CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS OF PRINCIPAL
FAMILY OF MUTUAL FUNDS
I. Covered Officers/Purpose of the Code
The Principal Family of Mutual Funds code of ethics (this "Code") for the
mutual funds within the complex (collectively "Funds" and each, "Company")
applies to the Company's Principal Executive Officer, Principal Financial
Officer and Controller (the "Covered Officers" each of whom is set forth in
Exhibit A) for the purpose of promoting:
o honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
o full, fair, accurate, timely and understandable disclosure in reports
and documents that a registrant files with, or submits to, the
Securities and Exchange Commission ("SEC") and in other public
communications made by the Company.
o compliance with applicable laws and governmental rules and
regulations;
o the prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
o accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business ethics
and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.
II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of
Interest
Overview. A "conflict of interest" occurs when a Covered Officer's private
interest interferes with the interests of, or the Covered Officer's service to,
the Company. For example, a conflict of interest would arise if a Covered
Officer, or a member of the Covered Officer's family, receives improper personal
benefits as a result of the Covered Officer's position with the Company.
Certain conflicts of interest arise out of the relationships between
Covered Officers and the Company and already are subject to conflict of interest
provisions in the Investment Company Act of 1940 ("Investment Company Act") and
the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example,
Covered Officers may not individually engage in certain transactions (such as
the purchase or sale of securities or other property) with the Company because
of their status as "affiliated persons" of the Company. The Company's and
Principal Management Corporation's (the "Investment Adviser") compliance
programs and procedures are designed to prevent, or identify and correct,
violations of these provisions. This Code does not, and is not intended to,
repeat or replace these programs and procedures, and such conflicts fall outside
of the parameters of this Code.
Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Company and the Investment Adviser of which the Covered Officers may
also be directors, officers or employees. As a result, this Code recognizes that
the Covered Officers will, in the normal course of their duties (whether
formally for the Company or for the adviser, or for both), be involved in
establishing policies and implementing decisions that will have different
effects on the Investment Adviser and the Company. The participation of the
Covered Officers in such activities is inherent in the contractual relationship
between the Company and the Investment Adviser and is consistent with the
performance by the Covered Officers of their duties as officers of the Company.
Thus, if performed in conformity with the provisions of the Investment Company
Act and the Investment Advisers Act, such activities will be deemed to have been
handled ethically. In addition, the Funds' Boards of Directors ("Boards")
recognize that the Covered Officers may also be officers or employees of one or
more other investment companies covered by this or other codes.
The Code covers other conflicts of interest, even if such conflicts of
interest are not subject to provisions in the Investment Company Act and the
Investment Advisers Act. The following list provides examples of conflicts of
interest under the Code, but Covered Officers should keep in mind that these
examples are not exhaustive. The overarching principle is that the personal
interest of a Covered Officer should not be placed improperly before the
interest of the Company.
Each Covered Officer must:
o not use his or her personal influence or personal relationships
improperly to influence investment decisions or financial reporting by
the Company whereby the Covered Officer would benefit personally to
the detriment of the Company;
o not cause the Company to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the
benefit the Company;
o not retaliate against any other Covered Officer or any employee of the
Funds or their affiliated persons for reports of potential violations
that are made in good faith.
There are some conflicts of interest it is advisable for Covered Officers
to discuss in advance with Counsel for the Funds, if material. Examples of these
include:
o service as a director on the board of any public or private company;
o any ownership interest in, or any consulting or employment
relationship with, any of the Company's service providers, other than
its principal underwriter, administrator, the Investment Adviser or
any affiliated person thereof;
o a direct or indirect financial interest in commissions, transaction
charges or spreads paid by the Company for effecting portfolio
transactions or for selling or redeeming shares other than an interest
arising from the Covered Officer's employment such as compensation or
equity ownership.
III. Disclosure and Compliance
o each Covered Officer should familiarize himself with the disclosure
requirements generally applicable to the Company;
o each Covered Officer should not knowingly misrepresent, or cause
others to misrepresent, facts about the Company to others, whether
within or outside the Company, including to the Company's directors
and auditors, and to governmental regulators and self-regulatory
organizations;
o each Covered Officer should, to the extent appropriate within his or
her area of responsibility, consult with other officers and employees
of the Funds and the adviser with the goal of promoting full, fair,
accurate, timely and understandable disclosure in the reports and
documents the Funds file with, or submit to, the SEC and in other
public communications made by the Funds; and
o it is the responsibility of each Covered Officer to promote compliance
with the standards and restrictions imposed by applicable laws, rules
and regulations.
IV. Reporting and Accountability
Each Covered Officer must:
o upon adoption of the Code (or thereafter as applicable, upon becoming
a Covered Officer), affirm in writing to the Board that he or she has
received, read, and understands the Code;
o annually thereafter affirm to the Board that he or she has complied
with the requirements of the Code; and
o notify Counsel to the Funds promptly if he or she knows of any
violation of this Code. Failure to do so is itself a violation of this
Code.
o report at least annually possible conflicts of interest by completing
the Principal Mutual Fund Complex Director and Officer Questionnaire.
Counsel to the Funds is responsible for applying this Code to specific
situations in which questions are presented under it and has the authority to
interpret this Code in any particular situation. However, any approvals or
waivers sought by the Covered Officers will be considered by the Audit and
Nominating Committee (the "Committee").
The Funds will follow these procedures in investigating and enforcing this
Code:
o Counsel to the Funds will take all appropriate action to investigate
any potential violations reported to Counsel;
o if, after such investigation, Counsel to the Funds believes that no
violation has occurred, Counsel is not required to take any further
action;
o any matter that Counsel believes is a violation will be reported to
the Committee;
o if the Committee concurs that a violation has occurred, it will take
appropriate action, which may include review of, and appropriate
modifications to, applicable policies and procedures; notification to
appropriate personnel of the investment adviser or its board; or a
recommendation to dismiss the Covered Officer;
o the Committee will be responsible for granting waivers, as
appropriate; and
o any changes to or waivers of this Code will, to the extent required,
be disclosed as provided by SEC rules.
V. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Funds for
purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms
applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Funds, the Funds' adviser, principal underwriter,
or other service providers govern or purport to govern the behavior or
activities of the Covered Officers who are subject to this Code, they are
superseded by this Code to the extent that they overlap or conflict with the
provisions of this Code. The Funds' and their investment adviser's and principal
underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act
are separate requirements applying to the Covered Officers and others, and are
not part of this Code.
VI. Amendments
Any amendments to this Code, other than amendments to Exhibit A, must be
approved or ratified by a majority vote of the Committee.
VII. Confidentiality
All reports and records prepared or maintained pursuant to this Code will
be considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code, such matters shall not be
disclosed to anyone other than the Committee, Board, Counsel to the Funds and
officers of the Investment Adviser.
VIII. Internal Use
The Code is intended solely for the internal use by the Funds and does not
constitute an admission, by or on behalf of any Company, as to any fact,
circumstance, or legal conclusion.
9/8/03
Exhibit A
Persons Covered by this Code of Ethics
Principal Executive Officer: Ralph Eucher, President
Principal Financial Officer: Jill Brown, Chief Financial Officer
Controller: Layne Rasmussen, Controller