PRINCIPAL FUNDS.
INC.
AMENDED AND
RESTATED SUB-
ADVISORY
AGREEMENT
CREDIT SUISSE
ASSET
MANAGEMENT LLC
AGREEMENT executed as of May 22. 2017, by and
between PRINCIPAL GLOBAL INVESTORS, LLC, a
Delaware limited liability company (hereinafter called
"the Manager"), and CREDIT SUISSE ASSET
MANAGEMENT LLC, a Delaware limited liability
company (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 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
such portion of the assets of each Series as
may be allocated to the Sub-Advisor by the
Manager, from time to time (the "Allocated
Assets"), 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.
U) 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 Advisor's Act of 1940 (the
"Investment Advisor's 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.
(k) Observe and comply with Rule 1?j-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.
(I) 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 general partners 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) Perform quarterly and annual tax compliance tests to
monitor the Series' compliance with Subchapter M of the
Code and Section 817(h) of the Code, 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 shall notify the Manager
immediately upon having a reasonable basis for
believing that the Series has ceased to be in
compliance or that it might not be in compliance in
the future. If it is determined that the Series is not in
compliance with the requirements noted above, the
Sub-Advisor, in consultation with the Manager, will
take prompt action to bring the Series back into
compliance (to the extent possible) within the time
permitted under the Code.
(o) 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 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 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, shall continue in
effect 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 Allocated Assets of 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 Allocated Assets of such 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 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 9, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "interested person," "assignment" and "voting
security") 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. 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-
0200, and the address of the Sub-Advisor shall be
00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 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 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) This Agreement contains the entire understanding and
agreement of the parties.
12. The Sub-Advisor acknowledges Manager's representation
that the Diversified Real Asset Fund series does not rely
on the exclusion from the definition of "commodity pool
operator" under Section 4.5 of the General Regulations
under the Commodity Exchange Act (the CEA).
The Sub-Advisor represents that it is a commodity trading
advisor duly registered with the Commodity Futures
Trading Commission and is a member in good standing 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 in good standing 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,
revocation or limitation of the Sub-Advisor's commodity
trading advisor registration or NFA membership, or (iii) the
institution of an action or proceeding that could lead to a
statutory disqualification under the CEA or an
investigation by any governmental agency or self-
regulatory organization of which the Sub-Advisor is
subject or has been advised it is a target.
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
Xxxxxxx X. Beer, Executive Director-Principal Funds
By /s/Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, Counsel
CREDIT SUISSE ASSET MANAGEMENT LLC
By /s/Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Managing Director
APPENDIX A
[Intentionally Omitted]
APPENDIX B
Effective Date and Initial Term of Sub-Advisory Agreement
for each Series
Series
Effective Date
Initial Term
Diversified Real Asset Fund
May 22, 2017
2 Years
