PRINCIPAL EXCHANGE-TRADED FUNDS
MANAGEMENT AGREEMENT
AGREEMENT to be effective March 21, 2016, by and
between PRINCIPAL EXCHANGE-TRADED FUNDS, a Delaware
statutory trust (hereinafter called the "Fund") on behalf of each
series identified on Schedule 1 attached hereto, as may be
amended from time to time (each, a "Series"), and PRINCIPAL
MANAGEMENT CORPORATION, an Iowa corporation (hereinafter
called the "Manager").
W I T N E S S E T H:
WHEREAS, The Fund has furnished the Manager with
copies properly certified or authenticated of each of the following:
(a) Agreement and Declaration of Trust of the Fund;
(b) Bylaws of the Fund as adopted by the Board of
Trustees; and
(c) Resolutions of the Board of Trustees of the Fund
selecting the Manager as investment adviser for each
Series and approving the form of this Agreement with
respect to each such Series; and
WHEREAS, The Fund desires to retain the Manager to
provide investment management services to each Series on the
terms set forth in this Agreement, and the Manager is willing to
provide such investment management services to each Series on
the terms set forth in this Agreement; and
NOW THEREFORE, in consideration of the premises and
mutual agreements herein contained, the Fund hereby appoints the
Manager to act as investment adviser and manager of each Series,
and the Manager agrees to act, perform or assume the
responsibility therefore in the manner and subject to the conditions
hereinafter set forth. The Fund will furnish the Manager from time
to time with copies, properly certified or authenticated, of all
amendments of or supplements to the foregoing, if any.
1. INVESTMENT ADVISORY SERVICES
The Manager will regularly perform the following services
for each Series:
(a) Provide investment research, advice and supervision;
(b) Provide investment advisory, research and statistical
facilities and all clerical services relating to research,
statistical and investment work;
(c) Furnish to the Board of Trustees of the Fund (or any
appropriate committee of such Board), and provide
ongoing review, evaluation and revision from time to
time as conditions require of, a recommended
investment program for the portfolio of each Series of
the Fund consistent with each Series' investment
objective and policies, including any recommendation
for any combination of liquidation of Series;
(d) Where applicable, based on upon research, analysis
and due diligence, recommend to the Board of Trustees
of the Fund one or more sub-advisers for a Series o the
Fund; regularly monitor and evaluate each
sub-adviser's performance and recommend changes to
the sub-advisers in situations in which appropriate.
(e) Implement such of its recommended investment
program for each Series as the Fund shall approve, by
placing orders for the purchase and sale of securities,
subject always to the provisions of the Fund's
Agreement and Declaration of Trust and Bylaws and the
requirements of the Investment Company Act of 1940,
as amended (the "1940 Act"), and the Fund's
Registration Statement, current Prospectus and
Statement of Additional Information, as each of the
same shall be from time to time in effect;
(f) Advise and assist the officers of the Fund 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; and
(g) Report to the Board of Trustees of the Fund at such
times and in such detail as the Board may deem
appropriate in order to enable it to determine that the
investment policies of each Serie are being observed.
2. ACCOUNTING SERVICES
The Manager will provide all accounting services
customarily required by investment companies, in
accordance with the requirements of applicable laws, rules
and regulations and with the policies and practices of each
Series as communicated to the Manager from time to time,
including, but not limited to, the following:
(a) Maintain fund general ledger and journal;
(b) Prepare and record disbursements for direct expenses
of each Series;
(c) Prepare daily money transfer;
(d) Reconcile all bank and custodian accounts of each
Series;
(e) Assist Fund independent auditors as appropriate;
(f) Prepare daily projection of available cash balances;
(g) Record trading activity for purposes of determining net
asset values and daily dividend;
(h) Prepare daily portfolio valuation report to value portfolio
securities and determine daily accrued income;
(i) Determine the net asset value per share if each Series
daily or at such other intervals as the Fund may
reasonably request or as may be required by law;
(j) Prepare monthly, quarterly, semi-annual and annual
financial statements;
(k) Provide financial information for reports to the Securities
and Exchange Commission (the "SEC") in compliance
with the provisions of the 1940 Act and the Securities
Act of 1933, as amended the (the "Securities Act"), the
Internal Revenue Service and any other regulatory or
governmental agencies as required;
(l) Provide financial, yield, net asset value, and similar
information to National Association of Securities
Dealers, Inc., and other survey and statistical agencies
as instructed from time to time by the Fund;
(m) Investigate, assist in the selection of and conduct
relations with custodians, depositories, accountants,
legal counsel, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the
operations of each Series; and
(n) Obtain and keep in effect fidelity bonds and trustees and
officers/errors and omissions insurance policies for the
Fund in accordance with the requirements of the 1940
Act and the rules thereunder, as such bonds and
policies are approved by the Fund's Board of Trustees.
3. TRUST ADMINISTRATIVE SERVICES
The Manager will provide the following trust administrative
services for the Fund:
(a) furnish the services of such of the Manager's officers
and employees as may be elected officers or trustees of
the Fund, subject to their individual consent to serve and
to any limitations imposed by law;
(b) furnish office space, and all necessary office facilities
and equipment, for the general trust functions of the
Fund (i.e., functions other than (i) underwriting and
distribution of the shares of each Series; (ii) custody of
the assets of each Series, (iii) transfer and paying
agency services; and (iv) corporate and portfolio
accounting services);
(c) furnish the services of executive and clerical personnel
necessary to perform the general trust functions of the
Fund.
(d) design, develop, implement and regularly monitor
appropriate compliance processes; and
(e) prepare, or provide oversight and review of the
preparation of, registration statements, shareholder
reports and other disclosure materials and regulatory
filings for each Series.
4. RESERVED RIGHT TO DELEGATE DUTIES AND
SERVICES TO OTHERS
In each case, to the extent required by applicable law (i)
subject to the prior approval of a majority of the Board of
Trustees of the Fund, including a majority of the Trustees
who are not interested persons (as defined in the 1940 Act
of the manager, Principal Life Insurance Company, or the
Fund and, (ii) by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the applicable
Series, the Manager, in assuming responsibility for the
various services as set forth in this Agreement may (a) enter
into agreements with others for the performance of certain
duties and services or (b) delegate the performance of
some or all of such duties and (services to Principal Life
Insurance Company, one or more affiliates or to unaffiliated
parties thereof; provided, however, that the (x) entry into
any such agreements shall not relieve the Manager of its
duty to review and monitor the performance of such persons
to the extent provided in the agreements with such persons
or as determined from time to time by the Board of Trustees
and (y) the entry into any such agreements in clause (a) or
any such delegation in clause (b) shall not relieve the
Manager of any of its obligations under this Agreement.
5. EXPENSES
The Manager shall pay all expenses of each Series except
for the Management Fees, payments made under each
Series 12b-1 plan, brokerage commissions and other
expenses connected to the execution of portfolio
transactions, interest expense, taxes, acquired fund fees
and expenses, litigation expenses and other extraordinary
expenses.
6. COMPENSATION OF THE MANAGER BY FUND
For all services to be rendered and payments made as
provided in Sections 1, 2 and 3 hereof, the Fund will accrue
daily and pay the Manager monthly, or at such other
intervals as the Fund and Manager may agree, a fee based
on the average of the values placed on the net assets of
each Series of the Fund as of the time of determination of
the net asset value on each trading day throughout the
month in accordance with Schedule 1 attached hereto.
Net asset value shall be determined pursuant to applicable
provisions of the Agreement and Declaration of Trust of the
Fund. If pursuant to such provisions the determination of
net asset value is suspended, then for the purposes of this
Section 6 the value of the net assets of each Series as last
determined shall be deemed to be the value of the net
assets for each day the suspension continues.
The Manager may, at its option, waive all or part of its
compensation for such period of time as it deems necessary
or appropriate.
7. AVOIDANCE OF INCONSISTENT POSITION
In connection with purchases or sales of portfolio securities
for the account of the Fund, neither the Manager nor any of
the Manager's trustees, officers or employees will act as a
principal or agent or receive any commission.
8. LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the Manager's part in the
performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
9. COPIES OF TRUST DOCUMENTS
The Fund will furnish the Manager promptly with properly
certified or authenticated copies of amendments or
supplements to its Agreement and Declaration of Trust or
Bylaws. Also, the Fund will furnish the Manager financial
and other trust information as needed, and otherwise
cooperate fully with the Manager in its efforts to carry out its
duties and responsibilities under this Agreement.
10. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective with respect to a
Series as of the corresponding date set forth on Schedule 2
to this Agreement, as may be amended from time to time,
and, unless otherwise termianated with respect to such
Series shall continue in effect thereafter for the initial term
set forth on Schedule 2 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 Trustees of
the Fund or by a vote of a majority of the outstanding voting
securities of the Series and in either event by vote of a
majority of the trustees of the Fund who are not interested
persons of the Manager, Principal Life Insurance Company,
or the Fund cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may,
on sixty days written notice, be terminated with respect to a
Series at any time without the payment of any penalty, by
the Board of Trustees of the Fund, by vote of a majority of
the outstanding voting securities of the Series, or by the
Manager. This Agreement shall automatically terminate in
the event of its assignment. In interpreting the provisions of
this Section 10, 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 provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no
amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the
outstanding voting securities of the Series to which such
amendment relates and by the vote of a majority of the
trustees who are not interested persons of the Manager,
Principal Life Insurance Company or the Fund cast in
person at a meeting called for the purpose of voting on such
approval.
12. ADDRESS FOR PURPOSE OF NOTICE
In the event the Fund establishes one or more Series after
the effective date of this Agreement, such Series will
become Series under this Agreement upon approval of this
Agreement for such Series in the manner required by the
1940 Act and the amendment of Schedules 1 and 2 hereto.
13. ADDRESS FOR PURPOSE OF NOTICE
Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, 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 Fund
and that of the Manager for this purpose shall be the
Principal Financial Group, Xxx Xxxxxx, Xxxx 00000-0000.
14. MISCELLANEOUS
The captions in this Agreement are included for
convenience of reference only, and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers thereunto
duly authorized.
PRINCIPAL EXCHANGE-TRADED FUNDS
/s/ Xxxx X. Xxxxxx
By Xxxx X. Xxxxxx,
Vice President & Secretary
/s/ Xxxx X. Xxxxxx
By Xxxx X. Xxxxxx,
Assistant Counsel
PRINCIPAL MANAGEMENT CORPORATION
/s/ Xxxxxxx X. Beer
By Xxxxxxx X. Beer,
President and Chief Executive Officer
SCHEDULE 1
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $500 million
Next $500 million
Next $500 million
Over $1.5 billion
Principal Shareholder Yield Index ETF
0.40%
0.38%
0.36%
0.35%
Principal Price Setters Index ETF
0.40%
0.38%
0.36%
0.35%
SCHEDULE 2
Effective Date and Initial Term of Management Agreement for each Series
Series
Effective Date
Initial Term
Principal Shareholder Yield Index ETF
03/21/2016
One Year
Principal Price Setters Index ETF
03/21/2006
One Year
