PRINCIPAL EXCHANGE-TRADED FUNDS
SUB-ADVISORY AGREEMENT
EDGE ASSET MANAGEMENT, INC. SUB-ADVISED SERIES
AGREEMENT executed as of July 8, 2015 and between
PRINCIPAL MANAGEMENT CORPORATION (hereinafter called
"the Manager"), and EDGE ASSET MANAGEMENT, INC.
(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 Principal Exchange-Traded Funds, (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 of the Fund identified in Appendix A
hereto (hereinafter called "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 Securities and Exchange Commission's Order
Approving a Proposed Rule Change (Release No. 34-74886;
File No. SR-NYSEArca-2015-15) related to the exchange listing of
the Series shares (the "19b-4 Order").
(d) The Fund's Declaration of Trust and By-laws;
(e) Policies, procedures or instructions adopted or
approved by the Board of Trustees of the Fund relating to
obligations and services to be 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 each Series,
subject to the control and direction of the Manager and the
Fund's Board of Trustees, 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 to the Manager or
a designee, including but not limited to, investment supervisory
services, investment research and investment
recommendations regarding the purchase, retention and sale
of investments for each Series.
(b) Furnish to the Board of Trustees of the Fund for
approval (or any appropriate committee of such Board), and
revise from time to time as conditions require, a recommended
investment program for each Series consistent with each Series
investment objective and policies.
(c) Implement the approved investment program by
making recommendations 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
registration statement, 19b-4 Order, Declaration of Trust and
Bylaws and the requirements of the 1940 Act, as each of the
same shall be from time to time in effect. The Sub-Advisor is
not responsible for the execution of securities trades.
(d) Advise and assist the officers of the Fund, as
requested by the officers, in taking such steps as are
necessary or appropriate to carry out the decisions of
its
Board of Trustees, and any appropriate committees of such
Board, regarding the general conduct of the investment
business of each Series.
(e) Maintain, in connection with the Sub-Advisor's
investment advisory services obligations, compliance with the
1940 Act and the regulations adopted by the Securities and
Exchange Commission thereunder, the Series' investment
strategies and restrictions as stated in the Fund's prospectus
and statement of additional information, and the restrictions
and limitations set forth in the 19b-4 Order.
(f) Report to the Board of Trustees of the Fund at such
times and in such detail as the Board of Trustees may
reasonably deem appropriate in order to enable it to determine
that the investment policies, procedures and approved
investment program of each Series 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 Trustees.
(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 each Series.
(i) Maintain all accounts, books and records with respect
to each 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
each 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 Series 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 a Series upon request by the Fund or the
Manager. The Sub-Advisor has no responsibility for the
maintenance of Fund records except insofar as is directly
related to the services the Sub-Advisor provides to a Series.
(j) 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 along with certification that the
Sub-Advisor has implemented procedures for administering the
Sub-Advisor's Code of Ethics.
(k) From time to time as the Manager or the Fund may
request, furnish the requesting party reports on investments
held by a 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
Trustees at the Fund's principal place of business on due notice
to review the investments of a Series.
(I) 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.
(m) Vote proxies received on behalf of the Series in a
manner consistent with Sub-Advisor's proxy voting policies
and procedures and provide a record of votes cast containing all
of the voting information required by Form N-PX in an
electronic format to enable the Series to file Form N-PX as
required by SEC rule.
(n) Respond to tender offers, rights offerings and other
voluntary corporate action requests affecting securities
held by the Fund.
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
provided however the Sub- Advisor shall consult with Principal
Global Investors LLC as necessary to discharge its
responsibilities to the Principal EDGE Asset Income ETF.
4. Compensation
As full compensation for all services rendered and obligations
assumed by the Sub-Advisor hereunder with respect to each
Series, 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
investment discretion in connection with selecting
investments for a Series 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, or affiliates.
6. 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 Trustees 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 Trustees of the Fund, including approval by the
vote of a majority of the Board of Trustees 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 Series. 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 Trustees 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 Trustees
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 at any time without the
payment of any penalty by the Board of Trustees 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" and "voting security") shall be applied.
9. 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
ofTrustees 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.
10. 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. The address of the Sub-Advisor for this purpose
shall be 000 Xxxxx Xx., Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx, 00000
(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 a
Series.
(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 a
Series, cash requirements and cash available for investment in a
Series, and all other reasonable information as may be
necessary for the Sub-Advisor to perform its duties and
responsibilities hereunder.
(e) 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 MANAGEMENT CORPORATION
By:/s/ Xxxxxxx X. Beer
Xxxxxxx X. Beer, President and Chief Executive Officer
EDGE ASSET MANAGEMENT, INC.
By:/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, President
APPENDIX A
Sub-Advisor shall serve as investment sub-advisor for each
Fund identified below. The Manager will pay Sub-Advisor, as
full compensation for all services provided under this
Agreement, a fee, computed and paid monthly, at an annual
rate as shown below of the Fund's net assets as of the first day
of each month allocated to Sub-Advisor's management.
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.
Sub-Advisor Percentage Fee
as a Percentage of Net Assets
Principal EDGE Active Income ETF .................. 0.18%
on all assets
