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Principal Partners Blue Chip Fund Inc/MD – ‘PRE 14A’ for 10/3/02

On: Friday, 9/20/02, at 4:34pm ET · For: 10/3/02 · Accession #: 870786-2-184 · File #: 811-06263

  As Of                Filer                Filing    For·On·As Docs:Size

 9/20/02  Principal Partners Blue C… Inc/MD PRE 14A    10/03/02    1:99K

Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Partners Blue Chip Fund Schedule 14A                  40±   131K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Goldman, Sachs & Co
1	1st Page - Filing Submission
8	Goldman, Sachs & Co

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U.S. SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. _______________) 

Filed by Registrant__X________                                                  
Filed by a party other than the Registrant_________                             

Check the appropriate box:                                                      
_X__ Preliminary Proxy Statement                                                
____ Confidential, for Use of the Commission Only (as permitted by Rule         
14a-6(e)(2))                                                        
____ Definitive Proxy Statement                                                 
____ Definitive Additional Materials                                            
____ Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12        

Exact Name of Registrant as Specified in Charter:                               

Principal Partners Blue Chip Fund, Inc.                               
(Formerly known as Principal Blue Chip Fund, Inc.)                    

Name of Person(s) Filing Proxy Statement, if other than the Registrant:         

N/A                                                                           

Paymnet of Filing Fee (Check the appropriate box):                              
_X__ No fee required                                                            
____ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.   
1) Title of each class of securities to which transaction applies:      

2) Aggregate number of securities to which transaction applies:         

    3) Per unit price or other underlying value of transaction computed pursuant
      to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):                        

4) Proposed maximum aggregate value of transaction:                     

5) Total fee paid:                                                      
____ Fee paid previously with preliminary materials.                            

Principal                                                                       
Mutual                                                                      
Funds                                                                       

October 1, 2002                                                                 

Dear Shareholder:                                                               

The Board of Directors of Principal Partners Blue Chip Fund, Inc. ("Blue Chip   
Fund"), formerly known as Principal Blue Chip Fund, Inc., have recently         
determined it was in the best interest of the Fund and the Fund's shareholders  
to change the structure of the management of the Fund's portfolio in an effort  
to improve the Fund's investment performance. As a result, the Board has decided
to terminate the sub-advisory agreement with Invista Capital Management         
effective December 15, 2002 and has approved sub-advisory agreements to be      
entered into between Principal Management Corporation, the Fund's investment    
adviser, and two sub-advisers, Goldman Sachs Asset Management and Wellington    
Management Company. The Board has called a special meeting of shareholders for  
November 20, 2002 to request shareholder approval of the two new sub-advisory   
agreements. The Board of the Blue Chip Fund believes that the proposed          
agreements are in the best interest of the Fund and its shareholders.           

The Board is also requesting shareholder approval of a proposal to permit       
Principal Management Corporation, with Board approval, to appoint and replace   
sub-advisers and to enter into and amend sub-advisory agreements on behalf of   
the Blue Chip Fund without further shareholder approval. Approval of this       
proposal would permit the Fund to implement changes the Board and the Fund's    
manager believe to be in the Fund's interest, on an expedited basis without the 
Fund incurring expenses related to shareholder meetings.                        

No matter how many shares you own, it is important that you take time to read   
the proxy statement and vote as soon as possible. If you have more than one     
account in Blue Chip Fund, you have received a consolidated proxy ballot which  
allows you to vote all of your accounts at once--by mail, by phone or via the   
Internet. Please return ALL of the proxy ballots.                               

We appreciate your taking the time to respond on this important matter. If you  
have questions regarding the proxy or the voting process, please call our proxy 
solicitor, D.F. King & Co., Inc. at 1-800-659-6590. If you have questions       
concerning your account, please call our shareholder services department        
toll-free at 1-800-247-4123.                                                    

Sincerely,                                                                      
LOGO                                                                            
LOGO                                                                            

/s/Ralph C. Eucher                                                            

Ralph C. Eucher                                                                 
President                                                                       
Principal Partners Blue Chip Fund, Inc.                                         

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IMPORTANT INFORMATION TO HELP YOU VOTE ON THE PROPOSAL

HOW MANY VOTES AM I ENTITLED TO CAST?                                           

You are entitled to one vote for each share of the Principal Partners 
Blue Chip Fund owned on the record date, September 16, 2002.          

HOW DO I VOTE MY SHARES?                                                        

Voting is easy. You may vote your shares by completing and signing the
enclosed proxy ballot and mailing it in the enclosed postage paid     
envelope or, if it is more convenient, you may vote by touch-tone     
telephone or via the Internet. Refer to your proxy ballot for the     
toll-free telephone number or Internet address. If you need any       
assistance or have any questions concerning the Plan or how to vote   
your shares, please call 1-800-659-6590.                              

HOW DO I SIGN THE PROXY BALLOT?                                                 

Individual Accounts: Shareholders should sign exactly as their names  
                 appear in the account registration shown on the
proxy ballot.                 

Joint Accounts:     Either owner may sign, but the name of the person 
               signing should conform exactly to a name that
                  appears in the account registration shown on the
proxy ballot.                 

All Other Accounts: The person signing must indicate his or her       
                 capacity. For example, a trustee for a trust or
                   other entity should sign, "John A. Doe, Trustee."

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PRINCIPAL PARTNERS BLUE CHIP FUND, INC. 
(FORMERLY KNOWN AS PRINCIPAL BLUE CHIP FUND, INC.)
DES MOINES, IOWA 50392-0200 
____________

NOTICE OF 
SPECIAL MEETING OF SHAREHOLDERS 

TO BE HELD ON NOVEMBER 20, 2002 
___________ 

To the Shareholders:                                                            

Notice hereby is given that a special meeting of the shareholders of Principal  
Partners Blue Chip Fund, Inc. (Blue Chip Fund) will be held at 2:00 p.m. C.S.T.,
on November 20, 2002, at the offices of Principal Management Corporation, 680   
8th Street, Des Moines, Iowa 50392-0200. The meeting is being held to consider  
and vote on the following matters as well as any other business that may        
properly come before the meeting or any adjournment thereof:                    

1.   Approval of sub-advisory agreements between Principal Management 
 Corporation, the Blue Chip Fund's investment adviser, and two
    sub-advisory firms, Goldman Sachs Asset Management a unit of the
Investment Management Division of Goldman, Sachs & Co., and 
Wellington Management Company, LLP.                         

2.   Approval of a proposal to permit Principal Management            
   Corporation, with the approval of the Blue Chip Fund's Board of
     Directors, to appoint and replace sub-advisers, and to enter into
     and amend sub-advisory agreements on behalf of the Blue Chip Fund
without further shareholder approval.                       

You are entitled to notice of and to vote at the meeting, and any adjournment,  
if you owned shares of the Blue Chip Fund at the close of business on September 
16, 2002, the record date for the meeting.                                      

Your vote is important. No matter how many shares you own, please read the      
attached proxy statement, and vote today.                                       
LOGO                                                                            

               /s/A. S. Filean
                          For the Board of Directors
                Arthur S. Filean
                                   Senior Vice President and Secretary

               October 1, 2002

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PROXY STATEMENT 

INTRODUCTION AND VOTING INFORMATION 

SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT                                 
-----------------------------------------------                                 
We are furnishing this proxy statement to you as shareholders of the Principal  
Partners Blue Chip Fund, Inc. (the "Fund"), formerly known as Principal Blue    
Chip Fund, Inc., in connection with the solicitation by the Board of Directors  
of the Fund of proxies to be used at a special meeting of the shareholders to be
held on November 20, 2002 and at any adjournment thereof. The purpose of the    
meeting is to vote on two issues described below. This proxy statement is first 
being furnished to shareholders on or about October 1, 2002.                    

Shareholders of record of the Fund at the close of business on September 16,    
2002, the record date, are entitled to vote at the meeting. As of the record    
date, the Fund had 7,838,074.50 Class A shares and 2,129,351.55 Class B shares  
outstanding and entitled to be voted. Shareholders are entitled to one vote for 
each share of each Class held. A quorum must be present at the meeting for the  
transaction of business. The holders of record of one-third of the shares       
outstanding at the close of business on the record date present in person or    
represented by proxy will constitute a quorum for the meeting. The approval of  
each issue requires the affirmative vote of a majority of all the votes entitled
to be cast by shareholders of the Fund. Abstentions and broker non-votes        
(proxies from brokers or nominees indicating that they have not received        
instructions from the beneficial owners on an item for which the broker or      
nominee does not have discretionary power) are counted toward a quorum but do   
not represent votes cast for any issue. If the shareholders of the Fund do not  
approve the sub-advisory agreements described below, the Fund will consider     
possible alternative arrangements, and Principal Management Corporation will    
continue to manage the Fund.                                                    

The proxies will vote in accordance with your direction, as indicated on your   
proxy ballot, if the proxy ballot is received and is properly executed. If you  
properly execute your proxy ballot and give no voting instructions with respect 
to an issue, the proxies will vote your shares in favor of the issues. The      
proxies, in their discretion, may vote upon such other matters as may properly  
come before the meeting. We are not aware of any other matters expected to come 
before the meeting.                                                             

If either (i) a quorum is not present at the meeting or (ii) a quorum is present
but sufficient votes in favor of approving the issues are not received by 12:00 
Noon C.S.T., November 20, 2002, then the persons named as proxies in the        
enclosed form of proxy may propose one or more adjournments of the meeting to   
permit further solicitation of proxies. Any such adjournment will require the   
affirmative vote of at least a majority of the Fund shares represented, in      
person or by proxy, at the session of the meeting to be adjourned. The proxies  
will vote those proxies that they are required to vote FOR the issues in favor  
of such an adjournment and will vote those proxies required to be voted AGAINST 
the issues against such an adjournment.                                         

PROXY SOLICITATION                                                              
------------------                                                              
We will solicit proxies primarily by mail. Additional solicitations may be made 
by internet, telephone, facsimile or personal contact by officers or employees  
of the Fund or Principal Management Corporation who will not be specially       
compensated for these services. In addition, the Fund has retained D.F. King &  
Co., Inc. to solicit proxies for estimated fees and expenses of $185,000 for the
services it provides to the Fund. The Fund will bear the costs of the meeting,  
including costs of preparing and mailing the notice, the proxy statement, and   
the proxy ballot and of soliciting proxies. Banks, brokers, and other persons   
holding Fund shares as nominees will be reimbursed for their reasonable expenses
incurred in sending proxy materials to and obtaining voting information from the
beneficial owners of those shares.                                              

REVOCATION OF PROXIES                                                           
---------------------                                                           
You may revoke your proxy: (i) at any time prior to the proxy's exercise by     
sending written notice to the Secretary of the Principal Partners Blue Chip     
Fund, at 680 8th Street, Des Moines, Iowa, 50392-0200 prior to the meeting; (ii)
by the subsequent execution and return of another proxy prior to the meeting; or
(iii) by being present and voting in person at the meeting after giving oral    
notice of revocation to the Chairman of the meeting.                            

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ADDITIONAL INFORMATION                                                          
----------------------                                                          
On September 16, 2002,  the  directors  and officers of the Fund together  owned
less than 1% of its outstanding shares. The Fund does not know of any person who
owned  at the  record  date,  of  record  or  beneficially,  5% or  more  of the
outstanding shares of the Fund.                                                 

PROPOSAL 1

APPROVAL OF SUB-ADVISORY AGREEMENTS BETWEEN THE MANAGER AND SUB-ADVISERS

The Fund's Board of Directors recently approved a proposal by the Manager to    
restructure the manner in which the Fund's portfolio assets are managed by      
having two sub-advisers directly manage a portion of the Fund's assets, subject 
to oversight by the Manager and the Board. The proposal to restructure is an    
effort by the Manager to improve the investment performance of the Fund. On     
September 9, 2002, the Funds' Board of Directors, including a majority of the   
Board members who are not "interested persons" as that term is defined in       
Section 2(a) (19) of the Investment Company Act of 1940 (Independent Board      
Members), voted to approve the proposal and to terminate the previous           
sub-advisory agreement (Former Agreement) between the Manager and Invista       
Capital Management, LLC, effective December 15, 2002, and to approve            
sub-advisory agreements ("Sub-Advisory Agreements") between the Manager and     
Goldman Sachs Asset Management (a unit of the Investment Management Division of 
Goldman, Sachs & Co.) and Wellington Management Company, LLP. The Board believes
that the Fund will be able to achieve better performance consistent with the    
investment objectives and strategies of the Fund by employing the proposed      
sub-advisers to manage the Fund's assets (as allocated from time to time by the 
Manager).                                                                       

Under the Sub-Advisory Agreements, each sub-adviser will invest the Fund's      
assets for which the Manager and not the Fund, will pay the sub-adviser an      
annual fee. The Board is asking shareholders to approve new Sub-Advisory        
Agreements between the Manager and the applicable sub-advisers.                 

Under each Sub-Advisory Agreement, each sub-adviser will manage the day-to-day  
investment of all or a portion of the Fund's assets (as allocated from time to  
time by the Manager), consistent with the Fund's investment objectives,         
policies, and restrictions. Each sub-adviser will be responsible for, among     
other things, placing all orders for the purchase and sale of portfolio         
securities for which it is responsible, subject to the supervision and          
monitoring of the Manager and the over-sight of the Fund's Board. The Manager,  
and not the Fund, will be responsible for paying all fees charged by the        
applicable Sub-Adviser for these Sub-Advisory services. Any description of the  
Sub-Advisory Agreements set forth herein is qualified in its entirety by the    
actual Sub-Advisory Agreements, forms of which are attached as Exhibits A and B.
The obligations of each sub-adviser under the Sub-Advisory Agreements as        
described above, are the same in all material respects as the obligations of    
Invista under the Former Agreement.                                             

If approved by the shareholders, each Sub-Advisory Agreement will remain in     
effect for an initial one-year period. Thereafter, each Sub-Advisory Agreement  
would continue automatically for successive years, provided that it is          
specifically approved at least annually by the Board of Directors of the Fund or
by a vote of a majority of the outstanding voting securities of the Fund, but in
either event by a vote of a majority of the Independent Board Members.The       
Sub-Advisory Agreement maybe terminated at any time, without penalty, by the    
Board of Directors of the Fund or by the Manager, sub-adviser or by vote of a   
majority of the outstanding shares of the Fund on 60 days' written notice. Each 
Sub-Advisory Agreement will automatically terminate without penalty in the event
of its assignment.                                                              

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If the proposal is not approved by the shareholders of the Fund, the Board and  
the Manager will consider appropriate alternative actions.                      

The Sub-Advisory agreements will not impact the Fund's total expense ratios. The
Manager (not the Fund) pays a fee to the sub-advisers for services under the    
Sub-Advisory Agreements.                                                        

At a meeting on September 9, 2002, the Board determined that it would be in the 
best interests of the Fund and its shareholders to approve the Sub-Advisory     
Agreements. In making this decision, the Board considered the expertise of each 
proposed sub-adviser, the financial strength and quality of services offered by 
each proposed sub-adviser, the fees charged for the services and the rigorous   
due diligence process employed by the Manager with respect to each proposed     
sub-adviser.                                                                    

The Manager's due diligence process is completed by a Search Committee          
consisting of members of senior management of the Manager. The Search Committee 
conducts an initial screening of potential investment advisory candidates based 
upon characteristics including: 1. At least a 3-year history of providing       
investment advisory services using an investment strategy appropriate for the   
fund; 2. Strong long-term investment performance; 3. Modest portfolio risk      
profile; 4. Institutional or retail name recognition; and 5. Existing investment
advisory relationships, including an investment advisory relationship with      
Principal Life. The Manager narrows the field of appropriate investment advisory
firms and solicits a detailed questionnaire (request for proposal) to selected  
candidates to elicit indications of interest and information about the firm, its
invest process, personnel and fees.                                             

The Search Committee evaluates the responses of each candidate to the request   
for proposal and selects final candidates which are then interviewed. The Search
Committee then evaluates the finalists based upon a variety of factors          
including:                                                                      
. General reputation of the firm                                            
. Market focus of the firm and the awareness of the firm within the industry
and markets                                                             
. Length of time in the investment advisory business                        
. Tenure of the firm and its investment professionals                       
. Investment style, process and strategy                                    
. Investment performance track record                                       
. Ability to link electronically with Principal Management Corporation and  
custodial bank                                                          
. Level and grading of fees                                                 
. Securities trading relationships                                          
. Marketing support and distribution potential                              
. Code of ethics and insider trading policies                               
. Familiarity with and understanding of the 1940 Act                        
. Regulatory experience                                                     
. Compliance monitoring procedures                                          
. Proxy voting procedures                                                   
. Soft dollar policies                                                      

All of the above factors are important considerations, although primary         
consideration is generally given to the investment process, personnel, fees,    
ability to link electronically, and investment performance track record.        

On the basis of the entire search process, the Search Committee reaches its     
conclusion and recommends hiring a particular firm.                             

The Board concluded that each proposed sub-adviser is capable of providing      
high-quality service as reflected by (i) the qualifications and experience of   
its advisory personnel, (ii) its available organizational resources, and (iii)  
its investment performance track record when managing accounts that are         
comparable to the Fund.                                                         

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GENERAL INFORMATION ABOUT WELLINGTON MANAGEMENT COMPANY, LLP                    
Wellington Management Company, LLP ("Wellington Management") is a Massachusetts 
limited liability partnership with principal offices at 75 State Street, Boston,
Massachusetts 02109. Wellington Management is a professional investment         
counseling firm that provides investment services to investment companies,      
employee benefit plan, endowments, foundations, and other institutions.         
Wellington Management and its predecessor organizations have provided investment
advisory services for over 70 years. As of June 30, 2002, Wellington Management 
had approximately $312 billion in assets under management.                      

Wellington Management is managed by its 74 partners, all of whom are full-time  
professional members of the firm. The managing partners of Wellington Management
are Laurie A. Gabriel, Duncan M. McFarland, and John R. Ryan. It should be noted
that the managing partners are not necessarily those with the largest economic  
interests in the firm. Matthew E. Megargel, Senior Vice President and Partner,  
has significant portfolio management responsibility for the Fund.               

Wellington Management, nor any of its affiliates, provide any additional        
services to the Fund. The Manager will pay Wellington Management a fee in the   
annual amount of 0.25% of the Fund's first $500 million of average net assets   
that Wellington Management manages and 0.20% on assets exceeding $500 million.  
In calculating the fee, other asset pools Wellington Management manages for     
Principal Financial Group that have the same investment objective as the portion
of the assets of the Blue Chip Fund managed by Wellington Management, will be   
aggregated to determine the average net asset amount to which the fee applies.  

Wellington Management also provides investment advisory services to other mutual
funds with similar investment objectives as the portions of the Fund's portfolio
that Wellington Management manages. The table below identifies the funds, the   
size of each fund as of its last fiscal year end, and the rate of compensation  
for advisory services (as a % of average net assets).                           

                                                                [Download Table]

                                                                 NET ASSETS  
             FUND                      SCHEDULE OF FEES        (IN THOUSANDS)
             ----                      ----------------        --------------
                                                                             
                                  First $50 million   0.325%    $ 2,189,571  
                                  Next $100 million   0.250%                 
Hartford MF Advisers Fund         Next $350 million   0.200%                 
                                  Next $500 million   0.150%                 
                                  Over $1  billion    0.125%                 

                                  First $50 million   0.325%    $11,836,564  
                                  Next $100 million   0.250%                 
Hartford VA Advisers Fund         Next $350 million   0.200%                 
                                  Over $500 million   0.150%                 

                                  First $50 million   0.325%    $ 1,931,822  
                                  Next $100 million   0.250%                 
Hartford MF Stock Fund            Next $350 million   0.200%                 
                                  Next $500 million   0.150%                 
                                  Over $1 billion     0.125%                 

                                  First $50 million   0.325%    $ 7,834,643  
                                  Next $100 million   0.250%                 
Hartford VA Stock Fund            Next $350 million   0.200%                 
                                  Over $500 million   0.150%                 

                                  First $100 million  0.325%    $   144,642  
New England Zenith Balanced       Next $100 million   0.275%                 
Series                            Over $200 million   0.250%                 

                                  First $50 million   0.325%    $   913,980  
                                  Next $450 million   0.250%                 
VALIC Core Equity Fund            Next $1  billion    0.200%                 
                                  Over $1.5 billion   0.180%                 

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GENERAL INFORMATION ABOUT GOLDMAN SACHS ASSET MANAGEMENT                        
Goldman Sachs Assets Management (GSAM), a business unit of the Investment       
Management Division ("IMD") of Goldman, Sachs & Co. is located at 32 Old Slip,  
New York, NY 10005. GSAM provides a wide range of discretionary investment      
advisory services, quantitatively driven and actively managed to U.S. and       
international equity portfolios, U.S. and global fixed-income portfolios,       
commodity and currency products and money market accounts. As of June 30, 2002, 
GSAM, along with other units of IMD, had assets under management of $297.7      
billion.                                                                        

Goldman, Sachs & Co. is a partnership consisting of two general partners, The   
Goldman, Sachs & Co. LLC and the Goldman, Sachs Group Inc. The address of both  
general partners is 85 Broad Street, new York, New York, 10004.                 

GSAM, nor any of its affiliates, provide additional services to the Fund. The   
Manager will pay GSAM a fee in the annual amount of 0.15% of the Fund's first   
$500 million of average net assets, that GSAM manages, 0.12% of the next $1     
billion in such assets and 0.10% on assets over $1.5 billion. In calculating the
fee, other asset pools GSAM manages for Principal Financial Group that have the 
same investment objective as the portion of the assets of the Blue Chip Fund    
managed by GSAM, will be aggregated to determine the average net asset amount to
which the fee applies.                                                          

GSAM also provides investment advisory services to another mutual fund with a   
similar investment objective as the portions of the Fund's portfolio that GSAM  
manages, Goldman Sachs CORE U.S. Equity Fund ("CORE Equity Fund"). The CORE     
Equity Fund had total assets of approximately $674,323,000 as of August 31,     
2002. GSAM received a fee for advisory services from the CORE Equity Fund of    
0.75% as a percentage of the funds average net assets, 0.70% after waiver.      

The Blue Chip Fund paid brokerage commissions in an amount of $14,982 to Goldman
Sachs & Company  during the year ended October 31, 2001,  which was 4.33% of the
fund's aggregate brokerage commissions.                                         

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSAL 1. 

Approval of this proposal requires a "FOR" vote by a "majority of the           
outstanding voting securities" of the Fund, as provided in the 1940 Act. For    
this purpose, this means a "FOR" vote by the lesser of (i) more than 50% of the 
outstanding shares of the Fund, or (ii) 67% or more of the shares present at the
meeting, if more than 50% of the outstanding shares are present at the meeting  
in person or by proxy. Because abstentions and broker non-votes are treated as  
shares present but not voting, any abstentions and broker non-votes will have   
the effect of votes "AGAINST" this proposal.                                    

PROPOSAL 2

APPROVAL OF A PROPOSAL TO PERMIT THE MANAGER AND THE BOARD
TO APPOINT AND REPLACE SUB-ADVISERS, ENTER INTO SUB-ADVISORY
AGREEMENTS AND APPROVE AMENDMENTS TO SUB-ADVISORY 
AGREEMENTS WITHOUT FURTHER SHAREHOLDER APPROVAL 

In conformity with Section 15 of the 1940 Act, each Fund currently must obtain  
shareholder approval of a sub-advisory agreement in order to employ new         
sub-advisers, replace existing sub-advisers, change the terms of a sub-advisory 
agreement, or continue the employment of an existing sub-adviser when that      
sub-adviser's contract terminates because of an assignment. The Board has       
determined that it would be in the best interests of shareholders for the       
Manager to have the ability to appoint and replace sub-advisers for the Blue    
Chip Fund and to enter into, and approve amendment of, sub-advisory agreements, 
in the future without first obtaining shareholder approval. Thus, at its meeting
on September 9, 2002, the Board approved, and recommended that the Fund's       
shareholders also be asked to approve, a policy to permit the Manager, subject  
to prior Board approval, to appoint and replace sub-advisers, to enter into     
sub-advisory agreements, and to amend sub-advisory agreements on behalf of the  
Fund without further shareholder approval.                                      

On January 19, 1999, the SEC granted an order ("Order") permitting the Manager  
to change sub-advisers for the Fund without first calling a special shareholder 
meeting and obtaining shareholder approval. One of the conditions for approval  
by the SEC is that the shareholders approve this "manager-of-managers"          
arrangement. By approving this proposal, you will be authorizing the Manager to 
change, with prior Board approval, sub-advisers in the future without first     
obtaining shareholder approval.                                                 

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If the proposal is approved, the Manager and the Fund would be permitted to     
enter into new or amended sub-advisory agreements without obtaining shareholder 
approval. In all cases, however, approval by the Board, including the           
Independent Board Members, will continue to be required for any new or amended  
sub-advisory agreement.                                                         

If the proposal is not approved by shareholders of the Fund, then the Manager   
and the Fund would only enter into new or amended sub-advisory agreements with  
shareholder approval, adding additional time and expense to making a change     
deemed beneficial by the Fund's Board. Sub-Advisory agreements with affiliated  
sub-advisers would remain subject to the shareholder approval requirement even  
if the proposal is approved.                                                    

If the proposal is approved, and a new sub-adviser is subsequently appointed    
without shareholder approval, the Fund will send an information statement       
containing all of the relevant information that otherwise would be in proxy     
materials to shareholders within 90 days following the hiring of any new        
sub-adviser. The information statement will include, for example, disclosure as 
to the level of fees to be paid by the Manager to the sub-adviser.              

If this proposal is approved, amendments to the Management Agreement between the
Manager and the Fund will remain subject, where applicable, to the shareholder  
and Board approval requirements of Section 15 of the 1940 Act and approval of   
the proposal generally will permit the Board and the Manager to change the fees 
payable to a sub-adviser without shareholder approval, which in turn may result 
in a different net fee retained by the Manager. Such changes will not permit the
Board and the Manager to increase the rate of the fees payable by the Fund to   
the Manager under the agreement without first obtaining shareholder approval.   

The Board believes that it is in the best interests of the Fund's shareholders  
to allow the Manager the maximum flexibility to select, supervise, and evaluate 
sub-advisers without incurring the expense and potential delay of seeking       
specific shareholder approval.                                                  

Generally, a change in investment management arrangements involving one or more 
sub-advisers requires that a Fund must call and hold a meeting of the Fund's    
shareholders, create and distribute proxy materials, and arrange for the        
solicitation of voting instructions from shareholders. This process results in  
unnecessary administrative expenses to a Fund and may cause harmful delays in   
executing changes that the Board and the Manager have determined are necessary  
or desirable. These costs are generally borne entirely by the Fund. If the      
Manager and the Board can rely on the proposed policy, the Board would be able  
to act more quickly and with less expense to the Fund to appoint an unaffiliated
sub-adviser when the Board and the Manager believe that the appointment would   
benefit the Fund and its shareholders. If the Fund's shareholders are not       
satisfied with the sub-advisory arrangements that the Manager and the Board     
implement, they would, of course, be able to exchange or sell their shares.     

Also, the Board will oversee the sub-adviser selection process to ensure that   
shareholders' interests are protected whenever the Manager selects a sub-adviser
or modifies a sub-advisory agreement. The Board, including a majority of the    
Independent Board Members, will continue to evaluate and approve all new        
sub-advisory agreements as well as any modification to existing sub-advisory    
agreements. In each review, the Board will analyze all factors that it considers
to be relevant to the determination, including the nature, quality, and scope of
services provided by the sub-advisers. The Board will compare the investment    
performance of the assets managed by the sub-adviser with other accounts with   
similar investment objectives managed by other advisers and will review the     
sub-adviser's compliance with federal securities laws and regulations. The Board
believes that its review will ensure that the Manager continues to act in the   
best interests of the Fund and its shareholders.                                

The Order grants the Fund relief from Section 15(a) of the 1940 Act and certain 
rules thereunder in order for the Fund to operate in the manner described in    
this proposal, subject to certain conditions, including approval of this        
proposal by the Fund's shareholders. The fund will not rely on the Order unless 
all such conditions have been met. The conditions for the relief set forth in   
the Order are as follows:                                                       
. Before the fund may rely on the Order, the proposed "manager of managers" 
structure of the Fund will be approved by a majority of the Fund's      
outstanding voting securities, as defined in the 1940 Act.              
. The Fund will disclose in its prospectus the existence, substance, and    
effect of the Order. In addition, the Fund will hold itself out to the  
public as employing a "Manager of Managers" strategy. The prospectus    
    relating to the Fund will prominently disclose that the Manager has ultimate
responsibility to oversee the subadviser and recommend its hiring,      
termination, and replacement.                                           

9 

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  . The Manager will provide management and administrative services to the Fund,
   including overall supervisory responsibility for the general management and
 investment of the Fund, and, subject to review and approval by the Board,
will (i) set the Fund's overall investment strategies; (ii) evaluate,   
select, and recommend subadvisers to manage all or part of the Fund's   
 assets; (iii) when appropriate, allocate and reallocate the Fund's assets
among multiple subadvisers; (iv) monitor and evaluate the investment    
    performance of subadvisers; and (v) implement procedures reasonably designed
    to ensure that the subadvisers comply with the fund's investment objectives,
policies, and restrictions.                                             
. At all times, a majority of the Fund's Board will be Independent Board    
  Members, and the nomination of new or additional Independent Board Members
   will be placed within the discretion of the then existing Independent Board
Members.                                                                
  . The Manager will not enter into a subadvisory agreement with any sub-adviser
that is an affiliated person of the Fund or the Manager, as defined in  
Section 2(a) (3) of the 1940 Act, without such agreement, including the 
 compensation to be paid thereunder, being approved by the shareholders of
the Fund.                                                               
. When a sub-adviser change is proposed for the Fund with an affiliated     
sub-adviser, the Board, including a majority of the Independent Board   
Members, will make a separate finding, reflected in the Board's minutes,
  that such change is in the best interests of the Fund and its shareholders
 and does not involve a conflict of interest from which the Manager or the
affiliated subadviser derives an inappropriate advantage.               
. No director or officer of the Fund or director or officer of the Manager  
will own directly or indirectly (other than through a pooled investment 
    vehicle that is not controlled by any such director or officer) any interest
    in any sub-adviser for the Fund except for (i) ownership of interests in the
 Manager or any entity that controls, is controlled by, or is under common
control with the Manager or (ii) ownership of less than 1% of the       
  outstanding securities of any class of equity or debt of a publicly traded
company that is either a sub-adviser or any entity that controls, is    
  controlled by, or is under common control with a sub-adviser for the Fund.
  . Within 90 days of the hiring of any new subadviser, the Manager will furnish
  shareholders of the Fund all the information that would have been included
in a proxy statement.                                                   

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSAL 2. 

Approval of Proposal 2 will require a "FOR" vote by a "majority of the          
outstanding voting securities" of a Fund, as provided in the 1940 Act. For this 
purpose, this means a "FOR" vote by the lesser of (i) more than 50% of the      
outstanding shares of the Fund, or (ii) 67% or more of the shares present at the
meeting in person or by proxy. Because abstentions and broker non-votes are     
treated as shares present but not voting, any abstentions and broker non-votes  
will have the effect of votes "AGAINST" this proposal.                          

10

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EXHIBIT A 
PRINCIPAL PARTNERS BLUE CHIP FUND, INC. 
SUB-ADVISORY AGREEMENT

AGREEMENT effective as of the _ day of December, 2002, by and between PRINCIPAL 
MANAGEMENT CORPORATION, an Iowa corporation (hereinafter called "the Manager"), 
and Goldman Sachs Asset Management, a unit of the Investment Management Division
of Goldman, Sachs & Co., New York limited partnership organized under the laws  
of the State of New York (hereinafter called "the Sub-Advisor").                

W I T N E S S E T H:

WHEREAS, the Manager is the manager and investment adviser to the Principal     
Partners Blue Chip Fund, Inc., (the "Fund"), an open-end management investment  
company registered under the Investment Company Act of 1940, as amended (the    
"1940 Act"); and                                                                

WHEREAS, the Manager desires to retain the Sub-Advisor to render discretionary  
investment advisory services with respect to assets allocated by the Manager for
management by the Sub-Advisor (the "Managed Assets") for a portion of the       
portfolio of the Fund, which the Manager has agreed to provide to the Fund, and 
the Sub-Advisor desires to furnish such services; and                           

WHEREAS, The Manager has furnished the Sub-Advisor with copies properly         
certified or authenticated of each of the following and will promptly provide   
the Sub-Advisor with copies properly certified or authenticated of any amendment
or supplement thereto:                                                          

(a)  Management Agreement (the "Management Agreement") with the Fund; 

(b)  The Fund's registration statement and financial statements as    
filed with the Securities and Exchange Commission;          

(c)  The Fund's Articles of Incorporation and By-laws;                

(d)  Policies, procedures or instructions adopted or approved by the  
Board of Directors of the Fund relating to obligations and  
    services provided by the Sub-Advisor, provided that with respect
   to procedures governing transactions involving affiliates (such
as those adopted pursuant to 1940 Act Rules 17a-7, 17e-1 and
  10f-3), the Manager will identify any affiliate of the Manager
  and, the Fund, and provided further that the Sub-Advisor shall
not bear any responsibility and shall be released from any  
    obligation or cost which results from entering into a trade with
any affiliated entity not specifically identified to the    
    Sub-Advisor by the Manager, unless the entity is affiliated with
the Sub-Advisor.                                            

NOW, THEREFORE, in consideration of the premises and the terms and conditions   
hereinafter set forth, the parties agree as follows:                            

1.   Appointment of Sub-Advisor                                       

   In accordance with and subject to the Management Agreement, the
   Manager hereby appoints the Sub-Advisor to perform the services
       described in Section 2 below for investment and reinvestment of the
       Managed Assets which Sub-Advisor shall manage in its discretion for
      the period and on the terms hereinafter set forth. The Sub-Advisor
accepts such appointment and agrees to furnish the services 
   hereinafter set forth for the compensation herein provided. The
Sub-Advisor shall for all purposes herein be deemed to be an
     independent contractor and shall, except as expressly provided or
         authorized, have no authority to act for or represent the Fund or the
         Manager in any way or otherwise be deemed an agent of the Fund or the
Manager.                                                    

2.   Obligations of and Services to be Provided by the Sub-Advisor    

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The Sub-Advisor will:                                       

(a)  Provide investment advisory services, including but not
 limited to research, advice and supervision for the
Managed Assets.                                   

(b)  Furnish to the Board of Directors of the Fund for      
    approval (or any appropriate committee of such Board),
 and revise from time to time as economic conditions
    require, a recommended investment program for the Fund
  consistent with the Series' investment objective and
policies.                                         

(c)  Implement the approved investment program by placing   
    orders for the purchase and sale of securities without
    prior consultation with the Manager and without regard
  to the length of time the securities have been held,
 the resulting rate of portfolio turnover or any tax
     considerations, subject always to the provisions of the
Fund's Articles of Incorporation and Bylaws, the  
     requirements of the 1940 Act, as each of the same shall
be from time to time in effect.                   

(d)  Advise and assist the officers of the Fund, as         
    requested by the officers, in taking such steps as are
  reasonably necessary or appropriate to carry out the
decisions of its Board of Directors, and any      
 appropriate committees of such Board, regarding the
     general conduct of the investment business of the Fund.

(e)  Maintain, in connection with the Sub-Advisor's         
  investment advisory services obligations provided to
the Series, compliance with the 1940 Act and the  
regulations adopted by the Securities and Exchange
Commission thereunder and the Fund's investment   
 strategies and restrictions as stated in the Fund's
 prospectus and statement of additional information,
  subject to receipt of such additional information as
may be required from the Manager and provided in  
 accordance with Section 9(d) of this Agreement. The
   Sub-Advisor has no responsibility for the maintenance
   of Fund records except insofar as is directly related
to the Managed Assets.                            

(f)  Report to the Board of Directors of the Fund at such   
    times and in such detail as the Board of Directors may
  reasonably deem appropriate in order to enable it to
    determine that the investment policies, procedures and
approved investment program of the Fund are being 
observed.                                         

(g)  Upon request from the Manager, provide consultation for
the determination of the fair value of certain    
securities when reliable market quotations are not
     readily available for purposes of calculating net asset
value.                                            

(h)  Furnish, at its own expense, (i) all necessary         
investment and management facilities, including   
   salaries of clerical and other personnel required for
it to execute its duties faithfully, and (ii)     
administrative facilities, including bookkeeping, 
clerical personnel and equipment necessary for the
     efficient conduct of the investment advisory affairs of
    the Fund (excluding brokerage expenses and pricing and
bookkeeping services).                            

(i)  Open accounts with broker-dealers and futures          
commission merchants ("broker-dealers"), select   
     broker-dealers to effect all transactions for the Fund,
place all necessary orders with broker-dealers or 
issuers (including affiliated broker-dealers), and
 negotiate commissions, if applicable. To the extent
     consistent with applicable law, purchase or sell orders
 for the Fund may be aggregated with contemporaneous
purchase or sell orders of other clients of       
the Sub-Advisor. In such event, allocation of     
securities so sold or purchased, as well as the   
   expenses incurred in the transaction, will be made by
     the Sub-Advisor in the manner the Sub-Advisor considers
to be the most equitable and consistent with its  
     fiduciary obligations to the Fund and to other clients.
    The Sub-Advisor will report on such allocations at the
     request of the Manager, the Fund or the Fund's Board of
   Directors providing such information as the number of
  aggregated trades to which the Fund was a party, the
  broker-dealers to whom such trades were directed and
     the basis for the allocation for the aggregated trades.
  The Sub-Advisor shall use its best efforts to obtain
best execution of transactions for the Fund. The  
    Sub-Advisor may select brokers or dealers on the basis
     that they provide brokerage, research or other services
or products to the Sub-Advisor. To the extent     
     consistent with applicable law, the Sub-Advisor may pay
a broker or dealer an amount of commission for    
 effecting a securities transaction in excess of the
     amount of commission or dealer spread another broker or
dealer would have charged for effecting that      
     transaction if the Sub-Advisor determines in good faith
that such amount of commission is reasonable in   
 relation to the value of the brokerage and research
 products and/or services provided by such broker or
   dealer. This determination, with respect to brokerage
     and research products and/or services, may be viewed in
terms of either that particular transaction or the
    overall responsibilities which the Sub-Advisor and its
    affiliates have with respect to the Fund as well as to
accounts over which they exercise investment      
   discretion. Not all such services or products need be
used by the Sub-Advisor in managing the Fund. In  
     addition, joint repurchase or other accounts may not be
 utilized by the Fund except to the extent permitted
   under any exemptive order obtained by the Sub-Advisor
     provided that all conditions of such order are complied
with.                                             

(j)  Maintain all accounts, books and records with respect  
    to the Managed Assets as are required of an investment
    advisor of a registered investment company pursuant to
    the 1940 Act and Investment Advisor's Act of 1940 (the
    "Investment Advisor's Act"), and the rules thereunder,
     and furnish the Fund and the Manager with such periodic
and special reports as the Fund or Manager may    
     reasonably request. In compliance with the requirements
of Rule 31a-3 under the 1940 Act, the Sub-Advisor 
  hereby agrees that all records that it maintains for
the Fund are the property of the Fund, agrees to  
    preserve for the periods described by Rule 31a-2 under
  the 1940 Act copies of any records that it maintains
    for the Fund and that are required to be maintained by
  Rule 31a-1 under the 1940 Act, and further agrees to
surrender promptly to the Fund any records that it
    maintains for the Fund upon request by the Fund or the
Manager.                                          

(k)  Observe and comply with Rule 17j-1 under the 1940 Act  
   and the Sub-Advisor's Code of Ethics adopted pursuant
  to that Rule as the same may be amended from time to
 time. The Manager acknowledges receipt of a copy of
     Sub-Advisor's current Code of Ethics. Sub-Advisor shall
    promptly forward to the Manager a copy of any material
amendment to the Sub-Advisor's Code of Ethics.    

(l)  From time to time as the Manager or the Fund may       
request, furnish the requesting party reports on  
    portfolio transactions and reports on investments held
   by the Fund, all in such detail as the Manager or the
    Fund may reasonably request. The Sub-Advisor will make
   available its officers and employees to meet with the
     Fund's Board of Directors at the Fund's principal place
    of business on due notice to review the investments of
the Fund.                                         

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(m)  Provide such information as is customarily provided by 
   a sub-advisor and may be required for the Fund or the
 Manager to comply with their respective obligations
   under applicable laws, including, without limitation,
the Internal Revenue Code of 1986, as amended (the
     "Code"), the 1940 Act, the Investment Advisers Act, the
 Securities Act of 1933, as amended (the "Securities
   Act"), and any state securities laws, and any rule or
    regulation thereunder. Sub-Advisor will advise Manager
     of any changes in Sub-Advisor's general partners within
a reasonable time after any such change. Manager  
  acknowledges receipt of Part II of the Sub-Advisor's
   Form ADV more than 48 hours prior to the execution of
this Agreement.                                   

(n)  Have the responsibility and authority to vote proxies  
solicited by, or with respect to, the issuers of  
     securities held in the Fund. The Manager shall cause to
be forwarded to Sub-Advisor all proxy solicitation
 materials that it receives. The Manager understands
that the Sub-Advisor establishes from time to time
     guidelines for the voting of proxies and may employ the
    services of a proxy voting service to exercise proxies
in accordance with the Advisor's guidelines.      

3.   Compensation                                                     

          As full compensation for all services rendered and obligations assumed
      by the Sub-Advisor hereunder with respect to the Fund, the Manager
         shall pay the compensation specified in Appendix A to this Agreement.
         All rights of compensation under the Agreement for services performed
    as of the termination date shall survive the termination of this
Agreement.                                                  

4.   Liability of Sub-Advisor                                         

          Neither the Sub-Advisor nor any of its directors, officers, employees,
        agents or affiliates shall be liable to the Manager, the Fund or its
        shareholders for any loss suffered by the Manager or the Fund or its
          Shareholders resulting from any error of judgment or mistake of law or
         for any loss arising out of any investment or for any act or omission
      in carrying out its duties hereunder, except a loss resulting from
          willful misfeasance, bad faith or gross negligence in the performances
   of its duties, or from reckless disregard of, the duties of the
    Sub-Advisor or any of its directors, officers, employees, agents
 (excluding any broker-dealer selected by the Sub-Advisor), or
affiliates.                                                 

5.   Indemnification                                                  

        The Sub-Advisor also shall have no liability for any act or omission
        taken in respect of the non-GSAM portion of the Fund and the Manager
 agrees to indemnify and hold harmless the Sub-Advisor and its
      officers, directors, agents and employees from any losses, claims,
      damages, liabilities or litigation (including reasonable legal and
       other expenses) incurred by the Sub-Advisor that (I) were caused by
        any action or omission relating to the non-GSAM portion of the Fund;
      (ii) may be based upon any willful misfeasance, bad faith or gross
        negligence by the Manager (other than Sub-Advisor or its employees);
     or (iii) may be based upon any untrue statement or alleged untrue
        statement of a material fact contained in the registration statement
          or prospectus covering shares of the Fund, or any amendment thereof or
        any supplement thereto, or the omission or alleged omission to state
         therein a material fact required to be stated therein or necessary to
       make the statement therein not misleading, unless such statement or
       omission was made in reliance upon written information furnished to
          the Fund or the Manager or any affiliated person of the Manager by the
Sub-Advisor which itself is materially misleading.          

6    Supplemental Arrangements                                        

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  The Sub-Advisor may enter into arrangements with other persons
         affiliated with the Sub-Advisor or with unaffiliated third parties to
       better enable the Sub-Advisor to fulfill its obligations under this
          Agreement for the provision of certain personnel and facilities to the
        Sub? Advisor, subject to written notification to and approval of the
         Manager and, where required by applicable law, the Board of Directors
of the Fund.                                                

7.   Regulation                                                       

     The Sub-Advisor shall submit to all regulatory and administrative
          bodies having jurisdiction over the services provided pursuant to this
       Agreement any information, reports or other material which any such
body may request or require pursuant to applicable laws and 
regulations.                                                

8.   Duration and Termination of This Agreement                       

          This Agreement shall become effective on the latest of (i) the date of
     its execution, (ii) the date of its approval by a majority of the
       Board of Directors of the Fund, including approval by the vote of a
         majority of the Board of Directors of the Fund who are not interested
     persons of the Manager, the Sub-Advisor, Principal Life Insurance
          Company or the Fund cast in person at a meeting called for the purpose
        of voting on such approval or (iii) if required by the 1940 Act, the
date of its approval by a majority of the outstanding voting
        securities of the Fund. It shall continue in effect, thereafter from
          year to year provided that the continuance is specifically approved at
       least annually either by the Board of Directors of the Fund or by a
       vote of a majority of the outstanding voting securities of the Fund
         and in either event by a vote of a majority of the Board of Directors
        of the Fund who are not interested persons of the Manager, Principal
         Life Insurance Company, the Sub-Advisor or the Fund cast in person at
a meeting called for the purpose of voting on such approval.

        If the shareholders of the Fund fail to approve the Agreement or any
       continuance of the Agreement in accordance with the requirements of
          the 1940 Act, the Sub-Advisor will continue to act as Sub-Advisor with
         respect to the Fund pending the required approval of the Agreement or
          its continuance or of any contract with the Sub-Advisor or a different
          manager or sub-advisor or other definitive action in the manner and to
      the extent permitted by the 1940 Act and the rules and regulations
thereunder.                                                 

       This Agreement may be terminated at any time without the payment of
any penalty by the Board of Directors of the Fund or by the 
        Sub-Advisor, the Manager or by vote of a majority of the outstanding
      voting securities of the Series on sixty days written notice. This
Agreement shall automatically terminate in the event of its 
     assignment. In interpreting the provisions of this Section 7, the
       definitions contained in Section 2(a) of the 1940 Act (particularly
    the definitions of "interested person," "assignment" and "voting
security") shall be applied.                                

9.   Severability. If any provision of this Agreement shall be held or
     made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.  

10.  Amendment of this Agreement                                      

    No material amendment of this Agreement shall be effective until
    approved, if required by the 1940 Act or the rules, regulations,
          interpretations or orders issued thereunder, by vote of the holders of
      a majority of the outstanding voting securities of the Fund and by
        vote of a majority of the Board of Directors of the Fund who are not
      interested persons of the Manager, the Sub-Advisor, Principal Life
        Insurance Company or the Fund cast in person at a meeting called for
        the purpose of voting on such approval, and such amendment is signed
by both parties.                                            

11.  General Provisions                                               

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(a)  Each party agrees to perform such further acts and     
execute such further documents as are necessary to
     effectuate the purposes hereof. This Agreement shall be
    construed and enforced in accordance with and governed
    by the laws of the State of Iowa. The captions in this
   Agreement are included for convenience only and in no
   way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.    

(b)  Any notice under this Agreement shall be in writing,   
   addressed and delivered or mailed postage pre-paid to
     the other party at such address as such other party may
designate for the receipt of such notices. Until  
  further notice to the other party, it is agreed that
  the address of the Manager for this purpose shall be
     Principal Financial Group, Des Moines, Iowa 50392-0200,
 and the address of the Sub-Advisor shall be One New
York Plaza, 41st Floor, New York, NY 10004.       

(c)  Custody, Delivery and Receipt of Securities. The       
    Manager shall designate one or more custodians to hold
   the Managed Assets. The custodians, as so designated,
will be responsible for the custody, receipt and  
 delivery of securities and other assets of the Fund
     including the Managed Assets, and the Sub-Advisor shall
  have no authority, responsibility or obligation with
respect to the custody, receipt or delivery of    
  securities or other assets of the Fund including the
Managed Assets. In the event that any cash or     
    securities of a Fund are delivered to the Sub-Advisor,
     it will promptly deliver the same over to the custodian
for the benefit of and in the name of the Fund.   

       Unless otherwise required by local custom, all securities
        transactions for the Managed Assets will be consummated by
              payment to or delivery by a Fund of cash or securities due to or
from the Managed Assets.                          

              Repurchase agreements, including tri-party repurchase agreements
         and other trading agreements, may be entered into by a Fund
            acting through designated officers or agents; custodians under
               tri-party repurchase agreements will act as sub-custodians of the
Fund.                                             

(d)  The Sub-Advisor will promptly notify the Manager in    
writing of the occurrence of any of the following 
events:                                           

(1)  the Sub-Advisor fails to be registered as an 
investment adviser under the Investment 
Advisers Act or under the laws of any   
jurisdiction in which the Sub-Advisor is
  required to be registered as an investment
   advisor in order to perform its obligations
under this Agreement.                   

(2)  the Sub-Advisor is served or otherwise       
receives notice of any action, suit,    
    proceeding, inquiry or investigation, at law
    or in equity, before or by any court, public
   board or body, involving the affairs of the
Fund.                                   

(e)  The Manager shall provide (or cause the Fund custodian 
to provide) timely information to the Sub-Advisor 
     regarding such matters as the composition of the assets
   of the Fund, cash requirements and cash available for
investment in the Fund, any applicable investment 
restrictions imposed by state insurance laws and  
 regulations, reports covering the classification of
     securities for purposes of Subchapter M of the Internal
  Revenue Code and Treasury Regulations Section 1.817,
and all other reasonable information as           
 may be necessary for the Sub-Advisor to perform its
duties and responsibilities hereunder.            

(f)  Neither the Manager, Principal Mutual Life Insurance   
  Company, nor the Fund will publish or distribute any
    information, including but not limited to registration
statements, advertising or promotional material,  
     regarding the provision of investment advisory services
   by the Sub-Advisor pursuant to this Agreement, or use
    in advertising, publicity or otherwise the name of the
Sub-Advisor or any of its affiliates, or any trade
    name, trademark, trade device, service mark, symbol or
    any abbreviation, contraction or simulation thereof of
 the Sub-Advisor or its affiliates without the prior
written consent of the Sub-Advisor. This provision
includes any written, electronic or video type of 
material intended for clients or brokers.         
Notwithstanding the foregoing, the Manager may    
distribute information regarding the provision of 
    investment advisory services by the Sub-Advisor to the
   Fund's board of Directors ("Board Materials") without
the prior written consent of the Sub-Advisor.     

(g)  The Manager shall perform quarterly and annual tax     
compliance tests to ensure that the Fund is in    
  compliance with Subchapter M of the Internal Revenue
Code ("IRC") and Section 817(h) of the IRC. In    
connection with such compliance tests, the Manager
  shall prepare and provide reports to the Sub-Advisor
within 10 business days of a calendar quarter end 
relating to the diversification of the Fund under 
    Subchapter M and Section 817(h). The Sub-Advisor shall
review such reports for purposes of determining   
   compliance with such diversification requirements. If
 it is determined that the Fund is not in compliance
    with the requirements noted above, the Sub-Advisor, in
    consultation with the Manager, will take prompt action
    to bring the Fund back into compliance within the time
permitted under the IRC, provided that any such   
    non-compliance was caused by Sub-Advisor in respect of
the Managed Assets.                               

(h)  This Agreement contains the entire understanding and   
agreement of the parties.                         

12.  Other Expenses.                                                  

        The Manager shall pay all expenses relating to mailing prospectuses,
         statements of additional information, proxy solicitation material and
shareholder reports to shareholders.                        

13.  Confidential Information.                                        

          Sub-Advisor shall not identify the Manager or the Fund as a client, or
       disclose any information about the Manager or the Fund to any third
       party except as may be required by law, regulatory proceeding or as
may be expressly permitted by the Manager.                  

     It is understood that the name "Goldman, Sachs & Co." or "Goldman
     Sachs" or any derivative thereof, any tradename, trademark, trade
        device, service mark, symbol or logo associated with those names are
         the valuable property of the Sub-Advisor and that the Manager has the
         right to use such name (or derivative or logo), in offering materials
        or promotional or sales-related materials of the Fund, only with the
    prior written approval of the Sub-Advisor and for so long as the
Sub-Advisor is Sub-Advisor to the Series and the Fund. Upon 
       termination of this Agreement between the Fund, the Manager and the
      Sub-Advisor, the Fund and the Manager shall forthwith cease to use
such name (or derivative or logo).                          

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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date   
first above written.                                                            

PRINCIPAL MANAGEMENT CORPORATION                                                

By _______________________________________________________                      
Ernest H. Gillum, Vice President                                                

GOLDMAN SACHS ASSET MANAGEMENT, A SEPARATE OPERATING                            
DIVISION OF GOLDMAN SACHS CO., NEW YORK                                   

By _________________________________________________________                    

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APPENDIX A

The Sub-Advisor shall serve as investment sub-advisor for the Fund. The Manager 
will pay the Sub-Advisor, as full compensation for all services provided under  
this Agreement, a fee computed at an annual rate as follows (the "Sub-Advisor   
Percentage Fee"):                                                               

                                                                [Download Table]

SUB-ADVISOR'S FEE AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS
--------------------------------------                       
                                                             
First $500 million                   0.15%                   
Next $1 billion                      0.12%                   
Over $1.5 billion                    0.10%                   

The Sub-Advisor Percentage Fee shall be accrued for each calendar day and the   
sum of the daily fee accruals shall be paid monthly to the Sub-Advisor. The     
daily fee accruals will be computed by multiplying the fraction of one over the 
number of calendar days in the year by the applicable annual rate described     
above and multiplying this product by the net assets of the Fund as determined  
in accordance with the Fund's prospectus and statement of additional information
as of the close of business on the previous business day on which the Fund was  
open for business.                                                              

If this Agreement becomes effective or terminates before the end of any month,  
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may 
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.                   

PRE 14A 18th “Page” of 24 TOC 1st Previous Next ↓Bottom Just 18th
EXHIBIT B 
PRINCIPAL PARTNERS BLUE CHIP FUND, INC. 
SUB-ADVISORY AGREEMENT

AGREEMENT effective as of the __ day of December, 2002, by and between PRINCIPAL
MANAGEMENT CORPORATION, an Iowa corporation (hereinafter called "the Manager"), 
and Wellington Asset Management, LLP (hereinafter called "the Sub-Advisor").    

W I T N E S S E T H:

WHEREAS, the Manager is the manager and investment adviser to Principal Partners
Blue Chip Fund, Inc., (the "Fund"), an open-end management investment company   
registered under the Investment Company Act of 1940, as amended (the "1940      
Act"); and                                                                      

WHEREAS, the Manager desires to retain the Sub-Advisor to furnish it with       
portfolio selection and related research and statistical services in connection 
with the investment advisory services for a portion of the portfolio of the     
Fund, which the Manager has agreed to provide to the Fund, and the Sub-Advisor  
desires to furnish such services; and                                           

WHEREAS, The Manager has furnished the Sub-Advisor with copies properly         
certified or authenticated of each of the following and will promptly provide   
the Sub-Advisor with copies properly certified or authenticated of any amendment
or supplement thereto:                                                          

(a)  Management Agreement (the "Management Agreement") with the Fund; 

(b)  The Fund's registration statement and financial statements as    
filed with the Securities and Exchange Commission (the      
"Registration Statement");                                  

(c)  The Fund's Articles of Incorporation and By-laws;                

(d)  Policies, procedures or instructions adopted or approved by the  
Board of Directors of the Fund relating to obligations and  
services provided by the Sub-Advisor.                       

NOW, THEREFORE, in consideration of the premises and the terms and conditions   
hereinafter set forth, the parties agree as follows:                            

1.   Appointment of Sub-Advisor                                       

   In accordance with and subject to the Management Agreement, the
   Manager hereby appoints the Sub-Advisor to perform the services
       described in Section 2 below for investment and reinvestment of the
       securities and other assets of the Fund, subject to the control and
       direction of the Manager and the Fund's Board of Directors, for the
          period and on the terms hereinafter set forth. The Sub-Advisor accepts
       such appointment and agrees to furnish the services hereinafter set
         forth for the compensation herein provided. The Sub-Advisor shall for
     all purposes herein be deemed to be an independent contractor and
        shall, except as expressly provided or authorized, have no authority
 to act for or represent the Fund or the Manager in any way or
otherwise be deemed an agent of the Fund or the Manager.    

2.   Obligations of and Services to be Provided by the Sub-Advisor    

The Sub-Advisor will:                                       

(a)  Provide investment advisory services, including but not
 limited to research, advice and supervision for the
Fund; or such portions of the Fund's assets as the
Manager shall specify from time to time.          

PRE 14A 19th “Page” of 24 TOC 1st Previous Next ↓Bottom Just 19th
(b)  Furnish to the Board of Directors of the Fund for      
    approval (or any appropriate committee of such Board),
 and revise from time to time as economic conditions
    require, a recommended investment program for the Fund
 consistent with the Fund's investment objective and
policies.                                         

(c)  Implement the approved investment program by placing   
    orders for the purchase and sale of securities without
    prior consultation with the Manager and without regard
  to the length of time the securities have been held,
 the resulting rate of portfolio turnover or any tax
     considerations, subject always to the provisions of the
 Fund's Articles of Incorporation and Bylaws and the
     requirements of the 1940 Act, as each of the same shall
be from time to time in effect.                   

(d)  Advise and assist the officers of the Fund, as         
    requested by the officers, in taking such steps as are
  reasonably necessary or appropriate to carry out the
decisions of its Board of Directors, and any      
 appropriate committees of such Board, regarding the
     general conduct of the investment business of the Fund.

(e)  Maintain, in connection with the Sub-Advisor's         
  investment advisory services obligations provided to
the Fund, compliance with the 1940 Act and the    
regulations adopted by the Securities and Exchange
Commission thereunder and the Fund's investment   
 strategies and restrictions as stated in the Fund's
 prospectus and statement of additional information,
  subject to receipt of such additional information as
may be required from the Manager and provided in  
  accordance with Section 12(d) of this Agreement. The
   Sub-Advisor has no responsibility for the maintenance
   of Fund records except insofar as is directly related
to the services provided to the Fund.             

(f)  Report to the Board of Directors of the Fund at such   
    times and in such detail as the Board of Directors may
  reasonably deem appropriate in order to enable it to
    determine that the investment policies, procedures and
approved investment program of the Fund are being 
observed.                                         

(g)  Upon request, provide assistance and recommendations   
for the determination of the fair value of certain
securities when reliable market quotations are not
     readily available for purposes of calculating net asset
value in accordance with procedures and methods   
established by the Fund's Board of Directors.     

(h)  Furnish, at its own expense, (i) all necessary         
investment and management facilities, including   
   salaries of clerical and other personnel required for
it to execute its duties faithfully, and (ii)     
administrative facilities, including bookkeeping, 
clerical personnel and equipment necessary for the
     efficient conduct of the investment advisory affairs of
the Fund (excluding custodial services, brokerage 
expenses and pricing and bookkeeping services).   

(i)  Open accounts with broker-dealers and futures          
commission merchants ("broker-dealers"), select   
 broker-dealers to effect transactions for the Fund,
place all necessary orders with broker-dealers or 
issuers (including affiliated broker-dealers), and
 negotiate commissions, if applicable. To the extent
     consistent with applicable law, purchase or sell orders
 for the Fund may be aggregated with contemporaneous
purchase or sell orders of other clients of the   
    Sub-Advisor. In such event allocation of securities so
    sold or purchased, as well as the expenses incurred in
     the transaction, will be made by the Sub-Advisor in the
manner the Sub-Advisor considers to be the most   
     equitable and consistent with its fiduciary obligations
    to the Fund and to other clients. The Sub-Advisor will
report on such allocations at the request of the  
Manager, the Fund or the Fund's Board of Directors
    providing such information as the number of aggregated
trades to which the Fund was a party, the         
  broker-dealers to whom such trades were directed and
     the basis for the allocation for the aggregated trades.
  The Sub-Advisor shall use its best efforts to obtain
    execution of transactions for the Fund at prices which
  are advantageous to the Fund and at commission rates
that are reasonable in relation to the benefits   
   received. However, the Sub-Advisor may select brokers
  or dealers on the basis that they provide brokerage,
research or other services or products to the     
   Sub-Advisor. To the extent consistent with applicable
law, the Sub-Advisor may pay a broker or dealer an
amount of commission for effecting a securities   
  transaction in excess of the amount of commission or
dealer spread another broker or dealer would have 
charged for effecting that transaction if the     
   Sub-Advisor determines in good faith that such amount
     of commission is reasonable in relation to the value of
 the brokerage and research products and/or services
    provided by such broker or dealer. This determination,
    with respect to brokerage and research products and/or
services, may be viewed in terms of either that   
    particular transaction or the overall responsibilities
which the Sub-Advisor and its affiliates have with
   respect to the Fund as well as to accounts over which
they exercise investment discretion. Not all such 
     services or products need be used by the Sub-Advisor in
 managing the Fund. In addition, joint repurchase or
   other accounts may not be utilized by the Fund except
to the extent permitted under any exemptive order 
obtained by the Sub-Advisor provided that all     
conditions of such order are complied with.       

(j)  Maintain all accounts, books and records with respect  
 to the Sub-Adviser's management of this Fund as are
required of an investment advisor of a registered 
investment company pursuant to the 1940 Act and   
Investment Advisers Act of 1940 (the "Investment  
   Advisers Act"), and the rules thereunder, and furnish
     the Fund and the Manager with such periodic and special
    reports as the Fund or Manager may reasonably request.
     In compliance with the requirements of Rule 31a-3 under
  the 1940 Act, the Sub-Advisor hereby agrees that all
     records that it maintains for the Fund are the property
of the Fund, agrees to preserve for the periods   
    described by Rule 31a-2 under the 1940 Act any records
     that it maintains for the Fund and that are required to
 be maintained by Rule 31a-1 under the 1940 Act, and
  further agrees to surrender promptly to the Fund any
    records that it maintains for the Fund upon request by
the Fund or the Manager.                          

(k)  Observe and comply with Rule 17j-1 under the 1940 Act  
   and the Sub-Advisor's Code of Ethics adopted pursuant
  to that Rule as the same may be amended from time to
 time. The Manager acknowledges receipt of a copy of
     Sub-Advisor's current Code of Ethics. Sub-Advisor shall
    promptly forward to the Manager a copy of any material
amendment to the Sub-Advisor's Code of Ethics.    

(l)  From time to time as the Manager or the Fund may       
request, furnish the requesting party reports on  
    portfolio transactions and reports on investments held
   by the Fund, all in such detail as the Manager or the
    Fund may reasonably request. The Sub-Advisor will make
   available its officers and employees to meet with the
     Fund's Board of Directors at the Fund's principal place
    of business on due notice to review the investments of
the Fund.                                         

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(m)  Provide such information as is customarily provided by 
   a sub-advisor and may be required for the Fund or the
 Manager to comply with their respective obligations
   under applicable laws, including, without limitation,
the Internal Revenue Code of 1986, as amended (the
     "Code"), the 1940 Act, the Investment Advisers Act, the
 Securities Act of 1933, as amended (the "Securities
   Act"), and any state securities laws, and any rule or
    regulation thereunder. Manager acknowledges receipt of
    Sub-Advisor's Form ADV more than 48 hours prior to the
execution of this Agreement.                      

(n)  Have the responsibility and authority to vote proxies  
solicited by, or with respect to, the issuers of  
     securities held in the Fund. The Manager shall cause to
be forwarded to Sub-Advisor all proxy solicitation
     materials that it receives and shall assist Sub-Advisor
 in its efforts to conduct the proxy voting process.

3.   Compensation                                                     

          As full compensation for all services rendered and obligations assumed
      by the Sub-Advisor hereunder with respect to the Fund, the Manager
         shall pay the compensation specified in Appendix A to this Agreement.

4.   Liability                                                        

(a)  Except as may otherwise be provided by the 1940 Act or 
any other federal securities law, neither the     
Sub-Advisor nor any of its partners, officers,    
employees, consultants, or agents thereof (its    
  "Affiliates") shall be liable for any loses, claims,
     damages, liabilities or litigation (including legal and
    other expenses) incurred or suffered by the Manager or
the Fund as a result of any error of judgment or  
 mistake of law by the Sub-Advisor or its Affiliates
   with respect to the Fund, except that nothing in this
  Agreement shall operate or purport to operate in any
   way to exculpate, waive or limit the liability of the
    Sub-Advisor or its Affiliates for, and the Sub-Advisor
shall indemnify and hold harmless the Fund, the   
 Manager, all affiliated persons thereof (within the
 meaning of Section 2(a)(3) of the 1940 Act) and all
    controlling persons (as described in Section 15 of the
  Securities Act of 1933, as amended (the "1933 Act"))
   (collectively, "Manager Indemnities") against any and
    all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) to
     which any of the Manager Indemnities may become subject
under the 1933 Act, the 1940 Act, the Investment  
   Advisers Act or under any other statue, at common law
     or otherwise arising out of or based on (i) any willful
misconduct, bad faith, reckless disregard or gross
     negligence of the Sub-Advisor in the performance of any
of its duties or obligations hereunder or (ii) any
  untrue statement of a material fact contained in the
Registration Statement, proxy materials, reports, 
  advertisements, sales literature, or other materials
pertaining to the Series or the omission to state 
    therein a material fact known to the Sub-Advisor which
    was required to be stated therein or necessary to make
the statements therein not misleading, if such    
statement or omission was made in reliance upon   
     information furnished to the Manager or the Fund by the
Sub-Advisor Indemnities (as defined below) for use
therein.                                          

(b)  Except as may otherwise be provided by the 1940 Act or 
   any other federal securities law, the Manager and the
Fund shall not be liable for any loses, claims,   
     damages, liabilities or litigation (including legal and
     other expenses) incurred or suffered by the Sub-Advisor
as a result of any error of judgment or           
mistake of law by the Manager with respect to the 
 Series, except that nothing in this Agreement shall
    operate or purport to operate in any way to exculpate,
  waive or limit the liability of the Manager for, and
the Manager shall indemnify and hold harmless the 
     Sub-Advisor, all affiliated persons thereof (within the
 meaning of Section 2(a)(3) of the 1940 Act) and all
    controlling persons (as described in Section 15 of the
 1933 Act) (collectively, "Sub-Advisor Indemnities")
against any and all losses, claims, damages,      
   liabilities or litigation (including reasonable legal
 and other expenses) to which any of the Sub-Advisor
    Indemnities may become subject under the 1933 Act, the
1940 Act, the Investment Advisers Act or under any
     other statue, at common law or otherwise arising out of
or based on (i) any willful misconduct, bad faith,
   reckless disregard or gross negligence of the Manager
    in the performance of any of its duties or obligations
  hereunder or (ii) any untrue statement of a material
 fact contained in the Registration Statement, proxy
   materials, reports, advertisements, sales literature,
or other materials pertaining to the Fund or the  
    omission to state therein a material fact known to the
Manager which was required to be stated therein or
necessary to make the statements therein not      
     misleading, unless such statement or omission concerned
   the Sub-Advisor and was made in reliance upon written
     information furnished to the Manager or the Fund by the
Sub-Advisor Indemnities (as defined below) for use
therein.                                          

5.   Supplemental Arrangements                                        

  The Sub-Advisor may enter into arrangements with other persons
         affiliated with the Sub-Advisor or with unaffiliated third parties to
       better enable the Sub-Advisor to fulfill its obligations under this
          Agreement for the provision of certain personnel and facilities to the
        Sub- Advisor, subject to written notification to and approval of the
         Manager and, where required by applicable law, the Board of Directors
of the Fund.                                                

6.   Regulation                                                       

     The Sub-Advisor shall submit to all regulatory and administrative
          bodies having jurisdiction over the services provided pursuant to this
       Agreement any information, reports or other material which any such
body may request or require pursuant to applicable laws and 
regulations.                                                

7.   Representations of the Manager                                   

The Manager represents and warrants as follows:             

(a)  The Manager (i) is registered as an investment advisor 
    under the Investment Advisers Act and will continue to
    be so registered for as long as this Agreement remains
  in effect; (ii) is not prohibited by the 1940 Act or
the Investment Advisers Act from performing the   
     services contemplated by this Agreement, (iii) has met,
   and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable 
federal or state requirements, or the applicable  
requirements of any regulatory or industry        
    self-regulatory agency necessary to be met in order to
  perform the services contemplated by this Agreement;
  (iv) has the authority to enter into and perform the
   services contemplated by this Agreement; and (v) will
  promptly notify the Sub-Advisor of the occurrence of
any event that would disqualify the Manager from  
serving as an investment advisor of an investment 
 company pursuant to Section 9(a) of the 1940 Act or
otherwise.                                        

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(b)  That (i) this Agreement has been approved by a majority
of the Board of Directors of the Fund, including  
approval by the vote of a majority of the Board of
     Directors of the Fund who are not interested persons of
    the Manager, the Sub-Advisor, Principal Life Insurance
    Company or the Fund cast in person at a meeting called
 for the purpose of voting on such approval and (ii)
either (a) this Agreement has been approved by a  
  majority of the outstanding voting securities of the
  Series or (b) the Fund has obtained exemptive relief
from the Securities and Exchange Commission to the
effect that no such approval is necessary.        

(c)  The Manager agrees that neither it nor any of its      
     affiliates will in any way refer directly or indirectly
     to its relationship with the Sub-Advisor, or any of its
affiliates, in offering, marketing, or other      
     promotional materials without the prior written consent
of the Sub-Advisor.                               

8.   References to the Sub-Advisor                                    

       During the term of this Agreement, the Manager agrees to furnish to
   the Sub-Advisor at its principal office all prospectuses, proxy
   statements, reports to shareholders, sales literature, or other
          material prepared for distribution to sales personnel, shareholders of
         the Fund or the public, which refer to the Sub-Advisor or its clients
        in any way, prior to use thereof and not to use such material if the
         Sub-Advisor reasonably objects in writing five business days (or such
     time as may be mutually agreed upon) after receipt thereof. Sales
literature may be furnished to the Sub-Advisor hereunder by 
        first-class or overnight mail, electronic or facsimile transmission,
or had delivery.                                            

9.   The Sub-Advisor's Services Are Not Exclusive                     

         Nothing in this Agreement shall limit or restrict the right of any of
       the Sub-Advisor's partners, officers, or employees to engage in any
        other business or to devote his or her time and attention in part to
         the management or other aspects of any business, whether of a similar
        or a dissimilar nature, or limit or restrict the Sub-Advisor's right
        to engage in any other business or to render services or any kind to
any other corporation, form, individual, or association.    

10.  Duration and Termination of This Agreement                       

          This Agreement shall become effective on the latest of (i) the date of
     its execution, (ii) the date of its approval by a majority of the
       Board of Directors of the Fund, including approval by the vote of a
         majority of the Board of Directors of the Fund who are not interested
     persons of the Manager, the Sub-Advisor, Principal Life Insurance
          Company or the Fund cast in person at a meeting called for the purpose
        of voting on such approval or (iii) if required by the 1940 Act, the
date of its approval by a majority of the outstanding voting
       securities of the Fund. It shall continue in effect thereafter from
          year to year provided that the continuance is specifically approved at
       least annually either by the Board of Directors of the Fund or by a
       vote of a majority of the outstanding voting securities of the Fund
         and in either event by a vote of a majority of the Board of Directors
        of the Fund who are not interested persons of the Manager, Principal
         Life Insurance Company, the Sub-Advisor or the Fund cast in person at
a meeting called for the purpose of voting on such approval.

        If the shareholders of the Fund fail to approve the Agreement or any
       continuance of the Agreement in accordance with the requirements of
          the 1940 Act, the Sub-Advisor will continue to act as Sub-Advisor with
         respect to the Fund pending the required approval of the Agreement or
          its continuance or of any contract with the Sub-Advisor or a different
         manager or sub-advisor or other definitive action; provided, that the
          compensation received by the Sub-Advisor in respect to the Fund during
    such period is in compliance with Rule 15a-4 under the 1940 Act.

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       This Agreement may be terminated at any time without the payment of
any penalty by the Board of Directors of the Fund or by the 
        Sub-Advisor, the Manager or by vote of a majority of the outstanding
    voting securities of the Fund on sixty days written notice. This
Agreement shall automatically terminate in the event of its 
     assignment. In interpreting the provisions of this Section 7, the
       definitions contained in Section 2(a) of the 1940 Act (particularly
    the definitions of "interested person," "assignment" and "voting
security") shall be applied.                                

11.  Amendment of this Agreement                                      

    No material amendment of this Agreement shall be effective until
    approved, if required by the 1940 Act or the rules, regulations,
          interpretations or orders issued thereunder, by vote of the holders of
      a majority of the outstanding voting securities of the Fund and by
        vote of a majority of the Board of Directors of the Fund who are not
      interested persons of the Manager, the Sub-Advisor, Principal Life
        Insurance Company or the Fund cast in person at a meeting called for
        the purpose of voting on such approval, and such amendment is signed
by both parties.                                            

12.  General Provisions                                               

(a)  Each party agrees to perform such further acts and     
execute such further documents as are necessary to
     effectuate the purposes hereof. This Agreement shall be
    construed and enforced in accordance with and governed
    by the laws of the State of Iowa. The captions in this
   Agreement are included for convenience only and in no
   way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.    

(b)  Any notice under this Agreement shall be in writing,   
   addressed and delivered or mailed postage pre-paid to
     the other party at such address as such other party may
designate for the receipt of such notices. Until  
  further notice to the other party, it is agreed that
  the address of the Manager for this purpose shall be
     Principal Financial Group, Des Moines, Iowa 50392-0200,
  Attention: Ernest H. Gillum, Vice President, and the
address of the Sub-Advisor shall be Wellington    
  Management Company, LLP, 75 State Street, Boston, MA
  02109, Attention: John E. Bruno, Regulatory Affairs.

(c)  The Sub-Advisor will promptly notify the Manager in    
writing of the occurrence of any of the following 
events:                                           

(1)  the Sub-Advisor fails to be registered as an 
investment adviser under the Investment 
Advisers Act or under the laws of any   
jurisdiction in which the Sub-Advisor is
  required to be registered as an investment
   advisor in order to perform its obligations
under this Agreement.                   

(2)  the Sub-Advisor is served or otherwise       
receives notice of any action, suit,    
    proceeding, inquiry or investigation, at law
    or in equity, before or by any court, public
   board or body, involving the affairs of the
Fund.                                   

(d)  The Manager shall provide (or cause the Fund custodian 
to provide) timely information to the Sub-Advisor 
     regarding such matters as the composition of the assets
   of the Fund, cash requirements and cash available for
investment in the Fund, and all other reasonable  
    information as may be necessary for the Sub-Advisor to
perform its duties and responsibilities hereunder.

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(e)  This Agreement contains the entire understanding and   
agreement of the parties.                         

(f)  It is understood and agreed that no (i) failure or     
    delay to exercise, nor (ii) single or partial exercise
of any right, power, or privilege given or arising
under this Agreement shall operate as a waiver or 
    future to exercise any such right, power or privilege.

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date   
first above written.                                                            

PRINCIPAL MANAGEMENT CORPORATION                                                

By ________________________________________                                     
Ernest H. Gillum, Vice President                                                

WELLINGTON MANAGEMENT COMPANY, LLP                                              

By ________________________________________                                     

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APPENDIX A

The Sub-Advisor shall serve as investment sub-advisor for the Fund. The Manager 
will pay the Sub-Advisor, as full compensation for all services provided under  
this Agreement, a fee computed at an annual rate as follows (the "Sub-Advisor   
Percentage Fee"):                                                               

                                                                [Download Table]

SUB-ADVISOR'S FEE AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS
--------------------------------------                       
                                                             
First $500 million                   0.25%                   
Over $500 million                    0.20%                   

The Sub-Advisor Percentage Fee shall be accrued for each calendar day and the   
sum of the daily fee accruals shall be paid monthly to the Sub-Advisor. The     
daily fee accruals will be computed by multiplying the fraction of one over the 
number of calendar days in the year by the applicable annual rate described     
above and multiplying this product by the net assets of the Fund as determined  
in accordance with the Fund's prospectus and statement of additional information
as of the close of business on the previous business day on which the Fund was  
open for business.                                                              

If this Agreement becomes effective or terminates before the end of any month,  
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may 
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.                   

Principal                                                                       
Mutual                                                                      
Funds                                                                       

TWO LOW-COST WAYS TO CAST YOUR PROXY VOTE 

It's Fast and Convenient. The accompanying Proxy Statement outlines important   
issues affecting your Principal Partners Blue Chip Growth Fund account(s). Help 
us save time and postage costs by voting on the Internet or by telephone. Each  
method is available 24 hours a day and will ensure that your vote is confirmed  
and posted immediately. DO NOT MAIL THE PROXY CARD IF YOU ARE VOTING BY INTERNET
OR TELEPHONE.                                                                   

 VOTING BY PHONE

.    Read the Proxy Statement and have this card at hand.                       
.    Call toll-free 1-888-221-0697                                              
.    Enter your Control Number and follow the recorded instructions             
.    Do not return this paper ballot                                            

VOTING ON THE INTERNET

.    Read the Proxy Statement and have this card at hand.                       
.    Log on to www.proxyweb.com                                                 
.    Enter your Control Number and follow the on-screen instructions            
.    Do not return this paper ballot                                            

VOTE YOUR PROXY TODAY!

CONTROL NUMBER: 99999999999 

 PRINCIPAL PARTNERS BLUE CHIP FUND, INC.
 SPECIAL MEETING OF SHAREHOLDERS NOVEMBER 20, 2002
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The  undersigned  shareholder  appoints  Arthur S. Filean,  Ernest H. Gillum and
Michael  J.  Beer,  and  each  of  them  separately,   Proxies,  with  power  of
substitution, and authorizes them to represent and to vote as designated on this
ballot,  at the meeting of shareholders of the Fund to be held November 20, 2002
at 2:00 p.m., C.D. T., and at any  adjournments  thereof,  all the shares of the
Fund that the  undersigned  shareholder  would be entitled to vote if personally
present.                                                                        

Check the appropriate box on the ballot, date the ballot and sign exactly as    
your name appears. Your signature acknowledges receipt of Notice of the Special 
Meeting of Shareholders and Proxy Statement dated September 30, 2002. Shares    
will be voted as you instruct. If no direction is made, the proxy will be voted 
FOR the proposals listed. In their discretion the Proxies will also be          
authorized to vote upon such other matters that may properly come before the    
meeting.                                                                        

Date_________________, 2002                                                     

---------------------------------------------                                   
Signature of Shareholder(s) (if held jointly)                                   

NOTE:  PLEASE SIGN  EXACTLY AS YOUR NAME  APPEARS ON THIS  BALLOT.  PLEASE MARK,
SIGN, DATE AND MAIL YOUR PROXY BALLOT IN THE ENCLOSED POSTAGE-PAID  ENVELOPE. If
shares are held jointly, either party may sign. If executed by a corporation, an
authorized officer must sign.  Executors,  administrators and trustees should so
indicate when signing.                                                          

Please fill in box as shown using black or blue ink or number 2 pencil.         
PLEASE DO NOT USE FINE POINT PENS.                                              

The Board of Directors recommends that shareholders vote FOR the following      
proposals. Sign the proxy ballot and return it as soon as possible in the       
enclosed envelope.                                                              

PROPOSAL:                                                                       

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

Logo                                                                            
Principal                                                                       
Mutual                                                                    
Funds                                                                     

VOTING HAS NEVER BEEN EASIER! 

This EzVote Consolidated Proxy covers all of your accounts registered to the    
same Social Securities or Tax I.D. or plan number at this address. You may vote 
all of these accounts on the consolidated ballot at the bottom of the page or   
you may cast a consolidated vote by phone or on the Internet using your EzVote  
Control Number.                                                                 

YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY!

 VOTING BY PHONE

.    Read the Proxy Statement and have this card at hand.                       
.    Call toll-free 1-888-221-0697                                              
.    Enter your Control Number and follow the recorded instructions             
.    Do not return this paper ballot                                            

VOTING ON THE INTERNET

.    Read the Proxy Statement and have this card at hand.                       
.    Log on to www.proxyweb.com                                                 
.    Enter your Control Number and follow the on-screen instructions            
.    Do not return this paper ballot                                            

 Your EzVote Control Number is
XXX XXX XXX XXX XX

EzVoteSM CONSOLIDATED PROXY BALLOT

By voting and signing the consolidated  proxy ballot,  you are voting all of the
affected  accounts  in the  same  manner.  if you  desire  to vote  each of your
accounts  separately,  use the  individual  ballots on the reverse  side of this
card.                                                                           

 PRINCIPAL PARTNERS BLUE CHIP FUND, INC.
 SPECIAL MEETING OF SHAREHOLDERS NOVEMBER 20, 2002
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The  undersigned  shareholder  appoints  Arthur S. Filean,  Ernest H. Gillum and
Michael  J.  Beer,  and  each  of  them  separately,   Proxies,  with  power  of
substitution, and authorizes them to represent and to vote as designated on this
ballot,  at the meeting of shareholders of the Fund to be held November 20, 2002
at 2:00 p.m., C.D. T., and at any  adjournments  thereof,  all the shares of the
Fund that the  undersigned  shareholder  would be entitled to vote if personally
present.                                                                        

Check the appropriate box on the ballot, date the ballot and sign exactly as    
your name appears. Your signature acknowledges receipt of Notice of the Special 
Meeting of Shareholders and Proxy Statement dated September 30, 2002. Shares    
will be voted as you instruct. If no direction is made, the proxy will be voted 
FOR the proposal(s) listed. In their discretion the Proxies will also be        
authorized to vote upon such other matters that may properly come before the    
meeting.                                                                        

The Board of Directors recommends that shareholders vote FOR the following      
proposals. Sign the proxy ballot and return it as soon as possible in the       
enclosed envelope.                                                              

Please fill in box as shown using black or blue ink or number 2 pencil.         
PLEASE DO NOT USE FINE POINT PENS.                                              

PROPOSAL:                                                                       

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

Date_________________, 2002                                                     

NOTE:  PLEASE SIGN  EXACTLY AS YOUR NAME  APPEARS ON THIS  BALLOT.  PLEASE MARK,
SIGN, DATE AND MAIL YOUR PROXY BALLOT IN THE ENCLOSED POSTAGE-PAID  ENVELOPE. If
shares are held jointly, either party may sign. If executed by a corporation, an
authorized officer must sign.  Executors,  administrators and trustees should so
indicate when signing.                                                          

---------------------------------------------                                   
Signature(s) (and Titles(s), if applicable).                                    

INDIVIDUAL PROXY BALLOTS
IMPORTANT: USE THESE BALLOTS ONLY IF YOU WISH TO VOTE EACH ACCOUNT SEPARATELY 

The Board of Directors recommends that shareholders vote FOR the following      
proposals. Sign the proxy ballot and return it as soon as possible in the       
enclosed envelope.                                                              
Please fill in box as shown using black or blue ink or number 2 pencil.         
PLEASE DO NOT USE FINE POINT PENS.                                              

XXX XXXXXXXXXX XXX                                                              

Account Registration                                                            
Prints Here                                                                     

CONTROL NUMBER                            
XXX XXX XXX XXX XX                        

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

XXX XXXXXXXXXX XXX                                                              

Account Registration                                                            
Prints Here                                                                     

CONTROL NUMBER                            
XXX XXX XXX XXX XX                        

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

XXX XXXXXXXXXX XXX                                                              

Account Registration                                                            
Prints Here                                                                     

CONTROL NUMBER                            
XXX XXX XXX XXX XX                        

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

XXX XXXXXXXXXX XXX                                                              

Account Registration                                                            
Prints Here                                                                     

CONTROL NUMBER                            
XXX XXX XXX XXX XX                        

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

XXX XXXXXXXXXX XXX                                                              

Account Registration                                                            
Prints Here                                                                     

CONTROL NUMBER                            
XXX XXX XXX XXX XX                        

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

XXX XXXXXXXXXX XXX                                                              

Account Registration                                                            
Prints Here                                                                     

CONTROL NUMBER                            
XXX XXX XXX XXX XX                        

1.   Approval of sub-advisory agreements between Principal Management           
Corporation, the Principal Partners Blue Chip Fund, Inc.'s ("Blue Chip
    Fund") investment adviser, and two sub-advisory firms, Goldman Sachs Asset
     Management a unit of the Investment Management Division of Goldman, Sachs &
Co., and Wellington Management Company, LLP.                          

For_______            Against_______            Abstain__________               

2.   Approval of a proposal to permit Principal Management Corporation, with the
     approval of the Blue Chip Fund's Board of Directors, to appoint and replace
     sub-advisers, and to enter into and amend sub-advisory agreements on behalf
of the Blue Chip Fund without further shareholder approval.           

For_______            Against_______            Abstain__________               

NOTE:  PLEASE SIGN  EXACTLY AS YOUR NAME  APPEARS ON THIS  BALLOT.  PLEASE MARK,
SIGN, DATE AND MAIL YOUR PROXY BALLOT IN THE ENCLOSED POSTAGE-PAID  ENVELOPE. If
shares are held jointly, either party may sign. If executed by a corporation, an
authorized officer must sign.  Executors,  administrators and trustees should so
indicate when signing.                                                          

---------------------------------------------                                   
Signature(s) (and Titles(s), if applicable).

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘PRE 14A’ Filing	Date	First	Last	Other Filings

	12/15/02	1	5
	11/20/02	1	24
For Period End:	10/3/02			DEF 14A
	10/1/02	1	4	497, DEF 14A
	9/30/02	24
Filed on:	9/20/02
	9/16/02	2	5
	9/9/02	5	8
	8/31/02	8
	6/30/02	7	8
	10/31/01	8		24F-2NT, N-30D, N-30D/A, NSAR-B
	1/19/99	8
				List all Filings

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Filing Submission 0000870786-02-000184 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Principal Partners Blue Chip Fund Inc/MD – ‘PRE 14A’ for 10/3/02

On: Friday, 9/20/02, at 4:34pm ET · For: 10/3/02 · Accession #: 870786-2-184 · File #: 811-06263

Preliminary Proxy Solicitation Material — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents