PRINCIPAL FUNDS, INC.
AMENDED & RESTATED SUB-ADVISORY AGREEMENT
AMENDED & RESTATED SUB ADVISORY AGREEMENT (the
"Agreement") executed as of the 1st day of January, 2018, by and between
PRINCIPAL GLOBAL INVESTORS, LLC, a Delaware limited liability
company (hereinafter called the "Manager"), and ORGIN ASSET
MANAGEMENT LLP, a limited liability partnership organized under the laws
of the United Kingdom (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 each
series of the Principal Funds, 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 in connection with the investment advisory services for
each series of the Fund identified in Appendix A (hereinafter called the
"Series"), which the Manager has agreed to provide to the Fund, and the
Sub-Advisor desires to furnish such services on the terms and conditions
set forth herein; and
WHEREAS, the Manager and the Sub-Advisor agree to amend and
restate the Amended and Restated Sub-Advisory Agreement between
the Manager (having assumed the rights and obligation of Principal
Management Corporation) and the Sub-Advisor dated January 23, 2015
with this Agreement; and
WHEREAS, the Manager has furnished the Sub-Advisor with copies
properly certified or authenticated of each of the following:
(a) The Amended and Restated Management Agreement between the
Fund and the Manager (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.
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 Series, subject to the
supervision 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 provide such services with respect to the
portion of the assets of the Series allocated to it for management
from time to time by the Manager. The Sub-Advisor shall for all
purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized herein, 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:
(i) Provide investment advisory services, including but not
limited to research, advice and supervision for the Series.
(ii) Furnish to the Board of Directors for approval (or any
appropriate committee of such Board of Directors), and
revise from time to time as economic conditions require, a
recommended investment program for the Series
consistent with the Series' written investment objective and
policies.
(iii) Implement the approved investment program by placing
orders for the purchase, sale and exchange of securities,
"commodity interests" (as defined in the Commodity
Exchange Act, as amended) and other financial
instruments without prior consultation with the Manager
and without regard to the length of time the securities and
other financial instruments have been held, the resulting
rate of portfolio turnover or any tax considerations, subject
always to (i) the provisions of the Fund's Articles of
Incorporation and Bylaws and (ii) the requirements of the
1940 Act, as each of the same shall be from time to time in
effect.
(iv) Advise and assist the officers of the Fund, as reasonably
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 Series.
(v) Maintain, in connection with the Sub-Advisor's investment
advisory services provided to the Series, its compliance
with the 1940 Act and the regulations adopted by the
Securities and Exchange Commission ("SEC") thereunder
and the Series' investment strategies and restrictions as
stated in the Fund's prospectus and statement of additional
information (together , the "Registration Statement"),
subject to receipt of such additional information as may be
required from the Manager and provided in accordance
with Section 11(d) of this Agreement.
(vi) 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 Series are being
observed.
(vii) Upon request, provide reasonable assistance in 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 Board of
Directors.
(viii) 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 its duties under this Agreement.
(ix) Open accounts with Foreign Account Tax Compliance Act
("FATCA") compliant broker-dealers, futures commission
merchants, banks and other financial institutions
(collectively "broker-dealers"), select broker-dealers to
effect all transactions for the Series, 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 Series 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 of the Sub-Advisor and its affiliates over time.
The Manager recognizes that, in some cases, this
procedure may limit the size of the position that may be
acquired or sold for the Series and that aggregation of
orders may not result in more favorable pricing or lower
brokerage commissions in all instances. At the Manager's
request, the Sub-Advisor will provide the Manager with the
information required pursuant to Rule 31a-1(b)(9) of the
1940 Act. The Sub-Advisor will effect transactions with
those broker-dealers which it believes provide favorable
net prices and are capable of providing efficient
executions, taking into consideration, among other things,
order size, difficulty of execution, the operational
capabilities, facilities and financial condition of the broker-
dealer involved, whether that broker-dealer has risked its
own capital in positioning a block of securities or other
assets, and the prior experience of the broker-dealer in
effecting transactions of the relevant types. The Sub-
Advisor's primary objective will be to obtain best execution
with respect to all transactions for the Series. However,
the Sub-Advisor may select brokers-dealers on the basis
that they provide brokerage, research or other services or
products to the Sub-Advisor or its affiliates. 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- 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-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 Series and other
accounts over which they exercise investment discretion.
Not all such services or products need be used by the Sub-
Advisor in managing the Series. In addition, joint
repurchase or other accounts may not be utilized by the
Series except to the extent permitted under any exemptive
order obtained by the Sub-Advisor provided that all
conditions of such order are complied with.
(x) Section 871(m) Transactions: Sub-Advisor shall not on
behalf of the Fund enter into certain U.S. dividend
equivalent payment transactions described in Section
871(m) of the U.S. Internal Revenue Code and the
regulations thereunder ("871(m) Transaction") with a
foreign counterparty unless: (i), Sub-Advisor adheres to the
ISDA 2015 Section 871(m) Protocol on behalf of the Fund,
and (ii), The foreign counterparty to the 871(m) Transaction
provides Sub-Advisor with a properly completed Form W-
8IMY certifying to its status as a qualified derivatives
dealer ("QDD").
(xi) Maintain all accounts, books and records with respect to
the Series as are required of an investment adviser of a
registered investment company pursuant to the 1940 Act
and the Investment Advisers Act of 1940, as amended (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 Series 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 Series upon request by the Fund or the
Manager. The Sub-Advisor may retain copies of any such
records.
(xii) Observe and comply with Rule 17j-1 under the 1940 Act
and the Sub-Advisor's code of ethics (the "Code of Ethics")
adopted pursuant to Rule 17j-1 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.
(xiii) 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
Series, all in such detail as the Manager or the Fund may
reasonably request. The Sub-Advisor will make available
its personnel to meet with the Fund's Board of Directors at
the Fund's principal place of business on reasonable prior
notice to review the investments of the Series.
(xiv) Provide such additional information in the possession of
the Sub-Advisor or its affiliates 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 Senior Management (i.e.
Chief Investment Officer and/or Chief Executive Officer)
within a reasonable time after any such change. Manager
acknowledges receipt of Sub-Advisor's Form ADV more
than 48 hours prior to the execution of this Agreement.
(xv) Have the responsibility and authority to vote proxies
solicited by, or with respect to, the issuers of securities
held in the Series in accordance with the Sub-Advisor's
proxy voting policy as most recently provided to the
Manager. The Sub-Advisor's obligations in the previous
sentence are contingent upon its timely receipt of such
proxy solicitation materials from the Manager. 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. Prohibited Conduct
In providing the services described in this agreement, the Sub-
Advisor will not consult with any other investment advisory firm that
provides investment advisory services to any investment company
sponsored by Principal Life Insurance Company regarding
transactions for the Fund in securities or other assets. The
Manager agrees to provide a list of such other investment advisory
firms to the Sub-Advisor, such list to be promptly updated by the
Manager upon any changes thereto.
4. 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.
5. Liability of Sub-Advisor
Neither the Sub-Advisor nor any of its partners, members,
directors, officers, employees, agents or affiliates shall be liable to
the Manager, the Board of Directors, the Fund or its shareholders
for any claim, expense or other loss suffered by the Manager or
the Fund resulting from any error of judgment made in the good
faith exercise of the Sub-Advisor's duties under this Agreement or
as a result of the failure by the Manager or any of its affiliates to
comply with the terms of this Agreement except for losses resulting
from willful misfeasance, bad faith or gross negligence of, or from
reckless disregard of, the duties of the Sub-Advisor or any of its
partners, members, directors, officers, employees, agents
(excluding any broker-dealer selected by the Sub-Advisor), or
affiliates.
6. Trade Errors
The Sub-Advisor will notify the Manager of any Trade Error(s),
regardless of materiality, promptly upon the discovery such Trade
Error(s) by the Sub-Advisor. Notwithstanding Section 5, the Sub-
Advisor will be shall be liable to the Manager, the Fund or its
shareholders for any loss suffered by the Manager or the Fund
resulting from Trade Errors. Any gains which occur due to a Trade
Error shall be retained by the Fund. For purposes under this
Section, Trade Errors are defined as errors (regardless of cause,
and including, but not limited to errors caused, at least in part, by
manual error or systems-related issues such as coding,
unauthorized access, or security breach) due to (i) erroneous
orders by the Sub-Advisor for the Series that result in the purchase
or sale of securities that were not intended to be purchased or sold;
(ii) erroneous orders by the Sub-Advisor that result in the purchase
or sale of securities for the Series in an unintended amount or
price; or (iii) purchases or sales of financial instruments which
violate the investment limitations or restrictions disclosed in the
Registration Statement and/or imposed by applicable law or
regulation (calculated at the Sub-Advisor's portfolio level), unless
otherwise agreed to in writing.
7. 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.
8. 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 require pursuant to applicable laws and regulations.
9. Duration and Termination of This Agreement
This Agreement shall become effective with respect to a Series as
of the corresponding date set forth on Appendix B to this
Agreement, as may be amended from time to time, and, unless
otherwise terminated with respect to such Series, shall continue in
effect thereafter for the initial term set forth on Appendix B to this
Agreement, and thereafter from year to year, provided that in each
case the continuance is specifically approved within the period
required by the 1940 Act either by the Board of Directors of the
Fund or by a vote of a majority of the outstanding voting securities
of the Series 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 a Series 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 Series 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 Series during such period is in compliance
with Rule 15a-4 under the 1940 Act.
This Agreement may be terminated with respect to a Series at any
time without the payment of any penalty by the Board of Directors
of the Fund or by the Sub-Advisor, or 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 9, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person," "assignment,"
"voting security" and "majority of the outstanding voting securities")
shall be applied.
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 Series and
by vote of a majority of the Board of Directors 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
(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, Xxx Xxxxxx, Xxxx 00000-0000, and the
address of the Sub-Advisor shall be Origin Asset
Management LLP, Xxx Xxxxx Xxxx, Xxxxxx, XX0X 0XX, Xxxxxx
Xxxxxxx.
(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,
specifically naming the Fund or involving the affairs of the
Fund.
(d) The Manager shall provide (or cause the Series custodian to
provide) timely information to the Sub-Advisor regarding such
matters as the composition of the assets of the Series, cash
requirements and cash available for investment in the Series, and
all other reasonable information as may be necessary for the Sub-
Advisor to perform its duties and responsibilities hereunder.
(e) The Sub-Advisor represents that it will not enter into any
agreement, oral or written, or other understanding under which
the Fund directs or is expected to direct portfolio securities
transactions, or any remuneration, to a broker or dealer in
consideration for the promotion or sale of Fund shares or shares
issued by any other registered investment company. Sub-Advisor
further represents that it is contrary to the Sub-Advisor's policies
to permit those who select brokers or dealers for execution of
fund portfolio securities transactions to take into account the
broker or dealer's promotion or sale of Fund shares or shares
issued by any other registered investment company.
(f) The Sub-Advisor acknowledges that the Series is relying on the
exclusion from the definition of "commodity pool
operator" under Section 4.5 of the General Regulations under
the Commodity Exchange Act ("Rule 4.5"). The Sub-
Advisor will not exceed the de minimis trading limits set forth in
Rule 4.5(c)(2) unless otherwise agreed to in writing.
(g) The Sub-Advisor agrees that neither it nor any of its affiliates will in
any way refer directly or indirectly to its relationship with the Fund,
the Series, or the Manager or any of their respective affiliates in
offering, marketing or other promotional materials without the
express written consent of the Manager; provided, however, that
the Manager consents to the Sub-Advisor's use of the Manager's
name and the Fund name in the Sub-Advisor's representative client
list that may be distributed to potential and existing clients so long
as this Agreement is in effect.
(h) The Manager shall promptly notify the Sub-Advisor of the
occurrence of any event that would disqualify the Manager
from serving as an investment adviser of an investment company
pursuant to Section 9(a) of the 1940 Act or other applicable
law, rule or regulation.
(i) The Sub-Advisor shall promptly notify the Manager of the
occurrence of any event that would disqualify the Sub-
Advisor from serving as an investment adviser of an investment
company pursuant to Section 9(a) of the 1940 Act or other
applicable law, rule or regulation.
(j) Each party represents, warrants and covenants to the other party
that (i) it has all requisite power and authority to enter into
and perform its obligations under the Agreement, (ii) it has taken
all necessary corporate action to authorize its execution,
delivery and performance of this Agreement, (iii) it has duly
executed and delivered the Agreement, and (iv) this Agreement
constitutes its legal, valid and binding agreement,
enforceable against it in accordance with its terms.
(k) This Agreement contains the entire understanding and
agreement of the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
on the date first above written.
PRINCIPAL GLOBAL
INVESTORS, LLC
By /s/ Xxxxxxx X. Beer
Name: Xxxxxxx X. Beer
Title: Executive
Director - Principal Funds
By /s/ Xxxx X. Xxxxxx
Name: Xxxx X.
Xxxxxx
Title: Counsel
Origin Asset Management
LLP
By /s/ Lindsay Xxxxx
Xxxxxxxx
Name: Lindsay Xxxxx
Xxxxxxxx
Title: Partner & Chief
Operating Officer
By /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Partner
APPENDIX A
[Intentionally Omitted]
APPENDIX B
Effective Date and Initial Term of Sub-Advisory Agreement for each Series
Series
Effective Date
Initial Term
International Fund I
06/03/2014
2 Years
Origin Emerging Markets Fund
12/30/2015
2 Years
