidiaries of Mellon Financial Corporation ("Mellon"), the
investment companies advised by such subsidiaries (the "Funds"), and the
banking subsidiaries of Mellon (Mellon's investment advisory and banking
subsidiaries are hereinafter referred to individually as a "Subsidiary" and
collectively as the "Subsidiaries").
2. FIDUCIARY DUTY - We recognize that an investment adviser is a fiduciary that
owes its clients a duty of utmost good faith and full and fair disclosure of
all material facts. We further recognize that the right to vote proxies is an
asset, just as the economic investment represented by the shares is an asset.
An investment adviser's duty of loyalty precludes the adviser from subrogating
its clients' interests to its own. Accordingly, in voting proxies, we will
seek to act solely in the best financial and economic interests of our
clients, including the Funds and their shareholders, and for the exclusive
benefit of pension and other employee benefit plan participants. With regard
to voting proxies of foreign companies, Adviser weighs the cost of voting, and
potential inability to sell, the shares against the benefit of voting the
shares to determine whether or not to vote.
3. LONG-TERM PERSPECTIVE - We recognize that management of a publicly-held
company may need protection from the market's frequent focus on short-term
considerations, so as to be able to concentrate on such long-term goals as
productivity and development of competitive products and services.
4. LIMITED ROLE OF SHAREHOLDERS - We believe that a shareholder's role in the
governance of a publicly-held company is generally limited to monitoring the
performance of the company and its managers and voting on matters which
properly come to a shareholder vote. We will carefully review proposals that
would limit shareholder control or could affect shareholder values.
5. ANTI-TAKEOVER PROPOSALS - We generally will oppose proposals that seem
designed to insulate management unnecessarily from the wishes of a majority of
the shareholders and that would lead to a determination of a company's future
by a minority of its shareholders. We will generally support proposals that
seem to have as their primary purpose providing management with temporary or
short-term insulation from outside influences so as to enable them to bargain
effectively with potential suitors and otherwise achieve identified long-term
goals to the extent such proposals are discrete and not bundled with other
proposals.
6. "SOCIAL" ISSUES - On questions of social responsibility where economic
performance does not appear to be an issue, we will attempt to ensure that
management reasonably responds to the social issues. Responsiveness will be
measured by management's efforts to address the particular social issue
including, where appropriate, assessment of the implications of the proposal
to the ongoing operations of the company. We will pay particular attention to
repeat issues where management has failed in the intervening period to take
actions previously committed to.
With respect to clients having investment policies that require proxies to be
cast in a certain manner on particular social responsibility issues, proposals
relating to such issues will be evaluated and voted separately by the client's
portfolio manager in accordance with such policies, rather than pursuant to
the procedures set forth in section 7.
7. PROXY VOTING PROCESS - Every voting proposal is reviewed, categorized and
analyzed in accordance with our written guidelines in effect from time to
time. Our guidelines are reviewed periodically and updated as necessary to
reflect new issues and any changes in our policies on specific issues. Items
that can be categorized will be voted in accordance with any applicable
guidelines or referred to the Mellon Proxy Policy Committee (the "Committee"),
if the applicable guidelines so require. Proposals that cannot be categorized
under the guidelines will be referred to the Committee for discussion and
vote. Additionally, the Committee may review any proposal where it has
identified a particular company, particular industry or particular issue for
special scrutiny. The Committee will also consider specific interests and
issues raised by a Subsidiary to the Committee, which interests and issues may
require that a vote for an account managed by a Subsidiary be cast differently
from the collective vote in order to act in the best interests of such
account's beneficial owners.
8. MATERIAL CONFLICTS OF INTEREST - We recognize our duty to vote proxies in the
best interests of our clients. We seek to avoid material conflicts of interest
through the establishment of our Committee structure, which applies detailed,
pre-determined proxy voting guidelines in an objective and consistent manner
across client accounts, based on internal and external research and
recommendations provided by a third party vendor, and without consideration of
any client relationship factors. Further, we engage a third party as an
independent fiduciary to vote all proxies for Mellon securities and Fund
securities.
9. SECURITIES LENDING - We seek to balance the economic benefits of engaging in
lending securities against the inability to vote on proxy proposals to
determine whether to recall shares, unless a plan fiduciary retains the right
to direct us to recall shares.
10. RECORDKEEPING - We will keep, or cause our agents to keep, the records for
each voting proposal required by law.
11. DISCLOSURE - We will furnish a copy of this Proxy Voting Policy and any
related procedures, or a description thereof, to investment advisory clients
as required by law. In addition, we will furnish a copy of this Proxy Voting
Policy, any related procedures, and our voting guidelines to investment
advisory clients upon request. The Funds shall include this Proxy Voting
Policy and any related procedures, or a description thereof, in their
Statements of Additional Information, and shall disclose their proxy votes, as
required by law. We recognize that the applicable trust or account document,
the applicable client agreement, the Employee Retirement Income Security Act
of 1974 (ERISA) and certain laws may require disclosure of other information
relating to proxy voting in certain circumstances. This information will only
be disclosed to those who have an interest in the account for which shares are
voted, and after the vote is recorded.
MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES
I. POLICY STATEMENT
Introduction - Morgan Stanley Investment Management's ("MSIM") policy and
------------
procedures for voting proxies ("Policy") with respect to securities held in the
accounts of clients applies to those MSIM entities that provide discretionary
investment management services and for which a MSIM entity has authority to vote
proxies. The Policy will be reviewed and, updated, as necessary, to address new
or revised proxy voting issues. The MSIM entities covered by the Policy
currently include the following: Morgan Stanley Investment Advisors Inc., Morgan
Stanley AIP GP LP, Morgan Stanley Investment Management Inc., Morgan Stanley
Investment Management Limited, Morgan Stanley Investment Management Company,
Morgan Stanley Asset & Investment Trust Management Co., Limited, Morgan Stanley
Investment Management Private Limited, Morgan Stanley Hedge Fund Partners GP LP,
Morgan Stanley Hedge Fund Partners LP, Van Kampen Asset Management, and Van
Kampen Advisors Inc. (each an "MSIM Affiliate" and collectively referred to as
the "MSIM Affiliates").
Each MSIM Affiliate will use its best efforts to vote proxies as part of its
authority to manage, acquire and dispose of account assets. With respect to the
MSIM registered management investment companies (Van Kampen, Institutional and
Advisor Funds)(collectively referred to herein as the "MSIM Funds"), each MSIM
Affiliate will vote proxies pursuant to authority granted under its applicable
investment advisory agreement or, in the absence of such authority, as
authorized by the Board of Directors or Trustees of the MSIM Funds. A MSIM
Affiliate will not vote proxies if the "named fiduciary" for an ERISA account
has reserved the authority for itself, or in the case of an account not governed
by ERISA, the investment management or investment advisory agreement does not
authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will, in a
prudent and diligent manner, vote proxies in the best interests of clients,
including beneficiaries of and participants in a client's benefit plan(s) for
which the MSIM Affiliates manage assets, consistent with the objective of
maximizing long-term investment returns ("Client Proxy Standard"). In certain
situations, a client or its fiduciary may provide a MSIM Affiliate with a proxy
voting policy. In these situations, the MSIM Affiliate will comply with the
client's policy unless to do so would be inconsistent with applicable laws or
regulations or the MSIM Affiliate's fiduciary responsibility.
Proxy Research Services - Institutional Shareholder Services ("ISS") and Glass
-----------------------
Lewis (together with other proxy research providers as MSIM Affiliates may
retain from time to time, the "Research Providers") are independent advisers
that specialize in providing a variety of fiduciary-level proxy-related services
to institutional investment managers, plan sponsors, custodians, consultants,
and other institutional investors. The services provided include in-depth
research, global issuer analysis, and voting recommendations. While the MSIM
Affiliates may review and utilize the recommendations of the Research Providers
in making proxy voting decisions, they are in no way obligated to follow such
recommendations. In addition to research, ISS provides vote execution,
reporting, and recordkeeping. MSIM's Proxy Review Committee (see Section IV.A.
below) will carefully monitor and supervise the services provided by the
Research Providers.
Voting Proxies for Certain Non-U.S. Companies - While the proxy voting process
---------------------------------------------
is well established in the United States and other developed markets with a
number of tools and services available to assist an investment manager, voting
proxies of non-U.S. companies located in certain jurisdictions, particularly
emerging markets, may involve a number of problems that may restrict or prevent
a MSIM Affiliate's ability to vote such proxies. These problems include, but
are not limited to: (i) proxy statements and ballots being written in a
language other than English; (ii) untimely and/or inadequate notice of
shareholder meetings; (iii) restrictions on the ability of holders outside the
issuer's jurisdiction of organization to exercise votes; (iv) requirements to
vote proxies in person, (v) the imposition of restrictions on the sale of the
securities for a period of time in proximity to the shareholder meeting; and
(vi) requirements to provide local agents with power of attorney to facilitate
the MSIM Affiliate's voting instructions. As a result, clients' non-U.S.
proxies will be voted on a best efforts basis only, after weighing the costs and
benefits to MSIM's clients of voting such proxies, consistent with the Client
Proxy Standard. ISS has been retained to provide assistance to the MSIM
Affiliates in connection with voting their clients' non-U.S. proxies.
II.GENERAL PROXY VOTING GUIDELINES
----------------------------------
To ensure consistency in voting proxies on behalf of its clients, MSIM
Affiliates will follow (subject to any exception set forth herein) this Policy,
including the guidelines set forth below. These guidelines address a broad
range of issues, including board size and composition, executive compensation,
anti-takeover proposals, capital structure proposals and social responsibility
issues and are meant to be general voting parameters on issues that arise most
frequently. The MSIM Affiliates, however, may, pursuant to the procedures set
forth in Section IV. below, vote in a manner that is not in accordance with the
following general guidelines, provided the vote is approved by the Proxy Review
Committee and is consistent with the Client Proxy Standard. A MSIM Affiliate
will not generally vote a proxy if it has sold the affected security between the
record date and the meeting date.
III.GUIDELINES
--------------
A. CORPORATE GOVERNANCE MATTERS. The following proposals will generally be
voted as indicated below, unless otherwise determined by the Proxy Review
Committee.
i. General.
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1.Generally, routine management proposals will be supported. The following
are examples of routine management proposals:
. . Approval of financial statements, director and auditor reports.
. . General updating/corrective amendments to the charter.
. . Proposals related to the conduct of the annual meeting, except those
proposals that relate to the "transaction of such other business which
may come before the meeting."
2. Proposals to eliminate cumulative voting generally will be supported;
proposals to establish cumulative voting in the election of directors will
not be supported.
3. Proposals requiring confidential voting and independent tabulation of
voting results will be supported.
4. Proposals requiring a U.S. company to have a separate Chairman and CEO
will not be supported. Proposals requiring non-U.S. companies to have a
separate Chairman and CEO will be supported.
5. Proposals by management of non-U.S. companies regarding items that are
clearly related to the regular course of business will be supported.
6. Proposals to require the company to expense stock options will be
supported.
7. Open-ended requests for adjournment generally will not be supported.
However, where management specifically states the reason for requesting
an adjournment and the requested adjournment is necessary to permit a
proposal that would otherwise be supported under this Policy to be carried
out (i.e. an uncontested corporate transaction), the adjournment request
will be supported.
8. Proposals to declassify the Board of Directors (if management supports a
classified board) generally will not be supported.
9. Proposal requiring that the company prepare reports that are costly to
provide or that would require duplicative efforts or expenditures that are
of a non-business nature or would provide no pertinent information from
the perspective of institutional shareholders generally will not be
supported.
ii. Election of Directors. In situations where no conflict exists and where
----------------------
no specific governance deficiency has been noted, unless otherwise
determined by the Proxy Review Committee, proxies will be voted in support
of nominees of management.
1.The following proposals generally will be supported:
. . Proposals requiring that a certain percentage (up to 66 2/3%) of the
company's board members be independent directors.
. . Proposals requiring that members of the company's compensation,
nominating and audit committees be comprised of independent or
unaffiliated directors.
2. Unless otherwise determined by the Proxy Review Committee, a withhold
vote will be made in the following circumstances:
(a)If a company's board is not comprised of a majority of disinsterested
directors, a withhold vote will be made for interested directors. A director
nominee may be deemed to be interested if the nominee has, or any time
during the previous five years had, a relationship with the issuer (e.g.,
investment banker, counsel or other professional service provider, or
familial relationship with a senior officer of the issuer) that may impair
his or her independence;
(b) If a nominee who is interested is standing for election as a member of
the company's compensation, nominating or audit committees;
(c) A direct conflict exists between the interests of the nominee and the
public shareholders;
(d) Where the nominees standing for election have not taken action to
implement generally accepted governance practices for which there is a
"bright line" test. These would include elimination of dead hand or slow
hand poison pills, requiring audit, compensation or nominating committees
to be composed of independent directors and requiring a majority
independent board;
(e) A nominee has failed to attend at least 75% of board meetings within a
given year without a reasonable excuse; or
(f) A nominee serves on the board of directors for more than six companies
(excluding investment companies).
iii. Auditors
--------
1. Generally, management proposals for selection or ratification of auditors
will be supported. However, such proposals may not be supported if the
audit fees are excessive. Generally, to determine if audit fees are
excessive, a 50% test will be applied for audit fees in excess of $1
million: if audit fees are $1 million or more, non-audit fees should less
than 50% of the total fees paid to the auditor. If audit fees are less
than $1 million, the fees will be reviewed case by case by the Proxy
Review Committee.
2. Proposals requiring auditors to attend the annual meeting of shareholders
will be supported.
3. Proposals to indemnify auditors will not be supported.
iv. Anti-Takeover Matters
---------------------
1. Proposals to modify or rescind existing supermajority vote requirements
to amend the charter or bylaws will be supported; proposals to amend
by-laws to require a supermajority shareholder vote to pass or repeal
certain provisions will not be supported.
2. Proposals relating to the adoption of anti-greenmail provisions will be
supported, provided that the proposal: (i) defines greenmail; (ii)
prohibits buyback offers to large block holders (holders of at least 1% of
the outstanding shares and in certain cases, a greater amount, as
determined by the Proxy Review Committee) not made to all shareholders or
not approved by disinterested shareholders; and (iii) contains no
anti-takeover measures or other provisions restricting the rights of
shareholders.
3. Proposals requiring shareholder approval or ratification of a shareholder
rights plan or poison pill will be supported.
B. CAPITALIZATION CHANGES. The following proposals generally will be voted
as indicated below, unless otherwise determined by the Proxy Review
Committee.
1. The following proposals generally will be supported:. Proposals relating
to capitalization changes that eliminate other classes of stock and/or
eliminate unequal voting rights.
. Proposals to increase the authorization of existing classes of common
stock (or securities convertible into common stock) if: (i) a clear and
legitimate business purpose is stated; (ii) the number of shares
requested is reasonable in relation to the purpose for which
authorization is requested; and (iii) the authorization does not exceed
100% of shares currently authorized and at least 30% of the new
authorization will be outstanding.
. Proposals to create a new class of preferred stock or for issuances of
preferred stock up to 50% of issued capital.
. Proposals for share repurchase plans.
. Proposals to reduce the number of authorized shares of common or
preferred stock, or to eliminate classes of preferred stock.
. Proposals to effect stock splits.
. Proposals to effect reverse stock splits if management proportionately
reduces the authorized share amount set forth in the corporate charter.
Reverse stock splits that do not adjust proportionately to the
authorized share amount generally will be approved if the resulting
increase in authorized shares coincides with the proxy guidelines set
forth above for common stock increases.
2. The following proposals generally will not be supported (notwithstanding
management support).
. Proposals relating to capitalization changes that add classes of stock
which substantially dilute the voting interests of existing
shareholders.
. Proposals to increase the authorized number of shares of existing
classes of stock that carry preemptive rights or supervoting rights.
. Proposals to create "blank check" preferred stock.
. Proposals relating to changes in capitalization by 100% or more.
C. COMPENSATION. The following proposals generally will be voted as
indicated below, unless otherwise determined by the Proxy Review
Committee.
1. The following proposals generally will be supported:
. Proposals relating to director fees, provided the amounts are not
excessive relative to other companies in the country or industry.
. Proposals for employee stock purchase plans that permit discounts up to
15%, but only for grants that are part of a broad-based employee plan,
including all non-executive employees.
. Proposals for the establishment of employee stock option plans and other
employee ownership plans, provided that our research does not indicate
that approval of the plan would be against shareholder interest.
. Proposals for the establishment of employee retirement and severance
plans, provided that our research does not indicate that approval of the
plan would be against shareholder interest.
2. Blanket proposals requiring shareholder approval of all severance
agreements will not be supported, however, proposals that require
shareholder approval for agreements in excess of three times the annual
compensation (salary and bonus) generally will be supported.
3. Blanket proposals requiring shareholder approval of executive
compensation generally will not be supported.
4. Proposals that request or require disclosure of executive compensation in
addition to the disclosure required by the Securities and Exchange
Commission ("SEC") regulations generally will not be supported.
D. OTHER RECURRING ITEMS. The following proposals generally will be voted as
indicated below, unless otherwise determined by the Proxy Review
Committee.
1. Proposals to add restrictions related to social, political, environmental
or special interest issues that do not relate directly to the business of
the company and which do not appear to be directed specifically to the
business or financial interest of the company generally will not be
supported.
2. Proposals requiring adherence to workplace standards that are not
required or customary in market(s) to which the proposals relate will not
be supported.
E. ITEMS TO BE REVIEWED BY THE PROXY REVIEW COMMITTEE
The following types of non-routine proposals, which potentially may have a
substantive financial or best interest impact on an issuer, will be voted
as determined by the Proxy Review Committee.
i. Corporate Transactions
----------------------
. Proposals relating to mergers, acquisitions and other special corporate
transactions (i.e., takeovers, spin-offs, sales of assets,
reorganizations, restructurings and recapitalizations) will be examined
on a case-by-case basis. In all cases, Research Providers' research and
analysis will be used along with MSIM Affiliates' research and analysis,
including, among other things, MSIM internal company-specific knowledge.
Proposals for mergers or other significant transactions that are
friendly, approved by the Research Providers, and where there is no
portfolio manager objection, generally will be supported.
ii. Compensation
------------
. Proposals relating to change-in-control provisions in non-salary
compensation plans, employment contracts, and severance agreements that
benefit management and would be costly to shareholders if triggered.
With respect to proposals related to severance and change of control
situations, MSIM Affiliates will support a maximum of three times salary
and bonus.
. Proposals relating to Executive/Director stock option plans. Generally,
stock option plans should be incentive based. The Proxy Review
Committee will evaluate the the quantitative criteria used by a Research
Provider when considering such Research Provider's recommendation. If
the Proxy Review Committee determines that the criteria used by the
Research Provider is reasonable, the proposal will be supported if it
falls within a 5% band above the Research Provider's threshold.
. Compensation proposals that allow for discounted stock options that have
not been offered to employees in general.
iii. Other
-----
. Proposals for higher dividend payouts.
. Proposals recommending set retirement ages or requiring specific levels
of stock ownership by directors.
. Proposals for election of directors, where a director nominee is related
to MSIM (i.e. on an MSIM Fund's Board of Directors/Trustees or part of
MSIM senior management) must be considered by the Proxy Review
Committee. If the proposal relates to a director nominee who is on a Van
Kampen Fund's Board of Directors/Trustees, to the extent that the shares
of the relevant company are held by a Van Kampen Fund, the Van Kampen
Board shall vote the proxies with respect to those shares, to the extent
practicable. In the event that the Committee cannot contact the Van
Kampen Board in advance of the shareholder meeting, the Committee will
vote such shares pursuant to the Proxy Voting Policy.
. Proposals requiring diversity of board membership relating to broad
based social, religious or ethnic groups.
. Proposals to limit directors' liability and/or broaden indemnification
of directors. Generally, the Proxy Review Committee will support such
proposals provided that the officers and directors are eligible for
indemnification and liability protection if they have acted in good
faith on company business and were found innocent of any civil or
criminal charges for duties performed on behalf of the company.
IV. ADMINISTRATION OF POLICY
A. PROXY REVIEW COMMITTEE
1. The MSIM Proxy Review Committee ("Committee") is responsible for
creating and implementing the Policy and, in this regard, has expressly
adopted it.
(a) The Committee, which is appointed by MSIM's Chief Investment Officer
("CIO"), consists of senior investment professionals who represent the
different investment disciplines and geographic locations of the firm. The
Committee is responsible for establishing MSIM's Policy and determining
how MSIM will vote proxies on an ongoing basis.
(b) The Committee will periodically review and have the authority to amend,
as necessary, the Policy and establish and direct voting positions
consistent with the Client Proxy Standard.
(c) The Committee will meet at least monthly to (among other matters): (1)
address any outstanding issues relating to the Policy and (2) review
proposals at upcoming shareholder meetings of MSIM portfolio
companies in accordance with this Policy including, as appropriate, the
voting results of prior shareholder meetings of the same issuer where a
similar proposal was presented to shareholders. The Committee, or its
designee, will timely communicate to ISS MSIM's Policy (and any amendments
to them and/or any additional guidelines or procedures it may adopt).
(d) The Committee will meet on an ad hoc basis to (among other matters): (1)
authorize "split voting" (i.e., allowing certain shares of the same issuer
that are the subject of the same proxy solicitation and held by one or
more MSIM portfolios to be voted differently than other shares) and/or
"override voting" (i.e., voting all MSIM portfolio shares in a manner
contrary to the Policy); (2) review and approve upcoming votes, as
appropriate, for matters for which specific direction has been provided in
this Policy; and (3) determine how to vote matters for which specific
direction has not been provided in this Policy. Split votes generally
will not be approved within a single Global Investor Group investment
team. The Committee may take into account Research Providers'
recommendations and research as well as any other relevant information
they may request or receive, including portfolio manager and/or analyst
research, as applicable. Generally, proxies related to securities held in
accounts that are managed pursuant to quantitative, index or index-like
strategies ("Index Strategies") will be voted in the same manner as those
held in actively managed accounts. Because accounts managed using Index
Strategies are passively managed accounts, research from portfolio
managers and/or analysts related to securities held in these accounts may
not be available. If the affected securities are held only in accounts
that are managed pursuant to Index Strategies, and the proxy relates to a
matter that is not described in this Policy, the Committee will consider
all available information from the Research Providers, and to the extent
that the holdings are significant, from the portfolio managers and/or
analysts.
(e) In addition to the procedures discussed above, if the Committee
determines that an issue raises a potential material conflict of interest,
or gives rise to the appearance of a potential material conflict of
interest, the Committee will request a special committee to review, and
recommend a course of action with respect to, the conflict(s) in question
("Special Committee"). The Special Committee shall be comprised of the
Chairperson of the Proxy Review Committee, the Compliance Director for the
area of the firm involved or his/her designee, a senior portfolio manager
(if practicable, one who is a member of the Proxy Review Committee)
designated by the Proxy Review Committee, and MSIM's Chief Investment
Officer or his/her designee. The Special Committee may request the
assistance of MSIM's General Counsel or his/her designee and will have
sole discretion to cast a vote. In addition to the research provided by
Research Providers, the Special Committee may request analysis from MSIM
Affiliate investment professionals and outside sources to the extent it
deems appropriate.
(f) The Committee and the Special Committee, or their designee(s), will
document in writing all of their decisions and actions, which
documentation will be maintained by the Committee and the Special
Committee, or their designee(s), for a period of at least 6 years. To the
extent these decisions relate to a security held by a MSIM U.S. registered
investment company, the Committee and Special Committee, or their
designee(s), will report their decisions to each applicable Board of
Trustees/Directors of those investment companies at each Board's next
regularly scheduled Board meeting. The report will contain information
concerning decisions made by the Committee and Special Committee during
the most recently ended calendar quarter immediately preceding the Board
meeting.
(g) The Committee and Special Committee, or their designee(s), will timely
communicate to applicable portfolio managers, the Compliance Departments
and, as necessary, to ISS, decisions of the Committee and Special
Committee so that, among other things, ISS will vote proxies consistent
with their decisions.
B. IDENTIFICATION OF MATERIAL CONFLICTS OF INTEREST
1. If there is a possibility that a vote may involve a material conflict of
interest, the vote must be decided by the Special Committee in
consultation with MSIM's General Counsel or his/her designee.
2. A material conflict of interest could exist in the following situations,
among others:
(a) The issuer soliciting the vote is a client of MSIM or an affiliate of
MSIM and the vote is on a material matter affecting the issuer;
(b) The proxy relates to Morgan Stanley common stock or any other security
issued by Morgan Stanley or its affiliates; or
(c) Morgan Stanley has a material pecuniary interest in the matter submitted
for a vote (e.g., acting as a financial advisor to a party to a merger or
acquisition for which Morgan Stanley will be paid a success fee if
completed).
C. PROXY VOTING REPORTS
(a) MSIM will promptly provide a copy of this Policy to any client
requesting them. MSIM will also, upon client request, promptly provide a
report indicating how each proxy was voted with respect to securities held
in that client's account.
(b) MSIM's legal department is responsible for filing an annual Form N-PX on
behalf of each registered management investment company for which such
filing is required, indicating how all proxies were voted with respect to
such investment company's holdings.
NEUBERGER BERMAN, LLC
NEUBERGER BERMAN MANAGEMENT INC.
PROXY VOTING POLICIES AND PROCEDURES
NON-SOCIALLY RESPONSIVE CLIENTS
I. INTRODUCTION AND GENERAL PRINCIPLES
A) Neuberger Berman, LLC and Neuberger Berman Management Inc. (collectively,
"NB") have been delegated the authority and responsibility to vote the proxies
of their respective investment advisory clients, including both ERISA and
non-ERISA clients.
B) NB understands that proxy voting is an integral aspect of investment
management. Accordingly, proxy voting must be conducted with the same degree
of prudence and loyalty accorded any fiduciary or other obligation of an
investment manager.
C) NB believes that the following policies and procedures are reasonably
expected to ensure that proxy matters are conducted in the best interest of
clients, in accordance with NB's fiduciary duties, applicable rules under the
Investment Advisers Act of 1940 and fiduciary standards and responsibilities
for ERISA clients set out in Department of Labor interpretations.
D) In instances where NB does not have authority to vote client proxies, it is
the responsibility of the client to instruct the relevant custody bank or
banks to mail proxy material directly to such client.
E) In all circumstances, NB will comply with specific client directions to vote
proxies, whether or not such client directions specify voting proxies in a
manner that is different from NB's policies and procedures.
F) There may be circumstances under which NB may abstain from voting a client
proxy for cost reasons (e.g., non-U.S. securities). NB understands that it
must weigh the costs and benefits of voting proxy proposals relating to
foreign securities and make an informed decision with respect to whether
voting a given proxy proposal is prudent and solely in the interests of the
client and, in the case of an ERISA client, the plan's participants and
beneficiaries. NB's decision in such circumstances will take into account the
effect that the proxy vote, either by itself or together with other votes, is
expected to have on the value of the client's investment and whether this
expected effect would outweigh the cost of voting.
II. RESPONSIBILITY AND OVERSIGHT
A) NB has designated a Proxy Committee with the responsibility for
administering and overseeing the proxy voting process, including:
1) developing, authorizing, implementing and updating NB's policies and
procedures;
2) overseeing the proxy voting process; and
3) engaging and overseeing any third-party vendors as voting delegate to
review, monitor and/or vote proxies.
B) Such Proxy Committee will meet as frequently and in such manner as necessary
or appropriate to fulfill its responsibilities.
C) The members of the Proxy Committee will be appointed from time to time and
will include the Chief Investment Officer, a senior portfolio manager and
senior members of the Legal and Compliance and Portfolio Administration
Departments.
D) In the event that one or more members of the Proxy Committee are not
independent with respect to a particular matter, the Proxy Committee shall
appoint an independent subcommittee of the Proxy Committee, which will have
full authority to act upon such matter.
III. PROXY VOTING GUIDELINES
A) NB has determined that, except as set forth below, proxies will be voted in
accordance with the voting recommendations contained in the applicable
domestic or global ISS Proxy Voting Manual, as in effect from time to time. A
summary of the current applicable ISS proxy voting guidelines is attached to
these NB Voting Policies and Procedures as Exhibit A.
B) Except as set forth below, in the event the foregoing proxy voting
guidelines do not address how a proxy should be voted, the proxy will be voted
in accordance with ISS recommendations. In the event that ISS refrains from
making a recommendation, the Proxy Committee will follow the procedures set
forth in Section V, Paragraph D.
C) There may be circumstances under which the Chief Investment Officer, a
portfolio manager or other NB investment professional ("NB Investment
Professional") believes that it is in the best interest of a client or clients
to vote proxies in a manner inconsistent with the foregoing proxy voting
guidelines or in a manner inconsistent with ISS recommendations. In such
event, the procedures set forth in Section V, Paragraph C will be followed.
IV. PROXY VOTING PROCEDURES
A) NB will vote client proxies in accordance with a client's specific request
even if it is in a manner inconsistent with NB's policies and procedures. Such
specific requests must be made in writing by the individual client or by an
authorized officer, representative or named fiduciary of a client.
B) At the recommendation of the Proxy Committee, NB has engaged ISS as its
voting delegate to:
1) research and make voting determinations in accordance with the proxy voting
guidelines described in Section III;
2) vote and submit proxies in a timely manner;
3) handle other administrative functions of proxy voting;
4) maintain records of proxy statements received in connection with proxy votes
and provide copies of such proxy statements promptly upon request;
5) maintain records of votes cast; and
6) provide recommendations with respect to proxy voting matters in general.
C) Except in instances where clients have retained voting authority, NB will
instruct custodians of client accounts to forward all proxy statements and
materials received in respect of client accounts to ISS.
D) Notwithstanding the foregoing, NB retains final authority and fiduciary
responsibility for proxy voting.
V. CONFLICTS OF INTEREST
A) NB has obtained a copy of ISS Policies, Procedures and Practices regarding
potential conflicts of interest that could arise in ISS proxy voting services
to NB as a result of business conducted by ISS. NB believes that potential
conflicts of interest by ISS are minimized by these Policies, Procedures and
Practices, a copy of which is attached hereto as Exhibit B.
B) ISS will vote proxies in accordance with the proxy voting guidelines
described in Section III or as ISS recommends. NB believes that this process
is reasonably designed to address material conflicts of interest that may
arise between NB and a client as to how proxies are voted.
C) In the event that an NB Investment Professional believes that it is in the
best interest of a client or clients to vote proxies in a manner inconsistent
with the proxy voting guidelines described in Section III or in a manner
inconsistent with ISS recommendations, such NB Investment Professional will
contact a member of the Proxy Committee and complete and sign a questionnaire
in the form adopted by the Proxy Committee from time to time. Such
questionnaire will require specific information, including the reasons the NB
Investment Professional believes a proxy vote in this manner is in the best
interest of a client or clients and disclosure of specific ownership, business
or personal relationship or other matters that may raise a potential material
conflict of interest between NB and the client or clients with respect to the
voting of the proxy in that manner.
The Proxy Committee will review the questionnaire completed by the NB
Investment Professional and consider such other matters as it deems
appropriate to determine that there is no material conflict of interest
between NB and the client or clients with respect to the voting of the proxy
in that manner. The Proxy Committee shall document its consideration of such
other matters in a form adopted by the Proxy Committee from time to time.
In the event that the Proxy Committee determines that such vote will not
present a material conflict between NB and the client or clients, the Proxy
Committee will make a determination whether to vote such proxy as recommended
by the NB Investment Professional. In the event of a determination to vote the
proxy as recommended by the NB Investment Professional, an authorized member
of the Proxy Committee will instruct ISS to vote in such manner with respect
to such client or clients.
In the event that the Proxy Committee determines that the voting of a proxy as
recommended by the NB Investment Professional presents a material conflict of
interest between NB and the client or clients with respect to the voting of
the proxy, the Proxy Committee will: (i) take no further action, in which case
ISS shall vote such proxy in accordance with the proxy voting guidelines
described in Section III or as ISS recommends; (ii) disclose such conflict to
the client or clients and obtain written direction from the client or clients
as to how to vote the proxy; (iii) suggest that the client or clients engage
another party to determine how to vote the proxy; or (iv) engage another
independent third party to determine how to vote the proxy.
D) In the event that the proxy voting guidelines described in Section III do
not address how a proxy should be voted and ISS refrains from making a
recommendation as to how such proxy should be voted, the Proxy Committee will
make a determination as to how the proxy should be voted. After determining
how it believes the proxy should be voted, the Proxy Committee will consider
such matters as it deems appropriate to determine that there is no material
conflict of interest between NB and the client or clients with respect to the
voting of the proxy in that manner. The Proxy Committee shall document its
consideration of such matters in a form adopted by the Proxy Committee from
time to time.
In the event that the Proxy Committee determines that such vote will not
present a material conflict between NB and the client, an authorized member of
the Proxy Committee will instruct ISS to vote in such manner with respect to
such client or clients.
In the event that the Proxy Committee determines that such vote presents a
material conflict of interest between NB and the client or clients with
respect to the voting of the proxy, the Proxy Committee will: (i) disclose
such conflict to the client or clients and obtain written direction from the
client or clients as to how to vote the proxy; (ii) suggest that the client or
clients engage another party to determine how proxies should be voted; or
(iii) engage another independent third party to determine how proxies should
be voted.
E) Material conflicts cannot be resolved by simply abstaining from voting.
VI. RECORDKEEPING
NB will maintain records relating to the implementation of these proxy voting
policies and procedures, including:
1) a copy of these policies and procedures, which shall be made available to
clients upon request;
2) proxy statements received regarding client securities (which will be
satisfied by relying on EDGAR or ISS);
3) a record of each vote cast (which ISS maintains on NB's behalf);
4) a copy of each questionnaire completed by any NB Investment Professional
under Section V above;
5) any other document created by NB that was material to making a decision how
to vote proxies on behalf of a client or that memorializes the basis for that
decision; and
6) each written client request for proxy voting records and NB's written
response to any client request (written or oral) for such records.
Such proxy voting books and records shall be maintained in an easily accessible
place for a period of five years, the first two by the Proxy Committee member
who represents the Portfolio Administration Department.
VII. DISCLOSURE
Except as otherwise required by law or with the consent of the client, NB has a
general policy of not disclosing to any issuer or third party how NB or its
voting delegate voted a client's proxy.
Modified November 10, 2004
POST ADVISORY GROUP, LLC
PROXY AND CORPORATE ACTION VOTING
POLICIES AND PROCEDURES
POLICY
Post Advisory Group, LLC ("Post") acts as discretionary investment adviser for
various clients, including clients governed by the Employee Retirement Income
Security Act of 1974 ("ERISA") and registered open-end investment companies
("mutual funds"). While Post primarily manages fixed income securities, it does
often hold a limited amount of voting securities (or securities for which
shareholder action is solicited) in a client account. Thus, unless a client
(including a "named fiduciary" under ERISA) specifically reserves the right to
vote its own proxies or to take
shareholder action in other corporate actions, Post will vote all proxies or act
on all other actions received in sufficient time prior to their deadlines as
part of its full discretionary authority over the assets. Corporate actions may
include, for example and without limitation, tender offers or exchanges,
bankruptcy proceedings, and class actions.
When voting proxies or acting on corporate actions for clients, Post's utmost
concern is that all decisions be made solely in the best interest of the
shareholder (for ERISA accounts, plan beneficiaries and participants, in
accordance with the letter and spirit of ERISA). Post will act in a manner
deemed prudent and diligent and which is intended to enhance the economic value
of the assets of the account.
PURPOSE
The purpose of these Proxy Voting and Corporate Action Policies and Procedures
is to memorialize the procedures and policies adopted by Post to enable it to
comply with its accepted responsibilities and the requirements of Rule 206(4)-6
under the Investment Advisers Act of 1940, as amended ("Advisers Act").
PROCEDURES
Post's Operations Department is ultimately responsible for ensuring that all
proxies received by Post are voted in a timely manner and voted consistently
across all portfolios. Although many proxy proposals can be voted in accordance
with our established guidelines, we recognize that some proposals require
special consideration, which may dictate that we make an exception to our broad
guidelines.
Where a proxy proposal raises a material conflict of interest between Post's
interests and the client's, Post will disclose the conflict to the relevant
clients and obtain their consent to the proposed vote prior to voting the
securities. When a client does not respond to such a conflict disclosure
request or denies the request, Post will abstain from voting the securities held
by that client's account.
The Operations Department is also responsible for ensuring that all corporate
actions received by Post are addressed in a timely manner and consistent action
is taken across all portfolios.
RECORD KEEPING
In accordance with Rule 204-2 under the Advisers Act, Post will maintain for the
time periods set forth in the Rule (i) these proxy voting procedures and
policies, and all amendments thereto; (ii) all proxy statements received
regarding client securities (provided, however, that Post may rely on the proxy
statement filed on EDGAR as its records); (iii) a record of all votes cast on
behalf of clients; (iv) records of all client requests for proxy voting
information; (v) any documents prepared by the adviser that were material to
making a decision how to vote or that memorialized the basis for the decision;
and (vi) all records relating to requests made to clients regarding conflicts of
interest in voting the proxy.
Post will describe in its Part II of Form ADV (or other brochure fulfilling the
requirement of Rule 204-3) its proxy voting policies and procedures and the
manner in which clients may obtain information on how Post voted their
securities. Clients may obtain information on how their securities were voted
or a copy of our Policies and Procedures by written request addressed to Post.
Post will coordinate with the relevant mutual fund service providers to assist
in the provision of all information required to be filed by such mutual funds on
Form N-PX.
GUIDELINES
Each proxy issue will be considered individually. The following guidelines are
a partial list to be used in evaluating voting proposals contained in the proxy
statements, but will not be used as rigid rules.
VOTE AGAINST
a) Issues regarding Board entrenchment and anti-takeover measures such as the
following:
(i)Proposals to stagger board members' terms;
(ii)Proposals to limit the ability of shareholders to call special meetings;
(iii)Proposals to require super majority votes;
(iv)Proposals requesting excessive increases in authorized common or
preferred shares where management provides no explanation for the use or
need of these additional shares;
(v)Proposals regarding "fair price" provisions;
(vi)Proposals regarding "poison pill" provisions; and
(vii)Permitting "green mail."
b) Providing cumulative voting rights.
VOTE FOR
a) Election of directors recommended by management, except if there is a proxy
fight.
b) Election of auditors recommended by management, unless seeking to replace
if there exists a dispute over policies.
c) Date and place of annual meeting.
d) Rotation of annual meeting place.
e) Limitation on charitable contributions or fees paid to lawyers.
f) Ratification of directors' actions on routine matters since previous annual
meeting.
g) Confidential voting.
h) Limiting directors' liability.
CASE-BY-CASE
Proposals to:
(1 Pay directors solely in stock.
(2) Eliminate director mandatory retirement policy.
(3) Mandatory retirement age for directors.
(4) Rotate annual meeting location/date.
(5) Option and stock grants to management and directors.
(6) Allowing indemnification of directors and/or officers after reviewing the
applicable state laws and extent of protection requested.
PRINCIPAL GLOBAL INVESTORS, LLC ("PGI")*
POLICY ON PROXY VOTING
FOR INVESTMENT ADVISORY CLIENTS
PGI has adopted the policies and procedures set out below regarding the voting
of proxies on securities held in client accounts (the "Policy"). These policies
and procedures are designed to ensure that where PGI has the authority to vote
proxies, PGI complies with its legal, fiduciary, and contractual obligations.
GUIDING PRINCIPLES
Proxy voting and the analysis of corporate governance issues in general are
important elements of the portfolio management services we provide to our
advisory clients who have authorized us to address these matters on their
behalf. Our guiding principles in performing proxy voting are to make decisions
that (i) favor proposals that tend to maximize a company's shareholder value and
(ii) are not influenced by conflicts of interest. These principles reflect PGI's
belief that sound corporate governance will create a framework within which a
company can be managed in the interests of its shareholders.
PUBLIC EQUITY INVESTMENTS
To implement these guiding principles for investments in publicly-traded
equities, we follow the Institutional Shareholder Services ("ISS") Standard
Proxy Voting Guidelines (the "Guidelines"), except in circumstances as described
below. The Guidelines embody the positions and factors PGI generally considers
important in casting proxy votes. They address a wide variety of individual
topics, including, among other matters, shareholder voting rights, anti-takeover
defenses, board structures, the election of directors, executive and director
compensation,reorganizations, mergers, and various shareholder proposals.
Recognizing the complexity and fact-specific nature of many corporate governance
issues, the Guidelines often do not direct a particular voting outcome, but
instead identify factors ISS considers in determining how the vote should be
cast.
In connection with each proxy vote, ISS prepares a written analysis and
recommendation (an "ISS Recommendation") that reflects ISS's application of
Guidelines to the particular proxy issues. Where the Guidelines do not direct a
particular response and instead list relevant factors, the ISS Recommendation
will reflect ISS's own evaluation of the factors. As explained more fully below,
however, each PGI equity portfolio management team ("Portfolio Management Team")
may on any particular proxy vote decide to diverge from the Guidelines or an ISS
Recommendation. In such cases, our procedures require: (i) the requesting
Portfolio Management Team to set forth the reasons for their decision; (ii) the
approval of the lead Portfolio Manager for the requesting Portfolio Management
Team; (iii) notification to the Compliance Department and other appropriate PGI
personnel; (iv) a determination that the decision is not influenced by any
conflict of interest; and (v) the creation of a written record reflecting the
process.
The principles and positions reflected in this Policy are designed to guide us
in voting proxies, and not necessarily in making investment decisions. Portfolio
Management Teams base their determinations of whether to invest in a particular
company on a variety of factors, and while corporate governance may be one such
factor, it may not be the Senior management of PGI periodically reviews this
Policy, including our use of the Guidelines, to ensure it continues to be
consistent with our guiding principles.
Implementation by Portfolio Management Teams
GENERAL OVERVIEW
Our Portfolio Management Teams have decided to generally follow the Guidelines
and ISS Recommendations, based on such Portfolio Management Teams' investment
philosophy and approach to portfolio construction, as well as the evaluation of
ISS's services and methodology in analyzing shareholder and corporate governance
matters. Nevertheless, our Portfolio Management Teams retain the authority to
revisit this position, with respect to both their general approach to proxy
voting (subject to the approval of PGI senior management) and any specific
shareholder vote (subject to the approval process described in this policy).
Use of Third-Party Service Providers
We utilize independent service providers, such as ISS, to assist us in
developing substantive proxy voting positions. ISS also updates and revises the
Guidelines on a periodic basis, and any such revisions are reviewed by PGI to
determine whether they are consistent with our guiding principles. In addition,
ISS assists us in the proxy voting process by providing operational,
recordkeeping and reporting services.
PGI's decision to retain ISS to perform the services described in this Policy is
based principally on the view the services ISS provides will result in proxy
voting decisions that are consistent with our guiding principles. PGI management
is responsible for reviewing our relationship with ISS and for evaluating the
quality and effectiveness of the various services provided by ISS to assist us
in satisfying our proxy voting responsibilities.
PGI may hire other service providers to replace or supplement ISS with respect
to any of the services PGI currently receives from ISS. In addition, individual
Portfolio Management Teams may supplement the information and analyses ISS
provides from other sources.
Conflicts of Interest
Pursuant to this Policy, PGI has implemented procedures designed to prevent
conflicts of interest from influencing its proxy voting decisions. These
procedures include our use of the Guidelines and ISS Recommendations. Proxy
votes cast by PGI in accordance with the Guidelines and ISS Recommendations will
not be viewed as being the product of any conflicts of interest because PGI
casts such votes in accordance with a pre-determined policy based upon the
recommendations of an independent third party.
Our procedures also prohibit the influence of conflicts of interest where a
Portfolio Management Team decides to vote against an ISS Recommendation. In any
particular case, the approval process for a decision to vote against an ISS
Recommendation, as described above, may include consultation with the client
whose account may be affected by the conflict as well as an inquiry by PGI
management into potential conflicts of interest., PGI senior management will not
approve decisions that are based on the influence of such conflicts.
FIXED INCOME AND PRIVATE INVESTMENTS
Voting decisions with respect to client investments in fixed income securities
and the securities of privately-held issuers generally will be made by the
relevant portfolio managers based on their assessment of the particular
transactions or other matters at issue.
EXTERNAL MANAGERS
Where PGI places client assets with managers outside of PGI, whether through
separate accounts, funds-of-funds or other structures, such external managers
generally will be responsible for voting proxies in accordance with the
managers' own policies. PGI may, however, retain such responsibilities where it
deems appropriate.
CLIENT DIRECTION
Clients may choose to vote proxies themselves, in which case they must arrange
for their custodians to send proxy materials directly to them. PGI can also
accommodate individual clients that have developed their own guidelines with ISS
or another proxy service. Clients may also discuss with PGI the possibility of
receiving individualized reports or other individualized services regarding
proxy voting conducted on their behalf.
APPENDIX XV-A
PROXY VOTING POLICIES AND PROCEDURES FOR
PRINCIPAL INVESTORS FUND
PRINCIPAL VARIABLE CONTRACTS FUND
PRINCIPAL RETAIL FUNDS
(DECEMBER 15, 2003)
It is each fund's policy to delegate authority to its advisor or sub-advisor, as
appropriate, to vote proxy ballots relating to the fund's portfolio securities
in accordance with the advisor's or sub-advisor's voting policies and
procedures.
The advisor or sub-advisor must provide, on a quarterly basis:
1) Written affirmation that all proxies voted during the preceding calendar
quarter, other than those specifically identified by the advisor or
sub-advisor, were voted in a manner consistent with the advisor's or
sub-advisor's voting policies and procedures. In order to monitor the
potential effect of conflicts of interest of an advisor or sub-advisor, the
advisor or sub-advisor will identify any proxies the advisor or sub-advisor
voted in a manner inconsistent with its policies and procedures. The advisor
or sub-advisor shall list each such vote, explain why the advisor or
sub-advisor voted in a manner contrary to its policies and procedures, state
whether the advisor or sub-advisor's vote was consistent with the
recommendation to the advisor or sub-advisor of a third party and, if so,
identify the third party; and
2) Written notification of any changes to the advisor's or sub-advisor's proxy
voting policies and procedures made during the preceding calendar quarter.
The advisor or sub-advisor must provide, no later than July 31 of each year, the
following information regarding each proxy vote cast during the 12-month period
ended June 30 for each fund portfolio or portion of fund portfolio for which it
serves as investment advisor, in a format acceptable to fund management:
1) Identification of the issuer of the security;
2) Exchange ticker symbol of the security;
3) CUSIP number of the security;
4) The date of the shareholder meeting;
5) A brief description of the subject of the vote;
6) Whether the proposal was put forward by the issuer or a shareholder;
7) Whether and how the vote was cast;
8) Whether the vote was cast for or against management of the issuer.
PRINCIPAL REAL ESTATE INVESTORS, LLC
POLICY ON PROXY VOTING
FOR INVESTMENT ADVISORY CLIENTS
PREI has adopted the policies and procedures set out below regarding the voting
of proxies on securities held in client accounts (the "Policy"). These policies
and procedures are designed to ensure that where PREI has the authority to vote
proxies, PREI complies with its legal, fiduciary, and contractual obligations.
GUIDING PRINCIPLES
Proxy voting and the analysis of corporate governance issues in general are
important elements of the portfolio management services we provide to our
advisory clients who have authorized us to address these matters on their
behalf. Our guiding principles in performing proxy voting are to make decisions
that (i) favor proposals that tend to maximize a company's shareholder value and
(ii) are not influenced by conflicts of interest. These principles reflect
PREI's belief that sound corporate governance will create a framework within
which a company can be managed in the interests of its shareholders.
PUBLIC EQUITY INVESTMENTS
To implement these guiding principles for investments in publicly-traded
equities, we follow the Institutional Shareholder Services ("ISS") Standard
Proxy Voting Guidelines (the "Guidelines"), except in circumstances as described
below. The Guidelines embody the positions and factors PREI generally considers
important in casting proxy votes. They address a wide variety of individual
topics, including, among other matters, shareholder voting rights, anti-takeover
defenses, board structures, the election of directors, executive and director
compensation, reorganizations, mergers, and various shareholder proposals.
Recognizing the complexity and fact-specific nature of many corporate governance
issues, the Guidelines often do not direct a particular voting outcome, but
instead identify factors ISS considers in determining how the vote should be
cast.
In connection with each proxy vote, ISS prepares a written analysis and
recommendation (an "ISS Recommendation") that reflects ISS's application of
Guidelines to the particular proxy issues. Where the Guidelines do not direct a
particular response and instead list relevant factors, the ISS Recommendation
will reflect ISS's own evaluation of the factors. As explained more fully below,
however, each PREI equity portfolio management team ("Portfolio Management
Team") may on any particular proxy vote decide to diverge from the Guidelines or
an ISS Recommendation. In such cases, our procedures require: (i) the requesting
Portfolio Management Team to set forth the reasons for their decision; (ii) the
approval of the lead Portfolio Manager for the requesting Portfolio Management
Team; (iii) notification to the Compliance Department and other appropriate PREI
personnel; (iv) a determination that the decision is not influenced by any
conflict of interest; and (v) the creation of a written record reflecting the
process.
The principles and positions reflected in this Policy are designed to guide us
in voting proxies, and not necessarily in making investment decisions. Portfolio
Management Teams base their determinations of whether to invest in a particular
company on a variety of factors, and while corporate governance may be one such
factor, it may not be the primary consideration.
Senior management of PREI periodically reviews this Policy, including our use of
the Guidelines, to ensure it continues to be consistent with our guiding
principles.
Implementation by Portfolio Management Teams
General Overview
Our Portfolio Management Teams have decided to generally follow the Guidelines
and ISS Recommendations, based on such Portfolio Management Teams' investment
philosophy and approach to portfolio construction, as well as the evaluation of
ISS's services and methodology in analyzing shareholder and corporate governance
matters. Nevertheless, our Portfolio Management Teams retain the authority to
revisit this position, with respect to both their general approach to proxy
voting (subject to the approval of PREI senior management) and any specific
shareholder vote (subject to the approval process described in this policy).
Use of Third-Party Service Providers
We utilize independent service providers, such as ISS, to assist us in
developing substantive proxy voting positions. ISS also updates and revises the
Guidelines on a periodic basis, and any such revisions are reviewed by PREI to
determine whether they are consistent with our guiding principles. In addition,
ISS assists us in the proxy voting process by providing operational,
recordkeeping and reporting services.
PREI's decision to retain ISS to perform the services described in this Policy
is based principally on the view the services ISS provides will result in proxy
voting decisions that are consistent with our guiding principles. PREI
management is responsible for reviewing our relationship with ISS and for
evaluating the quality and effectiveness of the various services provided by ISS
to assist us in satisfying our proxy voting responsibilities.
PREI may hire other service providers to replace or supplement ISS with respect
to any of the services PREI currently receives from ISS. In addition, individual
Portfolio Management Teams may supplement the information and analyses ISS
provides from other sources.
Conflicts of Interest
Pursuant to this Policy, PREI has implemented procedures designed to prevent
conflicts of interest from influencing its proxy voting decisions. These
procedures include our use of the Guidelines and ISS Recommendations. Proxy
votes cast by PREI in accordance with the Guidelines and ISS Recommendations
will not be viewed as being the product of any conflicts of interest because
PREI casts such votes in accordance with a pre-determined policy based upon the
recommendations of an independent third party.
Our procedures also prohibit the influence of conflicts of interest where a
Portfolio Management Team decides to vote against an ISS Recommendation. In any
particular case, the approval process for a decision to vote against an ISS
Recommendation, as described above, may include consultation with the client
whose account may be affected by the conflict as well as an inquiry by PREI
management into potential conflicts of interest., PREI senior management will
not approve decisions that are based on the influence of such conflicts.
FIXED INCOME AND PRIVATE INVESTMENTS
Voting decisions with respect to client investments in fixed income securities
and the securities of privately-held issuers generally will be made by the
relevant portfolio managers based on their assessment of the particular
transactions or other matters at issue.
EXTERNAL MANAGERS
Where PREI places client assets with managers outside of PREI, whether through
separate accounts, funds-of-funds or other structures, such external managers
generally will be responsible for voting proxies in accordance with the
managers' own policies. PREI may, however, retain such responsibilities where it
deems appropriate.
CLIENT DIRECTION
Clients may choose to vote proxies themselves, in which case they must arrange
for their custodians to send proxy materials directly to them. PREI can also
accommodate individual clients that have developed their own guidelines with ISS
or another proxy service. Clients may also discuss with PREI the possibility of
receiving individualized reports or other individualized services regarding
proxy voting conducted on their behalf.
Pyramis Global Advisors LLC Proxy Voting Guidelines March 2007
I. General Principles
A. Voting of shares will be conducted in a manner consistent with the
best interests of clients as follows: (i) securities of a portfolio
company will generally be voted in a manner consistent with the
guidelines; and (ii) voting will be done without regard to any other
Pyramis or Fidelity companies' relationship, business or otherwise,
with that portfolio company.
B. The FMR Investment & Advisor Compliance Department votes proxies on
behalf of the clients of Pyramis. In the event an Investment & Advisor
Compliance employee has a personal conflict with a portfolio company
or an employee or director of a portfolio company, that employee will
withdraw from making any proxy voting decisions with respect to that
portfolio company. A conflict of interest arises when there are
factors that may prompt one to question whether a Fidelity and/or
Pyramis employee is acting solely on the best interests of Pyramis,
Fidelity and their customers. Employees are expected to avoid
situations that could present even the appearance of a conflict
between their interests and the interests of Pyramis, Fidelity and
their customers.
C. Except as set forth herein, Pyramis will generally vote in favor of
routine management proposals.
D. Non-routine proposals will generally be voted in accordance with the
guidelines.
E. Non-routine proposals not covered by the guidelines or involving other
special circumstances will be evaluated on a case-by-case basis with
input from the appropriate Pyramis analyst or portfolio manager, as
applicable, subject to review by an attorney within the General
Counsel's office and a member of senior management within FMR's
Investment and Advisor Compliance Department. A significant pattern of
such proposals or other special circumstances will be referred to the
Fund Board Proxy Voting Committee or its designee.
F. Pyramis will vote on shareholder proposals not specifically addressed
by the guidelines based on an evaluation of a proposal's likelihood to
enhance the economic returns or profitability of the portfolio company
or to maximize shareholder value. Where information is not readily
available to analyze the economic impact of the proposal, Pyramis will
generally abstain.
G. Many clients invest in voting securities issued by companies that are
domiciled outside the United States and are not listed on a U.S.
securities exchange. Corporate governance standards, legal or
regulatory requirements and disclosure practices in foreign countries
can differ from those in the United States. When voting proxies
relating to non-U.S. securities, Pyramis will generally evaluate
proposals in the context of these guidelines, but Pyramis may, where
applicable and feasible, take into consideration differing laws and
regulations in the relevant foreign market in determining how to vote
shares.
H. In certain non-U.S. jurisdictions, shareholders voting shares of a
portfolio company may be restricted from trading the shares for a
period of time around the shareholder meeting date. Because such
trading restrictions can hinder portfolio management and could result
in a loss of liquidity for a client, Pyramis will generally not vote
proxies in circumstances where such restrictions apply. In addition,
certain non-U.S. jurisdictions require voting shareholders to disclose
current share ownership on a fund-by-fund basis. When such disclosure
requirements apply, Pyramis will generally not vote proxies in order
to safeguard fund holdings information.
I. Where a management-sponsored proposal is inconsistent with the
guidelines, Pyramis may receive a company's commitment to modify the
proposal or its practice to conform to the guidelines, and Pyramis
will generally support management based on this commitment. If a
company subsequently does not abide by its commitment, Pyramis will
generally withhold authority for the election of directors at the next
election.
II. Definitions (as used in this document)
A. Anti-Takeover Provision - includes fair price amendments; classified
boards; "blank check" preferred stock; golden and tin parachutes;
supermajority provisions; Poison Pills; and any other provision that
eliminates or limits shareholder rights.
B. Golden parachute - accelerated options and/or employment contracts for
officers and directors that will result in a lump sum payment of more
than three times annual compensation (salary and bonus) in the event
of termination.
C. Tin Parachute - accelerated options and/or employment contracts for
employees beyond officers and directors that will result in a lump sum
payment in the event of termination.
D. Greenmail - payment of a premium to repurchase shares from a
shareholder seeking to take over a company through a proxy contest or
other means.
E. Sunset Provision - a condition in a charter or plan that specifies an
expiration date.
F. Permitted Bid Feature - a provision suspending the application of a
Poison Pill, by shareholder referendum, in the event a potential
acquirer announces a bona fide offer for all outstanding shares.
G. Poison Pill- a strategy employed by a potential take-over / target
company to make its stock less attractive to an acquirer. Poison Pills
are generally designed to dilute the acquirer's ownership and value in
the event of a take-over.
H. Large Capitalization Company - a company included in the Russell 1000
stock index.
I. Small Capitalization Company - a company not included in the Russell
1000 stock index that is not a Micro-Capitalization Company.
J. Micro-Capitalization Company - a company with market capitalization
under US $300 million.
III. Directors
A. Incumbent Directors
Pyramis will generally vote in favor of incumbent and nominee
directors except where one or more such directors clearly appear to
have failed to exercise reasonable judgment.
Pyramis will also generally withhold authority for the election of
all directors or directors on responsible committees if:
1. An Anti-Takeover Provision was introduced, an Anti-Takeover
Provision was extended, or a new Anti-Takeover Provision was
adopted upon the expiration of an existing Anti-Takeover
Provision, without shareholder approval except as set forth
below.
With respect to Poison Pills, however, Pyramis will consider not
withholding authority on the election of directors if all of the
following conditions are met when a Poison Pill is introduced,
extended, or adopted:
a. The Poison Pill includes a Sunset Provision of less than 5
years;
b. The Poison Pill includes a Permitted Bid Feature;
c. The Poison Pill is linked to a business strategy that will
result in greater value for the shareholders, and
d. Shareholder approval is required to reinstate the Poison
Pill upon expiration.
Pyramis will also consider not withholding authority on the
election of directors when one or more of the conditions above
are not met if a board is willing to strongly consider seeking
shareholder ratification of, or adding above conditions noted a.
and b. to an existing Poison Pill. In such a case, if the company
does not take appropriate action prior to the next annual
shareholder meeting, Pyramis will withhold authority on the
election of directors.
2. The company refuses, upon request by Pyramis, to amend the Poison
Pill to allow Fidelity to hold an aggregate position of up to 20%
of a company's total voting securities and of any class of voting
securities.
3. Within the last year and without shareholder approval, a
company's board of directors or compensation committee has
repriced outstanding options.
4. The company failed to act in the best interests of shareholders
when approving executive compensation, taking into accounts such
factors as: (i) whether the company used an independent
compensation committee; (ii) whether the compensation committee
engaged independent compensation consultants; and (iii) whether
the company has admitted to or settled a regulatory proceeding
relating to options backdating.
5. To gain Pyramis' support on a proposal, the company made a
commitment to modify a proposal or practice to conform to these
guidelines and the company has failed to act on that commitment.
6. The director attended fewer than 75% of the aggregate number of
meetings of the board or its committees on which the director
served during the company's prior fiscal year, absent extenuating
circumstances.
B. Indemnification
Pyramis will generally vote in favor of charter and by-law amendments
expanding the indemnification of directors and/or limiting their
liability for breaches of care unless Pyramis is otherwise
dissatisfied with the performance of management or the proposal is
accompanied by Anti-Takeover Provisions.
C. Independent Chairperson
Pyramis will generally vote against shareholder proposals calling for
or recommending the appointment of a non-executive or independent
chairperson. However, Pyramis will consider voting for such proposals
in limited cases if, based upon particular facts and circumstances,
appointment of a non-executive or independent chairperson appears
likely to further the interests of shareholders and to promote
effective oversight of management by the board of directors.
D. Majority Director Elections
Pyramis will generally vote in favor of proposals calling for
directors to be elected by an affirmative majority of votes cast in a
board election, provided that the proposal allows for plurality
voting standard in the case of contested elections (i.e., where there
are more nominees than board seats). Pyramis may consider voting
against such shareholder proposals where a company's board has
adopted an alternative measure, such as a director resignation
policy, that provides a meaningful alternative to the majority voting
standard and appropriately addresses situations where an incumbent
director fails to receive the support of a majority of the votes cast
in an uncontested election.
IV. Compensation
A. Equity Award Plans (including stock options, restricted stock awards,
and other stock awards).
Pyramis will generally vote against Equity Award Plans or amendments
to authorize additional shares under such plans if:
1. (a) The dilution effect of the shares outstanding and available
for issuance pursuant to all plans, plus any new share requests
is greater than 10% for a Large Capitalization Company, 15% for a
Small Capitalization Company or 20% for a Micro-Capitalization
Company; and (b) there were no circumstances specific to the
company or the plans that lead Pyramis to conclude that the level
of dilution in the plan or the amendments is acceptable.
2. In the case of stock option plans, (a) the offering price of
options is less than 100% of fair market value on the date of
grant, except that the offering price may be as low as 85% of
fair market value if the discount is expressly granted in lieu of
salary or cash bonus; (b) the plan's terms allow repricing of
underwater options; or (c) the board/committee has repriced
options outstanding under the plan in the past two years.
3. The plan may be materially altered without shareholder approval,
including increasing the benefits accrued to participants under
the plan; increasing the number of securities which may be issued
under the plan; modifying the requirements for participation in
the plan; or including a provision allowing the Board to lapse or
waive restrictions at its discretion.
4. Awards to non-employee directors are subject to management
discretion.
5. In the case of stock awards, the restriction period, or holding
period after exercise, is less than 3 years for
non-performance-based awards, and less than 1 year for
performance-based awards.
Pyramis will consider approving an Equity Award Plan or an amendment
to authorize additional shares under such plan if, without complying
with the guidelines immediately above, the following two conditions
are met:
1. The shares are granted by a compensation committee composed
entirely of independent directors; and
2. The shares are limited to 5% (large capitalization company) and
10% (small capitalization company) of the shares authorized for
grant under the plan.
B. Equity Exchanges and Repricing
Pyramis will generally vote in favor of a management proposal to
exchange shares or reprice outstanding options if the proposed
exchange or repricing is consistent with the interests of
shareholders, taking into account such factors as:
1. Whether the proposal excludes senior management and directors;
2. Whether the equity proposed to be exchanged or repriced exceeded
Pyramis' dilution thresholds when initially granted;
3. Whether the exchange or repricing proposal is value neutral to
shareholders based upon an acceptable pricing model;
4. The company's relative performance compared to other companies
within the relevant industry or industries;
5. Economic and other conditions affecting the relevant industry or
industries in which the company competes; and
6. Any other facts or circumstances relevant to determining whether
an exchange or repricing proposal is consistent with the
interests of shareholders.
C. Employee Stock Purchase Plans
Pyramis will generally vote against employee stock purchase plans if
the plan violates any of the criteria in section IV(A) above, except
that the minimum stock purchase price may be equal to or greater than
85% of the stock's fair market value if the plan constitutes a
reasonable effort to encourage broad based participation in the
company's equity. In the case of non-U.S. company stock purchase
plans, Pyramis may permit a lower minimum stock purchase price equal
to the prevailing "best practices" in the relevant non-U.S. market,
provided that the minimum stock purchase price must be at least 75% of
the stock's fair market value.
D. Employee Stock Ownership Plans (ESOPs)
Pyramis will generally vote in favor of non-leveraged ESOPs. For
leveraged ESOPs, Pyramis may examine the company's state of
incorporation, existence of supermajority vote rules in the charter,
number of shares authorized for the ESOP, and number of shares held by
insiders. Pyramis may also examine where the ESOP shares are purchased
and the dilution effect of the purchase. Pyramis will generally vote
against leveraged ESOPs if all outstanding loans are due immediately
upon change in control.
E. Executive Compensation
Pyramis will generally vote against management proposals on
stock-based compensation plans or other compensation plans if such
proposals are inconsistent with the interests of shareholders, taking
into account such factors as: (i) whether the company has an
independent compensation committee; and (ii) whether the compensation
committee has authority to engage independent compensation
consultants.
F. Bonus Plans and Tax Deductibility Proposals
Pyramis will generally vote in favor of cash and stock incentive plans
that are submitted for shareholder approval in order to qualify for
favorable tax treatment under Section 162(m) of the Internal Revenue
Code, provided that the plan includes well defined and appropriate
performance criteria, and with respect to any cash component, that the
maximum award per participant is clearly stated and is not
unreasonable or excessive.
V. Anti-Takeover Provisions
Pyramis will generally vote against a proposal to adopt or approve the
adoption of an Anti-Takeover Provision unless:
A. The Poison Pill includes the following features:
1. A sunset provision of no greater than 5 years;
2. Linked to a business strategy that is expected to result in
greater value for the shareholders;
3. Requires shareholder approval to be reinstated upon expiration or
if amended;
4. Contains a Permitted Bid Feature; and
5. Allows Fidelity to hold an aggregate position of up to 20% of a
company's total voting securities and of any class of voting
securities.
B. An Anti-Greenmail proposal that does not include other Anti-Takeover
Provisions; or
C. It is a fair price amendment that considers a two-year price history
or less.
Pyramis will generally vote in favor of proposals to eliminate
Anti-Takeover Provisions. In the case of proposals to declassify a
board of directors, Pyramis will generally vote against such a
proposal if the issuer's Articles of Incorporation or applicable
statutes include a provision whereby a majority of directors may be
removed at any time, with or without cause, by written consent, or
other reasonable procedures, by a majority of shareholders entitled to
vote for the election of directors.
VI. Capital Structure / Incorporation
A. Increases in Common Stock
Pyramis will generally vote against a provision to increase a
Company's common stock if such increase will result in a total number
of authorized shares greater than 3 times the current number of
outstanding and scheduled to be issued shares, including stock
options, except in the case of real estate investment trusts, where an
increase that will result in a total number of authorized shares up to
5 times the current number of outstanding and scheduled to be issued
shares is generally acceptable.
B. New Classes of Shares
Pyramis will generally vote against the introduction of new classes of
stock with differential voting rights.
C. Cumulative Voting Rights
Pyramis will generally vote against the introduction and in favor of
the elimination of cumulative voting rights.
D. Acquisition or Business Combination Statutes
Pyramis will generally vote in favor of proposed amendments to a
company's certificate of incorporation or by-laws that enable the
company to opt out of the control shares acquisition or business
combination statutes.
E. Incorporation or Reincorporation in Another State or Country
Pyramis will generally vote against shareholder proposals calling for,
or recommending that, a portfolio company reincorporate in the United
States and vote in favor of management proposals to reincorporate in a
jurisdiction outside the United States if (i) it is lawful under
United States, state and other applicable law for the company to be
incorporated under the laws of the relevant foreign jurisdiction and
to conduct its business and (ii) reincorporating or maintaining a
domicile in the United States would likely give rise to adverse tax or
other economic consequences detrimental to the interests of the
company and its shareholders. However, Pyramis will consider
supporting such shareholder proposals and opposing such management
proposals in limited cases if, based upon particular facts and
circumstances, reincorporating in or maintaining a domicile in the
relevant foreign jurisdiction gives rise to significant risks or other
potential adverse consequences that appear reasonably likely to be
detrimental to the interests of the company or its shareholders.
VII. Auditors
A. Pyramis will generally vote against shareholder proposals calling for
or recommending periodic rotation of a portfolio company's auditor.
Pyramis will consider voting for such proposals in limited cases if,
based upon particular facts and circumstances, a company's board of
directors and audit committee clearly appear to have failed to
exercise reasonable business judgment in the selection of the
company's auditor.
B. Pyramis will generally vote against shareholder proposals calling for
or recommending the prohibition or limitation of the performance of
non-audit services by a portfolio company's auditor. Pyramis will also
generally vote against shareholder proposals calling for or
recommending removal of a company's auditor due to, among other
reasons, the performance of non-audit work by the auditor. Pyramis
will consider voting for such proposals in limited cases if, based
upon particular facts and circumstances, a company's board of
directors and audit committee clearly appear to have failed to
exercise reasonable business judgment in the oversight of the
performance of the auditor for audit or non-audit services for the
company.
VIII. Shares of Investment Companies
A. If applicable, when a Fidelity Fund invests in an underlying Fidelity
fund, shares will be voted in the same proportion as all other
shareholders of such underlying fund or class ("echo voting").
B. Certain client may invest in shares of Fidelity Central Funds. Central
Fund shares, which are held exclusively by Fidelity funds or accounts
managed by Pyramis or an FMR affiliate, will be voted in favor of
proposals recommended by the Central Funds' Board of Trustees.
IX. Other A. Voting Process
A. Pyramis will generally vote in favor of proposals to adopt
confidential voting and independent vote tabulation practices.
B. Regulated Industries
Voting of shares in securities of any regulated industry (e.g., U.S.
banking) organization shall be conducted in a manner consistent with
conditions that may be specified by the industry's regulator (e.g.,
the Federal Reserve Board) for a determination under applicable law
(e.g., federal banking law) that no client or group of clients has
acquired control of such organization.
SPECTRUM ASSET MANAGEMENT, INC.
POLICY ON PROXY VOTING
FOR INVESTMENT ADVISORY CLIENTS
GENERAL POLICY
Spectrum, an investment adviser registered with the Securities and Exchange
Commission, acts as investment advisor for various types of client accounts
(e.g. employee benefit plans, governmental plans, mutual funds, insurance
company separate accounts, corporate pension plans, endowments and foundations).
While Spectrum receives few proxies for the preferred shares it manages,
Spectrum nonetheless will, when delegated the authority by a client, vote these
shares per the following policy voting standards and processes:
STANDARDS:
Spectrum's standards aim to ensure the following in keeping with the best
interests of its clients:
. . That Spectrum act solely in the interest of clients in providing for
ultimate long-term stockholder value.
. . That Spectrum act without undue influence from individuals or groups who
may have an economic interest in the outcome of a proxy vote.
. . That custodian bank is aware of our fiduciary duty to vote proxies on
behalf of others - Spectrum relies on the best efforts of its custodian bank
to deliver all proxies we are entitled to vote.
. . That Spectrum will exercise its right to vote all proxies on behalf of its
clients (or permit clients to vote their interest, as the case(s) may be).
. . That Spectrum will implement a reasonable and sound basis to vote proxies.
PROCESSES:
A. Following ISS' Recommendations
Spectrum has selected Institutional Shareholder Services (ISS) to assist it with
its proxy voting responsibilities. Spectrum follows ISS Standard Proxy Voting
guidelines (the "Guidelines"). The Guidelines embody the positions and factors
Spectrum generally considers important in casting proxy votes. They address a
wide variety of individual topics, including, among other matters, shareholder
voting rights, anti-takeover defenses, board structures, the election of
directors, executive and director compensation, reorganizations, mergers, and
various shareholder proposals. Recognizing the complexity and fact-specific
nature of many corporate governance issues, the Guidelines often do not direct a
particular voting outcome, but instead identify factors ISS considers in
determining how the vote should be cast.
In connection with each proxy vote, ISS prepares a written analysis and
recommendation (an "ISS Recommendation") that reflects ISS's application of
Guidelines to the particular proxy issues. Where the Guidelines do not direct a
particular response and instead list relevant factors, the ISS Recommendation
will reflect ISS's own evaluation of the factors. Spectrum may on any particular
proxy vote decide to diverge from the Guidelines or an ISS Recommendation. In
such cases, our procedures require: (i) the requesting Portfolio Manager to set
forth the reasons for their decision; (ii) the approval of the Chief Investment
Officer; (iii) notification to the Compliance Department and other appropriate
Principal Global Investors personnel; (iv) a determination that the decision is
not influenced by any conflict of interest; and (v) the creation of a written
record reflecting the process.
Spectrum generally votes proxies in accordance with ISS' recommendations. When
Spectrum follows ISS' recommendations, it need not follow the conflict of
interest procedures in Section B, below.
From time to time ISS may have a business relationship or affiliation with one
or more issuers held in Spectrum client accounts, while also providing voting
recommendations on these issuers' securities. Because this practice may present
a conflict of interest for ISS, Spectrum's Chief Compliance Officer will require
from ISS at least annually additional information, or a certification that ISS
has adopted policies and procedures to detect and mitigate such conflicts of
interest in issuing voting recommendations. Spectrum may obtain voting
recommendations from two proxy voting services as an additional check on the
independence of the ISS' voting recommendations.
B. Disregarding ISS' Recommendations
Should Spectrum determine not to follow ISS' recommendation for a particular
proxy, Spectrum will use the following procedures for identifying and resolving
a material conflict of interest, and will use the Proxy Voting Guidelines
(below) in determining how to vote.
Spectrum will classify proxy vote issues into three broad categories: Routine
Administrative Items, Special Interest Issues, and Issues Having the Potential
for Significant Economic Impact. Once the Senior Portfolio Manager has analyzed
and identified each issue as belonging in a particular category, and disclosed
the conflict of interests to affected clients and obtained their consents prior
to voting, Spectrum will cast the client's vote(s) in accordance with the
philosophy and decision guidelines developed for that category. New and
unfamiliar issues are constantly appearing in the proxy voting process. As new
issues arise, we will make every effort to classify them among the following
three categories. If we believe it would be informative to do so, we may revise
this document to reflect how we evaluate such issues.
Due to timing delays, logistical hurdles and high costs associated with
procuring and voting international proxies, Spectrum has elected to approach
international proxy voting on the basis of achieving "best efforts at a
reasonable cost."
As a fiduciary, Spectrum owes its clients an undivided duty of loyalty. We
strive to avoid even the appearance of a conflict that may compromise the trust
our clients have placed in it.
Identifying a Conflict of Interest. There may be a material conflict of
-----------------------------------
interest when Spectrum votes a proxy solicited by an issuer whose retirement
plan or fund we manage or with whom Spectrum, an affiliate, or an officer or
director of Spectrum or of an affiliate has any other material business or
personal relationship that may affect how we vote the issuer's proxy. To avoid
any perceived material conflict of interest, the following procedures have been
established for use when Spectrum encounters a potential material conflict to
ensure that voting decisions are based on a clients' best interest and are not
the product of a material conflict.
Monitoring for Conflicts of Interest. All employees of Spectrum are responsible
-------------------------------------
for monitoring for conflicts of interest and referring any that may be material
to the CCO for resolution. At least annually, the CCO, will take reasonable
steps to evaluate the nature of Spectrum's material business relationships (and
those of its affiliates) with any company whose preferred securities are held in
client accounts (a "portfolio company") to assess which, if any, could give rise
to a conflict of interest. CCO's review will focus on the following three
categories:
. . Business Relationships - The CCO will consider whether Spectrum (or an
affiliate) has a substantial business relationship with a portfolio company
or a proponent of a proxy proposal relating to the portfolio company (e.g.,
an employee group), such that failure to vote in favor of management (or the
proponent) could harm the adviser's relationship with the company (or
proponent). For example, if Spectrum manages money for the portfolio
company or an employee group, manages pension assets, leases office space
from the company, or provides other material services to the portfolio
company, the CCO will review whether such relationships may give rise to a
conflict of interest.
. . Personal Relationships - The CCO will consider whether any senior
executives or portfolio managers (or similar persons at Spectrum's
affiliates) have a personal relationship with other proponents of proxy
proposals, participants in proxy contests, corporate directors, or
candidates for directorships that might give rise to a conflict of interest.
. . Familial Relationships - The CCO will consider whether any senior
executives or portfolio managers (or similar persons at Spectrum's
affiliates) have a familial relationship relating to a portfolio company
(e.g., a spouse or other relative who serves as a director of a portfolio
company, is a candidate for such a position, or is employed by a portfolio
company in a senior position).
In monitoring for conflicts of interest, the CCO will consider all information
reasonably available to it about any material business, personal, or familial
relationship involving Spectrum (and its affiliates) and a portfolio company,
including the following:
. . A list of clients that are also public companies, which is prepared and
updated by the Operations Department and retained in the Compliance
Department.
. . Publicly available information.
. . Information generally known within Spectrum.
. . Information actually known by senior executives or portfolio managers.
When considering a proxy proposal, investment professionals involved in the
decision-making process must disclose any potential material conflict that
they are aware of to CCO prior to any substantive discussion of a proxy
matter.
.Information obtained periodically from those persons whom CCO reasonably
believes could be affected by a conflict arising from a personal or familial
relationship (e.g., portfolio managers, senior management).
The CCO may, at her discretion, assign day-to-day responsibility for monitoring
for conflicts to a designated person. With respect to monitoring of affiliates,
the CCO in conjunction with PGI's CCO and/or Director of Compliance may rely on
information barriers between Spectrum and its affiliates in determining the
scope of its monitoring of conflicts involving affiliates.
Determining Whether a Conflict of Interest is "Material" - On a regular basis,
--------------------------------------------------------
CCO will monitor conflicts of interest to determine whether any may be
"material" and therefore should be referred to PGI for resolution. The SEC has
not provided any specific guidance as to what types of conflicts may be
"material" for purposes of proxy voting, so therefore it would be appropriate to
look to the traditional materiality analysis under the federal securities laws,
i.e., that a "material" matter is one that is reasonably likely to be viewed as
important by the average shareholder.
Whether a conflict may be material in any case will, of course, depend on the
facts and circumstances. However, in considering the materiality of a conflict,
Spectrum will use the following two-step approach:
1) Financial Materiality - The most likely indicator of materiality in most
cases will be the dollar amount involved with the relationship in question.
For purposes of proxy voting, each committee will presume that a conflict is
not material unless it involves at least 5% of Spectrum's annual revenues or a
minimum dollar amount $1,000,000. Different percentages or dollar amounts may
be used depending on the proximity of the conflict (e.g., a higher number if
the conflict arises through an affiliate rather than directly with Spectrum).
2) Non-Financial Materiality - A non-financial conflict of interest might be
material (e.g., conflicts involving personal or familial relationships) and
should be evaluated on the facts of each case.
If the CCO has any question as to whether a particular conflict is material, it
should presume the conflict to be material and refer it to the PGI's CCO for
resolution. As in the case of monitoring conflicts, the CCO may appoint a
designated person or subgroup of Spectrum's investment team to determine whether
potential conflicts of interest may be material.
Resolving a Material Conflict of Interest - When an employee of Spectrum refers
a potential material conflict of interest to the CCO, the CCO will determine
whether a material conflict of interest exists based on the facts and
circumstances of each particular situation. If the CCO determines that no
material conflict of interest exists, no further action is necessary and the CCO
will notify management accordingly. If the CCO determines that a material
conflict exists, CCO must disclose the conflict to affected clients and obtain
consent from each to the manner in which Spectrum proposes to vote.
Clients may obtain information about how we voted proxies on their behalf by
contacting Spectrum's Compliance Department.
PROXY VOTING GUIDELINES
-----------------------
CATEGORY I: ROUTINE ADMINISTRATIVE ITEMS
-----------------------------------------
Philosophy: Spectrum is willing to defer to management on matters of a routine
-----------
administrative nature. We feel management is best suited to make those
decisions which are essential to the ongoing operation of the company and which
do not have a major economic impact on the corporation and its shareholders.
Examples of issues on which we will normally defer to management's
recommendation include:
1) selection of auditors
2) increasing the authorized number of common shares
3) election of unopposed directors
CATEGORY II: SPECIAL INTEREST ISSUES
-------------------------------------
Philosophy: While there are many social, political, environmental and other
-----------
special interest issues that are worthy of public attention, we do not believe
the corporate proxy process is the appropriate arena in which to achieve gains
in these areas. In recent history, proxy issues of this sort have included such
matters as sales to the military, doing business in South Africa, and
environmental responsibility. Our primary responsibility in voting proxies is
to provide for the greatest long-term value for Spectrum's clients. We are
opposed to proposals which involve an economic cost to
the corporation, or which restrict the freedom of management to operate in the
best interest of the corporation and its shareholders. However, in general we
will abstain from voting on shareholder social, political and environmental
proposals because their long-term impact on share value cannot be calculated
with any reasonable degree of confidence.
CATEGORY III: ISSUES HAVING THE POTENTIAL FOR SIGNIFICANT ECONOMIC IMPACT
--------------------------------------------------------------------------
Philosophy: Spectrum is not willing to defer to management on proposals which
-----------
have the potential for major economic impact on the corporation and the value of
its shares. We believe such issues should be carefully analyzed and decided by
the owners of the corporation. Presented below are examples of issues which we
believe have the potential for significant economic impact on shareholder value.
1) Classification of Board of Directors. Rather than electing all directors
-------------------------------------
annually, these provisions stagger a board, generally into three annual
classes, and call for only one-third to be elected each year. Staggered
boards may help to ensure leadership continuity, but they also serve as
defensive mechanisms. Classifying the board makes it more difficult to change
control of a company through a proxy contest involving election of directors.
In general, we vote on a case by case basis on proposals for staggered
boards, but generally favor annual elections of all directors.
2) Cumulative Voting of Directors. Most corporations provide that shareholders
------------------------------
are entitled to cast one vote for each director for each share owned - the one
share, one vote standard. The process of cumulative voting, on the other
hand, permits shareholders to distribute the total number of votes they have
in any manner they wish when electing directors. Shareholders may possibly
elect a minority representative to a corporate board by this process, ensuring
representation for all sizes of shareholders. Outside shareholder involvement
can encourage management to maximize share value. We generally support
cumulative voting of directors.
3) Prevention of Greenmail. These proposals seek to prevent the practice of
------------------------
"greenmail", or targeted share repurchases by management of company stock from
individuals or groups seeking control of the company. Since only the hostile
party receives payment, usually at a substantial premium over the market value
of its shares, the practice discriminates against all other shareholders. By
making greenmail payments, management transfers significant sums of corporate
cash to one entity, most often for the primary purpose of saving their jobs.
Shareholders are left with an asset-depleted and often less competitive
company. We think that if a corporation offers to buy back its stock, the
offer should be made to all shareholders, not just to a select group or
individual. We are opposed to greenmail and will support greenmail prevention
proposals.
4) Supermajority Provisions. These corporate charter amendments generally
-------------------------
require that a very high percentage of share votes (70-81%) be cast
affirmatively to approve a merger, unless the board of directors has approved
it in advance. These provisions have the potential to give management veto
power over merging with another company, even though a majority of
shareholders favor the merger. In most cases we believe requiring
supermajority approval of mergers places too much veto power in the hands of
management and other minority shareholders, at the expense of the majority
shareholders, and we oppose such provisions.
5) Defensive Strategies. These proposals will be analyzed on a case by case
---------------------
basis to determine the effect on shareholder value. Our decision will be
based on whether the proposal enhances long-term economic value.
6) Business Combinations or Restructuring. These proposals will be analyzed on
---------------------------------------
a case by case basis to determine the effect on shareholder value. Our
decision will be based on whether the proposal enhances long-term economic
value.
7) Executive and Director Compensation. These proposals will be analyzed on a
-----------------------------------
case by case basis to determine the effect on shareholder value. Our decision
will be based on whether the proposal enhances long-term economic value.
Policy Established May, 2003
Revised January, 2006
T. ROWE PRICE ASSOCIATES, INC
T. ROWE PRICE INTERNATIONAL, INC
T. ROWE PRICE GLOBAL INVESTMENT SERVICES, LTD
T. ROWE PRICE GLOBAL ASSET MANAGEMENT, LTD
PROXY VOTING POLICIES AND PROCEDURES
RESPONSIBILITY TO VOTE PROXIES
T. Rowe Price Associates, Inc., T. Rowe Price International, Inc., T.
Rowe Price Global Investment Services Limited, and T. Rowe Price Global Asset
Management Limited ("T. Rowe Price") recognize and adhere to the principle that
one of the privileges of owning stock in a company is the right to vote in the
election of the company's directors and on matters affecting certain important
aspects of the company's structure and operations that are submitted to
shareholder vote. As an investment adviser with a fiduciary responsibility to
its clients, T. Rowe Price analyzes the proxy statements of issuers whose stock
is owned by the U.S.-registered investment companies which it sponsors and
serves as investment adviser ("T. Rowe Price Funds") and by institutional and
private counsel clients who have requested that T. Rowe Price be involved in the
proxy process. T. Rowe Price has assumed the responsibility for voting proxies
on behalf of the T. Rowe Price Funds and certain counsel clients who have
delegated such responsibility to T. Rowe Price. In addition, T. Rowe Price makes
recommendations regarding proxy voting to counsel clients who have not delegated
the voting responsibility but who have requested voting advice.
T. Rowe Price has adopted these Proxy Voting Policies and Procedures
("Policies and Procedures") for the purpose of establishing formal policies and
procedures for performing and documenting its fiduciary duty with regard to the
voting of client proxies.
Fiduciary Considerations. It is the policy of T. Rowe Price that
decisions with respect to proxy issues will be made in light of the anticipated
impact of the issue on the desirability of investing in the portfolio company
from the viewpoint of the particular client or Price Fund. Proxies are voted
solely in the interests of the client, Price Fund shareholders or, where
employee benefit plan assets are involved, in the interests of plan participants
and beneficiaries. Our intent has always been to vote proxies, where possible to
do so, in a manner consistent with our fiduciary obligations and
responsibilities. Practicalities and costs involved with international investing
may make it impossible at times, and at other times disadvantageous, to vote
proxies in every instance.
Consideration Given Management Recommendations. One of the primary
factors T. Rowe Price considers when determining the desirability of investing
in a particular company is the quality and depth of its management. The Policies
and Procedures were developed with the recognition that a company's management
is entrusted with the day-to-day operations of the company, as well as its
long-term direction and strategic planning, subject to the oversight of the
company's board of directors. Accordingly, T. Rowe Price believes that the
recommendation of management on most issues should be given weight in
determining how proxy issues should be voted. However, the position of the
company's management will not be supported in any situation where it is found to
be not in the best interests of the client, and the portfolio manager may always
elect to vote contrary to management when he or she believes a particular proxy
proposal may adversely affect the investment merits of owning stock in a
portfolio company.
ADMINISTRATION OF POLICIES AND PROCEDURES
Proxy Committee. T. Rowe Price's Proxy Committee ("Proxy Committee") is
responsible for establishing positions with respect to corporate governance and
other proxy issues, including those involving social responsibility issues. The
Proxy Committee also reviews questions and responds to inquiries from clients
and mutual fund shareholders pertaining to proxy issues of corporate
responsibility. While the Proxy Committee sets voting guidelines and serves as a
resource for T. Rowe Price portfolio management, it does not have proxy voting
authority for any Price Fund or counsel client. Rather, this responsibility is
held by the Chairperson of the Fund's Investment Advisory Committee or counsel
client's portfolio manager.
Investment Services Group. The Investment Services Group ("Investment
Services Group") is responsible for administering the proxy voting process as
set forth in the Policies and Procedures.
Proxy Administrator. The Investment Services Group will assign a Proxy
Administrator ("Proxy Administrator") who will be responsible for ensuring that
all meeting notices are reviewed and important proxy matters are communicated to
the portfolio managers and regional managers for consideration.
HOW PROXIES ARE REVIEWED, PROCESSED AND VOTED
In order to facilitate the proxy voting process, T. Rowe Price has
retained Institutional Shareholder Services ("ISS") as an expert in the proxy
voting and corporate governance area. ISS specializes in providing a variety of
fiduciary-level proxy advisory and voting services. These services include
in-depth research, analysis, and voting recommendations as well as vote
execution, reporting, auditing and consulting assistance for the handling of
proxy voting responsibility and corporate governance-related efforts. While the
Proxy Committee relies upon ISS research in establishing T. Rowe Price's proxy
voting guidelines, and many of our guidelines are consistent with ISS positions,
T. Rowe Price does at times deviate from ISS recommendations on general policy
issues or specific proxy proposals.
Meeting Notification
T. Rowe Price utilizes ISS' voting agent services to notify us of
upcoming shareholder meetings for portfolio companies held in client accounts
and to transmit votes to the various custodian banks of our clients. ISS tracks
and reconciles T. Rowe Price holdings against incoming proxy ballots. If ballots
do not arrive on time, ISS procures them from the appropriate custodian or proxy
distribution agent. Meeting and record date information is updated daily, and
transmitted to T. Rowe Price through ProxyMaster.com, an ISS web-based
application. ISS is also responsible for maintaining copies of all proxy
statements received by issuers and to promptly provide such materials to T. Rowe
Price upon request.
Vote Determination
ISS provides comprehensive summaries of proxy proposals (including
social responsibility issues), publications discussing key proxy voting issues,
and specific vote recommendations regarding portfolio company proxies to assist
in the proxy research process. Upon request, portfolio managers may receive any
or all of the above-mentioned research materials to assist in the vote
determination process. The final authority and responsibility for proxy voting
decisions remains with T. Rowe Price. Decisions with respect to proxy matters
are made primarily in light of the anticipated impact of the issue on the
desirability of investing in the company from the viewpoint of our clients.
Portfolio managers may decide to vote their proxies consistent with T.
Rowe Price's policies as set by the Proxy Committee and instruct our Proxy
Administrator to vote all proxies accordingly. In such cases, he or she may
request to review the vote recommendations and sign-off on all the proxies
before the votes are cast, or may choose only to sign-off on those votes cast
against management. The portfolio managers are also given the option of
reviewing and determining the votes on all proxies without utilizing the vote
guidelines of the Proxy Committee. In all cases, the portfolio managers may
elect to receive current reports summarizing all proxy votes in his or her
client accounts. Portfolio managers who vote their proxies inconsistent with T.
Rowe Price guidelines are required to document the rationale for their vote. The
Proxy Administrator is responsible for maintaining this documentation and
assuring that it adequately reflects the basis for any vote which is cast in
opposition to T. Rowe Price policy.
T. Rowe Price Voting Policies
Specific voting guidelines have been adopted by the Proxy Committee for
routine anti-takeover, executive compensation and corporate governance
proposals, as well as other common shareholder proposals, and are available to
clients upon request. The following is a summary of the significant T. Rowe
Price policies:
Election of Directors - T. Rowe Price generally supports slates with a
majority of independent directors. T. Rowe Price withholds votes for outside
directors that do not meet certain criteria relating to their independence or
their inability to dedicate sufficient time to their board duties due to their
commitments to other boards. We also withhold votes for inside directors serving
on compensation, nominating and audit committees and for directors who miss more
than one-fourth of the scheduled board meetings. We vote against management
efforts to stagger board member terms by withholding votes from directors
because a staggered board may act as a deterrent to takeover proposals. T. Rowe
Price supports shareholder proposals calling for a majority vote threshold for
the election of directors.
Anti-takeover and Corporate Governance Issues - T. Rowe Price generally opposes
anti-takeover measures since they adversely impact shareholder rights and limit
the ability of shareholders to act on possible transactions. Such anti-takeover
mechanisms include classified boards, supermajority voting requirements, dual
share classes, and poison pills. We also oppose proposals that give management a
"blank check" to create new classes of stock with disparate rights and
privileges. We generally support proposals to permit cumulative voting and those
that seek to prevent potential acquirers from receiving a takeover premium for
their shares. When voting on corporate governance proposals, T. Rowe Price will
consider the dilutive impact to shareholders and the effect on shareholder
rights. With respect to proposals for the approval of a company's auditor, we
typically oppose auditors who have a significant non-audit relationship with the
company.
Executive Compensation Issues - T. Rowe Price's goal is to assure that a
company's equity-based compensation plan is aligned with shareholders' long-term
interests. While we evaluate most plans on a case-by-case basis, T. Rowe Price
generally opposes compensation packages that provide what we view as excessive
awards to a few senior executives or that contain excessively dilutive stock
option grants based on a number of criteria such as the costs associated with
the plan, plan features, burn rates which are excessive in relation to the
company's peers, dilution to shareholders and comparability to plans in the
company's peer group. We generally oppose efforts to reprice options in the
event of a decline in value of the underlying stock.
Social and Cor porate Responsibility Issues - Vote determinations for corporate
responsibility issues are made by the Proxy Committee using ISS voting
recommendations. T. Rowe Price generally votes with a company's management on
the following social issues unless the issue has substantial economic
implications for the company's business and operations which have not been
adequately addressed by management:
o Corporate environmental practices;
o Board diversity;
o Employment practices and employment opportunity;
o Military, nuclear power and related energy issues;
o Tobacco, alcohol, infant formula and safety in advertising practices;
o Economic conversion and diversification;
o International labor practices and
operating policies; o Genetically-modified foods;
o Animal rights; and
o Political contributions/activities and charitable contributions.
Global Portfolio Companies - ISS applies a two-tier approach to
determining and applying global proxy voting policies. The first tier
establishes baseline policy guidelines for the most fundamental issues, which
span the corporate governance spectrum without regard to a company's domicile.
The second tier takes into account various idiosyncrasies of different
countries, making allowances for standard market practices, as long as they do
not violate the fundamental goals of good corporate governance. The goal is to
enhance shareholder value through effective use of shareholder franchise,
recognizing that application of policies developed for U.S. corporate governance
issues are not necessarily appropriate for foreign markets. The Proxy Committee
has reviewed ISS' general global policies and has developed international proxy
voting guidelines which in most instances are consistent with ISS
recommendations.
Votes Against Company Management - Where ISS recommends a vote against
management on any particular proxy issue, the Proxy Administrator ensures that
the portfolio manager reviews such recommendations before a vote is cast.
Consequently, if a portfolio manager believes that management's view on a
particular proxy proposal may adversely affect the investment merits of owning
stock in a particular company, he/she may elect to vote contrary to management.
Also, our research analysts are asked to present their voting recommendations in
such situations to our portfolio managers.
Index and Passively Managed Accounts - Proxy voting for index and other
passively-managed portfolios is administered by the Investment Services Group
using ISS voting recommendations when their recommendations are consistent with
T. Rowe Price's policies as set by the Proxy Committee. If a portfolio company
is held in both an actively managed account and an index account, the index
account will default to the vote as determined by the actively managed proxy
voting process.
Divided Votes - In the unusual situation where a decision is made which
is contrary to the policies established by the Proxy Committee, or differs from
the vote for any other client or Price Fund, the Investment Services Group
advises the portfolio managers involved of the divided vote. The persons
representing opposing views may wish to confer to discuss their positions.
Opposing votes will be cast only if it is determined to be prudent to do so in
light of each client's investment program and objectives. In such instances, it
is the normal practice for the portfolio manager to document the reasons for the
vote if it is against T. Rowe Price policy. The Proxy Administrator is
responsible for assuring that adequate documentation is maintained to reflect
the basis for any vote which is cast in opposition to T. Rowe Price policy.
Shareblocking - Shareblocking is the practice in certain foreign
countries of "freezing" shares for trading purposes in order to vote proxies
relating to those shares. In markets where shareblocking applies, the custodian
or sub-custodian automatically freezes shares prior to a shareholder meeting
once a proxy has been voted. Shareblocking typically takes place between one and
fifteen (15) days before the shareholder meeting, depending on the market. In
markets where shareblocking applies, there is a potential for a pending trade to
fail if trade settlement takes place during the blocking period. Depending upon
market practice and regulations, shares can sometimes be unblocked, allowing the
trade to settle but negating the proxy vote. T. Rowe Price's policy is generally
to vote all shares in shareblocking countries unless, in its experience, trade
settlement would be unduly restricted.
Securities on Loan - The T. Rowe Price Funds and our institutional
clients may participate in securities lending programs to generate income.
Generally, the voting rights pass with the securities on loan; however, lending
agreements give the lender the right to terminate the loan and pull back the
loaned shares provided sufficient notice is given to the custodian bank in
advance of the voting deadline. T. Rowe Price's policy is generally not to vote
securities on loan unless the portfolio manager has knowledge of a material
voting event that could affect the value of the loaned securities. In this
event, the portfolio manager has the discretion to instruct the Proxy
Administrator to pull back the loaned securities in order to cast a vote at an
upcoming shareholder meeting.
Vote Execution and Monitoring of Voting Process
Once the vote has been determined, the Proxy Administrator enters votes
electronically into ISS's ProxyMaster system. ISS then transmits the votes to
the proxy agents or custodian banks and sends electronic confirmation to T. Rowe
Price indicating that the votes were successfully transmitted.
On a daily basis, the Proxy Administrator queries the ProxyMaster
system to determine newly announced meetings and meetings not yet voted. When
the date of the stockholders' meeting is approaching, the Proxy Administrator
contacts the applicable portfolio manager if the vote for a particular client or
Price Fund has not yet been recorded in the computer system.
Should a portfolio manager wish to change a vote already submitted, the
portfolio manager may do so up until the deadline for vote submission, which
varies depending on the company's domicile.
Monitoring and Resolving Conflicts of Interest
The Proxy Committee is also responsible for monitoring and resolving
possible material conflicts between the interests of T. Rowe Price and those of
its clients with respect to proxy voting. We have adopted safeguards to ensure
that our proxy voting is not influenced by interests other than those of our
fund shareholders. While membership on the Proxy Committee is diverse, it does
not include individuals whose primary duties relate to client relationship
management, marketing, or sales. Since T. Rowe Price's voting guidelines are
pre-determined by the Proxy Committee using recommendations from ISS, an
independent third party, application of the T. Rowe Price guidelines by fund
portfolio managers to vote fund proxies should in most instances adequately
address any possible conflicts of interest. However, the Proxy Committee reviews
all proxy votes that are inconsistent with T. Rowe Price guidelines to determine
whether the portfolio manager's voting rationale appears reasonable. The Proxy
Committee also assesses whether any business or other relationships between T.
Rowe Price and a portfolio company could have influenced an inconsistent vote on
that company's proxy. Issues raising possible conflicts of interest are referred
to designated members of the Proxy Committee for immediate resolution prior to
the time T. Rowe Price casts its vote. With respect to personal conflicts of
interest, T. Rowe Price's Code of Ethics and Conduct requires all employees to
avoid placing themselves in a "compromising position" in which their interests
may conflict with those of our clients and restricts their ability to engage in
certain outside business activities. Portfolio managers or Proxy Committee
members with a personal conflict of interest regarding a particular proxy vote
must recuse themselves and not participate in the voting decisions with respect
to that proxy.
Specific Conflict of Interest Situations - Voting of T. Rowe Price
Group, Inc. common stock (sym: TROW) by certain T. Rowe Price Index Funds will
be done in all instances in accordance with T. Rowe Price policy and votes
inconsistent with policy will not be permitted. In addition, T. Rowe Price has
voting authority for proxies of the holdings of certain T. Rowe Price funds that
invest in other T. Rowe Price funds. In cases where the underlying fund of a T.
Rowe Price fund-of -funds holds a proxy vote, T. Rowe Price will mirror vote the
fund shares held by the fund-of-funds in the same proportion as the votes cast
by the shareholders of the underlying funds.
REPORTING AND RECORD RETENTION
Vote Summary Reports will be generated for each client that requests T.
Rowe Price to furnish proxy voting records. The report specifies the portfolio
companies, meeting dates, proxy proposals, and votes which have been cast for
the client during the period and the position taken with respect to each issue.
Reports normally cover quarterly or annual periods. All client requests for
proxy information will be recorded and fulfilled by the Proxy Administrator.
T. Rowe Price retains proxy solicitation materials, memoranda regarding
votes cast in opposition to the position of a company's management, and
documentation on shares voted differently. In addition, any document which is
material to a proxy voting decision such as the T. Rowe Price voting guidelines,
Proxy Committee meeting materials, and other internal research relating to
voting decisions will be kept. Proxy statements received from issuers (other
than those which are available on the SEC's EDGAR database) are kept by ISS in
its capacity as voting agent and are available upon request. All proxy voting
materials and supporting documentation are retained for six years.
TURNER INVESTMENT PARTNERS, INC.
TURNER INVESTMENT MANAGEMENT, LLC
TURNER INVESTMENT ADVISORS, LLC
PROXY VOTING POLICY AND PROCEDURES
Turner Investment Partners, Inc., as well as its two investment advisory
affiliates, Turner Investment Management, LLC and Turner Investment Advisors,
LLC (collectively, Turner), act as fiduciaries in relation to their clients and
the assets entrusted by them to their management. Where the assets placed in
Turner's care include shares of corporate stock, and except where the client has
expressly reserved to itself or another party the duty to vote proxies, it is
Turner's duty as a fiduciary to vote all proxies relating to such shares.
DUTIES WITH RESPECT TO PROXIES:
Turner has an obligation to vote all proxies appurtenant to shares of corporate
stock owned by its client accounts in the best interests of those clients. In
voting these proxies, Turner may not be motivated by, or subordinate the
client's interests to, its own objectives or those of persons or parties
unrelated to the client. Turner will exercise all appropriate and lawful care,
skill, prudence and diligence in voting proxies, and shall vote all proxies
relating to shares owned by its client accounts and received by Turner. Turner
shall not be responsible, however, for voting proxies that it does not receive
in sufficient time to respond.
DELEGATION:
In order to carry out its responsibilities in regard to voting proxies, Turner
must track all shareholder meetings convened by companies whose shares are held
in Turner client accounts, identify all issues presented to shareholders at such
meetings, formulate a principled position on each such issue and ensure that
proxies pertaining to all shares owned in client accounts are voted in
accordance with such determinations.
Consistent with these duties, Turner has delegated certain aspects of the proxy
voting process to Institutional Shareholder Services, and its Proxy Voting
Service (PVS) subsidiary. PVS is a separate investment adviser registered under
the Investment Advisers Act of 1940, as amended. Under an agreement entered into
with Turner, PVS has agreed to vote proxies in accordance with recommendations
developed by PVS and overseen by Turner, except in those instances where Turner
has provided it with different direction.
REVIEW AND OVERSIGHT:
Turner has reviewed the methods used by PVS to identify and track shareholder
meetings called by publicly traded issuers throughout the United States and
around the globe. Turner has satisfied itself that PVS operates a system
reasonably designed to identify all such meetings and to provide Turner with
timely notice of the date, time and place of such meetings. Turner has further
reviewed the principles and procedures employed by PVS in making recommendations
on voting proxies on each issue presented, and has satisfied itself that PVS's
recommendations are: (i) based upon an appropriate level of diligence and
research, and (ii) designed to further the interests of shareholders and not
serve other unrelated or improper interests. Turner, either directly or through
its duly-constituted Proxy Committee, shall review its determinations as to PVS
at least annually.
Notwithstanding its belief that PVS's recommendations are consistent with the
best interests of shareholders and appropriate to be implemented for Turner's
client accounts, Turner has the right and the ability to depart from a
recommendation made by PVS as to a particular vote, slate of candidates or
otherwise, and can direct PVS to vote all or a portion of the shares owned for
client accounts in accordance with Turner's preferences. PVS is bound to vote
any such shares subject to that direction in strict accordance with all such
instructions. Turner, through its Proxy Committee, reviews on a monthly basis
the overall shareholder meeting agenda, and seeks to identify shareholder votes
that warrant further review based upon either (i) the total number of shares of
a particular company stock that Turner holds for its clients accounts, or (ii)
the particular subject matter of a shareholder vote, such as board independence
or shareholders' rights issues. In determining whether to depart from a PVS
recommendation, the Turner Proxy Committee looks to its view of the best
interests of shareholders, and provides direction to PVS only where in Turner's
view departing from the PVS recommendation appears to be in the best interests
of Turner's clients as shareholders. The Proxy Committee keeps minutes of its
determinations in this regard.
CONFLICTS OF INTEREST:
Turner stock is not publicly traded, and Turner is not otherwise affiliated with
any issuer whose shares are available for purchase by client accounts. Further,
no Turner affiliate currently provides brokerage, underwriting, insurance,
banking or other financial services to issuers whose shares are available for
purchase by client accounts.
Where a client of Turner is a publicly traded company in its own right, Turner
may be restricted from acquiring that company's securities for the client's
benefit. Further, while Turner believes that any particular proxy issues
involving companies that engage Turner, either directly or through their pension
committee or otherwise, to manage assets on their behalf, generally will not
present conflict of interest dangers for the firm or its clients, in order to
avoid even the appearance of a conflict of interest, the Proxy Committee will
determine, by surveying the Firm's employees or otherwise, whether Turner, an
affiliate or any of their officers has a business, familial or personal
relationship with a participant in a proxy contest, the issuer itself or the
issuer's pension plan, corporate directors or candidates for directorships. In
the event that any such relationship is found to exist, the Proxy Committee will
take appropriate steps to ensure that any such relationship (or other potential
conflict of interest), does not influence Turner's or the
Committee's decision to provide direction to PVS on a given vote or issue.
Further to that end, Turner will adhere to all recommendations made by PVS in
connection with all shares issued by such companies and held in Turner client
accounts, and, absent extraordinary circumstances that will be documented in
writing, will not subject any such proxy to special review by the Proxy
Committee. Turner will seek to resolve any conflicts of interests that may arise
prior to voting proxies in a manner that reflects the best interests of its
clients.
OBTAINING PROXY VOTING INFORMATION:
To obtain information on how Turner voted proxies, please contact:
Andrew Mark, Director of Operations
and Technology Administration
C/o Turner Investment Partners, Inc.
1205 Westlakes Drive, Suite 100
Berwyn, PA 19312
RECORDKEEPING:
Turner shall retain its (i) proxy voting policies and procedures; (ii) proxy
statements received regarding client statements; (iii) records or votes it casts
on behalf of clients; (iv) records of client requests for proxy voting
information, and (v) any documents prepared by Turner that are material in
making a proxy voting decision. Such records may be maintained with a third
party, such as PVS, that will provide a copy of the documents promptly upon
request.
Adopted: This 1st day of July, 2003
UBS GLOBAL ASSET MANAGEMENT
GLOBAL CORPORATE GOVERNANCE PHILOSOPHY
AND PROXY VOTING GUIDELINES AND POLICY
POLICY SUMMARY
Underlying our voting and corporate governance policies we have three
fundamental objectives:
1) We seek to act in the best financial interests of our clients to protect and
enhance the long-term value of their investments.
2) In order to do this effectively, we aim to utilize the full weight of our
clients' shareholding inmaking our views felt.
3) As investors, we have a strong commercial interest in ensuring that the
companies in which we invest are successful. We actively pursue this interest
by promoting best practice in the boardroom.
To achieve these objectives, we have implemented this Policy, which we believe
is reasonably designed to guide our exercise of voting rights and the taking of
other appropriate actions, within our ability, and to support and encourage
sound corporate governanace practice. This Policy is being implemented globally
to harmonize our philosophies across UBS Global Asset Management offices
worldwide and theregby maximize our ability to influence the companies we invest
in. However, this Policy is also supplemented by the UBS Global Asset Management
Local Proxy and Corporate Governance Guidelines to permit individual regions or
countries with UBS Global Asset Management the flexibility to vote or take other
actions consistent with their local laws or standards where necessary.
RISKS ADDRESSED BY THIS POLICY
The policy is designed to address the following risks:
. Failure to provided required disclosures for investment advisers and
registered investment companies
. Failure to vote proxies in best interest of clients and funds
. Failure to identify and address conflicts of interest
. Failure to provide adequate oversight of third party service providers
TABLE OF CONTENTS
Global Voting and Corporate Governance Policy
A) General Corporate Governance Benchmarks 2
B) Proxy Voting Guidelines oe Macro Rationales 4
C) Proxy Voting Disclosure Guidelines 8
D) Proxy Voting Conflict Guidelines 9
E) Special Disclosure Guidelines for Registered Investment Companies 9
F) Documentation 11
G) Compliance Dates 11
H) Other Policies 12
I) Disclosures 12
GLOBALPROXY VOTING AND CORPORATE GOVERNANCE POLICY
PHILOSOPHY
Our philosophy, guidelines and policy are based on our active investment style
and structure whereby we have detailed knowledge of the investments we make on
behalf of our clients and therefore are in a position to judge what is in the
best interests of our clients as shareholders. We believe voting rights have
economic value and must be treated accordingly. Proxy votes that impact the
economic value of client investments involve the exercise of fiduciary
responsibility. Good corporate governance should, in the long term, lead toward
both better corporate performance and improved shareholder value.Thus, we expect
board members of companies we have invested in (the -company" or -companies") to
act in the service of the shareholders, view themselves as stewards of the
financial assets of the company, exercise good judgment and practice diligent
oversight with the management of the company.
A) General Corporate Governance Benchmarks UBS Global Asset Management (US)
Inc. and UBS Global Asset Management (Americas) Inc. (collectively, -UBS
Global AM") will evaluate issues that may have an impact on the economic value
of client investments during the time period it expects to hold the
investment.While there is no absolute set of rules that determine appropriate
governance under all circumstances and no set of rules will guarantee ethical
behavior, there are certain benchmarks, which, if substantial progress is made
toward, give evidence of good corporate governance. Therefore, we will
generally exercise voting rights on behalf of clients in accordance with this
policy.
PRINCIPLE 1: INDEPENDENCE OF BOARD FROM COMPANY
MANAGEMENT GUIDELINES:
. Board exercises judgment independently of management.
. Separate Chairman and Chief Executive.
. Board has access to senior management members.
. Board is comprised of a significant number of independent outsiders.
. Outside directors meet independently.
. CEO performance standards are in place.
. CEO performance is reviewed annually by the full board.
. CEO succession plan is in place.
. Board involvement in ratifying major strategic initiatives.
. Compensation, audit and nominating committees are led by a majority of
outside directors.
PRINCIPLE 2: QUALITY OF BOARD
MEMBERSHIP GUIDELINES:
. Board determines necessary board member skills, knowledge and experience.
. Board conducts the screening and selection process for new directors.
. Shareholders should have the ability to nominate directors.
. Directors whose present job responsibilities change are reviewed as to the
appropriateness of continued directorship.
. Directors are reviewed every 3-5 years to determine appropriateness of
continued directorship.
. Board meets regularly (at least four times annually).
PRINCIPLE 3: APPROPRIATE MANAGEMENT OF CHANGE IN
CONTROL GUIDELINES:
. Protocols should ensure that all bid approaches and material proposals by
management are brought forward for board consideration.
. Any contracts or structures, which impose financial constraints on changes
in control, should require prior shareholder approval.
. Employment contracts should not entrench management.
. Management should not receive substantial rewards when employment contracts
are terminated for performance reasons.
PRINCIPLE 4: REMUNERATION POLICIES ARE ALIGNED WITH SHAREHOLDER
INTERESTS GUIDELINES:
. Executive remuneration should be commensurate with responsibilities and
performance.
. Incentive schemes should align management with shareholder objectives.
. Employment policies should encourage significant shareholding by management
and board members.
. Incentive rewards should be proportionate to the successful achievement of
predetermined financial targets.
. Long-term incentives should be linked to transparent long-term performance
criteria.
. Dilution of shareholders' interests by share issuance arising from egregious
employee share schemes and management incentives should be limited by
shareholder resolution.
PRINCIPLE 5: AUDITORS ARE
INDEPENDENT GUIDELINES:
. Auditors are approved by shareholders at the annual meeting.
. Audit, consulting and other fees to the auditor are explicitly disclosed.
. The Audit Committee should affirm the integrity of the audit has not been
compromised by other services provided by the auditor firm.
. Periodic (every 5 years) tender of the audit firm or audit partner.
B) Proxy Voting Guidelines - Macro Rationales Macro Rationales are used to
explain why we vote on each proxy issue.The Macro Rationales reflect our
guidelines enabling voting consistency between offices yet allowing for
flexibility so the local office can reflect specific knowledge of the company
as it relates to a proposal.
1) General Guidelines
.a. When our view of the issuer's management is favorable, we generally
support current management initiatives. When our view is that changes to the
management structure would probably increase shareholder value, we may not
support existing management proposals.
.b. If management's performance has been questionable we may abstain or vote
against specific proxy proposals.
.c. Where there is a clear conflict between management and shareholder
interests, even in those cases where management has been doing a good job,
we may elect to vote against management.
.d. In general, we oppose proposals, which in our view, act to entrench
management.
.e. In some instances, even though we strongly support management, there are
some corporate governance issues that, in spite of management objections, we
believe should be subject to shareholder approval.
.f. We will vote in favor of shareholder resolutions for confidential voting.
2) Board of Directors and Auditors
.a. Unless our objection to management's recommendation is strenuous, if we
believe auditors to be competent and professional, we support continuity in
the appointed auditing firm subject to regular review.
.b. We generally vote for proposals that seek to fix the size of the board
and/or require shareholder approval to alter the size of the board and that
allow shareholders to remove directors with or without cause.
.c. We generally vote for proposals that permit shareholders to act by written
consent and/or give the right to shareholders to call a special meeting.
.d. We generally oppose proposals to limit or restrict shareholder ability to
call special meetings.
.e. We will vote for separation of Chairman and CEO if we believe it will lead
to better company management, otherwise, we will support an outside lead
director board structure.
3) Compensation
.a. We will not try to micro-manage compensation schemes, however, we believe
remuneration should not be excessive, and we will not support compensation
plans that are poorly structured or otherwise egregious.
.b. Senior management compensation should be set by independent directors
according to industry standards, taking advice from benefits consultants
where appropriate.
.c. All senior management and board compensation should be disclosed within
annual financial statements, including the value of fringe benefits, company
pension contributions, deferred compensation and any company loans.
.d. We may vote against a compensation or incentive program if it is not
adequately tied to a company's fundamental financial performance;, is
vague;, is not in line with market practices;, allows for option
re-pricing;, does not have adequate performance hurdles; or is highly
dilutive.
.e. Where company and management's performance has been poor, we may object to
the issuance of additional shares for option purposessuch that management is
rewarded for poor performance or further entrenches its position.
.f. Given the increased level of responsibility and oversight required of
directors, it is reasonable to expect that compensation should increase
commensurably.We consider that there should be an appropriate balance
between fixed and variable elements of compensation and between short and
long term incentives.
4) Governance Provisions
.a. We believe that votes at company meetings should be determined on the
basis of one share one vote. We will vote against cumulative voting
proposals.
.b. We believe that -poison pill" proposals, which dilute an issuer's stock
when triggered by particular events, such as take over bids or buy-outs,
should be voted on by the shareholders and will support attempts to bring
them before the shareholders.
.c. Any substantial new share issuance should require prior shareholder
approval.
.d. We believe proposals that authorize the issuance of new stock without
defined terms or conditions and are intended to thwart a take-over or
restrict effective control by shareholders should be discouraged.
.e. We will support directives to increase the independence of the board of
directors when we believe that the measures will improve shareholder value.
.f. We generally do not oppose management's recommendation to implement a
staggered board and generally support the regular re-election of directors
on a rotational basis as it may provide some continuity of oversight.
.g. We will support proposals that enable shareholders to directly nominate
directors.
5) Capital Structure and Corporate Restructuring
.a. It is difficult to direct where a company should incorporate, however, in
instances where a move is motivated solely to entrench management or
restrict effective corporate governance, we will vote accordingly.
.b. In general we will oppose management initiatives to create dual classes of
stock, which serves to insulate company management from shareholder opinion
and action.We support shareholder proposals to eliminate dual class schemes.
6) Mergers, Tender Offers and Proxy Contests
.a. Based on our analysis and research we will support proposals that increase
shareholder value and vote against proposals that do not.
7) Social, Environmental, Political and Cultural
.a. Depending on the situation, we do not typically vote to prohibit a company
from doing business anywhere in the world.
.b. There are occasional issues, we support, that encourage management to make
changes or adopt more constructive policies with respect to social,
environmental, political and other special interest issues, but in many
cases we believe that the shareholder proposal may be too binding or
restrict management's ability to find an optimal solution.While we wish to
remain sensitive to these issues, we believe there are better ways to
resolve them than through a proxy proposal.We prefer to address these issues
through engagement.
.c. Unless directed by clients to vote in favor of social, environmental,
political and other special interest proposals, we are generally opposed to
special interest proposals that involve an economic cost to the company or
that restrict the freedom of management to operate in the best interest of
the company and its shareholders.
8) Administrative and Operations
.a. Occasionally, stockholder proposals, such as asking for reports and
donations to the poor, are presented in a way that appear to be honest
attempts at bringing up a worthwhile issue.Nevertheless, judgment must be
exercised with care, as we do not expect our shareholder companies to be
charitable institutions.
.b. We are sympathetic to shareholders who are long-term holders of a
company's stock, who desire to make concise statements about the long-term
operations of the company in the proxy statement.However, because regulatory
agencies do not require such actions, we may abstain unless we believe there
are compelling reasons to vote for or against.
9) Miscellaneous
.a. Where a client has given specific direction as to how to exercise voting
rights on its behalf, we will vote in accordance with a client's direction.
.b. Where we have determined that the voting of a particular proxy is of
limited benefit to clients or where the costs of voting a proxy outweigh the
benefit to clients, we may abstain or choose not to vote. Among others, such
costs may include the cost of translating a proxy, a requirement to vote in
person at a shareholders meeting or if the process of voting restricts our
ability to sell for a period of time (an opportunity cost).
.c. For holdings managed pursuant to quantitative, index or index-like
strategies, we may delegate the authority to exercise voting rights for such
strategies to an independent proxy voting and research service with the
direction that the votes be exercised in accordance with this Policy. If
such holdings are also held in an actively managed strategy, we will
exercise the voting rights for the passive holdings according to the active
strategy.
.d. In certain instances when we do not have enough information we may choose
to abstain or vote against a particular Proposal.
C) Proxy Voting Disclosure Guidelines
. UBS Global AM will disclose to clients, as required by the Investment
Advisers Act of 1940, how they may obtain information about how we voted
with respect to their securities. This disclosure may be made on Form ADV.
. UBS Global AM will disclose to clients, as required by the Investment
Advisers Act of 1940, these procedures and will furnish a copy of these
procedures to any client upon request. This disclosure may be made on Form
ADV.
. Upon request or as required by law or regulation, UBS Global AMwill disclose
to a client or a client's fiduciaries, the manner in which we exercised
voting rights on behalf of the client.
. Upon request, we will inform a client of our intended vote. Note, however,
in some cases, because of the controversial nature of a particular proxy,
our intended vote may not be available until just prior to the deadline.If
the request involves a conflict due to the client's relationship with the
company that has issued the proxy, the Legal and Compliance Department
should be contacted immediately to ensure adherence to UBS Global AM
Corporate Governance Principles. (See Proxy Voting Conflict Guidelines
below.)
. Other than as described herein, we will not disclose our voting intentions
or make public statements to any third party (except electronically to our
proxy vote processor or regulatory agencies) including but not limited to
proxy solicitors, non-clients, the media, or other UBS divisions, but we may
inform such parties of the provisions of our Policy.We may communicate with
other shareholders regarding a specific proposal but will not disclose our
voting intentions or agree to vote in concert with another shareholder
without approval from the Chairman of the Global Corporate Governance
Committeeand regional Legal and Compliance representative.
. Any employee, officer or director of UBS Global AM receiving an inquiry
directly from a company will notify the appropriate industry analyst and
persons responsible for voting the company's proxies.
. Proxy solicitors and company agents will not be provided with either our
votes or the number of shares we own in a particular company.
. In response to a proxy solicitor or company agent, we will acknowledge
receipt of the proxy materials, inform them of our intent to vote or that we
have voted, but not the result of the vote itself.
. We may inform the company (not their agent) where we have decided to vote
against any material resolution at their company.
. The Chairman of the Global Corporate Governance Committee and the applicable
Chair of the Local Corporate Governance Committee must approve exceptions to
this disclosure policy.
Nothing in this policy should be interpreted as to prevent dialogue with the
company and its advisers by the industry analyst, proxy voting delegate or other
appropriate senior investment personnel when a company approaches us to discuss
governance issues or resolutions they wish to include in their proxy statement.
D) Proxy Voting Conflict Guidelines In addition to the Proxy Voting Disclosure
Guidelines above, UBS Global AM has implemented the following guidelines to
address conflicts of interests that arise in connection with our exercise of
voting rights on behalf of clients:
. Under no circumstances will general business, sales or marketing issues
influence our proxy votes.
. UBS Global AM and its affiliates engaged in banking, broker-dealer and
investment banking activities (-Affiliates") have policies in place
prohibiting the sharing of certain sensitive information.These policies
prohibit our personnel from disclosing information regarding our voting
intentions to any Affiliate.Any of our personnel involved in the proxy
voting process who are contacted by an Affiliate regarding the manner in
which we intend to vote on a specific issue, must terminate the contact and
notify the Legal and Compliance Department immediately.[Note:Legal and
Compliance personnel may have contact with their counterparts working for an
Affiliate on matters involving information barriers.] In the event of any
issue arising in relation to Affiliates, the Chair of the Global Corporate
Governance Committee must be advised, who will in turn advise the Chief Risk
Officer.
E) Special Disclosure Guidelines for Registered Investment Company Clients
1) Registration Statement (Open-End and Closed-End Funds)Management is
responsible for ensuring the following:
. That these procedures, which are the procedures used by the investment
adviser on the Funds' behalf, are described in the Statement of Additional
Information (SAI).Theprocedures may be described in the SAI or attached as
an exhibit to the registration statement.
. That the SAI disclosure includes the procedures that are used when a vote
presents a conflict between the interests of Fund shareholders, on the one
hand; and those of the Funds investment adviser, principal underwriter or
any affiliated person of the Fund, its investment adviser or principal
underwriter, on the other.
. That the SAI disclosure states that information regarding how the Fund voted
proxies during the most recent 12-month period ended June 30 is available
(i) without charge, upon request, by calling a specified toll-free (or
collect) telephone number; or on or through the Fund's website, or both; and
(ii) on the Commission's website.If a request for the proxy voting record is
received, the Fund must comply within three business days by first class
mail. If website disclosure is elected, Form N-PX must be posted as soon as
reasonably practicable after filing the report with the Commission, and must
remain available on the website as long as the Fund discloses that it its
available on the website.
2) Shareholder Annual and Semi-Annual Report (Open-End and Closed-End Funds)
Management is responsible for ensuring the following:
. That each Fund's shareholder report contain a statement that a description
of these procedures is available (i) without charge, upon request, by
calling a toll-free or collect telephone number; (ii) on the Fund's website,
if applicable; and (iii) on the Commission's website.If a request for the
proxy voting record is received, the Fund must comply within three business
days by first class mail.
. That the report contain a statement that information regarding how the Fund
voted proxies during the most recent 12-month period ended June 30 is
available (i) without charge, upon request, by calling a specified toll-free
(or collect) telephone number; or on or through the Fund's website, or both;
and
.(ii) on the Commission's website. If a request for the proxy voting record
is received, the Fund must comply within three business days by first class
mail. If website disclosure is elected, Form N-PX must be posted as soon as
reasonably practicable after filing the report with the Commission, and must
remain available on the website as long as the Fund discloses that it its
available on the website.
3) Form N-CSR (Closed-End Fund Annual Reports Only)Management is responsible
for ensuring the following:
. That these procedures are described in Form N-CSR. In lieu of describing the
procedures, a copy of these procedures may simply be included with the
filing.However, the SEC's preference is that the procedures be included
directly in Form N-CSR and not attached as an exhibit to the N-CSR filing.
. That the N-CSR disclosure includes the procedures that are used when a vote
presents a conflict between the interests of Fund shareholders, on the one
hand, and those of the Funds' investment adviser, principal underwriter or
any affiliated person of the Fund, its investment adviser or principal
underwriter, on the other.
4) Form N-PX (Open-End and Closed-End Funds) Management is responsible for
ensuring the following:
. That each Fund files its complete proxy voting record on Form N-PX for the
12 month period ended June 30 by no later than August 31 of each year.
. Fund management is responsible for reporting to the Funds' Chief Compliance
Officer any material issues that arise in connection with the voting of Fund
proxies or the preparation, review and filing of the Funds' Form N-PX.
5) Oversight of Disclosure The Funds' Chief Compliance Officer shall be
responsible for ensuring that the required disclosures listed in these
procedures are implemented and complied with.The Funds' Chief Compliance
Officer shall recommend to each Fund's Board any changes to these policies and
procedures that he or she deems necessary or appropriate to ensure the Funds'
compliance with relevant federal securities laws.
RESPONSIBLE PARTIES
The following parties will be responsible for implementing and enforcing this
policy:
THE CHIEF COMPLIANCE OFFICER AND HIS/HER DESIGNEES
DOCUMENTATION
Monitoring and testing of this policy will be documented in the following ways:
. ANNUAL REVIEW BY THE FUNDS' AND UBS GLOBAL AM'S CHIEF COMPLIANCE OFFICER OF
THE EFFECTIVENESS OF THESE PROCEDURES
. ANNUAL REPORT OF FUNDS' CHIEF COMPLIANCE OFFICER REGARDING THE EFFECTIVENESS
OF THESE PROCEDURES
. PERIODIC REVIEW OF ANY PROXY SERVICE VENDOR BY THE CHIEF COMPLIANCE OFFICER
. PERIODIC REVIEW OF PROXY VOTES BY THE VOTING COMMITTEE
COMPLIANCE DATES
The following compliance dates should be added to the Complaince Calendar:
. FILE FORM N-PX BY AUGUST 31 FOR EACH REGISTERED INVESTMENT COMPANY CLIENT
. ANNUAL REVIEW BY THE FUNDS' AND UBS GLOBAL AM'S CHIEF COMPLIANCE OFFICER OF
THE EFFECTIVENESS OF THESE PROCEDURES
. ANNUAL REPORT OF FUNDS' CHIEF COMPLIANCE OFFICER REGARDING THE EFFECTIVENESS
OF THESE PROCEDURES
. FORM N-CSR, SHAREHOLDER ANNUAL AND SEMI-ANNUAL REPORTS, AND ANNUAL UPDATES
TO FUND REGISTRATION STATEMENTS AS APPLICABLE
. PERIODIC REVIEW OF ANY PROXY SERVICE VENDOR BY THE CHIEF COMPLIANCE OFFICER
. PERIODIC REVIEW OF PROXY VOTES BY THE PROXY VOTING COMMITTEE
OTHER POLICIES
Other policies that this policy may affect include:
. RECORDKEEPING POLICY
. AFFILIATED TRANSACTIONS POLICY
. CODE OF ETHICS
. SUPERVISION OF SERVICE PROVIDERS POLICY
Other policies that may affect this policy include:
. RECORDKEEPING POLICY
. AFFILIATED TRANSACTIONS POLICY
. CODE OF ETHICS
. SUPERVISION OF SERVICE PROVIDERS POLICY
17244038
Description of Proxy Voting Policy and Procedures
Policy
Vaughan Nelson undertakes to vote all client proxies in a manner reasonably
expected to ensure the client's best interest is upheld and in a manner that
does not subrogate the client's best interest to that of the firm's in instances
where a material conflict exists.
Approach
Vaughan Nelson has created a Proxy Voting Guideline ("Guideline") believed to be
in the best interest of clients relating to common and recurring issues found
within proxy voting material. The Guideline is the work product of Vaughan
Nelson's Investment Committee and it considers the nature of it's business, the
types of securities being managed and other sources of information including,
but not limited to, research provided by an independent research firm
(Institutional Shareholder Services), internal research, published information
on corporate governance and experience. The Guideline helps to ensure voting
consistency on issues common amongst issuers and to serve as evidence that a
vote was not the product of a conflict of interest but rather a vote in
accordance with a pre-determined policy. However, in many recurring and common
proxy issues a "blanket voting approach" cannot be applied. In these instances
the Guideline indicates that such issues will be addressed on a case-by-case
basis in consultation with a portfolio manager to determine how to vote the
issue in your best interest.
Vaughan Nelson in executing their duty to vote proxies, may encounter a material
conflict of interest. Vaughan Nelson does not envision a large number of
situations where a conflict of interest would exist, if any, given the nature of
Vaughan Nelson's business, client base, relationships, the types of securities
managed and the fact Vaughan Nelson is not affiliated with an investment banking
or similar firm. Notwithstanding, if a conflict of interest arises we will
undertake to vote the proxy or proxy issue in your continued best interest. This
will be accomplished by either casting the vote in accordance with the
Guideline, if the application of such policy to the issue at hand involves
little discretion on Vaughan Nelson's part, or casting the vote as indicated by
the independent third-party research firm, Institutional Shareholder Services
("ISS").
Finally, there may be circumstances or situations that may preclude or limit the
manner in which a proxy is voted. These may include: 1) Mutual funds - whereby
voting may be controlled by restrictions within the fund or the actions of
authorized persons, 2) International Securities - whereby the perceived benefit
of voting an international proxy does not outweigh the anticipated costs of
doing so, 3) New Accounts - instances where security holdings assumed will be
sold in the near term thereby limiting any benefit to be obtained by a vote of
proxy material, or 4) Unsupervised Securities - where the firm does not have a
basis on which to offer advice.
In summary, Vaughan Nelson's goal is to vote proxy material in a manner that is
believed to assist in maximizing the value of a portfolio.
Vaughan Nelson's procedures in practice involve forwarding a listing of client
holdings to ISS each day in order to assist with identifying upcoming proxy
votes. Vaughan Nelson arranges for the custodians associated with each client to
forward all client proxy forms to ISS. Once a "proxy analysis" is received from
ISS the individual issues are matched to the Vaughan Nelson Proxy Voting
Guideline. Areas not covered by the Guideline (such as votes on
mergers/acquisitions) are routed to the portfolio manager for vote indications.
Completed proxy analyses are voted electronically through an interface with ISS
who then completes the actual proxy vote on Vaughan Nelson's behalf. All
analyses with vote indications are retained. Reports concerning votes made on
behalf of an account are accessible through ISS.
APPENDIX C
PORTFOLIO MANAGER DISCLOSURES
Information relating to the portfolio managers for each of the Funds follows.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS LARGE CAP VALUE FUND
[Name of Fund
] MARILYN G. FEDAK, JOHN MAHEDY, CHRIS MARX, JOHN D. PHILLIPS, JR., MARK R.
GORDON
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
ALLIANCEBERNSTEIN L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 37,827 $44,272,000,000
----------------------------
* other pooled investment vehicles:... 35 $2,360,000,000
----------------------------
* other accounts:..................... 496 $33,880,000,000
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $6,776,000,000
---------------------------
* other pooled investment vehicles:... - -
---------------------------
* other accounts:..................... 13 $3,206,000,000
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS AN INVESTMENT ADVISER AND FIDUCIARY, ALLIANCEBERNSTEIN OWES ITS CLIENTS
AND SHAREHOLDERS AN UNDIVIDED DUTY OF LOYALTY. WE RECOGNIZE THAT CONFLICTS
OF INTEREST ARE INHERENT IN OUR BUSINESS AND ACCORDINGLY HAVE DEVELOPED
POLICIES AND PROCEDURES (INCLUDING OVERSIGHT MONITORING) REASONABLY DESIGNED
TO DETECT, MANAGE AND MITIGATE THE EFFECTS OF ACTUAL OR POTENTIAL CONFLICTS
OF INTEREST IN THE AREA OF EMPLOYEE PERSONAL TRADING, MANAGING MULTIPLE
ACCOUNTS FOR MULTIPLE CLIENTS, INCLUDING ALLIANCEBERNSTEIN MUTUAL FUNDS, AND
ALLOCATING INVESTMENT OPPORTUNITIES. INVESTMENT PROFESSIONALS, INCLUDING
PORTFOLIO MANAGERS AND RESEARCH ANALYSTS, ARE SUBJECT TO THE ABOVE-MENTIONED
POLICIES AND OVERSIGHT MONITORING TO ENSURE THAT ALL CLIENTS ARE TREATED
EQUITABLY. WE PLACE THE INTERESTS OF OUR CLIENTS FIRST AND EXPECT ALL OF OUR
EMPLOYEES TO MEET THEIR FIDUCIARY DUTIES.
EMPLOYEE PERSONAL TRADING
ALLIANCEBERNSTEIN HAS ADOPTED A CODE OF BUSINESS CONDUCT AND ETHICS THAT IS
DESIGNED TO DETECT AND PREVENT CONFLICTS OF INTEREST WHEN INVESTMENT
PROFESSIONALS AND OTHER PERSONNEL OF ALLIANCEBERNSTEIN OWN, BUY OR SELL
SECURITIES WHICH MAY BE OWNED BY, OR BOUGHT OR SOLD FOR, CLIENTS. PERSONAL
SECURITIES TRANSACTIONS BY AN EMPLOYEE MAY RAISE A POTENTIAL CONFLICT OF
INTEREST WHEN AN EMPLOYEE OWNS OR TRADES IN A SECURITY THAT IS OWNED OR
CONSIDERED FOR PURCHASE OR SALE BY A CLIENT, OR RECOMMENDED FOR PURCHASE OR
SALE BY AN EMPLOYEE TO A CLIENT. SUBJECT TO THE REPORTING REQUIREMENTS AND
OTHER LIMITATIONS OF ITS CODE OF BUSINESS CONDUCT AND ETHICS,
ALLIANCEBERNSTEIN PERMITS ITS EMPLOYEES TO ENGAGE IN PERSONAL SECURITIES
TRANSACTIONS, AND ALSO ALLOWS THEM TO ACQUIRE INVESTMENTS IN THE
ALLIANCEBERNSTEIN MUTUAL FUNDS THROUGH DIRECT PURCHASE, 401K/PROFIT SHARING
PLAN INVESTMENT AND/OR NOTIONALLY IN CONNECTION WITH DEFERRED INCENTIVE
COMPENSATION AWARDS. ALLIANCEBERNSTEIN'S CODE OF ETHICS AND BUSINESS CONDUCT
REQUIRES DISCLOSURE OF ALL PERSONAL ACCOUNTS AND MAINTENANCE OF BROKERAGE
ACCOUNTS WITH DESIGNATED BROKER-DEALERS APPROVED BY ALLIANCEBERNSTEIN. THE
CODE ALSO REQUIRES PRECLEARANCE OF ALL SECURITIES TRANSACTIONS AND IMPOSES A
ONE-YEAR HOLDING PERIOD FOR SECURITIES PURCHASED BY EMPLOYEES TO DISCOURAGE
SHORT-TERM TRADING.
MANAGING MULTIPLE ACCOUNTS FOR MULTIPLE CLIENTS
ALLIANCEBERNSTEIN HAS COMPLIANCE POLICIES AND OVERSIGHT MONITORING IN PLACE
TO ADDRESS CONFLICTS OF INTEREST RELATING TO THE MANAGEMENT OF MULTIPLE
ACCOUNTS FOR MULTIPLE CLIENTS. CONFLICTS OF INTEREST MAY ARISE WHEN AN
INVESTMENT PROFESSIONAL HAS RESPONSIBILITIES FOR THE INVESTMENTS OF MORE THAN
ONE ACCOUNT BECAUSE THE INVESTMENT PROFESSIONAL MAY BE UNABLE TO DEVOTE EQUAL
TIME AND ATTENTION TO EACH ACCOUNT. THE INVESTMENT PROFESSIONAL OR
INVESTMENT PROFESSIONAL TEAMS FOR EACH CLIENT MAY HAVE RESPONSIBILITIES FOR
MANAGING ALL OR A PORTION OF THE INVESTMENTS OF MULTIPLE ACCOUNTS WITH A
COMMON INVESTMENT STRATEGY, INCLUDING OTHER REGISTERED INVESTMENT COMPANIES,
UNREGISTERED INVESTMENT VEHICLES, SUCH AS HEDGE FUNDS, PENSION PLANS,
SEPARATE ACCOUNTS, COLLECTIVE TRUSTS AND CHARITABLE FOUNDATIONS. AMONG OTHER
THINGS, ALLIANCEBERNSTEIN'S POLICIES AND PROCEDURES PROVIDE FOR THE PROMPT
DISSEMINATION TO INVESTMENT PROFESSIONALS OF INITIAL OR CHANGED INVESTMENT
RECOMMENDATIONS BY ANALYSTS SO THAT INVESTMENT PROFESSIONALS ARE BETTER ABLE
TO DEVELOP INVESTMENT STRATEGIES FOR ALL ACCOUNTS THEY MANAGE. IN ADDITION,
INVESTMENT DECISIONS BY INVESTMENT PROFESSIONALS ARE REVIEWED FOR THE PURPOSE
OF MAINTAINING UNIFORMITY AMONG SIMILAR ACCOUNTS AND ENSURING THAT ACCOUNTS
ARE TREATED EQUITABLY. NO INVESTMENT PROFESSIONAL THAT MANAGES CLIENT
ACCOUNTS CARRYING PERFORMANCE FEES IS COMPENSATED DIRECTLY OR SPECIFICALLY
FOR THE PERFORMANCE OF THOSE ACCOUNTS. INVESTMENT PROFESSIONAL COMPENSATION
REFLECTS A BROAD CONTRIBUTION IN MULTIPLE DIMENSIONS TO LONG-TERM INVESTMENT
SUCCESS FOR OUR CLIENTS AND IS NOT TIED SPECIFICALLY TO THE PERFORMANCE OF
ANY PARTICULAR CLIENT'S ACCOUNT, NOR IS IT DIRECTLY TIED TO THE LEVEL OR
CHANGE IN THE LEVEL OF ASSETS UNDER MANAGEMENT.
ALLOCATING INVESTMENT OPPORTUNITIES
ALLIANCEBERNSTEIN HAS POLICIES AND PROCEDURES INTENDED TO ADDRESS CONFLICTS
OF INTEREST RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES. THESE
POLICIES AND PROCEDURES ARE DESIGNED TO ENSURE THAT INFORMATION RELEVANT TO
INVESTMENT DECISIONS IS DISSEMINATED PROMPTLY WITHIN ITS PORTFOLIO MANAGEMENT
TEAMS AND INVESTMENT OPPORTUNITIES ARE ALLOCATED EQUITABLY AMONG DIFFERENT
CLIENTS. THE INVESTMENT PROFESSIONALS AT ALLIANCEBERNSTEIN ROUTINELY ARE
REQUIRED TO SELECT AND ALLOCATE INVESTMENT OPPORTUNITIES AMONG ACCOUNTS.
PORTFOLIO HOLDINGS, POSITION SIZES, AND INDUSTRY AND SECTOR EXPOSURES TEND TO
BE SIMILAR ACROSS SIMILAR ACCOUNTS, WHICH MINIMIZES THE POTENTIAL FOR
CONFLICTS OF INTEREST RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES.
NEVERTHELESS, INVESTMENT OPPORTUNITIES MAY BE ALLOCATED DIFFERENTLY AMONG
ACCOUNTS DUE TO THE PARTICULAR CHARACTERISTICS OF AN ACCOUNT, SUCH AS SIZE OF
THE ACCOUNT, CASH POSITION, TAX STATUS, RISK TOLERANCE AND INVESTMENT
RESTRICTIONS OR FOR OTHER REASONS.
ALLIANCEBERNSTEIN'S PROCEDURES ARE ALSO DESIGNED TO PREVENT POTENTIAL
CONFLICTS OF INTEREST THAT MAY ARISE WHEN ALLIANCEBERNSTEIN HAS A PARTICULAR
FINANCIAL INCENTIVE, SUCH AS A PERFORMANCE-BASED MANAGEMENT FEE, RELATING TO
AN ACCOUNT. AN INVESTMENT PROFESSIONAL MAY PERCEIVE THAT HE OR SHE HAS AN
INCENTIVE TO DEVOTE MORE TIME TO DEVELOPING AND ANALYZING INVESTMENT
STRATEGIES AND OPPORTUNITIES OR ALLOCATING SECURITIES PREFERENTIALLY TO
ACCOUNTS FOR WHICH ALLIANCEBERNSTEIN COULD SHARE IN INVESTMENT GAINS.
TO ADDRESS THESE CONFLICTS OF INTEREST, ALLIANCEBERNSTEIN'S POLICIES AND
PROCEDURES REQUIRE, AMONG OTHER THINGS, THE PROMPT DISSEMINATION TO
INVESTMENT PROFESSIONALS OF ANY INITIAL OR CHANGED INVESTMENT RECOMMENDATIONS
BY ANALYSTS; THE AGGREGATION OF ORDERS TO FACILITATE BEST EXECUTION FOR ALL
ACCOUNTS; PRICE AVERAGING FOR ALL AGGREGATED ORDERS; OBJECTIVE ALLOCATION FOR
LIMITED INVESTMENT OPPORTUNITIES (E.G., ON A ROTATIONAL BASIS) TO ENSURE FAIR
AND EQUITABLE ALLOCATION AMONG ACCOUNTS; AND LIMITATIONS ON SHORT SALES OF
SECURITIES. THESE PROCEDURES ALSO REQUIRE DOCUMENTATION AND REVIEW OF
JUSTIFICATIONS FOR ANY DECISIONS TO MAKE INVESTMENTS ONLY FOR SELECT ACCOUNTS
OR IN A MANNER DISPROPORTIONATE TO THE SIZE OF THE ACCOUNT.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
ALLIANCEBERNSTEIN'S COMPENSATION PROGRAM FOR INVESTMENT PROFESSIONALS IS
DESIGNED TO BE COMPETITIVE AND EFFECTIVE IN ORDER TO ATTRACT AND RETAIN THE
HIGHEST CALIBER EMPLOYEES. THE COMPENSATION PROGRAM FOR INVESTMENT
PROFESSIONALS IS DESIGNED TO REFLECT THEIR ABILITY TO GENERATE LONG-TERM
INVESTMENT SUCCESS FOR OUR CLIENTS, INCLUDING SHAREHOLDERS OF THE
ALLIANCEBERNSTEIN MUTUAL FUNDS. INVESTMENT PROFESSIONALS DO NOT RECEIVE ANY
DIRECT COMPENSATION BASED UPON THE INVESTMENT RETURNS OF ANY INDIVIDUAL
CLIENT ACCOUNT, NOR IS COMPENSATION TIED DIRECTLY TO THE LEVEL OR CHANGE IN
THE LEVEL OF ASSETS UNDER MANAGEMENT. INVESTMENT PROFESSIONALS' ANNUAL
COMPENSATION IS COMPRISED OF THE FOLLOWING:
(I)FIXED BASE SALARY: THIS IS GENERALLY THE SMALLEST PORTION OF
COMPENSATION. THE BASE SALARY IS A RELATIVELY LOW, FIXED SALARY WITHIN A
SIMILAR RANGE FOR ALL INVESTMENT PROFESSIONALS. THE BASE SALARY [IS
DETERMINED AT THE OUTSET OF EMPLOYMENT BASED ON LEVEL OF EXPERIENCE,] DOES
NOT CHANGE SIGNIFICANTLY FROM YEAR TO YEAR, AND HENCE, IS NOT PARTICULARLY
SENSITIVE TO PERFORMANCE.
(II)DISCRETIONARY INCENTIVE COMPENSATION IN THE FORM OF AN ANNUAL CASH BONUS:
ALLIANCEBERNSTEIN'S OVERALL PROFITABILITY DETERMINES THE TOTAL AMOUNT OF
INCENTIVE COMPENSATION AVAILABLE TO INVESTMENT PROFESSIONALS. THIS PORTION OF
COMPENSATION IS DETERMINED SUBJECTIVELY BASED ON QUALITATIVE AND QUANTITATIVE
FACTORS. IN EVALUATING THIS COMPONENT OF AN INVESTMENT PROFESSIONAL'S
COMPENSATION, ALLIANCEBERNSTEIN CONSIDERS THE CONTRIBUTION TO HIS/HER TEAM OR
DISCIPLINE AS IT RELATES TO THAT TEAM'S OVERALL CONTRIBUTION TO THE LONG-TERM
INVESTMENT SUCCESS, BUSINESS RESULTS AND STRATEGY OF ALLIANCEBERNSTEIN.
QUANTITATIVE FACTORS CONSIDERED INCLUDE, AMONG OTHER THINGS, RELATIVE
INVESTMENT PERFORMANCE (E.G., BY COMPARISON TO COMPETITOR OR PEER GROUP FUNDS
OR SIMILAR STYLES OF INVESTMENTS, AND APPROPRIATE, BROAD-BASED OR SPECIFIC
MARKET INDICES), AND CONSISTENCY OF PERFORMANCE. THERE ARE NO SPECIFIC
FORMULAS USED TO DETERMINE THIS PART OF AN INVESTMENT PROFESSIONAL'S
COMPENSATION AND THE COMPENSATION IS NOT TIED TO ANY PRE-DETERMINED OR
SPECIFIED LEVEL OF PERFORMANCE. ALLIANCEBERNSTEIN ALSO CONSIDERS QUALITATIVE
FACTORS SUCH AS THE COMPLEXITY AND RISK OF INVESTMENT STRATEGIES INVOLVED IN
THE STYLE OR TYPE OF ASSETS MANAGED BY THE INVESTMENT PROFESSIONAL; SUCCESS
OF MARKETING/BUSINESS DEVELOPMENT EFFORTS AND CLIENT SERVICING;
SENIORITY/LENGTH OF SERVICE WITH THE FIRM; MANAGEMENT AND SUPERVISORY
RESPONSIBILITIES; AND FULFILLMENT OF ALLIANCEBERNSTEIN'S LEADERSHIP CRITERIA.
(III)DISCRETIONARY INCENTIVE COMPENSATION IN THE FORM OF AWARDS UNDER
ALLIANCEBERNSTEIN'S PARTNERS COMPENSATION PLAN ("DEFERRED AWARDS"):
ALLIANCEBERNSTEIN'S OVERALL PROFITABILITY DETERMINES THE TOTAL AMOUNT OF
DEFERRED AWARDS AVAILABLE TO INVESTMENT PROFESSIONALS. THE DEFERRED AWARDS
ARE ALLOCATED AMONG INVESTMENT PROFESSIONALS BASED ON CRITERIA SIMILAR TO
THOSE USED TO DETERMINE THE ANNUAL CASH BONUS. THERE IS NO FIXED FORMULA FOR
DETERMINING THESE AMOUNTS. DEFERRED AWARDS, FOR WHICH THERE ARE VARIOUS
INVESTMENT OPTIONS, VEST OVER A FOUR-YEAR PERIOD AND ARE GENERALLY FORFEITED
IF THE EMPLOYEE RESIGNS OR ALLIANCEBERNSTEIN TERMINATES HIS/HER EMPLOYMENT.
INVESTMENT OPTIONS UNDER THE DEFERRED AWARDS PLAN INCLUDE MANY OF THE SAME
ALLIANCEBERNSTEIN MUTUAL FUNDS OFFERED TO MUTUAL FUND INVESTORS, THEREBY
CREATING A CLOSE ALIGNMENT BETWEEN THE FINANCIAL INTERESTS OF THE INVESTMENT
PROFESSIONALS AND THOSE OF ALLIANCEBERNSTEIN'S CLIENTS AND MUTUAL FUND
SHAREHOLDERS WITH RESPECT TO THE PERFORMANCE OF THOSE MUTUAL FUNDS.
ALLIANCEBERNSTEIN ALSO PERMITS DEFERRED AWARD RECIPIENTS TO ALLOCATE UP TO
50% OF THEIR AWARD TO INVESTMENTS IN ALLIANCEBERNSTEIN'S PUBLICLY TRADED
EQUITY SECURITIES.
(IV)CONTRIBUTIONS UNDER ALLIANCEBERNSTEIN'S PROFIT SHARING/401(K) PLAN: THE
CONTRIBUTIONS ARE BASED ON ALLIANCEBERNSTEIN'S OVERALL PROFITABILITY. THE
AMOUNT AND ALLOCATION OF THE CONTRIBUTIONS ARE DETERMINED AT THE SOLE
DISCRETION OF ALLIANCEBERNSTEIN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Jennifer Bergenfeld 12/8/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Jennifer Bergenfeld
[(Printed Name of person signing)]
Vice President/Counsel
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS SMALL CAP GROWTH FUND
[Name of Fund
] BRUCE K. ARONOW, MICHAEL W. DOHERTY, N. KUMAR KIRPALANI, SAMANTHA S. LAU,
JAMES RUSSO
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
ALLIANCEBERNSTEIN L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 22 $2,267,000,000
---------------------------
* other pooled investment vehicles:... 24 $308,000,000
---------------------------
* other accounts:..................... 23 $1,338,000,000
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... - -
-------------------------
* other pooled investment vehicles:... - -
-------------------------
* other accounts:..................... 3 $392,000,000
-------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS AN INVESTMENT ADVISER AND FIDUCIARY, ALLIANCEBERNSTEIN OWES ITS CLIENTS
AND SHAREHOLDERS AN UNDIVIDED DUTY OF LOYALTY. WE RECOGNIZE THAT CONFLICTS
OF INTEREST ARE INHERENT IN OUR BUSINESS AND ACCORDINGLY HAVE DEVELOPED
POLICIES AND PROCEDURES (INCLUDING OVERSIGHT MONITORING) REASONABLY DESIGNED
TO DETECT, MANAGE AND MITIGATE THE EFFECTS OF ACTUAL OR POTENTIAL CONFLICTS
OF INTEREST IN THE AREA OF EMPLOYEE PERSONAL TRADING, MANAGING MULTIPLE
ACCOUNTS FOR MULTIPLE CLIENTS, INCLUDING ALLIANCEBERNSTEIN MUTUAL FUNDS, AND
ALLOCATING INVESTMENT OPPORTUNITIES. INVESTMENT PROFESSIONALS, INCLUDING
PORTFOLIO MANAGERS AND RESEARCH ANALYSTS, ARE SUBJECT TO THE ABOVE-MENTIONED
POLICIES AND OVERSIGHT MONITORING TO ENSURE THAT ALL CLIENTS ARE TREATED
EQUITABLY. WE PLACE THE INTERESTS OF OUR CLIENTS FIRST AND EXPECT ALL OF OUR
EMPLOYEES TO MEET THEIR FIDUCIARY DUTIES.
EMPLOYEE PERSONAL TRADING
ALLIANCEBERNSTEIN HAS ADOPTED A CODE OF BUSINESS CONDUCT AND ETHICS THAT IS
DESIGNED TO DETECT AND PREVENT CONFLICTS OF INTEREST WHEN INVESTMENT
PROFESSIONALS AND OTHER PERSONNEL OF ALLIANCEBERNSTEIN OWN, BUY OR SELL
SECURITIES WHICH MAY BE OWNED BY, OR BOUGHT OR SOLD FOR, CLIENTS. PERSONAL
SECURITIES TRANSACTIONS BY AN EMPLOYEE MAY RAISE A POTENTIAL CONFLICT OF
INTEREST WHEN AN EMPLOYEE OWNS OR TRADES IN A SECURITY THAT IS OWNED OR
CONSIDERED FOR PURCHASE OR SALE BY A CLIENT, OR RECOMMENDED FOR PURCHASE OR
SALE BY AN EMPLOYEE TO A CLIENT. SUBJECT TO THE REPORTING REQUIREMENTS AND
OTHER LIMITATIONS OF ITS CODE OF BUSINESS CONDUCT AND ETHICS,
ALLIANCEBERNSTEIN PERMITS ITS EMPLOYEES TO ENGAGE IN PERSONAL SECURITIES
TRANSACTIONS, AND ALSO ALLOWS THEM TO ACQUIRE INVESTMENTS IN THE
ALLIANCEBERNSTEIN MUTUAL FUNDS THROUGH DIRECT PURCHASE, 401K/PROFIT SHARING
PLAN INVESTMENT AND/OR NOTIONALLY IN CONNECTION WITH DEFERRED INCENTIVE
COMPENSATION AWARDS. ALLIANCEBERNSTEIN'S CODE OF ETHICS AND BUSINESS CONDUCT
REQUIRES DISCLOSURE OF ALL PERSONAL ACCOUNTS AND MAINTENANCE OF BROKERAGE
ACCOUNTS WITH DESIGNATED BROKER-DEALERS APPROVED BY ALLIANCEBERNSTEIN. THE
CODE ALSO REQUIRES PRECLEARANCE OF ALL SECURITIES TRANSACTIONS AND IMPOSES A
ONE-YEAR HOLDING PERIOD FOR SECURITIES PURCHASED BY EMPLOYEES TO DISCOURAGE
SHORT-TERM TRADING.
MANAGING MULTIPLE ACCOUNTS FOR MULTIPLE CLIENTS
ALLIANCEBERNSTEIN HAS COMPLIANCE POLICIES AND OVERSIGHT MONITORING IN PLACE
TO ADDRESS CONFLICTS OF INTEREST RELATING TO THE MANAGEMENT OF MULTIPLE
ACCOUNTS FOR MULTIPLE CLIENTS. CONFLICTS OF INTEREST MAY ARISE WHEN AN
INVESTMENT PROFESSIONAL HAS RESPONSIBILITIES FOR THE INVESTMENTS OF MORE THAN
ONE ACCOUNT BECAUSE THE INVESTMENT PROFESSIONAL MAY BE UNABLE TO DEVOTE EQUAL
TIME AND ATTENTION TO EACH ACCOUNT. THE INVESTMENT PROFESSIONAL OR
INVESTMENT PROFESSIONAL TEAMS FOR EACH CLIENT MAY HAVE RESPONSIBILITIES FOR
MANAGING ALL OR A PORTION OF THE INVESTMENTS OF MULTIPLE ACCOUNTS WITH A
COMMON INVESTMENT STRATEGY, INCLUDING OTHER REGISTERED INVESTMENT COMPANIES,
UNREGISTERED INVESTMENT VEHICLES, SUCH AS HEDGE FUNDS, PENSION PLANS,
SEPARATE ACCOUNTS, COLLECTIVE TRUSTS AND CHARITABLE FOUNDATIONS. AMONG OTHER
THINGS, ALLIANCEBERNSTEIN'S POLICIES AND PROCEDURES PROVIDE FOR THE PROMPT
DISSEMINATION TO INVESTMENT PROFESSIONALS OF INITIAL OR CHANGED INVESTMENT
RECOMMENDATIONS BY ANALYSTS SO THAT INVESTMENT PROFESSIONALS ARE BETTER ABLE
TO DEVELOP INVESTMENT STRATEGIES FOR ALL ACCOUNTS THEY MANAGE. IN ADDITION,
INVESTMENT DECISIONS BY INVESTMENT PROFESSIONALS ARE REVIEWED FOR THE PURPOSE
OF MAINTAINING UNIFORMITY AMONG SIMILAR ACCOUNTS AND ENSURING THAT ACCOUNTS
ARE TREATED EQUITABLY. NO INVESTMENT PROFESSIONAL THAT MANAGES CLIENT
ACCOUNTS CARRYING PERFORMANCE FEES IS COMPENSATED DIRECTLY OR SPECIFICALLY
FOR THE PERFORMANCE OF THOSE ACCOUNTS. INVESTMENT PROFESSIONAL COMPENSATION
REFLECTS A BROAD CONTRIBUTION IN MULTIPLE DIMENSIONS TO LONG-TERM INVESTMENT
SUCCESS FOR OUR CLIENTS AND IS NOT TIED SPECIFICALLY TO THE PERFORMANCE OF
ANY PARTICULAR CLIENT'S ACCOUNT, NOR IS IT DIRECTLY TIED TO THE LEVEL OR
CHANGE IN THE LEVEL OF ASSETS UNDER MANAGEMENT.
ALLOCATING INVESTMENT OPPORTUNITIES
ALLIANCEBERNSTEIN HAS POLICIES AND PROCEDURES INTENDED TO ADDRESS CONFLICTS
OF INTEREST RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES. THESE
POLICIES AND PROCEDURES ARE DESIGNED TO ENSURE THAT INFORMATION RELEVANT TO
INVESTMENT DECISIONS IS DISSEMINATED PROMPTLY WITHIN ITS PORTFOLIO MANAGEMENT
TEAMS AND INVESTMENT OPPORTUNITIES ARE ALLOCATED EQUITABLY AMONG DIFFERENT
CLIENTS. THE INVESTMENT PROFESSIONALS AT ALLIANCEBERNSTEIN ROUTINELY ARE
REQUIRED TO SELECT AND ALLOCATE INVESTMENT OPPORTUNITIES AMONG ACCOUNTS.
PORTFOLIO HOLDINGS, POSITION SIZES, AND INDUSTRY AND SECTOR EXPOSURES TEND TO
BE SIMILAR ACROSS SIMILAR ACCOUNTS, WHICH MINIMIZES THE POTENTIAL FOR
CONFLICTS OF INTEREST RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES.
NEVERTHELESS, INVESTMENT OPPORTUNITIES MAY BE ALLOCATED DIFFERENTLY AMONG
ACCOUNTS DUE TO THE PARTICULAR CHARACTERISTICS OF AN ACCOUNT, SUCH AS SIZE OF
THE ACCOUNT, CASH POSITION, TAX STATUS, RISK TOLERANCE AND INVESTMENT
RESTRICTIONS OR FOR OTHER REASONS.
ALLIANCEBERNSTEIN'S PROCEDURES ARE ALSO DESIGNED TO PREVENT POTENTIAL
CONFLICTS OF INTEREST THAT MAY ARISE WHEN ALLIANCEBERNSTEIN HAS A PARTICULAR
FINANCIAL INCENTIVE, SUCH AS A PERFORMANCE-BASED MANAGEMENT FEE, RELATING TO
AN ACCOUNT. AN INVESTMENT PROFESSIONAL MAY PERCEIVE THAT HE OR SHE HAS AN
INCENTIVE TO DEVOTE MORE TIME TO DEVELOPING AND ANALYZING INVESTMENT
STRATEGIES AND OPPORTUNITIES OR ALLOCATING SECURITIES PREFERENTIALLY TO
ACCOUNTS FOR WHICH ALLIANCEBERNSTEIN COULD SHARE IN INVESTMENT GAINS.
TO ADDRESS THESE CONFLICTS OF INTEREST, ALLIANCEBERNSTEIN'S POLICIES AND
PROCEDURES REQUIRE, AMONG OTHER THINGS, THE PROMPT DISSEMINATION TO
INVESTMENT PROFESSIONALS OF ANY INITIAL OR CHANGED INVESTMENT RECOMMENDATIONS
BY ANALYSTS; THE AGGREGATION OF ORDERS TO FACILITATE BEST EXECUTION FOR ALL
ACCOUNTS; PRICE AVERAGING FOR ALL AGGREGATED ORDERS; OBJECTIVE ALLOCATION FOR
LIMITED INVESTMENT OPPORTUNITIES (E.G., ON A ROTATIONAL BASIS) TO ENSURE FAIR
AND EQUITABLE ALLOCATION AMONG ACCOUNTS; AND LIMITATIONS ON SHORT SALES OF
SECURITIES. THESE PROCEDURES ALSO REQUIRE DOCUMENTATION AND REVIEW OF
JUSTIFICATIONS FOR ANY DECISIONS TO MAKE INVESTMENTS ONLY FOR SELECT ACCOUNTS
OR IN A MANNER DISPROPORTIONATE TO THE SIZE OF THE ACCOUNT.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
ALLIANCEBERNSTEIN'S COMPENSATION PROGRAM FOR INVESTMENT PROFESSIONALS IS
DESIGNED TO BE COMPETITIVE AND EFFECTIVE IN ORDER TO ATTRACT AND RETAIN THE
HIGHEST CALIBER EMPLOYEES. THE COMPENSATION PROGRAM FOR INVESTMENT
PROFESSIONALS IS DESIGNED TO REFLECT THEIR ABILITY TO GENERATE LONG-TERM
INVESTMENT SUCCESS FOR OUR CLIENTS, INCLUDING SHAREHOLDERS OF THE
ALLIANCEBERNSTEIN MUTUAL FUNDS. INVESTMENT PROFESSIONALS DO NOT RECEIVE ANY
DIRECT COMPENSATION BASED UPON THE INVESTMENT RETURNS OF ANY INDIVIDUAL
CLIENT ACCOUNT, NOR IS COMPENSATION TIED DIRECTLY TO THE LEVEL OR CHANGE IN
THE LEVEL OF ASSETS UNDER MANAGEMENT. INVESTMENT PROFESSIONALS' ANNUAL
COMPENSATION IS COMPRISED OF THE FOLLOWING:
(I)FIXED BASE SALARY: THIS IS GENERALLY THE SMALLEST PORTION OF
COMPENSATION. THE BASE SALARY IS A RELATIVELY LOW, FIXED SALARY WITHIN A
SIMILAR RANGE FOR ALL INVESTMENT PROFESSIONALS. THE BASE SALARY [IS
DETERMINED AT THE OUTSET OF EMPLOYMENT BASED ON LEVEL OF EXPERIENCE,] DOES
NOT CHANGE SIGNIFICANTLY FROM YEAR TO YEAR, AND HENCE, IS NOT PARTICULARLY
SENSITIVE TO PERFORMANCE.
(II)DISCRETIONARY INCENTIVE COMPENSATION IN THE FORM OF AN ANNUAL CASH BONUS:
ALLIANCEBERNSTEIN'S OVERALL PROFITABILITY DETERMINES THE TOTAL AMOUNT OF
INCENTIVE COMPENSATION AVAILABLE TO INVESTMENT PROFESSIONALS. THIS PORTION OF
COMPENSATION IS DETERMINED SUBJECTIVELY BASED ON QUALITATIVE AND QUANTITATIVE
FACTORS. IN EVALUATING THIS COMPONENT OF AN INVESTMENT PROFESSIONAL'S
COMPENSATION, ALLIANCEBERNSTEIN CONSIDERS THE CONTRIBUTION TO HIS/HER TEAM OR
DISCIPLINE AS IT RELATES TO THAT TEAM'S OVERALL CONTRIBUTION TO THE LONG-TERM
INVESTMENT SUCCESS, BUSINESS RESULTS AND STRATEGY OF ALLIANCEBERNSTEIN.
QUANTITATIVE FACTORS CONSIDERED INCLUDE, AMONG OTHER THINGS, RELATIVE
INVESTMENT PERFORMANCE (E.G., BY COMPARISON TO COMPETITOR OR PEER GROUP FUNDS
OR SIMILAR STYLES OF INVESTMENTS, AND APPROPRIATE, BROAD-BASED OR SPECIFIC
MARKET INDICES), AND CONSISTENCY OF PERFORMANCE. THERE ARE NO SPECIFIC
FORMULAS USED TO DETERMINE THIS PART OF AN INVESTMENT PROFESSIONAL'S
COMPENSATION AND THE COMPENSATION IS NOT TIED TO ANY PRE-DETERMINED OR
SPECIFIED LEVEL OF PERFORMANCE. ALLIANCEBERNSTEIN ALSO CONSIDERS QUALITATIVE
FACTORS SUCH AS THE COMPLEXITY AND RISK OF INVESTMENT STRATEGIES INVOLVED IN
THE STYLE OR TYPE OF ASSETS MANAGED BY THE INVESTMENT PROFESSIONAL; SUCCESS
OF MARKETING/BUSINESS DEVELOPMENT EFFORTS AND CLIENT SERVICING;
SENIORITY/LENGTH OF SERVICE WITH THE FIRM; MANAGEMENT AND SUPERVISORY
RESPONSIBILITIES; AND FULFILLMENT OF ALLIANCEBERNSTEIN'S LEADERSHIP CRITERIA.
(III)DISCRETIONARY INCENTIVE COMPENSATION IN THE FORM OF AWARDS UNDER
ALLIANCEBERNSTEIN'S PARTNERS COMPENSATION PLAN ("DEFERRED AWARDS"):
ALLIANCEBERNSTEIN'S OVERALL PROFITABILITY DETERMINES THE TOTAL AMOUNT OF
DEFERRED AWARDS AVAILABLE TO INVESTMENT PROFESSIONALS. THE DEFERRED AWARDS
ARE ALLOCATED AMONG INVESTMENT PROFESSIONALS BASED ON CRITERIA SIMILAR TO
THOSE USED TO DETERMINE THE ANNUAL CASH BONUS. THERE IS NO FIXED FORMULA FOR
DETERMINING THESE AMOUNTS. DEFERRED AWARDS, FOR WHICH THERE ARE VARIOUS
INVESTMENT OPTIONS, VEST OVER A FOUR-YEAR PERIOD AND ARE GENERALLY FORFEITED
IF THE EMPLOYEE RESIGNS OR ALLIANCEBERNSTEIN TERMINATES HIS/HER EMPLOYMENT.
INVESTMENT OPTIONS UNDER THE DEFERRED AWARDS PLAN INCLUDE MANY OF THE SAME
ALLIANCEBERNSTEIN MUTUAL FUNDS OFFERED TO MUTUAL FUND INVESTORS, THEREBY
CREATING A CLOSE ALIGNMENT BETWEEN THE FINANCIAL INTERESTS OF THE INVESTMENT
PROFESSIONALS AND THOSE OF ALLIANCEBERNSTEIN'S CLIENTS AND MUTUAL FUND
SHAREHOLDERS WITH RESPECT TO THE PERFORMANCE OF THOSE MUTUAL FUNDS.
ALLIANCEBERNSTEIN ALSO PERMITS DEFERRED AWARD RECIPIENTS TO ALLOCATE UP TO
50% OF THEIR AWARD TO INVESTMENTS IN ALLIANCEBERNSTEIN'S PUBLICLY TRADED
EQUITY SECURITIES.
(IV)CONTRIBUTIONS UNDER ALLIANCEBERNSTEIN'S PROFIT SHARING/401(K) PLAN: THE
CONTRIBUTIONS ARE BASED ON ALLIANCEBERNSTEIN'S OVERALL PROFITABILITY. THE
AMOUNT AND ALLOCATION OF THE CONTRIBUTIONS ARE DETERMINED AT THE SOLE
DISCRETION OF ALLIANCEBERNSTEIN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Jennifer Bergenfeld 12/8/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Jennifer Bergenfeld
[(Printed Name of person signing)]
Vice President/Counsel
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Partners LargeCap Growth Fund II
[Name of Fund/Account
]Prescott LeGard
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
American Century
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $5,053,839,293
---------------------------
* other pooled investment vehicles:... 0 N/A
---------------------------
* other accounts:..................... 3 $140,744,392
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 N/A
-------------------
* other pooled investment vehicles:... 0 N/A
-------------------
* other accounts:..................... 0 N/A
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
Certain conflicts of interest may arise in connection with the management of
multiple portfolios. Potential conflicts include, for example, conflicts among
investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
Responsibility for managing American Century client portfolios is organized
according to investment discipline. Investment disciplines include, for
example, quantitative equity, small- and mid-cap growth, large-cap growth,
value, international, fixed income, asset allocation, and sector funds. Within
each discipline are one or more portfolio teams responsible for managing
specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team using the same objective, approach, and
philosophy. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which minimizes
the potential for conflicts of interest.
For each investment strategy, one portfolio is generally designated as the
"policy portfolio." Other portfolios with similar investment objectives,
guidelines and restrictions are referred to as "tracking portfolios." When
managing policy and tracking portfolios, a portfolio team typically purchases
and sells securities across all portfolios that the team manages. American
Century's trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same security for
multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century has adopted policies and procedures
to minimize the risk that a client portfolio could be systematically advantaged
or disadvantaged in connection with the aggregation of orders. To the extent
equity trades are aggregated, shares purchased or sold are generally allocated
to the participating portfolios pro rata based on order size. Because initial
public offerings (IPOs) are usually available in limited supply and in amounts
too small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio
manager at the time of trade execution and orders entered on the fixed income
order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these
potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
American Century portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. It includes the components described below, each of which is determined
with reference to a number of factors such as overall performance, market
competition, and internal equity. Compensation is not directly tied to the
value of assets held in client portfolios.
BASE SALARY
Portfolio managers receive base pay in the form of a fixed annual salary.
BONUS
A significant portion of portfolio manager compensation takes the form of an
annual incentive bonus tied to performance. Bonus payments are determined by a
combination of factors. One factor is fund investment performance. For policy
portfolios, investment performance is measured by a combination of one- and
three-year pre-tax performance relative to a pre-established, internally-
customized peer group and/or market benchmark. Custom peer groups are
constructed using all the funds in appropriate Lipper or Morningstar categories
as a starting point. Funds are then eliminated from the peer group based on a
standardized methodology designed to result in a final peer group that more
closely represents the fund's true peers based on internal investment mandates
and that is more stable (i.e., has less peer turnover) over the long-term. In
cases where a portfolio manager has responsibility for more than one policy
portfolio, the performance of each is assigned a percentage weight commensurate
with the portfolio manager's level of responsibility.
With regard to tracking portfolios, investment performance may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for the
Partners LargeCap Growth Fund II.
A second factor in the bonus calculation relates to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investment performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay.
RESTRICTED STOCK PLANS
Portfolio managers are eligible for grants of restricted stock of ACC. These
grants are discretionary, and eligibility and availability can vary from year to
year. The size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years).
DEFERRED COMPENSATION PLANS
Portfolio managers are eligible for grants of deferred compensation. These
grants are used in limited situations, primarily for retention purposes. Grants
are fixed and can appreciate/depreciate in value based on the performance of the
American Century mutual funds in which the portfolio manager chooses to invest
them.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
Mr. LeGard did not own any shares of the fund as of October 31, 2006, the fund's
most recent fiscal year end.
/s/Ryan L. Blaine December 8, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ryan L. Blaine
[(Printed Name of person signing)]
Corporate Counsel, American Century Investments
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Partners LargeCap Growth Fund II
[Name of Fund/Account
]Gregory Woodhams
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
American Century
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $5,069,683,233
---------------------------
* other pooled investment vehicles:... 0 N/A
---------------------------
* other accounts:..................... 4 $141,802,183
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 N/A
-------------------
* other pooled investment vehicles:... 0 N/A
-------------------
* other accounts:..................... 0 N/A
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
Certain conflicts of interest may arise in connection with the management of
multiple portfolios. Potential conflicts include, for example, conflicts among
investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
Responsibility for managing American Century client portfolios is organized
according to investment discipline. Investment disciplines include, for
example, quantitative equity, small- and mid-cap growth, large-cap growth,
value, international, fixed income, asset allocation, and sector funds. Within
each discipline are one or more portfolio teams responsible for managing
specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team using the same objective, approach, and
philosophy. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which minimizes
the potential for conflicts of interest.
For each investment strategy, one portfolio is generally designated as the
"policy portfolio." Other portfolios with similar investment objectives,
guidelines and restrictions are referred to as "tracking portfolios." When
managing policy and tracking portfolios, a portfolio team typically purchases
and sells securities across all portfolios that the team manages. American
Century's trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same security for
multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century has adopted policies and procedures
to minimize the risk that a client portfolio could be systematically advantaged
or disadvantaged in connection with the aggregation of orders. To the extent
equity trades are aggregated, shares purchased or sold are generally allocated
to the participating portfolios pro rata based on order size. Because initial
public offerings (IPOs) are usually available in limited supply and in amounts
too small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio
manager at the time of trade execution and orders entered on the fixed income
order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these
potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
American Century portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. It includes the components described below, each of which is determined
with reference to a number of factors such as overall performance, market
competition, and internal equity. Compensation is not directly tied to the
value of assets held in client portfolios.
BASE SALARY
Portfolio managers receive base pay in the form of a fixed annual salary.
BONUS
A significant portion of portfolio manager compensation takes the form of an
annual incentive bonus tied to performance. Bonus payments are determined by a
combination of factors. One factor is fund investment performance. For policy
portfolios, investment performance is measured by a combination of one- and
three-year pre-tax performance relative to a pre-established, internally-
customized peer group and/or market benchmark. Custom peer groups are
constructed using all the funds in appropriate Lipper or Morningstar categories
as a starting point. Funds are then eliminated from the peer group based on a
standardized methodology designed to result in a final peer group that more
closely represents the fund's true peers based on internal investment mandates
and that is more stable (i.e., has less peer turnover) over the long-term. In
cases where a portfolio manager has responsibility for more than one policy
portfolio, the performance of each is assigned a percentage weight commensurate
with the portfolio manager's level of responsibility.
With regard to tracking portfolios, investment performance may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for the
Partners LargeCap Growth Fund II.
A second factor in the bonus calculation relates to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investment performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay.
RESTRICTED STOCK PLANS
Portfolio managers are eligible for grants of restricted stock of ACC. These
grants are discretionary, and eligibility and availability can vary from year to
year. The size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years).
DEFERRED COMPENSATION PLANS
Portfolio managers are eligible for grants of deferred compensation. These
grants are used in limited situations, primarily for retention purposes. Grants
are fixed and can appreciate/depreciate in value based on the performance of the
American Century mutual funds in which the portfolio manager chooses to invest
them.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
Mr. Woodhams did not own any shares of the fund as of October 31, 2006, the
fund's most recent fiscal year end.
/s/Ryan L. Blaine December 8, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ryan L. Blaine
[(Printed Name of person signing)]
Corporate Counsel, American Century Investments
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Partners LargeCap Growth Fund
[Name of Fund/Account
]Prescott LeGard
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
American Century
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $5,744,340,066
---------------------------
* other pooled investment vehicles:... 0 N/A
---------------------------
* other accounts:..................... 3 $140,744,392
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 N/A
-------------------
* other pooled investment vehicles:... 0 N/A
-------------------
* other accounts:..................... 0 N/A
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
Certain conflicts of interest may arise in connection with the management of
multiple portfolios. Potential conflicts include, for example, conflicts among
investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
Responsibility for managing American Century client portfolios is organized
according to investment discipline. Investment disciplines include, for
example, quantitative equity, small- and mid-cap growth, large-cap growth,
value, international, fixed income, asset allocation, and sector funds. Within
each discipline are one or more portfolio teams responsible for managing
specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team using the same objective, approach, and
philosophy. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which minimizes
the potential for conflicts of interest.
For each investment strategy, one portfolio is generally designated as the
"policy portfolio." Other portfolios with similar investment objectives,
guidelines and restrictions are referred to as "tracking portfolios." When
managing policy and tracking portfolios, a portfolio team typically purchases
and sells securities across all portfolios that the team manages. American
Century's trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same security for
multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century has adopted policies and procedures
to minimize the risk that a client portfolio could be systematically advantaged
or disadvantaged in connection with the aggregation of orders. To the extent
equity trades are aggregated, shares purchased or sold are generally allocated
to the participating portfolios pro rata based on order size. Because initial
public offerings (IPOs) are usually available in limited supply and in amounts
too small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio
manager at the time of trade execution and orders entered on the fixed income
order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these
potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
American Century portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. It includes the components described below, each of which is determined
with reference to a number of factors such as overall performance, market
competition, and internal equity. Compensation is not directly tied to the
value of assets held in client portfolios.
BASE SALARY
Portfolio managers receive base pay in the form of a fixed annual salary.
BONUS
A significant portion of portfolio manager compensation takes the form of an
annual incentive bonus tied to performance. Bonus payments are determined by a
combination of factors. One factor is fund investment performance. For policy
portfolios, investment performance is measured by a combination of one- and
three-year pre-tax performance relative to a pre-established, internally-
customized peer group and/or market benchmark. Custom peer groups are
constructed using all the funds in appropriate Lipper or Morningstar categories
as a starting point. Funds are then eliminated from the peer group based on a
standardized methodology designed to result in a final peer group that more
closely represents the fund's true peers based on internal investment mandates
and that is more stable (i.e., has less peer turnover) over the long-term. In
cases where a portfolio manager has responsibility for more than one policy
portfolio, the performance of each is assigned a percentage weight commensurate
with the portfolio manager's level of responsibility.
With regard to tracking portfolios, investment performance may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for the
Partners LargeCap Growth Fund.
A second factor in the bonus calculation relates to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investment performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay.
RESTRICTED STOCK PLANS
Portfolio managers are eligible for grants of restricted stock of ACC. These
grants are discretionary, and eligibility and availability can vary from year to
year. The size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years).
DEFERRED COMPENSATION PLANS
Portfolio managers are eligible for grants of deferred compensation. These
grants are used in limited situations, primarily for retention purposes. Grants
are fixed and can appreciate/depreciate in value based on the performance of the
American Century mutual funds in which the portfolio manager chooses to invest
them.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
Mr. LeGard did not own any shares of the fund as of October 31, 2006, the fund's
most recent fiscal year end.
/s/Ryan L. Blaine December 8, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ryan L. Blaine
[(Printed Name of person signing)]
Corporate Counsel, American Century Investments
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Partners LargeCap Growth Fund
[Name of Fund/Account
]Gregory Woodhams
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
American Century
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $5,760,184,006
---------------------------
* other pooled investment vehicles:... 0 N/A
---------------------------
* other accounts:..................... 4 $141,802,183
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 N/A
-------------------
* other pooled investment vehicles:... 0 N/A
-------------------
* other accounts:..................... 0 N/A
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
Certain conflicts of interest may arise in connection with the management of
multiple portfolios. Potential conflicts include, for example, conflicts among
investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
Responsibility for managing American Century client portfolios is organized
according to investment discipline. Investment disciplines include, for
example, quantitative equity, small- and mid-cap growth, large-cap growth,
value, international, fixed income, asset allocation, and sector funds. Within
each discipline are one or more portfolio teams responsible for managing
specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team using the same objective, approach, and
philosophy. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which minimizes
the potential for conflicts of interest.
For each investment strategy, one portfolio is generally designated as the
"policy portfolio." Other portfolios with similar investment objectives,
guidelines and restrictions are referred to as "tracking portfolios." When
managing policy and tracking portfolios, a portfolio team typically purchases
and sells securities across all portfolios that the team manages. American
Century's trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same security for
multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century has adopted policies and procedures
to minimize the risk that a client portfolio could be systematically advantaged
or disadvantaged in connection with the aggregation of orders. To the extent
equity trades are aggregated, shares purchased or sold are generally allocated
to the participating portfolios pro rata based on order size. Because initial
public offerings (IPOs) are usually available in limited supply and in amounts
too small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio
manager at the time of trade execution and orders entered on the fixed income
order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these
potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
American Century portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. It includes the components described below, each of which is determined
with reference to a number of factors such as overall performance, market
competition, and internal equity. Compensation is not directly tied to the
value of assets held in client portfolios.
BASE SALARY
Portfolio managers receive base pay in the form of a fixed annual salary.
BONUS
A significant portion of portfolio manager compensation takes the form of an
annual incentive bonus tied to performance. Bonus payments are determined by a
combination of factors. One factor is fund investment performance. For policy
portfolios, investment performance is measured by a combination of one- and
three-year pre-tax performance relative to a pre-established, internally-
customized peer group and/or market benchmark. Custom peer groups are
constructed using all the funds in appropriate Lipper or Morningstar categories
as a starting point. Funds are then eliminated from the peer group based on a
standardized methodology designed to result in a final peer group that more
closely represents the fund's true peers based on internal investment mandates
and that is more stable (i.e., has less peer turnover) over the long-term. In
cases where a portfolio manager has responsibility for more than one policy
portfolio, the performance of each is assigned a percentage weight commensurate
with the portfolio manager's level of responsibility.
With regard to tracking portfolios, investment performance may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for the
Partners LargeCap Growth Fund.
A second factor in the bonus calculation relates to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investment performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay.
RESTRICTED STOCK PLANS
Portfolio managers are eligible for grants of restricted stock of ACC. These
grants are discretionary, and eligibility and availability can vary from year to
year. The size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years).
DEFERRED COMPENSATION PLANS
Portfolio managers are eligible for grants of deferred compensation. These
grants are used in limited situations, primarily for retention purposes. Grants
are fixed and can appreciate/depreciate in value based on the performance of the
American Century mutual funds in which the portfolio manager chooses to invest
them.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
Mr. Woodhams did not own any shares of the fund as of October 31, 2006, the
fund's most recent fiscal year end.
/s/Ryan L. Blaine December 8, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ryan L. Blaine
[(Printed Name of person signing)]
Corporate Counsel, American Century Investments
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Partners LargeCap Value Fund II
[Name of Fund/Account
]Brendan Healy
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
American Century
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the most recent
practicable date).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $3,806,751,486
---------------------------
* other pooled investment vehicles:... **0** N/A
---------------------------
* other accounts:..................... 3 $253,081,985
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 N/A
-------------------
* other pooled investment vehicles:... 0 N/A
-------------------
* other accounts:..................... 0 N/A
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
Certain conflicts of interest may arise in connection with the management of
multiple portfolios. Potential conflicts include, for example, conflicts among
investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
Responsibility for managing American Century client portfolios is organized
according to investment discipline. Investment disciplines include, for
example, quantitative equity, small- and mid-cap growth, large-cap growth,
value, international, fixed income, asset allocation, and sector funds. Within
each discipline are one or more portfolio teams responsible for managing
specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team using the same objective, approach, and
philosophy. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which minimizes
the potential for conflicts of interest.
For each investment strategy, one portfolio is generally designated as the
"policy portfolio." Other portfolios with similar investment objectives,
guidelines and restrictions are referred to as "tracking portfolios." When
managing policy and tracking portfolios, a portfolio team typically purchases
and sells securities across all portfolios that the team manages. American
Century's trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same security for
multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century has adopted policies and procedures
to minimize the risk that a client portfolio could be systematically advantaged
or disadvantaged in connection with the aggregation of orders. To the extent
equity trades are aggregated, shares purchased or sold are generally allocated
to the participating portfolios pro rata based on order size. Because initial
public offerings (IPOs) are usually available in limited supply and in amounts
too small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio
manager at the time of trade execution and orders entered on the fixed income
order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these
potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
American Century portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. It includes the components described below, each of which is determined
with reference to a number of factors such as overall performance, market
competition, and internal equity. Compensation is not directly tied to the
value of assets held in client portfolios.
BASE SALARY
Portfolio managers receive base pay in the form of a fixed annual salary.
BONUS
A significant portion of portfolio manager compensation takes the form of an
annual incentive bonus tied to performance. Bonus payments are determined by a
combination of factors. One factor is fund investment performance. For policy
portfolios, investment performance is measured by a combination of one- and
three-year pre-tax performance relative to a pre-established, internally-
customized peer group and/or market benchmark. Custom peer groups are
constructed using all the funds in appropriate Lipper or Morningstar categories
as a starting point. Funds are then eliminated from the peer group based on a
standardized methodology designed to result in a final peer group that more
closely represents the fund's true peers based on internal investment mandates
and that is more stable (i.e., has less peer turnover) over the long-term. In
cases where a portfolio manager has responsibility for more than one policy
portfolio, the performance of each is assigned a percentage weight commensurate
with the portfolio manager's level of responsibility.
With regard to tracking portfolios, investment performance may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for the
Partners LargeCap Value Fund II.
A second factor in the bonus calculation relates to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investment performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay.
RESTRICTED STOCK PLANS
Portfolio managers are eligible for grants of restricted stock of ACC. These
grants are discretionary, and eligibility and availability can vary from year to
year. The size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years).
DEFERRED COMPENSATION PLANS
Portfolio managers are eligible for grants of deferred compensation. These
grants are used in very limited situations, primarily for retention purposes.
Grants are fixed and can appreciate/depreciate in value based on the performance
of the American Century mutual funds in which the portfolio manager chooses to
invest them.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
The portfolio manager did not own any shares of the fund as of October 31, 2006,
the fund's most recent fiscal year end.
/s/Ryan L. Blaine December 8, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ryan L. Blaine
[(Printed Name of person signing)]
Corporate Counsel, American Century Investments
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Partners LargeCap Value Fund II
[Name of Fund/Account
]Charles Ritter
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
American Century
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the most recent
practicable date).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $3,806,751,486
---------------------------
* other pooled investment vehicles:... **0** N/A
---------------------------
* other accounts:..................... 3 $253,081,985
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 N/A
-------------------
* other pooled investment vehicles:... 0 N/A
-------------------
* other accounts:..................... 0 N/A
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
Certain conflicts of interest may arise in connection with the management of
multiple portfolios. Potential conflicts include, for example, conflicts among
investment strategies and conflicts in the allocation of investment
opportunities. American Century has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
Responsibility for managing American Century client portfolios is organized
according to investment discipline. Investment disciplines include, for
example, quantitative equity, small- and mid-cap growth, large-cap growth,
value, international, fixed income, asset allocation, and sector funds. Within
each discipline are one or more portfolio teams responsible for managing
specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team using the same objective, approach, and
philosophy. Accordingly, portfolio holdings, position sizes, and industry and
sector exposures tend to be similar across similar portfolios, which minimizes
the potential for conflicts of interest.
For each investment strategy, one portfolio is generally designated as the
"policy portfolio." Other portfolios with similar investment objectives,
guidelines and restrictions are referred to as "tracking portfolios." When
managing policy and tracking portfolios, a portfolio team typically purchases
and sells securities across all portfolios that the team manages. American
Century's trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is not.
American Century may aggregate orders to purchase or sell the same security for
multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century has adopted policies and procedures
to minimize the risk that a client portfolio could be systematically advantaged
or disadvantaged in connection with the aggregation of orders. To the extent
equity trades are aggregated, shares purchased or sold are generally allocated
to the participating portfolios pro rata based on order size. Because initial
public offerings (IPOs) are usually available in limited supply and in amounts
too small to permit across-the-board pro rata allocations, American Century has
adopted special procedures designed to promote a fair and equitable allocation
of IPO securities among clients over time. Fixed income securities transactions
are not executed through a centralized trading desk. Instead, portfolio teams
are responsible for executing trades with broker/dealers in a predominantly
dealer marketplace. Trade allocation decisions are made by the portfolio
manager at the time of trade execution and orders entered on the fixed income
order management system.
Finally, investment of American Century's corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these
potential conflicts of interest, American Century has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century to the
detriment of client portfolios.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
American Century portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. It includes the components described below, each of which is determined
with reference to a number of factors such as overall performance, market
competition, and internal equity. Compensation is not directly tied to the
value of assets held in client portfolios.
BASE SALARY
Portfolio managers receive base pay in the form of a fixed annual salary.
BONUS
A significant portion of portfolio manager compensation takes the form of an
annual incentive bonus tied to performance. Bonus payments are determined by a
combination of factors. One factor is fund investment performance. For policy
portfolios, investment performance is measured by a combination of one- and
three-year pre-tax performance relative to a pre-established, internally-
customized peer group and/or market benchmark. Custom peer groups are
constructed using all the funds in appropriate Lipper or Morningstar categories
as a starting point. Funds are then eliminated from the peer group based on a
standardized methodology designed to result in a final peer group that more
closely represents the fund's true peers based on internal investment mandates
and that is more stable (i.e., has less peer turnover) over the long-term. In
cases where a portfolio manager has responsibility for more than one policy
portfolio, the performance of each is assigned a percentage weight commensurate
with the portfolio manager's level of responsibility.
With regard to tracking portfolios, investment performance may be measured in a
number of ways. The performance of the tracking portfolio may be measured
against a customized peer group and/or market benchmark as described above for
policy portfolios. Alternatively, the tracking portfolio may be evaluated
relative to the performance of its policy portfolio, with the goal of matching
the policy portfolio's performance as closely as possible. In some cases, the
performance of a tracking portfolio is not separately considered; rather, the
performance of the policy portfolio is the key metric. This is the case for the
Partners LargeCap Value Fund II.
A second factor in the bonus calculation relates to the performance of all
American Century funds managed according to a particular investment style, such
as U.S. growth or value. Performance is measured for each product individually
as described above and then combined to create an overall composite for the
product group. These composites may measure one-year performance (equal
weighted) or a combination of one- and three-year performance (asset weighted)
depending on the portfolio manager's responsibilities and products managed.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A portion of some portfolio managers' bonuses may be tied to individual
performance goals, such as research projects and the development of new
products.
Finally, portfolio manager bonuses may occasionally be affected by
extraordinarily positive or negative financial performance by American Century
Companies, Inc. ("ACC"), the adviser's privately-held parent company. This
feature has been designed to maintain investment performance as the primary
component of portfolio manager bonuses while also providing a link to the
adviser's ability to pay.
RESTRICTED STOCK PLANS
Portfolio managers are eligible for grants of restricted stock of ACC. These
grants are discretionary, and eligibility and availability can vary from year to
year. The size of an individual's grant is determined by individual and product
performance as well as other product-specific considerations. Grants can
appreciate/depreciate in value based on the performance of the ACC stock during
the restriction period (generally three years).
DEFERRED COMPENSATION PLANS
Portfolio managers are eligible for grants of deferred compensation. These
grants are used in very limited situations, primarily for retention purposes.
Grants are fixed and can appreciate/depreciate in value based on the performance
of the American Century mutual funds in which the portfolio manager chooses to
invest them.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
The portfolio manager did not own any shares of the fund as of October 31, 2006,
the fund's most recent fiscal year end.
/s/Ryan L. Blaine December 8, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ryan L. Blaine
[(Printed Name of person signing)]
Corporate Counsel, American Century Investments
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL PARTNERS SMALL CAP VALUE FUND
[Name of Fund
] COLEMAN M. BRANDT
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
ARK ASSET MANAGEMENT CO., INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
--------------------------
* other pooled investment vehicles:... 2 61,900,591
--------------------------
* other accounts:..................... 77 1,945,800,465
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
ARK'S MANAGEMENT DETERMINES LEVELS OF EACH PORFOLIO MANAGER'S COMPENSATION.
COMPENSATION IS COMPRISED OF ANNUAL SALARY AND ANNUAL INCENTIVE BONUS. THERE
IS NO PARTICULAR STRUCTURE OR FORMULA USED BY ARK TO DETERMINE ITS PORTFOLIO
MANAGER'S COMPENSATION. EACH PORTFOLIO MANAGER'S COMPENSATION IS BASED UPON
SEVERAL FACTORS, INCLUDING THE RELATIVE PERFORMANCE ACHIEVED VERSUS THE
PORTFOLIO'S GROUPS BENHMARKS, THE FIRMS PROFITABILITY, THE THE PORTFOLIO
MANAGER'S GROUP'S PROFITABILITY AND THE PORTFOLIO MANAGER'S: (1)
CONTRIBUTION OF INVESTMENT IDEAS TO THE INVESTMENT PROCESS, (2) SKILL AS A
PROFESSIONAL, AND (3) EFFECTIVE INTERFACE WITH CLIENTS AND OTHER
PROFESSIONALS WITHIN THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Grace A. Zona 1/11/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Grace A. Zona
[(Printed Name of person signing)]
Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL PARTNERS SMALL CAP VALUE FUND
[Name of Fund
] WILLIAM G. CHARCALIS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
ARK ASSET MANAGEMENT CO., INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
--------------------------
* other pooled investment vehicles:... 2 61,900,591
--------------------------
* other accounts:..................... 77 1,945,800,465
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
ARK'S MANAGEMENT DETERMINES LEVELS OF EACH PORFOLIO MANAGER'S COMPENSATION.
COMPENSATION IS COMPRISED OF ANNUAL SALARY AND ANNUAL INCENTIVE BONUS. THERE
IS NO PARTICULAR STRUCTURE OR FORMULA USED BY ARK TO DETERMINE ITS PORTFOLIO
MANAGER'S COMPENSATION. EACH PORTFOLIO MANAGER'S COMPENSATION IS BASED UPON
SEVERAL FACTORS, INCLUDING THE RELATIVE PERFORMANCE ACHIEVED VERSUS THE
PORTFOLIO'S GROUPS BENHMARKS, THE FIRMS PROFITABILITY, THE THE PORTFOLIO
MANAGER'S GROUP'S PROFITABILITY AND THE PORTFOLIO MANAGER'S: (1)
CONTRIBUTION OF INVESTMENT IDEAS TO THE INVESTMENT PROCESS, (2) SKILL AS A
PROFESSIONAL, AND (3) EFFECTIVE INTERFACE WITH CLIENTS AND OTHER
PROFESSIONALS WITHIN THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/S. jay Mermelstein 12/27/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
S. Jay Mermelstein
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND
[Name of Fund
] MARK GIAMBRONE
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $3,910.8 MIL.
--------------------------
* other pooled investment vehicles:... 0 $0
--------------------------
* other accounts:..................... 15 $967.7 MIL.
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $3,470.3 MIL.
--------------------------
* other pooled investment vehicles:... 0 $0
--------------------------
* other accounts:..................... 0 $0
--------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ACTUAL OR POTENTIAL CONFLICTS OF INTEREST MAY ARISE WHEN A PORTFOLIO MANAGER
HAS MANAGEMENT RESPONSIBILITIES TO MORE THAN ONE ACCOUNT (INCLUDING THE
FUND). BHMS MANAGES POTENTIAL CONFLICTS BETWEEN FUNDS OR WITH OTHER TYPES OF
ACCOUNTS THROUGH ALLOCATION POLICIES AND PROCEDURES, INTERNAL REVIEW
PROCESSES AND OVERSIGHT BY DIRECTORS AND INDEPENDENT THIRD PARTIES TO ENSURE
THAT NO CLIENT, REGARDLESS OF TYPE OR FEE STRUCTURE, IS INTENTIONALLY FAVORED
AT THE EXPENSE OF ANOTHER. ALLOCATION POLICIES ARE DESIGNED TO ADDRESS
POTENTIAL CONFLICTS IN SITUATIONS WHERE TWO OR MORE FUNDS OR ACCOUNTS
PARTICIPATE IN INVESTMENT DECISIONS INVOLVING THE SAME SECURITIES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
IN ADDITION TO BASE SALARY, ALL PORTFOLIO MANAGERS AND ANALYSTS SHARE IN A
BONUS POOL THAT IS DISTRIBUTED SEMI-ANNUALLY. THE AMOUNT OF BONUS
COMPENSATION IS BASED ON QUANTITATIVE AND QUALITATIVE FACTORS. ANALYSTS AND
PORTFOLIO MANAGERS ARE RATED ON THEIR VALUE ADDED TO THE TEAM-ORIENTED
INVESTMENT PROCESS. COMPENSATION IS NOT TIED TO A PUBLISHED OR PRIVATE
BENCHMARK. IT IS IMPORTANT TO UNDERSTAND THAT CONTRIBUTIONS TO THE OVERALL
INVESTMENT PROCESS MAY INCLUDE NOT RECOMMENDING SECURITIES IN AN ANALYST'S
SECTOR IF THERE ARE NO COMPELLING OPPORTUNITIES IN THE INDUSTRIES COVERED BY
THAT ANALYST.
IN ADDITION, MANY OF OUR EMPLOYEES, INCLUDING ALL PORTFOLIO MANAGERS AND
ANALYSTS, HAVE EQUITY OWNERSHIP IN THE FIRM THROUGH "PHANTOM STOCK" IN BHMS,
AS WELL AS PARTICIPATION IN A LONG-TERM INCENTIVE PLAN WITH OLD MUTUAL ASSET
MANAGEMENT (US). ALSO, ALL PARTNERS OF THE FIRM RECEIVE, ON A QUARTERLY
BASIS, A SHARE OF THE FIRM'S PROFITS, WHICH ARE, TO A GREAT EXTENT, RELATED
TO THE PERFORMANCE OF THE ENTIRE INVESTMENT TEAM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Patricia B. Andres November 9, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Patricia B. Andrews
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND
[Name of Fund
] JAMES P. BARROW
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
3. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 15 $33,956.1 MIL.
---------------------------
* other pooled investment vehicles:... 0 $0
---------------------------
* other accounts:..................... 27 $2,957.5 MIL.
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $31,811.3 MIL.
---------------------------
* other pooled investment vehicles:... 0 $0
---------------------------
* other accounts:..................... 0 $0
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ACTUAL OR POTENTIAL CONFLICTS OF INTEREST MAY ARISE WHEN A PORTFOLIO MANAGER
HAS MANAGEMENT RESPONSIBILITIES TO MORE THAN ONE ACCOUNT (INCLUDING THE
FUND). BHMS MANAGES POTENTIAL CONFLICTS BETWEEN FUNDS OR WITH OTHER TYPES OF
ACCOUNTS THROUGH ALLOCATION POLICIES AND PROCEDURES, INTERNAL REVIEW
PROCESSES AND OVERSIGHT BY DIRECTORS AND INDEPENDENT THIRD PARTIES TO ENSURE
THAT NO CLIENT, REGARDLESS OF TYPE OR FEE STRUCTURE, IS INTENTIONALLY FAVORED
AT THE EXPENSE OF ANOTHER. ALLOCATION POLICIES ARE DESIGNED TO ADDRESS
POTENTIAL CONFLICTS IN SITUATIONS WHERE TWO OR MORE FUNDS OR ACCOUNTS
PARTICIPATE IN INVESTMENT DECISIONS INVOLVING THE SAME SECURITIES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
IN ADDITION TO BASE SALARY, ALL PORTFOLIO MANAGERS AND ANALYSTS SHARE IN A
BONUS POOL THAT IS DISTRIBUTED SEMI-ANNUALLY. THE AMOUNT OF BONUS
COMPENSATION IS BASED ON QUANTITATIVE AND QUALITATIVE FACTORS. ANALYSTS AND
PORTFOLIO MANAGERS ARE RATED ON THEIR VALUE ADDED TO THE TEAM-ORIENTED
INVESTMENT PROCESS. COMPENSATION IS NOT TIED TO A PUBLISHED OR PRIVATE
BENCHMARK. IT IS IMPORTANT TO UNDERSTAND THAT CONTRIBUTIONS TO THE OVERALL
INVESTMENT PROCESS MAY INCLUDE NOT RECOMMENDING SECURITIES IN AN ANALYST'S
SECTOR IF THERE ARE NO COMPELLING OPPORTUNITIES IN THE INDUSTRIES COVERED BY
THAT ANALYST.
IN ADDITION, MANY OF OUR EMPLOYEES, INCLUDING ALL PORTFOLIO MANAGERS AND
ANALYSTS, HAVE EQUITY OWNERSHIP IN THE FIRM THROUGH "PHANTOM STOCK" IN BHMS,
AS WELL AS PARTICIPATION IN A LONG-TERM INCENTIVE PLAN WITH OLD MUTUAL ASSET
MANAGEMENT (US). ALSO, ALL PARTNERS OF THE FIRM RECEIVE, ON A QUARTERLY
BASIS, A SHARE OF THE FIRM'S PROFITS, WHICH ARE, TO A GREAT EXTENT, RELATED
TO THE PERFORMANCE OF THE ENTIRE INVESTMENT TEAM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Patricia B. Andres November 9, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Patricia B. Andrews
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF-Principal LargeCap Growth Fund II and
PIF-Partners LargeCap Value Fund
(Cash Equitization portion)
Name of Fund
James Boffa
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
BNY Asset Management
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ...... 5 $12,923 Mil
------------ --------------
------------ --------------
>> other pooled investment vehicles:...... 2 $8,466 Mil
------------ --------------
------------ --------------
>> other accounts:........................ 356 $13,579 Mil
------------ -------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ......
------------- -----------
------------- -----------
>> other pooled investment vehicles:......
------------- -----------
------------- -----------
>> other accounts:........................
------------- -----------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The compensation package consists of base and bonus, plus other Bank
components such as 401k, defined contribution plan and benefits. The
majority of the bonus pool for the team is driven by the success of both
short (1 year) and longer term performance (3 and 5 year). Success is
determined by relative performance versus the passive benchmark and peer
group rankings. The head of the team's bonus is determined by the head of
Institutional Asset Management and the head of BNY Asset Management. The
head of the team then determines, in conjunction with the head of
Institutional Asset Management, the bonuses for the team members. Bonuses
are determined by performance contribution to team, evaluated using
quantitative judgments based on performance attribution (approximately 80%)
and qualitative judgments based on revenue retention, client interaction
and contribution to the team dynamic (approximately 20%).
The bonus consists of cash, deferred cash, stock grants and stock options.
Deferral is considered for greater incentive earners particularly as awards
increase.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
Not applicable.
As access person we are subject to all compliance and precertification
requirements.
/s/James Boffa 1/19/2007
--------------------------------------------------------------- ---------
(Signature of person authorized to sign on behalf of the Sub-Advisor) (Date)
James Boffa
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF-Principal LargeCap Growth Fund II and
PIF-Partners LargeCap Value Fund
(Cash Equitization portion)
[Name of Fund
] KURT ZYLA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
BNY ASSET MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 533.2
---------------------
* other pooled investment vehicles:... 10 6,089.6
---------------------
* other accounts:..................... 88 14,274.4
---------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... ***** *****
-------------------
* other pooled investment vehicles:... ***** *****
-------------------
* other accounts:..................... ***** *****
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE COMPENSATION PACKAGE CONSISTS OF BASE AND BONUS, PLUS OTHER BANK
COMPONENTS SUCH AS 401K, DEFINED CONTRIBUTION PLAN AND BENEFITS. THE
MAJORITY OF THE BONUS POOL FOR THE TEAM IS DRIVEN BY THE SUCCESS OF BOTH
SHORT (1 YEAR) AND LONGER TERM PERFORMANCE (3 AND 5 YEAR). SUCCESS IS
DETERMINED BY RELATIVE PERFORMANCE VERSUS THE PASSIVE BENCHMARK AND PEER
GROUP RANKINGS. THE HEAD OF THE TEAM'S BONUS IS DETERMINED BY THE HEAD OF
INSTITUTIONAL ASSET MANAGEMENT AND THE HEAD OF BNY ASSET MANAGEMENT.
THE HEAD OF THE TEAM THEN DETERMINES, IN CONJUNCTION WITH THE HEAD OF
INSTITUTIONAL ASSET MANAGEMENT, THE BONUSES FOR THE TEAM MEMBERS. BONUSES
ARE DETERMINED BY PERFORMANCE CONTRIBUTION TO TEAM, EVALUATED USING
QUANTITATIVE JUDGMENTS BASED ON PERFORMANCE ATTRIBUTION (APPROXIMATELY 80%)
AND QUALITATIVE JUDGMENTS BASED ON REVENUE RETENTION, CLIENT INTERACTION AND
CONTRIBUTION TO THE TEAM DYNAMIC (APPROXIMATELY 20%).
THE BONUS CONSISTS OF CASH, DEFERRED CASH, STOCK GRANTS AND STOCK OPTIONS.
DEFERRAL IS CONSIDERED FOR GREATER INCENTIVE EARNERS PARTICULARLY AS AWARDS
INCREASE.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
BECAUSE THE EQUITY INDEX IS BASED ON REPLICATION OF THE INDEX RATHER THAN
STOCK PICKING BY THE PORTFOLIO MANAGERS, WE DO NOT TRACK THEIR PERSONAL
SECURITY HOLDINGS AGAINST THE INDEX FUNDS.
AS ACCESS PERSONS WE ARE SUBJECT TO ALL COMPLIANCE AND PRECERTIFICATION
REQUIREMENTS.
/s/Kurt Zyla 1-16-07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Kurt Zyla
[(Printed Name of person signing)]
Managing Director & CIO, Head of Quantitative Equity Management
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - Large Cap Growth Fund
[Name of Fund/Account
]Anthony Rizza
[Name of Portfolio Manager
]
Columbus Circle Investors
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $1,370.9 M
-----------------------
* other pooled investment vehicles:... 2 $1,132.5 M
-----------------------
* other accounts:..................... 54 $2,212.7 M
-----------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------
* other pooled investment vehicles:... 0 $0
---------------------
* other accounts:..................... 2 $111.6 M
---------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COLUMBUS CIRCLE INVESTORS SEEKS TO MAINTAIN A COMPETITIVE COMPENSATION
PROGRAM BASED ON INVESTMENT MANAGEMENT INDUSTRY STANDARDS TO ATTRACT AND
RETAIN SUPERIOR INVESTMENT PROFESSIONALS. COMPENSATION STRUCTURE IS
COMPRISED OF THE FOLLOWING:
BASE SALARY - EACH PORTFOLIO MANAGER IS PAID A FIXED BASE SALARY, WHICH
VARIES AMONG PORTFOLIO MANAGERS DEPENDING ON THE EXPERIENCE AND
RESPONSIBILITIES OF THE PORTFOLIO MANAGER. THE FIRM'S GOAL IS TO MAINTAIN
COMPETITIVE BASE SALARIES THROUGH AN ANNUAL REVIEW PROCESS, WHICH INCLUDES AN
ANALYSIS OF INDUSTRY STANDARDS, MARKET CONDITIONS, AND SALARY SURVEYS.
BONUS - EACH PORTFOLIO MANAGER IS ELIGIBLE TO RECEIVE AN ANNUAL BONUS.
TARGETED BONUS AMOUNTS VERY AMONG PORTFOLIO MANAGERS BASED ON THE EXPERIENCE
LEVEL AND RESPONSIBILITIES OF THE PORTFOLIO MANAGER. BONUS COMPENSATION IS
BASED UPON THE PERFORMANCE OF THE INVESTMENT STRATEGY FOR WHICH THE PORTFOLIO
MANAGER IS RESPONSIBLE AND THE ROLE THE PORTFOLIO MANAGER PLAYS IN THAT
PERFORMANCE, PLUS THE VALUE TO THE FIRM THAT THE STRATEGY THE PORTFOLIO
MANAGER HAS PROVIDED. VALUE TO THE FIRM IS RELATED TO THE ASSETS UNDER
MANAGEMENT THAT EMPLOY THE PORTFOLIO MANAGER'S STRATEGY AS WELL AS THE PART
THAT SUCCESS AND THE PORTFOLIO MANAGER PERSONALLY PLAY IN OVERALL FIRM
SUCCESS. PORTFOLIO MANAGERS WHO ARE PARTNERS RECEIVE QUARTERLY BONUS
COMPENSATION BASED UPON OVERALL REVENUE GENERATED BY THE PRODUCTS FOR WHICH
THEY ARE RESPONSIBLE.
EQUITY PAYMENTS - PORTFOLIO MANAGERS WHO ARE PARTNERS OF CCI RECEIVE
QUARTERLY DISTRIBUTIONS BASED UPON THEIR EQUITY OWNERSHIP SHARE AND FIRM
PROFITABILITY. WE BELIEVE THIS STRUCTURE ALLOWS US TO RETAIN HIGHLY
QUALIFIED PORTFOLIO MANAGERS, AS IT PROVIDES THE OPPORTUNITY TO SHARE
DIRECTLY IN THE SUCCESS OF THE BUSINESS.
EACH PORTFOLIO MANAGER IS ELIGIBLE TO PARTICIPATE IN A COMPETITIVE BENEFITS
PACKAGE INCLUDING HEALTH AND RETIREMENT BENEFITS [ IN THE FORM OF 401(K)
PLAN], WHICH ARE AVAILABLE TO ALL OF COLUMBUS CIRCLE EMPLOYEES.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Frank A. Cuttia 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Frank Cuttita
[(Printed Name of person signing)]
Chief Administrative Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - Mid Cap Growth Fund
[Name of Fund/Account
]Clifford Fox
[Name of Portfolio Manager
]
Columbus Circle Investors
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $339.2 M
-----------------------
* other pooled investment vehicles:... 4 $215.6 M
-----------------------
* other accounts:..................... 99 $1,457.5 M
-----------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COLUMBUS CIRCLE INVESTORS SEEKS TO MAINTAIN A COMPETITIVE COMPENSATION
PROGRAM BASED ON INVESTMENT MANAGEMENT INDUSTRY STANDARDS TO ATTRACT AND
RETAIN SUPERIOR INVESTMENT PROFESSIONALS. COMPENSATION STRUCTURE IS
COMPRISED OF THE FOLLOWING:
BASE SALARY - EACH PORTFOLIO MANAGER IS PAID A FIXED BASE SALARY, WHICH
VARIES AMONG PORTFOLIO MANAGERS DEPENDING ON THE EXPERIENCE AND
RESPONSIBILITIES OF THE PORTFOLIO MANAGER. THE FIRM'S GOAL IS TO MAINTAIN
COMPETITIVE BASE SALARIES THROUGH AN ANNUAL REVIEW PROCESS, WHICH INCLUDES AN
ANALYSIS OF INDUSTRY STANDARDS, MARKET CONDITIONS, AND SALARY SURVEYS.
BONUS - EACH PORTFOLIO MANAGER IS ELIGIBLE TO RECEIVE AN ANNUAL BONUS.
TARGETED BONUS AMOUNTS VERY AMONG PORTFOLIO MANAGERS BASED ON THE EXPERIENCE
LEVEL AND RESPONSIBILITIES OF THE PORTFOLIO MANAGER. BONUS COMPENSATION IS
BASED UPON THE PERFORMANCE OF THE INVESTMENT STRATEGY FOR WHICH THE PORTFOLIO
MANAGER IS RESPONSIBLE AND THE ROLE THE PORTFOLIO MANAGER PLAYS IN THAT
PERFORMANCE, PLUS THE VALUE TO THE FIRM THAT THE STRATEGY THE PORTFOLIO
MANAGER HAS PROVIDED. VALUE TO THE FIRM IS RELATED TO THE ASSETS UNDER
MANAGEMENT THAT EMPLOY THE PORTFOLIO MANAGER'S STRATEGY AS WELL AS THE PART
THAT SUCCESS AND THE PORTFOLIO MANAGER PERSONALLY PLAY IN OVERALL FIRM
SUCCESS. PORTFOLIO MANAGERS WHO ARE PARTNERS RECEIVE QUARTERLY BONUS
COMPENSATION BASED UPON OVERALL REVENUE GENERATED BY THE PRODUCTS FOR WHICH
THEY ARE RESPONSIBLE.
EQUITY PAYMENTS - PORTFOLIO MANAGERS WHO ARE PARTNERS OF CCI RECEIVE
QUARTERLY DISTRIBUTIONS BASED UPON THEIR EQUITY OWNERSHIP SHARE AND FIRM
PROFITABILITY. WE BELIEVE THIS STRUCTURE ALLOWS US TO RETAIN HIGHLY
QUALIFIED PORTFOLIO MANAGERS, AS IT PROVIDES THE OPPORTUNITY TO SHARE
DIRECTLY IN THE SUCCESS OF THE BUSINESS.
EACH PORTFOLIO MANAGER IS ELIGIBLE TO PARTICIPATE IN A COMPETITIVE BENEFITS
PACKAGE INCLUDING HEALTH AND RETIREMENT BENEFITS [ IN THE FORM OF 401(K)
PLAN], WHICH ARE AVAILABLE TO ALL OF COLUMBUS CIRCLE EMPLOYEES.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$100,000 - $500,000
/s/ Frank A. Cuttita 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Frank Cuttita
[(Printed Name of person signing)]
Chief Administrative Officer
[(Title of person signing)
]
Chief Administrative Officer
MANAGEMENT OF THE PARTNERS SMALLCAP VALUE FUND II (THE "FUND")
Dimensional Fund Advisors LP ("Dimensional")[[[1]] serves as a sub-advisor
to the Fund. As such, Dimensional is responsible for the Fund's assets. The Fund
is managed using a team approach. The investment team includes the Investment
Committee of Dimensional, portfolio managers and all other trading personnel.
The Investment Committee is composed primarily of certain officers and
directors of Dimensional who are appointed annually. As of the date of this
Prospectus the Investment Committee has seven members. Investment decisions for
the Fund are made by the Investment Committee, which meets on a regular basis
and also as needed to consider investment issues. The Investment Committee also
sets and reviews all investment related policies and procedures and approves any
changes in regards to approved countries, security types and brokers.
In accordance with the team approach used to manage the Fund, the portfolio
managers and portfolio traders implement the policies and procedures established
by the Investment Committee. The portfolio managers and portfolio traders also
make daily decisions regarding the portfolios managed by Dimensional including
running buy and sell programs based on the parameters established by the
Investment Committee. Robert T. Deere coordinates the efforts of all other
portfolio managers with respect to domestic equity portfolios. For this reason,
Dimensional has identified Mr. Deere as primarily responsible for the day-to-day
management of the Fund.
Mr. Deere is a Portfolio Manager and Vice President of Dimensional and a
member of the Investment Committee. Mr. Deere received his MBA from the
University of California at Los Angeles in 1991. He also holds a B.S. and a
B.A. from the University of California at San Diego. Mr. Deere joined
Dimensional in 1991 and has been responsible for the domestic equity portfolios
since 1994.
PORTFOLIO MANAGER
INVESTMENTS IN THE FUND
Information relating to the portfolio manager's ownership (including the
ownership of his or her immediate family) in the Fund in this SAI as of October
31, 2006 is set forth in the chart below.
DOLLAR RANGE OF FUND SHARES OWNED
NAME OF PORTFOLIO MANAGER PORTFOLIO
Robert T. Deere Partners SmallCap Value Fund II None
DESCRIPTION OF COMPENSATION STRUCTURE
Portfolio managers receive a base salary, an incentive bonus and may receive
a commission based on services provided to certain clients of Dimensional.
Compensation of a portfolio manager is determined by Dimensional and is based on
a portfolio manager's experience, responsibilities, the perception of the
quality of his or her work efforts and other subjective factors. The
compensation of portfolio managers is not directly based upon the performance of
the Funds or other accounts that they manage or on the value of assets held in
the Funds' portoflios. Dimensional reviews the compensation of each portfolio
manager annually and may make modifications in compensation as it deems
necessary to reflect changes in the market. Each portfolio manager's
compensation consists of the following:
{circle}BASE SALARY. Each portfolio manager is paid a base salary.
Dimensional considers the factors above to determine each portfolio
manager's base salary.
{circle}SEMI-ANNUAL BONUS. Each portfolio manager receives a bonus that is
based on the factors described above. The bonus is paid two times per
year.
{circle}COMMISSIONS FOR CLIENT SERVICES. Certain portfolio managers may
receive a commission based on services the portfolio manager provides to
certain clients of Dimensional.
Portfolio managers may be awarded the right to purchase an equity interest in
Dimensional or its parent company, as determined from time to time by the Board
of Directors of Dimensional's parent company or its delegees. Portfolio
managers also participate in benefit and retirement plans and other programs
available generally to all employees.
OTHER MANAGED ACCOUNTS
In addition to the Portfolio, each portfolio manager manages (i) other
U.S. registered investment companies advised or sub-advised by Dimensional, (ii)
other pooled investment vehicles that are not U.S. registered mutual funds and
(iii) other accounts managed for organizations and individuals. The following
table sets forth information regarding accounts other than the Portfolio for
which each portfolio manager has the day-to-day management responsibilities.
NAME OF NUMBER OF ACCOUNTS MANAGED AND TOTAL ASSETS BY CATEGORY AS NUMBER OF ACCOUNTS MANAGED AND TOTAL ASSETS BY CATEGORY AS
PORTFOLIO OF OCTOBER 31, 2006 OF OCTOBER 31, 2006 FOR WHICH ADVISORY FEE IS PERFORMANCE-
MANAGER BASED
Robert T. {circle}19 U.S. registered mutual funds with {circle}None with respect to registered mutual funds.
Deere approximately $46,436 million in total assets under
management.
{circle}8 unregistered pooled investment vehicles with {circle}1 unregistered pooled investment vehicle with
approximately $10,031 million in total assets under approximately $303 million in total assets under
management. management.
{circle}39 other accounts with approximately $2,859 {circle}None with respect to other accounts.
million in total assets under management.
Actual or apparent conflicts of interest may arise when a portfolio
manager has the primary day-to-day responsibilities with respect to the Fund and
also simultaneously other accounts. Other accounts include registered mutual
funds and other unregistered pooled investment vehicles, and other accounts
managed for organizations and individuals ("other accounts"). Other accounts
may have similar investment objectives to the Fund, or purchase, sell or hold
securities that are eligible to be purchased, sold or held by the Fund. Actual
or apparent conflicts of interest include:
{circle}Time Management. The management of multiple funds and/or other
accounts may result in a portfolio manager devoting unequal time and
attention to the management of the Fund and/or other accounts.
Dimensional seeks to manage such competing interests for the time and
attention of portfolio managers by having portfolio managers focus on a
particular investment discipline. Most other accounts managed by a
portfolio manager are managed using the same investment models that are
used in connection with the management of the Fund.
{circle}Investment Opportunities. It is possible that at times identical
securities will be held by more than one fund and/or other account.
However, positions in the same security may vary and the length of time
that any fund or other account may choose to hold its investment in the
same security may likewise vary. If a portfolio manager identifies a
limited investment opportunity that may be suitable for more than one fund
or other account, a fund may not be able to take full advantage of that
opportunity due to an allocation of filled purchase or sale orders across
all eligible funds and other accounts. To deal with these situations,
Dimensional has adopted procedures for allocating portfolio transactions
across multiple accounts.
{circle}Broker Selection. With respect to securities transactions for the
Fund, Dimensional determines which broker to use to execute each order,
consistent with its duty to seek best execution of the transaction.
However, with respect to certain other accounts (such as separate
accounts), Dimensional may be limited by the client with respect to the
selection of brokers or may be instructed to direct trades through a
particular broker. In these cases, Dimensional or its affiliates may
place separate, non-simultaneous, transactions for a fund and another
account that may temporarily affect the market price of the security or
the execution of the transaction, or both, to the detriment of the fund or
the other account.
{circle}Performance-Based Fees. For some accounts, Dimensional may be
compensated based on the profitability of the account, such as by a
performance-based management fee. These incentive compensation structures
may create a conflict of interest for Dimensional with regard to other
accounts where Dimensional is paid based on a percentage of assets in that
the portfolio manager may have an incentive to allocate securities
preferentially to the accounts where Dimensional might share in investment
gains.
{circle}Client Service Responsibilities. A conflict may arise where a
portfolio manager receives a commission for servicing a client in that the
portfolio manager may have an incentive to favor the account of that
client over other accounts that the portfolio manager manages.
{circle}Investment in the Fund. A portfolio manager or his/her relatives may
invest in a portfolio that he or she manages and a conflict may arise
where he or she may therefore have an incentive to treat the portfolio in
which the portfolio manager or his/her relatives invest preferentially as
compared to other Funds or Accounts for which they have portfolio
management responsibilities.
Dimensional has adopted certain compliance procedures that are reasonably
designed to address these types of conflicts. However, there is no guarantee
that such procedures will detect each and every situation in which a conflict
arises.
Footnotes
][1][] Effective November 3, 2006, Dimensional converted its organizational
structure from Dimensional Fund Advisors Inc., a Delaware corporation, to
Dimensional Fund Advisors LP, a Delaware limited partnership. All references to
"Dimensional" or the "Sub-Adviser" hereafter shall be to Dimensional Fund
Advisors LP, formerly known as Dimensional Fund Advisors Inc.
/s/Robert T. Deere
[(Signature of person authorized to sign on behalf of the Sub-Advisor)]
Robert T. Deere
[(Printed Name of person signing)]
Vice President and Senior Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF EQUITY INCOME FUND I
[Name of Fund
] JOSEPH T. SUTY
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $366,800,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES ), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER EQUITY INCOME FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF HIGH YIELD FUND II
[Name of Fund
] GARY J. POKRZYWINSKI
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $199,200,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER CORPORATE DEBT BBB-RATED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER BENEFICIALLY OWNS SHARES OF THE FUND RANGING BETWEEN
$500,001 - $1,000,000.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF INCOME FUND
[Name of Fund
] JOHN R. FRIEDL
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $199,200,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER CORPORATE DEBT BBB RANTED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF INCOME FUND
[Name of Fund
] GARY J. POKRZYWINSKI
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $199,200,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER CORPORATE DEBT BBB-RATED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF MIDCAP STOCK FUND
[Name of Fund
] DANIEL R. COLEMAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $115,800,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER MID-CAP CORE FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER BENEFICIALLY OWNS SHARES OF THE FUND IN THE RANGE OF
$100,001 - $500,000.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF MORTGAGE SECURITIES FUND
[Name of Fund
] CRAIG V. SOSEY
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $309,000,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3-, AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER U.S. MORTGAGE FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM BALANCED PORTFOLIO
[Name of Fund
] MICHAEL D. MEIGHAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER BENEFICIALLY OWNS SHARES OF THE FUND IN THE RANGE OF
$50,001 TO $100,000.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM BALANCED PORTFOLIO
[Name of Fund
] RANDALL L. YOAKUM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-. 3-. AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWNS SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM CONSERVATIVE BALANCED PORTFOLIO
[Name of Fund
] MICHAEL D. MEIGHAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM CONSERVATIVE BALANCED PORTFOLIO
[Name of Fund
] RANDALL L. YOAKUM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM CONSERVATIVE GROWTH PORTFOLIO
[Name of Fund
] MICHAEL D. MEIGHAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWNS SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM CONSERVATIVE GROWTH PORTFOLIO
[Name of Fund
] RANDALL L. YOAKUM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM FLEXIBLE INCOME PORTFOLIO
[Name of Fund
] MICHAEL D. MEIGHAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM FLEXIBLE INCOME PORTFOLIO
[Name of Fund
] RANDALL L. YOAKUM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM STRATEGIC GROWTH PORTFOLIO
[Name of Fund
] MICHAEL D. MEIGHAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3-, AND 5-YEAR PERCENTILE
RANKINGS AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SAM STRATEGIC GROWTH PORTFOLIO
[Name of Fund
] RANDALL L. YOAKUM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,083,500,000
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE PVC BALANCED FUND'S 1-. 2-, 3, AND 5-YEAR PERCENTILE RANKINGS
AMONG ITS LIPPER BALANCED FUNDS PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER BENEFICIALLY OWN SHARES OF THE FUND IN THE RANGE OF
$500,001 TO $1,000,000.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF SHORT-TERM INCOME FUND
[Name of Fund
] CRAIG V. SOSEY
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $309,000,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER SHORT TERM INVESTMENT GRADE DEBT FUND PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER DOES NOT BENEFICIALLY OWN SHARES OF THE FUND.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF WEST COAST EQUITY FUND
[Name of Fund
] PHILIP M. FOREMAN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EDGE ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $169,600,000
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 0 0
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
MATERIAL CONFLICTS OF INTEREST MAY ARISE WHEN A FUND'S PORTFOLIO MANAGER ALSO
HAS DAY-TO-DAY MANAGEMENT RESPONSIBILITIES WITH RESPECT TO ONE OR MORE OTHER
FUNDS OR OTHER ACCOUNTS, AS IS THE CASE FOR THE PORTFOLIO MANAGER LISTED
ABOVE.
A PORTFOLIO MANAGER WHO IS RESPONSIBLE FOR MANAGING MULTIPLE FUNDS AND/OR
ACCOUNTS MAY DEVOTE UNEQUAL TIME AND ATTENTION TO THE MANAGEMENT OF THOSE
FUNDS AND/OR ACCOUNTS. AS A RESULT, THE PORTFOLIO MANAGER MAY NOT BE ABLE TO
FORMULATE AS COMPLETE A STRATEGY OR IDENTIFY EQUALLY ATTRACTIVE INVESTMENT
OPPORTUNITIES FOR EACH OF THOSE ACCOUNTS AS MIGHT BE THE CASE IF HE OR SHE
WERE TO DEVOTE SUBSTANTIALLY MORE ATTENTION TO THE MANAGEMENT OF A SINGLE
FUND. THE EFFECTS OF THIS POTENTIAL CONFLICT MAY BE MORE PRONOUNCED WHERE
FUNDS AND/OR ACCOUNTS OVERSEEN BY A PARTICULAR PORTFOLIO MANAGER HAVE
DIFFERENT INVESTMENT STRATEGIES.
IF THE PORTFOLIO MANAGER IDENTIFIES A LIMITED INVESTMENT OPPORTUNITY THAT MAY
BE SUITABLE FOR MULTIPLE FUNDS AND/OR ACCOUNTS, THE OPPORTUNITY MAY BE
ALLOCATED AMONG THESE SEVERAL FUNDS OR ACCOUNTS, WHICH MAY LIMIT A FUND'S
ABILITY TO TAKE FULL ADVANTAGE OF THE INVESTMENT OPPORTUNITY.
AT TIMES, THE PORTFOLIO MANAGER MAY DETERMINE THAT AN INVESTMENT OPPORTUNITY
MAY BE APPROPRIATE FOR ONLY SOME OF THE FUNDS AND/OR ACCOUNTS FOR WHICH HE OR
SHE EXERCISES INVESTMENT RESPONSIBILITY, OR MAY DECIDE THAT CERTAIN OF THE
FUNDS AND/OR ACCOUNTS SHOULD TAKE DIFFERING POSITIONS WITH RESPECT TO A
PARTICULAR SECURITY. IN THESE CASES, THE PORTFOLIO MANAGER MAY PLACE SEPARATE
TRANSACTIONS FOR ONE OR MORE FUNDS OR ACCOUNTS WHICH MAY AFFECT THE MARKET
PRICE OF THE SECURITY OR THE EXECUTION OF THE TRANSACTION, OR BOTH, TO THE
DETRIMENT OR BENEFIT OF ONE OR MORE OTHER FUNDS AND/OR ACCOUNTS.
A PORTFOLIO MANAGER MAY BE ABLE TO SELECT OR INFLUENCE THE SELECTION OF THE
BROKERS AND DEALERS THAT ARE USED TO EXECUTE SECURITIES TRANSACTIONS FOR THE
FUNDS AND/OR ACCOUNT THAT THEY SUPERVISE. IN ADDITION TO EXECUTING TRADES,
SOME BROKERS AND DEALERS PROVIDE PORTFOLIO MANAGERS WITH BROKERAGE AND
RESEARCH SERVICES (AS THOSE TERMS ARE DEFINED IN SECTION 28(E) OF THE
SECURITIES EXCHANGE ACT OF 1934), WHICH MAY RESULT IN THE PAYMENT OF HIGHER
BROKERAGE FEES THAN MIGHT HAVE OTHERWISE BEEN AVAILABLE. THESE SERVICES MAY
BE MORE BENEFICIAL TO CERTAIN FUNDS OR ACCOUNTS THAN TO OTHERS. ALTHOUGH THE
PAYMENT OF BROKERAGE COMMISSIONS IS SUBJECT TO THE REQUIREMENT THAT THE
PORTFOLIO MANAGER DETERMINE IN GOOD FAITH THAT THE COMMISSIONS ARE REASONABLE
IN RELATION TO THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED TO
THE FUND, A PORTFOLIO MANAGER'S DECISION AS TO THE SELECTION OF BROKERS AND
DEALERS COULD YIELD DISPROPORTIONATE COSTS AND BENEFITS AMONG THE FUNDS
AND/OR ACCOUNTS THAT HE OR SHE MANAGES.
A CONFLICT OF INTEREST MAY ARISE WHERE THE FINANCIAL OR OTHER BENEFITS
AVAILABLE TO THE PORTFOLIO MANAGER DIFFER AMONG THE FUNDS AND/OR ACCOUNTS
THAT HE OR SHE MANAGES. IF THE STRUCTURE OF THE INVESTMENT ADVISOR'S
MANAGEMENT FEE AND/OR THE PORTFOLIO MANAGER'S COMPENSATION DIFFERS AMONG
FUNDS AND/OR ACCOUNTS (SUCH AS WHERE CERTAIN FUNDS OR ACCOUNTS PAY HIGHER
MANAGEMENT FEES), THE PORTFOLIO MANAGER MIGHT BE MOTIVATED TO HELP CERTAIN
FUNDS AND/OR ACCOUNTS OVER OTHERS. THE PORTFOLIO MANAGER MIGHT BE MOTIVATED
TO FAVOR FUNDS AND/OR ACCOUNTS IN WHICH HE OR SHE HAS AN INTEREST OR IN WHICH
THE INVESTMENT ADVISOR AND/OR ITS AFFILIATES HAVE INTERESTS. SIMILARLY, THE
DESIRE TO MAINTAIN ASSETS UNDER MANAGEMENT OR TO ENHANCE THE PORTFOLIO
MANAGER'S PERFORMANCE RECORD OR TO DERIVE OTHER REWARDS, FINANCIAL OR
OTHERWISE, COULD INFLUENCE THE PORTFOLIO MANAGER IN AFFORDING PREFERENTIAL
TREATMENT TO THOSE FUNDS AND/OR ACCOUNTS THAT COULD MOST SIGNIFICANTLY
BENEFIT THE PORTFOLIO MANAGER.
EDGE ASSET MANAGEMENT, INC. OR AN AFFILIATE OF EITHER MAY PROVIDE MORE
SERVICES (SUCH AS DISTRIBUTION OR RECORDKEEPING) FOR SOME TYPES OF FUNDS OR
ACCOUNTS THAN FOR OTHERS. IN SUCH CASES, THE PORTFOLIO MANAGER MAY BENEFIT,
EITHER DIRECTLY OR INDIRECTLY, BY DEVOTING DISPROPORTIONATE ATTENTION TO THE
MANAGEMENT OF FUNDS AND/OR ACCOUNTS THAT PROVIDE GREATER OVERALL RETURNS TO
THE INVESTMENT MANAGER AND ITS AFFILIATES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PORTFOLIO MANAGER RECEIVES A FIXED SALARY AS WELL AS INCENTIVE-BASED
COMPENSATION. SALARY IS BASED UPON A VARIETY OF FACTORS INCLUDING EDUCATION,
PROFESSIONAL EXPERIENCE, SENIORITY AND ANNUAL SURVEYS OF INVESTMENT ADVISOR
COMPENSATION. THE INCENTIVE-BASED PORTION OF THE PORTFOLIO MANAGER'S
COMPENSATION IS DETERMINED BY AN EVALUATION OF PROFESSIONAL AND INVESTMENT
PERFORMANCE. PROFESSIONAL PERFORMANCE IS ASSESSED BY REFERENCE TO THE
PORFOLIO MANAGER'S SATISFACTION OF GOALS SUCH AS THOSE RELATED TO COMPLIANCE,
TEAM CONTRIBUTION, AND RESEARCH, ALL OF WHICH ARE INHERENTLY SUBJECTIVE. THE
PORTFOLIO MANAGER'S INVESTMENT PERFORMANCE FOR COMPENSATION PURPOSES IS
MEASURED BY THE FUND'S 1-, 2-, 3- AND 5-YEAR PERCENTILE RANKINGS AMONG ITS
LIPPER MULTI-CAP CORE PEERS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER BENEFICIALLY OWNS SHARES OF THE FUND IN THE RANGE OF
$100,001 - $500,000.
/s/Alex Ghazanfari 1/8/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alex Ghazanfari
[(Printed Name of person signing)]
Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS SMALLCAP GROWTH FUND II
[Name of Fund
] JOSEPH W. GARNER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EMERALD ADVISERS, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $199 MM
----------------------
* other pooled investment vehicles:... 0 0
----------------------
* other accounts:..................... 80 $1,988 MM
----------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
EMERALD HAS A COMPANY-WIDE COMPENSATION/INCENTIVE PLAN. A OUTSIDE CONSULTING
FIRM AIDED IN THE DEVELOPMENT OF THIS PLAN.
COMPENSATION IS DIVIDED INTO THREE PARTS. THE FIRST PART IS A FIXED SALARY
THAT WE BELIEVE IS COMPARABLE TO SALARIES AT SIMILAR ASSET MANAGEMENT FIRMS.
THE FIRM'S COMPENSATION COMMITTEE (WHICH INCLUDES MEMBERS OF EMERALD'S BOARD
OF DIRECTORS) CAN ADJUST AN INDIVIDUAL'S SALARY BASED ON ACTUAL JOB
PERFORMANCE AS WELL AS OTHER FACTORS SUCH AS INFLATION. SALARY REVIEWS ARE
CONDUCTED ON AN ANNUAL BASIS.
THE SECOND PART OF THE COMPENSATION PLAN CONSISTS OF A QUARTERLY REVIEW AND
BONUS. THE BONUS POOL IS DETERMINED BY THE OVERALL PERFORMANCE OF THE FIRM.
EACH PORTFOLIO MANAGER SHARES IN THE POOL DEPENDENT ON FIVE PERFORMANCE
FACTORS. THREE PARTS, OR 60%, ARE EARNED BY OUTPERFOMING THE RUSSELL 2000
GROWTH INDEX ON A FIVE YEAR ROLLING, ONE YEAR ROLLING, AND QUARTERLY BASIS.
OUTPERFORMANCE IS REWARDED ON AN ESCALATING SCALE AND UNDERPERFORMANCE DOES
NOT MERIT A BONUS IN EACH PARTICULAR TIME FRAME. ONE PART, OR 20%, IS BASED
ON A QUARTERLY PERFORMANCE REVIEW BY THE PORTFOLIO MANAGER'S IMMEDIATE
SUPERVISOR. FINALLY, THE LAST PART OF THE BONUS IS BASED ON THE PORTFOLIO
MANAGER'S OPERATIONAL EFFICIENCIES.
THE FINAL PORTION OF THE NEW PLAN IS A LONG-TERM INCENTIVE PLAN. EMERALD HAS
CONSISTENTLY AWARDED OR OFFERED THE PURCHASE OF DIRECT EQUITY OWNERSHIP IN
THE FIRM TO KEY EMPLOYEES. SHARE OWNERSHIP IN EMERALD IS SIGNIFICANT.
ADDITIONALLY, ALL EMPLOYEES ARE ELIGIBLE FOR PENSION CONTIRIBUTION MATCHING
AND PROFIT SHARING CONTRIBUTIONS BY EMERALD. EMERALD BELIEVES IT HAS A
COMPETITIVE COMPENSATION/INCENTIVE STRUCTURE RELATIVE TO ITS INDUSTRY BASED
BOTH ON THE INVOLVEMENT OF THE CONSULTANT AND THE FACT THAT IT HAS
CONSISTENTLY RETAINED ITS KEY SENIOR MANAGEMENT STAFF OVER THE LONG-TERM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE. OUR PORTFOLIO MANAGERS ARE PROHIBITED FROM PURCHASING SHARES OF THIS
FUND.
/s/Kenneth G. Mertz II 12/27/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Kenneth G. Mertz II
[(Printed Name of person signing)]
President
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS SMALLCAP GROWTH FUND II
[Name of Fund
] KENNETH G. MERTZ II, CFA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EMERALD ADVISERS, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $480 MM
----------------------
* other pooled investment vehicles:... 0 0
----------------------
* other accounts:..................... 82 $2,283 MM
----------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
EMERALD HAS A COMPANY-WIDE COMPENSATION/INCENTIVE PLAN. A OUTSIDE CONSULTING
FIRM AIDED IN THE DEVELOPMENT OF THIS PLAN.
COMPENSATION IS DIVIDED INTO THREE PARTS. THE FIRST PART IS A FIXED SALARY
THAT WE BELIEVE IS COMPARABLE TO SALARIES AT SIMILAR ASSET MANAGEMENT FIRMS.
THE FIRM'S COMPENSATION COMMITTEE (WHICH INCLUDES MEMBERS OF EMERALD'S BOARD
OF DIRECTORS) CAN ADJUST AN INDIVIDUAL'S SALARY BASED ON ACTUAL JOB
PERFORMANCE AS WELL AS OTHER FACTORS SUCH AS INFLATION. SALARY REVIEWS ARE
CONDUCTED ON AN ANNUAL BASIS.
THE SECOND PART OF THE COMPENSATION PLAN CONSISTS OF A QUARTERLY REVIEW AND
BONUS. THE BONUS POOL IS DETERMINED BY THE OVERALL PERFORMANCE OF THE FIRM.
EACH PORTFOLIO MANAGER SHARES IN THE POOL DEPENDENT ON FIVE PERFORMANCE
FACTORS. THREE PARTS, OR 60%, ARE EARNED BY OUTPERFOMING THE RUSSELL 2000
GROWTH INDEX ON A FIVE YEAR ROLLING, ONE YEAR ROLLING, AND QUARTERLY BASIS.
OUTPERFORMANCE IS REWARDED ON AN ESCALATING SCALE AND UNDERPERFORMANCE DOES
NOT MERIT A BONUS IN EACH PARTICULAR TIME FRAME. ONE PART, OR 20%, IS BASED
ON A QUARTERLY PERFORMANCE REVIEW BY THE PORTFOLIO MANAGER'S IMMEDIATE
SUPERVISOR. FINALLY, THE LAST PART OF THE BONUS IS BASED ON THE PORTFOLIO
MANAGER'S OPERATIONAL EFFICIENCIES.
THE FINAL PORTION OF THE NEW PLAN IS A LONG-TERM INCENTIVE PLAN. EMERALD HAS
CONSISTENTLY AWARDED OR OFFERED THE PURCHASE OF DIRECT EQUITY OWNERSHIP IN
THE FIRM TO KEY EMPLOYEES. SHARE OWNERSHIP IN EMERALD IS SIGNIFICANT.
ADDITIONALLY, ALL EMPLOYEES ARE ELIGIBLE FOR PENSION CONTIRIBUTION MATCHING
AND PROFIT SHARING CONTRIBUTIONS BY EMERALD. EMERALD BELIEVES IT HAS A
COMPETITIVE COMPENSATION/INCENTIVE STRUCTURE RELATIVE TO ITS INDUSTRY BASED
BOTH ON THE INVOLVEMENT OF THE CONSULTANT AND THE FACT THAT IT HAS
CONSISTENTLY RETAINED ITS KEY SENIOR MANAGEMENT STAFF OVER THE LONG-TERM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE. OUR PORTFOLIO MANAGERS ARE PROHIBITED FROM PURCHASING SHARES OF THIS
FUND.
/s/Kenneth G. Mertz II 12/27/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Kenneth G. Mertz II
[(Printed Name of person signing)]
President
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS SMALLCAP GROWTH FUND II
[Name of Fund
] STACEY L. SEARS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
EMERALD ADVISERS, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $188 MM
----------------------
* other pooled investment vehicles:... 0 0
----------------------
* other accounts:..................... 80 $1,987 MM
----------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
EMERALD HAS A COMPANY-WIDE COMPENSATION/INCENTIVE PLAN. A OUTSIDE CONSULTING
FIRM AIDED IN THE DEVELOPMENT OF THIS PLAN.
COMPENSATION IS DIVIDED INTO THREE PARTS. THE FIRST PART IS A FIXED SALARY
THAT WE BELIEVE IS COMPARABLE TO SALARIES AT SIMILAR ASSET MANAGEMENT FIRMS.
THE FIRM'S COMPENSATION COMMITTEE (WHICH INCLUDES MEMBERS OF EMERALD'S BOARD
OF DIRECTORS) CAN ADJUST AN INDIVIDUAL'S SALARY BASED ON ACTUAL JOB
PERFORMANCE AS WELL AS OTHER FACTORS SUCH AS INFLATION. SALARY REVIEWS ARE
CONDUCTED ON AN ANNUAL BASIS.
THE SECOND PART OF THE COMPENSATION PLAN CONSISTS OF A QUARTERLY REVIEW AND
BONUS. THE BONUS POOL IS DETERMINED BY THE OVERALL PERFORMANCE OF THE FIRM.
EACH PORTFOLIO MANAGER SHARES IN THE POOL DEPENDENT ON FIVE PERFORMANCE
FACTORS. THREE PARTS, OR 60%, ARE EARNED BY OUTPERFOMING THE RUSSELL 2000
GROWTH INDEX ON A FIVE YEAR ROLLING, ONE YEAR ROLLING, AND QUARTERLY BASIS.
OUTPERFORMANCE IS REWARDED ON AN ESCALATING SCALE AND UNDERPERFORMANCE DOES
NOT MERIT A BONUS IN EACH PARTICULAR TIME FRAME. ONE PART, OR 20%, IS BASED
ON A QUARTERLY PERFORMANCE REVIEW BY THE PORTFOLIO MANAGER'S IMMEDIATE
SUPERVISOR. FINALLY, THE LAST PART OF THE BONUS IS BASED ON THE PORTFOLIO
MANAGER'S OPERATIONAL EFFICIENCIES.
THE FINAL PORTION OF THE NEW PLAN IS A LONG-TERM INCENTIVE PLAN. EMERALD HAS
CONSISTENTLY AWARDED OR OFFERED THE PURCHASE OF DIRECT EQUITY OWNERSHIP IN
THE FIRM TO KEY EMPLOYEES. SHARE OWNERSHIP IN EMERALD IS SIGNIFICANT.
ADDITIONALLY, ALL EMPLOYEES ARE ELIGIBLE FOR PENSION CONTIRIBUTION MATCHING
AND PROFIT SHARING CONTRIBUTIONS BY EMERALD. EMERALD BELIEVES IT HAS A
COMPETITIVE COMPENSATION/INCENTIVE STRUCTURE RELATIVE TO ITS INDUSTRY BASED
BOTH ON THE INVOLVEMENT OF THE CONSULTANT AND THE FACT THAT IT HAS
CONSISTENTLY RETAINED ITS KEY SENIOR MANAGEMENT STAFF OVER THE LONG-TERM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE. OUR PORTFOLIO MANAGERS ARE PROHIBITED FROM PURCHASING SHARES OF THIS
FUND.
/s/Stacey L. Sears 12/27/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Stacey L. Sears
[(Printed Name of person signing)]
Sr. Vice President & Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC.-PARTNERS SMALLCAP GROWTH FUND II
[Name of Fund
] NANCY PRIAL
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
ESSEX INVESTMENT MANAGEMENT COMPANY, LLC
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category: (does not include either Principal Account)
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 125,700,000
------------------------
* other pooled investment vehicles:... 5 49,500,000
------------------------
* other accounts:..................... 75 471,600,000
------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... NONE *****
-------------------
* other pooled investment vehicles:... NONE *****
-------------------
* other accounts:..................... NONE *****
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ESSEX IS NOT AWARE OF ANY MATERIAL CONFLICTS OF INTEREST IN CONNECTION WITH
THE PM'S MANAGEMENT OF THE FUND'S INVESTMENTS, ON THE ONE HAND, AND THE
INVESTMENTS OF THE OTHER ACCOUNTS INCLUDED IN RESPONSE TO QUESTION 1, ON THE
OTHER. MOREOVER, ESSEX HAS ESTABLISHED WRITTEN POLICIES AND PROCEDURES
RELATING TO ITS INVESTMENT MANAGEMENT AND TRADING PRACTICES, INCLUDING ITS
TRADE ALLOCATION PRACTICES, AS PART OF ESSEX'S INTERNAL CONTROLS IN ORDER TO
PREVENT SUCH CONFLICTS OF INTEREST FROM ARISING.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE PROFESSIONALS AT ESSEX ARE COMPENSATED BY A THREE-TIERED APPROACH.
FIRST, ALL OF THE INVESTMENT PROFESSIONALS HAVE INDUSTRY-COMPETITIVE BASE
SALARIES AND RECEIVE A PERCENTAGE OF THE FIRM'S PROFITS THROUGH A PROFIT-
SHARING/PENSION PLAN. SECOND, ESSEX'S PROFESSIONALS RECEIVE A YEAR-END BONUS
BASED ON THEIR PERSONAL PERFORMANCE AND ESSEX'S COMPOSITE PERFORMANCE
RELATIVE TO OUR PEERS AND BENCHMARK. THIRD, ESSEX OFFERS A COMPETITIVE
BENEFIT PACKAGE INCLUDING COMPREHENSIVE FAMILY HEALTH COVERAGE.
ESSEX'S YEARLY INVESTMENT PERFORMANCE DRIVES THE PORTFOLIO MANAGERS'
INCENTIVE PORTION ("BONUS") OF THEIR COMPENSATION PACKAGE. THE PORTFOLIO
MANAGERS' BONUS IS BASED ON THEIR RESPECTIVE PORTFOLIOS' ABSOLUTE, RELATIVE,
AND RISK-ADJUSTED PERFORMANCE. SIXTY PERCENT OF THE EVALUATION IS BASED ON
PERFORMANCE OF THE PORTFOLIOS AND 40% IS BASED ON TEAMWORK, COMMUNICATION,
AND OTHER SUBJECTIVE CRITERIA. WE ALSO INCENT THEM ON THEIR 1,2 AND 3 YEAR
PERFORMANCE TRACK RECORD.
AS AN ADDED RETENTION MECHANISM, ESSEX OFFERS OWNERSHIP TO BOTH EXISTING AND
PROSPECTIVE EMPLOYEES. THE CURRENT OWNERSHIP STRUCTURE ALLOWS ESSEX TO
CAPITALIZE A PORTION OF ITS FREE CASH FLOW EACH YEAR AND TRANSFORM IT INTO
STOCK OWNERSHIP. ESSEX ENVISIONS GRANTING OWNERSHIP AS AN ADDITIONAL
INCENTIVE TO THE EMPLOYEES WHO CONTRIBUTE THE GREATEST TO THE FIRM'S FUTURE
SUCCESS.
FINALLY, ESSEX IS COMMITTED TO USING A FUNDAMENTAL TEAM APPROACH AND CULTURE
THAT ENCOURAGES CONTINUITY AMONG ITS INVESTMENT PROFESSIONALS AND MAKES A
CONSCIOUS EFFORT TO REWARD ITS TEAM MEMBERS ACCORDINGLY.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Christopher P. McConnell 12/1/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Christopher P. McConnell
[(Printed Name of person signing)]
CEO & Chief Compliance Officer
[(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS INTERNATIONAL FUND
[Name of Fund
] CESAR HERNANDEZ
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
FIDELITY INVESTMENTS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $940
--------------------
* other pooled investment vehicles:... 3 $3,449
--------------------
* other accounts:..................... 46 $18,001
--------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... NONE NONE
-------------------
* other pooled investment vehicles:... NONE NONE
-------------------
* other accounts:..................... NONE NONE
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
THE PORTFOLIO MANAGER'S COMPENSATION PLAN MAY GIVE RISE TO POTENTIAL
CONFLICTS OF INTEREST. ALTHOUGH INVESTORS IN THE FUND MAY INVEST THROUGH
EITHER TAX-DEFERRED ACCOUNTS OR TAXABLE ACCOUNTS, THE PORTFOLIO MANAGER'S
COMPENSATION IS LINKED TO THE PRE-TAX PERFORMANCE OF THE FUND, RATHER THAN
ITS AFTER-TAX PERFORMANCE. THE PORTFOLIO MANAGER'S BASE PAY TENDS TO INCREASE
WITH ADDITIONAL AND MORE COMPLEX RESPONSIBILITIES THAT INCLUDE INCREASED
ASSETS UNDER MANAGEMENT AND A PORTION OF THE BONUS RELATES TO MARKETING
EFFORTS, WHICH TOGETHER INDIRECTLY LINK COMPENSATION TO SALES. WHEN A
PORTFOLIO MANAGER TAKES OVER A FUND OR AN ACCOUNT, THE TIME PERIOD OVER WHICH
PERFORMANCE IS MEASURED MAY BE ADJUSTED TO PROVIDE A TRANSITION PERIOD IN
WHICH TO ASSESS THE PORTFOLIO. THE MANAGEMENT OF MULTIPLE FUNDS AND ACCOUNTS
(INCLUDING PROPRIETARY ACCOUNTS) MAY GIVE RISE TO POTENTIAL CONFLICTS OF
INTEREST IF THE FUNDS AND ACCOUNTS HAVE DIFFERENT OBJECTIVES, BENCHMARKS,
TIME HORIZONS, AND FEES AS THE PORTFOLIO MANAGER MUST ALLOCATE HIS TIME AND
INVESTMENT IDEAS ACROSS MULTIPLE FUNDS AND ACCOUNTS. IN ADDITION, THE FUND'S
TRADE ALLOCATION POLICIES AND PROCEDURES MAY GIVE RISE TO CONFLICTS OF
INTEREST IF THE FUND'S ORDERS DO NOT GET FULLY EXECUTED DUE TO BEING
AGGREGATED WITH THOSE OF OTHER ACCOUNTS MANAGED BY FMR OR AN AFFILIATE. THE
PORTFOLIO MANAGER MAY EXECUTE TRANSACTIONS FOR ANOTHER FUND OR ACCOUNT THAT
MAY ADVERSELY IMPACT THE VALUE OF SECURITIES HELD BY THE FUND. SECURITIES
SELECTED FOR FUNDS OR ACCOUNTS OTHER THAN THE FUND MAY OUTPERFORM THE
SECURITIES SELECTED FOR THE FUND. PERSONAL ACCOUNTS MAY GIVE RISE TO
POTENTIAL CONFLICTS OF INTEREST; TRADING IN PERSONAL ACCOUNTS IS RESTRICTED
BY THE FUND'S CODE OF ETHICS.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
CESAR HERNANDEZ IS THE PORTFOLIO MANAGER OF PARTNERS INTERNATIONAL FUND AND
RECEIVES COMPENSATION FOR HIS SERVICES. AS OF OCTOBER 31, 2005, PORTFOLIO
MANAGER COMPENSATION GENERALLY CONSISTS OF A FIXED BASE SALARY DETERMINED
PERIODICALLY (TYPICALLY ANNUALLY), A BONUS AND, IN CERTAIN CASES,
PARTICIPATION IN SEVERAL TYPES OF EQUITY-BASED COMPENSATION PLANS. A PORTION
OF THE PORTFOLIO MANAGER'S COMPENSATION MAY BE DEFERRED BASED ON CRITERIA
ESTABLISHED BY FMR OR AT THE ELECTION OF THE PORTFOLIO MANAGER. THE
PORTFOLIO MANAGER'S BASE SALARY IS DETERMINED BY LEVEL OF RESPONSIBILITY AND
TENURE AT FMR OR ITS AFFILIATES. THE PORTFOLIO MANAGER'S BONUS IS BASED ON
SEVERAL COMPONENTS. THE PRIMARY COMPONENTS OF THE PORTFOLIO MANAGER'S BONUS
ARE BASED ON (I) THE PRE-TAX INVESTMENT PERFORMANCE OF THE PORTFOLIO
MANAGER'S MASTER ACCOUNTS RELATIVE TO A BENCHMARK INDEX ASSIGNED TO EACH
MASTER ACCOUNT AND (II) THE INVESTMENT PERFORMANCE OF A BROAD RANGE OF OTHER
EQUITY FUNDS AND ACCOUNTS MANAGED BY FMR OR AN AFFILIATE. THE PRE-TAX
INVESTMENT PERFORMANCE OF THE PORTFOLIO MANAGER'S MASTER ACCOUNTS IS WEIGHTED
ACCORDING TO HIS TENURE ON THOSE MASTER ACCOUNTS AND THE AVERAGE ASSET SIZE
OF THOSE MASTER ACCOUNTS OVER HIS TENURE. EACH COMPONENT IS CALCULATED
SEPARATELY OVER THE PORTFOLIO MANAGER'S TENURE ON THOSE MASTER ACCOUNTS OVER
A MEASUREMENT PERIOD THAT INITIALLY IS CONTEMPORANEOUS WITH HIS TENURE, BUT
THAT EVENTUALLY ENCOMPASSES ROLLING PERIODS OF UP TO FIVE YEARS FOR THE
COMPARISON TO A BENCHMARK INDEX. A SMALLER, SUBJECTIVE COMPONENT OF THE
PORTFOLIO MANAGER'S BONUS IS BASED ON THE PORTFOLIO MANAGER'S OVERALL
CONTRIBUTION TO MANAGEMENT OF FMR. THE PORTION OF THE PORTFOLIO MANAGER'S
BONUS THAT IS LINKED TO THE INVESTMENT PERFORMANCE OF THE MASTER ACCOUNT FOR
THE INTERNATIONAL INVESTMENT DISCIPLINE IN WHICH PARTNERS INTERNATIONAL FUND
IS INVESTED IS BASED ON THE MASTER ACCOUNT'S PRE-TAX INVESTMENT PERFORMANCE
MEASURED AGAINST THE MSCI EAFE INDEX (NET LUXEMBOURG TAX RATE ADJUSTED). THE
PORTFOLIO MANAGER ALSO IS COMPENSATED UNDER EQUITY-BASED COMPENSATION PLANS
LINKED TO INCREASES OR DECREASES IN THE NET ASSET VALUE OF THE STOCK OF FMR
CORP., FMR'S PARENT COMPANY. FMR CORP. IS A DIVERSE FINANCIAL SERVICES
COMPANY ENGAGED IN VARIOUS ACTIVITIES THAT INCLUDE FUND MANAGEMENT,
BROKERAGE, RETIREMENT, AND EMPLOYER ADMINISTRATIVE SERVICES.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE DOLLAR RANGE OF SHARES OF PARTNERS INTERNATIONAL FUND BENEFICIALLY OWNED
BY MR. HERNANDEZ AS OF OCTOBER 31, 2005 WAS $0.
/s/Jacquelyn E. Regan 1/17/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Jacquelyn E. Regan
[(Printed Name of person signing)]
Senior Legal Product Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS MID CAP GROWTH FUND II
[Name of Fund
] BAHAA FAM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
FIDELITY INVESTMENTS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 4 $1,828
-------------------
* other pooled investment vehicles:... 5 $2,079
-------------------
* other accounts:..................... 11 $2,083
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $607
-------------------
* other pooled investment vehicles:... NONE NONE
-------------------
* other accounts:..................... NONE NONE
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
THE PORTFOLIO MANAGER'S COMPENSATION PLAN MAY GIVE RISE TO POTENTIAL
CONFLICTS OF INTEREST. ALTHOUGH INVESTORS IN THE FUND MAY INVEST THROUGH
EITHER TAX-DEFERRED ACCOUNTS OR TAXABLE ACCOUNTS, THE PORTFOLIO MANAGER'S
COMPENSATION IS LINKED TO THE PRE-TAX PERFORMANCE OF THE FUND, RATHER THAN
ITS AFTER-TAX PERFORMANCE. THE PORTFOLIO MANAGER'S BASE PAY TENDS TO INCREASE
WITH ADDITIONAL AND MORE COMPLEX RESPONSIBILITIES THAT INCLUDE INCREASED
ASSETS UNDER MANAGEMENT AND A PORTION OF THE BONUS RELATES TO MARKETING
EFFORTS, WHICH TOGETHER INDIRECTLY LINK COMPENSATION TO SALES. WHEN A
PORTFOLIO MANAGER TAKES OVER A FUND OR AN ACCOUNT, THE TIME PERIOD OVER WHICH
PERFORMANCE IS MEASURED MAY BE ADJUSTED TO PROVIDE A TRANSITION PERIOD IN
WHICH TO ASSESS THE PORTFOLIO. THE MANAGEMENT OF MULTIPLE FUNDS AND ACCOUNTS
(INCLUDING PROPRIETARY ACCOUNTS) MAY GIVE RISE TO POTENTIAL CONFLICTS OF
INTEREST IF THE FUNDS AND ACCOUNTS HAVE DIFFERENT OBJECTIVES, BENCHMARKS,
TIME HORIZONS, AND FEES AS THE PORTFOLIO MANAGER MUST ALLOCATE HIS TIME AND
INVESTMENT IDEAS ACROSS MULTIPLE FUNDS AND ACCOUNTS. IN ADDITION, THE FUND'S
TRADE ALLOCATION POLICIES AND PROCEDURES MAY GIVE RISE TO CONFLICTS OF
INTEREST IF THE FUND'S ORDERS DO NOT GET FULLY EXECUTED DUE TO BEING
AGGREGATED WITH THOSE OF OTHER ACCOUNTS MANAGED BY FMR OR AN AFFILIATE. THE
PORTFOLIO MANAGER MAY EXECUTE TRANSACTIONS FOR ANOTHER FUND OR ACCOUNT THAT
MAY ADVERSELY IMPACT THE VALUE OF SECURITIES HELD BY THE FUND. SECURITIES
SELECTED FOR FUNDS OR ACCOUNTS OTHER THAN THE FUND MAY OUTPERFORM THE
SECURITIES SELECTED FOR THE FUND. PERSONAL ACCOUNTS MAY GIVE RISE TO
POTENTIAL CONFLICTS OF INTEREST; TRADING IN PERSONAL ACCOUNTS IS RESTRICTED
BY THE FUNDS CODE OF ETHICS.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
BAHAA FAM IS THE PORTFOLIO MANAGER OF PARTNERS MIDCAP GROWTH II FUND OF
PRINCIPAL INVESTORS FUND, INC. AND RECEIVES COMPENSATION FOR HIS SERVICES. AS
OF OCTOBER 31, 2005, PORTFOLIO MANAGER COMPENSATION GENERALLY CONSISTS OF A
FIXED BASE SALARY DETERMINED PERIODICALLY (TYPICALLY ANNUALLY), A BONUS AND,
IN CERTAIN CASES, PARTICIPATION IN SEVERAL TYPES OF EQUITY-BASED COMPENSATION
PLANS. A PORTION OF THE PORTFOLIO MANAGER'S COMPENSATION MAY BE DEFERRED
BASED ON CRITERIA ESTABLISHED BY FMR OR AT THE ELECTION OF THE PORTFOLIO
MANAGER. THE PORTFOLIO MANAGER'S BASE SALARY IS DETERMINED BY LEVEL OF
RESPONSIBILITY AND TENURE AT FMR OR ITS AFFILIATES. THE PORTFOLIO MANAGER'S
BONUS IS BASED ON SEVERAL COMPONENTS. THE PRIMARY COMPONENTS OF THE PORTFOLIO
MANAGER'S BONUS ARE BASED ON (I) THE PRE-TAX INVESTMENT PERFORMANCE OF THE
PORTFOLIO MANAGER'S FUND(S) AND ACCOUNT(S) RELATIVE TO A BENCHMARK INDEX
ASSIGNED TO EACH FUND OR ACCOUNT, AND (II) THE INVESTMENT PERFORMANCE OF A
BROAD RANGE OF OTHER EQUITY FUNDS AND ACCOUNTS MANAGED BY FMR OR AN
AFFILIATE. THE PRE-TAX INVESTMENT PERFORMANCE OF THE PORTFOLIO MANAGER'S
FUND(S) AND ACCOUNT(S) IS WEIGHTED ACCORDING TO HIS TENURE ON THOSE FUND(S)
AND ACCOUNT(S) AND THE AVERAGE ASSET SIZE OF THOSE FUND(S) AND ACCOUNT(S)
OVER HIS TENURE. EACH COMPONENT IS CALCULATED SEPARATELY OVER THE PORTFOLIO
MANAGER'S TENURE ON THOSE FUND(S) AND ACCOUNT(S) OVER A MEASUREMENT PERIOD
THAT INITIALLY IS CONTEMPORANEOUS WITH HIS TENURE, BUT THAT EVENTUALLY
ENCOMPASSES ROLLING PERIODS OF UP TO FIVE YEARS FOR THE COMPARISON TO A
BENCHMARK INDEX. A SMALLER, SUBJECTIVE COMPONENT OF THE PORTFOLIO MANAGER'S
BONUS IS BASED ON THE PORTFOLIO MANAGER'S OVERALL CONTRIBUTION TO MANAGEMENT
OF FMR. THE PORTION OF THE PORTFOLIO MANAGER'S BONUS THAT IS LINKED TO THE
INVESTMENT PERFORMANCE OF THE FUND IS BASED ON THE PRE-TAX INVESTMENT
PERFORMANCE OF THE EQUITY ASSETS OF THE FUND MEASURED AGAINST THE RUSSELL
MIDCAP GROWTH INDEX. THE PORTFOLIO MANAGER ALSO IS COMPENSATED UNDER EQUITY-
BASED COMPENSATION PLANS LINKED TO INCREASES OR DECREASES IN THE NET ASSET
VALUE OF THE STOCK OF FMR CORP., FMR'S PARENT COMPANY. FMR CORP. IS A DIVERSE
FINANCIAL SERVICES COMPANY ENGAGED IN VARIOUS ACTIVITIES THAT INCLUDE FUND
MANAGEMENT, BROKERAGE, RETIREMENT, AND EMPLOYER ADMINISTRATIVE SERVICES.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE DOLLAR RANGE OF SHARES OF PARTNERS MIDCAP GROWTH FUND II BENEFICIALLY
OWNED BY MR. FAM AS OF OCTOBER 31, 2005 WAS $0..
/s/Jacquelyn E. Regan 1/17/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Jacquelyn E. Regan
[(Printed Name of person signing)]
Senior Legal Product Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS LARGE CAP BLEND I
[Name of Fund
] MELISSA BROWN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 72 $21,501 MIL.
-------------------------
* other pooled investment vehicles:... 37 $20,271 MIL.
-------------------------
* other accounts:..................... 636 $64,870 MIL
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 46 $13,273 MIL.
-------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE S&P 500 INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Melissa Brown 1-10-07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Melissa Brown
[(Printed Name of person signing)]
Managing Dierctor
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS LARGE CAP BLEND I
[Name of Fund
] ROBERT C. JONES
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 72 $21,501 MIL.
-------------------------
* other pooled investment vehicles:... 37 $20,271 MIL.
-------------------------
* other accounts:..................... 636 $64,870 MIL
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 46 $13,273 MIL.
-------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE S&P 500 INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Robert C. Jones 1-10-07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Robert C. Jones
[(Printed Name of person signing)]
Managing Dierctor
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] DOLORES BAMFORD
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Dolores S. Bamford 1/11/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dolores S. Bamford
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] DAVID L. BERDON
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/David Berdon 1/7/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
David Berdon
[(Printed Name of person signing)]
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] ANDREW BRAUN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Andrew Braun 1/9/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Andrew Braun
[(Printed Name of person signing)]
Managing Director/Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] SCOTT CARROLL
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Scott A. Carroll 1/9/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Scott A. Carroll
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] J. KELLY FLYNN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$100,001-$500,000
/s/J. K. Flynn 1/9/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
John Kelly Flynn
[(Printed Name of person signing)]
JK Flynn
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] SEAN GALLAGHER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Sean Gallagher 1/10/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
sean Gallagher
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] LISA PARISI
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Lisa L. Parisi 1/9/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Lisa L. Parisi
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] EDWARD PERKIN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Edward J. Perkin 1/9/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Edward J. Perkin
[(Printed Name of person signing)]
Portfolio Manager/Vice President
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] SALLY POPE DAVIS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Sally Pope Davis 1/9/07
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Sally Pope Davis
[(Printed Name of person signing)]
Vice President/Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
MID CAP VALUE FUND I
[Name of Fund
] EILEEN ROMINGER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
GOLDMAN SACHS ASSET MANAGEMENT L.P.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 21 13.1 B
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 265 8.7 B
-------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 2 342 M
-------------------
* other accounts:..................... 1 102 M
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST. THE INVESTMENT ADVISERS' PORTFOLIO MANAGERS ARE OFTEN
RESPONSIBLE FOR MANAGING ONE OR MORE OF THE FUNDS AS WELL AS OTHER ACCOUNTS,
INCLUDING PROPRIETARY ACCOUNTS, SEPARATE ACCOUNTS AND OTHER POOLED INVESTMENT
VEHICLES, SUCH AS UNREGISTERED HEDGE FUNDS. A PORTFOLIO MANAGER MAY MANAGE A
SEPARATE ACCOUNT OR OTHER POOLED INVESTMENT VEHICLE WHICH MAY HAVE MATERIALLY
HIGHER FEE ARRANGEMENTS THAN THE FUND AND MAY ALSO HAVE A PERFORMANCE-BASED
FEE. THE SIDE-BY-SIDE MANAGEMENT OF THESE FUNDS MAY RAISE POTENTIAL
CONFLICTS OF INTEREST RELATING TO CROSS TRADING, THE ALLOCATION OF INVESTMENT
OPPORTUNITIES AND THE AGGREGATION AND ALLOCATION OF TRADES.
THE INVESTMENT ADVISERS HAVE A FIDUCIARY RESPONSIBILITY TO MANAGE ALL CLIENT
ACCOUNTS IN A FAIR AND EQUITABLE MANNER. THEY SEEK TO PROVIDE BEST EXECUTION
OF ALL SECURITIES TRANSACTIONS AND AGGREGATE AND THEN ALLOCATE SECURITIES TO
CLIENT ACCOUNTS IN A FAIR AND TIMELY MANNER. TO THIS END, THE INVESTMENT
ADVISERS HAVE DEVELOPED POLICIES AND PROCEDURES DESIGNED TO MITIGATE AND
MANAGE THE POTENTIAL CONFLICTS OF INTEREST THAT MAY ARISE FROM SIDE-BY-SIDE
MANAGEMENT. IN ADDITION, THE INVESTMENT ADVISERS AND THE FUNDS HAVE ADOPTED
POLICIES LIMITING THE CIRCUMSTANCES UNDER WHICH CROSS-TRADES MAY BE EFFECTED
BETWEEN A FUND AND ANOTHER CLIENT ACCOUNT. THE INVESTMENT ADVISERS CONDUCT
PERIODIC REVIEWS OF TRADES FOR CONSISTENCY WITH THESE POLICIES. FOR MORE
INFORMATION ABOUT CONFLICTS OF INTERESTS THAT MAY ARISE IN CONNECTION WITH
THE PORTFOLIO MANAGER'S MANAGEMENT OF THE FUNDS' INVESTMENTS AND THE
INVESTMENTS OF OTHER ACCOUNTS, SEE "POTENTIAL CONFLICTS OF INTEREST -
POTENTIAL CONFLICTS RELATING TO THE ALLOCATION OF INVESTMENT OPPORTUNITIES
AMONG THE FUNDS AND OTHER GOLDMAN SACHS ACCOUNTS AND POTENTIAL CONFLICTS
RELATING TO GOLDMAN SACHS' AND THE INVESTMENT ADVISER'S PROPRIETARY
ACTIVITIES AND ACTIVITIES ON BEHALF OF OTHER ACCOUNTS."
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE INVESTMENT ADVISER PROVIDES GENEROUS COMPENSATION PACKAGES FOR ITS
INVESTMENT PROFESSIONALS, WHICH ARE COMPRISED OF A BASE SALARY AND A
PERFORMANCE BONUS. THE YEAR-END PERFORMANCE BONUS IS A FUNCTION OF EACH
PROFESSIONAL'S INDIVIDUAL PERFORMANCE; HIS OR HER CONTRIBUTION TO THE OVERALL
PERFORMANCE OF THE GROUP; THE PERFORMANCE OF GSAM; THE PROFITABILITY OF
GOLDMAN SACHS; AND ANTICIPATED COMPENSATION LEVELS AMONG COMPETITOR FIRMS.
PORTFOLIO MANAGEMENT TEAMS ARE REWARDED FOR THEIR ABILITY TO OUTPERFORM A
BENCHMARK WHILE MANAGING RISK EXPOSURE. AN INDIVIDUAL'S COMPENSATION DEPENDS
ON HIS/HER CONTRIBUTION TO THE TEAM AS WELL AS HIS/HER ABILITY TO WORK AS A
MEMBER OF THE TEAM.
THE PORTFOLIO MANAGEMENT TEAM'S PERFORMANCE MEASURES ARE ALIGNED WITH GSAM'S
GOALS TO:
(1) EXCEED BENCHMARK OVER ONE-YEAR AND THREE-YEAR PERIODS; (2) MANAGE
PORTFOLIOS WITHIN A DEFINED RANGE AROUND A TARGETED TRACKING ERROR; (3)
PERFORM CONSISTENTLY WITH OBJECTIVES AND CLIENT COMMITMENTS; (4) ACHIEVE TOP
TIER RANKINGS AND RATINGS; AND (5) MANAGE ALL SIMILARLY MANDATED ACCOUNTS IN
A CONSISTENT MANNER.
PERFORMANCE-RELATED REMUNERATION FOR PORTFOLIO MANAGERS IS SIGNIFICANTLY
INFLUENCED BY THE FOLLOWING CRITERIA:(1) OVERALL PORTFOLIO PERFORMANCE AND
CONSISTENCY OF PERFORMANCE OVER TIME; (2) CONSISTENCY OF PERFORMANCE ACROSS
ACCOUNTS WITH SIMILAR PROFILES; (3) COMPLIANCE WITH RISK BUDGETS; AND (4)
COMMUNICATION WITH OTHER PORTFOLIO MANAGERS WITHIN THE RESEARCH PROCESS.
IN ADDITION, DETAILED PORTFOLIO ATTRIBUTION IS CRITICAL TO THE MEASUREMENT
PROCESS.
THE BENCHMARK FOR THIS FUND IS THE RUSSELL MIDCAP VALUE INDEX.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Eileen Rominger 12/13/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Eileen Rominger
[(Printed Name of person signing)]
Chief Investment Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS MIDCAP VALUE FUND
[Name of Fund
]BRUCE I. JACOBS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
JACOBS LEVY EQUITY MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
BRUCE JACOBS AND KEN LEVY ARE JOINTLY RESPONSIBLE FOR THE LEADERSHIP OF THE
JACOBS LEVY INVESTMENT STRATEGIES AND THE MANAGEMENT OF ALL CLIENT PORTFOLIOS.
Please provide the following information as of October 31, 2006 (the fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... ***** *****
----------------------------
* other pooled investment vehicles:... ***** *****
----------------------------
* other accounts*:.................... 112 $23,933,627,031
----------------------------
*Jacobs Levy manages only separate accounts. We do not manage our own
registered investment companies or other pooled investment vehicles, and
sub-advise funds only for Principal Financial Group and one other client
as separate accounts in a multi-manager format.
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... ***** *****
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 22 $4,169,535,194
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
TRADE ALLOCATION AMONG ACCOUNTS IS A POTENTIAL CONFLICT OF INTEREST. OUR
PORTFOLIO OPTIMIZER GENERATES OUR TRADE PROGRAMS. TRADERS DO NOT HAVE
DISCRETION TO ADD SECURITIES OR ACCOUNTS TO THE TRADE PROGRAM. THE FULL
ALLOCATION FOR ALL ACCOUNTS ACROSS ALL STRATEGIES IS DETERMINED PRIOR TO
PLACING THE ORDER. IN THE EVENT THE ORDER IS ONLY PARTIALLY COMPLETED, A
DAILY ALLOCATION IS DONE ON A FAIR BASIS, EITHER PRO RATA OR RANDOM, AT THE
AVERAGE PRICE FOR THE DAY. ALLOCATION BY ACCOUNT OF ACTUAL SHARES TRADED IS
PROVIDED TO THE BROKER AT THE END OF THE DAY'S TRADING. THIS PROCEDURE TREATS
ALL PARTICIPATING ACCOUNTS ACROSS ALL STRATEGIES EQUITABLY WITH RESPECT TO
THE EXECUTED TRADE. EXTERNAL LEGAL COUNSEL HAS REVIEWED OUR TRADE ALLOCATION
PROCEDURES, WHICH ARE ALSO STATED IN OUR FORM ADV, AND CONCUR THAT THESE
PROCEDURES ADEQUATELY ADDRESS THE POTENTIAL CONFLICT OF INTEREST ISSUE. OUR
TRADE ALLOCATION PROCEDURES ARE ALSO REVIEWED AND TESTED ANNUALLY BY ERNST &
YOUNG, OUR INDEPENDENT ACCOUNTANTS, AS PART OF THEIR SAS 70 EXAMINATION OF
OUR OPERATING PROCEDURES AND INTERNAL CONTROLS.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE TWO PRINCIPALS/PORTFOLIO MANAGERS ARE OWNERS OF THE FIRM. THEIR
COMPENSATION IS PRIMARILY THROUGH THEIR EQUITY SHARE OF THE FIRM'S OPERATING
AND FINANCIAL SUCCESS, WHICH IS DETERMINED IN LARGE PART BY THE PERFORMANCE
OF OUR STRATEGIES.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER HELD NO SECURITIES IN THE FUND.
/s/Peter A. Rudolph 12/06/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Peter A. Rudolph
[(Printed Name of person signing)]
Chief Financial Officer/Chief Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS MIDCAP VALUE FUND
[Name of Fund
]KENNETH N. LEVY
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
JACOBS LEVY EQUITY MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
BRUCE JACOBS AND KEN LEVY ARE JOINTLY RESPONSIBLE FOR THE LEADERSHIP OF THE
JACOBS LEVY INVESTMENT STRATEGIES AND THE MANAGEMENT OF ALL CLIENT PORTFOLIOS.
Please provide the following information as of October 31, 2006 (the fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... ***** *****
----------------------------
* other pooled investment vehicles:... ***** *****
----------------------------
* other accounts*:.................... 112 $23,933,627,031
----------------------------
*Jacobs Levy manages only separate accounts. We do not manage our own
registered investment companies or other pooled investment vehicles, and
sub-advise funds only for Principal Financial Group and one other client
as separate accounts in a multi-manager format.
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... ***** *****
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 22 $4,169,535,194
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
TRADE ALLOCATION AMONG ACCOUNTS IS A POTENTIAL CONFLICT OF INTEREST. OUR
PORTFOLIO OPTIMIZER GENERATES OUR TRADE PROGRAMS. TRADERS DO NOT HAVE
DISCRETION TO ADD SECURITIES OR ACCOUNTS TO THE TRADE PROGRAM. THE FULL
ALLOCATION FOR ALL ACCOUNTS ACROSS ALL STRATEGIES IS DETERMINED PRIOR TO
PLACING THE ORDER. IN THE EVENT THE ORDER IS ONLY PARTIALLY COMPLETED, A
DAILY ALLOCATION IS DONE ON A FAIR BASIS, EITHER PRO RATA OR RANDOM, AT THE
AVERAGE PRICE FOR THE DAY. ALLOCATION BY ACCOUNT OF ACTUAL SHARES TRADED IS
PROVIDED TO THE BROKER AT THE END OF THE DAY'S TRADING. THIS PROCEDURE TREATS
ALL PARTICIPATING ACCOUNTS ACROSS ALL STRATEGIES EQUITABLY WITH RESPECT TO
THE EXECUTED TRADE. EXTERNAL LEGAL COUNSEL HAS REVIEWED OUR TRADE ALLOCATION
PROCEDURES, WHICH ARE ALSO STATED IN OUR FORM ADV, AND CONCUR THAT THESE
PROCEDURES ADEQUATELY ADDRESS THE POTENTIAL CONFLICT OF INTEREST ISSUE. OUR
TRADE ALLOCATION PROCEDURES ARE ALSO REVIEWED AND TESTED ANNUALLY BY ERNST &
YOUNG, OUR INDEPENDENT ACCOUNTANTS, AS PART OF THEIR SAS 70 EXAMINATION OF
OUR OPERATING PROCEDURES AND INTERNAL CONTROLS.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE TWO PRINCIPALS/PORTFOLIO MANAGERS ARE OWNERS OF THE FIRM. THEIR
COMPENSATION IS PRIMARILY THROUGH THEIR EQUITY SHARE OF THE FIRM'S OPERATING
AND FINANCIAL SUCCESS, WHICH IS DETERMINED IN LARGE PART BY THE PERFORMANCE
OF OUR STRATEGIES.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
THE PORTFOLIO MANAGER HELD NO SECURITIES IN THE FUND.
/s/Peter A. Rudolph 12/06/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Peter A. Rudolph
[(Printed Name of person signing)]
Chief Financial Officer/Chief Compliance Officer
[(Title of person signing)]
Principal Investors Fund, Inc. High Yield Fund
Information as of February 28, 2007
--------------------------------------------------------------------------------
Principal Investors Fund, Inc. High Yield Fund ("Fund")
J.P. Morgan Investment Management Inc. ("Adviser")
--------------------------------------------------------------------------------
----------------------------- --------------------------------------------------
(a)(1) Identify portfolio (a)(2) For each person identified in column (a)(1),
provide (a)(3) For each of the categories in column (a)(2), provide manager(s)
of the Adviser number of other accounts managed by the person within each number
of accounts and the total assets in the accounts with to be named in the Fund
category below and the total assets in the accounts managed respect to which the
advisory fee is based on the performance of prospectus within each category
below the account
----------------------------- ----------------------------------------------------------------- ----------------------
----------------------------- --------------------- ----------------------- ------------------- ---------------------
Registered Other Pooled Other Accounts Registered
Investment Companies Investment Investment Companies
Vehicles
----------------------------- --------------------- ----------------------- ------------------- ---------------------
----------------------------- ------ -------------- -------- -------------- ------ -------------- ------ ------------
Number Total Assets Number Total Number Total Assets Number Total Assets
of (mm) of Assets(mm) of (mm) of
Accounts Accounts Accounts Accounts
----------------------------- ------ -------------- -------- -------------- ------ -------------- ------ ------------
----------------------------- ------ -------------- -------- -------------- ------ -------------- ------ ------------
James P. Shanahan 2 1,413.39 6 81.37 10 287.67 N/A N/A
----------------------------- ------ -------------- -------- -------------- ------ -------------- ------ ------------
----------------------------- ------ -------------- -------- -------------- ------ -------------- ------ ------------
William J. Morgan 3 2,349.68 6 81.37 10 246.65 N/A N/A
----------------------------- ------ -------------- -------- -------------- ------ -------------- ------ ------------
----------------------------- --------------------------------------------
----------------------------- --------------------- ----------------------
Other Pooled Other Accounts
Investment Vehicles
----------------------------- --------------------- ----------------------
----------------------------- ----------- --------- ---------- -----------
Number of Total Number of Total Assets
Accounts Assets Accounts
----------------------------- ----------- --------- ---------- -----------
----------------------------- ----------- --------- ---------- -----------
James P. Shanahan N/A N/A N/A N/A
----------------------------- ----------- --------- ---------- -----------
----------------------------- ----------- --------- ---------- -----------
William J. Morgan N/A N/A N/A N/A
----------------------------- ----------- --------- ---------- -----------
1. Potential Conflicts
The potential for conflicts of interest exists when portfolio managers manage
other accounts with similar investment objectives and strategies as the Fund
("Similar Accounts"). Potential conflicts may include, for example, conflicts
between investment strategies and conflicts in the allocation of investment
opportunities.
Responsibility for managing J.P. Morgan Investment Management Inc. (JP Morgan)'s
and its affiliates clients' portfolios is organized according to investment
strategies within asset classes. Generally, client portfolios with similar
strategies are managed by portfolio managers in the same portfolio management
group using the same objectives, approach and philosophy. Underlying sectors or
strategy allocations within a larger portfolio are likewise managed by portfolio
managers who use the same approach and philosophy as similarly managed
portfolios. Therefore, portfolio holdings, relative position sizes and industry
and sector exposures tend to be similar across similar portfolios and
strategies, which minimize the potential for conflicts of interest.
JP Morgan and/or its affiliates may receive more compensation with respect to
certain Similar Accounts than that received with respect to the Fund or may
receive compensation based in part on the performance of certain Similar
Accounts. This may create a potential conflict of interest for JP Morgan and its
affiliates or its portfolio managers by providing an incentive to favor these
Similar Accounts when, for example, placing securities transactions. In
addition, JP Morgan or its affiliates could be viewed as having a conflict of
interest to the extent that JP Morgan or an affiliate has a proprietary
investment in Similar Accounts, the portfolio managers have personal investments
in Similar Accounts or the Similar Accounts are investment options in JP
Morgan's or its affiliate's employee benefit plans. Potential conflicts of
interest may arise with both the aggregation and allocation of securities
transactions and allocation of limited investment opportunities because of
market factors or investment restrictions imposed upon JP Morgan and its
affiliates by law, regulation, contract or internal policies. Allocations of
aggregated trades, particularly trade orders that were only partially completed
due to limited availability and allocation of investment opportunities
generally, could raise a potential conflict of interest, as JP Morgan or its
affiliates may have an incentive to allocate securities that are expected to
increase in value to favored accounts. Initial public offerings, in particular,
are frequently of very limited availability. JP Morgan and its affiliates may be
perceived as causing accounts it manages to participate in an offering to
increase JP Morgan's or its affiliates' overall allocation of securities in that
offering.
A potential conflict of interest also may be perceived to arise if transactions
in one account closely follow related transactions in a different account, such
as when a purchase increases the value of securities previously purchased by
another account, or when a sale in one account lowers the sale price received in
a sale by a second account. If JP Morgan or its affiliates manages accounts that
engage in short sales of securities of the type in which the Fund invests, JP
Morgan or its affiliates could be seen as harming the performance of the Fund
for the benefit of the accounts engaging in short sales if the short sales cause
the market value of the securities to fall.
As an internal policy matter, JP Morgan may from time to time maintain certain
overall investment limitations on the securities positions or positions in other
financial instruments JP Morgan or its affiliates will take on behalf of its
various clients due to, among other things, liquidity concerns and regulatory
restrictions. It should be recognized that such policies may preclude an account
from purchasing particular securities or financial instruments, even if such
securities or financial instruments would otherwise meet the account's
objectives.
The goal of JP Morgan and its affiliates is to meet their fiduciary obligation
with respect to all clients, JP Morgan and its affiliates have have policies and
procedures designed to manage the conflicts. JP Morgan and its affiliates
monitor a variety of areas, including compliance with fund guidelines, review of
allocation decisions and compliance with JP Morgan's Codes of Ethics and JPMC's
Code of Conduct. With respect to the allocation of investment opportunities, JP
Morgan and its affiliates also have certain policies designed to achieve fair
and equitable allocation of investment opportunities among its clients over
time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with JP Morgan's duty of best execution
for its clients. If aggregated trades are fully executed, accounts participating
in the trade will be allocated their pro rata share on an average price basis.
Partially completed orders generally will be allocated among the participating
accounts on a pro-rata average price basis, subject to certain limited
exceptions. For example, accounts that would receive a de minimis allocation
relative to their size may be excluded from the order. Another exception may
occur when thin markets or price volatility require that an aggregated order be
completed in multiple executions over several days. If partial completion of the
order would result in an uneconomic allocation to an account due to fixed
transaction or custody costs, JP Morgan or its affiliates may exclude small
orders until 50% of the total order is completed. Then the small orders will be
executed. Following this procedure, small orders will lag in the early execution
of the order, but will be completed before completion of the total order.
Purchases of money market instruments and fixed income securities cannot always
be allocated pro rata across the accounts with the same investment strategy and
objective. However, JP Morgan and its affiliates attempts to mitigate any
potential unfairness by basing non-pro rata allocations traded through a single
trading desk or system upon an objective predetermined criteria for the
selection of investments and a disciplined process for allocating securities
with similar duration, credit quality and liquidity in the good faith judgment
of JP Morgan or its affiliates so that fair and equitable allocation will occur
over time.
(b) Portfolio Manager Compensation
J.P. Morgan Investment Management Inc. (JP Morgan)'s Portfolio managers
participate in a competitive compensation program that is designed to attract
and retain outstanding people and closely link the performance of investment
professionals to client investment objectives. The total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of JP Morgan's business as a whole.
Each portfolio manager's performance is formally evaluated annually based on a
variety of factors including the aggregate size and blended performance of the
portfolios such portfolio manager manages. Individual contribution relative to
client goals carries the highest impact. Portfolio manager compensation is
primarily driven by meeting or exceeding clients' risk and return objectives,
relative performance to competitors or competitive indices and compliance with
firm policies and regulatory requirements. In evaluating each portfolio
manager's performance with respect to the mutual funds he or she manages, the
funds' pre-tax performance is compared to the appropriate market peer group and
to each fund's benchmark index listed in the fund's prospectus over one, three
and five year periods (or such shorter time as the portfolio manager has managed
the fund). Investment performance is generally more heavily weighted to the long
term.
Awards of restricted stock are granted as part of an employee's annual
performance bonus and comprise from 0% to 35% of a portfolio manager's total
bonus. As the level of incentive compensation increases, the percentage of
compensation awarded in restricted stock also increases. Up to 50% of the
restricted stock portion of a portfolio manager's bonus may instead be subject
to a mandatory notional investment in selected mutual funds advised by the
Adviser or its affiliates. When these deferred amounts vest, the portfolio
manager receives cash equal to the market value of the notional investment in
the selected mutual funds.
(c) Ownership of Securities
------------------------ -------------- ---------------- --------------------- ----------------------- -----------------------
Portfolio Manager None $1-$10,000 $10,001-$50,000 $50,001-$100,000 $100,001-$500,000
------------------------ -------------- ---------------- --------------------- ----------------------- -----------------------
------------------------ -------------- ---------------- --------------------- ----------------------- -----------------------
James P Shanahan N/A N/A N/A N/A
------------------------ -------------- ---------------- --------------------- ----------------------- -----------------------
------------------------ -------------- ---------------- --------------------- ----------------------- -----------------------
William J. Morgan N/A N/A N/A N/A
------------------------ -------------- ---------------- --------------------- ----------------------- -----------------------
------------------------ ---------------- -----------------
Portfolio Manager $500,001 - over
$1,000,000 $1,000,000
------------------------ ---------------- -----------------
------------------------ ---------------- -----------------
James P Shanahan N/A N/A
------------------------ ---------------- -----------------
------------------------ ---------------- -----------------
William J. Morgan N/A N/A
------------------------ ---------------- -----------------
Principal Investors Fund, Inc. High Yield Fund
Information as of February 28, 2007
--------------------------------------------------------------------------------
Principal Investors Fund, Inc. High Yield Fund ("Fund")
J.P. Morgan Investment Management Inc. ("Adviser")
--------------------------------------------------------------------------------
----------------------------- --------------------------------------------------
(a)(1) Identify portfolio (a)(2) For each person identified in column (a)(1),
provide (a)(3) For each of the categories in column (a)(2), provide manager(s)
of the Adviser number of other accounts managed by the person within each number
of accounts and the total assets in the accounts with to be named in the Fund
category below and the total assets in the accounts managed respect to which the
advisory fee is based on the performance of prospectus within each category
below the account
----------------------------- ----------------------------------------------------------------- ----------------------
----------------------------- --------------------- ----------------------- ------------------- ---------------------
Registered Other Pooled Other Accounts Registered
Investment Companies Investment Investment Companies
Vehicles
----------------------------- --------------------- ----------------------- ------------------- ---------------------
----------------------------- ---------- ---------- ---------- ------------ ---------- ---------- -------- ----------
Number Total Number Total Number Total Number ofTotal Asset
of Assets of Assets(mm) of Assets Accounts
Accounts (mm) Accounts Accounts (mm)
----------------------------- ---------- ---------- ---------- ------------ ---------- ---------- -------- ----------
----------------------------- ---------- ---------- ---------- ------------ -------- ------------ -------- ----------
James E. Gibson N/A N/A N/A N/A N/A N/A N/A N/A
----------------------------- ---------- ---------- ---------- ------------ -------- ------------ -------- ----------
----------------------------- --------------------------------------------
----------------------------- --------------------- ----------------------
Other Pooled Other Accounts
Investment Vehicles
----------------------------- --------------------- ----------------------
----------------------------- ----------- --------- ---------- -----------
Number of Total Number of Total Assets
Accounts Assets Accounts
----------------------------- ----------- --------- ---------- -----------
----------------------------- ----------- --------- ---------- -----------
James E. Gibson N/A N/A N/A N/A
----------------------------- ----------- --------- ---------- -----------
*As of February 28, 2007, Mr. Gibson did not serve as portfolio manager for
other accounts.
1. Potential Conflicts
The potential for conflicts of interest exists when portfolio managers manage
other accounts with similar investment objectives and strategies as the Fund
("Similar Accounts"). Potential conflicts may include, for example, conflicts
between investment strategies and conflicts in the allocation of investment
opportunities.
Responsibility for managing J.P. Morgan Investment Management Inc. (JP Morgan)'s
and its affiliates clients' portfolios is organized according to investment
strategies within asset classes. Generally, client portfolios with similar
strategies are managed by portfolio managers in the same portfolio management
group using the same objectives, approach and philosophy. Underlying sectors or
strategy allocations within a larger portfolio are likewise managed by portfolio
managers who use the same approach and philosophy as similarly managed
portfolios. Therefore, portfolio holdings, relative position sizes and industry
and sector exposures tend to be similar across similar portfolios and
strategies, which minimize the potential for conflicts of interest.
JP Morgan and/or its affiliates may receive more compensation with respect to
certain Similar Accounts than that received with respect to the Fund or may
receive compensation based in part on the performance of certain Similar
Accounts. This may create a potential conflict of interest for JP Morgan and its
affiliates or its portfolio managers by providing an incentive to favor these
Similar Accounts when, for example, placing securities transactions. In
addition, JP Morgan or its affiliates could be viewed as having a conflict of
interest to the extent that JP Morgan or an affiliate has a proprietary
investment in Similar Accounts, the portfolio managers have personal investments
in Similar Accounts or the Similar Accounts are investment options in JP
Morgan's or its affiliate's employee benefit plans. Potential conflicts of
interest may arise with both the aggregation and allocation of securities
transactions and allocation of limited investment opportunities because of
market factors or investment restrictions imposed upon JP Morgan and its
affiliates by law, regulation, contract or internal policies. Allocations of
aggregated trades, particularly trade orders that were only partially completed
due to limited availability and allocation of investment opportunities
generally, could raise a potential conflict of interest, as JP Morgan or its
affiliates may have an incentive to allocate securities that are expected to
increase in value to favored accounts. Initial public offerings, in particular,
are frequently of very limited availability. JP Morgan and its affiliates may be
perceived as causing accounts it manages to participate in an offering to
increase JP Morgan's or its affiliates' overall allocation of securities in that
offering.
A potential conflict of interest also may be perceived to arise if transactions
in one account closely follow related transactions in a different account, such
as when a purchase increases the value of securities previously purchased by
another account, or when a sale in one account lowers the sale price received in
a sale by a second account. If JP Morgan or its affiliates manages accounts that
engage in short sales of securities of the type in which the Fund invests, JP
Morgan or its affiliates could be seen as harming the performance of the Fund
for the benefit of the accounts engaging in short sales if the short sales cause
the market value of the securities to fall.
As an internal policy matter, JP Morgan may from time to time maintain certain
overall investment limitations on the securities positions or positions in other
financial instruments JP Morgan or its affiliates will take on behalf of its
various clients due to, among other things, liquidity concerns and regulatory
restrictions. It should be recognized that such policies may preclude an account
from purchasing particular securities or financial instruments, even if such
securities or financial instruments would otherwise meet the account's
objectives.
The goal of JP Morgan and its affiliates is to meet their fiduciary obligation
with respect to all clients, JP Morgan and its affiliates have have policies and
procedures designed to manage the conflicts. JP Morgan and its affiliates
monitor a variety of areas, including compliance with fund guidelines, review of
allocation decisions and compliance with JP Morgan's Codes of Ethics and JPMC's
Code of Conduct. With respect to the allocation of investment opportunities, JP
Morgan and its affiliates also have certain policies designed to achieve fair
and equitable allocation of investment opportunities among its clients over
time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with JP Morgan's duty of best execution
for its clients. If aggregated trades are fully executed, accounts participating
in the trade will be allocated their pro rata share on an average price basis.
Partially completed orders generally will be allocated among the participating
accounts on a pro-rata average price basis, subject to certain limited
exceptions. For example, accounts that would receive a de minimis allocation
relative to their size may be excluded from the order. Another exception may
occur when thin markets or price volatility require that an aggregated order be
completed in multiple executions over several days. If partial completion of the
order would result in an uneconomic allocation to an account due to fixed
transaction or custody costs, JP Morgan or its affiliates may exclude small
orders until 50% of the total order is completed. Then the small orders will be
executed. Following this procedure, small orders will lag in the early execution
of the order, but will be completed before completion of the total order.
Purchases of money market instruments and fixed income securities cannot always
be allocated pro rata across the accounts with the same investment strategy and
objective. However, JP Morgan and its affiliates attempts to mitigate any
potential unfairness by basing non-pro rata allocations traded through a single
trading desk or system upon an objective predetermined criteria for the
selection of investments and a disciplined process for allocating securities
with similar duration, credit quality and liquidity in the good faith judgment
of JP Morgan or its affiliates so that fair and equitable allocation will occur
over time.
(b) Portfolio Manager Compensation
J.P. Morgan Investment Management Inc. (JP Morgan)'s Portfolio managers
participate in a competitive compensation program that is designed to attract
and retain outstanding people and closely link the performance of investment
professionals to client investment objectives. The total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of JP Morgan's business as a whole.
Each portfolio manager's performance is formally evaluated annually based on a
variety of factors including the aggregate size and blended performance of the
portfolios such portfolio manager manages. Individual contribution relative to
client goals carries the highest impact. Portfolio manager compensation is
primarily driven by meeting or exceeding clients' risk and return objectives,
relative performance to competitors or competitive indices and compliance with
firm policies and regulatory requirements. In evaluating each portfolio
manager's performance with respect to the mutual funds he or she manages, the
funds' pre-tax performance is compared to the appropriate market peer group and
to each fund's benchmark index listed in the fund's prospectus over one, three
and five year periods (or such shorter time as the portfolio manager has managed
the fund). Investment performance is generally more heavily weighted to the long
term.
Awards of restricted stock are granted as part of an employee's annual
performance bonus and comprise from 0% to 35% of a portfolio manager's total
bonus. As the level of incentive compensation increases, the percentage of
compensation awarded in restricted stock also increases. Up to 50% of the
restricted stock portion of a portfolio manager's bonus may instead be subject
to a mandatory notional investment in selected mutual funds advised by the
Adviser or its affiliates. When these deferred amounts vest, the portfolio
manager receives cash equal to the market value of the notional investment in
the selected mutual funds.
(c) Ownership of Securities
------------------------ ------- ------------ ---------------- ------------------ ------------------- ---------------- -----------
Portfolio Manager None $1-$10,000 $10,001-$50,000 $50,001-$100,000 $100,001-$500,000 $500,001 - over
$1,000,000 $1,000,000
------------------------ ------- ------------ ---------------- ------------------ ------------------- ---------------- -----------
------------------------ ------- ------------ ---------------- ------------------ ------------------- ---------------- -----------
James E. Gibson N/A N/A N/A N/A N/A N/A
------------------------ ------- ------------ ---------------- ------------------ ------------------- ---------------- -----------
PRINCIPAL INVESTORS FUND, INC. PARTNERS GLOBAL EQUITY FUND
INFORMATION AS OF OCTOBER 31, 2006
Principal Investors Fund, Inc. Partners Global Equity ("Fund")
J.P. Morgan Investment Management Inc. ("Adviser")
(a)(1) Identify portfolio (a)(2) For each person identified in column (a)(1), (a)(3) For each of the categories in column (a)(2),
manager(s) of the Adviser to provide number of other accounts managed by the provide number of accounts and the total assets in
be named in the Fund person within each category below and the total the accounts with respect to which the advisory fee
prospectus assets in the accounts managed within each category is based on the performance of the account
below
Registered Other Pooled Other Registered Other Pooled Other Accounts
Investment Investment Accounts Investment Investment
Companies Vehicles Companies Vehicles
Number Total Number Total Number Total Number Total Number Total Number Total
of Assets of Assets(mm) of Assets of Assets of Assets of Assets
Accounts (mm) Accounts Accounts (mm) Accounts Accounts Accounts
Matthew Beesley 0 0.00 11 3,793.00 22 8,233.50 N/A N/A N/A N/A N/A N/A
Edward Walker 0 0.00 11 3,793.00 22 8,233.50 N/A N/A N/A N/A N/A N/A
Howard Williams 2 1,828.00 11 3,793.00 22 8,233.50 N/A N/A N/A N/A N/A N/A
1.Potential Conflicts
The potential for conflicts of interest exists when portfolio managers manage
other accounts with similar investment objectives and strategies as the Fund
("Similar Accounts"). Potential conflicts may include, for example, conflicts
between investment strategies and conflicts in the allocation of investment
opportunities.
Responsibility for managing J.P. Morgan Investment Management Inc. (JP Morgan)'s
and its affiliates clients' portfolios is organized according to investment
strategies within asset classes. Generally, client portfolios with similar
strategies are managed by portfolio managers in the same portfolio management
group using the same objectives, approach and philosophy. Underlying sectors or
strategy allocations within a larger portfolio are likewise managed by portfolio
managers who use the same approach and philosophy as similarly managed
portfolios. Therefore, portfolio holdings, relative position sizes and industry
and sector exposures tend to be similar across similar portfolios and
strategies, which minimize the potential for conflicts of interest.
JP Morgan and/or its affiliates may receive more compensation with respect to
certain Similar Accounts than that received with respect to the Fund or may
receive compensation based in part on the performance of certain Similar
Accounts. This may create a potential conflict of interest for JP Morgan and its
affiliates or its portfolio managers by providing an incentive to favor these
Similar Accounts when, for example, placing securities transactions. In
addition, JP Morgan or its affiliates could be viewed as having a conflict of
interest to the extent that JP Morgan or an affiliate has a proprietary
investment in Similar Accounts, the portfolio managers have personal investments
in Similar Accounts or the Similar Accounts are investment options in JP
Morgan's or its affiliate's employee benefit plans. Potential conflicts of
interest may arise with both the aggregation and allocation of securities
transactions and allocation of limited investment opportunities because of
market factors or investment restrictions imposed upon JP Morgan and its
affiliates by law, regulation, contract or internal policies. Allocations of
aggregated trades, particularly trade orders that were only partially completed
due to limited availability and allocation of investment opportunities
generally, could raise a potential conflict of interest, as JP Morgan or its
affiliates may have an incentive to allocate securities that are expected to
increase in value to favored accounts. Initial public offerings, in particular,
are frequently of very limited availability. JP Morgan and its affiliates may be
perceived as causing accounts it manages to participate in an offering to
increase JP Morgan's or its affiliates' overall allocation of securities in that
offering.
A potential conflict of interest also may be perceived to arise if transactions
in one account closely follow related transactions in a different account, such
as when a purchase increases the value of securities previously purchased by
another account, or when a sale in one account lowers the sale price received in
a sale by a second account. If JP Morgan or its affiliates manages accounts that
engage in short sales of securities of the type in which the Fund invests, JP
Morgan or its affiliates could be seen as harming the performance of the Fund
for the benefit of the accounts engaging in short sales if the short sales cause
the market value of the securities to fall.
As an internal policy matter, JP Morgan may from time to time maintain certain
overall investment limitations on the securities positions or positions in other
financial instruments JP Morgan or its affiliates will take on behalf of its
various clients due to, among other things, liquidity concerns and regulatory
restrictions. It should be recognized that such policies may preclude an
account from purchasing particular securities or financial instruments, even if
such securities or financial instruments would otherwise meet the account's
objectives.
The goal of JP Morgan and its affiliates is to meet their fiduciary obligation
with respect to all clients, JP Morgan and its affiliates have have policies and
procedures designed to manage the conflicts. JP Morgan and its affiliates
monitor a variety of areas, including compliance with fund guidelines, review of
allocation decisions and compliance with JP Morgan's Codes of Ethics and JPMC's
Code of Conduct. With respect to the allocation of investment opportunities, JP
Morgan and its affiliates also have certain policies designed to achieve fair
and equitable allocation of investment opportunities among its clients over
time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with JP Morgan's duty of best execution
for its clients. If aggregated trades are fully executed, accounts participating
in the trade will be allocated their pro rata share on an average price basis.
Partially completed orders generally will be allocated among the participating
accounts on a pro-rata average price basis, subject to certain limited
exceptions. For example, accounts that would receive a de minimis allocation
relative to their size may be excluded from the order. Another exception may
occur when thin markets or price volatility require that an aggregated order be
completed in multiple executions over several days. If partial completion of the
order would result in an uneconomic allocation to an account due to fixed
transaction or custody costs, JP Morgan or its affiliates may exclude small
orders until 50% of the total order is completed. Then the small orders will be
executed. Following this procedure, small orders will lag in the early execution
of the order, but will be completed before completion of the total order.
Purchases of money market instruments and fixed income securities cannot always
be allocated pro rata across the accounts with the same investment strategy and
objective. However, JP Morgan and its affiliates attempts to mitigate any
potential unfairness by basing non-pro rata allocations traded through a single
trading desk or system upon an objective predetermined criteria for the
selection of investments and a disciplined process for allocating securities
with similar duration, credit quality and liquidity in the good faith judgment
of JP Morgan or its affiliates so that fair and equitable allocation will occur
over time.
(b) Portfolio Manager Compensation
J.P. Morgan Investment Management Inc. (JP Morgan)'s Portfolio managers
participate in a competitive compensation program that is designed to attract
and retain outstanding people and closely link the performance of investment
professionals to client investment objectives. The total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of JP Morgan's business as a whole.
Each portfolio manager's performance is formally evaluated annually based on a
variety of factors including the aggregate size and blended performance of the
portfolios such portfolio manager manages. Individual contribution relative to
client goals carries the highest impact. Portfolio manager compensation is
primarily driven by meeting or exceeding clients' risk and return objectives,
relative performance to competitors or competitive indices and compliance with
firm policies and regulatory requirements. In evaluating each portfolio
manager's performance with respect to the mutual funds he or she manages, the
funds' pre-tax performance is compared to the appropriate market peer group and
to each fund's benchmark index listed in the fund's prospectus over one, three
and five year periods (or such shorter time as the portfolio manager has managed
the fund). Investment performance is generally more heavily weighted to the long
term.
Awards of restricted stock are granted as part of an employee's annual
performance bonus and comprise from 0% to 35% of a portfolio manager's total
bonus. As the level of incentive compensation increases, the percentage of
compensation awarded in restricted stock also increases. Up to 50% of the
restricted stock portion of a portfolio manager's bonus may instead be subject
to a mandatory notional investment in selected mutual funds advised by the
Adviser or its affiliates. When these deferred amounts vest, the portfolio
manager receives cash equal to the market value of the notional investment in
the selected mutual funds.
(c) Ownership of Securities
Portfolio Manager None $1-$10,000 $10,001-$50,000 $50,001-$100,000 $100,001-$500,000 $500,001 - over
$1,000,000 $1,000,000
Matthew Beesley N/A N/A N/A N/A N/A N/A
Edward Walker N/A N/A N/A N/A N/A N/A
Howard Williams N/A N/A N/A N/A N/A N/A
PRINCIPAL INVESTORS FUND, INC. SMALL CAP VALUE I FUND
INFORMATION AS OF OCTOBER 31, 2006
Principal Investors Fund, Inc. Small Cap Value I Fund ("Fund")
J.P. Morgan Investment Management Inc. ("Adviser")
(a)(1) Identify portfolio (a)(2) For each person identified in column (a)(3) For each of the categories in column (a)(2),
manager(s) of the Adviser to (a)(1), provide number of other accounts managed provide number of accounts and the total assets in
be named in the Fund by the person within each category below and the the accounts with respect to which the advisory fee
prospectus total assets in the accounts managed within each is based on the performance of the account
category below
Registered Other Pooled Other Registered Other Pooled Other Accounts
Investment Investment Accounts Investment Investment
Companies Vehicles Companies Vehicles
Number Total Number Total Number Total Number Total Number Total Number Total
of Assets of Assets(mm) of Assets of Assets of Assets of Assets
Accounts (mm) Accounts Accounts (mm) Accounts Accounts Accounts
Dennis Ruhl 14 3,927.00 8 912.00 8 464.00 N/A N/A N/A N/A N/A N/A
Christoher Blum 14 3,927.00 8 912.00 8 464.00 N/A N/A N/A N/A N/A N/A
1.Potential Conflicts
The potential for conflicts of interest exists when portfolio managers manage
other accounts with similar investment objectives and strategies as the Fund
("Similar Accounts"). Potential conflicts may include, for example, conflicts
between investment strategies and conflicts in the allocation of investment
opportunities.
Responsibility for managing J.P. Morgan Investment Management Inc. (JP Morgan)'s
and its affiliates clients' portfolios is organized according to investment
strategies within asset classes. Generally, client portfolios with similar
strategies are managed by portfolio managers in the same portfolio management
group using the same objectives, approach and philosophy. Underlying sectors or
strategy allocations within a larger portfolio are likewise managed by portfolio
managers who use the same approach and philosophy as similarly managed
portfolios. Therefore, portfolio holdings, relative position sizes and industry
and sector exposures tend to be similar across similar portfolios and
strategies, which minimize the potential for conflicts of interest.
JP Morgan and/or its affiliates may receive more compensation with respect to
certain Similar Accounts than that received with respect to the Fund or may
receive compensation based in part on the performance of certain Similar
Accounts. This may create a potential conflict of interest for JP Morgan and its
affiliates or its portfolio managers by providing an incentive to favor these
Similar Accounts when, for example, placing securities transactions. In
addition, JP Morgan or its affiliates could be viewed as having a conflict of
interest to the extent that JP Morgan or an affiliate has a proprietary
investment in Similar Accounts, the portfolio managers have personal investments
in Similar Accounts or the Similar Accounts are investment options in JP
Morgan's or its affiliate's employee benefit plans. Potential conflicts of
interest may arise with both the aggregation and allocation of securities
transactions and allocation of limited investment opportunities because of
market factors or investment restrictions imposed upon JP Morgan and its
affiliates by law, regulation, contract or internal policies. Allocations of
aggregated trades, particularly trade orders that were only partially completed
due to limited availability and allocation of investment opportunities
generally, could raise a potential conflict of interest, as JP Morgan or its
affiliates may have an incentive to allocate securities that are expected to
increase in value to favored accounts. Initial public offerings, in particular,
are frequently of very limited availability. JP Morgan and its affiliates may be
perceived as causing accounts it manages to participate in an offering to
increase JP Morgan's or its affiliates' overall allocation of securities in that
offering.
A potential conflict of interest also may be perceived to arise if transactions
in one account closely follow related transactions in a different account, such
as when a purchase increases the value of securities previously purchased by
another account, or when a sale in one account lowers the sale price received in
a sale by a second account. If JP Morgan or its affiliates manages accounts that
engage in short sales of securities of the type in which the Fund invests, JP
Morgan or its affiliates could be seen as harming the performance of the Fund
for the benefit of the accounts engaging in short sales if the short sales cause
the market value of the securities to fall.
As an internal policy matter, JP Morgan may from time to time maintain certain
overall investment limitations on the securities positions or positions in other
financial instruments JP Morgan or its affiliates will take on behalf of its
various clients due to, among other things, liquidity concerns and regulatory
restrictions. It should be recognized that such policies may preclude an
account from purchasing particular securities or financial instruments, even if
such securities or financial instruments would otherwise meet the account's
objectives.
The goal of JP Morgan and its affiliates is to meet their fiduciary obligation
with respect to all clients, JP Morgan and its affiliates have have policies and
procedures designed to manage the conflicts. JP Morgan and its affiliates
monitor a variety of areas, including compliance with fund guidelines, review of
allocation decisions and compliance with JP Morgan's Codes of Ethics and JPMC's
Code of Conduct. With respect to the allocation of investment opportunities, JP
Morgan and its affiliates also have certain policies designed to achieve fair
and equitable allocation of investment opportunities among its clients over
time. For example:
Orders for the same equity security are aggregated on a continual basis
throughout each trading day consistent with JP Morgan's duty of best execution
for its clients. If aggregated trades are fully executed, accounts participating
in the trade will be allocated their pro rata share on an average price basis.
Partially completed orders generally will be allocated among the participating
accounts on a pro-rata average price basis, subject to certain limited
exceptions. For example, accounts that would receive a de minimis allocation
relative to their size may be excluded from the order. Another exception may
occur when thin markets or price volatility require that an aggregated order be
completed in multiple executions over several days. If partial completion of the
order would result in an uneconomic allocation to an account due to fixed
transaction or custody costs, JP Morgan or its affiliates may exclude small
orders until 50% of the total order is completed. Then the small orders will be
executed. Following this procedure, small orders will lag in the early execution
of the order, but will be completed before completion of the total order.
Purchases of money market instruments and fixed income securities cannot always
be allocated pro rata across the accounts with the same investment strategy and
objective. However, JP Morgan and its affiliates attempts to mitigate any
potential unfairness by basing non-pro rata allocations traded through a single
trading desk or system upon an objective predetermined criteria for the
selection of investments and a disciplined process for allocating securities
with similar duration, credit quality and liquidity in the good faith judgment
of JP Morgan or its affiliates so that fair and equitable allocation will occur
over time.
(b) Portfolio Manager Compensation
J.P. Morgan Investment Management Inc. (JP Morgan)'s Portfolio managers
participate in a competitive compensation program that is designed to attract
and retain outstanding people and closely link the performance of investment
professionals to client investment objectives. The total compensation program
includes a base salary fixed from year to year and a variable performance bonus
consisting of cash incentives and restricted stock and, in some cases, mandatory
deferred compensation. These elements reflect individual performance and the
performance of JP Morgan's business as a whole.
Each portfolio manager's performance is formally evaluated annually based on a
variety of factors including the aggregate size and blended performance of the
portfolios such portfolio manager manages. Individual contribution relative to
client goals carries the highest impact. Portfolio manager compensation is
primarily driven by meeting or exceeding clients' risk and return objectives,
relative performance to competitors or competitive indices and compliance with
firm policies and regulatory requirements. In evaluating each portfolio
manager's performance with respect to the mutual funds he or she manages, the
funds' pre-tax performance is compared to the appropriate market peer group and
to each fund's benchmark index listed in the fund's prospectus over one, three
and five year periods (or such shorter time as the portfolio manager has managed
the fund). Investment performance is generally more heavily weighted to the long
term.
Awards of restricted stock are granted as part of an employee's annual
performance bonus and comprise from 0% to 35% of a portfolio manager's total
bonus. As the level of incentive compensation increases, the percentage of
compensation awarded in restricted stock also increases. Up to 50% of the
restricted stock portion of a portfolio manager's bonus may instead be subject
to a mandatory notional investment in selected mutual funds advised by the
Adviser or its affiliates. When these deferred amounts vest, the portfolio
manager receives cash equal to the market value of the notional investment in
the selected mutual funds.
(c) Ownership of Securities
Portfolio Manager None $1-$10,000 $10,001-$50,000 $50,001-$100,000 $100,001-$500,000 $500,001 - over
$1,000,000 $1,000,000
Christopher Blum N/A N/A N/A N/A N/A N/A
Dennis Ruhl N/A N/A N/A N/A N/A N/A
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS MID CAP VALUE I
[Name of Fund
] DAVE BORGER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Dave Borger 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dave Borger
[(Printed Name of person signing)]
Director of Research
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS MID CAP VALUE I
[Name of Fund
] CHRISTINE KUGLER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Christine Kugler 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Christine Kugler
[(Printed Name of person signing)]
Director of Implementation
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS MID CAP VALUE I
[Name of Fund
] STUART MATSUDA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Stuart Matsuda 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Stuart Matsuda
[(Printed Name of person signing)]
Director of Trading
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS MID CAP VALUE I
[Name of Fund
] HAL REYNOLDS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Hal Reynolds 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Hal Reynolds
[(Printed Name of person signing)]
CIO
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS MID CAP VALUE I
[Name of Fund
] THOMAS D. STEVENS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Thomas D. Stevens 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Thomas D. Stevens
[(Printed Name of person signing)]
Chairman
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE
[Name of Fund
] DAVE BORGER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Dave Borger 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dave Borger
[(Printed Name of person signing)]
Director of Research
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE
[Name of Fund
] CHRISTINE KUGLER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Christine Kugler 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Christine Kugler
[(Printed Name of person signing)]
Director of Implementation
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE
[Name of Fund
] STUART MATSUDA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Stuart Matsuda 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Stuart Matsuda
[(Printed Name of person signing)]
Director of Trading
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE
[Name of Fund
] HAL REYNOLDS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Hal Reynolds 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Hal Reynolds
[(Printed Name of person signing)]
CIO
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE
[Name of Fund
] THOMAS D. STEVENS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
LOS ANGELES CAPITAL MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $1,033.3 MILLION
-----------------------------
* other pooled investment vehicles:... ***** *****
-----------------------------
* other accounts:..................... 31 $3,232.7 MILLION
-----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... ***** *****
---------------------------
* other accounts:..................... 6 $621.9 MILLION
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
ALL ACCOUNTS ARE MANAGED IN A CONSISTENT FASHION BASED ON THE FIRM'S DYNAMIC
ALPHA STOCK SELECTION MODEL. AS A RESULT, EACH ACCOUNT BENEFITS EQUALLY FROM
THE CHANGES THAT ARE IMPLEMENTED.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION CONSISTS OF SALARY AND DIVIDENDS BASED UPON FIRM PROFITABILITY.
COMPENSATION IS NOT TIED TO THE PERFORMANCE OR VALUE OF ASSETS IN A
PORTFOLIO.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Thomas D. Stevens 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Thomas D. Stevens
[(Printed Name of person signing)]
Chairman
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC.
Name of Fund
Ann H. Benjamin
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
Lehman Brothers Asset Management LLC (LBAM)
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of (the Fund's most recently
completed fiscal year).
The following information is provided as of March 31, 2007.
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 6 $923.2 million*
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 3 $209.2 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 25 $4,146.1 million
----------------------- ------------------------
*Assets reported represent only the portion of the account for which the
Portfolio Manager has investment authority. Total assets in such accounts
may be greater.
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 2 $169.5 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
LBAM's portfolio managers are often responsible for managing multiple
accounts (including proprietary accounts), which may include separately
managed advisory accounts (managed on behalf of institutions such as
pension and other retirement plans, corporations, insurance companies,
foundations, endowments, trusts, and individuals), mutual funds, various
pooled investment vehicles and wrap fee programs. Actual or potential
conflicts of interest may arise between a portfolio manager's management of
the investments in the Fund and the management of other accounts. As a
result, LBAM and its affiliates have adopted policies and procedures
designed to mitigate and manage these conflicts.
Accounts other than the Fund may or may not have similar investment
objectives and strategies, benchmarks and time horizons as the Fund.
Generally, portfolios in a particular product strategy with similar
strategies and objectives are managed similarly. However, portfolio
managers make investment decisions for each portfolio based on the
investment objectives, policies, and other relevant investment
considerations that the managers believe are applicable to that portfolio.
Consequently, portfolio managers may take actions on behalf of the Fund
that may differ from the timing or nature of action taken with respect to
other accounts. For instance, portfolio managers may purchase or sell
certain securities for one account and not another. Securities purchased in
one account may perform better than the securities purchased in another.
Similarly, the sale of securities from one account may cause that account
to perform better than others if the value of those securities still held
in the other accounts decline. Furthermore, a portfolio manager managing
more than one account could take positions in certain accounts that appear
inconsistent. A portfolio manager may take a short position in a security
that may be held long in another account he manages. For instance, where a
portfolio manager wants to take a short position in an account that
prohibits shorting, a similar effect may be accomplished by holding the
security long but underweighting its position relative to a benchmark..
Additional reasons for such portfolio positionings may include, but are not
limited to, suitability, capital structure arbitrage, model driven trading,
hedging, and client direction. LBAM has policies and procedures in place
that seek to manage and monitor this conflict.
Potential conflicts of interest may also arise when aggregating and/or
allocating trades. LBAM will frequently aggregate trades (both buys and
sells) for a client with other LBAM clients when it is determined that such
aggregation should result in a more favorable trade execution for such
client. LBAM has also adopted trade allocation policies and procedures that
seek to treat all clients fairly and equitably when there is a limited
investment opportunity that may be suitable for more than one portfolio.
LBAM's trade allocation procedures seek to ensure that no client is favored
over another. However, there are numerous factors that might affect whether
a particular account participates in a trade allocation or be allocated a
different amount than other accounts. Such factors include, but are not
limited to, client guidelines, suitability, cash flows, strategy or product
specific considerations, issuer or sector exposure considerations and de
minimis allocations.
The fees charged to advisory clients by LBAM may differ depending upon a
number of factors, including but not limited to, the particular strategy,
the size of the portfolio being managed and the investment vehicle. In
addition, certain accounts are subject to performance based fees. These
differences may give rise to a potential conflict that a portfolio manager
may favor the higher fee-paying account over others. To address this
conflict, LBAM, as discussed above, has adopted allocation policies that
are intended to fairly allocate investment opportunities among client
accounts.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Portfolio Managers are typically compensated on the basis of a salary and
an annual discretionary, performance-based bonus, which is in the form of
cash and conditional equity awards (restricted stock units and/or stock
options). Elements of consideration for the discretionary bonuses are
overall performance of the accounts managed by a portfolio manager in
relation to relevant benchmarks and their peers, ability to attract and
retain clients, revenue generation, assets under management, the current
market conditions and overall contribution to the Firm. Managers are also
evaluated on their collaboration with their client relationship and sales
staff, their franchise building activities, teamwork, people and product
development and their corporate citizenship.
The percentage of compensation varies by position, experience/level and
performance. In general, the more senior the investment professional,
variable compensation becomes a greater portion of total compensation. As
previously mentioned, all employees participate in the Lehman Brothers
Equity Award program. The portion of compensation paid in equity increases
as total compensation rises.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/Keith J. Beaudoin 07/02/2007
--------------------------------------- ---------
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Keith J. Beaudoin
-------------------------------------------------------------------------------
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC.
Name of Fund
Thomas P. O'Reilly
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
Lehman Brothers Asset Management LLC (LBAM)
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of (the Fund's most recently
completed fiscal year).
The following information is provided as of March 31, 2007.
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 6 $923.2 million*
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 3 $209.2 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 25 $4,146.1 million
----------------------- ------------------------
*Assets reported represent only the portion of the account for which the
Portfolio Manager has investment authority. Total assets in such accounts
may be greater.
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 2 $169.5 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
LBAM's portfolio managers are often responsible for managing multiple
accounts (including proprietary accounts), which may include separately
managed advisory accounts (managed on behalf of institutions such as
pension and other retirement plans, corporations, insurance companies,
foundations, endowments, trusts, and individuals), mutual funds, various
pooled investment vehicles and wrap fee programs. Actual or potential
conflicts of interest may arise between a portfolio manager's management of
the investments in the Fund and the management of other accounts. As a
result, LBAM and its affiliates have adopted policies and procedures
designed to mitigate and manage these conflicts.
Accounts other than the Fund may or may not have similar investment
objectives and strategies, benchmarks and time horizons as the Fund.
Generally, portfolios in a particular product strategy with similar
strategies and objectives are managed similarly. However, portfolio
managers make investment decisions for each portfolio based on the
investment objectives, policies, and other relevant investment
considerations that the managers believe are applicable to that portfolio.
Consequently, portfolio managers may take actions on behalf of the Fund
that may differ from the timing or nature of action taken with respect to
other accounts. For instance, portfolio managers may purchase or sell
certain securities for one account and not another. Securities purchased in
one account may perform better than the securities purchased in another.
Similarly, the sale of securities from one account may cause that account
to perform better than others if the value of those securities still held
in the other accounts decline. Furthermore, a portfolio manager managing
more than one account could take positions in certain accounts that appear
inconsistent. A portfolio manager may take a short position in a security
that may be held long in another account he manages. For instance, where a
portfolio manager wants to take a short position in an account that
prohibits shorting, a similar effect may be accomplished by holding the
security long but underweighting its position relative to a benchmark..
Additional reasons for such portfolio positionings may include, but are not
limited to, suitability, capital structure arbitrage, model driven trading,
hedging, and client direction. LBAM has policies and procedures in place
that seek to manage and monitor this conflict.
Potential conflicts of interest may also arise when aggregating and/or
allocating trades. LBAM will frequently aggregate trades (both buys and
sells) for a client with other LBAM clients when it is determined that such
aggregation should result in a more favorable trade execution for such
client. LBAM has also adopted trade allocation policies and procedures that
seek to treat all clients fairly and equitably when there is a limited
investment opportunity that may be suitable for more than one portfolio.
LBAM's trade allocation procedures seek to ensure that no client is favored
over another. However, there are numerous factors that might affect whether
a particular account participates in a trade allocation or be allocated a
different amount than other accounts. Such factors include, but are not
limited to, client guidelines, suitability, cash flows, strategy or product
specific considerations, issuer or sector exposure considerations and de
minimis allocations.
The fees charged to advisory clients by LBAM may differ depending upon a
number of factors, including but not limited to, the particular strategy,
the size of the portfolio being managed and the investment vehicle. In
addition, certain accounts are subject to performance based fees. These
differences may give rise to a potential conflict that a portfolio manager
may favor the higher fee-paying account over others. To address this
conflict, LBAM, as discussed above, has adopted allocation policies that
are intended to fairly allocate investment opportunities among client
accounts.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Portfolio Managers are typically compensated on the basis of a salary and
an annual discretionary, performance-based bonus, which is in the form of
cash and conditional equity awards (restricted stock units and/or stock
options). Elements of consideration for the discretionary bonuses are
overall performance of the accounts managed by a portfolio manager in
relation to relevant benchmarks and their peers, ability to attract and
retain clients, revenue generation, assets under management, the current
market conditions and overall contribution to the Firm. Managers are also
evaluated on their collaboration with their client relationship and sales
staff, their franchise building activities, teamwork, people and product
development and their corporate citizenship.
The percentage of compensation varies by position, experience/level and
performance. In general, the more senior the investment professional,
variable compensation becomes a greater portion of total compensation. As
previously mentioned, all employees participate in the Lehman Brothers
Equity Award program. The portion of compensation paid in equity increases
as total compensation rises.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/Keith J. Beaudoin 07/02/2007
---------------------------------------- ---------
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Keith J. Beaudoin
------------------------------------------------------
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SMALL CAP GROWTH FUND SERIES III
[Name of Fund
] STEPHEN C. BRINK
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MAZAMA CAPITAL MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 11 1.57 BILLION
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 75 5.73 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
------------------------
* other pooled investment vehicles:... 0 0
------------------------
* other accounts:..................... 2 254 MILLION
------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS EVERY MEMBER OF THE INVESTMENT TEAM HAS DAY-TO-DAY MANAGEMENT
RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE ACCOUNT AND MORE THAN ONE
INVESTMENT STRATEGY, ACTUAL OR APPARENT CONFLICTS MAY ARISE.
THE COMPENSATION PAID TO MAZAMA FOR MANAGING THE FUND(S) IS BASED ON A
PERCENTAGE OF ASSETS UNDER MANAGEMENT RATHER THAN A SHARE OF THE GAINS. AS
DESCRIBED ABOVE, MEMBERS OF THE INVESTMENT TEAM, AS EQUITY OWNERS AND BY
RECEIVING A SHARE OF PORTFOLIO MANAGEMENT FEES, BENEFIT FROM MAZAMA'S
REVENUES AND PROFITABILITY. CONFLICTS OF INTEREST CAN ARISE TO THE EXTENT
THAT LARGER CLIENT ACCOUNTS GENERATE MORE FEES AND POTENTIALLY LARGER PROFITS
FOR MAZAMA COMPARED TO SMALL ACCOUNTS. TWO ACCOUNTS PAY FEES BASED ON A
PERCENTAGE OF ASSETS THAT CAN INCREASE AND DECREASE BASED ON PERFORMANCE
AGAINST A BENCHMARK INDEX, THESE TWO ACCOUNTS ARE MANAGED CONSISTENTLY WITH
THEIR STATED INVESTMENT STRATEGY. DESPITE THESE DIFFERENCES MAZAMA BELIEVES
THAT ITS TRADE ALLOCATION AND OTHER COMPLIANCE PROCEDURES EFFECTIVELY ADDRESS
ANY RELATED CONFLICTS OF INTEREST. OTHERWISE, NO MEMBER OF THE INVESTMENT
TEAM IS COMPENSATED IN A WAY THAT WOULD ADD TO THOSE CONFLICTS OF INTEREST BY
CREATING AN INCENTIVE TO FAVOR PARTICULAR ACCOUNTS OVER OTHER ACCOUNTS.
EXECUTION AND RESEARCH SERVICES PROVIDED BY BROKERS MAY NOT ALWAYS BE
UTILIZED IN CONNECTION WITH THE FUND(S) OR WITH OTHER CLIENT ACCOUNTS THAT
MAY HAVE PAID THE COMMISSION OR A PORTION OF THE COMMISSION TO THE BROKER
PROVIDING THE SERVICES. MAZAMA ALLOCATES BROKERAGE COMMISSIONS FOR THESE
SERVICES IN A MANNER THAT IT BELIEVES IS FAIR AND EQUITABLE AND CONSISTENT
WITH ITS FIDUCIARY OBLIGATIONS TO EACH OF ITS CLIENTS.
IF A MEMBER OF THE INVESTMENT TEAM IDENTIFIES A LIMITED INVESTMENT
OPPORTUNITY THAT MAY BE SUITABLE FOR MORE THAN JUST THE FUND(S) OR ANOTHER
CLIENT ACCOUNT, THE FUND(S) MAY NOT BE ABLE TO TAKE FULL ADVANTAGE OF THAT
OPPORTUNITY. TO MITIGATE THIS CONFLICT OF INTEREST, MAZAMA AGGREGATES ORDERS
FOR THE FUND(S) WITH ORDERS FROM EACH OF ITS OTHER CLIENT ACCOUNTS
PARTICIPATING IN THE SAME STRATEGY IN ORDER TO ENSURE THAT CLIENTS ARE
TREATED FAIRLY AND EQUITABLY OVER TIME AND CONSISTENT WITH ITS FIDUCIARY
OBLIGATIONS TO EACH OF ITS CLIENTS.
MAZAMA HAS ADOPTED POLICIES AND PROCEDURES TO ADDRESS AND PREVENT THE ABOVE
CONFLICTS OF INTEREST; HOWEVER THERE IS NO GUARANTEE THAT SUCH PROCEDURES
WILL DETECT EACH AND EVERY SITUATION IN WHICH A CONFLICT ARISES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
MAZAMA'S COMPENSATION STRUCTURE IS DESIGNED TO ATTRACT AND RETAIN HIGHLY
SKILLED INVESTMENT PROFESSIONALS. THE COMPENSATION IS STRUCTURED TO MAXIMIZE
PERFORMANCE AND KEEP THE INTERESTS OF EACH MEMBER OF OUR PORTFOLIO MANAGEMENT
TEAM ALIGNED WITH THOSE OF OUR CLIENTS.
THE INCENTIVE COMPENSATION STRUCTURE KEEPS EACH MEMBER OF THE TEAM FOCUSED ON
THE RELATIVE PERFORMANCE OF EACH STRATEGY VERSUS ITS RESPECTIVE BENCHMARK.
EACH PORTFOLIO MANAGER AND RESEARCH ANALYST RECEIVES A BASE SALARY
REPRESENTING 20-30% OF CASH COMPENSATION AND A PERFORMANCE BASED INCENTIVE
REPRESENTING 70-80% OF CASH COMPENSATION. THE PERFORMANCE BASED INCENTIVE
COMPENSATION IS BASED ON THE PORTFOLIO MANAGEMENT FEES RECEIVED BY MAZAMA FOR
ALL ACCOUNTS UNDER MANAGEMENT. THE INVESTMENT TEAM DOES NOT DISTINGUISH
BETWEEN DIFFERENT ACCOUNTS WITHIN EACH INVESTMENT STYLE/STRATEGY WITH RESPECT
TO COMPENSATION. CASH COMPENSATION INCREASES AS ASSETS UNDER MANAGEMENT
INCREASE, WHETHER BY APPRECIATION OR BY ATTRACTING NEW CLIENTS, BOTH OF WHICH
ARE ACCOMPLISHED BY ACHIEVING HIGHER THAN AVERAGE EXCESS RETURNS. EXCESS
RETURNS ARE MEASURED AS THE DIFFERENCE BETWEEN OUR PORTFOLIO RETURNS AND THE
RETURNS OF THE BENCHMARK FOR THE PORTION OF THE FUND(S) MANAGED BY MAZAMA
(I.E. RUSSELL 2000 GROWTH INDEX, RUSSELL 2500 GROWTH INDEX RUSSELL MID CAP
GROWTH OR RUSSELL 3000 GROWTH INDEX).
EQUITY BASED INCENTIVES HAVE BEEN A SIGNIFICANT PART OF MAZAMA'S COMPENSATION
PLAN SINCE THE FIRM'S INCEPTION. IN TOTAL, OUR INVESTMENT TEAM REPRESENTS
OVER 70% OF THE EQUITY OF THE FIRM ON A FULLY DILUTED BASIS. EVERY MEMBER OF
THE INVESTMENT TEAM IS EITHER A DIRECT EQUITY OWNER OR AN OPTION HOLDER OR
BOTH.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Shannon M. Lynch 11/21/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Shannon M. Lynch
[(Printed Name of person signing)]
Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SMALL CAP GROWTH FUND SERIES III
[Name of Fund
] TIMOTHY P. BUTLER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MAZAMA CAPITAL MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 11 1.57 BILLION
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 75 5.73 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
------------------------
* other pooled investment vehicles:... 0 0
------------------------
* other accounts:..................... 2 254 MILLION
------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS EVERY MEMBER OF THE INVESTMENT TEAM HAS DAY-TO-DAY MANAGEMENT
RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE ACCOUNT AND MORE THAN ONE
INVESTMENT STRATEGY, ACTUAL OR APPARENT CONFLICTS MAY ARISE.
THE COMPENSATION PAID TO MAZAMA FOR MANAGING THE FUND(S) IS BASED ON A
PERCENTAGE OF ASSETS UNDER MANAGEMENT RATHER THAN A SHARE OF THE GAINS. AS
DESCRIBED ABOVE, MEMBERS OF THE INVESTMENT TEAM, AS EQUITY OWNERS AND BY
RECEIVING A SHARE OF PORTFOLIO MANAGEMENT FEES, BENEFIT FROM MAZAMA'S
REVENUES AND PROFITABILITY. CONFLICTS OF INTEREST CAN ARISE TO THE EXTENT
THAT LARGER CLIENT ACCOUNTS GENERATE MORE FEES AND POTENTIALLY LARGER PROFITS
FOR MAZAMA COMPARED TO SMALL ACCOUNTS. TWO ACCOUNTS PAY FEES BASED ON A
PERCENTAGE OF ASSETS THAT CAN INCREASE AND DECREASE BASED ON PERFORMANCE
AGAINST A BENCHMARK INDEX, THESE TWO ACCOUNTS ARE MANAGED CONSISTENTLY WITH
THEIR STATED INVESTMENT STRATEGY. DESPITE THESE DIFFERENCES MAZAMA BELIEVES
THAT ITS TRADE ALLOCATION AND OTHER COMPLIANCE PROCEDURES EFFECTIVELY ADDRESS
ANY RELATED CONFLICTS OF INTEREST. OTHERWISE, NO MEMBER OF THE INVESTMENT
TEAM IS COMPENSATED IN A WAY THAT WOULD ADD TO THOSE CONFLICTS OF INTEREST BY
CREATING AN INCENTIVE TO FAVOR PARTICULAR ACCOUNTS OVER OTHER ACCOUNTS.
EXECUTION AND RESEARCH SERVICES PROVIDED BY BROKERS MAY NOT ALWAYS BE
UTILIZED IN CONNECTION WITH THE FUND(S) OR WITH OTHER CLIENT ACCOUNTS THAT
MAY HAVE PAID THE COMMISSION OR A PORTION OF THE COMMISSION TO THE BROKER
PROVIDING THE SERVICES. MAZAMA ALLOCATES BROKERAGE COMMISSIONS FOR THESE
SERVICES IN A MANNER THAT IT BELIEVES IS FAIR AND EQUITABLE AND CONSISTENT
WITH ITS FIDUCIARY OBLIGATIONS TO EACH OF ITS CLIENTS.
IF A MEMBER OF THE INVESTMENT TEAM IDENTIFIES A LIMITED INVESTMENT
OPPORTUNITY THAT MAY BE SUITABLE FOR MORE THAN JUST THE FUND(S) OR ANOTHER
CLIENT ACCOUNT, THE FUND(S) MAY NOT BE ABLE TO TAKE FULL ADVANTAGE OF THAT
OPPORTUNITY. TO MITIGATE THIS CONFLICT OF INTEREST, MAZAMA AGGREGATES ORDERS
FOR THE FUND(S) WITH ORDERS FROM EACH OF ITS OTHER CLIENT ACCOUNTS
PARTICIPATING IN THE SAME STRATEGY IN ORDER TO ENSURE THAT CLIENTS ARE
TREATED FAIRLY AND EQUITABLY OVER TIME AND CONSISTENT WITH ITS FIDUCIARY
OBLIGATIONS TO EACH OF ITS CLIENTS.
MAZAMA HAS ADOPTED POLICIES AND PROCEDURES TO ADDRESS AND PREVENT THE ABOVE
CONFLICTS OF INTEREST; HOWEVER THERE IS NO GUARANTEE THAT SUCH PROCEDURES
WILL DETECT EACH AND EVERY SITUATION IN WHICH A CONFLICT ARISES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
MAZAMA'S COMPENSATION STRUCTURE IS DESIGNED TO ATTRACT AND RETAIN HIGHLY
SKILLED INVESTMENT PROFESSIONALS. THE COMPENSATION IS STRUCTURED TO MAXIMIZE
PERFORMANCE AND KEEP THE INTERESTS OF EACH MEMBER OF OUR PORTFOLIO MANAGEMENT
TEAM ALIGNED WITH THOSE OF OUR CLIENTS.
THE INCENTIVE COMPENSATION STRUCTURE KEEPS EACH MEMBER OF THE TEAM FOCUSED ON
THE RELATIVE PERFORMANCE OF EACH STRATEGY VERSUS ITS RESPECTIVE BENCHMARK.
EACH PORTFOLIO MANAGER AND RESEARCH ANALYST RECEIVES A BASE SALARY
REPRESENTING 20-30% OF CASH COMPENSATION AND A PERFORMANCE BASED INCENTIVE
REPRESENTING 70-80% OF CASH COMPENSATION. THE PERFORMANCE BASED INCENTIVE
COMPENSATION IS BASED ON THE PORTFOLIO MANAGEMENT FEES RECEIVED BY MAZAMA FOR
ALL ACCOUNTS UNDER MANAGEMENT. THE INVESTMENT TEAM DOES NOT DISTINGUISH
BETWEEN DIFFERENT ACCOUNTS WITHIN EACH INVESTMENT STYLE/STRATEGY WITH RESPECT
TO COMPENSATION. CASH COMPENSATION INCREASES AS ASSETS UNDER MANAGEMENT
INCREASE, WHETHER BY APPRECIATION OR BY ATTRACTING NEW CLIENTS, BOTH OF WHICH
ARE ACCOMPLISHED BY ACHIEVING HIGHER THAN AVERAGE EXCESS RETURNS. EXCESS
RETURNS ARE MEASURED AS THE DIFFERENCE BETWEEN OUR PORTFOLIO RETURNS AND THE
RETURNS OF THE BENCHMARK FOR THE PORTION OF THE FUND(S) MANAGED BY MAZAMA
(I.E. RUSSELL 2000 GROWTH INDEX, RUSSELL 2500 GROWTH INDEX RUSSELL MID CAP
GROWTH OR RUSSELL 3000 GROWTH INDEX).
EQUITY BASED INCENTIVES HAVE BEEN A SIGNIFICANT PART OF MAZAMA'S COMPENSATION
PLAN SINCE THE FIRM'S INCEPTION. IN TOTAL, OUR INVESTMENT TEAM REPRESENTS
OVER 70% OF THE EQUITY OF THE FIRM ON A FULLY DILUTED BASIS. EVERY MEMBER OF
THE INVESTMENT TEAM IS EITHER A DIRECT EQUITY OWNER OR AN OPTION HOLDER OR
BOTH.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Shannon M. Lynch 11/21/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Shannon M. Lynch
[(Printed Name of person signing)]
Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SMALL CAP GROWTH FUND SERIES III
[Name of Fund]
MICHAEL D. CLULOW
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)]
MAZAMA CAPITAL MANAGEMENT, INC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 11 1.57 BILLION
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 75 5.73 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
------------------------
* other pooled investment vehicles:... 0 0
------------------------
* other accounts:..................... 2 254 MILLION
------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS EVERY MEMBER OF THE INVESTMENT TEAM HAS DAY-TO-DAY MANAGEMENT
RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE ACCOUNT AND MORE THAN ONE
INVESTMENT STRATEGY, ACTUAL OR APPARENT CONFLICTS MAY ARISE.
THE COMPENSATION PAID TO MAZAMA FOR MANAGING THE FUND(S) IS BASED ON A
PERCENTAGE OF ASSETS UNDER MANAGEMENT RATHER THAN A SHARE OF THE GAINS. AS
DESCRIBED ABOVE, MEMBERS OF THE INVESTMENT TEAM, AS EQUITY OWNERS AND BY
RECEIVING A SHARE OF PORTFOLIO MANAGEMENT FEES, BENEFIT FROM MAZAMA'S
REVENUES AND PROFITABILITY. CONFLICTS OF INTEREST CAN ARISE TO THE EXTENT
THAT LARGER CLIENT ACCOUNTS GENERATE MORE FEES AND POTENTIALLY LARGER PROFITS
FOR MAZAMA COMPARED TO SMALL ACCOUNTS. TWO ACCOUNTS PAY FEES BASED ON A
PERCENTAGE OF ASSETS THAT CAN INCREASE AND DECREASE BASED ON PERFORMANCE
AGAINST A BENCHMARK INDEX, THESE TWO ACCOUNTS ARE MANAGED CONSISTENTLY WITH
THEIR STATED INVESTMENT STRATEGY. DESPITE THESE DIFFERENCES MAZAMA BELIEVES
THAT ITS TRADE ALLOCATION AND OTHER COMPLIANCE PROCEDURES EFFECTIVELY ADDRESS
ANY RELATED CONFLICTS OF INTEREST. OTHERWISE, NO MEMBER OF THE INVESTMENT
TEAM IS COMPENSATED IN A WAY THAT WOULD ADD TO THOSE CONFLICTS OF INTEREST BY
CREATING AN INCENTIVE TO FAVOR PARTICULAR ACCOUNTS OVER OTHER ACCOUNTS.
EXECUTION AND RESEARCH SERVICES PROVIDED BY BROKERS MAY NOT ALWAYS BE
UTILIZED IN CONNECTION WITH THE FUND(S) OR WITH OTHER CLIENT ACCOUNTS THAT
MAY HAVE PAID THE COMMISSION OR A PORTION OF THE COMMISSION TO THE BROKER
PROVIDING THE SERVICES. MAZAMA ALLOCATES BROKERAGE COMMISSIONS FOR THESE
SERVICES IN A MANNER THAT IT BELIEVES IS FAIR AND EQUITABLE AND CONSISTENT
WITH ITS FIDUCIARY OBLIGATIONS TO EACH OF ITS CLIENTS.
IF A MEMBER OF THE INVESTMENT TEAM IDENTIFIES A LIMITED INVESTMENT
OPPORTUNITY THAT MAY BE SUITABLE FOR MORE THAN JUST THE FUND(S) OR ANOTHER
CLIENT ACCOUNT, THE FUND(S) MAY NOT BE ABLE TO TAKE FULL ADVANTAGE OF THAT
OPPORTUNITY. TO MITIGATE THIS CONFLICT OF INTEREST, MAZAMA AGGREGATES ORDERS
FOR THE FUND(S) WITH ORDERS FROM EACH OF ITS OTHER CLIENT ACCOUNTS
PARTICIPATING IN THE SAME STRATEGY IN ORDER TO ENSURE THAT CLIENTS ARE
TREATED FAIRLY AND EQUITABLY OVER TIME AND CONSISTENT WITH ITS FIDUCIARY
OBLIGATIONS TO EACH OF ITS CLIENTS.
MAZAMA HAS ADOPTED POLICIES AND PROCEDURES TO ADDRESS AND PREVENT THE ABOVE
CONFLICTS OF INTEREST; HOWEVER THERE IS NO GUARANTEE THAT SUCH PROCEDURES
WILL DETECT EACH AND EVERY SITUATION IN WHICH A CONFLICT ARISES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
MAZAMA'S COMPENSATION STRUCTURE IS DESIGNED TO ATTRACT AND RETAIN HIGHLY
SKILLED INVESTMENT PROFESSIONALS. THE COMPENSATION IS STRUCTURED TO MAXIMIZE
PERFORMANCE AND KEEP THE INTERESTS OF EACH MEMBER OF OUR PORTFOLIO MANAGEMENT
TEAM ALIGNED WITH THOSE OF OUR CLIENTS.
THE INCENTIVE COMPENSATION STRUCTURE KEEPS EACH MEMBER OF THE TEAM FOCUSED ON
THE RELATIVE PERFORMANCE OF EACH STRATEGY VERSUS ITS RESPECTIVE BENCHMARK.
EACH PORTFOLIO MANAGER AND RESEARCH ANALYST RECEIVES A BASE SALARY
REPRESENTING 20-30% OF CASH COMPENSATION AND A PERFORMANCE BASED INCENTIVE
REPRESENTING 70-80% OF CASH COMPENSATION. THE PERFORMANCE BASED INCENTIVE
COMPENSATION IS BASED ON THE PORTFOLIO MANAGEMENT FEES RECEIVED BY MAZAMA FOR
ALL ACCOUNTS UNDER MANAGEMENT. THE INVESTMENT TEAM DOES NOT DISTINGUISH
BETWEEN DIFFERENT ACCOUNTS WITHIN EACH INVESTMENT STYLE/STRATEGY WITH RESPECT
TO COMPENSATION. CASH COMPENSATION INCREASES AS ASSETS UNDER MANAGEMENT
INCREASE, WHETHER BY APPRECIATION OR BY ATTRACTING NEW CLIENTS, BOTH OF WHICH
ARE ACCOMPLISHED BY ACHIEVING HIGHER THAN AVERAGE EXCESS RETURNS. EXCESS
RETURNS ARE MEASURED AS THE DIFFERENCE BETWEEN OUR PORTFOLIO RETURNS AND THE
RETURNS OF THE BENCHMARK FOR THE PORTION OF THE FUND(S) MANAGED BY MAZAMA
(I.E. RUSSELL 2000 GROWTH INDEX, RUSSELL 2500 GROWTH INDEX RUSSELL MID CAP
GROWTH OR RUSSELL 3000 GROWTH INDEX).
EQUITY BASED INCENTIVES HAVE BEEN A SIGNIFICANT PART OF MAZAMA'S COMPENSATION
PLAN SINCE THE FIRM'S INCEPTION. IN TOTAL, OUR INVESTMENT TEAM REPRESENTS
OVER 70% OF THE EQUITY OF THE FIRM ON A FULLY DILUTED BASIS. EVERY MEMBER OF
THE INVESTMENT TEAM IS EITHER A DIRECT EQUITY OWNER OR AN OPTION HOLDER OR
BOTH.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Shannon M. Lynch 11/21/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Shannon M. Lynch
[(Printed Name of person signing)]
Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SMALL CAP GROWTH FUND SERIES III
[Name of Fund
] GRETCHEN M. NOVAK
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MAZAMA CAPITAL MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 11 1.57 BILLION
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 75 5.73 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
------------------------
* other pooled investment vehicles:... 0 0
------------------------
* other accounts:..................... 2 254 MILLION
------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS EVERY MEMBER OF THE INVESTMENT TEAM HAS DAY-TO-DAY MANAGEMENT
RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE ACCOUNT AND MORE THAN ONE
INVESTMENT STRATEGY, ACTUAL OR APPARENT CONFLICTS MAY ARISE.
THE COMPENSATION PAID TO MAZAMA FOR MANAGING THE FUND(S) IS BASED ON A
PERCENTAGE OF ASSETS UNDER MANAGEMENT RATHER THAN A SHARE OF THE GAINS. AS
DESCRIBED ABOVE, MEMBERS OF THE INVESTMENT TEAM, AS EQUITY OWNERS AND BY
RECEIVING A SHARE OF PORTFOLIO MANAGEMENT FEES, BENEFIT FROM MAZAMA'S
REVENUES AND PROFITABILITY. CONFLICTS OF INTEREST CAN ARISE TO THE EXTENT
THAT LARGER CLIENT ACCOUNTS GENERATE MORE FEES AND POTENTIALLY LARGER PROFITS
FOR MAZAMA COMPARED TO SMALL ACCOUNTS. TWO ACCOUNTS PAY FEES BASED ON A
PERCENTAGE OF ASSETS THAT CAN INCREASE AND DECREASE BASED ON PERFORMANCE
AGAINST A BENCHMARK INDEX, THESE TWO ACCOUNTS ARE MANAGED CONSISTENTLY WITH
THEIR STATED INVESTMENT STRATEGY. DESPITE THESE DIFFERENCES MAZAMA BELIEVES
THAT ITS TRADE ALLOCATION AND OTHER COMPLIANCE PROCEDURES EFFECTIVELY ADDRESS
ANY RELATED CONFLICTS OF INTEREST. OTHERWISE, NO MEMBER OF THE INVESTMENT
TEAM IS COMPENSATED IN A WAY THAT WOULD ADD TO THOSE CONFLICTS OF INTEREST BY
CREATING AN INCENTIVE TO FAVOR PARTICULAR ACCOUNTS OVER OTHER ACCOUNTS.
EXECUTION AND RESEARCH SERVICES PROVIDED BY BROKERS MAY NOT ALWAYS BE
UTILIZED IN CONNECTION WITH THE FUND(S) OR WITH OTHER CLIENT ACCOUNTS THAT
MAY HAVE PAID THE COMMISSION OR A PORTION OF THE COMMISSION TO THE BROKER
PROVIDING THE SERVICES. MAZAMA ALLOCATES BROKERAGE COMMISSIONS FOR THESE
SERVICES IN A MANNER THAT IT BELIEVES IS FAIR AND EQUITABLE AND CONSISTENT
WITH ITS FIDUCIARY OBLIGATIONS TO EACH OF ITS CLIENTS.
IF A MEMBER OF THE INVESTMENT TEAM IDENTIFIES A LIMITED INVESTMENT
OPPORTUNITY THAT MAY BE SUITABLE FOR MORE THAN JUST THE FUND(S) OR ANOTHER
CLIENT ACCOUNT, THE FUND(S) MAY NOT BE ABLE TO TAKE FULL ADVANTAGE OF THAT
OPPORTUNITY. TO MITIGATE THIS CONFLICT OF INTEREST, MAZAMA AGGREGATES ORDERS
FOR THE FUND(S) WITH ORDERS FROM EACH OF ITS OTHER CLIENT ACCOUNTS
PARTICIPATING IN THE SAME STRATEGY IN ORDER TO ENSURE THAT CLIENTS ARE
TREATED FAIRLY AND EQUITABLY OVER TIME AND CONSISTENT WITH ITS FIDUCIARY
OBLIGATIONS TO EACH OF ITS CLIENTS.
MAZAMA HAS ADOPTED POLICIES AND PROCEDURES TO ADDRESS AND PREVENT THE ABOVE
CONFLICTS OF INTEREST; HOWEVER THERE IS NO GUARANTEE THAT SUCH PROCEDURES
WILL DETECT EACH AND EVERY SITUATION IN WHICH A CONFLICT ARISES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
MAZAMA'S COMPENSATION STRUCTURE IS DESIGNED TO ATTRACT AND RETAIN HIGHLY
SKILLED INVESTMENT PROFESSIONALS. THE COMPENSATION IS STRUCTURED TO MAXIMIZE
PERFORMANCE AND KEEP THE INTERESTS OF EACH MEMBER OF OUR PORTFOLIO MANAGEMENT
TEAM ALIGNED WITH THOSE OF OUR CLIENTS.
THE INCENTIVE COMPENSATION STRUCTURE KEEPS EACH MEMBER OF THE TEAM FOCUSED ON
THE RELATIVE PERFORMANCE OF EACH STRATEGY VERSUS ITS RESPECTIVE BENCHMARK.
EACH PORTFOLIO MANAGER AND RESEARCH ANALYST RECEIVES A BASE SALARY
REPRESENTING 20-30% OF CASH COMPENSATION AND A PERFORMANCE BASED INCENTIVE
REPRESENTING 70-80% OF CASH COMPENSATION. THE PERFORMANCE BASED INCENTIVE
COMPENSATION IS BASED ON THE PORTFOLIO MANAGEMENT FEES RECEIVED BY MAZAMA FOR
ALL ACCOUNTS UNDER MANAGEMENT. THE INVESTMENT TEAM DOES NOT DISTINGUISH
BETWEEN DIFFERENT ACCOUNTS WITHIN EACH INVESTMENT STYLE/STRATEGY WITH RESPECT
TO COMPENSATION. CASH COMPENSATION INCREASES AS ASSETS UNDER MANAGEMENT
INCREASE, WHETHER BY APPRECIATION OR BY ATTRACTING NEW CLIENTS, BOTH OF WHICH
ARE ACCOMPLISHED BY ACHIEVING HIGHER THAN AVERAGE EXCESS RETURNS. EXCESS
RETURNS ARE MEASURED AS THE DIFFERENCE BETWEEN OUR PORTFOLIO RETURNS AND THE
RETURNS OF THE BENCHMARK FOR THE PORTION OF THE FUND(S) MANAGED BY MAZAMA
(I.E. RUSSELL 2000 GROWTH INDEX, RUSSELL 2500 GROWTH INDEX RUSSELL MID CAP
GROWTH OR RUSSELL 3000 GROWTH INDEX).
EQUITY BASED INCENTIVES HAVE BEEN A SIGNIFICANT PART OF MAZAMA'S COMPENSATION
PLAN SINCE THE FIRM'S INCEPTION. IN TOTAL, OUR INVESTMENT TEAM REPRESENTS
OVER 70% OF THE EQUITY OF THE FIRM ON A FULLY DILUTED BASIS. EVERY MEMBER OF
THE INVESTMENT TEAM IS EITHER A DIRECT EQUITY OWNER OR AN OPTION HOLDER OR
BOTH.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Shannon M. Lynch 11/21/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Shannon M. Lynch
[(Printed Name of person signing)]
Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SMALL CAP GROWTH FUND SERIES III
[Name of Fund
] RONALD A. SAUER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MAZAMA CAPITAL MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 11 1.57 BILLION
-------------------------
* other pooled investment vehicles:... 0 0
-------------------------
* other accounts:..................... 75 5.73 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
------------------------
* other pooled investment vehicles:... 0 0
------------------------
* other accounts:..................... 2 254 MILLION
------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
AS EVERY MEMBER OF THE INVESTMENT TEAM HAS DAY-TO-DAY MANAGEMENT
RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE ACCOUNT AND MORE THAN ONE
INVESTMENT STRATEGY, ACTUAL OR APPARENT CONFLICTS MAY ARISE.
THE COMPENSATION PAID TO MAZAMA FOR MANAGING THE FUND(S) IS BASED ON A
PERCENTAGE OF ASSETS UNDER MANAGEMENT RATHER THAN A SHARE OF THE GAINS. AS
DESCRIBED ABOVE, MEMBERS OF THE INVESTMENT TEAM, AS EQUITY OWNERS AND BY
RECEIVING A SHARE OF PORTFOLIO MANAGEMENT FEES, BENEFIT FROM MAZAMA'S
REVENUES AND PROFITABILITY. CONFLICTS OF INTEREST CAN ARISE TO THE EXTENT
THAT LARGER CLIENT ACCOUNTS GENERATE MORE FEES AND POTENTIALLY LARGER PROFITS
FOR MAZAMA COMPARED TO SMALL ACCOUNTS. TWO ACCOUNTS PAY FEES BASED ON A
PERCENTAGE OF ASSETS THAT CAN INCREASE AND DECREASE BASED ON PERFORMANCE
AGAINST A BENCHMARK INDEX, THESE TWO ACCOUNTS ARE MANAGED CONSISTENTLY WITH
THEIR STATED INVESTMENT STRATEGY. DESPITE THESE DIFFERENCES MAZAMA BELIEVES
THAT ITS TRADE ALLOCATION AND OTHER COMPLIANCE PROCEDURES EFFECTIVELY ADDRESS
ANY RELATED CONFLICTS OF INTEREST. OTHERWISE, NO MEMBER OF THE INVESTMENT
TEAM IS COMPENSATED IN A WAY THAT WOULD ADD TO THOSE CONFLICTS OF INTEREST BY
CREATING AN INCENTIVE TO FAVOR PARTICULAR ACCOUNTS OVER OTHER ACCOUNTS.
EXECUTION AND RESEARCH SERVICES PROVIDED BY BROKERS MAY NOT ALWAYS BE
UTILIZED IN CONNECTION WITH THE FUND(S) OR WITH OTHER CLIENT ACCOUNTS THAT
MAY HAVE PAID THE COMMISSION OR A PORTION OF THE COMMISSION TO THE BROKER
PROVIDING THE SERVICES. MAZAMA ALLOCATES BROKERAGE COMMISSIONS FOR THESE
SERVICES IN A MANNER THAT IT BELIEVES IS FAIR AND EQUITABLE AND CONSISTENT
WITH ITS FIDUCIARY OBLIGATIONS TO EACH OF ITS CLIENTS.
IF A MEMBER OF THE INVESTMENT TEAM IDENTIFIES A LIMITED INVESTMENT
OPPORTUNITY THAT MAY BE SUITABLE FOR MORE THAN JUST THE FUND(S) OR ANOTHER
CLIENT ACCOUNT, THE FUND(S) MAY NOT BE ABLE TO TAKE FULL ADVANTAGE OF THAT
OPPORTUNITY. TO MITIGATE THIS CONFLICT OF INTEREST, MAZAMA AGGREGATES ORDERS
FOR THE FUND(S) WITH ORDERS FROM EACH OF ITS OTHER CLIENT ACCOUNTS
PARTICIPATING IN THE SAME STRATEGY IN ORDER TO ENSURE THAT CLIENTS ARE
TREATED FAIRLY AND EQUITABLY OVER TIME AND CONSISTENT WITH ITS FIDUCIARY
OBLIGATIONS TO EACH OF ITS CLIENTS.
MAZAMA HAS ADOPTED POLICIES AND PROCEDURES TO ADDRESS AND PREVENT THE ABOVE
CONFLICTS OF INTEREST; HOWEVER THERE IS NO GUARANTEE THAT SUCH PROCEDURES
WILL DETECT EACH AND EVERY SITUATION IN WHICH A CONFLICT ARISES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
MAZAMA'S COMPENSATION STRUCTURE IS DESIGNED TO ATTRACT AND RETAIN HIGHLY
SKILLED INVESTMENT PROFESSIONALS. THE COMPENSATION IS STRUCTURED TO MAXIMIZE
PERFORMANCE AND KEEP THE INTERESTS OF EACH MEMBER OF OUR PORTFOLIO MANAGEMENT
TEAM ALIGNED WITH THOSE OF OUR CLIENTS.
THE INCENTIVE COMPENSATION STRUCTURE KEEPS EACH MEMBER OF THE TEAM FOCUSED ON
THE RELATIVE PERFORMANCE OF EACH STRATEGY VERSUS ITS RESPECTIVE BENCHMARK.
EACH PORTFOLIO MANAGER AND RESEARCH ANALYST RECEIVES A BASE SALARY
REPRESENTING 20-30% OF CASH COMPENSATION AND A PERFORMANCE BASED INCENTIVE
REPRESENTING 70-80% OF CASH COMPENSATION. THE PERFORMANCE BASED INCENTIVE
COMPENSATION IS BASED ON THE PORTFOLIO MANAGEMENT FEES RECEIVED BY MAZAMA FOR
ALL ACCOUNTS UNDER MANAGEMENT. THE INVESTMENT TEAM DOES NOT DISTINGUISH
BETWEEN DIFFERENT ACCOUNTS WITHIN EACH INVESTMENT STYLE/STRATEGY WITH RESPECT
TO COMPENSATION. CASH COMPENSATION INCREASES AS ASSETS UNDER MANAGEMENT
INCREASE, WHETHER BY APPRECIATION OR BY ATTRACTING NEW CLIENTS, BOTH OF WHICH
ARE ACCOMPLISHED BY ACHIEVING HIGHER THAN AVERAGE EXCESS RETURNS. EXCESS
RETURNS ARE MEASURED AS THE DIFFERENCE BETWEEN OUR PORTFOLIO RETURNS AND THE
RETURNS OF THE BENCHMARK FOR THE PORTION OF THE FUND(S) MANAGED BY MAZAMA
(I.E. RUSSELL 2000 GROWTH INDEX, RUSSELL 2500 GROWTH INDEX RUSSELL MID CAP
GROWTH OR RUSSELL 3000 GROWTH INDEX).
EQUITY BASED INCENTIVES HAVE BEEN A SIGNIFICANT PART OF MAZAMA'S COMPENSATION
PLAN SINCE THE FIRM'S INCEPTION. IN TOTAL, OUR INVESTMENT TEAM REPRESENTS
OVER 70% OF THE EQUITY OF THE FIRM ON A FULLY DILUTED BASIS. EVERY MEMBER OF
THE INVESTMENT TEAM IS EITHER A DIRECT EQUITY OWNER OR AN OPTION HOLDER OR
BOTH.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Shannon M. Lynch 11/21/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Shannon M. Lynch
[(Printed Name of person signing)]
Compliance Officer
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND - PARTNERS SMALLCAP VALUE FUND I
[Name of Fund
] RONALD P. GALA, CFA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MELLON EQUITY ASSOCIATES, LLP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 7 $1,691,763,935.94
------------------------------
* other pooled investment vehicles:... 0 0
------------------------------
* other accounts:..................... 19 $1,619,007,150.24
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
----------------------------
* other pooled investment vehicles:... 0 0
----------------------------
* other accounts:..................... 4 $449,190,378.14
----------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION
THE PORTFOLIO MANAGER'S CASH COMPENSATION IS COMPRISED PRIMARILY OF A MARKET-
BASED SALARY AND AN INCENTIVE COMPENSATION PLAN (ANNUAL AND LONG TERM
INCENTIVE). FUNDING FOR THE MEA ANNUAL INCENTIVE PLAN AND LONG TERM INCENTIVE
PLAN IS THROUGH A PRE-DETERMINED FIXED PERCENTAGE OF OVERALL COMPANY
PROFITABILITY. THEREFORE, ALL BONUS AWARDS ARE BASED INITIALLY ON COMPANY
PERFORMANCE. THE INVESTMENT PROFESSIONALS ARE ELIGIBLE TO RECEIVE ANNUAL
CASH BONUS AWARDS FROM THE INCENTIVE COMPENSATION PLAN. ANNUAL AWARDS ARE
GRANTED IN MARCH FOR THE PRIOR CALENDAR YEAR. INDIVIDUAL AWARDS FOR
INVESTMENT PROFESSIONALS ARE DISCRETIONARY, BASED ON PRODUCT PERFORMANCE,
GOALS ESTABLISHED AT THE BEGINNING OF EACH CALENDAR YEAR AND A SUBJECTIVE
EVALUATION OF THE PORTFOLIO MANAGER'S CONTRIBUTION TO THE OVERALL INVESTMENT
PROCESS. ALSO CONSIDERED IN DETERMINING INDIVIDUAL AWARDS ARE TEAM
PARTICIPATION AND GENERAL CONTRIBUTIONS TO MEA.
ALL PORTFOLIO MANAGERS ARE ALSO ELIGIBLE TO PARTICIPATE IN THE MEA LONG TERM
INCENTIVE PLAN. THIS PLAN PROVIDES FOR AN ANNUAL AWARD, PAYABLE IN DEFERRED
CASH THAT CLIFF VESTS AFTER 3 YEARS, WITH AN INTEREST RATE EQUAL TO THE
AVERAGE YEAR OVER YEAR EARNINGS GROWTH OF MEA (CAPPED AT 20% PER YEAR).
MANAGEMENT HAS DISCRETION WITH RESPECT TO ACTUAL PARTICIPATION AND AWARD
SIZE.
MELLON ELECTIVE DEFERRED COMPENSATION PLAN
PORTFOLIO MANAGERS WHOSE COMPENSATION EXCEEDS CERTAIN LEVELS MAY ELECT TO
DEFER PORTIONS OF THEIR BASE SALARIES AND/OR INCENTIVE COMPENSATION PURSUANT
TO MELLON'S ELECTIVE DEFERRED COMPENSATION PLAN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Ronald P. Gala 11-29-06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ronald P. Gala, CFA
[(Printed Name of person signing)]
Portfolio Manger
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND - PARTNERS MIDCAP GROWTH FUND I
[Name of Fund
] ADAM T. LOGAN, CFA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MELLON EQUITY ASSOCIATES, LLP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $1,503,466,964.02
------------------------------
* other pooled investment vehicles:... 0 0
------------------------------
* other accounts:..................... 10 $352,503,457.15
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION
THE PORTFOLIO MANAGER'S CASH COMPENSATION IS COMPRISED PRIMARILY OF A MARKET-
BASED SALARY AND AN INCENTIVE COMPENSATION PLAN (ANNUAL AND LONG TERM
INCENTIVE). FUNDING FOR THE MEA ANNUAL INCENTIVE PLAN AND LONG TERM INCENTIVE
PLAN IS THROUGH A PRE-DETERMINED FIXED PERCENTAGE OF OVERALL COMPANY
PROFITABILITY. THEREFORE, ALL BONUS AWARDS ARE BASED INITIALLY ON COMPANY
PERFORMANCE. THE INVESTMENT PROFESSIONALS ARE ELIGIBLE TO RECEIVE ANNUAL
CASH BONUS AWARDS FROM THE INCENTIVE COMPENSATION PLAN. ANNUAL AWARDS ARE
GRANTED IN MARCH FOR THE PRIOR CALENDAR YEAR. INDIVIDUAL AWARDS FOR
INVESTMENT PROFESSIONALS ARE DISCRETIONARY, BASED ON PRODUCT PERFORMANCE,
GOALS ESTABLISHED AT THE BEGINNING OF EACH CALENDAR YEAR AND A SUBJECTIVE
EVALUATION OF THE PORTFOLIO MANAGER'S CONTRIBUTION TO THE OVERALL INVESTMENT
PROCESS. ALSO CONSIDERED IN DETERMINING INDIVIDUAL AWARDS ARE TEAM
PARTICIPATION AND GENERAL CONTRIBUTIONS TO MEA.
ALL PORTFOLIO MANAGERS ARE ALSO ELIGIBLE TO PARTICIPATE IN THE MEA LONG TERM
INCENTIVE PLAN. THIS PLAN PROVIDES FOR AN ANNUAL AWARD, PAYABLE IN DEFERRED
CASH THAT CLIFF VESTS AFTER 3 YEARS, WITH AN INTEREST RATE EQUAL TO THE
AVERAGE YEAR OVER YEAR EARNINGS GROWTH OF MEA (CAPPED AT 20% PER YEAR).
MANAGEMENT HAS DISCRETION WITH RESPECT TO ACTUAL PARTICIPATION AND AWARD
SIZE.
MELLON ELECTIVE DEFERRED COMPENSATION PLAN
PORTFOLIO MANAGERS WHOSE COMPENSATION EXCEEDS CERTAIN LEVELS MAY ELECT TO
DEFER PORTIONS OF THEIR BASE SALARIES AND/OR INCENTIVE COMPENSATION PURSUANT
TO MELLON'S ELECTIVE DEFERRED COMPENSATION PLAN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Adam T. Logan 29-Nov-06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Adam T. Logan, CFA
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND - PARTNERS MIDCAP GROWTH FUND I
[Name of Fund
] JOHN R. O'TOOLE, CFA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MELLON EQUITY ASSOCIATES, LLP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $1,424,490,683.06
------------------------------
* other pooled investment vehicles:... 3 $109,515,511.60
------------------------------
* other accounts:..................... 26 $599.261,866.25
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 4 $44,796,148.71
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION
THE PORTFOLIO MANAGER'S CASH COMPENSATION IS COMPRISED PRIMARILY OF A MARKET-
BASED SALARY AND AN INCENTIVE COMPENSATION PLAN (ANNUAL AND LONG TERM
INCENTIVE). FUNDING FOR THE MEA ANNUAL INCENTIVE PLAN AND LONG TERM INCENTIVE
PLAN IS THROUGH A PRE-DETERMINED FIXED PERCENTAGE OF OVERALL COMPANY
PROFITABILITY. THEREFORE, ALL BONUS AWARDS ARE BASED INITIALLY ON COMPANY
PERFORMANCE. THE INVESTMENT PROFESSIONALS ARE ELIGIBLE TO RECEIVE ANNUAL
CASH BONUS AWARDS FROM THE INCENTIVE COMPENSATION PLAN. ANNUAL AWARDS ARE
GRANTED IN MARCH FOR THE PRIOR CALENDAR YEAR. INDIVIDUAL AWARDS FOR
INVESTMENT PROFESSIONALS ARE DISCRETIONARY, BASED ON PRODUCT PERFORMANCE,
GOALS ESTABLISHED AT THE BEGINNING OF EACH CALENDAR YEAR AND A SUBJECTIVE
EVALUATION OF THE PORTFOLIO MANAGER'S CONTRIBUTION TO THE OVERALL INVESTMENT
PROCESS. ALSO CONSIDERED IN DETERMINING INDIVIDUAL AWARDS ARE TEAM
PARTICIPATION AND GENERAL CONTRIBUTIONS TO MEA.
ALL PORTFOLIO MANAGERS ARE ALSO ELIGIBLE TO PARTICIPATE IN THE MEA LONG TERM
INCENTIVE PLAN. THIS PLAN PROVIDES FOR AN ANNUAL AWARD, PAYABLE IN DEFERRED
CASH THAT CLIFF VESTS AFTER 3 YEARS, WITH AN INTEREST RATE EQUAL TO THE
AVERAGE YEAR OVER YEAR EARNINGS GROWTH OF MEA (CAPPED AT 20% PER YEAR).
MANAGEMENT HAS DISCRETION WITH RESPECT TO ACTUAL PARTICIPATION AND AWARD
SIZE.
MELLON ELECTIVE DEFERRED COMPENSATION PLAN
PORTFOLIO MANAGERS WHOSE COMPENSATION EXCEEDS CERTAIN LEVELS MAY ELECT TO
DEFER PORTIONS OF THEIR BASE SALARIES AND/OR INCENTIVE COMPENSATION PURSUANT
TO MELLON'S ELECTIVE DEFERRED COMPENSATION PLAN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/John R. O'Toole 11/29/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
John R. O'Toole, CFA
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND - PARTNERS SMALLCAP BLEND FUND
[Name of Fund
] RONALD P. GALA, CFA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MELLON EQUITY ASSOCIATES, LLP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 7 $1,595,551,824.59
------------------------------
* other pooled investment vehicles:... 0 0
------------------------------
* other accounts:..................... 19 $1,619,007,150.24
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
----------------------------
* other pooled investment vehicles:... 0 0
----------------------------
* other accounts:..................... 4 $449,190,378.14
----------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION
THE PORTFOLIO MANAGER'S CASH COMPENSATION IS COMPRISED PRIMARILY OF A MARKET-
BASED SALARY AND AN INCENTIVE COMPENSATION PLAN (ANNUAL AND LONG TERM
INCENTIVE). FUNDING FOR THE MEA ANNUAL INCENTIVE PLAN AND LONG TERM INCENTIVE
PLAN IS THROUGH A PRE-DETERMINED FIXED PERCENTAGE OF OVERALL COMPANY
PROFITABILITY. THEREFORE, ALL BONUS AWARDS ARE BASED INITIALLY ON COMPANY
PERFORMANCE. THE INVESTMENT PROFESSIONALS ARE ELIGIBLE TO RECEIVE ANNUAL
CASH BONUS AWARDS FROM THE INCENTIVE COMPENSATION PLAN. ANNUAL AWARDS ARE
GRANTED IN MARCH FOR THE PRIOR CALENDAR YEAR. INDIVIDUAL AWARDS FOR
INVESTMENT PROFESSIONALS ARE DISCRETIONARY, BASED ON PRODUCT PERFORMANCE,
GOALS ESTABLISHED AT THE BEGINNING OF EACH CALENDAR YEAR AND A SUBJECTIVE
EVALUATION OF THE PORTFOLIO MANAGER'S CONTRIBUTION TO THE OVERALL INVESTMENT
PROCESS. ALSO CONSIDERED IN DETERMINING INDIVIDUAL AWARDS ARE TEAM
PARTICIPATION AND GENERAL CONTRIBUTIONS TO MEA.
ALL PORTFOLIO MANAGERS ARE ALSO ELIGIBLE TO PARTICIPATE IN THE MEA LONG TERM
INCENTIVE PLAN. THIS PLAN PROVIDES FOR AN ANNUAL AWARD, PAYABLE IN DEFERRED
CASH THAT CLIFF VESTS AFTER 3 YEARS, WITH AN INTEREST RATE EQUAL TO THE
AVERAGE YEAR OVER YEAR EARNINGS GROWTH OF MEA (CAPPED AT 20% PER YEAR).
MANAGEMENT HAS DISCRETION WITH RESPECT TO ACTUAL PARTICIPATION AND AWARD
SIZE.
MELLON ELECTIVE DEFERRED COMPENSATION PLAN
PORTFOLIO MANAGERS WHOSE COMPENSATION EXCEEDS CERTAIN LEVELS MAY ELECT TO
DEFER PORTIONS OF THEIR BASE SALARIES AND/OR INCENTIVE COMPENSATION PURSUANT
TO MELLON'S ELECTIVE DEFERRED COMPENSATION PLAN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Ronald P. Gala 11-29-06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Ronald P. Gala, CFA
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND - PARTNERS SMALLCAP BLEND FUND
[Name of Fund
] PETER D. GOSLIN, CFA
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MELLON EQUITY ASSOCIATES, LLP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $763,072,183.99
----------------------------
* other pooled investment vehicles:... 1 $200,789,809.12
----------------------------
* other accounts:..................... 7 $111,038,643.67
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION
THE PORTFOLIO MANAGER'S CASH COMPENSATION IS COMPRISED PRIMARILY OF A MARKET-
BASED SALARY AND AN INCENTIVE COMPENSATION PLAN (ANNUAL AND LONG TERM
INCENTIVE). FUNDING FOR THE MEA ANNUAL INCENTIVE PLAN AND LONG TERM INCENTIVE
PLAN IS THROUGH A PRE-DETERMINED FIXED PERCENTAGE OF OVERALL COMPANY
PROFITABILITY. THEREFORE, ALL BONUS AWARDS ARE BASED INITIALLY ON COMPANY
PERFORMANCE. THE INVESTMENT PROFESSIONALS ARE ELIGIBLE TO RECEIVE ANNUAL
CASH BONUS AWARDS FROM THE INCENTIVE COMPENSATION PLAN. ANNUAL AWARDS ARE
GRANTED IN MARCH FOR THE PRIOR CALENDAR YEAR. INDIVIDUAL AWARDS FOR
INVESTMENT PROFESSIONALS ARE DISCRETIONARY, BASED ON PRODUCT PERFORMANCE,
GOALS ESTABLISHED AT THE BEGINNING OF EACH CALENDAR YEAR AND A SUBJECTIVE
EVALUATION OF THE PORTFOLIO MANAGER'S CONTRIBUTION TO THE OVERALL INVESTMENT
PROCESS. ALSO CONSIDERED IN DETERMINING INDIVIDUAL AWARDS ARE TEAM
PARTICIPATION AND GENERAL CONTRIBUTIONS TO MEA.
ALL PORTFOLIO MANAGERS ARE ALSO ELIGIBLE TO PARTICIPATE IN THE MEA LONG TERM
INCENTIVE PLAN. THIS PLAN PROVIDES FOR AN ANNUAL AWARD, PAYABLE IN DEFERRED
CASH THAT CLIFF VESTS AFTER 3 YEARS, WITH AN INTEREST RATE EQUAL TO THE
AVERAGE YEAR OVER YEAR EARNINGS GROWTH OF MEA (CAPPED AT 20% PER YEAR).
MANAGEMENT HAS DISCRETION WITH RESPECT TO ACTUAL PARTICIPATION AND AWARD
SIZE.
MELLON ELECTIVE DEFERRED COMPENSATION PLAN
PORTFOLIO MANAGERS WHOSE COMPENSATION EXCEEDS CERTAIN LEVELS MAY ELECT TO
DEFER PORTIONS OF THEIR BASE SALARIES AND/OR INCENTIVE COMPENSATION PURSUANT
TO MELLON'S ELECTIVE DEFERRED COMPENSATION PLAN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Peter D. Goslin 12-1-06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Peter D. Goslin, CFA
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND - PARTNERS SMALLCAP VALUE FUND I
[Name of Fund
] PETER D. GOSLIN
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
MELLON EQUITY ASSOCIATES, LLP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $859,284,295.34
----------------------------
* other pooled investment vehicles:... 1 $200,789,809.12
----------------------------
* other accounts:..................... 7 $111,038,643.67
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION
THE PORTFOLIO MANAGER'S CASH COMPENSATION IS COMPRISED PRIMARILY OF A MARKET-
BASED SALARY AND AN INCENTIVE COMPENSATION PLAN (ANNUAL AND LONG TERM
INCENTIVE). FUNDING FOR THE MEA ANNUAL INCENTIVE PLAN AND LONG TERM INCENTIVE
PLAN IS THROUGH A PRE-DETERMINED FIXED PERCENTAGE OF OVERALL COMPANY
PROFITABILITY. THEREFORE, ALL BONUS AWARDS ARE BASED INITIALLY ON COMPANY
PERFORMANCE. THE INVESTMENT PROFESSIONALS ARE ELIGIBLE TO RECEIVE ANNUAL
CASH BONUS AWARDS FROM THE INCENTIVE COMPENSATION PLAN. ANNUAL AWARDS ARE
GRANTED IN MARCH FOR THE PRIOR CALENDAR YEAR. INDIVIDUAL AWARDS FOR
INVESTMENT PROFESSIONALS ARE DISCRETIONARY, BASED ON PRODUCT PERFORMANCE,
GOALS ESTABLISHED AT THE BEGINNING OF EACH CALENDAR YEAR AND A SUBJECTIVE
EVALUATION OF THE PORTFOLIO MANAGER'S CONTRIBUTION TO THE OVERALL INVESTMENT
PROCESS. ALSO CONSIDERED IN DETERMINING INDIVIDUAL AWARDS ARE TEAM
PARTICIPATION AND GENERAL CONTRIBUTIONS TO MEA.
ALL PORTFOLIO MANAGERS ARE ALSO ELIGIBLE TO PARTICIPATE IN THE MEA LONG TERM
INCENTIVE PLAN. THIS PLAN PROVIDES FOR AN ANNUAL AWARD, PAYABLE IN DEFERRED
CASH THAT CLIFF VESTS AFTER 3 YEARS, WITH AN INTEREST RATE EQUAL TO THE
AVERAGE YEAR OVER YEAR EARNINGS GROWTH OF MEA (CAPPED AT 20% PER YEAR).
MANAGEMENT HAS DISCRETION WITH RESPECT TO ACTUAL PARTICIPATION AND AWARD
SIZE.
MELLON ELECTIVE DEFERRED COMPENSATION PLAN
PORTFOLIO MANAGERS WHOSE COMPENSATION EXCEEDS CERTAIN LEVELS MAY ELECT TO
DEFER PORTIONS OF THEIR BASE SALARIES AND/OR INCENTIVE COMPENSATION PURSUANT
TO MELLON'S ELECTIVE DEFERRED COMPENSATION PLAN.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Peter D. Goslin 12-1-06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Peter D. Goslin
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND PARTNERS MID-CAP VALUE FUND
[Name of Fund
] S. BASU MULLICK
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
NEUBERGER BERMAN MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 12 $7.9 BILLION
--------------------------
* other pooled investment vehicles:... 1 $10.9 MILLION
--------------------------
* other accounts:..................... 1 $15.0 MILLION
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
A PORTION OF THE COMPENSATION PAID TO EACH PORTFOLIO MANAGER IS DETERMINED BY
COMPARISONS TO PRE-DETERMINED PEER GROUPS AND BENCHMARKS, AS OPPOSED TO A
SYSTEM DEPENDENT ON A PERCENT OF MANAGEMENT FEES. THE PORTFOLIO MANAGERS ARE
PAID A BASE SALARY THAT IS NOT DEPENDENT ON PERFORMANCE. EACH PORTFOLIO
MANAGER ALSO HAS A "TARGET BONUS," WHICH IS SET EACH YEAR AND CAN BE
INCREASED OR DECREASED PRIOR TO PAYMENT BASED IN PART ON PERFORMANCE MEASURED
AGAINST THE RELEVANT PEER GROUP AND BENCHMARK. PERFORMANCE IS MEASURED ON A
THREE-YEAR ROLLING AVERAGE IN ORDER TO EMPHASIZE LONGER-TERM PERFORMANCE.
THERE IS ALSO A SUBJECTIVE COMPONENT TO DETERMINING THE BONUS, WHICH CONSISTS
OF THE FOLLOWING FACTORS: (I) THE INDIVIDUAL'S WILLINGNESS TO WORK WITH THE
MARKETING AND SALES GROUPS; (II) HIS OR HER EFFECTIVENESS IN BUILDING A
FRANCHISE; AND (III) CLIENT SERVICING. SENIOR MANAGEMENT DETERMINES THIS
COMPONENT IN APPROPRIATE CASES. THERE ARE ADDITIONAL COMPONENTS THAT COMPRISE
THE PORTFOLIO MANAGERS' COMPENSATION PACKAGES, INCLUDING: (I) WHETHER THE
MANAGER WAS A PARTNER/PRINCIPAL OF NEUBERGER BERMAN PRIOR TO NEUBERGER BERMAN
INC.'S INITIAL PUBLIC OFFERING; (II) FOR MORE RECENT HIRES, INCENTIVES THAT
MAY HAVE BEEN NEGOTIATED AT THE TIME THE PORTFOLIO MANAGER JOINED THE
NEUBERGER BERMAN COMPLEX; AND (III) THE TOTAL AMOUNT OF ASSETS FOR WHICH THE
PORTFOLIO MANAGER IS RESPONSIBLE.
OUR PORTFOLIO MANAGERS HAVE ALWAYS HAD A DEGREE OF INDEPENDENCE THAT THEY
WOULD NOT GET AT OTHER FIRMS THAT HAVE, FOR EXAMPLE, INVESTMENT COMMITTEES.
WE BELIEVE THAT OUR PORTFOLIO MANAGERS ARE RETAINED NOT ONLY THROUGH
COMPENSATION AND OPPORTUNITIES FOR ADVANCEMENT, BUT ALSO BY A COLLEGIAL AND
STABLE MONEY MANAGEMENT ENVIRONMENT.
IN ADDITION, THERE ARE ADDITIONAL STOCK AND OPTION AWARD PROGRAMS AVAILABLE.
WE BELIEVE THE MEASUREMENT VERSUS THE PEER GROUPS ON A THREE-YEAR ROLLING
AVERAGE BASIS CREATES A MEANINGFUL DISINCENTIVE TO TRY AND BEAT THE PEER
GROUP AND BENCHMARK IN ANY GIVEN YEAR BY TAKING UNDUE RISKS IN PORTFOLIO
MANAGEMENT. THE INCENTIVE IS TO BE A SOLID PERFORMER OVER THE LONGER-TERM,
NOT NECESSARILY TO BE A SHORT-TERM WINNER IN ANY GIVEN YEAR.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Kevin A. Pemberton 12/7/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Kevin A. Pemberton
[(Printed Name of person signing)]
Vice President, Compliance Officer, Sub-Advised Funds
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - High Yield Fund
[Name of Fund/Account
]Lawrence A. Post
[Name of Portfolio Manager
]Post Advisory Group, LLC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $493,768,794
---------------------------
* other pooled investment vehicles:... 10 $1,448,322,996
---------------------------
* other accounts:..................... 51 $7,100,274,165
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------------
* other pooled investment vehicles:... 3 $224,178,235
---------------------------
* other accounts:..................... 18 $2,233,430,454
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
POST ADVISORY GROUP, LLC ("POST") AND ITS RESPECTIVE AFFILIATES ADVISE OTHER
CLIENTS AND FUNDS, WHOSE ACCOUNTS MAY PURCHASE OR SELL THE SAME SECURITIES AS
THE FUND. IN ADDITION, POST OR ITS AFFILIATES MAY ORGANIZE OTHER DOMESTIC OR
OFFSHORE FUNDS, WHICH MAY BE MANAGED BY POST AND WHICH MAY HAVE INVESTMENT
OBJECTIVES SUBSTANTIALLY SIMILAR TO THOSE OF THE FUND. POST OR ITS
AFFILIATES MAY ALSO SEEK INVESTMENT OPPORTUNITIES THAT MAY BE OF INTEREST TO
THE FUND. IN MANAGING SUCH FUNDS AND ACCOUNTS, CONFLICTS OF INTEREST MAY
ARISE. POST'S INVESTMENT ALLOCATIONS ARE DESIGNED TO PROVIDE A FAIR
ALLOCATION OF PURCHASES AND SALES OF SECURITIES AMONG THE VARIOUS ACCOUNTS
MANAGED BY POST, WHILE PRESERVING INCENTIVES FOR THE KEY PRINCIPALS TO FIND
NEW INVESTMENT OPPORTUNITIES, AND TO ENSURE COMPLIANCE WITH APPROPRIATE
REGULATORY REQUIREMENTS. POTENTIAL CONFLICTS OF INTEREST MAY EXIST IN
INSTANCES IN WHICH POST OR ITS AFFILIATES DETERMINE THAT A SPECIFIC
TRANSACTION IN A SECURITY IS APPROPRIATE FOR A SPECIFIC ACCOUNT BASED UPON
NUMEROUS FACTORS INCLUDING, AMONG OTHER THINGS, INVESTMENT OBJECTIVES,
INVESTMENT STRATEGIES, OR RESTRICTIONS, WHILE OTHER ACCOUNT MANAGED BY POST
OR ITS AFFILIATES MAY HOLD OR TAKE THE OPPOSITE POSITION IN THE SECURITY IN
ACCORDANCE WITH THOSE ACCOUNTS' INVESTMENT OBJECTIVES, STRATEGIES AND
RESTRICTIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, POST MAY AGGREGATE
THE TRADE ORDERS OF THE FUDN WITH THE TRADE ORDERS OF POST FOR OTHER ACCOUNTS
MANAGED BY POST OR ITS AFFILIATES. POST'S POLICIES AND PROCEDURES ARE
INTENDED TO PRODUCE FAIRNESS OVER TIME, BUT MAY NOT PRODUCE MATHEMATICAL
PRECISION IN THE ALLOCATION OF INDIVIDUAL PURCHASES AND SALES OF SECURITIES
BECAUSE OF, AMONG OTHER THINGS, THE NATURE OF THE FIXED INCOME MARKET AND THE
TRANSACTIONS COSTS THAT MAYBE INCURRED IN DOING SO. POST'S POLICIES AND
PROCEDURES ARE ALSO INTENDED TO BE SO0NSISTENT WITH ITS DUTY TO SEEK BEST
EXECUTION AND BEST PRICES OBTAINABLE UNDER THE CIRCUMSTANCES FOR ALL ACCOUNTS
UNDER THEIR MANAGEMENT. POST'S KEY PRINCIPALS MAY FACE DEMANDS ON THEIR TIME
OTHER THAN THE DEMANDS OF THE FUND. SUCH KEY PRINCIPALS WILL ENGAGE IN THE
SAME OR SIMILAR TRADING STRATEGIES FOR THE ACCOUNTS MANAGED BY POST AND ITS
AFFILIATES OR OTHERS AS THOSE OF THE HIGH YIELD BOND FUND. SUCH KEY
PRINCIPALS RECEIVE SALARIES AND OTHER COMPENSATION FROM THEIR EMPLOYMENT WITH
POST AND POST MAY RECEIVE FEES AND OTHER COMPENSATION FOR THE SERVICES IT
PROVIDES AND OTHER TRANSACTIONS INTO WITH IT ENTERS. EMPLOYEES OF POST MAY
ENGAGE IN PERSONAL INVESTMENT ACTIVITIES THAT COULD INVOLVE A CONFLICT OF
INTEREST WITH THE INVESTMENT ACTIVITIES IOF THE FUND. POST'S CODE OF ETHICS
INVOLVES PROCEDURES AND POLICIES INTENDED TO MINIMIZE ANY SUCH CONFLICTS OF
INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE COMPENSATION FOR THE POST ADVISORY GROUP, LLC SENIOR INVESTMENT
PROFESSIONALS IS COMPRISED OF BASE SALARY, BONUS POOL AND CERTAIN OTHER
PERFORMANCE INCENTIVES. INCENTIVES IN THE FORM OF AN ANNUAL BONUS ARE
DETERMINED BASED ON THE OVERALL PERFORMANCE OF THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/ Lawrence A. Post 12/1/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Lawrence A. Post
[(Printed Name of person signing)]
Chief Executive Officer & Chief Investment Officer, Post Advisory Group, LLC
[(Title of person signing)
]
[(INTERNAL USE: REVIEWER'S SIGNATURE)
]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - High Yield Fund
[Name of Fund/Account
]Allan Schweitzer
[Name of Portfolio Manager
]
Post Advisory Group, LLC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $493,768,794
---------------------------
* other pooled investment vehicles:... 6 $1,168,053,306
---------------------------
* other accounts:..................... 41 $6,000,239,390
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------------
* other pooled investment vehicles:... 0 $0
---------------------------
* other accounts:..................... 9 $1,150,560,526
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
POST ADVISORY GROUP, LLC ("POST") AND ITS RESPECTIVE AFFILIATES ADVISE OTHER
CLIENTS AND FUNDS, WHOSE ACCOUNTS MAY PURCHASE OR SELL THE SAME SECURITIES AS
THE FUND. IN ADDITION, POST OR ITS AFFILIATES MAY ORGANIZE OTHER DOMESTIC OR
OFFSHORE FUNDS, WHICH MAY BE MANAGED BY POST AND WHICH MAY HAVE INVESTMENT
OBJECTIVES SUBSTANTIALLY SIMILAR TO THOSE OF THE FUND. POST OR ITS
AFFILIATES MAY ALSO SEEK INVESTMENT OPPORTUNITIES THAT MAY BE OF INTEREST TO
THE FUND. IN MANAGING SUCH FUNDS AND ACCOUNTS, CONFLICTS OF INTEREST MAY
ARISE. POST'S INVESTMENT ALLOCATIONS ARE DESIGNED TO PROVIDE A FAIR
ALLOCATION OF PURCHASES AND SALES OF SECURITIES AMONG THE VARIOUS ACCOUNTS
MANAGED BY POST, WHILE PRESERVING INCENTIVES FOR THE KEY PRINCIPALS TO FIND
NEW INVESTMENT OPPORTUNITIES, AND TO ENSURE COMPLIANCE WITH APPROPRIATE
REGULATORY REQUIREMENTS. POTENTIAL CONFLICTS OF INTEREST MAY EXIST IN
INSTANCES IN WHICH POST OR ITS AFFILIATES DETERMINE THAT A SPECIFIC
TRANSACTION IN A SECURITY IS APPROPRIATE FOR A SPECIFIC ACCOUNT BASED UPON
NUMEROUS FACTORS INCLUDING, AMONG OTHER THINGS, INVESTMENT OBJECTIVES,
INVESTMENT STRATEGIES, OR RESTRICTIONS, WHILE OTHER ACCOUNT MANAGED BY POST
OR ITS AFFILIATES MAY HOLD OR TAKE THE OPPOSITE POSITION IN THE SECURITY IN
ACCORDANCE WITH THOSE ACCOUNTS' INVESTMENT OBJECTIVES, STRATEGIES AND
RESTRICTIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, POST MAY AGGREGATE
THE TRADE ORDERS OF THE FUDN WITH THE TRADE ORDERS OF POST FOR OTHER ACCOUNTS
MANAGED BY POST OR ITS AFFILIATES. POST'S POLICIES AND PROCEDURES ARE
INTENDED TO PRODUCE FAIRNESS OVER TIME, BUT MAY NOT PRODUCE MATHEMATICAL
PRECISION IN THE ALLOCATION OF INDIVIDUAL PURCHASES AND SALES OF SECURITIES
BECAUSE OF, AMONG OTHER THINGS, THE NATURE OF THE FIXED INCOME MARKET AND THE
TRANSACTIONS COSTS THAT MAYBE INCURRED IN DOING SO. POST'S POLICIES AND
PROCEDURES ARE ALSO INTENDED TO BE SO0NSISTENT WITH ITS DUTY TO SEEK BEST
EXECUTION AND BEST PRICES OBTAINABLE UNDER THE CIRCUMSTANCES FOR ALL ACCOUNTS
UNDER THEIR MANAGEMENT. POST'S KEY PRINCIPALS MAY FACE DEMANDS ON THEIR TIME
OTHER THAN THE DEMANDS OF THE FUND. SUCH KEY PRINCIPALS WILL ENGAGE IN THE
SAME OR SIMILAR TRADING STRATEGIES FOR THE ACCOUNTS MANAGED BY POST AND ITS
AFFILIATES OR OTHERS AS THOSE OF THE HIGH YIELD BOND FUND. SUCH KEY
PRINCIPALS RECEIVE SALARIES AND OTHER COMPENSATION FROM THEIR EMPLOYMENT WITH
POST AND POST MAY RECEIVE FEES AND OTHER COMPENSATION FOR THE SERVICES IT
PROVIDES AND OTHER TRANSACTIONS INTO WITH IT ENTERS. EMPLOYEES OF POST MAY
ENGAGE IN PERSONAL INVESTMENT ACTIVITIES THAT COULD INVOLVE A CONFLICT OF
INTEREST WITH THE INVESTMENT ACTIVITIES IOF THE FUND. POST'S CODE OF ETHICS
INVOLVES PROCEDURES AND POLICIES INTENDED TO MINIMIZE ANY SUCH CONFLICTS OF
INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE COMPENSATION FOR THE POST ADVISORY GROUP, LLC SENIOR INVESTMENT
PROFESSIONALS IS COMPRISED OF BASE SALARY, BONUS POOL AND CERTAIN OTHER
PERFORMANCE INCENTIVES. INCENTIVES IN THE FORM OF AN ANNUAL BONUS ARE
DETERMINED BASED ON THE OVERALL PERFORMANCE OF THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/ Allan Schweitzer 12/1/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Allan Schweitzer
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)
]
[(INTERNAL USE: REVIEWER'S SIGNATURE)
]
Page 1 of 3
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- BOND & MORTGAGE
SECURITIES FUND
[Name of Fund
] WILLIAM C. ARMSTRONG
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS
SHARED BY FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $2,577,357,891.02
------------------------------
* other pooled investment vehicles:... 4 $6,845,031,104.85
------------------------------
* other accounts:..................... 19 $992,498,861.04
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
------------------------------
* other pooled investment vehicles:... ***0** 0
------------------------------
* other accounts:..................... ***2** $1,175,160,712.65
------------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$50,001 - $100,000
/s/ William C. Armstrong 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
William C. Armstrong
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- BOND & MORTGAGE
SECURITIES FUND
[Name of Fund
] TIMOTHY R. WARRICK
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $2,577,357,891.02
------------------------------
* other pooled investment vehicles:... 4 $6,845,031,104.85
------------------------------
* other accounts:..................... 21 $1,263,256,520.67
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
------------------------------
* other pooled investment vehicles:... 0 $0
------------------------------
* other accounts:..................... 2 $1,175,160,712.65
------------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$10,001 - $50,000
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Timothy R. Warrick
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- DISCIPLINED LARGE CAP BLEND FUND
[Name of Fund
] JEFFREY A. SCHWARTE
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,177,491,049.23
------------------------------
* other pooled investment vehicles:... 2 $582,739,794.73
------------------------------
* other accounts:..................... 8 $454,904,359.70
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Jeff Schwarte 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Jeff Schwarte
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. --DIVERSIFIED INTERNATIONAL FUND
[Name of Fund
] PAUL BLANKENHAGEN
[Name of Portfolio Manager
] PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
THREE PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,164,875,693.52
------------------------------
* other pooled investment vehicles:... 2 $3,324,414,221.10
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$50,000 - $100,000
/s/ Paul Blankenhagen 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Paul Blankenhagen
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- DIVERSIFIED INTERNATIONAL FUND
[Name of Fund
] JULIET COHN
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
THREE PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,164,875,693.52
------------------------------
* other pooled investment vehicles:... 2 $3,324,414,221.10
------------------------------
* other accounts:..................... 2 $116,580,952.48
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Juliet Cohn 12/7/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Juliet Cohn
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- DIVERSIFIED INTERNATIONAL FUND
[Name of Fund
] CHRIS IBACH
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
THREE PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,164,875,693.52
------------------------------
* other pooled investment vehicles:... 2 $3,324,414,221.10
------------------------------
* other accounts:..................... 3 $68,125,430.72
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$100,001 - $500,000
/s/ Chris Ibach 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Chris Ibach
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - EQUITY INCOME FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Principal LifeTime Strategic Income Fund
Principal Investors Fund, Inc.-Principal LifeTime 2010 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2020 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2030 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2040 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2050 Fund
Name of Fund
James Fennessey, CFA
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
Principal Management Corporation
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of May 29, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. n/a n/a
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:.............
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:...............................
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. n/a n/a
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:.............
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:...............................
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Compensation is predominatly composed of salary. Salary is reviewed
annually. Annual Bonus is driven by company and business unit performance.
No part of salary, bonus, or retirement plan compensation is tied to fund
performance or aset levels.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/James Fennessey 9/14/2007
------------------------------------- ---------
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
James Fennessey
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Principal LifeTime Strategic Income Fund
Principal Investors Fund, Inc.-Principal LifeTime 2010 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2020 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2030 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2040 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2050 Fund
Name of Fund
Name of Fund
Michael P. Finnegan, CFA
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
Principal Management Corporation
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of May 29, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. n/a n/a
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:.............
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:...............................
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. n/a n/a
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:.............
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:...............................
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Compensation is predominatly composed of salary. Salary is reviewed
annually. Annual Bonus is driven by company and business unit performance.
No part of salary, bonus, or retirement plan compensation is tied to fund
performance or aset levels.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/Michael P. Finnegan 9/14/2007
------------------------------------- ---------
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Michael P. Finnegan
--------------------
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Principal LifeTime Strategic Income Fund
Principal Investors Fund, Inc.-Principal LifeTime 2010 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2020 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2030 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2040 Fund
Principal Investors Fund, Inc.-Principal LifeTime 2050 Fund
Name of Fund
Randy L. Welch
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
Principal Management Corporation
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of May 29, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. n/a n/a
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:.............
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:...............................
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. n/a n/a
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:.............
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:...............................
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Compensation is predominatly composed of salary. Salary is reviewed
annually. Annual Bonus is driven by company and business unit performance.
No part of salary, bonus, or retirement plan compensation is tied to fund
performance or aset levels.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/Randy L. Welch. 9/14/2007
-------------------------------------- ----------
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Randy L. Welch
----------------
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - GOVERNMENT AND HIGH QUALITY BOND FUND
[Name of Fund
]BRAD FREDERICKS
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $693,274,927.48
----------------------------
* other pooled investment vehicles:... 1 $952,385,788.51
----------------------------
* other accounts:..................... 0 $0
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Brad Fredericks 12/05/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Brad Fredericks
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - GOVERNMENT AND HIGH QUALITY BOND FUND
[Name of Fund
]LISA STANGE
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $693,274,927.48
----------------------------
* other pooled investment vehicles:... 1 $952,385,788.51
----------------------------
* other accounts:..................... 0 $0
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Lisa A. Stange 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Lisa Stange
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - HIGH QUALITY
INTERMEDIATE TERM BOND FUND
[Name of Fund
] WILLIAM C. ARMSTRONG
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $2,577,357,891.02
------------------------------
* other pooled investment vehicles:... 4 $6,845,031,104.85
------------------------------
* other accounts:..................... 19 $992,498,861.04
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
------------------------------
* other pooled investment vehicles:... 0 $0
------------------------------
* other accounts:..................... 2 $1,175,160,712.65
------------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ William C. Armstrong 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
William C. Armstrong
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - HIGH QUALITY
INTERMEDIATE TERM BOND FUND
[Name of Fund
] TIMOTHY R. WARRICK
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $2,577,357,891.02
------------------------------
* other pooled investment vehicles:... 4 $6,845,031,104.85
------------------------------
* other accounts:..................... 21 $1,263,256,520.67
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
------------------------------
* other pooled investment vehicles:... 0 $0
------------------------------
* other accounts:..................... 2 $1,175,160,712.65
------------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Timothy R. Warrick 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Timothy R. Warrick
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- INFLATION PROTECTION FUND
[Name of Fund
]MARTIN J. SCHAFER
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $455,352,670.89
----------------------------
* other pooled investment vehicles:... 2 $262,917,019.91
----------------------------
* other accounts:..................... 5 $442,300,536.06
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Martin J. Schafer 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Martin J. Schafer
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- INFLATION PROTECTION FUND
[Name of Fund
]GWEN SWANGER
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $122,378,223.87
----------------------------
* other pooled investment vehicles:... 0 $0
----------------------------
* other accounts:..................... 3 $282,689,743.46
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Gwen Swanger 12/06/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Gwen Swanger
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. -- International Emerging Markets Fund
Name of Fund
Michael Ade
Name of Portfolio Manager
Principal Global Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
The day-to-day portfolio management for the fund listed above is shared by three
portfolio managers operating as a team, sharing authority and responsibility for
research and day-to-day management with no limitation on the authority of one
portfolio manager in relation to another.
Please provide the following information as of March 31, 2007 (the Fund's most
recently completed quarter).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 4 $1,253,278,353.33
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 2 $1,320,962,961.95
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 9 $840,956,918.56
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Principal Global Investors offers all employees a competitive salary and
incentive compensation plan that is evaluated annually. Percentages of base
salary versus performance bonus vary by position but are based on
nationally competitive market data and are consistent with industry
standards. Total cash compensation is targeted at the median of the market
and benefits are targeted slightly above median. The investment staff is
compensated under a base salary plus variable annual bonus (incentive
compensation). The incentive compensation plan for equity portfolio
managers is 90% weighted to investment performance and 10% weighted to
Principal Global Investors annual performance score.
o Investment performance is based on gross performance versus a benchmark
peer group or both, depending on the client mandate.
o Performance versus peers is measured for a period up to three years
(shorter if the portfolio manager has managed the respective portfolio for
a period less than three years.
o Versus the peer group, incentive payout starts at 55th percentile and
reaches 100% at the 25th percentile for the 1, 2, and 3-year periods.
As a wholly owned subsidiary of Principal Financial Group, some Principal
Global employees are eligible to participate in our Employee Stock Purchase
Plan that allows them to purchase company stock at a 15% discount each
quarter. In addition, through our 401(k) plan, employees are able to
contribute to an Employee Stock Ownership Plan (ESOP) through which they
can buy additional company stock.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/Michael Ade 05/18/07
------------------------------------ -----------
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Michael Ade
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. -- International Emerging Markets Fund
Name of Fund
Mihail Dobrinov
Name of Portfolio Manager
Principal Global Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
The day-to-day portfolio management for the fund listed above is shared by three
portfolio managers operating as a team, sharing authority and responsibility for
research and day-to-day management with no limitation on the authority of one
portfolio manager in relation to another.
Please provide the following information as of March 31, 2007 (the Fund's most
recently completed quarter).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 4 $1,253,278,353.33
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 2 $1,320,962,961.95
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 3 $423,770,252.51
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Principal Global Investors offers all employees a competitive salary and
incentive compenstaion plan that is evaluated annually. Percentages of base
salary versus performance bonus vary by position but are based on
nationally competitive market data and are consistent with industry
standards. Total cash compensation is targeted at the median of the market
and benfits Tare targeted slightly above median. The investment staff is
compensated under a base salary plus variable annual bonus (incentive
conpensaion). The incentive conpensaion plan for equity portforlio managers
is 90% weighted to investment performance and 10% weighted to Principal
Global Investors annual performance score.
o Investment performance is based on gross performance versus a
benchmark, peer group or both, depending on the client mandate
o Performance versus peers is measured for a period up to three years
(shorter if the portfolio manager has managed the respective portfolio
for a period less that three years).
o Versus the peer group, incentive payout starts at 55th percentile and
reaches 100% at the 25th percentile for the 1, 2, and 3-year periods.
As a wholly owned subsidiary of Principal Financial Group, some Principal
Global employees are eligible to participate in our Employee Stock Purchase
Plan that allows them to purchase company stock at a 15% discount each
quarter. In addition, through our 401(k) plan, employees are able to
contribute to an Employee Stock Ownership Plan (ESOP) through which they
can buy additional company stock.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/Mihail Dobrinov 05/02/2007
_______________________________________ __________________
(Signature of person authorized to (Date)
sign on behalf of the Sub-Advisor)
Mihail Dobrinov
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- INTERNATIONAL EMERGING MARKETS FUND
[Name of Fund
] MICHAEL L. REYNAL
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $437,338,274.91
----------------------------
* other pooled investment vehicles:... 1 $796,912,444.76
----------------------------
* other accounts:..................... 8 $691,380,563.75
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$50,000 - $100,000*****
/s/ Michael L. Reynal 12/8/2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Michael L. Reynal
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- INTERNATIONAL GROWTH FUND
[Name of Fund
] STEVE LARSON
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $1,272,521,187.05
------------------------------
* other pooled investment vehicles:... 1 $5,314,776.70
------------------------------
* other accounts:..................... 2 $348,946,701.53
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Steven M. Larson 12/8/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Steven M. Larson
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- INTERNATIONAL GROWTH FUND
[Name of Fund
] JOHN PIHLBLAD
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $2,298,622,135.48
------------------------------
* other pooled investment vehicles:... 2 $468,924,259.58
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ John Pihlblad 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
John Pihlblad
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LARGECAP S&P 500 INDEX FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LARGECAP S&P 500 INDEX FUND
[Name of Fund
] MARIATERESA MONACO
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $1,749,885,489.23
------------------------------
* other pooled investment vehicles:... 4 $8,397,891,842.51
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0
/s/ Mariateresa Monaco 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Mariateresa Monaco
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. -- LargeCap Value Fund
Name of Fund
Arild Holm
Name of Portfolio Manager
Principal Global Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of 7 (the Fund's most recently
completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 3 $1,069,057,168.93
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 1 $473,138,937.95
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
$100,001 - $500,000
/s/Arild Holm
(Signature of person authorized
to sign on behalf of the Sub-Advisor) (Date)
Arild Holm
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LARGE CAP VALUE FUND
[Name of Fund
] JOHN PIHLBLAD
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $2,298,622,135.48
------------------------------
* other pooled investment vehicles:... 2 $468,924,259.58
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ John Pihlblad 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
John Pihlblad
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- MIDCAP BLEND FUND
[Name of Fund
] K. WILLIAM NOLIN
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,255,183,656.90
------------------------------
* other pooled investment vehicles:... 3 $1,408,727,253.72
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$50,001 - $100,000
/s/ K. William Nolin 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
K. William Nolin
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- MIDCAP S&P 400 INDEX FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- MIDCAP S&P 400 INDEX FUND
[Name of Fund
] MARIATERESA MONACO
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $1,749,885,489.23
------------------------------
* other pooled investment vehicles:... 4 $8,397,891,842.51
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0
/s/ Mariateresa Monaco 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Mariateresa Monaco
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. --MidCap Value Fund
Name of Fund
Steve Musser
Name of Portfolio Manager
Principal Global Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
The day-to-day portfolio management for the fund listed above is shared by two
portfolio managers operating as a team, sharing authority and responsibility for
research and day-to-day management with no limitation on the authority of one
portfolio manager in relation to another.
Please provide the following information as of March 31, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 1 $82,341,719.51
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 1 $613,841,287.27
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Principal Global Investors offers all employees a competitive salary and
incentive compensation plan that is evaluated annually. Percentages of base
salary versus performance bonus vary by position but are based on
nationally competitive market data and are consistent with industry
standards. Total cash compensation is targeted at the median of the market
and benefits are targeted slightly above median. The investment staff is
compensated under a base salary plus variable annual bonus (incentive
compensation). The incentive compensation plan for equity portfolio
managers is 90% weighted to investment performance and 10% weighted to
Principal Global Investors annual performance score.
o Investment performance is based on gross performance versus a
benchmark, peer group or both, depending on the client mandate
o Performance versus peers is measured for a period up to three years
(shorter if the portfolio manager has managed the respective portfolio
for a period less than three years).
o Versus the peer group, incentive payout starts at 55th percentile and
reaches 100% at the 25th percentile for the 1, 2, and 3-year periods.
As a wholly owned subsidiary of Principal Financial Group, some Principal
Global employees are eligible to participate in our Employee Stock Purchase
Plan that allows them to purchase company stock at a 15% discount each
quarter. In addition, through our 401(k) plan, employees are able to
contribute to an Employee Stock Ownership Plan (ESOP) through which they
can buy additional company stock.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None.
/s/Steve Musser 5/29/07
----------------------------------- -----------------
(Signature of person authorized to (Date)
sign on behalf of the Sub-Advisor)
Steve Musser
(Printed Name of person signing)
Portfolio Manager
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. --MIDCAP VALUE FUND
[Name of Fund
] JEFFREY A. SCHWARTE
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,177,491,049.23
------------------------------
* other pooled investment vehicles:... 2 $582,739,794.73
------------------------------
* other accounts:..................... 8 $454,904,359.70
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Jeff Schwarte 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Jeff Schwarte
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- MONEY MARKET FUND
[Name of Fund
]TRACY REEG
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $866,706,607.41
------------------------------
* other pooled investment vehicles:... 1 $3,897,931,676.37
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 70%
WEIGHTED TO INVESTMENT PERFORMANCE, 10% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE, AND 20% WEIGHTED TO PRINCIPAL FINANCIAL
GROUP ANNUAL PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A PEER GROUP
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO FIVE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 50TH.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$1-$10,000*****
/s/Tracy Reeg 12/14/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Tracy Reeg
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- MONEY MARKET FUND
[Name of Fund
]ALICE ROBERTSON
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $866,706,607.41
------------------------------
* other pooled investment vehicles:... 1 $3,897,931,676.37
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 70%
WEIGHTED TO INVESTMENT PERFORMANCE, 10% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE, AND 20% WEIGHTED TO PRINCIPAL FINANCIAL
GROUP ANNUAL PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A PEER GROUP
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO FIVE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 50TH.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Alice B. Robertson 12/14/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Alice B. Robertson
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LIFETIME 2010 FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LIFETIME 2020 FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LIFETIME 2030 FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LIFETIME 2040 FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LIFETIME 2050 FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- LIFETIME STRATEGIC INCOME FUND
[Name of Fund
] DIRK LASCHANZKY
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 8 $2,167,498,632.43
------------------------------
* other pooled investment vehicles:... 4 $8,659,519,873.81
------------------------------
* other accounts:..................... 6 $628,983,801.83
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Dirk Laschanzky 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Dirk Laschanzky
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SHORT TERM BOND FUND
[Name of Fund
]ZEID AYER
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
THREE PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $621,459,722.26
----------------------------
* other pooled investment vehicles:... 1 $252,681,866.16
----------------------------
* other accounts:..................... 4 $324,923,172.26
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/ Zeid Ayer 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Zeid Ayer
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SHORT TERM BOND FUND
[Name of Fund
]CRAIG DAWSON
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
THREE PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $621,459,722.26
----------------------------
* other pooled investment vehicles:... 1 $252,681,866.16
----------------------------
* other accounts:..................... 4 $324,923,172.26
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/ Craig Dawson 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Craig Dawson
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - SHORT TERM BOND FUND
[Name of Fund
]MARTIN J. SCHAFER
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
THREE PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $455,352,670.89
----------------------------
* other pooled investment vehicles:... 2 $262,917,019.91
----------------------------
* other accounts:..................... 5 $442,300,536.06
----------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR FIXED INCOME PORTFOLIO MANAGERS IS 80%
WEIGHTED TO INVESTMENT PERFORMANCE AND 20% WEIGHTED TO PRINCIPAL GLOBAL
INVESTORS ANNUAL PERFORMANCE SCORE. THE TARGET INCENTIVE FOR FIXED INCOME
PORTFOLIO MANAGERS RANGES FROM 60% TO 150% OF ACTUAL BASE EARNINGS, DEPENDING
ON JOB LEVEL.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS AND A BENCHMARK IS MEASURED FOR A PERIOD UP TO
FIVE YEARS (SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE
PORTFOLIO FOR A PERIOD LESS THAN FIVE YEARS).
O VERSUS THE PEER GROUP, 100% OF TARGET INCENTIVE IS ACHIEVED IF THE
PORTFOLIO PERFORMANCE IS 35TH PERCENTILE. NO PAYOUT IS REALIZED IF
PERFORMANCE IS BELOW 50TH PERCENTILE. 200% PAYOUT IS ACHIEVED AT 15TH
PERCENTILE OR BETTER FOR THE RESPECTIVE PERIOD.
O VERSUS THE BENCHMARK, 100% OF TARGET INCENTIVE IS ACHIEVED AT CERTAIN
LEVELS OF OUTPERFORMANCE, WHICH VARY BY PORTFOLIO. NO PAYOUT IS REALIZED FOR
PERFORMANCE AT OR BELOW THE LEVEL OF THE BENCHMARK.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$1 - $10,000
/s/ Martin J. Schafer 12/5/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Martin J. Schafer
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- SMALL CAP BLEND FUND
[Name of Fund
] THOMAS MORABITO
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $657,688,953.60
------------------------------
* other pooled investment vehicles:... 11 $2,269,905,174.58
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$
/s/ Thomas A. Morabito 12/12/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Thomas A. Morabito
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- SMALL CAP BLEND FUND
[Name of Fund
] PHIL NORDHUS
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $434,890,692.02
------------------------------
* other pooled investment vehicles:... 2 $1,832,776,717.49
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.*****
/s/Phil Nordhus 12/6/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Phil Nordhus
[(Printed Name of person signing)]
Associate Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- SMALL CAP VALUE FUND
[Name of Fund
] THOMAS MORABITO
[ Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $657,688,953.60
------------------------------
* other pooled investment vehicles:... 11 $2,269,905,174.58
------------------------------
* other accounts:..................... 0 $0
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
-------------------
* other pooled investment vehicles:... 0 $0
-------------------
* other accounts:..................... 0 $0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL GLOBAL INVESTORS OFFERS ALL EMPLOYEES A COMPETITIVE SALARY AND
INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY. PERCENTAGES OF BASE
SALARY VERSUS PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONALLY
COMPETITIVE MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL
CASH COMPENSATION IS TARGETED AT THE MEDIAN OF THE MARKET AND BENEFITS ARE
TARGETED SLIGHTLY ABOVE MEDIAN. THE INVESTMENT STAFF IS COMPENSATED UNDER A
BASE SALARY PLUS VARIABLE ANNUAL BONUS (INCENTIVE COMPENSATION). THE
INCENTIVE COMPENSATION PLAN FOR EQUITY PORTFOLIO MANAGERS IS 90% WEIGHTED TO
INVESTMENT PERFORMANCE AND 10% WEIGHTED TO PRINCIPAL GLOBAL INVESTORS ANNUAL
PERFORMANCE SCORE.
O INVESTMENT PERFORMANCE IS BASED ON GROSS PERFORMANCE VERSUS A BENCHMARK,
PEER GROUP OR BOTH, DEPENDING ON THE CLIENT MANDATE
O PERFORMANCE VERSUS PEERS IS MEASURED FOR A PERIOD UP TO THREE YEARS
(SHORTER IF THE PORTFOLIO MANAGER HAS MANAGED THE RESPECTIVE PORTFOLIO FOR A
PERIOD LESS THAN THREE YEARS).
O VERSUS THE PEER GROUP, INCENTIVE PAYOUT STARTS AT 55TH PERCENTILE AND
REACHES 100% AT THE 25TH PERCENTILE FOR THE 1, 2, AND 3-YEAR PERIODS.
AS A WHOLLY OWNED SUBSIDIARY OF PRINCIPAL FINANCIAL GROUP, SOME PRINCIPAL
GLOBAL EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN OUR EMPLOYEE STOCK PURCHASE
PLAN THAT ALLOWS THEM TO PURCHASE COMPANY STOCK AT A 15% DISCOUNT EACH
QUARTER. IN ADDITION, THROUGH OUR 401(K) PLAN, EMPLOYEES ARE ABLE TO
CONTRIBUTE TO AN EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) THROUGH WHICH THEY CAN
BUY ADDITIONAL COMPANY STOCK.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0
/s/ Thomas A. Morabito 12/12/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Thomas A. Morabito
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. -Global Real Estate Securities Fund
Name of Fund
Simon Hedger
Name of Portfolio Manager
Principal Real Estate Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
The day-to-day portfolio management for the fund listed above is shared by two
portfolio managers operating as a team, sharing authority and responsibility for
research and day-to-day management with no limitation on the authority of one
portfolio manager in relation to another.
Please provide the following information as of March 31, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 1 $103,625,503
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/ Marcus Dummer 9/17/07
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Marcus Dummer
(Printed Name of person signing)
Managing Director
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. -Global Real Estate Securities Fund
Name of Fund
Chris Lepherd
Name of Portfolio Manager
Principal Real Estate Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
The day-to-day portfolio management for the fund listed above is shared by two
portfolio managers operating as a team, sharing authority and responsibility for
research and day-to-day management with no limitation on the authority of one
portfolio manager in relation to another.
Please provide the following information as of March 31, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 1 $103,625,503
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $22,279,020
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None
/s/ Chris Lepherd 09/17/07
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Chris Lepherd
(Printed Name of person signing)
Managing Director
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. -Global Real Estate Securities Fund
Name of Fund
Kelly Rush
Name of Portfolio Manager
Principal Real Estate Investors
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
The day-to-day portfolio management for the fund listed above is shared by two
portfolio managers operating as a team, sharing authority and responsibility for
research and day-to-day management with no limitation on the authority of one
portfolio manager in relation to another.
Please provide the following information as of March 31, 2007 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 2 $2,158,970,971
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 9 $158,686,173
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 14 $408,139,070
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 $0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 $0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
None.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
$10,001 - $50,000
/s/ Kelly Rush 9/17/07
(Signature of person authorized (Date)
to sign on behalf of the Sub-Advisor)
Kelly Rush
(Printed Name of person signing)
Managing Director
(Title of person signing)
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- REAL ESTATE SECURITIES FUND
[Name of Fund
] KELLY RUSH
[Name of Portfolio Manager
]
PRINCIPAL GLOBAL INVESTORS
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 2 $1,619,442,164.08
------------------------------
* other pooled investment vehicles:... 9 $149,350,204.47
------------------------------
* other accounts:..................... 14 $352,248,961.72
------------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------------
* other pooled investment vehicles:... 0 $0
---------------------------
* other accounts:..................... 1 $39,343,129.69
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PRINCIPAL REAL ESTATE INVESTORS IS A MEMBER OF PRINCIPAL GLOBAL INVESTORS
("PRINCIPAL GLOBAL"), WHOSE COMPENSATION POLICIES AND PRACTICES APPLY TO
PRINCIPAL'S PORTFOLIO MANAGER. PRINCIPAL GLOBAL OFFERS A NATIONALLY
COMPETITIVE SALARY AND INCENTIVE COMPENSATION PLAN THAT IS EVALUATED ANNUALLY
RELATIVE TO OTHER TOP-TIER ASSET MANAGEMENT FIRMS. PERCENTAGES OF BASE
SALARY VERSES PERFORMANCE BONUS VARY BY POSITION BUT ARE BASED ON NATIONAL
MARKET DATA AND ARE CONSISTENT WITH INDUSTRY STANDARDS. TOTAL CASH
COMPENSATION IS TARGETED TO BE CONSISTENT WITH THE NATIONAL AVERAGES.
INCENTIVE COMPENSATION FOR PORTFOLIO MANAGERS IS DIRECTLY ALIGNED WITH CLIENT
OBJECTIVES. ON AVERAGE, TWO THIRDS OF INCENTIVE COMPENSATION FOR PORTFOLIO
MANAGERS IS DETERMINED DIRECTLY ON THE BASIS OF RELATIVE PERFORMANCE VERSUS
APPROPRIATE CLIENT BENCHMARKS AND PEER GROUPS. RESULTS ARE MEASURED OVER
ROLLING ONE YEAR, THREE YEAR AND FIVE YEAR PERIODS CONSISTENT WITH
APPROPRIATE RISK MANAGEMENT STANDARDS. THE REMAINING ONE THIRD OF INCENTIVE
COMPENSATION IS BASED ON A COMBINATION OF INDIVIDUAL RESULTS AND OVERALL FIRM
RESULTS. OVERALL FIRM RESULTS ARE DRIVEN PRIMARILY BY AGGREGATE INVESTMENT
PERFORMANCE ACROSS PRODUCTS RELATIVE TO BENCHMARKS AND PEERS, IN ADDITION TO
FINANCIAL RESULTS AND NEW BUSINESS DEVELOPMENT. A PORTION OF ANNUAL
INCENTIVE COMPENSATION FOR REAL ESTATE PORTFOLIOS MAY BE PAYABLE IN THE FORM
OF RESTRICTED STOCK GRANTS.
IN ADDITION TO TRADITIONAL CASH INCENTIVE COMPENSATION, PORTFOLIO MANAGERS
ARE ELIGIBLE FOR LONG-TERM EQUITY INCENTIVES INCLUDING STOCK OPTIONS AND
STOCK GRANTS.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$10,001 - $50,000
/s/ Kelly Rush
12/08/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Kelly Rush
[(Printed Name of person signing)]
Portfolio Manager
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- PREFERRED SECURITIES FUND
[Name of Fund
]L. PHILLIP JACOBY
[Name of Portfolio Manager
]
SPECTRUM ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 7,458,405,940
--------------------------
* other pooled investment vehicles:... 16 2,504,716,504
--------------------------
* other accounts:..................... 32 2,492,953,991
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
SPECTRUM PROFESSIONALS ARE PAID A BASE SALARY AS WELL AS QUARTERLY AND YEAR-
END PERFORMANCE BONUSES. THE PERFORMANCE BONUSES ARE BASED ON OVERALL FIRM
REVENUES (25% WEIGHTING), ASSETS UNDER MANAGEMENT (25%), AND INDIVIDUAL
PERFORMANCE AND CONTRIBUTIONS TO THE INVESTMENT TEAM (50%). THE PERFORMANCE
BONUSES MAY COMPRISE UP TO 90% OF AN INDIVIDUAL'S TOTAL COMPENSATION.
SALARIES OF OUR SENIOR EXECUTIVE AND INVESTMENT STAFF ARE BENCHMARKED AGAINST
NATIONAL COMPENSATION LEVELS OF ASSET MANAGEMENT FIRMS AND THE BONUS IS
DRIVEN BY INVESTMENT PERFORMANCE AND FACTORS DESCRIBED EARLIER, SUCH THAT TOP
QUARTILE FUND PERFORMANCE GENERATES TOP QUARTILE COMPENSATION.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0*****
/s/L. Phillip Jacoby 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
L. Phillip Jacoby
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)
]
Page 1 of 2
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- PREFERRED SECURITIES FUND
[Name of Fund
]BERNARD SUSSMAN
[Name of Portfolio Manager
]
SPECTRUM ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
TWO PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND RESPONSIBILITY
FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE AUTHORITY OF
ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 7,458,405,940
--------------------------
* other pooled investment vehicles:... 16 2,504,716,504
--------------------------
* other accounts:..................... 36 2,498,437,508
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
SPECTRUM PROFESSIONALS ARE PAID A BASE SALARY AS WELL AS QUARTERLY AND YEAR-
END PERFORMANCE BONUSES. THE PERFORMANCE BONUSES ARE BASED ON OVERALL FIRM
REVENUES (25% WEIGHTING), ASSETS UNDER MANAGEMENT (25%), AND INDIVIDUAL
PERFORMANCE AND CONTRIBUTIONS TO THE INVESTMENT TEAM (50%). THE PERFORMANCE
BONUSES MAY COMPRISE UP TO 90% OF AN INDIVIDUAL'S TOTAL COMPENSATION.
SALARIES OF OUR SENIOR EXECUTIVE AND INVESTMENT STAFF ARE BENCHMARKED AGAINST
NATIONAL COMPENSATION LEVELS OF ASSET MANAGEMENT FIRMS AND THE BONUS IS
DRIVEN BY INVESTMENT PERFORMANCE AND FACTORS DESCRIBED EARLIER, SUCH THAT TOP
QUARTILE FUND PERFORMANCE GENERATES TOP QUARTILE COMPENSATION.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0
/s/Bernard Sussman 12/05/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Bernard Sussman
[(Printed Name of person signing)]
Executive Director
[(Title of person signing)
]
Page 3 of 3
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - Partners LargeCap Blend Fund
Name of Fund
Anna M. Dopkin
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
T.Rowe Price Associates, Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of December 31, 2006 (the Fund's
most recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 1 $1,674,761,501
(excludes PIF Partners LargeCap
Blend Fund)
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 1 $126,553,853
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 0
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 0 0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
Portfolio managers at T. Rowe Price typically manage multiple accounts. These
accounts may include, among others, mutual funds, separate accounts (assets
managed on behalf of institutions such as pension funds, colleges and
universities, foundations), and commingled trust accounts. Portfolio managers
make investment decisions for each portfolio based on the investment objectives,
policies, practices and other relevant investment considerations that the
managers believe are applicable to that portfolio. Consequently, portfolio
mangers may purchase (or sell) securities for one portfolio and not another
portfolio. T. Rowe Price has adopted brokerage and trade allocation policies and
procedures which it believes are reasonably designed to address any potential
conflicts associated with managing multiple accounts for multiple clients. Also,
as disclosed under the "Portfolio Manager's Compensation" section, our portfolio
managers' compensation is determined in the same manner with respect to all
portfolios managed by the portfolio manager. Please see the attached excerpts
from T. Rowe Price's form ADV for more information on our brokerage and trade
allocation policies.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Portfolio manager compensation consists primarily of a base salary, a cash
bonus, and an equity incentive that usually comes in the form of a stock option
grant. Occassionally, portfolio managers will also have the opportunity to
participate in venture capital partnerships. Compensation is variable and is
dtermined baased on the following factors.
Portfolio manager compensation is based partly on performance. Investment
performance over one-, three-, five-, and 10-year periods is the most important
input. We evaluate performance in absolute, relative, and risk-adjusted terms.
Relative performace and risk-adjusted performance are dtermined with reference
to the broad based index (ex. S&P500) and an applicable Lipper index
(ex.Large-Cap Blend), though other benchmarks may be used as well. Investment
results are also compared to comparably managed funds of competitive investment
management firms.
Performance is primarily measured on a pre-tax basis though tax-efficiency is
considered and is especially important for tax efficent funds. It is important
to note that compensation is viewed with a long term time horizon. The more
consistent a manager's performance over time, the higher the compensation
opportunity. The increase or decrease in a fund's assets due to the perchase or
sale of fund shares is not considered a material factor.
Contribution to our overall investment process is an important consideration as
well. Sharing ideas with other portfolio managers, working effectively with and
mentoring our younger analysts, and being good corporate citizens are important
components of our long term success and are highly valued.
All employees of T. Rowe Price, including portfolio managers, participate in a
401(k) plan sponsored by T. Rowe Price Group. In additiion, all empolyees are
eligible to purchase T. Rowe Price common stock through an employee stock
purchase plan that features an limited corporate matching contribution.
Eligibility for and participation in these plans is on the same basis as for all
employees. Finally, all vice presidents of T. Rowe Price Group, including all
portfolio managers, recieve supplemental medical/hospital reimbursement
benefits.
This compensation structure is used for all portfolios managed by the portfolio
manager.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
None.
/s/ Darrell N. Braman 03/06/07
--------------------------------------------------------------------
(Signature of person authorized to sign on behalf of the Sub-Advisor) (Date)
Darrell N. Braman
(Printed Name of person signing)
Vice President
(Title of person signing)
Page 1 of 3
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Pricipal Investors Fund, Inc. -- Partners LargeCap Blend Fund
Name of Fund
Richard T. Whitney
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
T. Rowe Price Associates, Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the
management team who is jointly and primarily responsible for the day-to-day
management (with decision-making authority) of the Fund's portfolio. If the
Fund has more than one Portfolio Manager, please describe the role of each
Portfolio Manager including any limitation of the person's role and the
relationship between the person's role and the roles of other persons who
have responsibility for the day-to-day management of the Fund's portfolio.
For example, if a portfolio management team for a balanced fund has one
team member who is responsible only for the overall allocation of the
fund's assets among equities, bonds, and money market instruments, and
other team members who are responsible only for selection of securities
within a particular segment of the fund, the disclosure should describe
these limitations in describing each member's role.
Please provide the following information as of October 31, 2006(the Fund's
most recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
Number of Total
Accounts Assets
>> registered investment companies: ............. 2 $1,676,842,147 (excludes PIF
Partners LargeCap Blend Fund)
>> other pooled investment vehicles:............. 0 0
----------------------- ------------------------
>> other accounts:............................... 0 0
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the performance
of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
>> other pooled investment vehicles:............ 0 0
----------------------- ------------------------
>> other accounts:............................... 0 0
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
Portfolio managers at T. Rowe Price typically manage multiple accounts.
These accounts may include among others, mutual funds, separate accounts (
assets managed on behalf of institutions such as pension funds, colleges
and universities, foundations), and commingled trust accounts. Portfolio
managers make investment decisions for each portfolio based on the
investment objectives, policies, practices and other relevant investment
considerations that the managers believe are applicable to that portfolio.
Consequently, portfolio managers may purchase ( or sell) securities for one
portfolio and not another portfolio. T. Rowe Price has adopted brokerage
and trade allocation policies and procedures which it believes are
reasonably designed to address any potential conflicts associated with
managing multiple accounts for multiple clients. Also, as disclosed under
the "Portfolio Manager's Compensation" section, our portfolio managers'
compensation is determined in the same manner with respect to all
portfolios managed by the portfolio manager. Please see the attached
excerpts from T. Rowe Price's Form ADV for more information on our
brokerage and trade allocation policies.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
Portfolio manager compensation consists primarily of a base salary, a cash
bonus, and an equity incentive that usually cones in the form of a stock
option grant. Occasionally, portfolio managers will also have the
opportunity to participate in venture capital partnerships. Compensation is
variable and is determined based on the following factors.
Portfolio manager compensation is based partly on performance. Investment
performance over one-, three-, five-, and 10-year periods is the most
important input. We evaluate performance in absolute, relative, and
risk-adjusted terms. Relative performance and risk-adjusted performance are
determined with reference to the broad based index (ex. S&P500) and an
applicable Lipper index (ex. Large-Cap Blend) though other benchmarks may
be used as well. Investment results are also compared to comparably managed
funds of competitive investment management firms.
Performance is primarily measured on a pre-tax basis though tax-efficiency
is considered and is especially important for tax efficient funds. It is
important to note that compensation is viewed with a long term time
horizon. The more consistent a manager's performance over time, the higher
the compensation opportunity. The increase or decrease in a fund's assets
due to the purchase or sale of fund shares is not considered a material
factor.
Contribution to our overall investment process is an important
consideration as well. Sharing ideas with other portfolio managers, working
effectively with and mentoring our younger analysts, and being good
corporate citizens are important components of our long term success and
are highly valued
All employees of T. Rowe Price, including portfolio managers, participate
in a 401(k) plan sponsored by T. Rowe Price Group. In addition, all
employees are eligible to purchase T. Rowe Price common sock through an
employee stock purchase plan that features a limited corporate matching
contribution. Eligibility for and participation in these plans is on the
same basis as for all employees. Finally, all vice presidents of T. Rowe
Price Group, including all portfolio managers, receive supplemental
medical/hospital reimbursement benefits
This compensation structure is used for all portfolios managed by the
portfolio manage
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
/s/ _____Darrell N Braman______________ __04/19/2007___
(Signature of person authorized to (Date)
sign on behalf of the Sub-Advisor)
_Darrell N Braman
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- PARTNERS LARGECAP GROWTH FUND I
[Name of Fund
] ROBERT W. SHARPS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
T. ROWE PRICE ASSOCIATES, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $2,137,158,500 (EXCLUDES PIF PARTNERS LARGECAP GROWTH FUND I)
* other pooled investment vehicles:... 5 $1,001,875,221
* other accounts:..................... 26 $6,111,641,929
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
PORTFOLIO MANAGERS AT T. ROWE PRICE TYPICALLY MANAGE MULTIPLE ACCOUNTS.
THESE ACCOUNTS MAY INCLUDE, AMONG OTHERS, MUTUAL FUNDS, SEPARATE ACCOUNTS
(ASSETS MANAGED ON BEHALF OF INSTITUTIONS SUCH AS PENSION FUNDS, COLLEGES AND
UNIVERSITIES, FOUNDATIONS), AND COMMINGLED TRUST ACCOUNTS. PORTFOLIO
MANAGERS MAKE INVESTMENT DECISIONS FOR EACH PORTFOLIO BASED ON THE INVESTMENT
OBJECTIVES, POLICIES, PRACTICES AND OTHER RELEVANT INVESTMENT CONSIDERATIONS
THAT THE MANAGERS BELIEVE ARE APPLICABLE TO THAT PORTFOLIO. CONSEQUENTLY,
PORTFOLIO MANAGERS MAY PURCHASE (OR SELL) SECURITIES FOR ONE PORTFOLIO AND
NOT ANOTHER PORTFOLIO. T. ROWE PRICE HAS ADOPTED BROKERAGE AND TRADE
ALLOCATION POLICIES AND PROCEDURES WHICH IT BELIEVES ARE REASONABLY DESIGNED
TO ADDRESS ANY POTENTIAL CONFLICTS ASSOCIATED WITH MANAGING MULTIPLE ACCOUNTS
FOR MULTIPLE CLIENTS. ALSO, AS DISCLOSED UNDER THE "PORTFOLIO MANAGER'S
COMPENSATION" SECTION, OUR PORTFOLIO MANAGERS' COMPENSATION IS DETERMINED IN
THE SAME MANNER WITH RESPECT TO ALL PORTFOLIOS MANAGED BY THE PORTFOLIO
MANAGER. PLEASE SEE THE ATTACHED EXCERPTS FROM T. ROWE PRICE'S FORM ADV FOR
MORE INFORMATION ON OUR BROKERAGE AND TRADE ALLOCATION POLICIES.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION CONSISTS PRIMARILY OF A BASE SALARY, A CASH
BONUS, AND AN EQUITY INCENTIVE THAT USUALLY COMES IN THE FORM OF A STOCK
OPTION GRANT. OCCASIONALLY, PORTFOLIO MANAGERS WILL ALSO HAVE THE OPPORTUNITY
TO PARTICIPATE IN VENTURE CAPITAL PARTNERSHIPS. COMPENSATION IS VARIABLE AND
IS DETERMINED BASED ON THE FOLLOWING FACTORS.
INVESTMENT PERFORMANCE OVER ONE-, THREE-, FIVE-, AND 10-YEAR PERIODS IS THE
MOST IMPORTANT INPUT. WE EVALUATE PERFORMANCE IN ABSOLUTE, RELATIVE, AND
RISK-ADJUSTED TERMS. RELATIVE PERFORMANCE AND RISK-ADJUSTED PERFORMANCE ARE
DETERMINED WITH REFERENCE TO THE BROAD BASED INDEX (EX. S&P500) AND AN
APPLICABLE LIPPER INDEX (EX. LARGE-CAP GROWTH), THOUGH OTHER BENCHMARKS MAY
BE USED AS WELL. INVESTMENT RESULTS ARE ALSO COMPARED TO COMPARABLY MANAGED
FUNDS OF COMPETITIVE INVESTMENT MANAGEMENT FIRMS.
PERFORMANCE IS PRIMARILY MEASURED ON A PRE-TAX BASIS THOUGH TAX-EFFICIENCY IS
CONSIDERED AND IS ESPECIALLY IMPORTANT FOR TAX EFFICIENT FUNDS. IT IS
IMPORTANT TO NOTE THAT COMPENSATION IS VIEWED WITH A LONG TERM TIME HORIZON.
THE MORE CONSISTENT A MANAGER'S PERFORMANCE OVER TIME, THE HIGHER THE
COMPENSATION OPPORTUNITY. THE INCREASE OR DECREASE IN A FUND'S ASSETS DUE TO
THE PURCHASE OR SALE OF FUND SHARES IS NOT CONSIDERED A MATERIAL FACTOR.
CONTRIBUTION TO OUR OVERALL INVESTMENT PROCESS IS AN IMPORTANT CONSIDERATION
AS WELL. SHARING IDEAS WITH OTHER PORTFOLIO MANAGERS, WORKING EFFECTIVELY
WITH AND MENTORING OUR YOUNGER ANALYSTS, AND BEING GOOD CORPORATE CITIZENS
ARE IMPORTANT COMPONENTS OF OUR LONG TERM SUCCESS AND ARE HIGHLY VALUED.
ALL EMPLOYEES OF T. ROWE PRICE, INCLUDING PORTFOLIO MANAGERS, PARTICIPATE IN
A 401(K) PLAN SPONSORED BY T. ROWE PRICE GROUP. IN ADDITION, ALL EMPLOYEES
ARE ELIGIBLE TO PURCHASE T. ROWE PRICE COMMON STOCK THROUGH AN EMPLOYEE STOCK
PURCHASE PLAN THAT FEATURES A LIMITED CORPORATE MATCHING CONTRIBUTION.
ELIGIBILITY FOR AND PARTICIPATION IN THESE PLANS IS ON THE SAME BASIS AS FOR
ALL EMPLOYEES. FINALLY, ALL VICE PRESIDENTS OF T. ROWE PRICE GROUP, INCLUDING
ALL PORTFOLIO MANAGERS, RECEIVE SUPPLEMENTAL MEDICAL/HOSPITAL REIMBURSEMENT
BENEFITS.
THIS COMPENSATION STRUCTURE IS USED FOR ALL PORTFOLIOS MANAGED BY THE
PORTFOLIO MANAGER. *****
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE.
/s/Darrell N. Braman 11/16/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Darrell N. Braman
[(Printed Name of person signing)]
Vice President
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. - PARTNERS MIDCAP GROWTH FUND
[Name of Fund
] TURNER MID CAP GROWTH TEAM
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
TURNER INVESTMENT PARTNERS, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006.
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
CHRISTOPHER MCHUGH (LEAD MANAGER)
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 19 $4.0 BILLION
-------------------------
* other pooled investment vehicles:... 33 $626 MILLION
-------------------------
* other accounts:..................... 78 $5.5 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 3 $1.2 BILLION
-------------------------
* other pooled investment vehicles:... 0 $0.00
-------------------------
* other accounts:..................... 2 $19 MILLION
-------------------------
JASON SCHROTBERGER (CO-MANAGER)
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 13 $2.7 BILLION
-------------------------
* other pooled investment vehicles:... 26 $480 MILLION
-------------------------
* other accounts:..................... 59 $3.0 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $24 MILLION
------------------------
* other pooled investment vehicles:... 0 $0.00
------------------------
* other accounts:..................... 2 $19 MILLION
------------------------
TARA HEDLUND (CO-MANAGER)
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 $2.3 BILLION
-------------------------
* other pooled investment vehicles:... 22 $397 MILLION
-------------------------
* other accounts:..................... 22 $1.1 BILLION
-------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 1 $24 MILLION
------------------------
* other pooled investment vehicles:... 0 $0.00
------------------------
* other accounts:..................... 0 $0.00
------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
*****
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
As is typical for many money managers, potential conflicts of interest may
arise related to Turner's management of accounts including the Fund where not
all accounts are able to participate in a desired IPO, or other limited
opportunity, relating to use of soft dollars and other brokerage practices,
related to the voting of proxies, employee personal securities trading, and
relating to a variety of other circumstances. In all cases, however, Turner
believes it has written policies and procedures in place reasonably designed
to prevent violations of the federal securities laws and to prevent material
conflicts of interest from arising. Please also see Turner's Form ADV, Part
II for a description of some of its policies and procedures in this regard.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
*****
Turner's investment professionals receive a base salary commensurate with
their level of experience. Turner's goal is to maintain competitive base
salaries through review of industry standards, market conditions, and salary
surveys. Bonus compensation, which is a multiple of base salary, is based on
the performance of each individual's sector and portfolio assignments
relative to appropriate market benchmarks. In addition, each employee is
eligible for equity ownership and equity owners share the firm's profits.
Most of the members of the Investment Team and all Portfolio Managers for The
Funds, are equity owners of Turner. This compensation and ownership structure
provides incentive to attract and retain highly qualified people, as each
member of the firm has the opportunity to share directly in the
accomplishments of the business.
The objective performance criteria noted above accounts for 90% of the bonus
calculation. The remaining 10% is based upon subjective, "good will" factors
including teamwork, interpersonal relations, the individual's contribution to
overall success of the firm, media and client relations, presentation skills,
and professional development. Portfolio managers/analysts are reviewed on an
annual basis. The Chief Investment Officer is responsible for setting base
salaries, bonus targets, and making all subjective judgments related to an
investment professionals' compensation. The CIO is also responsible for
identifying investment professionals that should be considered for equity
ownership on an annual basis.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
*****
CHRISTOPHER MCHUGH (LEAD MANAGER)- NONE
JASON SCHROTBERGER (CO-MANAGER)- NONE
TARA HEDLUND (CO-MANAGER)- NONE
/s/Chris Holmes December 04, 2006
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Chris Holmes
[(Printed Name of person signing)]
Associate, Mutual Funds Administration and Compliance
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Partners LargeCap Value Fund I
Name of Fund
Thomas Cole
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
UBS Global Asset Management (Americas) Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 15 $3,165 million
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 72 $19,909 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 17 $1,806 million
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 3 $2,000 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $265 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
The management of a portfolio and other accounts by a portfolio manager
could result in potential conflicts of interest if the portfolio and other
accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the portfolio. The portfolio manager
and his team manage the portfolio and other accounts utilizing a model
portfolio approach that groups similar accounts within a model portfolio.
UBS Global Asset Management (Americas) Inc. manages accounts according to
the appropriate model portfolio, including where possible, those accounts
that have specific investment restrictions. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across accounts, which may minimize the potential for conflicts of
interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the portfolio may
not be able to take full advantage of that opportunity due to an allocation
or filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, UBS Global Asset Management
(Americas) Inc. has adopted procedures for allocating portfolio trades
among multiple accounts to provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. UBS Global Asset Management
(Americas) Inc. has adopted Codes of Ethics that govern such personal
trading, but there is no assurance that the Codes will adequately address
all such conflicts.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The portfolio management team's management of a Fund and other accounts
could result in potential conflicts of interest if the Fund and other
accounts have different objectives, benchmarks and fees because the
portfolio management team must allocate its time and investment expertise
across multiple accounts, including the Fund. A portfolio manager and his
or her team manage a Fund and other accounts utilizing a model portfolio
approach that groups similar accounts within a model portfolio. The Advisor
manages accounts according to the appropriate model portfolio, including
where possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes and industry and sector
exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the Fund may not
be able to take full advantage of that opportunity due to an allocation of
filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, the Advisor has adopted procedures
for allocating portfolio trades across multiple accounts to provide fair
treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. The Advisor and the Trust have
adopted Codes of Ethics that govern such personal trading but there is no
assurance that the Codes will adequately address all such conflicts.
The compensation received by the portfolio managers at UBS Global Asset
Management, including the Funds' portfolio managers, includes a base salary
and incentive compensation, as detailed below. UBS Global Asset
management's compensation and benefits programs are designed to provide its
investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the
interests of the investment professionals with the interests of UBS Global
Asset Management's clients.
Overall compensation can be grouped into three categories:
- Competitive salary, benchmarked to maintain competitive compensation
opportunities.
- Annual bonus, tied to individual contributions and investment
performance.
- UBS equity awards, promoting company-wide success and employee retention.
BASE SALARY is fixed compensation used to recognize the experience, skills
and knowledge that the investment professionals bring to their roles.
Salary levels are monitored and adjusted periodically in order to remain
competitive within the investment management industry.
ANNUAL BONUSES are correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's
overall business success; 2) the performance of the respective asset class
and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. UBS Global Asset Management strongly believes that
tying bonuses to both long-term (3-year) and shorter-term (1-year)
portfolio pre-tax performance closely aligns the investment professionals'
interests with those of UBS Global Asset Management's clients. Each
portfolio manager's bonus is based on the performance of each Fund the
portfolio manager manages as compared to the Fund's broad-based index over
a three-year rolling period. For purposes of the annual bonus, the Fund's
performance is compared to that of the Fund's broad-based index, Russell
1000 Value Index.
UBS AG EQUITY. Senior investment professionals, including each portfolio
manager of the Funds , may receive a portion of their annual
performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that
this reinforces the critical Importance of creating long-term business
value and also serves as an effective Retention tool as the equity shares
typically vest over a number of years.
Broader equity share ownership is encouraged for all employees through
"Equity Plus." This long-term incentive program gives employees the
opportunity to purchase UBS stock with after-tax funds from their bonus
an/or salary. Two UBS stock options are given for each share acquired and
held for two years. UBS Global Asset Management feels this engages its
employees as partners in the firm's success, and helps to maximize its
integrated business strategy.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
See Attached
------------------------------------------------ ------------------
(Signature of person authorized
to sign on behalf of the Sub-Advisor) (Date)
(Printed Name of person signing)
(Title of person signing)
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
Principal Investors Fund, Inc. LargeCap Value Fund I
John Leonard, Thomas M. Cole, Thomas Digenan and Scott Hazen are the members of
the North American Equities investment management team primarily responsible for
the day-to-day management of the LargeCap Value Fund I. Mr. Leonard as the head
of the investment management team oversees the other members of the team, leads
the portfolio construction process and reviews the overall composition of each
Fund's portfolio to ensure compliance with its stated investment objective and
strategies. Mr. Cole as the director of research for the investment management
team oversees the analyst team that provides the investment research on the
large cap markets that is used in making the security selections for each Fund's
portfolio. Mr. Digenan and Mr. Hazen as the primary strategists for the
investment management team provide cross-industry assessments and risk
management assessments for portfolio construction for each Fund. Information
about Messrs. Leonard, Cole, Digenan and Hazen is provided below.
John Leonard is Head of North American Equities and Deputy Global Head of
Equities at UBS Global Asset Management. Mr. Leonard is also a Managing Director
of UBS Global Asset Management and has been an investment professional with UBS
Global Asset Management since 1991.
Thomas M. Cole is Head of Research--North American Equities and a Managing
Director at UBS Global Asset Management. Mr. Cole has been an investment
professional with UBS Global Asset Management since 1995.
Thomas Digenan has been a North American Equity Strategist at UBS Global Asset
Management since 2001 and is an Executive Director of UBS Global Asset
Management. Mr. Digenan was President of The UBS Funds from 1993 to 2001.
Scott Hazen has been a North American Equity Strategist at UBS Global Asset
Management since 2004 and is an Executive Director of UBS Global Asset
Management. From 1992 until 2004, Mr. Hazen was a Client Service and
Relationship Management professional with UBS Global Asset Management.
October 31, 2006 Information
Portfolio Manager (Funds managed) Registered Investment Other Pooled Other Accounts
Companies Investment Vehicles
Assets Assets Assets
Managed Managed Managed
(in (in (in
Number millions) Number millions) Number millions)
John C. Leonard 15 $3,165 72 $19,9091 14 $1,8092
Thomas M. Cole 15 $3,165 72 $19,9091 17 $1,8062
Thomas Digenan 15 $3,165 72 $19,9091 19 $1,8022
Scott Hazen 15 $3,165 72 $19,9091 10 $1,8022
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
POTENTIAL CONFLICTS OF INTEREST
The management of a portfolio and other accounts by a portfolio manager could
result in potential conflicts of interest if the portfolio and other accounts
have different objectives, benchmarks and fees because the portfolio manager and
his team must allocate time and investment expertise across multiple accounts,
including the portfolio. The portfolio manager and his team manage the portfolio
and other accounts utilizing a model portfolio approach that groups similar
accounts within a model portfolio. UBS Global Asset Management (Americas) Inc.
manages accounts according to the appropriate model portfolio, including where
possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across accounts, which may minimize the potential
for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the portfolio may not be
able to take full advantage of that opportunity due to an allocation or filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, UBS Global Asset Management (Americas) Inc. has
adopted procedures for allocating portfolio trades among multiple accounts to
provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. UBS Global Asset Management (Americas) Inc. has
adopted Codes of Ethics that govern such personal trading, but there is no
assurance that the Codes will adequately address all such conflicts.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
DESCRIPTION OF COMPENSATION STRUCTURE
Our compensation and benefits programs are designed to provide our investment
professionals with incentives to excel, and to promote an entrepreneurial,
performance-oriented culture. They also align the interests of our investment
professionals with the interests of our clients. Overall compensation can be
grouped into four categories:
1. Competitive salary, benchmarked annually to maintain very competitive
compensation opportunities. 2. Annual bonus, tied to individual contributions
and investment performance. 3. Analyst incentives, tied to performance of model
portfolios.
4. UBS equity awards, promoting company-wide success and employee retention.
Base salary is used to recognize the experience, skills and knowledge that our
investment professionals bring to their roles. Salary levels are monitored and
adjusted periodically in order to remain competitive within the investment
management industry.
Annual bonuses are strictly and rigorously correlated with performance. As such,
annual incentives can be highly variable, and are based on three components: 1)
the firm's overall business success; 2) the performance of the respective asset
class and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. We strongly believe that tying bonuses to both long-term
(3-year) and shorter-term (1-year) portfolio performance closely aligns our
investment professionals' interests with those of our clients.
Analyst Incentives. Because we value our proprietary research, we have designed
a compensation system that has made investment analysis a highly regarded career
within our firm. Grouped into 12 global sector teams, our analysts manage model
portfolios in global and local sectors. Our portfolio managers use the model
sector portfolios to build actual client portfolios. Analyst incentives are tied
to the performance of the model portfolios, which we evaluate over rolling
three-year periods. One-third of each analyst's rating is based upon the
performance of the model global sector portfolio; one-third on the model local
sector portfolio; and one-third is a qualitative assessment of their
contribution. We believe that this system closely aligns our analysts'
incentives with our clients.
UBS AG EQUITY. MANY OF OUR SENIOR INVESTMENT PROFESSIONALS ARE REQUIRED TO
DEFER A PORTION OF THEIR ANNUAL PERFORMANCE-BASED INCENTIVE IN THE FORM OF
DEFERRED OR RESTRICTED
UBS AG SHARES OR EMPLOYEE STOCK OPTIONS. NOT ONLY DOES THIS REINFORCE THE
CRITICAL IMPORTANCE OF CREATING LONG-TERM BUSINESS VALUE, IT ALSO SERVES AS
AN EFFECTIVE RETENTION TOOL AS THE EQUITY SHARES TYPICALLY VEST OVER A
NUMBER OF YEARS.
Broader equity share ownership is encouraged for all employees through "Equity
Plus". This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-tax funds from their bonus or salary. Two UBS
stock options are given for each share acquired and held for two years. We feel
this engages our employees as partners in the firm's success, and helps to
maximize our integrated business strategy.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director Assoc. Direcgtor
1 Three of these accounts with approximately $2 billion has an advisory fee
based upon the performance of the account. 2 One of these accounts with
approximately $265 million has an advisory fee based upon the performance
of the account.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Partners LargeCap Value Fund I
Name of Fund
Thomas Digenan
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
UBS Global Asset Management (Americas) Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31,2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 15 $3,165 million
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 72 $19,909 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 19 $1,802 million
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 3 $2,000 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $265 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
The management of a portfolio and other accounts by a portfolio manager
could result in potential conflicts of interest if the portfolio and other
accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the portfolio. The portfolio manager
and his team manage the portfolio and other accounts utilizing a model
portfolio approach that groups similar accounts within a model portfolio.
UBS Global Asset Management (Americas) Inc. manages accounts according to
the appropriate model portfolio, including where possible, those accounts
that have specific investment restrictions. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across accounts, which may minimize the potential for conflicts of
interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the portfolio may
not be able to take full advantage of that opportunity due to an allocation
or filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, UBS Global Asset Management
(Americas) Inc. has adopted procedures for allocating portfolio trades
among multiple accounts to provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. UBS Global Asset Management
(Americas) Inc. has adopted Codes of Ethics that govern such personal
trading, but there is no assurance that the Codes will adequately address
all such conflicts.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The portfolio management team's management of a Fund and other accounts
could result in potential conflicts of interest if the Fund and other
accounts have different objectives, benchmarks and fees because the
portfolio management team must allocate its time and investment expertise
across multiple accounts, including the Fund. A portfolio manager and his
or her team manage a Fund and other accounts utilizing a model portfolio
approach that groups similar accounts within a model portfolio. The Advisor
manages accounts according to the appropriate model portfolio, including
where possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes and industry and sector
exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the Fund may not
be able to take full advantage of that opportunity due to an allocation of
filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, the Advisor has adopted procedures
for allocating portfolio trades across multiple accounts to provide fair
treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. The Advisor and the Trust have
adopted Codes of Ethics that govern such personal trading but there is no
assurance that the Codes will adequately address all such conflicts.
The compensation received by the portfolio managers at UBS Global Asset
Management, including the Funds' portfolio managers, includes a base salary
and incentive compensation, as detailed below. UBS Global Asset
management's compensation and benefits programs are designed to provide its
investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the
interests of the investment professionals with the interests of UBS Global
Asset Management's clients. Overall compensation can be grouped into three
categories:
- Competitive salary, benchmarked to maintain competitive compensation
opportunities.
- Annual bonus, tied to individual contributions and investment
performance.
- UBS equity awards, promoting company-wide success and employee retention.
BASE SALARY is fixed compensation used to recognize the experience, skills
and knowledge that the investment professionals bring to their roles.
Salary levels are monitored and adjusted periodically in order to remain
competitive within the investment management industry.
ANNUAL BONUSES are correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's
overall business success; 2) the performance of the respective asset class
and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. UBS Global Asset Management strongly believes that
tying bonuses to both long-term (3-year) and shorter-term (1-year)
portfolio pre-tax performance closely aligns the investment professionals'
interests with those of UBS Global Asset Management's clients. Each
portfolio manager's bonus is based on the performance of each Fund the
portfolio manager manages as compared to the Fund's broad-based index over
a three-year rolling period. For purposes of the annual bonus, the Fund's
performance is compared to that of the Fund's broad-based index, Russell
1000 Value Index.
UBS AG EQUITY. Senior investment professionals, including each portfolio
manager of the Funds , may receive a portion of their annual
performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that
this reinforces the critical Importance of creating long-term business
value and also serves as an effective Retention tool as the equity shares
typically vest over a number of years.
Broader equity share ownership is encouraged for all employees through
"Equity Plus." This long-term incentive program gives employees the
opportunity to purchase UBS stock with after-tax funds from their bonus
an/or salary. Two UBS stock options are given for each share acquired and
held for two years. UBS Global Asset Management feels this engages its
employees as partners in the firm's success, and helps to maximize its
integrated business strategy.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
See Attached
------------------------------------------- ------------------
(Signature of person authorized
to sign on behalf of the Sub-Advisor) (Date)
(Printed Name of person signing)
(Title of person signing)
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
Principal Investors Fund, Inc. LargeCap Value Fund I
John Leonard, Thomas M. Cole, Thomas Digenan and Scott Hazen are the members of
the North American Equities investment management team primarily responsible for
the day-to-day management of the LargeCap Value Fund I. Mr. Leonard as the head
of the investment management team oversees the other members of the team, leads
the portfolio construction process and reviews the overall composition of each
Fund's portfolio to ensure compliance with its stated investment objective and
strategies. Mr. Cole as the director of research for the investment management
team oversees the analyst team that provides the investment research on the
large cap markets that is used in making the security selections for each Fund's
portfolio. Mr. Digenan and Mr. Hazen as the primary strategists for the
investment management team provide cross-industry assessments and risk
management assessments for portfolio construction for each Fund. Information
about Messrs. Leonard, Cole, Digenan and Hazen is provided below.
John Leonard is Head of North American Equities and Deputy Global Head of
Equities at UBS Global Asset Management. Mr. Leonard is also a Managing Director
of UBS Global Asset Management and has been an investment professional with UBS
Global Asset Management since 1991.
Thomas M. Cole is Head of Research--North American Equities and a Managing
Director at UBS Global Asset Management. Mr. Cole has been an investment
professional with UBS Global Asset Management since 1995.
Thomas Digenan has been a North American Equity Strategist at UBS Global Asset
Management since 2001 and is an Executive Director of UBS Global Asset
Management. Mr. Digenan was President of The UBS Funds from 1993 to 2001.
Scott Hazen has been a North American Equity Strategist at UBS Global Asset
Management since 2004 and is an Executive Director of UBS Global Asset
Management. From 1992 until 2004, Mr. Hazen was a Client Service and
Relationship Management professional with UBS Global Asset Management.
October 31, 2006 Information
Portfolio Manager (Funds managed) Registered Investment Other Pooled Other Accounts
Companies Investment Vehicles
Assets Assets Assets
Managed Managed Managed
(in (in (in
Number millions) Number millions) Number millions)
John C. Leonard 15 $3,165 72 $19,9091 14 $1,8092
Thomas M. Cole 15 $3,165 72 $19,9091 17 $1,8062
Thomas Digenan 15 $3,165 72 $19,9091 19 $1,8022
Scott Hazen 15 $3,165 72 $19,9091 10 $1,8022
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
POTENTIAL CONFLICTS OF INTEREST
The management of a portfolio and other accounts by a portfolio manager could
result in potential conflicts of interest if the portfolio and other accounts
have different objectives, benchmarks and fees because the portfolio manager and
his team must allocate time and investment expertise across multiple accounts,
including the portfolio. The portfolio manager and his team manage the portfolio
and other accounts utilizing a model portfolio approach that groups similar
accounts within a model portfolio. UBS Global Asset Management (Americas) Inc.
manages accounts according to the appropriate model portfolio, including where
possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across accounts, which may minimize the potential
for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the portfolio may not be
able to take full advantage of that opportunity due to an allocation or filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, UBS Global Asset Management (Americas) Inc. has
adopted procedures for allocating portfolio trades among multiple accounts to
provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. UBS Global Asset Management (Americas) Inc. has
adopted Codes of Ethics that govern such personal trading, but there is no
assurance that the Codes will adequately address all such conflicts.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
DESCRIPTION OF COMPENSATION STRUCTURE
Our compensation and benefits programs are designed to provide our investment
professionals with incentives to excel, and to promote an entrepreneurial,
performance-oriented culture. They also align the interests of our investment
professionals with the interests of our clients. Overall compensation can be
grouped into four categories:
1. Competitive salary, benchmarked annually to maintain very competitive
compensation opportunities. 2. Annual bonus, tied to individual contributions
and investment performance. 3. Analyst incentives, tied to performance of model
portfolios.
4. UBS equity awards, promoting company-wide success and employee retention.
Base salary is used to recognize the experience, skills and knowledge that our
investment professionals bring to their roles. Salary levels are monitored and
adjusted periodically in order to remain competitive within the investment
management industry.
Annual bonuses are strictly and rigorously correlated with performance. As such,
annual incentives can be highly variable, and are based on three components: 1)
the firm's overall business success; 2) the performance of the respective asset
class and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. We strongly believe that tying bonuses to both long-term
(3-year) and shorter-term (1-year) portfolio performance closely aligns our
investment professionals' interests with those of our clients.
Analyst Incentives. Because we value our proprietary research, we have designed
a compensation system that has made investment analysis a highly regarded career
within our firm. Grouped into 12 global sector teams, our analysts manage model
portfolios in global and local sectors. Our portfolio managers use the model
sector portfolios to build actual client portfolios. Analyst incentives are tied
to the performance of the model portfolios, which we evaluate over rolling
three-year periods. One-third of each analyst's rating is based upon the
performance of the model global sector portfolio; one-third on the model local
sector portfolio; and one-third is a qualitative assessment of their
contribution. We believe that this system closely aligns our analysts'
incentives with our clients.
UBS AG EQUITY. MANY OF OUR SENIOR INVESTMENT PROFESSIONALS ARE REQUIRED TO
DEFER A PORTION OF THEIR ANNUAL
PERFORMANCE-BASED INCENTIVE IN THE FORM OF DEFERRED OR RESTRICTED UBS AG
SHARES OR EMPLOYEE STOCK OPTIONS. NOT ONLY DOES THIS REINFORCE THE CRITICAL
IMPORTANCE OF CREATING LONG-TERM BUSINESS VALUE, IT ALSO SERVES AS AN
EFFECTIVE RETENTION TOOL AS THE EQUITY SHARES TYPICALLY VEST OVER A NUMBER
OF YEARS.
Broader equity share ownership is encouraged for all employees through "Equity
Plus". This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-tax funds from their bonus or salary. Two UBS
stock options are given for each share acquired and held for two years. We feel
this engages our employees as partners in the firm's success, and helps to
maximize our integrated business strategy.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director Assoc. Direcgtor
1 Three of these accounts with approximately $2 billion has an advisory fee
based upon the performance of the account. 2 One of these accounts with
approximately $265 million has an advisory fee based upon the performance
of the account.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - SmallCap Growth Fund II
Name of Fund
Paul Graham
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
UBS Global Asset Management (Americas) Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 6 $888 million
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 2 $256 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 6 $368 million
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $60 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
The management of a portfolio and other accounts by a portfolio manager
could result in potential conflicts of interest if the portfolio and other
accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the portfolio. The portfolio manager
and his team manage the portfolio and other accounts utilizing a model
portfolio approach that groups similar accounts within a model portfolio.
UBS Global Asset Management (Americas) Inc. manages accounts according to
the appropriate model portfolio, including where possible, those accounts
that have specific investment restrictions. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across accounts, which may minimize the potential for conflicts of
interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the portfolio may
not be able to take full advantage of that opportunity due to an allocation
or filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, UBS Global Asset Management
(Americas) Inc. has adopted procedures for allocating portfolio trades
among multiple accounts to provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. UBS Global Asset Management
(Americas) Inc. has adopted Codes of Ethics that govern such personal
trading, but there is no assurance that the Codes will adequately address
all such conflicts.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The portfolio management team's management of a Fund and other accounts
could result in potential conflicts of interest if the Fund and other
accounts have different objectives, benchmarks and fees because the
portfolio management team must allocate its time and investment expertise
across multiple accounts, including the Fund. A portfolio manager and his
or her team manage a Fund and other accounts utilizing a model portfolio
approach that groups similar accounts within a model portfolio. The Advisor
manages accounts according to the appropriate model portfolio, including
where possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes and industry and sector
exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the Fund may not
be able to take full advantage of that opportunity due to an allocation of
filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, the Advisor has adopted procedures
for allocating portfolio trades across multiple accounts to provide fair
treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. The Advisor and the Trust have
adopted Codes of Ethics that govern such personal trading but there is no
assurance that the Codes will adequately address all such conflicts.
The compensation received by the portfolio managers at UBS Global Asset
Management, including the Funds' portfolio managers, includes a base salary
and incentive compensation, as detailed below. UBS Global Asset
management's compensation and benefits programs are designed to provide its
investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the
interests of the investment professionals with the interests of UBS Global
Asset Management's clients.
Overall compensation can be grouped into three categories:
- Competitive salary, benchmarked to maintain competitive compensation
opportunities.
- Annual bonus, tied to individual contributions and investment
performance.
- UBS equity awards, promoting company-wide success and employee retention.
BASE SALARY is fixed compensation used to recognize the experience, skills
and knowledge that the investment professionals bring to their roles.
Salary levels are monitored and adjusted periodically in order to remain
competitive within the investment management industry.
ANNUAL BONUSES are correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's
overall business success; 2) the performance of the respective asset class
and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. UBS Global Asset Management strongly believes that
tying bonuses to both long-term (3-year) and shorter-term (1-year)
portfolio pre-tax performance closely aligns the investment professionals'
interests with those of UBS Global Asset Management's clients. Each
portfolio manager's bonus is based on the performance of each Fund the
portfolio manager manages as compared to the Fund's broad-based index over
a three-year rolling period. For purposes of the annual bonus, the Fund's
performance is compared to that of the Fund's broad-based index, Russell
2000 Growth Index.
UBS AG EQUITY. Senior investment professionals, including each portfolio
manager of the Funds , may receive a portion of their annual
performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that
this reinforces the critical Importance of creating long-term business
value and also serves as an effective Retention tool as the equity shares
typically vest over a number of years.
Broader equity share ownership is encouraged for all employees through
"Equity Plus." This long-term incentive program gives employees the
opportunity to purchase UBS stock with after-tax funds from their bonus
an/or salary. Two UBS stock options are given for each share acquired and
held for two years. UBS Global Asset Management feels this engages its
employees as partners in the firm's success, and helps to maximize its
integrated business strategy.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
none
See Attached
----------------------------------------------- ------------------
(Signature of person authorized
to sign on behalf of the Sub-Advisor) (Date)
(Printed Name of person signing)
(Title of person signing)
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
Principal Investors Fund, Inc. SmallCap Growth Fund II
Paul Graham and David Wabnik are the portfolio managers for the UBS U.S. Small
Cap Growth Fund and are jointly and primarily responsible for the day-to-day
management of the Fund's portfolio. The portfolio managers have access to
members of the US Equities Growth investment management team, each of whom has
some responsibility for research and security selection. The portfolio managers
also may have access to additional portfolio managers and analysts within the
various asset classes and markets in which the Fund invests. Information about
Mr. Graham and Mr. Wabnik is provided below.
Paul Graham is the Head of US Growth Equities at UBS Global Asset Management.
Mr. Graham has been an employee of UBS Global Asset Management since 1994, a
Managing Director of UBS Global Asset Management since 2003, and portfolio
manager of the Fund since its inception.
David Wabnik is a Co-Head of Small-Mid Cap Growth Equities and a Senior
Portfolio Manager at UBS Global Asset Management. Mr. Wabnik has been an
employee of UBS Global Asset Management since 1995, an Executive Director of UBS
Global Asset Management since 2001, and portfolio manager of the Fund since its
inception.
October 31, 2006 Information
Portfolio Manager (Funds managed) Registered Investment Other Pooled Other Accounts
Companies Investment Vehicles
Assets Assets Assets
Managed Managed Managed
(in (in (in
Number millions) Number millions) Number millions)
Paul Graham 6 $888 2 $256 6 $368 1
David Wabnik 6 $888 2 $256 28 $368 (1)
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
POTENTIAL CONFLICTS OF INTEREST
The management of a portfolio and other accounts by a portfolio manager could
result in potential conflicts of interest if the portfolio and other accounts
have different objectives, benchmarks and fees because the portfolio manager and
his team must allocate time and investment expertise across multiple accounts,
including the portfolio. The portfolio manager and his team manage the portfolio
and other accounts utilizing a model portfolio approach that groups similar
accounts within a model portfolio. UBS Global Asset Management (Americas) Inc.
manages accounts according to the appropriate model portfolio, including where
possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across accounts, which may minimize the potential
for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the portfolio may not be
able to take full advantage of that opportunity due to an allocation or filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, UBS Global Asset Management (Americas) Inc. has
adopted procedures for allocating portfolio trades among multiple accounts to
provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. UBS Global Asset Management (Americas) Inc. has
adopted Codes of Ethics that govern such personal trading, but there is no
assurance that the Codes will adequately address all such conflicts.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
DESCRIPTION OF COMPENSATION STRUCTURE
Our compensation and benefits programs are designed to provide our investment
professionals with incentives to excel, and to promote an entrepreneurial,
performance-oriented culture. They also align the interests of our investment
professionals with the interests of our clients. Overall compensation can be
grouped into four categories:
1. Competitive salary, benchmarked annually to maintain very competitive
compensation opportunities. 2. Annual bonus, tied to individual contributions
and investment performance. 3. Analyst incentives, tied to performance of model
portfolios.
4. UBS equity awards, promoting company-wide success and employee retention.
Base salary is used to recognize the experience, skills and knowledge that our
investment professionals bring to their roles. Salary levels are monitored and
adjusted periodically in order to remain competitive within the investment
management industry.
Annual bonuses are strictly and rigorously correlated with performance. As such,
annual incentives can be highly variable, and are based on three components: 1)
the firm's overall business success; 2) the performance of the respective asset
class and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. We strongly believe that tying bonuses to both long-term
(3-year) and shorter-term (1-year) portfolio performance closely aligns our
investment professionals' interests with those of our clients.
Analyst Incentives. Because we value our proprietary research, we have designed
a compensation system that has made investment analysis a highly regarded career
within our firm. Grouped into 12 global sector teams, our analysts manage model
portfolios in global and local sectors. Our portfolio managers use the model
sector portfolios to build actual client portfolios. Analyst incentives are tied
to the performance of the model portfolios, which we evaluate over rolling
three-year periods. One-third of each analyst's rating is based upon the
performance of the model global sector portfolio; one-third on the model local
sector portfolio; and one-third is a qualitative assessment of their
contribution. We believe that this system closely aligns our analysts'
incentives with our clients.
UBS AG EQUITY. MANY OF OUR SENIOR INVESTMENT PROFESSIONALS ARE REQUIRED TO
DEFER A PORTION OF THEIR ANNUAL PERFORMANCE-BASED INCENTIVE IN THE FORM OF
DEFERRED OR RESTRICTED UBS AG SHARES OR EMPLOYEE STOCK OPTIONS. NOT ONLY
DOES THIS REINFORCE THE CRITICAL IMPORTANCE OF CREATING LONG-TERM BUSINESS
VALUE, IT ALSO SERVES AS AN EFFECTIVE RETENTION TOOL AS THE EQUITY SHARES
TYPICALLY VEST OVER A NUMBER OF YEARS.
Broader equity share ownership is encouraged for all employees through "Equity
Plus". This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-tax funds from their bonus or salary. Two UBS
stock options are given for each share acquired and held for two years. We feel
this engages our employees as partners in the firm's success, and helps to
maximize our integrated business strategy.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director Assoc. Direcgtor
1 One of these accounts with approximately $60 million has an advisory fee
based upon the performance of the account.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Partners LargeCap Value Fund I
Name of Fund
Scott Hazen
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
UBS Global Asset Management (Americas) Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 15 $3,165 million
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 72 $19,909 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 10 $1,802 million
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 3 $2,000 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $265 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
The management of a portfolio and other accounts by a portfolio manager
could result in potential conflicts of interest if the portfolio and other
accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the portfolio. The portfolio manager
and his team manage the portfolio and other accounts utilizing a model
portfolio approach that groups similar accounts within a model portfolio.
UBS Global Asset Management (Americas) Inc. manages accounts according to
the appropriate model portfolio, including where possible, those accounts
that have specific investment restrictions. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across accounts, which may minimize the potential for conflicts of
interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the portfolio may
not be able to take full advantage of that opportunity due to an allocation
or filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, UBS Global Asset Management
(Americas) Inc. has adopted procedures for allocating portfolio trades
among multiple accounts to provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. UBS Global Asset Management
(Americas) Inc. has adopted Codes of Ethics that govern such personal
trading, but there is no assurance that the Codes will adequately address
all such conflicts.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The portfolio management team's management of a Fund and other accounts
could result in potential conflicts of interest if the Fund and other
accounts have different objectives, benchmarks and fees because the
portfolio management team must allocate its time and investment expertise
across multiple accounts, including the Fund. A portfolio manager and his
or her team manage a Fund and other accounts utilizing a model portfolio
approach that groups similar accounts within a model portfolio. The Advisor
manages accounts according to the appropriate model portfolio, including
where possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes and industry and sector
exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the Fund may not
be able to take full advantage of that opportunity due to an allocation of
filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, the Advisor has adopted procedures
for allocating portfolio trades across multiple accounts to provide fair
treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. The Advisor and the Trust have
adopted Codes of Ethics that govern such personal trading but there is no
assurance that the Codes will adequately address all such conflicts.
The compensation received by the portfolio managers at UBS Global Asset
Management, including the Funds' portfolio managers, includes a base salary
and incentive compensation, as detailed below. UBS Global Asset
management's compensation and benefits programs are designed to provide its
investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the
interests of the investment professionals with the interests of UBS Global
Asset Management's clients. Overall compensation can be grouped into three
categories:
- Competitive salary, benchmarked to maintain competitive compensation
opportunities.
- Annual bonus, tied to individual contributions and investment
performance.
- UBS equity awards, promoting company-wide success and employee retention.
BASE SALARY is fixed compensation used to recognize the experience, skills
and knowledge that the investment professionals bring to their roles.
Salary levels are monitored and adjusted periodically in order to remain
competitive within the investment management industry.
ANNUAL BONUSES are correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's
overall business success; 2) the performance of the respective asset class
and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. UBS Global Asset Management strongly believes that
tying bonuses to both long-term (3-year) and shorter-term (1-year)
portfolio pre-tax performance closely aligns the investment professionals'
interests with those of UBS Global Asset Management's clients. Each
portfolio manager's bonus is based on the performance of each Fund the
portfolio manager manages as compared to the Fund's broad-based index over
a three-year rolling period. For purposes of the annual bonus, the Fund's
performance is compared to that of the Fund's broad-based index, Russell
1000 Value Index.
UBS AG EQUITY. Senior investment professionals, including each portfolio
manager of the Funds , may receive a portion of their annual
performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that
this reinforces the critical Importance of creating long-term business
value and also serves as an effective Retention tool as the equity shares
typically vest over a number of years.
Broader equity share ownership is encouraged for all employees through
"Equity Plus." This long-term incentive program gives employees the
opportunity to purchase UBS stock with after-tax funds from their bonus
an/or salary. Two UBS stock options are given for each share acquired and
held for two years. UBS Global Asset Management feels this engages its
employees as partners in the firm's success, and helps to maximize its
integrated business strategy.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
See Attached
------------------------------------------- ------------------
(Signature of person authorized
to sign on behalf of the Sub-Advisor) (Date)
(Printed Name of person signing)
(Title of person signing)
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
Principal Investors Fund, Inc. LargeCap Value Fund I
John Leonard, Thomas M. Cole, Thomas Digenan and Scott Hazen are the members of
the North American Equities investment management team primarily responsible for
the day-to-day management of the LargeCap Value Fund I. Mr. Leonard as the head
of the investment management team oversees the other members of the team, leads
the portfolio construction process and reviews the overall composition of each
Fund's portfolio to ensure compliance with its stated investment objective and
strategies. Mr. Cole as the director of research for the investment management
team oversees the analyst team that provides the investment research on the
large cap markets that is used in making the security selections for each Fund's
portfolio. Mr. Digenan and Mr. Hazen as the primary strategists for the
investment management team provide cross-industry assessments and risk
management assessments for portfolio construction for each Fund. Information
about Messrs. Leonard, Cole, Digenan and Hazen is provided below.
John Leonard is Head of North American Equities and Deputy Global Head of
Equities at UBS Global Asset Management. Mr. Leonard is also a Managing Director
of UBS Global Asset Management and has been an investment professional with UBS
Global Asset Management since 1991.
Thomas M. Cole is Head of Research--North American Equities and a Managing
Director at UBS Global Asset Management. Mr. Cole has been an investment
professional with UBS Global Asset Management since 1995.
Thomas Digenan has been a North American Equity Strategist at UBS Global Asset
Management since 2001 and is an Executive Director of UBS Global Asset
Management. Mr. Digenan was President of The UBS Funds from 1993 to 2001.
Scott Hazen has been a North American Equity Strategist at UBS Global Asset
Management since 2004 and is an Executive Director of UBS Global Asset
Management. From 1992 until 2004, Mr. Hazen was a Client Service and
Relationship Management professional with UBS Global Asset Management.
October 31, 2006 Information
Portfolio Manager (Funds managed) Registered Investment Other Pooled Other Accounts
Companies Investment Vehicles
Assets Assets Assets
Managed Managed Managed
(in (in (in
Number millions) Number millions) Number millions)
John C. Leonard 15 $3,165 72 $19,9091 14 $1,8092
Thomas M. Cole 15 $3,165 72 $19,9091 17 $1,8062
Thomas Digenan 15 $3,165 72 $19,9091 19 $1,8022
Scott Hazen 15 $3,165 72 $19,9091 10 $1,8022
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
POTENTIAL CONFLICTS OF INTEREST
The management of a portfolio and other accounts by a portfolio manager could
result in potential conflicts of interest if the portfolio and other accounts
have different objectives, benchmarks and fees because the portfolio manager and
his team must allocate time and investment expertise across multiple accounts,
including the portfolio. The portfolio manager and his team manage the portfolio
and other accounts utilizing a model portfolio approach that groups similar
accounts within a model portfolio. UBS Global Asset Management (Americas) Inc.
manages accounts according to the appropriate model portfolio, including where
possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across accounts, which may minimize the potential
for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the portfolio may not be
able to take full advantage of that opportunity due to an allocation or filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, UBS Global Asset Management (Americas) Inc. has
adopted procedures for allocating portfolio trades among multiple accounts to
provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. UBS Global Asset Management (Americas) Inc. has
adopted Codes of Ethics that govern such personal trading, but there is no
assurance that the Codes will adequately address all such conflicts.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
DESCRIPTION OF COMPENSATION STRUCTURE
Our compensation and benefits programs are designed to provide our investment
professionals with incentives to excel, and to promote an entrepreneurial,
performance-oriented culture. They also align the interests of our investment
professionals with the interests of our clients. Overall compensation can be
grouped into four categories:
1. Competitive salary, benchmarked annually to maintain very competitive
compensation opportunities. 2. Annual bonus, tied to individual contributions
and investment performance. 3. Analyst incentives, tied to performance of model
portfolios.
4. UBS equity awards, promoting company-wide success and employee retention.
Base salary is used to recognize the experience, skills and knowledge that our
investment professionals bring to their roles. Salary levels are monitored and
adjusted periodically in order to remain competitive within the investment
management industry.
Annual bonuses are strictly and rigorously correlated with performance. As such,
annual incentives can be highly variable, and are based on three components: 1)
the firm's overall business success; 2) the performance of the respective asset
class and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. We strongly believe that tying bonuses to both long-term
(3-year) and shorter-term (1-year) portfolio performance closely aligns our
investment professionals' interests with those of our clients.
Analyst Incentives. Because we value our proprietary research, we have designed
a compensation system that has made investment analysis a highly regarded career
within our firm. Grouped into 12 global sector teams, our analysts manage model
portfolios in global and local sectors. Our portfolio managers use the model
sector portfolios to build actual client portfolios. Analyst incentives are tied
to the performance of the model portfolios, which we evaluate over rolling
three-year periods. One-third of each analyst's rating is based upon the
performance of the model global sector portfolio; one-third on the model local
sector portfolio; and one-third is a qualitative assessment of their
contribution. We believe that this system closely aligns our analysts'
incentives with our clients.
UBS AG EQUITY. MANY OF OUR SENIOR INVESTMENT PROFESSIONALS ARE REQUIRED TO
DEFER A PORTION OF THEIR ANNUAL PERFORMANCE-BASED INCENTIVE IN THE FORM OF
DEFERRED OR RESTRICTED UBS AG SHARES OR EMPLOYEE STOCK OPTIONS. NOT ONLY
DOES THIS REINFORCE THE CRITICAL IMPORTANCE OF CREATING LONG-TERM BUSINESS
VALUE, IT ALSO SERVES AS AN EFFECTIVE RETENTION TOOL AS THE EQUITY SHARES
TYPICALLY VEST OVER A NUMBER OF YEARS.
Broader equity share ownership is encouraged for all employees through "Equity
Plus". This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-tax funds from their bonus or salary. Two UBS
stock options are given for each share acquired and held for two years. We feel
this engages our employees as partners in the firm's success, and helps to
maximize our integrated business strategy.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director Assoc. Direcgtor
1 Three of these accounts with approximately $2 billion has an advisory fee
based upon the performance of the account. 2 One of these accounts with
approximately $265 million has an advisory fee based upon the performance
of the account.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc.-Partners LargeCap Value Fund I
Name of Fund
John Leonard
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
UBS Global Management (Americas) Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 15 $3,165 million
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 72 $19,909 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 14 $1,809 milllion
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 3 $2,000 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $265 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
The management of a portfolio and other accounts by a portfolio manager
could result in potential conflicts of interest if the portfolio and other
accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the portfolio. The portfolio manager
and his team manage the portfolio and other accounts utilizing a model
portfolio approach that groups similar accounts within a model portfolio.
UBS Global Asset Management (Americas) Inc. manages accounts according to
the appropriate model portfolio, including where possible, those accounts
that have specific investment restrictions. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across accounts, which may minimize the potential for conflicts of
interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the portfolio may
not be able to take full advantage of that opportunity due to an allocation
or filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, UBS Global Asset Management
(Americas) Inc. has adopted procedures for allocating portfolio trades
among multiple accounts to provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. UBS Global Asset Management
(Americas) Inc. has adopted Codes of Ethics that govern such personal
trading, but there is no assurance that the Codes will adequately address
all such conflicts.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The portfolio management team's management of a Fund and other accounts
could result in potential conflicts of interest if the Fund and other
accounts have different objectives, benchmarks and fees because the
portfolio management team must allocate its time and investment expertise
across multiple accounts, including the Fund. A portfolio manager and his
or her team manage a Fund and other accounts utilizing a model portfolio
approach that groups similar accounts within a model portfolio. The Advisor
manages accounts according to the appropriate model portfolio, including
where possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes and industry and sector
exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the Fund may not
be able to take full advantage of that opportunity due to an allocation of
filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, the Advisor has adopted procedures
for allocating portfolio trades across multiple accounts to provide fair
treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. The Advisor and the Trust have
adopted Codes of Ethics that govern such personal trading but there is no
assurance that the Codes will adequately address all such conflicts.
The compensation received by the portfolio managers at UBS Global Asset
Management, including the Funds' portfolio managers, includes a base salary
and incentive compensation, as detailed below. UBS Global Asset
management's compensation and benefits programs are designed to provide its
investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the
interests of the investment professionals with the interests of UBS Global
Asset Management's clients. Overall compensation can be grouped into three
categories:
- Competitive salary, benchmarked to maintain competitive compensation
opportunities.
- Annual bonus, tied to individual contributions and investment
performance.
- UBS equity awards, promoting company-wide success and employee retention.
BASE SALARY is fixed compensation used to recognize the experience, skills
and knowledge that the investment professionals bring to their roles.
Salary levels are monitored and adjusted periodically in order to remain
competitive within the investment management industry.
ANNUAL BONUSES are correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's
overall business success; 2) the performance of the respective asset class
and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. UBS Global Asset Management strongly believes that
tying bonuses to both long-term (3-year) and shorter-term (1-year)
portfolio pre-tax performance closely aligns the investment professionals'
interests with those of UBS Global Asset Management's clients. Each
portfolio manager's bonus is based on the performance of each Fund the
portfolio manager manages as compared to the Fund's broad-based index over
a three-year rolling period. For purposes of the annual bonus, the Fund's
performance is compared to that of the Fund's broad-based index, Russell
1000 Value Index.
UBS AG EQUITY. Senior investment professionals, including each portfolio
manager of the Funds , may receive a portion of their annual
performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that
this reinforces the critical Importance of creating long-term business
value and also serves as an effective Retention tool as the equity shares
typically vest over a number of years.
Broader equity share ownership is encouraged for all employees through
"Equity Plus." This long-term incentive program gives employees the
opportunity to purchase UBS stock with after-tax funds from their bonus
an/or salary. Two UBS stock options are given for each share acquired and
held for two years. UBS Global Asset Management feels this engages its
employees as partners in the firm's success, and helps to maximize its
integrated business strategy.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
See Attached
--------------------------------------------- ------------------
(Signature of person authorized to
sign on behalf of the Sub-Advisor) (Date)
(Printed Name of person signing)
(Title of person signing)
Principal Investors Fund, Inc. LargeCap Value Fund I
John Leonard, Thomas M. Cole, Thomas Digenan and Scott Hazen are the members of
the North American Equities investment management team primarily responsible for
the day-to-day management of the LargeCap Value Fund I. Mr. Leonard as the head
of the investment management team oversees the other members of the team, leads
the portfolio construction process and reviews the overall composition of each
Fund's portfolio to ensure compliance with its stated investment objective and
strategies. Mr. Cole as the director of research for the investment management
team oversees the analyst team that provides the investment research on the
large cap markets that is used in making the security selections for each Fund's
portfolio. Mr. Digenan and Mr. Hazen as the primary strategists for the
investment management team provide cross-industry assessments and risk
management assessments for portfolio construction for each Fund. Information
about Messrs. Leonard, Cole, Digenan and Hazen is provided below.
John Leonard is Head of North American Equities and Deputy Global Head of
Equities at UBS Global Asset Management. Mr. Leonard is also a Managing Director
of UBS Global Asset Management and has been an investment professional with UBS
Global Asset Management since 1991.
Thomas M. Cole is Head of Research--North American Equities and a Managing
Director at UBS Global Asset Management. Mr. Cole has been an investment
professional with UBS Global Asset Management since 1995.
Thomas Digenan has been a North American Equity Strategist at UBS Global Asset
Management since 2001 and is an Executive Director of UBS Global Asset
Management. Mr. Digenan was President of The UBS Funds from 1993 to 2001.
Scott Hazen has been a North American Equity Strategist at UBS Global Asset
Management since 2004 and is an Executive Director of UBS Global Asset
Management. From 1992 until 2004, Mr. Hazen was a Client Service and
Relationship Management professional with UBS Global Asset Management.
October 31, 2006 Information
Portfolio Manager (Funds managed) Registered Investment Other Pooled Other Accounts
Companies Investment Vehicles
Assets Assets Assets
Managed Managed Managed
(in (in (in
Number millions) Number millions) Number millions)
John C. Leonard 15 $3,165 72 $19,9091 14 $1,8092
Thomas M. Cole 15 $3,165 72 $19,9091 17 $1,8062
Thomas Digenan 15 $3,165 72 $19,9091 19 $1,8022
Scott Hazen 15 $3,165 72 $19,9091 10 $1,8022
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
POTENTIAL CONFLICTS OF INTEREST
The management of a portfolio and other accounts by a portfolio manager could
result in potential conflicts of interest if the portfolio and other accounts
have different objectives, benchmarks and fees because the portfolio manager and
his team must allocate time and investment expertise across multiple accounts,
including the portfolio. The portfolio manager and his team manage the portfolio
and other accounts utilizing a model portfolio approach that groups similar
accounts within a model portfolio. UBS Global Asset Management (Americas) Inc.
manages accounts according to the appropriate model portfolio, including where
possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across accounts, which may minimize the potential
for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the portfolio may not be
able to take full advantage of that opportunity due to an allocation or filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, UBS Global Asset Management (Americas) Inc. has
adopted procedures for allocating portfolio trades among multiple accounts to
provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. UBS Global Asset Management (Americas) Inc. has
adopted Codes of Ethics that govern such personal trading, but there is no
assurance that the Codes will adequately address all such conflicts.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
DESCRIPTION OF COMPENSATION STRUCTURE
Our compensation and benefits programs are designed to provide our investment
professionals with incentives to excel, and to promote an entrepreneurial,
performance-oriented culture. They also align the interests of our investment
professionals with the interests of our clients. Overall compensation can be
grouped into four categories:
1. Competitive salary, benchmarked annually to maintain very competitive
compensation opportunities. 2. Annual bonus, tied to individual contributions
and investment performance. 3. Analyst incentives, tied to performance of model
portfolios.
4. UBS equity awards, promoting company-wide success and employee retention.
Base salary is used to recognize the experience, skills and knowledge that our
investment professionals bring to their roles. Salary levels are monitored and
adjusted periodically in order to remain competitive within the investment
management industry.
Annual bonuses are strictly and rigorously correlated with performance. As such,
annual incentives can be highly variable, and are based on three components: 1)
the firm's overall business success; 2) the performance of the respective asset
class and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. We strongly believe that tying bonuses to both long-term
(3-year) and shorter-term (1-year) portfolio performance closely aligns our
investment professionals' interests with those of our clients.
Analyst Incentives. Because we value our proprietary research, we have designed
a compensation system that has made investment analysis a highly regarded career
within our firm. Grouped into 12 global sector teams, our analysts manage model
portfolios in global and local sectors. Our portfolio managers use the model
sector portfolios to build actual client portfolios. Analyst incentives are tied
to the performance of the model portfolios, which we evaluate over rolling
three-year periods. One-third of each analyst's rating is based upon the
performance of the model global sector portfolio; one-third on the model local
sector portfolio; and one-third is a qualitative assessment of their
contribution. We believe that this system closely aligns our analysts'
incentives with our clients.
UBS AG EQUITY. MANY OF OUR SENIOR INVESTMENT PROFESSIONALS ARE REQUIRED TO
DEFER A PORTION OF THEIR ANNUAL PERFORMANCE-BASED INCENTIVE IN THE FORM OF
DEFERRED OR RESTRICTED UBS AG SHARES OR EMPLOYEE STOCK OPTIONS. NOT ONLY
DOES THIS REINFORCE THE CRITICAL IMPORTANCE OF CREATING LONG-TERM BUSINESS
VALUE, IT ALSO SERVES AS AN EFFECTIVE RETENTION TOOL AS THE EQUITY SHARES
TYPICALLY VEST OVER A NUMBER OF YEARS.
Broader equity share ownership is encouraged for all employees through "Equity
Plus". This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-tax funds from their bonus or salary. Two UBS
stock options are given for each share acquired and held for two years. We feel
this engages our employees as partners in the firm's success, and helps to
maximize our integrated business strategy.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director Assoc. Direcgtor
1 Three of these accounts with approximately $2 billion has an advisory fee
based upon the performance of the account. 2 One of these accounts with
approximately $265 million has an advisory fee based upon the performance
of the account.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. SmallCap Growth Fund II
Name of Fund
David Wabnik
Name of Portfolio Manager
(Please use one form per Portfolio Manager per Fund/Account)
UBS Global Asset Management (Americas) Inc.
Firm Name
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of October 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
o the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 6 $888 million
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 2 $256 million
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 28 $368 million
----------------------- ------------------------
or each of the categories, the number of accounts and the total assets
in the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
>> registered investment companies: ............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other pooled investment vehicles:............. 0 0
----------------------- ------------------------
----------------------- ------------------------
>> other accounts:............................... 1 $60 million
----------------------- ------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's
investments, on the one hand, and the investments of the other account
included in response to this question, on the other.
The management of a portfolio and other accounts by a portfolio manager
could result in potential conflicts of interest if the portfolio and other
accounts have different objectives, benchmarks and fees because the
portfolio manager and his team must allocate time and investment expertise
across multiple accounts, including the portfolio. The portfolio manager
and his team manage the portfolio and other accounts utilizing a model
portfolio approach that groups similar accounts within a model portfolio.
UBS Global Asset Management (Americas) Inc. manages accounts according to
the appropriate model portfolio, including where possible, those accounts
that have specific investment restrictions. Accordingly, portfolio
holdings, position sizes, and industry and sector exposures tend to be
similar across accounts, which may minimize the potential for conflicts of
interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the portfolio may
not be able to take full advantage of that opportunity due to an allocation
or filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, UBS Global Asset Management
(Americas) Inc. has adopted procedures for allocating portfolio trades
among multiple accounts to provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. UBS Global Asset Management
(Americas) Inc. has adopted Codes of Ethics that govern such personal
trading, but there is no assurance that the Codes will adequately address
all such conflicts.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
2. Describe the structure of, and the method used to determine, the
compensation of each Portfolio Manager. For each type of compensation
(e.g., salary, bonus, deferred compensation, retirement plans and
arrangements), describe with specificity the criteria on which that type of
compensation is based, for example, whether compensation is fixed, whether
(and, if so, how) compensation is based on Fund pre- or after-tax
performance over a certain time period, and whether (and, if so, how)
compensation is based on the value of assets held in the Fund's portfolio.
For example, if compensation is based solely or in part on performance,
identify any benchmark used to measure performance and state the length of
the period over which performance is measured. If the Portfolio Manager's
compensation is based on performance with respect to some accounts but not
the Fund, this must be disclosed.
The portfolio management team's management of a Fund and other accounts
could result in potential conflicts of interest if the Fund and other
accounts have different objectives, benchmarks and fees because the
portfolio management team must allocate its time and investment expertise
across multiple accounts, including the Fund. A portfolio manager and his
or her team manage a Fund and other accounts utilizing a model portfolio
approach that groups similar accounts within a model portfolio. The Advisor
manages accounts according to the appropriate model portfolio, including
where possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes and industry and sector
exposures tend to be similar across accounts, which may minimize the
potential for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may
be suitable for more than one account or model portfolio, the Fund may not
be able to take full advantage of that opportunity due to an allocation of
filled purchase or sale orders across all eligible model portfolios and
accounts. To deal with these situations, the Advisor has adopted procedures
for allocating portfolio trades across multiple accounts to provide fair
treatment to all accounts.
The management of personal accounts by a portfolio manager may also give
rise to potential conflicts of interest. The Advisor and the Trust have
adopted Codes of Ethics that govern such personal trading but there is no
assurance that the Codes will adequately address all such conflicts.
The compensation received by the portfolio managers at UBS Global Asset
Management, including the Funds' portfolio managers, includes a base salary
and incentive compensation, as detailed below. UBS Global Asset
management's compensation and benefits programs are designed to provide its
investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the
interests of the investment professionals with the interests of UBS Global
Asset Management's clients.
Overall compensation can be grouped into three categories:
- Competitive salary, benchmarked to maintain competitive compensation
opportunities.
- Annual bonus, tied to individual contributions and investment
performance.
- UBS equity awards, promoting company-wide success and employee retention.
BASE SALARY is fixed compensation used to recognize the experience, skills
and knowledge that the investment professionals bring to their roles.
Salary levels are monitored and adjusted periodically in order to remain
competitive within the investment management industry.
ANNUAL BONUSES are correlated with performance. As such, annual incentives
can be highly variable, and are based on three components: 1) the firm's
overall business success; 2) the performance of the respective asset class
and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. UBS Global Asset Management strongly believes that
tying bonuses to both long-term (3-year) and shorter-term (1-year)
portfolio pre-tax performance closely aligns the investment professionals'
interests with those of UBS Global Asset Management's clients. Each
portfolio manager's bonus is based on the performance of each Fund the
portfolio manager manages as compared to the Fund's broad-based index over
a three-year rolling period. For purposes of the annual bonus, the Fund's
performance is compared to that of the Fund's broad-based index, Russell
2000 Growth Index.
UBS AG EQUITY. Senior investment professionals, including each portfolio
manager of the Funds , may receive a portion of their annual
performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that
this reinforces the critical Importance of creating long-term business
value and also serves as an effective Retention tool as the equity shares
typically vest over a number of years.
Broader equity share ownership is encouraged for all employees through
"Equity Plus." This long-term incentive program gives employees the
opportunity to purchase UBS stock with after-tax funds from their bonus
an/or salary. Two UBS stock options are given for each share acquired and
held for two years. UBS Global Asset Management feels this engages its
employees as partners in the firm's success, and helps to maximize its
integrated business strategy.
3. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges:
none, $1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 -
$500,000; $500,001 - $1,000,000; or over $1,000,000. If the Portfolio
Manager has reasons for not holding shares of the Fund, e.g., that its
investment objectives do not match the Portfolio Manager's, you may provide
an explanation of those reasons.
none
See Attached
-------------------------------------------------------- ------------------
(Signature of person authorized to
sign on behalf of the Sub-Advisor) (Date)
(Printed Name of person signing)
(Title of person signing)
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
Principal Investors Fund, Inc. SmallCap Growth Fund II
Paul Graham and David Wabnik are the portfolio managers for the UBS U.S. Small
Cap Growth Fund and are jointly and primarily responsible for the day-to-day
management of the Fund's portfolio. The portfolio managers have access to
members of the US Equities Growth investment management team, each of whom has
some responsibility for research and security selection. The portfolio managers
also may have access to additional portfolio managers and analysts within the
various asset classes and markets in which the Fund invests. Information about
Mr. Graham and Mr. Wabnik is provided below.
Paul Graham is the Head of US Growth Equities at UBS Global Asset Management.
Mr. Graham has been an employee of UBS Global Asset Management since 1994, a
Managing Director of UBS Global Asset Management since 2003, and portfolio
manager of the Fund since its inception.
David Wabnik is a Co-Head of Small-Mid Cap Growth Equities and a Senior
Portfolio Manager at UBS Global Asset Management. Mr. Wabnik has been an
employee of UBS Global Asset Management since 1995, an Executive Director of UBS
Global Asset Management since 2001, and portfolio manager of the Fund since its
inception.
October 31, 2006 Information
Portfolio Manager (Funds managed) Registered Investment Other Pooled Other Accounts
Companies Investment Vehicles
Assets Assets Assets
Managed Managed Managed
(in (in (in
Number millions) Number millions) Number millions)
Paul Graham 6 $888 2 $256 6 $368 1
David Wabnik 6 $888 2 $256 28 $368 (1)
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
POTENTIAL CONFLICTS OF INTEREST
The management of a portfolio and other accounts by a portfolio manager could
result in potential conflicts of interest if the portfolio and other accounts
have different objectives, benchmarks and fees because the portfolio manager and
his team must allocate time and investment expertise across multiple accounts,
including the portfolio. The portfolio manager and his team manage the portfolio
and other accounts utilizing a model portfolio approach that groups similar
accounts within a model portfolio. UBS Global Asset Management (Americas) Inc.
manages accounts according to the appropriate model portfolio, including where
possible, those accounts that have specific investment restrictions.
Accordingly, portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across accounts, which may minimize the potential
for conflicts of interest.
If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the portfolio may not be
able to take full advantage of that opportunity due to an allocation or filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, UBS Global Asset Management (Americas) Inc. has
adopted procedures for allocating portfolio trades among multiple accounts to
provide fair treatment to all accounts.
The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. UBS Global Asset Management (Americas) Inc. has
adopted Codes of Ethics that govern such personal trading, but there is no
assurance that the Codes will adequately address all such conflicts.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director
Assoc. Direcgtor
UBS Global Asset Management (Americas) Inc.
Portfolio Manager Questionnaire 2006
DESCRIPTION OF COMPENSATION STRUCTURE
Our compensation and benefits programs are designed to provide our investment
professionals with incentives to excel, and to promote an entrepreneurial,
performance-oriented culture. They also align the interests of our investment
professionals with the interests of our clients. Overall compensation can be
grouped into four categories:
1. Competitive salary, benchmarked annually to maintain very competitive
compensation opportunities. 2. Annual bonus, tied to individual contributions
and investment performance. 3. Analyst incentives, tied to performance of model
portfolios.
4. UBS equity awards, promoting company-wide success and employee retention.
Base salary is used to recognize the experience, skills and knowledge that our
investment professionals bring to their roles. Salary levels are monitored and
adjusted periodically in order to remain competitive within the investment
management industry.
Annual bonuses are strictly and rigorously correlated with performance. As such,
annual incentives can be highly variable, and are based on three components: 1)
the firm's overall business success; 2) the performance of the respective asset
class and/or investment mandate; and 3) an individual's specific contribution to
the firm's results. We strongly believe that tying bonuses to both long-term
(3-year) and shorter-term (1-year) portfolio performance closely aligns our
investment professionals' interests with those of our clients.
Analyst Incentives. Because we value our proprietary research, we have designed
a compensation system that has made investment analysis a highly regarded career
within our firm. Grouped into 12 global sector teams, our analysts manage model
portfolios in global and local sectors. Our portfolio managers use the model
sector portfolios to build actual client portfolios. Analyst incentives are tied
to the performance of the model portfolios, which we evaluate over rolling
three-year periods. One-third of each analyst's rating is based upon the
performance of the model global sector portfolio; one-third on the model local
sector portfolio; and one-third is a qualitative assessment of their
contribution. We believe that this system closely aligns our analysts'
incentives with our clients.
UBS AG EQUITY. MANY OF OUR SENIOR INVESTMENT PROFESSIONALS ARE REQUIRED TO
DEFER A PORTION OF THEIR ANNUAL PERFORMANCE-BASED INCENTIVE IN THE FORM OF
DEFERRED OR RESTRICTED UBS AG SHARES OR EMPLOYEE STOCK OPTIONS. NOT ONLY
DOES THIS REINFORCE THE CRITICAL IMPORTANCE OF CREATING LONG-TERM BUSINESS
VALUE, IT ALSO SERVES AS AN EFFECTIVE RETENTION TOOL AS THE EQUITY SHARES
TYPICALLY VEST OVER A NUMBER OF YEARS.
Broader equity share ownership is encouraged for all employees through "Equity
Plus". This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-tax funds from their bonus or salary. Two UBS
stock options are given for each share acquired and held for two years. We feel
this engages our employees as partners in the firm's success, and helps to
maximize our integrated business strategy.
Signature: /s/Stephen Fleischer /s/Rachel M. Wood
Name: Stephen Fleischer Rachel M. Wood
Title: Director Assoc. Direcgtor
1 One of these accounts with approximately $60 million has an advisory fee
based upon the performance of the account.
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF-CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
[Name of Fund
] JOSEPH A. PIRARO
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
VAN KAMPEN ASSET MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 7 $3,212,835,713
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
BECAUSE THE PORTFOLIO MANAGERS MANAGE ASSETS FOR OTHER INVESTMENT COMPANIES,
POOLED INVESTMENT VEHICLES, AND/OR OTHER ACCOUNTS (INCLUDING INSTITUTIONAL
CLIENTS, PENSION PLANS AND CERTAIN HIGH NET WORTH INDIVIDUALS), THERE MAY BE AN
INCENTIVE TO FAVOR ONE CLIENT OVER ANOTHER RESULTING IN CONFLICTS OF INTEREST.
FOR INSTANCE, THE INVESTMENT ADVISER MAY RECEIVE FEES FROM CERTAIN ACCOUNTS THAT
ARE HIGHER THAN THE FEE IT RECEIVES FROM THE FUND, OR IT MAY RECEIVE A
PERFORMANCE-BASED FEE ON CERTAIN ACCOUNTS. IN THOSE INSTANCES, THE PORTFOLIO
MANAGERS MAY HAVE AN INCENTIVE TO FAVOR THE HIGHER AND/OR PERFORMANCE-BASED FEE
ACCOUNTS OVER THE FUND. IN ADDITION, A CONFLICT OF INTEREST COULD EXIST TO THE
EXTENT THE INVESTMENT ADVISER HAS PROPRIETARY INVESTMENTS IN CERTAIN ACCOUNTS,
WHERE PORTFOLIO MANAGERS HAVE PERSONAL INVESTMENTS IN CERTAIN ACCOUNTS OR WHEN
CERTAIN ACCOUNTS ARE INVESTMENT OPTIONS IN THE INVESTMENT ADVISER'S EMPLOYEE
BENEFITS AND/OR DEFERRED COMPENSATION PLANS. THE PORTFOLIO MANAGER MAY HAVE AN
INCENTIVE TO FAVOR THESE ACCOUNTS OVER OTHERS. IF THE INVESTMENT ADVISER MANAGES
ACCOUNTS THAT ENGAGE IN SHORT SALES OF SECURITIES OF THE TYPE IN WHICH THE FUND
INVESTS, THE INVESTMENT ADVISER COULD BE SEEN AS HARMING THE PERFORMANCE OF THE
FUND FOR THE BENEFIT OF THE ACCOUNTS ENGAGING IN SHORT SALES IF THE SHORT SALES
CAUSE THE MARKET VALUE OF THE SECURITIES TO FALL. THE INVESTMENT ADVISER HAS
ADOPTED TRADE ALLOCATION AND OTHER POLICIES AND PROCEDURES THAT IT BELIEVES ARE
REASONABLY DESIGNED TO ADDRESS THESE AND OTHER CONFLICTS OF INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION STRUCTURE
PORTFOLIO MANAGERS RECEIVE A COMBINATION OF BASE COMPENSATION AND
DISCRETIONARY COMPENSATION, COMPRISING A CASH BONUS AND SEVERAL DEFERRED
COMPENSATION PROGRAMS DESCRIBED BELOW. THE METHODOLOGY USED TO DETERMINE
PORTFOLIO MANAGER COMPENSATION IS APPLIED ACROSS ALL FUNDS/ACCOUNTS MANAGED
BY THE PORTFOLIO MANAGER.
BASE SALARY COMPENSATION. GENERALLY, PORTFOLIO MANAGERS RECEIVE BASE SALARY
COMPENSATION BASED ON THE LEVEL OF THEIR POSITION WITH THE SUB-ADVISER.
DISCRETIONARY COMPENSATION. IN ADDITION TO BASE COMPENSATION, PORTFOLIO
MANAGERS MAY RECEIVE DISCRETIONARY COMPENSATION.
DISCRETIONARY COMPENSATION CAN INCLUDE:
- CASH BONUS.
- MORGAN STANLEY'S LONG TERM INCENTIVE COMPENSATION AWARDS-- A MANDATORY
PROGRAM THAT DEFERS A PORTION OF DISCRETIONARY YEAR-END COMPENSATION INTO
RESTRICTED STOCK UNITS OR OTHER AWARDS BASED ON MORGAN STANLEY COMMON STOCK
THAT ARE SUBJECT TO VESTING AND OTHER CONDITIONS.
- INVESTMENT MANAGEMENT ALIGNMENT PLAN (IMAP) AWARDS-- A MANDATORY PROGRAM
THAT DEFERS A PORTION OF DISCRETIONARY YEAR-END COMPENSATION AND NOTIONALLY
INVESTS IT IN DESIGNATED FUNDS ADVISED BY THE INVESTMENT ADVISER OR ITS
AFFILIATES. THE AWARD IS SUBJECT TO VESTING AND OTHER CONDITIONS. PORTFOLIO
MANAGERS MUST NOTIONALLY INVEST A MINIMUM OF 25% TO A MAXIMUM OF 100% OF THE
IMAP DEFERRAL INTO A COMBINATION OF THE DESIGNATED FUNDS THEY MANAGE THAT ARE
INCLUDED IN THE IMAP FUND MENU, WHICH MAY OR MAY NOT INCLUDE THE FUND.
- VOLUNTARY DEFERRED COMPENSATION PLANS-- VOLUNTARY PROGRAMS THAT PERMIT
CERTAIN EMPLOYEES TO ELECT TO DEFER A PORTION OF THEIR DISCRETIONARY YEAR-END
COMPENSATION AND DIRECTLY OR NOTIONALLY INVEST THE DEFERRED AMOUNT: (1)
ACROSS A RANGE OF DESIGNATED INVESTMENT FUNDS, INCLUDING FUNDS ADVISED BY THE
SUB-ADVISER OR ITS AFFILIATES; AND/OR (2) IN MORGAN STANLEY STOCK UNITS.
SEVERAL FACTORS DETERMINE DISCRETIONARY COMPENSATION, WHICH CAN VARY BY
PORTFOLIO MANAGEMENT TEAM AND CIRCUMSTANCES. IN ORDER OF RELATIVE IMPORTANCE,
THESE FACTORS INCLUDE:
- INVESTMENT PERFORMANCE. A PORTFOLIO MANAGER'S COMPENSATION IS LINKED TO THE
PRE-TAX INVESTMENT PERFORMANCE OF THE FUNDS/ACCOUNTS MANAGED BY THE PORTFOLIO
MANAGER. INVESTMENT PERFORMANCE IS CALCULATED FOR ONE-, THREE- AND FIVE-YEAR
PERIODS MEASURED AGAINST A FUND'S/ACCOUNT'S PRIMARY BENCHMARK (AS SET FORTH
IN THE FUND'S PROSPECTUS), INDICES AND/OR PEER GROUPS, WHERE APPLICABLE.
GENERALLY, THE GREATEST WEIGHT IS PLACED ON THE THREE- AND FIVE-YEAR PERIODS.
- REVENUES GENERATED BY THE INVESTMENT COMPANIES, POOLED INVESTMENT VEHICLES
AND OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGER.
- CONTRIBUTION TO THE BUSINESS OBJECTIVES OF THE SUB-ADVISER.
- THE DOLLAR AMOUNT OF ASSETS MANAGED BY THE PORTFOLIO MANAGER.
- MARKET COMPENSATION SURVEY RESEARCH BY INDEPENDENT THIRD PARTIES.
- OTHER QUALITATIVE FACTORS, SUCH AS CONTRIBUTIONS TO CLIENT OBJECTIVES.
- PERFORMANCE OF MORGAN STANLEY AND MORGAN STANLEY INVESTMENT MANAGEMENT, AND
THE OVERALL PERFORMANCE OF THE INVESTMENT TEAM(S) OF WHICH THE PORTFOLIO
MANAGER IS A MEMBER.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Kimberley H. Costello 1-9-2007
(Signature of person authorized to sign on behalf of the Sub-Advisor) (Date)
Kimberley H. Costello
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF-CALIFORNIA MUNICIPAL FUND
[Name of Fund
] JOSEPH A. PIRARO
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
VAN KAMPEN ASSET MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 7 $3,212,835,713
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
BECAUSE THE PORTFOLIO MANAGERS MANAGE ASSETS FOR OTHER INVESTMENT COMPANIES,
POOLED INVESTMENT VEHICLES, AND/OR OTHER ACCOUNTS (INCLUDING INSTITUTIONAL
CLIENTS, PENSION PLANS AND CERTAIN HIGH NET WORTH INDIVIDUALS), THERE MAY BE
AN INCENTIVE TO FAVOR ONE CLIENT OVER ANOTHER RESULTING IN CONFLICTS OF
INTEREST. FOR INSTANCE, THE SUB-ADVISER MAY RECEIVE FEES FROM CERTAIN
ACCOUNTS THAT ARE HIGHER THAN THE FEE IT RECEIVES FROM THE FUND, OR IT MAY
RECEIVE A PERFORMANCE-BASED FEE ON CERTAIN ACCOUNTS. IN THOSE INSTANCES, THE
PORTFOLIO MANAGERS MAY HAVE AN INCENTIVE TO FAVOR THE HIGHER AND/OR
PERFORMANCE-BASED FEE ACCOUNTS OVER THE FUND. IN ADDITION, A CONFLICT OF
INTEREST COULD EXIST TO THE EXTENT THE SUB-ADVISER HAS PROPRIETARY
INVESTMENTS IN CERTAIN ACCOUNTS, WHERE PORTFOLIO MANAGERS HAVE PERSONAL
INVESTMENTS IN CERTAIN ACCOUNTS OR WHEN CERTAIN ACCOUNTS ARE INVESTMENT
OPTIONS IN THE SUB-ADVISER'S EMPLOYEE BENEFITS AND/OR DEFERRED COMPENSATION
PLANS. THE PORTFOLIO MANAGER MAY HAVE AN INCENTIVE TO FAVOR THESE ACCOUNTS
OVER OTHERS. IF THE SUB-ADVISER MANAGES ACCOUNTS THAT ENGAGE IN SHORT SALES
OF SECURITIES OF THE TYPE IN WHICH THE FUND INVESTS, THE SUB-ADVISER COULD BE
SEEN AS HARMING THE PERFORMANCE OF THE FUND FOR THE BENEFIT OF THE ACCOUNTS
ENGAGING IN SHORT SALES IF THE SHORT SALES CAUSE THE MARKET VALUE OF THE
SECURITIES TO FALL. THE SUB-ADVISER HAS ADOPTED TRADE ALLOCATION AND OTHER
POLICIES AND PROCEDURES THAT IT BELIEVES ARE REASONABLY DESIGNED TO ADDRESS
THESE AND OTHER CONFLICTS OF INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION STRUCTURE
PORTFOLIO MANAGERS RECEIVE A COMBINATION OF BASE COMPENSATION AND
DISCRETIONARY COMPENSATION, COMPRISING A CASH BONUS AND SEVERAL DEFERRED
COMPENSATION PROGRAMS DESCRIBED BELOW. THE METHODOLOGY USED TO DETERMINE
PORTFOLIO MANAGER COMPENSATION IS APPLIED ACROSS ALL FUNDS/ACCOUNTS MANAGED
BY THE PORTFOLIO MANAGER.
BASE SALARY COMPENSATION. GENERALLY, PORTFOLIO MANAGERS RECEIVE BASE SALARY
COMPENSATION BASED ON THE LEVEL OF THEIR POSITION WITH THE SUB-ADVISER.
DISCRETIONARY COMPENSATION. IN ADDITION TO BASE COMPENSATION, PORTFOLIO
MANAGERS MAY RECEIVE DISCRETIONARY COMPENSATION.
DISCRETIONARY COMPENSATION CAN INCLUDE:
- CASH BONUS.
- MORGAN STANLEY'S LONG TERM INCENTIVE COMPENSATION AWARDS-- A MANDATORY
PROGRAM THAT DEFERS A PORTION OF DISCRETIONARY YEAR-END COMPENSATION INTO
RESTRICTED STOCK UNITS OR OTHER AWARDS BASED ON MORGAN STANLEY COMMON STOCK
THAT ARE SUBJECT TO VESTING AND OTHER CONDITIONS.
- INVESTMENT MANAGEMENT ALIGNMENT PLAN (IMAP) AWARDS-- A MANDATORY PROGRAM
THAT DEFERS A PORTION OF DISCRETIONARY YEAR-END COMPENSATION AND NOTIONALLY
INVESTS IT IN DESIGNATED FUNDS ADVISED BY THE SUB-ADVISER OR ITS AFFILIATES.
THE AWARD IS SUBJECT TO VESTING AND OTHER CONDITIONS. PORTFOLIO MANAGERS MUST
NOTIONALLY INVEST A MINIMUM OF 25% TO A MAXIMUM OF 100% OF THE IMAP DEFERRAL
INTO A COMBINATION OF THE DESIGNATED FUNDS THEY MANAGE THAT ARE INCLUDED IN
THE IMAP FUND MENU, WHICH MAY OR MAY NOT INCLUDE THE FUND.
- VOLUNTARY DEFERRED COMPENSATION PLANS-- VOLUNTARY PROGRAMS THAT PERMIT
CERTAIN EMPLOYEES TO ELECT TO DEFER A PORTION OF THEIR DISCRETIONARY YEAR-END
COMPENSATION AND DIRECTLY OR NOTIONALLY INVEST THE DEFERRED AMOUNT: (1)
ACROSS A RANGE OF DESIGNATED INVESTMENT FUNDS, INCLUDING FUNDS ADVISED BY THE
SUB-ADVISER OR ITS AFFILIATES; AND/OR (2) IN MORGAN STANLEY STOCK UNITS.
SEVERAL FACTORS DETERMINE DISCRETIONARY COMPENSATION, WHICH CAN VARY BY
PORTFOLIO MANAGEMENT TEAM AND CIRCUMSTANCES. IN ORDER OF RELATIVE IMPORTANCE,
THESE FACTORS INCLUDE:
- INVESTMENT PERFORMANCE. A PORTFOLIO MANAGER'S COMPENSATION IS LINKED TO THE
PRE-TAX INVESTMENT PERFORMANCE OF THE FUNDS/ACCOUNTS MANAGED BY THE PORTFOLIO
MANAGER. INVESTMENT PERFORMANCE IS CALCULATED FOR ONE-, THREE- AND FIVE-YEAR
PERIODS MEASURED AGAINST A FUND'S/ACCOUNT'S PRIMARY BENCHMARK (AS SET FORTH
IN THE FUND'S PROSPECTUS), INDICES AND/OR PEER GROUPS, WHERE APPLICABLE.
GENERALLY, THE GREATEST WEIGHT IS PLACED ON THE THREE- AND FIVE-YEAR PERIODS
- REVENUES GENERATED BY THE INVESTMENT COMPANIES, POOLED INVESTMENT VEHICLES
AND OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGER.
- CONTRIBUTION TO THE BUSINESS OBJECTIVES OF THE SUB-ADVISER.
- THE DOLLAR AMOUNT OF ASSETS MANAGED BY THE PORTFOLIO MANAGER.
- MARKET COMPENSATION SURVEY RESEARCH BY INDEPENDENT THIRD PARTIES.
- OTHER QUALITATIVE FACTORS, SUCH AS CONTRIBUTIONS TO CLIENT OBJECTIVES.
- PERFORMANCE OF MORGAN STANLEY AND MORGAN STANLEY INVESTMENT MANAGEMENT, AND
THE OVERALL PERFORMANCE OF THE INVESTMENT TEAM(S) OF WHICH THE PORTFOLIO
MANAGER IS A MEMBER.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Kimberley H. Costello 1-9-2007
(Signature of person authorized to sign on behalf of the Sub-Advisor) (Date)
Kimberley H. Costello
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE FUND II
[Name of Fund
] CHRIS WALLIS
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
VAUGHAN NELSON INVESTMENT MANAGEMENT, LP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 14 500,274,506
--------------------------
* other pooled investment vehicles:... 4 105,815,267
--------------------------
* other accounts:..................... 160 2,476,424,878
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST
ACTUAL OR APPARENT CONFLICTS OF INTEREST MAY ARISE WHEN A PORTFOLIO MANAGER
HAS DAY-TO-DAY RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE INVESTMENT
ACCOUNT. PORTFOLIO MANAGERS WHO MANAGE OTHER INVESTMENT ACCOUNTS IN ADDITION
TO A PORTION OF THE STRATEGIC PARTNERS ASSET ALLOCATION FUND MAY BE PRESENTED
WITH THE FOLLOWING POTENTIAL CONFLICTS:
1) A CONFLICT BETWEEN THE INVESTMENT STRATEGY OF THE STRATEGIC PARTNERS
ASSET ALLOCATION PORTFOLIO AND THE OTHER STRATEGIES AND ACCOUNTS MANAGED BY
THE PORTFOLIO MANAGER WITH REGARD TO THE ALLOCATION OF LIMITED INVESTMENT
OPPORTUNITIES THAT MAY BE APPROPRIATE FOR MORE THAN ONE INVESTMENT STRATEGY;
2) A CONFLICT IN THE ALLOCATION OF INVESTMENT OPPORTUNITIES AMONGST ACCOUNTS
WITHIN THE STRATEGY EMPLOYED BY THE STRATEGIC PARTNERS ASSET ALLOCATION
PORTFOLIO; AND
3) A CONFLICT IN THE ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES BETWEEN
THE STRATEGY EMPLOYED BY THE STRATEGIC PARTNERS ASSET ALLOCATION PORTFOLIO
AND OTHER MANAGED ACCOUNTS FOR WHICH ADVISORY FEES ARE BASED UPON THE
PERFORMANCE OF THE ACCOUNT
VAUGHAN NELSON MAINTAINS POLICIES AND PROCEDURES IN PLACE THAT ADDRESS THESE
POTENTIAL CONFLICT OF INTEREST ISSUES TO AID IN ASSURING THAT INVESTMENT
OPPORTUNITIES ARE ALLOCATED FAIRLY AND EQUITABLY AMONGST ALL CLIENT ACCOUNTS.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION AT VAUGHAN NELSON IS DETERMINED BY THE COMPENSATION COMMITTEE AT
THE RECOMMENDATION OF THE CHIEF EXECUTIVE OFFICER. PORTFOLIO MANAGEMENT
PROFESSIONALS ARE COMPENSATED THROUGH A FIXED BASE SALARY, VARIABLE BONUS AND
A CONTRIBUTION TO THE FIRM'S RETIREMENT PLAN. THE VARIABLE BONUS COMPONENT,
AS A WHOLE FOR ALL PORTFOLIO MANAGEMENT PROFESSIONALS, IS BASED UPON A
PERCENTAGE OF THE FIRM'S OPERATING PROFIT, AS DEFINED. EACH PORTFOLIO
MANAGEMENT PROFESSIONAL'S PARTICIPATION IN THE VARIABLE BONUS POOL IS BASED
PRIMARILY UPON THE PERFORMANCE OF THE STRATEGY MANAGED, AS REPRESENTED BY A
COMPOSITE OF ALL ACCOUNTS QUALIFYING FOR SUCH COMPOSITE RELATIVE TO THE
RUSSELL UNIVERSE PEER GROUP (ON A ROLLING THREE YEAR BASIS), AND AN
ASSESSMENT OF THE QUALITY OF CLIENT SERVICE PROVIDED. THE CONTRIBUTION TO
THE FIRM'S RETIREMENT PLAN IS BASED ON A PERCENTAGE (AT THE DISCRETION OF THE
VAUGHAN NELSON BOARD) OF TOTAL CASH COMPENSATION (SUBJECT TO IRS LIMITS) AND
SUCH PERCENTAGE IS THE SAME FOR ALL FIRM PERSONNEL. KEY EMPLOYEES, AT THE
DISCRETION OF THE COMPENSATION COMMITTEE, ARE ELIGIBLE TO PARTICIPATE WITHIN
IXIS' LONG-TERM INCENTIVE PROGRAM. THERE IS NO DISTINCTION OF COMPENSATION
AMONGST THE PORTFOLIO AND ANY OTHER ACCOUNTS MANAGED.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
0
/s/Carlos Gonzalez 11/15/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Carlos Gonzalez
[(Printed Name of person signing)]
Compliance Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PARTNERS SMALL CAP VALUE FUND II
[Name of Fund
] SCOTT WEBER
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
VAUGHAN NELSON INVESTMENT MANAGEMENT, LP
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 13 469,636,545
--------------------------
* other pooled investment vehicles:... 2 22,669,080
--------------------------
* other accounts:..................... 87 1,979,895,945
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
CONFLICTS OF INTEREST
ACTUAL OR APPARENT CONFLICTS OF INTEREST MAY ARISE WHEN A PORTFOLIO MANAGER
HAS DAY-TO-DAY RESPONSIBILITIES WITH RESPECT TO MORE THAN ONE INVESTMENT
ACCOUNT. PORTFOLIO MANAGERS WHO MANAGE OTHER INVESTMENT ACCOUNTS IN ADDITION
TO A PORTION OF THE STRATEGIC PARTNERS ASSET ALLOCATION FUND MAY BE PRESENTED
WITH THE FOLLOWING POTENTIAL CONFLICTS:
1) A CONFLICT BETWEEN THE INVESTMENT STRATEGY OF THE STRATEGIC PARTNERS
ASSET ALLOCATION PORTFOLIO AND THE OTHER STRATEGIES AND ACCOUNTS MANAGED BY
THE PORTFOLIO MANAGER WITH REGARD TO THE ALLOCATION OF LIMITED INVESTMENT
OPPORTUNITIES THAT MAY BE APPROPRIATE FOR MORE THAN ONE INVESTMENT STRATEGY;
2) A CONFLICT IN THE ALLOCATION OF INVESTMENT OPPORTUNITIES AMONGST ACCOUNTS
WITHIN THE STRATEGY EMPLOYED BY THE STRATEGIC PARTNERS ASSET ALLOCATION
PORTFOLIO; AND
3) A CONFLICT IN THE ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES BETWEEN
THE STRATEGY EMPLOYED BY THE STRATEGIC PARTNERS ASSET ALLOCATION PORTFOLIO
AND OTHER MANAGED ACCOUNTS FOR WHICH ADVISORY FEES ARE BASED UPON THE
PERFORMANCE OF THE ACCOUNT
VAUGHAN NELSON MAINTAINS POLICIES AND PROCEDURES IN PLACE THAT ADDRESS THESE
POTENTIAL CONFLICT OF INTEREST ISSUES TO AID IN ASSURING THAT INVESTMENT
OPPORTUNITIES ARE ALLOCATED FAIRLY AND EQUITABLY AMONGST ALL CLIENT ACCOUNTS.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
COMPENSATION AT VAUGHAN NELSON IS DETERMINED BY THE COMPENSATION COMMITTEE AT
THE RECOMMENDATION OF THE CHIEF EXECUTIVE OFFICER. PORTFOLIO MANAGEMENT
PROFESSIONALS ARE COMPENSATED THROUGH A FIXED BASE SALARY, VARIABLE BONUS AND
A CONTRIBUTION TO THE FIRM'S RETIREMENT PLAN. THE VARIABLE BONUS COMPONENT,
AS A WHOLE FOR ALL PORTFOLIO MANAGEMENT PROFESSIONALS, IS BASED UPON A
PERCENTAGE OF THE FIRM'S OPERATING PROFIT, AS DEFINED. EACH PORTFOLIO
MANAGEMENT PROFESSIONAL'S PARTICIPATION IN THE VARIABLE BONUS POOL IS BASED
PRIMARILY UPON THE PERFORMANCE OF THE STRATEGY MANAGED, AS REPRESENTED BY A
COMPOSITE OF ALL ACCOUNTS QUALIFYING FOR SUCH COMPOSITE RELATIVE TO THE
RUSSELL UNIVERSE PEER GROUP (ON A ROLLING THREE YEAR BASIS), AND AN
ASSESSMENT OF THE QUALITY OF CLIENT SERVICE PROVIDED. THE CONTRIBUTION TO
THE FIRM'S RETIREMENT PLAN IS BASED ON A PERCENTAGE (AT THE DISCRETION OF THE
VAUGHAN NELSON BOARD) OF TOTAL CASH COMPENSATION (SUBJECT TO IRS LIMITS) AND
SUCH PERCENTAGE IS THE SAME FOR ALL FIRM PERSONNEL. KEY EMPLOYEES, AT THE
DISCRETION OF THE COMPENSATION COMMITTEE, ARE ELIGIBLE TO PARTICIPATE WITHIN
IXIS' LONG-TERM INCENTIVE PROGRAM. THERE IS NO DISTINCTION OF COMPENSATION
AMONGST THE PORTFOLIO AND ANY OTHER ACCOUNTS MANAGED.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
0
/s/Carlos Gonzalez 11/15/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Carlos Gonzalez
[(Printed Name of person signing)]
Compliance Manager
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PIF-TAX-EXEMPT BOND FUND I
[Name of Fund
] THOMAS M. BYRON
[Name of Portfolio Manager
(PLEASE USE ONE FORM PER PORTFOLIO MANAGER PER FUND/ACCOUNT)
]
VAN KAMPEN ASSET MANAGEMENT
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 6 $2,855,360,088
---------------------------
* other pooled investment vehicles:... 0 0
---------------------------
* other accounts:..................... 0 0
---------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
BECAUSE THE PORTFOLIO MANAGERS MANAGE ASSETS FOR OTHER INVESTMENT COMPANIES,
POOLED INVESTMENT VEHICLES, AND/OR OTHER ACCOUNTS (INCLUDING INSTITUTIONAL
CLIENTS, PENSION PLANS AND CERTAIN HIGH NET WORTH INDIVIDUALS), THERE MAY BE
AN INCENTIVE TO FAVOR ONE CLIENT OVER ANOTHER RESULTING IN CONFLICTS OF
INTEREST. FOR INSTANCE, THE SUB-ADVISER MAY RECEIVE FEES FROM CERTAIN
ACCOUNTS THAT ARE HIGHER THAN THE FEE IT RECEIVES FROM THE FUND, OR IT MAY
RECEIVE A PERFORMANCE-BASED FEE ON CERTAIN ACCOUNTS. IN THOSE INSTANCES, THE
PORTFOLIO MANAGERS MAY HAVE AN INCENTIVE TO FAVOR THE HIGHER AND/OR
PERFORMANCE-BASED FEE ACCOUNTS OVER THE FUND. IN ADDITION, A CONFLICT OF
INTEREST COULD EXIST TO THE EXTENT THE SUB-ADVISER HAS PROPRIETARY
INVESTMENTS IN CERTAIN ACCOUNTS, WHERE PORTFOLIO MANAGERS HAVE PERSONAL
INVESTMENTS IN CERTAIN ACCOUNTS OR WHEN CERTAIN ACCOUNTS ARE INVESTMENT
OPTIONS IN THE SUB-ADVISER'S EMPLOYEE BENEFITS AND/OR DEFERRED COMPENSATION
PLANS. THE PORTFOLIO MANAGER MAY HAVE AN INCENTIVE TO FAVOR THESE ACCOUNTS
OVER OTHERS. IF THE SUB-ADVISER MANAGES ACCOUNTS THAT ENGAGE IN SHORT SALES
OF SECURITIES OF THE TYPE IN WHICH THE FUND INVESTS, THE SUB-ADVISER COULD BE
SEEN AS HARMING THE PERFORMANCE OF THE FUND FOR THE BENEFIT OF THE ACCOUNTS
ENGAGING IN SHORT SALES IF THE SHORT SALES CAUSE THE MARKET VALUE OF THE
SECURITIES TO FALL. THE SUB-ADVISER HAS ADOPTED TRADE ALLOCATION AND OTHER
POLICIES AND PROCEDURES THAT IT BELIEVES ARE REASONABLY DESIGNED TO ADDRESS
THESE AND OTHER CONFLICTS OF INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
PORTFOLIO MANAGER COMPENSATION STRUCTURE
PORTFOLIO MANAGERS RECEIVE A COMBINATION OF BASE COMPENSATION AND
DISCRETIONARY COMPENSATION, COMPRISING A CASH BONUS AND SEVERAL DEFERRED
COMPENSATION PROGRAMS DESCRIBED BELOW. THE METHODOLOGY USED TO DETERMINE
PORTFOLIO MANAGER COMPENSATION IS APPLIED ACROSS ALL FUNDS/ACCOUNTS MANAGED
BY THE PORTFOLIO MANAGER.
BASE SALARY COMPENSATION. GENERALLY, PORTFOLIO MANAGERS RECEIVE BASE SALARY
COMPENSATION BASED ON THE LEVEL OF THEIR POSITION WITH THE SUB-ADVISER.
DISCRETIONARY COMPENSATION. IN ADDITION TO BASE COMPENSATION, PORTFOLIO
MANAGERS MAY RECEIVE DISCRETIONARY COMPENSATION.
DISCRETIONARY COMPENSATION CAN INCLUDE:
- CASH BONUS.
- MORGAN STANLEY'S LONG TERM INCENTIVE COMPENSATION AWARDS-- A MANDATORY
PROGRAM THAT DEFERS A PORTION OF DISCRETIONARY YEAR-END COMPENSATION INTO
RESTRICTED STOCK UNITS OR OTHER AWARDS BASED ON MORGAN STANLEY COMMON STOCK
THAT ARE SUBJECT TO VESTING AND OTHER CONDITIONS.
- INVESTMENT MANAGEMENT ALIGNMENT PLAN (IMAP) AWARDS-- A MANDATORY PROGRAM
THAT DEFERS A PORTION OF DISCRETIONARY YEAR-END COMPENSATION AND NOTIONALLY
INVESTS IT IN DESIGNATED FUNDS ADVISED BY THE SUB-ADVISER OR ITS AFFILIATES.
THE AWARD IS SUBJECT TO VESTING AND OTHER CONDITIONS. PORTFOLIO MANAGERS MUST
NOTIONALLY INVEST A MINIMUM OF 25% TO A MAXIMUM OF 100% OF THE IMAP DEFERRAL
INTO A COMBINATION OF THE DESIGNATED FUNDS THEY MANAGE THAT ARE INCLUDED IN
THE IMAP FUND MENU, WHICH MAY OR MAY NOT INCLUDE THE FUND.
- VOLUNTARY DEFERRED COMPENSATION PLANS-- VOLUNTARY PROGRAMS THAT PERMIT
CERTAIN EMPLOYEES TO ELECT TO DEFER A PORTION OF THEIR DISCRETIONARY YEAR-END
COMPENSATION AND DIRECTLY OR NOTIONALLY INVEST THE DEFERRED AMOUNT: (1)
ACROSS A RANGE OF DESIGNATED INVESTMENT FUNDS, INCLUDING FUNDS ADVISED BY THE
SUB-ADVISER OR ITS AFFILIATES; AND/OR (2) IN MORGAN STANLEY STOCK UNITS.
SEVERAL FACTORS DETERMINE DISCRETIONARY COMPENSATION, WHICH CAN VARY BY
PORTFOLIO MANAGEMENT TEAM AND CIRCUMSTANCES. IN ORDER OF RELATIVE IMPORTANCE,
THESE FACTORS INCLUDE:
- INVESTMENT PERFORMANCE. A PORTFOLIO MANAGER'S COMPENSATION IS LINKED TO THE
PRE-TAX INVESTMENT PERFORMANCE OF THE FUNDS/ACCOUNTS MANAGED BY THE PORTFOLIO
MANAGER. INVESTMENT PERFORMANCE IS CALCULATED FOR ONE-, THREE- AND FIVE-YEAR
PERIODS MEASURED AGAINST A FUND'S/ACCOUNT'S PRIMARY BENCHMARK (AS SET FORTH
IN THE FUND'S PROSPECTUS), INDICES AND/OR PEER GROUPS, WHERE APPLICABLE.
GENERALLY, THE GREATEST WEIGHT IS PLACED ON THE THREE- AND FIVE-YEAR PERIODS.
- REVENUES GENERATED BY THE INVESTMENT COMPANIES, POOLED INVESTMENT VEHICLES
AND OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGER.
- CONTRIBUTION TO THE BUSINESS OBJECTIVES OF THE SUB-ADVISER.
- THE DOLLAR AMOUNT OF ASSETS MANAGED BY THE PORTFOLIO MANAGER.
- MARKET COMPENSATION SURVEY RESEARCH BY INDEPENDENT THIRD PARTIES.
- OTHER QUALITATIVE FACTORS, SUCH AS CONTRIBUTIONS TO CLIENT OBJECTIVES.
- PERFORMANCE OF MORGAN STANLEY AND MORGAN STANLEY INVESTMENT MANAGEMENT, AND
THE OVERALL PERFORMANCE OF THE INVESTMENT TEAM(S) OF WHICH THE PORTFOLIO
MANAGER IS A MEMBER.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Kimberley H. Costello 1-9-2007
(Signature of person authorized to sign on behalf of the Sub-Advisor) (Date)
Kimberley H. Costello
(Printed Name of person signing)
Vice President
(Title of person signing)
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - Bond and Mortgage Securities Fund
[Name of Fund/Account]
Lawrence A. Post
[Name of Portfolio Manager]
Post Advisory Group, LLC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $493,768,794
---------------------------
* other pooled investment vehicles:... 10 $1,448,322,996
---------------------------
* other accounts:..................... 51 $7,100,274,165
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------------
* other pooled investment vehicles:... 3 $224,178,235
---------------------------
* other accounts:..................... 18 $2,233,430,454
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
POST ADVISORY GROUP, LLC ("POST") AND ITS RESPECTIVE AFFILIATES ADVISE OTHER
CLIENTS AND FUNDS, WHOSE ACCOUNTS MAY PURCHASE OR SELL THE SAME SECURITIES AS
THE FUND. IN ADDITION, POST OR ITS AFFILIATES MAY ORGANIZE OTHER DOMESTIC OR
OFFSHORE FUNDS, WHICH MAY BE MANAGED BY POST AND WHICH MAY HAVE INVESTMENT
OBJECTIVES SUBSTANTIALLY SIMILAR TO THOSE OF THE FUND. POST OR ITS
AFFILIATES MAY ALSO SEEK INVESTMENT OPPORTUNITIES THAT MAY BE OF INTEREST TO
THE FUND. IN MANAGING SUCH FUNDS AND ACCOUNTS, CONFLICTS OF INTEREST MAY
ARISE. POST'S INVESTMENT ALLOCATIONS ARE DESIGNED TO PROVIDE A FAIR
ALLOCATION OF PURCHASES AND SALES OF SECURITIES AMONG THE VARIOUS ACCOUNTS
MANAGED BY POST, WHILE PRESERVING INCENTIVES FOR THE KEY PRINCIPALS TO FIND
NEW INVESTMENT OPPORTUNITIES, AND TO ENSURE COMPLIANCE WITH APPROPRIATE
REGULATORY REQUIREMENTS. POTENTIAL CONFLICTS OF INTEREST MAY EXIST IN
INSTANCES IN WHICH POST OR ITS AFFILIATES DETERMINE THAT A SPECIFIC
TRANSACTION IN A SECURITY IS APPROPRIATE FOR A SPECIFIC ACCOUNT BASED UPON
NUMEROUS FACTORS INCLUDING, AMONG OTHER THINGS, INVESTMENT OBJECTIVES,
INVESTMENT STRATEGIES, OR RESTRICTIONS, WHILE OTHER ACCOUNT MANAGED BY POST
OR ITS AFFILIATES MAY HOLD OR TAKE THE OPPOSITE POSITION IN THE SECURITY IN
ACCORDANCE WITH THOSE ACCOUNTS' INVESTMENT OBJECTIVES, STRATEGIES AND
RESTRICTIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, POST MAY AGGREGATE
THE TRADE ORDERS OF THE FUDN WITH THE TRADE ORDERS OF POST FOR OTHER ACCOUNTS
MANAGED BY POST OR ITS AFFILIATES. POST'S POLICIES AND PROCEDURES ARE
INTENDED TO PRODUCE FAIRNESS OVER TIME, BUT MAY NOT PRODUCE MATHEMATICAL
PRECISION IN THE ALLOCATION OF INDIVIDUAL PURCHASES AND SALES OF SECURITIES
BECAUSE OF, AMONG OTHER THINGS, THE NATURE OF THE FIXED INCOME MARKET AND THE
TRANSACTIONS COSTS THAT MAYBE INCURRED IN DOING SO. POST'S POLICIES AND
PROCEDURES ARE ALSO INTENDED TO BE SO0NSISTENT WITH ITS DUTY TO SEEK BEST
EXECUTION AND BEST PRICES OBTAINABLE UNDER THE CIRCUMSTANCES FOR ALL ACCOUNTS
UNDER THEIR MANAGEMENT. POST'S KEY PRINCIPALS MAY FACE DEMANDS ON THEIR TIME
OTHER THAN THE DEMANDS OF THE FUND. SUCH KEY PRINCIPALS WILL ENGAGE IN THE
SAME OR SIMILAR TRADING STRATEGIES FOR THE ACCOUNTS MANAGED BY POST AND ITS
AFFILIATES OR OTHERS AS THOSE OF THE HIGH YIELD BOND FUND. SUCH KEY
PRINCIPALS RECEIVE SALARIES AND OTHER COMPENSATION FROM THEIR EMPLOYMENT WITH
POST AND POST MAY RECEIVE FEES AND OTHER COMPENSATION FOR THE SERVICES IT
PROVIDES AND OTHER TRANSACTIONS INTO WITH IT ENTERS. EMPLOYEES OF POST MAY
ENGAGE IN PERSONAL INVESTMENT ACTIVITIES THAT COULD INVOLVE A CONFLICT OF
INTEREST WITH THE INVESTMENT ACTIVITIES IOF THE FUND. POST'S CODE OF ETHICS
INVOLVES PROCEDURES AND POLICIES INTENDED TO MINIMIZE ANY SUCH CONFLICTS OF
INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE COMPENSATION FOR THE POST ADVISORY GROUP, LLC SENIOR INVESTMENT
PROFESSIONALS IS COMPRISED OF BASE SALARY, BONUS POOL AND CERTAIN OTHER
PERFORMANCE INCENTIVES. INCENTIVES IN THE FORM OF AN ANNUAL BONUS ARE
DETERMINED BASED ON THE OVERALL PERFORMANCE OF THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Lawrence A. Post 12/01/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Lawrence A. Post
[(Printed Name of person signing)]
Chief Executive Officer & Chief Investment Officer, Post Advisory Group, LLC
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - Bond and Mortgage Securities Fund
[Name of Fund/Account]
Allan Schweitzer
[Name of Portfolio Manager]
Post Advisory Group, LLC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $493,768,794
---------------------------
* other pooled investment vehicles:... 6 $1,168,053,306
---------------------------
* other accounts:..................... 41 $6,000,239,390
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------------
* other pooled investment vehicles:... 0 $0
---------------------------
* other accounts:..................... 9 $1,150,560,526
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
POST ADVISORY GROUP, LLC ("POST") AND ITS RESPECTIVE AFFILIATES ADVISE OTHER
CLIENTS AND FUNDS, WHOSE ACCOUNTS MAY PURCHASE OR SELL THE SAME SECURITIES AS
THE FUND. IN ADDITION, POST OR ITS AFFILIATES MAY ORGANIZE OTHER DOMESTIC OR
OFFSHORE FUNDS, WHICH MAY BE MANAGED BY POST AND WHICH MAY HAVE INVESTMENT
OBJECTIVES SUBSTANTIALLY SIMILAR TO THOSE OF THE FUND. POST OR ITS
AFFILIATES MAY ALSO SEEK INVESTMENT OPPORTUNITIES THAT MAY BE OF INTEREST TO
THE FUND. IN MANAGING SUCH FUNDS AND ACCOUNTS, CONFLICTS OF INTEREST MAY
ARISE. POST'S INVESTMENT ALLOCATIONS ARE DESIGNED TO PROVIDE A FAIR
ALLOCATION OF PURCHASES AND SALES OF SECURITIES AMONG THE VARIOUS ACCOUNTS
MANAGED BY POST, WHILE PRESERVING INCENTIVES FOR THE KEY PRINCIPALS TO FIND
NEW INVESTMENT OPPORTUNITIES, AND TO ENSURE COMPLIANCE WITH APPROPRIATE
REGULATORY REQUIREMENTS. POTENTIAL CONFLICTS OF INTEREST MAY EXIST IN
INSTANCES IN WHICH POST OR ITS AFFILIATES DETERMINE THAT A SPECIFIC
TRANSACTION IN A SECURITY IS APPROPRIATE FOR A SPECIFIC ACCOUNT BASED UPON
NUMEROUS FACTORS INCLUDING, AMONG OTHER THINGS, INVESTMENT OBJECTIVES,
INVESTMENT STRATEGIES, OR RESTRICTIONS, WHILE OTHER ACCOUNT MANAGED BY POST
OR ITS AFFILIATES MAY HOLD OR TAKE THE OPPOSITE POSITION IN THE SECURITY IN
ACCORDANCE WITH THOSE ACCOUNTS' INVESTMENT OBJECTIVES, STRATEGIES AND
RESTRICTIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, POST MAY AGGREGATE
THE TRADE ORDERS OF THE FUDN WITH THE TRADE ORDERS OF POST FOR OTHER ACCOUNTS
MANAGED BY POST OR ITS AFFILIATES. POST'S POLICIES AND PROCEDURES ARE
INTENDED TO PRODUCE FAIRNESS OVER TIME, BUT MAY NOT PRODUCE MATHEMATICAL
PRECISION IN THE ALLOCATION OF INDIVIDUAL PURCHASES AND SALES OF SECURITIES
BECAUSE OF, AMONG OTHER THINGS, THE NATURE OF THE FIXED INCOME MARKET AND THE
TRANSACTIONS COSTS THAT MAYBE INCURRED IN DOING SO. POST'S POLICIES AND
PROCEDURES ARE ALSO INTENDED TO BE SO0NSISTENT WITH ITS DUTY TO SEEK BEST
EXECUTION AND BEST PRICES OBTAINABLE UNDER THE CIRCUMSTANCES FOR ALL ACCOUNTS
UNDER THEIR MANAGEMENT. POST'S KEY PRINCIPALS MAY FACE DEMANDS ON THEIR TIME
OTHER THAN THE DEMANDS OF THE FUND. SUCH KEY PRINCIPALS WILL ENGAGE IN THE
SAME OR SIMILAR TRADING STRATEGIES FOR THE ACCOUNTS MANAGED BY POST AND ITS
AFFILIATES OR OTHERS AS THOSE OF THE HIGH YIELD BOND FUND. SUCH KEY
PRINCIPALS RECEIVE SALARIES AND OTHER COMPENSATION FROM THEIR EMPLOYMENT WITH
POST AND POST MAY RECEIVE FEES AND OTHER COMPENSATION FOR THE SERVICES IT
PROVIDES AND OTHER TRANSACTIONS INTO WITH IT ENTERS. EMPLOYEES OF POST MAY
ENGAGE IN PERSONAL INVESTMENT ACTIVITIES THAT COULD INVOLVE A CONFLICT OF
INTEREST WITH THE INVESTMENT ACTIVITIES IOF THE FUND. POST'S CODE OF ETHICS
INVOLVES PROCEDURES AND POLICIES INTENDED TO MINIMIZE ANY SUCH CONFLICTS OF
INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE COMPENSATION FOR THE POST ADVISORY GROUP, LLC SENIOR INVESTMENT
PROFESSIONALS IS COMPRISED OF BASE SALARY, BONUS POOL AND CERTAIN OTHER
PERFORMANCE INCENTIVES. INCENTIVES IN THE FORM OF AN ANNUAL BONUS ARE
DETERMINED BASED ON THE OVERALL PERFORMANCE OF THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Allan Schweitzer 12/1/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Allan Schweitzer
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
Principal Investors Fund, Inc. - Ultra Short Bond Fund
[Name of Fund/Account
]Allan Schweitzer
[Name of Portfolio Manager
]Post Advisory Group, LLC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 5 $493,768,794
---------------------------
* other pooled investment vehicles:... 6 $1,168,053,306
---------------------------
* other accounts:..................... 41 $6,000,239,390
---------------------------
For each of the categories, the number of accounts and the total assets in
the accounts with respect to which the advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 $0
---------------------------
* other pooled investment vehicles:... 0 $0
---------------------------
* other accounts:..................... 9 $1,150,560,526
---------------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
POST ADVISORY GROUP, LLC ("POST") AND ITS RESPECTIVE AFFILIATES ADVISE OTHER
CLIENTS AND FUNDS, WHOSE ACCOUNTS MAY PURCHASE OR SELL THE SAME SECURITIES AS
THE FUND. IN ADDITION, POST OR ITS AFFILIATES MAY ORGANIZE OTHER DOMESTIC OR
OFFSHORE FUNDS, WHICH MAY BE MANAGED BY POST AND WHICH MAY HAVE INVESTMENT
OBJECTIVES SUBSTANTIALLY SIMILAR TO THOSE OF THE FUND. POST OR ITS
AFFILIATES MAY ALSO SEEK INVESTMENT OPPORTUNITIES THAT MAY BE OF INTEREST TO
THE FUND. IN MANAGING SUCH FUNDS AND ACCOUNTS, CONFLICTS OF INTEREST MAY
ARISE. POST'S INVESTMENT ALLOCATIONS ARE DESIGNED TO PROVIDE A FAIR
ALLOCATION OF PURCHASES AND SALES OF SECURITIES AMONG THE VARIOUS ACCOUNTS
MANAGED BY POST, WHILE PRESERVING INCENTIVES FOR THE KEY PRINCIPALS TO FIND
NEW INVESTMENT OPPORTUNITIES, AND TO ENSURE COMPLIANCE WITH APPROPRIATE
REGULATORY REQUIREMENTS. POTENTIAL CONFLICTS OF INTEREST MAY EXIST IN
INSTANCES IN WHICH POST OR ITS AFFILIATES DETERMINE THAT A SPECIFIC
TRANSACTION IN A SECURITY IS APPROPRIATE FOR A SPECIFIC ACCOUNT BASED UPON
NUMEROUS FACTORS INCLUDING, AMONG OTHER THINGS, INVESTMENT OBJECTIVES,
INVESTMENT STRATEGIES, OR RESTRICTIONS, WHILE OTHER ACCOUNT MANAGED BY POST
OR ITS AFFILIATES MAY HOLD OR TAKE THE OPPOSITE POSITION IN THE SECURITY IN
ACCORDANCE WITH THOSE ACCOUNTS' INVESTMENT OBJECTIVES, STRATEGIES AND
RESTRICTIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, POST MAY AGGREGATE
THE TRADE ORDERS OF THE FUDN WITH THE TRADE ORDERS OF POST FOR OTHER ACCOUNTS
MANAGED BY POST OR ITS AFFILIATES. POST'S POLICIES AND PROCEDURES ARE
INTENDED TO PRODUCE FAIRNESS OVER TIME, BUT MAY NOT PRODUCE MATHEMATICAL
PRECISION IN THE ALLOCATION OF INDIVIDUAL PURCHASES AND SALES OF SECURITIES
BECAUSE OF, AMONG OTHER THINGS, THE NATURE OF THE FIXED INCOME MARKET AND THE
TRANSACTIONS COSTS THAT MAYBE INCURRED IN DOING SO. POST'S POLICIES AND
PROCEDURES ARE ALSO INTENDED TO BE SO0NSISTENT WITH ITS DUTY TO SEEK BEST
EXECUTION AND BEST PRICES OBTAINABLE UNDER THE CIRCUMSTANCES FOR ALL ACCOUNTS
UNDER THEIR MANAGEMENT. POST'S KEY PRINCIPALS MAY FACE DEMANDS ON THEIR TIME
OTHER THAN THE DEMANDS OF THE FUND. SUCH KEY PRINCIPALS WILL ENGAGE IN THE
SAME OR SIMILAR TRADING STRATEGIES FOR THE ACCOUNTS MANAGED BY POST AND ITS
AFFILIATES OR OTHERS AS THOSE OF THE HIGH YIELD BOND FUND. SUCH KEY
PRINCIPALS RECEIVE SALARIES AND OTHER COMPENSATION FROM THEIR EMPLOYMENT WITH
POST AND POST MAY RECEIVE FEES AND OTHER COMPENSATION FOR THE SERVICES IT
PROVIDES AND OTHER TRANSACTIONS INTO WITH IT ENTERS. EMPLOYEES OF POST MAY
ENGAGE IN PERSONAL INVESTMENT ACTIVITIES THAT COULD INVOLVE A CONFLICT OF
INTEREST WITH THE INVESTMENT ACTIVITIES IOF THE FUND. POST'S CODE OF ETHICS
INVOLVES PROCEDURES AND POLICIES INTENDED TO MINIMIZE ANY SUCH CONFLICTS OF
INTEREST.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manger. For each type of compensation (e.g., salary, bonus,
deferred compensation, retirement plans and arrangements), describe with
specificity the criteria on which that type of compensation is based, for
example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
THE COMPENSATION FOR THE POST ADVISORY GROUP, LLC SENIOR INVESTMENT
PROFESSIONALS IS COMPRISED OF BASE SALARY, BONUS POOL AND CERTAIN OTHER
PERFORMANCE INCENTIVES. INCENTIVES IN THE FORM OF AN ANNUAL BONUS ARE
DETERMINED BASED ON THE OVERALL PERFORMANCE OF THE FIRM.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
NONE
/s/Allan Schweitzer 12/1/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Allan Schweitzer
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- BOND & MORTGAGE SECURITIES FUND
[Name of Fund]
L. PHILLIP JACOBY
[Name of Portfolio Manager]
SPECTRUM ASSET MANAGEMENT, INC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 7,458,405,940
--------------------------
* other pooled investment vehicles:... 16 2,504,716,504
--------------------------
* other accounts:..................... 32 2,492,953,991
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
SPECTRUM PROFESSIONALS ARE PAID A BASE SALARY AS WELL AS QUARTERLY AND YEAR-
END PERFORMANCE BONUSES. THE PERFORMANCE BONUSES ARE BASED ON OVERALL FIRM
REVENUES (25% WEIGHTING), ASSETS UNDER MANAGEMENT (25%), AND INDIVIDUAL
PERFORMANCE AND CONTRIBUTIONS TO THE INVESTMENT TEAM (50%). THE PERFORMANCE
BONUSES MAY COMPRISE UP TO 90% OF AN INDIVIDUAL'S TOTAL COMPENSATION.
SALARIES OF OUR SENIOR EXECUTIVE AND INVESTMENT STAFF ARE BENCHMARKED AGAINST
NATIONAL COMPENSATION LEVELS OF ASSET MANAGEMENT FIRMS AND THE BONUS IS
DRIVEN BY INVESTMENT PERFORMANCE AND FACTORS DESCRIBED EARLIER, SUCH THAT TOP
QUARTILE FUND PERFORMANCE GENERATES TOP QUARTILE COMPENSATION.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0*****
/s/L. Phillip Jacoby 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
L. Phillip Jacoby
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- BOND & MORTGAGE SECURITIES FUND
[Name of Fund
]BERNARD SUSSMAN
[Name of Portfolio Manager
]
SPECTRUM ASSET MANAGEMENT, INC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 7,458,405,940
--------------------------
* other pooled investment vehicles:... 16 2,504,716,504
--------------------------
* other accounts:..................... 36 2,498,437,508
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
SPECTRUM PROFESSIONALS ARE PAID A BASE SALARY AS WELL AS QUARTERLY AND YEAR-
END PERFORMANCE BONUSES. THE PERFORMANCE BONUSES ARE BASED ON OVERALL FIRM
REVENUES (25% WEIGHTING), ASSETS UNDER MANAGEMENT (25%), AND INDIVIDUAL
PERFORMANCE AND CONTRIBUTIONS TO THE INVESTMENT TEAM (50%). THE PERFORMANCE
BONUSES MAY COMPRISE UP TO 90% OF AN INDIVIDUAL'S TOTAL COMPENSATION.
SALARIES OF OUR SENIOR EXECUTIVE AND INVESTMENT STAFF ARE BENCHMARKED AGAINST
NATIONAL COMPENSATION LEVELS OF ASSET MANAGEMENT FIRMS AND THE BONUS IS
DRIVEN BY INVESTMENT PERFORMANCE AND FACTORS DESCRIBED EARLIER, SUCH THAT TOP
QUARTILE FUND PERFORMANCE GENERATES TOP QUARTILE COMPENSATION.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0
/s/Bernard Sussman 12/05/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Bernard Sussman
[(Printed Name of person signing)]
Executive Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- HIGH QUALITY INTERMEDIATE TERM BOND FUND
[Name of Fund]
L. PHILLIP JACOBY
[Name of Portfolio Manager]
SPECTRUM ASSET MANAGEMENT, INC.
[Firm Name]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 7,458,405,940
--------------------------
* other pooled investment vehicles:... 16 2,504,716,504
--------------------------
* other accounts:..................... 32 2,492,953,991
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
SPECTRUM PROFESSIONALS ARE PAID A BASE SALARY AS WELL AS QUARTERLY AND YEAR-
END PERFORMANCE BONUSES. THE PERFORMANCE BONUSES ARE BASED ON OVERALL FIRM
REVENUES (25% WEIGHTING), ASSETS UNDER MANAGEMENT (25%), AND INDIVIDUAL
PERFORMANCE AND CONTRIBUTIONS TO THE INVESTMENT TEAM (50%). THE PERFORMANCE
BONUSES MAY COMPRISE UP TO 90% OF AN INDIVIDUAL'S TOTAL COMPENSATION.
SALARIES OF OUR SENIOR EXECUTIVE AND INVESTMENT STAFF ARE BENCHMARKED AGAINST
NATIONAL COMPENSATION LEVELS OF ASSET MANAGEMENT FIRMS AND THE BONUS IS
DRIVEN BY INVESTMENT PERFORMANCE AND FACTORS DESCRIBED EARLIER, SUCH THAT TOP
QUARTILE FUND PERFORMANCE GENERATES TOP QUARTILE COMPENSATION.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0*****
/s/L. Phillip Jacoby 12/11/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
L. Phillip Jacoby
[(Printed Name of person signing)]
Managing Director
[(Title of person signing)]
FISCAL YEAR-END PORTFOLIO MANAGER QUESTIONNAIRE
PRINCIPAL INVESTORS FUND, INC. -- HIGH QUALITY INTERMEDIATE TERM BOND FUND
[Name of Fund
]BERNARD SUSSMAN
[Name of Portfolio Manager
]
SPECTRUM ASSET MANAGEMENT, INC.
[Firm Name
]
For purposes of this request, Portfolio Manager is a member of the management
team who is jointly and primarily responsible for the day-to-day management
(with decision-making authority) of the Fund's portfolio. If the Fund has more
than one Portfolio Manager, please describe the role of each Portfolio Manager
including any limitation of the person's role and the relationship between the
person's role and the roles of other persons who have responsibility for the
day-to-day management of the Fund's portfolio. For example, if a portfolio
management team for a balanced fund has one team member who is responsible only
for the overall allocation of the fund's assets among equities, bonds, and money
market instruments, and other team members who are responsible only for
selection of securities within a particular segment of the fund, the disclosure
should describe these limitations in describing each member's role.
THE DAY-TO-DAY PORTFOLIO MANAGEMENT FOR THE FUND LISTED ABOVE IS SHARED BY
FOUR PORTFOLIO MANAGERS OPERATING AS A TEAM, SHARING AUTHORITY AND
RESPONSIBILITY FOR RESEARCH AND DAY-TO-DAY MANAGEMENT WITH NO LIMITATION ON THE
AUTHORITY OF ONE PORTFOLIO MANAGER IN RELATION TO ANOTHER.
Please provide the following information as of OCTOBER 31, 2006 (the Fund's most
recently completed fiscal year).
1. If the Portfolio Manager is primarily responsible for the day-to-day
management of the portfolio of any other account, please provide:
{circle}the number of other accounts managed within each of the following
categories and the total assets in the accounts managed within each
category:
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 9 7,458,405,940
--------------------------
* other pooled investment vehicles:... 16 2,504,716,504
--------------------------
* other accounts:..................... 36 2,498,437,508
--------------------------
or each of the categories, the number of accounts and the total assets in
the accounts with respect to which advisory fee is based on the
performance of the account
NUMBER OF TOTAL
ACCOUNTS ASSETS
* registered investment companies: ... 0 0
-------------------
* other pooled investment vehicles:... 0 0
-------------------
* other accounts:..................... 0 0
-------------------
A description of any material conflicts of interest that may arise in
connection with the Portfolio Manager's management of the Fund's investments,
on the one hand, and the investments of the other account included in
response to this question, on the other.
NONE.
For example: Material conflicts between the investment strategy of the Fund
and the investment strategy of other accounts managed by the Portfolio
Manager and material conflicts in allocation of investment opportunities
between the Fund and other accounts managed by the Portfolio Manager.
1. Describe the structure of, and the method used to determine, the compensation
of each Portfolio Manager. For each type of compensation (e.g., salary,
bonus, deferred compensation, retirement plans and arrangements), describe
with specificity the criteria on which that type of compensation is based,
for example, whether compensation is fixed, whether (and, if so, how)
compensation is based on Fund pre- or after-tax performance over a certain
time period, and whether (and, if so, how) compensation is based on the value
of assets held in the Fund's portfolio. For example, if compensation is based
solely or in part on performance, identify any benchmark used to measure
performance and state the length of the period over which performance is
measured. If the Portfolio Manager's compensation is based on performance
with respect to some accounts but not the Fund, this must be disclosed.
SPECTRUM PROFESSIONALS ARE PAID A BASE SALARY AS WELL AS QUARTERLY AND YEAR-
END PERFORMANCE BONUSES. THE PERFORMANCE BONUSES ARE BASED ON OVERALL FIRM
REVENUES (25% WEIGHTING), ASSETS UNDER MANAGEMENT (25%), AND INDIVIDUAL
PERFORMANCE AND CONTRIBUTIONS TO THE INVESTMENT TEAM (50%). THE PERFORMANCE
BONUSES MAY COMPRISE UP TO 90% OF AN INDIVIDUAL'S TOTAL COMPENSATION.
SALARIES OF OUR SENIOR EXECUTIVE AND INVESTMENT STAFF ARE BENCHMARKED AGAINST
NATIONAL COMPENSATION LEVELS OF ASSET MANAGEMENT FIRMS AND THE BONUS IS
DRIVEN BY INVESTMENT PERFORMANCE AND FACTORS DESCRIBED EARLIER, SUCH THAT TOP
QUARTILE FUND PERFORMANCE GENERATES TOP QUARTILE COMPENSATION.
2. For each Portfolio Manager, state the dollar range of equity securities in
the Fund beneficially owned (as defined by Securities Exchange Act of 1934
Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none,
$1 - $10,000; $10,001 - $50,000; $50,001 - $ 100,000; $100,001 - $500,000;
$500,001 - $1,000,000; or over $1,000,000. If the Portfolio Manager has
reasons for not holding shares of the Fund, e.g., that its investment
objectives do not match the Portfolio Manager's, you may provide an
explanation of those reasons.
$0
/s/Bernard Sussman 12/05/06
[(Signature of person authorized to sign on behalf of the Sub-Advisor)][(Date)]
Bernard Sussman
[(Printed Name of person signing)]
Executive Director
[(Title of person signing)]
</TEXT>
</DOCUMENT>