PRINCIPAL FUNDS, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT executed as of July , 2015, by and between
PRINCIPAL MANAGEMENT CORPORATION, an Iowa corporation
(hereinafter called "the Manager"), and KLS DIVERSIFIED ASSET
MANAGEMENT LP, a Delaware limited partnership (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 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 of the
Fund identified in Appendix A (hereinafter called the "Series"), which the
Manager has agreed to provide to the Series, 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 provide such services with
respect to the portion of the assets of the Series allocated to it for
management from time to time by the Manager. The Sub-Advisor
shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized
in this Agreement or another writing by the Fund or the Manager
to the Sub-Advisor, 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 or present 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 as agreed
by the Sub-Advisor from time to time.
(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. In
connection therewith, the Sub-Advisor is hereby appointed
as the Series' and the Fund's agent and attorney-in-fact for
the limited purposes of executing account documentation
agreements (including without limitation prime brokerage
agreements, International Swaps and Derivatives
Association (ISDA) Master Agreements, Bond Market
Association Master Repurchase and Global Master
Repurchase Agreements), and other contracts and
documents as the Sub-Advisor shall be requested by
brokers, dealers, counterparties and other persons in
connection with its management of the Series.
(d) Advise and assist the officers of the Fund, as reasonably
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
13(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 reasonable 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 employed by the Sub-Advisor required for it to
execute its duties hereunder, and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment
necessary for the efficient conduct of its duties under this
Agreement. The Sub-Advisor shall not be responsible for
any expenses incurred by the Fund or the Series, except as
otherwise specifically provided herein.
(i) Open accounts with Foreign Account Tax Compliance Act
("FATCA") compliant 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
applicable law or 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 "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.
(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 reasonable prior 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 Advisers Act, the Securities Act of 1933, as
amended (the "Securities Act"), and any state securities
laws, and any rule or regulation thereunder. Such
information includes, but is not limited to; the Sub-Advisor's
compliance manual and policies and procedures adopted to
comply with Rule 206(4)-7 of the Investment Advisers Act;
the Sub-Advisor's most recent annual compliance report or a
detailed summary of such report; timely and complete
responses to Quarterly Compliance Questionnaires
(including the identification of any material compliance
matters and a copy of any material changes to the
Sub-Advisor's Rule 206(4)-7 compliance policies and
procedures marked to show changes along with a written
summary of the purpose of such changes), Annual Proxy
Voting Questionnaires, Annual Best Execution and Soft
Dollar Questionnaire, and other ad-hoc compliance requests
the Manager deems necessary. Sub-Advisor agrees to make
available for review, deficiency letters issued by the
Securities and Exchange Commission and the
Sub-Advisor's response to such deficiency letters.
Sub-Advisor will advise Manager of any material changes in
Sub-Advisor's ownership 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) Cooperate with the Manager in its performance of quarterly
and annual tax compliance tests to monitor the Series'
compliance with Subchapter M of the Code and Section
817(h) of the Code. If it is determined by the Manager or its
tax advisors that the Series is not in compliance with the
requirements noted above, the Sub-Advisor, in consultation
with the Manager and its tax advisors, 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 in accordance with the Sub-Advisor's proxy voting
policy as most recently provided to the Manager. 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.
The Manager agrees to provide a list of any such investment
advisory firms, such list to be promptly updated by the Manager
upon any changes thereto.
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. In no
event will the Sub-Advisor have any responsibility for any series of
the Fund other than the Series, for any portion of the Series not
managed by the Sub-Advisor or for the acts or omissions of any
other sub-adviser to the Series.
Notwithstanding anything in this Agreement to the contrary
contained herein, the Sub-Advisor shall not be responsible or
liable for its failure to perform under this Agreement or for any
losses to the Manager, the Fund, the Series or to any shareholder
resulting from any event beyond the reasonable control of the
Sub-Advisor or its agents, including but not limited to,
nationalization, expropriation, devaluation, seizure, or similar
unusual actions by any governmental authority, de facto or de
jure; or the breakdown, failure or malfunction of any utilities or
telecommunications systems; or acts of war, terrorism,
insurrection or revolution; or acts of God (collectively, "Force
Majeure Events"). Upon the occurrence of a Force Majeure
Event, the Sub-Advisor shall endeavor to recommence
performance or observance without delay, in a manner consistent
with its obligations under the Advisers Act, the 1940 Act and as a
fiduciary of the Fund.
6. Trade Errors
The Sub-Advisor will notify the Manager of any Trade Error(s),
regardless of materiality, promptly upon the discovery such Trade
Error(s) by the Sub-Advisor. Notwithstanding Section 5, the
Sub-Advisor will be shall be liable to the Manager, the Fund or its
shareholders for any loss suffered by the Manager or the Fund
resulting from Trade Errors due to negligence, misfeasance, or
disregard of duties of the Sub-Advisor or any of its directors,
officers, employees, agents (excluding any broker-dealer selected
by the Sub-Advisor), or affiliates. For purposes under this Section,
Trade Errors are defined as errors due to (i) erroneous orders by
the Sub-Advisor for the Series that result in the purchase or sale
of securities that were not intended to be purchased or sold; (ii)
erroneous orders by the Sub-Advisor that result in the purchase or
sale of securities for the Series in an unintended amount or price;
or (iii) purchases or sales of financial instruments which violate the
investment limitations or restrictions disclosed in the Registration
Statement and/or imposed by applicable law or regulation
(calculated at the Sub-Advisor's portfolio level), unless otherwise
agreed to in writing.
7. Supplemental Arrangements
Subject to Section 3 hereof, 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
This Agreement shall become effective as of the date of its
execution and, unless otherwise terminated, shall continue in
effect for a period of two years and thereafter from year to year
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 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 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 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 amendment of this Agreement shall be effective unless in
writing and signed by both parties. 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. Services not Exclusive
The services of the Sub-Advisor to the Manager and the Series
are not to be deemed exclusive and the Sub-Advisor shall be free
to render similar services to others so long as its services
hereunder are not impaired thereby. It is specifically understood
that directors, officers and employees of the Sub-Advisor and of
its subsidiaries and affiliates may continue to engage in providing
portfolio management services and advice to other investment
advisory clients. The Manager agrees that Sub-Advisor may give
advice and take action in the performance of its duties with
respect to any of its other clients which may differ from advice
given or the timing or nature of action taken with respect to the
Series. Nothing in this Agreement shall be deemed to require
Sub-Advisor, its principals, affiliates, agents or employees to
purchase or sell for the Series any security which it or they may
purchase or sell for its or their own account or for the account of
any other client.
12. CFTC
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
adviser 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
adviser. 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 adviser 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 adviser
registration or NFA membership, or (iii) the institution of an
action or proceeding of which the Sub-Advisor is aware
and that would be reasonably likely to 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 and has been advised it is
a target.
13. 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 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx
XX 00000.
(c) The Sub-Advisor will promptly notify the Manager in writing of
the occurrence of any of the following events, provided such
notice is not prohibited by applicable law, regulation or order
of a government agency or regulator with appropriate
jurisdiction. Any notification will be considered prompt if it is
given in a manner consistent with the Sub-Advisor's fiduciary
and other obligations under the Advisers Act and
contemporaneously with any regulatory filing or notice to
other affected parties within the time that such filing or notice
is required by applicable law:
(1) the Sub-Advisor fails to be registered as an investment
adviser under the 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 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.
MANAGER SHOULD ALSO BE AWARE THAT THE SUB-ADVISOR MAY
ENGAGE IN TRADING FOREIGN FUTURES OR OPTIONS
CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE
THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO
A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS
WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION.
FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE
UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF
REGULATORY AUTHORITIES OR MARKETS IN NON UNITED STATES
JURISDICTIONS WHERE THE SUB-ADVISOR'S TRANSACTIONS MAY
BE EFFECTED. BEFORE THE MANAGER TRADES, THE MANAGER
SHOULD INQUIRE ABOUT ANY RULES RELEVANT TO THE
MANAGER'S PARTICULAR CONTEMPLATED TRANSACTIONS AND
ASK THE FIRM WITH WHICH THE MANAGER INTENDS TO TRADE
FOR DETAILS ABOUT THE TYPES OF REDRESS AVAILABLE IN BOTH
MANAGER'S LOCAL AND OTHER RELEVANT JURISDICTIONS.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES
TRADING COMMISSION (THE "COMMISSION") IN CONNECTION WITH
ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE
OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT
BEEN, FILED WITH THE COMMISSION. THE COMMISSION DOES
NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING
PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF
COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY,
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS
BROCHURE OR ACCOUNT DOCUMENT.
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,
Executive Vice President
and Chief Operating
Officer
KLS DIVERSIFIED ASSET
MANAGEMENT LP
By /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx,
Chief Operating Officer and
Partner
APPENDIX A
KLS Diversified Asset Management LP ("KLS") shall serve as an
investment sub-advisor for the Series identified below. The Manager will
pay KLS as full compensation for all services provided under this
Agreement, a fee, computed daily and paid monthly, at an annual rate as
shown below of the Series' net assets allocated to KLS' management.
In calculating the fee for a series included in the table, assets of any
unregistered separate account of Principal Life Insurance Company, any
investment company sponsored by Principal Life Insurance Company,
and any collective investment trust sponsored by Delaware Charter
Guarantee & Trust Company to which KLS provides investment advisory
services and which have the same investment mandate as the series for
which the fee is calculated, will be combined with the assets of the series
to arrive at net assets.
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.
Global Multi-Strategy Fund
Sub-Advisor's Fee as a Percentage of Average Daily Net
Assets
First $250 million 1.00%
Over $250 million 0.90%
