PRINCIPAL FUNDS, INC.
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
AGREEMENT to be effective March 1, 2013, by and between
PRINCIPAL FUNDS, INC., a Maryland corporation (hereinafter called the
"Fund") 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) Articles of Incorporation of the Fund;
(b) Bylaws of the Fund as adopted by the Board of Directors;
and
(c) Resolutions of the Board of Directors of the Fund selecting
the Manager as investment adviser and approving the form
of this Agreement.
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 the Fund, 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 the
Fund:
(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 Directors of the Fund (or any
appropriate committee of such Board), and revise from time
to time as conditions require, a recommended investment
program for the portfolio of each Series of the Fund
consistent with each Series' investment objective and
policies;
(d) Implement such of its recommended investment program
as the Fund shall approve, by placing orders for the
purchase and sale of securities, subject always to the
provisions of the Fund's Articles of Incorporation and
Bylaws and the requirements of the Investment Company
Act of 1940 (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;
(e) 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 Directors and any appropriate
committees of such Board regarding the general conduct of
the investment business of the Fund; and
(f) Report to the Board of Directors 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 the Fund 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 the Fund 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 Fund
expenses;
(c) Prepare daily money transfer;
(d) Reconcile all Fund bank and custodian accounts;
(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 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 in compliance with the
provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, 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 Fund's operations; and
(n) Obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the
Fund in accordance with the requirements of the
Investment Company Act of 1940 and the rules thereunder,
as such bonds and policies are approved by the Fund's
Board of Directors.
3. CORPORATE ADMINISTRATIVE SERVICES
The Manager will provide the following corporate administrative
services for the Fund:
(a) furnish the services of such of the Manager's officers and
employees as may be elected officers or directors 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 corporate functions of the Fund
(i.e., functions other than (i) underwriting and distribution of
Fund shares; (ii) custody of Fund assets, (iii) transfer and
paying agency services; and (iv) corporate and portfolio
accounting services); and
(c) furnish the services of executive and clerical personnel
necessary to perform the general corporate functions of the
Fund.
4. RESERVED RIGHT TO DELEGATE DUTIES AND SERVICES
TO OTHERS
The Manager in assuming responsibility for the various services
as set forth in this Agreement reserves the right to enter into
agreements with others for the performance of certain duties and
services or to delegate the performance of some or all of such
duties and services to Principal Life Insurance Company, or one
or more affiliates thereof; provided, however, that 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 Directors.
5. EXPENSES BORNE BY THE MANAGER
The Manager will pay:
(a) the organizational expenses of the Fund and its portfolios
and share classes, including the Fund's registration under
the Investment Company Act of 1940, and the initial
registration of its Capital Stock for sale under the Securities
Act of 1933 with the Securities and Exchange Commission;
(b) Compensation of personnel, officers and directors who are
also affiliated with the Manager; and
(c) Expenses and compensation associated with furnishing
office space, and all necessary office facilities and
equipment, and personnel necessary to perform the general
corporate functions of the Fund.
6. COMPENSATION OF THE MANAGER BY FUND
For all services to be rendered and payments made as provided
in Sections 1, 2 and 4 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 Articles of Incorporation of the Fund. If pursuant
to such provisions the determination of net asset value is
suspended, then for the purposes of this Section 5 the value of
the net assets of the Fund 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. EXPENSES BORNE BY FUND
The Fund will pay, without reimbursement by the Manager, all
expenses attributable to the operation of the Fund or the
services described in this Agreement and not specifically
identified in this Agreement as being paid by the Manager.
8. 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 directors, officers or employees will act as a principal
or agent or receive any commission.
9. 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.
10. COPIES OF CORPORATE DOCUMENTS
The Fund will furnish the Manager promptly with properly
certified or authenticated copies of amendments or supplements
to its Articles of Incorporation or Bylaws. Also, the Fund will
furnish the Manager financial and other corporate information as
needed, and otherwise cooperate fully with the Manager in its
efforts to carry out its duties and responsibilities under this
Agreement.
11. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall remain in force and in effect from year to
year following its execution provided that the continuance is
specifically approved at least annually 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 vote of a
majority of the directors 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 at any time without the payment of
any penalty, by the Board of Directors 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
Investment Company Act of 1940 (particularly the definitions of
"interested person," "assignment" and "voting security") shall be
applied.
12. 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
vote of a majority of the directors 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.
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 FUNDS, INC.
By /s/ Xxxxxxx X. Beer
Xxxxxxx X. Beer, Executive Vice President
By /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, Vice President & Secretary
PRINCIPAL MANAGEMENT CORPORATION
By /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, 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
$1
billion
Next
$1
billion
Next
$1
billion
Next
$1
billion
Over
$5
billion
XXX Balanced Portfolio*
0.55%
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
XXX Conservative Balanced Portfolio*
0.55%
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
XXX Conservative Growth Portfolio*
0.55%
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
XXX Flexible Income Portfolio*
0.55%
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
XXX Strategic Growth Portfolio*
0.55%
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
*Breakpoints based on aggregate XXX Portfolio net assets
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $500
million
Next $500
million
Next $500
million
Over $1.5
billion
Diversified Real Asset Fund
0.85%
0.83%
0.81%
0.80%
Global Multi-Strategy Fund
1.60%
1.58%
1.56%
1.55%
Global Opportunities Fund
0.85%
0.83%
0.81%
0.80%
Global Real Estate Securities Fund
0.90%
0.88%
0.86%
0.85%
Inflation Protection Fund
0.40%
0.38%
0.36%
0.35%
Overseas Fund
1.10%
1.08%
1.06%
1.05%
LargeCap Blend Fund II
0.75%
0.73%
0.71%
0.70%
MidCap Growth Fund
0.65%
0.63%
0.61%
0.60%
MidCap Growth Fund III
1.00%
0.96%
0.94%
0.92%
MidCap Value Fund III
0.65%
0.63%
0.61%
0.60%
Small-MidCap Dividend Income Fund
0.80%
0.78%
0.76%
0.75%
SmallCap Blend Fund
0.75%
0.73%
0.71%
0.70%
SmallCap Growth Fund I
1.10%
1.08%
1.06%
1.05%
SmallCap Growth Fund II
1.00%
0.98%
0.96%
0.95%
SmallCap Value Fund II
1.00%
0.98%
0.96%
0.95%
Tax-Exempt Bond Fund
0.45%
0.43%
0.41%
0.40%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First
$500
million
Next
$500
million
Next
$500
million
Next
$500
million
Next
$1
billion
Over
$3
billion
Bond & Mortgage Securities Fund
0.55%
0.53%
0.51%
0.50%
0.48%
0.45%
Diversified International Fund
0.90%
0.88%
0.86%
0.85%
0.83%
0.80%
Global Diversified Income Fund
0.80%
0.78%
0.76%
0.75%
0.73%
0.70%
High Yield Fund I
0.65%
0.63%
0.61%
0.60%
0.59%
0.58%
International Emerging Markets Fund
1.20%
1.18%
1.16%
1.15%
1.14%
1.13%
International Fund I
0.97%
0.95%
0.93%
0.92%
0.91%
0.90%
LargeCap Value Fund
0.45%
0.43%
0.41%
0.40%
0.39%
0.38%
LargeCap Value Fund I
0.80%
0.78%
0.76%
0.75%
0.74%
0.73%
LargeCap Value Fund III
0.80%
0.78%
0.76%
0.75%
0.73%
0.70%
LargeCap Growth Fund I
0.66%
0.64%
0.62%
0.61%
0.60%
0.59%
LargeCap Growth Fund II
0.89%
0.87%
0.85%
0.84%
0.83%
0.82%
MidCap Blend Fund
0.65%
0.63%
0.61%
0.60%
0.59%
0.58%
MidCap Value Fund I
1.00%
0.98%
0.96%
0.95%
0.94%
0.93%
Money Market Fund
0.40%
0.39%
0.38%
0.37%
0.36%
0.35%
Preferred Securities Fund
0.75%
0.73%
0.71%
0.70%
0.69%
0.68%
Real Estate Securities Fund
0.85%
0.83%
0.81%
0.80%
0.79%
0.78%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $500
million
Next $500
million
Next $1
billion
Next $1
billion
Over $3
billion
LargeCap Growth Fund
0.68%
0.65%
0.62%
0.58%
0.55%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First
$500
million
Next
$500
million
Next
$500
million
Next
$500
million
Next
$500
million
Over
$2.5
billion
Core Plus Bond Fund I
0.60%
0.58%
0.56%
0.55%
0.53%
0.50%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $250
million
Next $250
million
Over $500
million
Equity Income Fund
0.60%
0.55%
0.50%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $500
million
Next $500
million
Over $1
billion
Principal Capital Appreciation Fund
0.625%
0.50%
0.375%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $2 billion
Over $2 billion
Government & High Quality Bond Fund
0.50%
0.45%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $2
billion
Next $1
billion
Over $3
billion
Income Fund
0.50%
0.44%
0.43%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $2 billion
Over $2 billion
Government & High Quality Bond Fund
0.50%
0.45%
Income Fund
0.50%
0.45%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $250 million
Over $250 million
High Yield Fund
0.625%
0.50%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $1 billion
Over $1 billion
California Municipal Fund
0.45%
0.40%
Series
Management Fee as a Percentage
of Average Daily Net Assets
First $200
million
Next $300
million
Over $500
million
Short-Term Income
0.50%
0.45%
0.40%
Series
Management Fee as a Percentage
of Average Daily Net Assets
Bond Market Index Fund
0.25%
International Equity Index Fund
0.25%
LargeCap S&P 500 Index Fund
0.15%
MidCap S&P 400 Index Fund
0.15%
Principal LifeTime 2010 Fund
0.03%
Principal LifeTime 2015 Fund
0.03%
Principal LifeTime 2020 Fund
0.03%
Principal LifeTime 2025 Fund
0.03%
Principal LifeTime 2030 Fund
0.03%
Principal LifeTime 2035 Fund
0.03%
Principal LifeTime 2040 Fund
0.03%
Principal LifeTime 2045 Fund
0.03%
Principal LifeTime 2050 Fund
0.03%
Principal LifeTime 2055 Fund
0.03%
Principal LifeTime 2060 Fund
0.03%
Principal LifeTime Strategic Income Fund
0.03%
SmallCap S&P 600 Index Fund
0.15%
2
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