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AMENDED AND
RESTATED SUB-
ADVISORY
AGREEMENT
WELLINGTON
MANAGEMENT
COMPANY LLP SUB-
ADVISED FUND
AGREEMENT executed as of the 1st day of January, 2017, by and
between PRINCIPAL MANAGEMENT CORPORATION, an Iowa
corporation (hereinafter called "the Manager"), and WELLINGTON
MANAGEMENT COMPANY LLP, a Delaware Limited Liability
Partnership (hereinafter called "the Sub-Advisor).
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:
WHEREAS, the Manager is the manager and investment adviser to
each Fund 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 and related research and statistical services
in connection with the investment advisory services for each series
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; 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.
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 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 Series.
(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 Series.
(e) 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 thereunder and the Series'
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 11(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 it provides to the Series.
(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 Series are being observed.
(g) Upon request, provide 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 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 its duties under this Agreement.
(i) Open accounts with broker-dealers and futures commission
merchants ("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. 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. 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 Series 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
Series at prices which are advantageous to the Series 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 Series 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 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.
(j) Maintain all accounts, books and records with respect to the
Series 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 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; provided, however, that the Sub-Advisor may retain
a copy of such records if required under applicable law.
(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 Series,
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 Series.
(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 Senior Management (i.e. Chief
Investment Officer and 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.
(n) Have the responsibility and authority to vote proxies
solicited by, or with respect to, the issuers of securities held
in the Series. 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.
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 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 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 directors, officers, employees, agents (excluding any
broker-dealer selected by the Sub-Advisor), or affiliates.
6. Indemnification
The Manager agrees to indemnify and hold harmless the Sub-
Advisor from and against any and all claims, losses, liabilities or
damages (including reasonable attorneys' fees and other related
expenses), ("Losses") howsoever arising, from or in connection
with this Agreement or the performance by the Sub-Advisor of its
duties hereunder, so long as the Sub-Advisor shall, after receipt of
notice of any claim or commencement of any action, promptly
notify the Manager in writing of the claim or commencement of
such action. The Manager shall not be liable for any settlement of
any claim or action effected without its written consent. Nothing
contained herein shall require the Manager to indemnify the Sub-
Advisor for Losses resulting from the Sub-Advisor's willful
misfeasance, bad faith or gross negligence in the performance of
its duties or from its reckless disregard of its obligations and duties
under this Agreement.
7. Supplemental Arrangements
The Sub-Advisor may engage any of its affiliates to assist it with
providing services under this Agreement, provided that the Sub-
Advisor will remain liable to the Manager at all times for the
performance of its obligations under the Agreement, will remain
responsible for the acts and omissions of such affiliates, and will
be solely responsible for any fees owed to such affiliates;
provided, that doing so will not involve an "assignment" as such
term is understood under the 1940 Act. The Sub-Advisor may also
enter into arrangements 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.
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 may request or require pursuant to applicable laws
and regulations.
9. Duration and Termination of This Agreement
No amendment of this Agreement shall be effective unless in
writing and signed by both parties. 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 such 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 such Series during
such period is in compliance with Rule 1Sa-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, 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 8; 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 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. Additional Series
In the event the Manager wishes to appoint the Sub-Advisor to
perform the services described in this Agreement with respect to
one or more additional Series of the Fund after the effective date
of this Agreement, such Series will become a Series under this
Agreement upon approval of this Agreement in the manner
required by the 1940 Act and the amendment of Appendices A
and B hereto.
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,
Xxx Xxxxxx, Xxxx 00000-0000, and the address of the Sub-
Advisor shall be Wellington Management Company, LLP,
000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 0000X ATTN:
Legal and Compliance.
(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 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 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.
(g) The parties acknowledge and agree that during the term of
this agreement the parties may have access to information
that is proprietary or confidential to both parties, or their
respective affiliates ("Confidential Information"). The parties
agree that their respective officers and employees shall treat
all
such Confidential Information as confidential
and proprietary
and will not use or disclose Confidential Information for any
purpose other than in connection with the exercise of their
responsibilities under this Agreement, except in the following
circumstances: (i) where any Confidential Information is
made publicly available other than in breach of this
Agreement; and (ii) where disclosure is required by law or
requested by any governmental or regulatory authority that
may have jurisdiction over either party, in which case such
party shall request confidential treatment of such information
whenever possible. For the avoidance of doubt, the
Manager agrees not to make use of the investment
decisions or recommendations of the Sub-Advisor, other
than with respect to each relevant Series, without the written
consent of the Sub-Advisor. In addition, each party shall use
its best efforts to ensure that any of its agents or affiliates
who may gain access to Confidential Information shall be
made aware of its proprietary nature and shall likewise treat
it as confidential.
(h) This agreement contains the entire understanding and
agreement of the parties.
13. CFTC
The Sub-Advisor acknowledges Manager's
representation that the Global Multi-Strategy Fund
series is a "commodity pool" under the Commodity
Exchange Act (the "CEA") and that the Manager does
not rely on the exclusion from the definition of
"commodity pool operator" under Section 4.5 of the
General Regulations under the CEA.
The Sub-Advisor represents that it is a commodity
trading advisor duly registered with the Commodity
Futures Trading Commission (the "CFTC") and is a
member of the National Futures Association (the
"NFA") or is relying on an exemption from registration
as a commodity trading advisor. As applicable, the
Sub-Advisor shall maintain such registration and
membership or continue to qualify for an exemption
from registration as a commodity trading advisor during
the term of this Agreement. Further, the Sub-Advisor
agrees to notify the Manager within a commercially
reasonable time upon (i) a statutory disqualification of
the Sub-Advisor under Sections 8a(2) or 8a(3) of the
CEA, (ii) a suspension or revocation of the Sub-
Advisor's commodity trading advisor registration or
NFA membership, or (iii) unless prohibited, the
institution of an action or proceeding that the Sub-
Advisor reasonably believes is likely to lead to a
statutory disqualification under the CEA or an
investigation involving the affairs of the Fund by the
CFTC or NFA.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the date first above written.
PRINCIPAL MANAGEMENT
CORPORATION
By /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx,
Counsel
By /s/ Xxxxxxxx X. Block
Xxxxxxxx X. Block,
Counsel
WELLINGTON MANAGEMENT
COMPANY LLP
By /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Senior Managing
Director
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APPENDIX B
Effective Date and Initial Term of
Sub-Advisory Agreement for
each Series
Series
Effective Date
Initial Term
Global Multi-Strategy Fund
10/24/2011
Two Years
1
